UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: April 30, 2020
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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
13-5593032
I.R.S. Employer Identification No.
111 River Street, Hoboken, NJ
Address of principal executive offices
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
Trading Symbol
JW.A
JW.B
Name of each exchange on which registered
New York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☒
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 ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically 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 ☒ 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, a smaller
reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller
reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
Non-accelerated filer ☐
Accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
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, 2019, was approximately $2,040
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, 2020 was 46,767,784 and
9,094,674 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 24, 2020, are incorporated by reference into Part III of this Form 10-K.
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
FORM 10-K
FOR THE FISCAL YEAR ENDED APRIL 30, 2020
INDEX
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Information About Our Executive Officers
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
PART I
ITEM 1.
ITEM 1A.
ITEM 1B.
ITEM 2.
ITEM 3.
ITEM 4
PART II
ITEM 5.
ITEM 6.
ITEM 7.
ITEM 7A.
ITEM 8.
ITEM 9.
ITEM 9A.
ITEM 9B.
PART III
ITEM 10.
ITEM 11.
ITEM 12.
ITEM 13.
ITEM 14.
PART IV
ITEM 15.
ITEM 16.
SIGNATURES
Exhibits, Financial Statement Schedules
Form 10-K Summary
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Cautionary Notice Regarding Forward-Looking Statements “Safe Harbor” Statement under the Private Securities Litigation
Reform Act of 1995:
This report contains “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 concerning our business, consolidated financial condition and results of operations. The Securities and Exchange
Commission (“SEC”) encourages companies to disclose forward-looking information so that investors can better understand a
company’s prospects and make informed investment decisions. Forward-looking statements are subject to risks and uncertainties,
many of which are outside our control, which could cause actual results to differ materially from these statements. Therefore, you
should not rely on any of these forward-looking statements. Forward-looking statements can be identified by such words as
“anticipates,” “believes,” “plan,” “assumes,” “could,” “should,” “estimates,” “expects,” “intends,” “potential,” “seek,” “predict,”
“may,” “will” and similar references to future periods. All statements other than statements of historical facts included in this report
regarding our strategies, prospects, financial condition, operations, costs, plans and objectives are forward-looking statements.
Examples of forward-looking statements include, among others, statements we make regarding our fiscal year 2021 outlook, the
anticipated impact on the ability of our employees, contractors, customers and other business partners to perform our and their
respective responsibilities and obligations relative to the conduct of our business in the future due to the current coronavirus (COVID-
19) outbreak, anticipated restructuring charges and savings, 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 many assumptions and estimates that are inherently subject to uncertainties and
contingencies, many of which are beyond our control, 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 our
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 our educational business and the
impact of the used book market; (vii) worldwide economic and political conditions; (viii) our ability to protect our copyrights and
other intellectual property worldwide; (ix) our ability to successfully integrate acquired operations and realize expected opportunities;
(x) the ability to realize operating savings over time and in fiscal year 2021 in connection with our multi-year Business Optimization
Program; and (xi) other factors detailed from time to time in our filings with the SEC. We undertake no obligation to update or revise
any such forward-looking statements to reflect subsequent events or circumstances.
Please refer to Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for important factors that we believe could cause
actual results to differ materially from those in our forward-looking statements. Any forward-looking statement made by us in this
report is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no
obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as
a result of new information, future developments or otherwise.
Non-GAAP Financial Measures:
We present financial information that conforms to Generally Accepted Accounting Principles in the United States of America (“U.S.
GAAP”). We also present financial information that does not conform to U.S. GAAP, which we refer to as non-GAAP.
In this report, we may present the following non-GAAP performance measures:
Adjusted Earnings Per Share “(Adjusted EPS)”;
Free Cash Flow less Product Development Spending;
Adjusted Revenue;
Adjusted Operating Income and margin;
Adjusted Contribution to Profit and margin;
EBITDA and Adjusted EBITDA and margin;
Organic revenue; and
Results on a constant currency basis.
Management uses these non-GAAP performance measures as supplemental indicators of our operating performance and financial
position as well for internal reporting and forecasting purposes, when publicly providing our outlook, to evaluate our performance and
calculate incentive compensation. We present these non-GAAP performance measures in addition to U.S. GAAP financial results
because we believe that these non-GAAP performance measures provide useful information to certain investors and financial analysts
for operational trends and comparisons over time. The use of these non-GAAP performance measures may also provide a consistent
basis to evaluate operating profitability and performance trends by excluding items that we do not consider to be controllable activities
for this purpose.
Index
3
For example:
Adjusted EPS, Adjusted Revenue, Adjusted Operating Income, Adjusted Contribution to Profit, Adjusted EBITDA, and
organic revenue provide a more comparable basis to analyze operating results and earnings and are measures commonly used
by shareholders to measure our performance.
Free Cash Flow less Product Development Spending helps assess our ability, over the long term, to create value for our
shareholders as it represents cash available to repay debt, pay common stock dividends and fund share repurchases and
acquisitions.
Results on a constant currency basis removes distortion from the effects of foreign currency movements to provide better
comparability of our business trends from period to period. We measure our performance before the impact of foreign
currency (or at “constant currency”), which means that we apply the same foreign currency exchange rates for the current and
equivalent prior period.
In addition, we have historically provided these or similar non-GAAP performance measures and understand that some investors and
financial analysts find this information helpful in analyzing our operating margins, and net income and comparing our financial
performance to that of our peer companies and competitors. Based on interactions with investors, we also believe that our non-GAAP
performance measures are regarded as useful to our investors as supplemental to our U.S. GAAP financial results, and that there is no
confusion regarding the adjustments or our operating performance to our investors due to the comprehensive nature of our disclosures.
We have not provided our 2021 outlook for the most directly comparable U.S. GAAP financial measures, as they are not available
without unreasonable effort due to the high variability, complexity, and low visibility with respect to certain items, including
restructuring charges and credits, gains and losses on foreign currency, and other gains and losses. These items are uncertain, depend
on various factors, and could be material to our consolidated results computed in accordance with U.S. GAAP.
Non-GAAP performance measures do not have standardized meanings prescribed by U.S. GAAP and therefore may not be
comparable to the calculation of similar measures used by other companies and should not be viewed as alternatives to measures of
financial results under U.S. GAAP. The adjusted metrics have limitations as analytical tools and should not be considered in isolation
from or as a substitute for U.S. GAAP information. It does not purport to represent any similarly titled U.S. GAAP information and is
not an indicator of our performance under U.S. GAAP. Non-U.S. GAAP financial metrics that we present may not be comparable with
similarly titled measures used by others. Investors are cautioned against placing undue reliance on these non-U.S. GAAP measures.
PART I
Item 1. Business
The Company, founded in 1807, was incorporated in the state of New York on January 15, 1904. Throughout this report, when we
refer to “Wiley,” the “Company,” “we,” “our,” or “us,” we are referring to John Wiley & Sons, Inc. and all of our subsidiaries, except
where the context indicates otherwise.
Please refer to Part II, Item 8, “Financial Statements and Supplementary Data,” for financial information about the Company and its
subsidiaries, which is incorporated herein by reference. Also, when we cross reference to a “Note,” we are referring to our “Notes to
Consolidated Financial Statements,” unless the context indicates otherwise.
As previously announced, we have changed our segment reporting structure to align with our strategic focus areas: (1) Research
Publishing & Platforms, which continues to include the Research publishing and Atypon businesses, (2) Academic & Professional
Learning, which is the former “Publishing” segment combined with our corporate training businesses – previously noted as
Professional Assessment and Corporate Learning; and (3) Education Services, which includes our Online Program Management and
mthree training, upskilling and talent placement services for professionals and businesses. Prior period segment results have been
revised to the new segment presentation. There were no changes to our consolidated financial results.
Wiley drives the world forward with research and education. Through publishing, platforms and services, we help researchers,
professionals, students, universities, and corporations to achieve their goals in an ever-changing world. Through the Research
Publishing & Platforms segment, we provide scientific, technical, medical, and scholarly journals, as well as related content and
services, to academic, corporate, and government libraries, learned societies, and individual researchers and other professionals. The
Academic & Professional Learning segment provides scientific, professional, and education books in print and digital formats, digital
courseware, and test preparation services, to students, libraries, corporations, professionals, and researchers, as well as learning,
development, and assessment services for businesses and professionals. The Education Services segment provides online program
management services for higher education institutions and mthree talent placement services for professionals and businesses. Our
operations are primarily located in the United States (“U.S.”), United Kingdom (“U.K.”), Germany, Russia, Sri Lanka, Canada,
Jordan, and France. In the year ended April 30, 2020, approximately 44% of our consolidated revenue was from outside the U.S.
Index
4
Our business growth strategies include:
driving volume growth from existing journal and book brands and titles, as well as learning services related to education and
professional development;
developing new journal titles or through publishing partnerships;
developing new products and services for existing university partners, as well as signing new online program management
partners;
making technology and content acquisitions that complement our existing businesses;
designing and implementing new methods of delivering products to our customers; and
the development of new products and services.
Business Segments
We report our segment information in accordance with the provisions of Financial Accounting Standards Board Accounting Standards
Codification Topic 280, “Segment Reporting” (“FASB ASC Topic 280”). Our segment reporting structure consists of three reportable
segments, which are listed below, and a Corporate category:
Research Publishing & Platforms;
Academic & Professional Learning; and
Education Services.
Research Publishing & Platforms:
Research Publishing & Platforms’ mission is to support researchers, professionals and learners in the discovery and use of research
knowledge to help them achieve their goals. Research provides scientific, technical, medical, and scholarly journals, as well as related
content and services, to academic, corporate, and government libraries, learned societies, and individual researchers and other
professionals. Journal publishing areas include the physical sciences and engineering, health sciences, social sciences and humanities
and life sciences. Research Publishing & Platforms also includes Atypon Systems, Inc. (“Atypon”), a publishing software and service
provider that enables scholarly and professional societies and publishers to deliver, host, enhance, market, and manage their content on
the web through the Literatum™ platform. Research Publishing & Platforms’ customers include academic, corporate, government,
and public libraries, funders of research, researchers, scientists, clinicians, engineers and technologists, scholarly and professional
societies, and students and professors. Research Publishing & Platforms 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, and other customers. Publishing centers include Australia, China, Germany, India, the United
Kingdom, and the United States. Research Publishing & Platforms’ revenue accounted for approximately 52% of our consolidated
revenue in the year ended April 30, 2020, with a 35.3% Adjusted EBITDA margin.
Research Publishing & Platforms revenue by product type includes Research Publishing and Research Platforms. The graphs below
present revenue by product type for the years ended April 30, 2020 and 2019:
Key growth strategies for the Research Publishing & Platforms segment include evolving and developing new licensing models for
our institutional customers (“pay to read and publish”), developing new open access products and revenue streams (“pay to publish”),
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.
Index
5
Research Publishing
Research Publishing generates the majority of its revenue from contracts with its customers for the following revenue streams:
Journal Subscriptions;
Licensing, Reprints, Backfiles and Other; and
Open Access and Comprehensive Agreements
Journal Subscriptions
We publish approximately 1,675 academic research journals. We sell journal subscriptions directly through our 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 available online through Wiley Online Library, which is delivered through our Literatum platform. Contracts are negotiated by
us directly with customers or their subscription agents. Subscription periods typically cover calendar years. Print journals are generally
mailed to subscribers directly from independent printers. We do not own or manage printing facilities. Subscription revenue is
generally collected in advance.
Approximately 50% of Journal Subscription revenue is derived from publishing rights owned by us. Publishing alliances also play a
major role in Research Publishing’s success. Approximately 50% of Journal Subscription revenue is derived from publication rights
that are owned by professional societies and published by us pursuant to a long-term contract (generally 5–10 years) 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. Societies that
sponsor or own such journals generally receive a royalty and/or other financial consideration. We may procure editorial services from
such societies on a pre-negotiated fee basis. We also enter 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 our journal portfolio transfer publication
rights to us or a professional society, as applicable. We publish 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.
Literatum, our online publishing platform for Research Publishing, delivers integrated access to over 9 million articles from
approximately 1,675 journals, as well as 22,000 online books and hundreds of multi-volume reference works, laboratory protocols and
databases. Wiley Online Library, which is delivered through our Literatum platform, provides the user with intuitive navigation,
enhanced discoverability, expanded functionality, and a range of personalization options. Access to abstracts is free and 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. Our online publishing
platforms provide revenue growth opportunities through new applications and business models, online advertising, deeper market
penetration, and individual sales and pay-per-view options. The Literatum platform hosts over 40% of the world’s English language
journals.
Wiley’s performance in the 2018 release of Clarivate Analytics’ Journal Citation Reports (JCR) remains strong, maintaining its
position as #3 in terms of the number of titles indexed, articles published, and citations received. Wiley saw a 9.5% increase in JCR
articles, giving it 9.7% overall share (+0.6%) – its biggest increase since 2008.
A total of 1,223 Wiley journals were included in the reports, 58% of these were society publications – reaffirming Wiley’s position as
the world’s leading society publishing partner. Wiley journals ranked #1 in 27 categories across 25 titles and achieved 349 top-10
category rankings.
The annual Journal Citation Reports (JCR) are one of the most widely-used sources of citation metrics used to analyze the
performance of peer-reviewed journals. The most famous of these metrics, the Impact Factor, is based on the frequency with which an
average article is cited in the JCR report year. Alongside other metrics, this makes it an important tool for evaluating a journal’s
impact on ongoing research.
Index
6
Licensing, Reprints, Backfiles, and Other
Licensing, Reprints, Backfiles, and Other includes advertising, backfile sales, the licensing of publishing rights, journal and article
reprints, and individual article sales. We generate advertising revenue from print and online journal subscription products, our online
publishing platform, Literatum, online events such as webinars and virtual conferences, community interest Web sites such as
spectroscopyNOW.com, and other Web sites. A backfile license provides access to a historical collection of Wiley journals, generally
for a one-time fee. We also engage with international publishers and receive licensing revenue from photocopies, reproductions,
translations, and other digital uses of our content. Journal and article reprints are primarily used by pharmaceutical companies and
other industries for marketing and promotional purposes. Through the Article Select and PayPerView programs, we provide fee-based
access to non-subscribed journal articles, content, book chapters, and major reference work articles. The Research Publishing business
is also a provider of content and services in evidence-based medicine (“EBM”). Through our alliance with The Cochrane
Collaboration, we publish The Cochrane Library, a premier source of high-quality independent evidence to inform healthcare
decision-making. EBM facilitates the effective management of patients through clinical expertise informed by best practice evidence
that is derived from medical literature.
Open Access and Comprehensive Agreements
Under the Author-Funded Access business model, accepted research articles are published subject to payment of Article Publication
Charges ("APCs"). After payment to Wiley, all Author-Funded articles are immediately free to access online. Contributors of Author-
Funded Access articles retain many rights and typically license their work under terms that permit re-use.
Author-Funded Access offers authors choices in how to share and disseminate their work, and it serves the needs of researchers who
may be required by their research funder to make articles freely accessible without embargo. APCs are typically paid by the individual
author or by the author’s funder, and payments are often mediated by the author’s institution. We provide specific workflows and
infrastructure to authors, funders, and institutions to support the requirements of the Author-Funded Access model.
We offer two Open Access publishing models. The first of these is Hybrid Open Access where, upon payment of an APC, authors
publishing in the majority of our paid subscription journals are offered, after article acceptance, the opportunity to make their
individual research article openly available through the OnlineOpen service.
The second offering of the Open Access model is a growing portfolio of fully open access journals, also known as Gold Open Access
Journals, in which all accepted articles are published subject to receipt of an APC. All Open Access articles are subject to the same
rigorous peer-review process applied to our subscription-based journals. As with our subscription portfolio, a number of the Gold
Open Access Journals are published under contract for, or in partnership with, prestigious societies, including the American
Geophysical Union, the American Heart Association, the European Molecular Biology Organization and the British Ecological
Society. The Open Access portfolio spans life, physical, medical and social sciences and includes a choice of high impact journals and
broad-scope titles that offer a responsive, author-centered service.
In March 2020, we agreed with Jisc, the U.K.’s research and education not-for-profit that negotiates licenses and digital content
agreements on behalf of U.K. universities, on a four year comprehensive “read and publish” agreement that, for an annual fee, enables
U.K. institutions to access our journal portfolio and researchers at U.K. universities the means to publish open access (“OA”) in all
Wiley journals at no direct cost to them. As part of the new agreement, the proportion of OA articles published by U.K. researchers
will increase from 27% to an estimated 85% in year one, with the potential to reach 100% by 2022. The agreement will also enable
institutions and their users to access all of Wiley’s journals. Other comprehensive agreements include consortia in Austria, Finland,
Germany, Hungary, Netherlands, Norway, and Sweden. We are compensated through a publish and read fee.
In January 2019, we announced a contractual arrangement in support of Open Access, a countrywide partnership agreement with
Projekt DEAL, a representative of nearly 700 academic institutions in Germany. This three-year agreement provides all Projekt DEAL
institutions with access to read Wiley’s academic journals back to the year 1997, and researchers at Projekt DEAL institutions can
publish articles open access in Wiley’s journals. The partnership will better support institutions and researchers in advancing open
science, driving discovery, and developing and disseminating knowledge. We are compensated through a fee per article published.
Research Platforms
Research Platforms is principally comprised of Atypon, a publishing software and service provider that enables scholarly and
professional societies and publishers to deliver, host, enhance, market, and manage their content on the web through the Literatum
platform.
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Academic & Professional Learning:
Our Academic & Professional Learning segment provides scientific, professional, and education books in print and digital formats,
digital courseware, and test preparation services, to libraries, corporations, students, professionals, and researchers, as well as learning,
development, and assessment services for businesses and professionals. Communities served include business, finance, accounting,
workplace learning, management, leadership, technology, behavioral health, engineering/ architecture, science and medicine, 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, Web sites, distributor networks and other
online applications. Publishing centers include Australia, Germany, India, the United Kingdom, and the United States. Academic &
Professional Learning accounted for approximately 35% of our consolidated revenue in the year ended April 30, 2020, with a 23.7%
Adjusted EBITDA margin.
Academic & Professional Learning revenue by product type includes Education Publishing and Professional Learning. The graphs
below present revenue by product type for the years ended April 30, 2020 and 2019:
Key growth strategies for the Academic & Professional Learning 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, and innovating digital book formats while expanding their global discoverability and distribution. We
continue to implement strategies to manage declines in print revenue through cost improvement initiatives and focusing our efforts on
growing its digital lines of business. We are continuing to perform portfolio reviews and workforce realignment, restructuring, and
operational excellence initiatives. In certain areas, we will explore new formats or promote digital-only, and in other areas, we may
rationalize our portfolio. Our approach is to continue to realign our cost structure to help mitigate the market changes that are
contributing to revenue decline, and to sharpen our focus on high performing areas and digital opportunities, while improving
operating efficiency.
Book sales for STM (Scientific, Technical and Medical), Professional and Education Publishing are generally made on a returnable
basis with certain restrictions. We provide for estimated future returns on sales made during the year based on historical return
experience and current market trends.
Materials for book publications are obtained from authors throughout most of the world, utilizing 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. We enter 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. We may make advance royalty
payments against future royalties to authors of certain publications. Royalty advances are reviewed for recoverability and a reserve for
loss is maintained, if appropriate.
We continue to add new titles, revise existing titles, and discontinue the sale of others in the normal course of our business, and we
also create adaptations of original content for specific markets based on customer demand. Our general practice is to revise our
textbooks approximately every three years, if warranted, and to revise other titles as appropriate. Subscription-based products are
updated on a more frequent basis.
Index
8
We generally contract with independent printers and binderies globally for their services. Management believes that adequate printing
and binding facilities and sources of paper and other required materials are available to it, and that it is not dependent upon any single
supplier.
In fiscal year 2016, we entered into an agreement to outsource our US-based book distribution operations to Cengage Learning, with
the continued aim of improving efficiency in our distribution activities and moving to a more variable cost model. As of April 30,
2020, we had one global warehousing and distribution facility remaining, which is in the United Kingdom.
Education Publishing
Education Publishing generates the majority of its revenue from contracts with its customers for the following revenue streams:
Education and STM Publishing;
Digital Courseware;
Test Preparation and Certification; and
Licensing and Other.
Education and STM Publishing
Book products including Education and Scientific Technical and Medical (STM) Publishing.
Education textbooks and related supplementary material and digital products are sold primarily to bookstores and online booksellers
serving both for-profit and nonprofit educational institutions (primarily colleges and universities), and direct-to-students. We employ
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. The textbook business is seasonal, with the majority of textbook sales occurring during the July-
through- October and December-through-January periods. There are active used and rental print textbook markets, which adversely
affect the sale of new textbooks. We are exploring opportunities to expand into the print rental market.
STM books (“Reference”) 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.
We develop 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 (delivered through our
Literatum platform), WileyPLUS, zyBooks, alta, and other proprietary platforms. Digital books are delivered to intermediaries,
including Amazon, Apple, Google and Ingram/Vital-Source, 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 online 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. Our
online presence not only enables us to deliver content online, but also to sell more books. The growth of online booksellers benefits us
because they provide unlimited virtual “shelf space” for our entire backlist.
Publishing alliances and franchise products are important to our strategy. Education and STM publishing (including Test Preparation)
alliance partners include the AICPA, the CFA Institute, ACT (American College Test), IEEE, American Institute of Chemical
Engineers, and many others. The ability to join Wiley’s product development, sales, marketing, distribution, and technology with a
partner’s content, technology, and/or brand name has contributed to our success.
Digital Courseware
We offer high-quality online learning solutions, including 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.
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On July 1, 2019, Wiley acquired Zyante, Inc, a leading provider of computer science and STEM education courseware. The highly-
interactive zyBooks® platform enables learners to learn by doing while allowing professors to be more efficient and devote more time
to teaching. The platform maximizes learner engagement and retention through demonstration and hands-on learning experiences
using interactive question sets, animations, tools, and embedded labs. The zyBooks platform will become an essential component of
Wiley’s differentiated digital learning experience and, when combined with the recent acquisition of Knewton’s alta™ and adaptive
learning technology in May 2019, will power lower-cost, higher-impact education across Wiley’s education business.
Test Preparation and Certification
The Test Preparation and Certification business represents learning solutions, training activities and print and digital formats that are
delivered to customers directly through online digital delivery platforms, bookstores, online booksellers, and other customers.
Products include CPAExcel®, a modular, digital platform comprised of online self-study, videos, mobile apps, and sophisticated
planning tools to help professionals prepare for the CPA exam, and test preparation products for the CFA®, CMA®, CIA®, CMT®,
FRM®, FINRA®, Banking, and PMP® exams.
Licensing and Other
Licensing and distribution services are made available to other publishers under agency arrangements. We also engage in co-
publishing titles with international publishers and receive licensing revenue from photocopies, reproductions, translations, and digital
uses of our content and use of the Knewton® adaptive engine.
Professional Learning
Professional Learning generates the majority of its revenue from contracts with its customers for the following revenue streams:
Professional Publishing;
Licensing and Other;
Corporate Training - Professional Assessment; and
Corporate Training - Corporate Learning.
Professional Publishing
Professional books, which include business and finance, technology, and other professional categories, as well as the For Dummies®
brand, are sold to bookstores and online booksellers serving the general public, wholesalers who supply such bookstores, warehouse
clubs, college bookstores, individual practitioners, industrial organizations and government agencies. We employ 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.
We also promote active and growing custom professional and education publishing programs. Our custom professional publications
are used by professional organizations for internal promotional or incentive programs and include digital and print books written
specifically for a customer and customizations of existing publications to include custom cover art, such as imprints, messages, and
slogans. More specific 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.
Licensing and Other
Licensing and distribution services are made available to other publishers under agency arrangements. We also engage in co-
publishing titles with international publishers and receive licensing revenue from photocopies, reproductions, translations, and digital
uses of our content. Wiley also realizes advertising revenue from branded Web sites (e.g. Dummies.com) and online applications.
Corporate Training - Professional Assessment
Our professional assessment businesses include high-demand soft-skills training solutions that are delivered to organizational clients
through online digital delivery platforms, either directly or through an authorized distributor network of independent consultants,
trainers, and coaches. Wiley’s branded assessment solutions include Everything DiSC®, The Five Behaviors® based on Patrick
Lencioni’s perennial bestseller The Five Dysfunctions of a Team, and Leadership Practices Inventory® from Kouzes and Posner’s
bestselling The Leadership Challenge®, as well as PXT Select™, a pre-hire selection tool. Our solutions help organizations hire and
develop effective managers, leaders, and teams.
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Corporate Training - Corporate Learning
The Corporate Learning business offers online learning and training solutions for global corporations, universities, and small and
medium-sized enterprises, which are sold on a subscription or fee basis. Learning formats and modules on topics such as leadership
development, value creation, client orientation, change management and corporate strategy are delivered on a cloud-based Cross
Knowledge Learning Management System (“LMS”) platform that hosts over 20,000 content assets (videos, digital learning modules,
written files, etc.) in 17 languages. Its offering includes a collaborative e-learning publishing and program creation system. Revenue
growth is derived from legacy markets, such as France, England, and other European markets, and newer markets, such as the U.S.
and Brazil. In addition, content and LMS offerings are continuously refreshed and expanded to serve a wider variety of customer
needs. These digital learning solutions are sold directly to corporate customers either direct or through our partners.
Education Services:
Our Education Services segment consists of online program management services for higher education institutions and mthree
training, upskilling and talent placement services for professionals and businesses. Key growth strategies include developing new
products and services for existing university partners, increasing enrollments for online program management programs, signing new
and prestigious university partners, and bridging the IT skills gap through finding, training and placing emerging technology talent
with corporations around the world. Education Services accounted for approximately 13% of our consolidated revenue in the year
ended April 30, 2020, with a 8.7% Adjusted EBITDA margin.
Education Services revenue by product type includes Education Services and mthree. The graphs below present revenue by product
type for the years ended April 30, 2020 and 2019:
Education Services
Our Education Services segment engages in the comprehensive management of online degree programs for universities and has grown
to include a broad array of tech enabled service offerings that address our partner specific pain points. Increasingly, this includes
delivering full stack career credentialing education that advances specific careers within demand skills.
As student demand for online degree and certificate programs continues to increase, traditional institutions are partnering with online
program management providers to develop and support these programs. Education Services include market research, marketing,
student recruitment, enrollment support, proactive retention support, academic services to design courses, faculty support, and access
to the Engage Learning Management System, which facilitates the online education experience. Graduate degree programs include
Business Administration, Finance, Accounting, Healthcare, Engineering, Communications, and others. Revenue is derived from pre-
negotiated contracts with institutions that provide for a share of tuition generated from students who enroll in a program. As of April
30, 2020, the Education Services business had 69 university partners under contract. We are also extending the core OPM business
and also delivering a broader array of essential university and career credentialing services that the market is demanding and that
leverage our core Wiley skills and assets. This full stack education includes teacher professional development and IT skills training,
through which we develop, and deliver professional credits and job placement through our 500-plus corporate partners. In addition,
Education Services derives revenue from un-bundled service offerings.
On November 1, 2018, Wiley acquired The Learning House, Inc. (“Learning House”) headquartered in Louisville (KY). Learning
House provides online program management services including graduate and undergraduate programs; short courses, boot camps, and
other skills training and credentialing for students and professionals; pathway services for international students; professional
development services for teachers; and learning solutions for corporate clients.
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mthree
On January 1, 2020, Wiley acquired mthree, a rapidly growing education services provider that addresses the IT skills gap by finding,
training and placing job-ready technology talent in roles with leading corporations worldwide. mthree sources, trains, and prepares
aspiring students and professionals to meet the skill needs of today’s tech careers, and then places them with some of the world’s
largest financial institutions, technology companies, and government agencies. mthree also works with its clients to retrain and retain
existing employees so they can continue to meet the changing demands of today’s technology landscape.
mthree’s primary operations is in the sourcing, training and placement of emerging technology talent for large corporations across the
world. The sourcing process includes a multi-stage evaluation and is highly selective, with only 5-10% of applicants accepted into the
program. The applicants are then trained by industry experts utilizing curriculum designed specifically for the clients’ needs. After
training, the trainees are employed by mthree and placed on client site, supported by mthree, until converted to a full-time employee
with the client. Conversion is generally after 2 years and mthree has a strong track record of success, with nearly 80% of trainees
converted to full time employees with clients.
Employees
As of April 30, 2020, we employed approximately 6,900 persons on a full-time equivalent basis worldwide.
Financial Information About Business Segments
The information set forth in Note 20, “Segment Information,” of the Notes to Consolidated Financial Statements and Item 7,
“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of this Form 10-K are incorporated
herein by reference.
Available Information
Our Internet address is www.wiley.com. We make available, free of charge, on or through our website, our Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports that we file or furnish
pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, or the Exchange Act, as soon as reasonably practicable
after we electronically file these materials with, or furnish them to, the SEC. The information contained on, or that may be accessed
through, our website is not incorporated by reference into, and is not a part of, this Form 10-K.
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Item 1A. Risk Factors
You should carefully consider all the information set forth in this Form 10-K, including the following risk factors, before deciding to
invest in any of our securities. The risks below are the most significant risks we face but are not the only risk factors we face.
Additional risks not currently known to us or that we presently deem insignificant could impact our consolidated financial position
and results of operations. Our business consolidated financial position, and results of operations could be materially adversely affected
by any of these risks. The trading price of our securities could decline due to any of these risks, and investors in our securities may
lose all or part of their investment.
The recent global coronavirus outbreak may continue to harm our business, results of operations, and financial condition.
In March 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious outbreak and the related
adverse public health developments, including orders to shelter-in-place, travel restrictions and mandated business closures, have
adversely affected workforces, organizations, customers, economies and financial markets globally, leading to an economic downturn
and increased market volatility. It has also disrupted the normal operations of many businesses, including ours.
This outbreak, as well as lockdown measures undertaken to contain the spread of COVID-19, caused disruptions and had a significant
impact on our business, including, but not limited to:
declines in print book sales due to indefinite closings of retail bookstores and the temporary prioritization of essential goods
by online retailers;
declines in businesses that rely on in-person engagement, primarily test prep and corporate training;
delays in signing annual journal subscription agreements in certain parts of Europe and Asia due to challenges of remote
selling and university disruption;
delays in customer payments due to widespread disruption and pervasive cash conservation behaviors in the face of
uncertainty;
reduced student demand for continuing education which impacted our undergraduate and masters online program
management programs, due to funding constraints related to loss of employment and/or lack of interest in pursuing education
during a period of uncertainty; and
lower demand for early career technology talent due to client constraints including, the closure of corporate offices, staffing
uncertainty, internal contractor hiring restrictions or financial constraints.
The outbreak also presents challenges as the majority of our workforce is currently working remotely and shifting to assisting new and
existing customers who are also generally working remotely.
We cannot predict with any certainty the degree to which the disruption caused by the COVID-19 pandemic and reactions thereto will
continue.
The COVID-19 pandemic may have the effect of heightening other risks identified in this section of our Annual Report on Form 10-K
for the year ended April 30, 2020, such as those related to technology disruption and the adoption by colleges and universities of
online delivery of their educational offerings. It is not possible for us to predict the duration or magnitude of the adverse impacts of the
outbreak and its effects on our business, results of operations or financial condition at this time, but such effects may be material.
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The trading price of the shares of our common stock may fluctuate materially, and investors of our common stock could incur
substantial losses.
Our stock price may fluctuate materially. The stock market in general has experienced significant volatility that has often been
unrelated to the operating performance of companies. As a result of this volatility, investors may not be able to sell their common
stock at or above the price paid for the shares. The market price for our common stock may be influenced by many factors, including:
actual or anticipated changes in our consolidated operating results;
variances between actual consolidated operating results and the expectations of securities analysts, investors and the financial
community;
changes in financial estimates by us or by any securities analysts who might cover our stock;
conditions or trends in our industry, the stock market or the economy;
the level of demand for our stock, the stock market price and volume fluctuations of comparable companies;
announcements by us or our competitors of new product or service offerings, significant acquisitions, strategic partnerships
or divestitures;
announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us;
capital commitments;
investors’ general perception of the Company and our business;
recruitment or departure of key personnel; and
sales of our common stock, including sales by our directors and officers or specific stockholders.
Our company is highly dependent on information technology systems and their business management and customer-facing
capabilities critical for the long-term competitive sustainability of the business. These capabilities include business planning and
transaction information, product development and delivery, marketing and sales information and management, and system
security.
We must continue to invest in technology and other innovations to adapt and add value to our products and services to remain
competitive. This is particularly true in the current environment, where investment in new technology is ongoing and there are rapid
changes in the products competitors are offering, the products our customers are seeking, and our sales and distribution channels. In
some cases, investments will take the form of internal development; in others, they may take the form of an acquisition. There are
uncertainties whenever developing or acquiring 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. If we are unable to
introduce new technologies, products, and services, our ability to be profitable may be adversely affected.
The demand for digital and lower cost books could impact our sales volumes and pricing in an adverse way.
A common trend facing each of our 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 risks and opportunities to our traditional publishing models, potentially impacting both
sales volumes and pricing.
As the market has shifted to digital products, customer expectations for lower-priced products have increased due to customer
awareness of reductions in production costs and the availability of free or low-cost digital content and products. As a result, there has
been pressure to sell digital versions of products at prices below their print versions. Increased customer demand for lower prices
could reduce our revenue.
We publish educational content for undergraduate, graduate, and advanced placement students, lifelong learners, and in Australia, for
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. The internet has made the used and rental
textbook markets more efficient and has significantly increased student access to used and rental books. Further expansion of the used
and rental book markets could further adversely affect our sales of print textbooks, subsequently affecting our consolidated financial
position and results of operations.
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Adverse publicity could negatively impact our reputation, which could adversely affect our consolidated financial position and
results of operations.
