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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: April, 30, 2000
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the transition period from to
Commission file number 1-11507
JOHN WILEY & SONS, INC.
(Exact name of Registrant as specified in its charter)
NEW YORK 13-5593032
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State or other jurisdiction of I.R.S. Employer
Incorporation or organization Identification No.
605 Third Avenue, New York, NY 10158-0012
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Address of principal executive offices Zip Code
Registrant's telephone number including area code (212) 850-6000
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Securities registered pursuant to Section 12(b) of the Act
Title of each class Name of each exchange on which registered
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Class A Common Stock, par value $1.00 per share New York Stock Exchange
Class B Common Stock, par value $1.00 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of 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 _____
The number of shares outstanding of the Registrant's Class A and Class B Common
Stock, par value $1.00 per share as of May 31, 2000, was 48,923,008 and
11,813,564 respectively, and the aggregate market value of such shares of Common
Stock held by non-affiliates of the Registrant as of such date was $660,729,313
based upon the closing market price of the Class A and Class B Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's Definitive proxy Statement to be filed with the Commission on
or about August 8, 2000 for the Annual Meeting of Shareholders to be held on
September 21, 2000, (the "2000 Proxy Statement") is, to the extent noted below,
incorporated by reference in Part III.
PART I
Item 1. Business
The Company is a New York corporation incorporated on January 15,
1904. (As used herein the term "Company" means John Wiley & Sons,
Inc., and its subsidiaries and affiliated companies, unless the
context indicates otherwise).
The Company is a global publisher of print and electronic
products, specializing in scientific, technical and medical
journals and books; professional and consumer books and
subscription services; and textbooks and other educational
materials for undergraduate and graduate students as well as
lifelong learners. The Company has publishing, marketing and
distribution centers in the United States, Canada, Europe, Asia,
and Australia. Technology is enabling the Company to make its
content more accessible to its global communities of interest.
Scientific, Technical, and Medical (STM) Publishing
The Company is a leading publisher for the scientific, technical
and medical communities worldwide. It's STM programs encompass
journals, encyclopedias, books and other products in subjects such
as the life and medical sciences, chemistry, statistics and
mathematics, and electrical and electronics engineering. The
Company develops products in the United States, the United
Kingdom, and Germany - primarily in English, but in some cases
German - for global distribution. STM publishing represented 41%
of total revenues in fiscal 2000.
Wiley InterScience, the Company's Web-based service, offers more
than 300 of the Company's STM journals online for sale by
subscription license, and, in the future, by purchase of access to
individual articles. In addition, the Company is expanding the
content of Wiley InterScience to include fully searchable online
reference material as evidenced by the recent launch of the online
24-volume Wiley Encyclopedia of Electrical and Electronics
Engineering, the first of approximately 30 major reference works
that are to be added to Wiley InterScience. Titles will include
the 27-volume Kirk-Othmer Encyclopedia of Chemical Technology and
the 28-volume Ullmann's Encyclopedia of Industrial Chemistry,
Patty's Industrial Hygiene and Toxicology, as well as Current
Protocols, the widely used laboratory manual series.
Other new features of Wiley InterScience include EarlyView,
launched in May 2000, wherein customers can access individual
articles online well in advance of the print issue. The Company is
also improving Wiley InterScience with full-text HTML versions of
journal content, allowing more advanced search and navigation
options, and providing customers with greater choice and control
over the information they retrieve.
The Company entered into an alliance with 32 other publishers to
launch and operate CrossRef to facilitate the research process.
CrossRef is an electronic linking system that will allow a reader
to click on a reference in a journal published by one participant
and go directly to the referenced article, even if it is published
by another participant and located on that publisher's server.
Professional/Trade Publishing
The Company's professional/trade program includes books and
subscription products, both print and electronic, for
professionals and business people. Subject areas include business,
accounting, computers, psychology, architecture, engineering,
culinary arts, education/health management and general interest.
Products are developed in the United States, Canada, Europe, Asia,
and Australia for worldwide distribution through multiple
channels, including bookstores, the Internet, and direct
marketing. Professional/trade publishing accounted for 33% of
total revenues in fiscal 2000.
During the year, the Company acquired Jossey-Bass for
approximately $81 million. Jossey-Bass specializes in books and
journals for professionals and executives in such areas as
business, psychology and education/health management. The Company
also acquired the J.K. Lasser tax and financial guides during the
year. In addition, the Company has expanded its alliances to
include an agreement with CNBC, a world leader in business news,
to publish a series of books that will provide insights into
personal investing, and educate both avid CNBC viewers and the
average consumer.
Electronic products are a growing part of the professional/trade
program. Examples include the Wiley Virtual CPA Exam Review,
developed in partnership with KeepSmart.com, Inc. Based on the
Company's Delaney CPA Examination Review, it adds convenience and
value for customers by transforming the product into a fully
interactive course on the Web. The Web-based version offers CPA
candidates the interactivity of a live classroom experience, with
a program that lets them study at their desktop computers. It
features full-streaming audio and video lectures, online learning
and problem-solving, and a discussion forum monitored by
accounting professionals.
The Company's TheraScribe/Practice Planner library has been used
in print and electronic formats by more than 200,000 behavioral
health professionals to improve the quality of patient care and
streamline clinical recordkeeping. The Company is partnering with
Netsmart Technologies to deliver this product to customers'
desktops in a dynamic publishing model.
Management training is another area that lends itself to online
products. Jossey-Bass is developing a Web-based version of its
widely used management assessment program, Leadership Practices
Inventory, by James M. Kouzes and Barry Z. Posner. The new
interactive version is designed to facilitate management training
and evaluation through online scoring and test administration,
test/retest score analysis, and detailed feedback on how managers
can improve their leadership skills.
The Internet not only enables the Company to deliver content
online, but also helps to sell more books. The growth of online
booksellers benefits the Company because they provide unlimited
virtual "shelf space" for the Company's entire backlist. More than
10% of the Company's worldwide sales of professional and trade
books in fiscal 2000 were through online bookstores.
Educational Publishing
The Company publishes English-language textbooks and other
educational materials in print, CD-ROMs, and online formats in the
United States, Canada, Europe, and Australia for undergraduate and
graduate students and lifelong learners. Programs are targeted,
focusing on the sciences, mathematics, engineering, and business.
In Australia, the Company is also a leading publisher for the
secondary school market. Educational publishing generated 26% of
total revenues in fiscal 2000.
During the current fiscal year, the Company acquired certain
publishing assets from Pearson Education for approximately $57
million, including college textbooks and instructional packages in
biology/anatomy and physiology, engineering, computer science,
mathematics, economics, finance, and teacher education.
All of the Company's major textbooks have a technology component.
Currently, there are over 300 Websites serving the needs of
professors and students. As part of the purchase price of a new
text, a student receives a password to a Website containing
additional and timely learning materials.
The Company is working with course management providers, such as
WebCT and Blackboard, to offer interactive syllabi, chat rooms,
and assessment tools including online quizzing and testing. In
addition, the Company has formed a partnership with Versaware Inc.
to issue approximately 15 Wiley texts as ebooks that can be read
online, downloaded, or printed from the Web.
One of the trends in higher education is toward distance learning
- students taking online courses either on or off campus. The
Company's initial efforts involve exploratory projects as this
market evolves, including forming partnerships with course
developers, such as an alliance with Caliber Learning Network to
provide distance learning courses to the higher education and
corporate training markets; the transatlantic alliance with the
International Securities Market Association in Switzerland to
create Internet-based finance courses; and the alliance with the
Institute for Operations Research and Management Science (INFORMS)
to provide online teaching cases for use in courses in management
science, operations research, operations management, and other
business and engineering areas.
Publishing Operations
Journal Products
The Company publishes over 400 journals and other
subscription-based products, which accounted for approximately 34%
of the Company's fiscal 2000 revenues. Most journals are owned by
the Company, in which case they may or may not be sponsored by a
professional society. Some are owned by such societies and
published by the Company under an agreement. Societies which
sponsor or own such journals generally receive a royalty and/or
other consideration which varies with the nature of the
relationship. The Company usually enters into agreements with
outside independent editors of journals which state the duties of
the editors, and the fees and expenses for their services.
Contributors of journal articles transfer publication rights to
the Company or professional society, as applicable.
Journal subscriptions result primarily from direct mail and other
advertising and promotional campaigns, renewals which are
solicited annually either directly or by companies commonly
referred to as independent subscription agents, and memberships in
the professional societies for those journals that are sponsored
by such societies. Printed journals are generally mailed to
subscribers directly from independent printers.
Journal content for virtually all of the journals is also made
available online through subscription licenses ranging from one to
three years, and by selling online access to individual journal
articles.
Book Products
Materials for book publications are obtained from authors
throughout most of the world through the efforts of an editorial
staff, outside editorial advisors, and advisory boards. Most
materials originate with their authors, but many are prepared as a
result of suggestions or solicitations by editors or advisors. The
Company usually enters into agreements with authors which state
the terms and conditions under which the respective authors'
materials will be published and under which other related rights
may be exercised, the name in which the copyright will be
registered, the basis for any royalties, and other matters. Most
of the authors are compensated by royalties which vary with the
nature of the product and its anticipated sales potential. In
general, royalties for textbooks and consumer books are higher
than royalties for research and reference works. The Company makes
advances against future royalties to authors of certain of its
publications. The Company continues to add new titles, revise
existing titles, and discontinue the sale of others in the normal
course of its business. The Company's general practice is to
revise its basic textbooks every three to five years, if
warranted, and to revise other titles as appropriate.
Subscription-based products, other than journals, are updated more
frequently on a regular schedule. Approximately 35% of the
Company's fiscal 2000 domestic book publishing revenues were from
titles published or revised in that fiscal year.
Professional and consumer book sales consist of sales to trade
bookstores and online booksellers serving the general public, to
wholesalers who supply such bookstores, to certain college
bookstores for their non-textbook requirements, to individual
professional practitioners, and to research institutions, jobbers,
libraries (including public, professional, academic, and other
special libraries), industrial organizations, and governmental
agencies. The Company employs sales representatives who call upon
independent bookstores, along with national and regional chain
bookstores, wholesalers and jobbers. Trade sales to bookstores,
wholesalers and jobbers are generally made on a fully returnable
basis. Sales of professional and consumer books also result from
direct mail campaigns, telemarketing, online access, and
advertising and reviews in periodicals.
Adopted textbooks (i.e., textbooks prescribed for course use) are
sold primarily to bookstores, including online bookstores, serving
educational institutions. The Company employs sales
representatives who call on faculty members responsible for
selecting books to be used in courses, and on the bookstores which
serve such institutions and their students. Textbook sales are
generally made on a fully returnable basis. The textbook business
is seasonal with the majority of textbook sales occurring during
June through August and November through January. There is an
active used textbook market which negatively affects the sales of
new textbooks.
Like most other publishers, the Company generally contracts with
independent printers and binderies for their services. The Company
purchases its paper from independent suppliers and printers. Paper
prices on average decreased slightly during fiscal 2000, but are
expected to increase in the future. The Company believes that
adequate printing and binding facilities, and sources of paper and
other required materials are available to it, and that it is not
dependent upon any single supplier. Printed book products are
distributed from Company operated warehouses.
The Company performs marketing and distribution services for other
publishers under agency arrangements. It also engages in
co-publishing of titles with foreign publishers and in publication
of adaptations of works from other publishers for particular
markets. The Company also receives licensing revenues from
photocopies, reproductions and electronic uses of its content.
The Company is increasingly developing content in digital format
that can be used for both online and print products, which results
in productivity and efficiency savings, as well as being able to
offer customized publishing and print-on-demand products. Book
content is increasingly being made available online and in ebook
format through licenses with alliance partners. The Company is
also developing online communities of interest both on its own and
in partnership with others to expand the market for its products.
The Company believes that the demand for new electronic technology
products will increase. Accordingly, to properly service its
customers and to remain competitive, the Company anticipates it
will be necessary to increase its expenditures related to such new
technologies over the next several years.
International Operations
The Company's publications are sold throughout most of the world
through subsidiaries located in Europe, Canada, Australia, and
Asia, or through agents, or directly from the United States. These
subsidiaries market their own indigenous publications, as well as
publications produced by the domestic operations and other
subsidiaries and affiliates. The Export Sales Department in the
United States markets the Company's publications through agents as
well as foreign sales representatives in countries not served by a
foreign subsidiary. John Wiley & Sons International Rights, Inc.
sells foreign reprint and translations rights. The Company
publishes, or licenses others to publish, its products which are
distributed throughout the world in 35 foreign languages.
