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, 2016
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 001-11507
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, a non-accelerated
filer, or a smaller reporting company. 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, 2015, was approximately $2,331.2 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, 2016
was 48,109,204 and 9,475,140 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 22, 2016, 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, 2016
INDEX
PART I
ITEM 1.
ITEM 1A.
ITEM 1B.
ITEM 2.
ITEM 3.
ITEM 4
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures – Not Applicable
PART II
ITEM 5. Market for the Company’s Common Equity, Related Stockholder Matters and Issuer
ITEM 6.
ITEM 7.
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 Supplementary Data
ITEM 9.
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Controls and Procedures
Other Information
ITEM 9A.
ITEM 9B.
PART III
ITEM 10.
ITEM 11.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related
Directors, Executive Officers and Corporate Governance
Executive Compensation
Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
PAGE
4
4-11
11
12
13
13
14
15-55
55-58
59-98
99
99
99
99-102
102
102-103
103
103
ITEM 13.
ITEM 14.
PART IV
ITEM 15.
SIGNATURES
Exhibits, Financial Statement Schedules and Reports on Form 8-K
104-106
- 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 is a global provider of knowledge and knowledge-enabled services that improve
outcomes in areas of research, professional practice and education. Through the Research segment,
the Company provides digital and print scientific, technical, medical and scholarly journals, reference
works, books, database services and advertising. The Professional Development segment provides
digital and print books, corporate learning solutions, employment assessment and training services,
and test prep and certification. In Education, the Company provides print and digital content, and
education solutions including online program management services for higher education institutions
and course management tools for instructors and students. The Company takes full advantage of its
content from all three 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’s operations are primarily located 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, 2016, the Company employed approximately 4,700 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
15 through 55 of the Management’s Discussion and Analysis section of this Form 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 pages
15 and 55 of the Management’s Discussion and Analysis section of this Form 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.
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Cautionary Statement Under the Private Securities Litigation Reform Act of 1995:
This Form 10-K for the year ended April 30, 2016 contains 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 seasonal nature of the Company’s education business and the impact
of the used-book market; (vii) worldwide economic and political conditions; (viii) the Company’s ability
to protect its copyrights and other intellectual property worldwide; (ix) the ability of the Company to
successfully integrate acquired operations and realize expected opportunities and (x) 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 and Administrative 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 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 and retirement benefit 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. As of April
30, 2016, the Company’s consolidated paper inventory was approximately $4.9 million and there were
no outstanding multi-year supply contracts.
Protection of Intellectual Property Rights
A substantial portion 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 a 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.
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Maintaining the Company’s Reputation
The Company’s professional customers 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, 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 December and April. 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 22% of total annual consolidated revenue and no one agent accounts for more than
11% of total annual consolidated revenue.
The Company’s non-journal subscription business is not dependent upon a single customer. Although
no one non-journal customer accounts for more than 9% of total consolidated revenue and 12% of
accounts receivable at April 30, 2016, the top 10 non-journal customers account for approximately
16% of total consolidated revenue and approximately 26% of accounts receivable at April 30, 2016.
The Company maintains approximately $25 million of trade credit insurance, subject to certain
limitations, covering balances due from certain named customers which expires in May, 2017.
Changes in Laws and Regulations That Could Adversely Affect the Company’s Business
The Company maintains operations 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.
The scientific research publishing industry generates much of its revenue from paid customer
subscriptions to online and print journal content. There is debate within government, academic and
library communities whether such journal content should be made available for free, immediately or
following a period of embargo after publication, referred to as “open access”. For instance, certain
governments have implemented mandates that require journal articles derived from government-
funded research to be made available to the public at no cost after an embargo period. Open access
can be achieved in two ways: Green, which enables authors to publish articles in subscription based
journals and self–archive the author accepted version of the article for free public use after an
embargo period, and Gold, which enables authors to publish their articles in journals that provide
immediate free access to the article on the publisher’s website following payment of an article
publication fee. These mandates have the potential to put pressure on subscription-based
publications. If such regulations are widely implemented the Company’s operating results could be
adversely affected. To date, the majority of governments that have taken a position on Open access
have favored the green model and have generally specified embargo periods of twelve months. The
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publishing community generally takes the view that this period should be sufficient to protect
subscription revenues provided that publishers’ platforms offer sufficient added value to the article.
Governments in Europe have been more supportive of the gold model, which thus far is generating
incremental revenue for publishers with active open access programs. A number of European
administrations are showing interest in a business model which combines the purchasing of
subscription content with the purchase of open access publishing for authors in their country. This
development removes an element of risk by fixing revenues from that market, provided that the terms
and price negotiated are acceptable.
Business Transformation and Restructuring
The Company is transforming portions of its business from a traditional publishing model to being a
global provider of content-enabled solutions with a focus on digital products and services. The
acquisition of Deltak.edu, LLC (“Deltak”), Inscape Holdings, Inc. (“Inscape”), Efficient Learning
Systems, Inc. (“ELS”), Profiles International (“Profiles”) and CrossKnowledge Group Limited
(“CrossKnowledge”), along with the divestment of the Company’s consumer publishing programs, are
examples of strategic initiatives that were implemented as part of the Company’s business
transformation. The Company will continue to explore opportunities to develop new business models
and enhance the efficiency of its organizational structure. The rapid pace and scope of change
increases the risk that not all of our strategic initiatives will deliver the expected benefits within the
anticipated timeframes. In addition, these efforts may somewhat disrupt the Company’s business
activities which could adversely affect its operating results.
The Company continues to restructure and realign its cost base with current and anticipated future
market conditions. Significant risks associated with these actions that may impair the Company’s
ability to achieve the anticipated cost reductions or that may disrupt its business include delays in the
implementation of anticipated workforce reductions in highly regulated locations outside of the U.S.;
decreases in employee morale; the failure to meet operational targets due to the loss of key
employees; and disruptions of third parties to whom we have outsourced business functions. In
addition, the Company’s ability to achieve the anticipated cost savings and other benefits from these
actions within the expected timeframe is subject to many estimates and assumptions. These
estimates and assumptions are subject to significant economic, competitive and other uncertainties,
some of which are beyond our control. If these estimates and assumptions are incorrect, if we
experience delays, or if other unforeseen events occur, our business and results of operations could
be adversely affected.
Outsourcing of Business Processes
The Company has outsourced certain business functions, principally in technology, content
management and certain transactional functions, to third-party service providers to achieve cost
savings and efficiencies. If these third-party service providers do not perform effectively, the Company
may not be able to achieve the expected cost savings and depending on the function involved, may
experience business disruption or processing inefficiencies, all with potential adverse effects on the
Company’s operating results.
- 7 -
Introduction of New Technologies, Products and Services
The Company must continue to invest in technology and other innovations to adapt and add value to
its products and services to 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.
A common trend facing each of the Company’s businesses is the digitization of content and
proliferation of distribution channels through the internet and other electronic means, which are
replacing traditional print formats. The trend to digital content 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 consumers 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), combined with the concentration of retailer power,
present both threats and opportunities to the Company’s traditional publishing models, potentially
impacting both sales volumes and pricing. In addition, there is an enhanced risk associated with the
illegal unauthorized replication and distribution of digital products.
Student Demand for Lower Cost Textbooks in Higher Education
The Company’s Education business publishes educational content for undergraduate, graduate and
advanced placement students, lifelong learners and in Australia secondary school students. Due to
growing student demand for less expensive textbooks, many college bookstores, online retailers and
other entities offer used or rental textbooks to students at lower prices than new textbooks. It is
uncertain how such sales of lower priced textbooks will impact the Company’s operating results.
Factors that Reduce Enrollment at Colleges and Universities
Enrollment in U.S. colleges and universities can be adversely affected by many factors, including
changes in government and private student loan and grant programs, uncertainty about current and
future economic conditions, general decreases in family income and net worth and a perception of
uncertain job prospects for recent graduates. In addition, enrollment levels at colleges and universities
outside the United States are influenced by the global and local economic climate, local political
conditions and other factors that make predicting foreign enrollment levels difficult. Reductions in
expected levels of enrollment at colleges and universities both within and outside the United States
could adversely affect demand for our higher education products.
Information Technology Risks
Information technology is a key part of the Company’s business strategy and operations. As a
business strategy, Wiley’s 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.
We are continually improving and upgrading our computer systems and software. We are in the
process of implementing a new Enterprise Resource Planning system as part of a multi-year plan to
integrate and upgrade our operational and financial systems and processes. The implementation of
- 8 -
this global system will occur in phases over the next several years. Implementation of a new
enterprise resource planning system involves risks and uncertainties. Any disruptions, delays, or
deficiencies in the design or implementation of a new system, could result in increased costs,
disruptions in operations or delays in the collection of cash from our customers, as well as have an
adverse effect on our ability to timely report our financial results, all of which could materially
adversely affect our business, financial condition, and results of operations.
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. The size and complexity of our information technology
and information security systems, and those of our third-party vendors with whom we contract, make
such systems potentially vulnerable to cyber-attacks common to most industries from inadvertent or
intentional actions by employees, vendors, or malicious third-parties. Such attacks are of ever-
increasing levels of sophistication and are made by groups and individuals with a wide range of
motives. 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 critical to our success.
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. The percentage of Consolidated Revenue for fiscal year
2016 recognized in the following currencies (on an equivalent U.S. dollar basis) were: approximately
57% U.S dollar; 28% British pound sterling; 8% euro and 7% 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. The Company
to hedge such risks.
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.
time-to-time uses derivative
instruments
from
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
- 9 -
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. See Note 12 (“Tax Audits”) for further details on the Company’s income tax
audit in Germany.
Business Risk in Developing, Emerging and Other Foreign 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.
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. In fiscal year 2016, the Company recorded revenue and net profits of $3.7 million
and $1.0 million, respectively, related to sales to Cuba, Sudan, Syria and Iran. 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.
The Company has certain technology development operations in Russia related to software
development and architecture, digital content production and system testing services. Due to the
political instability within the region, there is the potential for future government embargos and
sanctions which could disrupt the Company’s operations in the area. While the Company has
developed business continuity plans to address these issues, further adverse developments in the
region could have a material impact on the Company’s business and operating results.
Approximately 14% of Research journal articles are sourced from authors in China. Any restrictions
on exporting intellectual property could adversely affect the company’s business and operating
results.
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
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. 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 certain employees worldwide. The
Company’s Board of Directors approved amendments to the U.S., Canada and U.K. defined benefit
plans that froze the future accumulation of benefits effective June 30, 2013, December 31, 2015 and
April 30, 2015, respectively. 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
- 10 -
demographics and changes in pension regulations. Changes in these factors affect the Company’s
plan funding, cash flow and results of operations.
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, including
knowledge-enabled services which complement the Company’s existing businesses. Acquisitions may
have a substantial impact on the Company’s revenues, costs, 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.
Valuation of Goodwill and Intangible Assets
At April 30, 2016, the Company had $951.7 million of goodwill and $877.0 million of intangible assets
on its balance sheet. The intangible assets are principally comprised of content and publishing rights,
customer relationships, and brands and trademarks. Failure to achieve business objectives and
financial projections could result in an asset impairment charge, which would result in a non-cash
charge to operating expenses. Goodwill and intangible assets with indefinite lives are tested for
impairment on an annual basis and also when events or changes in circumstances indicate that
impairment may have occurred. Intangible assets with determinable lives are tested for impairment
only when events or changes in circumstances indicate that an impairment may have occurred.
Determining whether an impairment exists can be difficult as a result of increased uncertainty and
current market dynamics, and requires significant management estimates and judgment. In addition,
the potential for goodwill impairment is increased during periods of economic uncertainty. An asset
impairment charge could have a material adverse effect on the Company’s business, operating results
and financial condition.
Attracting and Retaining Key Employees
The Company is highly dependent on the continued services of its Chief Executive Officer, Chief
Financial Officer and other senior officers and key employees. The loss of the services of skilled
personnel for any reason and the Company’s inability to replace them with suitable candidates quickly
or at all, as well as any negative market perception resulting from such loss, could have a material
adverse effect on the Company’s business, operating results and financial condition. In addition, we
are dependent upon our ability to continue to attract new employees with key skills to support
business growth.
Item 1B. Unresolved Staff Comments
None
- 11 -
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 operating condition and are suitable for the conduct of its business.
Location Purpose
Owned or Leased Approx. Sq. Ft.
United States:
New Jersey
Corporate Headquarters
Office & Warehouse
Indiana
California
Office
Office
Massachusetts Office
Illinois
Florida
Office
Office
Minnesota
Offices
Texas
Offices
Colorado
Office
International:
Australia
Offices
Canada
Office
England
Germany
Warehouses
Offices
Offices
Office
Office
Singapore Offices
Russia
Office
India
China
Warehouse
Office
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Owned
Owned
Leased
Leased
Leased
Leased
Leased
415,000
185,000
108,000
19,000
34,000
51,000
49,000
36,000
29,000
15,000
59,000
12,000
297,000
80,000
70,000
59,000
24,000
44,000
21,000
16,000
14,000
- 12 -
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.
Over the past few years, the Company has from time to time faced claims from photographers or
agencies that the Company has used photographs without licenses or beyond licensed permissions.
The Company has insurance coverage for a significant portion of such claims. The Company does
not believe that its exposure to such claims either individually or in the aggregate is material.
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:
2016
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
2015
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Class A Common Stock
Market Price
Class B Common Stock
Market Price
Dividends
High
Low
Dividends
High
Low
$0.30
0.30
0.30
0.30
$0.29
0.29
0.29
0.29
$58.66
53.18
54.29
50.74
$62.05
60.42
62.85
65.21
$51.68
48.16
40.29
40.21
$54.52
51.45
56.48
56.88
$0.30
0.30
0.30
0.30
$0.29
0.29
0.29
0.29
$58.74
52.93
53.80
50.85
$61.80
61.08
62.75
65.10
$52.54
48.25
41.25
40.18
$54.35
52.04
56.37
56.74
On a quarterly basis, the Board of Directors considers 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,
2016, the approximate number of holders of the Company’s Class A and Class B Common Stock
were 847 and 74 respectively, based on the holders of record.
During the fourth quarter of fiscal year 2016, the Company made the following purchases of Class A
Common Stock under its stock repurchase program.
February 2016
March 2016
April 2016
Total
Total
Number of
Shares
Purchased
-
118,036
98,150
216,186
Average
Price Paid
Per Share
-
$47.12
$48.00
$47.52
- 13 -
Total Number of
Shares
Purchased as
part of a Publicly
Announced
Program
Maximum
Number of
Shares that May
be Purchased
Under the
Program
-
118,036
98,150
216,186
963,022
845,006
746,836
Item 6. Selected Financial Data
Dollars in millions (except per share data)
2016
2015
2014
2013
2012
For the Years Ended April 30,
Revenue
Operating Income (a-b)
Net Income (a-c)
Working Capital (d)
Deferred Revenue in Working Capital (d)
Total Assets
Long-Term Debt
Shareholders’ Equity
Per Share Data
Earnings Per Share (a-c)
Diluted
Basic
Cash Dividends
Class A Common
Class B Common
$1,727.0
$1,822.4
$1,775.2
$1,760.8
$1,782.7
188.1
145.8
(111.1)
(426.5)
237.7
176.9
(62.8)
206.7
160.5
60.1
199.4
144.2
(32.2)
280.4
212.7
(66.3)
(372.1)
(385.7)
(363.0)
(342.0)
2,921.1
3,004.2
3,077.4
2,806.4
2,532.9
605.0
650.1
700.1
1,037.1
1,055.0
1,182.2
673.0
988.4
475.0
1,017.6
$2.48
$2.51
$1.20
$1.20
$2.97
$3.01
$1.16
$1.16
$2.70
$2.73
$1.00
$1.00
$2.39
$2.43
$0.96
$0.96
$3.47
$3.53
$0.80
$0.80
a)
In fiscal years 2016, 2015, 2014 and 2013, the Company recorded restructuring charges of $28.6 million
($0.8 per share), $28.8 million ($0.34 per share), $42.7 million ($0.48 per share) and $29.3 million ($0.33
per share), respectively, and related impairment charges in fiscal years 2014 and 2013 of $4.8 million ($0.06
per share) and $30.7 million ($0.35 per share), respectively.
b)
In fiscal year 2013, the Company recorded a gain, net of losses, on the sale of certain Professional
Development consumer publishing programs of $6.0 million ($0.04 per share).
c) Certain tax benefits and charges included in fiscal year results are as follows:
Fiscal years 2016, 2014, 2013 and 2012 include tax benefits of $5.9 million ($0.10 per share), $10.6
million ($0.18 per share), $8.4 million ($0.14 per share), and $8.8 million ($0.14 per share), respectively,
principally associated with consecutive tax legislation enacted in the United Kingdom that reduced the
U.K. corporate income tax rates.
Fiscal year 2015 includes a non-recurring tax benefit of $3.1 million ($0.05 per share) related to tax
deductions claimed on the write-up of certain foreign tax assets to fair market value.
Fiscal year 2012 includes a tax benefit of $7.5 million ($0.12 per share) related to the reversal of an
income tax reserve recorded in conjunction with the Blackwell acquisition.
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 acquisitions; debt repayments; funding operations; dividend
payments; and purchasing treasury shares. The deferred revenue will be recognized in income over the
term of the subscription; when the related issue is shipped or made available online, or the service is
rendered.
- 14 -
Item 7. Management’s Discussion and Analysis of Business, Financial Condition and Results of
Operations
The Company is a global provider of knowledge and knowledge-enabled services that improve outcomes in
areas of research, professional practice and education. Through the Research segment, the Company provides
digital and print scientific, technical, medical and scholarly journals, reference works, books, database services
and advertising. The Professional Development segment provides digital and print books, corporate learning
solutions, post and pre-employment assessment and training services, and test preparation and certification. In
Education, the Company provides print and digital content, and education solutions including online program
management services for higher education institutions and course management tools for instructors and
students. The Company takes full advantage of its content from all three 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’s operations are primarily located in the United States, Canada, Europe, Asia, and
Australia.
Business growth comes from a combination of organic growth from existing brands and titles; title, imprint and
other business acquisitions which complement the Company’s existing businesses; designing and implementing
new methods of delivering products to our customers; and the development of new products and services. The
Company’s revenue declined at a compound annual rate of 0.2% over the past five years.
Core Business Segments
Research:
The Company’s Research business serves the world’s research and scholarly communities and is the largest
publisher for professional and scholarly societies. Research’s mission is to support researchers, professionals
and learners in the discovery and use of research knowledge to help them achieve their goals in research,
learning and practice. Research products include scientific, technical, medical and scholarly research journals,
books, reference works, databases, clinical decision support tools, laboratory manuals and workflow tools, in the
publishing areas of the physical sciences and engineering, health sciences, social science and humanities and
life sciences. Research customers include academic, corporate, government, and public libraries; researchers;
scientists; clinicians; engineers and technologists; scholarly and professional societies; and students and
professors. The Company’s Research products are sold and distributed globally in digital and print formats
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, China, Germany, India, the United Kingdom and the United States. Research
accounted for approximately 56% of total Company revenue in fiscal year 2016 which declined at a compound
annual rate of 1% over the past five years.
Research revenue by product type includes: Journal Subscriptions; Author-Funded Access; Other Journal
Revenue, which includes publishing service charges for article customization charges, sales of journal licensing
rights, journal reprint revenue, backfiles and individual articles. In addition, Print Books; Digital Books; and Other
Books and Reference Revenue, which includes, advertising, book licensing rights, distribution services and the
sale of protocols.
- 15 -
The graph below presents Research revenue by product type for fiscal year 2016 and 2015:
Author-Funded
Access
3%
Digital Books
5%
Licensing
and Other
1%
Print Books
9%
Licensing,
Reprints,
Backfiles
and Other
18%
Journal
Subscriptions
63%
2016
Author-Funded
Access
2%
Digital Books
4%
Print Books
10%
Licensing,
Reprints,
Backfiles
and Other
18%
Licensing
and Other
1%
Journal
Subscriptions
65%
2015
Key growth strategies for the Research business include evolving and developing new licensing models for the
Company’s institutional customers; developing new funded access revenue streams; focusing resources on
high-growth and emerging markets; and developing new digital products, services and workflow solutions to
meet the needs of researchers, authors, societies and corporate customers.
Approximately 50% of Journal Subscription revenue is derived from publishing rights owned by the Company.
Publishing alliances also play a major role in Research’s success. Approximately 50% 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 European Molecular Biology Organization, the American
Anthropological Association, the American Geophysical Union and the German Chemical Society.
The Company transitioned from issue-based to time-based digital journal subscription agreements for calendar
year 2016. Under this new model, the Company provides access to all journal content published within a
calendar year and recognizes revenue on a straight-line basis over the calendar year. Under the Company’s
previous licensing model, a customer subscribed to a discrete number of online journal issues and revenue was
recognized as each issue was made available online. The change shifted approximately $37 million of revenue
from fiscal year 2016 to the remainder of calendar year 2016 (fiscal year 2017). The change had no impact on
free cash flow. The Company made these changes to significantly simplify the contracting and administration of
digital journal subscriptions.
The Company’s Research business 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, which
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, the online publishing platform for the Company’s Research business, is one of the world’s
broadest and deepest multidisciplinary collections of online resources covering life, health and physical
sciences, social science and the humanities. Designed with extensive input from scholars around the world,
Wiley Online Library delivers seamless integrated access to over 7 million articles from 1,700 journals, 19,000
- 16 -
online books, and hundreds of multi-volume 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. Access to abstracts is free, full content is accessible through licensing agreements or
as individual article purchases. Large portions of the content are provided free or at nominal cost to nations in
the developing world through partnerships with certain non-profit organizations. Wiley Online Library also
provides the Company with revenue growth opportunities through new applications and business models, online
advertising, deeper market penetration and individual sales and pay-per-view options.
Full content Access on 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. Through the Article Select and PayPerView programs, the Company provides fee-based access
to 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 the Wiley Journals Apps service, which enables users to access articles and related content
from over 200 titles on a tablet or other mobile device.
Wiley Open Access is the Company’s publishing program for open-access research articles. Under the Wiley
Open Access business model, research articles submitted by authors are published in open-access journals. All
research articles published in Wiley Open Access journals are freely available to the general public on Wiley
Online Library to read, download and share. A publication service fee is charged upon acceptance of a
research article by the Company, which may be paid by the individual author or by the author’s funder or
institution. To actively support researchers and members who wish to publish in Wiley Open Access journals, an
academic or research institution, society or corporation may fund the fee directly. In return for the service fee,
the Company provides its customary publishing, editing, peer review, technology and distribution services. All
accepted open-access 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 make their
individual research articles that were published within the Company’s paid subscription journals freely available
to the general public through OnlineOpen on payment of an Article Payment Charge.
Professional Development (“PD”):
The Company’s Professional Development business acquires, develops and publishes professional information
and content delivered through print and digital books, test preparation, assessments, online learning solutions
and certification and training services. Communities served include business, finance, accounting, workplace
learning, management, leadership, technology, behavioral health, engineering/architecture and education.
Professional Development’s mission is to create products and services that help professionals worldwide learn,
achieve results, and enhance their skills throughout their careers enabling corporations to maximize their
investment in employees, having them become more effective in the workplace. Products are developed in print
and digitally for worldwide distribution through multiple channels, including chain and online booksellers,
libraries, colleges and universities, corporations, direct to consumer, websites, distributor networks and other
online applications. Publishing centers include Australia, Germany, India, the United Kingdom and the United
States. Professional Development accounted for approximately 23% of total Company revenue in fiscal year
- 17 -
2016 which declined at a compound annual rate of 1% over the past five years, including the impact of the
divested consumer publishing programs in fiscal year 2013 and the acquisitions of Inscape in fiscal year 2012,
Efficient Learning Systems, Inc. in fiscal year 2013, Profiles in fiscal year 2014 and CrossKnowledge in fiscal
year 2015.
Professional Development revenue by product type includes Print Books; Digital Books; Online Test Preparation
and Certification; Assessments; and Corporate Learning.
The graph below presents PD revenue by product type for fiscal year 2016 and 2015:
Corporate
Learning
13%
Print Books
48%
Online Test
Preparation
and
Certification
7%
Assessments
14%
Corporate
Learning
10%
Print Books
51%
Online Test
Preparation
and
Certification
5%
Assessments
14%
Other
Knowledge
Service
Revenue
7%
2016
Digital Books
12%
Other
Knowledge
Service
Revenue
7%
Digital Books
12%
2015
Key growth strategies for the Professional Development business include: developing and acquiring products
and services to drive corporate development and professional career development; developing leading brands
and franchises; executing strategic acquisitions and partnerships; innovating digital book formats while
expanding their global discoverability and distribution; and creating advertising opportunities on the Company’s
branded websites and online applications. Several of the more recent acquisitions that focus on achieving these
growth strategies are described in more detail below.
In May 2014, the Company acquired CrossKnowledge for approximately $166 million in cash, net of cash
acquired. CrossKnowledge is a learning solutions provider focused on leadership and managerial skills
development that offers subscription-based, digital learning solutions for global corporations, universities, and
small and medium-sized enterprises. CrossKnowledge’s solutions include a variety of managerial and
leadership skills assessments, courses, certifications, content and executive training programs that are
delivered on a cloud-based LMS platform with over 19,000 learning objects in 17 languages. CrossKnowledge
serves over seven million end-users in 80 countries. CrossKnowledge generated revenue of $50.7 million in
fiscal year 2016.
In April 2014, the Company acquired Profiles International (“Profiles”) for approximately $48 million in cash, net
of cash acquired. Profiles provides pre-employment assessment and selection tools that enable employers to
optimize candidate selections and develop the full potential of their employees. Solutions include pre-hire
assessments, including those designed to measure and match personality, knowledge, skills, managerial fit,
loyalty, and values; and post-hire assessments, focused on measuring sales and managerial effectiveness,
employee performance and career potential. Profiles serves approximately 4,000 corporate clients and millions
of end users in over 120 countries, with assessments available in 32 languages. Profiles generated revenue of
$20.3 million in fiscal year 2016.