Our professional customers worldwide rely upon many of our publications to perform their jobs. It is imperative that we consistently
demonstrate our ability to maintain the integrity of the information included in our publications. Adverse publicity, whether valid or
not, may reduce demand for our publications and adversely affect our consolidated financial position and results of operations.
Our intellectual property rights may not be protected, which could adversely affect our consolidated financial position and results
of operations.
A substantial portion of our publications are protected by copyright, held either in our name, in the name of the author of the work, or
in the name of a sponsoring professional society. Such copyrights protect our 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. Our ability to continue to achieve our expected results depends, in part, upon our ability to protect our
intellectual property rights. Our consolidated financial position and results of operations may be adversely affected by lack of legal
and/or technological protections for its intellectual property in some jurisdictions and markets.
A reduction in enrollment at colleges and universities could adversely affect the demand for our higher education products.
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, increases in tuition, general decreases in
family income and net worth, and a perception of uncertain job prospects for graduates. In addition, enrollment levels at colleges and
universities outside the United States are influenced by global and local economic factors, 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, which could adversely impact
our consolidated financial position and results of operations.
In our journal publishing business we have a trade concentration and credit risk related to subscription agents, and in our book
business the industry has a concentration of customers in national, regional, and online bookstore chains. Changes in the
financial position and liquidity of our subscription agents and customers, could adversely impact our consolidated financial
position and results of operations.
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 us between the months of
December and April. Although at fiscal year-end we had minimal credit risk exposure to these agents, future calendar-year
subscription receipts from these agents are highly dependent on their financial condition and liquidity.
Subscription agents account for approximately 20% of total annual consolidated revenue and one affiliated group of subscription
agents accounts for approximately 10% of total annual consolidated revenue.
Our book business is not dependent upon a single customer; however, the industry is concentrated in national, regional, and online
bookstore chains. Although no book customer accounts for more than 8% of total consolidated revenue and 9% of accounts receivable
at April 30, 2020, the top 10 book customers account for approximately 12% of total consolidated revenue and approximately 18% of
accounts receivable at April 30, 2020. We maintain approximately $20 million of trade credit insurance, covering balances due from
certain named customers, subject to certain limitations and annual renewal.
A disruption or loss of data sources could limit our collection and use of certain kinds of information, which could adversely
impact our communication with our customers.
Several of our businesses rely extensively upon content and data from external sources. Data is obtained from public records,
governmental authorities, customers and other information companies, including competitors. Legal regulations, such as the European
Union’s General Data Protection Regulation (“GDPR”), relating to internet communications, privacy and data protection, e-
commerce, information governance, and use of public records, are becoming more prevalent worldwide. The disruption or loss of data
sources, either because of changes in the law or because data suppliers decide not to supply them, may impose limits on our collection
and use of certain kinds of information about individuals and our ability to communicate such information effectively with our
customers. In addition, GDPR imposes a strict data protection compliance regime with severe penalties of up to 4% of worldwide
revenue or €20 million, whichever is greater.
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If we are unable to retain key employees and other personnel, our consolidated financial condition or results of operations may be
adversely affected.
The Company and industry are highly dependent on the loyal engagement of key management leaders and professional staff. Loss of
staff due to inadequate skills and career path development or maintaining competitive salaries and benefits could have significant
impact on Company performance.
We have a significant investment in our employees around the world. We offer 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 costs
are affected by competitive market conditions for qualified individuals, and factors such as healthcare and retirement benefit costs.
We are highly dependent on the continued services of key employees who have in-depth market and business knowledge and/or key
relationships with business partners. The loss of the services of key personnel for any reason and our 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 our business, consolidated financial position, and results of operation.
Changes in pension costs and related funding requirements may impact our consolidated financial position and results of
operations.
We provide defined benefit pension plans for certain employees worldwide. Our 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 demographics, and changes in pension regulations. Changes in
these factors affect our plan funding, consolidated financial position, and results of operations.
We may not realize the anticipated cost savings and benefits from, or our business may be disrupted by, our business
transformation and restructuring efforts.
We continue to transform our business from a traditional publishing model to a global provider of content-enabled solutions with a
focus on digital products and services. We have made several acquisitions over the past few years that represent examples of strategic
initiatives that were implemented as part of our business transformation. We will continue to explore opportunities to develop new
business models and enhance the efficiency of our organizational structure. The rapid pace and scope of change increases the risk that
not all our strategic initiatives will deliver the expected benefits within the anticipated timeframes. In addition, these efforts may
somewhat disrupt our business activities, which could adversely affect our consolidated financial position and results of operations.
We continue to restructure and realign our cost base with current and anticipated future market conditions. Significant risks associated
with these actions that may impair our ability to achieve the anticipated cost savings or that may disrupt our 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, our 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 consolidated financial position and results
of operations could be adversely affected.
We may not realize the anticipated cost savings and processing efficiencies associated with the outsourcing of certain business
processes.
We have outsourced certain business functions, principally in technology, content management, printing, manufacturing, warehousing,
fulfillment, distribution, returns processing, and certain other transactional processing functions, to third-party service providers to
achieve cost savings, and efficiencies. If these third-party service providers do not perform effectively, we may not be able to achieve
the anticipated cost savings, and depending on the function involved, we may experience business disruption or processing
inefficiencies, all with potential adverse effects on our consolidated financial position and results of operations.
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We may not be able to realize the expected benefits of our growth strategies, including successfully integrating acquisitions, which
could adversely impact our consolidated financial position and results of operations.
Our growth strategy includes title, imprint, and other business acquisitions, including knowledge-enabled services, which complement
our existing businesses. Acquisitions may have a substantial impact on our consolidated financial position and results of operations.
Acquisitions involve risks and uncertainties, including difficulties in integrating acquired operations and in realizing expected
opportunities, cost synergies, diversions of management resources, and loss of key employees, challenges with respect to operating
new businesses, and other uncertainties.
As a result of acquisitions, we have and may record a significant amount of goodwill and other identifiable intangible assets and
we may never realize the full carrying value of these assets.
As a result of acquisitions, we recorded a significant amount of goodwill and other identifiable intangible assets, including customer
relationships, trademarks and developed technologies. At April 30, 2020, we had $1,116.8 million of goodwill and $807.4 million of
intangible assets, of which $121.3 million are indefinite-lived intangible assets, on our Consolidated Statements of Financial Position.
The intangible assets are principally composed of content and publishing rights, customer relationships, brands and trademarks and
developed technology. Failure to achieve business objectives and financial projections could result in an asset impairment charge,
which would result in a non-cash charge to our consolidated results of operations. Goodwill and intangible assets with indefinite lives
are tested for impairment on an annual basis and when events or changes in circumstances indicate that impairment may have
occurred. Intangible assets with definite lives, which were $686.1 million at April 30, 2020, 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 management to make significant estimates and
judgments. A non-cash intangible asset impairment charge could have a material adverse effect on our consolidated financial position
and results of operations. See Note 11, “Goodwill and Intangible Assets” for further information related to goodwill and intangible
assets, and the impairment charges recorded in the year ended April 30, 2020.
We may be susceptible to information technology risks that may adversely impact our business, consolidated financial position and
results of operations.
Information technology is a key part of our business strategy and operations. As a business strategy, Wiley’s technology enables us to
provide customers with new and enhanced products and services and is critical to our 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.
Our business is dependent on information technology systems to support our businesses. We provide internet-based products and
services to our customers. We also use complex information technology systems and products to support our business activities,
particularly in infrastructure, and as we move our products and services to an increasingly digital delivery platform.
We face technological risks associated with internet-based product and service delivery in our businesses, including with respect to
information technology capability, reliability and security, enterprise resource planning, system implementations and upgrades.
Failures of our information technology systems and products (including because of operational failure, natural disaster, computer
virus, or hacker attacks) could interrupt the availability of our internet-based products and services, result in corruption or loss of data
or breach in security, and result in liability or reputational damage to our brands and/or adversely impact our consolidated financial
position and results of operations.
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, we have disaster recovery plans in place 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 we have taken steps to address these risks,
there can be no assurance that a system failure, disruption, or data security breach would not adversely affect our business and could
have an adverse impact on our consolidated financial position and results of operations.
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We are continually improving and upgrading our computer systems and software. We are in the process of implementing a new global
Enterprise Resource Planning (“ERP”) system as part of a multi-year plan to integrate and upgrade our operational and financial
systems and processes. We have completed the implementation of record-to-report, purchase-to-pay, and several other business
processes within all locations through fiscal year 2017. We completed the implementation of order-to-cash for certain businesses in
May 2018 and may continue to roll out additional processes and functionality of the ERP system in phases in the foreseeable future.
Implementation of a new ERP 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 having an adverse effect on our ability to timely report our financial results, all of which could materially
adversely affect our business, consolidated financial position and results of operations.
Challenges and uncertainties associated with operating in developing markets has a higher risk due to political instability,
economic volatility, crime, terrorism, corruption, social and ethnic unrest, and other factors, which may adversely impact our
consolidated financial position and results of operations.
We sell our products to customers in certain sanctioned and previously sanctioned developing markets where we do not have
operating subsidiaries. We do not own any assets or liabilities in these markets except for trade receivables. In the year ended April
30, 2020, we recorded an immaterial amount of revenue and net earnings related to sales to Cuba, Sudan, Syria and Iran. While sales
in these markets are not material to our consolidated financial position and results of operations, adverse developments related to the
risks associated with these markets may cause actual results to differ from historical and forecasted future consolidated operating
results.
We have certain technology development operations in Russia and Sri Lanka related to software development and architecture, digital
content production, and system testing services. Due to the political instability within these regions, there is the potential for future
government embargos and sanctions, which could disrupt our operations in this area. While we have developed business continuity
plans to address these issues, further adverse developments in the region could have a material impact on our consolidated financial
position and results of operations.
Approximately 22% of Research journal articles are sourced from authors in China. Any restrictions on exporting intellectual property
could adversely affect our business and consolidated financial position and results of operations.
If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis
could be impaired.
We are subject to the reporting requirements of the Securities Exchange Act of 1934, the Sarbanes-Oxley Act (“Sarbanes-Oxley Act”)
and the rules and regulations of the New York Stock Exchange. The Sarbanes-Oxley Act requires, among other things, that we
maintain effective disclosure controls and procedures and internal control over financial reporting. We are required to perform system
and process evaluations and testing of our internal control over financial reporting to allow management to report on the effectiveness
of our internal control over financial reporting in our Annual Report on Form 10-K, as required by Section 404 of the Sarbanes-Oxley
Act. This may require us to incur substantial additional professional fees and internal costs to further expand our accounting and
finance functions and expend significant management efforts.
We may in the future discover material weaknesses in our system of internal financial and accounting controls and procedures that
could result in a material misstatement of our financial statements. In addition, our internal control over financial reporting will not
prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable,
not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that misstatements due to errors or fraud will not occur or that all control issues
and instances of fraud will be detected.
If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we are unable
to maintain proper and effective internal controls, we may not be able to produce timely and accurate financial statements. If that were
to happen, the market price of our stock could decline and we could be subject to sanctions or investigations by the New York Stock
Exchange, the SEC, or other regulatory authorities.
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The competitive pressures we face in our business, as well as our ability to retain our business relationships with our authors and
professional societies, could adversely affect our consolidated financial position and results of operations.
The contribution of authors and their professional societies is one of the more important elements of the highly competitive elements
of the publishing business. We operate in highly competitive markets. Success and continued growth depend 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 is critical to our success. If we are unable to retain our existing business
relationships with authors and professional societies, this could have an adverse impact on our consolidated financial position and
results of operations.
Changes in laws, tariffs, and regulations, including regulations related to open access, could adversely impact our consolidated
financial position and results of operations.
We maintain 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 our future consolidated financial position and results of operations.
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 and privately held funding bodies 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 final version of the article on the publisher’s Web site, and elsewhere under permissive licensing terms,
following payment of an APC. These mandates have the potential to put pressure on subscription-based publications. If such
regulations are widely implemented, our consolidated financial position and results of operations 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 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. Several 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, price, and rate of transition negotiated are acceptable.
The uncertainty surrounding the implementation and effect of Brexit may cause increased economic volatility, affecting our
operations and business.
On January 31, 2020, the United Kingdom (UK) exited the European Union (referred to as "Brexit"). The UK has agreed to abide by
EU rules during a transition period until the end of 2020, at which point the European Union and the UK expect to have agreements in
place regarding future ties including trade, customs, commerce and travel.
A withdrawal without a trade agreement in place could significantly disrupt the free movement of goods, services, and people between
the U.K. and the European Union, and result in increased legal and regulatory complexities, as well as potential higher costs of
conducting business in Europe. Additional Brexit-related impacts on our business could include potential inventory shortages in the
U.K., increased regulatory burdens and costs to comply with U.K.-specific regulations and higher transportation costs for our products
coming into and out of the U.K. Any of these effects, among others, could materially and adversely affect our business and
consolidated financial position and results of operations.
Cyber risk and the failure to maintain the integrity of our operational or security systems or infrastructure, or those of third parties
with which we do business, could have a material adverse effect on our business, consolidated financial condition, and results of
operations.
Cyber-attacks and hackers are becoming more sophisticated and pervasive. Our business is dependent on information technology
systems to support our businesses. We provide internet-based products and services to our customers. We also use complex
information technology systems and products to support our business activities, particularly in infrastructure and as we move our
products and services to an increasingly digital delivery platform. Across our businesses, we hold personal data, including that of
employees and customers.
Index
19
Efforts to prevent cyber-attacks and hackers from entering our systems are expensive to implement and may limit the functionality of
our systems. Individuals may try to gain unauthorized access to our systems and data for malicious purposes, and our security
measures may fail to prevent such unauthorized access. Cyber-attacks and/or intentional hacking of our systems could adversely affect
the performance or availability of our products, result in loss of customer data, adversely affect our ability to conduct business, or
result in theft of our funds or proprietary information, the occurrence of which could have an adverse impact on our consolidated
financial position and results of operations.
Fluctuations in interest rates and foreign currency exchange rates could materially impact our consolidated financial condition
and results of operations.
Non-U.S. revenues, as well as our substantial non-U.S. net assets, expose our consolidated results to volatility from changes in foreign
currency exchange rates. Non-U.S. dollar revenues accounted for 44% of our total consolidated revenues for fiscal year 2020, which
primarily includes revenues in British pound sterling of 26% and euro of 10%. 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 mitigate them are discussed in
Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” of this Annual Report on Form 10-K. We may, from
time-to-time, use derivative instruments to hedge such risks. Notwithstanding our efforts to foresee and mitigate the effects of changes
in external market or fiscal circumstances, we cannot predict with certainty changes in foreign currency exchange rates and interest
rates, inflation, or other related factors affecting our business, consolidated financial position and results of operations.
We may not be able to mitigate the impact of inflation and cost increases, which could have an adverse impact on our consolidated
financial position and results of operations.
From time to time, we experience cost increases reflecting, in part, general inflationary factors. There is no guarantee that we can
increase selling prices or reduce costs to fully mitigate the effect of inflation on our costs, which may adversely impact our
consolidated financial position and results of operations.
Changes in tax laws, including regulations and other guidance in connection with the U.S. Federal tax legislation originally
known as the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), could have a material impact on our consolidated financial position
and results of operations.
We are subject to tax laws within the jurisdictions in which we conduct business, including the U.S. and many foreign jurisdictions. In
addition to the Tax Act in the U.S., changes in tax laws and interpretations in other jurisdictions where we do business, such as the
U.K. and Germany, could significantly impact the taxation of our non-U.S. earnings. We are also subject to potential taxes and
regulations in jurisdictions where we have sales even though we do not have a physical presence. These taxes and potential taxes
could have a material impact on our consolidated financial position and results of operations as most of our income is earned outside
the U.S. In addition, we are subject to audit by tax authorities and are regularly audited by various tax authorities. Although we believe
our tax estimates are reasonable, the final determination of tax audits could be materially different from our historical income tax
provisions and accruals and could have a material impact on our consolidated financial position and results of operations.
Changes in global economic conditions could impact our ability to borrow funds and meet our future financing needs.
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
consolidated financial position and results of operations will not be adversely 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.
Item 1B. Unresolved Staff Comments
None.
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20
Item 2. Properties
We occupy 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 our business.
Location
Purpose
Owned or Leased
Approx. Sq. Ft.
United States:
New Jersey
Indiana
California
Massachusetts
Illinois
Florida
Minnesota
Texas
Kentucky
International:
Australia
Canada
England
France
Germany
Jordan
Singapore
Russia
China
India
Greece
Brazil
Sri Lanka
Corporate Headquarters
Office
Office
Offices
Office
Office
Office
Office
Office
Office
Offices
Office
Distribution Centers
Offices
Offices
Offices
Office
Office
Office
Office
Office
Office
Distribution Centers
Office
Office
Office
Office
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Owned
Leased
Owned
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
294,000
185,000
42,000
21,000
26,000
52,000
58,000
28,000
11,000
47,000
34,000
13,000
298,000
102,000
70,000
36,000
104,000
18,000
24,000
35,000
27,000
18,000
12,000
25,000
16,000
12,000
32,000
Item 3. Legal Proceedings
The information set forth in Note 16, “Commitment and Contingencies,” of the Notes to Consolidated Financial Statements is
incorporated herein by reference.
We are involved in routine litigation in the ordinary course of our business. In the opinion of management, the ultimate resolution of
all pending litigation will not have a material effect upon our consolidated financial position or results of operations.
Item 4. Mine Safety Disclosures
Not applicable.
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21
Information About Our Executive Officers
Set forth below are the current executive officers of the Company. 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.
Name, Current and Former Positions
BRIAN A. NAPACK
President and Chief Executive Officer and Director
March 2012 – Senior Advisor, Providence Equity Partners LLC
Age
First Elected to
Current Position
58
December 2017
JOHN A. KRITZMACHER
Executive Vice President, Chief Financial Officer, and Interim Chief Accounting Officer
October 2012 – Senior Vice President of Business Operations, Organizational Planning & Structure at
59
WebMD Health Corp
July 2013
(EVP, CFO)
June 2020
(Interim CAO)
MATTHEW S. KISSNER
Executive Vice President, Group Executive
December 2017 – Chairman of Company's Board of Directors
May 2017 – Interim Chief Executive Officer of the Company
October 2015 – Chairman of Company's Board of Directors
DEIRDRE SILVER
Executive Vice President, General Counsel
August 2015 – Associate General Counsel, Senior Vice President of Legal, Research
JUDY VERSES
Executive Vice President, Research
October 2011 – President – Global Enterprise and Education, Rosetta Stone Inc.
KEVIN MONACO
Senior Vice President, Treasurer and Tax
October 2009 – SVP, Finance, Treasurer and Investor Relations, Coty Inc.
AREF MATIN
Executive Vice President, Chief Technology Officer
February 2015 – Executive Vice President, Chief Technology Officer, Ascend Learning
July 2012 – Executive Vice President, Chief Technology Officer, Pearson Learning Technologies &
Pearson Higher Education
MATTHEW LEAVY
Executive Vice President and General Manager, Educational Publishing
September 2018 – SVP, Business Development
January 2018 – Principal Leavy Consulting LLC
August 2013 – Managing Director Global Managed Services, Pearson plc
DANIELLE MCMAHAN
Executive Vice President, Chief People Officer
June 2017 – Chief Human Resources Officer, York Risk Services Group
July 2014 – VP, Global Talent, American Express
66
February 2019
52
February 2020
63
October 2016
56
October 2018
61
May 2018
52
September 2019
45
November 2019
Index
22
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our Class A and Class B shares are listed on the New York Stock Exchange under the symbols JW.A and JW.B, respectively.
On a quarterly basis, the Board of Directors considers the payment of cash dividends based upon its review of earnings, our financial
position, and other relevant factors. As of May 31, 2020, the approximate number of holders of our Class A and Class B Common
Stock were 733 and 56, respectively, based on the holders of record.
During the year ended April 30, 2020, our Board of Directors approved an additional share repurchase program of $200 million of
Class A or B Common Stock. This share repurchase program is in addition to the share repurchase program approved by our Board of
Directors during the year ended April 30, 2017 of four million shares of Class A or B Common Stock.
During the fourth quarter of 2020, we made the following purchases of Class A and Class B Common Stock under these publicly
announced stock repurchase programs.
Total Number
of Shares
Purchased
Average Price
Paid Per
Share
Total Number
of Shares
Purchased
as Part of a
Publicly
Announced
Program
Maximum
Number
of Shares that
May be
Purchased
Under the
Program
Maximum
Dollar Value
of Shares that
May Yet be
Purchased
Under
Additional
Plans
or Programs
(Dollars in
millions)
February 2020
March 2020
April 2020
Total
— $
325,000
—
325,000 $
—
35.66
—
35.66
—
325,000
—
325,000
1,131,758
806,758
806,758
806,758
$200
$200
$200
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23
Item 6. Selected Financial Data
Dollars (in millions, except per share data)
Revenue, net
Impairment of goodwill and intangible assets (d)
Operating (Loss) Income (e)
Net (Loss) Income
Working Capital (f)
Contract Liabilities in Working Capital (f)
Total Assets
Long-Term Debt
Shareholders' Equity
Per Share Data
(Loss) Earnings Per Share
Basic
Diluted
Cash Dividends
Class A Common
Class B Common
$
$
$
$
$
2020
1,831.5 $
202.3
(54.3)
(74.3)
(312.3)
(520.2)
3,168.8
765.7
933.6
2019
For the Years Ended April 30, (a)(b)(c)
2017
2018
1,796.1 $
3.6
231.5
192.2
(394.3)
(486.4)
2,839.5
360.0
1,190.6
1,800.1 $
—
224.0
168.3
(379.8)
(519.1)
2,948.8
478.8
1,181.3
1,718.5 $
—
211.5
113.6
(428.1)
(436.2)
2,606.2
365.0
1,003.1
2016
1,727.0
—
188.1
145.8
(111.1)
(426.5)
2,921.1
605.0
1,037.1
(1.32) $
(1.32) $
1.36 $
1.36 $
2.94 $
2.91 $
1.32 $
1.32 $
3.37 $
3.32 $
1.28 $
1.28 $
1.98 $
1.95 $
1.24 $
1.24 $
2.51
2.48
1.20
1.20
(a)
(b)
(c)
(d)
(e)
(f)
See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for a discussion of
the factors that contributed to our consolidated operating results for the three years ended April 30, 2020.
On May 1, 2018, we adopted the U.S. accounting standard regarding revenue recognition ("Topic 606," or "ASC 606"). The
adoption of Topic 606 did not have a material impact to our consolidated results of operations.
On May 1, 2019, we adopted the U.S. accounting standard regarding leases (“Topic 842”) which required us to recognize a
right-of-use asset (“ROU”) and lease liability for all leases with terms of more than 12 months and provide enhanced
disclosures. Refer to Note 2, " Summary of Significant Accounting Policies, Recently Issued, and Recently Adopted
Accounting Standards," in the Notes to Consolidated Financial Statements for more information.
During the fourth quarter of fiscal year 2020, we recorded non-cash charges for impairment of goodwill and intangible assets
totaling $202.3 million. See Note 11, “Goodwill and Intangible Assets,” for further discussion of our goodwill and
identifiable intangible assets.
Due to the retrospective adoption on May 1, 2018 of Accounting Standards Update (“ASU”) 2017-07, “Compensation—
Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement
Benefit Cost,” total net benefits (costs) of $8.1 million and $(5.3) million related to the non-service components of defined
benefit and other post-employment benefit plans were reclassified from Operating and Administrative Expenses to Interest
and Other Income for the years ended April 30, 2018 and 2017, respectively. Total net benefits related to the non-service
components of defined benefit and other post-employment benefit plans were $8.8 million for the year ended April 30, 2019.
The primary driver of the negative working capital is unearned contract liabilities related to subscriptions for which cash has
been collected in advance. Cash received in advance for subscriptions is used by us for a number of purposes including
funding: acquisitions, debt repayments, operations, dividend payments, and purchasing treasury shares. The contract
liabilities will be recognized as income when the products are shipped or made available online to the customers over the
term of the subscription period.
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24
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The information in our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should
be read together with our Consolidated Financial Statements and related notes set forth in Part II, Item 8, as well as the discussion
included above, “Cautionary Notice Regarding Forward-Looking Statements “Safe Harbor” Statement under the Private Securities
Litigation Reform Act of 1995” and “Non-GAAP Financial Measures,” along with Part I, Item 1A, “Risk Factors,” of this Annual
Report on Form 10-K. All amounts and percentages are approximate due to rounding and all dollars are in thousands, except per share
amounts or where otherwise noted. When we cross-reference to a “Note,” we are referring to our “Notes to Consolidated Financial
Statements,” unless the context indicates otherwise.
Recent Events
On June 25, 2020, our Board of Directors declared a quarterly dividend of $0.3425 per share, or approximately $19.1 million,
on our Class A and Class B Common Stock. The dividend is payable on July 22, 2020 to shareholders of record on July 7,
2020.
Fourth Quarter Highlights
In March 2020, the global economy experienced a sudden and unprecedented downturn due to the COVID-19 pandemic.
Wiley’s financial position is fundamentally strong, and we will continue to benefit from our leadership positions in research
and education. However, the global isolation measures aimed at halting the COVID-19 spread had a significant impact on
fourth quarter results, including the following:
declines in print book sales due to indefinite closings of retail bookstores and the temporary prioritization of
essential goods by online retailers;
declines in businesses that rely on in-person engagement, primarily test prep and corporate training;
delays in signing annual journal subscription agreements in certain parts of Europe and Asia due to challenges of
remote selling and university disruption;
delays in customer payments due to widespread disruption and pervasive cash conservation behaviors in the face of
uncertainty;
reduced student demand for continuing education which impacted our undergraduate and masters online program
management programs, due to funding constraints related to loss of employment and/or lack of interest in pursuing
education during a period of uncertainty; and
lower demand for early career technology talent due to client constraints including, the closure of corporate offices,
staffing uncertainty, internal contractor hiring restrictions or financial constraints.
As a result, we estimate that the pandemic shutdown impacted fourth quarter revenue and EPS by $30 million to $35 million
and $0.15 to $0.20 per share, respectively.
Below is a summary of fourth quarter fiscal year 2020 results as compared with prior year:
GAAP Results: Revenue of $474.6 million, a decrease of 3%, and Diluted Loss per Share of $2.83;
Non-GAAP Adjusted Results on a constant currency basis: Adjusted Revenue decreased 2%, and Adjusted EPS
decreased 44%;
We recorded non-cash charges for impairment of goodwill and intangible assets totaling $202.3 million. This
impairment does not result in any future cash expenditures, impact liquidity, affect the ongoing business or financial
performance of Wiley, or impact compliance with our debt covenants. See Note 11, “Goodwill and Intangible
Assets,” for further discussion of our goodwill and identifiable intangible assets.
On April 1, 2020, we completed the acquisition of Bio-Rad Laboratories Inc.’s Informatics products including the
company’s spectroscopy software and spectral databases (“Informatics”). The results of Informatics are included in
our Research Publishing & Platforms segment results.
On March 2, 2020, we completed the acquisition of Madgex, a market-leading provider of advanced job board
software and career center services. The results of Madgex are included in our Research Publishing & Platforms
segment results.
We added four new university partners in the quarter: Drake University in Iowa, University of Iowa, Methodist
University in North Carolina and Point University in Georgia.
Index
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Results of Operations
FISCAL YEAR 2020 AS COMPARED TO FISCAL YEAR 2019 SUMMARY RESULTS
Revenue:
Revenue for the year ended April 30, 2020 increased $31.4 million, or 2%, as compared with the prior year. On a constant currency
basis, revenue increased 3% mainly driven by the following factors:
an increase of $74.9 million in the Education Services business, including contributions from Learning House, which was
acquired in November 2018, and mthree, which was acquired in January 2020; and
an increase of $21.0 million in the Research Publishing & Platforms business.
These increases were partially offset by a decline of $44.8 million in the Academic & Professional Learning business.
Excluding the impact of acquisitions, revenues on a constant currency basis declined 1% as compared with the prior year.
See the “Segment Operating Results” below for additional details on each segment’s revenue and Adjusted EBITDA performance.
Cost of Sales:
Cost of sales for the year ended April 30, 2020 increased $36.3 million, or 7%, as compared with the prior year. On a constant
currency basis, cost of sales increased 8%. This increase was primarily due to higher employment related costs in the Education
Services business, and to a lesser extent, an increase in marketing costs, partially offset by lower inventory and royalty costs in
Academic & Professional Learning.
Operating and Administrative Expenses:
Operating and administrative expenses for the year ended April 30, 2020 increased $33.8 million, or 4%, as compared with the prior
year. On a constant currency basis, operating and administrative expenses increased 5%. The increase was primarily due to increased
investment in growth initiatives, including incremental costs associated with the acquisitions in the year ended April 30, 2020, and to a
lesser extent, investments in additional resources in editorial and content support, and higher technology related costs.
Impairment of Goodwill and Intangible Assets:
Goodwill Impairment
For the year ended April 30, 2020, we recorded a non-cash impairment of goodwill of $110.0 million related to our Education
Services reporting unit. This charge is reflected in Impairment of Goodwill and Intangible Assets in the Consolidated Statements of
(Loss) Income. The impairment charge is not deductible for federal or state tax purposes and therefore there is no tax benefit related to
the impairment charge.
During our annual goodwill impairment test initiated on February 1, 2020 we identified indicators that the goodwill of the Education
Services business was impaired due to underperformance as compared with our acquisition case projections for revenue growth and
operating cash flow. Subsequently, during the fourth quarter of fiscal year 2020, we determined that our updated revenue and
operating cash flow projections would be further impacted by anticipated near-term headwinds due to COVID-19, including adverse
impacts on new student starts and student re-enrollment. Therefore, we updated the impairment test as of March 31, 2020 to reflect
this change in circumstances. As a result, we concluded that the carrying value was above the fair value, resulting in a non-cash
goodwill impairment of $110.0 million. We remain confident in the Education Services unit’s strong growth and profit potential,
which is expected over time to be enhanced by the current accelerated shift to online learning.
Intangible Asset Impairment
For the year ended April 30, 2020, we recorded a pre-tax non-cash impairment charge of $89.5 million for our Blackwell trademark,
which was acquired in 2007 and carried as an indefinite-lived intangible asset primarily related to our Research Publishing &
Platforms segment. The impairment reflects our decision to simplify Wiley’s brand portfolio and unify our research journal content
under one Wiley brand, which will sharply limit the use of the Blackwell trade name. This impairment resulted in writing off
substantially all of the carrying value of the intangible trademark asset. This charge is reflected in Impairment of Goodwill and
Intangible Assets in the Consolidated Statements of (Loss) Income. The resulting non-cash impairment charge is entirely unrelated to
COVID-19 or the expected future financial performance of the Research Publishing & Platforms segment.
Index
26
In addition, as a result of our decision to discontinue the use of certain technology offerings within the Research Publishing &
Platforms segment, we recorded a pre-tax non-cash impairment charge of $2.8 million related to a certain developed technology
intangible. This charge is reflected in Impairment of Goodwill and Intangible Assets in the Consolidated Statements of (Loss) Income.
See Note 11, “Goodwill and Intangible Assets” for further information related to goodwill and intangible assets.
Restructuring and Related Charges:
Business Optimization Program
For the year ended April 30, 2020, we recorded pre-tax restructuring charges of $32.8 million. We originally anticipated
approximately $15 million to $20 million of restructuring charges, of which approximately $10 million to $15 million was expected to
be severance-related costs and the remainder to be other related costs. However, in the fourth quarter of 2020, we recorded $15.0
million of pre-tax restructuring charges due to additional actions to mitigate the impact of COVID-19. These charges are reflected in
Restructuring and Related Charges in the Consolidated Statements of (Loss) Income. See Note 7, “Restructuring and Related
Charges” for more details on these charges.
These fourth quarter actions are expected to generate $30 million of estimated gross annual savings, which is incremental to the
original $100 million of estimated gross savings anticipated over the three-year period. Most of those savings to be reinvested in the
Company to drive and sustain profitable revenue growth.
Restructuring and Reinvestment Program
For the years ended April 30, 2020 and 2019, we recorded pre-tax restructuring credits of $0.2 million and charges of $3.1 million,
respectively, related to this program. These credits and charges are reflected in Restructuring and Related Charges in the Consolidated
Statements of (Loss) Income. See Note 7, “Restructuring and Related Charges” for more details on these credits and charges.
For the impact of both of our restructuring programs on diluted earnings per share, see the section below, “Diluted Earnings per Share
(“EPS”).”
Amortization of Intangibles:
Amortization of intangibles was $62.4 million for the year ended April 30, 2020, an increase of $7.8 million, or 14% as compared
with the prior year. On a constant currency basis, amortization of intangibles increased 15% as compared with the prior year. The
increase in amortization was due to the intangibles acquired as part of the acquisitions completed in fiscal year 2020 and, to a lesser
extent, intangibles acquired as part of the acquisition of Learning House in November 2018, partially offset by a decrease due to the
completion of amortization of certain acquired intangible assets. See Note 4, “Acquisitions” for more details on these transactions.
Operating (Loss) Income:
Operating loss was $54.3 million for the year ended April 30, 2020 compared with the prior year income of $224.0 million. On a
constant currency basis and excluding the impairment of goodwill and intangible assets and restructuring charges, Adjusted EBITDA
decreased 8% primarily due to investment in growth initiatives and the impact of COVID-19.
Interest Expense:
Interest expense for the year ended April 30, 2020 was $25.0 million compared with the prior year of $16.1 million. This increase was
due to higher average debt balances outstanding, which included borrowings for the funding of acquisitions and a higher weighted
average effective borrowing rate.
Foreign Exchange Transaction Gains (Losses):
Foreign exchange transaction gains were $2.8 million for the year ended April 30, 2020 and were primarily due to the net impact of
the change in average foreign exchange rates as compared to the U.S. dollar on our third-party accounts receivable and payable
balances. Foreign exchange transaction losses were $6.0 million for the year ended April 30, 2019 and were primarily due to the net
impact of the change in average foreign exchange rates as compared to the U.S. dollar on our intercompany accounts receivable and
payable balances.