Approximately 41% of the Company's fiscal 2000 revenues were
derived from non-U.S. markets.
Copyrights, Patents, Trademarks, and Environment
Substantially all of the Company's publications are protected by
copyright, either in its own name, in the name of the author of
the work, or in the name of the sponsoring professional society.
Such copyrights protect the Company's exclusive right to publish
the work in the United States and in many countries abroad for
specified periods: in most cases the author's life plus 70 years,
but in any event a minimum of 28 years for works published prior
to 1978 and 35 years for works published thereafter.
The Company does not own any other material patents, franchises,
or concessions, but does have registered trademarks and service
marks in connection with its publishing businesses. The Company's
operations are generally not affected by environmental
legislation.
Concentration of Credit Risk
The Company's business is not dependent upon a single customer,
the loss of which could have a material adverse effect. The
journal subscription business is primarily sourced through
independent subscription agents who facilitate the journal
ordering process by consolidating the subscription orders/billings
of each subscriber with various publishers. Monies are collected
in advance from subscribers by the subscription agents and are
remitted to the journal publishers, including the Company,
generally prior to the commencement of the subscriptions. Although
at fiscal year-end the Company had minimal credit risk exposure to
these agents, future calendar year subscription receipts from
these agents are highly dependent on their financial position and
liquidity. Subscription agents account for approximately 24% of
total consolidated revenues and no one agent accounts for more
than 7% of total consolidated revenues. The book publishing
business has witnessed a significant concentration in national and
regional bookstore chains in recent years; however, no one
customer accounts for more than 6% of total consolidated revenues.
Competition Within the Publishing Industry
The sectors of the publishing industry in which the Company is
engaged are highly competitive. The principal competitive criteria
for the publishing industry are believed to be product quality,
suitability of format and subject matter, author reputation,
price, timely availability of both new titles and revisions of
existing books, online availability of journal and other published
information and, for textbooks and certain trade books, timely
delivery of products to retail outlets and consumers. Recent years
have seen a consolidation trend within the publishing industry,
including several publishing companies having been acquired by
larger publishers and other companies.
Based upon currently available industry statistics, the Company
believes that of books published and sold in the United States, it
accounts for approximately 5% of the total sales of such
university and college textbooks, and approximately 3% of the
total sales of such professional books.
The Company knows of no reliable industry statistics which would
enable it to determine its share of the various foreign markets in
which it operates. The Company believes that the percentage of its
total book publishing sales in markets outside the United States
is higher than that of most of the United States publishers. The
Company also believes it is in the top rank of publishers of
scientific and technical journals worldwide, as well as the
leading commercial chemistry publisher at the research level, and
one of the leading publishers of university and college textbooks
for the "hardside" disciplines, i.e., sciences, engineering and
mathematics.
Employees
As of April 30, 2000, the Company employed approximately 2,300
persons on a full-time basis worldwide.
Financial Information About Industry Segments
The note entitled "Segment Information" of the Notes to
Consolidated Financial Statements listed in the attached index is
incorporated herein by reference.
Financial Information about Foreign and
Domestic Operations and Export Sales
The note entitled "Segment Information" of the Notes to
Consolidated Financial Statements listed in the attached index is
incorporated herein by reference.
Executive Officers
Set forth below as of April 30, 2000 are the names and ages of all
executive officers of the Company, the period during which they
have been officers, and the offices presently held by each of
them.
Name and age Officer since Present office
Bradford Wiley II 1993 Chairman of the Board since January
59 1993 and a Director
William J. Pesce 1989 President and Chief Executive
49 Officer and a Director since May 1,
1998, (previously Chief Operating
Officer; Executive Vice President,
Educational and International
Group; Senior Vice President,
Educational and International
Group;and Senior Vice President,
Educational Publishing)
Stephen A. Kippur 1986 Executive Vice President and
53 President, Professional and Trade
Publishing since July 1998
(previously Executive Vice
President and Group President,
Professional, Reference & Trade;
Senior Vice President,Professional,
Reference & Trade Publishing Group)
Robert D. Wilder 1986 Executive Vice President and Chief
51 Financial and Operations Officer
since June 1996 previously Senior
Vice President, Chief Financial
Officer)
William Arlington 1990 Senior Vice President, Human
51 Resources since June 1996
(previously Vice President,
Human Resources)
Peter W. Clifford 1989 Senior Vice President, Finance,
54 Corporate Controller and Chief
Accounting Officer since June 1996
(previously Vice President, Finance
and Controller)
Timothy B. King 1996 Senior Vice President, Planning and
60 Planning and Development)
Richard S. Rudick 1978 Senior Vice President, General
61 Counsel since June 1989
Deborah E. Wiley 1982 Senior Vice President, Corporate
54 Communications since June 1996
(previously Vice President and
Director of Corporate
Communications, and a Director of
the Company until September 1998.)
Each of the officers listed above will serve until the next
organizational meeting of the Board of Directors of the Company
and until each of the respective successors is duly elected and
qualified. Deborah E. Wiley is the sister of Bradford Wiley II.
There is no other family relationship among any of the
aforementioned individuals.
Item 2. Properties
The Company's publishing businesses occupy office, warehouse, and
distribution centers 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).
Lease Expiration
Location Purpose Approx. Sq. Ft. Date
Leased-domestic
New York Executive and 232,000 2003
Editorial Offices
New Jersey Distribution 170,000 2003
Center and Office
New Jersey Warehouses 247,000 2002
California Office 40,000 2002
Owned-foreign
Germany Office 66,000
Leased-foreign
Australia Office 16,000 2002
Warehouse 29,000 2003
Canada Office 14,000 2001
Warehouse 41,000 2001
England Office 49,000 2009
Warehouse 96,000 2012
Germany Warehouse 70,000 2008
Singapore Office and 53,000 2002
Warehouse
All of the buildings and the equipment owned or leased are
believed to be in good condition and are generally fully utilized.
Item 3. Legal Proceedings
The Company is involved in routine litigation in the ordinary
course of its business. In the opinion of management, the ultimate
resolution of all pending litigation will not have a material
effect upon the financial condition or results of operations of
the Company.
Item 4. Submission of Matters to a
Vote of Security Holders
No matters were submitted to the Company's security holders during
the last quarter of the fiscal year ended April 30, 2000.
PART II
Item 5. Market for the Company's Common
Equity and Related Stockholder Matters
The Quarterly Share Prices, Dividends and Related Stockholder
Matters listed in the attached index are incorporated herein by
reference.
Item 6. Selected Financial Data
The Selected Financial Data listed in the attached index is
incorporated herein by reference.
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Management's Discussion and Analysis of Financial Condition and
Results of Operations listed in the attached index is incorporated
herein by reference.
Item 7A. Quantitative And Qualitative Disclosures About Market Risk
The information appearing under the caption "Market Risk" in
Management's Discussion and Analysis of Financial Condition and
Results of Operations listed in the attached index is incorporated
herein by reference.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary data listed in the
attached index are incorporated herein by reference.
Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers
The information regarding the Board of Directors on pages 4 to 10
of the 2000 Proxy Statement is incorporated herein by reference,
and information regarding Executive Officers appears in Part I of
this report.
Item 11. Executive Compensation
The information on pages 9 to 15 of the 2000 Proxy Statement is
incorporated herein by reference.
Item 12. Security Ownership of Certain
Beneficial Owners and Management
The information on pages 2, 3, 7, and 8 of the 2000 Proxy
Statement is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
None.
PART IV
Item 14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K
(a) Financial Statements and Schedules
(1) List of Financial Statements filed. The financial
statements listed in the attached index are filed as part
of this Report.
(2) List of Financial Statement Schedules filed. The financial
statement schedules listed in the attached index are
filed as part of this Report.
(b) Reports on Form 8-K.
No reports on form 8-K were filed during the quarter ended April
30, 2000.
(c) Exhibits
2.1 Amendment No. 1 to the Asset Purchase Agreement dated
as of April 15, 1999 between the Company and Pearson
Inc. (incorporated by reference to the Company's Report
on Form 8-K dated as of May 10, 1999).
2.2 Asset Purchase Agreement dated as of April 15, 1999
between the Company and Pearson Inc. (incorporated
by reference to the Company's Report on Form 8-K dated as
of May 10, 1999).
2.3 Stock Purchase Agreement dated as of May 21, 1999 between
the Company and Pearson Education, Inc. (incorporated by
reference to the Company's Report on Form 8-K dated as of
May 21, 1999).
3.1 Restated Certificate of Incorporation (incorporated by
reference to the Company's Report on Form 10-K for the
year ended April 30, 1992).
3.2 Certificate of Amendment of the Certificate of
Incorporation dated October 13, 1995 (incorporated by
reference to the Company's Report on Form 10-K for the
year ended April 30, 1997).
3.3 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).
3.4 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).
3.5 By-Laws as Amended and Restated 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).
10.1 Credit agreement dated as of November 15, 1996 among the
Company, the Banks from time to time parties hereto, and
Morgan Guaranty Trust Company of New York, as Agent
(incorporated by reference to the Company's report on Form
10-Q for the quarterly period ended October 31, 1996).
10.2 Agreement of Lease dated as of May 16, 1985 between Fisher
40th & 3rd Company and Hawaiian Realty, Inc., Landlord,
and the Company, Tenant (incorporated by reference to the
Company's Report on Form 10-K for the year ended April 30,
1985).
10.3 Long Term Incentive Plan (incorporated by reference to the
Company's Definitive Proxy Statement dated August 6, 1999)
10.4 Executive Annual Incentive Plan (incorporated by reference
to the Company's Definitive Proxy Statement dated August
6, 1999).
10.5 1991 Key Employee Stock Plan (incorporated by reference to
the Company's Definitive Proxy Statement dated August 8,
1991).
10.6 Amendment to 1991 Key Employee Stock plan dated as of
September 19, 1996 (incorporated by reference to
the Company's Definitive Proxy Statement dated August
9, 1996).
10.7 1987 Incentive Stock Option and Performance Stock Plan
(incorporated by reference to the Company's Definitive
Proxy Statements dated August 10, 1987).
10.8 Amendment to 1987 Incentive Stock Option and Performance
Stock Plan dated as of March 2, 1989 (incorporated by
reference to the Company's Report on Form 10-K for the
year ended April 30, 1989).
10.9 1990 Director Stock Plan as Amended and Restated as
of June 22, 1995 (incorporated by reference to the
Company's Report on Form 10-K for the year ended April
30, 1997).
10.10 1989 Supplemental Executive Retirement Plan (incorporated
by reference to the Company's Report on Form 10-K for the
year ended April 30, 1989).
10.11 Form of the Fiscal Year 1998 Executive Long Term Incentive
Plan (incorporated by reference to the Company's Report on
Form 10-K for the year ended April 30, 1998).
10.12 Form of the Fiscal Year 1999 Executive Long Term Incentive
Plan (incorporated by reference to the Company's Report on
Form 10-K for the year ended April 30, 1999).
10.13 Form of the Fiscal Year 2000 Qualified Executive Long Term
Incentive Plan.
10.14 Form of the Fiscal Year 2000 Qualified Executive Annual
Incentive Plan.
10.15 Form of the Fiscal Year 2000 Executive Annual Strategic
Milestones Incentive Plan.
10.16 Senior Executive Employment Agreement dated as of January
8, 1998 between William J. Pesce and the Company
(incorporated by reference to the Company's Report on Form
10-K for the year ended April 30, 1998).
10.17 Restricted Stock Award Agreement dated as of June 23, 1994
between William J. Pesce and the Company (incorporated by
reference to the Company's Report on Form 10-Q for the
quarterly period ended July 31, 1995).
10.18 Senior Executive Employment Agreement dated as of July 1,
1994 between Stephen A. Kippur and the Company
(incorporated by reference to the Company's Report on Form
10-Q for the quarterly period ended July 31, 1995).
10.19 Amendment No. 1 to Stephen A. Kippur's Senior
Executive Employment Agreement dated as of July 1,1994
(incorporated by reference to the Company's Report on
Form 10-Q for the quarterly period ended July 31, 1995).
10.20 Restricted Stock Award Agreement dated as of June 23, 1994
between Stephen A. Kippur and the Company (incorporated by
reference to the Company's Report on Form 10-Q for the
quarterly period ended July 31, 1995).
10.21 Employment Agreement dated as of June 15, 2000 between
Robert D. Wilder and the Company.
