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John Wiley & Sons, Inc. Reports Second Quarter Fiscal Year 2015 Results

[December 09, 2014]

John Wiley & Sons, Inc. Reports Second Quarter Fiscal Year 2015 Results

John Wiley & Sons, Inc. (NYSE:JWa and JWb), a global provider of knowledge and knowledge-enabled services that improve outcomes in research, professional practice, and education, today announced the following results for the second quarter of fiscal year 2015:


			Change
$ millions	FY15	FY14	Excluding FX	Including FX

ADJUSTED

Revenue
Q2	$477	$449	6%	6%
6 Months	$915	$860	5%	6%
EPS
Q2	$0.90	$0.84	8%	7%
6 Months	$1.46	$1.35	8%	8%

US GAAP

Revenue
Q2	$477	$449	6%	6%
6 Months	$915	$860	5%	6%
EPS
Q2	$0.90	$0.61	49%	48%
6 Months	$1.46	$1.22	20%	20%

Please see the attached financial schedules for more detail

Management Commentary

"Our second quarter revenue growth reflects sustained momentum in Research journals and the expansion of our digital solutions portfolio across Professional Development and Education," said Steve Smith, President and CEO. "We delivered another quarter of solid earnings growth, resulting from the combination of continued revenue growth and efficiency gains from restructuring."

Fiscal Year 2015 Outlook

Wiley is reaffirming its fiscal year 2015 outlook of mid-single-digit revenue growth and EPS in a range of $3.25 to $3.35.

Second Quarter and First Half Summary

Second quarter revenue grew 6% on both a reported and constant currency basis to $477 million due to growth in Research (+5%) and Education (+3%), accompanied by contributions from CrossKnowledge and Profiles International, which were acquired at the end of the prior fiscal year. First half revenue grew 5% on a constant currency basis to $915 million.
Adjusted earnings per share (EPS) grew 8% on a constant currency basis to $0.90. Adjusted EPS excludes certain one-time or unusual items in the prior year as further described in the attached reconciliation of US GAAP to Adjusted EPS. Adjusted EPS growth was due to revenue growth in Research, including approximately $10 million for the sale of a backfile license, and company-wide cost savings resulting from restructuring partially offset by the dilutive impacts of investments in Talent Solutions and Education Services. Adjusted EPS for the first six months rose 8% to $1.46.
Adjusted shared services costs decreased 1% on a constant currency basis to $123 million, with Distribution and Operation Services (-12%) and Technology and Content Management (-1%) offsetting higher Other Administration costs (+10%) related to the acquisition of CrossKnowledge. Adjusted shared services and administrative costs, excluding the impact of currency, were down 1% in the first half of the year.
Free Cash Flow was a use of $141 million for the first half of the year as compared to a use of $112 million in the prior year period, mainly due to higher fiscal year 2014 annual incentive compensation payments, which were paid in the first quarter of fiscal year 2015, and restructuring payments related to reorganization. Note that free cash flow is seasonally negative in the first half of Wiley's fiscal year principally due to the timing of annual journal subscription cash collections.
Share Repurchases: Wiley repurchased 532,010 shares in the quarter at a cost of $29.4 million, or $55.19 per share. For the first six months, Wiley repurchased 732,502 shares at a cost of $41.5 million, or $56.70/share.
Reorganization: On November 13, the Company announced plans to reorganize the Research business. The reorganization will provide sharper focus on managing the portfolio of journal-related products and services. The books-related portion of Research will be managed toward increasing operating synergies with the Professional Development books business.

Third Quarter Restructuring Charge

The Company expects to record a restructuring charge of approximately $18 million in the third quarter. Roughly half of the expected charge is related to the completion of facility consolidations and dispositions in connection with prior restructuring actions. The restructuring charge will also include severance costs for reorganization and consolidation plans, primarily in Research and books, consistent with the November reorganization announcement.

Revised Allocations of Shared Services and Administrative Costs

In the first quarter of fiscal year 2015, the Company consolidated certain decentralized business functions (Content Management, Vendor Procurement Services, Marketing Services, etc.) into global shared service functions. These newly centralized service groups enable significant cost reduction opportunities, including efficiencies gained from standardized technology and centralized management. The costs of these functions were previously reported as direct operating expenses in each business segment but are now reported within the shared service functions. Prior year amounts have been revised to reflect the same reporting methodology.