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27
Provision for Income Taxes:
The following table summarizes the effective tax rate for the years ended April 30, 2020 and 2019:
Effective tax rate as reported
Impairment of goodwill and intangible assets
Tax effect from other unusual items
State tax adjustment in 2019
Deferred tax from the Tax Act Rate Change
Effective tax rate excluding the items listed above in each year
2020
2019
(17.7)%
42.3%
(3.1)%
—
—
21.5%
21.0%
—
—
1.3%
(0.1)%
22.2%
The effective tax rate for the year ended April 30, 2020 was less than the year ended April 30, 2019 due to the impairment of goodwill
and intangible assets, with respect to which we obtained a relatively small tax benefit. Excluding the effect of the impairment charges
partially offset by the tax effect on other unusual items, the rate was 21.5% for the year ended April 30, 2020, compared to 22.2% for
the year ended April 30, 2019, primarily due to lower taxes on income outside the U.S. as well as increased tax credits and related
benefits.
Diluted (Loss) Earnings Per Share (“EPS”):
Diluted loss per share for the year ended April 30, 2020 was $1.32 per share compared with earnings per share of $2.91 in the prior
year.
Below is a reconciliation of our U.S. GAAP (loss) earnings per share to Non-GAAP Adjusted EPS:
U.S. GAAP (LOSS) EARNINGS PER SHARE
Adjustments:
Impairment of goodwill
Impairment of Blackwell trade name
Impairment of developed technology intangible
Restructuring and related charges
Foreign exchange losses on intercompany transactions
Impact of change in certain International tax rates in 2020 and US state tax rates in 2019
EPS impact of using weighted-average dilutive shares for adjusted EPS calculation (1)
Non-GAAP Adjusted EPS
2020
2019
$
(1.32)
$
2.91
1.94
1.31
0.04
0.43
0.02
(0.03)
0.01
2.40 $
—
—
—
0.04
0.06
(0.05)
—
2.96
$
(1)
Represents the impact of using diluted weighted-average number of common shares outstanding (56.7 million shares for the
year ended April 30, 2020) included in the Non-U.S. GAAP adjusted EPS calculation in order to apply the dilutive impact on
adjusted net income due to the effect of unvested restricted stock units and other stock awards. This impact occurs when a
U.S. GAAP net loss is reported and the effect of using dilutive shares is antidilutive.
Excluding the impact of the items included in the table above, Adjusted EPS for the year ended April 30, 2020 decreased 19% to
$2.40 per share compared with $2.96 per share for the year April 30, 2019. On a constant currency basis, Adjusted EPS decreased
21% due to investment in growth initiatives, including acquisitions, the impact of COVID-19, and higher interest expense. The
inorganic earnings impact of acquisitions was $0.33 per share of dilution for fiscal year 2020, including interest expense.
Index
28
SEGMENT OPERATING RESULTS:
RESEARCH PUBLISHING & PLATFORMS:
Revenue:
Research Publishing
Research Platforms
Total Research Publishing & Platforms Revenue
Cost of Sales
Operating Expenses
Amortization of Intangibles
Impairment of Intangible Assets (see Note 11)
Restructuring Charges (see Note 7)
Contribution to Profit
Impairment of Intangible Assets (see Note 11)
Restructuring Charges (see Note 7)
Adjusted Contribution to Profit
Depreciation and Amortization
Adjusted EBITDA
Adjusted EBITDA Margin
# Not meaningful
Revenue:
Year Ended
April 30,
% Change
Favorable
Constant
Currency
% Change
Favorable
2020
2019
(Unfavorable) (Unfavorable)
$
$
908,952 $
39,887
948,839
255,696
398,514
29,276
92,348
3,886
169,119
92,348
3,886
265,353
69,495
334,848 $
35.3%
903,249
35,968
939,217
254,560
395,670
28,102
—
1,131
259,754
—
1,131
260,885
60,889
321,774
34.3%
1%
11%
1%
—
(1)%
(4)%
100%
#
2%
11%
2%
(2)%
(2)%
(6)%
100%
#
(35)%
(35)%
2%
4%
2%
4%
Research Publishing & Platforms revenue for the year ended April 30, 2020 increased 1% to $948.8 million on a reported basis and
increased 2% on a constant currency basis as compared with the prior year. The increase was primarily due to continued growth in
Open Access in Research Publishing primarily due to growth in comprehensive “read and publish” agreements, which was partly
offset by lower traditional subscription revenue. Also contributing to the decrease in subscription revenue were delays in renewing
subscription agreements due to COVID-19 isolation and university disruption.
Adjusted EBITDA:
On a constant currency basis, Adjusted EBITDA increased 4% as compared with the prior year. This increase was due to higher
revenues, and to a lesser extent, lower inventory related costs. These factors were partially offset by an increase in royalty costs,
higher operating costs, which reflected investments in additional resources in editorial to support increased article publishing, and
marketing related costs, which was partially offset by lower incentive compensation costs.
Society Partnerships
For the year ended April 30, 2020:
9 new society contracts were signed with a combined annual revenue of approximately $9.3 million;
99 society contracts were renewed with a combined annual revenue of approximately $51.6 million;
16 society contracts were not renewed with a combined annual revenue of approximately $5.7 million.
Index
29
ACADEMIC & PROFESSIONAL LEARNING:
Revenue:
Education Publishing
Professional Learning
Total Academic & Professional Learning
Cost of Sales
Operating Expenses
Amortization of Intangibles
Restructuring Charges (see Note 7)
Contribution to Profit
Restructuring Charges (see Note 7)
Adjusted Contribution to Profit
Depreciation and Amortization
Adjusted EBITDA
Adjusted EBITDA Margin
# Not meaningful
Revenue:
Year Ended
April 30,
% Change
Favorable
Constant
Currency
% Change
Favorable
2020
2019
(Unfavorable) (Unfavorable)
$
$
352,188 $
298,601
650,789
179,131
370,363
16,649
10,470
74,176
10,470
84,646
69,807
154,453 $
23.7%
372,018
331,285
703,303
195,331
343,859
16,709
1,139
146,265
1,139
147,404
68,126
215,530
30.6%
(5)%
(10)%
(7)%
8%
(8)%
—
#
(49)%
(43)%
(28)%
(4)%
(9)%
(6)%
7%
(9)%
(1)%
#
(49)%
(42)%
(28)%
Academic & Professional Learning revenue decreased 7% to $650.8 million on a reported basis, and 6% on a constant currency basis
as compared with the prior year. Excluding revenue from acquisitions, organic revenue declined 9% on a constant currency basis. This
decrease was primarily due to the continued decline in book publishing reflecting market conditions, and to a lesser extent, a decrease
in test preparation and certification offerings. During the fourth quarter of April 30, 2020, due to the impact of COVID-19, there was a
further decrease in revenue for print books due to retail closures, reprioritization of online retailer shipments toward “essential goods”
only, test preparation offerings due to cancelled exams, and classroom-dependent corporate training due to office closures.
Adjusted EBITDA:
On a constant currency basis, Adjusted EBITDA decreased 28% as compared with the prior year. This decrease was primarily due to
the decline in revenue. Also contributing to lower Adjusted EBITDA, but to a lesser extent, was increased investment in growth
initiatives including the acquisitions of zyBooks and Knewton, and an increase in reserves for accounts receivable primarily due to the
impact of COVID-19. These factors were partially offset by lower inventory and royalty costs as a result of lower revenue.
Index
30
Year Ended
April 30,
% Change
Favorable
Constant
Currency
% Change
Favorable
2020
2019
(Unfavorable) (Unfavorable)
$
$
214,376
17,479
231,855
156,197
62,991
16,511
110,000
3,671
(117,515)
110,000
3,671
(3,844)
24,131
20,287
8.7%
$
$
157,549
—
157,549
104,831
55,754
9,847
—
389
(13,272)
—
389
(12,883)
18,117
5,234
3.3%
36%
100%
47%
(49)%
(13)%
(68)%
100%
#
#
70%
#
36%
100%
48%
(49)%
(13)%
(68)%
100%
#
#
70%
#
EDUCATION SERVICES:
Revenue:
Education Services
mthree
Total Education Services Revenue
Cost of Sales
Operating Expenses
Amortization of Intangibles
Impairment of Goodwill (see Note 11)
Restructuring Charges (see Note 7)
Contribution to Loss
Impairment of Goodwill (see Note 11)
Restructuring Charges (see Note 7)
Adjusted Contribution to Profit
Depreciation and Amortization
Adjusted EBITDA
Adjusted EBITDA Margins
# Not meaningful
Revenue:
Education Services revenue increased 47% to $231.9 million on a reported basis and 48% on a constant currency basis as compared
with the prior year. Excluding revenue from acquisitions, organic revenue increased 11% on a constant currency basis. The increase
was mainly driven by an increase in fee-based online program management revenue.
Adjusted EBITDA:
On a constant currency basis, Adjusted EBITDA increased by $15.1 million as compared with the prior year. This was due to higher
revenue, partially offset by higher costs of sales from employment related costs, and to a lesser extent, higher marketing costs.
Education Services Partners and Programs:
As of April 30, 2020, Wiley had 69 university partners under contract.
CORPORATE EXPENSES:
Corporate Expenses for the year ended April 30, 2020 increased 7% to $180.1 million as compared with the prior year. On a constant
currency basis and excluding restructuring charges, these expenses decreased 1%. This was primarily due to a decrease in
employment and technology related costs, and a life insurance recovery of $2.0 million. These factors were partially offset by
additional legal related expense.
Index
31
FISCAL YEAR 2019 AS COMPARED TO FISCAL YEAR 2018 SUMMARY RESULTS
Revenue:
Revenue for the year ended April 30, 2019 was flat at $1,800 million, as compared with prior year. On a constant currency basis,
revenue increased 2% as compared with prior year. This increase was primarily due to the following:
the incremental impact of the acquisition of Learning House on November 1, 2018, which contributed $31.5 million of
revenue;
increased revenue in our Research Publishing & Platforms segment primarily driven by open access; and to a lesser extent,
licensing, reprints, backfiles, and other offerings; and,
increased revenue in our Education Services segment businesses, excluding the impact of Learning House.
These increases were offset by declines in Academic & Professional Learning print product sales.
Refer to Note 4, “Acquisitions,” for more information related to the acquisition of Learning House.
See the “Segment Operating Results” below for additional details on each segment’s revenue and Adjusted EBITDA performance.
Cost of Sales:
Cost of sales for the year ended April 30, 2019 increased $23.7 million, or 4%, as compared with prior year. On a constant currency
basis, cost of sales increased 6%. This increase was primarily due to the following factors:
the incremental impact of Learning House, primarily due to marketing and employment related costs;
an increase in legacy Education Services business marketing costs of $8.1 million primarily due to increased investments to
support revenue growth;
higher royalty costs of $6.6 million; and, to a lesser extent,
higher employment costs of $3.4 million.
These increases were offset by lower inventory costs of $5.8 million primarily due to lower Academic & Professional Learning print
sales.
Operating and Administrative Expenses:
Operating and administrative expenses for the year ended April 30, 2019 increased $6.8 million, or 1%, as compared with prior year
and 2% on a constant currency basis. The increase was primarily due to higher costs related to increased resources in editorial
resources to increase article output, as well as higher marketing, advertising and sales costs and the incremental impact of the
acquisition of Learning House. These factors were partially offset by lower technology costs and the impairment charge in the prior
year related to one of our Publishing brands of $3.6 million.
Restructuring and Related Charges:
Restructuring and Reinvestment Program
For the years ended April 30, 2019 and 2018, we recorded pre-tax restructuring charges of $3.1 million and $28.6 million,
respectively, related to this program. These charges are reflected in Restructuring and Related Charges in the Consolidated Statements
of (Loss) Income. See Note 7, “Restructuring and Related Charges” for more details on these charges.
For the impact of this restructuring program on diluted earnings per share, see the section below, “Diluted Earnings per Share
(“EPS”).”
Amortization of Intangibles:
Amortization of intangibles was $54.7 million for the year ended April 30, 2019, an increase of $6.4 million as compared with prior
year. On a constant currency basis, amortization of intangibles increased 14%. The increase in amortization was primarily due to the
acquisition of intangibles as part of the acquisition of Learning House and, to a lesser extent, in the Research Publishing & Platforms
segment due to the timing of the acquisitions of publishing rights in the second half of 2018.
Index
32
Operating Income:
Operating income was $224.0 million for the year ended April 30, 2019, a decrease of $7.5 million, or 3%, as compared with prior
year. On a constant currency basis, excluding the impact from Learning House, which reported an operating loss of $8.0 million, and
restructuring charges and the brand impairment charge in the prior year, operating income decreased 6%, due to higher expenses,
partially offset by higher revenue.
Interest Expense:
Interest expense for the year ended April 30, 2019 increased $2.8 million to $16.1 million on a reported basis. This increase was due
to a higher average debt balances outstanding, which included borrowings for the funding of the acquisition of Learning House, and a
higher weighted average effective borrowing rate.
Foreign Exchange Transaction Gains (Losses):
Foreign exchange transaction losses were $6.0 million for the year ended April 30, 2019 and were primarily due to the net impact of
the change in average foreign exchange rates as compared to the U.S. dollar on our intercompany accounts receivable and payable
balances. For the year ended April 30, 2018, foreign exchange transaction losses were $12.8 million which were primarily due to the
impact of changes in average foreign exchange rates as compared to the U.S. dollar on our intercompany and third-party accounts
receivable and payable balances.
Provision for Income Taxes:
The following table summarizes the effective tax rate for the years ended April 30, 2019 and 2018:
Effective tax rate as reported
State tax adjustment in 2019
Deferred Tax from the Tax Act Rate Change
Effective tax rate excluding the deferred tax from the Tax Act and state tax adjustment
2019
2018
21.0%
1.3%
(0.1)%
22.2%
10.2%
—
11.7%
21.9%
The effective tax rate for the year ended April 30, 2019 was greater than the rate for the year ended April 30, 2018 due to the net
deferred tax benefit from the Tax Act in the year ended April 30, 2018 compared to the relatively small net deferred benefit in the year
ended April 30, 2019 from state tax apportionment changes.
The effective tax rate was equal to the U.S. statutory rate for the year ended April 30, 2019 as the increase from higher taxes on non-
U.S. income and various other items was offset by a state tax benefit from more favorable apportionment factors which reduced our
deferred tax liabilities, net of federal benefit.
The Tax Act
On December 22, 2017, the U.S. government enacted comprehensive tax legislation. The Tax Act significantly revised the U.S.
corporate income tax system. We recorded a significant nonrecurring benefit from the Tax Act during the year ended April 30, 2018.
EPS:
EPS for the year ended April 30, 2019 was $2.91 per share compared with $3.32 per share in the prior year. Excluding the impact of
the items included in the table below, Adjusted EPS for the year ended April 30, 2019 decreased 14% to $2.96 per share compared
with $3.43 per share in the prior year.
U.S. GAAP EPS
Adjustments:
Restructuring and related charges
Foreign exchange losses on intercompany transactions
Impact of Tax Cuts and Job Act
Impact of reduction in certain U.S. state tax rates in 2019
Non-GAAP Adjusted EPS
Index
33
2019
2018
$
2.91 $
0.04
0.06
—
(0.05)
2.96 $
$
3.32
0.39
0.15
(0.43)
—
3.43
On a constant currency basis, Adjusted EPS decreased 8% due to lower Adjusted Operating Income. Adjusted EPS for the year ended
April 30, 2019 was also lower as compared with prior year due to an $0.15 per share dilutive impact of the Learning House
acquisition.
SEGMENT OPERATING RESULTS:
As previously announced, we have changed our segment reporting structure to align with our strategic focus areas: (1) Research
Publishing & Platforms, which continues to include the Research publishing and Atypon businesses, (2) Academic & Professional
Learning, which is the former “Publishing” segment combined with our corporate training businesses – previously noted as
Professional Assessment and Corporate Learning; and (3) Education Services, which includes our Online Program Management and
mthree training, upskilling and talent placement services for professionals and businesses. Prior period segment results have been
revised to the new segment presentation. There were no changes to our consolidated financial results.
RESEARCH PUBLISHING & PLATFORMS:
Revenue:
Research Publishing
Research Platforms
Total Research Publishing & Platforms Revenue
Cost of Sales
Operating Expenses
Amortization of Intangibles
Restructuring Charges (see Note 7)
Contribution to Profit
Restructuring Charges (see Note 7)
Adjusted Contribution to Profit
Depreciation and Amortization
Adjusted EBITDA
Adjusted EBITDA Margin
Revenue:
Year Ended
April 30,
2019
2018
% Change
Favorable
(Unfavorable)
Constant
Currency
% Change
Favorable
(Unfavorable)
$
$
903,249 $
35,968
939,217
903,950
32,907
936,857
254,560
395,670
28,102
1,131
259,754
1,131
260,885
60,889
321,774 $
34.3%
247,833
384,030
26,833
5,257
272,904
5,257
278,161
54,805
332,966
35.5%
—
9%
—
(3)%
(3)%
(5)%
78%
(5)%
(6)%
(3)%
3%
9%
3%
(5)%
(4)%
(6)%
78%
—
(2)%
1%
Research Publishing & Platforms revenue for the year ended April 30, 2019 increased $2.4 million, or flat as compared with the prior
year. On a constant currency basis, revenue increased 3%, compared with the prior year, primarily due to continued strong growth in
publication volumes for Open Access, particularly hybrid journals.
Adjusted EBITDA:
On a constant currency basis, Adjusted EBITDA increased 1% as compared with the prior year. This increase was due to higher
revenues, partially offset by higher cost of sales, primarily due to increased royalty costs and higher operating costs. The higher
operating costs include additional resources in editorial to support increased journal publishing of $11.2 million, increased costs
related to advertising and marketing of $3.0 million, and sales resources of $2.5 million, which were partially offset by lower
administrative costs.
Society Partnerships:
For the year ended April 30, 2019, 17 new society contracts were signed, with combined annual revenue of approximately $5.4
million, and 4 society contracts were not renewed with combined annual revenue of approximately $1.8 million.
Projekt DEAL:
In the third quarter of 2019, we completed a new agreement with a national consortium representing all 700 German academic
institutions. This new three-year agreement provides those German libraries and their researchers with both subscriptions access and
open access publishing. We expect to generate modestly more revenue from this new arrangement and the opportunity to grow
revenue through higher publishing volumes.
Index
34
ACADEMIC & PROFESSIONAL LEARNING:
Revenue:
Education Publishing
Professional Learning
Total Academic & Professional Learning
Cost of Sales
Operating Expenses
Amortization of Intangibles
Restructuring Charges (see Note 7)
Publishing Brand Impairment Charge
Contribution to Profit
Restructuring Charges (see Note 7)
Publishing Brand Impairment Charge
Adjusted Contribution to Profit
Depreciation and Amortization
Adjusted EBITDA
Adjusted EBITDA Margin
Revenue:
Year Ended
April 30,
2019
2018
% Change
Favorable
(Unfavorable)
Constant
Currency
% Change
Favorable
(Unfavorable)
$
$
372,018
331,285
703,303
195,331
343,859
16,709
1,139
—
146,265
1,139
—
147,404
68,126
215,530
30.6%
$
$
401,607
338,508
740,115
209,951
357,976
16,303
8,244
3,600
144,041
8,244
3,600
155,885
72,274
228,159
30.8%
(7)%
(2)%
(5)%
7%
4%
(2)%
86%
100%
2%
(5)%
(6)%
(6)%
(1)%
(4)%
6%
2%
(3)%
86%
100%
3%
(4)%
(4)%
Academic & Professional Learning revenue decreased 5% to $703.3 million on a reported basis, and 4% on a constant currency basis
as compared with the prior year. The decrease was primarily due to a decline in book publishing due to a continued shift in market
demand for print products. This decline was partially offset by an increase in volume of test preparation and certification product
offerings, an increase in WileyPLUS mainly due to the timing of revenue recognition, and an increase in Professional Assessment
services and Corporate Learning.
Adjusted EBITDA:
On a constant currency basis, Adjusted EBITDA decreased 4% as compared with the prior year. This decrease was primarily due to
lower revenues, partially offset by lower cost of sales due to a decrease in inventory costs and to a lesser extent, book composition and
product development amortization expense, as well as lower operating expenses, including employee related costs, content related
costs and, to a lesser extent, technology costs.
Index
35
Year Ended
April 30,
2019
2018
% Change
Favorable
(Unfavorable)
Constant
Currency
% Change
Favorable
(Unfavorable)
$
157,549
157,549
$
119,131
119,131
104,831
55,754
9,847
389
(13,272)
389
(12,883)
18,117
5,234
3.3%
$
73,239
40,805
5,092
1,894
(1,899)
1,894
(5)
13,112
13,107
11.0%
$
32%
32%
(43)%
(37)%
(93)%
79%
#
#
32%
32%
(43)%
(37)%
(93)%
79%
#
#
(60)%
(61)%
EDUCATION SERVICES:
Revenue:
Education Services
Total Education Services Revenue
Cost of Sales
Operating Expenses
Amortization of Intangibles
Restructuring Charges (see Note 7)
Contribution to Profit
Restructuring Charges (see Note 7)
Adjusted Contribution to Profit
Depreciation and Amortization
Adjusted EBITDA
Adjusted EBITDA Margins
# Not meaningful
Revenue:
Education Services revenue increased 32% to $157.5 million on a reported and on a constant currency basis as compared with the
prior year. The increase was mainly driven by the impact of the acquisition of Learning House on November 1, 2018 which
contributed $31.5 million in revenue, and to a lesser extent, higher revenue in the legacy Education Services business.
Adjusted EBITDA:
On a constant currency basis, Adjusted EBITDA decreased 61% as compared with the prior year. This decrease was mainly driven by
higher costs of sales due to the incremental impact of the acquisition of Learning House and higher marketing related costs of $8.1
million, due to the legacy Education Services business primarily due to increased investments to support revenue growth; and to a
lesser extent, higher composition and product development amortization. In addition, higher operating expenses were due to the
incremental impact of the acquisition of Learning House; and to a lesser extent, an increase in sales related and technology costs.
Legacy Education Services Partners and Programs:
As of April 30, 2019, we had 39 university partners and 276 programs under contract.
CORPORATE EXPENSES:
Corporate Expenses for the year ended April 30, 2019 decreased 8% to $168.8 million as compared with the prior year. On a constant
currency basis and excluding restructuring charges, these expenses decreased 1%. This decrease was primarily due to lower
employment related costs, including incentive compensation costs, partially offset by higher stock-based compensation expense of
$2.3 million and costs associated with strategic planning of $1.4 million.
FISCAL YEAR 2021 OUTLOOK
The isolation measures related to COVID-19 continue to impact the Research and Education businesses, with uncertainties about
student enrollments, university budgets, and corporate spending. Wiley cannot confidently predict the extent or duration of the impact
of the pandemic on its operating results and is therefore not providing fiscal year 2021 outlook. We are also withdrawing our fiscal
year 2022 targets given such limited visibility.
Index
36
We are expecting COVID-19 related pressure on revenue and earnings to continue through the first quarter and into the second quarter
of fiscal year 2021. With the reopening of retail outlets and a return to routine distribution by online retailers, we should see less
pressure on print book sales. Student enrollments and university finances are important indicators to both our Research and Education
businesses. Other leading indicators we are tracking include resumption of college-entry exams and certification testing; corporate
spending on professional learning; and corporate hiring.
On June 11, 2020, the Company announced that the Executive Leadership Team (ELT) and the CEO of the Company, along with the
Board of Directors, agreed to six-month base pay reductions, ranging from 15% of the base salary of the ELT to 30% of the base
salary of the CEO. For the Board of Directors, compensation reductions were set at 30% of the cash portion of the annual retainer for
the independent non-employee directors of the Board, accompanied by an equivalent percentage reduction in the compensation of the
Chairman of the Board. These voluntary reductions are not financially necessary for Wiley but are important in demonstrating
leadership's shared commitment to our colleagues across the Company who will be impacted by deferred salary merit increases. We
have implemented discretionary spending controls across the Company. We are reviewing our real estate portfolio for targeted
rationalization, given success to date and working from home and the potential workforce benefits. We are significantly accelerating
our process reengineering and technology in-sourcing initiatives to enable our strategic plans and reduce costs. We are also planning
to further simplify, standardize and automate our workflows for sustainable efficiency gains. We project capital expenditures to be
approximately $100 million with investment focused on the development of tech-enabled services and platforms as well as workflow
and process redesign. To further mitigate the impact of the economic downturn, additional cost savings actions are anticipated as we
make our way through the coming fiscal year.
As previously announced on April 9, 2020, due to the COVID-19 uncertainty, we have decided to temporarily suspend share
repurchases. We will resume share repurchases as the economic environment and our business improve.
Adjusted EBITDA:
Below is a reconciliation of our consolidated U.S. GAAP net (loss) income to Non-GAAP EBITDA and Adjusted EBITDA:
Net (Loss) Income
Interest expense
Provision for income taxes
Depreciation and amortization
Non-GAAP EBITDA
Impairment of goodwill and intangible assets
Restructuring and related charges
Foreign exchange transaction (gains) losses
Interest and other income
Non-GAAP Adjusted EBITDA
LIQUIDITY AND CAPITAL RESOURCES:
Principal Sources of Liquidity
Year Ended
April 30,
2019
2020
(74,287) $
24,959
11,195
175,127
136,994
202,348
32,607
(2,773)
(13,381)
355,795 $
168,263 $
16,121
44,689
161,155
390,228
—
3,118
6,016
(11,100)
388,262 $
$
$
2018
192,186
13,274
21,745
153,989
381,194
3,600
28,566
12,819
(8,563)
417,616
We believe that our operating cash flow, together with our revolving credit facilities and other available debt financing, will be
adequate to meet our operating, investing, and financing needs in the foreseeable future. There can be no assurance that continued or
increased volatility in the global capital and credit markets will not impair our ability to access these markets on terms commercially
acceptable in the future. In addition, our liquidity could be adversely impacted by COVID-19 due to the continued impact on our
customers, including cash collections. We do not have any off-balance-sheet debt.
As of April 30, 2020, we had cash and cash equivalents of $202.5 million, of which approximately $152.4 million, or 75% was located
outside the U.S. 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 our operations. Notwithstanding the Tax Act which generally eliminated federal income tax on future
cash repatriation to the U.S., cash repatriation may be subject to state and local taxes and withholding or similar taxes. As described in
Note 13, “Income Taxes,” of the Notes to Consolidated Financial Statements, since April 30, 2018, we no longer intend to
permanently reinvest earnings outside the U.S. We have a $2.0 million liability related to the estimated taxes that would be incurred
upon repatriating certain non-U.S. earnings.
Index
37
On May 30, 2019, we entered into a credit agreement that amended and restated the existing agreement (“Amended and Restated
RCA”). The Amended and Restated RCA provides for senior unsecured credit facilities comprised of a (i) five-year revolving credit
facility in an aggregate principal amount up to $1.25 billion, and (ii) a five-year term loan A facility consisting of $250 million. The
agreement contains certain customary affirmative and negative covenants, including a financial covenant in the form of a consolidated
net leverage ratio and consolidated interest coverage ratio. We incurred approximately $4.0 million of costs related to this agreement.
As of April 30, 2020, we had $775.1 million of debt outstanding and approximately $722.3 million of unused borrowing capacity
under our Amended and Restated RCA and other facilities. Our Amended and Restated RCA contains certain restrictive covenants
related to our consolidated leverage ratio and interest coverage ratio, which we were in compliance with as of April 30, 2020.
Contractual Obligations and Commercial Commitments
A summary of contractual obligations and commercial commitments, excluding unrecognized tax benefits further described in Note
13, “Income Taxes,” of the Notes to the Consolidated Financial Statements, as of April 30, 2020 is as follows:
Total Debt(1)
Interest on Debt(2)
Non-Cancelable Leases
Minimum Royalty Obligations
Other Operating Commitments
Total
Payments Due by Period
Total
Within
Year 1
2–3
Years
4–5
Years
After 5
Years
$
$
775.8 $
61.8
243.4
401.1
83.3
1,565.4 $
9.4 $
16.5
32.3
98.5
42.2
198.9 $
31.3 $
30.1
52.0
146.3
36.0
295.7 $
735.1 $
15.2
45.2
87.5
5.1
888.1 $
—
—
113.9
68.8
—
182.7
(1) Total debt is exclusive of unamortized issuance costs of $0.7 million.
(2)
Interest on Debt includes the effect of our interest rate swap agreements and the estimated future interest payments on our
unhedged variable rate debt, assuming that the interest rates as of April 30, 2020 remain constant until the maturity of the debt.
Analysis of Historical Cash Flow
The following table shows the changes in our Consolidated Statements of Cash Flows for the years ended April 30, 2020, 2019 and
2018.
Net Cash Provided by Operating Activities
Net Cash Used in Investing Activities
Net Cash Provided by (Used in) Financing Activities
Effect of Foreign Currency Exchange Rate Changes on Cash, Cash Equivalents and
$
Restricted Cash
2020
Year Ended April 30,
2019
288,435 $
(346,670)
172,677
250,831 $
(301,502)
(17,595)
2018
382,322
(177,411)
(96,831)
(4,943)
(8,443)
3,661
Free Cash Flow less Product Development Spending helps assess our ability, over the long term, to create value for our shareholders,
as it represents cash available to repay debt, pay common dividends, and fund share repurchases and new acquisitions. Below are the
details of Free Cash Flow less Product Development Spending for the years ended April 30, 2020, 2019, and 2018.
Cash flow from operations is seasonally a use of cash in the first half of Wiley’s fiscal year principally due to the timing of collections
for annual journal subscriptions, which occurs in the beginning of the second half of our fiscal year.
Free Cash Flow less Product Development Spending:
Net Cash Provided by Operating Activities
Less: Additions to Technology, Property and Equipment
Less: Product Development Spending
Free Cash Flow less Product Development Spending
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2020
Year Ended April 30,
2019
288,435 $
(88,593)
(26,608)
173,234 $
250,831 $
(77,167)
(24,426)
149,238 $
$
$
2018
382,322
(114,225)
(36,503)
231,594
Net Cash Provided by Operating Activities
The following is a summary of the $37.6 million change in Net Cash Provided By Operating Activities for the year ended April 30,
2020 as compared with the year ended April 30, 2019 (amounts in millions).
Net Cash Provided By Operating Activities – Year Ended April 30, 2019
Working Capital Changes:
Accounts receivable, net and contract liabilities - due to the timing of collections, including collections from the
delayed calendar year 2019 journal subscription billing into fiscal year 2020
Accrued income taxes primarily due to the timing of certain international tax payments
Lower contributions to the employment retirement plans due to a prior year $10.0 million discretionary contribution
to the U.S. Employees' Retirement Plan of John Wiley & Sons, Inc.
Other working capital items, including the timing of payments of accounts payable
Lower net income adjusted for items to reconcile net loss to net cash provided by operating activities
Net Cash Provided By Operating Activities – Year Ended April 30, 2020
$
250.8
31.8
(15.8)
6.7
22.2
(7.3)
288.4
$
Our negative working capital was $312.3 million and $379.8 million as of April 30, 2020 and April 30, 2019, respectively, due to the
seasonality of our businesses. The primary driver of the negative working capital is unearned contract liabilities related to
subscriptions for which cash has been collected in advance. Cash received in advance for subscriptions is used by us for a number of
purposes, including funding: acquisitions, debt repayments, operations, dividend payments and purchasing treasury shares. Due to the
economic downturn, we estimate that approximately $30 million of customer payments are delayed into fiscal year 2021.
The $67.5 million change in negative working capital was primarily due to the increase in cash and cash equivalents, partially offset
by, an increase in current liabilities of $21.8 million due to the recognition of the short-term portion of operating lease liabilities due to
the adoption of ASU 2016-02, "Leases (Topic 842),” on May 1, 2019, and an increase in accrued employment costs of $11.2 million,
primarily due to an increase in the restructuring liability related to severance related costs. See Note 2, “Summary of Significant
Accounting Policies, Recently Issued, and Recently Adopted Accounting Standards”, for further details on the adoption of Topic 842.
The contract liabilities 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, 2020 and as of April 30, 2019 includes $520.2 million and $519.1 million,
respectively, primarily related to deferred subscription revenue for which cash was collected in advance.
2019 compared to 2018
Net Cash Provided by Operating Activities in the year ended April 30, 2019 decreased $131.5 million compared to the year ended
April 30, 2018 to $250.8 million primarily due to the following factors:
lower net earnings adjusted for non-cash items of $24 million, including Learning House;
the unfavorable net impact on accounts receivable and contract liabilities from the delay in billings and subsequent
collections of calendar year 2019 journal subscriptions of $57 million;
the net use of cash for other working capital items, including the payment of accounts payable and accrued liabilities of $26
million, primarily due to timing of payments and lower accruals for incentive compensation;
a net use of cash related to employee retirement plan contributions of $13 million, which includes a $10.0 million tax-
advantage discretionary contribution to the U.S. Employees' Retirement Plan in fiscal year 2019; and
certain one-time closing costs related to the Learning House acquisition of $10 million.
Our negative working capital was $379.8 million and $394.3 million as of April 30, 2019, and April 30, 2018, respectively, due to the
seasonality of our businesses. The primary driver of the negative working capital is unearned contract liabilities related to
subscriptions for which cash has been collected in advance. Cash received in advance for subscriptions is used by us for a number of
purposes, including funding: acquisitions, debt repayments, operations, dividend payments and purchasing treasury shares.
Our change in working capital of $14.6 million was primarily due to the delay in billings and subsequent cash collections for calendar
year 2019 subscriptions partly related to our ERP transition. We estimated that approximately $35 million of cash collections for
calendar year 2019 journal subscriptions collections were delayed into fiscal year 2020.