In 2012, the Company acquired Efficient Learning Systems, Inc. (“ELS”) for approximately $24 million in cash,
net of cash acquired. ELS is an e-learning system provider focused in the areas of professional finance and
- 18 -
accounting. ELS’ flagship product, CPAExcel, is a modular, digital platform comprised of online self-study,
videos, mobile apps, and sophisticated planning tools that has helped over 65,000 professionals prepare for the
CPA exam since 1998. The acquisition enhanced Wiley’s position in the growing CPA test preparation market
and provided the Company with a scalable platform that can be leveraged globally across other areas of its
Professional Development business. In 2013, the Company also acquired Elan Guides for approximately $2.5
million. Elan Guides provides content in multiple formats to help prepare candidates for the CFA examinations.
The fiscal year 2016 revenue associated with these businesses was approximately $14.1 million.
In 2012, Wiley acquired Inscape Holdings, Inc. (“Inscape”), a leading provider of assessment-based employee
training solutions, for approximately $85 million in cash, net of cash acquired. The acquisition combined Wiley’s
deep well of valuable content and global reach in leadership and training with Inscape’s talent development
content, technology and distribution network, including the innovative EPIC online assessment-delivery platform
and an elite global authorized distributor network of over 1,700 independent consultants, trainers, and coaches.
Inscape’s solution-focused products are used in thousands of organizations, including major government
agencies and Fortune 500 companies. Inscape generated revenue of $29.3 million in fiscal year 2016.
Inscape’s solutions-focused DiSC® offerings complement Wiley’s existing offerings, such as Kouzes and
Posner’s Leadership Practices Inventory® and The Five Behaviors of a Cohesive TeamTM, in the growing
workplace learning industry. The combined assessment offerings increased the Company’s presence in the
professional training and development arena. We believe Inscape’s competitive strengths will also advance a
number of Professional Development’s major strategic goals. As a workplace learning business with more than
90% of revenue from a proprietary digital platform, Inscape enables Wiley to move more rapidly into digital
delivery within the growing workplace learning and assessment market and build a significant market position in
the category of leadership development. Inscape also enhanced Wiley’s global presence, serving customers
around the world in more than 30 languages each year, with approximately 28% of fiscal year 2016 revenue
generated outside the U.S through Inscape’s dedicated global distributor network.
Publishing Alliances and Programs:
Publishing alliances and franchise products are central to the Company’s strategy. Professional Development
alliance partners include Bloomberg Press, the American Institute of Architects, the Leader to Leader Institute,
Fisher Investments, the CFA Institute, ACT (American College Test), Autodesk and many others.
The Company also promotes an active and growing Professional Development custom publishing program.
Custom publications are typically used by organizations for internal promotional or incentive programs. The
Company’s custom publications include digital and print books written specifically for a customer and
customizations of Professional Development’s existing publications to include custom cover art, such as
imprints, messages and 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.
Education:
The Company’s Education business produces educational content and solutions, including course management
tools for instructors and students and online program services for higher education institutions. Education’s
mission is to help teachers teach and students learn by delivering personalized content, tools and services that
demonstrate results to students, faculty and institutions throughout the world. Education offers learning
solutions, innovative products and services principally delivered through college bookstores, online distributors
and directly to institutions and more recently direct-to-student, with customers having access to content in digital
- 19 -
and custom print formats, as well as the traditional print textbook. Education’s cost-effective, flexible solutions
are available in each of its publishing disciplines, including sciences, engineering, computer science,
mathematics, business and accounting, statistics, geography, hospitality and the culinary arts, education,
psychology and modern languages.
Education accounted for approximately 21% of total Company revenue in fiscal year 2016 and generated
revenue growth at a compound annual rate of 3% over the past five years, including the acquisition of Deltak in
fiscal year 2013.
Education revenue by product type includes Print Textbooks; Digital Books; Online Program Management
(Deltak); Custom Material; Course Workflow (WileyPLUS), and Other Education revenue which includes
revenue from the licensing of publishing content rights and other content adaptions.
The graph below presents Education revenue by product type for fiscal year 2016 and 2015:
Other
Education
Revenue
2%
Online
Program
Management
(Deltak)
27%
Course
Workflow
(WileyPLUS)
16%
Print
Textbooks
30%
Other
Education
Revenue
3%
Online
Program
Management
(Deltak)
22%
Digital
Books
10%
Course
Workflow
(WileyPLUS)
14%
Print
Textbooks
39%
Custom
Material
15%
2016
Custom
Material
14%
2015
Digital
Books
9%
The Company continues to transform the Education business from a content publisher to an education solutions
provider. Education’s key growth strategies include developing and acquiring digital products and solutions
across the educational value chain; continuing the transformation of the business from traditional print products
to digital and custom products and services; focusing on institutional relationships and direct-to-student digital
products; and developing the Company’s online education services model acquired with Deltak.
In 2012, the Company acquired Deltak for approximately $220 million in cash, net of cash acquired. Deltak
works in close partnership with leading colleges and universities to develop and support online degree and
certificate programs. These new services position the Company as an online education services provider. Wiley
now provides a complete solution to help higher education institutions transition their programs into valuable
online experiences. Deltak offers market research to validate degree or certification program demand;
instructional design; marketing; student recruitment; and retention services. Deltak uses its Engage Learning
Management System and Student Relationship Platform to enhance the quality and efficacy of online and hybrid
programs. The Company now has access to high-growth markets and a variety of capabilities and technologies
for its expansion into custom online courses and curriculum development. The Company leverages its strong
reputation and financial stability for new program investment, to accelerate growth globally, to access
professional consumers and corporations and to expand content and faculty development offerings. As of April
30, 2016, the Company had 38 partners and 226 degree programs under contract. Deltak generated revenue of
$96.5 million in fiscal year 2016.
Strategic partnerships and relationships with companies such as Microsoft®, Blackboard, Canvas, Snapwiz and
the Culinary Institute of America are an important component of Education’s growth strategy. The ability to join
- 20 -
Wiley’s product development, sales, marketing, distribution and technology with a partner’s content, technology
and/or brand name has contributed to Education’s success.
Education offers high-quality online learning solutions including Course Workflow (WileyPLUS), a 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 as well as a full range of course-oriented activities, including online planning, presentations,
study, homework and testing. In selected courses, WileyPlus includes a personalized adaptive learning
component, Orion, which is based on cognitive science. Orion helps to build student proficiency on topics while
improving the effectiveness of their study time. It assists educators in identifying areas that need reinforcement
and measures student engagement and proficiency throughout the course.
Education promotes 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 creation of
customized content in instructors’ hands. Our suite of custom products empowers users to create high-quality,
affordable education solutions tailored to meet individual classroom needs. Through Wiley Custom Select, an
online custom textbook system, instructors can easily build print and digital materials tailored to their specific
course needs and add their own content to create a customized solution derived from any one of the Company’s
three business segments.
Knowledge-Enabled Products and Services:
Journal Products:
The Company publishes approximately 1,700 Research and Professional Development journals. Journal
Subscription revenue and other related publishing income, such as Author-Funded Access, advertising, backfile
sales, the licensing of publishing rights, journal reprints and individual article sales accounted for approximately
48% of the Company’s consolidated fiscal year 2016 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.
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 digital content delivered through the Company’s online 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. Print 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 via Wiley Online Library. Subscription revenue is generally collected in advance,
and deferred until the Company has fulfilled its obligation to the customer at which time the revenue is earned.
The Company transitioned from issue-based to time-based digital journal subscription agreements for calendar
year 2016. Under this new model, the Company provides access to all journal content published within a
calendar year and recognizes revenue on a straight-line basis over the calendar year. Under the Company’s
previous licensing model, a customer subscribed to a discrete number of online journal issues and revenue was
recognized as each issue was made available online. The Company made these changes to simplify the
contracting and administration of digital journal subscriptions. Print journal subscription revenue is recognized
once the related issue is shipped.
- 21 -
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 define 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 general 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.
Book Products:
Book products and other book publishing revenue, such as advertising and the sale of publishing rights,
accounted for approximately 41% of the Company’s consolidated fiscal year 2016 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 are originated by the authors themselves 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 with
royalties, which vary depending on 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, and also creates adaptations of original content for specific markets based on customer
demand. The Company’s general practice is to revise its textbooks approximately every three years, if
warranted, and to revise other titles as appropriate. Subscription-based products are updated on a more
frequent basis.
Professional books are sold to bookstores and online booksellers serving the general public; wholesalers who
supply such bookstores; warehouse clubs; college bookstores; 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 books also result from direct mail
campaigns, telemarketing, online access, advertising and reviews in periodicals. Trade sales are generally
made on a returnable basis with certain restrictions. The Company provides for estimated future returns on
sales made during the year based on historical return experience and current market trends.
Adopted education textbooks and related supplementary material and digital products are sold primarily to
bookstores and online booksellers, serving both for-profit, nonprofit educational institutions and direct-to-
students. 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 are active used and rental textbook markets, which adversely affect the sale of new textbooks.
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 2016 weighted average
- 22 -
U.S. paper prices decreased approximately 1% from fiscal year 2015. Approximately 75% 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 both digital and print products, resulting
in productivity and efficiency savings, and enabling print-on-demand delivery. Book content is available online
through Wiley Online Library, WileyPLUS, Wiley Custom Select and other proprietary platforms. Digital books
are delivered to intermediaries including Amazon, Apple and Google, for re-sale to individuals in various
industry-standard formats, which are now the preferred deliverable for licensees of all types, including foreign
language publishers. Digital books are also licensed to libraries through aggregators. Specialized formats for
digital textbooks go to distributors servicing the academic market, and digital book collections are sold by
subscription through independent third-party aggregators servicing distinct communities. Custom deliverables
are provided to corporations, institutions and associations to educate their employees, generate leads for their
products, and extend their brands. Content from digital books is also used to create website articles, mobile
apps, newsletters and promotional collateral. This continual re-use of content improves margins, speeds
delivery and helps satisfy a wide range of customer needs. 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 titles with international publishers and receives licensing revenue from
photocopies, reproductions, translations, and digital uses of its content.
Solutions:
The Company believes that the demand for learning solutions will continue to increase for the foreseeable
future. In order to meet this demand, the Company is focused on delivering knowledge-enabled services, which
improve learning, career development and employment management for its target communities. With the goal
of servicing its customers across the arc of their careers the Company is creating new revenue streams through
organic development and acquisition. The acquisitions of Deltak, Inscape, ELS, Profiles and CrossKnowledge
have enhanced the Company’s portfolio of knowledge-enabled digital services and provided the Company with
new capabilities and expertise, including new channels to market and direct end-user engagement. The
Inscape, ELS, Profiles and CrossKnowledge acquisitions highlight the Company’s focus on providing digital
content; workflow solutions around professional career development and talent assessment, while the Deltak
acquisition positions the Company as an online higher educational solutions provider with a variety of
capabilities and technologies for its expansion into custom online course and curriculum development. In
addition, Education’s Course Workflow (WileyPLUS) platform improves student learning through instant
feedback, personalized learning plans and self-evaluation tools.
Corporate Learning:
The Corporate Learning (CrossKnowledge) business offers digital learning solutions for global corporations,
universities, and small and medium-sized enterprises, which are sold on a subscription or fee basis.
CrossKnowledge’s solutions include a variety of managerial and leadership topics such as leadership, diversity,
value creation, client orientation, change and corporate strategy, that are delivered on a cloud-based LMS
platform with over 19,000 learning objects in 17 languages. Its Mohive offering also provides a collaborative e-
learning publishing and program creation system. Revenue growth is derived from legacy markets, such as
- 23 -
Europe, Asia and the Nordics, and in newer markets, such as the U.S. and Latin America. In addition, content
and LMS offerings are continuously refreshed and expanded to serve a wider variety of customer needs.
Corporate Learning revenue was approximately $50.7 million in fiscal year 2016.
Assessments:
The Inscape and Profiles businesses represent the core of the Company’s professional assessment services.
These businesses offer four of the leading assessment brands available in the market today. The offerings are
delivered to customers through online digital delivery platforms either directly or through an authorized
distributor network of independent consultants, trainers and coaches. The Company’s professional assessment
services offer highly flexible packages and modules for its customers that include online pre and post-hire
assessments. Revenue for these products and services are deferred until the Company’s obligation has been
performed, typically when an online assessment has been completed. Assessment revenue was approximately
$57.4 million in fiscal year 2016.
Professional Online Test Preparation and Certifications:
The Company’s acquisitions of ELS and Elan Guides represent the Company’s professional Online Test
Preparation and Certification services. These businesses offer a variety of online learning solutions and training
activities that are delivered to customers directly through online digital delivery platforms. ELS’ flagship product,
CPAExcel, is a modular, digital platform comprised of online self-study, videos, mobile apps, and sophisticated
planning tools to help professionals prepare for the CPA exam. Elan Guides provides content in multiple formats
to help prepare candidates for the Certified Financial Analyst examinations. Revenue for these products and
services are deferred until the Company’s obligation has been performed, typically when an online training
program has been completed or over the timeframe covered by a license to use the online training and study
materials. PD’s Online Test Preparation and Certification revenue was approximately $28.2 million in fiscal year
2016.
Online Program Management (Deltak):
As student demand continues to drive higher education institutions to offer online degree and certificate
programs, institutions are partnering with online program management businesses to develop and support these
programs. Through the Deltak acquisition, the Company has entered this high-growth market, accelerated its
digital learning strategy and diversified the service offerings of its Education business to include both operational
and academic solutions for higher education institutions. Through Deltak, the Company acquired capabilities
and technologies to expand into custom online course and curriculum development. Deltak services include
market research, marketing, student recruitment, enrollment support, proactive retention support, academic
services to design courses, faculty support and access to the Deltak Engage Learning Management System.
Deltak’s online program management revenue is derived from pre-negotiated contracts with institutions that
provide for a share of tuition generated from students who enroll in programs that Deltak develops and manages
for its institutional partners. Online program management revenue is deferred and recognized over the
timeframe that each student is enrolled in the online program. As of April 30, 2016 the Company had 38
partners and 226 degree programs under contract. Deltak generated revenue of $96.5 million in fiscal year
2016.
Course Workflow (WileyPLUS):
Through Education’s WileyPLUS platform, the Company offers an online environment for effective teaching and
learning that is fully integrated with a complete digital or print textbook. WileyPLUS improves student learning
through instant feedback, personalized learning plans, and self-evaluation tools as well as a full range of course-
- 24 -
oriented activities, including online planning, presentations, study, homework and testing. WileyPLUS revenue
is deferred and recognized over the timeframe that each student is enrolled in the online course. WileyPLUS
revenue was approximately $58.6 million in fiscal year 2016.
Advertising Revenue:
The Company generates advertising revenue from print and online journal subscription products; its online
publishing platform, Wiley Online Library; online events such as webinars and virtual conferences; community
interest websites such as spectroscopyNOW.com and websites for the Company’s leading brands like
Dummies.com. These revenues accounted for approximately 2% of the Company’s consolidated fiscal year
2016 revenue.
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; and a variety of
businesses targeting the Company’s leading 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. applications for smartphones and tablets).
Global Operations
The Company’s publications and services are sold throughout most of the world through operations primarily
located in Europe, Canada, Australia, Asia, and the United States. All operations market their indigenous
publications, as well as publications produced by other publishing locations 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 49% of the
Company’s consolidated fiscal year 2016 revenue was billed in non-U.S. markets.
The global nature of the Company’s business creates an exposure to foreign currency. Each of the Company’s
geographic locations sells products worldwide in multiple currencies. The percentage of Consolidated Revenue
for fiscal year 2016 recognized in the following currencies (on an equivalent U.S. dollar basis) were:
approximately 57% U.S dollar; 28% British pound sterling; 8% euro and 7% 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 and searchability of format and subject matter, author reputation,
price, timely 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 research 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 Development markets. The Company
- 25 -
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.
Research uses various reports to monitor competitor performance and industry financial metrics. Specifically for
Research journal titles, the Thomson Reuters® Journal Citation Reports are used as a key metric of a journal
title’s influence in scientific publishing. For Professional Development, 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 Education, the Company subscribes to
Management Practices Inc., which publishes customized comparative sales reports, and also uses industry
statistics and reports produced by the Association of American Publishers.
Results of Operations
Throughout this report, references to variances “excluding foreign exchange”, “currency neutral basis” 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. For fiscal
years 2016 and 2015, the average annual exchange rates to convert British pounds sterling to U.S. dollars were
1.50 and 1.60; the average annual exchange rates to convert euros into U.S. dollars were 1.11 and 1.25,
respectively; and the average annual exchange rates to convert Australian dollars into U.S. dollars were 0.74
and 0.86, respectively. Unless otherwise noted, all variance explanations below are on a currency neutral basis.
FISCAL YEAR 2016 SUMMARY RESULTS
Revenue:
Revenue for fiscal year 2016 decreased 5% to $1,727.0 million, or 2% excluding the unfavorable impact of
foreign exchange. The decrease was mainly driven by a decline in print books ($44 million) and the previously
announced transition to time-based digital journal subscription agreements for calendar year 2016 ($37 million),
partially offset by growth in Online Program Management (Deltak) ($14 million); Corporate Learning
(CrossKnowledge) ($13 million); online test preparation and certification ($6 million); new product formats in
Education ($6 million); digital books ($4 million) and other ($4 million).
As previously announced the Company transitioned from issue-based to time-based digital journal subscription
agreements for calendar year 2016. The transition to time-based digital journal subscription agreements shifted
approximately $37 million of revenue from fiscal year 2016 to the remainder of calendar year 2016 (fiscal year
2017). The change had no impact on free cash flow. The Company made these changes to simplify the
contracting and administration of digital journal subscriptions.
Cost of Sales and Gross Profit:
Cost of sales for fiscal year 2016 decreased 7% to $465.9 million, or 4% excluding the favorable impact of
foreign exchange. The decrease was mainly driven by lower sales volume ($8 million); cost savings from
outsourcing and procurement initiatives and lower cost digital products ($13 million); lower royalty cost due to
the transition to time-based digital journal subscription agreements ($5 million) and other ($4 million), mainly
- 26 -
lower composition costs, partially offset by higher royalty rates on society owned journals ($5 million); growth in
Corporate Learning (CrossKnowledge) ($4 million) and Online Program Management (Deltak) ($2 million).
Gross profit margin for fiscal year 2016 increased 40 basis points to 73.0% mainly driven by growth in higher
margin digital products (70 basis points), partially offset by the impact of transitioning to time-based digital
journal subscription agreements.
Operating and Administrative Expenses:
Operating and administrative expense for fiscal year 2016 decreased 1% to $994.6 million, but increased 2%
excluding the favorable impact of foreign exchange. The increase reflects higher student recruitment costs to
support new Online Program Management (Deltak) programs ($14 million); investment in the Company’s
Enterprise Resource Planning and related systems ($13 million) and other technology development and
maintenance ($17 million); higher employment costs ($13 million), mainly merit increases and higher accrued
variable incentive compensation; investments in Corporate Learning (CrossKnowledge) ($11 million); and higher
process reengineering consulting ($4 million) and legal costs ($4 million). Restructuring and other cost savings
initiatives ($41 million); synergies from the Talent Solution-Assessment business ($6 million); and lower
distribution costs due to lower sales volumes of print books and journals ($2 million) partially offset the cost
increases.
Restructuring Charges:
Beginning in fiscal year 2013, the Company initiated a program (the “Restructuring and Reinvestment Program”)
to restructure and realign its cost base with current and anticipated future market conditions. The Company is
targeting a majority of the cost savings achieved to improve margins and earnings, while the remainder will be
reinvested in high growth digital business opportunities.
In fiscal years 2016 and 2015, the Company recorded pre-tax restructuring charges of $28.6 million ($0.32 per
share) and $28.8 million ($0.34 per share), respectively, related to this program. These charges are reflected in
Restructuring Charges in the Consolidated Statements of Income and summarized in the following table (in
thousands):
Charges by Segment:
Research
Professional Development
Education
Shared Services
Total Restructuring Charges
Charges by Activity:
Severance
Process reengineering consulting
Other activities
Total Restructuring Charges
2016
2015
Total Charges
Incurred to Date
$5,048
2,277
1,206
20,080
$28,611
$16,443
7,191
4,977
$28,611
$4,555
4,385
1,571
18,293
$28,804
$17,093
301
11,410
$28,804
$20,273
24,806
4,786
74,724
$124,589
$79,204
18,666
26,719
$124,589
Other Activities reflects leased facility consolidations, contract termination costs and the curtailment of certain
defined benefit pension plans. The fiscal year 2016 restructuring charges of $28.6 million are expected to be
fully recovered within the next 18 months.
- 27 -
Amortization of Intangibles:
Amortization of intangibles decreased $1.5 million in fiscal year 2016 mainly due to the effect of foreign
exchange.
Interest Expense/Income, Foreign Exchange and Other:
Interest expense for fiscal year 2016 decreased $0.4 million to $16.7 million due to a decrease in the
Company’s average borrowing rate from 2.1% to 2.0%, partially offset by higher average debt balances
outstanding. Foreign exchange transaction gains decreased from $1.7 million to $0.5 million in fiscal year 2016.
Provision for Income Taxes:
The effective tax rate for fiscal year 2016 was 16.6% compared to 21.6% in the prior year. In fiscal year 2016,
the Company recorded non-cash deferred tax benefits of $5.9 million ($0.10 per share), principally associated
with new tax legislation enacted in the United Kingdom (“U.K.”) that reduced the future U.K. statutory income tax
rates by 2%. The benefits reflect the remeasurement of all applicable U.K. deferred tax balances to the new
income tax rates of 19% effective April 1, 2017 and 18% effective April 1, 2020. In fiscal year 2015, the
Company recognized a non-recurring tax benefit of $3.1 million ($0.05 per share) related to tax deductions
claimed on the write-up of certain foreign tax assets to fair market value. Excluding the impact of the tax benefits
described above, the Company’s effective tax rate decreased from 22.9% to 19.9% principally due to lower
foreign tax rates, a tax reserve release and a lower proportion of income from the U.S. at higher tax rates.
Earnings Per Share:
Earnings per diluted share for fiscal year 2016 decreased $0.49 per share to $2.48 per share, or $0.43 per
share excluding the current ($0.32 per share) and prior year ($0.34 per share) restructuring charges, the current
year deferred tax benefit on the U.K. rate change ($0.10 per share), the prior year non-recurring tax benefit
($0.05 per share) and the unfavorable impact of foreign exchange ($0.13 per share). The decline was mainly
driven by the transition to time-based digital journal subscription agreements ($0.42 per share); investments in
the Company’s Enterprise Resource Planning and related systems, Online Program Management (Deltak) and
Corporate Learning (CrossKnowledge), partially offset by restructuring and other cost savings initiatives.
BUSINESS SEGMENT RESULTS:
As part of Wiley’s Restructuring and Reinvestment Program, the Company consolidated its marketing services
functions into a single global shared service function. This newly centralized service group enables significant
cost reduction opportunities, including efficiencies gained from standardized technology and centralized
management. The costs of these functions were previously reported as direct operating expenses in each
business segment but are now reported within Shared Services and Administrative Costs and are allocated to
each business segment. In addition, the Company modified its product/service revenue categories for the
Research segment. As a result, prior year amounts have been restated to reflect these same reporting
methodologies. The Company uses occupied square footage of space; number of employees; units shipped;
specific identification/activity-based; gross profit; revenue and number of invoices to allocate shared service
costs to each business segment.
- 28 -
RESEARCH:
Revenue:
Journal Revenue:
2016
2015
% change
% change w/o FX (a)
Journal Subscriptions
Author-Funded Access
Licensing, Reprints, Backfiles, and Other
Total Journal Revenue
$611,403
25,669
178,542
815,614
$672,218
22,388
188,326
882,932
Books and References:
Print Books
Digital Books
Licensing and Other
Total Books and References Revenue
Total Revenue
Cost of Sales
Gross Profit
Gross Profit Margin
Direct Expenses
Amortization of Intangibles
Restructuring Charges (see Note 6)
Direct Contribution to Profit
Direct Contribution Margin
Shared Services and Administrative Costs:
Distribution and Operation Services
Technology and Content Management
Occupancy and Other
Contribution to Profit
Contribution Margin
-9%
15%
-5%
-8%
-9%
5%
-9%
-5%
-7%
-5%
-8%
-6%
-2%
-6%
21%
0%
-4%
-6%
9%
0%
-1%
-3%
-1%
-4%
-2%
2%
90,586
44,788
14,266
149,640
99,746
42,512
15,605
157,863
$965,254
$1,040,795
(262,693)
(275,487)
$702,561
72.8%
$765,308
73.5%
(245,278)
(28,190)
(4,555)
(229,666)
(27,546)
(5,048)
$440,301
45.6%
$487,285
-10%
-6%
46.8%
(39,348)
(98,442)
(29,516)
(44,620)
(96,486)
(30,405)
$272,995
$315,774
28.3%
30.3%
-12%
2%
-3%
-14%
-7%
5%
2%
-10%
(a) Adjusted to exclude the fiscal year 2016 and 2015 Restructuring Charges
Revenue:
Research revenue for fiscal year 2016 decreased 7% to $965.3 million, or 3% excluding the unfavorable impact
of foreign exchange. As previously announced, the Company transitioned from issue-based to time-based digital
journal subscription agreements for calendar year 2016. The change shifted approximately $37 million of
revenue from fiscal year 2016 to the remainder of calendar year 2016 (fiscal year 2017). The change had no
impact on free cash flow. The Company made these changes to simplify the contracting and administration of
digital journal subscriptions. Excluding the impact of the transition to time-based subscriptions and foreign
exchange, Research revenue was flat with the prior year.
Journal Subscriptions revenue decreased 6% on a currency neutral basis mainly due the impact of moving to
time-based digital journal subscriptions ($37 million) and the trailing effects of the Swets bankruptcy ($3 million).
As previously disclosed, Swets Information Services, a global library subscription agent based in Amsterdam,
declared bankruptcy in late September 2014. Excluding the impact of transitioning to time-based journal
- 29 -
subscription agreements and foreign exchange, Journal Subscription revenue was flat with the prior year. As of
April 30, 2016, calendar year 2016 journal subscription renewals were 1% higher than calendar year 2015
billings on a constant currency basis with approximately 95% of targeted business under contract for the 2016
calendar year.
