UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[x]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: April 30, 2012
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
Registrant’s telephone number
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
-1-
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 whether the registrant has submitted electronically and posted on its corporate Web site,
if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files).
Yes |X| No | |
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this
chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. | |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-
accelerated filer. See definitions of “large accelerated filer,” ”accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act.
Large accelerated filer |X| Accelerated filer | | Non-accelerated filer | | Smaller reporting
company | |
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 price as of the last business day of the registrant’s most recently completed second fiscal quarter,
October 31, 2011, was approximately $2,238.7 million. The registrant has no non-voting common stock.
The number of shares outstanding of the registrant’s Class A and Class B Common Stock as of May 31, 2012
was 49,997,919 and 9,531,216 respectively.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement for use in connection with its annual meeting of
stockholders scheduled to be held on September 20, 2012, 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, 2012
INDEX
PART I
ITEM 1.
ITEM 1A.
ITEM 1B.
ITEM 2.
ITEM 3.
ITEM 4
PART II
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures – Not Applicable
ITEM 5. Market for the Company’s Common Equity, Related Stockholder Matters and
ITEM 6.
ITEM 7.
Issuer Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
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.
ITEM 9B.
Controls and Procedures
Other Information
PART III
ITEM 10.
ITEM 11.
Directors, Executive Officers and Corporate Governance
Executive Compensation
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
PAGE
4
4-9
9
10
10
11
12
13-46
46-48
49-81
82
82
82
82-84
84
85
85
85
ITEM 13.
ITEM 14.
PART IV
ITEM 15.
SIGNATURES
Exhibits, Financial Statement Schedules and Reports on Form 8-K
86-94
-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 herein the term “Company” means John Wiley & Sons, Inc., and its subsidiaries and affiliated
companies, unless the context indicates otherwise.
The Company provides content and content-enabled digital services to customers worldwide. Core
businesses produce scientific, technical, medical and scholarly journals, reference works, books,
database services, and advertising; professional books, subscription products, certification and
training services and online applications; and educational content and services. Education content
and services includes integrated online teaching and learning resources for undergraduate and
graduate students, educators, and lifelong learners worldwide as well as secondary school students in
Australia. 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 researchers, professionals,
students, and educators. The use of technology enables the Company to make its content efficiently
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 Company’s business is incorporated herein by reference in the
Management’s Discussion and Analysis section of this 10-K.
Employees
As of April 30, 2012, the Company employed approximately 5,200 persons on a full-time equivalent
basis worldwide.
Financial Information About Business Segments
The note entitled “Segment Information” of the Notes to Consolidated Financial Statements and pages
13 through 41 of the Management’s Discussion and Analysis section of this 10-K are incorporated
herein by reference.
Financial Information About Foreign and Domestic Operations and Export Sales
The note entitled “Segment Information” of the Notes to Consolidated Financial Statements and page
20 of the Management’s Discussion and Analysis section of this 10-K 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 factors, before deciding to invest in any of the Company’s securities. The risks below are not the
only ones the Company faces. Additional risks not currently known to the Company or that the
Company presently deems immaterial may also impair its business operations. The Company’s
business, financial condition, results of operations or prospects could be materially adversely affected
by any of these risks.
Cautionary Statement Under the Private Securities Litigation Reform Act of 1995:
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This 10-K and our Annual Report to Shareholders for the year ending April 30, 2012 contain certain
forward-looking statements concerning the Company’s operations, 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 level of investment in new technologies and products; (ii) subscriber renewal rates
for the Company’s journals; (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
conditions; and (viii) the Company’s ability to protect its copyrights and other intellectual property
worldwide (ix) other factors detailed from time to time in the Company’s filings with the Securities and
Exchange Commission. The Company undertakes no obligation to update or revise any such forward-
looking statements to reflect subsequent events or circumstances.
Operating Costs and Expenses
In general, any significant increase in the costs of goods and services provided to the Company may
adversely affect the Company’s costs of operation. 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. To reduce the impact of paper price increases, the Company relies upon multiple
suppliers. The Company from time-to-time may hedge the exposure to fluctuations in price by entering
into multi-year supply contracts. As of April 30, 2012, there were no outstanding multi-year supply
contracts.
Protection of Intellectual Property Rights
Substantially all of the Company’s publications are protected by copyright, held either in the
Company’s name, in the name of the author of the work, or in the name of the sponsoring
professional society. Such copyrights protect the Company’s exclusive right to publish the work in
many countries abroad for specified periods, in most cases the author’s life plus 70 years, but in any
event a minimum of 50 years for works published after 1978. The ability of the Company to continue
to achieve its expected results depends, in part, upon the Company’s ability to protect its intellectual
property rights. The Company’s results may be adversely affected by lack of legal and/or
technological protections for its intellectual property in some jurisdictions and markets.
The Scientific, Technical, Medical and Scholarly (“STMS”) publishing industry generates much of its
revenue from paid customer subscriptions to online and print journal content. There is debate within
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the academic and government communities whether such journal content should be made available
for free, immediately or following a period of embargo after publication. For instance, certain
governments are considering mandating that all publications containing information derived from
government-funded research be made available to the public at no cost. These mandates have the
potential to put pressure on subscription-based publications and favor business models funded by
author fees or government and private subsidies. If such regulations are widely implemented, the
Company’s operating results could be adversely affected.
Maintaining the Company’s Reputation
Professionals worldwide rely upon many of the Company’s publications to perform their jobs. It is
imperative that the Company consistently demonstrates its ability to maintain the integrity of the
information included in its publications. Adverse publicity, whether or not valid, may reduce demand
for the Company’s publications.
Trade Concentration and Credit Risk
In the journal publishing business, print 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 principally remitted to the Company
between the months of November and January. 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 24% of total annual consolidated revenue and no one agent accounts for more than
10% of total annual consolidated revenue.
The Company’s book business is not dependent upon a single customer; however, the industry is
concentrated in national, regional, and online bookstore chains. Although no one book customer
accounts for more than 10% of total consolidated revenue and 15% of accounts receivable at April 30,
2012, the top 10 book customers account for approximately 20% of total consolidated revenue and
approximately 40% of accounts receivable at April 30, 2012.
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 tax
regulations and accounting standards, may adversely affect the Company’s future financial results.
Introduction of New Technologies, Products and Services
The Company must continue to invest in technological and other innovations to adapt and 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.
-6-
A common trend facing each of the Company’s businesses is the digitization of content and
proliferation of distribution channels, either over the internet, or via other electronic means, replacing
traditional print formats. The trend to eBooks has also created contraction in the print book retail
market which increases the risk of bankruptcy for certain retail customers, potentially leading to the
disruption of short-term product supply to the market as well as potential bad debt write-offs. New
distribution channels, such as digital formats, the internet, online retailers and growing delivery
platforms (e.g. tablets and e-readers), present both threats and opportunities to the Company’s
traditional consumer publishing models, potentially impacting both sales volumes and pricing. There is
an enhanced risk associated with the illegal unauthorized replication and distribution of digital
products.
Information Technology Risks
Information technology is a key part of the Company’s business strategy and operations. As a
business strategy, Wiley’s publishing technology enables the Company to provide customers with new
and enhanced products and services and is critical to the Company’s success in migrating from print
to digital business models. Information technology is also a fundamental component of all our
business processes; collecting and reporting business data; and communicating internally and
externally with customers, suppliers, employees and others.
Information technology system failures, network disruptions and breaches of data security could
significantly disrupt the operations of the Company. Management has designed and implemented
policies, processes and controls to mitigate risks of information technology failure and to provide
security from unauthorized access to our systems. In addition, the Company has in place disaster
recovery plans to maintain business continuity. While the Company has taken steps to address these
risks, there can be no assurance that a system failure, disruption or data security breach would not
adversely affect the Company’s business and operating results.
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.
Introduction of Higher Education Textbook Rental Programs
The Company’s Global Education business publishes educational content for two and four-year
colleges and universities, for-profit career colleges, advanced placement classes, as well as
secondary schools in Australia. Due to growing demand by students for less expensive textbooks, a
number of college bookstores and other entities are offering textbook rental programs to students. In
many ways, the textbook rental business model is an adaptation of the used book model that has
been in place in the higher education market for many years. Due to its recent introduction it is
uncertain what impact, if any, such textbook rental programs will have on Wiley’s results.
Interest Rate and Foreign Exchange Risk
Non-U.S. revenues, as well as our substantial non-U.S. net assets, expose the Company’s results to
foreign currency exchange rate volatility. Fiscal year 2012 revenue was recognized in the following
-7-
currencies (as measured in U.S. dollar equivalents): approximately 54% U.S dollar; 28% British pound
sterling; 8% euro and 10% other currencies. In addition, our interest-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, see Note 13
to the Consolidated Financial Statements in this 10-K which is incorporated herein 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.
Changes in Tax Legislation
The Company is subject to tax laws within the jurisdictions in which it does business. Changes in tax
legislation could have a material impact on the Company’s financial results. There have been recent
proposals to reform U.S. tax laws that would significantly impact how U.S. multinational corporations
are taxed on earnings outside of the U.S. This could have a material impact on the Company’s
financial results since a substantial portion of the Company’s income is earned outside the U.S. In
addition, the Company is subject to audit by tax authorities. Although we believe our tax estimates
are reasonable, the final determination of tax audits could be materially different from our historical
income tax provisions and accruals and have a material impact on the Company’s net income, cash
flow and financial position.
Risk of Doing Business in Developing and Emerging Markets
The Company sells its products to customers in the Middle East (including Iran and Syria), Africa
(including Sudan), Cuba, and other developing markets where it does not have operating subsidiaries.
In addition, approximately 9% of STMS journal articles are sourced from authors in China. The
Company does not own any assets or liabilities in these markets except for trade receivables.
Challenges and uncertainties associated with operating in developing markets has a higher relative
risk due to political instability, economic volatility, crime, terrorism, corruption, social and ethnic unrest,
and other factors. While sales in these markets are not material to the Company’s business results,
adverse developments related to the risks associated with these markets may cause actual results to
differ from historical and forecasted future operating results. Disruption in these markets could also
trigger a decrease in consumer purchasing power, resulting in a reduced demand for our products.
In November 2011, the United Kingdom, the United States and Canada imposed new sanctions
following a United Nations report targeting Iran, including restrictions on financial transactions;
business relationships; and prohibitions on direct and indirect trading with listed “designated persons”.
The European Union also extended its existing sanctions regime. The Company has assessed its
business relationship and transactions with Iran and is in compliance with the regulations. As of April
30, 2012, the Company had outstanding trade receivables with Iran of approximately $2.0 million,
mainly related to book sales recognized prior to the sanctions. It is unclear at present whether these
sanctions will have an effect on the recovery of this outstanding receivable.
Liquidity and Global Economic Conditions
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
-8-
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 possible future changes in global financial markets
and global economic conditions. Similar to other global businesses, we face the potential effects of a
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 Increases in Pension Costs and Funding Requirements
The Company provides defined benefit pension plans for the majority of its employees worldwide.
The funding requirements and costs of these plans are dependent upon various factors, including the
actual return on plan assets, discount rates, plan participant population demographics and changes in
pension regulations. Changes in these factors affect the Company’s plan funding, cash flow and
results of operations. A further discussion on how these factors could impact the Company’s
consolidated financial statements is included on page 45 within the Management’s Discussion and
Analysis section of this 10-K and incorporated herein by reference.
Effects of Inflation and Cost Increases
The Company, from time to time, experiences cost increases reflecting, in part, general inflationary
factors. There is no guarantee that the Company can increase selling prices or reduce costs to fully
mitigate the effect of inflation on company costs.
Ability to Successfully Integrate Key Acquisitions
The Company’s growth strategy includes title, imprint and other business acquisitions which
complement the Company’s existing 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 the Company’s
costs, revenues, cash flows, and financial position. 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
The Company’s success is highly dependent upon the retention of key employees globally. In
addition, we are 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
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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
Owned or Leased
Approx. Sq. Ft.
United States:
New Jersey
Corporate Headquarters
Warehouse
Office & Warehouse
Indiana
California
Office
Office
Massachusetts Office
Iowa
Office & Warehouse
Minnesota
Offices
International:
Australia
Canada
England
Germany
Office & Warehouse
Offices
Office & Warehouse
Office
Warehouses
Offices
Offices
Office
Office
India
Office & Warehouse
Singapore
Offices
Office & Warehouse
Leased
Leased
Leased
Leased
Leased
Leased
Owned
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Owned
Owned
Leased
Leased
Leased
Leased
404,000
380,000
185,000
123,000
57,000
43,000
27,000
12,000
93,000
59,000
87,000
20,000
339,000
80,000
70,000
58,000
19,000
16,000
68,000
61,000
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.
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PART II
Item 5. Market for the Company’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
The Company’s Class A and Class B shares are listed on the New York Stock Exchange under the
symbols JWa and JWb, respectively. Dividends per share and the market price range (Based on daily
closing prices) 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
2012
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2011
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
$0.20
0.20
0.20
0.20
$0.16
0.16
0.16
0.16
$53.00
50.71
49.43
47.93
$42.84
43.75
46.79
52.64
$49.08
42.35
43.50
44.41
$36.87
35.59
41.21
46.71
$0.20
0.20
0.20
0.20
$0.16
0.16
0.16
0.16
$53.22
50.90
49.66
48.00
$42.62
43.72
46.85
52.81
$49.28
43.06
43.57
44.30
$36.83
35.74
41.15
46.55
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. As of April 30, 2012, the
approximate number of holders of the Company’s Class A and Class B Common Stock were 1,155
and 94 respectively, based on the holders of record.
During the fourth quarter of fiscal year 2012, the Company made the following purchases of Class A
Common Stock under its stock repurchase program:
Total
Number of
Shares
Purchased
-
280,000
280,000
560,000
Average
Price Paid
Per Share
-
$47.62
$46.78
$47.20
Total Number of
Shares
Purchased as
part of a Publicly
Announced
Program
-
280,000
280,000
560,000
Maximum
Number of
Shares that May
be Purchased
Under the
Program
2,916,525
2,636,525
2,356,525
February 2012
March 2012
April 2012
Total
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Item 6. Selected Financial Data
Dollars in millions (except per share data)
2012
2011
2010
2009
2008
For the Years Ended April 30,
Revenue
Operating Income (a,b)
Net Income (a,b,c)
Working Capital (d)
Deferred Revenue in Working Capital (d)
Total Assets
Long-Term Debt
Shareholders’ Equity
Per Share Data
Earnings Per Share (a,b,c)
Diluted
Basic
Cash Dividends
Class A Common
Class B Common
$1,782.7
$1,742.6
$1,699.1
$1,611.4
$1,673.7
280.4
212.7
(66.3)
(342.0)
248.1
171.9
(228.9)
(321.4)
242.6
143.5
(188.7)
(275.7)
218.5
128.3
225.2
147.5
(157.4)
(243.6)
(246.6)
(303.2)
2,532.9
2,430.1
2,308.6
2,216.8
2,570.3
475.0
1,017.6
330.5
977.9
559.0
722.4
754.9
513.5
797.3
689.1
$3.47
$2.80
$2.41
$2.15
$2.49
$3.53
$2.86
$2.45
$2.20
$2.55
$0.80
$0.64
$0.56
$0.52
$0.44
$0.80
$0.64
$0.56
$0.52
$0.44
(a)
(b)
On February 16, 2011, Borders Group, Inc. (“Borders”) filed a petition for reorganization relief under Chapter 11 of the U.S.
Bankruptcy code. The Company recorded a $9.3 million bad debt provision ($6.0 million after taxes) or $0.10 per diluted
share related to Borders in fiscal year 2011.
In fiscal year 2010, the Company recognized intangible asset impairment and restructuring charges principally related to GIT
Verlag, a Business-to-Business German-language controlled circulation magazine business acquired in 2002. The fiscal
year 2010 charges were $15.1 million ($10.6 million after taxes) and impacted diluted earnings per share by $0.17.
(c)
Tax benefits included in fiscal year results are as follows:
Fiscal year 2012 includes a $8.8 million tax benefit, or $0.14 per diluted share, principally associated with new tax
legislation enacted in the U.K. that reduced the corporate income tax rate from 27% to 25%. The benefit recognized by the
Company reflects the adjustments required to record all U.K. related deferred tax balances at the new income tax rate.
Fiscal year 2012 also includes a $7.5 million tax benefit, or $0.12 per diluted share, related to the reversal of an income
tax reserve recorded in conjunction with the Blackwell acquisition in fiscal year 2007.
Fiscal year 2011 includes a $4.2 million tax benefit, or $0.07 per diluted share, associated with new tax legislation
enacted in the U.K. that reduced the corporate income tax rate from 28% to 27%.
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.
(d)
The primary driver of the negative working capital is unearned deferred revenue related to subscriptions for which cash has
been collected in advance. Cash received in advance for subscriptions is used by the Company for a number of purposes
including paying down debt; funding operations; paying dividends; and purchasing treasury shares. The deferred revenue will
be recognized in income as the products are shipped or made available online to the customers over the term of the
subscription.
-12-
Item 7. Management’s Discussion and Analysis of Business, Financial Condition and Results of
Operations
The Company provides content and content-enabled digital services to customers worldwide. Core businesses
produce scientific, technical, medical and scholarly journals, reference works, books, database services, and
advertising; professional books, subscription products, certification and training services and online applications;
and educational content and services. Education content and services includes integrated online teaching and
learning resources for undergraduate and graduate students, educators, and lifelong learners worldwide as well
as secondary school students in Australia. 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 researchers,
professionals, students, and educators. The use of technology enables the Company to make its content
efficiently 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
Company’s existing businesses; from the development of new products and services; from designing and
implementing new methods of delivering products to our customers; and from organic growth of existing brands
and titles. The Company’s revenue grew at a compound annual rate of 8% over the past five years, which
includes the acquisition of Blackwell Publishing (Holdings) Ltd. (“Blackwell”) in February 2007.
Core Businesses
Scientific, Technical, Medical and Scholarly (STMS):
The Company is one of the 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, books, major reference works, databases, clinical decision support tools and laboratory
manuals and workflow tools. STMS publishing areas include the physical sciences and engineering, health
sciences, social science and humanities and life sciences. The Company’s STMS products are sold and
distributed globally, online and in print through multiple channels, including research libraries and library
consortia, independent subscription agents, direct sales to professional society members, bookstores, online
booksellers and other customers. Publishing centers include Australia, Germany, India, Singapore, the United
Kingdom and the United States. STMS accounted for approximately 58% of total Company revenue in fiscal
year 2012 and generated revenue growth at a compound annual rate of 12% over the past five years, including
the February 2007 acquisition of Blackwell, a leading publisher of journals and books for the academic, research
and professional markets focused on science, technology, medicine and social sciences and humanities. The
graph below presents STMS revenue by product type for fiscal year 2012:
Other Income
9%
Publishing Rights
6%
Books and
Reference
Works 17%
Advertising 5%
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Journal
Subscriptions
63%
Approximately 53% of journal subscription revenue is derived from publishing rights owned by the Company.
Publishing alliances also play a major role in STMS’s success. Approximately 47% of journal subscription
revenue is derived from publication rights which are owned by professional societies and published by the
Company pursuant to a long-term contract or owned jointly with a professional society. These society alliances
bring mutual benefit, with the societies gaining Wiley’s publishing, marketing, sales and distribution expertise,
while Wiley benefits from being affiliated with prestigious societies and their members. The Company publishes
the journals of many prestigious societies, including the American Cancer Society, the American Heart
Association, the British Journal of Surgery Society, the Federation of European Biochemical Societies, the
European Molecular Biology Organization, the American Anthropological Association and the German Chemical
Society.
STMS is a provider of content and services in evidence-based medicine (EBM). Through the Company’s
alliance with The Cochrane Collaboration, the Company publishes The Cochrane Library, a premier source of
high-quality independent evidence to inform healthcare decision-making, provides the foundation for the
Company’s growing suite of EBM products designed to improve patient healthcare. EBM facilitates the effective
management of patients through clinical expertise informed by best practice evidence that is derived from
medical literature.
Wiley Online Library, one of the world’s broadest and deepest multidisciplinary collections of online resources
covering life, health and physical sciences, social science and the humanities, was launched in August 2010.
Built on the latest technology and designed with extensive input from scholars around the world, Wiley Online
Library delivers seamless integrated access to over 5 million articles from 1,600 journals, 12,000 books, and
hundreds of reference works, laboratory protocols and databases. Wiley Online Library provides the user with
intuitive navigation, enhanced discoverability, expanded functionality and a range of personalization options.
Wiley Online Library provides the Company with revenue opportunities, such as new applications and business
models, online advertising, deeper market penetration and individual sales and pay-per-view options.
Access to Wiley Online Library is sold through licenses with academic 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 and online book publications. Licenses are typically sold in durations of one to three years.
The Company also provides fee-based access to its content through its Article Select and PayPerView
programs which offer non-subscribed journal content, book chapters and major reference work articles.
Wiley Online Library takes advantage of technology to update content frequently and to add 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 February 2011, the Company launched Wiley Open Access, its new publishing program for open-access
research articles. Under the Wiley Open Access business model, research articles submitted by authors are
published and compiled in certain subject areas into open-access journals. The journal compilation is available
free online to the general public on Wiley Online Library. A publication service fee is charged upon acceptance
of a research article by the Company. The service fee may be paid by the individual author. To actively support
researchers and members who wish to publish in Wiley Open Access journals an academic or research
institution, a society or a corporation may fund the fee directly. In return for the service fee, the Company
provides its customary publishing, editing, peer review and technology services. All accepted open-access
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articles are subject to the same rigorous peer-review process applied to the Company’s subscription based
journals which are supported by the Company’s network of prestigious journals and societies. In addition to
Wiley Open Access, the company provides authors with the opportunity to provide their individual research
articles that are published within the Company’s paid subscription journals, free through OnlineOpen.
OnlineOpen articles are also available free to the general public via Wiley Online Library.
The Company has been focused on reducing costs associated with the STMS business to finance investments
in enabling technology and new businesses. The cost savings are principally the result of increased off-shoring
of certain functions and activities from high cost locations to Singapore and other countries in Asia. Significant
portions of the STMS journals and books content management, customer support and central marketing
functions have been off-shored. In addition to cost savings, the off-shoring of these functions has enabled the
Company to focus its resources on value-added activities, such as process and service enhancements.
Professional/Trade:
The Company’s Professional/Trade business acquires, develops and publishes books, workflow solutions and
other information services in the subject areas of business, technology, architecture, cooking, psychology,
professional education, travel, health, 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 websites.
The Company’s Professional/Trade customers are professionals, consumers, and students worldwide.
Publishing centers include Australia, Canada, Germany, India, Singapore, the United Kingdom and the United
States. Professional/Trade publishing accounted for approximately 24% of total Company revenue in fiscal year
2012 and generated revenue growth at a compound annual rate of 1% over the past five years. The graph
below presents P/T revenue by product type for fiscal year 2012:
Publishing Rights
5%
Advertising 1%
Journal
Subscriptions 2%
Other Income 5%
Books 87%
Key revenue growth strategies of the Professional/Trade business include providing critical content and content-
enabled digital services to professionals and developing its leading brands and franchises, and executing
strategic acquisitions.
In February 2012, Wiley acquired Inscape Holdings, Inc. (“Inscape”), a leading provider of workplace learning
solutions, for approximately $85 million in cash, net of cash acquired. The acquisition will combine Wiley’s deep
well of valuable content and global reach in leadership and training with Inscape’s technology, distribution
network, and talent expertise, including the innovative EPIC online assessment-delivery platform and an elite
global authorized distributors network of nearly 1,700 independent consultants, trainers, and coaches. Inscape’s
solution-focused products are used in thousands of organizations, including major government agencies and
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Fortune 500 companies. Inscape was generating approximately $20 million annually in revenue prior to the
acquisition.
Inscape’s solutions-focused DiSC® offerings complement the products published under Wiley’s Pfeiffer brand,
such as Kouzes and Posner’s Leadership Practices Inventory®, in the growing workplace learning industry.