The contract liabilities 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, 2019 and as of April 30, 2018 includes $519.1 million and $486.4 million,
respectively, primarily related to deferred subscription revenue for which cash was collected in advance.
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Net Cash Used in Investing Activities
2020 compared to 2019
Net Cash Used in Investing Activities in the year ended April 30, 2020 was $346.7 million compared to $301.5 million in the prior
year. The increase was due to additional net cash used in the year ended April 30, 2020 to acquire businesses, and to a lesser extent,
additions for technology, property and equipment of $11.4 million for investments in products and platforms. See Note 4,
“Acquisitions,” for more information related to the acquisitions in fiscal year 2020 and 2019.
2019 compared to 2018
Net Cash Used in Investing Activities in the year ended April 30, 2019 was $301.5 million compared to $177.4 million in the prior
year. The increase was due to $190.4 million of net cash used to acquire Learning House. This was partially offset by a decrease of
$37.1 million due to lower spending for technology, property and equipment in the year ended April 30, 2019 as a result of the May
2018 implementation of our enterprise resource planning system (“ERP”) order to cash release for journal subscriptions and the
completion of our headquarters renovations. In addition, a $12.1 million decrease in product development spending, which was
primarily due to the adoption of Topic 606 whereby certain costs to fulfill contracts, which were previously included in product
development spending are now included in cash flow from operations. As well as a decrease of $17.2 million in cash used for the
acquisition of publication rights and other.
Net Cash Provided by (Used in) Financing Activities
2020 compared to 2019
Net Cash Provided by Financing Activities was $172.7 million in the year ended April 30, 2020 compared to Net Cash Used in
Financing Activities of $17.6 million in the year ended April 30, 2019. This increase in cash provided by financing activities was due
to an increase in net borrowings of $183.7 million for the year ended April 30, 2020 compared to the prior year, which was primarily
due to the funding of acquisitions described above, and to a lesser extent, a decrease in cash used for the purchase of treasury stock in
the year ended April 30, 2020 compared to the prior year.
During the year ended April 30, 2020, we repurchased 1,082,217 shares of Class A and B Common stock at an average price of
$43.05 compared to 1,191,496 shares of Class A Common stock at an average price of $50.35 in the prior year.
In the year ended April 30, 2020, we increased our quarterly dividend to shareholders by 3% to $1.36 per share annualized versus
$1.32 per share annualized in the prior year.
During the year ended April 30, 2020, our Board of Directors approved an additional share repurchase program of $200 million of
Class A or B Common Stock. As of April 30, 2020, we had authorization from our Board of Directors to purchase up to $200 million
that was remaining under this program. No share repurchases were made under this program during the year ended April 30, 2020.
The share repurchase program described above is in addition to the share repurchase program approved by our Board of Directors
during the year ended April 30, 2017 of four million shares of Class A or B Common Stock. As of April 30, 2020, we had
authorization from our Board of Directors to purchase up to 806,758 additional shares that were remaining under this program.
2019 compared to 2018
Net Cash Used in Financing Activities was $17.6 million in the year ended April 30, 2019 compared to $96.8 million in the year
ended April 30, 2018. This decrease in cash used in financing activities was due to an increase in net borrowings of $128.7 million in
the year ended April 30, 2019 compared to the year ended April 30, 2018. This was partially offset by $25.5 million of lower cash
proceeds from the exercise of stock options and an increase in cash used of $20.3 million to repurchase shares of our Class A
Common Stock.
During the year ended April 30, 2019, we repurchased 1,191,496 shares of Class A Common stock at an average price of $50.35
compared to 713,177 shares of Class A Common Stock at an average price of $55.65 in the prior year.
In the year ended April 30, 2019, we increased our quarterly dividend to shareholders by 3% to $1.32 per share annualized versus
$1.28 per share annualized in the prior year.
As of April 30, 2019, we had authorization from our Board of Directors to purchase up to 1,888,975 additional shares.
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RECENTLY ISSUED STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS, ACCOUNTING GUIDANCE, AND
DISCLOSURE REQUIREMENTS
We are subject to numerous recently issued statements of financial accounting standards, accounting guidance, and disclosure
requirements. The information set forth in Note 2, “Summary of Significant Accounting Policies, Recently Issued and Recently
Adopted Accounting Standards,” of the Notes to Consolidated Financial Statements of this Form 10-K is incorporated by reference
and describes these new accounting standards.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES:
The preparation of our Consolidated Financial Statements and related disclosures in conformity with U.S. GAAP requires our
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities as of the date of the financial statements and revenue and expenses during the reporting period. These estimates
include, among other items, sales return reserves, allocation of acquisition purchase price to assets acquired and liabilities assumed,
goodwill and indefinite-lived intangible assets, intangible assets with definite lives and other long-lived assets, and retirement plans.
We review these estimates and assumptions periodically using historical experience and other factors and reflect the effects of any
revisions on the Consolidated Financial Statements in the period we determine any revisions to be necessary. Actual results could
differ from those estimates, which could affect the reported results. Note 2, “Summary of Significant Accounting Policies, Recently
Issued and Recently Adopted Accounting Standards” 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 our more critical accounting policies and methods.
Revenue Recognition:
See Note 3, “Revenue Recognition, Contracts with Customers,” of the Notes to Consolidated Financial Statements for details of our
revenue recognition policy.
Sales Return Reserves:
See Note 2, “Summary of Significant Accounting Policies, Recently Issued, and Recently Adopted Accounting Standards” in the
section “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements for details of our sales return
reserves.
A one percent change in the estimated sales return rate could affect net income by approximately $1.3 million. A change in the pattern
or trends in returns could also affect the estimated allowance.
Allocation of Acquisition Purchase Price to Assets Acquired and Liabilities Assumed:
In connection with acquisitions, we allocate 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. The excess of the purchase consideration over the fair value of
assets acquired and liabilities assumed is recorded as goodwill. The determination of the acquisition date fair value of the assets
acquired and liabilities assumed required us to make significant estimates and assumptions, such as projected revenues and related
growth rates, forecasted operating cash flows, customer attrition rates, obsolescence rates of developed technology, and discount rates.
We may use a third-party valuation consultant to assist in the determination of such estimates.
See Note 4, “Acquisitions,” of the Notes to Consolidated Financial Statements for details of our acquisitions.
Goodwill and Indefinite-lived Intangible Assets:
Goodwill is reviewed for possible impairment at least annually on a reporting unit level during the fourth quarter of each year. Our
annual impairment assessment date is February 1. A review of goodwill may be initiated before or after conducting the annual analysis
if events or changes in circumstances indicate the carrying value of goodwill may no longer be recoverable.
A reporting unit is the operating segment unless, at businesses one level below that operating segment– the “component” level,
discrete financial information is prepared and regularly reviewed by management, and the component has economic characteristics
that are different from the economic characteristics of the other components of the operating segment, in which case the component is
the reporting unit.
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As part of the annual impairment test, we may elect to first assess qualitative factors to determine whether it is more likely than not
that the fair value of a reporting unit is less than its carrying amount. In a qualitative assessment, we would consider the
macroeconomic conditions, including any deterioration of general conditions and industry and market conditions, including any
deterioration in the environment where the reporting unit operates, increased competition, changes in the products/services and
regulatory and political developments, cost of doing business, overall financial performance, including any declining cash flows and
performance in relation to planned revenues and earnings in past periods, other relevant reporting unit specific facts, such as changes
in management or key personnel or pending litigation, and events affecting the reporting unit, including changes in the carrying value
of net assets.
If the results of our qualitative assessment indicate it is more likely than not that the fair value of a reporting unit is less than its
carrying amount, we are required to perform a quantitative assessment to determine the fair value of the reporting unit.
Alternatively, if an optional qualitative goodwill impairment assessment is not performed, we may perform a quantitative assessment.
We early adopted ASU 2017-04, “Intangibles–Goodwill and Other (Topic 350): “Simplifying the Test for Goodwill Impairment”
which eliminated the requirement to calculate an implied fair value of the goodwill based on the fair value of a reporting unit’s other
assets and liabilities. Under the quantitative assessment, we compare the fair value of each reporting unit to its carrying value,
including the goodwill allocated to the reporting unit. If the fair value of the reporting unit exceeded its carrying value, there would be
no indication of impairment. If the fair value of the reporting unit were less than the carrying value, an impairment charge would be
recognized for the difference.
We derive an estimate of fair values for each of our reporting units using a combination of an income approach and a market
approach, each based on an applicable weighting. We assess the applicable weighting based on such factors as current market
conditions and the quality and reliability of the data. Absent an indication of fair value from a potential buyer or similar specific
transactions, we believe that the use of these methods provides a reasonable estimate of a reporting unit’s fair value.
Fair value computed by these methods is arrived at using a number of key assumptions including forecasted revenues and related
growth rates, forecasted operating cash flows, the discount rate, and the selection of relevant market multiples of comparable publicly-
traded companies with similar characteristics to the reporting unit. There are inherent uncertainties, however, related to these factors
and to our judgment in applying them to this analysis. Nonetheless, we believe that the combination of these methods provides a
reasonable approach to estimate the fair value of our reporting units. Assumptions for sales, net earnings, and cash flows for each
reporting unit were consistent among these methods.
2020 Annual Goodwill Impairment Test
As of February 1, 2020, we completed our annual goodwill impairment test for our reporting units. We concluded that the fair values
of our Research Publishing & Platforms and Academic & Professional Learning reporting units were above their carrying values and,
therefore, there was no indication of impairment.
During our annual goodwill impairment test initiated on February 1, 2020 we identified indicators that the goodwill of the Education
Services business was impaired due to underperformance as compared with our acquisition case projections for revenue growth and
operating cash flow. Subsequently, during the fourth quarter of fiscal year 2020, we determined that our updated revenue and
operating cash flow projections would be further impacted by anticipated near-term headwinds due to COVID-19, including adverse
impacts on new student starts and student re-enrollment. Therefore, we updated the impairment test as of March 31, 2020 to reflect
this change in circumstances. As a result, we concluded that the carrying value was above the fair value, resulting in a non-cash
goodwill impairment of $110.0 million. This charge is reflected in Impairment of Goodwill and Intangible Assets in the Consolidated
Statements of (Loss) Income. Critical assumptions that we used in performing the income and market approach for this reporting unit
included; revenue projections and operating cash flow projections, the discount rate, and the selection of relevant market multiples of
comparable publicly-traded companies with similar characteristics to the reporting unit.
Prior to performing the goodwill impairment test for Education Services, we also evaluated the recoverability of long-lived assets of
the reporting unit. When indicators of impairment are present, we test definite lived and long-lived assets for recoverability by
comparing the carrying value of an asset group to an estimate of the future undiscounted cash flows expected to result from the use
and eventual disposition of the asset group. We considered the lower than expected revenue and operating cashflows over a sustained
period of time, and downward revisions to our cash flow forecasts for this reporting unit to be indicators of impairment for their long-
lived assets. Based on the results of the recoverability test, we determined that the undiscounted cash flows of the asset group of the
Education Services reporting unit exceeded the carrying value. Therefore, there was no impairment.
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Income Approach Used to Determine Fair Values
The income approach is based upon the present value of expected cash flows. Expected cash flows are converted to present value
using factors that consider the timing and risk of the future cash flows. The estimate of cash flows used is prepared on an unleveraged
debt-free basis. We use a discount rate that reflects a market-derived weighted average cost of capital. We believe that this approach is
appropriate because it provides a fair value estimate based upon the reporting unit’s expected long-term operating and cash flow
performance. The projections are based upon our best estimates of forecasted economic and market conditions over the related period
including growth rates, expected changes in forecasted operating cash flows, and cash expenditures. Other estimates and assumptions
include terminal value long-term growth rates, provisions for income taxes, future capital expenditures, and changes in future cashless,
debt-free working capital.
Changes in any of these assumptions could materially impact the estimated fair value of our reporting units. Our forecasts take into
account the near and long-term expected business performance, considering the long-term market conditions and business trends
within the reporting units. For example, each reporting unit includes an assumption regarding the impact of COVID-19 from both a
current and long-term perspective. However, changes in this assumption may impact our ability to recover the allocated goodwill in
the future. For further discussion of the factors that could result in a change in our assumptions, see “Risk Factors” in this Annual
Report on Form 10-K.
Market Approach Used to Determine Fair Values
The market approach estimates the fair value of the reporting unit by applying multiples of operating performance measures to the
reporting unit’s operating performance (the “Guideline Public Company Method”). These multiples are derived from comparable
publicly-traded companies with similar investment characteristics to the reporting unit, and such comparable data are reviewed and
updated as needed annually. We believe that this approach is appropriate because it provides a fair value estimate using multiples from
entities with operations and economic characteristics comparable to our reporting units and Wiley.
The key estimates and assumptions that are used to determine fair value under this market approach include current and forward 12-
month revenue and EBITDA results, as applicable, and the selection of the relevant multiples to be applied. Under the Guideline
Public Company Method, a control premium, or an amount that a buyer is usually willing to pay over the current market price of a
publicly traded company, is considered and applied, to the calculated equity values to adjust the public trading value upward for a
100% ownership interest, where applicable.
In order to assess the reasonableness of the calculated fair values of our reporting units, we also compare the sum of the reporting
units’ fair values to our market capitalization and calculate an implied control premium (the excess of the sum of the reporting units’
fair values over the market capitalization). We evaluate the control premium by comparing it to control premiums of recent
comparable market transactions. If the implied control premium is not reasonable in light of these recent transactions, we will
reevaluate our fair value estimates of the reporting units by adjusting the discount rates and/or other assumptions.
If our assumptions and related estimates change in the future, or if we change our reporting unit structure or other events and
circumstances change (such as a sustained decrease in the price of our common stock, a decline in current market multiples, a
significant adverse change in legal factors or business climates, an adverse action or assessment by a regulator, heightened
competition, strategic decisions made in response to economic or competitive conditions, or a more-likely-than-not expectation that a
reporting unit or a significant portion of a reporting unit will be sold or disposed of), we may be required to record impairment charges
in future periods. Any impairment charges that we may take in the future could be material to our consolidated results of operations
and financial condition.
2020 Annual Indefinite-lived Intangible Impairment Test
We estimate the fair value of these assets using a relief from royalty method under an income approach. The key assumptions for this
method are revenue projections, a royalty rate as determined by management in consultation with valuation experts, and a discount
rate.
We recorded a pre-tax non-cash impairment charge of $89.5 million for our Blackwell trademark, which was acquired in 2007 and
carried as an indefinite-lived intangible asset primarily related to our Research Publishing & Platforms segment. The impairment
reflects our decision to simplify Wiley’s brand portfolio and unify our research journal content under one Wiley brand, which will
sharply limit the use of the Blackwell trade name. This impairment resulted in writing off substantially all of the carrying value of the
intangible trademark asset. This charge is reflected in Impairment of Goodwill and Intangible Assets in the Consolidated Statements
of (Loss) Income. The resulting non-cash impairment charge is entirely unrelated to COVID-19 or the expected future financial
performance of the Research Publishing & Platforms segment.
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See Note 11, “Goodwill and Intangible Assets,” of the Notes to Consolidated Financial Statements for details of our goodwill and
indefinite lived intangible balances and the review performed in the year ended April 30, 2020 and other related information.
Intangible Assets with Definite Lives and Other Long-Lived Assets:
See Note 2, “Summary of Significant Accounting Policies, Recently Issued, and Recently Adopted Accounting Standards” in the
section “Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements for details of definite lived
intangible assets and other long-lived assets.
Retirement Plans:
We provide defined benefit pension plans for certain employees worldwide. Our 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 discount rates, long-term return rates on pension plan assets, healthcare cost trends, compensation increases and other
factors. In determining such assumptions, we consult with outside actuaries and other advisors.
The discount rates for the U.S., Canada and U.K. pension plans are based on the derivation of a single-equivalent discount rate using a
standard spot rate curve and the timing of expected benefit payments as of the balance sheet date. The spot rate curves are based upon
portfolios of corporate bonds rated at Aa or above by a respected rating agency. The discount rate for Germany is based on the
expected benefit payments for the sample mixed population plan. The expected long-term rates of return on pension plan assets are
estimated using forecasted returns for equities and bonds applied to each plan’s target asset allocation. The expected long-term rates
are then compared to the historic investment performance of the plan assets and established 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 our historical experience and future outlook. While we believe 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 our defined benefit pension plans. A hypothetical one percent increase in the discount rate would increase net
income and decrease the accrued pension liability by approximately $1.2 million and $106.6 million, respectively. A one percent
decrease in the discount rate would decrease net income and increase the accrued pension liability by approximately $0.3 million and
$130.1 million, respectively. A one percent change in the expected long-term rate of return would affect net income by approximately
$4.6 million.
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Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risk primarily related to interest rates, foreign exchange, and credit risk. It is our 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. We do not use derivative financial instruments for trading or speculative
purposes.
Interest Rates:
From time to time, we may use interest rate swaps, collars, or options to manage our exposure to fluctuations in interest rates. 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.
The information set forth in Note 15, "Derivative Instruments and Activities," of the Notes to Consolidated Financial Statements under
the caption "Interest Rate Contracts," is incorporated herein by reference.
On an annual basis, a hypothetical one percent change in interest rates for the $475.7 million of unhedged variable rate debt as of
April 30, 2020 would affect net income and cash flow by approximately $3.6 million.
Foreign Exchange Rates:
Fluctuations in the currencies of countries where we operate outside the U.S. may have a significant impact on financial results. We
are 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 the Statements of Income are translated into U.S. dollars using weighted-average exchange rates for revenues
and expenses. The percentage of Consolidated Revenue for the year ended April 30, 2020 recognized in the following currencies (on
an equivalent U.S. dollar basis) were approximately: 56% U.S dollar, 26% British pound sterling, 10% euro, and 8% other currencies.
Our 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 the year ended April 30, 2020, we recorded foreign currency translation
losses in Accumulated Other Comprehensive Loss of approximately $28.6 million primarily as a result of the fluctuations of the U.S.
dollar relative to the British pound sterling, and to a lesser extent the euro.
Exchange rate gains or losses related to foreign currency transactions are recognized as transaction gains or losses on the Consolidated
Statements of (Loss) Income as incurred. Under certain circumstances, we 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 information set forth in Note 15, "Derivative Instruments and Activities," of the Notes to Consolidated Financial Statements under
the caption "Foreign Currency Contracts," is incorporated herein by reference.
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 us between the months of
December and April. Although at fiscal year-end we had minimal credit risk exposure to these agents, future calendar-year
subscription receipts from these agents are highly dependent on their financial condition and liquidity. Subscription agents account for
approximately 20% of total annual consolidated revenue and one affiliated group of subscription agents accounts for approximately
10% of total annual consolidated revenue.
Our book business is not dependent upon a single customer; however, the industry is concentrated in national, regional, and online
bookstore chains. Although no book customer accounts for more than 8% of total consolidated revenue and 9% of accounts receivable
at April 30, 2020, the top 10 book customers account for approximately 12% of total consolidated revenue and approximately 18% of
accounts receivable at April 30, 2020. We maintain approximately $20 million of trade credit insurance, covering balances due from
certain named customers, subject to certain limitations and annual renewal.
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As described above, in Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” in the
caption “Fourth Quarter Highlights,” certain of our customers could be impacted by COVID-19 and we could experience potential
delays in payments due to widespread disruption and pervasive cash conservation behaviors in the face of uncertainty causing one or
more of our clients to file for bankruptcy protection or shut down.
Disclosure of Certain Activities Relating to Iran:
The European Union, Canada and the U.S. 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 the year ended April 30,
2020, we recorded an immaterial amount of revenue and net earnings 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. We assessed our business relationship and transactions with Iran and believe we are
in compliance with the regulations governing the sanctions. We intend to continue in these or similar sales as long as they continue to
be consistent with all applicable sanction-related regulations.
Index
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Item 8. Financial Statements and Supplementary Data
The following Consolidated Financial Statements and Notes are filed as part of this report.
John Wiley & Sons, Inc. and Subsidiaries
Reports of Independent Registered Public Accounting Firm
Financial Statements
Consolidated Statements of Financial Position - April 30, 2020 and 2019
Consolidated Statements of (Loss) Income for the years ended April 30, 2020, 2019, and 2018
Consolidated Statements of Comprehensive (Loss) Income for the years ended April 30, 2020, 2019, and 2018
Consolidated Statements of Cash Flows for the years ended April 30, 2020, 2019, and 2018
Consolidated Statements of Shareholders’ Equity for the years ended April 30, 2020, 2019, and 2018
Notes to Consolidated Financial Statements
Note 1. Description of Business
Note 2. Summary of Significant Accounting Policies, Recently Issued, and Recently Adopted Accounting Standards
Note 3. Revenue Recognition, Contracts with Customers
Note 4. Acquisitions
Note 5. Reconciliation of Weighted Average Shares Outstanding
Note 6. Accumulated Other Comprehensive Loss
Note 7. Restructuring and Related Charges
Note 8. Inventories
Note 9. Product Development Assets
Note 10. Technology, Property, and Equipment
Note 11. Goodwill and Intangible Assets
Note 12. Operating Leases
Note 13. Income Taxes
Note 14. Debt and Available Credit Facilities
Note 15. Derivative Instruments and Activities
Note 16. Commitment and Contingencies
Note 17. Retirement Plans
Note 18. Stock-Based Compensation
Note 19. Capital Stock and Changes in Capital Accounts
Note 20. Segment Information
Note 21. Supplementary Quarterly Financial Information–Results By Quarter (Unaudited)
Note 22. Subsequent Events
54
55
56
57
58
59
59
66
71
75
75
76
78
78
78
79
81
83
85
86
88
88
91
94
96
98
98
Financial Statement Schedule
Schedule II – Valuation and Qualifying Accounts for the years ended April 30, 2020, 2019, and 2018
104
Index
47
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
To our Shareholders
John Wiley & Sons, Inc.:
The management of John Wiley & 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, 2020.
Changes in Internal Control over Financial Reporting:
The Company acquired mthree during fiscal year 2020, which represented less than 1% of total consolidated assets, excluding
goodwill and intangible assets which are included within the scope of the assessment, and approximately 1% of total consolidated
revenues of the Company as of and for the year ended April 30, 2020. mthree was excluded from the Company's assessment of the
effectiveness of the Company’s internal control over financial reporting as of April 30, 2020.
We are in the process of implementing a new global ERP that will enhance our business and financial processes and standardize our
information systems. As previously disclosed, we have completed the implementation of record-to-report, purchase-to-pay and several
other business processes within all locations through fiscal year 2017. We completed the implementation of order-to-cash for certain
businesses in May 2018 and may continue to roll out additional processes and functionality of the ERP in phases in the foreseeable
future.
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 2020.
The effectiveness of our internal control over financial reporting as of April 30, 2020 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—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/ Brian A. Napack
Brian A. Napack
President and Chief Executive Officer
/s/ John A. Kritzmacher
John A. Kritzmacher
Executive Vice President, Chief Financial Officer, and
Interim Chief Accounting Officer
June 26, 2020
Index
48
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
John Wiley & Sons, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of John Wiley & Sons, Inc. and subsidiaries (the
Company) as of April 30, 2020 and 2019, the related consolidated statements of (loss) income, comprehensive (loss) income, cash
flows, and shareholders’ equity for each of the years in the three-year period ended April 30, 2020, and the related notes and financial
statement schedule in Item 15(2) (collectively, the consolidated financial statements). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company as of April 30, 2020 and 2019, and the results
of its operations and its cash flows for each of the years in the three-year period ended April 30, 2020, in conformity with U.S.
generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of April 30, 2020, based on criteria established in Internal
Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our
report dated June 26, 2020 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial
reporting.
Change in Accounting Principle
As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for leases as of
May 1, 2019 due to the adoption of Accounting Standard Codification (ASC) Topic 842, Leases.
As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for revenue
recognition as of May 1, 2018 due to the adoption of ASC Topic 606, Revenue from Contracts with Customers.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining,
on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the
critical audit matters or on the accounts or disclosures to which they relate.
Evaluation of the sufficiency of audit evidence over revenue
As discussed in Note 3 to the consolidated financial statements, the Company generated $909.0 million, $650.8 million, and
$214.4 million of Research Publishing, Academic & Professional Learning, and Education Services revenue, respectively, for
the year ended April 30, 2020. The Company’s uses multiple information technology (IT) systems to record revenue.
Index
49
We identified the evaluation of the sufficiency of audit evidence over Research Publishing, Academic & Professional
Learning, and Education Services revenue as a critical audit matter. Evaluating the sufficiency of audit evidence obtained
involved IT professionals with specialized skills and knowledge and required especially subjective auditor judgment because
of the multiple revenue recognition processes, IT applications, and data interfaces.
The primary procedures we performed to address this critical audit matter included the following. We performed risk
assessment procedures and applied auditor judgment to determine the nature and extent of procedures to be performed over
revenue. We tested certain internal controls over the Company’s revenue recognition processes. We involved IT
professionals with specialized skills and knowledge, who assisted in (1) testing certain IT applications and controls used by
the Company in its revenue recognition processes, and (2) testing the interface of relevant revenue data between different IT
systems used in the revenue recognition processes. On a sample basis, we also tested the recorded revenue by tracing the
recorded amounts for specific transactions back to underlying documentation. In addition, we evaluated the overall
sufficiency of the audit evidence obtained over revenue
Assessment of the initial fair value of certain acquired intangible assets
As discussed in Note 4 to the consolidated financial statements, the Company accounts for acquired businesses using the
acquisition method of accounting by recording assets and liabilities acquired at their respective fair values. During the year
ended April 30, 2020, the Company completed the acquisition of mthree, Zyante Inc., and other businesses for an aggregate
purchase price of $234.2 million (“acquisitions”). The Company recorded intangible assets of $109.0 million during the year
related to these acquisitions, including customer relationships, developed technology, content and trademarks. The
determination of the acquisition date fair value of these intangible assets required the Company to develop assumptions,
including key assumptions regarding forecasted revenues and related growth rates, forecasted operating cash flows, the
customer attrition rate, the obsolescence rate of developed technology, and the discount rates.
We identified the assessment of the initial fair value of the acquired mthree customer relationships and Zyante Inc. developed
technology as a critical audit matter. There was a high degree of subjectivity involved in evaluating the key assumptions
developed by the Company used to determine the fair value of such customer relationships and developed technology. The
estimated fair values of the mthree customer relationships and Zyante Inc. developed technology were also sensitive to
changes in these key assumptions.
The primary procedures we performed to address this critical audit matter included the following. We tested certain internal
controls over the Company’s acquisition-date valuation process, including controls related to the development of the key
assumptions for the mthree customer relationships and Zyante Inc. developed technology. We performed risk assessment
procedures and applied auditor judgment to determine the nature and extent of procedures to be performed over the mthree
customer relationships and Zyante Inc. developed technology. We evaluated the growth rates used by the Company to
determine forecasted revenues by comparing them to prior acquisitions; current industry, market, and economic trends; and
historical results of the acquired entities. We evaluated the forecasted operating cash flows by comparing them to prior
acquisitions, analyst reports of comparable entities, and historical results of the acquired business and the Company. We
assessed the obsolescence rate of the Zyante Inc. developed technology and mthree customer attrition rate by comparing them
to historical experience of the Company and acquired entities. We performed sensitivity analyses over the Company’s key
assumptions to assess the impact of possible changes to the key assumptions on the acquisition-date fair value of the mthree
customer relationships and Zyante, Inc. developed technology. We involved a valuation professional with specialized skills
and knowledge, who assisted in:
evaluating certain discount rates by comparing them to discount rates that were independently developed using publicly
available market data for comparable entities,
developing the estimated fair value of mthree customer relationships using the Company’s cash flow forecasts and an
independently developed discount rate, and comparing it to the Company’s fair value estimate, and
developing estimated fair value of Zyante Inc. developed technology using the Company’s forecasted revenues and an
independently developed discount rate and comparing it to the Company’s fair value estimate.
Index
50
Assessment of the fair value of the Education Services reporting unit
As discussed in Note 11 to the consolidated financial statements, the total goodwill balance was $1,116.8 million as of April
30, 2020, of which $167.6 million was related to the Education Services segment, which includes the Education Services
reporting unit. During the completion of the annual goodwill impairment test, the Company identified indicators of
impairment in the Education Services reporting unit. Evaluating goodwill for impairment involves comparing the fair value
of the Education Services reporting unit to its carrying value. The Company uses a combination of an income approach and a
market approach to estimate the fair value of its reporting units, which requires the Company to make key assumptions
regarding forecasted revenues and related growth rates, forecasted operating cash flows, the discount rate, and the selection
of relevant market multiples of comparable publicly-traded companies with similar characteristics to the reporting unit. The
Company concluded that the fair value of the Education Services reporting unit was below its carrying value and an
impairment of $110.0 million was recognized.
We identified the assessment of the fair value of the Education Services reporting unit as a critical audit matter. Testing the
key assumptions used to estimate the fair value of the Education Services reporting unit involved a high degree of auditor
judgment as changes to those assumptions had a significant effect on the Company’s assessment of the fair value.
The primary procedures we performed to address this critical audit matter included the following. We tested certain internal
controls over the Company’s goodwill impairment testing process, including controls related to the development of the key
assumptions. We evaluated (1) the revenue growth rates used by the Company to determine forecasted revenues, and (2)
forecasted operating cash flows by comparing them to industry, market and economic reports, and historical results of the
Education Services reporting unit. We performed a sensitivity analysis to assess the impact of possible changes to the key
assumptions on the measurement date fair value of the Education Services reporting unit. We involved a valuation
professional with specialized skills and knowledge, who assisted in:
evaluating the discount rate by comparing it to (1) a weighted average cost of capital that was independently developed
using publicly available market data for comparable entities, (2) discount rates used in previous impairment analyses of
the Education Services reporting unit, and (3) discount rates utilized in historical acquisitions of the Education Services
reporting unit,
evaluating relevant market multiples of comparable publicly-traded companies with similar characteristics to the
reporting unit, and
developing an estimated fair value of the Education Services reporting unit using the Company’s cash flow forecast and
an independently developed discount rate and comparing it to the Company’s fair value estimate.
/s/ KPMG LLP
We have served as the Company’s auditor since 2002.
New York, New York
June 26, 2020
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51
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
John Wiley & Sons, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited John Wiley & Sons, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of April 30,
2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal
control over financial reporting as of April 30, 2020, 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)
(PCAOB), the consolidated statements of financial position of the Company as of April 30, 2020 and 2019, and the related
consolidated statements of (loss) income, comprehensive (loss) income, cash flows, and shareholders’ equity for each of the years in
the three-year period ended April 30, 2020, and the related notes and financial statement schedule in Item 15(2) (collectively, the
consolidated financial statements), and our report dated June 26, 2020 expressed an unqualified opinion on those consolidated
financial statements.
The Company acquired mthree during the year ended April 30, 2020, and management excluded from its assessment of the
effectiveness of the Company’s internal control over financial reporting as of April 30, 2020, mthree’s internal control over financial
reporting associated with less than 1% of total consolidated assets, excluding goodwill and intangible assets which are included within
the scope of the assessment, and approximately 1% of total consolidated revenues of the Company as of and for the year ended April
30, 2020. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over
financial reporting of mthree.
Basis for Opinion
The Company’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 are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. 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 of internal control over financial reporting 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.
Definition and Limitations of Internal Control Over Financial Reporting
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.
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52
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.
/s/ KPMG LLP
New York, New York
June 26, 2020
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53
John Wiley & Sons, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
In thousands
Assets:
Current Assets
Cash and cash equivalents
Accounts receivable, net
Inventories, net
Prepaid expenses and other current assets
Total Current Assets
Product Development Assets, net
Royalty Advances, net
Technology, Property and Equipment, net
Intangible Assets, net
Goodwill
Operating Lease Right-of-Use Assets
Other Non-Current Assets
Total Assets
Liabilities and Shareholders’ Equity:
Current Liabilities
Accounts payable
Accrued royalties
Short-term portion of long-term debt
Contract liabilities
Accrued employment costs
Accrued income taxes
Short-term portion of operating lease liabilities
Other accrued liabilities
Total Current Liabilities
Long-Term Debt
Accrued Pension Liability
Deferred Income Tax Liabilities
Operating Lease Liabilities
Other Long-Term Liabilities
Total Liabilities
Shareholders’ Equity
$
$
$
April 30,
2020
2019
202,464 $
309,384
43,614
59,465
614,927
53,643
36,710
298,005
807,405
1,116,790
142,716
98,598
3,168,794 $
93,691 $
87,408
9,375
520,214
108,448
13,728
21,810
72,595
927,269
765,650
187,969
119,127
159,782
75,373
2,235,170
92,890
306,631
35,582
67,441
502,544
62,470
36,185
289,021
865,572
1,095,666
—
97,308
2,948,766
90,980
78,062
—
519,129
97,230
21,025
—
75,900
882,326
478,790
166,331
143,775
—
96,197
1,767,419
Preferred Stock, $1 par value: Authorized – 2 million, Issued – 0
Class A Common Stock, $1 par value: Authorized – 180 million, Issued – 70,166 and 70,127 as of
April 30, 2020 and 2019, respectively
Class B Common Stock, $1 par value: Authorized – 72 million, Issued – 13,016 and 13,055 as of
—
—
70,166
70,127
April 30, 2020 and 2019, respectively
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
Total accumulated other comprehensive loss, net of tax
Less: Treasury Shares At Cost (Class A – 23,405 and 22,634 as of April 30, 2020 and 2019,
respectively, Class B – 3,920 and 3,918 of April 30, 2020 and 2019, respectively)
Total Shareholders’ Equity
Total Liabilities and Shareholders’ Equity
13,016
431,680
1,780,129
(340,703)
(227,920)
(6,874)
(575,497)
(785,870)
933,624
3,168,794 $
$
13,055
422,305
1,931,074
(312,107)
(196,057)
(574)
(508,738)
(746,476)
1,181,347
2,948,766
See accompanying Notes to Consolidated Financial Statements.