10.22 Senior Executive Employment Agreement dated as of July 1,
1994 between Robert D. Wilder and the Company
(incorporated by reference to the Company's Report on Form
10-Q for the quarterly period ended July 31, 1995).
10.23 Amendment No. 1 to Robert D. Wilder's Senior
Executive Employment Agreement dated as of July 1, 1994
(incorporated by reference to the Company's Report on
Form 10-Q for the quarterly period ended July 31, 1995).
10.24 Restricted Stock Award Agreement dated as of June 23, 1994
between Robert D. Wilder and the Company (incorporated by
reference to the Company's Report on Form 10-Q for the
quarterly period ended July 31, 1995).
10.25 Employment Agreement letter dated as of January 16, 1997
between Richard S. Rudick and the Company (Incorporated by
reference to the Company's Report on Form 10-K for the
year ended April 30, 1997).
10.26 Employment Agreement letter dated as of January 16, 1997
between Timothy B. King and the Company.
22 List of Subsidiaries of the Company.
23 Consent of Independent Public Accountants (included in this
report as listed in the attached index).
27 Financial Data Schedule.
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
The following financial statements and information appearing on the pages
indicated are filed as part of this Report:
Page(s)
Report of Independent Public Accountants and
Consent of Independent Public Accountants................................14
Consolidated Statements of Financial Position
as of April 30, 2000 and 1999............................................15
Consolidated Statements of Income and Retained Earnings
for the years ended April 30, 2000, 1999 and 1998........................16
Consolidated Statements of Comprehensive Income
for the years ended April 30, 2000, 1999 and 1998........................16
Consolidated Statements of Cash Flows for the
years ended April 30, 2000, 1999 and 1998................................17
Notes to Consolidated Financial Statements...............................18 - 28
Management's Discussion and Analysis of Financial Condition
and Results of Operations...........................................29 - 33
Results by Quarter (Unaudited)................................................33
Quarterly Share Prices, Dividends and Related Stockholder Matters.............33
Selected Financial Data.......................................................34
Schedule II - Valuation and Qualifying Accounts
for the years ended April 30, 2000, 1999 and 1998........................35
Other schedules are omitted because of absence of conditions under which they
apply or because the information required is included in the Notes to
Consolidated Financial Statements.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and the Shareholders
of John Wiley & Sons, Inc.:
We have audited the accompanying consolidated statements of financial position
of John Wiley & Sons, Inc. (a New York corporation), and subsidiaries as of
April 30, 2000 and 1999, and the related consolidated statements of income and
retained earnings, comprehensive income and cash flows for each of the three
years in the period ended April 30, 2000. These financial statements and the
schedule referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements and
the schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of John Wiley & Sons, Inc., and
subsidiaries as of April 30, 2000 and 1999, and the results of their operations
and their cash flows for each of the three years in the period ended April 30,
2000 in conformity with accounting principles generally accepted in the United
States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the Index to
Consolidated Financial Statements and Schedules is presented for purposes of
complying with the Securities and Exchange Commission's rules and is not a
required part of the basic financial statements. This schedule has been
subjected to the auditing procedures applied in our audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
New York, New York
June 8, 2000
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form 10-K of our report dated June 8, 2000 included in
Registration Statement File Nos. 333-93691, 33-60268, 2-65296, 2-95104, 33-29372
and 33-62605. It should be noted that we have not audited any financial
statements of the company subsequent to April 30, 2000 or performed any audit
procedures subsequent to the date of our report.
ARTHUR ANDERSEN LLP
New York, New York
June 28, 2000
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
John Wiley & Sons, Inc. and Subsidiaries April 30
------------------------
Dollars in thousands 2000 1999
========================
Assets
Current Assets
Cash and cash equivalents $ 42,299 $148,970
Accounts receivable 68,080 53,785
Inventories 46,109 40,003
Deferred income tax benefits 10,999 3,865
Prepaid expenses 9,624 9,347
------------------------
Total Current Assets 177,111 255,970
------------------------
Product Development Assets 39,809 38,099
Property and Equipment 38,226 34,726
Intangible Assets 297,085 174,911
Deferred Income Tax Benefits 3,395 13,001
Other Assets 13,711 11,845
------------------------
Total Assets $569,337 $528,552
------------------------
Liabilities and Sharelholders' Equity
Current Liabilities
Notes payable and current portion of long-term debt $ 30,000 $ -
Accounts and royalties payable 45,816 34,708
Deferred subscription revenues 112,337 110,143
Accrued income taxes 6,102 3,356
Other accrued liabilities 59,795 46,893
------------------------
Total Current Liabilities 254,050 195,100
------------------------
Long-Term Debt 95,000 125,000
Other Long-Term Liabilities 32,109 30,271
Deferred Income Taxes 15,440 15,969
Shareholders' Equity
Common stock issued
Class A ( 67,891,602 and 67,548,260 shares) 67,892 67,548
Class B ( 15,298,660 and 15,641,752 shares) 15,299 15,642
Additional paid-in capital 14,178 13,045
Retained earnings 198,539 154,759
Accumulated other comprehensive income (3,642) (526)
Unearned deferred compensation (1,703) (3,114)
------------------------
290,563 247,354
Less Treasury shares at cost (Class A - 18,994,081 and 17,323,920;
Class B - 3,484,096 and 3,484,096) (117,825) (85,142)
------------------------
Total Shareholders' Equity 172,738 162,212
------------------------
Total Liabilities and Shareholders' Equity $569,337 $528,552
========================
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
AND RETAINED EARNINGS
John Wiley & Sons, Inc. and Subsidiaries For the years ended April 30
-------------------------------------------
Dollars in thousands except per share data 2000 1999 1998
===========================================
Revenues $594,815 $508,435 $467,081
Costs and Expenses
Cost of sales 194,939 173,983 164,169
Operating and administrative expenses 294,425 261,353 253,284
Amoritization of intangibles 16,447 9,445 8,764
-------------------------------------------
Total Costs and Expenses 505,811 444,781 426,217
-------------------------------------------
Gain on Sale of Publishing Assets - - 21,292
-------------------------------------------
Operating Income 89,004 63,654 62,156
Interest Income and Other 2,017 5,713 3,863
Interest Expense (8,390) (7,322) (7,933)
-------------------------------------------
Interest Income (Expense) -Net (6,373) (1,609) (4,070)
-------------------------------------------
Income Before Taxes
82,631 62,045 58,086
Provision for Income Taxes
30,243 22,336 21,498
-------------------------------------------
Net Income
52,388 39,709 36,588
-------------------------------------------
Retained Earnings at Beginning of Year 154,759 122,906 93,337
Cash Dividends
Class A Common ($.1425, $.1275 and $.1125 per share)
(7,075) (6,479) (5,766)
Class B Common ($.1275, $.1125 and $.1000 per share)
(1,533) (1,377) (1,253)
Total Dividends -------------------------------------------
(8,608) (7,856) (7,019)
-------------------------------------------
Retained Earnings at End of Year $198,539 $154,759 $ 122,906
===========================================
Income Per Share
Diluted $ 0.81 $ 0.60 $ 0.55
Basic $ 0.85 $ 0.63 $ 0.58
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
John Wiley & Sons, Inc. and Subsidiaries For the years ended April 30
Dollars in thousands 2000 1999 1998
-------------------------------------------
Net Income $ 52,388 $ 39,709 $ 36,588
Other Comprehensive Income
Foreign currency translation adjustments (3,116) 14 (646)
-------------------------------------------
Comprehensive Income $ 49,272 $ 39,723 $ 35,942
===========================================
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
John Wiley & Sons, Inc. and Subsidiaries For the years ended April 30
-------------------------------------------
Dollars in thousands 2000 1999 1998
===========================================
Operating Activities
Net Income $ 52,388 $ 39,709 $ 36,588
Noncash Items
Amortization of intangibles 16,447 9,445 8,764
Amortization of composition costs 24,900 21,322 20,213
Depreciation of property and equipment 11,822 9,788 9,188
Reserves for returns, doubtful accounts, and obsolescence 11,211 5,406 10,181
Deferred income taxes 1,795 (1,056) 9,234
Gain on sale of publishing assets - - (21,292)
Other 12,675 10,822 15,483
Changes in Operating Assets and Liabilities
Decrease (increase) in receivables (21,611) 1,151 (2,872)
Decrease (increase) in inventorie (1,149) 3,032 4,426
Increase (decrease) in accounts and royalties payable 6,134 (1,917) 6,000
Increase in deferred subscription revenues 3,602 10,413 5,983
Increase in other accrued liabilities 12,100 8,037 8,211
Net change in other operating assets and liabilities 1,525 1,746 (6,049)
------------------------------------------
Cash Provided by Operating Activities 131,839 117,898 104,058
------------------------------------------
Investing Activities
Additions to product development assets (33,153) (31,998) (30,220)
Additions to property and equipment (15,804) (10,631) (11,935)
Proceeds from sale of publishing assets - - 26,500
Acquisitions of publishing assets (145,111) (10,429) (30,491)
------------------------------------------
Cash Used for Investing Activities (194,068) (53,058) (46,146)
------------------------------------------
Financing Activities
Purchase of treasury shares (35,317) (38,549) (4,281)
Net repayments of short-term debt - - (156)
Cash dividends (8,608) (7,856) (7,019)
Proceeds from issuance of stock on option exercises and other 3,891 5,159 2,288
------------------------------------------
Cash Used for Financing Activities (40,034) (41,246) (9,168)
------------------------------------------
Effects of exchange rate changes on cash (4,408) (2,029) (455)
------------------------------------------
Cash and Cash Equivalents
Increase (decrease) for year (106,671) 21,565 48,289
Balance at beginning of year 148,970 127,405 79,116
-----------------------------------------
Balance at end of year $ 42,299 $148,970 $127,405
=========================================
Cash Paid During the Year for
Interest $ 8,556 $ 7,886 $ 8,042
Income taxes $ 21,122 $ 17,201 $ 12,409
The accompanying notes are an integral part of the consolidated financial statements.
Notes to Consolidated Financial Statements
Summary of Significant Accounting Policies
Principles of Consolidation: The consolidated financial statements include the
accounts of John Wiley & Sons, Inc., and its majority-owned subsidiaries (the
"Company"). All significant intercompany accounts and transactions have been
eliminated in consolidation. Certain prior year amounts have been reclassified
to conform to the current year's presentation.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Revenue Recognition: Revenues are principally recognized upon shipment of
products. Subscription revenues are generally collected in advance, and are
deferred and recognized as earned when the related issue is shipped or made
available on-line to the subscriber.
Sales Returns and Doubtful Accounts: The Company provides an estimated allowance
for doubtful accounts and for future returns on sales made during the year. The
allowance for doubtful accounts and returns (estimated returns net of inventory
and royalty costs) is shown as a reduction of receivables in the accompanying
consolidated balance sheets and amounted to $53.4 and $41.8 million at April 30,
2000 and 1999, respectively.
Inventories: Inventories are stated at cost or market, whichever is lower.
Domestic book inventories aggregating $35.4 and $27.4 million at April 30, 2000
and 1999, respectively, are valued using the last-in, first-out (LIFO) method.
All other inventories are valued using the first-in, first-out method.
Depreciation and Amortization: Buildings, leasehold improvements, and capital
leases are amortized over the lesser of the estimated useful lives of the assets
up to 40 years, or the duration of the various leases, using the straight-line
method. Furniture and equipment is depreciated principally on the straight-line
method over estimated useful lives ranging from 3 to 10 years. Composition costs
representing the costs incurred to bring an edited manuscript to publication
including typesetting, proofreading, design and illustration, etc., are
capitalized and amortized over estimated useful lives representative of product
revenue patterns, generally three years. Capitalized internal-use software is
amortized on a straight-line basis over its estimated useful life, generally 3
years.
Intangible Assets: Intangible assets consist of acquired publication rights,
which are principally amortized on a straight-line basis over periods ranging
from 3 to 30 years; noncompete agreements, which are amortized over the term of
such agreements; and goodwill and other intangibles, which are amortized on a
straight-line basis over periods ranging from 5 to 40 years. If facts and
circumstances indicate that long-lived assets and/or intangible assets may be
permanently impaired, it is the Company's policy to assess the carrying value
and recoverability of such assets based on an analysis of undiscounted future
cash flows of the related operations. Any resulting reduction in carrying value
based on the estimated fair value would be charged to operating results. As a
result of this review, approximately $3.6 million of intangibles was written-off
and charged against operating income in fiscal year 2000, and $3.3 million in
fiscal year 1998.