Adjusted Results

The Company provides financial measures referred to as "adjusted" revenue, contribution to profit, and EPS, which exclude restructuring and impairment charges and deferred tax benefits related to a UK corporate income tax rate reduction. Variances to adjusted revenue, contribution to profit, and EPS are on a constant currency basis unless otherwise noted. Management believes the exclusion of such items provides additional information to facilitate the analysis of results. These non-GAAP measures are not intended to replace the financial results reported in accordance with GAAP.

Foreign Exchange ("FX")

Throughout this report, references are made to variances "excluding foreign exchange" or "on a constant currency basis"; such amounts exclude both currency translation effects and transactional gains and losses.

RESEARCH

Revenue: Second quarter revenue of $264.8 million grew 5% on a constant currency basis. Steady growth continued in Journal Subscription revenue (+2%) and Funded Access (+30%). Growth in Other Journal Revenue (+55%) included approximately $10 million for the sale of a backfile license. Books/References and Other Research revenue fell 9% and 13%, respectively. For the first six months, Research revenue increased 2% on a constant currency basis, to $519.7 million.
Calendar Year 2014 Journal Subscriptions: Through November 30, calendar year 2014 journal subscriptions increased 1.8% on a constant currency basis with nearly all expected business closed.
Adjusted Contribution to Profit: Second quarter adjusted contribution to profit after allocated shared service and administrative costs of $78.8 million increased 9% on a constant currency basis, the result of revenue growth and cost savings. For the first six months, adjusted contribution to profit grew 5% to $148.4 million.
Society Business: Three new society journals were signed in the quarter with combined annual revenue of $0.9 million; three were renewed worth $0.8 million annually; and two were not renewed, worth $0.4 million.
Swets Bankruptcy: Swets Information Services, a global library subscription agent based in Amsterdam, declared bankruptcy in late September. Impact to CY15 journal subscription revenue is expected to be on the order of $5 million. Wiley continues to investigate the matter and will provide an update when it releases third quarter earnings.

PROFESSIONAL DEVELOPMENT

Revenue: Second quarter revenue grew 14% on a constant currency basis to $105.7 million due to contribution from recent acquisitions, with full quarter revenue from both CrossKnowledge (+$11.3 million) and Profiles International (+$5.9 million). Excluding the contributions from both acquisitions, revenue was down 4% from prior year as declines in Book sales (-9%) exceeded growth in Online Test Preparation and Certification (+30%) and other Assessment revenue (+9%). Revenue for the first six months increased 12% on a constant currency basis to $198 million, reflecting four months of operating results from CrossKnowledge. As previously noted, financial results for the recently acquired CrossKnowledge are reported on a two-month delay pending implementation of reporting process improvements.
Adjusted Contribution to Profit: Second quarter adjusted contribution to profit after allocated shared service and administrative costs rose 2% to $9.7 million primarily due to restructuring savings offset by investment in Talent Solutions, which was dilutive to earnings, as expected. Adjusted contribution to profit for the first six months increased 48% on a constant currency basis.
Online Learning and Training: CrossKnowledge recently launched new learning modules featuring the latest in interactive content and mobile integration adapted for touch-screen technology. This new collection was designed with CrossKnowledge's authoring and publishing system, Mohive, which allows for quick customization and natively integrates web accessibility.

EDUCATION

Revenue: Second quarter revenue on a constant currency basis grew 3% to $106.5 million, with double digit growth in Custom Products (+11%), Course Workflow Solutions (16%), and Education Services (+19%) offsetting a 7% decline in Books. Revenue for the first six months grew 7% on a constant currency basis.
Adjusted Contribution to Profit: Second quarter adjusted contribution to profit after shared service and administrative costs fell 11% to $19.5 million, reflecting investment in Deltak. Adjusted contribution to profit for the first six months grew 2% on a constant currency basis.
Education Services (Deltak): In the quarter, Education Services added the University of Birmingham as its first European online program partner. The university is the UK's 11th largest with over 19,000 undergraduate and 9,000 postgraduate students. At quarter-end, Education Services had 37 partners and 181 programs (156 revenue-generating and 25 in development).