Through the Pfeiffer brand, Wiley has a 40-year history of serving professional development and resource
needs of learning professionals. The combined Inscape and Pfeiffer businesses will increase the Company’s
presence in the professional development and skill assessment arena. We believe Inscape’s competitive
strengths will also advance a number of P/T’s major strategic goals. As a workplace learning business with
more than 50% of its revenue from a proprietary digital platform, Inscape will enable Wiley to move more rapidly
into digital delivery within the growing workplace learning and assessment market and build its strong position in
the category of leadership development. Inscape also enhances Wiley’s global presence, serving customers
around the world in more than 30 languages each year, with approximately 35% of revenue generated outside
the U.S through Inscape’s global distributor network.
In March 2012, Wiley announced that it was exploring opportunities to sell a number of consumer print and
digital publishing assets in its Professional/Trade business as they no longer align with the company’s long-term
strategies. Fiscal year 2012 revenue associated with the assets to be sold was approximately $80 million with a
direct contribution to profit, before shared service expenses, of approximately $6 million. Assets include travel
(including the well-known Frommer’s brand), culinary, general interest, nautical, pets, crafts, Webster’s New
World, and Cliff’s Notes. Wiley will re-deploy resources in its Professional/Trade business to build on its global
market-leading positions in business, finance, accounting, leadership, technology, architecture, psychology,
education, and through the For Dummies brand.
Publishing alliances and franchise products are central to the Company’s strategy. The ability to bring together
Wiley’s product development, sales, marketing, distribution and technological capabilities with a partner’s
content and brand name recognition has been a driving factor in its success. Professional/Trade alliance
partners include Bloomberg Press, the American Institute of Architects, the Leader to Leader Institute, Fisher
Investments, the Culinary Institute of America and many others.
Growing revenue from digital products and services represents a core strategy for Professional/Trade, including
increased availability of eBooks, advertising from branded websites and online tools and services.
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.
Global Education:
The Company’s Global Education business publishes educational content for two and four-year colleges and
universities, for-profit career colleges, advanced placement classes, as well as secondary schools in Australia.
Global Education’s mission is to help teachers teach and students learn. In doing so, our strategy is to provide
personalized content, tools and services that deliver demonstrable results to students, faculty and institutions.
Global Education offers innovative products and services principally delivered through college bookstores and
online distributors, with customers having access to content in multi-media formats, as well as the traditional
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textbook. Global Education’s cost-effective, flexible solutions are available in each of its publishing disciplines,
including the sciences, engineering, mathematics, business/accounting, geography, computer science,
statistics, education, culinary, hospitality, psychology and world languages.
Global Education accounted for approximately 18% of total Company revenue in fiscal year 2012 and generated
revenue growth at a compound annual rate of 6% over the past five years. The graph below presents Global
Education revenue by product type for fiscal year 2012:
Ebooks and Other
Non-Traditional &
Digital Products
19%
WileyPLUS 11%
Publishing Rights
2%
Print Books 68%
Global Education offers high-quality online learning solutions including WileyPLUS, it’s research-based, online
environment for effective teaching and learning that is integrated with a complete digital textbook. WileyPLUS
improves student learning through instant feedback, personalized learning plans, and self-evaluation tools and a
full range of course-oriented activities, including online planning, presentations, study, homework and testing.
Global Education encourages and supports the customization of its content. Wiley Custom Learning Solutions is
a full-service custom publishing program that offers an array of tools and services designed to put content
creation in instructors’ hands. Our suite of custom products empowers users to create high-quality, economical
education solutions tailored to meet individual classroom needs. Through a custom textbook system, Wiley
Custom Select, instructors can easily build print and digital materials tailored to their specific course needs. With
Wiley Custom Select, instructors can also add their own content to create a customized solution derived from
one or more Wiley resources.
The Company also provides the services of the Wiley Faculty Network, a global community of faculty that offers
guidance, training, and resources. Through the Wiley Faculty Network, instructors and administrators can
collaborate with each other, attend virtual and live events, and utilize a wealth of resources all designed to help
them grow as educators. Colleagues can also benefit from taking part in the Wiley Learning Institute, an online
center for professional development offering workshops, applied learning, coaching programs, and a unique
community experience.
Strategic partnerships and relationships with companies such as Microsoft® and Blackboard are also an
important component of Global Education’s growth strategy. The ability to join Wiley’s product development,
sales, marketing, distribution and technology with a partner’s content and/or brand name has contributed to
Global Education’s success.
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Publishing Operations
Journal Products:
The Company publishes approximately 1,600 Scientific, Technical, Medical and Scholarly and
Professional/Trade journals. Journal subscription revenue and other related publishing income, such as
advertising, backfile sales, the licensing of publishing rights, journal reprints and individual article sales
accounted for approximately 49% of the Company’s consolidated fiscal year 2012 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 professional societies and published
by the Company pursuant to long-term contracts.
Societies that sponsor or own such journals generally receive a royalty and/or other consideration. The
Company may procure editorial services from such societies on a pre-negotiated fee basis. The Company also
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 articles to the Company’s journal portfolio 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 grant holder to make articles (either the published version or an earlier unedited version) available free of
charge to the public, typically after an embargo period. Funded open access under the Company’s Wiley Open
Access and OnlineOpen business models facilitate the ability of the grant holder to comply.
The Company sells journal subscriptions directly through Company sales representatives; indirectly through
independent subscription agents; through promotional campaigns; and through memberships in professional
societies for those journals that are sponsored by societies. Journal subscriptions are primarily licensed through
contracts for online content delivered through the Company’s web-based platform, Wiley Online Library.
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.
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 deferred until the related issue is shipped or made available online at which
time the revenue is earned.
Book Products:
Book products and book related publishing revenue, such as advertising revenue and the sale of publishing
rights, accounted for approximately 51% of the Company’s consolidated fiscal year 2012 revenue. Materials for
book 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 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. 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
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demand. The Company’s general practice is to revise its textbooks every two to five years, if warranted, and to
revise other titles as appropriate. Subscription-based products are updated more frequently on a regular
schedule.
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. Sales of professional and consumer books also result from direct mail campaigns,
telemarketing, online access, advertising and reviews in periodicals. 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.
Adopted textbooks, related supplementary material, and online products such as WileyPLUS, are sold primarily
to bookstores and online booksellers, serving both for-profit and nonprofit 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
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 sale of new textbooks.
Like most other publishers, the Company generally contracts with independent printers and binderies globally
for their services. The Company purchases its paper from independent suppliers and printers. The fiscal year
2012 weighted average U.S. paper prices increased approximately 1% from fiscal year 2011. Approximately
60% of the Company’s paper inventory is held in the United States. Management believes that adequate
printing and binding facilities, 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 a digital format that can be used for online and print products, resulting 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 Online Library,
WileyPLUS, Custom Select and other platforms, and in eBook formats through direct relationships with eBook
vendors and 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 digital products and services will continue to increase.
Accordingly, to properly service its customers and to remain competitive, the Company has increased its
expenditures related to such new technologies and anticipates it will continue to do so for the foreseeable future.
The Company’s online presence not only enables it to deliver content online, but also to sell more books. The
growth of online booksellers benefits the Company because they provide unlimited virtual “shelf space” for the
Company’s entire backlist.
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
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works from other publishers for particular markets. The Company also receives licensing revenue from
photocopies, reproductions, translations, and digital uses of its content.
Advertising Revenue:
The Company generates advertising revenue from print and online journal subscription products; controlled
circulation magazines which are issued for free to a specific target audience; its online publishing platform,
Wiley Online Library; the Wiley Job Network, a full service online job board that launched in fiscal year 2012;
online events such as webinars and virtual conferences; community
interest websites such as
spectroscopyNOW.com and consumer brand websites like Dummies.com. These revenues accounted for
approximately 3% of the Company’s consolidated fiscal year 2012 revenue.
The Wiley Job Network is a new online recruitment tool that enables employers to attract talented applicants
from high-caliber users in science, technology, healthcare, law, and business. Recruiters and employers who
advertise jobs on the network of career sites reach a large pool of talented professionals and specialists who are
regular users of Wiley Online Library.
Advertisements are sold by company and independent sales representatives to advertising agencies
representing the Company’s target customers. Typical customers include worldwide pharmaceutical companies;
equipment manufacturers and distributors servicing the pharmaceutical industry; recruiters; companies servicing
the travel industry and a variety of businesses targeting the Company’s consumer brand customers. The
Company’s advertising growth strategy focuses on increasing the volume of advertising on its online publishing
platform; leveraging the brand recognition of its titles and society partnerships; the development of new
advertising products such as online video promotions or event sponsorship arrangements; and advertising in
new and emerging technologies such as the mobile devices market (i.e. smart phone and iPad applications).
Global Operations
The Company’s publications and services are sold throughout most of the 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
independent agents as well as independent sales representatives in countries not served by the Company. John
Wiley & Sons International Rights, Inc., a wholly owned subsidiary of the Company, 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 Company’s consolidated fiscal year 2012
revenue was billed in non-U.S. markets.
The global nature of the Company’s business creates an exposure to foreign currency fluctuations relative to the
U.S dollar. Each of the Company’s geographic locations sells products worldwide in multiple currencies.
Revenue and deferred revenue, although billed in multiple currencies are accounted for in the local currency of
the selling location. Fiscal year 2012 revenue was recognized in the following currencies (on an equivalent U.S.
dollar basis): approximately 54% U.S dollar; 28% British pound sterling; 8% euro and 10% other currencies.
Competition and Economic Drivers within the Publishing Industry
The sectors of the publishing and information services industry in which the Company is engaged are
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
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availability of both new titles and revisions of existing books, digital availability of published products, 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 professional society journal publisher; one of the
leading publishers of university and college textbooks and related materials for the “hardside” disciplines, (i.e.
sciences, 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 periodically by the Institute for Scientific Information, is
used as a key metric of a journal title’s influence in scientific publishing. For Professional/Trade, the Company
evaluates market share statistics periodically published by BOOKSCAN, a statistical clearinghouse for book
industry point of sale data in the United States. 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
Throughout this report, references to amounts “excluding foreign exchange”, “currency neutral” and
“performance basis” exclude both foreign currency translation effects and transactional gains and losses.
Foreign currency translation effects are based on the change in average exchange rates for each reporting
period multiplied by the current period’s volume of activity in local currency for each non-U.S. location. Unless
otherwise noted, all variance explanations below are on a currency neutral basis.
Fiscal Year 2012 Summary Results
Revenue and Gross Profit:
Revenue for fiscal year 2012 increased 2% to $1,782.7 million, or 1% excluding the favorable impact of foreign
exchange. On a currency neutral basis, growth in Scientific, Technical, Medical and Scholarly (“STMS”) was
partially offset by declines in Professional/Trade (“P/T”) and Global Education (“GEd”). Gross profit margin for
fiscal year 2012 of 69.5% was 40 basis points higher than prior year mainly due to increased sales of higher
margin digital products in P/T and STMS, partially offset by higher composition costs in GEd to support business
growth. Approximately 40% of the Company’s revenue for fiscal year 2012 was generated from digital products
and services, as compared to 37% in the prior year.
Operating and Administrative Expenses:
Operating and administrative expenses for fiscal year 2012 of $922.2 million were 1% higher than prior year, or
flat excluding the unfavorable impact of foreign exchange. Lower employment cost ($7 million) mainly due to
accrued incentive compensation; lower distribution costs ($4 million) and lower travel and advertising costs due
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to cost containment initiatives ($3 million); were offset by higher technology costs ($13 million); and other ($1
million), mainly higher STMS editorial costs to support business growth.
On February 16, 2011, Borders Group, Inc. (“Borders”) filed a petition for reorganization relief under Chapter 11
of the U.S. Bankruptcy Code. Accordingly, in fiscal year 2011 the Company recorded a pre-tax bad debt
provision of $9.3 million, or $6.0 million after tax ($0.10 per share), within the P/T reporting segment related to
Borders. The provision represented the Company’s outstanding receivable with Borders, net of existing reserves
and recoveries. There were no additional charges or bad debt expense with respect to this customer.
Operating Income:
Operating income for fiscal year 2012 increased 13% to $280.4 million, or 6% excluding the favorable impact of
foreign exchange and the prior year Borders bad debt provision mainly due to the top-line results and higher
gross profit margins.
Interest Expense/Income, Foreign Exchange and Other:
Interest expense for fiscal year 2012 decreased $8.3 million to $9.0 million. Lower interest rates and lower
average debt contributed approximately $4.2 million and $4.1 million to the decrease, respectively. Losses on
foreign currency transactions primarily due to intercompany loans in currencies other than U.S. dollars, were
$2.3 million and $2.2 million for fiscal years 2012 and 2011, respectively. Interest income and other for fiscal
year 2012 increased $0.6 million to $3.0 million mainly due to a favorable copyright infringement settlement
received by the Company in the current year.
Provision for Income Taxes:
The effective tax rate for fiscal year 2012 was 21.8% compared to 25.6% in the prior year. During fiscal years
2012 and 2011, the Company recorded non-cash deferred tax benefits of $8.8 million ($0.14 per share) and
$4.2 million ($0.07 per share), respectively, principally associated with new tax legislation enacted in the U.K.
that reduced the U.K. statutory income tax rates by 2% and 1%, respectively. The benefits recognized by the
Company reflect the remeasurement of all applicable U.K. deferred tax balances to the new income tax rates as
of April 1, 2012 and 2011, respectively. In addition, in fiscal year 2012 due to the expiration of the statute of
limitations the Company also released an income tax reserve of approximately $7.5 million ($0.12 per share)
originally recorded in conjunction with the purchase accounting for the Blackwell acquisition. Excluding the tax
benefits described above, the Company’s effective tax rate for fiscal year 2012 was 27.8% compared to 27.4%
in the prior year. The increase was mainly due to State net operating loss benefits of $1.9 million ($0.03 per
share) recognized by the Company in the prior year, partially offset by higher tax benefits on non-U.S. earnings
in the current year.
Earnings Per Share:
Earnings per diluted share for fiscal years 2012 and 2011 were $3.47 and $2.80, respectively. Excluding the
effects of favorable foreign exchange ($0.08), the prior year Borders bad debt provision ($0.10), the changes in
fiscal year 2012 and 2011 deferred tax benefits associated with the U.K. corporate income tax rates ($0.07) and
the fiscal year 2012 tax reserve release ($0.12), earnings per diluted share increased 11% or $0.30 per share.
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Fiscal Year 2012 Segment Results
Scientific, Technical, Medical and Scholarly (STMS):
Dollars in thousands
2012
2011
% change
% change
w/o FX
Journal Subscriptions
Books
Other Publishing Income
Total Revenue
$650,938
179,204
210,585
$1,040,727
$621,551
175,611
201,740
$998,902
Gross Profit
Gross Profit Margin
762,300
73.2%
729,931
73.1%
Direct Expenses & Amortization
310,026
305,134
Direct Contribution to Profit
Direct Contribution Margin
$452,274
43.5%
$424,797
42.5%
Revenue:
5%
2%
4%
4%
4%
2%
6%
2%
1%
3%
2%
2%
0%
4%
STMS revenue for fiscal year 2012 increased 4% to $1,040.7 million, or 2% excluding the favorable impact of
foreign exchange. The growth was driven by journal subscriptions, books and other publishing income.
Journal Subscriptions
Journal subscription revenue for fiscal year 2012 increased 5% to $650.9 million, or 2% excluding the favorable
impact of foreign exchange. The growth was mainly driven by increased subscriptions ($7 million), new society
business ($4 million) and the timing of production scheduling ($2 million). As of April 30, 2012, receipts for
calendar year 2012 journal subscriptions grew approximately 3% over calendar year 2011 with approximately
95% of expected calendar year 2012 subscription receipts received.
Books
Book revenue for fiscal year 2012 increased 2% to $179.2 million, or 1% excluding the favorable impact of
foreign exchange. The growth was driven by higher digital reference and eBook sales ($6 million) and lower
returns ($2 million), partially offset by a decline in print books ($5 million).
Other Publishing Income
Other publishing income for fiscal year 2012 of $210.6 million increased 4% over prior year, or 3% on a currency
neutral basis. The improvement was driven by increased sales of rights ($5 million), journal advertising ($2
million) and pay-per-view access ($2 million), partially offset by a decline in reprints ($1 million) and backfiles
($1 million).
Total STMS Revenue by Region (on a currency neutral basis)
Americas grew 3% to $392.1 million
EMEA grew 1% to $580.9 million
Asia-Pacific grew 4% to $67.7 million
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Gross Profit:
Gross profit margin for fiscal year 2012 improved 10 basis points to 73.2%. The improvement was mainly driven
by increased sales of higher margin digital products (50 basis points), partially offset by higher royalty rates (40
basis points).
Direct Expenses and Amortization:
Direct expenses and amortization of $310.0 million increased 2% from the prior year, but was flat excluding the
unfavorable impact of foreign exchange. Lower accrued incentive compensation ($4 million) and lower travel
and advertising costs due to cost containment initiatives ($2 million) were offset by higher editorial costs ($3
million) and additional headcount ($2 million) to support business growth; and a bad debt provision related to an
outstanding receivable with a university in Iran ($1 million).
Direct Contribution to Profit:
Direct contribution to profit increased 6% to $452.3 million, or 4% excluding the favorable impact of foreign
exchange. Direct contribution margin improved 100 basis points to 43.5% in fiscal year 2012. The improvement
was driven by the top-line results and higher gross profit margins.
Society Partnerships
24 new society journals were signed with combined annual revenue of approximately $9 million
103 renewals/extensions were signed with approximately $45 million in combined annual revenue
7 journals were not renewed in fiscal year 2012 which had combined annual revenue of approximately
$1 million
New Society Contracts
The Reading Teacher, Journal of Adolescent & Adult Literacy, and Reading Research Quarterly, for the
International Reading Association
TESOL Quarterly and TESOL Journal, for Teachers of English to Speakers of Other Languages
(TESOL)
The Hastings Center Report, a leading journal in applied ethics, covering areas such as bioethics and
the environment
International Journal of Pediatric Obesity, for the International Association for the Study of Obesity
Symbolic Interaction, for the Society for the Study of Symbolic Interaction
PsyCh Journal, for the Institute of Psychology, Chinese Academy of Sciences (IPCAS), China's national
psychology research institute. The journal will be the first English-language Psychology journal to
appear from China.
Four new titles added to our existing partnership with the Policy Studies Organisation: Policy & Internet,
Poverty & Public Policy, Risk, Hazards & Crisis in Public Policy, and World Medical & Health Policy.
European Journal of Pain for the European Federation of IASP Chapters (EFIC)
Pharmacotherapy, for the American College of Clinical Pharmacists
Rehabilitation Nursing Journal, for the Association of Rehabilitation Nurses (ARN)
British Journal of Educational Technology, for the British Educational Research Association (BERA)
Oceania and Archaeology in Oceania, for the University of Sydney
Biology of the Cell for the French Society for Cell Biology and the French Society for Microscopy
-24-
Journal of the American Heart Association for the American Heart Association – the first open access
online-only journal for the AHA. The online journal has been launched on-time and on-budget. This is a
new society relationship for STMS.
British Educational Research Journal (BERJ) and a new-start review journal for the British Educational
Research Association (BERA). BERA is the largest educational research organization outside of the
U.S., with 1,800 members.
Obesity, for The Obesity Society
Journal for the Society for Information Display (SID)
Alliances
Strategic alliance with CECity, Inc. to provide healthcare professionals with new, customized quality and
information technology platforms that link job
learning solutions. CECity provides healthcare
performance improvement, lifelong learning, and quality reporting to drive high-quality clinical outcomes
and patient care. This partnership will employ CECity’s market-leading technology capabilities with
Wiley’s quality content to develop personalized eLearning and job performance improvement services
for healthcare professionals.
Acquisitions
In May 2012, Wiley announced the acquisition of Harlan Davidson Inc. (HDI), a small family-owned
publishing company in Wheeling, IL. The acquisition builds on Wiley’s existing high quality American
History portfolio, and strengthens growing curriculum areas such as World History, Atlantic History and
State History.
New Product and Service Launches
In September, Wiley launched the Wiley Job Network – a new online recruitment tool that enables
employers to attract talented applicants from high-caliber users in science, technology, healthcare, law,
and business. Recruiters and employers who advertise jobs on our network of career sites reach a large
pool of talented professionals and specialists who are regular users of one of the world’s leading
research platforms, Wiley Online Library.
Digital Update
Digital revenue now accounts for 61% of total STMS revenue.
The Wiley Job Network has surpassed 50,000 registered users and over 2 million job views since its
launch in September.
Total articles accessed on Wiley Online Library increased 26%.
STMS Journal Quality and Impact Factors
In June, Wiley announced that the number of journal titles with an impact factor in the Thomson ISI®
2010 Journal Citation Reports increased 7% to 1,087 titles, of which 317 are ranked in the top ten.
Approximately 73% of Wiley’s journal portfolio has a reported impact factor. Impact Factor is a leading
evaluator of journal influence and impact, as it reflects the frequency that peer-reviewed journals are
cited by researchers.
-25-
Professional/Trade (P/T):
Dollars in thousands
2012
2011
% change
% change w/o FX (a)
Books
Other Publishing Income
Total Revenue
Gross Profit
Gross Profit Margin
$378,400
55,258
$433,658
$387,228
49,860
$437,088
272,188
62.8%
269,112
61.6%
Direct Expenses & Amortization
160,290
173,616
Direct Contribution to Profit
Direct Contribution Margin
$111,898
25.8%
$95,496
21.8%
-2%
11%
-1%
1%
-8%
17%
-3%
11%
-1%
1%
-3%
6%
(a) Adjusted to exclude a fiscal year 2011 bad debt provision of $9.3 million related to Borders from direct
expenses and direct contribution.
Revenue:
P/T revenue for fiscal year 2012 declined 1% to $433.7 million. On a currency neutral basis, book revenue
decreased 3% to $378.4 million, while other publishing income grew 11% to $55.3 million. The decline in book
revenue was mainly driven by softness in the consumer line ($8 million), primarily cooking and travel, and
declines in technology and business ($2 million). The declines in consumer, technology and business were due
to the residual effects of the Borders’ bankruptcy, including liquidation sales which we believe were completed
by mid-September and the inclusion of sales to Borders in the prior year, combined with a weak global economy
and reduced shelf-space for print titles. The growth in other publishing income reflects the incremental revenue
from the Company’s acquisition of Inscape on February 16, 2012 ($3 million) and increased revenue from
advertising and distribution services.
Total P/T revenue by Region (on a currency neutral basis)
Americas was flat at $342.8 million
EMEA fell 5% to $58.6 million
Asia-Pacific fell 1% to $32.3 million
Total P/T Revenue by Major Category (on a currency neutral basis)
Business grew 2% to $141.6 million
Consumer fell 6% to $129.2 million due in large part to Borders and the weak global economy
Technology fell 1% to $87.1 million
Professional Education was flat with the prior year at $28.0 million
Architecture was flat with the prior year at $25.0 million
Psychology declined 3% to $13.0 million
Gross Profit:
Gross profit margin for fiscal year 2012 improved 120 basis points to 62.8%. The improvement was mainly
driven by increased eBook sales (70 basis points), high margin incremental revenue from the Inscape
acquisition (20 basis points) and lower composition costs (30 basis points).
-26-
Direct Expenses and Amortization:
Direct expenses and amortization for fiscal year 2012 decreased 8% to $160.3 million, or 3% on a currency
neutral basis and excluding the Borders bad debt provision in the prior year. The improvement was principally
driven by lower sales, marketing and advertising costs due to cost containment initiatives ($2 million), a
reduction in the bad debt provision for other retail accounts ($2 million) and lower accrued incentive
compensation ($1 million).