Author-Funded Access, which represents article publication fees that provide for free access to articles, grew
$3.3 million in fiscal year 2016. Licensing, Reprints, Backfiles and Other revenue of $178.5 million was flat with
the prior year on a constant currency basis.
On a currency neutral basis, Print Books declined 6% to $90.6 million in fiscal year 2016. Digital Books grew
9% on a currency neutral basis which was mainly driven by a single $4 million digital book sale in the current
year. Licensing and Other revenue of $14.3 million was flat with the prior year on a currency neutral basis.
Revenue by Region is as follows:
Revenue by Region:
Americas
EMEA
Asia-Pacific
Total Revenue
Cost of Sales:
2016
2015
% of
Revenue
% change
w/o FX
$370,111
540,562
54,581
$965,254
$398,573
585,693
56,529
$1,040,795
38%
56%
6%
100%
-6%
-3%
7%
-3%
Cost of Sales for fiscal year 2016 decreased 5% to $262.7 million, or 1% excluding the favorable impact of
foreign exchange. The decrease was mainly driven by lower royalty costs due to the transition to time-based
digital journal subscription agreements ($5 million) and cost savings from outsourcing and procurement
initiatives and lower cost digital products ($4 million), partially offset by higher royalty rates on society owned
journals ($5 million) and higher print inventory obsolescence provisions ($1 million).
Gross Profit:
Gross Profit Margin decreased 70 basis points to 72.8% in fiscal year 2016 mainly due to the impact of
transitioning to time-based digital journal subscription agreements.
Direct Expenses and Amortization:
Direct Expenses for fiscal year 2016 decreased 6% to $229.7 million, or 2% excluding the favorable impact of
foreign exchange. The decrease was mainly driven by the curtailment of a Company defined benefit pension
plan ($3 million) and other restructuring savings and cost containment initiatives ($6 million), partially offset by
merit increases ($2 million); higher legal and process reengineering consulting fees ($2 million); and higher
accrued incentive compensation ($1 million). Amortization of Intangibles decreased $0.6 million to $27.5 million
in fiscal year 2016 mainly due to the favorable impact of foreign exchange.
Contribution to Profit:
Contribution to Profit for fiscal year 2016 decreased 14% to $273.0 million, or 10% excluding the unfavorable
impact of foreign exchange and the current and prior year Restructuring Charges. The decrease was principally
driven by the impact of the transition to time-based journal subscriptions; higher royalty rates on society owned
journals; and higher employment costs, partially offset by restructuring and other cost savings from outsourcing
and procurement initiatives. Contribution Margin was 28.3% compared to 30.3% in the prior year period.
- 30 -
Society Partnerships
6 new society journals were signed with combined annual revenue of approximately $12 million
87 renewals/extensions were signed with approximately $54 million in combined annual revenue
18 journals were not renewed with combined annual revenue of approximately $11 million
Journal Impact Index
In July 2015, Wiley announced a strong performance in the number of its journal titles indexed in the Thomson
Reuters® 2014 Journal Citation Reports (JCR). A total of 1,200 Wiley titles were indexed, with 24 Wiley journals
achieving the top rank in their respective categories and 240 achieving a top 10 ranking. The Thomson Reuters
index is a barometer of journal influence across the research community.
PROFFESIONAL DEVELOPMENT (PD):
2016
2015
% change
% change
w/o FX (a)
Revenue:
Knowledge Services:
Print Books
Digital Books
Online Test Preparation and Certification
Other Knowledge Service Revenue
Talent Solutions:
Assessment
Corporate Learning
Total Revenue
Cost of Sales
Gross Profit
Gross Profit Margin
Direct Expenses
Amortization of Intangibles
Restructuring Charges (see Note 6)
Direct Contribution to Profit
Direct Contribution Margin
Shared Services and Administrative Costs:
Distribution and Operation Services
Technology and Content Management
Occupancy and Other
Contribution to Profit
Contribution Margin
$192,149
47,089
28,169
28,813
296,220
$206,086
49,672
22,119
30,094
307,971
$57,369
50,692
108,061
$57,035
42,017
99,052
$404,281
$407,023
(103,652)
(114,014)
$300,629
74.4%
$293,009
72.0%
(118,638)
(12,691)
(2,277)
(131,969)
(13,498)
(4,385)
$167,023
41.3%
$143,157
35.2%
(28,364)
(40,951)
(23,160)
(30,838)
(48,002)
(26,180)
$74,548
$38,137
18.4%
9.4%
-7%
-5%
27%
-4%
-4%
1%
21%
9%
-1%
-9%
3%
-10%
-6%
-4%
-3%
27%
-2%
-2%
1%
31%
14%
2%
-7%
6%
-7%
-3%
17%
17%
-8%
-15%
-12%
95%
-5%
-13%
-8%
84%
(a) Adjusted to exclude the fiscal year 2016 and 2015 Restructuring Charges
Revenue:
PD revenue for fiscal year 2016 decreased 1% to $404.3 million, but increased 2% excluding the unfavorable
impact of foreign exchange. The increase on a currency neutral basis was driven by growth in Talent Solutions,
and Online Test Preparation and Certification partially offset by a decline in Book Revenue.
- 31 -
Knowledge Services revenue decreased 4% to $296.2 million, or 2% excluding the unfavorable impact of
foreign exchange. The decrease was mainly driven by Print ($9 million) and Digital ($2 million) Books and Other
Knowledge Services Revenue ($1 million), partially offset by growth in Online Test Preparation and Certification
($6 million). Print and Digital Books results reflected continued retail softness, particularly in EMEA and Asia,
partially offset by lower sales return provisions. The increase in Online Test Preparation and Certification was
driven by new editions of GMAT titles and growth in proprietary sales of the Company’s CPA, CFA and CMA
online certification products. The decline in Other Knowledge Services was driven by lower revenue from the
licensing of intellectual content.
Talent Solutions revenue increased 9% to $108.1 million, or 14% excluding the unfavorable impact of foreign
exchange. Revenue growth in Corporate Learning came from new customers, including the expansion into the
U.S. market, and renewals for existing customers, with France, U.S. and Central and South American markets
driving the results. Assessment revenue grew 1% in fiscal year 2016 and was driven by higher post-hire
assessment revenue, partially offset by an expected decline in pre-hire assessment revenue following portfolio
actions to optimize longer-term profitable growth.
Revenue by Region is as follows:
Revenue by Region:
Americas
EMEA
Asia-Pacific
Total Revenue
Cost of Sales:
2016
2015
% of
Revenue
% change
w/o FX
$291,258
92,106
20,917
$404,281
$288,882
95,613
22,528
$407,023
72%
23%
5%
100%
1%
4%
0%
2%
Cost of Sales for fiscal year 2016 decreased 9% to $103.7 million, or 7% excluding the favorable impact of
foreign exchange. The decrease was mainly driven by lower cost digital products ($6 million); lower royalty and
print inventory obsolescence provisions ($4 million); and lower sales volume ($2 million), partially offset by
growth in the Corporate Learning business ($4 million).
Gross Profit:
Gross Profit Margin increased by 240 basis points to 74.4% in fiscal year 2016. The improvement was mainly
driven by higher margin digital revenue (170 bps) and lower royalty and print inventory obsolescence provisions
(70 bps).
Direct Expenses and Amortization:
Direct Expenses for fiscal year 2016 decreased 10% to $118.6 million, or 7% excluding the favorable impact of
foreign exchange. The reduction was driven by restructuring and other cost savings ($18 million) and lower
process reengineering consulting fees ($1 million), partially offset by Corporate Learning business growth ($8
million); higher accrued variable incentive compensation ($2 million); and merit increases ($1 million).
Amortization of Intangibles decreased $0.8 million to $12.7 million in fiscal year 2016.
Contribution to Profit:
Contribution to Profit for fiscal year 2016 was $74.5 million compared to $38.1 million in the prior year. The
improvement was mainly driven by restructuring and other cost savings, gross margin improvement and
reduced technology investment. Contribution Margin for fiscal year 2016 increased from 9.4% to 18.4%.
- 32 -
Test Preparation Partnership
Wiley announced a partnership with ACT, the nation’s leader in college and career readiness, to enhance both
organizations’ test prep product offerings and take over as the exclusive publisher for ACT’s The Real ACT®
Prep Guide beginning in January 2016. Maker of the ACT test and ACT WorkKeys®, among other respected
assessment programs, ACT (American College Test) is committed to providing insights that help individuals
better prepare for success throughout their lives—from education through career.
Junior Achievement Program
CrossKnowledge and Junior Achievement USA® announced a joint partnership that will bring digital learning
solutions to thousands of students and educators. As part of the agreement, CrossKnowledge has donated the
use of its Learning Management System (LMS) to Junior Achievement USA (JA) for the next five years (starting
in 2016) through the CrossKnowledge Foundation. This in-kind contribution is one of the largest of its kind in the
history of JA. By 2020, we expect that CrossKnowledge programs will reach 1.6 million JA users.
CrossKnowledge/L’Oréal platform:
CrossKnowledge announced the creation of MySalon-Edu.com, an online platform that focuses on salon
education, in conjunction with L’Oréal group. The e-cademy massive online open course (MOOC) was created
for professional hairdressers and beauticians.
EDUCATION:
Revenue:
Books:
Print Textbooks
Digital Books
Custom Materials
Course Workflow Solutions (WileyPLUS)
Online Program Management (Deltak)
Other Education Revenue
Total Revenue
Cost of Sales
Gross Profit
Gross Profit Margin
Direct Expenses
Amortization of Intangibles
Restructuring Charges (see Note 6)
Direct Contribution to Profit
Direct Contribution Margin
Shared Services and Administrative Costs:
Distribution and Operation Services
Technology and Content Management
Occupancy and Other
Contribution to Profit
Contribution Margin
2016
2015
% change
% change w/o FX (a)
$107,636
34,462
142,098
$144,500
34,086
178,586
51,842
58,551
96,469
8,542
50,659
54,200
81,593
9,584
$357,502
$374,622
(99,573)
(110,182)
$257,929
72.1%
(128,821)
(9,527)
(1,206)
$118,375
33.1%
$264,440
70.6%
(125,613)
(9,527)
(1,571)
$127,729
34.1%
(15,207)
(51,612)
(15,688)
(12,863)
(54,272)
(13,950)
$35,868
$46,644
10.0%
12.5%
- 33 -
-26%
1%
-20%
2%
8%
18%
-11%
-5%
-10%
-2%
3%
0%
-7%
18%
-5%
12%
-23%
-20%
5%
-15%
2%
10%
18%
-11%
-2%
-8%
0%
5%
0%
0%
-3%
24%
-3%
15%
-18%
(a) Adjusted to exclude the fiscal year 2016 and 2015 Restructuring Charges
Revenue:
Education revenue for fiscal year 2016 decreased 5% to $357.5 million, or 2% excluding the unfavorable impact
of foreign exchange. Print Textbooks decreased 20% to $107.6 million due to higher returns; retail channel
consolidation; lower enrollments; increased market penetration by rental; and a shift to lower priced alternatives
such as Digital Books, Custom Materials and Course Workflow Solutions (WileyPLUS). Digital books increased
5% to $34.5 million, Custom Materials increased 2% to $51.8 million, and Course Workflow Solutions
(WileyPLUS) increased 10% to $58.6 million on a currency neutral basis due to new and digital formats. Other
Education Revenue decreased 11% to $8.5 million principally due to lower revenue from the licensing of
intellectual content.
Revenue from Online Program Management (Deltak) grew 18% to $96.5 million reflecting higher enrollments;
an increase in institutional partners and programs generating revenue; and growth in fee-for-service
agreements. As of April 30, 2016, Deltak had 38 partners and 226 degree programs under contract, compared
to 38 partners and 200 programs as of April 30, 2015. As of April 30, 2016, 186 of Deltak’s 226 degree
programs were revenue generating.
Revenue by Region is as follows:
Revenue by Region:
Americas
EMEA
Asia-Pacific
Total Revenue
Cost of Sales:
2016
2015
% of
Revenue
% change
w/o FX
$295,296
15,764
46,442
$357,502
$300,174
19,265
55,183
$374,622
83%
4%
13%
100%
-1%
-15%
-4%
-2%
Cost of Sales for fiscal year 2016 decreased 10% to $99.6 million, or 8% excluding the favorable impact of
foreign exchange. The decrease was mainly driven by lower sales volume ($7 million); savings from
procurement initiatives and lower cost digital products ($3 million); and lower composition costs ($3 million),
partially offset by higher Online Program Management (Deltak) costs due to program growth ($2 million) and
higher royalty costs due to mix ($2 million).
Gross Profit:
Gross Profit Margin for fiscal year 2016 improved 150 basis points to 72.1% principally due higher margin
growth from Online Program Management (Deltak) (80 bps) and lower inventory and composition costs.
Direct Expenses and Amortization:
Direct Expenses increased 3% to $128.8 million, or 5% excluding the favorable impact of foreign exchange.
The increase was mainly driven by student recruitment costs to support new Online Program Management
(Deltak) programs ($14 million) and merit increases ($1 million), partially offset by restructuring and other cost
savings ($5 million); lower accrued variable incentive compensation ($2 million); and other, mainly lower third-
party advertising and promotional expenses ($2 million). Amortization of Intangibles was $9.5 million in fiscal
years 2016 and 2015.
- 34 -
Contribution to Profit:
Contribution to Profit for fiscal year 2016 decreased 23% to $35.9 million, or 18% excluding the current and prior
year Restructuring Charges and the unfavorable impact of foreign exchange. The decline was mainly driven by
lower print book revenue; investment in Online Program Management (Deltak) programs; and higher digital
fulfillment and marketing support costs, partially offset by restructuring and other cost savings and reduced
technology investments. Contribution Margin was 10.0% compared to 12.5% in the prior year.
SHARED SERVICES AND ADMINISTRATIVE COSTS:
As part of Wiley’s Restructuring and Reinvestment Program, the Company consolidated its marketing services
functions into a single global shared service function. This newly centralized service group enables significant
cost reduction opportunities, including efficiencies gained from standardized technology and centralized
management. The costs of these functions were previously reported as direct operating expenses in each
business segment but are now reported within Shared Services and Administrative Costs and are allocated to
each business segment. As a result, prior year amounts have been restated to reflect these same reporting
methodologies. The Company uses occupied square footage of space; number of employees; units shipped;
specific identification/activity-based; gross profit; revenue and number of invoices to allocate shared service
costs to each business segment.
Dollars in thousands
2016
2015
% Change
Distribution and Operation Services
Technology and Content Management
Finance
Other Administration
Restructuring Charges (see Note 6)
Total
$83,109
257,822
49,798
126,777
20,080
$537,586
$89,024
244,850
52,796
115,469
18,293
$520,432
-7%
5%
-6%
10%
3%
% Change
w/o FX (a)
-3%
8%
-2%
13%
6%
(a) Adjusted to exclude the fiscal year 2016 and 2015 Restructuring Charges
Shared Services and Administrative Costs for fiscal year 2016 increased 3% to $537.6 million, or 6% on a
currency neutral basis and excluding the current and prior year Restructuring Charges. Lower Distribution and
Operation Services costs mainly reflect lower journal shipping and handling costs ($2 million). Technology and
Content Management increased mainly due to incremental investments in the Company’s Enterprise Resource
Planning and related systems ($13 million); higher license, maintenance and hosting costs ($11 million);
investments in Corporate Learning (CrossKnowledge) and Online Program Management (Deltak) programs ($3
million); and merit increases ($2 million), partially offset by restructuring and other cost savings ($14 million).
Finance costs decreased 2% on a currency neutral basis mainly due to restructuring and other cost savings ($1
million). Other Administration costs increased mainly due to higher employment costs ($8 million); higher legal
costs ($3 million); Online Program Management (Deltak) program growth ($2 million); and process
reengineering consulting costs ($2 million).
U.S. Distribution Outsourcing:
As part of the Company’s restructuring initiatives, in November 2015, Wiley entered into an agreement to
outsource its US-based print textbook fulfillment operations to Cengage Learning, with the aim of creating a
more efficient and variable cost model. As of April 30, 2016 these operations were fully transitioned to
Cengage.
- 35 -
LIQUIDITY AND CAPITAL RESOURCES:
The Company’s Cash and Cash Equivalents balance was $363.8 million at the end of fiscal year 2016,
compared with $457.4 million a year earlier. Cash Provided by Operating Activities in fiscal year 2016
decreased $5.2 million from fiscal year 2015 to $350.0 million principally due to the timing of vendor and royalty
payments ($28 million); higher employee retirement plan contributions ($6 million); and higher royalty advance
payments due to higher royalty rates on society owned journals and new society contracts ($5 million), partially
offset by lower annual incentive compensation payments ($15 million); lower income tax payments and deposits
($11 million); lower payments related to the Company’s restructuring programs ($2 million); and timing of journal
subscription cash collections. The change in deferred revenue was driven by lower non-cash earnings mainly
due to the impact of transitioning to time-based digital journal subscription agreements; foreign exchange; and
timing of cash collections.
Cash Used for Investing Activities in fiscal year 2016 was $151.4 million compared to $279.7 million in the prior
year. Fiscal year 2015 includes the acquisition of CrossKnowledge (Corporate Learning) for approximately $166
million in cash, net of cash acquired. The acquisition was funded through the use of the existing credit facilities
and available cash and did not have an impact on the Company’s ability to meet other operating, investing and
financing needs. Acquisitions in fiscal year 2016 mainly reflect the acquisition of publication rights for society
journals. During fiscal year 2015, the Company received $1.1 million of escrow proceeds from the sale of certain
consumer publishing assets in fiscal year 2013 which represented the final amounts due to the Company from
the sale of those assets.
Composition spending was $37.3 million in fiscal year 2016 compared to $39.4 million in the prior year. Cash
used for technology, property and equipment was $93.7 million in fiscal year 2016 compared to $69.1 million in
the prior year. The increase mainly reflects incremental investment in the Company’s Enterprise Resource
Planning and related systems ($18 million) and other technology infrastructure.
Cash Used for Financing Activities was $285.7 million in fiscal year 2016 compared to $61.0 million in the prior
year. During fiscal year 2016, net debt repayments were $145.1 million compared to borrowings of $47.7 million
in the prior year. The Company’s net debt (debt less cash and cash equivalents) decreased $51.4 million from
the prior year to $241.2 million.
On March 1, 2016, the Company amended and extended its existing revolving credit agreement (“RCA”) with a
syndicated bank group led by Bank of America. The previous RCA consisted of a $940 million senior revolving
credit facility due on November 2, 2016. The new agreement consists of a $1.1 billion five-year senior revolving
credit facility payable March 1, 2021. The proceeds of the amended facility will be used for general corporate
purposes including seasonal operating cash requirements investments in technology systems and new
businesses, and strategic acquisitions. Under the agreement, which can be drawn in multiple currencies, 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 0.98% to 1.50%, 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 0.45%, 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 pays a facility fee ranging from 0.15% to 0.25% depending on the
Company’s consolidated leverage ratio. The Company also has the option to request an additional credit limit
increase of up to $350 million in minimum increments of $50 million, subject to the approval of the lenders. The
credit agreement contains certain restrictive covenants related to the Company’s consolidated leverage ratio
- 36 -
and interest coverage ratio, which the Company was in compliance with as of April 30, 2016. Due to the fact that
there are no principal payments due until the end of the agreement in fiscal year 2021, the Company has
classified its entire debt obligation related to this facility as long-term which was approximately $605.0 million as
of April 30, 2016. As of April 30, 2015, the entire debt obligation related to the previous facility of approximately
$750.1 was classified as long-term. As part of the amendment, the Company paid $3.4 million in debt financing
costs in fiscal year 2016 which were capitalized and included in the Other Assets line item in the Consolidated
Statements of Financial Position. The total notional amount of the fixed interest rate swap agreements
associated with the Company’s revolving credit facility was $500.0 million as of April 30, 2016.
On August 6, 2015, the Company amended its December 22, 2014 364-day U.S. dollar revolving credit facility
reinstated every 30 days with Santander Bank, N.A. by increasing the facility to $100 million from $50 million.
The additional $50 million was drawn during August and used to repay a portion of the senior revolving credit
facility. The facility was equally ranked with the Company’s previous agreement with Bank of America - Merrill
Lynch and The Royal Bank of Scotland plc, and TD Bank, N.A. The facility was fully paid on April 29, 2016. This
facility’s termination date was May 23, 2016 and was not renewed.
During fiscal year 2016, the Company repurchased 1,432,284 shares of common stock at an average price of
$48.86 compared to 1,082,502 shares at an average price of $57.26 in the prior year. In fiscal year 2016, the
Company increased its quarterly dividend to shareholders by 3% to $0.30 per share versus $0.29 per share in
the prior year. Lower proceeds from the exercise of stock options mainly reflected lower stock option exercises
in fiscal year 2016 compared to the prior year.
The Company’s operating cash flow is affected by the seasonality and timing of receipts from its Research
journal subscriptions and its Education business. Cash receipts for calendar year Research subscription
journals occur primarily from December through April. Reference is made to the Customer 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 October.
Cash and Cash Equivalents held outside the U.S. were approximately $339 million as of April 30, 2016. The
balances in equivalent U.S. dollars were comprised primarily of pound sterling ($222 million), euros ($46 million),
Singapore dollars ($19 million), U.S. dollars ($18 million), Australian dollars ($14 million), and other ($20 million).
Maintenance of these cash and cash equivalent balances outside the U.S. does not have a material impact on
the liquidity or capital resources of the Company’s global, including U.S., operations. Cash and cash equivalent
balances outside the U.S. may be subject to U.S. taxation, if repatriated. The Company intends to reinvest cash
outside the U.S. except in instances where repatriating such earnings would result in no additional income tax.
Accordingly, the Company has not accrued for U.S. income tax on the repatriation of non-U.S. earnings. It is not
practical to determine the U.S. income tax liability that would be payable if such cash and cash equivalents were
not indefinitely reinvested.
As of April 30, 2016, the Company had approximately $605 million of debt outstanding and approximately $602
million of unused borrowing capacity under its Revolving Credit and other facilities. The Company believes that
its operating cash flow, together with its revolving credit facilities and other available debt financing, will be
adequate to meet its 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 its ability to
access these markets on terms commercially acceptable. The Company does not have any off-balance-sheet
debt.
- 37 -
The Company’s working capital can be negative due to the seasonality of its businesses. 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; dividend payments; and purchasing
treasury shares. The deferred revenue will be recognized as income when the products are shipped or made
available online to the customers over the term of the subscription. Current liabilities as of April 30, 2016 include
$426.5 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 2017 is
forecast to be approximately $115 million and $50 million, respectively. The increase in fiscal year 2017
Technology, Property and Equipment projected spending is mainly driven by investment in new enterprise
resource systems to enable future operating efficiency gains and spending to transform the Company’s Hoboken
headquarters to enable consolidation and productivity gains. Projected spending for author advances, which is
classified as an operating activity, for fiscal year 2017 is forecast to be approximately $110 million.
FISCAL YEAR 2015 SUMMARY RESULTS
Revenue:
Revenue for fiscal year 2015 increased 3% to $1,822.4 million, or 4% excluding the unfavorable impact of
foreign exchange. The increase mainly reflects incremental revenue from the recent acquisitions of
CrossKnowledge Group, Ltd. (“CrossKnowledge”) ($42 million) and Profiles International (“Profiles”) ($21
million), growth in Education custom products and workflow solutions ($12 million), Education Services (Deltak)
($11 million), the sale of an individually large journal backfile license ($10 million), journal subscriptions ($7
million), funded access revenue ($5 million), growth in online test preparation ($3 million) and other ($9 million),
mainly the licensing of research publication content, partially offset by lower print book revenue in all three
businesses ($46 million).
Cost of Sales and Gross Profit:
Cost of sales for fiscal year 2015 decreased 1% to $499.7 million, but was flat excluding the favorable impact of
foreign exchange. Cost savings from outsourcing and procurement initiatives ($10 million), lower print volume
($5 million) and lower cost digital products ($5 million) were partially offset by incremental costs from
acquisitions ($8 million), higher royalty rates on society owned journals ($5 million), Education Services (Deltak)
program growth ($3 million) and higher journal subscription volume ($3 million).
Gross profit for fiscal year 2015 of 72.6% was 120 basis points higher than prior year due to cost savings from
outsourcing and procurement initiatives and growth in digital products (90 basis points) and incremental revenue
from higher margin acquisitions (60 basis points), partially offset by higher royalty rates on society owned
journals (30 basis points).
Operating and Administrative Expenses:
Operating and administrative expenses for fiscal year 2015 increased 4% to $1,005.0 million, or 5% excluding
the favorable impact of foreign exchange. The increase was mainly driven by incremental operating and
administrative expenses from acquisitions ($54 million), higher technology costs related to investments in
internal systems and digital platforms ($18 million) including continued development costs related to the
Company’s new global Enterprise Resource Planning (“ERP”) system ($6 million), Education Services (Deltak)
program growth ($16 million), other employment costs, principally merit ($3 million); the expiration of a real
estate tax incentive related to the Hoboken headquarters ($3 million) and higher editorial costs in Research to
- 38 -
support business growth ($2 million), partially offset by restructuring and other cost savings ($39 million) and
lower accrued incentive compensation ($12 million).
Restructuring Charges:
In fiscal year 2013, the Company initiated a program (the “Restructuring and Reinvestment Program”) to
restructure and realign its cost base with current and anticipated future market conditions. The Company is
targeting a majority of the cost savings achieved to improve margins and earnings, while the remainder will be
reinvested in high growth digital business opportunities.