Earnings Conference Call

Scheduled for today, December 9, at 10:00 a.m. (EDT)
Access the webcast at www.wiley.com> Investor Relations> Events and Presentations, or http://www.wiley.com/WileyCDA/Section/id-370238.html
U.S. callers, please dial (888) 505-4369 and enter the participant code 8589771#
International callers, please dial (719) 325-2435 and enter the participant code 8589771#
An archive of the webcast will be available for a period of up to 14 days

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995

This release contains certain forward-looking statements concerning the Company's operations, performance, and financial condition. Reliance should not be placed on forward-looking statements, as actual results may differ materially from those in any forward-looking statements. Any such forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to uncertainties and contingencies, many of which are beyond the control of the Company, and are subject to change based on many important factors. Such factors include, but are not limited to (i) the level of investment in new technologies and products; (ii) subscriber renewal rates for the Company's journals; (iii) the financial stability and liquidity of journal subscription agents; (iv) the consolidation of book wholesalers and retail accounts; (v) the market position and financial stability of key online retailers; (vi) the seasonal nature of the Company's educational business and the impact of the used book market; (vii) worldwide economic and political conditions; (viii) the Company's ability to protect its copyrights and other intellectual property worldwide (ix) the ability of the Company to successfully integrate acquired operations and realize expected opportunities and (x) other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances.

About Wiley

Wiley is a global provider of knowledge and knowledge-enabled services that improve outcomes in areas of research, professional practice, and education. Through the Research segment, the Company provides digital and print scientific, technical, medical, and scholarly journals, reference works, books, database services, and advertising. The Professional Development segment provides digital and print books, online assessment and training services, and test prep and certification. In Education, Wiley provides education solutions including online program management services for higher education institutions and course management tools for instructors and students, as well as print and digital content.


JOHN WILEY & SONS, INC.
UNAUDITED SUMMARY OF OPERATIONS
FOR THE SECOND QUARTER AND SIX MONTHS ENDED
OCTOBER 31, 2014 AND 2013
(in thousands, except per share amounts)


SECOND QUARTER ENDED OCTOBER 31,

			2014						2013						% Change
			US GAAP		Adjustments		Adjusted		US GAAP		Adjustments (A-B)		Adjusted		US GAAP		Adjusted excl. FX

Revenue		$	476,972		-		476,972		449,153		-		449,153		6	%	6	%

Costs and Expenses
	Cost of Sales		134,541		-		134,541		130,352		-		130,352		3	%	3	%
	Operating and Administrative		253,328		-		253,328		237,526		-		237,526		7	%	6	%
	Restructuring Charges (A)		-		-		-		15,316		(15,316	)	-
	Impairment Charges (B)		-		-		-		4,786		(4,786	)	-
	Amortization of Intangibles		13,099		-		13,099		10,986		-		10,986		19	%	17	%

	Total Costs and Expenses		400,968		-		400,968		398,966		(20,102	)	378,864		1	%	5	%

Operating Income			76,004		-		76,004		50,187		20,102		70,289		51	%	10	%
	Operating Margin		15.9	%			15.9	%	11.2	%			15.6	%

Interest Expense			(4,506	)	-		(4,506	)	(3,392	)	-		(3,392	)	33	%	33	%
Foreign Exchange Gain (Loss)			210		-		210		(581	)	-		(581	)	-136	%	2	%
Interest Income and Other			1,108		-		1,108		491		-		491		126	%	126	%

Income Before Taxes			72,816		-		72,816		46,705		20,102		66,807		56	%	10	%

Provision (Benefit) for Income Taxes (A-B)			19,039		-		19,039		10,508		6,362		16,870		81	%	14	%

Net Income		$	53,777		-		53,777		36,197		13,740		49,937		49	%	9	%


Earnings Per Share- Diluted (A-B)		$	0.90		-		0.90		0.61		0.23		0.84		48	%	8	%

Average Shares - Diluted			59,756		59,756		59,756		59,416		59,416		59,416


SIX MONTHS ENDED OCTOBER 31,

			2014						2013						% Change
			US GAAP		Adjustments (A)		Adjusted		US GAAP		Adjustments (A-C)		Adjusted		US GAAP		Adjusted excl. FX