Direct Contribution to Profit:
Direct contribution to profit for fiscal year 2012 increased 17% to $111.9 million, or 6% on a currency neutral
basis and excluding the Borders bad debt provision in the prior year. Direct contribution margin for fiscal year
2012 was 25.8% as compared to 21.8% in the prior year. On a currency neutral basis and excluding the
Borders bad debt provision in the prior year, direct contribution margin improved 180 basis points reflecting
higher gross profit margins and lower direct expenses.
Alliances
Wiley (Pfeiffer) partnered with CPP, a leader in research, training, and organizational development tools for a
jointly developed Leadership Plus Report. The product, built on the integration of Wiley's Leadership Practices
Inventory® (LPI®) and CPP's Myers-Briggs® personality assessment, combines the LPI's in-depth view of
applied leadership behavior practices through 360-degree feedback with the Myers-Briggs self-evaluation and
insight into personality.
Acquisitions
In February, Wiley acquired Inscape Holdings, a leading global provider of workplace learning solutions, for
approximately $85 million in cash, net of cash acquired. The acquisition will combine Wiley's reservoir of
valuable content and global reach in leadership and training with Inscape's technology, distribution network, and
talent expertise, including the innovative EPIC online assessment-delivery platform and an elite network of
nearly 1,700 independent consultants, trainers, and coaches. Inscape was generating approximately $20 million
annually in revenue prior to the acquisition. Inscape derives approximately two-thirds of its revenue from digital
products and services.
Potential Consumer Divestiture
In March, Wiley announced that it intends to explore opportunities to sell a number of its consumer print and
digital publishing assets as they no longer align with the company’s long-term strategy. Fiscal Year 2012
revenue associated with the assets to be sold was approximately $80 million with a direct contribution to profit,
before shared-service expenses, of approximately $6 million. Assets include travel (including the well-known
Frommer’s brand), culinary, general interest, nautical, pets, crafts, Webster’s New World, and Cliff’s Notes.
Wiley will re-deploy resources in its Professional/Trade business to build on its global market-leading positions
in business, finance, accounting, leadership, technology, architecture, psychology, education, and through the
For Dummies brand.
Digital Update
Digital revenue includes eBooks, online advertising, content-enabled services and content licensing.
Digital revenue accounted for 15% of total P/T revenue, up from 10% in the prior year.
-27-
eBook sales increased approximately 70% over prior year to approximately $40 million, or 9% of total
P/T revenue. Strong eBook growth came from all accounts, notably Amazon, Barnes and Noble and
Apple.
Global Education (GEd):
Dollars in thousands
2012
2011
% change
% change
w/o FX
Print Books
Non-Traditional & Digital Content
Other Publishing Income
Total Revenue
Gross Profit
Gross Profit Margin
$208,682
87,857
11,818
$308,357
$211,611
83,789
11,161
$306,561
204,858
66.4%
204,465
66.7%
-1%
5%
6%
1%
0%
Direct Expenses & Amortization
100,614
103,421
-3%
Direct Contribution to Profit
Direct Contribution Margin
$104,244
33.8%
$101,044
33.0%
3%
-3%
5%
1%
-1%
-1%
-4%
2%
Revenue:
GEd revenue for fiscal year 2012 increased 1% to $308.4 million, but declined 1% excluding the favorable
impact of foreign exchange. The decline reflects lower revenue from print books, partially offset by growth in
non-traditional and digital content revenue and other publishing income.
Print Books
Print book revenue for fiscal year 2012 decreased 1% to $208.7 million, or 3% excluding the favorable impact of
foreign exchange. The decline was driven by lower enrollments in for-profit institutions due to government
scrutiny over recruiting practices, prior year rental stock build-up and lower demand outside the U.S.
Non-Traditional & Digital Content
Non-traditional and digital content revenue, which includes WileyPLUS, eBooks, digital content sold directly to
institutions, binder editions and custom publishing, increased 5% to $87.9 million in fiscal year 2012. The
growth was principally driven by increased sales of custom textbooks and eBooks, which grew 36% over prior
year.
Total GEd Revenue by Region (on a currency neutral basis)
Americas grew 1% to $222.0 million
EMEA fell 9% to $21.1 million
Asia-Pacific fell 4% to $65.3 million
Total GEd Revenue by Major Subject (on a currency neutral basis)
Engineering and Computer Science fell 1% to $41.8 million
Science grew 3% to $70.1 million
Business and Accounting was flat with the prior year at $84.0 million
Social Science declined 6% to $45.3 million
Math fell 4% to $25.9 million
Microsoft Official Academic Couse (MOAC) decreased 4% to $10.6 million
-28-
Gross Profit:
Gross profit margin for fiscal year 2012 declined 30 basis points to 66.4% principally due to higher composition
costs.
Direct Expenses and Amortization:
Direct expenses and amortization for fiscal year 2012 decreased 3% to $100.6 million, or 4% excluding the
unfavorable impact of foreign exchange. The decrease was mainly driven by lower employment costs mainly
due to accrued incentive compensation ($5 million), partially offset by higher sales and marketing costs ($1
million).
Direct Contribution to Profit:
Direct contribution to profit for fiscal year 2012 increased 3% to $104.2 million, or 2% excluding the favorable
impact of foreign exchange. Direct contribution margin improved 80 basis points to 33.8% in fiscal year 2012
mainly driven by lower direct expenses.
Acquisitions and Alliances
An alliance agreement was signed with Blackboard, which will provide instructors and students with
direct access to WileyPLUS through the Blackboard learning management system. The collaboration will
provide a seamless experience between Wiley course materials and the campus environment. In
addition, thirty-one institutions are evaluating a new integration for using digital learning content from
Wiley with Blackboard Inc.’s learning management system (LMS). The field trial gives students and
faculty access to Wiley’s rich collection of learning content and tools directly within their online course
environment. The field trial involves students, faculty and campus administrators across 42 courses at
two and four-year higher education institutions in the U.S. and Canada. The integration is expected to be
fully available globally in summer 2012. In March 2012, the Company signed a new partnership with the
National Environmental Health Association (NEHA), MindLeaders, and Prometric to offer Food Safety
training and certification. The three partners are leaders in their fields: NEHA is a 70-year old
association of health departments, concentrating on the inspection of restaurants and foodservice
operations in the area of food safety; MindLeaders is a global e-Learning company; and Prometric is a
worldwide leader in testing and certification.
Wiley acquired the newsletter National Teaching & Learning Forum (NTLF) and launched two 2012
NTLF issues on Wiley Online Library in March. The NTLF is a subscription fee-based newsletter that
serves to “create a sustained and sustaining conversation about teaching and learning.”
Wiley Learning Institute
In February, Wiley announced the launch of Wiley Learning Institute™ (www.WileyLearningInstitute.com), a
new service center that provides essential knowledge, ideas, and best practices to promote professional
learning for faculty and campus leaders. The online center leverages content, expertise, and resources from
across Wiley's global businesses to enable them to excel in their work, fulfill the education mission of their
institutions, and provide additional opportunities to enhance teaching and learning. Wiley Learning Institute
employs the latest technologies to provide participants with interactive workshops, applied learning labs, one-
on-one coaching programs, and an online, collaborative community of researchers, thought leaders, and
professionals across multiple disciplines.
-29-
Digital Update
Digital revenue now 16% of Global Education business.
Revenue for WileyPLUS fell 2% to approximately $32 million mainly due to a sharp decline in for-profit
enrolment.
eBook sales grew 36% to approximately $17 million.
Shared Services and Administrative Costs
Shared services and administrative costs for fiscal year 2012 increased 4% to $388.0 million, or 3% excluding
the unfavorable impact of foreign exchange. The increase mainly reflects higher technology costs, to support
investments in digital products and infrastructure ($13 million) and higher employment costs due to new hires
and merit increases ($7 million). These increases were partially offset by lower accrued incentive compensation
($6 million), lower distribution costs due to the continued migration from print to digital products ($4 million) and
other ($1 million), mainly lower professional fees.
Liquidity and Capital Resources – Fiscal year 2012
The Company’s cash and cash equivalents balance was $259.8 million at the end of fiscal year 2012, compared
with $201.9 million a year earlier. Cash provided by operating activities in fiscal year 2012 increased $4.0 million
to $379.6 million due primarily to higher net income net of non-cash charges ($35 million), mostly offset by
changes in operating assets and liabilities ($24 million) and higher royalty advance payments ($7 million).
Changes in operating assets and liabilities were primarily due to lower accrued expenses ($29 million)
principally accrued incentive compensation; lower Deferred Revenue ($13 million) and lower royalties payable
($7 million) due to higher royalty advance payments, partially offset by lower Accounts Receivable ($15 million)
due to improved collections and higher income taxes payable ($8 million). The decrease in Deferred Revenue
reflects the timing of subscription cash collections primarily due to accelerated collections in the prior year.
Cash used for investing activities for fiscal year 2012 was approximately $212.0 million compared to $113.0
million in fiscal year 2011. The Company invested $92.2 million in the acquisition of publishing businesses,
assets and rights compared to $7.2 million in the prior year primarily reflecting the $85 million paid for the
Inscape acquisition (See Note 4). This acquisition was funded through the use of the existing credit facility and
available cash and did not have an impact on the Company’s ability to meet other operating, investing and
financing needs. Cash used for technology, property and equipment increased $12.9 million in fiscal year 2012
versus the prior year mainly reflecting increased investments in technology to support new products and
business growth and leasehold improvements on new facilities.
Cash used in financing activities was $104.7 million in fiscal year 2012, as compared to $230.0 million in fiscal
year 2011. The Company’s net debt (debt less cash and cash equivalents) decreased $37.2 million from the
prior fiscal year end. During fiscal year 2012, net borrowings were $20.8 million compared to net payments of
$194.8 million in the prior year period. In fiscal 2012, cash was used primarily to fund the Inscape acquisition,
repurchase treasury shares and pay dividends to shareholders, partially offset by proceeds on stock option
exercises. In fiscal year 2012, the Company repurchased 1,864,700 shares at an average price of $46.69
compared to 577,405 shares at an average price of $48.42 in the prior year. The Company increased its
quarterly dividend to shareholders by 25% to $0.20 per share in fiscal year 2012 from $0.16 per share in the
prior year. Proceeds from stock option exercises decreased $12.5 million to $15.3 million in fiscal 2012.
On November 2, 2011, the Company amended and restated its existing credit facility with Bank of America -
Merrill Lynch and The Royal Bank of Scotland plc as joint lead arrangers and Bank of America as administrative
-30-
agent. The new agreement consists of a $700 million five-year senior revolving credit facility, which can be
drawn in multiple currencies. The proceeds of the new revolving credit facility were used to pay down the
Company’s prior credit facility and meet seasonal operating cash requirements. The Company also has the
option to request a credit limit increase of up to $250 million in minimum increments of $50 million, subject to the
approval of the lenders. The amended credit agreement contains certain restrictive covenants related to the
Company’s consolidated leverage ratio and interest coverage ratio. Due to the fact that there are no principal
payments due until the end of the amended agreement in fiscal year 2017, the Company has classified its entire
debt obligation as long-term as of April 30, 2012. See Note 12 for further discussion of the debt arrangement.
The aggregate notional amount of interest rate swap agreements associated with the Term Loan and Revolving
Credit Facility were $375.0 million as of April 30, 2012. 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
derivatives.
The Company’s operating cash flow is affected by the seasonality and timing of receipts from its STMS journal
subscriptions and its Global Education business. Cash receipts for calendar year STMS subscription journals
occur primarily from November through March. Reference is made to the Credit Risk section, which follows, for
a description of the impact on the Company as it relates to independent journal agents’ financial position and
liquidity. Sales 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.
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.
Cash and Cash Equivalents held outside the U.S. were approximately $253.7 million as of April 30, 2012. The
balances were comprised primarily of Euros, Pound Sterling, and Australian dollars. Maintenance of these non-
U.S. dollar cash balances does not have a material impact on the liquidity or capital resources of the Company.
As of April 30, 2012, the Company had approximately $475.0 million of debt outstanding and approximately
$235 million of unused borrowing capacity under the Revolving Credit Facility which is described in Note 12 and
matures on November 2, 2016. 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 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.
The primary driver of the negative working capital is unearned deferred revenue related to subscriptions for
which cash has been collected in advance. Cash received in advance for subscriptions is used by the Company
for a number of purposes including acquisitions; debt repayments; funding operations; dividends payments; and
purchasing treasury shares. The deferred revenue will be recognized in 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, 2012
include $342.0 million of such deferred subscription revenue for which cash was collected in advance.
Projected capital spending for Technology, Property and Equipment and Composition for fiscal year 2013 is
forecast to be approximately $85 million and $55 million, respectively, primarily to create new and enhance
existing digital products and system functionality that will drive future business growth. Projected spending for
author advances, which is classified as an operating activity, for fiscal year 2013 is forecast to be approximately
$110 million.
-31-
As part of its routine tax audit process, the German tax authorities notified the Company in May 2012, they are
challenging the Company’s tax position which is further discussed in Note 19. The Company’s management and
its advisors believe that it is “more likely than not” to successfully defend that the tax treatment was proper and
in accordance with German tax regulations. Under German tax law a company must pay all the tax contested
and the related interest to have the right to defend a position challenged by authorities. As such, in June 2012,
Wiley made a 24 million euro deposit with the German Government. The Company expects to deposit an
estimated additional 33 million euros plus interest in future periods until the issue is resolved. The
circumstances are not unique to Wiley.
Fiscal Year 2011 Summary Results
Revenue and Gross Profit:
Revenue for fiscal year 2011 increased 3% to $1,742.6 million, or 4% excluding the unfavorable impact of
foreign exchange. The increase was driven by growth in all three businesses, led by strong growth in Global
Education (“GEd”).
Gross profit margin for fiscal year 2011 of 69.1% was 0.5% higher than prior year. The increase was driven by
lower journal production costs due to off-shoring (30 basis points) and increased sales of higher margin digital
products (20 basis points), including a digital backlist book license with a university consortium in Saudi Arabia.
Operating and Administrative Expenses:
Operating and administrative expenses for fiscal year 2011 of $910.8 million were 4% higher than prior year, or
5% excluding the favorable impact of foreign exchange. The increase was primarily driven by higher technology
costs ($15 million) reflecting ongoing investments in digital products and infrastructure, such as WileyPLUS,
eBooks, customer data/relationship management initiatives, and Wiley Online Library; higher employment costs
($8 million) due to merit increases and retirement benefits; higher journal editorial costs ($7 million); higher
warehouse rent and facility costs ($6 million) and travel expenses ($3 million) to support business expansion,
partially offset by lower journal distribution costs due to off-shoring and outsourcing ($3 million).
In fiscal year 2011, the Company recorded a $9.3 million bad debt provision ($0.10 per share) within the
Professional/Trade reporting segment related to the Company’s customer, Borders Group, Inc. (“Borders”). The
provision represented the Company’s outstanding receivable with Borders, net of existing reserves and
expected recoveries. Borders was projected to account for 5% of fiscal year 2011 P/T sales. There were no
additional charges or bad debt expense with respect to this customer.
In fiscal year 2010, the Company recognized impairment and restructuring charges of $15.1 million ($0.17 per
share) within the STMS reporting segment. The charges include an $11.5 million impairment charge for GIT
Verlag, a business-to-business German-language controlled circulation magazine business; a $1.6 million
restructuring charge for severance-related costs to reduce certain staff levels and the number of magazines
published by GIT Verlag; an impairment charge of $0.9 million for three smaller business-to-business controlled
circulation advertising magazines; and a $1.1 million restructuring charge for severance costs related to the off-
shoring of certain central marketing and content management activities to Singapore and other countries in
Asia.
-32-
Operating Income:
Operating income for fiscal year 2011 increased 2% to $248.1 million, or 8% on a currency neutral basis.
Excluding the impact of the Borders bad debt provision ($9.3 million) and the prior year impairment and
restructuring charges ($15.1 million), operating income increased 6% on a currency neutral basis. Higher
revenue and higher gross profit margins were partially offset by higher operating and administrative expenses to
support business growth.
Interest Expense/Income, Foreign Exchange and Other:
Interest expense for fiscal year 2011 decreased $15.0 million to $17.3 million. Lower interest rates and lower
average debt contributed approximately $10.0 million and $5.0 million to the decrease, respectively. Losses on
foreign currency transactions for fiscal years 2011 and 2010 were $2.2 million and $10.9 million, respectively.
The foreign currency transaction loss in fiscal year 2010 was principally due to the revaluation of U.S. dollar
cash balances held by the Company’s non-U.S. locations into the local currency of those operations. Interest
income and other increased $1.6 million from the prior year, reflecting interest earned on higher average cash
balances.
Provision for Income Taxes:
The effective tax rate for fiscal year 2011 was 25.6% compared to 28.3% in the prior year. During fiscal year
2011, the Company recorded a $4.2 million ($0.07 per share) non-cash deferred tax benefit associated with new
tax legislation enacted in the United Kingdom (“U.K.”) that reduced the U.K. statutory income tax rate from 28%
to 27%. The new tax rate was effective as of April 1, 2011. The benefit recognized by the Company reflected
the restatement of all applicable U.K. deferred tax balances to the new income tax rate. In fiscal year 2011, the
Company also recognized state net operating loss benefits of approximately $1.9 million ($0.03 per share). The
Company’s effective tax rate for fiscal year 2011 excluding the tax benefits described above was 28.3%.
Earnings Per Share:
Earnings per diluted share for fiscal years 2011 and 2010 were $2.80 and $2.41, respectively. Excluding the
effects of unfavorable foreign exchange transaction and translation losses ($0.07 per share), the current year
Borders bad debt provision ($0.10 per share), the prior year impairment and restructuring charges ($0.17 per
share) and the fiscal year 2011 deferred tax benefit associated with the change in U.K. corporate income tax
rates ($0.07 per share), earnings per diluted share increased 12% on higher shares outstanding. The dilutive
effect of higher shares outstanding in fiscal year 2011 was approximately $0.08 per share as compared to the
prior year.
-33-
Fiscal Year 2011 Segment Results
Scientific, Technical, Medical and Scholarly (STMS):
Dollars in thousands
2011
2010
% change
% change w/o FX (a)
Journal Subscriptions
Books
Other Publishing Income
Total Revenue
Gross Profit
Gross Profit Margin
$621,551
175,611
201,740
$998,902
$621,257
163,349
202,077
$986,683
729,931
73.1%
716,470
72.6%
Direct Expenses & Amortization
305,134
311,229
Direct Contribution to Profit
Direct Contribution Margin
$424,797
42.5%
$405,241
41.1%
0%
8%
0%
1%
2%
-2%
5%
4%
8%
1%
4%
5%
5%
5%
(a) Adjusted to exclude a fiscal year 2010 impairment and restructuring charges of $15.1 million from direct
expenses and direct contribution.
Revenue:
STMS revenue for fiscal year 2011 increased 1% to $998.9 million, or 4% excluding the unfavorable impact of
foreign exchange. On a currency neutral basis, the growth was driven by higher journal subscription and book
revenue, while other publishing income increased slightly from prior year.
Journal Subscriptions
Journal subscription revenue for fiscal year 2011 of $621.6 million was flat with the prior year, but increased 4%
excluding the unfavorable impact of foreign exchange. On a currency neutral basis, the growth was driven by an
increase in journal subscriptions ($18 million), new journal society business ($3 million) and the timing of journal
publications ($3 million). As of April 30, 2011, receipts for calendar year 2011 journal subscriptions grew
approximately 3% over calendar year 2010 with approximately 95% of expected calendar year 2011
subscription receipts received.
Books
Books revenue for fiscal year 2011 increased 8% to $175.6 million. The growth mainly reflects higher digital
($12 million) and print ($2 million) book sales. The increase in digital book revenue includes a $5 million online
book license with a consortium in Saudi Arabia.
Other Publishing Income
Other publishing income for fiscal year 2011 of $201.7 million was flat with the prior year, but grew 1% excluding
the unfavorable impact of foreign exchange as an increase in backfile revenue ($4 million) was partially offset by
a decline in journal reprint revenue ($3 million).
Gross Profit:
Gross profit margin for fiscal year 2011 of 73.1% was 0.5% higher than the prior year. The improvement was
mainly driven by lower journal production costs due to off-shoring and outsourcing.
-34-
Direct Expenses and Amortization:
Direct expenses and amortization for fiscal year 2011 decreased 2% to $305.1 million. On a currency neutral
basis and excluding the $15.1 million asset impairment and restructuring charges recorded in fiscal year 2010,
direct expenses and amortization increased 5%. The increase primarily reflects higher journal editorial costs to
support business growth ($9 million) and higher employment costs ($2 million).
Direct Contribution to Profit:
Direct contribution to profit increased 5% to $424.8 million in fiscal year 2011, or 9% excluding the unfavorable
impact of foreign exchange. Excluding foreign exchange and the prior year asset impairment and restructuring
charges, direct contribution to profit increased 5%. Increased revenue and higher gross profit margins were
partially offset by an increase in direct expenses as described above. Direct contribution margin improved 140
basis points to 42.5% in fiscal year 2011, or 40 basis points on a currency neutral basis and excluding the prior
year asset impairment and restructuring charges principally due to improved gross profit margins.
Full Year Digital Revenue
Digital revenue was 59% of total STMS revenue
Digital journal revenue was 81% of total journal revenue, up from 79% a year earlier
Digital book revenue was up 74% and accounted for 16% of total book sales
Wiley Online Library
Wiley Online Library, one of the world’s broadest and deepest multidisciplinary collection of online resources
covering life, health and physical sciences, social science and the humanities, was launched in August 2010.
Built on the new technology and designed with extensive input from scholars around the world, Wiley Online
Library now provides access to over 5 million articles from 1,600 journals, 12,000 books, and hundreds of
reference works, laboratory protocols and databases. Key attributes:
New revenue opportunities, including new applications and business models, online advertising, deeper
penetration into markets, enhanced discoverability, and individual sales/pay-per-view
An easy-to-use interface providing intuitive navigation and fast access to online content
Research tools to enable the discovery of available resources and help pinpoint information
Personalization options to keep up-to-date on the latest research with content alerts and RSS feeds and
the ability to store key publications and articles for future reference
Customizable product home pages that allow journal and society communities to highlight key features
and share news and information
Access icons that identify the content available to customers through institutional licenses, society
membership and author-funded Online Open publication, as well as freely available content
Society Partnerships
37 new society journals were signed with combined annual revenue of approximately $9 million
100 renewals/extensions with approximately $56 million in combined annual revenue
4 journals were not renewed in fiscal year 2011, totalling approximately $1 million in annual revenue.
Alliances
An agreement to co-publish a new book series on neuroendocrinology was signed with the International
Neuroendocrine Federation
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An agreement signed with GeneBio for us to distribute their SmileMS mass spectrometry software which
is used to identify small molecules.
A publishing agreement was signed for a joint venture with the Society of Chemical Industry (SCI) to
launch a new electronic journal entitled Greenhouse Gases: Science and Technology.
A partnership with the Association of American Geographers to publish a definitive reference work for
the discipline to be published online and in 15 print volumes.
Wiley purchased the remaining 50% of the Journal for the Theory of Social Behaviour, which publishes
original theoretical and methodological articles that examine the links between social structures and
human agency embedded in behavioral practices. The journal is accessible to readers worldwide in the
fields of psychology, sociology and philosophy.
New Society Journals
Eleven journals on behalf of the British Psychological Society (BPS). The BPS is the second largest
psychological society in the world with approximately 50,000 members.
Acta Obstetricia et Gynecologica, on behalf of the Nordisk Förening för Obstetrik och Gynekologi
(NFOG), the Nordic Federation of Societies of Obstetrics and Gynaecology
Journal of the European Economic Association, on behalf of the European Economic Association
(EEA). The EEA is the third highest profile economic society in the world.