In fiscal years 2015 and 2014, the Company recorded pre-tax restructuring charges of $28.8 million ($0.34 per
share) and $42.7 million ($0.48 per share), respectively, related to this program. These charges are summarized
in the following table (in thousands):
Charges by Segment:
Research
Professional Development
Education
Shared Services
Total Restructuring Charges
Charges by Activity:
Severance
Process reengineering consulting
Other activities
Total Restructuring Charges
2015
2014
Total Charges
Incurred to Date
$4,555
4,385
1,571
18,293
$28,804
$17,093
301
11,410
$28,804
$7,774
11,860
891
22,197
$42,722
$25,962
8,556
8,204
$42,722
$15,225
22,529
3,580
54,644
$95,978
$62,761
11,475
21,742
$95,978
Other Activities mainly reflect lease and other contract termination costs. The cumulative charge recorded to-
date related to the Restructuring and Reinvestment Program of $96.0 million is expected to be fully recovered
by April 30, 2016.
Impairment Charges:
In fiscal year 2014, the Company terminated a multi-year software development program for an internal
operations application due to a change in the Company’s longer-term enterprise systems plans. As a result, the
Company recorded an asset impairment charge for previously capitalized software costs related to the program
of $4.8 million ($0.06 per share).
Amortization of Intangibles:
Amortization of intangibles increased $6.5 million to $51.2 million in fiscal year 2015 and was mainly driven by
Talent Solutions acquisitions in Professional Development.
Interest Expense/Income, Foreign Exchange and Other:
Interest expense for fiscal year 2015 increased $3.2 million to $17.1 million. The increase was driven by higher
interest rates and higher average debt due to acquisition financing. The Company’s average cost of borrowing in
fiscal years 2015 and 2014 was 1.9% and 1.8%, respectively. In fiscal year 2015, the Company recognized
- 39 -
foreign exchange transaction gains of $1.7 million mainly related to U.S. dollar intercompany receivables in the
U.K. and Germany.
Provision for Income Taxes:
The effective tax rate for fiscal year 2015 was 21.6% compared to 17.9% in the prior year. In the fourth quarter
of fiscal year 2015, the Company recognized a non-recurring tax benefit of $3.1 million related to tax deductions
claimed on the write up of certain foreign tax assets to fair market value. During fiscal year 2014, the Company
recorded non-cash deferred tax benefits of $10.6 million ($0.18 per share), principally associated with new tax
legislation enacted in the United Kingdom (“U.K”) that reduced the U.K. statutory income tax rates by 3%. The
benefits reflect the measurement of all applicable U.K. deferred tax balances to the new income tax rates of
21% effective April 1, 2014 and 20% effective April 1, 2015. Excluding the impact of the tax benefits described
above, the Company’s effective tax rate decreased from 23.3% to 22.9% principally due to higher non-U.S. tax
benefits and lower U.K. income tax rates, partially offset by lower net tax reserve releases of $2.0 million.
Earnings Per Share:
Earnings per diluted share for fiscal year 2015 increased 10% to $2.97 per share. Excluding the impact of the
fiscal year 2015 ($0.34 per share) and the fiscal year 2014 ($0.48 per share) restructuring charges, the prior
year asset impairment charges ($0.06 per share), fiscal year 2015 ($0.05 per share) and fiscal year 2014 ($0.18
per share) non-recurring tax benefits and the unfavorable impact of foreign exchange ($0.11 per share),
earnings per diluted share increased 7%. The growth was mainly driven by company-wide restructuring and
other cost savings, higher margin digital revenue and lower accrued incentive compensation, partially offset by
the dilutive impacts of investments in CrossKnowledge and Education Services (Deltak) and costs incurred for
the development of internal systems and digital platforms.
FISCAL YEAR 2015 SEGMENT RESULTS:
As part of Wiley’s Restructuring and Reinvestment Program, during the first quarter of fiscal year 2015, the
Company consolidated certain decentralized business functions (Content Management, Vendor Procurement
Services, Marketing Services, etc.) into Shared Service and Administrative functions. These newly centralized
service groups are part of the Company’s plan to reduce costs through efficiencies gained from standardized
technology and centralized management. The costs of these functions were previously reported as direct
operating expenses in each business segment but are now reported within the shared service functions. Prior
year amounts have been restated to reflect the same reporting methodology. The Company uses occupied
square footage of space; number of employees; units shipped; specific identification/activity-based; gross profit;
revenue and number of invoices to allocate shared service costs to each business segment.
- 40 -
RESEARCH:
Revenue:
Journal Revenue:
2015
2014
% change
% change w/o FX (a)
Journal Subscriptions
Author-Funded Access
Licensing, Reprints, Backfiles, and Other
Total Journal Revenue
$672,218
22,388
188,326
882,932
$675,266
17,673
177,255
870,194
Books and References:
Print Books
Digital Books
Licensing and Other
Total Books and References Revenue
Total Revenue
Cost of Sales
Gross Profit
Gross Profit Margin
Direct Expenses
Amortization of Intangibles
Restructuring Charges (see Note 6)
Direct Contribution to Profit
Direct Contribution Margin
Shared Services and Administrative Costs:
Distribution and Operation Services
Technology and Content Management
Occupancy and Other
Contribution to Profit
Contribution Margin
0%
27%
6%
1%
-11%
-7%
-1%
-9%
0%
-2%
0%
-1%
0%
99,746
42,512
15,605
157,863
112,386
45,934
15,835
174,155
$1,040,795
$1,044,349
(275,487)
(280,794)
$765,308
73.5%
$763,555
73.1%
(248,404)
(28,188)
(7,774)
(245,278)
(28,190)
(4,555)
$487,285
46.8%
$479,189
2%
45.9%
(44,620)
(96,486)
(30,405)
(45,773)
(99,929)
(28,491)
$315,774
$304,996
30.3%
29.2%
-3%
-3%
7%
4%
1%
29%
9%
3%
-10%
-5%
2%
-7%
2%
-1%
2%
1%
0%
3%
-1%
-3%
9%
5%
(a) Adjusted to exclude the fiscal year 2015 and 2014 Restructuring Charges
Revenue:
Research revenue for fiscal year 2015 of $1,040.8 million was flat with the prior year, but increased 2%
excluding the unfavorable impact of foreign exchange. The increase was driven by Journal Subscriptions;
Licensing, Reprints, Backfiles and Other Journal revenue; and Author-Funded Access, partially offset by declines
in Print and Digital Books. Journal Subscription revenue growth was driven by new subscriptions ($4 million),
new titles ($2 million) and publication timing ($1 million). As of April 30, 2015, calendar year 2015 journal
subscription renewals were up approximately 1% over calendar year 2014 on a constant currency basis with
approximately 97% of targeted business closed. Growth in Licensing, Reprints, Backfiles, and Other was mainly
driven by the sale of an individually large journal backfile license ($10 million) and journal content rights ($6
million).
Author-Funded Access revenue, which represents article publication fees that provide for free access to author
articles, grew $4.7 million in fiscal year 2015 due to a higher volume of articles published by the Company. Print
- 41 -
Books declined 10% to $99.7 million and Digital Books declined 5% to $42.5 million excluding the unfavorable
impact of foreign exchange.
Revenue by Region is as follows:
Revenue by Region:
Americas
EMEA
Asia-Pacific
Total Revenue
Cost of Sales:
2015
2014
% of
Revenue
% change
w/o FX
$398,573
585,693
56,529
$1,040,795
$408,001
578,099
58,249
$1,044,349
38%
56%
6%
100%
-2%
4%
3%
1%
Cost of Sales for fiscal year 2015 decreased 2% to $275.5 million, or 1% excluding the favorable impact of
foreign exchange. The decrease reflects cost savings from outsourcing and procurement initiatives and lower
cost digital products ($10 million), partially offset by higher royalty rates on society owned journals ($5 million)
and higher journal volume ($3 million).
Gross Profit:
Gross Profit Margin for fiscal year 2015 of 73.5% was 40 basis points higher than prior year mainly due to cost
savings from outsourcing and procurement initiatives and growth in digital products (110 basis points), including
the sale of an individually large digital journal backfile license, partially offset by higher royalty rates on society
owned journals (70 basis points).
Direct Expenses and Amortization:
Direct Expenses for fiscal year 2015 of $245.3 million decreased 1% from the prior year, but increased 1%
excluding the favorable impact of foreign exchange. The increase was mainly driven by higher editorial costs to
support business growth ($3 million) and higher employment costs ($3 million), partially offset by lower accrued
incentive compensation ($3 million). Amortization of Intangibles in fiscal year 2015 of $28.2 million was flat with
the prior year.
Contribution to Profit:
Contribution to Profit for fiscal year 2015 increased 4% to $315.8 million, or 5% excluding the current and prior
year Restructuring Charges and the unfavorable impact of foreign exchange. Revenue growth and cost savings
from outsourcing and procurement initiatives were partially offset by higher royalty rates on society owned
journals and higher employment costs. Contribution Margin increased 110 basis points to 30.3% in fiscal year
2015 mainly due to cost savings from outsourcing and procurement initiatives and growth in digital products,
partially offset by higher royalty rates on society owned journals.
Society Partnerships
9 new society journals were signed with combined annual revenue of approximately $5 million
45 renewals/extensions were signed with approximately $30 million in combined annual revenue
14 journals were not renewed with combined annual revenue of approximately $9 million
- 42 -
Journal Impact Index
In July 2014, the Company announced a continued increase in the number of its journal titles indexed in the
Thomson Reuters® 2013 Journal Citation Reports (JCR). A total of 1,202 Wiley titles were indexed, up from
1,193 in the previous year report. 27 Wiley journals achieved the top category rank, up from 25 in the previous
year. The Thomson Reuters index is an important barometer of journal influence and impact.
PROFFESIONAL DEVELOPMENT (PD):
2015
2014
% change
% change
w/o FX (a)
Revenue:
Knowledge Services:
Print Books
Digital Books
Online Test Preparation and Certification
Other Knowledge Service Revenue
Talent Solutions:
Assessment
Corporate Learning
Total Revenue
Cost of Sales
Gross Profit
Gross Profit Margin
Direct Expenses
Amortization of Intangibles
Restructuring Charges (see Note 6)
Direct Contribution to Profit
Direct Contribution Margin
Shared Services and Administrative Costs:
Distribution and Operation Services
Technology and Content Management
Occupancy and Other
Contribution to Profit
Contribution Margin
$206,086
49,672
22,119
30,094
307,971
$229,199
53,764
17,975
29,884
330,822
$57,035
42,017
99,052
$33,047
-
33,047
$407,023
$363,869
(114,014)
(111,911)
$293,009
72.0%
$251,958
69.2%
(131,969)
(13,498)
(4,385)
(102,706)
(6,965)
(11,860)
$143,157
35.2%
$130,427
35.8%
(30,838)
(48,002)
(26,180)
$38,137
9.4%
(37,673)
(50,426)
(19,712)
$22,616
6.2%
-10%
-8%
23%
1%
-7%
73%
-
200%
12%
2%
16%
28%
94%
10%
-18%
-5%
33%
69%
-9%
-7%
23%
1%
-6%
73%
200%
13%
3%
17%
29%
94%
8%
-17%
-5%
33%
47%
(a) Adjusted to exclude the fiscal year 2015 and 2014 Restructuring Charges
Revenue:
PD revenue for fiscal year 2015 increased 12% to $407.0 million, or 13% excluding the unfavorable impact of
foreign exchange. Revenue
the Talent Solutions acquisitions of
incremental revenue from
CrossKnowledge ($42 million) and Profiles ($21 million). Excluding revenue from both acquisitions, revenue
decreased 6% on a currency neutral basis as declines in Book sales, exceeded growth in Online Test
Preparation and Certification and other Assessment revenue. The decline in Book revenue was mainly driven by
slow demand for backlist titles through retail and wholesale accounts and strategically planned reductions in
includes
- 43 -
front list titles. Growth in Online Test Preparation and Certification reflects the addition of new products, mainly
test preparation for the CFA and CMA exams, to the ELS Excel platform. Growth in Assessment revenue
excluding the acquisitions was approximately $3.0 million and driven by new Inscape assessment products and
other growth in Workplace Learning Solutions products. Other Knowledge Services revenue, which includes the
sale of licensing rights, subscription revenue and advertising and agency revenue, increased 1% to $30.1 million
due to growth in licensing revenue.
Revenue by Region is as follows:
Revenue by Region:
Americas
EMEA
Asia-Pacific
Total Revenue
Cost of Sales:
2015
2014
% of
Revenue
% change
w/o FX
$288,882
95,613
22,528
$407,023
$285,376
54,240
24,253
$363,869
71%
23%
6%
100%
2%
78%
-4%
13%
Cost of Sales for fiscal year 2015 increased 2% or 3% excluding the favorable impact of foreign exchange to
$114.0 million. The increase was mainly driven by costs from new acquisitions ($8 million), partially offset by
lower Print Book volume ($5 million).
Gross Profit:
Gross Profit Margin increased from 69.2% to 72.0% in fiscal year 2015. The improvement was mainly driven by
higher margin incremental revenue from the CrossKnowledge (150 basis points) and Profiles (140 basis points)
acquisitions.
Direct Expenses and Amortization:
Direct Expenses for fiscal year 2015 increased 28% to $132.0 million, or 29% excluding the favorable impact of
foreign exchange. The increase was driven by incremental operating expenses from Talent Solutions
acquisitions ($40 million) and content development costs for new assessment products ($1 million), partially
offset by restructuring and other cost savings ($12 million). Amortization of Intangibles increased $6.5 million in
fiscal year 2015 principally due to the Talent Solutions acquisitions of CrossKnowledge and Profiles.
Contribution to Profit:
Contribution to Profit increased 69% to $38.1 million in fiscal year 2015, or 47% on a currency neutral basis and
excluding the current and prior year Restructuring Charges. The improvement was mainly driven by
restructuring and other cost savings, partially offset by lower Book revenue and the dilutive impact of the
CrossKnowledge acquisition. Contribution Margin increased from 6.2% to 9.4% in fiscal year 2015, or 120 basis
points on a currency neutral basis and excluding the Restructuring Charges. The increase was mainly driven by
restructuring and other cost savings, partially offset by the dilutive impact of the CrossKnowledge acquisition.
Acquisitions
On April 1, 2014, the Company acquired Profiles International (“Profiles”) for approximately $48 million
in cash, net of cash acquired. Profiles provides pre-employment assessment and selection tools that
enable employers to optimize candidate selections and develop the full potential of their employees.
Solutions include pre-hire assessments, including those designed to measure and match personality,
knowledge, skills, managerial fit, loyalty, and values; and post-hire assessments, focused on measuring
sales and managerial effectiveness, employee performance and career potential. Profiles serves
- 44 -
approximately 4,000 corporate clients and millions of end users in over 120 countries, with
assessments available in 32 languages. Profiles revenue and operating income for fiscal year 2015 was
$23.3 million and $1.0 million, respectively.
On May 1, 2014, the Company acquired CrossKnowledge Group Limited (“CrossKnowledge”) for
approximately $166 million in cash, net of cash acquired. CrossKnowledge is a learning solutions
provider focused on leadership and managerial skills development that offers subscription-based, digital
learning solutions for global corporations, universities, and small and medium-sized enterprises.
CrossKnowledge’s solutions include a variety of managerial and leadership skills assessments,
courses, certifications, content and executive training programs that are delivered on a cloud-based
LMS platform with over 19,000 learning objects in 17 languages. CrossKnowledge serves over seven
million end-users in 80 countries. For the fiscal year ended April 30, 2015, CrossKnowledge’s revenue
and operating loss included in Wiley’s results was $42.0 million and $5.1 million, respectively, including
$4.6 million of acquisition amortization.
Collaborations and Alliances
CrossKnowledge announced an agreement with Gavisus, a Scandinavian-based digital learning and
talent development company. CrossKnowledge will provide Gavisus with the technology to plan, design
and deliver online leadership training to clients in Norway, Sweden and Denmark.
Wiley announced a strategic collaboration with SilverCloud Health, a global provider of online
behavioral and wellness solutions. The partnership, which will provide a comprehensive range of
therapeutic programs across behavioral health and long-term chronic disease management, brings
together Wiley’s evidence-based psychological and wellness content and SilverCloud Health’s award-
winning cloud-based technology platform. The first set of programs, released in 2015, will address
Generalized Anxiety Disorder and Diabetes, conditions that affect more than 40 million people in the
United States on a daily basis alone.
Wiley has partnered with Chinese Cultural University to distribute the CPAexcel test preparation
platform in China.
The Institute of Management Accountants announced a partnership agreement in India with Wiley to
offer Wiley’s Certified Management Accountant Exam (CMA) Learning System as part of a full offering
that includes live training from Miles Professional Education, a major professional certification course
provider in India.
- 45 -
EDUCATION:
Revenue:
Books:
Print Textbooks
Digital Books
Custom Materials
Course Workflow Solutions (WileyPLUS)
Online Program Management (Deltak)
Other Education Revenue
Total Revenue
Cost of Sales
Gross Profit
Gross Profit Margin
Direct Expenses
Amortization of Intangibles
Restructuring Charges (see Note 6)
Direct Contribution to Profit
Direct Contribution Margin
Shared Services and Administrative Costs:
Distribution and Operation Services
Technology and Content Management
Occupancy and Other
Contribution to Profit
Contribution Margin
2015
2014
% change
% change w/o FX (a)
$144,500
34,086
178,586
$163,152
30,137
193,289
50,659
54,200
81,593
9,584
43,556
49,459
70,179
10,494
$374,622
$366,977
(110,182)
(114,174)
$264,440
70.6%
(125,613)
(9,527)
(1,571)
$127,729
34.1%
$252,803
68.9%
(118,240)
(9,527)
(891)
$124,145
33.8%
(12,863)
(54,272)
(13,950)
(15,685)
(48,097)
(11,769)
$46,644
$48,594
12.5%
13.2%
-11%
13%
-8%
16%
10%
16%
-9%
2%
-3%
5%
6%
0%
3%
-18%
13%
19%
-4%
-9%
15%
-6%
16%
11%
16%
-9%
3%
-2%
6%
7%
0%
4%
-16%
13%
19%
0%
(a) Adjusted to exclude the fiscal year 2015 and 2014 Restructuring Charges
Revenue:
Education revenue for fiscal year 2015 increased 2% to $374.6 million, or 3% excluding the unfavorable impact
of foreign exchange. The growth was mainly driven by Online Program Management (Deltak), Custom
Materials, Course Workflow Solutions (WileyPLUS) and Digital Books, partially offset by a decline in Print
Textbooks. WileyPLUS revenue, which is earned ratably over the school semester, grew 10% in fiscal year
2015. Unearned deferred WileyPLUS revenue as of April 30, 2015 was $3.8 million. The decline in Print
Textbooks reflects student’s preference for Digital Books and Custom Products, a decline in for-profit
enrollments and impact from rental book programs.
Online Program Management (Deltak) accounted for 22% of total Education revenue in fiscal year 2015
compared to 19% in the prior year. During the fiscal year, Wiley added 27 net programs and signed the
University of Birmingham (UK), Manhattan College (US), University College Cork (Ireland), University of
Delaware (US), and the largest partnership to-date, a university-wide agreement with one of America’s most
prestigious institutions. As of April 30, 2015, Deltak had 38 partners and 200 degree programs under contract.
- 46 -
Revenue by Region is as follows:
Revenue by Region:
Americas
EMEA
Asia-Pacific
Total Revenue
Cost of Sales
2015
2014
% of
Revenue
% change
w/o FX
$300,174
19,265
55,183
$374,622
$288,329
19,334
59,314
$366,977
80%
5%
15%
100%
5%
0%
-2%
3%
Cost of Sales for fiscal year 2015 decreased 3% to $110.2 million, or 2% excluding the favorable impact of
foreign exchange. The decrease was mainly driven by lower composition costs from lower cost digital products
($3 million), lower royalty costs due to product mix ($2 million) and lower inventory obsolescence provisions ($1
million), partially offset by higher student recruitment costs in Online Program Management (Deltak) due to
growth in new partners and programs ($3 million).
Gross Profit:
Gross Profit Margin for fiscal year 2015 improved 170 basis points to 70.6% principally due to lower composition
costs from lower cost digital products (70 basis points), lower royalty costs due to product mix (60 basis points)
and lower inventory obsolescence provisions (40 basis points).
Direct Expenses and Amortization:
Direct Expenses increased 6% to $125.6 million, or 7% excluding the favorable impact of foreign exchange.
The increase was mainly driven by costs associated with growth in Online Program Management (Deltak)
partner programs ($12 million), partially offset by restructuring and other cost savings ($2 million), lower accrued
incentive compensation ($1 million) and lower editorial costs due to a reduced title count ($1 million).
Amortization of Intangibles was $9.5 million in fiscal years 2015 and 2014.
Contribution to Profit:
Contribution to Profit for fiscal year 2015 decreased 4% to $46.6 million, but was flat on a currency neutral basis
and excluding the current and prior year Restructuring Charges. Digital revenue growth and cost savings
initiatives were partially offset by continued investment in Online Program Management (Deltak) programs.
Contribution Margin decreased 70 basis points to 12.5% in fiscal year 2015, or 40 basis points on a currency
neutral basis and excluding the Restructuring Charges. The decline was mainly driven by continued investment
in Online Program Management (Deltak) program development, partially offset by higher gross profit margins
and restructuring and other cost savings.
- 47 -
SHARED SERVICES AND ADMINISTRATIVE COSTS:
The following table reflects total shared services and administrative costs by function, which are included in the
Operating and Administrative Expenses line item in the Consolidated Statements of Income. A portion of these
costs are allocated to each segment above based on allocation methodologies described in Note 20.
Dollars in thousands
2015
2014
% Change
Distribution and Operation Services
Technology and Content Management
Finance
Other Administration
Restructuring Charges (see Note 6)
Impairment Charges (see Note 7)
Total
$89,024
244,850
52,796
115,469
18,293
-
$520,432
$100,310
240,797
54,191
104,807
22,197
4,786
$527,088
-11%
2%
-3%
10%
-
-
-1%
% Change
w/o FX (a)
-10%
2%
-1%
12%
-
-
1%
(a) Adjusted to exclude the fiscal year 2015 and 2014 Restructuring and fiscal year 2014 Impairment Charges
Shared Services and Administrative Costs for fiscal year 2015 decreased 1% to $520.4 million, but increased
1% on a currency neutral basis and excluding the current and prior year Restructuring Charges and prior year
Asset Impairment Charges.
Distribution and Operation Services costs decreased mainly due to the outsourcing of certain warehousing ($8
million), lower print volume ($1 million) and lower accrued incentive compensation ($1 million). Technology and
Content Management costs increased mainly due to investments in digital platforms and internal systems ($20
million), including approximately $6 million for the continued investment in the Company’s Enterprise Resource
Planning System, incremental costs from Talent Solutions acquisitions ($7 million) and investments in new
Online Program Management (Deltak) partners and programs ($2 million), partially offset by Content
Management restructuring and other cost savings ($18 million) and lower accrued incentive compensation ($4
million). Finance costs decreased mainly due to lower employment costs ($4 million), partially offset by
incremental costs from acquisitions ($3 million). Other Administration costs increased mainly due to incremental
costs from the CrossKnowledge acquisition ($5 million) and the expiration of a real estate tax incentive related
to the Company’s Hoboken headquarters ($3 million).
LIQUIDITY AND CAPITAL RESOURCES:
The Company’s Cash and Cash Equivalents balance was $457.4 million at the end of fiscal year 2015,
compared with $486.4 million a year earlier. Cash Provided by Operating Activities in fiscal year 2015 increased
$6.9 million to $355.1 million principally due to lower income tax payments ($18 million), lower income tax
deposits paid to German tax authorities ($7 million), lower employee retirement plan contributions ($6 million)
and lower royalty advance payments ($5 million), partially offset by higher annual incentive compensation
payments ($20 million), higher payments related to the Company’s restructuring programs ($4 million) and other
working capital changes mainly due to timing.
Cash Used for Investing Activities in fiscal year 2015 was $279.7 million compared to $149.3 million in the prior
year. Fiscal year 2015 includes the acquisition of CrossKnowledge for approximately $166 million in cash, net of
cash acquired, while fiscal year 2014 includes the acquisition of Profiles for approximately $48 million, net of
cash acquired. The acquisitions were 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.
During fiscal years 2015 and 2014, the Company received $1.1 million and $3.3 million of escrow proceeds,
- 48 -
respectively, from the sale of certain consumer publishing assets in fiscal year 2013 which represented the final
amounts due to the Company from the sale of those assets.
Composition spending was $39.4 million in fiscal year 2015 compared to $40.6 million in the prior year. The
decrease reflects lower spending in Education and Research due to cost reduction efficiencies and lower
planned title volume. Cash used for technology, property and equipment was $69.1 million in fiscal year 2015
compared to $57.6 million in the prior year. The increase mainly reflects Deltak curriculum development costs
due to growth in new partners and programs ($5 million), incremental capital spending for CrossKnowledge ($4
million), and capital spending on new leased facilities ($2 million).
Cash Used for Financing Activities was $61.0 million in fiscal year 2015 as compared to $53.5 million in the prior
year. The Company’s net debt (debt less cash and cash equivalents) increased $78.9 million from the prior year
principally to fund the CrossKnowledge acquisition ($166 million). During fiscal year 2015, net debt borrowings
were $47.7 million compared to $27.1 million in the prior year. The total notional amount of the interest rate
swap agreements associated with the Company’s revolving credit facilities was $300 million as of April 30, 2015.
To take advantage of more favorable interest rates available in the current market, on December 22, 2014, the
Company entered into a $50 million 364-day U.S. dollar revolving credit facility reinstated every 30 days with
Santander Bank, N.A. which is equally ranked with the Company’s existing agreement with Bank of America -
Merrill Lynch and The Royal Bank of Scotland plc, and TD Bank, N.A.. The facility was fully drawn as of April 30,
2015. The borrowing rate is LIBOR plus a margin of 1.00%. The proceeds of the revolving credit facility were
used to pay a portion of the Company’s existing revolving credit facilities and meet seasonal operating cash
requirements.