Derivative Financial Instruments - Foreign Exchange Contracts: The Company, from
time to time, enters into forward exchange contracts as a hedge against its
overseas subsidiaries' foreign currency asset, liability, commitment and
anticipated transaction exposures. To qualify as a hedge, the financial
instrument must be designated as a hedge against identified items which have a
high correlation with the financial instrument. The Company does not use
financial instruments for trading or speculative purposes. Realized and
unrealized gains and losses are deferred and taken into income over the lives of
the hedged items if permitted by generally accepted accounting principles;
otherwise, the contracts are marked to market with any gains and losses
reflected in operating expenses. There were no open foreign exchange contracts
and no
gains or losses were deferred at April 30, 2000 or 1999. Included in
operating and administrative expenses were net foreign exchange gains (losses)
of approximately $.1, $(.1) and $(.1) million in 2000, 1999, and 1998,
respectively.
Stock-Based Compensation: Stock options and restricted stock grants are
accounted for in accordance with Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and the disclosure-only provisions of
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation". Accordingly, the Company recognizes no compensation
expense for fixed stock option grants since the exercise price is equal to the
fair value of the shares at date of grant. For restricted stock grants,
compensation cost is generally recognized ratably over the vesting period based
on the fair value of shares.
Cash Equivalents: Cash equivalents consist primarily of highly liquid
investments with a maturity of three months or less and are stated at cost plus
accrued interest, which approximates market value.
New Accounting Standards: In fiscal year 2000, the Company adopted Statement of
Position (SOP) 98-1, "Accounting for the Cost of Computer Software Developed or
Obtained for Internal Use" issued by the American Institute of Certified Public
Accountants. SOP 98-1 requires that certain costs incurred in developing or
obtaining internal use software be capitalized and amortized over the useful
life of the software. Previously, the Company expensed most of these costs as
incurred. The adoption of SOP 98-1 had the effect of increasing net income in
fiscal year 2000 by approximately $1.5 million.
The Financial Accounting Standards Board issued SFAS No. 133 "Accounting for
Derivative Instruments and Hedging Activities", which specifies the accounting
and disclosure requirements for such instruments, and is effective for the
Company's fiscal year beginning on May 1, 2001. It is anticipated that the
adoption of this new accounting standard will not have a material effect on the
consolidated financial statements of the Company.
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. (SAB) 101. SAB 101 summarizes certain areas of the SEC's
views in applying generally accepted accounting principals to revenue
recognition in financial statements. The Company believes that its current
revenue recognition policies comply with SAB 101.
Income Per Share
A reconciliation of the shares used in the computation of net income per share
for the years ended April 30, follows:
In thousands 2000 1999 1998
- ----------------------------- ----------- ---------- -----------
Weighted average shares
outstanding 62,229 63,738 63,876
Less: Unearned deferred
compensation shares
(505) (781) (782)
- ----------------------------- ----------- ---------- -----------
Shares used for basic
income per share
61,724 62,957 63,094
Dilutive effect of stock
options and other stock
awards 3,101 3,556 2,858
- ----------------------------- ----------- ---------- -----------
Shares used for diluted
income per share
64,825 66,513 65,952
- ----------------------------- ----------- ---------- -----------
Acquisitions
In the first quarter of fiscal year 2000, the Company acquired certain higher
education titles for approximately $57 million in cash, and Jossey-Bass for
approximately $81 million in cash, from Pearson Inc. The higher education titles
include such disciplines as biology/anatomy and physiology, engineering,
mathematics, economics, finance and teacher education. Jossey-Bass publishes
books and journals for professionals and executives in such areas as business,
psychology and educational/health management. The Company also acquired the J.K.
Lasser tax and financial guides for approximately $5 million in cash and other
smaller acquisitions for approximately $2 million. The acquisitions were
financed by available cash balances and short-term lines of credit. The cost of
the acquisitions has been allocated on the basis of preliminary estimates of the
fair values of the assets acquired and the liabilities assumed. Final asset and
liability fair values may differ based on appraisals and tax bases, however, it
is anticipated that any changes will not have a material effect, in the
aggregate, on the consolidated financial position of the Company. The excess of
cost over the preliminary estimate of the fair value of the tangible assets
acquired amounted to approximately $143 million, relating primarily to acquired
publication rights, goodwill and noncompete agreements which are being amortized
on a straight-line basis over estimated average lives ranging from 3 to 20
years.
In fiscal 1999, the Company acquired various publishing properties for
approximately $10.4 million in cash including the Huthig Publishing Group's
scientific book and journals program; the German Materials Science Society book
program; Chronimed's publishing program in such areas as general health,
cooking, nutrition, diabetes and other chronic illnesses; Hewin International, a
publisher of technological-commercial reports in the areas of agrochemicals,
biochemistry, oleochemicals, and petrochemicals; and the remaining shares of
Verlag Helvetica Chemica Acta, a scientific publisher of chemistry books and
journals. The excess of cost over the fair value of the tangible assets acquired
amounted to approximately $11.4 million, relating primarily to acquired
publishing rights that are being amortized on a straight-line basis over periods
ranging from 5 to 30 years.
In fiscal 1998, the Company acquired the publishing assets of Van Nostrand
Reinhold (VNR) for approximately $28 million in cash. VNR publishes in such
areas as architecture / design, environmental / industrial sciences, culinary
arts / hospitality, and business technology. The excess of cost over the fair
value of the tangible assets acquired amounted to approximately $23 million,
relating primarily to acquired publication rights that are being amortized on a
straight-line basis over an estimated average life of 15 years. In addition,
during the year, the Company acquired various newsletters, books, and journals
for purchase prices aggregating approximately $2 million, which primarily
relates to acquired publication rights that are being amortized over periods
ranging from 15 to 30 years.
All acquisitions have been accounted for by the purchase method, and the
accompanying financial statements include their results of operations
since their respective dates of acquisition.
Divested Operations
In fiscal 1998, the Company sold its domestic law publishing program for $26.5
million, resulting in a gain of $21.3 million. Offsetting this gain are special
asset write-downs and other items amounting to approximately $4.4 million,
including write-downs of intangible assets of approximately $3.3 million. The
net effect of these unusual items amounted to a pretax gain of $16.9 million, or
$9.7 million after taxes, equal to $.14 per diluted share, or $.15 per basic
share.
Inventories
Inventories at April 30 were as follows:
Dollars in thousands 2000 1999
- --------------------------- ----------------- ----------------
Finished Goods $40,370 $ 34,485
Work-in-Process 3,537 5,325
Paper, Cloth, and Other 5,241 2,007
- --------------------------- ----------------- ----------------
49,148 41,817
LIFO Reserve (3,039) (1,814)
- --------------------------- ----------------- ----------------
Total $46,109 $ 40,003
- --------------------------- ----------------- ----------------
Product Development Assets
Product development assets consisted of the following at April 30:
Dollars in thousands 2000 1999
- ---------------------------------- ------------ -------------
Composition Costs $26,753 $27,110
Royalty Advances 13,056 10,989
- ---------------------------------- ------------ -------------
Total $39,809 $38,099
- ---------------------------------- ------------ -------------
Composition costs are net of accumulated amortization of $48,045 in 2000 and
$44,107 in 1999.
Property and Equipment
Property and equipment consisted of the following at April 30:
Dollars in thousands 2000 1999
- -------------------------------- -------------- ---------------
Land and Land Improvements $ 1,542 $ 1,542
Buildings and Leasehold
Improvements 19,763 19,891
Furniture and Equipment 81,910 72,481
Internal-use Software 2,813 -
- -------------------------------- -------------- ---------------
106,028 93,914
Accumulated Depreciation (67,802) (59,188)
- -------------------------------- -------------- ---------------
Total $ 38,226 $ 34,726
- -------------------------------- -------------- ---------------
Intangible Assets
Intangible assets consisted of the following at April 30:
Dollars in thousands 2000 1999
- -------------------------------- ------------- -------------
Acquired Publication Rights $245,219 $164,705
Goodwill and Other Intangibles 112,053 51,870
Non-compete Agreements 2,016 1,516
- -------------------------------- ------------- -------------
359,288 218,091
Accumulated Amortization (62,203) (43,180)
- -------------------------------- ------------- -------------
Total $297,085 $174,911
- -------------------------------- ------------- -------------
Other Accrued Liabilities
Included in other accrued liabilities was accrued compensation of approximately
$28.3 million and $21.3 million for 2000 and 1999, respectively.
Income Taxes
The provision for income taxes was as follows:
Dollars in thousands 2000 1999 1998
- ---------------------------- ---------- ----------- ----------
Currently Payable
Federal $ 19,501 $ 16,419 $6,781
Foreign 6,181 4,663 4,332
State and local 2,618 2,249 1,166
- ---------------------------- ---------- ----------- ----------
Total Current Provision 28,300 23,331 12,279
- ---------------------------- ---------- ----------- ----------
Deferred Provision (Benefit)
Federal (4,353) (4,060) 6,211
Foreign 4,561 1,922 1,629
State and local 1,735 1,143 1,379
- ---------------------------- ---------- ----------- ----------
Total Deferred Provision 1,943 (995) 9,219
- ---------------------------- ---------- ----------- ----------
Total Provision $ 30,243 $ 22,336 $21,498
- ---------------------------- ---------- ----------- ----------
The Company's effective income tax rate as a percent of pretax income differed
from the U.S. federal statutory rate as shown below:
2000 1999 1998
- ------------------------------------- -------- -------- --------
U.S. Federal Statutory Rate 35.0% 35.0% 35.0%
State and Local Income Taxes
Net of Federal Income Tax Benefit 3.9 3.6 2.8
Tax Benefit Derived From FSC Income (3.6) (2.5) (2.7)
Foreign Source Earnings Taxed at
Other Than U.S. Statutory Rate - .1 .6
Nondeductible Amortization of 2.0 .6 .7
Intangibles
Other-Net (.7) (.8) .6
- ------------------------------------- -------- -------- --------
Effective Income Tax Rate 36.6% 36.0% 37.0%
- ------------------------------------- -------- -------- --------
Deferred taxes result from timing differences in the recognition of revenue and
expense for tax and financial reporting purposes. The components of the
provision for deferred taxes were as follows:
Dollars in thousands 2000 1999 1998
- ---------------------------------- --------- -------- ---------
Depreciation and Amortization $ 177 $(2,356) $(2,898)
Accrued Expenses (1,147) 2,500 (275)
Provision for Sales Returns and
Doubtful Accounts (6,573) (3,414) 5,699
Inventory (561) 5 1,331
Retirement Benefits 752 (1,454) (23)
Long-Term Liabilities 67 (1,175) 2,541
Alternative Minimum Tax Credit and
Other Carryforwards 492 288 236
Net Operating Loss Carryforwards 17,205 4,500 1,631
Valuation Allowance (7,079) 245 826
Other-Net (1,390) (134) 151
- ---------------------------------- --------- -------- ---------
Total Deferred Provision (Benefit) $1,943 $(995) $9,219
- ---------------------------------- --------- -------- ---------
The significant components of deferred tax assets and liabilities at April 30,
were as follows:
2000 1999
----------------- ------------------
Dollars in thousands Current Long-Term Current Long-Term
- ---------------------------- -------- -------- -------- --------
Deferred Tax Assets
Net Operating Loss
Carryforwards $ - $ 4,426 $ - $21,631
Reserve for Sales Returns
and Doubtful Accounts 12,181 - 5,608 -
Costs Capitalized for Taxes - 3,798 - 2,900
Retirement and Post-
Employment Benefits - 4,172 - 4,924
Amortization of Intangibles - 4,018 - 4,018
- ---------------------------- -------- -------- --------- --------
Total Deferred Tax Assets 12,181 16,414 5,608 33,473
Less: Valuation Allowance - (5,719) - (12,798)
- ---------------------------- -------- -------- --------- --------
Net Deferred Tax Assets 12,181 10,695 5,608 20,675
- ---------------------------- -------- -------- --------- --------
Deferred Tax Liabilities
Inventory (1,182) - (1,743) -
Depreciation and Amortization - (3,631) - (3,454)
Accrued Expenses - (8,355) - (9,502)
Long-Term Liabilities - (10,754) - (10,687)
- ---------------------------- -------- -------- --------- --------
Total Deferred Tax (1,182)(22,740) (1,743) (23,643)
Liabilities
- ---------------------------- -------- -------- --------- --------
Net Deferred Tax Assets
(Liability) $10,999 $(12,045) $3,865 $(2,968)
---------------------------- -------- -------- --------- --------
Approximately $5.0 million of the valuation allowance relates to net deferred
tax assets recorded in connection with the VCH acquisition. Any amounts realized
in future years will reduce the intangible assets recorded at date of
acquisition.