Three journals (Journal of Wildlife Management, Wildlife Monographs and the forthcoming re-launch of
the Wildlife Society Bulletin) on behalf of The Wildlife Society
Journal of Midwifery and Women's Health with the American College of Nurse Midwives
International Journal of Language and Communication Disorders on behalf of the Royal College of
Speech and Language Therapists, providing Wiley with a strong foundation in the field, opening
opportunities to add content and relationships
International Forum of Allergy & Rhinology for the American Rhinologic Society and the American
Academy of Otolaryngic Allergy
Biotechnology and Applied Biochemistry on behalf of the International Union of Biochemistry and
Molecular Biology
European Management Review with the European Academy of Management
Structural Concrete with the International Federation for Structural Concrete
The ten journals of the American Counseling Association. The ACA is the world’s leading association for
professionals in Counseling.
International Dental Journal, for the FDI World Dental Federation.
Journal of Business Logistics, for the Council of Supply Chain Management Professionals (CSCMP).
International Journal of Paediatric Obesity, for the International Association for the Study of Obesity.
Journal of Creative Behavior, for the Creative Education Foundation (CEF. Founded in 1954, the CEF
is recognized as the world leader in Applied Imagination
Asia Pacific Journal of Human Resources, for the Australian Human Resources Institute (AHRI).
APJHR is the leading journal for HR professionals in Australia.
Journal Quality and Impact Factors
Wiley announced that two thirds of its journals (68.8% and 1,013 titles) have an Impact Factor according to the
revised Thomson ISI® 2009 Journal Citation Reports (JCR) released in September 2010. Impact Factor is a
leading evaluator of journal influence and impact, as it reflects the frequency that peer-reviewed journals are
cited by researchers. Nearly a quarter of Wiley’s ranked journals are in the top ten of their subject category (238
titles) while two thirds are in the top half of their category. Wiley has 37 number 1 rankings. These titles
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represent the highest proportion of listed journals receiving the top rank of all the major journals publishers
(those publishing 100 or more titles listed in the JCR).
Professional/Trade (P/T):
Dollars in thousands
2011
2010
% change
% change w/o FX (a)
Books
Other Publishing Income
Total Revenue
Gross Profit
Gross Profit Margin
$387,228
49,860
$437,088
$379,934
50,054
$429,988
269,112
61.6%
263,552
61.3%
Direct Expenses & Amortization
173,616
163,356
Direct Contribution to Profit
Direct Contribution Margin
$95,496
21.8%
$100,196
23.3%
2%
0%
2%
2%
6%
-5%
2%
0%
1%
2%
1%
5%
(a) Adjusted to exclude fiscal year 2011 bad debt provision of $9.3 million related to Borders from direct
expenses and direct contribution.
Revenue:
P/T revenue for fiscal year 2011 increased 2% to $437.0 million, or 1% excluding the favorable impact of foreign
exchange. Book revenue increased 2% to $387.2 million, while other publishing income of $49.9 million was flat
with the prior year. The book revenue growth was driven by higher business/finance ($13 million) and
professional education ($4 million) sales, partially offset by a decline in consumer sales ($9 million) mainly due
to the Borders disruption. Other publishing income, which includes the sale of publishing rights, advertising
income, subscription journals and online services, was flat to prior year.
Total P/T Revenue by Category (on a currency neutral basis)
Business grew 10%, reflecting growth in digital sales
Consumer fell 6% due in large part to the Borders disruption
Technology, which maintained its #1 market position, was flat with the prior year
Professional Education grew 16% to $8 million, fueled by Doug Lemov’s best seller Teach like a
Champion
Architecture, yet to rebound from the recession, was down 3%
Psychology was up 2%
Gross Profit:
Gross profit margin for fiscal year 2011 of 61.6% was 0.3% higher than the prior year. The improvement was
driven by lower inventory obsolescence provisions reflecting improved inventory management and higher eBook
sales.
Direct Expenses and Amortization:
Direct expenses and amortization for fiscal year 2011 increased 6% to $173.6 million, or 1% excluding the $9.3
million Borders bad debt provision and foreign exchange.
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Direct Contribution to Profit:
Direct contribution to profit for fiscal year 2011 decreased 5% to $95.5 million, or 7% excluding unfavorable
foreign exchange. Excluding the $9.3 million Borders bad debt provision and foreign exchange, direct
contribution to profit increased 5%. The improvement reflects the top-line results and higher gross profit
margins. Direct contribution margin declined 150 basis points to 21.8% due to the Borders bad debt provision,
partially offset by higher gross profit margins from increased digital revenue.
Digital Revenue
Digital revenue for fiscal year 2011 was 10% of total P/T revenue, up from 7% in the prior year. Digital
revenue includes ebooks, online advertising, and content licensing.
eBook sales reached $23 million for fiscal year 2011, or 5% of total P/T revenue.
Alliances
A partnership with RSMeans, a division of Reed Construction Group, to become their exclusive
publisher and distributor of professional reference titles. In addition to managing their current reference
collection, Wiley and RSMeans will launch a branded series of new reference titles over the next several
years, primarily targeting the commercial and residential construction markets, in both print and digital
formats.
A partnership with the Tax institute at H&R Block to create exam prep product for the new Tax Preparer
certification from the IRS. The program will have books/eBooks and online test bank – eventually adding
a continuing professional education component.
A partnership with the AARP to become its exclusive book publisher. The agreement will include
cobranded publishing across a variety of categories, including health, personal finance, cooking, travel,
and technology. The AARP has nearly 40 million members and a target audience of adults aged 50+.
A partnership with Element K (acquired by Skillsoft Corporation in fiscal year 2012), a learning solutions
and online training company in the field of IT, to produce For Dummies “E-Learning” courses. The first
product launched in fiscal year 2012.
Notable New Books
Business
Little Book of Alternative Investments by Ben Stein
What Makes Business Rock, by former MTV Networks CEO Bill Roedy
Endgame by John Mauldin
Debunkery by Ken Fisher
The Truth About Leadership by Jim Kouzes and Barry Posner
Business Model Generation: A Handbook for Visionaries, Game-Changers and Challengers by
Alexander Osterwalder
Professional Education
Falling Upward: A Spirituality for the Two Halves of Life by Richard Rohr
Consumer
Betty Crocker Big Book of Cupcakes
Unofficial Guide to Walt Disney World Ebook
Frommers Day by Day guides for Greece, Germany, California and Alaska
Facebook For Dummies, 3e, Book + DVD Bundle by Leah Pearlman and Carolyn Abram
Better Homes & Gardens New Cook Book 15th Edition (Consumer - Cooking)
Avec Eric by Eric Ripert
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ASVAB For Dummies, 3e and ASVAB For Dummies, Premier Edition by Rod Powers
Technology
iPad For Dummies, 2nd Edition by Ed Baig and Bob Levitus
CCNA: Cisco Certified Network Associate Study Guide by Todd Lammle
Microsoft Data Warehouse Toolkit, 2E by Joy Mundy, Warren Thornthwaite, with Ralph Kimball
Digital SLR Photography All-in-One by David D. Busch
iPad All-in-One For Dummies by Nancy Muir
Psychology
Disorders of Personality by Theodore Millon
Handbook of Social Psychology eMRW
Architecture
A Global History of Architecture, 2 e by Frank Ching
Global Education (GEd):
Dollars in thousands
2011
2010
% change
% change
w/o FX
Print Books
Non-Traditional & Digital Content
Other Publishing Income
Total Revenue
Gross Profit
Gross Profit Margin
$211,611
83,789
11,161
$306,561
$205,326
66,574
10,491
$282,391
204,465
66.7%
185,039
65.5%
Direct Expenses & Amortization
103,421
98,827
Direct Contribution to Profit
Direct Contribution Margin
$101,044
33.0%
$86,212
30.5%
3%
26%
6%
9%
11%
5%
17%
1%
26%
3%
7%
9%
3%
15%
Revenue
GEd revenue for fiscal year 2011 increased 9% to $306.6 million, or 7% excluding the favorable impact of
foreign exchange. The improvement was driven by strong growth in Non-Traditional and Digital Content and
Print Book revenue.
Print Books
Print book revenue for fiscal year 2011 increased 3% to $211.6 million, or 1% excluding the favorable impact of
foreign exchange. The improvement was driven by increased student enrollment, a strong front list in the
engineering/computer science and science categories and increased sales of Windows 7 server titles.
Non-Traditional & Digital Content
Non-traditional & digital content revenue, which includes WileyPLUS, eBooks, digital content sold directly to
institutions, binder editions and custom publishing, increased 26% to $83.8 million. The growth was driven by
digital book sales ($6 million), custom publishing ($4 million), WileyPLUS ($3 million) and increased sales of
other non-traditional content ($3 million). WileyPLUS revenue increased 11% to approximately $33 million.
Revenue from non-traditional and digital content represents approximately 27% of total GEd revenue, as
compared to 24% in the prior year.
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Other Publishing Income
Other publishing income for fiscal year 2011 increased 6% to $11.2 million, or 3% excluding the favorable
impact of foreign exchange mainly due to higher revenue from the sale of translation rights.
Total GEd Revenue by Region (on a currency neutral basis)
Americas grew 8% to $216.2 million
EMEA grew 7% to $24.6 million
Asia-Pacific grew 1% to $65.8 million
Total GEd Revenue by Subject (on a currency neutral basis)
Engineering and Computer Science: revenue increased 21%. Textbooks driving growth include
Callister: Materials Science 8e, Rainer: Introduction to Information Systems 3e, Moran:
Thermodynamics 7e, Montgomery: Applied Statistics 5e, and Horstmann: Big Java 4e and Java for
Everyone 1e.
Science: revenue grew 14%. Textbooks driving growth included Halliday: Physics 9e, Solomons:
Organic Chemistry 10e, Grosvenor: Visualizing Nutrition 1e and Hein: Chemistry 13e.
Business and Accounting: revenue was flat with the prior year
Social Science and Culinary: revenue increased 1% from prior year
Mathematics: increased 5% over prior year
Microsoft Official Academic Course: revenue grew 6%, reflecting growth in the Windows Server books.
Gross Profit
Gross profit margin for fiscal year 2011 of 66.7% was 120 basis points higher than prior year. The improvement
was driven by increased sales of digital products (90 basis points) and lower inventory obsolescence provisions
(30 basis points).
Direct Expenses and Amortization
Direct expenses and amortization for fiscal year 2011 increased 5% to $103.4 million, or 3% excluding the
unfavorable impact of foreign exchange. The increase was mainly driven by higher employment costs ($4
million).
Direct Contribution to Profit
Direct contribution to profit for fiscal year 2011 increased 17% to $101.0 million, or 15% excluding the favorable
impact of foreign exchange. The growth was driven by the top-line results and higher gross profit margins,
partially offset by an increase in direct expenses as described above. Direct contribution margin improved 250
basis points to 33.0%, principally due to improved gross profit margins on higher digital revenue.
Digital Products
Digital revenue accounted for 16% of Global Education business, up from 13% in fiscal year 2010.
Fiscal year 2011 revenue of WileyPLUS grew 12% to $33 million, accounting for 11% of total Global
Education revenue. WileyPLUS is an online teaching and learning environment that integrates the entire
digital textbook with the most effective instructor and student resources to fit every learning style.
WileyPLUS digital-only revenue (not packaged with a print textbook) grew 18% to $13 million for the
2011 fiscal year, and represented approximately 40% of total WileyPLUS revenue.
In the U.S., student validation rates for WileyPLUS increased to 78% from approximately 73% in fiscal
year 2010.
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eBook revenue grew to $13 million in fiscal year 2011.
Shared Services and Administrative Costs
Shared services and administrative costs for fiscal year 2011 increased 7% to $373.2 million, including and
excluding the impact of foreign exchange. The increase was driven primarily by higher Technology costs ($23
million) reflecting ongoing investments in digital products and infrastructure, such as WileyPLUS, eBooks,
customer data/relationship management initiatives, and Wiley Online Library; Distribution costs due to higher
warehouse facility ($4 million) and employment costs ($2 million), partially offset by lower costs due to off-
shoring ($3 million); In addition, Finance and Other Administrative costs reflect lower employment costs mainly
due to lower accrued incentive compensation ($5 million) partially offset by increased legal and professional
fees ($2 million).
Liquidity and Capital Resources – Fiscal year 2011
The Company’s cash and cash equivalents balance was $201.9 million at the end of fiscal year 2011, compared
with $153.5 million a year earlier. Cash provided by operating activities in fiscal year 2011 increased $60.6
million to $375.6 million due primarily to higher net income ($28 million), lower pension contributions ($23
million), and lower changes in operating assets and liabilities ($16 million), partially offset by other ($6
million). Pension contributions in fiscal year 2011 were $24.8 million compared to $48.1 in the prior year, of
which none were discretionary in fiscal year 2011, while $31.0 million were discretionary with respect to timing in
the prior year.
Changes in operating assets and liabilities were principally due to the timing of vendor payments ($28 million),
higher earned royalty advances ($12 million) higher Deferred Revenue ($10 million), partially offset by higher
incentive compensation payments ($17 million). The increase in Deferred Revenue reflects journal subscription
growth and the timing of subscription cash collections.
Cash used for investing activities for fiscal year 2011 was approximately $113.0 million compared to $106.1
million in fiscal year 2010. The Company invested $7.1 million in the acquisition of publishing businesses,
assets and rights compared to $6.4 million in the prior year. Cash used for property, equipment and technology
and product development increased $6.2 million in fiscal year 2011 versus the prior year mainly reflecting
increased spending on leasehold improvements and fixtures related to newly leased facilities.
Cash used in financing activities was $230.0 million in fiscal year 2011, as compared to $156.4 million in fiscal
year 2010. In fiscal 2011, cash was used primarily to repay debt, pay dividends to shareholder and to
repurchase treasury shares. In fiscal year 2011, the Company repurchased 577,405 shares at an average price
of $48.42. In fiscal 2010, the Company did not repurchase any treasury shares in the prior period. The
Company increased its quarterly dividend to shareholders by 14.3% to $0.16 per share in fiscal year 2011 from
$0.14 per share in the prior year. Proceeds from stock option exercises decreased $4.9 million to $27.8 million
in fiscal 2011.
The aggregate notional amount of interest rate swap agreements associated with the Term Loan and Revolving
Credit Facility were $125.0 million as of April 30, 2011. 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.
The Company’s operating cash flow is affected by the seasonality and timing of receipts from its STMS journal
subscriptions and its Global Education business. Cash receipts for calendar year STMS subscription journals
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occur primarily from November through March. Reference is made to the Credit Risk section, which follows, for
a description of the impact on the Company as it relates to independent journal agents’ financial position and
liquidity. Sales 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.
Cash and Cash Equivalents held outside the U.S. were approximately $192.1 million as of April 30, 2011. The
balances were comprised primarily of Euros, Pound Sterling, and Australian dollars. Maintenance of these non-
U.S. dollar cash balances does not have a material impact on the liquidity or capital resources of the U.S.
operations.
As of April 30, 2011, the Company had approximately $454.0 million of debt outstanding and approximately
$697.4 million of unused borrowing capacity under the Revolving Credit Facility which is described in Note 12.
The Term Loan matures on February 2, 2013 and the Revolver will terminate on February 2, 2012. 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 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.
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.
Working capital at April 30, 2011 was negative $228.9 million. The primary driver of the negative working capital
is unearned deferred revenue related to subscriptions for which cash has been collected in advance. Cash
received in advance for subscriptions is used by the Company to fund acquisitions; pay debt; fund operations;
purchase treasury share and pay dividends. 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, 2011 include $321.4 million of such deferred subscription revenue for which cash was collected in
advance. Total Company cash on-hand in working capital at April 30, 2011 was $201.9 million.
Critical Accounting Policies and Estimates
The preparation of the Company’s financial statements in conformity with accounting principles generally
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 as of 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. Note 2 of the “Notes to Consolidated Financial Statements” includes a summary of the significant
accounting policies and methods used in preparation of our Consolidated Financial Statements. Set forth below
is a discussion of the Company’s more critical accounting policies and methods.
Revenue Recognition: The Company 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
met, revenue is 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. Collectability is evaluated
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based on the amount involved, the credit history of the customer, and the status of the customer’s account with
the Company.
When a product is sold with multiple deliverables, the Company accounts for each deliverable within the
arrangement as a separate unit of accounting due to the fact that each deliverable is also sold on a stand-alone
basis. The total consideration of a multiple-element arrangement is allocated to each unit of accounting based
on the price charged by the Company when it is sold separately. The Company’s multiple deliverable
arrangements principally include WileyPLUS, the online teaching and learning environment for the Company’s
Global Education business which also includes a complete print or digital textbook for the course, as well as
negotiated licenses for bundles of electronic content available on Wiley Online Library, the online publishing
platform for the Company’s STMS business.
When the Company’s electronic content is sold through a third party, the Company is generally not the primary
obligor within the arrangement since it typically is not responsible for fulfilling the customer’s order or handling
any customer requests or claims. Accordingly, the Company will recognize revenue for the sale of its electronic
content through third parties based on the amount billed to the end customer, net of any commission owed to
the third party seller of the content. Revenue is also 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, historical write-off experience, credit evaluations of customers and
current market conditions. A change in the evaluation of a customer’s credit could affect the estimated
allowance. The allowance for doubtful accounts is shown as a reduction of Accounts Receivable in the
Consolidated Statements of Financial Position and amounted to $6.9 million and $19.6 million as of April 30,
2012 and 2011, respectively. The decrease was primarily due to the write-off of Borders which was provided for
in fiscal year 2011 as disclosed in Note 9 of the Consolidated Financial Statements.
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. Associated with the estimated
sales return reserves, the Company also includes a related reduction in inventory and royalty costs as a result of
the expected returns.
Net sales return reserves amounted to $35.8 million and $48.9 million as of April 30, 2012 and 2011,
respectively. The reserves are reflected in the following accounts of the Consolidated Statements of Financial
Position – increase (decrease):
Accounts Receivable
Inventory
Accounts and Royalties Payable
Decrease in Net Assets
2012
$(48,612)
7,246
(5,593)
$(35,773)
2011
$(65,664)
9,485
(7,270)
$(48,909)
The decrease in the sales return reserve was principally driven by the Company’s ongoing migration to eBooks
and improved ordering patterns and inventory management by the Company’s customers. A one percent
change in the estimated sales return rate could affect net income by approximately $3.4 million. A change in the
pattern or trends in returns could affect the estimated allowance.
Reserve for Inventory Obsolescence: Inventories are carried at the lower of cost or market. 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
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customer demand compared to the number of units currently on hand; 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 the Consolidated Statements of Financial Position and amounted to $33.9
million and $36.9 million as of April 30, 2012 and 2011, 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 the estimates of fair value for such items, including goodwill, other intangible assets and technology
acquired. 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 assist in the determination of such estimates.
Goodwill and Intangible Assets: Goodwill is the excess of the purchase price paid over the fair value of the net
assets of the business acquired. Intangible assets principally consist of brands, trademarks, content and
publication rights, customer relationships and non-compete agreements. Goodwill and indefinite-lived intangible
assets are not amortized but are reviewed annually for impairment, or more frequently if events or changes in
circumstances indicate the asset might be impaired. The fair values of the Company’s reporting units are
substantially in excess of their carrying values. Finite-lived intangible assets are amortized over their estimated
useful lives. Content and 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, generally up to 5 years.
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 projected undiscounted cash flows indicates impairment, the asset is written down to its estimated fair value
based on the discounted future cash flows.
Share-Based Compensation: The Company recognizes share-based compensation expense based on the fair
value of the share-based awards on the grant date, reduced by an estimate of future forfeited awards. As such,
share-based compensation expense is only recognized for those awards that are expected to ultimately vest.
The fair value of share-based awards is recognized in net income on a straight-line basis over the requisite
service period. The grant date fair value for stock options is estimated using the Black-Scholes option-pricing
model. The determination of the assumptions used in the Black-Scholes model requires the Company to make
significant judgments and estimates, which include the expected life of an option, the expected volatility of the
Company’s Common Stock over the estimated life of the option, a risk-free interest rate and the expected
dividend yield. Judgment is also required in estimating the amount of share-based awards that may be forfeited.
Share-based compensation expense associated with performance-based stock awards is based on actual
financial results for targets established three years in advance. 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. If actual results differ significantly from
estimates, the Company’s share-based compensation expense and results of operations could be impacted.
Retirement Plans: The Company provides defined benefit pension plans for the majority of its employees
worldwide. The accounting for benefit plans is highly dependent on assumptions concerning the outcome of
future events and circumstances, including compensation increases, long-term return rates on pension plan
assets, healthcare cost trends, discount rates and other factors. In determining such assumptions, the Company
consults with outside actuaries and other advisors. The discount rates for the U.S. and Canadian pension plans
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are based on the derivation of a single-equivalent discount rate using a standard spot rate curve and the timing
of expected payments as of the balance sheet date. The spot rate curve is based upon a portfolio of Moody’s-
rated Aa3 (or higher) corporate bonds. The discount rates for other non-U.S. plans are based on similar
published indices with durations comparable to that of each plan’s liabilities. The expected long-term rates of
return on pension plan assets are estimated using market benchmarks for equities, real estate and bonds
applied to each plan’s target asset allocation and are estimated by asset class including an anticipated inflation
rate. The expected long-term rates are then compared to the historic investment performance of the plan assets
as well as future expectations and estimated through consultation with investment advisors and actuaries.
Salary growth and healthcare cost trend assumptions are based on the Company’s historical experience and
future outlook. While the Company believes that the assumptions used in these calculations are reasonable,
differences in actual experience or changes in assumptions could materially affect the expense and liabilities
related to the defined benefit pension plans of the Company. A hypothetical one percent change in the discount
rate would impact net income and the accrued pension liability by approximately $5.5 million and $97.3 million,
respectively. A one percent change in the expected long term rate of return would affect net income by
approximately $2.5 million.
Recently Issued Accounting Standards: In October 2009, the Financial Accounting Standards Board (“FASB”)
issued Accounting Standards Update (“ASU”) 2009-13 “Revenue Recognition (Topic 605): Multiple-Deliverable
Revenue Arrangements” (“ASU 2009-13”). ASU 2009-13 addresses the accounting for multiple-deliverable
arrangements to enable vendors to account for products and services separately rather than as a combined
unit. Specifically, this guidance amends the existing criteria for separating consideration received in multiple-
deliverable arrangements, eliminates the residual method of allocation and requires that arrangement
consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price
method. The guidance also establishes a hierarchy for determining the selling price of a deliverable, which is
based on vendor-specific objective evidence; third-party evidence; or management estimates. Expanded
disclosures related to the Company’s multiple-deliverable revenue arrangements are also required. The new
guidance was adopted by the Company for all revenue arrangements entered into or materially modified on and
after May 1, 2011 and did not have a significant impact on the Company’s consolidated financial statements.
In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve
Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”)
which amends U.S. GAAP to provide common fair value measurement and disclosure requirements with
International Financial Reporting Standards. The Company does not expect ASU 2011-04 to have a significant
effect on its current fair value measurements within the consolidated financial statements, however, the new
guidance will result in additional disclosures which will include quantitative information about the unobservable
inputs used in all Level 3 fair value measurements. ASU 2011-04 will be effective for the Company as of May 1,
2012.
There have been no other new accounting standards issued that have had, or are expected to have a material
impact on the Company’s consolidated financial statements.
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Contractual Obligations and Commercial Commitments
A summary of contractual obligations and commercial commitments, excluding unrecognized tax benefits further
described in Note 11, as of April 30, 2012 is as follows (in thousands):
Payments Due by Period
Total
Within
Year 1
2-3
Years
4-5
Years
After 5
Years
Total Debt
$475.0
$ -
$ -
$475.0
$ -
Interest on Debt1
Non-Cancelable Leases
36.8
242.0
Minimum Royalty Obligations
235.2
8.7
38.8
52.7
16.3
71.9
82.7
11.8
67.1
58.5
-
64.2
41.3
Total
$989.0
$100.2
$170.9
$612.4
$105.5
1 Interest on Debt includes the effect of the Company’s interest rate swap agreements and the estimated future interest
payments on the Company’s unhedged variable rate debt, assuming that the interest rates as of April 30, 2012 remain
constant until the maturity of the debt.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk primarily related to interest rates, foreign exchange, and credit risk. It is
the Company’s policy to monitor these exposures and to use derivative financial investments and/or insurance
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 approximately $475.0 million of variable rate loans outstanding at April 30, 2012, which
approximated fair value. On August 19, 2010, the Company entered into an interest rate swap agreement which
fixed a portion of the variable interest due on its variable rate loans outstanding. Under the terms of the
agreement, the Company pays a fixed rate of 0.8% and receives a variable rate of interest based on one-month
LIBOR (as defined) from the counterparty which is reset every month for a twenty-nine month period ending
January 19, 2013. As of both April 30, 2012 and 2011, the notional amount of the interest rate swap was $125.0
million.