Index
54
John Wiley & Sons, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF (LOSS) INCOME
Dollars in thousands, except per share data
Revenue, net
Costs and Expenses
Cost of sales
Operating and administrative expenses
Impairment of goodwill and intangible assets
Restructuring and related charges
Amortization of intangibles
Total Costs and Expenses
Operating (Loss) Income
Interest Expense
Foreign Exchange Transaction Gains (Losses)
Interest and Other Income
(Loss) Income Before Taxes
Provision for Income Taxes
Net (Loss) Income
(Loss) Earnings Per Share
Basic
Diluted
Weighted Average Number of Common Shares Outstanding
Basic
Diluted
$
$
$
$
2020
For the Years Ended April 30,
2019
1,800,069 $
1,831,483 $
2018
1,796,103
591,024
997,355
202,348
32,607
62,436
1,885,770
554,722
963,582
—
3,118
54,658
1,576,080
531,024
953,222
3,600
28,566
48,230
1,564,642
(54,287)
223,989
231,461
(24,959)
2,773
13,381
(16,121)
(6,016)
11,100
(63,092)
11,195
212,952
44,689
(13,274)
(12,819)
8,563
213,931
21,745
(74,287) $
168,263 $
192,186
(1.32) $
(1.32) $
2.94 $
2.91 $
3.37
3.32
56,209
56,209
57,192
57,840
57,043
57,888
See accompanying Notes to Consolidated Financial Statements.
Index
55
John Wiley & Sons, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
Dollars in thousands
For the Years Ended April 30,
2019
2020
2018
Net (Loss) Income
$
(74,287) $
168,263 $
192,186
Other Comprehensive (Loss) Income:
Foreign currency translation adjustment
Unrealized retirement costs, net of tax benefit of $10,137, $1,337, and $252,
respectively
Unrealized (loss) gain on interest rate swaps, net of tax benefit (provision) of
$2,114, $1,161, and $(459), respectively
Total Other Comprehensive (Loss) Income
(28,596)
(60,534)
67,639
(31,863)
(5,031)
(524)
(6,300)
(66,759)
(3,593)
(69,158)
592
67,707
Comprehensive (Loss) Income
$
(141,046) $
99,105 $
259,893
See accompanying Notes to Consolidated Financial Statements.
Index
56
John Wiley & Sons, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in thousands
For the Years Ended April 30,
2019
2018
2020
$
(74,287) $
168,263 $
192,186
Operating Activities
Net (Loss) Income
Adjustments to reconcile net income to net cash provided by operating activities:
Impairment of goodwill and intangible assets
Amortization of intangibles
Amortization of product development assets
Depreciation and amortization of technology, property and equipment
Restructuring and related charges
Stock-based compensation expense
Employee retirement plan expense
Royalty advances
Earned royalty advances
Foreign exchange transaction (gains) losses
Other non-cash charges (credits)
Changes in Operating Assets and Liabilities
Accounts receivable, net
Inventories, net
Accounts payable
Accrued royalties
Contract liabilities
Accrued income taxes
Restructuring payments
Other accrued liabilities
Employee retirement plan contributions
Operating lease liabilities
Other
Net Cash Provided by Operating Activities
Investing Activities
Product development spending
Additions to technology, property and equipment
Businesses acquired in purchase transactions, net of cash acquired
Acquisitions of publication rights and other
Net Cash Used in Investing Activities
Financing Activities
Repayments of long-term debt
Borrowings of long-term debt
Payment of debt issuance costs
Purchases of treasury shares
Change in book overdrafts
Cash dividends
Net (payments) proceeds from exercise of stock options and other
Net Cash Provided by (Used in) Financing Activities
Effects of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash
Cash Reconciliation:
Cash and cash equivalents
Restricted cash included in Prepaid expenses and other current assets
Balance at Beginning of Year
Increase/(Decrease) for Year
Cash and cash equivalents
Restricted cash included in Prepaid expenses and other current assets
Balance at End of Year
Cash Paid During the Year for
Interest
Income taxes, net of refunds
Non-cash items:
Non-cash items associated with the acquisition of Learning House:
Warrants to purchase 0.4 million shares of Wiley Class A Common Stock issued in
connection with the Learning House acquisition
$
$
$
202,348
62,436
35,975
76,716
32,607
20,009
10,832
(133,497)
131,398
(2,773)
7,115
(2,962)
(2,714)
1,163
13,425
(118)
(5,962)
(12,563)
(7,817)
(33,729)
(28,243)
(924)
288,435
(26,608)
(88,593)
(229,629)
(1,840)
(346,670)
(630,551)
934,323
(4,006)
(46,589)
(48)
(76,658)
(3,794)
172,677
(4,943)
92,890
658
93,548
109,499
202,464
583
203,047
—
54,658
37,079
69,418
3,118
18,327
5,236
(129,949)
129,125
6,016
(11,136)
(64,734)
3,820
7,369
6,169
29,901
9,613
(15,219)
(32,713)
(40,470)
—
(3,060)
250,831
(24,426)
(77,167)
(190,415)
(9,494)
(301,502)
(476,246)
596,320
—
(59,994)
(5,674)
(75,752)
3,751
(17,595)
(8,443)
169,773
484
170,257
(76,709)
92,890
658
93,548
23,622 $
41,537 $
14,867 $
48,264 $
3,600
48,230
41,432
64,327
28,566
11,244
7,388
(122,602)
116,620
12,819
(29,951)
(14,209)
13,517
16,543
3,664
36,243
(565)
(30,595)
1,022
(27,550)
—
10,393
382,322
(36,503)
(114,225)
—
(26,683)
(177,411)
(467,915)
459,304
—
(39,688)
(4,191)
(73,542)
29,201
(96,831)
3,661
58,516
—
58,516
111,741
169,773
484
170,257
12,221
48,709
— $
565 $
—
Index
See accompanying Notes to Consolidated Financial Statements.
57
John Wiley & Sons, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Dollars in thousands
Common
Stock
Class A
Common
Stock
Class B
Additional
Paid-in
Capital
Retained
Earnings
$ 70,086 $ 13,096 $ 387,896 $ 1,715,423 $
Accumulated
Other
Comprehensi
ve
Treasury
Stock
Loss
(507,287) $ (676,077) $ 1,003,137
Total
Sharehold
er’s
Equity
—
—
(7,646)
(10)
—
7,968
312
—
—
—
—
—
—
15,686
11,184
—
—
—
—
—
—
—
(61,813)
—
—
—
—
13,515
60
(39,688)
29,201
11,244
(39,688)
—
(61,813)
—
—
25
—
(11,729)
—
—
—
— 192,186
$ 70,111 $ 13,071 $ 407,120 $ 1,834,057 $
—
(25)
—
—
67,707
(11,729)
—
259,893
(439,580) $ (694,222) $ 1,190,557
—
—
—
—
—
(8,544)
—
—
—
—
—
—
4,837
18,327
—
3
—
—
—
—
—
—
(63,684)
—
16
—
(16)
—
—
(12,068)
—
—
—
—
—
565
—
—
4,503
—
8,826
285
—
—
—
—
—
—
—
—
(1,086)
—
(59,994)
3,751
18,327
(59,994)
—
(63,684)
—
—
(12,068)
—
—
—
565
4,503
—
— 168,263
$ 70,127 $ 13,055 $ 422,305 $ 1,931,074 $
—
(69,158)
99,105
(508,738) $ (746,476) $ 1,181,347
—
—
—
(10,992)
—
—
—
—
—
—
358
20,009
—
—
—
—
—
—
—
—
(64,264)
—
11,347
355
—
—
—
—
(4,152)
—
(46,589)
(3,794)
20,009
(46,589)
—
(64,264)
—
39
—
(12,394)
—
(74,287)
$ 70,166 $ 13,016 $ 431,680 $ 1,780,129 $
—
(39)
—
—
—
—
—
—
(66,759)
(12,394)
—
—
—
— (141,046)
(575,497) $ (785,870) $ 933,624
Balance at April 30, 2017
Restricted Shares Issued under Stock-
based Compensation Plans
Net Proceeds from Exercise of Stock
Options and Other
Stock-based Compensation Expense
Purchase of Treasury Shares
Class A Common Stock Dividends
($1.28 per share)
Class B Common Stock Dividends
($1.28 per share)
Common Stock Class Conversions
Comprehensive Income, Net of Tax
Balance at April 30, 2018
Restricted Shares Issued under Stock-
based Compensation Plans
Net Proceeds/(Payments) from Exercise
of Stock Options and Other
Stock-based Compensation Expense
Purchase of Treasury Shares
Class A Common Stock Dividends
($1.32 per share)
Class B Common Stock Dividends
($1.32 per share)
Common Stock Class Conversions
Issuance of Warrants Related to
Acquisition of a Business
Adjustment Due to Adoption of New
Revenue Standard
Comprehensive Income (Loss), Net of
Tax
Balance at April 30, 2019
Restricted Shares Issued under Stock-
based Compensation Plans
Net Proceeds/(Payments) from Exercise
of Stock Options and Other
Stock-based Compensation Expense
Purchase of Treasury Shares
Class A Common Stock Dividends
($1.36 per share)
Class B Common Stock Dividends
($1.36 per share)
Common Stock Class Conversions
Comprehensive (Loss), Net of Tax
Balance at April 30, 2020
See accompanying Notes to Consolidated Financial Statements.
Index
58
Note 1 – Description of Business
John Wiley & Sons, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
The Company, founded in 1807, was incorporated in the state of New York on January 15, 1904. Throughout this report, when we
refer to “Wiley,” the “Company,” “we,” “our,” or “us,” we are referring to John Wiley & Sons, Inc. and all of our subsidiaries, except
where the context indicates otherwise.
We are a global research and learning company. Through our Research Publishing & Platforms segment, we provide scientific,
technical, medical, and scholarly journals, as well as related content and services, to academic, corporate, and government libraries,
learned societies, and individual researchers and other professionals. The Academic & Professional Learning segment provides
scientific, professional, and education books in print and digital formats, digital courseware, and test preparation services, to libraries,
corporations, students, professionals, and researchers, as well as learning, development, and assessment services for businesses and
professionals The Education Services segment provides online program management services for higher education institutions and
mthree training, upskilling and talent placement services for professionals and businesses. We have operations primarily located in the
United States (“U.S.”), United Kingdom (“U.K.”), Germany, Russia, Sri Lanka, Canada, Jordan, and France.
Note 2 – Summary of Significant Accounting Policies, Recently Issued, and Recently Adopted Accounting Standards
Summary of Significant Accounting Policies
Basis of Presentation:
Our Consolidated Financial Statements include all of the accounts of the Company and our subsidiaries. We have eliminated all
intercompany transactions and balances in consolidation. All amounts are in thousands, except per share amounts, and approximate
due to rounding.
Reclassifications:
Certain prior year amounts have been reclassified to conform to the current year’s presentation.
During the three months ended January 31, 2020, we identified an immaterial error within our Consolidated Statement of Financial
Position, including the results for the fiscal year ended April 30, 2019. Certain consideration received for services not yet performed,
mainly for our annual subscription licensing revenue agreements, was presented as a reduction to Accounts Receivable, Net, rather
than an increase to Contract Liabilities. The correction increases Accounts Receivable, Net and increases Contract Liabilities by
approximately $11.8 million for the fiscal year ended April 30, 2019. There was no impact on Revenue, Net, Operating Income, Net
Income, Earnings Per Share, or Net Cash Provided by Operating Activities or the Consolidated Statements of Cash Flows.
Management has evaluated all relevant quantitative and qualitative factors and has concluded that the error is not material to the
Consolidated Statement of Financial Position for the previously reported periods. We have revised our accompanying Consolidated
Statement of Financial Position to correct this for the fiscal year ended April 30, 2019 and any related disclosures. This immaterial
error did not impact the April 30, 2020 Consolidated Statement of Financial Position. The current policy for our subscription licensing
agreements is to record accounts receivable when performance occurs and recognize contract liabilities once the invoice is due, or
cash payment is received from the customer.
Use of Estimates:
The preparation of our Consolidated Financial Statements and related disclosures in conformity with U.S. GAAP requires our
management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities as of the date of the financial statements and revenue and expenses during the reporting period. These estimates
include, among other items, sales return reserves, allocation of acquisition purchase price to assets acquired and liabilities assumed,
goodwill and indefinite-lived intangible assets, intangible assets with definite lives and other long-lived assets, and retirement plans.
We review these estimates and assumptions periodically using historical experience and other factors and reflect the effects of any
revisions on the Consolidated Financial Statements in the period we determine any revisions to be necessary. Actual results could
differ from those estimates, which could affect the reported results.
Index
59
Book Overdrafts:
Under our cash management system, a book overdraft balance exists for our primary disbursement accounts. This overdraft represents
uncleared checks in excess of cash balances in individual bank accounts. Our 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, 2020 and 2019, book overdrafts of
$7.4 million, in each year respectively, were included in Accounts Payable on the Consolidated Statements of Financial Position.
Revenue Recognition:
Revenue from contracts with customers is recognized using a five-step model consisting of the following: (1) identify the contract
with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the
transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) we satisfy a performance
obligation. Performance obligations are satisfied when we transfer control of a good or service to a customer, which can occur over
time or at a point in time. The amount of revenue recognized is based on the consideration to which we expect to be entitled in
exchange for those goods or services, including the expected value of variable consideration. The customer’s ability and intent to pay
the transaction price is assessed in determining whether a contract exists with the customer. If collectability of substantially all the
consideration in a contract is not probable, consideration received is not recognized as revenue unless the consideration is
nonrefundable, and we no longer have an obligation to transfer additional goods or services to the customer or collectability becomes
probable.
See Note 3, “Revenue Recognition, Contracts with Customers,” of the Notes to Consolidated Financial Statements for further details
of our revenue recognition policy.
Cash and Cash Equivalents:
Cash and cash equivalents consist of highly liquid investments with an original maturity of three months or less at the time of purchase
and are stated at cost, which approximates market value, because of the short-term maturity of the instruments.
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, net on the
Consolidated Statements of Financial Position and amounted to $18.3 million and $14.3 million as of April 30, 2020 and 2019,
respectively.
Sales Return Reserves:
The process that we use to determine our 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 we do business. We collect, maintain and analyze significant
amounts of sales returns data for large volumes of homogeneous transactions. This allows us to make reasonable estimates of the
amount of future returns. All available data is utilized to identify the returns by market and 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, we also include a related increase to inventory and a reduction to accrued royalties as a result of the expected returns. Print
book sales return reserves amounted to a net liability balance of $19.6 million and $18.5 million as of April 30, 2020 and 2019,
respectively.
The reserves are reflected in the following accounts of the Consolidated Statements of Financial Position – increase (decrease):
Increase in Inventories, net
Decrease in Accrued royalties
Increase in Contract liabilities
Print book sales return reserve net liability balance
2020
2019
8,686 $
(4,441) $
32,769 $
(19,642) $
3,739
(3,653)
25,934
(18,542)
$
$
$
$
Index
60
Inventories:
Inventories are carried at the lower of cost or market. U.S. book inventories aggregating $24.3 million and $21.0 million at April 30,
2020 and 2019, respectively, are valued using the last-in, first-out (LIFO) method. All other inventories are valued using the first-in,
first-out (FIFO) method. Finished Goods not recorded at LIFO have been recorded at the lower of cost or market.
Product Development Assets:
Product development assets consist of book composition costs and other product development costs. Costs associated with developing
a book publication are expensed until the product is determined to be commercially viable. Book composition costs represent the costs
incurred to bring an edited commercial manuscript to publication, which include typesetting, proofreading, design, illustration costs,
and digital formatting. Book composition costs are capitalized and are generally amortized on a double-declining basis over their
estimated useful lives, ranging from 1 to 3 years. Other product development costs represent the costs incurred in developing software,
platforms, and digital content to be sold and licensed to third parties. Other product development costs are capitalized and amortized
on a straight-line basis over their estimated useful lives. As of April 30, 2020, the weighted average estimated useful life of other
product development costs was approximately 6 years.
Royalty Advances:
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 primarily reflected in Operating and Administrative Expenses on the
Consolidated Statements of (Loss) Income. We incurred $28.8 million, $32.7 million, and $33.7 million in shipping and handling
costs in the years ended April 30, 2020, 2019, and 2018, respectively.
Advertising and Marketing Costs:
Advertising and marketing costs are expensed as incurred. We incurred $103.1 million, $89.5 million, and $68.3 million in advertising
and marketing costs in the years ended April 30, 2020, 2019, and 2018, respectively, and these costs are included in Cost of Sales and
Operating and Administrative Expenses on the Consolidated Statements of (Loss) Income.
Advertising and marketing costs of $65.8 million, $53.7 million, and $38.3 million were included in Cost of Sales in the years ended
April 30, 2020, 2019, and 2018, respectively. This includes certain advertising and marketing costs incurred by our Education
Services business to fulfill performance obligations from contracts with educational institutions.
Advertising and marketing costs of $37.3 million, $35.8 million, and $30.0 million were included in Operating and Administrative
Expenses in the years ended April 30, 2020, 2019, and 2018, 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:
Computer Software – 3 to 10 years, Computer Hardware – 3 to 5 years; 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, Fixtures, and Warehouse Equipment – 5 to 10
years.
Costs incurred for computer software internally developed or obtained for internal use are capitalized during the application
development stage and expensed as incurred during the preliminary project and post-implementation stages. Costs incurred during the
application development stage include costs of materials, 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 5 years. Costs related to the investment in our 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.
Index
61
Allocation of Acquisition Purchase Price to Assets Acquired and Liabilities Assumed:
In connection with acquisitions, we allocate 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. The excess of the purchase consideration
over the fair value of assets acquired and liabilities assumed is recorded as goodwill. The determination of the acquisition date fair
value of the assets acquired and liabilities assumed required us to make significant estimates and assumptions, such as projected
revenues and related growth rates, forecasted operating cash flows, customer attrition rates, obsolescence rates of developed
technology, and discount rates. We may use a third-party valuation consultant to assist in the determination of such estimates.
Goodwill and Indefinite-lived Intangible Assets:
Goodwill represents the excess of the aggregate of the following: (1) consideration transferred, (2) the fair value of any noncontrolling
interest in the acquiree, and (3) if the business combination is achieved in stages, the acquisition-date fair value of our previously held
equity interest in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities
assumed.
Indefinite-lived intangible assets primarily consist of brands and trademarks, 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.
We use the acquisition method of accounting for all business combinations and do not amortize goodwill or intangible assets with
indefinite useful lives. Goodwill and intangible assets with indefinite useful lives are tested for possible impairment annually during
the fourth quarter of each fiscal year, or more frequently if events or changes in circumstances indicate that the asset might be
impaired.
Intangible Assets with Definite Lives and Other Long-Lived Assets:
Definite-lived intangible assets principally consist of content and publishing rights, customer relationships, brands and trademarks,
developed technology 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 and developed technology acquired combined with the strength and pattern of projected cash flows.
Intangible assets with definite lives as of April 30, 2020, are amortized on a straight line basis over the following weighted average
estimated useful lives: content and publishing rights – 34 years, customer relationships – 16 years, brands and trademarks – 13 years,
developed technology – 7 years, and non-compete agreements – 5 years.
Assets with definite lives are 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:
From time to time, we enter into foreign exchange forward 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. We do not use financial instruments for trading or speculative
purposes.
Foreign Currency Gains/Losses:
We maintain 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 expenses are translated into U.S. dollars using weighted average rates. Our 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. Foreign currency transaction gains or losses are
recognized on the Consolidated Statements of (Loss) Income as incurred.
Index
62
Stock-Based Compensation:
We recognize stock-based compensation expense based on the fair value of the stock-based awards on the grant date, reduced by an
estimate for future forfeited awards. As such, stock-based compensation expense is only recognized for those awards that are expected
to ultimately vest. The fair value of stock-based awards is recognized in net income generally 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 include the expected life of an option, the expected volatility of our
common stock over the estimated life of the option, a risk-free interest rate, and the expected dividend yield. Judgment was also
required in estimating the amount of stock-based awards that may be forfeited. Stock-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, our stock-
based compensation expense and Consolidated Statements of (Loss) Income could be impacted.
Recently Adopted Accounting Standards
Revenue from Contracts with Customers
In May 2014, the FASB issued ASU 2014-09 which requires entities to recognize revenues when control of the promised goods or
services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in
exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of
revenue and cash flows arising from contracts with customers. We adopted ASU 2014-09, and all related amendments, which
established ASC Topic 606 (the "new revenue standard"), effective as of May 1, 2018, using the modified retrospective method. The
adoption of the new revenue standard did not have a material impact to our consolidated revenues, financial position, or results of
operations. Upon adoption, we recorded an immaterial net increase to opening retained earnings resulting from the change in timing of
when certain components of our revenue are recognized as required under the new revenue standard as compared to historical policies.
The impact of the adoption of the new revenue standard was not material to our Consolidated Statements of (Loss) Income for the year
ended April 30, 2019; therefore, we have omitted the disclosure that summarizes the effect of the revenue recognition standard by line
item on our Consolidated Statements of (Loss) Income.
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income
In February 2018, the FASB issued ASU 2018-02 “Income Statement—Reporting Comprehensive Income (Topic 220):
Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which allows a reclassification from
accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. We
adopted ASU 2018-02 on May 1, 2019. We did not elect to reclassify the income tax effects from comprehensive income to retained
earnings for the stranded tax effects resulting from the Tax Cuts and Jobs Act. Our policy for releasing the income tax effects from
accumulated other comprehensive income is to release when the corresponding pretax accumulated other comprehensive income items
are reclassified to earnings.
Targeted Improvements to Accounting for Hedging Activities
In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for
Hedging Activities,” to simplify and improve the application and financial reporting of hedge accounting. Subsequently, in November
2018, the FASB issued ASU 2018-16, “Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate
(SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes”. ASU 2017-12 eases the
requirements for measuring and reporting hedge ineffectiveness and clarifies that changes in the fair value of hedging instruments for
cash flow, net investment, and fair value hedges should be reflected in the same income statement line item as the earnings effect of
the hedged item. The guidance also permits entities to designate specific components in cash flow and interest rate hedges as the
hedged risk, instead of using total cash flows. ASU 2018-16 allows the use of the OIS rate based on the SOFR as a U.S. benchmark
interest rate for hedge accounting purposes. We adopted ASU 2017-12, 2018-06 and 2019-04, for those portions related to ASU 2017-
02, on May 1, 2019 and there was no impact to our consolidated financial statements at the date of adoption.
Index
63
Leases
In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)”. Subsequently, the FASB issued in March 2019, ASU 2019-
01, “Leases (Topic 842): Codification Improvements”, in December 2018 ASU 2018-20, “Leases (Topic 842): Narrow Scope
Improvements for Lessors”, and in July 2018 the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements” and
ASU 2018-10, “Codification Improvements to Topic 842, Leases”. ASU 2016-02 requires an entity to recognize a right-of-use asset
(“ROU”) and lease liability for all leases with terms of more than 12 months and provide enhanced disclosures. Recognition,
measurement, and presentation of expenses depends on classification as a finance or operating lease. Similar modifications have been
made to lessor accounting in-line with revenue recognition guidance.
The new standard provides a number of optional practical expedients in transition. We elected the practical expedients to forgo a
reassessment of (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or
existing leases, and (3) initial direct costs. We did not elect the practical expedient allowing the use-of-hindsight which would have
required us to reassess the lease term of our leases based on all facts and circumstances through the effective date. In addition, we did
not elect the practical expedient pertaining to land easements.
In addition, the new standard provides as a practical expedient, certain policy elections for ongoing lease accounting which we elected
at the date of adoption and included the following, (i) to not separate nonlease components from the associated lease component if
certain conditions are met, and (ii) to not recognize ROU assets and lease liabilities for leases that qualify as short-term.
A modified retrospective transition approach was required, applying the standard to all leases existing at the date of initial application.
A company could choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the
financial statements as of its date of initial application. We adopted the new standard on May 1, 2019 and used the effective date as the
date of initial application. Accordingly, previously reported financial information was not updated, and the disclosures required under
the new standard will not be provided for dates and periods before May 1, 2019.
At adoption, we recognized operating lease liabilities of $178 million based on the present value of the remaining minimum rental
payments for existing operating leases and ROU assets of $142 million on our Consolidated Statement of Financial Position. The
difference between the ROU assets and operating lease liabilities represents the existing deferred rent liabilities, prepaid rent balances,
and applicable restructuring liabilities, which were reclassified upon adoption to reduce the measurement of the ROU assets. The
adoption of the standard did not have an impact on our Consolidated Statement of Shareholders’ Equity, Consolidated Statement of
(Loss) Income or Consolidated Statement of Cash Flow. See Note 12, “Operating Leases”, for further details on our operating leases.
Simplifying the Test for Goodwill Impairment
In January 2017, the FASB issued ASU 2017-04, “Intangibles–Goodwill and Other (Topic 350): “Simplifying the Test for Goodwill
Impairment”, which simplifies the measurement of a potential goodwill impairment charge by eliminating the requirement to calculate
an implied fair value of the goodwill based on the fair value of a reporting unit’s other assets and liabilities. The new guidance
eliminates the implied fair value method and instead measures a potential impairment charge based on the excess of a reporting unit’s
carrying value compared to its fair value. The impairment charge cannot exceed the total amount of goodwill allocated to that
reporting unit. The standard is effective for us on May 1, 2020, with early adoption permitted. We early adopted ASU 2017-04 during
the three months ended April 30, 2020. See Note 11, “Goodwill and Intangible Assets,” for further details on the impairment charges
we recorded during the three months ended April 30, 2020.
Recently Issued Accounting Standards
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate
Reform on Financial Reporting.” This ASU provides optional guidance for a limited period of time to ease the burden in accounting
for (or recognizing the effects of) reference rate reform on financial reporting. This would apply to companies meeting certain criteria
that have contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be
discontinued because of reference rate reform. This standard is effective for us as of March 12, 2020 through December 31, 2022. We
are currently assessing the impact the new guidance will have on our consolidated financial statements.
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Simplifying the Accounting for Income Taxes
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This
ASU is intended to simplify various aspects related to accounting for income taxes, eliminates certain exceptions within Topic 740,
“Income Taxes” and clarifies certain aspects of the current guidance to promote consistent application. The standard is effective for
us on May 1, 2021, and early adoption is permitted in any interim period for which financial statements have not yet been issued. We
are currently assessing the impact the new guidance will have on our consolidated financial statements.
Intangibles-Goodwill and Other-Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud
Computing Arrangement That is a Service Contract
In August 2018, the FASB issued ASU 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):
Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.” ASU
2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with
the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective
for us on May 1, 2020, and interim periods within that fiscal year, with early adoption permitted. This ASU may be applied either
retrospectively or prospectively to all implementation costs incurred after the date of adoption. We will adopt the new standard on
May 1, 2020 prospectively to all implementation costs that will be incurred on or after the date of adoption. The impact will be based
on future implementation costs for cloud computing arrangements, which we currently do not expect to have a material impact on our
consolidated financial statements and related disclosures.
Changes to the Disclosure Requirements for Defined Benefit Plans
In August 2018, the FASB issued ASU 2018-14, “Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-
20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans.” ASU 2018-14 removes certain
disclosures that are not considered cost beneficial, clarifies certain required disclosures and added additional disclosures. The standard
is effective for us on May 1, 2021, with early adoption permitted. The amendments in ASU 2018-14 would need to be applied on a
retrospective basis. We are currently assessing the impact the new guidance will have on our disclosures.
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the
Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 removes, modifies and added disclosures. The standard is
effective for us on May 1, 2020, with early adoption permitted. Certain disclosures in ASU 2018-13 would need to be applied on a
retrospective basis and others on a prospective basis. We will adopt the new standard on May 1, 2020. We do not believe that the
adoption of ASU 2018-13 will have an impact on our consolidated financial statements with the exception of new and expanded
disclosures.
Measurement of Credit Losses on Financial Instruments
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on
Financial Instruments.” Subsequently, in May 2019, the FASB issued ASU 2019-05 - "Financial Instruments—Credit Losses (Topic
326): Targeted Transition Relief”, in April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial
Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,” in November 2018, the
FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” in November 2019, the
FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” and in February 2020,
the FASB issued ASU 2020-02, “Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842)—Amendments to SEC
Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting
Standards Update No. 2016-02, Leases (Topic 842) (SEC Update)”. ASU 2016-13 requires entities to measure all expected credit
losses for most financial assets held at the reporting date based on an expected loss model which includes historical experience,
current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their
credit loss estimates. ASU 2016-13 also requires enhanced disclosures to help financial statement users better understand significant
estimates and judgments used in estimating credit losses. ASU 2016-13, ASU 2019-05, ASU 2019-04, ASU 2018-19, ASU 2019-11
and ASU 2020-02 are effective for us on May 1, 2020, including interim periods within those fiscal periods, with early adoption
permitted.
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We will adopt the new standard on May 1, 2020. Based on financial instruments currently held by us, the adoption of ASU 2016-13
will primarily impact our trade receivables, specifically our allowance for doubtful accounts. We haven’t completed our analysis,
however, due to the historical, current and expected credit quality of our customers, we do not expect the adoption of ASU 2016-13 to
have a material impact on our consolidated financial results.
Note 3 — Revenue Recognition, Contracts with Customers
Disaggregation of Revenue
The following tables present our revenue from contracts with customers disaggregated by segment and product type.
Research Publishing & Platforms:
Research Publishing
Research Platforms
Total Research Publishing & Platforms
Academic & Professional Learning:
Education Publishing
Professional Learning
Total Academic & Professional Learning
Education Services:
Education Services
mthree
Total Education Services
Total Revenue
Description of Revenue Generating Activities
2020
Years Ended April 30,
2019
2018
908,952 $
39,887
948,839
903,249 $
35,968
939,217
352,188
298,601
650,789
372,018
331,285
703,303
903,950
32,907
936,857
401,607
338,508
740,115
214,376
17,479
231,855
1,831,483 $
157,549
—
157,549
1,800,069 $
119,131
—
119,131
1,796,103
$
$
Refer to Part I, Item 1, “Business” for a description of our business and our reportable segments.
Research Publishing & Platforms Segment
Research Publishing & Platforms revenue by product type are Research Publishing and Research Platforms.
Research Publishing
Research Publishing generates the majority of its revenue from contracts with its customers for the following revenue streams:
Journal Subscriptions;
Licensing, Reprints, Backfiles and Other; and
Open Access and Comprehensive Agreements.
Journal Subscriptions
Journal subscription contracts are negotiated by us directly with customers or their subscription agents. Subscription periods typically
cover calendar years. In a typical journal subscription sale, there is a written agreement between us and our customer that cover
multiple years. However, we typically account for these agreements as one-year contracts because our enforceable rights under the
agreements are subject to an annual confirmation and negotiation process with the customer.
In journal subscriptions, there are generally two performance obligations; a functional intellectual property license with a stand-ready
promise to provide access to new content for one year, which includes online hosting of the content; and a functional intellectual
property perpetual license for access to historical journal content, which also includes online hosting of the content. The transaction
price consists of fixed consideration. Subscription revenue is generally collected in advance.
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We allocate revenue to the stand-ready promise to provide access to new content for one year based on its observable standalone
selling price which is generally the contractually stated price and the revenue for new content is recognized over one year as we have a
continuous stand-ready obligation to provide the right of access to additional intellectual property. The allocation of revenue to the
perpetual licenses for access to historical journal content is done using the expected cost plus a margin approach as permitted by the
revenue standard. Revenue is recognized at the point in time when access to historical content is initially granted.
Licensing, Reprints, Backfiles and Other
Within licensing, the revenue derived from these contracts is primarily comprised of advance payments, including minimum
guarantees and sales- or usage-based royalty agreements. Our intellectual property is considered to be functional intellectual property.
Due to the stand-ready promise to provide updates during the subscription period, which is generally an annual period, revenue for the
minimum guarantee is recognized on a straight-line basis over the term of the agreement. For our sales-or usage-based royalty
agreements, we recognize revenue in the period of usage based on the amounts earned. We record revenue under these arrangements
for the amounts due and not yet reported to us based on estimates of the sales or usage of these customers and pursuant to the terms of
the contracts. We also have certain licenses whereby we receive a non-refundable minimum guarantee against a volume-based royalty
throughout the term of the agreement. We recognize volume-based royalty income only when cumulative consideration exceeds the
minimum guarantee.
Reprints contracts generally contain a single performance obligation which is the delivery of printed articles. Revenue is recognized at
the time of delivery of the printed articles.
For Backfiles, the performance obligation is the granting of a functional intellectual property license. Revenue is recognized at the
time the functional intellectual property license is granted.
Other includes our Article Select offering, whereby we have a single performance obligation to our customers to give access to an
article through the purchase of a token. The customer redeems the token for access to the article for a 24-hour period. The customer
purchases the tokens with an upfront cash payment. Revenue is recognized when access to the article is provided.
Open Access and Comprehensive Agreements
Under the Author-Funded Access model, we have a signed contract with the customer that contains enforceable rights. The Author-
Funded Access model in a typical model includes an over-time single performance obligation that combines a promise to host the
customer’s content on our open access platform, and a promise to provide an APC at a discount to eligible users who are defined in
the contract, in exchange for an upfront payment. Enforceable right to payment occurs over time as we fulfill our obligation to provide
a discount to eligible users, as defined, on future APCs. Therefore, the upfront payment is recorded as a contract liability and revenue
is recognized over time.