Current taxes payable for 2000 and 1999 have been reduced by $5.0 and $4.6
million, respectively, relating to the utilization of net operating loss
carryforwards. At April 30, 2000, the Company had aggregate unused net operating
loss carryforwards of approximately $13.1 million, which may be available to
reduce future taxable income primarily in foreign tax jurisdictions and
generally have no expiration date.
In general, the Company plans to continue to invest the undistributed earnings
of its foreign subsidiaries in those businesses, and therefore no provision is
made for taxes that would be payable if such earnings were distributed. At April
30, 2000, the undistributed earnings of foreign subsidiaries approximated $31.3
million and, if remitted currently, would result in additional taxes
approximating $6.2 million.
Notes Payable and Debt
Long-term debt consisted of the following at April 30:
Dollars in thousands 2000 1999
- -------------------------------- ------------- -----------
Term Loan Notes Payable Due
October 2000 Through 2003 $125,000 $125,000
Less current portion of
long-term debt (30,000) --
---------- ----------
$ 95,000 $ 125,000
The weighted average interest rate on the term loan was 5.89% and 5.85% during
2000 and 1999, respectively; and 6.44% and 5.25% at April 30, 2000 and 1999,
respectively.
The Company has a $175 million credit agreement expiring on October 31, 2003,
with eight banks. The credit agreement consists of a term loan of $125 million
and a $50 million revolving credit facility. The Company has the option of
borrowing at the following floating interest rates: (i) Eurodollars at a rate
based on the London Interbank Offered Rate (LIBOR) plus an applicable margin
ranging from .15% to .30% depending on certain coverage ratios, or (ii) dollars
at a rate based on the current certificate of deposit rate, plus an applicable
margin ranging from .275% to .425% depending on certain coverage ratios, or
(iii) dollars at the higher of (a) the Federal Funds Rate plus .5% and (b) the
banks' prime rate. In addition, the Company pays a facility fee ranging from
.10% to .20 % on the total facility depending on certain coverage ratios.
In the event of a change of control, as defined, the banks have the option to
terminate the agreement and require repayment of any amounts outstanding.
Amounts outstanding under the term loan have mandatory repayments as follows:
Dollars in thousands 2001 2002 2003 2004
- ----------------------- -------- -------- --------- --------
$30,000 $30,000 $30,000 $35,000
The credit agreement contains certain restrictive covenants related to minimum
net worth, funded debt levels, an interest coverage ratio, and restricted
payments, including a cumulative limitation for dividends paid and share
repurchases. Under the most restrictive covenant, approximately $58 million was
available for such restricted payments as of April 30, 2000.
The Company and its subsidiaries have other short-term lines of credit
aggregating $80 million at various interest rates. Information relating to all
short-term lines of credit follows:
Dollars in thousands 2000 1999 1998
- -------------------------------- ---------- --------- ----------
End of Year
Amount outstanding $ -- $ -- $ --
Weighted average interest rate -- -- --
During the Year
Maximum amount outstanding $40,749 $ -- $ 28,794
Average amount outstanding $15,654 $ -- $ 742
Weighted average interest 5.6% -- 8.5%
rate
- -------------------------------- ---------- --------- ----------
Based on estimates of interest rates currently available to the Company for
loans with similar terms and maturities, the fair value of notes payable and
long-term debt approximates the carrying value.
Commitments and Contingencies
The following schedule shows the composition of rent expense for operating
leases:
Dollars in thousands 2000 1999 1998
- ------------------------------- ----------- ---------- -----------
Minimum Rental $ 14,614 $ 13,935 $ 13,137
Lease Escalation 2,352 2,248 2,250
Less: Sublease Rentals -- (60) (50)
- ------------------------------- ----------- ---------- -----------
Total $ 16,966 $ 16,123 $ 15,337
- ------------------------------- ----------- ---------- -----------
Future minimum payments under operating leases aggregated $61.0 million at April
30, 2000. Annual payments under these leases are $17.9, $17.3, $15.2, $1.9 and
$1.8 million for fiscal years 2001 through 2005, respectively. The Company has
entered into an agreement to purchase an office building in the U.K. upon
completion of construction in calendar year 2002 for approximately $15 million.
The Company is involved in routine litigation in the ordinary course of its
business. In the opinion of management, the ultimate resolution of all pending
litigation will not have a material effect upon the financial condition or
results of operations of the Company.
Retirement Plans
The Company and its principal subsidiaries have contributory and noncontributory
retirement plans that cover substantially all employees. The plans generally
provide for employee retirement between the ages of 60 to 65 and benefits based
on length of service and final average compensation, as defined.
The Company has agreements with certain officers and senior management personnel
that provide for the payment of supplemental retirement benefits during each of
the 10 years after the termination of employment. Under certain circumstances,
including a change of control as defined, the payment of such amounts could be
accelerated on a present value basis.
The Company provides life insurance and health care benefits, subject to certain
dollar limitations and retiree
contributions, for substantially all of its retired domestic employees. The cost
of such benefits is expensed over the years that the employees render service
and is funded on a pay-as-you-go, cash basis. The accumulated postretirement
benefit obligation amounted to $.4 million and $.3 million at April 30, 2000 and
1999, respectively, and the amount expensed in fiscal 2000 and prior years was
not material.
The components of net pension expense for the defined benefit plans were as
follows:
Dollars in thousands 2000 1999 1998
- ---------------------------------- --------- --------- ---------
Service Cost $5,535 $4,960 $3,913
Interest Cost 7,034 6,498 5,883
Expected Return on Plan Assets (7,321) (6,684) (5,460)
Net Amortization of Prior
Service Cost 470 356 355
Net Amortization of Unrecognized
Transition Asset (843) (850) (852)
Recognized Net Actuarial Gain (166) (157) (59)
- ---------------------------------- --------- --------- ---------
Net Pension Expense $4,709 $4,123 $3,780
- ---------------------------------- --------- --------- ---------
In fiscal 1999, the domestic plan was amended to provide that final average
compensation be based on the highest three consecutive years ended December 31,
1995. The Company may, but is not required to, update from time to time the
ending date for the three-year period used to determine final average
compensation. The amendment had the effect of increasing pension expense for
fiscal 1999 by $.2 million. The net pension expense included above for the
international plans amounted to approximately $2.9, $2.6 and $2.1 million for
2000, 1999, and 1998, respectively.
The following table sets forth the changes in and the status of the plans'
assets and benefit obligations. The unfunded plans primarily relate to a
non-U.S. subsidiary, which is governed by local statutory requirements, and the
domestic supplemental retirement plans for certain officers and senior
management personnel.
2000 1999
---------------------------------- ----------------------------------
Assets Exceed Accumulated Assets Exceed Accumulated
Accumulated Benefits Exceed Accumulated Benefits
Dollars in thousands Benefits Assets Benefits Exceed Assets
---------------------------------------------- ---------------- ----------------- ----------------- ----------------
Plan Assets
Fair Value, beginning of year $ 92,389 $ - $ 84,262 $ -
Actual Return on Plan Assets 2,793 - 9,780 -
Employer Contributions 2,224 832 1,866 963
Participants' Contributions - - 227 -
Benefits Paid (2,637) (832) (2,621) (963)
Foreign Currency Rate Changes (990) - (1,125) -
---------------------------------------------- ---------------- ----------------- ----------------- ----------------
Fair Value, end of year $ 93,779 $ - $ 92,389 $ -
---------------------------------------------- ---------------- ----------------- ----------------- ----------------
Benefit Obligation
Balance, beginning of year $ (74,953) $ (23,342) $ (63,429) $ (20,506)
Service Cost (4,637) (897) (4,122) (838)
Interest Cost (5,501) (1,533) (5,057) (1,441)
Amendments - (81) (1,748) -
Actuarial Gain (1,241) (39) (4,133) (1,902)
Benefits paid 2,637 832 2,621 963
Foreign Currency Rate Changes 938 1,467 915 382
---------------------------------------------- ---------------- ----------------- ----------------- ----------------
Balance, end of year $ (82,757) $ (23,593) $ (74,953) $ (23,342)
---------------------------------------------- ---------------- ----------------- ----------------- ----------------
Funded Status - Excess (Deficit) 11,022 (23,593) 17,436 (23,342)
Unrecognized Net Transition Asset (1,165) - (1,928) -
Unrecognized Net Actuarial Loss (Gain) (10,789) 2,944 (16,800) 2,630
Unrecognized Prior Service Cost 3,433 421 3,830 1,085
---------------------------------------------- ---------------- ----------------- ----------------- ----------------
Net Prepaid (Accrued) Pension Cost $ 2,501 $ (20,228) $ 2,538 $ (19,627)
---------------------------------------------- ---------------- ----------------- ----------------- ----------------
The weighted average assumption used in determining these amounts were as follows:
---------------------------------------------- ---------------- ----------------- ----------------- ----------------
Discount Rate 7.2% 6.8% 7.2% 6.8%
---------------------------------------------- ---------------- ----------------- ----------------- ----------------
Expected Return On Plan Assets 8.0% - 8.0% -
---------------------------------------------- ---------------- ----------------- ----------------- ----------------
Rate of Compensation Increase 2.4% 5.0% 2.3% 4.8%
---------------------------------------------- ---------------- ----------------- ----------------- ----------------
Stock Compensation Plans
Under the Company's Long Term Incentive Plan, qualified employees are eligible
to receive awards that may include stock options, performance stock awards, and
restricted stock awards up to a maximum per year of 600,000 shares of Class A
stock and subject to an overall maximum of 8,000,000 shares through June 22,
2009. As of April 30, 2000, approximately 7,930,400 shares were available for
future grants.
Options granted under the plan may not be less than 100% of the fair market
value of the stock at the date of grant. Options are exercisable, in part or in
full, over a maximum period of 10 years from the date of grant, and generally
vest within five years from the date of the grant. Under certain circumstances
relating to a change of control, as defined, the right to exercise options
outstanding could be accelerated.
The Company elected to apply the disclosure-only provisions of No. 123,
"Accounting for Stock-Based Compensation." Accordingly, no compensation cost is
recognized for fixed stock option grants. Had compensation cost been recognized,
net income would have been reduced on a pro forma basis by $1.7 million, or $.03
per diluted share, in 2000; $1.1 million, or $.02 per diluted share, in 1999;
and $.6 million, or $.01 per diluted share, in 1998. For the pro forma
calculations, the fair value of each option grant was estimated on the date of
grant using the Black-Scholes option-pricing model with the following
assumptions for 2000, 1999, and 1998: risk-free interest rate of 6.3%, 5.6%, and
6.5%, respectively; dividend yield of 1.0%, 1.2%, and 1.3%, respectively;
volatility of 25.7% 23.2%, and 18.1%, respectively; and expected life of nine
years for all years.
A summary of the activity and status of the Company's stock option plans
follows:
2000 1999 1998
---------------------------- --------------------------- ---------------------------
Weighted Weighted Weighted
Average Average Average
Options Exercise Price Options Exercise Price Options Exercise Price
---------------------------------- -------------- ------------- ------------- ------------- ------------- -------------
Outstanding at beginning of year 4,820,884 $ 7.04 4,207,636 $5.18 4,167,756 $4.47
Granted 517,800 $20.47 958,636 $13.88 598,712 $8.63
Exercised (476,591) $ 2.74 (345,388) $3.26 (550,332) $3.53
Canceled (24,400) - - (8,500) $6.47
$12.28
---------------------------------- -------------- ------------- ------------- ------------- ------------- -------------
Outstanding at end of year 4,837,693 $ 8.88 4,820,884 $7.04 4,207,636 $5.18
---------------------------------- -------------- ------------- ------------- ------------- ------------- -------------
Exercisable at end of year 2,245,837 $ 4.66 2,578,964 $4.05 2,162,272 $3.38
---------------------------------- -------------- ------------- ------------- ------------- ------------- -------------
The weighted average fair value of options granted during the year was $8.69,
$5.25 and $3.17 in 2000, 1999 and 1998, respectively.