On March 30, 2012, the Company entered into an interest rate swap agreement which fixed a portion of the
variable interest due on its variable rate loans outstanding. Under the terms of the agreement, the Company
pays a fixed rate of 0.645% and receives a variable rate of interest based on one month LIBOR (as defined)
from the counterparty which is reset every month for a three-year period ending March 31, 2015. As of April 30,
2012, the notional amount of the interest rate swap was $250.0 million.
It is management’s intention that the notional amount of interest rate swaps be less than the variable rate loans
outstanding during the life of the derivatives. During fiscal year 2012, the Company recognized a loss on its
hedge contracts of approximately $0.8 million which is reflected in Interest Expense in the Consolidated
Statements of Income. At April 30, 2012, the fair value of the outstanding interest rate swap was a net deferred
loss of $1.7 million. Based on the maturity dates of the contracts, approximately $0.5 million and $1.2 million of
-46-
the deferred loss as of April 30, 2012 was recorded in Other Accrued Liabilities and Other Long-Term Liabilities
in the Consolidated Statements of Financial Position, respectively. On an annual basis, a hypothetical one
percent change in interest rates for the $100.0 million of unhedged variable rate debt as of April 30, 2012 would
affect net income and cash flow by approximately $0.6 million.
Foreign Exchange Rates:
Fluctuations in the currencies of countries where the Company operates outside the U.S. may have a significant
impact on financial results. The Company is primarily exposed to movements in British pound sterling, euros,
Canadian and Australian dollars, and certain Asian currencies. The Statements 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. Fiscal year 2012 revenue was recognized in the
following currencies: approximately 54% U.S dollar; 28% British pound sterling; 8% euro and 10% other
currencies.
Adjustments resulting from translating assets and liabilities are reported as a separate component of
Accumulated Other Comprehensive Loss within Shareholders’ Equity under the caption Foreign Currency
Translation Adjustment. The Company also has significant investments in non-U.S. businesses that are
exposed to foreign currency risk. During fiscal year 2012, the Company recorded approximately $30.2 million of
currency translation losses in other comprehensive income primarily as a result of the strengthening of the U.S.
dollar relative to the British pound sterling and euro.
Exchange rate gains or losses related to foreign currency transactions are recognized as transaction gains or
losses in the Consolidated Statements of Income as incurred. Under certain circumstances, the Company may
enter into derivative financial instruments in the form of foreign currency forward contracts to hedge against
specific transactions, including intercompany purchases and loans. The Company does not use derivative
financial instruments for trading or speculative purposes.
The Company may enter into forward exchange contracts to manage the Company’s exposure on certain
foreign currency denominated assets and liabilities. The forward exchange contracts are marked to market
through Foreign Exchange Losses on the Consolidated Statements of Income, and carried at their fair value on
the Consolidated Statements of Financial Position. Foreign currency denominated assets and liabilities are
remeasured at spot rates in effect on the balance sheet date, with the effects of changes in spot rates reported
in Foreign Exchange Losses. During fiscal years 2010 through 2012 the Company did not designate any
forward exchange contracts as hedges under current accounting standards as the benefits of doing so were not
material due to the short-term nature of the contracts. The fair value changes in the forward exchange contracts
substantially mitigated the changes in the value of the applicable foreign currency denominated assets and
liabilities. The fair values of the contracts were measured on a recurring basis using Level 2 inputs and for fiscal
years 2012, 2011 and 2010 the gain/(loss) recognized was $2.4 million, $0.6 million, and ($2.0) million,
respectively. As of both April 30, 2012 and 2011, the Company had settled its forward exchange contracts.
Customer 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 principally remitted to the Company between the months of November and January. Although at
fiscal year-end the Company had minimal credit risk exposure to these agents, future calendar-year subscription
-47-
receipts from these agents are highly dependent on their financial condition and liquidity. Subscription agents
account for approximately 24% of total annual consolidated revenue and no one agent accounts for more than
10% of total annual consolidated revenue.
The Company’s book business is not dependent upon a single customer; however, the industry is concentrated
in national, regional, and online bookstore chains. Although no one book customer accounts for more than 10%
of total consolidated revenue and 15% of accounts receivable at April 30, 2012, the top 10 book customers
account for approximately 20% of total consolidated revenue and approximately 40% of accounts receivable at
April 30, 2012.
The United Kingdom, the United States and Canada have imposed new sanctions following a November 8,
2011 United Nations report targeting Iran, including restrictions on financial transactions; business relationships;
and prohibitions on direct and indirect trading with listed “designated persons”. The European Union has also
extended its existing sanctions regime. The Company has assessed its business relationship and transactions
with Iran and is in compliance with the regulations. As of April 30, 2012, the Company had outstanding trade
receivables with Iran of approximately $2.0 million, mainly related to book sales recognized prior to the
sanctions. It is unclear at present whether these sanctions will have an effect on the recovery of this outstanding
receivable.
“Safe Harbor” Statement Under the
Private Securities Litigation Reform Act of 1995
This report contains certain forward-looking statements concerning the Company’s operations, performance,
and financial condition. Reliance should not be placed on forward-looking statements, as actual results may
differ materially from those in any forward-looking statements. Any such forward-looking statements are based
upon a number of assumptions and estimates that are inherently subject to uncertainties and contingencies,
many of which are beyond the control of the Company, and are subject to change based on many important
factors. Such factors include, but are not limited to (i) the level of investment in new technologies and products;
(ii) subscriber renewal rates for the Company’s journals; (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 online retailers; (vi) the seasonal nature of the Company’s educational business and the
impact of the used-book market; (vii) worldwide economic and political conditions; and (viii) the Company’s
ability to protect its copyrights and other intellectual property worldwide (ix) other factors detailed from time to
time in the Company’s filings with the Securities and Exchange Commission. The Company undertakes no
obligation to update or revise any such forward-looking statements to reflect subsequent events or
circumstances.
-48-
Item 8. Financial Statements and Supplementary Data
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
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 –
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Based on our evaluation under the framework in Internal Control – Integrated Framework issued by
COSO, our management concluded that our internal control over financial reporting was effective as of April 30,
2012.
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 2012.
The effectiveness of our internal control over financial reporting as of April 30, 2012 has been audited by KPMG
LLP, an independent registered public accounting firm, as stated in their report which is included herein.
The Company’s Corporate Governance Principles, Committee Charters, Business Conduct and Ethics Policy
and the Code of Ethics for Senior Financial Officers are published on our web site at www.wiley.com under the
“About Wiley—Investor Relations—Corporate Governance” captions. Copies are also available free of charge
to shareholders on request to the Corporate Secretary, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ
07030-5774.
/s/ Stephen M. Smith
Stephen M. Smith
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 26, 2012
-49-
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
John Wiley & Sons, Inc.:
We have audited the accompanying consolidated statements of financial position of John Wiley & Sons, Inc.
(the “Company”) and subsidiaries as of April 30, 2012 and 2011, and the related consolidated statements of
income, shareholders’ equity and comprehensive income, and cash flows for each of the years in the three-year
period ended April 30, 2012. In connection with our audits of the consolidated financial statements, we also
have audited Schedule II on Page 81 of this Form 10-K. These consolidated financial statements and financial
statement schedule are the responsibility of the Company’s management. Our 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, 2012 and 2011, and the results of
their operations and their cash flows for each of the years in the three-year period ended April 30, 2012, 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
(United States), John Wiley & Sons, Inc.’s internal control over financial reporting as of April 30, 2012, based on
criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO)”), and our report dated June 26, 2012 expressed an
unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
(signed) KPMG LLP
Short Hills, New Jersey
June 26, 2012
-50-
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
John Wiley & Sons, Inc.:
We have audited John Wiley & Sons, Inc.’s internal control over financial reporting as of April 30, 2012, based
on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). John Wiley & Sons, Inc.’s management is responsible for
maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying Management’s Report on Internal Control
Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over
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.
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting
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
disposition of the company’s assets that could have a material effect on the financial statements.
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, 2012, based on criteria established in Internal Control – 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 30, 2012 and 2011, and the related consolidated statements of income, shareholders’ equity and
comprehensive income, and cash flows for each of the years in the three-year period ended April 30, 2012, and
our report dated June 26, 2012 expressed an unqualified opinion on those consolidated financial statements.
(signed) KPMG LLP
Short Hills, New Jersey
June 26, 2012
-51-
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
Technology, Property & Equipment
Intangible Assets
Goodwill
Other Assets
Total Assets
Liabilities and Shareholders’ Equity:
Current Liabilities
Accounts and royalties payable
Deferred revenue
Accrued employment costs
Accrued income taxes
Accrued pension liability
Other accrued liabilities
Current portion of long-term debt
Total Current Liabilities
Long-Term Debt
Accrued Pension Liability
Deferred Income Tax Liabilities
Other Long-Term Liabilities
Shareholders’ Equity
Preferred Stock, $1 par value: Authorized - 2 million, Issued - zero
Class A Common Stock, $1 par value: Authorized - 180 million,
Issued – 69,753,370 and 69,749,275
Class B Common Stock, $1 par value: Authorized - 72 million,
Issued – 13,436,892 and 13,440,987
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss:
Foreign currency translation adjustment
Unamortized retirement costs, net of tax
Unrealized loss on interest rate swap, net of tax
April 30
2012
2011
$
$
$
259,830 $
171,561
101,237
41,972
574,600
108,414
187,979
915,495
690,619
55,839
2,532,946 $
151,350 $
342,034
64,482
18,812
3,589
60,663
-
640,930
475,000
145,815
181,716
71,917
-
201,853
168,310
106,423
50,904
527,490
109,554
165,541
932,730
642,898
51,928
2,430,141
155,262
321,409
87,770
5,924
4,447
57,853
123,700
756,365
330,500
91,594
192,909
80,884
-
69,753
69,749
13,437
271,809
1,300,713
(95,981)
(103,381)
(1,048)
1,455,302
13,441
247,046
1,136,224
(65,808)
(61,636)
(297)
1,338,719
(360,830)
977,889
2,430,141
Less Treasury Shares At Cost (Class A – 19,771,896 and 18,577,704;
Class B – 3,902,576 and 3,902,576)
Total Shareholders’ Equity
Total Liabilities and Shareholders’ Equity
(437,734)
1,017,568
2,532,946 $
$
The accompanying notes are an integral part of the consolidated financial statements.
-52-
CONSOLIDATED STATEMENTS OF INCOME
John Wiley & Sons, Inc., and Subsidiaries
Dollars in thousands, except per share data
For the years ended April 30
2012
2011
2010
Revenue
$
1,782,742 $
1,742,551 $
1,699,062
Costs and Expenses
Cost of sales
Operating and administrative expenses
Additional provision for doubtful trade account
Impairment and restructuring charges
Amortization of intangibles
Total Costs and Expenses
543,396
922,177
-
-
36,750
1,502,323
539,043
910,847
9,290
-
35,223
1,494,403
534,001
872,193
-
15,118
35,158
1,456,470
Operating Income
280,419
248,148
242,592
Interest expense
Foreign exchange transaction losses
Interest income and other
Income Before Taxes
Provision for Income Taxes
Net Income
Earnings Per Share
Diluted
Basic
Cash Dividends Per Share
Class A Common
Class B Common
Average Shares
Diluted
Basic
(9,038)
(2,261)
2,975
272,095
59,349
(17,322)
(2,188)
2,422
231,060
59,171
(32,334)
(10,883)
834
200,209
56,666
212,746 $
171,889 $
143,543
3.47 $
3.53
0.80 $
0.80
2.80 $
2.86
0.64 $
0.64
2.41
2.45
0.56
0.56
61,272
60,184
61,359
60,160
59,679
58,498
$
$
$
The accompanying notes are an integral part of the consolidated financial statements.
-53-
CONSOLIDATED STATEMENTS OF CASH FLOWS
John Wiley & Sons, Inc., and Subsidiaries
Dollars in thousands
For the years ended April 30
2011
2010
2012
Operating Activities
Net Income
Adjustments to reconcile net income to net cash provided by operating
activities
Amortization of intangibles
Amortization of composition costs
Depreciation of technology, property and equipment
Provisions, impairment and restructuring charges (net of tax)
Stock-based compensation
Excess tax benefits from stock-based compensation
Reserves for returns, doubtful accounts, and obsolescence
Deferred tax benefits on U.K. rate changes
Deferred income taxes
Foreign exchange transaction losses
Pension expense
Royalty advances
Earned royalty advances
Changes in Operating Assets and Liabilities
Source/(Use), excluding acquisitions
Accounts receivable
Inventories
Accounts and royalties payable
Deferred revenue
Income taxes payable
Other accrued liabilities
Pension contributions
Other
Cash Provided by Operating Activities
Investing Activities
Composition spending
Additions to technology, property and equipment
Acquisitions, net of cash acquired
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
Cash dividends
Debt financing costs
Proceeds from exercise of stock options and other
Excess tax benefits from stock-based compensation
Cash Used for Financing Activities
Effects of Exchange Rate Changes on Cash
Cash and Cash Equivalents
Increase for year
Balance at beginning of year
Balance at end of year
Cash Paid During the Year for
Interest
Income taxes, net
$
212,746 $
171,889 $
143,543
36,750
50,944
50,397
-
17,262
(2,044)
(3,736)
(8,769)
11,799
2,261
20,975
(108,716)
100,639
9,605
4,467
540
19,381
27,835
(37,076)
(24,939)
(673)
379,648
(52,501)
(67,377)
(92,174)
(212,052)
(888,411)
909,211
(87,072)
(4,414)
(48,257)
(3,119)
15,303
2,044
(104,715)
(4,904)
57,977
201,853
259,830
35,223
51,421
45,862
6,039
17,719
(4,816)
4,449
(4,155)
9,862
2,188
25,633
(101,702)
93,016
(5,584)
7,453
6,425
32,032
19,455
(7,810)
(24,782)
(4,198)
375,619
(51,471)
(54,393)
(7,166)
(113,030)
(504,800)
310,000
(27,958)
(1,185)
(38,764)
-
27,847
4,816
(230,044)
15,795
48,340
153,513
201,853
$
$
7,745 $
42,841 $
19,686 $
37,822 $
35,158
47,440
40,281
10,631
24,842
(7,636)
18,916
-
9,481
10,883
20,319
(103,783)
80,993
(9,004)
13,960
(15,585)
21,626
10,887
15,908
(48,124)
(5,730)
315,006
(51,584)
(48,110)
(6,430)
(106,124)
(951,010)
777,610
-
9,707
(32,986)
-
32,625
7,636
(156,418)
(1,779)
50,685
102,828
153,513
33,186
33,358
The accompanying notes are an integral part of the consolidated financial statements.
-54-
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
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
Accumulated
Other Comp-
rehensive
Income
(Loss)
Total
Share-
holder’s
Equity
Balance at April 30, 2009
$69,644
$13,547
$164,592
$892,542
$(368,411)
$(258,398)
$513,516
Shares Issued Under Employee Benefit Plans
Exercise of Stock Options, including taxes
Stock-based compensation expense
Class A Common Stock Dividends
Class B Common Stock Dividends
Other
Comprehensive Income (Loss):
Net income
Foreign currency translation gain
Change in unamortized retirement costs, net of
a $18,657 tax benefit
Change in unrealized loss on interest rate
swap, net of a $5,685 tax provision
Total Comprehensive Income
(4,008)
22,892
24,842
5,166
16,189
62
(62)
2,530
(27,607)
(5,379)
143,543
1,158
39,081
24,842
(27,607)
(5,379)
2,530
143,543
60,292
60,292
(38,975)
(38,975)
9,435
9,435
174,295
Balance at April 30, 2010
$69,706
$13,485
$210,848
$1,003,099
$(347,056)
$(227,646)
$722,436
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 Income:
Net income
Foreign currency translation gain
Change in unamortized retirement costs, net of
a $7,490 tax provision
Change in unrealized loss on interest rate
swap, net of a $2,208 tax provision
Total Comprehensive Income
(3,321)
21,800
17,719
4,524
(27,958)
9,660
(32,648)
(6,116)
171,889
43
(44)
1,203
(27,958)
31,460
17,719
(32,648)
(6,116)
(1)
171,889
76,923
76,923
19,317
19,317
3,665
3,665
271,794
Balance at April 30, 2011
$69,749
$13,441
$247,046
$1,136,224
$(360,830)
$(127,741)
$977,889
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 Income (Loss):
Net income
Foreign currency translation loss
Change in unamortized retirement costs,
net of a $18,643 tax benefit
Change in unrealized loss on interest rate
swap, net of a $453 tax benefit
Total Comprehensive Income
(1,622)
9,123
17,262
3,042
(87,072)
7,126
(40,627)
(7,630)
212,746
4
(4)
1,420
(87,072)
16,249
17,262
(40,627)
(7,630)
-
212,746
(30,173)
(30,173)
(41,745)
(41,745)
(751)
(751)
140,077
Balance at April 30, 2012
$69,753
$13,437
$271,809
$1,300,713
$(437,734)
$(200,410)
$1,017,568
The accompanying notes are an integral part of the consolidated financial statements.
-55-
Notes to Consolidated Financial Statements
Note 1 – Description of Business
The Company, founded in 1807, was incorporated in the state of New York on January 15, 1904. As used
herein the term “Company” means John Wiley & Sons, Inc., and its subsidiaries and affiliated companies, unless
the context indicates otherwise.
The Company provides content and content-enabled digital services to customers worldwide. Core businesses
produce scientific, technical, medical and scholarly journals, reference works, books, database services, and
advertising; professional books, subscription products, certification and training services and online applications;
and educational content and services. Education content and services includes integrated online teaching and
learning resources for undergraduate and graduate students, educators, and lifelong learners worldwide as well
as secondary school students in Australia. 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 researchers,
professionals, students, and educators. The use of technology enables the Company to make its content
efficiently 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.
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.
Use of Estimates: The preparation of the Company’s financial statements in conformity with accounting
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 as of
the date of the financial statements and reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
Reclassifications: Certain prior year amounts have been reclassified to conform to the current year’s
presentation.
Book Overdrafts: Under the Company’s cash management system, a book overdraft balance exists for the
Company’s primary disbursement accounts. This overdraft represents uncleared checks in excess of cash
balances in individual bank accounts. The Company’s funds are transferred from other existing bank account
balances or from lines of credit as needed to fund checks presented for payment. As of April 30, 2012 and April
30, 2011, book overdrafts of $35.6 million and $40.0 million, respectively, were included in Accounts and
Royalties Payable in the Consolidated Statements of Financial Position.
Revenue Recognition: The Company 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
met, revenue is 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. Collectability is evaluated
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based on the amount involved, the credit history of the customer, and the status of the customer’s account with
the Company.
When a product is sold with multiple deliverables, the Company accounts for each deliverable within the
arrangement as a separate unit of accounting due to the fact that each deliverable is also sold on a stand-alone
basis. The total consideration of a multiple-element arrangement is allocated to each unit of accounting based
on the price charged by the Company when it is sold separately. The Company’s multiple deliverable
arrangements principally include WileyPLUS, the online teaching and learning environment for the Company’s
Global Education business which also includes a complete print or digital textbook for the course, as well as
negotiated licenses for bundles of electronic content available on Wiley Online Library, the online publishing
platform for the Company’s STMS business.
When the Company’s electronic content is sold through a third party, the Company is generally not the primary
obligor within the arrangement since it typically is not responsible for fulfilling the customer’s order or handling
any customer requests or claims. Accordingly, the Company will recognize revenue for the sale of its electronic
content through third parties based on the amount billed to the end customer, net of any commission owed to
the third party seller of the content. Revenue is also 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, historical write-off experience, credit evaluations of customers and
current market conditions. A change in the evaluation of a customer’s credit could affect the estimated
allowance. The allowance for doubtful accounts is shown as a reduction of Accounts Receivable in the
Consolidated Statements of Financial Position and amounted to $6.9 million and $19.6 million as of April 30,
2012 and 2011, respectively. The decrease was primarily due to the write-off of the Borders accounts receivable
which was provided for in fiscal year 2011 as disclosed in Note 9.
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. Associated with the estimated sales return reserves,
the Company also includes a related reduction in inventory and royalty costs as a result of the expected returns.
Net sales return reserves amounted to $35.8 million and $48.9 million as of April 30, 2012 and 2011,
respectively. The reserves are reflected in the following accounts of the Consolidated Statements of Financial
Position – increase (decrease):
Accounts Receivable
Inventory
Accounts and Royalties Payable
Decrease in Net Assets
2012
$(48,612)
7,246
(5,593)
$(35,773)
2011
$(65,664)
9,485
(7,270)
$(48,909)
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The decrease in the sales return reserve was principally driven by the Company’s ongoing migration to eBooks,
the elimination of the high return Borders account and inventory management by the Company’s customers.
Inventories: Inventories are carried at the lower of cost or market. U.S. book inventories aggregating $60.7
million and $60.1 million at April 30, 2012 and 2011, respectively, are valued using the last-in, first-out (LIFO)
method. All other inventories are valued using the first-in, first-out (FIFO) method.
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 compared to the number of units
currently on hand; and publication revision cycles. The inventory obsolescence reserve is reported as a
reduction of the Inventory balance in the Consolidated Statements of Financial Position and amounted to $33.9
million and $36.9 million as of April 30, 2012 and 2011, respectively.
Product Development Assets: Product development assets consist of composition costs and royalty advances.
Costs associated with developing a publication are expensed until the product is determined to be commercially
viable. Composition costs represent the costs incurred to bring an edited commercial manuscript to publication,
which include typesetting, proofreading, design, illustration costs, and digital formatting. Composition costs are
capitalized and are generally amortized on a double-declining basis over their estimated useful lives, ranging
from 1 to 3 years. Royalty advances are capitalized and, upon publication, are recovered as royalties earned
based on sales of the published works. Royalty advances are reviewed for recoverability and a reserve for loss
is maintained, if appropriate.
Shipping and Handling Costs: Costs incurred for shipping and handling are reflected in the Operating and
Administrative Expenses line item in the Consolidated Statements of Income. The Company incurred $50.4
million, $52.5 million and $55.6 million in shipping and handling costs in fiscal years 2012, 2011 and 2010,
respectively.
Advertising Expense: Advertising costs are expensed as incurred. The Company incurred $24.3 million, $27.1
million and $26.0 million in advertising costs in fiscal years 2012, 2011 and 2010, respectively.
Technology, Property and Equipment: Technology, property and equipment is recorded at cost. Major renewals
and improvements are capitalized, while maintenance and repairs are expensed as incurred.
Technology, property and equipment is depreciated using the straight-line method based upon the following
estimated useful lives: Buildings and Leasehold Improvements – the lessor of the estimated useful life of the
asset up to 40 years or the duration of the lease; Furniture and Fixtures - 3 to 10 years; Computer Hardware
and Software - 3 to 10 years.
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 which is generally 3 to 6
years. Maintenance, training, and upgrade costs that do not result in additional functionality are expensed as
incurred.
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
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based on the estimates of fair value for such items, including goodwill, other intangible assets and technology
acquired. 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 the expected tax basis of assets acquired. The Company may use an independent appraiser
to assist in the determination of such estimates.