On October 31, 2014, the Company entered into a U.S. dollar facility with TD Bank, N.A. which is equally ranked
with the Company’s existing agreement with Bank of America - Merrill Lynch and The Royal Bank of Scotland
plc, and Santander Bank. The new agreement consists of a $50 million 364-day revolving credit facility. The
facility was fully drawn as of April 30, 2015. The borrowing rate is LIBOR plus an applicable margin ranging from
0.80% to 1.40%, and a facility fee will be due on any undrawn amounts ranging from 0.125% to 0.30%, both
depending on the Company consolidated leverage ratio, as defined. The 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, 2015. The proceeds of the new revolving credit facility were
used to pay a portion of the Company’s existing revolving credit facility and meet seasonal operating cash
requirements.
During fiscal year 2015, the Company repurchased 1,082,502 shares of common stock at an average price of
$57.26 compared to 1,248,030 shares at an average price of $50.79 in the prior year. In fiscal year 2015, the
Company increased its quarterly dividend to shareholders by 16% to $0.29 per share versus $0.25 per share in
the prior year. Lower proceeds from the exercise of stock options reflect a lower volume of stock option
exercises in fiscal year 2015 compared to the prior year.
The Company’s operating cash flow is affected by the seasonality and timing of receipts from its Research
journal subscriptions and its Education business. Cash receipts for calendar year Research subscription
journals occur primarily from December through April. Reference is made to the Customer 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 October.
- 49 -
Cash and Cash Equivalents held outside the U.S. were approximately $411.6 million as of April 30, 2015. The
balances in equivalent U.S. dollars were comprised primarily of pound sterling ($256 million), euros ($73 million),
Australian dollars ($45 million), Singapore dollars ($34 million) and other ($4 million). Maintenance of these cash
and cash equivalent balances outside the U.S. does not have a material impact on the liquidity or capital
resources of the Company’s global, including U.S., operations. Cash and cash equivalent balances outside the
U.S. may be subject to U.S. taxation, if repatriated. The Company intends to reinvest cash outside the U.S.
except in instances where repatriating such earnings would result in no additional income tax. Accordingly, the
Company has not accrued for U.S. income tax on the repatriation of non-U.S. earnings. It is not practical to
determine the U.S. income tax liability that would be payable if such cash and cash equivalents were not
indefinitely reinvested.
As of April 30, 2015, the Company had approximately $750.1 million of debt outstanding and approximately
$302.9 million of unused borrowing capacity under its Revolving Credit and other facilities. The Company
believes that its operating cash flow, together with its revolving credit facilities and other available debt financing,
will be adequate to meet its 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
its ability to access these markets on terms commercially acceptable. The Company does not have any off-
balance-sheet debt.
The Company’s working capital can be negative due to the seasonality of its businesses. 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; dividend payments; and purchasing
treasury shares. The deferred revenue will be recognized as income when the products are shipped or made
available online to the customers over the term of the subscription. Current liabilities as of April 30, 2015 include
$372.1 million of such deferred subscription revenue for which cash was collected in advance.
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. Revenue related
to journal subscriptions and other products and services that are generally collected in advance are deferred
and recognized as earned over the term of the subscription; when the related issue is shipped; made available
online; or the service is rendered, in accordance with contractual terms. Collectability is evaluated based on the
amount involved, the credit history of the customer, and the status of the customer’s account with the Company.
- 50 -
The Company transitioned from issue-based to time-based digital journal subscription agreements for calendar
year 2016. Under this new contractual agreement, the Company provides access to all journal content published
within a calendar year and recognizes revenue on a straight-line basis over the calendar year. Under the
Company’s previous licensing model, a customer subscribed to a discrete number of online journal issues and
revenue was recognized as each issue was made available online. The Company made these changes to
simplify the contracting and administration of digital journal subscriptions.
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 course management tool for the Company’s Education
business which includes a complete print or digital textbook for the course; negotiated licenses for bundles of
digital content available on Wiley Online Library, the online publishing platform for the Company’s Research
business; and test preparation, assessment, certification and training services sold by the Professional
Development business which can include bundles of print and digital content and online workflow solutions.
The Company enters into contracts for the resale of its content through a third party where the Company is not
the primary obligor of the arrangement because it is not responsible for fulfilling the customer’s order; handling
customer requests or claims and/or maintains credit risk. The Company recognizes revenue for the sale of its
content, net of any commission owed to the third party seller or 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 $7.3 million and $8.3 million as of April 30,
2016 and 2015, respectively.
Sales Return Reserve: The estimated allowance for sales returns is based on a review of the historical return
patterns, as well as current market trends in the businesses in which we operate. 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 print book sales return reserves amounted to $19.9 million and $25.3 million as of
April 30, 2016 and 2015, respectively. The reserves are reflected in the following accounts of the Consolidated
Statements of Financial Position – increase (decrease):
Accounts Receivable
Inventories
Accounts and Royalties Payable
Decrease in Net Assets
2016
$(29,447)
4,924
(4,662)
$(19,861)
2015
$(37,300)
6,555
(5,405)
$(25,340)
A one percent change in the estimated sales return rate could affect net income by approximately $2.0 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
- 51 -
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 Inventories balance in the Consolidated Statements of Financial Position and amounted to
$22.0 million and $21.9 million as of April 30, 2016 and 2015, 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 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 expected tax basis of assets acquired. The Company may use a third party valuation consultant to assist in
the determination of such estimates.
Goodwill and Indefinite-lived Intangible Assets: Goodwill is the excess of the purchase price paid over the fair
value of the net assets of the business acquired. Indefinite-lived intangible assets primarily consist of brands,
trademarks, content and publishing rights and 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. 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 primarily 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 previously 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.
In certain circumstances, the Company uses a qualitative assessment as an alternative to the two-step test
approach. Under this approach certain market, industry and financial performance factors are considered to
determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
If that is the case, the two-step approach described above is then performed to evaluate the recoverability of
goodwill.
Intangible Assets with Finite Lives and Other Long-Lived Assets: Finite-lived intangible assets principally consist
of brands, trademarks, content and publication rights, customer relationships and non-compete agreements and
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 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.
- 52 -
Intangible assets with finite lives are amortized on a straight line basis over the following weighted average
estimated useful lives: content and publishing rights – 31 years; customer relationships – 20 years; brands and
trademarks – 13 years; non-compete agreements – 4 years.
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.
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 certain employees worldwide. The
Company’s Board of Directors approved amendments to the U.S., Canada and U.K. defined benefit plans that
froze the future accumulation of benefits effective June 30, 2013, December 31, 2015 and April 30, 2015,
respectively. Under the amendments, no new employees will be permitted to enter these plans and no additional
benefits for current participants for future services will be accrued after the effective dates of the amendments.
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., United Kingdom and
Canadian pension plans 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 increase in the discount rate would impact net income and the accrued pension liability by
- 53 -
approximately $1.5 million and $143.3 million, respectively. A one percent decrease in the discount rate would
impact net income and the accrued pension liability by approximately $1.2 million and $178.6 million,
respectively. A one percent change in the expected long term rate of return would affect net income by
approximately $3.7 million.
Recently Issued Accounting Standards:
In March 2016, the FASB issued ASU 2016-09 “Compensation-Stock Compensation (Topic 718): Improvements
to Employee Share-Based Payment Accounting” which simplifies the accounting for share-based payment
transactions, including income taxes, classification of awards as either equity or liabilities, and classification on
the statement of cash flows. The new guidance also allows an entity to make an accounting policy election to
account for forfeitures when they occur or to estimate the number of awards that are expected to vest with a
subsequent true up to actual forfeitures (current GAAP). The standard is effective for the company on May 1,
2017, with early adoption permitted. The Company is currently assessing the impact the new guidance will have
on its consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02 "Leases (Topic 842)”. ASU 2016-02 requires lessees to
recognize most leases on the balance sheet which will result in an increase in reported assets and liabilities.
The recognition of expenses within the income statement is consistent with the existing lease accounting
standards. There are no significant changes in the new standard for lessors under operating leases. The
standard is effective for the Company on May 1, 2019 with early adoption permitted. Adoption requires
application of the new guidance for all periods presented. The Company is currently assessing the impact the
new guidance will have on its consolidated financial statements.
In November 2015, the FASB issued ASU 2015-17 “Income Taxes- Balance Sheet Classification of Deferred
Taxes”. To simplify the presentation of deferred income taxes, the amendments in this update require that all
deferred tax liabilities and assets, including those previously classified as current, be classified as noncurrent in
a classified statement of financial position. The amendments in this Update will align the presentation of
deferred income tax assets and liabilities with IFRS. The standard is effective for the company May 1, 2017 with
early adoption permitted. The Company is currently assessing the impact the new guidance will have on its
consolidated financial statements.
In April 2015, the FASB issued ASU 2015-05 "Intangibles- Goodwill and Other- Internal-Use Software (Subtopic
350-40): Customer’s Accounting for Fees Paid in Cloud Computing Arrangements" (“ASU 2015-05”). Cloud
computing arrangements represent the delivery of hosted services over the internet which includes software,
platforms, infrastructure and other hosting arrangements. The ASU provides criteria to determine whether the
cloud computing arrangement includes a software license. A software license can include customized
development, maintenance, hosting and other related costs. If the criteria are met, the customer will capitalize
the fee attributable to the software license portion of the arrangement as internal-use software. If the
arrangement does not include a software license, it should be treated as a service contract. The standard is
effective for the Company on May 1, 2016 with early adoption permitted. An entity can elect to adopt either
prospectively for all arrangements entered into or materially modified after the effective date or retrospectively.
The Company intends to adopt the new guidance on a prospective basis as of May 1, 2016.
In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09 "Revenue from
Contracts with Customers" (Topic 606) (“ASU 2014-09”), and the International Accounting Standards Board
(“IASB”) published its equivalent standard, International Financial Reporting Standard (“IFRS”) 15, “Revenue
from Contracts with Customers”. These joint comprehensive new revenue recognition standards will supersede
- 54 -
most existing revenue recognition guidance and are intended to improve and converge revenue recognition and
related financial reporting requirements. The standard is effective for the Company on May 1, 2018 with early
adoption permitted on May 1, 2017. The standard allows for either “full retrospective” adoption, meaning the
standard is applied to all periods presented, or “cumulative effect” adoption, meaning the standard is applied
only to the most current period presented in the financial statements. Subsequently, the FASB issued ASU No.
2016-08, Revenue from Contracts with Customers (Topic 606) – Principal versus Agent Considerations (“ASU
2016-08”), ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606) – Identifying Performance
Obligations and Licensing (“ASU 2016-10”), and ASU 2016-12, Revenue from Contracts with Customers (Topic
606) – Narrow Scope Improvements and Practical Expedients (“ASU 2016-12”), which provide clarification and
additional guidance related to ASU 2014-09. The Company must adopt ASU 2016-08, ASU 2016-10, and ASU
2016-12 with ASU 2014-09. The Company is currently assessing whether the adoption of the new guidance will
have a significant impact on its consolidated financial statements.
Contractual Obligations and Commercial Commitments
A summary of contractual obligations and commercial commitments, excluding unrecognized tax benefits further
described in Note 12, as of April 30, 2016 is as follows (in thousands):
Total Debt
Interest on Debt1
Non-Cancelable Leases
Minimum Royalty Obligations
Other Operating Commitments
Payments Due by Period
Total
Within
Year 1
2-3
4-5
Years
Years
After 5
Years
$605.0
$ -
$ -
$605.0
$ -
50.7
328.2
257.4
71.7
11.6
35.2
83.4
30.5
20.4
47.3
97.4
30.0
18.7
46.4
55.0
11.2
-
199.3
21.6
-
Total
$1,313.0
$160.7
$195.1
$736.3
$220.9
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, 2016 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 $605.0 million of variable rate loans outstanding at April 30, 2016, which approximated fair
value.
On April 4, 2016, the Company entered into a forward starting interest rate swap agreement which fixed a
portion of the variable interest due on a variable rate debt renewal on May 16, 2016. Under the terms of the
agreement, the Company will pay a fixed rate of 0.92% 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 starting May
- 55 -
16, 2016 ending May 15, 2019. As of April 30, 2016, the notional amount of the interest rate swap was $350.0
million.
On August 15, 2014, 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 0.65% and receives a variable rate of interest based on one-month LIBOR (as defined) from
the counterparty which is reset every month for a two-year period ending August 15, 2016. As of April 30, 2016,
the notional amount of the interest rate swap was $150.0 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 2016, the Company recognized a loss on its
hedge contracts of approximately $0.9 million which is reflected in Interest Expense in the Consolidated
Statements of Income. At April 30, 2016, the fair value of the outstanding interest rate swaps was a deferred
loss of $0.6 million. Based on the maturity dates of the contracts, approximately $0.1 million and $0.5 million of
the deferred loss was recorded in Other Accrued Liabilities and Other Long-Term Liabilities, respectively. On an
annual basis, a hypothetical one percent change in interest rates for the $455 million of unhedged variable rate
debt as of April 30, 2016 would affect net income and cash flow by approximately $0.7 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 currencies in Asia. 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. The percentage of Consolidated Revenue
for fiscal year 2016 recognized in the following currencies (on an equivalent U.S. dollar basis) were:
approximately 57% U.S dollar; 28% British pound sterling; 8% euro and 7% other currencies.
The Company’s significant investments in non-U.S. businesses are exposed to foreign currency risk.
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. During fiscal year 2016, the Company recorded foreign currency translation losses in
other comprehensive income of approximately $21.1 million primarily as a result of the weakening of the U.S.
dollar relative to the British pound sterling.
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 Transaction Gains and 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 Transaction Gains and Losses. As of April 30, 2016 and
2015, the Company had two open forward contracts with notional amounts of 31 million Euros and 274 million
Pound Sterling to hedge intercompany loans. As of April 30, 2015, the Company did not maintain any open
- 56 -
forward contracts. During fiscal years 2014 through 2016, 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. As of
April 30, 2016, the fair value of the open forward exchange contracts was a gain of approximately $1.3 million
which was measured on a recurring basis using Level 2 inputs and recorded within the Prepaid and Other Line
item in the Consolidated Statements of Financial Position. For fiscal years 2016, 2015 and 2014, the gains
(losses) recognized on the forward contracts were $1.3 million, $(11.2) million, and $(0.4) million, respectively.
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 December and April. 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 22% of total annual consolidated revenue and no one agent accounts for more than
11% of total annual consolidated revenue.
The Company’s non-journal subscription business is not dependent upon a single customer. Although no one
non-journal customer accounts for more than 9% of total consolidated revenue and 12% of accounts receivable
at April 30, 2016, the top 10 non-journal customers account for approximately 16% of total consolidated revenue
and approximately 26% of accounts receivable at April 30, 2016. The Company maintains approximately $25
million of trade credit insurance, subject to certain limitations, covering balances due from certain named
customers which expires in May, 2017.
Disclosure of Certain Activities Relating to Iran:
The European Union, Canada and United States have imposed sanctions on business relationships with Iran,
including restrictions on financial transactions and prohibitions on direct and indirect trading with listed
“designated persons.” In fiscal year 2016, the Company recorded revenue and net profits of approximately $2.8
million and $0.7 million, respectively, related to the sale of scientific and medical content to certain publicly
funded universities, hospitals and institutions that meet the definition of the “Government of Iran” as defined
under section 560.304 of title 31, Code of Federal Regulations. The Company has assessed its business
relationship and transactions with Iran and believes it is in compliance with the regulations governing the
sanctions. The Company intends to continue in these or similar sales as long as they continue to be consistent
with all applicable sanctions-related regulations.
- 57 -
“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 retailers; (vi) the seasonal nature of the Company’s education business and the impact
of the used-book market; (vii) worldwide economic and political conditions; (viii) the Company’s ability to protect
its copyrights and other intellectual property worldwide; (ix) the ability of the Company to successfully integrate
acquired operations and realize expected opportunities and (x) 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.
- 58 -
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 (2013) 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, 2016.
Changes in Internal Control over Financial Reporting:
We are in the process of implementing a new global enterprise resource planning system (“ERP”) that will
enhance our business and financial processes and standardize our information systems. We have completed
the implementation with respect to certain subsidiaries/locations and will continue to roll out the ERP in phases
over the next three years.
As with any new information system we implement, this application, along with the internal controls over
financial reporting included in this process, will require testing for effectiveness. In connection with this ERP
implementation, we are updating our internal controls over financial reporting, as necessary, to accommodate
modifications to our business processes and accounting procedures. We do not believe that the ERP
implementation will have an adverse effect on our internal control over financial reporting.
Except as described above, 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 2016.
The effectiveness of our internal control over financial reporting as of April 30, 2016 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/ Mark Allin
Mark Allin
President and
Chief Executive Officer
- 59 -
/s/ John A. Kritzmacher
John A. Kritzmacher
Chief Financial Officer and
Executive Vice President, Technology and Operations
/s/ Edward J. Melando
Edward J. Melando
Senior Vice President, Controller and
Chief Accounting Officer
June 29, 2016
- 60 -
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, 2016 and 2015, and the related consolidated statements of
income, comprehensive income (loss), cash flows and shareholders’ equity for each of the years in the
three-year period ended April 30, 2016. In connection with our audits of the consolidated financial statements,
we also have audited Schedule II 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, 2016 and 2015, and the results of
their operations and their cash flows for each of the years in the three-year period ended April 30, 2016, 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, 2016, based on
criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO)”), and our report dated June 29, 2016 expressed an
unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
(signed) KPMG LLP
Short Hills, New Jersey
June 29, 2016
- 61 -
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, 2016, based
on criteria established in Internal Control – Integrated Framework (2013) 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, 2016, based on criteria established in Internal Control – Integrated Framework
(2013) 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, 2016 and 2015, and the related consolidated statements of income, comprehensive income (loss),
cash flows and shareholders’ equity for each of the years in the three-year period ended April 30, 2016, and our
report dated June 29, 2016 expressed an unqualified opinion on those consolidated financial statements.
(signed) KPMG LLP
Short Hills, New Jersey
June 29, 2016
- 62 -
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
Income Tax Deposits
Other Assets
Total Assets
Liabilities and Shareholders’ Equity:
Current Liabilities
Short-term debt
Accounts and royalties payable
Deferred revenue
Accrued employment costs
Accrued income taxes
Accrued pension liability
Other accrued liabilities
Total Current Liabilities
Long-Term Debt
Accrued Pension Liability
Deferred Income Tax Liabilities
Other Long-Term Liabilities
Shareholders’ Equity
$
$
$
April 30,
2016
2015
363,806 $
167,638
57,779
81,456
670,679
72,126
214,770
877,007
951,663
62,912
71,939
2,921,096 $
- $
166,222
426,489
97,902
9,450
5,492
76,252
781,807
605,007
224,170
189,868
83,138
457,441
147,183
63,779
72,516
740,919
69,589
193,010
917,621
962,367
57,098
63,639
3,004,243
100,000
161,465
372,051
93,922
9,484
4,594
62,167
803,683
650,090
209,727
198,947
86,756
Preferred Stock, $1 par value: Authorized - 2 million, Issued - zero
Class A Common Stock, $1 par value: Authorized - 180 million,
Issued – 69,797,994
Class B Common Stock, $1 par value: Authorized - 72 million,
-
-
69,798
69,798
Issued – 13,392,268
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
Less Treasury Shares At Cost (Class A – 21,708,905 and 20,441,767;
Class B – 3,917,128 and 3,910,264)
Total Shareholders’ Equity
Total Liabilities and Shareholders’ Equity
13,392
368,698
1,673,325
(267,920)
(179,405)
(361)
(447,686)
(640,421)
1,037,106
2,921,096 $
$
13,392
353,018
1,597,439
(246,854)
(159,434)
(345)
(406,633)
(571,974)
1,055,040
3,004,243
The accompanying notes are an integral part of the consolidated financial statements.
- 63 -
CONSOLIDATED STATEMENTS OF INCOME
John Wiley & Sons, Inc., and Subsidiaries
Dollars in thousands, except per share data
For the years ended April 30,
2015
2016
2014
Revenue
$
1,727,037 $
1,822,440 $
1,775,195
Costs and Expenses
Cost of sales
Operating and administrative expenses
Restructuring charges
Impairment charges
Amortization of intangibles
Total Costs and Expenses
465,917
994,632
28,611
-
49,764
1,538,924
499,683
1,005,000
28,804
-
51,214
1,584,701
506,879
969,456
42,722
4,786
44,679
1,568,522
Operating Income
188,113
237,739
206,673
Interest expense
Foreign exchange transaction gains (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
(16,707)
473
2,914
174,793
29,011
(17,077)
1,742
3,057
225,461
48,593
(13,916)
(8)
2,785
195,534
35,024
145,782 $
176,868 $
160,510
2.48 $
2.51
1.20 $
1.20
2.97 $
3.01
1.16 $
1.16
2.70
2.73
1.00
1.00
58,734
57,998
59,594
58,733
59,514
58,635
$
$
$
The accompanying notes are an integral part of the consolidated financial statements.
- 64 -
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
John Wiley & Sons, Inc., and Subsidiaries
Dollars in thousands
For the years ended April 30,
2015
2016
2014
Net Income
$
145,782 $
176,868 $
160,510
Other Comprehensive Income (Loss):
Foreign currency translation adjustment
Unrealized retirement costs net of tax benefit
(provision) of $8,807; $15,779 and
$(12,946), respectively
Unrealized (loss) gain on interest rate swaps net
of tax benefit (provision) of $10; $(157) and
$(225), respectively
Total Other Comprehensive Income (Loss)
(21,066)
(180,190)
67,875
(19,971)
(36,409)
20,099
(16)
(41,053)
257
(216,342)
367
88,341
Comprehensive Income (Loss)
$
104,729 $
(39,474) $
248,851
The accompanying notes are an integral part of the consolidated financial statements.
- 65 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
John Wiley & Sons, Inc., and Subsidiaries
Dollars in thousands
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
Restructuring and impairment charges
Deferred tax benefits on U.K. rate changes
Share-based compensation
(Excess) shortfalls in tax benefits from share-based compensation
Employee retirement plan expense
Royalty advances
Earned royalty advances
Other non-cash credits, net
Income tax deposits
Changes in Operating Assets and Liabilities
Source (Use), excluding acquisitions
Accounts receivable
Inventories
Accounts and royalties payable
Deferred revenue
Income taxes payable
Restructuring payments
Other accrued liabilities
Employee retirement plan contributions
Other
Cash Provided by Operating Activities
Investing Activities
Composition spending
Additions to technology, property and equipment
Acquisitions, net of cash acquired
Proceeds from sale of consumer publishing programs
Cash Used for Investing Activities
Financing Activities
Repayment of long-term debt
Repayment of short-term debt
Borrowings of long-term debt
Borrowing of short-term debt
Purchase of treasury stock
Change in book overdrafts
Cash dividends
Debt financing costs
Net (payments)/proceeds from exercise of stock options and other
Excess (shortfalls ) in tax benefits from share-based compensation
Cash Used for Financing Activities
Effects of Exchange Rate Changes on Cash
Cash and Cash Equivalents
(Decrease) Increase for year
Balance at beginning of year
Balance at end of year
Cash Paid During the Year for
Interest
Income taxes, net
For the years ended April 30,
2015
2016
2014
$
145,782 $
176,868 $
160,510
49,764
39,658
66,427
28,611
(5,859)
16,105
(1,027)
14,323
(110,135)
109,102
1,463
(1,151)
(14,456)
3,571
3,997
66,983
(7,091)
(29,864)
14,968
(34,214)
(7,000)
349,957
(37,272)
(93,705)
(20,418)
-
(151,395)
(460,085)
(150,000)
415,000
50,000
(69,977)
1,725
(69,896)
(3,362)
(95)
1,027
(285,663)
(6,534)
(93,635)
457,441
363,806
51,214
40,639
62,072
28,804
-
13,617
(3,191)
22,599
(104,876)
110,054
(8,046)
(5,280)
4,488
9,696
31,305
3,913
8,330
(32,341)
(10,901)
(28,503)
(15,339)
355,122
(39,421)
(69,121)
(172,229)
1,100
(279,671)
(711,654)
-
659,369
100,000
(61,981)
(6,711)
(68,498)
-
25,326
3,191
(60,958)
(43,429)
(28,936)
486,377
457,441
$
$
15,050 $
38,579 $
14,875 $
45,646 $
44,679
45,097
58,321
47,508
(10,634)
12,851
1,466
30,454
(107,639)
107,529
(3,626)
(11,968)
18,558
11,146
7,297
(750)
(14,131)
(28,276)
30,581
(33,889)
(16,860)
348,224
(40,568)
(57,564)
(54,515)
3,300
(149,347)
(658,224)
-
685,324
-
(63,393)
(12,354)
(58,953)
-
55,532
(1,466)
(53,534)
6,894
152,237
334,140
486,377
12,511
63,815
The accompanying notes are an integral part of the consolidated financial statements
- 66 -
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
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, 2013
$69,793
$13,397
$290,762
$1,387,512
$(494,476)
$(278,632)
$988,356
Restricted Shares Issued under Share-based
Compensation Plans
Proceeds from Exercise of Stock Options and
other
Shortfall in Tax Benefits from Share-based
Compensation
Share-based compensation expense
Purchase of Treasury Shares
Class A Common Stock Dividends
Class B Common Stock Dividends
Common Stock Class Conversions
5
(5)
(5,962)
31,403
(1,466)
12,851
6,144
24,417
(63,393)
(51,842)
(7,111)
182
55,820
(1,466)
12,851
(63,393)
(51,842)
(7,111)
-
Comprehensive Income
160,510
88,341
248,851
Balance at April 30, 2014
$69,798
$13,392
$327,588
$1,489,069
$(527,308)
$(190,291)
$1,182,248
Restricted Shares Issued under Share-based
Compensation Plans
Proceeds from Exercise of Stock Options and
other
Excess Tax Benefits from Share-based
Compensation
Share-based compensation expense
Purchase of Treasury Shares
Class A Common Stock Dividends
Class B Common Stock Dividends
Comprehensive Income (Loss)
(3,471)
12,093
3,191
13,617
4,085
13,230
(61,981)
(57,541)
(10,957)
176,868
614
25,323
3,191
13,617
(61,981)
(57,541)
(10,957)
(216,342)
(39,474)
Balance at April 30, 2015
$69,798
$13,392
$353,018
$1,597,439
$(571,974)
$(406,633)
$1,055,040
Restricted Shares Issued under Share-based
Compensation Plans
Net (Payments)/Proceeds from Exercise of
Stock Options and other
Excess Tax Benefits from Share-based
Compensation
Share-based compensation expense
Purchase of Treasury Shares
Class A Common Stock Dividends
Class B Common Stock Dividends
Comprehensive Income (Loss)
(3,152)
1,700
1,027
16,105
3,325
(1,795)
(69,977)
(58,658)
(11,238)
145,782
173
(95)
1,027
16,105
(69,977)
(58,658)
11,238
(41,053)
104,729
Balance at April 30, 2016
$69,798
$13,392
$368,698
$1,673,325
$(640,421)
$(447,686)
$1,037,106
The accompanying notes are an integral part of the consolidated financial statements.