A summary of information about stock options outstanding and options exercisable
at April 30, 2000, follows:
Options Outstanding Options Exercisable
Weight-ed
Weighted Average Weighted
Number Average Exercise Number Average
Range of Of Remaining Price Of Exercise
Exercise Prices Options Term Options Price
- ------------------ --------- --------- -------- ---------- ---------
$ 1.97 to $ 3.06 1,023,303 2.1 years $2.58 1,023,303 $2.58
$ 5.17 to $ 8.63 2,351,204 5.6 years $7.08 1,191,134 $6.21
$13.89 to $14.59 953,386 8.1 years $13.88 31,400 $13.75
$17.25 to $20.56 509,800 9.2 years $20.49 - -
- ------------------ --------- --------- -------- --------- ----------
Total 4,837,693 5.7 years $8.88 2,245,837 $ 4.66
- ------------------ --------- --------- -------- --------- ----------
Under the terms of the Company's executive long-term incentive plans, upon the
achievement of certain three-year financial performance-based targets, awards
will be payable in restricted shares of the Company's Class A Common stock. The
restricted shares vest equally as to 50% on the first and second anniversary
date after the date the award is earned. Compensation expense is charged to
earnings over the respective three-year period. In addition, the Company granted
restricted shares of the Company's Class A Common stock to key executive
officers and others in connection with their employment. The restricted shares
generally vest one-third at the end of the third, fourth, and fifth years,
respectively, following the date of the grant. Under certain circumstances
relating to a change of control or termination, as defined, the restrictions
would lapse and shares would vest earlier. Compensation expense is charged to
earnings ratably over five years, or sooner if vesting is accelerated, from the
dates of grant. Restricted shares issued in connection with the above plans
amounted to 91,600, 114,400 and 153,948 shares at weighted-average grant-date
fair values of $19.53, $14.55 and, $8.40 per share in 2000, 1999, and 1998,
respectively. Compensation expense charged to earnings for the above amounted to
$2.6, $3.0 million, and $2.6 million in 2000, 1999, and 1998, respectively.
Under the terms of the Company's Director Stock Plan, each member of the Board
of Directors who is not an employee of the Company is awarded Class A Common
stock equal to 50% of the board member's annual cash compensation, based on the
market value of the stock on the date of the shareholders' meeting. Directors
may also elect to receive all or a portion of their cash compensation in stock.
Under this plan 14,936, 15,844 and 28,196 shares were issued in 2000, 1999, and
1998, respectively. Compensation expense related to this plan amounted to
approximately $.4 million, $.5 million, and $.3 million in 2000, 1999, and 1998,
respectively.
Capital Stock and Changes in Capital Accounts
Preferred stock consists of 2,000,000 authorized shares with $1 par value. To
date, no preferred shares have been issued. Common stock consists of 180,000,000
authorized shares of Class A Common, $1 par value, and 72,000,000 authorized
shares of Class B Common, $1 par value.
Each share of the Company's Class B Common stock is convertible into one share
of Class A Common stock. The holders of Class A stock are entitled to elect 30%
of the entire Board of Directors and the holders of Class B stock are entitled
to elect the remainder. On all other matters, each share of Class A stock is
entitled to one-tenth of one vote and each share of Class B stock is entitled to
one vote.
Under the Company's current stock repurchase program, up to 4 million shares of
its Class A common stock may be purchased from time to time in the open market
and through privately negotiated transactions. Through April 30, 2000, the
Company repurchased 2,296,400 shares for a cost of approximately $37.5 million
under the program.
Accumulated other comprehensive income balances consist solely of cumulative
foreign currency translation adjustments.
Changes in selected capital accounts were as follows:
Common Stock
---------------------------------- Additional Treasury
Dollars in thousands Class A Class B Paid-in Capital Stock
------------------------------------------------- ----------------- ---------------- ----------------- ----------------
Balance at May 1, 1997 $66,276 $16,148 -- $(43,630)
Director Stock Plan Issuance -- -- 217 67
Executive Long-Term Incentive Plan Issuance -- -- 192 73
Purchase of Treasury Shares -- -- -- (4,281)
Restricted Share Issuance -- -- 1,862 270
Issuance of Shares Under Employee Savings Plan -- -- 316 101
Exercise of Stock Options 551 -- 3,037 (99)
Other 279 (279) -- --
------------------------------------------------- ----------------- ---------------- ----------------- ----------------
Balance at May 1, 1998 $67,106 $15,869 $5,624 $(47,499)
Director Stock Plan Issuance - - 207 46
Executive Long-Term Incentive Plan Issuance - - 233 52
Purchase of Treasury Shares - - - (38,549)
Restricted Share Issuance - - 2,754 349
Issuance of Shares Under Employee Savings Plan - - 461 86
Exercise of Stock Options 215 - 3,766 373
Other 227 (227) - -
------------------------------------------------- ----------------- ---------------- ----------------- ----------------
Balance at May 1, 1999 $67,548 $15,642 $13,045 $(85,142)
Director Stock Plan Issuance - - 192 68
Executive Long-Term Incentive Plan Issuance - - (188) (6)
Purchase of Treasury Shares - - - (35,317)
Restricted Share Issuance - - (48) 120
Issuance of Shares Under Employee Savings Plan - - 368 139
Exercise of Stock Options - - 809 2,314
Other 344 (343) - (1)
------------------------------------------------- ----------------- ---------------- ----------------- ----------------
Balance at April 30, 2000 $67,892 $15,299 $14,178 $(117,825)
------------------------------------------------- ----------------- ---------------- ----------------- ----------------
Segment Information
The Company is a global publisher of print and electronic products, specializing
in scientific, technical and medical journals and books; professional and
consumer books and subscription services; and textbooks and educational
materials for undergraduate and graduate students as well as lifelong learners.
The Company has publishing, marketing and distribution centers in the United
States, Canada, Europe, Asia and Australia. The Company's reportable segments
are based on the management reporting structure used to evaluate performance.
Segment information was as follows:
Dollars In thousands 2000
- ----------------------- ------------------------------------------------------------------------------------------------------------
Eliminations
European Other & Corporate
Domestic Segments Segment Segments Items Total
------------------------------------------------------ --------- ---------- ----------- -----------
Scientific,
Technical, Professional/ Total
and Medical Trade College Domestic
----------- ----------- ---------- ----------
Revenues
- - External Customers $138,017 $144,009 $109,356 $391,382 $136,668 $66,765 $ - $594,815
- - Intersegment Sales 7,115 16,065 18,366 41,546 10,869 743 (53,158) -
----------- ----------- ---------- ---------- --------- ---------- ----------- -----------
Total Revenues $145,132 $160,074 $127,722 $432,928 $147,537 $67,508 ($53,158) $594,815
----------- ----------- ---------- ---------- --------- ---------- ----------- -----------
Direct Contribution
To Profit $63,458 $35,168 $36,186 $134,812 $47,062 $11,967 - $193,841
----------- ----------- ---------- ----------- ---------- --------- ---------- ------------
Shared Services &
Admin. Costs
(104,837)
-----------
Operating Income 89,004
Interest Expense-Net (6,373)
-----------
Income Before Taxes $82,631
-----------
Assets $52,896 $179,590 $89,101 $321,587 $152,603 $20,954 $74,193 $569,337
Expenditures For
Long-Lived Assets
$6,381 $102,705 $65,834 $174,920 $7,405 $2,867 $8,876 $194,068
Depreciation &
Amortization
$8,708 $14,858 $10,769 $34,335 $11,663 $1,905 $5,266 $53,169
Dollars In thousands 1999
- ------------------------ -----------------------------------------------------------------------------------------------------------
Eliminations
European Other & Corporate
Domestic Segments Segment Segments Items Total
----------------------------------------------------- --------- ---------- ----------- ----------
Scientific,
Technical, Professional/ Total
and Medical Trade College Domestic
------------ ----------- ---------- ----------
Revenues
- - External Customers $131,132 $104,338 $84,326 $319,796 $135,008 $53,631 $ - $508,435
- - Intersegment Sales 7,375 13,587 14,141 35,103 11,396 466 (46,965) -
------------ ----------- ---------- ---------- --------- ---------- ----------- ----------
- - Total Revenues $138,507 $117,925 $98,467 $354,899 $146,404 $54,097 ($46,965) $508,435
------------ ----------- ---------- ---------- --------- ---------- ----------- ----------
Direct Contribution
To Profit
$59,325 $28,048 $22,232 $109,605 $42,232 $8,846 - $160,683
------------ ----------- ---------- ---------- --------- -------- ---------- ---------
Shared Services &
Admin. Costs
(97,029)
----------
Operating Income 63,654
Interest Expense-Net (1,609)
----------
Income Before Taxes $62,045
----------
Assets $62,250 $87,130 $24,107 $173,487 $162,379 $17,919 $174,767 $528,552
Expenditures For
Long-Lived Assets
$7,826 $14,047 $6,686 $28,559 $18,906 $2,444 $3,149 $53,058
Depreciation &
Amortization
$6,664 $9,288 $7,138 $23,090 $13,061 $945 $3,459 $40,555
Dollars In thousands 1998
- ------------------------ ----------------------------------------------------------------------------------------------------------
Eliminations
European Other & Corporate
Domestic Segments Segment Segments Items Total
---------------------------------------------------- --------- --------- ----------- ----------
Scientific,
Technical, Professional/ Total
and Medical Trade College Domestic
----------- ----------- ---------- ----------
Revenues
- - External Customers $123,080 $90,564 $76,317 $289,961 $122,385 $54,735 $ - $467,081
- - Intersegment Sales 6,741 11,701 14,558 33,000 11,164 344 (44,508) -
---------- ----------- ---------- ---------- --------- ---------- ----------- ----------
- -Total Revenues $129,821 $102,265 $90,875 $322,961 $133,549 $55,079 ($44,508) $467,081
---------- ----------- ---------- ---------- --------- ---------- ----------- ----------
Direct Contribution
To Profit
$55,405 $19,881 $17,833 $93,119 $37,185 $7,679 - $137,983
---------- ----------- ---------- ----------- --------- -------- ---------- ---------
Shared Services &
Admin. Costs
(92,720)
Unusual Items 16,893
----------
Operating Income 62,156
Interest Expense-Net (4,070)
----------
Income Before Taxes $58,086
----------
Assets $62,103 $83,166 $32,625 $177,894 $158,933 $17,626 $152,461 $506,914
Expenditures For
Long-Lived Assets
$12,231 $37,128 $7,823 $57,182 $8,641 $1,068 $5,755 $72,646
Depreciation &
Amortization
$5,619 $9,152 $7,698 $22,469 $11,628 $1,034 $3,035 $38,166
Intersegment sales are generally made at a fixed discount from list price.
Shared services and administrative costs include costs for such services as
information technology, distribution, occupancy, human resources, finance and
administration. These costs are not allocated as they support the Company's
worldwide operations. Corporate assets primarily consist of cash and cash
equivalents, deferred tax benefits, and certain property and equipment. Unusual
items amounting to $16,893 in 1998 relate to the gain on the sale of the
domestic law publishing program, net of a write-down of certain intangible
assets and other items. Export sales from the United States to unaffiliated
international customers amounted to approximately $62.1, $60.5 and $56.5 million
in 2000, 1999, and 1998, respectively. The pretax income for consolidated
international operations was approximately $25.5, $17.3, $14.1 million in 2000,
1999, and 1998, respectively.
Worldwide revenues for the Company's core businesses were as follows:
Dollars in thousands Revenues
- --------------------------------------------------- -------------------------------------------------------------------
2000 1999 1998
------------------ ------------------- ----------------------
Scientific, Technical, and $241,618 $ 232,594 $ 217,331
Medical
Professional/Trade 198,544 156,713 137,270
Educational 154,653 119,128 112,480
------------------ ------------------- ----------------------
Total $594,815 $ 508,435 $ 467,081
------------------ ------------------- ----------------------
Revenues from external customers and long-lived assets by geographic area were
as follows:
Dollars in thousands Revenues Long-Lived Assets
-------------------- ------------------------------------------- ------------------------------------------
2000 1999 1998 2000 1999 1998
------------- ----------- ----------- ----------- ------------ ------------
Domestic $350,875 $278,783 $253,429 $257,041 $121,643 $123,609
International 243,940 229,652 213,652 131,790 137,938 130,102
Total $594,815 $508,435 $467,081 $388,831 $259,581 $253,711
=========== =========== =========== =========== ============ ===========
Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Results of Operations:
Fiscal 2000 Compared to Fiscal 1999
The Company continued to grow its revenue base through both internal development
and acquisitions while improving operating margins. The Company continues to
invest in new technologies as it accelerates its migration to the digital world.
In the first quarter of fiscal year 2000, the Company acquired certain higher
education titles for approximately $57 million in cash, and Jossey-Bass for
approximately $81 million in cash, from Pearson Inc. The higher education titles
include such disciplines as biology/anatomy and physiology, engineering,
mathematics, economics, finance and teacher education. Jossey-Bass publishes
books and journals for professionals and executives in such areas as business,
psychology and education/health management. The Company also acquired the J.K.