Goodwill and Intangible Assets: Goodwill is the excess of the purchase price paid over the fair value of the net
assets of the business acquired. Intangible assets principally consist of brands, trademarks, content and
publication rights, customer relationships and non-compete agreements. Goodwill and indefinite-lived intangible
assets are not amortized but are reviewed annually for impairment, or more frequently if events or changes in
circumstances indicate the asset might be impaired. The Company evaluates the recoverability of indefinite-
lived intangible assets by comparing the fair value of the intangible asset to its carrying value.
To evaluate the recoverability of goodwill, the Company uses a two-step impairment test approach at the
reporting unit level. In the first step, the estimated fair value of the entire reporting unit is compared to its
carrying value including goodwill. If the fair value of the reporting unit is less than the carrying value, a second
step is performed to determine the charge for goodwill impairment. In the second step, the Company determines
an implied fair value of the reporting unit’s goodwill by determining the fair value of the individual assets and
liabilities (including any previous unrecognized intangible assets) of the reporting unit other than goodwill. The
resulting implied fair value of the goodwill is compared to the carrying amount and an impairment charge is
recognized for the difference.
Finite-lived intangible assets are amortized over their estimated useful lives. The most significant factors in
determining the estimated life of these intangibles is the history and longevity of the brands, trademarks and
content and publication rights acquired, combined with the strength of cash flows. Content and 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. Content and
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, generally up to 5 years.
Intangible assets with finite lives are amortized on a straight line basis over the following weighted average
estimated useful lives: acquired publishing rights – 36 years; customer relationships – 20 years; brands and
trademarks – 11 years; non-compete agreements – 3 years.
Impairment of Long-Lived Assets: Assets with finite lives are only evaluated for impairment upon a significant
change in the operating or macroeconomic environment. In these circumstances, if an evaluation of the
projected 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, changes in interest
rates and anticipated transaction exposures, including intercompany purchases. The Company’s 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 charge to earnings. The Company does not use financial
instruments for trading or speculative purposes.
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Foreign Currency Gains/Losses: The Company maintains operations in many non-U.S. locations. Assets and
liabilities are translated into U.S. dollars using end of period exchange rates and revenues and expense are
translated into U.S. dollars using weighted average rates. Foreign currency translation adjustments are
accumulated and reported as a separate component of Accumulated Other Comprehensive Loss within
Shareholders’ Equity. The Company’s significant investments in non-U.S. businesses are exposed to foreign
currency risk. During fiscal year 2012, the Company recorded $30.2 million of foreign currency translation losses
primarily due to the strengthening of the U.S. dollar relative to the British pound sterling and euro. Foreign
currency transaction gains or losses are recognized in the Consolidated Statements of Income as incurred.
Share-Based Compensation: The Company recognizes share-based compensation expense based on the fair
value of the share-based awards on the grant date, reduced by an estimate for future forfeited awards. As such,
share-based compensation expense is only recognized for those awards that are expected to ultimately vest.
The fair value of share-based awards is recognized in net income on a straight-line basis over the requisite
service period. Share-based compensation expense associated with performance-based stock awards is based
on actual financial results for targets established three years in advance. 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.
Recently Issued Accounting Standards: In October 2009, the FASB issued ASU 2009-13 “Revenue Recognition
(Topic 605): Multiple-Deliverable Revenue Arrangements” (“ASU 2009-13”). ASU 2009-13 addresses the
accounting for multiple-deliverable arrangements to enable vendors to account for products and services
separately rather than as a combined unit. Specifically, this guidance amends the existing criteria for separating
consideration received in multiple-deliverable arrangements, eliminates the residual method of allocation and
requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables
using the relative selling price method. The guidance also establishes a hierarchy for determining the selling
price of a deliverable, which is based on vendor-specific objective evidence; third-party evidence; or
management estimates. Expanded disclosures related to the Company’s multiple-deliverable revenue
arrangements are also required. The new guidance was adopted by the Company for all revenue arrangements
entered into or materially modified on and after May 1, 2011 and did not have a significant impact on the
Company’s consolidated financial statements.
In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve
Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”)
which amends U.S. GAAP to provide common fair value measurement and disclosure requirements with
International Financial Reporting Standards. The Company does not expect ASU 2011-04 to have a significant
effect on its current fair value measurements within the consolidated financial statements, however, the new
guidance will result in additional disclosures which will include quantitative information about the unobservable
inputs used in all Level 3 fair value measurements. ASU 2011-04 will be effective for the Company as of May 1,
2012.
There have been no other new accounting standards issued that have had, or are expected to have a material
impact on the Company’s consolidated financial statements.
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Note 3 – Reconciliation of Weighted Average Shares Outstanding
A reconciliation of the shares used in the computation of earnings per share for the years ended April 30 follows
(in thousands):
2012
2011
2010
Weighted Average Shares Outstanding
60,387 60,515 58,897
Less: Unearned Restricted Shares
(203)
(355)
(399)
Shares Used for Basic Earnings Per Share
60,184
60,160
58,498
Dilutive Effect of Stock Options and Other Stock Awards
1,088
1,199
1,181
Shares Used for Diluted Earnings Per Share
61,272
61,359
59,679
For the years ended April 30, 2012, 2011, and 2010, options to purchase Class A Common Stock of 1,655,362,
411,372 and 1,714,089 respectively, have been excluded from the shares used for diluted earnings per share as
their inclusion would have been antidilutive. In addition, for the years ended April 30, 2012, 2011 and 2010,
unearned restricted shares of 10,000; 1,500 and 14,128 have been excluded as their inclusion would have been
antidilutive.
Note 4 – Inscape Acquisition
On February 16, 2012, the Company acquired all of the stock of Inscape Holdings, Inc. (“Inscape”) for
approximately $85 million in cash, net of cash acquired. Inscape is a leading provider of workplace learning
solutions, including DiSC®-based assessments and training products, that develop critical interpersonal
business skills. The acquisition will enable Wiley’s Professional/Trade business to capitalize on both companies’
content, assets, and relationships, enhance its global reach, and move more rapidly into digital delivery within
the growing workplace learning and assessment market. Inscape was generating approximately $20 million
annually in revenue prior to the acquisition. The purchase price of $85 million was allocated $56.8 million to
Goodwill, $43.9 million to identifiable long-lived assets comprised primarily of customer relationships, content,
technology and trademarks, with the remainder allocated to deferred tax liabilities and working capital. The
customer relationships, content, technology and trademarks are being amortized over a weighted average
estimated useful life of approximately 15 years. Unaudited pro forma financial information has not been
presented since the effects of acquisitions were not material on either an individual or aggregate basis. The
purchase accounting was substantially completed as of April 30, 2012. The Company does not anticipate any
significant adjustments to finalize the purchase accounting.
Note 5 – Inventories
Inventories at April 30 were as follows (in thousands):
Finished Goods
Work-in-Process
Paper, Cloth, and Other
Inventory Value of Estimated Sales Returns
LIFO Reserve
Total Inventories
2012
2011
$86,954
$87,080
6,487
8,072
7,850
7,940
101,513
102,870
7,246
(7,522)
9,485
(5,932)
$101,237
$106,423
See Note 2, Summary of Significant Accounting Policies - Sales Return Reserves for a discussion of Inventory
Value From Estimated Returns.
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Note 6 – Product Development Assets
Product development assets consisted of the following at April 30 (in thousands):
Composition Costs
Royalty Advances
Total
2012
2011
$54,844
$54,162
53,570
55,392
$108,414
$109,554
Composition costs are net of accumulated amortization of $178.2 million and $160.8 million as of April 30, 2012
and 2011, respectively.
Note 7 – Technology, Property and Equipment
Technology, property and equipment consisted of the following at April 30 (in thousands):
2012
2011
Capitalized Software and Computer Hardware
$379,034
$331,387
Buildings and Leasehold Improvements
Furniture, Fixtures and Warehouse Equipment
Land and Land Improvements
98,635
82,678
4,187
95,537
76,167
4,360
564,534
507,451
Accumulated Depreciation/Amortization
(376,555)
(341,910)
Total
$187,979
$165,541
The net book value of capitalized software costs was $88.9 million and $69.9 million as of April 30, 2012 and
2011, respectively. Depreciation/Amortization expense recognized in 2012, 2011, and 2010 for capitalized
software costs was approximately $26.0 million, $22.6 million and $18.4 million, respectively.
Note 8 - Goodwill and Intangible Assets
The following table summarizes the activity in goodwill by segment as of April 30 (in thousands):
STMS
P/T
Total
2011
$483,433
159,465
$642,898
Acquisitions
$ -
56,847
$56,847
Foreign Translation
Adjustment
$(8,856)
(270)
$(9,126)
2012
$474,577
216,042
$690,619
The goodwill acquired relates to the Company’s acquisition of Inscape as discussed in Note 4.
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Intangible assets as of April 30 were as follows (in thousands):
2012
2011
Cost
Accumulated
Amortization
Cost
Accumulated
Amortization
Intangible Assets with Determinable Lives
Content and Publishing Rights
$794,986
$(227,934)
$779,135
$(195,586)
Brands & Trademarks
Covenants not to Compete
Customer Relationships
Intangible Assets with Indefinite Lives
Content and Publishing Rights
Brands & Trademarks
22,374
790
83,477
(8,401)
(484)
(17,240)
18,814
350
(6,944)
(297)
64,129
(13,972)
901,627
(254,059)
862,428
(216,799)
102,031
165,896
-
-
111,908
175,193
-
-
$1,169,554
$(254,059)
$1,149,529
$(216,799)
The change in intangible assets at April 30, 2012 compared to April 30, 2011 is primarily due to the Inscape
acquisition described in Note 4, foreign exchange translation and amortization expense.
Based on the current amount of intangible assets subject to amortization and assuming current exchange rates,
the estimated amortization expense for each of the succeeding five fiscal years are as follows: 2013 - $40.7
million; 2014 - $38.0 million; 2015 - $32.0 million; 2016 - $30.6 million and 2017 – $29.4 million.
Note 9 - Additional Provision for Doubtful Trade Account
In fiscal year 2011, the Company recorded a pre-tax bad debt provision of $9.3 million, or $6.0 million after-tax
($0.10 per diluted share), related to the Company’s customer, Borders Group, Inc. (“Borders”). The net charge
was reflected in the Additional Provision for Doubtful Trade Account line item in the Consolidated Statements of
Income and represented the difference between the Company’s outstanding receivable with Borders, net of
existing reserves and recoveries. There were no additional charges or bad debt expense with respect to this
customer. On February 16, 2011, Borders filed a petition for reorganization relief under Chapter 11 of the U.S.
Bankruptcy code.
Note 10 - Impairment and Restructuring Charges
In fiscal year 2010, the Company recognized intangible asset impairment and restructuring charges of $15.1
million, or $10.6 million after-tax ($0.17 per diluted share), which is reflected in the Impairment and
Restructuring Charges line item in the Consolidated Statements of Income and described in more detail below.
Impairment Charges
GIT Verlag, a business-to-business German-language controlled circulation magazine business, was acquired
by the Company in 2002. As part of a strategic review of certain non-core businesses within the STMS reporting
segment, the Company considered alternatives for GIT Verlag during fiscal year 2010 due to the economic
outlook for the print advertising business in German language publishing. As a result of the review, the
Company performed an impairment test on the intangible assets related to GIT Verlag which resulted in an
$11.5 million pre-tax impairment charge in fiscal year 2010. This impairment charge reduced the carrying value
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of the content and publication rights of GIT Verlag, which was classified as an indefinite-lived intangible asset, to
its fair value of $7.7 million. Concurrent with the strategic review and impairment, the Company classified the
remaining content and publication rights as a finite-lived intangible asset which is being amortized over a 10
year period. The Company also identified a similar decline in the economic outlook for three smaller business-
to-business controlled circulation advertising magazines. An impairment test on the intangible assets associated
with those magazines resulted in an additional $0.9 million pre-tax impairment charge in fiscal year 2010 that
reduced the intangible assets carrying values of these magazines to their fair value of $0.5 million. No further
impairment provision was required.
Restructuring Charges
After considering a number of strategic alternatives for the GIT Verlag business, the Company implemented a
restructuring plan in fiscal year 2010 to reduce certain staff levels and the number of magazines published. As a
result, the Company recorded a pre-tax restructuring charge of approximately $1.6 million within the STMS
reporting segment in fiscal year 2010 for GIT Verlag severance costs. The Company also recorded severance
costs of approximately $1.1 million related to the off-shoring and outsourcing of certain central marketing and
content management activities to Singapore and other countries in Asia. There were no additional restructuring
charges related to these programs and all severance payments were substantially completed in fiscal year
2011.
Note 11 - Income Taxes
The provision for income taxes for the years ending April 30 were as follows (in thousands):
Current Provision
US – Federal
International
State and Local
2012
2011
2010
$11,253
$15,563
$19,976
43,017
2,049
35,913
1,988
25,460
1,749
Total Current Provision
$56,319
$53,464
$47,185
Deferred Provision (Benefit)
US – Federal
International
State and Local
Total Deferred Provision
Total Provision
$9,736
(7,820)
1,114
$3,030
$59,349
$6,164
2,040
(2,497)
$5,707
$59,171
$5,536
3,286
659
$9,481
$56,666
International and United States pretax income for the years ending April 30 were as follows (in thousands):
International
United States
Total
2012
2011
2010
$171,315
$162,767
$133,088
100,780
68,293
67,121
$272,095
$231,060
$200,209
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The Company’s effective income tax rate as a percentage of pretax income differed from the U.S. federal
statutory rate as shown below:
2012
2011
2010
U.S. Federal Statutory Rate
35.0%
35.0%
35.0%
State Income Taxes, Net of U.S. Federal Tax Benefit
Benefit from Lower Taxes on Non-US Income
Deferred Tax Benefit From Statutory Tax Rate Change
Tax Adjustments
Other
0.8
(6.8)
(3.2)
(4.0)
-
(0.1)
(7.6)
(1.8)
(0.9)
1.0
0.8
(8.9)
-
-
1.4
Effective Income Tax Rate
21.8%
25.6%
28.3%
Deferred Tax Benefit from Statutory Tax Rate Change: In fiscal years 2012 and 2011, the Company recognized
non-cash deferred tax benefits of $8.8 million ($0.14 per diluted share) and $4.2 million ($0.07 per diluted
share), respectfully, principally associated with new tax legislation enacted in the United Kingdom (“U.K.”) that
reduced the U.K. statutory income tax rates by 2% and 1%, respectively. The benefits reflect the
remeasurement of all applicable U.K deferred tax balances to the new income tax rates as of April 1, 2012 and
2011, respectively.
Tax Adjustments: In fiscal years 2012 and 2011, the Company recorded tax benefits of $10.9 million and $2.0
million, respectively, related to the expiration of the statute of limitations and favorable resolutions of certain
federal, state and foreign tax matters with tax authorities. Fiscal year 2012 includes the release of a $7.5 million
income tax reserve that was originally recorded in conjunction with the purchase accounting for the Blackwell
acquisition.
Accounting for Uncertainty in Income Taxes:
As of April 30, 2012 and April 30, 2011, the total amount of unrecognized tax benefits were $24.3 million and
$38.1 million, respectively, of which $3.0 million and $6.2 million represented accruals for interest and penalties
recorded as additional tax expense in accordance with the Company’s accounting policy. Within the income tax
provision for fiscal years 2012 and 2011, the Company recorded net interest income/(expense) and penalties on
the unrecognized and recognized tax benefits of $1.6 million and ($0.8) million, respectively. As of April 30,
2012 and April 30, 2011, the total amount of unrecognized tax benefits that, if recognized, would reduce the
Company’s income tax provision were approximately $22.6 million and $35.0 million, respectively. The
Company does not expect any significant changes to the unrecognized tax benefits within the next 12 months.
A reconciliation of the unrecognized tax benefits included within the Other Long-Term Liabilities line item in the
Consolidated Statements of Financial Position are as follows (in thousands):
Balance at May 1st
Additions for Current Year Tax Positions
Additions for Prior Year Tax Positions
Reductions for Prior Year Tax Positions
Foreign Translation Adjustment
Reductions for Lapse of Statute of Limitations
2012
2011
$38,100
$37,612
375
1,105
(1,521)
(1,681)
(12,126)
459
1,224
(2,381)
1,653
(467)
Balance at April 30th
$24,252
$38,100
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Tax Audits:
The Company files income tax returns in the U.S. and various states and non-U.S. tax jurisdictions. The
Company’s major taxing jurisdictions include the United States, the United Kingdom and Germany. Other than
the Company’s German subsidiaries, the Company is no longer subject to income tax examinations for years
prior to fiscal year 2009 in the major jurisdictions in which the Company is subject to tax. The Company
completed the U.S. audit for fiscal years 2006 through 2009 resulting in minimal adjustments principally related
to temporary differences.
The Company completed the German tax audit for fiscal years 2003 through 2007 and audits have commenced
for fiscal years 2008 and 2009. The German tax authorities notified the Company in May 2012 that they are
challenging the Company’s tax position with respect to the step up of the tax deductible basis for the Company’s
German-related assets that occurred in fiscal year 2003 and the corresponding amortization claimed as a tax
benefit. The Company’s management and its advisors believe that it is “more likely than not” to successfully
defend that the tax treatment was proper and in accordance with German tax regulations. See Note 19
“Subsequent Event” for further information.
Deferred Taxes:
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):
Inventory
Intangible and Fixed Assets
Total Deferred Tax Liabilities
Net Operating Losses
Reserve for Sales Returns and Doubtful Accounts
Accrued Expenses
Accrued Employee Compensation
Retirement and Post-Employment Benefits
Total Deferred Tax Assets
Net Deferred Tax Liabilities
2012
$7,185
2011
$5,921
276,035
267,570
$283,220
$273,491
$6,297
5,577
6,157
30,946
48,188
$6,970
7,054
9,599
30,300
28,069
$97,165
$81,992
$186,055
$191,499
Pretax earnings of a non-U.S. subsidiary or affiliate are subject to U.S. taxation when repatriated. The Company
intends to reinvest earnings outside the U.S. except in instances where repatriating such earnings would result
in no additional tax. Accordingly, the Company has not recognized U.S. tax expense on non-U.S. earnings. At
April 30, 2012, the accumulated undistributed earnings of non-U.S. subsidiaries approximated $432 million. It is
not practical to determine the U.S. income tax liability that would be payable if such earnings were not
indefinitely reinvested.
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Note 12 - Debt and Available Credit Facilities
Outstanding debt and available credit facilities consisted of the following as of April 30 (in thousands):
Revolving Credit Facility
Term Loan
Total Debt
Less: Current Portion
Total Long-Term Debt
2012
$475,000
-
475,000
-
$475,000
2011
$11,200
443,000
454,200
(123,700)
$330,500
On November 2, 2011, the Company amended and restated its existing credit facility with Bank of America -
Merrill Lynch and The Royal Bank of Scotland plc as joint lead arrangers and Bank of America as administrative
agent. The new agreement consists of a $700 million five-year senior revolving credit facility, which can be
drawn in multiple currencies. The proceeds of the new revolving credit facility were used to pay down the
Company’s prior credit facility and meet seasonal operating cash requirements. The Company has the option of
borrowing at the following floating interest rates: (i) at a rate based on the London Interbank Offered Rate
(“LIBOR”) plus an applicable margin ranging from 1.05% to 1.65%, depending on the Company’s consolidated
leverage ratio, as defined, or (ii) for U.S. dollar-denominated loans only, at the lender’s base rate plus an
applicable margin ranging from zero to 0.65%, depending on the Company’s consolidated leverage ratio. The
lender’s base rate is defined as the highest of (i) the U.S. federal funds effective rate plus a 0.50% margin, (ii)
the Eurocurrency rate, as defined, plus a 1.00% margin, or (iii) the Bank of America prime lending rate. In
addition, the Company will pay a facility fee ranging from 0.20% to 0.35% depending on the Company’s
consolidated leverage ratio. The Company also has the option to request a credit limit increase of up to $250
million in minimum increments of $50 million, subject to the approval of the lenders. The amended credit
agreement contains certain restrictive covenants related to the Company’s consolidated leverage ratio and
interest coverage ratio, which the Company was in compliance with as of April 30, 2012. Due to the fact that
there are no principal payments due until the end of the amended agreement in fiscal year 2017, the Company
has classified its entire debt obligation as long-term as of April 30, 2012.
The Company and its subsidiaries have other short-term lines of credit aggregating $9.7 million at various
interest rates. No borrowings under the credit lines were outstanding as of April 30, 2012 or 2011. The
Company’s total available lines of credit as of April 30, 2012 were approximately $710 million, of which
approximately $235 million was unused. The weighted average interest rates on long-term debt outstanding
during fiscal years 2012 and 2011 were 1.60% and 2.46%, respectively. As of April 30, 2012 and 2011, the
weighted average interest rates for the long-term debt were 2.01% and 1.21%, respectively. Based on
estimates of interest rates currently available to the Company for loans with similar terms and maturities, the fair
value of the Company’s long-term debt approximates its carrying value.
Note 13 – Derivative Instruments and Hedging Activities
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, changes in interest rates and anticipated transaction
exposures, including intercompany purchases. 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 adjustment to earnings. The Company does not use financial instruments for trading or
speculative purposes.
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Interest Rate Contracts:
The Company had approximately $475.0 million of variable rate loans outstanding at April 30, 2012, which
approximated fair value. As of April 30, 2012, the Company maintained two interest rate swap agreements that
were designated as fully effective cash flow hedges as defined under Accounting Standards Codification
(“ASC”) 815 “Derivatives and Hedging.” The Company also maintained two additional interest rate swap
agreements that expired during fiscal year 2011 which were also designated as fully effective cash flow hedges.
As a result, there was no impact on the Company’s Consolidated Statements of Income for changes in the fair
value of the interest rate swaps. Under ASC 815, fully effective derivative instruments that are designated as
cash flow hedges have changes in their fair value recorded initially within Accumulated Other Comprehensive
Loss in the Consolidated Statements of Financial Position. As interest expense is recognized based on the
variable rate loan agreements, the corresponding deferred gain or loss on the interest rate swaps is reclassified
from Accumulated Other Comprehensive Loss to Interest Expense in the Consolidated Statements of Income. It
is management’s intention that the notional amount of interest rate swaps be less than the variable rate loans
outstanding during the life of the derivatives.
On February 16, 2007, the Company entered into an interest rate swap agreement which fixed variable interest
due on a portion of its term loan (“Term Loan”). Under the terms of the agreement, the Company paid a fixed
rate of 5.076% and received a variable rate of interest based on three month LIBOR (as defined) from the
counterparty which was reset every three months for a four-year period ending February 8, 2011, the date that
the swap expired.
On October 19, 2007, the Company entered into an interest rate swap agreement which fixed a portion of the
variable interest due on its revolving credit facility (“Revolving Credit Facility”). Under the terms of this interest
rate swap, the Company paid a fixed rate of 4.60% and received a variable rate of interest based on three
month LIBOR (as defined) from the counterparty which was reset every three months for a three-year period.
This interest rate swap expired on August 8, 2010.
On August 19, 2010, the Company entered into an interest rate swap agreement which fixed a portion of the
variable interest due on its variable rate loans outstanding. Under the terms of the agreement, the Company
pays a fixed rate of 0.8% and receives a variable rate of interest based on one-month LIBOR (as defined) from
the counterparty which is reset every month for a twenty-nine month period ending January 19, 2013. As of
both April 30, 2012 and 2011, the notional amount of the interest rate swap was $125.0 million.
On March 30, 2012, the Company entered into an interest rate swap agreement which fixed a portion of the
variable interest due on its variable rate loans outstanding. Under the terms of the agreement, the Company
pays a fixed rate of 0.645% and receives a variable rate of interest based on one month LIBOR (as defined)
from the counterparty which is reset every month for a three-year period ending March 31, 2015. As of April 30,
2012, the notional amount of the interest rate swap was $250.0 million.