Revenue		$	914,889		-		914,889		860,173		-		860,173		6	%	5	%

Costs and Expenses
	Cost of Sales		258,594		-		258,594		250,143		-		250,143		3	%	2	%
	Operating and Administrative		505,062		-		505,062		474,521		-		474,521		6	%	5	%
	Restructuring (Credits) Charges (A)		(155	)	155		-		23,071		(23,071	)	-
	Impairment Charges (B)		-		-		-		4,786		(4,786	)	-
	Amortization of Intangibles		25,754		-		25,754		21,901		-		21,901		18	%	15	%

	Total Costs and Expenses		789,255		155		789,410		774,422		(27,857	)	746,565		2	%	4	%

Operating Income			125,634		(155	)	125,479		85,751		27,857		113,608		47	%	10	%
	Operating Margin		13.7	%			13.7	%	10.0	%			13.2	%

Interest Expense			(8,650	)	-		(8,650	)	(6,863	)	-		(6,863	)	26	%	26	%
Foreign Exchange Gain (Loss)			45		-		45		300		-		300		-85	%	15	%
Interest Income and Other			1,418		-		1,418		1,629		-		1,629		-13	%	-13	%

Income Before Taxes			118,447		(155	)	118,292		80,817		27,857		108,674		47	%	9	%

Provision (Benefit) for Income Taxes (A-C)			31,024		(24	)	31,000		8,687		19,779		28,466		257	%	9	%

Net Income		$	87,423		(131	)	87,292		72,130		8,078		80,208		21	%	9	%


Earnings Per Share- Diluted (A-C)		$	1.46		-		1.46		1.22		0.14		1.35		20	%	8	%

Average Shares - Diluted			59,777		59,777		59,777		59,294		59,294		59,294

		See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment.

JOHN WILEY & SONS, INC.

FOR THE SECOND QUARTER AND SIX MONTHS ENDED

OCTOBER 31, 2014 AND 2013

RECONCILIATION OF US GAAP TO ADJUSTED EPS - DILUTED (UNAUDITED)

Second Quarter Ended

Six Months Ended

October 31,

2014

2013

2014

2013

US GAAP Earnings Per Share - Diluted

0.90

0.61

1.46

1.22

Adjusted to exclude the following:

Restructuring Charges (A)

(0.17

)

(0.26

)

Impairment Charges (B)

(0.06

)

(0.06

)

Deferred Income Tax Benefit on UK Rate Change (C)

0.18

Adjusted Earnings Per Share - Diluted

0.90

0.84

1.46

1.35


NOTES TO UNAUDITED FINANCIAL STATEMENTS


Adjustments:
(A)		RESTRUCTURING CHARGES: The adjusted results for the six months ended October 31, 2014 and the three and six months ended October 31, 2013 exclude restructuring (credits) charges related to the Company's Restructuring and Reinvestment Program of ($0.2 million), $15.3 million or $0.17 per share, and $23.1 million or $0.26 per share, respectively.

(B)		IMPAIRMENT CHARGES: The adjusted results for the three and six months ended October 31, 2013 exclude impairment charges related to certain technology investments of $4.8 million or $0.06 per share.

(C)		Deferred Income Tax Benefit on UK Rate Change: The adjusted results for the six months ended October 31, 2013 exclude deferred tax benefits of $10.6 million, or $0.18 per share, associated with tax legislation enacted in the United Kingdom that reduced the U.K. corporate income tax rates by 3%. The benefits reflect the remeasurement of the Company's deferred tax balances to the new income tax rates of 21% effective April 1, 2014 and 20% effective April 1, 2015 and had no current cash tax impact.

Non-GAAP Financial Measures:
In addition to providing financial results in accordance with GAAP, the Company has provided adjusted financial results that exclude the impact of other nonrecurring items described in more detail throughout this press release. These non-GAAP financial measures are labeled as "Adjusted" and are used for evaluating the results of operations for internal purposes. These non-GAAP measures are not intended to replace the presentation of financial results in accordance with GAAP. Rather, the Company believes the exclusion of such items provides additional information to investors to facilitate the comparison of past and present operations. Unless otherwise noted, adjusted amounts in the attached schedules include foreign exchange.