Lasser tax and financial guides for approximately $5 million in cash, and other
smaller acquisitions for approximately $2 million.
Revenues for the year increased 17% to $594.8 million reflecting improvement in
all of the Company's core businesses. The Company continued to gain market share
through the strength of its frontlist and backlist titles, as well as through
the successful integration of its acquisitions. Revenue growth for the year was
8% excluding the current year acquisitions and the foreign exchange translation
effect of weaker European currencies.
Cost of sales as a percentage of revenues was 32.8% in 2000 compared with 34.2%
in the prior year reflecting lower composition costs and paper, printing and
binding costs.
Operating and administrative costs increased 12.7% over the prior year, of which
7% was due to the acquisitions. Expenses as a percentage of revenues declined to
49.5% compared with 51.4% in the prior year, as the rate of growth in expenses
was contained at less than the revenue growth rate.
Operating income increased 40% over the prior year. The operating income margin
reached 15%, one year ahead of plan, compared with 12.5% in the prior year.
Interest expense net of interest income, of $6.4 million was $4.8 higher than
the prior year due to the financing costs related to the acquisitions. The
effective tax rate was 36.6% compared with 36% in the prior year.
Net income increased 32% to $52.4 million, and diluted earnings per share
increased 35% to $0.81 per share. Current year acquisitions were accretive to
earnings by approximately $0.03 per diluted share.
Segment Results
Domestic Professional/Trade segment revenues of $160.1 million advanced 36% over
the prior year, benefiting from recent acquisitions of Jossey-Bass and the J.K.
Lasser tax and financial guides, as well as a strong frontlist and backlist,
including increased demand from online Internet suppliers. Excluding the
acquisitions, revenue growth was 10% for the year. The direct contribution to
profit advanced 25% to $35.2 million. The direct contribution margin declined
from 23.8% in the prior year to 22.0%, as a result of the one-time integration
costs related to the current year acquisitions. The Professional/Trade business
is taking advantage of the dramatic growth of e-commerce. Online selling plays
to the division's strength as a niche publisher with a deep backlist serving the
professional needs of its customers. There is a growing demand for electronic
products among the professional markets that it serves, notably computing,
accounting, finance, psychology and architecture. The division is capitalizing
on these opportunities with a combination of print and Web-based products and
services, as well as through the formation of strategic alliances. During the
year, the domestic Professional/Trade business launched Wiley Virtual CPA Exam
Review, an interactive multimedia course on the Web which is based on the
Company's well known Delaney CPA Examination Review. This subscription-based
24/7 learning environment uses streaming video and audio lectures with
self-assessment tests and extensive graphics. Professional/Trade also recently
entered into an agreement with CNBC, a world leader in business news to publish
a series of books that will provide insight into personal investing.
Domestic College segment revenues of $127.7 million increased 30% over the prior
year, primarily related to increased market share due to the acquisition of
certain higher education titles during the year, as well as a strong frontlist.
Revenue growth for the year was 11% excluding the current year acquisition. The
direct contribution to profit increased 63% to $36.2 million, and the direct
contribution margin improved to 28.3% during the current year compared with
22.6% in the prior year. College continued to invest in new technological tools
to help teachers teach and students learn. For example, through alliances such
as WebCT and Blackboard the College segment will be offering interactive
syllabi, chat rooms and assessment tools including online quizzing and testing.
Every major college textbook now has a technology component designed to
facilitate teaching and learning. The College business has over 300 Web-sites
serving the needs of professors and students. These Web-sites are being
redesigned to generate content dynamically from existing databases, as well as
linking them to key portals. In the distance learning area, College is working
with Caliber Learning Network to provide online courses for the higher education
and corporate lifelong learning markets. Alliances are also being formed to
provide many of our top-selling textbooks in the e-book format.
Domestic Scientific, Technical and Medical (STM) revenues of $145.1 million
increased 5% over the prior year mainly due to the subscription journals
business. The direct contribution to profit increased 7% to $63.5 million. The
direct contribution margin was 43.7% in the current year compared with 42.8% in
the prior year. Wiley InterScience, the Company's Web-based service, is being
expanded to include the content of some of the division's best-selling major
reference works, as well as EarlyView, which allows customers to access
individual articles online well in advance of the print issue. During the year,
STM also formed an alliance with 32 other publishers to launch and operate
CrossRef to facilitate the research process. CrossRef is an electronic linking
system that allows a reader to click on a reference in a journal published by
one participant and go directly to the referenced article, even if it is
published by another participant and located on that publisher's server.
European segment revenues of $147.5 million were up only a modest 1% for the
year, as the translation effects of a stronger U.S. dollar adversely impacted
revenue growth. The direct contribution to profit of $47.1 million increased 11%
over the prior year. The direct contribution margin was 31.9% in the current
year compared with 28.8% in the prior year. During the year, the European
segment entered into a transatlantic alliance with the International Securities
Market Association of Switzerland to create Internet-based finance courses. It
also acquired an equity interest in InPharm-Internet Services, Ltd., the Oxford
based business to business portal site and online information resource for the
pharmaceutical industry.
The improvement in the Other segment's results of operations was due to strong
local product revenues in Canada and Australia and the strengthening of many of
the Asian economies.
Results of Operations:
Fiscal 1999 Compared to Fiscal 1998
The Company registered another year of strong earnings growth and margin
improvement through a combination of revenue gains and cost containment
measures.
Revenues for the year increased 9% to $508.4 million reflecting improvement in
all the Company's core businesses. Cost of sales as a percentage of revenues was
34.2% in 1999 compared with 35.1% in the prior year, primarily reflecting lower
paper, printing and binding costs.
Operating and administrative expenses increased 3.2% over the prior year.
Expenses as a percentage of revenues declined to 51.4%, compared with 54.2% in
the prior year, as the rate of growth in expenses was contained at less than the
revenue growth rate.
Operating income increased 41% over the prior year, excluding the unusual items
pre-tax gain in the prior year of $16.9 million. The operating income margin
reached 12.5% compared with 9.7% in the prior year.
Interest income increased by $1.9 million due to higher cash balances compared
with the prior year. The effective tax rate was 36% compared with 37% in the
prior year.
Net income increased 48% to 39.7 million, excluding the unusual items net gain
of $9.7 million after taxes in the prior year.
Segment Results
Domestic Professional/Trade segment revenues increased 15% to $117.9 million
driven by volume growth attributed to a strong frontlist and backlist as well as
increased sales through online accounts. The direct contribution to profit
advanced 41% to $28.0 million. The direct contribution margin increased to 23.7%
compared with 19.4% in the prior year.
Domestic College segment revenues advanced 8% to $98.5 million due to market
share gains resulting from a strong frontlist. The direct contribution to profit
increased 25% to $22.2 million. The direct contribution margin increased to
22.6% compared with 19.4% in the prior year.
Domestic STM revenues increased 7% to $138.5 million primarily related to the
journal publishing programs. The direct contribution to profit increased 7% to
$59.3 million. The direct contribution margin was 42.8% compared with 42.7% in
the prior year.
European segment revenues advanced 10% to $146.4 million driven primarily by
increased journal revenues. The direct contribution to profit increased 14% to
$42.2 million, and the direct contribution margin increased to 28.8% compared
with 27.8% in the prior year.
Other segment revenues declined modestly due to the weak Australian dollar. The
direct contribution to profit advanced 15% to $8.8 million, and the direct
contribution margin improved to 16.4% compared with 13.9% in the prior year.
Liquidity and Capital Resources
The Company's cash and cash equivalents balance was $42.3 million at the end of
fiscal 2000, compared with $149.0 million at the end of the prior year. Cash
provided by operating activities was $131.8 million in fiscal 2000, an increase
of $13.9 million compared with the prior year.
The Company's operating cash flow is strongly affected by the seasonality of its
domestic college business and receipts from its journal subscriptions. Receipts
from journal subscriptions occur primarily during November and December from
companies commonly referred to as independent subscription agents. These
companies facilitate the journal ordering process by consolidating the
subscription orders/billings of each subscriber with various publishers. Monies
are collected in advance from subscribers by the subscription agents and are
remitted to the Company, generally prior to the commencement of the
subscriptions. Although at fiscal year-end the Company had minimal credit risk
exposure to these agents, future calendar year subscription receipts from these
agents are highly dependent on their financial position and liquidity.
Subscription agents account for approximately 24% of total consolidated revenues
and no one agent accounts for more than 7% of total consolidated revenues.
Sales to the domestic college market tend to be concentrated in June through
August, and again in November through January. The Company normally requires
increased funds for working capital from the beginning of the fiscal year into
September. Subject to variations that may be caused by fluctuations in inventory
accumulation or in patterns of customer payments, the Company's normal operating
cash flow is not expected to vary materially in the near term.
To finance its short-term seasonal working capital requirements, including the
$30 million scheduled debt repayment, and its growth opportunities, the Company
has adequate cash and cash equivalents available, as well as both domestic and
foreign short-term lines of credit, as more fully described in the note to the
consolidated financial statements entitled "Notes Payable and Debt".
The capital expenditures of the Company consist primarily of investments in
product development and property and equipment. Capital expenditures for fiscal
2001 are expected to increase approximately 50% over 2000, primarily
representing investments in product development, including electronic media
products; computer equipment upgrades and internal-use software in support of
the higher volume of business to ensure efficient, quality-driven customer
service; and for facilities improvements at certain locations. These investments
will be funded primarily from internal cash generation or from the liquidation
of cash equivalents.
Market Risk
The Company is exposed to market risk primarily related to interest rates and
foreign exchange. It is the Company's policy to monitor these exposures and to
use derivative financial investments from time to time to reduce fluctuations in
earnings and cash flows when it is deemed appropriate to do so. The Company does
not use derivative financial investments for trading or speculative purposes.
Interest Rates
The Company had a $125 million variable rate long-term loan outstanding at April
30, 2000 and 1999, which approximated fair value. The Company did not use any
derivative financial investments to manage this exposure. A hypothetical 10%
adverse change in interest rates for this variable rate debt would negatively
affect net income and cash flow by approximately $.4 million.
Foreign Exchange Rates
The Company is exposed to foreign exchange movements primarily in European,
Asian, Canadian and Australian currencies. Consequently, the Company, from time
to time, enters into forward exchange contracts as a hedge against its overseas
subsidiaries' foreign currency asset, liability, commitment, and anticipated
transaction exposures, including intercompany purchases. There were no open
foreign exchange contracts at April 30, 2000 or 1999.
Effects of Inflation and Cost Increases
The Company, from time to time, does experience cost increases reflecting, in
part, general inflationary factors, although the impact of inflation is somewhat
minimized as the business does not require a high level of investment in
property and equipment. To mitigate the effects of cost increases, the Company
has taken a number of initiatives including various steps to lower overall
production and manufacturing costs such as substitution of paper grades. In
addition, selling prices have been selectively increased as competitive
conditions permit. The Company anticipates that it will be able to continue this
approach in the future.
New Accounting Standards
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 133 "Accounting for Derivative Instruments and Hedging
Activities", which specifies the accounting and disclosure requirements for such
instruments, and is effective for the Company's fiscal year beginning on May 1,
2001. It is anticipated that the adoption of this new accounting standard will
not have a material effect on the consolidated financial statements of the
Company.
"Safe Harbor" Statement under the
Private Securities Litigation Reform Act of 1995
This report contains certain forward-looking statements concerning the Company's
operations, performance and financial condition. Reliance should not be placed
on forward-looking statements, as actual results may differ materially from
those in any forward-looking statements. Any such forward-looking statements are
based upon a number of assumptions and estimates that are inherently subject to
uncertainties and contingencies, many of which are beyond the control of the
Company, and are subject to change based on many important factors. Such factors
include, but are not limited to: (i) the pace, acceptance, and level of
investment in emerging new electronic technologies and products; (ii) subscriber
renewal rates for the Company's journals; (iii) the consolidation of the retail
book trade market; (iv) the seasonal nature of the Company's educational
business and the impact of the used book market; (v) worldwide economic and
political conditions; and (vi) 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.