The Company records the fair value of its interest rate swaps on a recurring basis using Level 2 inputs of quoted
prices for similar assets or liabilities in active markets. The fair value of the interest rate swaps as of April 30,
2012 and 2011 was a net deferred loss of $1.7 million and $0.5 million, respectively. Based on the maturity
dates of the contracts, approximately $0.5 million and $1.2 million of the deferred loss as of April 30, 2012 was
recorded in Other Accrued Liabilities and Other Long-Term Liabilities in the Consolidated Statements of
Financial Position, respectively. As of April 30, 2011, the entire deferred loss was recorded in Other Long-Term
Liabilities. Net losses that were reclassified from Accumulated Other Comprehensive Loss into Interest Expense
for fiscal years 2012, 2011 and 2010 were $0.8 million, $9.1 million and $20.4 million, respectively. Based on
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the amount in Accumulated Other Comprehensive Loss at April 30, 2012, approximately $1.4 million, net of tax,
of unrecognized loss would be reclassified into net income in the next twelve months.
Foreign Currency Contracts:
The Company may enter into forward exchange contracts to manage the Company’s exposure on certain
foreign currency denominated assets and liabilities. The forward exchange contracts are marked to market
through Foreign Exchange Losses on the Consolidated Statements of Income, and carried at their fair value on
the Consolidated Statements of Financial Position. Foreign currency denominated assets and liabilities are
remeasured at spot rates in effect on the balance sheet date, with the effects of changes in spot rates reported
in Foreign Exchange Losses. During fiscal years 2010 through 2012 the Company did not designate any
forward exchange contracts as hedges under current accounting standards as the benefits of doing so were not
material due to the short-term nature of the contracts. The fair value changes in the forward exchange contracts
substantially mitigated the changes in the value of the applicable foreign currency denominated assets and
liabilities. The fair values of the contracts were measured on a recurring basis using Level 2 inputs and for fiscal
years 2012, 2011 and 2010 the gain/(loss) recognized was $2.4 million, $0.6 million, and ($2.0 million),
respectively. As of both April 30, 2012 and 2011, the Company had settled its forward exchange contracts.
Note 14 - Commitments and Contingencies
The following schedule shows the composition of rent expense for operating leases (in thousands):
2012
2011
2010
Minimum Rental
$43,620
$39,676
$37,261
Less: Sublease Rentals
(501)
(665)
(1,709)
Total
$43,119
$39,011
$35,552
Future minimum payments under operating leases were $242.0 million at April 30, 2012. Annual minimum
payments under these leases for fiscal years 2013 through 2017 are approximately $38.8 million, $36.4 million,
$35.4 million, $34.7 million, and $32.4 million, respectively. Rent expense associated with operating leases that
include scheduled rent increases and tenant incentives, such as rent holidays or leasehold improvement
allowances, are recorded on a straight-line basis over the term of the lease.
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 15 - 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.
The Company recognizes 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, in the
Consolidated Statements of Financial Position. The change in the funded status of the plan is recognized within
Accumulated Other Comprehensive Loss in the Consolidated Statements of Financial Position. Plan assets and
obligations are measured as of the Company’s balance sheet date.
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The amounts in Accumulated Other Comprehensive Loss that are expected to be recognized as components of
net periodic benefit cost during the next fiscal year are as follows (in thousands):
United States
Non-U.S.
Total
Actuarial Loss
$5,128
$3,995
$9,123
Prior Service Cost
854
126
980
Total
$5,982
$4,121
$10,103
The Company has agreements with certain officers and senior management that provide for the payment of
supplemental retirement benefits after the termination of employment for 10 years or in a lifetime annuity. Under
certain circumstances, including a change of control as defined, the payment of such amounts could be
accelerated on a present value basis.
The components of net pension expense for the defined benefit plans and the weighted-average assumptions
were as follows (in thousands):
Service Cost
Interest Cost
2012
2011
2010
U.S.
Non-U.S.
U.S.
Non-U.S.
U.S.
Non-U.S.
$9,951
$6,062
$9,591
$6,681
$6,451
$4,644
12,042
15,862
10,758
16,118
10,033
14,022
Expected Return on Plan Assets
(11,679)
(17,412)
(10,118)
(15,542)
(7,424)
(12,044)
Net Amortization of Prior Service Cost
902
and Transition Asset
Recognized Net Actuarial Loss
4,444
133
670
770
117
638
223
4,343
2,915
2,377
1,399
Net Pension Expense
$15,660
$5,315
$15,344
$10,289
$12,075
$8,244
Discount Rate
Rate of Compensation Increase
Expected Return on Plan Assets
5.7%
4.0%
8.0%
5.6%
4.4%
6.8%
5.9%
4.0%
8.5%
5.7%
4.6%
6.8%
7.5%
4.0%
8.7%
6.9%
4.2%
6.8%
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 and $563.4 million, $532.2 million and
$419.4 million, respectively, as of April 30, 2012 and $234.4 million, $220.2 million, and $144.9 million,
respectively, as of April 30, 2011.
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The following table sets forth the changes in and the status of the plans’ assets and benefit obligations:
Dollars in thousands
CHANGE IN PLAN ASSETS
2012
2011
U.S.
Non-U.S.
U.S.
Non-U.S.
Fair Value of Plan Assets, Beginning of Year
$144,887
$268,268
$119,301
$223,396
Actual Return on Plan Assets
Employer Contributions
Employees’ Contributions
Benefits Paid
Foreign Currency Rate Changes
Fair Value, End of Year
9,676
15,656
-
(9,823)
-
8,033
9,283
1,937
(11,556)
(5,636)
19,409
12,606
-
(6,429)
-
19,369
12,176
1,960
(6,619)
17,986
$160,396
$270,329
$144,887
$268,268
CHANGE IN PROJECTED BENEFIT OBLIGATION
Benefit Obligation, Beginning of Year
$(208,969)
$(300,178)
$(182,064)
$(282,119)
Service Cost
Interest Cost
Employee Contributions
Actuarial Gain (Loss)
Benefits Paid
Foreign Currency Rate Changes
Amendments and Other
(9,951)
(12,042)
-
(30,980)
9,823
-
(1,280)
(6,062)
(15,862)
(1,937)
(21,846)
11,556
7,900
(301)
(9,591)
(6,681)
(10,758)
(16,118)
-
(11,615)
6,429
(1,960)
21,329
6,619
-
(21,151)
(1,370)
(97)
Benefit Obligation, End of Year
$(253,399)
$(326,730)
$(208,969)
$(300,178)
Funded Status
$(93,003)
$(56,401)
$(64,082)
$(31,910)
AMOUNTS RECOGNIZED IN THE STATEMENT OF
FINANCIAL POSITION:
Deferred Pension Asset
Current Pension Liability
Noncurrent Pension Liability
$ -
$ -
$ -
$ 49
(2,524)
(90,479)
(1,065)
(55,336)
(3,241)
(1,206)
(60,841)
(30,753)
Net Amount Recognized in Statement of Financial Position
$(93,003)
$(56,401)
$(64,082)
$(31,910)
AMOUNTS RECOGNIZED IN ACCUMULATED OTHER
COMPREHENSIVE INCOME CONSIST OF (before tax)
Net Actuarial Loss
Prior Service Cost
$(82,301)
$(65,859)
$(53,758)
$(35,840)
(3,062)
(1,185)
(2,684)
(1,120)
Total Accumulated Other Comprehensive Loss
$(85,363)
$(67,044)
$(56,442)
$(36,960)
Change in Accumulated Other Comprehensive Loss
$(28,921)
$(30,084)
$1,380
$25,042
WEIGHTED AVERAGE ASSUMPTIONS USED IN
DETERMINING ASSETS AND LIABILITIES
Discount Rate
Rate of Compensation Increase
4.7%
3.1%
5.0%
3.4%
5.7%
4.0%
5.6%
4.4%
Accumulated Benefit Obligations
$(242,780)
$(299,947)
$(196,316)
$(276,045)
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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 expected benefit payments as of
April 30, 2012. The spot rate curve used is based upon a portfolio of Moody’s-rated Aa3 (or higher) corporate
bonds. The discount rates for the other international plans were based on similar published indices with
durations comparable to that of each plan’s liabilities.
Basis for determining the expected asset return:
The expected long-term rates of return were estimated using market benchmarks for equities, real estate, and
bonds applied to each plan’s target asset allocation and are estimated by asset class including an anticipated
inflation rate. The expected long-term rates are then compared to the historic investment performance of the
plan assets as well as future expectations and estimated through consultation with investment advisors and
actuaries.
Pension plan assets/investments:
The investment guidelines for the defined benefit pension plans are established based upon an evaluation of
market conditions, plan liabilities, cash requirements for benefit payments, and tolerance for risk. Investment
guidelines include the use of actively and passively managed securities. The investment objective is to ensure
that funds are available to meet the plan’s benefit obligations when they are due. The investment strategy is to
invest in high quality and diversified equity and debt securities to achieve our long-term expectation. The plans’
risk management practices provide guidance to the investment managers, including guidelines for asset
concentration, credit rating and liquidity. Asset allocation favors a balanced portfolio, with a target allocation of
approximately 54% equity securities, 43% fixed income securities and cash, and 3% real estate. Due to volatility
in the market, the target allocation is not always desirable and asset allocations will fluctuate between
acceptable ranges of plus or minus 5%. The Company regularly reviews the investment allocations and
periodically rebalances investments to the target allocations. The Company categorizes its pension assets into
three levels based upon the assumptions (inputs) used to price the assets. Level 1 provides the most reliable
measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels
are defined as follows:
Level 1: Unadjusted quoted prices in active markets for identical assets.
Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for similar
assets in active markets or quoted prices for identical assets in inactive markets.
Level 3: Unobservable inputs reflecting assumptions about the inputs used in pricing the asset.
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The Company did not maintain any level 3 assets during fiscal years 2012 and 2011. The following tables set
forth, by level within the fair value hierarchy, pension plan assets at their fair value as of April 30 (in thousands):
2012
2011
Level 1
Level 2
Total
Level 1
Level 2
Total
U.S. Plan Assets
Equity Securities:
U.S. Commingled Funds
$ -
$68,750
$68,750
$ -
$56,937
$56,937
Non-U.S. Commingled Funds
Fixed Income Commingled Funds
Real Estate
-
-
-
29,208
51,630
10,808
29,208
51,630
10,808
-
-
-
30,632
47,825
9,493
30,632
47,825
9,493
Total U.S. Plan Assets
$ -
$160,396
$160,396
$ -
$144,887
$144,887
Non-U.S. Plan Assets
Equity Securities:
U.S. Equities
Non-U.S. Equities
$14,720
$14,556
$29,276
$12,500
$14,635
$27,135
Balanced Managed Funds
9,761
1,542
Fixed Income Securities:
13,856
71,851
85,707
11,303
Government/Sovereign Securities
Fixed Income Funds
15,738
17,483
32,937
51,922
48,675
69,405
Other:
Real Estate/Other
3,027
12,586
Cash and Cash Equivalents
10,350
-
15,613
10,350
17,798
9,471
14,416
18,046
3,866
10,363
74,850
1,532
92,648
11,003
28,090
51,372
42,506
69,418
11,329
-
15,195
10,363
Total Non-U.S. Plan Assets
$84,935
$185,394
$270,329
$86,460
$181,808
$268,268
Total Plan Assets
$84,935
$345,790
$430,725
$86,460
$326,695
$413,155
Expected employer contributions to the defined benefit pension plans in fiscal year 2013 will be approximately
$20.8 million, including $8.7 million of minimum amounts required for the Company’s 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.
Benefit payments from all plans are expected to approximate $14.7 million in fiscal year 2013, $17.6 million in
fiscal year 2014, $18.4 million in fiscal year 2015, $20.4 million in fiscal year 2016, $21.6 million in fiscal year
2017 and $132.1 million for fiscal years 2018 through 2022.
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
recognized in the Consolidated Statements of Financial Position as of April 30, 2012 and 2011 was $5.7 million
and $4.4 million, respectively. Annual expenses for these plans for fiscal years 2012, 2011 and 2010 were $0.7
million, $0.6 million and $0.5 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 $9.1
million, $8.5 million and $8.4 million in fiscal years 2012, 2011, and 2010, respectively.
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Note 16 – Stock-Based Compensation
All equity compensation plans have been approved by security holders. At the meeting of shareholders held in
September 2009, shareholders approved the 2009 Key Employee Stock Plan (“the Plan”). Under the Plan,
qualified employees are eligible to receive awards that may include stock options, performance-based stock
awards and other 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, 2012, there were approximately 6,599,328 securities
remaining available for future issuance under the Plan. The Company issues treasury shares to fund awards
issued under the Plan.
Stock Option Activity:
Under the terms of the Company’s stock option plan, 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 for options granted each period using the
Black-Scholes option-pricing model and the significant weighted average assumptions used in their
determination. The expected life represents an estimate of the period of time stock options will be outstanding
based on the historical exercise behavior of option recipients. The risk-free interest rate is based on the
corresponding U.S. Treasury yield curve in effect at the time of the grant. The expected volatility is based on the
historical volatility of the Company’s Common Stock price over the estimated life of the option while, the
dividend yield is based on the expected dividend payments to be made by the Company.
For the Twelve Months
Ending April 30,
2012
2011
2010
Fair Value of Options on Grant Date
$14.11
$11.97
$11.32
Weighted Average assumptions:
Expected Life of Options (years)
7.3
7.7
Risk-Free Interest Rate
Expected Volatility
Expected Dividend Yield
2.3%
29.0%
1.6%
2.7%
28.9%
1.6%
Fair Value of Common Stock on Grant Date
$49.55
$40.02
7.8
3.3%
29.9%
1.6%
$35.04
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A summary of the activity and status of the Company’s stock option plans follows:
2012
2011
2010
Stock Options
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Term
(in years)
Average
Intrinsic
Value
(in
millions)
Options
(in 000’s)
Weighted
Average
Exercise
Price
Options
(in 000’s)
Weighted
Average
Exercise
Price
Options
(in 000’s)
Outstanding at Beginning of Year
4,258
$38.52
4,987
$36.51
5,722
$34.05
Granted
Exercised
Expired or Forfeited
411
$49.55
(539)
$29.97
-
-
Outstanding at End of Year
4,130
$40.74
Exercisable at End of Year
2,301
$40.08
Vested and Expected to Vest in the
3,992
$40.82
Future at April 30, 2012
4.5
2.9
4.5
$23.7
$14.5
$22.6
413
$40.02
695
$35.04
(1,133)
$30.23
(1,407)
$25.74
(9)
$32.54
(23)
$40.37
4,258
$38.52
4,987
$36.51
2,218
$35.40
2,513
$31.47
The intrinsic value is the difference between the Company’s common stock price and the option grant price. The
total intrinsic value of options exercised during fiscal years 2012, 2011 and 2010 was $8.2 million, $23.5 million
and $22.9 million, respectively. The total grant date fair value of stock options vested during fiscal year 2012
was $10.5 million.
As of April 30, 2012, there was $5.7 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 2.2 years on a weighted
average basis.
The following table summarizes information about stock options outstanding and exercisable at April 30, 2012:
Options Outstanding
Options Exercisable
Number of
Options
(in 000’s)
Weighted
Average
Remaining
Term (in years)
Weighted
Average
Exercise Price
Number of
Options
(in 000’s)
Weighted
Average
Exercise Price
125
1,939
2,066
4,130
1.0
3.6
5.5
4.5
25.21
35.36
46.72
40.74
125
1,246
930
2,301
$25.21
$35.54
$48.15
$40.08
Range of
Exercise Prices
$21.44 to $25.32
$31.89 to $38.55
$40.02 to $49.55
Total/Average
Performance-Based and Other Restricted Stock Activity:
Under the terms of the Company’s long-term incentive plans, performance-based restricted stock awards are
payable in restricted shares of the Company’s Class A Common Stock upon the achievement of certain three-
year financial performance-based targets. 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.
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The Company may also grant individual restricted awards of the Company’s Class A Common Stock to 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
fiscal years 2012, 2011 and 2010 was as follows (shares in thousands):
2012
2011
2010
Weighted
Average
Grant Date
Value
Restricted
Shares
Restricted
Shares
Restricted
Shares
Nonvested Shares at Beginning of Year
Granted
Change in shares due to performance
Vested and Issued
Forfeited
Nonvested Shares at End of Year
904
272
31
(159)
(6)
1,042
$40.15
$49.42
$35.04
$47.06
$48.88
$41.31
926
255
78
(349)
(6)
904
682
363
191
(292)
(18)
926
As of April 30, 2012, there was $19.3 million of unrecognized share-based compensation cost related to
performance-based and other restricted stock awards, which is expected to be recognized over a period up to 5
years, or 3.0 years on a weighted average basis. Compensation expense for restricted stock awards is
measured using the closing market price of the Company’s Class A Common Stock at the date of grant. The
total grant date value of shares vested during fiscal years 2012, 2011 and 2010 was $7.5 million, $13.5 million
and $10.2 million, respectively.
Director Stock Awards:
Under the terms of the Company’s Director Stock Plan (the “Director Plan”), each non-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 12,474; 11,144 and 14,130 shares awarded under the
Director Plan for fiscal years 2012, 2011 and 2010, respectively.
Note 17 - Capital Stock and Changes in Capital Accounts
Each share of the Company’s Class B Common Stock is convertible into one share of Class A Common Stock.
The holders of Class A stock are entitled to elect 30% of the entire Board of Directors and the holders of Class B
stock are entitled to elect the remainder. On all other matters, each share of Class A stock is entitled to one
tenth of one vote and each share of Class B stock is entitled to one vote.
During fiscal year 2011, the Board of Directors of the Company approved a share repurchase program for an
additional four million shares of Class A or Class B Common Stock. The approval of this repurchase program
increased the number of shares that may be purchased from time to time in the open market and through
privately negotiated transactions to eight million. During fiscal year 2012, the Company repurchased 1,864,700
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shares at an average price $46.69 per share. As of April 30, 2012, the Company has authorization from its
Board of Directors to purchase up to 2,356,525 additional shares.
Note 18 - Segment Information
The Company provides content and content-enabled digital services to customers worldwide. The Company
maintains publishing, marketing and distribution centers principally in Asia, Australia, Canada, Germany, the
United Kingdom and the United States. Below is a description of the Company’s three operating segments.
Scientific, Technical, Medical and Scholarly provides content and content-enabled digital services 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. Products include journals, books, major reference works, databases,
clinical decision support tools and laboratory manuals and workflow tools. Publishing areas include the physical
sciences, health sciences, social science and humanities and life sciences. Products are sold and distributed
globally, online and in print through multiple channels, including research libraries and library consortia,
independent subscription agents, direct sales to professional society members, bookstores, online booksellers
and other customers. Publishing centers include Australia, Germany, India, Singapore, the United Kingdom and
the United States.
Professional/Trade acquires, develops and publishes books, workflow solutions, certification and training
services and other information services in the subject areas of business, technology, architecture, cooking,
psychology, professional education, travel, health, 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 websites. Professional/Trade customers are professionals, consumers and students worldwide. Publishing
centers include Asia, Australia, Canada, Germany, the United Kingdom and the United States.
Global Education publishes educational content for two and four-year colleges and universities, for-profit
career colleges, advanced placement classes, as well as secondary schools in Australia. Global Education
products focus on courses in the sciences, engineering, mathematics, business/accounting, geography,
computer science, statistics, education, culinary, hospitality, psychology and world languages. Global Education
delivers its content, tools and resources to students, faculty and institutions principally through college
bookstores and online distributors, with customers having access to content in muti-media formats as well as
the traditional textbook. The Company maintains centers in Asia, Australia, Canada, India, the United Kingdom
and the United States.
Shared Services - The Company reports 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.
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Segment information is as follows (in thousands):
2012
For the years ended April 30,
2011
2010
Revenue
Scientific, Technical, Medical and Scholarly
$1,040,727
Professional/Trade
Global Education
433,658
308,357
$998,902
437,088
306,561
$986,683
429,988
282,391
Total
$1,782,742
$1,742,551
$1,699,062
Direct Contribution to Profit
Scientific, Technical, Medical and Scholarly
Professional/Trade
Global Education
Total
Shared Services and Administration Costs
Distribution
Technology Services
Finance
Other Administration
$452,274
111,898
104,244
$668,416
$(109,079)
(144,418)
(45,106)
(89,394)
$424,797
95,496
101,044
$621,337
$(113,010)
(125,766)
(45,243)
(89,170)
$405,241
100,196
86,212
$591,649
$(110,858)
(102,634)
(47,294)
(88,271)
Operating Income
Foreign Exchange Transaction Losses
Interest Expense & Other, net
Income Before Taxes
Total Assets
Total
$(387,997)
$(373,189)
$(349,057)
$280,419
(2,261)
(6,063)
$272,095
$248,148
(2,188)
(14,900)
$231,060
$242,592
(10,883)
(31,500)
$200,209
Scientific, Technical, Medical and Scholarly
$1,444,114
$1,486,052
$1,415,979
Professional/Trade
Global Education
Corporate/Shared Services
548,751
156,286
383,795
465,752
157,822
320,515
469,273
156,676
266,682
Total
$2,532,946
$2,430,141
$2,308,610
Expenditures for Long Lived Assets
Scientific, Technical, Medical and Scholarly
Professional/Trade
Global Education
Corporate/Shared Services
Total
Depreciation and Amortization
Scientific, Technical, Medical and Scholarly
Professional/Trade
Global Education
Corporate/Shared Services
$24,454
103,934
20,729
62,935
$212,052
$56,335
34,734
29,792
17,230
$24,636
$21,960
20,881
21,545
45,968
23,325
18,449
42,390
$113,030
$106,124
$54,423
34,954
27,672
15,457
$52,215
32,191
25,125
13,348
Total
$138,091
$132,506
$122,879
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Export sales from the United States to unaffiliated customers amounted to approximately $151.1 million, $149.8
million and $140.5 million in fiscal years 2012, 2011, and 2010, respectively. The pretax income for consolidated
operations outside the United States was approximately $171.3 million, $162.8 million and $133.1 million in
2012, 2011, and 2010, respectively.
Revenue from external customers based on the location of the customer and long-lived assets by geographic
area were as follows (in thousands):
Revenue
Long-Lived Assets
2012
2011
2010
2012
2011
2010
United States
$893,662
$888,833
$865,519
$664,112
$557,263
$734,512
United Kingdom
135,781
117,072
120,953
1,078,704
1,113,946
889,921
Germany
88,314
91,502
91,954
133,078
146,037
132,783
Asia
Australia
Canada
251,360
242,177
234,585
8,506
7,239
81,150
74,797
78,722
79,227
79,194
70,566
61,092
64,722
5,860
5,924
Other Countries
257,678
245,018
236,291
-
-
3,454
57,447
5,635
-
Total
$1,782,742
$1,742,551
$1,699,062
$1,951,352
$1,895,131
$1,823,752
Note 19 – Subsequent Events
Payments Related to Tax Audits in Germany
In fiscal year 2003, the Company merged several of its German subsidiaries into a new operating entity which enabled
the Company to increase (“step-up”) the tax deductible net asset basis of the merged subsidiaries to fair market value.
The expected tax benefits to be derived from the step-up are approximately 50 million euros claimed as amortization
over 15 years beginning in fiscal year 2003. The Company’s management and its advisors believe that it is “more likely
than not” to successfully defend that the tax treatment was proper and in accordance with German tax regulations. The
circumstances are not unique to the Company.
As part of its routine tax audit process, the German tax authorities notified the Company in May 2012, they are
challenging the Company’s tax position with respect to the amortization of certain stepped-up assets.
In June 2012, the Company made a 24 million euro deposit related to amortization claimed on certain “stepped-up”
assets through fiscal year 2007. Under German tax law, the Company must pay all contested taxes and the related
interest to have the right to defend its position challenged by authorities. The Company expects that it will be required
to deposit additional amounts up to 33 million euros plus interest in future periods until the issue is resolved. The
challenge is expected to ultimately be decided by a court and could take several years to reach resolution. If the
Company is successful, as expected, all funds will be returned with 6% simple interest, based on current German
legislation.