JOHN WILEY & SONS, INC.
UNAUDITED SEGMENT RESULTS
FOR THE SECOND QUARTER AND SIX MONTHS ENDED
OCTOBER 31, 2014 AND 2013
(in thousands)


SECOND QUARTER ENDED OCTOBER 31,

		2014						2013					% Change
		US GAAP		Adjustments (A)		Adjusted		US GAAP		Adjustments (A)	Adjusted		US GAAP		Adjusted excl. FX
Revenue
Research	$	264,825		-		264,825		252,947		-	252,947		5	%	5	%
Professional Development		105,667		-		105,667		92,545		-	92,545		14	%	14	%
Education		106,480		-		106,480		103,661		-	103,661		3	%	3	%

Total	$	476,972		-		476,972		449,153		-	449,153		6	%	6	%

Direct Contribution to Profit
Research	$	121,577		-		121,577		112,854		3,401	116,255		8	%	5	%
Professional Development		36,799		-		36,799		34,972		2,114	37,086		5	%	-1	%
Education		40,154		-		40,154		40,484		210	40,694		-1	%	0	%

Total	$	198,530		-		198,530		188,310		5,725	194,035		5	%	3	%

Contribution to Profit (After Allocated Shared Services
and Admin. Costs)
Research	$	78,753		-		78,753		69,664		3,401	73,065		13	%	9	%
Professional Development		9,725		-		9,725		7,504		2,114	9,618		30	%	2	%
Education		19,505		-		19,505		22,185		210	22,395		-12	%	-11	%

Total	$	107,983		-		107,983		99,353		5,725	105,078		9	%	4	%

Unallocated Shared Services and Admin. Costs		(31,979	)	-		(31,979	)	(49,166	)	14,377	(34,789	)	-35	%	-8	%

Operating Income	$	76,004		-		76,004		50,187		20,102	70,289		51	%	10	%




Total Shared Services and Admin. Costs by Function
Distribution and Operation Services	$	(22,443	)	-		(22,443	)	(27,642	)	2,361	(25,281	)	-19	%	-12	%
Technology and Content Management		(59,452	)	-		(59,452	)	(70,780	)	10,960	(59,820	)	-16	%	-1	%
Finance		(12,817	)	-		(12,817	)	(13,457	)	-	(13,457	)	-5	%	-5	%
Other Administration		(27,814	)	-		(27,814	)	(26,244	)	1,056	(25,188	)	6	%	10	%
Total	$	(122,526	)	-		(122,526	)	(138,123	)	14,377	(123,746	)	-11	%	-1	%


SIX MONTHS ENDED OCTOBER 31,

		2014						2013					% Change
		US GAAP		Adjustments (A)		Adjusted		US GAAP		Adjustments (A)	Adjusted		US GAAP		Adjusted excl. FX
Revenue
Research	$	519,695		-		519,695		498,735		-	498,735		4	%	2	%
Professional Development		197,994		-		197,994		176,631		-	176,631		12	%	12	%
Education		197,200		-		197,200		184,807		-	184,807		7	%	7	%

Total	$	914,889		-		914,889		860,173		-	860,173		6	%	5	%

Direct Contribution to Profit
Research	$	235,428		(185	)	235,243		222,861		5,372	228,233		6	%	2	%
Professional Development		69,140		245		69,385		61,189		5,667	66,856		13	%	3	%
Education		68,306		51		68,357		64,630		258	64,888		6	%	6	%

Total	$	372,874		111		372,985		348,680		11,297	359,977		7	%	3	%

Contribution to Profit (After Allocated Shared Services
and Admin. Costs)
Research	$	148,604		(185	)	148,419		135,413		5,372	140,785		10	%	5	%
Professional Development		17,323		245		17,568		6,234		5,667	11,901		-		48	%
Education		28,176		51		28,227		27,651		258	27,909		2	%	2	%

Total	$	194,103		111		194,214		169,298		11,297	180,595		15	%	7	%

Unallocated Shared Services and Admin. Costs		(68,469	)	(266	)	(68,735	)	(83,547	)	16,560	(66,987	)	-18	%	1	%