- 67 -
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 is a global provider of knowledge and knowledge-enabled services that improve outcomes in
areas of research, professional practice and education. Through the Research segment, the Company provides
digital and print scientific, technical, medical and scholarly journals, reference works, books, database services
and advertising. The Professional Development segment provides digital and print books, corporate learning
solutions, employment assessment and training services, and test prep and certification. In Education, the
Company provides print and digital content, and education solutions including online program management
services for higher education institutions and course management tools for instructors and students. The
Company takes full advantage of its content from all three 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’s operations are primarily located 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, 2016 and
2015, book overdrafts of $17.8 million and $16.1 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. Revenue related
to journal subscriptions and other products and services that are generally collected in advance are deferred
- 68 -
and recognized as earned over the term of the subscription; when the related issue is shipped; made available
online; or the service is rendered, in accordance with contractual terms. Collectability is evaluated based on the
amount involved, the credit history of the customer, and the status of the customer’s account with the Company.
The Company transitioned from issue-based to time-based digital journal subscription agreements for calendar
year 2016. Under this new contractual agreement, the Company provides access to all journal content published
within a calendar year and recognizes revenue on a straight-line basis over the calendar year. Under the
Company’s previous licensing model, a customer subscribed to a discrete number of online journal issues and
revenue was recognized as each issue was made available online. The Company made these changes to
simplify the contracting and administration of digital journal subscriptions.
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 course management tool for the Company’s Education
business which includes a complete print or digital textbook for the course; negotiated licenses for bundles of
digital content available on Wiley Online Library, the online publishing platform for the Company’s Research
business; and test preparation, assessment, certification and training services sold by the Professional
Development business which can include bundles of print and digital content and online workflow solutions.
The Company enters into contracts for the resale of its content through a third party where the Company is not
the primary obligor of the arrangement because it is not responsible for fulfilling the customer’s order; handling
customer requests or claims and/or maintains credit risk. The Company recognizes revenue for the sale of its
content, net of any commission owed to the third party seller or 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 $7.3 million and $8.3 million as of April 30,
2016 and 2015, respectively.
Sales Return Reserves: The process which the Company uses to determine its sales returns and the related
reserve provision charged against revenue is based on applying an estimated return rate to current year
returnable print book 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
- 69 -
and royalty costs as a result of the expected returns. Net print book sales return reserves amounted to $19.9
million and $25.3 million as of April 30, 2016 and 2015, respectively.
The reserves are reflected in the following accounts of the Consolidated Statements of Financial Position –
increase (decrease) as of April 30:
Accounts Receivable
Inventories
Accounts and Royalties Payable
Decrease in Net Assets
2016
$(29,447)
4,924
(4,662)
$(19,861)
2015
$(37,300)
6,555
(5,405)
$(25,340)
Inventories: Inventories are carried at the lower of cost or market. U.S. book inventories aggregating $31.0
million and $35.7 million at April 30, 2016 and 2015, 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 Inventories balance in the Consolidated Statements of Financial Position and amounted to
$22.0 million and $21.9 million as of April 30, 2016 and 2015, 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 expensed 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 third party shipping and handling are reflected in the Operating
and Administrative Expenses line item in the Consolidated Statements of Income. The Company incurred $40.5
million, $42.5 million and $42.2 million in shipping and handling costs in fiscal years 2016, 2015 and 2014,
respectively.
Advertising Expense: Advertising costs are expensed as incurred. The Company incurred $54.1 million, $40.8
million and $35.2 million in advertising costs in fiscal years 2016, 2015 and 2014, 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 lesser 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
the preliminary project and post-
application development stage and expensed as
incurred during
- 70 -
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. Costs related to the investment in the Company’s Enterprise Resource Planning and related systems are
amortized over an expected useful life of 10 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
based on the estimates of fair value for such items, including 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 a third party valuation consultant to
assist in the determination of such estimates.
Goodwill and Indefinite-lived Intangible Assets: Goodwill is the excess of the purchase price paid over the fair
value of the net assets of the business acquired. Indefinite-lived intangible assets primarily consist of brands,
trademarks, content and publishing rights and 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. 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 previously 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.
In certain circumstances, the Company uses a qualitative assessment as an alternative to the two-step test
approach. Under this approach certain market, industry and financial performance factors are considered to
determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
If that is the case, the two-step approach described above is then performed to evaluate the recoverability of
goodwill.
Intangible Assets with Finite Lives and Other Long-Lived Assets: Finite-lived intangible assets principally consist
of brands, trademarks, content and publication rights, customer relationships and non-compete agreements and
are amortized over their estimated useful lives. The most significant factors in determining the estimated lives of
these intangibles are the history and longevity of the brands, trademarks and content and publication rights
acquired combined with the strength of cash flows. 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.
- 71 -
Intangible assets with finite lives as of April 30, 2016 are amortized on a straight line basis over the following
weighted average estimated useful lives: content and publishing rights – 31 years; customer relationships – 20
years; brands and trademarks – 13 years; non-compete agreements – 4 years.
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. 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.
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. The Company’s significant investments in non-U.S.
businesses are exposed to foreign currency risk. Foreign currency translation adjustments are reported as a
separate component of Accumulated Other Comprehensive Loss within Shareholders’ Equity. During fiscal year
2016, the Company recorded $21.1 million of foreign currency translation losses primarily due to the
strengthening of the U.S. dollar relative to the British pound sterling. 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 March 2016, the FASB issued ASU 2016-09 “Compensation-Stock Compensation (Topic 718): Improvements
to Employee Share-Based Payment Accounting” which simplifies the accounting for share-based payment
transactions, including income taxes, classification of awards as either equity or liabilities, and classification on
the statement of cash flows. The new guidance also allows an entity to make an accounting policy election to
account for forfeitures when they occur or to estimate the number of awards that are expected to vest with a
subsequent true up to actual forfeitures (current GAAP). The standard is effective for the company on May 1,
2017, with early adoption permitted. The Company is currently assessing the impact the new guidance will have
on its consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02 "Leases (Topic 842)”. ASU 2016-02 requires lessees to
recognize most leases on the balance sheet which will result in an increase in reported assets and liabilities.
The recognition of expenses within the income statement is consistent with the existing lease accounting
standards. There are no significant changes in the new standard for lessors under operating leases. The
- 72 -
standard is effective for the Company on May 1, 2019 with early adoption permitted. Adoption requires
application of the new guidance for all periods presented. The Company is currently assessing the impact the
new guidance will have on its consolidated financial statements.
In November 2015, the FASB issued ASU 2015-17 “Income Taxes- Balance Sheet Classification of Deferred
Taxes”. To simplify the presentation of deferred income taxes, the amendments in this update require that all
deferred tax liabilities and assets, including those previously classified as current, be classified as noncurrent in
a classified statement of financial position. The amendments in this Update will align the presentation of
deferred income tax assets and liabilities with IFRS. The standard is effective for the company May 1, 2017 with
early adoption permitted. The Company is currently assessing the impact the new guidance will have on its
consolidated financial statements.
In April 2015, the FASB issued ASU 2015-05 "Intangibles- Goodwill and Other- Internal-Use Software (Subtopic
350-40): Customer’s Accounting for Fees Paid in Cloud Computing Arrangements" (“ASU 2015-05”). Cloud
computing arrangements represent the delivery of hosted services over the internet which includes software,
platforms, infrastructure and other hosting arrangements. The ASU provides criteria to determine whether the
cloud computing arrangement includes a software license. A software license can include customized
development, maintenance, hosting and other related costs. If the criteria are met, the customer will capitalize
the fee attributable to the software license portion of the arrangement as internal-use software. If the
arrangement does not include a software license, it should be treated as a service contract. The standard is
effective for the Company on May 1, 2016 with early adoption permitted. An entity can elect to adopt either
prospectively for all arrangements entered into or materially modified after the effective date or retrospectively.
The Company intends to adopt the new guidance on a prospective basis as of May 1, 2016.
In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09 "Revenue from
Contracts with Customers" (Topic 606) (“ASU 2014-09”), and the International Accounting Standards Board
(“IASB”) published its equivalent standard, International Financial Reporting Standard (“IFRS”) 15, “Revenue
from Contracts with Customers”. These joint comprehensive new revenue recognition standards will supersede
most existing revenue recognition guidance and are intended to improve and converge revenue recognition and
related financial reporting requirements. The standard is effective for the Company on May 1, 2018 with early
adoption permitted on May 1, 2017. The standard allows for either “full retrospective” adoption, meaning the
standard is applied to all periods presented, or “cumulative effect” adoption, meaning the standard is applied
only to the most current period presented in the financial statements. Subsequently, the FASB issued ASU No.
2016-08, Revenue from Contracts with Customers (Topic 606) – Principal versus Agent Considerations (“ASU
2016-08”), ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606) – Identifying Performance
Obligations and Licensing (“ASU 2016-10”), and issued ASU 2016-12, Revenue from Contracts with Customers
(Topic 606) – Narrow Scope Improvements and Practical Expedients (“ASU 2016-12”), which provide
clarification and additional guidance related to ASU 2014-09. The Company must adopt ASU 2016-08, ASU
2016-10, and ASU 2016-12 with ASU 2014-09. The Company is currently assessing whether the adoption of the
new guidance will have a significant impact on its consolidated financial statements.
- 73 -
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):
2016
2015
2014
Weighted Average Shares Outstanding
58,253
59,004
58,925
Less: Unearned Restricted Shares
Shares Used for Basic Earnings Per Share
Dilutive Effect of Stock Options and Other Stock Awards
Shares Used for Diluted Earnings Per Share
(255)
57,998
736
58,734
(271)
58,733
861
59,594
(290)
58,635
879
59,514
Since their inclusion in the calculation of diluted earnings per share would have been anti-dilutive, options to
purchase 336,803, 178,144 and 389,400 shares of Class A Common Stock have been excluded for fiscal years
2016, 2015 and 2014, respectively. In addition, for fiscal years 2016 and 2015 unearned restricted shares of
15,200 and 2,500, respectively, have been excluded as their inclusion would have been anti-dilutive.
Note 4- Accumulated Other Comprehensive Loss
Changes in Accumulated Other Comprehensive Loss by component, net of tax, for the fiscal years ended April
30, 2016 and 2015 were as follows (in thousands):
Foreign
Currency
Translation
Unamortized
Retirement
Costs
Interest
Rate
Swaps
Total
Balance at April 30, 2014
$(66,664)
$(123,025)
$(602)
$(190,291)
Other comprehensive income (loss)
before reclassifications
Reclassification of amounts to
Consolidated Statements of Income
Total other comprehensive income (loss)
Balance at April 30, 2015
Other comprehensive income (loss)
before reclassifications
Reclassification of amounts to
Consolidated Statements of Income
Total other comprehensive income (loss)
Balance at April 30, 2016
(180,190)
(42,347)
(783)
(223,320)
-
(180,190)
$(246,854)
5,938
(36,409)
$(159,434)
1,040
257
$(345)
6,978
(216,342)
$(406,633)
(21,066)
(24,930)
(569)
(46,565)
-
(21,066)
$(267,920)
4,959
(19,971)
$(179,405)
553
(16)
$(361)
5,512
(41,053)
$(447,686)
For the fiscal years ended April 30, 2016 and 2015, pre-tax actuarial losses included in Unamortized Retirement
Costs of approximately $6.2 million and $7.8 million, respectively, were amortized from Accumulated Other
Comprehensive Loss and recognized as pension expense in Operating and Administrative Expenses in the
Consolidated Statements of Income.
- 74 -
Note 5 – Acquisitions
CrossKnowledge:
On May 1, 2014, the Company acquired CrossKnowledge Group Limited (“CrossKnowledge”) for approximately
$166 million in cash, net of cash acquired. CrossKnowledge is a learning solutions provider focused on
leadership and managerial skills development that offers subscription-based, digital learning solutions for global
corporations, universities, and small and medium-sized enterprises. CrossKnowledge’s solutions include a
variety of managerial and leadership skills assessments, courses, certifications, content and executive training
programs that are delivered on a cloud-based LMS platform with over 19,000 learning objects in 17 languages.
CrossKnowledge serves over seven million end-users in 80 countries. For the fiscal years ended April 30, 2016
and 2015, CrossKnowledge’s revenue included in Wiley’s results was $50.7 million and $42.0 million,
respectively.
The $166 million purchase price was allocated to identifiable long-lived intangible assets, mainly customer
relationships and content ($63.0 million); technology ($6.3 million); long-term deferred tax liabilities ($21.5
million); negative working capital ($4.3 million); and goodwill ($122.5 million). The fair value of intangible assets
and technology acquired was based on management’s assessment performed with the assistance of a third
party valuation consultant. Goodwill represents the excess of the purchase price over the fair value of net assets
acquired and comprises the estimated value of CrossKnowledge’s workforce, unidentifiable intangible assets
and the fair value of expected synergies. None of the goodwill is deductible for tax purposes. The identifiable
long-lived intangible assets are primarily amortized over a weighted average estimated useful life of
approximately 15 years. The acquisition was funded through the use of the Company’s existing credit facility
and available cash balances.
Profiles International:
On April 1, 2014, the Company acquired all of the stock of Profiles International (“Profiles”) for approximately
$47.5 million in cash, net of cash acquired. Profiles provides pre-employment assessment and selection tools
that enable employers to optimize candidate selections and develop the full potential of their employees.
Solutions include pre-hire assessments, including those designed to measure and match personality,
knowledge, skills, managerial fit, loyalty, and values; and post-hire assessments, focused on measuring sales
and managerial effectiveness, employee performance and career potential. Profiles serves approximately 4,000
corporate clients and millions of end users in over 120 countries, with assessments available in 32 languages.
The $47.5 million purchase price was allocated to identifiable long-lived intangible assets, mainly customer
relationships and assessment content ($22.9 million); technology ($2.7 million); long-term deferred tax liabilities
($9.7 million); a credit to short-term deferred tax assets ($2.9 million); negative working capital ($5.9 million) and
goodwill ($40.4 million). The fair value of intangible assets and technology acquired was based on
management’s assessment performed with the assistance of a third party valuation consultant. Goodwill
represents the excess of the purchase price over the fair value of net assets acquired and comprises the
estimated value of Profile’s workforce, unidentifiable intangible assets and the fair value of expected synergies.
None of the goodwill is deductible for tax purposes. The identifiable long-lived intangible assets are primarily
amortized over a weighted average estimated useful life of approximately 13 years. Profiles contributed $20.3
million, $23.3 million and $1.9 million to the Company’s revenue for fiscal years 2016, 2015 and 2014,
respectively.
Unaudited proforma financial information has not been presented for any of these acquisitions since the effects
of the acquisitions were not material individually or in the aggregate.
- 75 -
Note 6 – Restructuring Charges
In fiscal years 2016, 2015 and 2014, the Company recorded pre-tax restructuring charges of $28.6 million
($0.32 per share), $28.8 million ($0.34 per share) and $42.7 million ($0.48 per share), respectively, which are
reflected in the Restructuring Charges line item in the Consolidated Statements of Income and described in
more detail below:
Restructuring and Reinvestment Program:
Beginning in fiscal year 2013, the Company initiated a program (the “Restructuring and Reinvestment Program”)
to restructure and realign its cost base with current and anticipated future market conditions. The Company is
targeting a majority of the cost savings achieved to improve margins and earnings, while the remainder will be
reinvested in high growth digital business opportunities.
The following table summarizes the pre-tax restructuring charges related to this program (in thousands):
2016
2015
2014
Total Charges
Incurred to Date
Charges by Segment:
Research
Professional Development
Education
Shared Services
Total Restructuring Charges
Charges by Activity:
Severance
Process reengineering consulting
Other activities
Total Restructuring Charges
$5,048
2,277
1,206
20,080
$28,611
$16,443
7,191
4,977
$28,611
$4,555
4,385
1,571
18,293
$28,804
$17,093
301
11,410
$28,804
$7,774
11,860
891
22,197
$42,722
$25,962
8,556
8,204
$42,722
$20,273
24,806
4,786
74,724
$124,589
$79,204
18,666
26,719
$124,589
Other Activities reflects leased facility consolidations, contract termination costs and the curtailment of certain
defined benefit pension plans.
The following table summarizes the activity for the Restructuring and Reinvestment Program liability as of April
30 (in thousands):
Foreign
Translation &
2015
Charges
Payments Reclassifications
2016
Severance
$18,794
$16,443
$(18,485)
$(95)
$16,657
Process reengineering consulting
Other activities
Total
-
11,859
$30,653
7,191
4,977
(7,191)
(4,188)
$28,611
$(29,864)
-
(796)
$(891)
-
11,852
$28,509
The restructuring liability for accrued Severance costs is reflected in Accrued Employment Costs in the
Consolidated Statements of Financial Position. Approximately $0.6 million and $11.3 million of the Other
Activities are reflected in Other Accrued Liabilities and Other Long-Term Liabilities, respectively.
- 76 -
Note 7 – Impairment Charges
In fiscal year 2014, the Company terminated a multi-year software development program for an internal
operations application due to a change in the Company’s longer-term enterprise systems plans. As a result, the
Company recorded an asset impairment charge for previously capitalized software costs related to the program
of $4.8 million ($0.06 per share).
Note 8 – 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
2016
$45,170
7,592
4,867
57,629
4,924
(4,774)
$57,779
2015
$52,705
6,552
4,676
63,933
6,555
(6,709)
$63,779
See Note 2, Summary of Significant Accounting Policies - Sales Return Reserves for a discussion of the
Inventory Value of Estimated Sales Returns.
Note 9 – Product Development Assets
Product development assets consisted of the following at April 30 (in thousands):
Composition Costs
Royalty Advances
Total
2016
$40,944
31,182
$72,126
2015
$41,280
28,309
$69,589
Composition costs are net of accumulated amortization of $199.3 million and $198.2 million as of April 30, 2016
and 2015, respectively.
Note 10 – Technology, Property and Equipment
Technology, property and equipment consisted of the following at April 30 (in thousands):
Capitalized Software and Computer Hardware
Buildings and Leasehold Improvements
Furniture, Fixtures and Warehouse Equipment
Land and Land Improvements
Accumulated Depreciation
Total
2016
$539,968
84,923
54,607
3,726
683,224
(468,454)
$214,770
2015
$460,199
86,225
60,460
3,820
610,704
(417,694)
$193,010
The net book value of capitalized software costs was $151.5 million and $121.9 million as of April 30, 2016 and
2015, respectively. Depreciation expense recognized in fiscal years 2016, 2015, and 2014 for capitalized
software costs was approximately $49.6 million, $42.1 million and $36.5 million, respectively.
- 77 -
Note 11 - Goodwill and Intangible Assets
The following table summarizes the activity in goodwill by segment as of April 30 (in thousands):
Research
Professional Development
Education
Total
$447,326
365,215
149,826
$962,367
Intangible assets as of April 30 were as follows (in thousands):
2015
Acquisitions
Foreign
Translation
Adjustment
$(14,025)
3,321
-
2016
$433,301
368,536
149,826
-
$(10,704)
$951,663
-
-
-
2016
2015
Cost
Accumulated
Amortization
Cost
Accumulated
Amortization
Intangible Assets with Determinable Lives
Content and Publishing Rights
Customer Relationships
Brands & Trademarks
Covenants not to Compete
Intangible Assets with Indefinite Lives
Brands & Trademarks
Content and Publishing Rights
$790,055
224,839
30,116
1,687
1,046,697
147,683
87,202
$(333,174)
(54,677)
(15,713)
(1,011)
$781,618
225,239
30,008
1,343
$(299,022)
(43,967)
(13,225)
(677)
(404,575)
1,038,208
(356,891)
-
-
152,332
83,972
-
-
$1,281,582
$(404,575)
$1,274,512
$(356,891)
Based on the current amount of intangible assets subject to amortization and assuming current foreign
exchange rates, the estimated amortization expense for each of the succeeding five fiscal years are as follows:
2017 - $48 million; 2018 – $44 million; 2019 - $42 million; 2020 - $38 million and 2021 - $35 million.
Note 12 - Income Taxes
The provisions for income taxes for the years ended April 30 were as follows (in thousands):
Current Provision
US – Federal
International
State and Local
Total Current Provision
Deferred Provision (Benefit)
US – Federal
International
State and Local
Total Deferred (Benefit)
Total Provision
2016
2015
2014
$(5,365)
31,958
1,657
$28,250
$27,137
27,613
1,007
$13,541
34,519
(733)
$55,757
$47,327
$6,625
(6,459)
595
$(7,554)
606
(216)
$(1,748)
(10,008)
(547)
$761
$(7,164)
$(12,303)
$29,011
$48,593
$35,024
- 78 -
International and United States pretax income for the years ended April 30, 2016 were as follows (in thousands):
International
United States
Total
2016
2015
2014
$159,152
15,641
$165,085
60,376
$159,442
36,092
$174,793
$225,461
$195,534
The Company’s effective income tax rate as a percentage of pretax income differed from the U.S. federal
statutory rate as shown below:
U.S. Federal Statutory Rate
Benefit from Lower Taxes on Non-U.S. Income
State Income Taxes, Net of U.S. Federal Tax Benefit
Deferred Tax Benefit From Statutory Tax Rate Change
Tax Adjustments and Other
Effective Income Tax Rate
2016
2015
2014
35.0%
(14.6)
0.8
(3.4)
(1.2)
16.6%
35.0%
(11.9)
0.3
-
(1.8)
21.6%
35.0%
(10.8)
0.4
(5.4)
(1.3)
17.9%
Note: A substantial portion of the Company’s income is earned outside the U.S. in jurisdictions with lower
statutory income tax rates than the U.S. including: U.K. (20%): Germany (27%): Australia (30%): Canada (28%).
Deferred Tax Benefit from Statutory Tax Rate Change: In fiscal years 2016 and 2014, the Company recognized
non-cash deferred tax benefits of $5.9 million ($0.10 per share), and 10.6 million ($0.18 per 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 3%, respectively. The benefits reflect the remeasurement of all applicable
U.K deferred tax balances to the new income tax rates of 19% effective April 1, 2017 and 18% effective April 1,
2020.
Tax Adjustments and Other: In fiscal years 2016, 2015 and 2014, the Company recorded tax benefits of $1.3
million, $0.7 million, and $2.6 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. In addition, in fiscal
year 2015, the Company recognized a non-recurring tax benefit of $3.1 million related to tax deductions claimed
on the write-up of certain foreign tax assets to fair market value.
Accounting for Uncertainty in Income Taxes:
As of April 30, 2016 and April 30, 2015, the total amount of unrecognized tax benefits were $19.9 million and
$19.3 million, respectively, of which $3.5 million and $3.0 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 both fiscal years 2016 and 2015, the Company recorded net interest expense on reserves for
unrecognized and recognized tax benefits of $0.5 million in each year. As of April 30, 2016 and April 30, 2015,
the total amount of unrecognized tax benefits that, would reduce the Company’s income tax provision, if
recognized, were approximately $19.2 million and $18.8 million, respectively. The Company does not expect
any significant changes to the unrecognized tax benefits within the next twelve months.
- 79 -
A reconciliation of the unrecognized tax benefits included within the Other Long-Term Liabilities line item in the
Consolidated Statements of Financial Position 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
Payments
Reductions for Lapse of Statute of Limitations
2016
$19,349
1,077
533
(214)
569
(132)
(1,319)
2015
$23,826
503
519
(595)
(4,207)
-
(697)
Balance at April 30th
$19,863
$19,349
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. The
Company is no longer subject to income tax examinations for years prior to fiscal year 2010 in the major
jurisdictions in which the Company is subject to tax. The Company’s last completed U.S. federal audit was for
fiscal years 2006 through 2009, which resulted in minimal adjustments principally related to temporary
differences. The IRS is currently auditing the fiscal year 2013 U.S. Federal income tax return.
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.
In May 2012, as part of its routine tax audit process, the German tax authorities filed a challenge to the
Company’s tax position with respect to the amortization of certain stepped-up assets. The Company filed an
appeal with the local finance court in September 2014. Under German tax law, the Company must pay all
contested taxes and the related interest to have the right to defend its position. The Company has made all
required payments to date with total deposits paid of 48 million euros through April 30, 2016. The Company
expects that it will be required to deposit additional amounts up to 10 million euros plus interest for tax returns to
be filed in future periods until the issue is resolved.
In October 2014, the Company received an unfavorable decision from the local finance court and is in the
process of appealing the court decision. The Company’s management and its advisors continue to believe that
the Company is “more likely than not” to successfully defend that the tax treatment was proper and in
accordance with German tax regulations. As such, the Company has not recorded any charges related to the
loss of the step-up benefit. The Company filed its appeal in January 2015. Resolution of the appeal is expected
to take up to 24 months from January 2015. If the Company is ultimately successful, as expected, the tax
deposits will be returned with 6% simple interest, based on current German legislation. As of April 30, 2016, the
USD equivalent of the deposit and accrued interest was $62.9 million, which is recorded as Income Tax
Deposits on the Consolidated Statements of Financial Position. The Company records the accrued interest at
6% within the Provision for Income Taxes in the Consolidated Statements of Income.