Planned Fiscal year 2013 Restructuring Initiatives
Due to the Company’s ongoing transition and transformation to digital products and services, we have identified certain
activities that will either be discontinued, outsourced, or relocated to a lower cost region. As a result, the Company will
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record a restructuring charge of approximately $4.5 million in the first quarter of fiscal year 2013 for redundancy and
related separation benefits. These charges are expected to be fully recovered within 18 months.
Supplementary Financial Information
Results By Quarter (Unaudited)
Dollars in millions, except per share data
Revenue
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Fiscal Year
Gross Profit
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Fiscal Year
Operating Income
First Quarter
Second Quarter
Third Quarter (c)
Fourth Quarter
Fiscal Year
Net Income
First Quarter (a)
Second Quarter
Third Quarter (b,c)
Fourth Quarter
Fiscal Year
Income Per Share
First Quarter (a)
Second Quarter
Third Quarter (b,c)
Fourth Quarter
Fiscal Year
2012
430.1
447.0
451.1
454.5
1,782.7
300.4
314.3
309.0
315.6
1,239.3
60.2
72.0
78.5
69.7
280.4
50.8
50.8
62.9
48.2
212.7
$
$
$
$
$
$
$
$
2012
Diluted
$
0.82
0.83
1.03
0.80
3.47
$
2011
407.9
441.8
447.9
445.0
1,742.6
282.7
302.3
309.9
308.6
1,203.5
63.1
77.7
69.7
37.6
248.1
44.0
53.7
45.6
28.6
171.9
$
$
$
$
$
$
$
$
Basic
0.84
0.84
1.05
0.81
3.53
$
$
$
$
2011
Diluted
Basic
0.72
0.88
0.74
0.46
2.80
$
$
0.74
0.89
0.76
0.47
2.86
(a)
In the first quarters of fiscal years 2012 and 2011, the Company recorded non-cash deferred tax benefits of $8.8 million, or $0.14 per
diluted share, and $4.2 million, or $0.07 per diluted share, respectively, principally associated with new tax legislation enacted in the
U.K. that reduced the U.K. statutory income tax rates by 2% and 1%, respectively. The benefits recognized by the Company reflect
the remeasurement of all applicable U.K. deferred tax balances to the new income tax rates as of April 1, 2012 and 2011,
respectively.
(b)
In the third quarter of fiscal year 2012, the Company recorded a $7.5 million tax benefit, or $0.12 per diluted share, related to the
reversal of an income tax reserve recorded in conjunction with the Blackwell acquisition in fiscal year 2007.
(c)
In the third quarter of fiscal year 2011, the Company recorded a $9.3 million bad debt provision ($6.0 million after taxes), or $0.10 per
diluted share, related to the Company’s customer, Borders Group, Inc. (“Borders”). On February 16, 2011, Borders filed a petition for
reorganization relief under Chapter 11 of the U.S. Bankruptcy code.
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JOHN WILEY & SONS, INC., AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED APRIL 30, 2012, 2011, AND 2010
Schedule II
(Dollars in thousands)
Description
Year Ended April 30, 2012
Additions/
(Deductions)
Balance at
Beginning
of Period
Charged to
Cost &
Expenses
Deductions
From
Reserves(2)
Balance
at End of
Period
Allowance for Sales Returns (1)
$48,909
$82,901
$96,037
$35,773
Allowance for Doubtful Accounts
$19,642
$2,111
$14,903
$6,850
Allowance for Inventory Obsolescence
$36,917
$23,074
$26,059
$33,932
Year Ended April 30, 2011
Allowance for Sales Returns (1)
$55,311
$96,841
$103,243
$48,909
Allowance for Doubtful Accounts
$6,859
$13,989
$1,206
$19,642
Allowance for Inventory Obsolescence
$39,674
$19,216
$21,973
$36,917
Year Ended April 30, 2010
Allowance for Sales Returns (1)
$55,207
$102,395
$102,291
$55,311
Allowance for Doubtful Accounts
$5,655
$3,177
$1,973
$6,859
Allowance for Inventory Obsolescence
$36,329
$28,699
$25,354
$39,674
(1) Allowance for sales returns represents anticipated returns net of a recovery 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 reduction of accounts receivable with corresponding increases in Inventory and a reduction in
Accounts and royalties payable (See Note 2).
(2) Deductions from reserves include foreign exchange translation adjustments and accounts written off, less
recoveries.
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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
performed under the supervision and with the participation of the Company’s management, including the
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the
Company’s disclosure controls and procedures as such term is defined in Rule 13a-15(e) of the Exchange
Act. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that
the Company’s disclosure controls and procedures provide reasonable assurance that information required
to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded,
processed, summarized and reported within the time periods specified in the Securities and Exchange
Commission rules and forms and (ii) accumulated and communicated to the Company’s management,
including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure.
Management’s Report on Internal Control over Financial Reporting: 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 –
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, 2012.
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 2012.
Item 9B. Other Information
None
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The name, age and background of each of the directors nominated for election are contained under the
caption “Election of Directors” in the Proxy Statement for our 2012 Annual Meeting of Shareholders (“2012
Proxy Statement”) and are incorporated herein by reference.
Information on the audit committee financial experts is contained in the 2012 Proxy Statement under the
caption “Report of the Audit Committee” and is incorporated herein by reference.
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Information on the Audit Committee Charter is contained in the 2012 Proxy Statement under the caption
“Committees of the Board of Directors and Certain Other Information concerning the Board”
Information with respect to the Company’s Corporate Governance principles is publicly available on the
Company’s Corporate Governance website at www.wiley.com/WileyCDA/Section/id-301708.html.
Executive Officers
Set forth below are the executive officers of the Company as of April 30, 2012. Each of the officers listed 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.
PETER BOOTH WILEY - 69
September 2002 - Chairman of the Board, John Wiley and Sons, Inc. (Director since 1984)
STEPHEN M. SMITH – 57
May 2011 - President and Chief Executive Officer, John Wiley and Sons, Inc.
June 2009 - Executive Vice President and Chief Operating Officer – responsible for all publishing,
editorial, sales and marketing and business development activities globally.
May 2007 - Senior Vice President, Wiley Europe, Asia and Australia – responsible for all company
activities and operations in the world outside North America
ELLIS E. COUSENS – 60
2001 - Executive Vice President and Chief Financial and Operations Officer – responsible for the
Company’s worldwide financial organization, strategic planning and business development, internal
audit, information technology, distribution and investor relations.
MARK J. ALLIN – 50
August 2010 - Senior Vice President, Professional and Trade Publishing – responsible for leading the
Company’s global Professional/Trade business.
January 2010 - Vice President and Chief Operating Officer, Professional and Trade – responsible for P/T
profitability and marketing operations.
July 2009 - Vice President, Asia/Pacific and International Development – responsible for managing
Wiley’s business operations in Asia and Australia.
July 2006 - Managing Director, Wiley Asia – responsible for managing Wiley’s business operations in
Asia
WILLIAM ARLINGTON – 63
1996 - Senior Vice President, Human Resources – responsible for managing the Company’s Global
Human Resources organization.
JOSEPH S. HEIDER – 53
May 2011 - Senior Vice President, Global Education – responsible for leading the Company’s Global
Education business.
January 2011 - Senior Vice President, US Higher Education – responsible for leading the Company’s US
Higher Education business.
May 2010 - Vice President and Chief Operating Officer, Higher Education – responsible for leading the
Company’s US Higher Education Product Development and New Business Development and
Production Groups.
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October 2000 - Vice President, Product and E-Business Development – responsible for leading the
Company’s Higher Education Product and New Business Development Group.
GARY M. RINCK – 60
2004 - Senior Vice President, General Counsel – responsible for all of the Company’s legal and corporate
governance functions at Wiley.
STEVEN J. MIRON – 51
May 2010 - Senior Vice President, Scientific, Technical, Medical and Scholarly – responsible for leading
the Company’s Scientific, Technical, Medical and Scholarly business.
November 2009 - Chief Operating Officer, Scientific, Technical, Medical and Scholarly business –
responsible for the STMS's editorial strategy and operations as well as product marketing.
February 2007 - Vice President and Managing Director, Physical Science – responsible for leading
STMS's Physical Sciences business.
VINCENT MARZANO – 49
September 2006 - Vice President, Treasurer – responsible for global treasury operations, insurable risk
management, accounts receivable, and credit and collections.
EDWARD J. MELANDO – 56
2002 - Vice President, Corporate Controller and Chief Accounting Officer – responsible for Financial
Reporting, Taxes and the Financial Shared Services.
MICHAEL PRESTON – 44
February 2009 - Corporate Secretary – responsible for Board administration and compliance with
corporate regulatory requirements.
August 2005 - Senior Assistant Corporate Secretary of Sunoco, Inc. – responsible for the governance of
the company’s subsidiaries, joint ventures and limited liability companies including Sunoco Logistics
Partners, L.P. and Sun Coke entities.
Item 11. Executive Compensation
Information on compensation of the directors and executive officers is contained in the 2012 Proxy
Statement under the captions “Directors’ Compensation” and “Executive Compensation,” respectively, and is
incorporated herein by reference.
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information on the beneficial ownership reporting for the directors and executive officers is contained under
the caption “Section 16(a) Beneficial Ownership Reporting Compliance” within the “Beneficial Ownership of
Directors and Management” section of the 2012 Proxy Statement and is incorporated herein by reference.
Information on the beneficial ownership reporting for all other shareholders that own 5% of more of the
Company’s Class A or Class B Common Stock is contained under the caption “Voting Securities, Record
Date, Principal Holders” in the 2012 Proxy Statement and is incorporated herein by reference.
The following table summarizes the Company’s equity compensation plan information as of April 30, 2012:
Plan Category
Equity compensation plans approved by
shareholders
Equity compensation plans not approved
by shareholders
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights
(a)
Weighted-average
exercise price of
outstanding
options, warrants
and rights
(b)
Number of
securities remaining
available for future
issuance under equity
compensation plans
(excluding securities
reflected in column
(a) (c)
5,171,750 (1)
$40.74
6,599,328
-
-
-
Total
5,171,750
$40.74
6,599,328
(1) This amount includes the following awards issued under the 2009 Key Employee Stock Plan:
4,130,210 shares issuable upon the exercise of outstanding stock options with a weighted average
exercise price of $40.74.
1,041,540 non-vested performance-based and other restricted stock awards. Since these awards have
no exercise price, they are not included in the weighted average exercise price calculation.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information on related party transactions and the policies and procedures for reviewing and approving
related party transactions are contained under the caption “Transactions with Related Persons” within the
“Board and Committee Oversight of Risk” section of the 2012 Proxy Statement and are incorporated herein
by reference.
Information on director independence is contained under the caption “Director Independence” within the
“Board of Directors and Corporate Governance” section of the 2012 Proxy Statement.
Item 14. Principal Accountant Fees and Services
Information required by this item is contained in the 2012 Proxy Statement under the caption “Report of the
Audit Committee” and is incorporated herein by reference.
-85-
PART IV
Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)
Financial Statements and Schedules are included in the attached index on page 3 and are filed as part of
this report
(b)
Reports on Form 8-K
Earnings release on the fiscal year 2012 results issued on Form 8-K dated June 19, 2012, which included
certain condensed financial statements of the Company.
(c)
2.1
2.2
3.1
3.2
3.3
3.4
3.5
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
Exhibits
Agreement and Plan of Merger dated as of August 12, 2001, among the Company, HMI Acquisition Corp.
and Hungry Minds, Inc. (incorporated by reference to the Company’s Report on Form 8-K dated as of
August 12, 2001).
Scheme of Arrangement dated as of November 21, 2006, among the Company, Wiley Europe Investment
Holdings Limited and Blackwell Publishing (Holdings) Limited (incorporated by reference to the Company’s
Report on Form 8-K dated as of November 21, 2006).
Restated Certificate of Incorporation (incorporated by reference to the Company’s Report on Form 10-K for
the year ended April 30, 1992).
Certificate of Amendment of the Certificate of Incorporation dated October 13, 1995 (incorporated by
reference to the Company’s Report on Form 10-K for the year ended April 30, 1997).
Certificate of Amendment of the Certificate of Incorporation dated as of September 1998 (incorporated by
reference to the Company’s Report on Form 10-Q for the quarterly period ended October 31, 1998).
Certificate of Amendment of the Certificate of Incorporation dated as of September 1999 (incorporated by
reference to the Company’s Report on Form 10-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
Company’s Report on Form 10-K for the year ended April 30, 2008).
Amended and Restated Credit Agreement dated as of November 2, 2011, among the Company and Bank of
America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, and Other Lenders Party Hereto
(incorporated by reference to the Company’s Report on Form 10-Q for the quarterly period ended October
31, 2011).
Agreement of Lease dated as of August 4, 2000, between, Block A South Waterfront Development L.L.C.,
as Landlord, and the Company, as Tenant (incorporated by reference to the Company’s Report on Form 10-
Q for the quarterly period ended July 31, 2000).
2009 Director Stock Plan (incorporated by reference to the Company’s Report on Form 10-Q for the
quarterly period ended October 31, 2009).
2009 Executive Annual Incentive Plan (incorporated by reference to the Company’s Report on Form 10-Q
for the quarterly period ended October 31, 2011).
Amended 2009 Key Employee Stock Plan (Revised September 15, 2011 and incorporated by reference to
the Company’s Report on Form 10-Q for the quarterly period ended October 31, 2011).
Supplemental Executive Retirement Plan as Amended and Restated effective as of January 1, 2009
(incorporated by reference to the Company’s Report on Form 10-K for the year ended April 30, 2010).
Amendments A and B to the Supplemental Executive Retirement Plan as Amended and Restated Effective
January 1, 2009 (incorporated by reference to the Company’s Report on Form 10-Q for the quarterly period
ended July 31, 2010).
Supplemental Benefit Plan Amended and Restated as of January 1, 2009, including amendments through
August 1, 2010 (incorporated by reference to the Company’s Report on Form 10-Q for the quarterly period
ended January 31, 2011).
10.9
10.10
Deferred Compensation Plan as Amended and Restated effective as of January 1, 2008 (incorporated by
reference to the Company’s Report on Form 10-K for the year ended April 30, 2010).
Deferred Compensation Plan for Directors’ 2005 & After Compensation (incorporated by reference to the
Report on Form 8-K, filed December 21, 2005).
-86-
10.11
Form of the Fiscal Year 2013 Qualified Executive Long Term Incentive Plan.
10.12
Form of the Fiscal Year 2013 Qualified Executive Annual Incentive Plan.
10.13
Form of the Fiscal Year 2013 Executive Annual Strategic Milestones Incentive Plan.
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
Form of the Fiscal Year 2012 Qualified Executive Long Term Incentive Plan (incorporated by reference to
the Company’s Report on Form 10-K for the year ended April 30, 2011).
Form of the Fiscal Year 2012 Qualified Executive Annual Incentive Plan (incorporated by reference to the
Company’s Report on Form 10-Q for the quarterly period ended July 31, 2011).
Form of the Fiscal Year 2012 Executive Annual Strategic Milestones Incentive Plan (incorporated by
reference to the Company’s Report on Form 10-Q for the quarterly period ended July 31, 2011).
Form of the Fiscal Year 2011 Qualified Executive Long Term Incentive Plan (incorporated by reference to
the Company’s Report on Form 10-K for the year ended April 30, 2010).
Form of the Fiscal Year 2011 Qualified Executive Annual Incentive Plan (incorporated by reference to the
Company’s Report on Form 10-K for the year ended April 30, 2010).
Form of the Fiscal Year 2011 Executive Annual Strategic Milestones Incentive Plan (incorporated by
reference to the Company’s Report on Form 10-K for the year ended April 30, 2010).
Senior Executive Employment Agreement to Arbitrate dated as of April 29, 2003 (incorporated by reference
to the Company’s Report on Form 10-K for the year ended April 30, 2003).
Schedule of individual officers party to Senior Executive Employment Agreement to Arbitrate dated as of
April 29, 2003 (incorporated by reference to the Company’s Report on Form 10-Q for the quarterly period
ended October 31, 2009).
Senior Executive Non-competition and Non-Disclosure Agreement dated as of April 29, 2003 (incorporated
by reference to the Company’s Report on Form 10-K for the year ended April 30, 2003).
Schedule of individual officers party to Senior Executive Non-Competition and Non-Disclosure Agreement
dated as of April 29, 2003 (incorporated by reference to the Company’s Report on Form 10-Q for the
quarterly period ended October 31, 2009).
Senior executive Employment Agreement dated as of September 17, 2010 and effective as of May 1, 2011,
between Stephen M. Smith and the Company (incorporated by reference to the Company’s Report on Form
8-K dated as of September 22, 2010)
Senior executive Employment Agreement dated as of December 1, 2008, between Ellis E. Cousens and the
Company (incorporated by reference to the Company’s Report on Form 10-Q for the quarterly period ended
January 31, 2009).
Senior executive Employment Agreement letter dated as of March 15, 2004, between Gary M. Rinck and the
Company (incorporated by reference to the Company’s Report on Form 10-K for the year ended April 30,
2011).
Senior executive Employment Agreement dated as of May 1, 2010, between Stephen J. Miron and the
Company (incorporated by reference to the Company’s Report on Form 10-K for the year ended April 30,
2011).
10.28
Senior executive Employment Agreement dated as of November 1, 2011, between Mark J. Allin and the
Company.
21*
23*
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.
31.2*
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*
32.2*
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.
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
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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
Dated: June 26, 2012
JOHN WILEY & SONS, INC.
(Company)
By:
/s/ Stephen M. Smith
Stephen M. Smith
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Company and in the capacities and on the dates indicated.
Signatures
Titles
Dated
/s/ Stephen M. Smith
Stephen M. Smith
/s/ Ellis E. Cousens
Ellis E. Cousens
President and Chief Executive Officer
June 26, 2012
Director
Executive Vice President and
June 26, 2012
Chief Financial and Operations Officer
/s/ Edward J. Melando
Vice President, Controller and
June 26, 2012
Edward J. Melando
Chief Accounting Officer
/s/ Peter Booth Wiley
Peter Booth Wiley
/s/ Bradford Wiley II
Bradford Wiley II
/s/ Warren J. Baker
Warren J. Baker
/s/ William J. Pesce
William J. Pesce
/s/ William B. Plummer
William B. Plummer
/s/ Kalpana Raina
Kalpana Raina
/s/ Mari J. Baker
Mari J. Baker
/s/ Jean-Lou Chameau
Jean-Lou Chameau
/s/ Mathew S. Kissner
Mathew S. Kissner
Director
Director
Director
Director
Director
Director
Director
Director
Director
/s/ Raymond McDaniel, Jr.
Director
Raymond McDaniel, Jr.
/s/ Eduardo R. Menascé
Eduardo R. Menascé
Director
/s/ Linda Katehi
Director
-88-
June 26, 2012
June 26, 2012
June 26, 2012
June 26, 2012
June 26, 2012
June 26, 2012
June 26, 2012
June 26, 2012
June 26, 2012
June 26, 2012
June 26, 2012
June 26, 2012
Linda Katehi
SUBSIDIARIES OF JOHN WILEY & SONS, INC. (1)
As of April 30, 2012
Exhibit 21
John Wiley & Sons International Rights, Inc.
JWS HQ, LLC
JWS DCM, LLC
Wiley Periodicals, Inc.
Wiley Publishing Services, Inc.
Inscape Holdings, Inc.
Inscape Midco, Inc
CLC Holding Co.
Inscape Publishing Inc.
Wiley Publishing LLC
Wiley India Private Ltd.
WWL Corp.
Wiley International, LLC
John Wiley & Sons UK LLP
John Wiley & Sons UK 2 LLP
Wiley Japan KK
Wiley Europe Investment Holdings, Ltd.
Wiley U.K. (Unlimited Co.)
Wiley Europe Ltd.
John Wiley & Sons, Ltd.
Wiley Heyden Ltd.
Wiley Distribution Services Ltd.
Blackwell Publishing (Holdings) Ltd.
Blackwell Publishing Ltd.
John Wiley & Sons Singapore Pte. Ltd.
Jurisdiction
In Which
Incorporated
Delaware
New Jersey
New Jersey
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
India
Delaware
Delaware
United Kingdom
United Kingdom
Japan
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Singapore
John Wiley & Sons Commercial Service Co. Ltd. China
John Wiley & Sons GmbH
Wiley-VCH Verlag GmbH & Co. KGaA
Blackwell Science Ltd.
Blackwell Science (Overseas Holdings)
John Wiley & Sons LTD A/S
Blackwell Verlag GmbH
Wiley Publishing Japan KK
Blackwell Science (HK) Ltd.
Wiley Publishing Australia Pty Ltd.
John Wiley and Sons Australia, Ltd.
Blackwell Publishing Asia Pty. Ltd
John Wiley & Sons Canada Limited
John Wiley & Sons (HK) Limited
Germany
Germany
United Kingdom
United Kingdom
Denmark
Germany
Japan
Hong Kong
Australia
Australia
Australia
Canada
Hong Kong
(1) The names of other subsidiaries that would not constitute a significant subsidiary in the aggregate have been
omitted.
-89-
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Exhibit 23
The Board of Directors and Shareholders
John Wiley & Sons, Inc.:
We consent to the incorporation by reference in the Registration Statement No. 33-62605 on Form S-8 of John Wiley &
Sons, Inc. (the “Company”) of our reports dated June 26, 2012, with respect to the consolidated statements of financial
position of John Wiley & Sons, Inc. as of April 30, 2012 and 2011, and the related consolidated statements of income,
shareholders’ equity and comprehensive income, and cash flows, for each of the years in the three-year period ended
April 30, 2012, and the related financial statement schedule, and the effectiveness of internal control over financial
reporting as of April 30, 2012, which reports appear in the April 30, 2012 annual report on Form 10-K of John Wiley &
Sons, Inc.
/s/ KPMG LLP
Short Hills, New Jersey
June 26, 2012
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CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Stephen M. Smith, President and Chief Executive Officer of John Wiley & Sons, Inc. (the “Company”), hereby certify
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. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure
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. Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in
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. Disclosed in this report any change in the Company’s internal control over financial reporting that
occurred during the Company’s most recent fiscal quarter (the Company’s fourth quarter in the case of
an annual report) that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting; and
5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of
directors (or persons performing the equivalent function):
a. all significant deficiencies and material weaknesses in the design or operation of internal controls over
financial reporting that are reasonably likely to adversely affect the Company’s ability to record,
process, summarize and report financial information; and
b. any fraud, whether or not material, that involves management or other employees who have a
significant role in the Company’s internal control over financial reporting.
By:
/s/ Stephen M. Smith
Stephen M. Smith
President and Chief Executive Officer
Dated: June 26, 2012
-91-
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.
(the “Company”), hereby certify that:
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. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure
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. Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in
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. Disclosed in this report any change in the Company’s internal control over financial reporting that
occurred during the Company’s most recent fiscal quarter (the Company’s fourth quarter in the case of
an annual report) that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting; and
5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of
directors (or persons performing the equivalent function):
a. all significant deficiencies and material weaknesses in the design or operation of internal controls over
financial reporting that are reasonably likely to adversely affect the Company’s ability to record,
process, summarize and report financial information; and
b. any fraud, whether or not material, that involves management or other employees who have a
significant role in the Company’s internal control over financial reporting.
By:
/s/ Ellis E. Cousens
Ellis E. Cousens
Executive Vice President and
Chief Financial and Operations Officer
Dated: June 26, 2012
-92-
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
In connection with the Annual Report of John Wiley & Sons, Inc. (the “Company”) on Form 10-K for the year ended
April 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen M.
Smith, 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/ Stephen M. Smith
Stephen M. Smith
President and Chief Executive Officer
Dated: June 26, 2012
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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 & Sons, Inc. (the “Company”) on Form 10-K for the year ended
April 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ellis E.
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 26, 2012
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