Operating Income	$	125,634		(155	)	125,479		85,751		27,857	113,608		47	%	10	%




Total Shared Services and Admin. Costs by Function
Distribution and Operation Services	$	(46,503	)	384		(46,119	)	(53,090	)	2,574	(50,516	)	-12	%	-10	%
Technology and Content Management		(121,274	)	(557	)	(121,831	)	(130,667	)	10,960	(119,707	)	-7	%	1	%
Finance		(26,459	)	(93	)	(26,552	)	(26,242	)	-	(26,242	)	1	%	0	%
Other Administration		(53,004	)	-		(53,004	)	(52,930	)	3,026	(49,904	)	0	%	5	%
Total	$	(247,240	)	(266	)	(247,506	)	(262,929	)	16,560	(246,369	)	-6	%	-1	%

	See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment. Certain prior year amounts have been reclassified to conform to the current year's presentation.


UNAUDITED ADJUSTED CONTRIBUTION TO PROFIT
INCLUDING ALLOCATED SHARED SERVICES AND ADMINISTRATIVE COSTS
FOR THE SECOND QUARTER AND SIX MONTHS ENDED
OCTOBER 31, 2014 AND 2013
(in thousands)


	Second Quarter Ended								Six Months Ended
	October 31,								October 31,
	2014		2013		% Change		% Change excl. FX		2014		2013		% Change		% Change excl. FX


Research:
Direct Contribution to Profit	121,577		112,854		8	%	8	%	235,428		222,861		6	%	4	%
Restructuring (Credits) Charges (A)	-		3,401						(185	)	5,372
Adjusted Direct Contribution to Profit	121,577		116,255		5	%	5	%	235,243		228,233		3	%	2	%

Allocated Shared Services and Admin. Costs:
Distribution and Operation Services	(11,449	)	(11,828	)	-3	%	-4	%	(23,419	)	(23,395	)	0	%	-3	%
Technology and Content Management	(25,314	)	(24,843	)	2	%	1	%	(51,186	)	(51,081	)	0	%	-2	%
Occupancy and Other	(6,061	)	(6,519	)	-7	%	-7	%	(12,219	)	(12,972	)	-6	%	-8	%
Adjusted Contribution to Profit (after allocated	78,753		73,065		8	%	9	%	148,419		140,785		5	%	5	%
Shared Services and Admin. Costs)

Professional Development:
Direct Contribution to Profit	36,799		34,972		5	%	5	%	69,140		61,189		13	%	13	%
Restructuring Charges (A)	-		2,114						245		5,667
Adjusted Direct Contribution to Profit	36,799		37,086		-1	%	-1	%	69,385		66,856		4	%	3	%

Allocated Shared Services and Admin. Costs:
Distribution and Operation Services	(7,991	)	(9,503	)	-16	%	-16	%	(16,270	)	(19,156	)	-15	%	-16	%
Technology and Content Management	(11,953	)	(12,969	)	-8	%	-9	%	(22,797	)	(26,038	)	-12	%	-13	%
Occupancy and Other	(7,130	)	(4,996	)	43	%	43	%	(12,750	)	(9,761	)	31	%	31	%
Adjusted Contribution to Profit (after allocated	9,725		9,618		1	%	2	%	17,568		11,901		48	%	48	%
Shared Services and Admin. Costs)

Education:
Direct Contribution to Profit	40,154		40,484		-1	%	0	%	68,306		64,630		6	%	6	%
Restructuring Charges (A)	-		210						51		258
Adjusted Direct Contribution to Profit	40,154		40,694		-1	%	0	%	68,357		64,888		5	%	6	%

Allocated Shared Services and Admin. Costs:
Distribution and Operation Services	(3,226	)	(3,848	)	-16	%	-16	%	(6,545	)	(7,889	)	-17	%	-17	%
Technology and Content Management	(13,828	)	(11,407	)	21	%	21	%	(26,815	)	(23,044	)	16	%	16	%
Occupancy and Other	(3,595	)	(3,044	)	18	%	18	%	(6,770	)	(6,046	)	12	%	12	%
Adjusted Contribution to Profit (after allocated	19,505		22,395		-13	%	-11	%	28,227		27,909		1	%	2	%
Shared Services and Admin. Costs)