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
- 80 -
income to realize the deferred tax assets. The significant components of deferred tax assets and liabilities at
April 30 were as follows (in thousands):
Inventories
Intangible and Fixed Assets
Total Deferred Tax Liabilities
Net Operating Losses
Reserve for Sales Returns and Doubtful Accounts
Accrued Employee Compensation
Other Accrued Expenses
Retirement and Post-Employment Benefits
Total Deferred Tax Assets
Net Deferred Tax Liabilities
Reported As
Current Deferred Tax Assets
Non-current Deferred Tax Assets
Non-current Deferred Tax Liabilities
Net Deferred Tax Liabilities
2016
2015
$5,349
288,769
$5,230
297,323
$294,118
$302,553
$3,148
6,075
29,550
14,842
64,438
$4,599
6,922
28,093
14,583
62,385
$118,053
$176,065
$116,582
$185,971
$11,126
2,677
189,868
$9,981
2,995
198,947
$176,065
$185,971
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, 2016, the accumulated undistributed earnings of non-U.S. subsidiaries approximated $716 million. It is
not practical to determine the U.S. income tax liability that would be payable if such earnings were not
indefinitely reinvested.
Note 13 - Debt and Available Credit Facilities
As of April 30, 2016 and 2015, the Company’s debt of approximately $605.0 million and $750.1 million,
respectively consisted of amounts due under the following revolving credit facilities:
On March 1, 2016, the Company amended and extended its existing revolving credit agreement (“RCA”) with a
syndicated bank group led by Bank of America. The previous RCA consisted of a $940 million senior revolving
credit facility due on November 2, 2016. The new agreement consists of a $1.1 billion five-year senior revolving
credit facility payable March 1, 2021. The proceeds of the amended facility will be used for general corporate
purposes including seasonal operating cash requirements investments in technology systems and new
businesses, and strategic acquisitions. Under the agreement, which can be drawn in multiple currencies, 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 0.98% to 1.50%, 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 0.45%, 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 pays a facility fee ranging from 0.15% to 0.25% depending on the
Company’s consolidated leverage ratio. The Company also has the option to request an additional credit limit
increase of up to $350 million in minimum increments of $50 million, subject to the approval of the lenders. The
credit agreement contains certain restrictive covenants related to the Company’s consolidated leverage ratio
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and interest coverage ratio, which the Company was in compliance with as of April 30, 2016. Due to the fact that
there are no principal payments due until the end of the agreement in fiscal year 2021, the Company has
classified its entire debt obligation related to this facility as long-term which was approximately $605.0 million as
of April 30, 2016. As of April 30, 2015, the entire debt obligation related to the previous facility of approximately
$750.1 was classified as long-term. As part of the amendment, the Company paid $3.4 million in debt financing
costs in fiscal year 2016 which were capitalized and included in the Other Assets line item in the Consolidated
Statements of Financial Position.
On October 31, 2015, the Company renewed its U.S. dollar facility with TD Bank, N.A. which was equally ranked
with the Company’s previous agreement with Bank of America - Merrill Lynch and The Royal Bank of Scotland
plc, and Santander Bank. The agreement consisted of a $50 million 364-day revolving credit facility which was
drawn in fiscal year 2015. The facility was terminated and fully paid off with the proceeds of the RCA refinancing
on March 1, 2016.
On August 6, 2015, the Company amended its December 22, 2014 364-day U.S. dollar revolving credit facility
reinstated every 30 days with Santander Bank, N.A. by increasing the facility to $100 million from $50 million.
The additional $50 million was drawn during August and was used to repay a portion of the senior revolving
credit facility. The facility was equally ranked with the Company’s previous agreement with Bank of America -
Merrill Lynch and The Royal Bank of Scotland plc, and TD Bank, N.A. The facility was fully paid on April 29,
2016. This facility’s termination date was May 23, 2016 and was not renewed.
The Company and its subsidiaries have other lines of credit aggregating $7.2 million at various interest rates.
There were no outstanding borrowings under these credit lines at April 30, 2016. Outstanding borrowings under
these credit lines were approximately $0.1 million as of April 30, 2015.
The Company’s total available lines of credit as of April 30, 2016 were approximately $1.1 billion, of which
approximately $0.5 billion was unused. The weighted average interest rates on total debt outstanding during
fiscal years 2016 and 2015 were 1.88% and 1.93%, respectively. As of April 30, 2016 and 2015, the weighted
average interest rates for the total debt were 2.12% and 1.77%, 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 debt approximates its carrying value.
Note 14 – Derivative Instruments and 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.
Interest Rate Contracts:
The Company had $605.0 million of variable rate loans outstanding at April 30, 2016, which approximated fair
value. As of April 30, 2016 and 2015, the interest rate swap agreements maintained by the Company were
designated as fully effective cash flow hedges as defined under Accounting Standards Codification (“ASC”) 815
“Derivatives and Hedging.” As a result, there was no impact on the Company’s Consolidated Statements of
Income from changes in the fair value of the interest rate swaps as they were fully offset by changes in the
interest expense on the underlying variable rate debt instruments. Under ASC 815, fully effective derivative
instruments that are designated as cash flow hedges have changes in their fair value recorded initially within
- 82 -
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 April 4, 2016, the Company entered into a forward starting interest rate swap agreement which fixed a
portion of the variable interest due on a variable rate debt renewal on May 16, 2016. Under the terms of the
agreement, the Company will pay a fixed rate of 0.92% 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 starting May
16, 2016 ending May 15, 2019. As of April 30, 2016, the notional amount of the interest rate swap was $350.0
million.
On August 15, 2014, 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 0.65% and receives a variable rate of interest based on one-month LIBOR (as defined) from
the counterparty which is reset every month for a two-year period ending August 15, 2016. As of April 30, 2016,
the notional amount of the interest rate swap was $150.0 million.
On January 15, 2014, the Company entered into a $150.0 million notional value 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 which expired on January 15, 2016, the Company paid a fixed rate of 0.47% and received a variable
rate of interest based on one-month LIBOR (as defined) from the counterparty which was reset every month for
a two-year period.
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,
2016 and 2015 was a deferred loss of $0.6 million. Based on the maturity dates of the contracts, approximately
$0.1 million and $0.2 million of the deferred losses as of April 30, 2016 and 2015 were recorded in Other
Accrued Liabilities, with the remaining deferred losses in each period of $0.5 million and $0.4 million recorded in
Other Long-Term Liabilities, respectively. The pre-tax losses that were reclassified from Accumulated Other
Comprehensive Loss into Interest Expense for fiscal years 2016, 2015 and 2014 were $0.9 million, $1.7 million
and $1.3 million, respectively. Based on the amount in Accumulated Other Comprehensive Loss at April 30,
2016, approximately $0.7 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 Transaction Gains (Losses) in the Consolidated Statements of Income, and carried
at their fair value in the Consolidated Statements of Financial Position with gains reported in Prepaid and Other
and losses reported in Other Accrued Liabilities. 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 Transaction Gains (Losses).
As of April 30, 2016, there were two open forward exchange contracts with notional amounts of 31 million Euros
and 274 million Pounds Sterling to hedge intercompany loans. As of April 30, 2015, the Company did not
maintain any open forward contracts. During fiscal years 2014 through 2016, the Company did not designate
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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 value of the open forward exchange contracts was measured on a recurring basis using
Level 2 inputs. For fiscal years 2016, 2015 and 2014, the gains (losses) recognized on forward contracts were
$1.3 million, $(11.2) million, and $(0.4) million, respectively.
Note 15 - Commitment and Contingencies
The following schedule shows the composition of rent expense for operating leases (in thousands):
Minimum Rental
Less: Sublease Rentals
Total
2016
$37,206
(597)
$36,609
2015
$39,748
(639)
$39,109
2014
$40,929
(642)
$40,287
Future minimum payments under operating leases were $328.1 million at April 30, 2016. Annual minimum
payments under these leases for fiscal years 2017 through 2021 are approximately $35.2 million, $20.2 million,
$27.1 million, $25.0 million, and $21.4 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. During the first quarter of fiscal year
2015, the Company renewed the lease for its corporate headquarters in Hoboken, New Jersey. The lease
renewal is an operating lease which commences on July 1, 2017 and extends the current lease through March
31, 2033. As a result of the renewal, the Company’s total future minimum payments under the new lease will be
$223.0 million, with annual minimum payments of $14.4 million in fiscal years 2018 through 2021.
The Company is involved in routine litigation in the ordinary course of its business. A provision for litigation is
accrued when information available to the Company indicates that it is probable a liability has been incurred and
the amount of loss can be reasonably estimated. Significant judgment may be required to determine both the
probability and estimates of loss. When the amount of the loss can only be estimated within a range, the most
likely outcome within that range is accrued. If no amount within the range is a better estimate than any other
amount, the minimum amount within the range is accrued. When uncertainties exist related to the probable
outcome of litigation and/or the amount or range of loss, the Company does not record a liability, but discloses
facts related to the nature of the contingency and possible losses if management considers the information to be
material. Reserves for legal defense costs are recorded when management believes such future costs will be
material. The accruals for loss contingencies and legal costs are reviewed regularly and may be adjusted to
reflect updated information on the status of litigation and advice of legal counsel. In the opinion of management,
the ultimate resolution of all pending litigation as of April 30, 2016 will not have a material effect upon the
financial condition or results of operations of the Company.
Over the past few years, the Company has from time to time faced claims from photographers or agencies that
the Company has used photographs without licenses or beyond licensed permissions. The Company has
insurance coverage for a significant portion of such claims. The Company does not believe that its exposure to
such claims either individually or in the aggregate is material.
- 84 -
Note 16 - Retirement Plans
The Company and its principal subsidiaries have 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.
Recent Plan Curtailments
In fiscal year 2013, the Company’s Board of Directors approved plan amendments that froze the U.S.
Employees’ Retirement Plan, Supplemental Benefit Plan, and Supplemental Executive Retirement Plan,
effective June 30, 2013. These plans are U.S. defined benefit plans. Under the amendments, no new
employees are permitted to enter these plans and no additional benefits for current participants for future
services will be accrued after June 30, 2013.
The Company’s Board of Directors approved plan amendments that froze the Retirement Plan for the
Employees of John Wiley & Sons, Canada, effective December 31, 2015. Under the amendments, no new
employees are permitted to enter this plan and no additional benefits for current participants for future services
will be accrued after December 31, 2015. The Company recorded a one-time pension plan benefit of $0.6
million in fiscal year 2015 as a result of the plan amendments. The curtailment benefit is included within the
fiscal year 2015 Restructuring Charges line item in the Consolidated Statements of Income.
The Company’s Board of Directors approved plan amendments that froze the Retirement Plan for the
Employees of John Wiley & Sons, Ltd., a U.K. plan, effective April 30, 2015. Under the amendments, no new
employees are permitted to enter this plan and no additional benefits for current participants for future services
will be accrued after April 30, 2015. While there was no significant amount recorded for the curtailment, there
was a resulting concession with employees to contribute an additional $0.8 million to the Company’s defined
contribution plans in fiscal year 2015. This contribution was recognized in the Restructuring charges line item in
the Company’s Consolidated Statements of Income.
The Company maintains the Supplemental Executive Retirement Plan for certain officers and senior
management which provides 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. Future accrued benefits
to the Plan have been discontinued as noted above.
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
Expected Return on Plan Assets
Net Amortization of Prior Service Cost
and Transition Asset
Recognized Net Actuarial Loss
Curtailment/Settlement Loss (Gain)
2016
2015
2014
U.S.
Non-U.S.
U.S.
Non-U.S.
U.S.
Non-U.S.
$ -
13,612
$1,455
16,446
$ -
13,159
$5,942
17,417
$ -
12,613
$8,066
17,144
(14,756)
(25,088)
(13,782)
(22,654)
(14,838)
(21,607)
(154)
2,240
1,857
55
2,475
-
(115)
1,470
-
68
6,299
(428)
-
5,681
-
124
7,490
79
Net Pension Charge (Credit)
$2,799
$(4,657)
$732
$6,644
$3,456
$11,296
Discount Rate
Rate of Compensation Increase
Expected Return on Plan Assets
4.2%
N/A
6.8%
3.5%
3.0%
6.7%
- 85 -
4.7%
N/A
6.8%
4.2%
3.2%
6.7%
4.2%
N/A
8.0%
4.2%
3.2%
6.7%
The curtailment/settlement loss in fiscal year 2016 of $1.9 million, noted above, relates to a disability payment
made subject to terms of the Company’s Supplemental Executive Retirement Plan.
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 $797.4 million, $759.2 million and
$567.8 million, respectively, as of April 30, 2016 and $813.3 million, $773.4 million and $589.9 million,
respectively, as of April 30, 2015.
The Recognized Net Actuarial Loss for each fiscal year is calculated using the “corridor method” which reflects
the amortization of the net loss at the beginning of the fiscal year in excess of 10% of the greater of the market
value of plan assets or the projected benefit obligation. The amortization period is based on the average
expected life of plan participants.
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 at fair value as of the Company’s balance sheet date.
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):
Actuarial Loss
Prior Service Cost
Total
U.S.
$2,712
(154)
$2,558
Non-U.S.
$2,819
56
$2,875
Total
$5,531
(98)
$5,433
- 86 -
The following table sets forth the changes in and the status of the Company’s defined benefit plans’ assets and
benefit obligations:
Dollars in thousands
CHANGE IN PLAN ASSETS
2016
2015
U.S.
Non-U.S.
U.S.
Non-U.S.
Fair Value of Plan Assets, Beginning of Year
$222,966
$376,576
$207,986
$351,092
Actual Return on Plan Assets
Employer Contributions
Employee Contributions
Settlements
Benefits Paid
Foreign Currency Rate Changes
Fair Value, End of Year
2,610
9,459
-
(4,446)
(2,789)
23,166
60,997
8,450
3,972
68
-
-
-
9,701
1,566
(2,353)
(7,118)
(14,666)
(14,354)
(12,158)
-
(15,467)
-
(37,309)
$215,923
$352,484
$222,966
$376,576
CHANGE IN PROJECTED BENEFIT OBLIGATION
Benefit Obligation, Beginning of Year
$(329,388)
$(484,458)
$(285,659)
$(442,703)
Service Cost
Interest Cost
Employee Contributions
Actuarial Gain (Loss)
Benefits Paid
Foreign Currency Rate Changes
Curtailment
Settlements and Other
-
(1,455)
-
(5,942)
(13,612)
(16,446)
(13,159)
(17,417)
-
(68)
-
(1,566)
(13,020)
14,666
-
-
4,446
9,582
(45,868)
(83,782)
14,354
17,330
-
-
12,158
-
-
3,140
7,118
52,513
5,147
2,174
Benefit Obligation, End of Year
$(336,908)
$(461,161)
$(329,388)
$(484,458)
Funded Status
$(120,985)
$(108,677)
$(106,422)
$(107,882)
AMOUNTS RECOGNIZED IN THE STATEMENT OF FINANCIAL POSITION:
Other Noncurrent Assets
Current Pension Liability
Noncurrent Pension Liability
-
-
-
(4,817)
(675)
(4,086)
17
(508)
(116,168)
(108,002)
(102,336)
(107,391)
Net Amount Recognized in Statement of Financial Position
$(120,985)
$(108,677)
$(106,422)
$(107,882)
AMOUNTS RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE LOSS (before tax) CONSIST OF:
Net Actuarial (Loss)
Prior Service Cost Gain (Loss)
$(124,087)
$(139,307)
$(103,017)
$(128,280)
2,870
(521)
3,024
(555)
Total Accumulated Other Comprehensive Loss
$(121,217)
$(139,828)
$(99,993)
$(128,835)
Change in Accumulated Other Comprehensive Loss
$(21,224)
$(10,993)
$(31,988)
$(20,329)
WEIGHTED AVERAGE ASSUMPTIONS USED IN DETERMINING ASSETS AND LIABILITIES:
Discount Rate
Rate of Compensation Increase
Accumulated Benefit Obligations
4.0%
N/A
3.5%
3.0%
4.2%
N/A
3.5%
3.0%
$(336,908)
$(422,861)
$(329,389)
$(444,561)
- 87 -
Basis for determining discount rate:
The discount rates for the United States, United Kingdom 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. 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 global aggregated
target allocation of approximately 49% equity securities, 50% fixed income securities and cash, and 1% 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.
- 88 -
The Company did not maintain any level 3 assets during fiscal years 2016 and 2015. 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):
2016
2015
Level 1
Level 2
Total
Level 1
Level 2
Total
U.S. Plan Assets
Equity Securities:
U.S. Commingled Funds
$ -
$69,550
$69,550
$ -
$68,671
$68,671
Non-U.S. Commingled Funds
Fixed Income Commingled Funds
Real Estate
-
-
-
28,741
28,741
105,841
105,841
11,791
11,791
-
-
-
38,336
38,336
105,363
105,363
10,596
10,596
Total U.S. Plan Assets
$ -
$215,923
$215,923
$ -
$222,966
$222,966
Non-U.S. Plan Assets
Equity Securities:
U.S. Equities
Non-U.S. Equities
Balanced Managed Funds
Fixed Income Funds:
Other:
Real Estate/Other
Cash and Cash Equivalents
$ -
$24,688
$24,688
$ -
$25,551
$25,551
-
10,070
72,892
32,203
72,892
42,273
-
10,295
80,014
66,707
80,014
77,002
-
-
562
211,561
211,561
508
-
508
562
-
-
3,176
190,344
190,344
489
-
489
3,176
Total Non-U.S. Plan Assets
$10,632
$341,852
$352,484
$13,471
$363,105
$376,576
Total Plan Assets
$10,632
$557,775
$568,407
$13,471
$586,071
$599,542
Expected employer contributions to the defined benefit pension plans in fiscal year 2017 will be approximately
$17.9 million, including $8.0 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 to retirees from all defined benefit plans are expected to approximate $22.8 million in fiscal
year 2017, $24.0 million in fiscal year 2018, $23.9 million in fiscal year 2019, $25.4 million in fiscal year 2020,
$25.2 million in fiscal year 2021 and $150.9 million for fiscal years 2022 through 2026.
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 retiree health benefit will no longer be available for
any employee who retires after December 31, 2017. 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, 2016 and 2015 was $2.2 million
and $6.7 million, respectively. Annual expenses for these plans for fiscal years 2016, 2015 and 2014 were $0.2
million, $0.7 million and $0.9 million, respectively.
The Company has defined contribution savings plans. The Company contribution is based on employee
contributions and the level of Company match. The Company may make discretionary contributions to all
employees as a group. The employer cash contributions to these plans were approximately $16.3 million, $14.8
million and $13.9 million in fiscal years 2016, 2015, and 2014 respectively. Approximately $0.8 million of the
fiscal year 2015 contributions were reflected in the Restructuring Charges line item as they were related to
- 89 -
contractual obligations resulting from the curtailment of the U.K. defined benefit pension plan. The expense
recorded for these plans was approximately $16.2 million, $15.2 million and $15.7 million in fiscal years 2016,
2015, and 2014 respectively.
Note 17 – Share-Based Compensation
All equity compensation plans have been approved by shareholders. Under the 2014 Key Employee Stock Plan,
(“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 million shares
of Company Class A stock may be issued. As of April 30, 2016, there were approximately 5,873,090 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. For fiscal years 2015 and prior, options generally vest 50% on the
fourth and fifth anniversary date after the award is granted. Starting in fiscal year 2016, options vest 25% per
year on April 30th. Under certain circumstances relating to a change of control, as defined, the right to exercise
options outstanding may 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 Years
Ended April 30,
2015
2016
2014
Fair Value of Options on Grant Date
$14.77
$16.97
$10.12
Weighted Average assumptions:
Expected Life of Options (years)
Risk-Free Interest Rate
Expected Volatility
Expected Dividend Yield
Fair Value of Common Stock on Grant Date
7.2
2.1%
29.7%
2.1%
$55.99
7.2
2.2%
30.9%
1.9%
$59.70
7.4
2.1%
30.5%
2.5%
$39.53
- 90 -
A summary of the activity and status of the Company’s stock option plans follows:
2016
2015
2014
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Term (in
years)
Aggregate
Intrinsic
Value (in
millions)
Options
(in 000’s)
Outstanding at Beginning of
Year
Granted
Exercised
1,921
$45.50
166
$55.99
(103)
$40.22
Weighted
Average
Exercise
Price
Weighted
Average
Exercise
Price
Options
(in 000’s)
Options
(in 000’s)
2,508
$42.34
3,732
$42.85
189
$59.70
322
$39.53
(747)
$38.32
(1,421)
$42.57
Expired or Forfeited
(18)
$51.02
(29)
$49.32
(125)
$47.65
Outstanding at End of Year
Exercisable at End of Year
Vested and Expected to Vest
in the Future at April 30
1,966
1,140
$46.62
$45.22
1,925
$46.61
4.3
3.1
4.3
$8.6
$5.3
$8.5
1,921
$45.50
2,508
$42.34
815
$42.31
1,191
$39.16
1,872
$42.91
2,432
$42.38
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 2016, 2015 and 2014 was $1.5 million, $16.1 million
and $12.4 million, respectively. The total grant date fair value of stock options vested during fiscal year 2016
was $5.7 million.
As of April 30, 2016, there was $2.9 million of unrecognized share-based compensation expense related to
stock options, which is expected to be recognized over a period up to 4 years, or 2.2 years on a weighted
average basis.
The following table summarizes information about stock options outstanding and exercisable at April 30, 2016:
Range of
Exercise Prices
$33.05 to $35.04
$39.53 to $40.02
$47.55 to $49.55
$55.99 to $59.70
Total/Average
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
154
560
915
337
1,966
2.4
4.4
3.2
7.9
4.3
$34.88
$39.75
$48.65
$57.87
$46.62
154
253
692
$34.88
$40.02
$48.77
41
$55.99
1,140
$45.22
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. For fiscal years 2015 and prior, restricted
performance shares vest 50% on the first and second anniversary date after the award is earned. For three year
periods beginning with fiscal year 2016, restricted performance shares vest 50% at the end of the three-year
performance cycle and 50% on April 30th of the following year.
- 91 -
The Company may also grant individual restricted awards of the Company’s Class A Common Stock to key
employees in connection with their employment. For fiscal years 2015 and prior, the restricted shares generally
vest 50% at the end of the fourth and fifth years following the date of the grant. Starting with fiscal year 2016
grants, restricted performance shares vest ratably 25% per year on the anniversary 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 2016, 2015 and 2014 was as follows (shares in thousands):
2016
2015
2014
Restricted
Shares
Weighted
Average
Grant Date
Value
752
289
86
(154)
(58)
915
$50.64
$55.78
$47.27
$43.69
$47.61
$52.60
Restricted
Shares
Restricted
Shares
745
363
(65)
(159)
(132)
752
837
348
(92)
(256)
(92)
745
Nonvested Shares at Beginning of Year
Granted
Change in shares due to performance
Vested and Issued
Forfeited
Nonvested Shares at End of Year
As of April 30, 2016, there was $21.2 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 3.2 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 2016, 2015 and 2014 was $7.2 million, $6.8 million
and $9.7 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 retainer fee
(excluding additional retainer fees paid to committee chairpersons), 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 19,559; 12,131 and 12,408 shares awarded under the Director Plan for fiscal years 2016,
2015 and 2014, respectively.
Note 18 - 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 2014, 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. During fiscal year 2016, the Company
repurchased 1,432,284 shares at an average price of $48.86 per share. As of April 30, 2016, the Company has
authorization from its Board of Directors to purchase up to 746,836 additional shares.
- 92 -
Note 19 - Segment Information
The Company’s operations are primarily located in the United States, Canada, Europe, Asia and Australia.
Below is a description of the Company’s three operating segments:
Research serves the world’s research and scholarly communities and is the largest publisher for professional
and scholarly societies. Research products include scientific, technical, medical and scholarly research journals,
books, reference works, databases, clinical decision support tools, laboratory manuals and workflow tools, in the
publishing areas of the physical sciences and engineering, health sciences, social science and humanities and
life sciences. Research customers include academic, corporate, government, and public libraries; researchers;
scientists; clinicians; engineers and technologists; scholarly and professional societies; and students and
professors. The Company’s Research products are sold and distributed globally in digital and print formats
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, China, Germany, India, the United Kingdom and the United States.
Professional Development acquires, develops and publishes professional information and content delivered
through print and digital books, test preparation, assessments, online learning solutions and certification and
training services. Communities served include business, finance, accounting, workplace learning, management,
leadership, technology, behavioral health, engineering/architecture and education. Products are developed in
print and digitally for worldwide distribution through multiple channels, including chain and online booksellers,
libraries, colleges and universities, corporations, direct to consumer, websites, distributor networks and other
online applications. Publishing centers include Australia, Germany, India, the United Kingdom and the United
States.
Education produces educational content and solutions, including course management tools for instructors and
students and online program services for higher education institutions. Education offers learning solutions,
innovative products and services principally delivered through college bookstores, online distributors and directly
to institutions, with customers having access to content in digital and custom print formats, as well as the
traditional print textbook. Education’s cost-effective, flexible solutions are available in each of its publishing
disciplines, including sciences, engineering, computer science, mathematics, business and accounting,
statistics, geography, hospitality and the culinary arts, education, psychology and modern languages.
Publishing centers include Asia, Australia, Canada, India, the United Kingdom and the United States.
Shared Services - The Company reports financial data for shared service functions, which are centrally
managed for the benefit of the three global businesses, including Distribution and Operation Services,
Technology and Content Management, Occupancy and Other Administration support.
As part of Wiley’s Restructuring and Reinvestment Program, the Company consolidated its marketing services
functions into a single global shared service function. This newly centralized service group enables significant
cost reduction opportunities, including efficiencies gained from standardized technology and centralized
management. The costs of these functions were previously reported as direct operating expenses in each
business segment but are now reported within Shared Services and Administrative Costs and are allocated to
each business segment. In addition, the Company modified its product/service revenue categories for the
Research segment. As a result, prior year amounts have been restated to reflect these same reporting
methodologies. The Company uses occupied square footage of space; number of employees; units shipped;
specific identification/activity-based; gross profit; revenue and number of invoices to allocate shared service
costs to each business segment.