In January 2019, Wiley announced a new contractual arrangement in support of Open Access, a countrywide partnership agreement
with Projekt DEAL, a representative of nearly 700 academic institutions in Germany. This transformative three-year agreement
provides all Projekt DEAL institutions with access to read Wiley’s academic journals back to the year 1997, and researchers at Projekt
DEAL institutions can publish articles open access in Wiley’s journals. The partnership will better support institutions and researchers
in advancing open science, driving discovery, and developing and disseminating knowledge. Projekt DEAL includes multiple
performance obligations, which include a stand-ready promise to provide access to new content, perpetual license for access to
historical journal content and accepting articles to be hosted on our open access platform. We are compensated primarily through a fee
per article published and a consolidated access fee. The consideration for Projekt DEAL consists of fixed and variable consideration.
We allocated the total consideration to the fixed and variable components based on stand-alone selling prices for each performance
obligation.
Research Platforms
Atypon contracts typically include a single performance obligation for the implementation and hosting subscription services. The
transaction price is fixed which may include price escalators that are fixed increases per year, and therefore, revenue is recognized
upon the initiation of the subscription period and straight-lined over the contract period. The duration of these contracts is generally
multi-year ranging from 2-5 years.
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Academic & Professional Learning
Academic & Professional Learning revenue by product type are Education Publishing and Professional Learning.
Education Publishing
Education Publishing generates the majority of its revenue from contracts with its customers for the following revenue streams:
Education and STM Publishing;
Digital Courseware;
Test Preparation and Certification; and
Licensing and Other
Education Publishing and STM (Scientific, Technical and Medical) Publishing within Education Publishing and Professional
Publishing within Professional Learning product type below
Our performance obligations as it relates to Education, STM and Professional Publishing are primarily book products delivered in
both print and digital form which could include a single or multiple performance obligations based on the number of print or digital
books purchased which are represented by an International Standard Book Number (“ISBN’s”), with each ISBN representing a
performance obligation. Each ISBN has an observable stand-alone selling price since Wiley sells the books separately.
This revenue stream also includes variable consideration as it relates to discounts and returns for both print and digital books.
Discounts are identifiable by performance obligation and therefore are applied at the point of sale by performance obligation. The
process that we use to determine our 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 we do business. We collect, maintain and analyze significant
amounts of sales returns data for large volumes of homogeneous transactions. This allows us to make reasonable estimates of the
amount of future returns. All available data is utilized to identify the returns by market and 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, we also include a related reduction in inventory and royalty costs as a result of the expected returns.
As it relates to print and digital books within the Education, STM, and Professional Publishing, revenue is recognized at the point
when control of product transfers, which for print is upon shipment or for digital when fulfillment of the products has been rendered.
Digital Courseware
Courseware customers purchase access codes to utilize the product. This could include a single or multiple performance obligations
based on the number of course ISBN’s purchased. Revenue is recognized when the access codes are activated and then over the
applicable semester term such product relates to.
Test Preparation and Certification
Test Preparation and Certification contracts are generally three-year agreements. This revenue stream includes multiple performance
obligations as it relates to the on-line and printed course materials, including such items as textbooks, e-books, video lectures,
flashcards, study guides and test banks. The transaction price is fixed; however, discounts are offered and returns of certain products
are allowed. We allocate revenue to each performance obligation based on its standalone selling price. Depending on the performance
obligation, revenue is recognized at the time the product is delivered and control has passed to the customer or over time due to our
stand-ready obligation to provide updates to the customer.
Licensing and Other
Revenue derived from our licensing contracts is primarily comprised of advance payments and sales- or usage-based royalties.
Revenue for advance payments is recognized at the point in time that the functional intellectual property license is granted. For sales-
or usage- based royalties, we record revenue under these arrangements for the amounts due and not yet reported to us based on
estimates of the sales or usage of these customers and pursuant to the terms of the contracts.
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Professional Learning
Professional Learning generates the majority of its revenue from contracts with its customers for the following revenue streams:
Professional Publishing, which is described above;
Licensing and Other, which is described above;
Corporate Training - Professional Assessment; and
Corporate Training - Corporate Learning
Corporate Training - Professional Assessment
Professional Assessment through our authorized distributor network includes multiple performance obligations. This includes a
performance obligation that includes an annual membership which includes the right to purchase products and services, access to the
platform, support and training. This performance obligation is recognized over time since we have an obligation to stand-ready for the
customer’s use of the services. In addition, there are performance obligations for the assessments and related products or services
which are recognized at a point in time when the assessment, product or service is provided or delivered. The transaction price is
allocated to each performance obligation based on its observable standalone selling price.
In addition, as it relates to Professional Assessment customers’ unexercised rights for situations where we have received a
nonrefundable payment for a customer to receive an assessment and the customer is not expected to exercise such right, we will
recognize such “breakage” amounts as revenue in proportion to the pattern of rights exercised by the customer which is generally one
year.
Corporate Training - Corporate Learning
The transaction price consists of fixed consideration that is determined at the beginning of each year and received at the same time.
Within Corporate Learning there are multiple performance obligations which includes the licenses to learning content and the learning
application. Revenue is recognized over time as we have a continuous obligation to provide the right of access to the intellectual
property which includes the licenses and learning applications.
Education Services
Education Services revenue by product type are Education Services and mthree.
Education Services
Revenue is primarily derived from pre-negotiated contracts with institutions that provide for a share of tuition generated from students
who enroll in a program. The duration of Education Services contracts are generally multi-year agreements ranging from a period of
7-10 years, with some having optional renewal periods. These optional renewal periods are not a material right and are not considered
a separate performance obligation.
Education Services includes a single performance obligation for the services provided because of the integrated technology and
services our institutional clients need to attract, enroll, educate and support students. Consideration is variable since it is based on the
number of students enrolled in a program. We begin to recognize revenue at the start of the delivery of the class within a semester,
which is also when the variable consideration contingency is resolved.
mthree
mthree includes a performance obligation for the services provided which is recognized over the period of time the services are
provided to its customers.
Accounts Receivable, net and Contract Liability Balances
When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services
to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue when, or as,
control of the products or services are transferred to the customer and all revenue recognition criteria have been met.
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The following table provides information about receivables and contract liabilities from contracts with customers.
Balances from contracts with customers:
Accounts receivable, net
Contract liabilities (1)
Contract liabilities (included in Other Long-Term Liabilities)
April 30,
2020
April 30,
2019
Increase/
(Decrease)
$
$
309,384 $
520,214
14,949 $
306,631 $
519,129
10,722 $
2,753
1,085
4,227
(1) The sales return reserve recorded in Contract Liabilities is $32.8 million and $25.9 million as of April 30, 2020 and April 30,
2019, respectively.
For the year ended April 30, 2020, we estimate that we recognized as revenue substantially all of the current contract liability at April
30, 2019.
The increase to contract liabilities in fiscal year 2020 was primarily driven by renewals of journal subscription agreements, as well as
open access and comprehensive agreements, partially offset by revenue earned on journal subscriptions and open access and
comprehensive agreements and the negative impact of foreign exchange. The acquisitions during the year ended April 30, 2020 did
not have a material impact on the change in our contract liability balances during fiscal year 2020.
Remaining Performance Obligations included in Contract Liability
As of April 30, 2020, the aggregate amount of the transaction price allocated to the remaining performance obligations is
approximately $535.2 million, which included the sales return reserve of $32.8 million. Excluding the sales return reserve, we expect
that approximately $487.5 million will be recognized in the next twelve months with the remaining $14.9 million to be recognized
thereafter.
Assets Recognized for the Costs to Fulfill a Contract
Costs to fulfill a contract are directly related to a contract that will be used to satisfy a performance obligation in the future and are
expected to be recovered. These costs are amortized on a systematic basis that is consistent with the transfer to the customer of the
goods or services to which the asset relates. These types of costs are incurred in the following revenue streams, (1) Research Platforms
and (2) Education Services.
Our assets associated with incremental costs to fulfill a contract were $11.5 million and $8.9 million at April 30, 2020 and 2019,
respectively, and are included within Other Non-Current Assets on our Consolidated Statements of Financial Position. We recorded
amortization expense of $4.2 million and $2.6 million during the years ended April 30, 2020 and 2019, respectively, related to these
assets within Cost of Sales on the Consolidated Statements of (Loss) Income.
Sales and value-added taxes are excluded from revenues. Shipping and handling costs, which are primarily incurred within the
Academic & Professional Learning segment, occur before the transfer of control of the related goods. Therefore, in accordance with
the revenue standard, it is not considered a promised service to the customer and would be considered a cost to fulfill our promise to
transfer the goods. Costs incurred for third party shipping and handling are primarily reflected in Operating and Administrative
Expenses on the Consolidated Statements of (Loss) Income. We incurred $28.8 million, $32.7 million, and $33.7 million in shipping
and handling costs in the years ended April 30, 2020, 2019 and 2018 respectively.
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Note 4 – Acquisitions
Fiscal Year 2020
Pro forma financial information related to these acquisitions has not been provided as it is not material to our consolidated results of
operations.
mthree
On January 1, 2020, we completed the acquisition of 100% of the outstanding stock of mthree. mthree is a rapidly growing education
services provider that addresses the IT skills gap by finding, training and placing job-ready technology talent in roles with leading
corporations worldwide. Its results of operations are included in our Education Services segment.
The preliminary fair value of the consideration transferred at the acquisition date was $128.6 million (£97.5 million) which included
$122.2 million of cash and $6.4 million of additional consideration to be paid after the acquisition date. We financed the payment of
the cash consideration primarily through borrowings under our Amended and Restated RCA (as defined below in Note 14, “Debt and
Available Credit Facilities”) and using cash on hand. The fair value of the cash consideration transferred including those amounts paid
after the acquisition date, net of $2.2 million of cash acquired was approximately $126.4 million.
At the time of the acquisition, Wiley entered into agreements with certain employees of mthree who will remain employees after the
acquisition. Cash payments will be made based on reaching certain revenue and EBITDA targets in each year over a four-year period.
Such payments are subject to continuing employment and would therefore be considered compensation expense for services provided
subsequent to the acquisition. Such expense would be recognized when it becomes probable that the targets will be achieved.
The mthree acquisition was accounted for using the acquisition method of accounting. The excess purchase price over identifiable net
tangible and intangible assets has been recorded to Goodwill in our Consolidated Statements of Financial Position as of April 30,
2020. The fair value assessed for the majority of the tangible assets acquired and liabilities assumed equaled their carrying value.
Goodwill represents synergies and economies of scale expected from the combination of services. We recorded the preliminary fair
value of the assets acquired and liabilities assumed on the acquisition date. None of the goodwill will be deductible for tax purposes.
The acquisition related costs to acquire mthree were expensed when incurred and were approximately $1.3 million. Such costs were
primarily allocated to the Education Services segment and are reflected in Operating and Administrative Expenses on the
Consolidated Statements of (Loss) Income in the year ended April 30, 2020.
mthree’s revenue and operating loss included in our Education Services segment results for the year ended April 30, 2020 was $17.5
million and $1.7 million, respectively.
The following table summarizes the preliminary consideration transferred to acquire mthree and the preliminary allocation of the
purchase price among the assets acquired and liabilities assumed.
Total cash consideration transferred
Assets:
Current Assets
Technology, Property and Equipment, net
Intangible Assets, net
Goodwill
Operating Lease Right-of-Use Assets
Total Assets
Liabilities:
Current Liabilities
Deferred Income Tax Liabilities
Operating Lease Liabilities
Other Long-Term Liabilities
Total Liabilities
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Preliminary
Allocation
122,242
8,750
484
56,836
82,561
3,710
152,341
14,380
12,722
2,692
305
30,099
$
$
$
The following table summarizes the identifiable intangible assets acquired and their weighted-average useful life at the date of
acquisition.
Customer Relationships
Trademarks
Content
Total
Weighted-
Average
Useful Life
(in Years)
12
10
4
Estimated
Fair Value
$
$
48,792
6,725
1,319
56,836
The allocation of the total consideration transferred to the assets acquired and the liabilities assumed is preliminary, and could be
revised as a result of additional information obtained due to the finalization of the third-party valuation report, leases and related
commitments, tax related matters and contingencies and certain assets and liabilities, including receivables and payables, but such
amounts will be finalized within the measurement period, which will not exceed one year from the acquisition date.
Zyante Inc.
On July 1, 2019, we completed the acquisition of Zyante Inc. (“zyBooks”), a leading provider of computer science and STEM
education courseware. The results of operations of zyBooks is included in our Academic & Professional Learning segment results.
The fair value of the consideration transferred at the acquisition date was $57.1 million which included $55.9 million of cash and $1.2
million of additional consideration to be paid after the acquisition date, inclusive of purchase price adjustments which were finalized
in the three months ended January 31, 2020. The fair value of the cash consideration transferred including those amounts paid after the
acquisition date, net of $1.8 million of cash acquired was approximately $54.7 million.
The zyBooks acquisition was accounted for using the acquisition method of accounting. The excess purchase price over identifiable
net tangible and intangible assets has been recorded to Goodwill in our Consolidated Statements of Financial Position as of April 30,
2020. The fair value assessed for the majority of the tangible assets acquired and liabilities assumed equaled their carrying value.
Goodwill represents synergies and economies of scale expected from the combination of services. Goodwill has been allocated to the
Academic & Professional Learning segment. None of the goodwill will be deductible for tax purposes. zyBooks revenue included in
our Academic & Professional Learning segment results for the year ended April 30, 2020 was $13.5 million.
The following table summarizes the consideration transferred to acquire zyBooks and the allocation of the purchase price among the
assets acquired and liabilities assumed.
Final
Allocation
55,939
2,280
28
24,500
36,903
63,711
2,581
5,191
7,772
$
$
$
Total cash consideration transferred
Assets:
Current Assets
Technology, Property and Equipment, net
Intangible Assets, net
Goodwill
Total Assets
Liabilities:
Current Liabilities
Deferred Income Tax Liabilities
Total Liabilities
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The following table summarizes the identifiable intangible assets acquired and their weighted-average useful life at the date of
acquisition.
Developed Technology
Customer Relationships
Content
Trademarks
Total
Weighted-
Average
Useful Life
(in Years)
7
10
10
10
Fair Value
10,400
6,800
4,400
2,900
24,500
$
$
The allocation of the consideration transferred to the assets acquired and the liabilities assumed is final.
Other Acquisitions
The preliminary fair value of cash consideration transferred during the year ended April 30, 2020 for all other acquisitions was
approximately $48.5 million. These other acquisitions were accounted for using the acquisition method of accounting as of their
respective acquisition dates. The excess purchase price over identifiable net tangible and intangible assets of $27.9 million has been
recorded to Goodwill in our Consolidated Statement of Financial Position as of April 30, 2020, and $27.7 million of intangible assets
subject to amortization have been recorded, including customer relationships, developed technology and content that are being
amortized over estimated weighted average useful lives of 8, 5 and 10, respectively. The fair value assessed for the majority of the
tangible assets acquired and liabilities assumed equaled their carrying value. Goodwill represents synergies and economies of scale
expected from the combination of services. Goodwill of $8.5 million has been allocated to the Academic & Professional Learning
segment, and $19.4 million has been allocated to the Research Publishing & Platforms segment. The revenue for the year ended April
30, 2020 related to these other acquisitions was approximately $9.7 million.
On April 1, 2020, we completed the acquisition of Bio-Rad Laboratories Inc.’s Informatics products including the company’s
spectroscopy software and spectral databases (“Informatics”). The results of Informatics are included in our Research Publishing &
Platforms segment results.
On March 2, 2020, we completed the acquisition of Madgex Holdings Limited (“Madgex”), a market-leading provider of advanced
job board software and career center services. The results of Madgex are included in our Research Publishing & Platforms segment
results.
The allocation of the total consideration transferred to the assets acquired and the liabilities assumed for Informatics and Madgex is
preliminary, and could be revised as a result of additional information obtained due to the finalization of the third-party valuation
report, leases and related commitments, tax related matters and contingencies and certain assets and liabilities, including receivables
and payables, but such amounts will be finalized within the measurement period, which will not exceed one year from the acquisition
dates.
On May 31, 2019, we completed the acquisition of certain assets of Knewton, Inc. (“Knewton”). Knewton is a provider of affordable
courseware and adaptive learning technology. The results of Knewton are included in our Academic & Professional Learning segment
results. The allocation of the consideration transferred to the assets acquired and the liabilities assumed for Knewton is final.
We also completed the acquisition of two immaterial businesses, which are included in our Research Publishing & Platforms segment,
one immaterial business included in our Academic & Professional Learning segment results and one immaterial business in our
Education Services business.
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Fiscal Year 2019
The Learning House, Inc.
On November 1, 2018, we completed the acquisition of 100% of the outstanding stock of The Learning House, Inc. (“Learning
House”) a diversified education services provider. The results of operations of Learning House are included in our Education Services
segment. Headquartered in Louisville, KY, Learning House provides online program management services including graduate and
undergraduate programs; short courses, boot camps, and other skills training and credentialing for students and professionals; pathway
services for international students; professional development services for teachers; and learning solutions for corporate clients. The
combination of Learning House and Wiley Education Services creates a leading provider of tech-enabled education services for
colleges and universities.
The fair value of the consideration transferred was $201.3 million which included $200.7 million of cash and $0.6 million of warrants,
inclusive of purchase price adjustments which were finalized in the three months ended April 30, 2019. We financed the payment of
the cash consideration through borrowings under our RCA (as defined below in Note 14, “Debt and Available Credit Facilities”). The
warrants were classified as equity and allow the holder to purchase 400,000 shares of our Class A Common Stock at an exercise price
of $90.00, subject to adjustments. The term of the warrants is three years, expiring on November 1, 2021. The fair value of the
warrants was determined using the Black-Scholes option pricing model. The final fair value of the cash consideration transferred, net
of $10.3 million of cash acquired was $190.4 million.
The transaction was accounted for using the acquisition method of accounting. We recorded the fair value of the assets acquired and
liabilities assumed on the acquisition date, all of which are included in the Education Services segment. None of the goodwill is
deductible for tax purposes. The allocation of the consideration transferred to the assets acquired and the liabilities assumed is final.
The following table summarizes the consideration transferred to acquire Learning House and the allocation of the purchase price
among the assets acquired and the liabilities assumed.
Total consideration transferred
Assets:
Current Assets
Technology, Property and Equipment, net
Intangible Assets, net
Goodwill
Other Non-Current Assets
Total Assets
Liabilities:
Current Liabilities
Deferred Income Tax Liabilities
Other Long-Term Liabilities
Total Liabilities
Final Allocation
$
201,274
20,353
343
109,548
110,966
5,025
246,235
16,999
26,778
1,184
44,961
$
$
The following table summarizes the identifiable intangible assets acquired and their weighted-average useful life at the date of
acquisition.
Customer Relationships
Course Content
Total
Weighted-
Average
Useful Life
(in Years)
15
4
Fair Value
$
$
103,850
5,698
109,548
Learning House’s revenue and operating loss included in our Education Services segment results for the year ended April 30, 2019
was $31.5 million and $8.0 million, respectively.
Pro forma financial information related to this acquisition has not been provided as it is not material to our consolidated results of
operations.
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Note 5 – 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:
Weighted average shares outstanding
Less: Unvested restricted shares
Shares used for basic (loss) earnings per share
Dilutive effect of stock options and other stock awards
Shares used for diluted (loss) earnings per share
2020
2019
2018
56,224
(15)
56,209
—
56,209
57,240
(48)
57,192
648
57,840
57,181
(138)
57,043
845
57,888
In calculating diluted net loss per common share for the year ended April 30, 2020, our diluted weighted average number of common
shares outstanding excludes the effect of unvested restricted stock units and other stock awards as the effect was anti-dilutive. This
occurs when a U.S. GAAP net loss is reported and the effect of using dilutive shares is antidilutive.
Since their inclusion in the calculation of diluted (loss) earnings per share would have been anti-dilutive, options to purchase 286,064,
260,984 and 244,590 shares of Class A Common Stock have been excluded for the years ended April 30, 2020, 2019 and 2018,
respectively.
There were 519,524, none, and 26,740 restricted shares excluded in the calculation of diluted (loss) earnings per share for the years
ended April 30, 2020, 2019 and 2018 as their inclusion would have been anti-dilutive.
Warrants to purchase 523,529 and 242,402 shares of Class A Common Stock have been excluded in the calculation of diluted (loss)
earnings per share for the years ended April 30, 2020 and 2019 as their inclusion would have been anti-dilutive. There were no
warrants issued during the year ended April 30, 2018.
Note 6 – Accumulated Other Comprehensive Loss
Changes in Accumulated Other Comprehensive Loss by component, net of tax, for the years ended April 30, 2020, 2019, and 2018
were as follows:
Balance at April 30, 2017
Other comprehensive income (loss) before reclassifications
Amounts reclassified from Accumulated Other Comprehensive Loss
Total other comprehensive income (loss)
Balance at April 30, 2018
Other comprehensive (loss) income before reclassifications
Amounts reclassified from Accumulated Other Comprehensive Loss
Total other comprehensive (loss) income
Balance at April 30, 2019
Other comprehensive (loss) before reclassifications
Amounts reclassified from Accumulated Other Comprehensive Loss
Total other comprehensive loss
Balance at April 30, 2020
Foreign
Currency
Translation
$
Unamortized
Retirement
Costs
(190,502) $
(4,979)
4,455
(524)
(191,026) $
(9,422)
4,391
(5,031)
(196,057) $
(36,965)
5,102
(31,863)
(227,920) $
(319,212) $
67,639
—
67,639
(251,573) $
(60,534)
—
(60,534)
(312,107) $
(28,596)
—
(28,596)
(340,703) $
$
$
$
Interest
Rate Swaps Total
2,427 $ (507,287)
64,399
1,739
3,308
(1,147)
67,707
592
3,019 $ (439,580)
(68,835)
1,121
(4,714)
(323)
(69,158)
(3,593)
(574) $ (508,738)
(71,549)
(5,988)
4,790
(312)
(66,759)
(6,300)
(6,874) $ (575,497)
For the years ended April 30, 2020, 2019 and 2018, pre-tax actuarial losses included in Unamortized Retirement Costs of
approximately $6.4 million, $5.5 million, and $5.9 million respectively, were amortized from Accumulated Other Comprehensive
Loss and recognized as pension and post-retirement benefit expense primarily in Operating and Administrative Expenses and Interest
and Other Income on the Consolidated Statements of (Loss) Income.
Index
75
Note 7 – Restructuring and Related Charges
Business Optimization Program
Beginning in fiscal year 2020, we initiated a multi-year Business Optimization Program (the “Business Optimization Program”) to
drive efficiency improvement and operating savings.
The following tables summarize the pre-tax restructuring charges related to this program:
Charges by Segment:
Research Publishing & Platforms
Academic & Professional Learning
Education Services
Corporate Expenses
Total Restructuring and Related Charges
Charges by Activity:
Severance and termination benefits
Operating lease right-of-use asset impairment
Facility related charges
Other activities
Total Restructuring and Related Charges
2020
3,546
10,475
3,774
15,018
32,813
26,864
161
3,986
1,802
32,813
$
$
$
$
Other Activities for the year ended April 30, 2020 primarily relate to reserves and costs associated with the cessation of certain
offerings, and to a lesser extent, a pension settlement, and the impairment of certain software licenses.
The following table summarizes the activity for the Business Optimization Program liability for the year ended April 30, 2020:
Foreign
Translation &
Other
Severance and termination benefits
Other activities
Total
$
$
— $
—
— $
26,864 $
1,802
28,666 $
April 30, 2019
Charges
Payments
(9,193) $
—
(9,193) $
Adjustments April 30, 2020
17,632
430
18,062
(39)
(1,372)
(1,411)
$
$
Approximately $16.9 million of the restructuring liability for accrued severance and termination benefits is reflected in Accrued
Employment Costs and approximately $0.7 million is reflected in Other Long-Term Liabilities in the Consolidated Statement of
Financial Position, as of April 30, 2020.
The amount included in Other Long-Term Liabilities that relates to severance and termination benefits is expected to be paid in the
year ended April 30, 2022.
The restructuring liability as of April 30, 2020 for other activities is reflected in Other Accrued Liabilities in the Consolidated
Statement of Financial Position.
Restructuring and Reinvestment Program
Beginning in the year ended April 30, 2013, we initiated a global program (the “Restructuring and Reinvestment Program”) to
restructure and realign our cost base with current and anticipated future market conditions. We are targeting a majority of the expected
cost savings achieved to improve margins and earnings, while the remainder will be reinvested in high-growth digital business
opportunities.
Index
76
The following tables summarize the pre-tax restructuring (credits) charges related to this program:
(Credits) Charges by Segment:
Research Publishing & Platforms
Academic & Professional Learning
Education Services
Corporate Expenses
Total Restructuring and Related (Credits) Charges
(Credits) Charges by Activity:
Severance and termination benefits
Consulting and contract termination costs
Other activities
Total Restructuring and Related (Credits) Charges
$
$
$
$
2020
2019 (1)
2018 (1)
Total Charges
Incurred to Date
340 $
(5)
(103)
(438)
(206) $
(250) $
(171)
215
(206) $
1,131 $
1,139
389
459
3,118 $
1,456 $
526
1,136
3,118 $
5,257 $
8,244
1,894
13,171
28,566 $
27,213 $
1,815
(462)
28,566 $
26,884
42,834
3,764
95,940
169,422
116,009
20,984
32,429
169,422
(1) As previously announced, we have changed our segment reporting structure to align with our strategic focus areas. See Note 20,
“Segment Information,” for more details.
Other activities for the year ended April 30, 2020 include facility related costs. Other Activities for the year ended April 30, 2019
reflect lease impairment related costs. The credits in other activities for the year ended April 30, 2018 mainly reflect changes in
estimates for previously accrued restructuring charges related to facility lease reserves.
The following table summarizes the activity for the Restructuring and Reinvestment Program liability for the year ended April 30,
2020:
April 30, 2019
(Credits)
Payments
Adoption of
New Lease
Standard (1)
Foreign
Translation &
Other
Adjustments
April 30, 2020
Severance and termination
benefits
Consulting and contract
termination costs
Other activities
Total
$
$
4,887 $
(250) $
(3,238)
$
303
2,544
7,734 $
(171)
—
(421) $
(132)
—
(3,370)
$
— $
—
(2,270)
(2,270) $
(39) $
—
(44)
(83) $
1,360
—
230
1,590
(1) Refer to Note 2, “Summary of Significant Accounting Policies, Recently Issued, and Recently Adopted Accounting Standards,”
and Note 12, “Operating Leases” for more information related to the adoption of the new lease standard.
The restructuring liability as of April 30, 2020 for accrued severance and termination benefits is reflected in Accrued Employment
Costs in the Consolidated Statement of Financial Position.
The restructuring liability as of April 30, 2020 for other activities are reflected in Other Long-Term Liabilities in the Consolidated
Statement of Financial Position and mainly relate to facility relocation and lease impairment related costs. The amount included in
Other Long-Term Liabilities is expected to be paid in the year ended April 30, 2022.
We currently do not anticipate any further material charges related to the Restructuring and Reinvestment Program.
Index
77
Note 8 – Inventories
Inventories, net consisted of the following at April 30:
Finished Goods
Work-in-Process
Paper and Other Materials
Total Inventories Before Estimated Sales Returns and LIFO Reserve
Inventory Value of Estimated Sales Returns
LIFO Reserve
Total Inventories
2020
2019
$
$
36,014 $
1,398
331
37,743
8,686
(2,815)
43,614 $
33,736
2,094
373
36,203
3,739
(4,360)
35,582
See Note 2, “Summary of Significant Accounting Policies, Recently Issued and Recently Adopted Accounting Standards,” under the
caption “Sales Return Reserves,” for a discussion of the Inventory Value of Estimated Sales Returns.
Finished Goods not recorded at LIFO have been recorded at the lower of cost or market, which resulted in a reduction of $16.1 million
and $15.8 million as of April 30, 2020 and 2019, respectively.
Note 9 – Product Development Assets
Product development assets consisted of the following at April 30:
Book Composition Costs
Software Costs
Content Development Costs
Total
2020
2019
18,744 $
28,995
5,904
53,643 $
19,197
38,048
5,225
62,470
$
$
Product development assets include $4.9 million and $4.3 million of work-in-process as of April 30, 2020 and 2019, respectively,
mainly for book composition costs.
Product development assets are net of accumulated amortization of $244.1 million and $236.5 million as of April 30, 2020 and 2019,
respectively.
Note 10 – Technology, Property and Equipment
Technology, property and equipment, net consisted of the following at April 30:
Capitalized Software
Computer Hardware
Buildings and Leasehold Improvements
Furniture, Fixtures, and Warehouse Equipment
Land and Land Improvements
Technology, Property and Equipment, gross
Accumulated Depreciation and Amortization
Total
2020
2019
471,844 $
46,640
99,230
44,104
3,298
665,116
(367,111)
298,005 $
440,437
68,718
118,685
57,471
3,390
688,701
(399,680)
289,021
$
$
The following table details our depreciation and amortization expense for technology, property and equipment, net for the years ended
April 30:
2020
2019
2018
Capitalized Software Amortization Expense
Depreciation and Amortization Expense, Excluding Capitalized Software
$
55,685 $
21,031
50,095 $
19,323
Total Depreciation and Amortization Expense for Technology, Property and Equipment
$
76,716 $
69,418 $
45,449
18,878
64,327
Technology, property and equipment includes $0.9 million and $2.3 of work-in-process as of April 30, 2020 and 2019, respectively,
mainly for capitalized software.
The net book value of capitalized software costs was $207.5 million and $200.2 million as of April 30, 2020 and 2019, respectively.
Index
78
Note 11 – Goodwill and Intangible Assets
Goodwill
The following table summarizes the activity in goodwill by segment as of April 30:
2019
Acquisitions (1)
Impairment
Foreign
Translation
Adjustment
Research Publishing & Platforms
Academic & Professional Learning
Education Services
Total
$
$
438,511 $
458,145
199,010
1,095,666 $
19,356 $
45,410
82,561
147,327 $
— $
—
(110,000)
(110,000) $
(9,737) $
(2,464)
(4,002)
(16,203) $
2020
448,130
501,091
167,569
1,116,790
(1) Refer to Note 4, “Acquisitions,” in the Notes to Consolidated Financial Statements for more information related to the
acquisitions that occurred in the year ended April 30, 2020.
Change in Segment Reporting Structure
As previously announced, we have changed our segment reporting structure to align with our strategic focus areas. See Note 20,
“Segment Information,” for more details. Due to this reorganization, we have reallocated goodwill as of April 30, 2019 to our
reporting units using a relative fair value approach. We tested goodwill for impairment immediately before and after the
reorganization, and we concluded that the fair values of the reporting units were above their carrying values and, therefore, there was
no indication of impairment.
Annual Goodwill Impairment Test as of February 1, 2020
As of February 1, 2020, we completed our annual goodwill impairment test for our reporting units. We concluded that the fair values
of our Research Publishing & Platforms and Academic & Professional Learning reporting units were above their carrying values and,
therefore, there was no indication of impairment.
During our annual goodwill impairment test initiated on February 1, 2020 we identified indicators that the goodwill of the Education
Services business was impaired due to underperformance as compared with our acquisition case projections for revenue growth and
operating cash flow. Subsequently, during the fourth quarter of fiscal year 2020, we determined that our updated revenue and
operating cash flow projections would be further impacted by anticipated near-term headwinds due to COVID-19, including adverse
impacts on new student starts and student re-enrollment. Therefore, we updated the impairment test as of March 31, 2020 to reflect
this change in circumstances. As a result, we concluded that the carrying value was above the fair value which resulted in a pre-tax
non-cash goodwill impairment of $110.0 million. This charge is reflected in Impairment of Goodwill and Intangible Assets in the
Consolidated Statements of (Loss) Income.
Prior to performing the goodwill impairment test for Education Services, we also evaluated the recoverability of long-lived assets of
the reporting unit. When indicators of impairment are present, we test definite lived and long-lived assets for recoverability by
comparing the carrying value of an asset group to an estimate of the future undiscounted cash flows expected to result from the use
and eventual disposition of the asset group. We considered the lower than expected revenue and forecasted operating cash flows over
a sustained period of time, and downward revisions to our cash flow forecasts for this reporting unit to be indicators of impairment for
their long-lived assets. Based on the results of the recoverability test, we determined that the undiscounted cash flows of the asset
group of the Education Services reporting unit exceeded the carrying value. Therefore, there was no impairment.
We estimated the fair value of these reporting units using a weighting of fair values derived from an income and a market approach.
Under the income approach, we determined the fair value of a reporting unit based on the present value of estimated future cash flows.
Cash flow projections are based on our best estimates of forecasted economic and market conditions over the period including growth
rates, expected changes in operating cash flows and cash expenditures. The discount rate used is based on a weighted average cost of
capital adjusted for the relevant risk associated with the characteristics of the business and the projected cash flows. The market
approach estimates fair value based on market multiples of current and forward 12-month revenue or EBITDA, as applicable, derived
from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit.
Index
79
As noted above, the fair value determined as part of the annual goodwill impairment test completed in the fourth quarter of 2020
exceeded the carrying value for the Research Publishing & Platforms and Academic & Professional Learning reporting
units. Therefore, there was no impairment of goodwill. However, if the fair value of the Research Publishing & Platforms and
Academic & Professional Learning reporting units decrease in future periods, we could potentially have an impairment. For the
Education Services reporting unit there was an impairment. If the Education Services reporting unit fair value decreases further in
future periods, we could potentially have an additional impairment. The future occurrence of a potential indicator of impairment, such
as a decrease in expected net earnings, changes in assumptions, including the impact of COVID-19, adverse equity market conditions,
a decline in current market multiples, a decline in our common stock price, a significant adverse change in legal factors or business
climates, an adverse action or assessment by a regulator, unanticipated competition, strategic decisions made in response to economic
or competitive conditions, or a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be
sold or disposed of, could require an interim assessment for some or all of the reporting units before the next required annual
assessment.