Total Adjusted Contribution to Profit (after	107,983		105,078		3	%	4	%	194,214		180,595		8	%	7	%
allocated Shared Services and Admin. Costs)

Unallocated Shared Services and Admin. Costs:
Unallocated Shared Services and Admin. Costs	(31,979	)	(49,166	)	-35	%	-35	%	(68,469	)	(83,547	)	-18	%	-19	%
Restructuring (Credits) Charges (A)	-		9,591						(266	)	11,774
Impairment Charges (B)	-		4,786						-		4,786
Adjusted Unallocated Shared Services and Admin. Costs	(31,979	)	(34,789	)	-8	%	-8	%	(68,735	)	(66,987	)	3	%	1	%

Adjusted Operating Income	76,004		70,289		8	%	10	%	125,479		113,608		10	%	10	%

	See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment. Certain prior year amounts have been reclassified to conform to the current year's presentation.

JOHN WILEY & SONS, INC.

SEGMENT REVENUE by PRODUCT/SERVICE

FOR THE SECOND QUARTER AND SIX MONTHS ENDED

OCTOBER 31, 2014 AND 2013

(in thousands)

Second Quarter

Six Months

Ended October 31,

% of

% Change

Ended October 31,

% of

% Change

2014

2013

Revenue

excl. FX

2014

2013

Revenue

excl. FX

RESEARCH

Research Communication:

Journal Subscriptions

168,315

164,119

64%

337,138

324,339

127%

Funded Access

5,067

3,857

30%

10,496

7,191

41%

Other Journal Revenue

36,425

23,534

14%

55%

62,887

49,094

24%

26%

209,807

191,510

79%

410,521

380,624

155%

Books and References:

Print Books

26,843

31,069

10%

-14%

52,915

58,493

20%

-11%

Digital Books

9,957

9,383

19,213

18,952

-1%

36,800

40,452

14%

-9%

72,128

77,445

27%

-9%

Other Research Revenue

18,218

20,985

-13%

37,046

40,666

14%

-10%

Total Revenue

264,825

252,947

100%

519,695

498,735

196%

PROFESSIONAL DEVELOPMENT

Knowledge Services:

Print Books

52,685

59,794

50%

-12%

108,612

116,102

103%

-7%

Digital Books

14,465

13,980

14%

24,964

25,637

24%

-3%

Online Test Preparation and Certification

5,538

4,275

30%

8,487

7,121

19%

Other Knowledge Service Revenue

6,539

5,942

10%

12,315

12,630

12%

-3%

79,227

83,991

75%

-6%

154,378

161,490

146%

-5%

Talent Solutions:

Assessment

15,187

8,554

14%

78%

28,309

15,141

27%

87%

Online Learning and Training

11,253

11%

15,307

14%

26,440

8,554

25%

209%

43,616

15,141

41%

188%

Total Revenue

105,667

92,545

100%

14%

197,994

176,631

187%

12%

EDUCATION

Books:

Print Textbooks

41,778

45,202

39%

-6%

86,313

86,574

81%

Digital Books

8,450

9,360

-10%

14,154

13,560

13%

50,228

54,562

47%

-7%

100,467

100,134

94%

Custom Products

16,363

14,762

15%

11%

35,935

31,074

34%

16%

Course Workflow Solutions (WileyPLUS)

18,397

15,916

17%

16%

19,711

17,012

19%

16%

Education Services (Deltak)

19,699

16,551

19%

35,935

31,251

34%

15%

Other Education Revenue

1,793

1,870

-4%

5,152

5,336

-3%

Total Revenue

106,480

103,661

100%

197,200

184,807

185%

Note: Segment Revenue Categorization

Wiley has modified its segment product revenue categories to reflect recent changes to the business, including acquisitions and restructuring. All prior periods have been revised to reflect the new categorization.

JOHN WILEY & SONS, INC.