- 93 -
Segment information is as follows (in thousands):
RESEARCH:
Revenue
Direct Contribution to Profit
Allocated Shared Services and Administrative Costs:
Distribution and Operation Services
Technology and Content Management
Occupancy and Other
Contribution to Profit
PROFESSIONAL DEVELOPMENT:
Revenue
Direct Contribution to Profit
Allocated Shared Services and Administrative Costs:
Distribution and Operation Services
Technology and Content Management
Occupancy and Other
Contribution to Profit
EDUCATION:
Revenue
Direct Contribution to Profit
Allocated Shared Services and Administrative Costs:
Distribution and Operation Services
Technology and Content Management
Occupancy and Other
Contribution to Profit
Total Contribution to Profit
For the years ended April 30,
2015
2016
2014
$965,254
$1,040,795
$1,044,349
440,301
487,285
479,189
(39,348)
(98,442)
(29,516)
$272,995
(44,620)
(96,486)
(30,405)
$315,774
(45,773)
(99,929)
(28,491)
$304,996
$404,281
$407,023
$363,869
$167,023
$143,157
130,427
(28,364)
(40,951)
(23,160)
$74,548
(30,838)
(48,002)
(26,180)
$38,137
(37,673)
(50,426)
(19,712)
22,616
$357,502
$374,622
$366,977
118,375
127,729
124,145
(15,207)
(51,612)
(15,688)
$35,868
(12,863)
(54,272)
(13,950)
$46,644
(15,685)
(48,097)
(11,769)
48,594
$383,411
$400,555
$376,206
Unallocated Shared Services and Administrative Costs
Foreign Exchange Transaction Gains (Losses)
Interest Expense & Other, Net
Income Before Taxes
(195,298)
473
(13,793)
$174,793
(162,816)
1,742
(14,020)
$225,461
(169,533)
(8)
(11,131)
$195,534
The following table reflects total shared services and administrative costs by function, which are allocated to
business segments based on the methodologies described above:
SHARED SERVICES AND ADMINISTRATIVE COSTS:
Distribution and Operation Services
Technology and Content Management
Finance
Other Administration
Restructuring Charges (see Note 6)
Impairment Charges (see Note 7)
Total
- 94 -
For the years ended April 30,
2015
$89,024
244,850
52,796
115,469
18,293
-
$520,432
2016
$83,109
257,822
49,798
126,777
20,080
-
$537,586
2014
$100,310
240,797
54,191
104,807
22,197
4,786
$527,088
In the fiscal year 2015, the Company modified its segment product/service revenue categories to reflect recent
changes to the business, including acquisitions and restructuring. All prior periods have been revised to reflect
the new categorization as follows:
Total Revenue by Product/Service
Journal Revenue
Books and Custom Material
Online Program Management (Deltak)
Talent Solutions
Course Workflow Solutions (WileyPlus)
Other
Total
Total Assets
Research
Professional Development
Education
Corporate/Shared Services
Total
Expenditures for Long Lived Assets
Research
Professional Development
Education
Corporate/Shared Services
Total
Depreciation and Amortization
Research
Professional Development
Education
Corporate/Shared Services
Total
For the years ended April 30,
2015
$882,932
642,866
81,593
99,052
54,200
61,797
$1,822,440
2016
$815,614
582,818
96,469
108,061
58,551
65,524
$1,727,037
2014
$870,194
693,963
70,179
33,047
49,459
58,353
$1,775,195
$1,216,350
730,434
426,077
548,235
$2,921,096
$1,246,673
695,859
430,733
630,978
$3,004,243
$1,392,373
554,146
455,848
674,998
$3,077,365
$32,294
15,020
10,376
93,705
$151,395
$55,646
37,837
35,536
26,830
$155,849
$18,288
179,174
14,188
69,121
$280,771
$57,992
31,943
38,928
25,062
$153,925
$23,311
59,837
11,935
57,564
$152,647
$62,664
28,542
40,023
16,868
$148,097
Export sales from the United States to unaffiliated customers amounted to approximately $164.4 million, $168.0
million and $169.0 million in fiscal years 2016, 2015 and 2014, respectively. The pretax income for consolidated
operations outside the United States was approximately $159.2 million, $165.1 million and $159.4 million in
fiscal years 2016, 2015 and 2014, respectively.
- 95 -
Revenue from external customers based on the location of the customer and long-lived assets by geographic
area were as follows (in thousands):
2016
Revenue
2015
Long-Lived Assets
(Technology, Property & Equipment)
2014
2016
2015
2014
United States
$884,185
$920,166
$937,106
$166,878
$143,786
$135,711
United Kingdom
153,442
142,680
127,716
Germany
Japan
China
India
Australia
France
Canada
69,676
76,930
52,815
38,208
78,786
49,970
50,243
83,714
84,420
45,159
39,494
80,380
57,492
56,949
89,107
80,074
41,581
39,953
79,453
25,376
61,559
Other Countries
272,782
311,986
293,270
23,246
9,629
35
244
234
1,041
9,517
1,617
2,329
24,711
9,781
21
307
180
1,696
6,720
1,606
4,202
32,286
12,877
40
516
172
2,712
-
729
3,675
Total
$1,727,037
$1,822,440
$1,775,195
$214,770
$193,010
$188,718
- 96 -
Supplementary Financial Information - Results By Quarter (Unaudited)
$ In millions, except per share data
2016
2015
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 (a)
Second Quarter (b)
Third Quarter (c)
Fourth Quarter (d)
Fiscal Year
Net Income
First Quarter (a)
Second Quarter (b)
Third Quarter (c)
Fourth Quarter (d)
Fiscal Year
Income Per Share
First Quarter (a)
Second Quarter (b)
Third Quarter (c)
Fourth Quarter (d)
Fiscal Year
$
$
$
$
$
$
$
$
$
$
422.9
433.4
436.4
434.3
1,727.0
303.2
316.6
316.2
325.1
1,261.1
44.9
60.3
39.6
43.3
188.1
32.5
43.6
35.5
34.2
145.8
$
$
$
$
$
$
$
$
437.9
477.0
465.9
441.6
1,822.4
313.9
342.4
341.7
324.8
1,322.8
49.6
76.1
54.0
58.0
237.7
33.7
53.8
42.5
46.9
176.9
2016
2015
Diluted
Basic
Diluted
0.55 $
0.74
0.61
0.59
2.48 $
0.55 $
0.75
0.62
0.60
2.51 $
0.56 $
0.90
0.72
0.79
2.97 $
Basic
0.57
0.91
0.73
0.80
3.01
a) In the first quarters of fiscal years 2016 and 2015, the Company recorded a restructuring charge of $3.4 million
($0.03 per share) and a restructuring credit of $(0.2) million, respectively, under its restructuring programs.
b) In the second quarter of fiscal year 2016, the Company recorded a restructuring charge of $3.7 million ($0.04
per share) under its restructuring program.
c) In the third quarters of fiscal years 2016 and 2015, the Company recorded restructuring charges of $13.7
million ($0.16 per share) and $24.0 million ($0.28 per share) under its restructuring programs, respectively. In
the third quarter of fiscal year 2016, the Company recorded deferred tax benefits of $5.9 million ($0.10 per
share) associated with tax legislation enacted in the United Kingdom that reduced the U.K. corporate income
tax rates by 2%.
d) In the fourth quarters of fiscal years 2016 and 2015, the Company recorded restructuring charges of $7.8
million ($0.08 per share) and $4.9 million ($0.07 per share), respectively, under its restructuring programs. In
the fourth quarter of fiscal year 2015, the Company recorded a non-recurring tax benefit of $3.1 million ($0.05
per share) related to tax deductions claimed on the write-up of certain foreign tax assets to fair market value.
97
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED APRIL 30, 2016, 2015, AND 2014
Schedule II
(Dollars in thousands)
Description
Year Ended April 30, 2016
Additions/
(Deductions)
Balance at
Beginning
of Period
Charged to
Expenses
and Other
Deductions
From
Reserves(2)
Balance
at End of
Period
Allowance for Sales Returns (1)
$25,340
$56,094
$61,573
$19,861
Allowance for Doubtful Accounts
$8,290
$698
$1,734
$7,254
Allowance for Inventory Obsolescence
$21,901
$15,167
$15,100
$21,968
Year Ended April 30, 2015
Allowance for Sales Returns (1)
$28,633
$52,848
$56,141
$25,340
Allowance for Doubtful Accounts
$7,946
$3,100(3)
$2,756
$8,290
Allowance for Inventory Obsolescence
$25,087
$17,655
$20,841
$21,901
Year Ended April 30, 2014
Allowance for Sales Returns (1)
$31,834
$52,770
$55,971
$28,633
Allowance for Doubtful Accounts
$7,360
$2,441
$1,855
$7,946
Allowance for Inventory Obsolescence
$28,243
$18,202
$21,358
$25,087
(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 a corresponding increase in Inventories 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.
(3) Additions
to Allowance
for Doubtful Accounts
includes approximately $2 million related
to
the
CrossKnowledge acquisition on May 1, 2014.
98
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
Item 9A. Controls and Procedures
Disclosure Controls and Procedures: The Company's Chief Executive Officer and Chief Financial Officer,
together with the Chief Accounting Officer and other members of the Company's management, have
conducted an evaluation of the Company’s disclosure controls and procedures as defined in Rules 13a-
15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the
period covered by this report. Based on this evaluation, the Chief Executive Officer and Chief Financial
Officer have concluded that the Company's disclosure controls and procedures were effective to ensure that
information required to be disclosed by the Company in reports filed or submitted under the Exchange Act is
(i) recorded, processed, summarized and reported within the time periods specified by the Securities and
Exchange Commission's 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 (2013) 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, 2016.
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 in the fourth quarter of fiscal year 2016 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
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 2016 Annual Meeting of Shareholders (“2016
Proxy Statement”) and are incorporated herein by reference.
Information on the audit committee financial experts is contained in the 2016 Proxy Statement under the
caption “Report of the Audit Committee” and is incorporated herein by reference.
99
Information on the Audit Committee Charter is contained in the 2016 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, 2016. 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.
MATTHEW S. KISSNER - 62
October 2015 - Chairman of the Board, John Wiley and Sons, Inc. (Director since 2003)
MARK J. ALLIN – 55
June 2015 - President and Chief Executive Officer and Director, John Wiley and Sons, Inc.
February 2015- Executive Vice President and Chief Operating Officer- responsible for strategy and
operations for all of Wiley’s businesses. (succeeded Steve Smith as President and Chief Executive
Officer, effective June 1, 2015.)
September 2014 – Executive Vice President, Professional Development
August 2010 - Senior Vice President, Professional Development – responsible for leading the Company’s
global Professional Development business.
JOHN A. KRITZMACHER – 55
July 2013 – Chief Financial Officer and Executive Vice President, Technology and Operations, John
Wiley & Sons Inc. – responsible for the Company’s worldwide financial organization, strategic planning
and business development, technology, internal audit, customer service, distribution and investor
relations.
October 2012 - Senior Vice President of Business Operations, Organizational Planning & Structure at
WebMD Health Corp
October 2008 - Chief Financial Officer and Executive Vice President of Global Crossing Ltd
MARY-JO O’LEARY – 53 (to be succeeded by Archana Singh effective June 30, 2016)
September 2014 – Executive Vice President, Human Resources
May 2013 – Senior Vice President, Human Resources
October 2012 – Vice President and Director, Human Resources – responsible for working with the Senior
Vice President, Human Resources to manage the Company’s Global Human Resources organization.
July 2003 – Vice President, Marketing & Sales – responsible for managing the sales, marketing and
custom publishing functions for the Company’s Education business.
ARCHANA SINGH - 46 (to succeed Mary-Jo O’Leary effective June 30, 2016)
2016 – Executive Vice President and Chief Human Resources Officer
2014 – Chief Human Resources Officer, Hay Group - responsible for aligning HR strategies and initiatives
to support the organization into its’ next stage of growth. Leading all aspects of Human Resources with
a strong focus on talent management, culture alignment and integration.
2012 – Vice President, Human Resources, Computer Science Corporation - Human Resources Leader
for CSC’s enterprise business (technology consulting, application software, services and regions)
100
2008 – Corporate Vice President, Human Resources, Advanced Micro Devices (“AMD”) - Human
Resources Business Partner for global sales, marketing, manufacturing, product engineering, shared
services, corporate functions
GARY M. RINCK – 64
September 2014 – Executive Vice President, General Counsel
2004 – Senior Vice President, General Counsel – responsible for all of the Company’s legal and
corporate governance functions at Wiley.
PHILIP CARPENTER – 60
May 2015 – Executive Vice President, Research – responsible for leading the Company’s worldwide
journals publishing business.
September 2014 – Senior Vice President and Managing Director, Research Communications
May 2013 – Vice President and Managing Director, Research Communications – responsible for leading
the Company’s worldwide journals publishing business, as part of the broader Research organization.
December 2007 – Vice President and Managing Director, SSH– responsible for leading the Company’s
worldwide Social Sciences and Humanities journals publishing business, as part of the broader
Research organization.
VINCENT MARZANO – 53
September 2014 – Senior Vice President, Treasurer
September 2006 - Vice President, Treasurer – responsible for global treasury operations, insurable risk
management, accounts receivable, and credit and collections.
EDWARD J. MELANDO – 60
January 2013 – Senior Vice President, Corporate Controller– and Chief Accounting Officer – responsible
for Financial Reporting, Taxes, and Financial Shared Services.
2002 - Vice President, Corporate Controller– responsible for Financial Reporting, Taxes and the Financial
Shared Services.
REED ELFENBEIN – 62
May 2015 – Executive Vice President, International Development and Global Research Sales
May 2014 - Senior Vice President, International Development and Global Research Sales
October 2012 – Senior Vice President, International Development and STMS – leads team responsible
for increasing market share in growing and emerging markets and leads the worldwide Research sales
team.
February 2007 – Vice President and Managing Director, Sales and Marketing – responsible for leading
the domestic and international sales and marketing teams.
CLAY E. STOBAUGH – 58
September 2014 – Executive Vice President & Chief Marketing Officer
October 2013 - Senior Vice President & Chief Marketing Officer
August 2011 – Senior Vice President, Corporate Marketing – responsible for strategic marketing and
customer relationship management.
JOHN W. SEMEL – 45
May 2015- Executive Vice President and Chief Strategy Officer- responsible for developing, prioritizing,
and implementing strategies that drive business growth.
101
February 2009 – Senior Vice President, Planning and Development – responsible for global acquisitions
and divestitures, strategic investments, strategic planning, corporate alliances and business
development.
JOAN O’NEIL - 53
November 2015 – Executive Vice President, Knowledge & Learning – responsible for leading the
Company’s global Knowledge & Learning business
September 2014 – Senior Vice President and Managing Director, Knowledge Services, Professional
Development – responsible for leading the Knowledge Services business within the Professional
Development business
May 2013 – Vice President and Managing Director, Business, Finance & Accounting, Professional
Development – responsible for leading the global business, finance and accounting programs within
Professional Development
January 2011 – Vice President & Group Executive Publisher, Professional/Trade – responsible for the
finance and accounting programs within the Professional/Trade business
JEFFREY L. SUGARMAN - 60
May 2015 – Executive Vice President, Talent Solutions and Education Services Group – responsible for
leading Wiley’s combined Talent Solutions and Education Services (i.e. CrossKnowledge, Deltak,
Profiles International and Inscape Publishing) in the corporate learning and higher education
marketplaces.
February 2012 – Senior Vice President, Venture Development – responsible for leading execution and
Inscape Publishing,
talent solutions business acquisition
including
integration of Wiley’s
CrossKnowledge and Profiles International.
November 2001 – President and CEO, Inscape Publishing – responsible for the transformation into an
independent company after being acquired by a prominent New York-based private equity firm.
EDWARD J. MAY – 53
November 2013 - Corporate Secretary – responsible for Board administration and compliance with
corporate regulatory requirements.
October 2012 - Director of Corporate Governance, Tyco International Ltd. – responsible for the
governance structure and ERM program at Tyco International Ltd.
Item 11. Executive Compensation
Information on compensation of the directors and executive officers is contained in the 2016 Proxy
Statement under the captions “Directors’ Compensation” and “Executive Compensation,” respectively, and is
incorporated herein by reference.
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 2016 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 2016 Proxy Statement and is incorporated herein by reference.
102
The following table summarizes the Company’s equity compensation plan information as of April 30, 2016:
Plan Category
Equity compensation plans approved by
shareholders
Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights
Weighted-
average
exercise price of
outstanding
options,
warrants
and rights
Number of
securities remaining
available for future
issuance under equity
compensation plans
2,880,697(1)
$46.62
5,873,090
(1) This amount includes the following awards issued under the 2009 Key Employee Stock Plan:
1,965,940 shares issuable upon the exercise of outstanding stock options with a weighted average
exercise price of $46.62
914,757 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.
All of the Company’s equity compensation plans are approved by shareholders.
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 2016 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 2016 Proxy Statement.
Item 14. Principal Accountant Fees and Services
Information required by this item is contained in the 2016 Proxy Statement under the caption “Report of the
Audit Committee” and is incorporated herein by reference.
103
PART IV
Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)
(b)
(c)
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
10.9
10.10
10.11
10.12
Financial Statements and Schedules are included in the attached index on page 3 and are filed as part of
this report
Reports on Form 8-K submitted to the Securities and Exchange Commission since the filing of the
Company’s 10-Q on March 10, 2016:
Announcement of the election of director issued on Form 8-K dated May 2, 2016.
Earnings release on the fiscal year 2016 results issued on Form 8-K dated June 14, 2016, which included
certain condensed financial statements of the Company.
Exhibits
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 March 1, 2016, 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
January 31, 2016).
Agreement of the Lease dated as of July 14, 2014 between Hub Properties Trust as Landlord, an
independent third party and John Wiley and Sons, Inc as Tenant (incorporated by reference to the
Company’s Report on Form 10-Q for the quarterly period ended July 31, 2014).
2014 Director Stock Plan (incorporated by reference to the Company’s Report on Form 10-Q for the
quarterly period ended October 31, 2014).
2014 Executive Annual Incentive Plan (incorporated by reference to the Company’s Report on Form 10-Q
for the quarterly period ended October 31, 2014).
Amended 2014 Key Employee Stock Plan (incorporated by reference to the Company’s Report on Form
10-Q for the quarterly period ended October 31, 2014).
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).
Resolution amending the Supplemental Executive Retirement Plan to Cease Accruals and Freeze
Participation effective June 30, 2013.
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).
Resolution amending the Supplemental Benefit (Retirement) Plan to Cease Accruals and Freeze
Participation effective June 30, 2013.
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).
Resolution amending the Deferred Compensation Plan effective July 1, 2013.
104
10.13
Deferred Compensation Plan for Directors’ 2005 & After Compensation (incorporated by reference to the
Report on Form 8-K, filed December 21, 2005).
10.14*
Form of the Fiscal Year 2017 Qualified Executive Long Term Incentive Plan.
10.15*
Form of the Fiscal Year 2017 Qualified Executive Annual Incentive Plan.
10.16*
Form of the Fiscal Year 2017 Executive Annual Strategic Milestones Incentive Plan.
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
21*
23*
31.1*
31.2*
32.1*
32.2*
Form of the Fiscal Year 2016 Qualified Executive Long Term Incentive Plan (incorporated by reference to
the Company’s Report on Form 10-K for the year ended April 30, 2015).
Form of the Fiscal Year 2016 Qualified Executive Annual Incentive Plan (incorporated by reference to the
Company’s Report on Form 10-K for the year ended April 30, 2015).
Form of the Fiscal Year 2016 Executive Annual Strategic Milestones Incentive Plan (incorporated by
reference to the Company’s Report on Form 10-K for the year ended April 30, 2015).
Form of the Fiscal Year 2015 Qualified Executive Long Term Incentive Plan (incorporated by reference to
the Company’s Report on Form 10-K for the year ended April 30, 2014).
Form of the Fiscal Year 2015 Qualified Executive Annual Incentive Plan (incorporated by reference to the
Company’s Report on Form 10-K for the year ended April 30, 2014).
Form of the Fiscal Year 2015 Executive Annual Strategic Milestones Incentive Plan (incorporated by
reference to the Company’s Report on Form 10-K for the year ended April 30, 2014).
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).
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).
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 April 15, 2015 between Mark Allin and the
Company (incorporated by reference to the Company’s Report on Form 8-K dated as of April 15, 2015).
Senior executive Employment Agreement dated as of May 20, 2013 between John A. Kritzmacher and the
Company (incorporated by reference to the Company’s Report on Form 8-K dated as of June 4, 2013).
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).
List of Subsidiaries of the Company
Consent of KPMG LLP
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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.
101.INS
XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
105
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
* Filed herewith
106
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
JOHN WILEY & SONS, INC.
(Company)
Dated: June 29, 2016
By:
/s/ Mark Allin
Mark Allin
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
/s/ Mark Allin
Mark Allin
President and Chief Executive Officer
Director
/s/ John A. Kritzmacher
Chief Financial Officer and
John A. Kritzmacher
Executive Vice President, Technology and Operations
Dated
June 29, 2016
June 29, 2016
/s/ Edward J. Melando
Edward J. Melando
/s/ Peter Booth Wiley
Peter Booth Wiley
/s/ Jesse C. Wiley
Jesse C. Wiley
/s/ William J. Pesce
William J. Pesce
Senior Vice President, Controller and
June 29, 2016
Chief Accounting Officer
Director
June 29, 2016
Manager, Business Development Client Solutions and
June 29, 2016
Director
Director
/s/ William B. Plummer
Director
William B. Plummer
/s/ Kalpana Raina
Kalpana Raina
/s/ Mari J. Baker
Mari J. Baker
/s/ Mathew S. Kissner
Mathew S. Kissner
Director
Director
Director
/s/ Raymond McDaniel, Jr.
Director
Raymond McDaniel, Jr.
/s/ Eduardo R. Menascé
Eduardo R. Menascé
/s/ George Bell
George Bell
/s/ Laurie Leshin
Laurie Leshin
/s/ William Pence
William Pence
Director
Director
Director
Director
107
June 29, 2016
June 29, 2016
June 29, 2016
June 29, 2016
June 29, 2016
June 29, 2016
June 29, 2016
June 29, 2016
June 29, 2016
June 29, 2016
SUBSIDIARIES OF JOHN WILEY & SONS, INC. (1)
As of April 30, 2016
Exhibit 21
John Wiley & Sons International Rights, Inc.
Wiley.edu, LLC
Wiley Brasil Divulgacao De Materiais Didaticos LTDA
Wiley Periodicals, Inc.
Wiley Publishing Services, Inc.
Wiley Subscription Services, Inc.
Inscape Publishing LLC
Profiles International, LLC
Wiley Publishing LLC
Wiley India Private Ltd.
Crossknowledge Inc.
WWL Corp.
John Wiley & Sons Rus LLC
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.
John Wiley & Sons Singapore Pte. Ltd.
John Wiley & Sons Commercial Service (Beijing) Co., Ltd.
J Wiley Ltd.
John Wiley & Sons GmbH
Wiley-VCH Verlag GmbH & Co. KGaA
CrossKnowledge Group Limited
E-Learning SAS
Epistema Sarl
Wiley Heyden Ltd.
Wiley Distribution Services Ltd.
Blackwell Publishing (Holdings) Ltd.
Blackwell Science Ltd.
Blackwell Science (Overseas Holdings)
John Wiley & Sons A/S
Blackwell Verlag GmbH
Wiley Publishing Japan KK
Blackwell Publishing (HK) Ltd.
Wiley Publishing Australia Pty Ltd.
John Wiley and Sons Australia, Ltd.
John Wiley & Sons Canada Limited
John Wiley & Sons (HK) Limited
Wiley Publishing Canada Limited
Simulated Biomolecular Systems, Inc.
Jurisdiction
In Which
Incorporated
Delaware
Delaware
Brazil
Delaware
Delaware
Delaware
Delaware
Texas
Delaware
India
Delaware
Delaware
Delaware
Delaware
United Kingdom
United Kingdom
Japan
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Singapore
China
United Kingdom
Germany
Germany
United Kingdom
France
France
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Denmark
Germany
Japan
Hong Kong
Australia
Australia
Canada
Hong Kong
Canada
Canada
(1)\ The names of other subsidiaries that would not constitute a significant subsidiary in the aggregate have been
omitted.
108
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 Registration Statement Nos. 33-62605 and 333-167697 on Form S-8
of John Wiley & Sons, Inc. (the “Company”) of our reports dated June 29, 2016, with respect to the consolidated
statements of financial position of John Wiley & Sons, Inc. as of April 30, 2016 and 2015, and the related consolidated
statements of income, comprehensive income, cash flows and shareholders’ equity for each of the years in the three-
year period ended April 30, 2016, and the related financial statement schedule, and the effectiveness of internal
control over financial reporting as of April 30, 2016, which reports appear in the April 30, 2016 annual report on Form
10-K of John Wiley & Sons, Inc.
/s/ KPMG LLP
Short Hills, New Jersey
June 29, 2016
109
Exhibit 31.1
CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Mark Allin, President and Chief Executive Officer of John Wiley & Sons, Inc. (the “Company”), hereby certify that:
I have reviewed this annual report on Form 10-K of the Company;
1.
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/ Mark Allin
Mark Allin
President and
Chief Executive Officer
Dated: June 29, 2016
110
CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, John A. Kritzmacher, Chief Financial Officer and Executive Vice President, Technology and Operations, of John
Wiley & Sons, Inc. (the “Company”), hereby certify that:
Exhibit 31.2
I have reviewed this annual report on Form 10-K of the Company;
1.
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/ John A. Kritzmacher
John A. Kritzmacher
Chief Financial Officer and
Executive Vice President, Technology and Operations
Dated: June 29, 2016
111
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, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark Allin,
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/ Mark Allin
Mark Allin
President and
Chief Executive Officer
Dated: June 29, 2016
112
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, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John A.
Kritzmacher, Chief Financial Officer and Executive Vice President, Technology and Operations, 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/ John A. Kritzmacher
John A. Kritzmacher
Chief Financial Officer and
Executive Vice President, Technology and Operations
Dated: June 29, 2016
113