Intangible Assets
Intangible assets, net as of April 30 were as follows:
2020
2019
Cost
Accumulated
Amortization
Accumulated
Impairment Net
Cost
Accumulated
Amortization
Accumulated
Impairment Net
Intangible Assets with
Definite Lives, net
Content and Publishing
Rights
Customer Relationships
Developed Technology
Brands and Trademarks
Covenants not to
Compete
Total (1)
Intangible Assets with
Indefinite Lives
$ 806,862 $
377,652
19,225
42,877
(444,756) $
(87,234)
(3,273)
(22,689)
— $ 362,106 $ 806,628 $
— 290,418 310,977
—
32,802
13,111
20,188
(2,841)
—
(417,456) $
(65,147)
—
(19,809)
1,675
1,248,291
(1,429)
(559,381)
—
1,681
246
(2,841) 686,069 1,152,088
(1,236)
(503,648)
— $ 389,172
— 245,830
—
—
— 12,993
445
—
— 648,440
Brands and Trademarks 130,107
Publishing Rights
84,336
Total
214,443
Total Intangible Assets,
Net
$1,462,734 $
—
—
—
(93,107)
—
37,000 134,509
86,223
84,336
220,732
(93,107) 121,336
—
—
—
(3,600)
130,909
— 86,223
217,132
(3,600)
(559,381) $
(95,948) $ 807,405 $ 1,372,820 $
(503,648) $
(3,600) $ 865,572
(1) Refer to Note 4, “Acquisitions,” in the Notes to Consolidated Financial Statements for more information related to the
acquisitions that occurred in 2020 and 2019.
Based on the current amount of intangible assets subject to amortization and assuming current foreign exchange rates, the estimated
amortization expense for the following years are as follows:
2021
2022
2023
2024
2025
Thereafter
Total
Index
Fiscal Year
80
Amount
65,570
59,748
53,796
50,554
46,364
410,037
686,069
$
$
Fiscal Year 2020 Impairment
Annual Indefinite Lived Intangibles Impairment Test as of February 1, 2020
We also review our indefinite-lived intangible assets for impairment annually, which consists of brands and trademarks and certain
acquired publishing rights. During the fourth quarter of 2020, we completed our annual impairment test related to the indefinite lived
intangible assets. We concluded that the fair values of these indefinite-lived intangible assets were above their carrying values and,
therefore, there was no indication of impairment, except for the Blackwell indefinite-lived trademark.
For the year ended April 30, 2020, we recorded a pre-tax non-cash impairment charge of $89.5 million for our Blackwell trademark,
which was acquired in 2007 and carried as an indefinite-lived intangible asset primarily related to our Research Publishing &
Platforms segment. The impairment reflects our decision to simplify Wiley’s brand portfolio and unify our research journal content
under one Wiley brand, which will sharply limit the use of the Blackwell trade name. This impairment resulted in writing off
substantially all of the carrying value of the intangible trademark asset. This charge is reflected in Impairment of Goodwill and
Intangible Assets in the Consolidated Statements of (Loss) Income. The resulting non-cash impairment charge is entirely unrelated to
COVID-19 or the expected future financial performance of the Research Publishing & Platforms segment.
Intangible Assets with Definite Lives
As a result of our decision to discontinue the use of certain technology offerings within the Research Publishing & Platforms segment,
we recorded a pre-tax non-cash impairment charge of $2.8 million related to a certain developed technology intangible. This charge
was included in Impairment of Goodwill and Intangible Assets on the Consolidated Statements of (Loss) Income.
Fiscal Year 2018 Impairment
In conjunction with a business review performed in the Academic & Professional Learning segment associated with the restructuring
activities in the first quarter of the year ended April 30, 2018 we identified an indefinite-lived brand with forecasted cash flows that
did not exceed its carrying value. As a result, a pre-tax impairment charge of $3.6 million was recorded in the first quarter of the year
ended April 30, 2018 to reduce the carrying value of the brand to its fair value of $1.2 million, which will now be amortized over an
estimated useful life of 5 years. This impairment charge was included in Impairment of Goodwill and Intangible Assets on the
Consolidated Statements of (Loss) Income.
Note 12 — Operating Leases
On May 1, 2019, we adopted a new accounting standard for leases. For further information, see Note 2, “Summary of Significant
Accounting Policies, Recently Issued, and Recently Adopted Accounting Standards.”
We have contractual obligations as a lessee with respect to offices, warehouses and distribution centers, automobiles, and office
equipment.
We determine if an arrangement is a lease at inception of the contract in accordance with guidance detailed in the new standard and
we perform the lease classification test as of the lease commencement date. ROU assets represent our right to use an underlying asset
for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU
assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.
The present value of the lease payments is calculated using an incremental borrowing rate, which was determined based on the rate of
interest that we would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. We
use an unsecured borrowing rate and risk-adjust that rate to approximate a collateralized rate.
Under the new leasing standard, leases that are more than one year in duration are capitalized and recorded on the Consolidated
Statements of Financial Position. Some of our leases offer an option to extend the term of such leases. We utilize the reasonably
certain threshold criteria in determining which options we will exercise. Furthermore, some of our lease payments are based on index
rates with minimum annual increases. These represent fixed payments and are captured in the future minimum lease payments
calculation.
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81
For operating leases, the ROU assets and liabilities are presented in our Consolidated Statement of Financial Position as follows:
Operating lease right-of-use assets
Short-term portion of operating lease liabilities
Operating lease liabilities, non-current
April 30, 2020
$
$
142,716
21,810
159,782
During the year ended April 30, 2020, we added $22.9 million to the ROU assets and $24.4 million to the operating lease liabilities
due to new leases as well as modifications and remeasurements to our existing operating leases.
Our total net lease costs are as follows:
Operating lease cost (1)
Variable lease cost
Short-term lease cost
Sublease income
Total net lease cost
Year Ended
April 30, 2020
26,027
3,856
86
(691)
29,278
$
$
(1) Operating lease cost does not include those costs included in Restructuring and Related Charges on the Consolidated Statements
of (Loss) Income. See Note 7, “Restructuring and Related Charges” for more information on these programs.
Other supplemental information includes the following:
Operating leases
Weighted-average discount rate:
Operating leases
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases
Weighted-Average
Remaining
Contractual
Lease Term (Years)
10
Year Ended
April 30, 2020
5.89%
$
28,243
The table below reconciles the undiscounted cash flows for the first five years and total of the remaining years to the operating lease
liabilities recorded in the Consolidated Statement of Financial Position as of April 30, 2020:
Fiscal Year
2021
2022
2023
2024
2025
Thereafter
Total future undiscounted minimum lease payments
Less: Imputed interest
Present Value of Minimum Lease Payments
Less: Current portion
Noncurrent portion
Index
82
Operating Lease
Liabilities
$
$
32,303
27,338
24,659
23,215
22,004
113,848
243,367
61,775
181,592
21,810
159,782
Prior to the Adoption of ASC Topic 842
The following schedule shows the composition of net rent expense for operating leases:
Minimum Rental
Less: Sublease Rentals
Total
2019
2018
$
$
29,066 $
(719)
28,347 $
31,451
(708)
30,743
Rent expense associated with operating leases that include scheduled rent increases and tenant incentives, such as rent holidays or
leasehold improvement allowances, were recorded on a straight-line basis over the term of the lease.
Note 13 – Income Taxes
The provisions for income taxes for the years ended April 30 were as follows:
Current Provision
U.S. – Federal
International
State and Local
Total Current Provision
Deferred (Benefit) Provision
U.S. – Federal
International
State and Local
Total Deferred (Benefit) Provision
Total Provision
2020
2019
2018
$
$
$
$
$
1,145 $
37,494
172
38,811 $
2,384 $
52,518
2,536
57,438 $
(8,476) $
(15,022)
(4,118)
(27,616) $
11,195 $
335 $
(7,630)
(5,454)
(12,749) $
44,689 $
(2,216)
46,112
961
44,857
(26,062)
2,420
530
(23,112)
21,745
International and United States pretax (loss) income for the years ended April 30 were as follows:
International
United States
Total
2020
2019
$
$
104,185 $
(167,277)
(63,092) $
204,326 $
8,626
212,952 $
2018
219,178
(5,247)
213,931
Our 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
Cost (Benefit) of Higher (Lower) Taxes on Non-U.S. Income
State Income Taxes, net of U.S. Federal Tax Benefit
Deferred Tax (Benefit) from U.S. Tax Act
Tax Credits and Related Benefits
Impairment of goodwill and intangibles
Other
Effective Income Tax Rate
2020
2019
2018
21.0%
4.8
3.3
—
(1.1)
(42.3)
(3.4)
(17.7)%
21.0%
0.9
(1.3)
0.1
(0.8)
—
1.1
21.0%
30.4%
(8.4)
0.4
(11.7)
(1.7)
—
1.2
10.2%
Our loss for the year ended April 30, 2020, was due to the impairment of goodwill and intangibles for which we received a relatively
small tax benefit, resulting in an overall negative effective income tax rate of (17.7)%. Excluding the tax cost from such impairment,
our effective income tax rate benefit was 24.6%. Our income was earned outside the U.S. in jurisdictions with different statutory
income tax rates than our U.S. statutory rate, at an average effective rate that is less than our combined U.S. Federal and State tax rate.
The effective tax rate for the year ended April 30, 2020 was less than the year ended April 30, 2019 due to the impairment charges
with respect to which we obtained a relatively small tax benefit. Excluding the effect of the impairment charges the tax benefit rate
was 24.6% for the year ended April 30, 2020, compared to a 21.0% expense for the year ended April 30, 2019, primarily due to lower
taxes on income outside the U.S. as well as increased tax credits and related benefits.
Index
83
Other: For the years ended April 30, 2020 and 2019, we recorded a tax benefit of $1.4 million and $0.3 million, respectively related to
the expiration of the statute of limitations or favorable resolutions of federal, state, and foreign tax matters with tax authorities.
The CARES Act
On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The
CARES Act includes provisions relating to refundable payroll tax credits, deferral of the employer portion of certain payroll taxes,
net operating loss carrybacks, modifications to net interest deduction limitations and technical corrections to tax depreciation
methods for qualified improvement property. The CARES Act did not have a material impact on our income tax expense for the year
ended April 30, 2020.
The Tax Act
On December 22, 2017, the U.S. government enacted comprehensive tax legislation (“Tax Act”). The Tax Act significantly revised
the U.S. corporate income tax system. We recorded a significant nonrecurring benefit from the Tax Act during the year ended April
30, 2018.
Accounting for Uncertainty in Income Taxes:
As of April 30, 2020 and April 30, 2019, the total amount of unrecognized tax benefits were $6.2 million and $7.7 million,
respectively, of which $0.6 million and $0.7 million represented accruals for interest and penalties recorded as additional tax expense
in accordance with our accounting policy. Within the income tax provision for the years ended April 30, 2020 and 2019, we recorded
net interest expense on reserves for unrecognized and recognized tax benefits of $0.2 million and $0.3 million, respectively. As of
April 30, 2020, and April 30, 2019, the total amounts of unrecognized tax benefits that would reduce our income tax provision, if
recognized, were approximately $6.2 million and $7.7 million, respectively. We do not expect any significant changes to the
unrecognized tax benefits within the next twelve months.
A reconciliation of the unrecognized tax benefits included within the Other Long-Term Liabilities line item on the Consolidated
Statements of Financial Position follows:
Balance at May 1
Additions for Current Year Tax Positions
Additions for Prior Year Tax Positions
Reductions for Prior Year Tax Positions
Foreign Translation Adjustment
Payments and Settlements
Reductions for Lapse of Statute of Limitations
Balance at April 30
Tax Audits:
2020
2019
7,659 $
694
—
(655)
(15)
(56)
(1,433)
6,194 $
6,833
1,473
414
(578)
(42)
(136)
(305)
7,659
$
$
We file income tax returns in the U.S. and various states and non-U.S. tax jurisdictions. Our major taxing jurisdictions are the United
States, United Kingdom and Germany. Except for one immaterial item, we are no longer subject to income tax examinations for years
prior to fiscal year 2014 in the major jurisdictions in which we are subject to tax. We received tax audit notices for our German
entities for the audit period fiscal years 2014-2017. The audit process has been delayed due to COVID-19. Our last completed U.S.
federal tax audit of our fiscal years 2011 through 2013 resulted in minimal adjustments related to temporary differences.
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84
Deferred Taxes:
Deferred taxes result from temporary differences in the recognition of revenue and expense for tax and financial reporting purposes.
We believe that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the net
deferred tax assets. The significant components of deferred tax assets and liabilities at April 30 were as follows:
Net Operating Losses
Reserve for Sales Returns and Doubtful Accounts
Accrued Employee Compensation
Foreign and Federal Credits
Other Accrued Expenses
Retirement and Post-Employment Benefits
Total Gross Deferred Tax Assets
Less Valuation Allowance
Total Deferred Tax Assets
Prepaid Expenses and Other Current Assets
Unremitted Foreign Earnings
Intangible and Fixed Assets
Total Deferred Tax Liabilities
Net Deferred Tax Liabilities
Reported As
Deferred Tax Assets
Deferred Tax Liabilities
Net Deferred Tax Liabilities
2020
2019
17,966 $
2,638
20,114
31,487
11,827
37,927
121,959 $
(23,287)
98,672 $
14,491
2,923
17,528
34,401
6,262
40,653
116,258
(21,179)
95,079
(1,142) $
(1,985)
(205,882)
(209,009) $
(110,337) $
(744)
(1,985)
(226,898)
(229,627)
(134,548)
8,790 $
(119,127)
(110,337) $
9,227
(143,775)
(134,548)
$
$
$
$
$
$
$
$
The decrease in net deferred tax liabilities is due to the non-cash impairment charge of our Blackwell trademark. This was partially
offset by deferred tax liabilities relating to non-goodwill intangibles acquired in our various acquisitions as well as the amortization of
our deferred tax liabilities related to non-goodwill intangibles, primarily from prior acquisitions. Our increase in deferred tax assets is
primarily attributable to an increase in our accrued expenses and net operating losses, partially offset by a decrease in our foreign and
federal credits. We have concluded that after valuation allowances, it is more likely than not that we will realize substantially all of the
net deferred tax assets at April 30, 2020. In assessing the need for a valuation allowance, we take into account related deferred tax
liabilities and estimated future reversals of existing temporary differences, future taxable earnings and tax planning strategies to
determine which deferred tax assets are more likely than not to be realized in the future. Changes to tax laws, statutory tax rates and
future taxable earnings can have an impact on our valuation allowances.
A $23.3 million valuation allowance has been provided based primarily on the uncertainty of utilizing the tax benefits related to our
deferred tax assets for foreign tax credits and state credits and net operating loss carry losses. As of April 30, 2020, we have
apportioned state net operating loss carryforwards totaling $102.0 million, with a tax effected value of $6.0 million net of federal
benefits, expiring in various amounts over 1 to 20 years. Our tax credits expire in various amounts over 6-20 years.
Since April 30, 2018, we no longer intend to permanently reinvest earnings outside the U.S. We have a $2.0 million liability related to
the estimated taxes that would be incurred upon repatriating certain non-U.S. earnings.
Note 14 – Debt and Available Credit Facilities
Amended and Restated RCA
On May 30, 2019, we entered into a credit agreement that amended and restated our existing revolving credit agreement (“Amended
and Restated RCA”). The Amended and Restated RCA provides for senior unsecured credit facilities comprised of a (i) five year
revolving credit facility in an aggregate principal amount up to $1.25 billion, and (ii) a five year term loan A facility consisting of
$250 million.
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Under the terms of the Amended and Restated RCA, which can be drawn in multiple currencies, we have 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 our consolidated net leverage ratio, as defined, or (ii) at the lender’s base rate plus an
applicable margin ranging from zero to 0.50%, depending on our consolidated net 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, we pay a facility fee for the revolving credit facility ranging from 0.15%
to 0.25% depending on our consolidated net leverage ratio. We also have the option to request an increase in the revolving credit
facility by an amount not to exceed $500 million, in minimum increments of $50 million, subject to the approval of the lenders.
The Amended and Restated RCA contains certain customary affirmative and negative covenants, including a financial covenant in the
form of a consolidated net leverage ratio and consolidated interest coverage ratio, which we were in compliance with as of April 30,
2020.
In the three months ended July 31, 2019, we incurred an immaterial loss on the write-off of unamortized deferred costs in connection
with the refinancing of our RCA (as defined below) which is reflected in Interest and Other Income on the Consolidated Statements of
(Loss) Income for the year ended April 30, 2020.
In the three months ended July 31, 2019, we incurred $4.0 million of costs related to the Amended and Restated RCA which resulted
in total costs capitalized of $5.2 million. The amount related to the term loan A facility was $0.9 million, consisting of $0.8 million of
lender fees and recorded as a reduction to Long-Term Debt and $0.1 million of non-lender fees included in Other Non-Current Assets.
The amount related to the five-year revolving credit facility was $4.3 million, all of which is included in Other Non-Current Assets.
The amortization expense of the lender and non-lender fees is recognized over the five-year term of the Amended and Restated RCA.
Total amortization expense for the year ended April 20, 2020 was $1.0 million and is included in Interest Expense on our
Consolidated Statement of (Loss) Income.
Our total debt outstanding as of April 30, 2020 was $775.1 million, which included $9.4 million of current portion of long-term debt
related to our term loan A under the Amended and Restated RCA and long-term debt of $765.7 million. The long-term debt consisted
of $235.3 million related to our term loan A under the Amended and Restated RCA (amount is net of unamortized issuance costs of
$0.7 million) and $530.4 million related to the revolving credit facility under the Amended and Restated RCA.
RCA
As of April 30, 2019, total debt outstanding was $478.8 million, which consisted of amounts due under our RCA.
We had a revolving credit agreement (“RCA”) with a syndicated bank group led by Bank of America. The RCA consisted of a $1.1
billion five-year senior revolving credit facility payable March 1, 2021. Since there were no principal payments due until the end of
the agreement in the year ended April 30, 2021, we had classified our entire debt obligation as long-term as of April 30, 2019.
Lines of Credit
We have other lines of credit aggregating $2.7 million at various interest rates. There were no outstanding borrowings under these
credit lines at April 30, 2020 and 2019.
Our total available lines of credit as of April 30, 2020, were approximately $1.5 billion, of which approximately $0.7 billion was
unused. The weighted average interest rates on total debt outstanding during the years ended April 30, 2020 and 2019 were 3.12% and
2.69%, respectively. As of April 30, 2020 and 2019, the weighted average interest rates for total debt were 2.26% and 2.88%,
respectively. Based on estimates of interest rates currently available to us for loans with similar terms and maturities, the fair value of
our debt approximates its carrying value.
Note 15 – Derivative Instruments and Activities
From time-to-time, we enter 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. We do not use financial instruments for trading or speculative
purposes.
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Interest Rate Contracts
As of April 30, 2020, we had total debt outstanding of $775.1 million, net of unamortized issuance costs of $0.7 million of which
$775.8 million are variable rate loans outstanding under the Amended and Restated RCA, which approximated fair value.
As of April 30, 2020 and 2019, the interest rate swap agreements we maintained were designated as fully effective cash flow hedges
as defined under Accounting Standards Codification 815 “Derivatives and Hedging” ("ASC 815"). As a result, there was no impact on
our Consolidated Statements of (Loss) 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, derivative instruments that are
designated as cash flow hedges have changes in their fair value recorded initially within Accumulated Other Comprehensive Loss on
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 on the Consolidated Statements of (Loss) Income. It is management’s intention that the notional amount of interest rate
swaps be less than the variable rate loans outstanding during the life of the derivatives.
On February 26, 2020 we entered into two forward starting interest rate swap agreements, which fixed a portion of the variable
interest due on our Amended and Restated RCA. Under the terms of the agreement, we pay a fixed rate of 1.150% and receive a
variable rate of interest based on one-month LIBOR from the counterparty which is reset every month for a 3-year period ending
March 15, 2023. As of April 30, 2020, the notional amount of the interest rate swaps was $100.0 million.
On August 7, 2019 we entered into a forward starting interest rate swap agreement, which fixed a portion of the variable interest due
on our Amended and Restated RCA. Under the terms of the agreement, we pay a fixed rate of 1.400% and receive a variable rate of
interest based on one-month LIBOR from the counterparty which is reset every month for a 3-year period ending August 15, 2022. As
of April 30, 2020, the notional amount of the interest rate swap was $100.0 million.
On June 24, 2019 we entered into a forward starting interest rate swap agreement, which fixed a portion of the variable interest due on
our Amended and Restated RCA. Under the terms of the agreement, we pay a fixed rate of 1.650% and receive a variable rate of
interest based on one-month LIBOR from the counterparty which is reset every month for a 3-year period ending July 15, 2022. As of
April 30, 2020, the notional amount of the interest rate swap was $100.0 million.
On April 4, 2016, we 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, which expired on May 15, 2019, we paid a fixed rate
of 0.920% and receive a variable rate of interest based on one-month LIBOR from the counterparty which was reset every month for a
three-year period ending May 15, 2019. Prior to expiration, the notional amount of the interest rate swap was $350.0 million.
We record the fair value of our 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, 2020 and 2019, was a deferred loss of $8.3 million
and a deferred gain of $0.5 million, respectively. Based on the maturity dates of the contracts, the entire deferred loss as of April 30,
2020 was recorded within Other Long-Term Liabilities and the entire deferred gain as of April 30, 2019 was recorded within Prepaid
Expenses and Other Current Assets.
The pre-tax gains that were reclassified from Accumulated Other Comprehensive Loss to Interest Expense for the years ended April
30, 2020, 2019, and 2018 were $0.4 million, $4.7 million, and $1.5 million, respectively. Based on the amount in Accumulated Other
Comprehensive Loss at April 30, 2020, approximately $2.7 million, net of tax, would be reclassified into net income in the next
twelve months.
Foreign Currency Contracts
We may enter into forward exchange contracts to manage our exposure on certain foreign currency denominated assets and liabilities.
The forward exchange contracts are marked to market through Foreign Exchange Transaction Gains (Losses) on the Consolidated
Statements of (Loss) 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 (Losses) on the Consolidated Statements of (Loss) Income.
As of April 30, 2020 and 2019, we did not maintain any open forward contracts. In addition, we did not maintain any open forward
contracts during the years ended April 30, 2020, 2019 and 2018.
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Note 16 – Commitment and Contingencies
We are involved in routine litigation in the ordinary course of our business. A provision for litigation is accrued when information
available to us 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, we do not record a liability, but disclose 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 recognized when incurred. 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,
2020, will not have a material effect upon our consolidated financial condition or results of operations.
Note 17 – Retirement Plans
We have retirement plans that cover substantially all employees. The plans generally provide for employee retirement between the
ages 60 and 65, and benefits based on length of service and compensation, as defined.
Our Board of Directors approved plan amendments that froze the following retirement plans:
Retirement Plan for the Employees of John Wiley & Sons, Canada was frozen effective December 31, 2015;
Retirement Plan for the Employees of John Wiley & Sons, Ltd., a U.K. plan was frozen effective April 30, 2015 and;
U.S. Employees’ Retirement Plan, Supplemental Benefit Plan, and Supplemental Executive Retirement Plan, were frozen
effective June 30, 2013.
We maintain 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 this plan have been discontinued as noted above.
The components of net pension (income) expense for the defined benefit plans and the weighted average assumptions were as follows:
2020
2019
2018
U.S.
Non-U.S.
U.S.
Non-U.S.
U.S.
Service Cost
Interest Cost
Expected Return on Plan Assets
Net Amortization of Prior Service Cost
Recognized Net Actuarial Loss
Curtailment/Settlement Loss
Net Pension (Income) Expense
$
$
— $
11,247
(14,038)
(154)
2,403
—
(542) $
1,851 $
12,652
(26,116)
73
3,993
291
(7,256) $
912 $
— $
11,704
12,943
(13,472) (25,551)
57
3,746
—
(7,893) $
(154)
2,035
—
113 $
— $
11,666
(13,154)
(154)
2,289
—
647 $
Non-U.S.
960
13,876
(26,385)
57
3,832
19
(7,641)
Discount Rate
Rate of Compensation Increase
Expected Return on Plan Assets
4.1%
N/A
6.8%
2.4%
3.0%
6.5%
4.3%
N/A
6.8%
2.6%
3.0%
6.5%
4.1%
N/A
6.8%
2.6%
3.0%
6.5%
In the year ended April 30, 2020, there was a settlement charge of $0.3 million related to the Retirement Plan for the Employees of
John Wiley & Sons, Canada which is reflected in Restructuring and Related Charges in the Consolidated Statements of (Loss) Income.
The service cost component of net pension (income) expense is reflected in Operating and Administrative Expenses on our
Consolidated Statements of (Loss) Income. The other components of net benefit costs are reported separately from the service cost
component and below Operating (Loss) Income. Such amounts are reflected in Interest and Other Income on our Consolidated
Statements of (Loss) Income.
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 $853.3 million, $816.5 million and $659.4 million, respectively, as of
April 30, 2020, and $794.2 million, $762.8 million, and $621.9 million, respectively, as of April 30, 2019.
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88
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 for plans with all or almost all inactive
participants and frozen plans, and on the average remaining working lifetime of active plan participants for all other plans.
We recognize 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, on the Consolidated Statements of Financial Position. The change in the
funded status of the plan is recognized in Accumulated Other Comprehensive Loss on the Consolidated Statements of Financial
Position. Plan assets and obligations are measured at fair value as of our Consolidated Statements of Financial Position 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:
Actuarial Loss
Prior Service Cost
Total
U.S.
Non-U.S.
Total
$
$
3,666 $
(154)
3,512 $
4,323 $
55
4,378 $
7,989
(99)
7,890
The following table sets forth the changes in and the status of our defined benefit plans’ assets and benefit obligations:
CHANGE IN PLAN ASSETS
Fair Value of Plan Assets, Beginning of Year
Actual Return on Plan Assets
Employer Contributions
Employee Contributions
Settlements
Benefits Paid
Foreign Currency Rate Changes
Fair Value, End of Year
CHANGE IN PROJECTED BENEFIT OBLIGATION
Benefit Obligation, Beginning of Year
Service Cost
Interest Cost
Actuarial Gains (Losses)
Benefits Paid
Foreign Currency Rate Changes
Settlements and Other
Benefit Obligation, End of Year
Underfunded Status, End of Year
AMOUNTS RECOGNIZED ON THE STATEMENT OF
FINANCIAL POSITION
Current Pension Liability
Noncurrent Pension Liability
Net Amount Recognized in Statement of Financial Position
AMOUNTS RECOGNIZED IN ACCUMULATED OTHER
COMPREHENSIVE LOSS (BEFORE TAX) CONSIST OF
Net Actuarial (Losses)
Prior Service Cost Gains (Losses)
Total Accumulated Other Comprehensive Loss
Change in Accumulated Other Comprehensive Loss
WEIGHTED AVERAGE ASSUMPTIONS USED IN
DETERMINING ASSETS AND LIABILITIES
Discount Rate
Rate of Compensation Increase
Accumulated Benefit Obligations
Index
89
2020
2019
U.S.
Non-U.S.
U.S.
Non-U.S.
213,628 $
11,645
3,700
—
—
(15,027)
—
213,946 $
(285,197) $
—
(11,247)
(37,550)
15,027
—
—
(318,967) $
(105,021) $
408,249 $
48,602
11,686
—
(1,459)
(9,162)
(12,436)
445,480 $
9,705
14,753
—
—
(15,813)
—
204,983 $ 419,448
24,891
11,872
—
—
(16,282)
(31,680)
213,628 $ 408,249
(509,015) $
(1,851)
(12,652)
(36,287)
9,162
15,176
1,164
(534,303) $
(88,823) $
—
(11,704)
(9,662)
15,813
—
—
(279,644) $ (540,686)
(912)
(12,943)
(11,013)
16,282
41,143
(886)
(285,197) $ (509,015)
(71,569) $ (100,766)
(4,990)
(100,031)
(105,021) $
(885)
(87,938)
(88,823) $
(816)
(5,188)
(66,381)
(99,950)
(71,569) $ (100,766)
(131,569) $
2,254
(129,315) $
(37,695) $
(181,403) $
(1,051)
(182,454) $
(4,143) $
2,408
(94,028) $ (177,157)
(1,154)
(91,620) $ (178,311)
5,446
(11,546) $
3.1%
N/A
(318,967) $
1.6%
3.0%
(497,489) $
4.1%
N/A
2.4%
3.0%
(285,197) $ (477,561)
$
$
$
$
$
$
$
$
$
$
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 plans 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 45% equity securities and 55% fixed income securities and cash. 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%. We regularly review the
investment allocations and periodically rebalance investments to the target allocations. We categorize our 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.
We did not maintain any level 3 assets during the years ended April 30, 2020 and 2019. In accordance with ASU 2015-07, “Fair Value
Measurement (“Topic 820”), certain investments that are measured at fair value using the net asset value (“NAV”) per share (or its
equivalent) practical expedient do not have to be classified in the fair value hierarchy. We adopted ASU 2015-07 in the year ended
April 30, 2018 and it was applied retrospectively to all periods presented. The fair value amounts presented in the following tables are
intended to permit reconciliation of the fair value hierarchy to the amounts presented for the total pension benefit plan assets.
The following tables set forth, by level within the fair value hierarchy, pension plan assets at their fair value as of April 30:
Level 1
2020
Level 2
Total
Level 1
2019
Level 2
Total
U.S. Plan Assets
Investments measured at NAV:
Global Equity Securities: Limited Partnership
Fixed Income Securities: Commingled Trust Funds
Other: Real Estate Commingled Trust Fund
Total Assets at NAV
Non-U.S. Plan Assets
Equity Securities:
U.S. Equities
Non-U.S. Equities
$
Balanced Managed Funds
Fixed Income Securities: Commingled Funds
Other:
Real Estate/Other
Cash and Cash Equivalents
Total Non-U.S. Plan Assets
Total Plan Assets
$
$
$
$
110,965
102,981
—
213,946
$
$
109,490
104,138
—
213,628
— $
—
—
3,431
—
2,134
5,565 $
5,565 $
36,842 $
103,460
44,989
254,134
490
—
439,915 $
439,915 $
36,842 $
103,460
44,989
257,565
490
2,134
445,480 $
659,426 $
— $
—
—
855
—
1,396
2,251 $
2,251 $
39,652 $
117,575
48,550
199,720
501
—
405,998 $
405,998 $
39,652
117,575
48,550
200,575
501
1,396
408,249
621,877
Expected employer contributions to the defined benefit pension plans in the year ended April 30, 2021 will be approximately $16.9
million, including $11.8 million of minimum amounts required for our non-U.S. plans. From time to time, we may elect to make
voluntary contributions to our defined benefit plans to improve their funded status. Included in our defined benefit pension
contributions for the year ended April 30, 2019 was a discretionary contribution of $10.0 million to the U.S. Employees' Retirement
Plan of John Wiley & Sons, Inc.
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90
Benefit payments to retirees from all defined benefit plans are expected to be the following in the fiscal year indicated:
Fiscal Year
U.S.
Non-U.S.
Total
2021
2022
2023
2024
2025
2026 – 2030
Total
Retiree Health Benefits
$
$
16,581 $
15,205
15,533
15,713
15,363
77,026
155,421 $
9,733 $
10,743
11,065
11,691
13,439
71,836
$128,507 $
26,314
25,948
26,598
27,404
28,802
148,862
$283,928
We provide contributory life insurance and health care benefits, subject to certain dollar limitations, for substantially all of our eligible
retired U.S. employees. The retiree health benefit is no longer 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 on the Consolidated Statements of Financial Position as of April 30, 2020 and 2019, was $1.4
and $1.6 million, respectively. Annual (credits) for these plans for the years ended April 30, 2020, 2019, and 2018 were $(0.1) million,
$(0.1) million and $(0.1) million, respectively.
Defined Contribution Savings Plans
We have defined contribution savings plans. Our contribution is based on employee contributions and the level of our match. We may
make discretionary contributions to all employees as a group. The expense recorded for these plans was approximately $19.0 million,
$13.1 million, and $14.4 million in the years ended April 30, 2020, 2019, and 2018 respectively.
Note 18 – Stock-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 6.5 million shares of our Class A stock may be issued. As of April 30, 2020, there
were approximately 3,501,116 securities remaining available for future issuance under the Plan. We issue treasury shares to fund
awards issued under the Plan.
Stock Option Activity
Under the terms of our 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 the years
ended April 30, 2015 and prior, options generally vest 50% on the fourth and fifth anniversary date after the award is granted. For the
year ended April 30, 2016, options vest 25% per year on April 30.
We did not grant any stock option awards since the year ended April 30, 2016. As of April 30, 2019, all outstanding options vested
allowing the participant the right to exercise their awards.
The fair value of the options granted in the year ended April 30, 2016 was $14.77 using the Black-Scholes option-pricing model. The
significant weighted average assumptions used in the fair value determination was the expected life which represented 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 was based on the corresponding U.S. Treasury yield curve in effect at the time of the grant. The expected volatility was
based on the historical volatility of our Common Stock price over the estimated life of the option, while the dividend yield was based
on the expected dividend payments to be made by us.
Index
91
A summary of the activity and status of our stock option plans follows:
2020
2019
2018
Number
of
Options
(in 000’s)
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Term
(in years)
Aggregate
Intrinsic
Value
(in
millions)
Outstanding at Beginning of Year
Granted
Exercised
Expired or Forfeited
Outstanding at End of Year
Exercisable at End of Year
Vested and Expected to Vest in the
372 $
— $
(34) $
(52) $
286 $
286 $
49.70
—
38.32
54.57
50.14
50.14
Future at April 30
286 $
50.14
2.0 $
2.0 $
2.0 $
—
—
—
Number
of
Options
(in 000’s)
Weighted
Average
Exercise
Price
Number
of
Options
(in 000’s)
Weighted
Average
Exercise
Price
611 $
— $
(229) $
(10) $
372 $
372 $
48.88
—
47.21
56.97
49.70
49.70
1,429 $
— $
(788) $
(30) $
611 $
530 $
47.39
—
45.97
54.24
48.88
47.43
372 $
49.70
599 $
48.90
The intrinsic value is the difference between our common stock price and the option grant price. The total intrinsic value of options
exercised during the years ended April 30, 2020, 2019, and 2018 was $0.3 million, $4.4 million, and $10.4 million, respectively. The
total grant date fair value of stock options vested during the year ended April 30, 2019 was $4.8 million.