UNAUDITED STATEMENTS OF FINANCIAL POSITION

(in thousands)

October 31,

April 30,

2014

2013

2014

Current Assets

Cash & cash equivalents

198,912

149,662

486,377

Accounts receivable

204,424

180,175

149,733

Inventories

70,941

81,368

75,495

Prepaid and other

66,233

52,377

78,057

Total Current Assets

540,510

463,582

789,662

Product Development Assets

58,851

67,149

82,940

Technology, Property and Equipment

190,811

184,050

188,718

Intangible Assets

992,618

961,588

984,661

Goodwill

1,003,290

851,309

903,665

Income Tax Deposits

64,036

61,001

64,037

Other Assets

62,659

61,782

63,682

Total Assets

2,912,775

2,650,461

3,077,365

Current Liabilities

Short-term debt

50,000

Accounts and royalties payable

180,033

161,649

142,534

Deferred revenue

163,902

138,354

385,654

Accrued employment costs

66,737

83,738

118,503

Accrued income taxes

10,127

7,804

13,324

Accrued pension liability

4,625

4,389

4,671

Other accrued liabilities

52,976

44,579

64,901

Total Current Liabilities

528,400

440,513

729,587

Long-Term Debt

749,513

647,900

700,100

Accrued Pension Liability

155,497

203,266

164,634

Deferred Income Tax Liabilities

234,685

194,639

222,482

Other Long-Term Liabilities

82,278

77,773

78,314

Shareholders' Equity

1,162,402

1,086,370

1,182,248

Total Liabilities & Shareholders' Equity

2,912,775

2,650,461

3,077,365

JOHN WILEY & SONS, INC.

UNAUDITED STATEMENTS OF FREE CASH FLOW

(in thousands)

Six Months Ended

October 31,

2014

2013

Operating Activities:

Net income

87,423

72,130

Amortization of intangibles

25,754

21,901

Amortization of composition costs

20,810

22,827

Depreciation of technology, property and equipment

30,510

28,909

Restructuring and impairment charges

(155)

27,857

Restructuring payments

(16,267)

(12,453)

Deferred tax benefits on U.K. rate changes

(10,634)

Share-based compensation expense

8,118

7,305

Excess tax (benefits) charges from share-based compensation

(1,774)

1,672

Royalty advances

(47,997)

(44,005)

Earned royalty advances

64,939

59,926

Other non-cash charges and credits

20,436

29,651

Change in deferred revenue

(223,731)

(229,572)

Income tax deposit

(3,783)

(10,433)

Net change in operating assets and liabilities, excluding acquisitions

(58,419)

(31,579)

Cash Used for Operating Activities

(94,136)

(66,498)

Investments in organic growth:

Composition spending

(16,934)

(19,290)

Additions to technology, property and equipment

(29,584)

(26,199)

Free Cash Flow

(140,654)

(111,987)

Other Investing and Financing Activities:

Acquisitions, net of cash

(172,145)

(739)

Proceeds from sale of consumer publishing programs

1,100

Repayment of long-term debt

(228,051)

(293,500)

Borrowings of long-term debt

275,070

268,400

Borrowings of short-term debt

50,000

Change in book overdrafts

(8,123)

(23,836)

Cash dividends

(34,402)

(29,347)

Purchase of treasury shares

(41,534)

(18,533)

Proceeds from exercise of stock options and other

18,876

24,900

Excess tax benefits (charges) from share-based compensation

1,774

(1,672)

Cash Used for Investing and Financing Activities

(137,435)

(74,327)

Effects of Exchange Rate Changes on Cash

(9,376)

1,836

Decrease in Cash and Cash Equivalents for Period

(287,465)

(184,478)

RECONCILIATION TO GAAP PRESENTATION

Investing Activities:

Composition spending

(16,934)

(19,290)

Additions to technology, property and equipment

(29,584)

(26,199)

Acquisitions, net of cash

(172,145)

(739)

Proceeds from sale of consumer publishing programs

1,100

Cash Used for Investing Activities

(217,563)

(46,228)

Financing Activities:

Cash Used for Investing and Financing Activities

(137,435)

(74,327)

Excluding:

Acquisitions, net of cash

(172,145)

(739)

Proceeds from sale of consumer publishing programs

1,100

Cash Provided by (Used for) Financing Activities

33,610

(73,588)

Note: The Company's management evaluates performance using free cash flow. The Company believes free cash
flow provides a meaningful and comparable measure of performance. Since free cash flow is not a measure
calculated in accordance with GAAP, it should not be considered as a substitute for other GAAP measures, including
cash used for or provided by operating activities, investing activities and financing activities, as an indicator of
performance.

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