As of April 30, 2020, there was no unrecognized share-based compensation expense related to stock options.
The following table summarizes information about stock options outstanding and exercisable at April 30, 2020:
Range of Exercise Prices
$39.53 to $40.02
$48.06 to $49.55
$55.99 to $59.70
Total/Average
Options Outstanding
Options Exercisable
Weighted
Average
Remaining
Term
(in years)
Weighted
Average
Exercise
Price
Number
of Options
(in 000’s)
Weighted
Average
Exercise
Price
1.5 $
1.2 $
2.9 $
2.0 $
39.69
48.75
57.89
50.14
78 $
88 $
120 $
286 $
39.69
48.75
57.89
50.14
Number
of Options
(in 000’s)
78
88
120
286
Performance-Based and Other Restricted Stock Activity
Under the terms of our long-term incentive plans, performance-based restricted unit awards are payable in restricted shares of our
Class A Common Stock upon the achievement of certain three-year financial performance-based targets. During each three-year
period, we adjust compensation expense based upon our best estimate of expected performance. For the years ended April 30, 2015
and prior, restricted performance shares vest 50% on the first and second anniversary date after the award is earned. For the years
ended April 30, 2016 and 2017, restricted performance shares vest 50% on June 30 following the end of the three-year performance
cycle and 50% on April 30 of the following year. Beginning in the year ended April 30, 2018, restricted performance share units vest
100% on June 30 following the end of the three-year performance cycle.
We may also grant individual restricted unit awards payable in restricted shares of our Class A Common Stock to key employees in
connection with their employment. For the years ended April 30, 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 the year ended April 30, 2016 grants, restricted shares generally
vest ratably 25% per year.
Under certain circumstances relating to a change of control or termination, as defined, the restrictions would lapse, and shares would
vest earlier.
Index
92
Activity for performance-based and other restricted stock awards during the years ended April 30, 2020, 2019, and 2018 was as
follows (shares in thousands):
Nonvested Shares at Beginning of Year
Granted
Change in Shares Due to Performance
Vested and Issued
Forfeited
Nonvested Shares at End of Year
2020
2019
2018
Weighted
Average
Grant Date
Value
Restricted
Shares
Restricted
Shares
Restricted
Shares
756 $
759 $
(70) $
(329) $
(173) $
943 $
57.38
44.46
50.17
53.14
53.35
49.74
861
415
(19)
(357)
(144)
756
913
525
(107)
(318)
(152)
861
For the years ended April 30, 2020, 2019 and 2018, we recognized stock-based compensation expense, on a pre-tax basis, of
$20.0 million, $18.3 million and $11.2 million, respectively.
As of April 30, 2020, there was $27.6 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 4 years, or 2.4 years on a weighted average basis.
Compensation expense for restricted stock awards is measured using the closing market price of our Class A Common Stock at the
date of grant. The total grant date value of shares vested during the years ended April 30, 2020, 2019, and 2018 was $17.5 million,
$19.6 million, and $15.7 million, respectively.
President and CEO New Hire Equity Awards
On October 17, 2017, we announced Brian A. Napack as the new President and Chief Executive Officer of Wiley effective December
4, 2017 (the "Commencement Date"). Upon the Commencement Date, Mr. Napack also became a member of our Board of Directors
(the "Board"). In connection with his appointment, Wiley and Mr. Napack entered into an employment offer letter (the "Employment
Agreement").
The Employment Agreement provides that beginning with the year ended April 30, 2018–2020 performance cycle, eligibility to
participate in annual grants under our Executive Long-Term Incentive Program (ELTIP). Targeted long-term incentive for this cycle is
equal to 300% of base salary, or $2.7 million. Sixty percent of the ELTIP value will be delivered in the form of target performance
share units and forty percent in restricted share units. The grant date fair value for restricted share units was $59.15 per share and
included 20,611 restricted share units, which vest 25% each year starting on April 30, 2018 to April 30, 2021. In addition, there was a
performance share unit award with a target of 30,916 units and a grant date fair value of $59.15. The performance metrics are based on
cumulative EBITDA for the year ended April 30, 2018-2020 and cumulative normalized free cash flow for the year ended April 30,
2018–2020.
The awards are described in further detail in Mr. Napack’s Employment Agreement filed with the SEC as Exhibit 10.1 to our Current
Report on Form 8-K filed on October 17, 2017.
In addition, the Employment Agreement provides for a sign-on grant of restricted share units, with a grant value of $4.0 million,
converted to shares using our Class A closing stock price as of the Commencement Date, and vesting in two equal installments on the
first and second anniversaries of the employment date. The grant date fair value for this award was $59.15 per share and included
67,625 units at the date of grant. Grants are subject to forfeiture in the case of voluntary termination prior to vesting and accelerated
vesting in the case of earlier termination of employment without Cause, due to death or Disability or Constructive Discharge, or upon
a Change in Control (as such terms are defined in the Employment Agreement).
The awards are described in further detail in Mr. Napack’s Employment Agreement filed with the SEC as Exhibit 10.1 to our Current
Report on Form 8-K filed on October 17, 2017.
Index
93
Director Stock Awards
Under the terms of our 2018 Director Stock Plan (the “Director Plan”), each non-employee director, other than the Chairman of the
Board, receives an annual award of restricted shares of our Class A Common Stock equal in value to 100% of the annual director
stock retainer fee, based on the stock price at the close of the New York Stock Exchange on the date of grant. Such restricted shares
will vest on the earliest of (i) the day before the next Annual Meeting following the grant, (ii) the non-employee director’s death or
disability (as determined by the Governance Committee), or (iii) a change in control (as defined in the 2014 Key Employee Stock
Plan). The granted shares may not be sold or transferred during the time the non-employee director remains a director. There were
20,048, 18,991, and 19,900 restricted shares awarded under the Director Plan for the years ended April 30, 2020, 2019, and 2018,
respectively.
Note 19 – Capital Stock and Changes in Capital Accounts
Each share of our 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.
Share Repurchases
During the year ended April 30, 2020, our Board of Directors approved an additional share repurchase program of $200 million of
Class A or B Common Stock. As of April 30, 2020, we had authorization from our Board of Directors to purchase up to $200 million
that was remaining under this program. No share repurchases were made under this program during the year ended April 30, 2020.
The share repurchase program described above is in addition to the share repurchase program approved by our Board of Directors
during the year ended April 30, 2017 of four million shares of Class A or B Common Stock. As of April 30, 2020, we had
authorization from our Board of Directors to purchase up to 806,758 additional shares that were remaining under this program.
The following table summarizes the shares repurchased of Class A and B Common Stock:
Shares repurchased – Class A
Shares repurchased – Class B
Average Price – Class A and Class B
2020
1,079,936
2,281
43.05 $
2019
1,191,496
—
50.35 $
2018
713,177
—
55.65
$
Index
94
Changes in Common Stock
The following is a summary of changes during the years ended April 30, in shares of our common stock and common stock in treasury
(shares in thousands).
Changes in Common Stock A:
Number of shares, beginning of year
Common stock class conversions and other
Number of shares issued, end of year
Changes in Common Stock A in treasury:
Number of shares held, beginning of year
Purchase of treasury shares
Restricted shares issued under stock-based compensation plans - non-PSU Awards
Restricted shares issued under stock-based compensation plans - PSU Awards
Shares issued under the Director Plan to Directors
Stock grants of fully vested Class A shares - common stock
Restricted shares, forfeited
Restricted shares issued from exercise of stock options
Shares withheld for taxes
Other
Number of shares held, end of year
Number of Common Stock A outstanding, end of year
Changes in Common Stock B:
Number of shares, beginning of year
Common stock class conversions and other
Number of shares issued, end of year
Changes in Common Stock B in treasury:
Number of shares held, beginning of year
Shares repurchased
Number of shares held, end of year
Number of Common Stock B outstanding, end of year
Dividends
2020
2019
2018
70,127
39
70,166
70,111
16
70,127
22,634
1,080
(232)
(68)
(97)
—
1
(34)
122
(1)
23,405
46,761
21,853
1,192
(205)
(110)
(5)
—
9
(229)
130
(1)
22,634
47,493
70,086
25
70,111
22,097
713
(133)
(126)
(20)
(20)
15
(788)
116
(1)
21,853
48,258
2020
2019
2018
13,055
(39)
13,016
13,071
(16)
13,055
13,096
(25)
13,071
3,918
2
3,920
9,096
3,918
—
3,918
9,137
3,918
—
3,918
9,153
The following table summarizes the cash dividends paid during the year ended April 30, 2020:
Date of Declaration by
Board of Directors
Quarterly Cash
Dividend
Total
Dividend
June 27, 2019
$0.34 per common share $19.2 million
September 26, 2019
$0.34 per common share $19.1 million
December 18, 2019
$0.34 per common share $19.0 million
March 18, 2020
$0.34 per common share $19.0 million
Class of Common
Stock
Class A and
Class B
Class A and
Class B
Class A and
Class B
Class A and
Class B
Dividend Paid Date
Shareholders of
Record as of Date
July 24, 2019
July 10, 2019
October 23, 2019
October 8, 2019
January 16, 2020
January 2, 2020
April 15, 2020
March 31, 2020
Index
95
Note 20 – Segment Information
As previously announced, we have changed our segment reporting structure to align with our strategic focus areas: (1) Research
Publishing & Platforms, which continues to include the Research publishing and Atypon businesses, (2) Academic & Professional
Learning, which is the former “Publishing” segment combined with our corporate training businesses – previously noted as
Professional Assessment and Corporate Learning; and (3) Education Services, which includes our Online Program Management and
mthree training, upskilling and talent placement services for professionals and businesses. Prior period segment results have been
revised to the new segment presentation. There were no changes to our consolidated financial results.
We report our segment information in accordance with the provisions of FASB ASC Topic 280. These segments reflect the way our
chief operating decision maker evaluates our business performance and manages the operations.
Segment information is as follows:
Revenue:
Research Publishing & Platforms
Academic & Professional Learning
Education Services
Total Revenue
Contribution to (Loss) Profit:
Research Publishing & Platforms
Academic & Professional Learning
Education Services
Total Contribution to Profit
Corporate Expenses
Operating (Loss) Income
Adjusted Contribution to Profit: (1)
Research Publishing & Platforms
Academic & Professional Learning
Education Services
Total Adjusted Contribution to Profit
Adjusted Corporate Expenses
Total Adjusted Operating Income
Depreciation and Amortization:
Research Publishing & Platforms
Academic & Professional Learning
Education Services
Total Depreciation and Amortization
Corporate Depreciation and Amortization
Total Depreciation and Amortization
Adjusted EBITDA: (2)
Research Publishing & Platforms
Academic & Professional Learning
Education Services
Total Segment Adjusted EBITDA
Corporate Adjusted EBITDA
Total Adjusted EBITDA
For the Years Ended April 30,
2019
2020
2018
948,839 $
650,789
231,855
1,831,483 $
939,217 $
703,303
157,549
1,800,069 $
936,857
740,115
119,131
1,796,103
169,119 $
74,176
(117,515)
125,780 $
(180,067)
(54,287) $
259,754 $
146,265
(13,272)
392,747 $
(168,758)
223,989 $
265,353 $
84,646
(3,844)
346,155 $
260,885 $
147,404
(12,883)
395,406 $
(165,487)
(168,299)
180,668 $
227,107 $
69,495 $
69,807
24,131
163,433 $
11,694
175,127 $
60,889 $
68,126
18,117
147,132 $
14,023
161,155 $
334,848 $
154,453
20,287
509,588 $
321,774 $
215,530
5,234
542,538 $
(153,793)
(154,276)
355,795 $
388,262 $
272,904
144,041
(1,899)
415,046
(183,585)
231,461
278,161
155,885
(5)
434,041
(170,414)
263,627
54,805
72,274
13,112
140,191
13,798
153,989
332,966
228,159
13,107
574,232
(156,616)
417,616
$
$
$
$
$
$
$
$
$
$
$
$
$
$
(1) Adjusted Contribution to Profit is Contribution to (Loss) Profit adjusted for restructuring charges and impairment of goodwill and
intangible assets. See Note 7, “Restructuring and Related Charges” and Note 11, “Goodwill and Intangible Assets” for these
charges by segment.
(2) Adjusted EBITDA is Adjusted Contribution to Profit with depreciation and amortization added back.
Index
96
The following table shows a reconciliation of our consolidated U.S. GAAP net (loss) income to Non-GAAP EBITDA and Adjusted
EBITDA:
Net (Loss) Income
Interest expense
Provision for income taxes
Depreciation and amortization
Non-GAAP EBITDA
Impairment of goodwill and intangible assets
Restructuring and related charges
Foreign exchange transaction (gains) losses
Interest and other income
Non-GAAP Adjusted EBITDA
For the Years Ended April 30,
2019
2020
2018
$
$
$
(74,287) $
24,959
11,195
175,127
136,994 $
202,348
32,607
(2,773)
(13,381)
355,795 $
168,263 $
16,121
44,689
161,155
390,228 $
—
3,118
6,016
(11,100)
388,262 $
192,186
13,274
21,745
153,989
381,194
3,600
28,566
12,819
(8,563)
417,616
See Note 3, “Revenue Recognition, Contracts with Customers,” for revenue from contracts with customers disaggregated by segment
and product type for the years ended April 30, 2020, 2019 and 2018.
Total Assets
Research Publishing & Platforms
Academic & Professional Learning
Education Services
Corporate
Total
Product Development Spending and Additions to Technology, Property
and Equipment
Research Publishing & Platforms
Academic & Professional Learning
Education Services
Corporate
Total
For the Years Ended April 30,
2019
2018
2020
1,225,313 $
924,924
486,316
532,241
3,168,794 $
1,172,145 $
959,601
440,516
376,504
2,948,766 $
1,242,458
942,598
199,023
455,372
2,839,451
(16,329) $
(38,229)
(613)
(60,030)
(115,201) $
(12,928) $
(32,337)
(3,160)
(53,168)
(101,593)
(24,961)
(43,625)
(5,991)
(76,151)
(150,728)
$
$
$
$
Revenue from external customers is based on the location of the customer and Technology, Property and Equipment, Net by
geographic area were as follows:
United States
United Kingdom
Germany
Japan
Australia
China
Canada
France
Scandinavia
Other Countries
Total
$
$
2020
Revenue, net
2019
932,927 $
150,242
97,505
77,145
77,453
55,024
50,882
51,441
30,971
276,479
1,831,483 $ 1,800,069 $
944,075 $
174,567
113,664
75,104
73,718
58,870
56,370
45,033
29,682
260,400
Technology, Property and Equipment, Net
2018
2020
2019
2018
913,852 $
147,406
98,404
81,572
78,270
53,076
55,568
51,826
31,695
284,434
1,796,103 $
261,296 $
18,076
8,059
112
1,051
492
1,734
1,358
223
5,604
298,005 $
252,459 $
18,331
8,423
87
1,440
688
2,659
403
229
4,302
289,021 $
249,542
20,955
9,259
72
1,454
229
3,635
635
309
3,844
289,934
Index
97
Note 21 – Supplementary Quarterly Financial Information - Results By Quarter (Unaudited)
Amounts in millions, except per share data
Revenue, net
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Year ended April 30,
2020
2019
423.5 $
466.2
467.1
474.7
1,831.5 $
280.4 $
322.8
313.2
324.1
1,240.5 $
4.5 $
63.4
48.5
(170.7)
(54.3) $
3.6 $
44.7
35.4
(158.0)
(74.3) $
410.9
448.6
449.4
491.2
1,800.1
283.1
316.0
305.5
340.7
1,245.3
36.1
57.5
50.3
80.1
224.0
26.3
43.8
34.9
63.3
168.3
$
$
$
$
$
$
$
$
Gross Profit
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Year ended April 30,
Operating (Loss) Income
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Year ended April 30,
Net (Loss) Income
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Year ended April 30,
(Loss) Earnings Per Share (1)
First Quarter
Second Quarter
Third Quarter
Fourth Quarter (2)
Year ended April 30, (2)
2020
2019
Basic
Diluted
Basic
Diluted
$
$
0.06 $
0.79
0.63
(2.83)
(1.32) $
0.06 $
0.79
0.63
(2.83)
(1.32) $
0.46 $
0.76
0.61
1.11
2.94 $
0.45
0.76
0.61
1.10
2.91
(1)
(2)
The sum of the quarterly earnings per share amounts may not agree to the respective annual amounts due to rounding.
In calculating diluted net (loss) earnings per common share for the fourth quarter and year ended April 30, 2020, our diluted
weighted average number of common shares outstanding excludes the effect of unvested restricted stock units and other stock
awards as the effect was anti-dilutive. This occurs when a U.S. GAAP net loss is reported and the effect of using dilutive shares
is antidilutive.
Note 22 – Subsequent Events
Dividend:
On June 25, 2020, our Board of Directors declared a quarterly dividend of $0.3425 per share, or approximately $19.1 million, on our
Class A and Class B Common Stock. The dividend is payable on July 22, 2020 to shareholders of record on July 7, 2020.
Index
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, 2020.
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: During fiscal year 2020, we closed on the acquisition of mthree. We excluded
mthree from the scope of management’s report on internal control over financial reporting for the year ended April 30, 2020. We are
in the process of integrating mthree to our overall internal control over financial reporting and will include them in scope for the year
ending April 30, 2021. This process may result in additions or changes to our internal control over financial reporting. mthree
represented less than 1% of total consolidated assets, excluding goodwill and intangible assets which are included within the scope of
assessment, and approximately 1% of total consolidated revenues of the Company as of and for the year ended April 30, 2020.
We are in the process of implementing a new global ERP that will enhance our business and financial processes and standardize our
information systems. As previously disclosed, we have completed the implementation of record-to-report, purchase-to-pay and several
other business processes within all locations through fiscal year 2017. We completed the implementation of order-to-cash for certain
businesses in May 2018 and may continue to roll out additional processes and functionality of the ERP in phases in the foreseeable
future.
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 in the fourth quarter of fiscal year
2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None
Index
99
PART III
Item 10. Directors, Executive Officers and Corporate Governance
For information with respect to Executive Officers of the Company, see “Information About Our Executive Officers” as set forth in
Part I of this Annual Report on Form 10-K.
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 2020 Annual Meeting of Shareholders (“2020 Proxy Statement”) and are incorporated herein by
reference.
Information on the audit committee financial experts is contained in the 2020 Proxy Statement under the caption “Report of the Audit
Committee” and is incorporated herein by reference.
Information on the Audit Committee Charter is contained in the 2020 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 https://www.wiley.com/en-us/corporategovernance.
Item 11. Executive Compensation
Information on compensation of the directors and executive officers is contained in the 2020 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 2020
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 2020 Proxy Statement and is incorporated herein by reference.
The following table summarizes the Company's equity compensation plan information as of April 30, 2020:
Plan Category
Equity compensation plans approved by shareholders
Number of
Securities to be
Issued Upon Exercise
of Outstanding Options,
Warrants and Rights (1)
1,228,430
Weighted Average
Exercise Price of
Outstanding Options,
Warrants and Rights
50.14
$
Number of
Securities Remaining
Available for Future
Issuance Under Equity
Compensation Plans (2)
3,501,116
(1)
This amount includes the following awards issued under the 2014 Key Employee Stock Plan:
●
●
286,064 shares issuable upon the exercise of outstanding stock options with a weighted average exercise price of $50.14.
942,366 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.
(2)
Per the terms of the 2014 Key Employee Stock Plan (“Plan”), a total of 6,500,000 shares shall be authorized for awards granted
under the Plan, less one (1) share for every one (1) share that was subject to an option or stock appreciation right granted after
April 30, 2014 under the 2009 Key Employee Stock Plan and 1.76 Shares for every one (1) share that was subject to an award
other than an option or stock appreciation right granted after April 30, 2014 under the 2009 Key Employee Stock Plan. Any
shares that are subject to options or stock appreciation rights shall be counted against this limit as one (1) share for every one
(1) share granted, and any shares that are subject to awards other than options or stock appreciation rights shall be counted
against this limit as 1.76 Shares for every one (1) share granted. After the Effective Date of the Plan, no awards may be granted
under the 2009 Key Employee Stock Plan.
All of the Company's equity compensation plans are approved by shareholders.
Index
100
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
2020 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 2020 Proxy Statement.
Item 14. Principal Accounting Fees and Services
Information required by this item is contained in the 2020 Proxy Statement under the caption “Report of the Audit Committee” and is
incorporated herein by reference.
Index
101
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) Documents filed as a part of this Annual Report on Form 10-K:
(1) Financial Statements
See Index to Consolidated Financial Statements and Schedule of this Annual Report on Form 10-K.
(2) Financial Statement Schedule
See Schedule II — Valuation and Qualifying Accounts and Reserves — Years Ended April 30, 2020, 2019 and 2018 of this Annual
Report on Form 10-K. The other schedules are omitted as they are not applicable, or the amounts involved are not material.
(3) Exhibits
(a)
(b)
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
Index
See Index to Consolidated Financial Statements and Schedule of this Annual Report on Form 10-K and are filed as part
of this report.
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, 1996).
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).
Amended and Restated By-Laws dated as of September 2007 (incorporated by reference to the Company's Report on
Form 10-K for the year ended April 30, 2018).
Amended and Restated Credit Agreement dated May 30, 2019, among the Company and Bank of America, N.A., as
Administrative Agent, Swing Line Lender, and L/C Issuer, and the lenders and other agents party thereto (incorporated
by reference to the Company's Report on Form 8-K filed on June 5, 2019).
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).
2018 Director Stock Plan (incorporated by reference to the Company's Report on Form 10-K for the year ended April 30,
2019).
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 (incorporated by reference to the Company’s Report on Form 10-K for the year ended April 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 (incorporated by reference to the Company’s Report on Form 10-K for the year ended April 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 (incorporated by reference to the
Company’s Report on Form 10-K for the year ended April 30, 2013).
102
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
21*
23*
31.1*
31.2*
32.1*
32.2*
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104**
Deferred Compensation Plan for Directors' 2005 & After Compensation (incorporated by reference to the Report on
Form 8-K, filed December 21, 2005).
Form of the Fiscal Year 2020 Qualified Executive Long Term Incentive Plan (incorporated by reference to the
Company’s Report on Form 10-K for the year ended April 30, 2019).
Form of the Fiscal Year 2020 Qualified Executive Annual Incentive Plan (incorporated by reference to the Company’s
Report on Form 10-K for the year ended April 30, 2019).
Form of the Fiscal Year 2020 Executive Annual Strategic Milestones Incentive Plan (incorporated by reference to the
Company’s Report on Form 10-K for the year ended April 30, 2019).
Form of the Fiscal Year 2019 Qualified Executive Long Term Incentive Plan (incorporated by reference to the
Company’s Report on Form 10-K for the year ended April 30, 2018).
Form of the Fiscal Year 2019 Qualified Executive Annual Incentive Plan (incorporated by reference to the Company’s
Report on Form 10-K for the year ended April 30, 2018).
Form of the Fiscal Year 2019 Executive Annual Strategic Milestones Incentive Plan (incorporated by reference to the
Company’s Report on Form 10-K for the year ended April 30, 2018).
Form of the Fiscal Year 2018 Qualified Executive Long Term Incentive Plan (incorporated by reference to the
Company’s Report on Form 10-K for the year ended April 30, 2017).
Form of the Fiscal Year 2018 Qualified Executive Annual Incentive Plan (incorporated by reference to the Company’s
Report on Form 10-K for the year ended April 30, 2017).
Form of the Fiscal Year 2018 Executive Annual Strategic Milestones Incentive Plan (incorporated by reference to the
Company’s Report on Form 10-K for the year ended April 30, 2017).
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 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).
Separation and Release Agreement, effective June 9, 2017, between Mark Allin, former President and Chief Executive
Officer and the Company (incorporated by reference to the Company’s Report on Form 10-Q for the period ended July
31, 2017).
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).
Addendum to the Employment Agreement, effective June 26, 2017, between John A. Kritzmacher, and the Company
(incorporated by reference to the Company’s Report on Form 10-Q for the period ended July 31, 2017).
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).
Employment Letter dated September 26, 2016 between Judy Verses, Executive Vice President, and the Company
(incorporated by reference to the Company's Report on Form 10-K for the year ended April 30, 2019).
Employment Letter dated October 12, 2017 between Brian A. Napack, President and Chief Executive Officer, and the
Company (incorporated by reference to the Company’s Report on Form 10-Q for the period ended October 31, 2017).
Employment Letter dated February 5, 2019 between Matthew Kissner, Group Executive, and the Company (incorporated
by reference to the Company’s Report on Form 8-K filed on February 7, 2019).
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.
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL
tags are embedded within the Inline XBRL document).
Inline XBRL Taxonomy Extension Schema Document.
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
Inline XBRL Taxonomy Extension Definition Linkbase Document.
Inline XBRL Taxonomy Extension Label Linkbase Document.
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101
* Filed herewith
Index
103
Item 16. Form 10-K Summary
None.
(2) Financial Statement Schedule
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED APRIL 30, 2020, 2019, AND 2018
(Dollars in thousands)
Schedule II
Description
Year Ended April 30, 2020
Allowance for Sales Returns (1)
Allowance for Doubtful Accounts
Allowance for Inventory Obsolescence
Valuation Allowance on Deferred Tax Assets
Year Ended April 30, 2019
Allowance for Sales Returns (1)
Allowance for Doubtful Accounts
Allowance for Inventory Obsolescence
Valuation Allowance on Deferred Tax Assets
Year Ended April 30, 2018
Allowance for Sales Returns (1)
Allowance for Doubtful Accounts
Allowance for Inventory Obsolescence
Valuation Allowance on Deferred Tax Assets
Balance at
Beginning
of Period
Charged to
Expenses
Deductions
From Reserves
and Other(2)
Balance at
End of Period
$
$
$
$
$
$
$
$
$
$
$
$
18,542 $
14,307 $
15,825 $
21,179 $
18,628 $
10,107 $
18,193 $
8,811 $
24,300 $
7,186 $
21,096 $
1,300 $
48,829 $
5,470 $
8,699 $
2,108 $
37,483 $
5,279 $
7,328 $
51 $
38,711 $
5,439 $
9,182 $
7,511 $
47,729 $
1,442 $
8,457 $
— $
37,569 $
1,079 $
9,696 $
(12,317) $
44,383 $
2,518 $
12,085 $
— $
19,642
18,335
16,067
23,287
18,542
14,307
15,825
21,179
18,628
10,107
18,193
8,811
(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, net (in the year ended April 30, 2018) with a corresponding increase in Inventories, net and a reduction in Accrued
Royalties for the years ended April 30, 2020, 2019 and 2018. Due to the adoption of the revenue standard, the sales return reserve
as of April 30, 2020 and 2019 is recorded in Contract Liabilities. In prior periods, it was recorded as a reduction of Accounts
Receivable, net. See Note 3, “Revenue Recognition, Contracts with Customers,” of the Notes to Consolidated Financial
Statements for more information.
(2) Deductions From Reserves and Other for the years ended April 30, 2020, 2019 and 2018 include foreign exchange translation
adjustments. Included in Allowance for Doubtful Accounts are accounts written off, less recoveries. Included in Allowance for
Inventory Obsolescence are items removed from inventory. Included in Valuation Allowance on Deferred Tax Assets for the year
ended April 30, 2019 are foreign tax credits generated and valuation allowances needed in connection with the Tax Act.
Index
104
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Dated: June 26, 2020
JOHN WILEY & SONS, INC.
(Company)
By:/s/ Brian A. Napack
Brian A. Napack
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
/s/ Brian A. Napack
Brian A. Napack
President and Chief Executive Officer and
Director
Titles
/s/ John A. Kritzmacher
John A. Kritzmacher
/s/ Jesse C. Wiley
Jesse C. Wiley
/s/ Mari J. Baker
Mari J. Baker
/s/ George D. Bell
George D. Bell
/s/ Beth A. Birnbaum
Beth A. Birnbaum
/s/ David C. Dobson
David C. Dobson
/s/ Laurie A. Leshin
Laurie A. Leshin
Executive Vice President, Chief Financial Officer, and
Interim Chief Accounting Officer
Chairman of the Board
Director
Director
Director
Director
Director
/s/ Raymond W. McDaniel, Jr.
Raymond W. McDaniel, Jr.
Director
/s/ William Pence
William Pence
/s/ William J. Pesce
William J. Pesce
Director
Director
Dated
June 26, 2020
June 26, 2020
June 26, 2020
June 26, 2020
June 26, 2020
June 26, 2020
June 26, 2020
June 26, 2020
June 26, 2020
June 26, 2020
June 26, 2020
Index
105
Exhibit 21
SUBSIDIARIES OF JOHN WILEY & SONS, INC. (1)
As of April 30, 2020
Jurisdiction In Which Incorporated
Wiley edu, LLC
Wiley Periodicals LLC
Inscape Publishing LLC
Profiles International, LLC
PIIEU Ltd
Wiley Publishing LLC
Wiley India Private Ltd.
Wiley APAC Services LLP
WWL LLC
Wiley Global Technology (Private) Limited
John Wiley & Sons Rus LLC
Wiley International LLC
John Wiley & Sons (HK) Limited
Wiley HK2 Limited
John Wiley & Sons Canada Ltd
Zyante Inc.
Wiley Europe Investment Holdings, Ltd.
Wiley Europe Ltd.
Wiley Heyden Ltd.
John Wiley & Sons, Ltd.
E-Learning SAS
Atypon Systems Ltd UK
John Wiley & Sons Singapore Pte. Ltd.
John Wiley & Sons Commercial Service (Beijing) Co., Ltd.
MThree Corporate Consulting Limited
MThree Corporate Consulting Limited
Consultants M Trois Inc
Madgex Holdings Ltd
J Wiley Ltd.
John Wiley & Sons GmbH
Wiley-VCH Verlag GmbH & Co. KGaA
CrossKnowledge Group Limited
Blackwell Science (Overseas Holdings)
John Wiley & Sons A/S
Blackwell Verlag GmbH
Wiley Publishing Japan KK
Wiley Publishing Australia Pty Ltd.
John Wiley and Sons Australia, Ltd.
Delaware
Delaware
Delaware
Texas
United Kingdom
Delaware
India
India
Delaware
Sri Lanka
Russia
Delaware
Hong Kong
Hong Kong
Canada
Delaware
United Kingdom
United Kingdom
United Kingdom
United Kingdom
France
United Kingdom
Singapore
China
United Kingdom
United States
Canada
United Kingdom
United Kingdom
Germany
Germany
United Kingdom
United Kingdom
Denmark
Germany
Japan
Australia
Australia
(1) The names of other subsidiaries that would not constitute a significant subsidiary in the aggregate have been omitted.
Index
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Exhibit 23
The Board of Directors
John Wiley & Sons, Inc.:
We consent to the incorporation by reference in the registration statements (Nos. 33-62605, 333-93691, 333-123359, and 333-167697)
on Form S-8 of John Wiley & Sons, Inc. of our reports dated June 26, 2020, with respect to the consolidated statements of financial
position of John Wiley & Sons, Inc. as of April 30, 2020 and 2019, 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, 2020, and the related notes
and financial statement schedule, and the effectiveness of internal control over financial reporting as of April 30, 2020, which reports
appear in the April 30, 2020 annual report on Form 10-K of John Wiley & Sons, Inc.
Our report dated June 26, 2020, on the consolidated financial statements refers to a change in the method of accounting for leases
effective May 1, 2019 due to the adoption of Accounting Standard Codification (ASC) Topic 842, Leases. Our report on the
consolidated financial statements also refers to a change in the method of accounting for revenue recognition effective May 1, 2018
due to the adoption of ASC Topic 606, Revenue from Contracts with Customers.
Our report dated June 26, 2020, on the effectiveness of internal control over financial reporting contains an explanatory paragraph that
states the Company acquired mthree during the year ended April 30, 2020, and management excluded from its assessment of the
effectiveness of the Company’s internal control over financial reporting as of April 30, 2020, mthree’s internal control over financial
reporting. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control
over financial reporting of mthree.
/s/ KPMG LLP
New York, New York
June 26, 2020
Index
CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 31.1
I, Brian A. Napack, certify that:
1.
I have reviewed this annual report on Form 10-K of John Wiley & Sons, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement 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 report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant’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 registrant 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 registrant, 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 registrant’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 registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected or is reasonably likely to materially affect the registrant’s internal control over financial reporting;
and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant’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
registrant’s internal control over financial reporting.
By:
/s/ Brian A. Napack
Brian A. Napack
President and Chief Executive Officer
Dated: June 26, 2020
Index
CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 31.2
I, John A. Kritzmacher, certify that:
1.
I have reviewed this annual report on Form 10-K of John Wiley & Sons, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement 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 report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4. The registrant’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 registrant 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 registrant, 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 registrant’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 registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal controls over financial
reporting which are reasonably likely to adversely affect the registrant’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
registrant’s internal control over financial reporting
By:
/s/ John A. Kritzmacher
John A. Kritzmacher
Executive Vice President, Chief Financial Officer, and
Interim Chief Accounting Officer
Dated: June 26, 2020
Index
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, 2020
as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian A. Napack, President and Chief
Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, that based on 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/ Brian A. Napack
Brian A. Napack
President and Chief Executive Officer
Dated: June 26, 2020
Index
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, 2020
as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John A. Kritzmacher, Executive Vice
President, Chief Financial Officer, and Interim Chief Accounting Officer, of the Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that based on 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
Executive Vice President, Chief Financial Officer, and
Interim Chief Accounting Officer
Dated: June 26, 2020
Index