Results by Quarter (Unaudited)
John Wiley & Sons, Inc. and Subsidiaries
Dollars in thousands except per share data
2000 1999
- ------------------- ------------------- -----------------------
Revenues
First quarter $ 136,980 $ 122,091
Second quarter 150,338 123,640
Third quarter 158,394 137,976
Fourth quarter 149,103 124,728
- ------------------- ------------------- -----------------------
Fiscal year $ 594,815 $ 508,435
- ------------------- ------------------- -----------------------
Operating Income
First quarter $ 22,569 $ 17,066
Second quarter 24,914 15,306
Third quarter 28,486 21,282
Fourth quarter 13,035 10,000
- ------------------- ------------------- -----------------------
Fiscal year $ 89,004 $ 63,654
- ------------------- ------------------- -----------------------
Net Income
First quarter $ 13,350 $ 10,564
Second quarter 14,084 9,275
Third quarter 16,732 13,358
Fourth quarter 8,222 6,512
- ------------------- ------------------- -----------------------
Fiscal year $ 52,388 $ 39,709
- ------------------- ------------------- -----------------------
Income Per Share Diluted Basic Diluted Basic
--------- ----------- --------- -----------
First quarter $.20 $.22 $.16 $.17
Second quarter .22 .23 .14 .15
Third quarter .26 .27 .20 .21
Fourth quarter .13 .14 .10 .11
Fiscal year .81 .85 .60 .63
- ------------------- --------- ----------- --------- -----------
Quarterly Share Prices, Dividends and Related Stockholder Matters
The Company's Class A and Class B shares are listed on the New York Stock
Exchange under the symbols JWA and JWB, respectively. Dividends per share and
the market price range by fiscal quarter for the past two fiscal years were as
follows:
Class A Common Stock Class B Common Stock
---------------------- ----------------------
Divi- Market Price Divi- Market Price
--------------- --------------
dends High Low dends High Low
--------- ------ ------ ------- ------- ------
2000
First quarter $.0356 $22.75 $16.88 $.0319 $22.81 $17.00
Second quarter .0356 18.50 15.69 .0319 18.38 15.56
Third quarter .0356 18.50 14.88 .0319 18.38 14.88
Fourth quarter .0356 18.00 13.88 .0319 17.56 13.75
---------------- ------ ------- ------- ------- ------ -------
1999
First quarter $.0319 $16.06 $13.31 $.0281 $16.05 $13.33
Second quarter .0319 18.28 14.07 .0281 18.44 14.25
Third quarter .0319 24.16 16.63 .0281 24.88 17.66
Fourth quarter .0319 23.47 19.25 .0281 23.41 19.31
As of April 30, 2000, the approximate number of holders of the Company's Class A
and Class B Common Stock were 1,245 and 175, respectively, based on the holders
of record and other information available to the Company.
The Company's credit agreement contains certain restrictive covenants related to
the payment of dividends and share repurchases. Under the most restrictive
covenant, approximately $58 million was available for such restricted payments.
Subject to the foregoing, the Board of Directors considers quarterly the payment
of cash dividends based upon its review of earnings, the financial position of
the Company, and other relevant factors.
Selected Financial Data
John Wiley & Sons, Inc. and Subsidiaries
Dollars in thousands except per share data For the years ended April 30
----------------------------------------------------------------------------
2000 1999 1998 1997 1996
- --------------------------------------------------- --------------- -------------- --------------- --------------- --------------
Revenues $594,815 $508,435 $467,081 $431,974 $362,704
Operating Income 89,004 63,654 62,156 (a) 34,797 32,955
Net Income 52,388 39,709 36,588 (a) 20,340 24,680 (b)
Working Capital (76,939) 60,870 59,257 39,783 31,515
Total Assets 569,337 528,552 506,914 457,944 284,501
Long-Term Debt 95,000 125,000 125,000 125,000 --
Shareholders' Equity 172,738 162,212 160,751 128,983 117,982
- --------------------------------------------------- --------------- -------------- --------------- --------------- --------------
Per Share Data
Income Per Share
Diluted .81 .60 .55 .31 .37 (b)
Basic .85 .63 .58 .32 .39 (b)
Cash Dividends
Class A Common .1425 .1275 .1125 .1000 .0875
Class B Common .1275 .1120 .1000 .0875 .0775
Book Value-End of Year 2.85 2.60 2.51 2.03 1.83
(a) Fiscal 1998 includes unusual items amounting to a pretax gain of $16,893 or
$9,713 after tax, equal to $.14 per diluted share ($.15 per basic share)
relating to the gain on the sale of the domestic law publishing program,
net of a write-down of certain intangible assets and other items. Excluding
the unusual items, operating income would have been $45,263 and net income
would have been $26,875, or $.41 per diluted share and $.43 per basic
share.
(b) Fiscal 1996 net income includes interest income after taxes of $2.6
million, or $.04 per diluted and basic share, received on the favorable
resolution of amended tax return claims.
Schedule II
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED APRIL 30, 2000, 1999 AND 1998
(Dollars in Thousands)
Additions
------------------------------
Balance at Charged to Deductions Balance at
Description Beginning Cost & From From Reserves End of Period
of Period Expenses Acquisitions
- --------------------------------------------- ------------- -------------- --------------- -------------- --------------
Year Ended April 30, 2000
Allowance for sales returns(1) $ 34,213 $ 43,960 $ 2,110 $ 36,323 $ 43,960
Allowance for doubtful accounts $ 7,611 $ 2,666 $ - $ 863 (2) $ 9,414
Year Ended April 30, 1999
Allowance for sales returns(1) $ 33,411 $ 34,213 $ - $ 33,411 $ 34,213
Allowance for doubtful accounts $ 8,165 $ 2,053 $ - $ 2,607(2) $ 7,611
Year Ended April 30, 1998
Allowance for sales returns(1) $ 27,099 $ 32,945 $ - $ 26,633 $ 33,411
Allowance for doubtful accounts $ 7,414 $ 3,445 $ - $ 2,694(2) $ 8,165
(1) Allowance for sales returns represents anticipated returns net of
inventory and royalty costs.
(2) Accounts written off, less recoveries.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
JOHN WILEY & SONS, INC.
----------------------------------------------------------------
(Company)
By: /s/ William J. Pesce
----------------------------------------------------------------
William J. Pesce
President and Chief Executive Officer
By: /s/ Robert D. Wilder
----------------------------------------------------------------
Robert D. Wilder
Executive Vice President and
Chief Financial & Support Operations Officer
By: /s/ Peter W. Clifford
----------------------------------------------------------------
Peter W. Clifford
Senior Vice President, Finance
Corporate Controller
& Chief Accounting Officer
Dated: June 23, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons constituting directors of the
Company on June 23, 2000.
/s/ Warren J. Baker /s/ John L. Marion, Jr.
- --------------------------------------- -------------------------------------
Warren J. Baker John L. Marion, Jr.
/s/ H. Allen Fernald /s/ William J. Pesce
-------------------------------------- -------------------------------------
H. Allen Fernald William J. Pesce
/s/ Larry Franklin /s/ William R. Sutherland
--------------------------------------- -------------------------------------
Larry Franklin William R. Sutherland
/s/ Henry A. McKinnell /s/ Bradford Wiley II
--------------------------------------- ------------------------------------
Henry A. McKinnell Bradford Wiley II
/s/ Peter Booth Wiley
---------------------------------------
Peter Booth Wiley
Exhibit - 10.13
JOHN WILEY & SONS, INC.
FY 2000 QUALIFIED EXECUTIVE LONG TERM INCENTIVE PLAN
PLAN DOCUMENT
CONFIDENTIAL
MAY 1, 1999
CONTENTS
Section Subject Page
------- ------- ----
I. Definitions 2
II. Plan Objectives 4
III. Eligibility 4
IV. Performance Measurement and Objectives 4
V. Performance Evaluation 5
VI. Restricted Performance Shares Award rovisions 6
VII. Stock Option 7
VIII. Administration and Other Matters 7
I. DEFINITIONS
Following are definitions for words and phrases used in this document. Unless
the context clearly indicates otherwise, these words and phrases are considered
to be defined terms and appear in this document in italicized print:
company John Wiley & Sons, Inc.
plan The company's FY (Fiscal Year) 2000 Qualified Executive Long Term
Incentive Plan as set forth in this document.
shareholder plan The company's Long Term Incentive Plan.
plan cycle The three year period from May 1, 1999 to April 30, 2002.
Governance and Compensation Committee (the Committee) The committee of the
company's Board of Directors (Board) responsible for reviewing executive
compensation.
award period objectives The company's objectives to achieve specific financial
results in terms of income, cash flow and earnings per share, for the plan
cycle, as determined by the the Committee, and confirmed in writing.
financial results The company's actual achievement against the award period
objectives set for the plan cycle, as reflected in the company's audited
financial statements and other financial records.
participant Any person who is eligible and is selected to participate in the
plan, as defined in Section III.
target incentive The target incentive as determined and authorized by the the
Committee at the committee meeting held on June 23, 1999 is a restricted
performance shares award, which represents the number of restricted performance
shares that a participant is eligible to receive if 100% of his/her applicable
award period objectives are achieved and the participant remains an employee of
the company through April 30, 2004, except as otherwise provided in Section
VIII. The target incentive is based on the participant's position and is
described in Section IV.
stock Class A Common Stock of the company.
restricted performance share issued pursuant to this plan and the shareholder
plan that is subject to forfeiture. In the shareholder plan, such stock is
referred to as "Performance-Based Stock." The value of each share of restricted
performance shares under this plan will be determined by reference to the stock
closing sale price, as reported by New York Stock Exchange (NYSE), on the date
the the Committee acts at the beginning of the plan cycle (June 23, 1999). In
the event the stock is not traded on June 23, 1999 or the date the the Committee
acts, whichever is later, the closing sales price shall be the price of the
stock on the next day after June 23, 1999 or the date the Committee acts on
which the stock trades.
restricted period The period during which the shares of restricted performance
shares shall be subject to forfeiture in whole or in part, as defined in the
shareholder plan, in accordance with the terms of the award.
plan end adjusted restricted performance shares award. The final amount of
restricted performance shares awarded to a participant at the end of the plan
cycle after adjustments, if any, are made, as set forth in Section VIII.
a stock option issued under this plan and the shareholder plan is a right
granted to a participant, as more fully described under Section IX, to purchase
a specific number of shares of stock at a specified price. The stock option
granted under this plan will be non-qualified (i.e. is not intended to comply
with the terms and conditions for a tax-qualified option, as set forth in
Section 422A of the Internal Revenue Code of 1986).
grant date The date on which a participant is granted the stock option. This is
also the date on which the exercise price of the stock option is based.
payout amount Cash, if any, plus plan end adjusted restricted performance shares
award, as set forth in Section VIII, to a participant under this plan, if any,
for achievement of the award period objectives, as further discussed in this
plan.
performance levels
threshold The minimum acceptable level of achievement for each financial
goal. If threshold performance is achieved against all award period
objectives, a participant may earn 25% of the target incentive amount for
which he/she is eligible.
target Achievement of the financial goal for a measure. Each individual
financial goal is set at a level which is both challenging and achievable.
outstanding Superior achievement of the award period objectives. If
outstanding performance is achieved against all award period objectives, the
maximum amount a participant may earn is 200% of the target incentive amount
for which he/she is eligible.
payout factor The percentage of award period objectives deemed achieved applied
to the target incentive amount, exclusive of the stock option portion, if any,
to determine the payout amount.
cash flow Net income, excluding unusual items not related to the period being
measured, plus/minus any non-cash items included in net income and changes in
operating assets and liabilities, minus normal investments in product
development assets and property and equipment for the final year of the plan
cycle.
earnings per share Earnings per share, excluding unusual items not related to
the period being measured for the final year of the plan cycle.
divisional operating income Operating income before allocations for corporate
support services and taxes, excluding the effects of any unusual items, for the
final year of the plan cycle.
divisional cash flow Operating income before allocations and taxes, excluding
unusual items not related to the period being measured, plus/minus any non-cash
items included in divisional operating income (other than provisions for bad
debts), and changes in controllable assets and liabilities, less normal
investments in product development assets and direct property and equipment
additions, for the final year of the plan cycle. Controllable assets and
liabilities are inventory, composition, author advances, other deferred
publication costs, and deferred subscription revenues.
GPC operating income divisional operating income as adjusted for the
intercompany profit earned by other divisions.
GPC cash flow divisional cash flow as adjusted for the intercompany profit
earned by other divisions.
II. PLAN OBJECTIVES
The plan is intended to provide the officers and other key employees of the
Company and of its subsidiaries, affiliates and certain Joint Venture Companies,
upon whose judgement, initiative and efforts the Company depends for its growth
and fort the profitable conduct of its business, with additional incentive to
promote the success of the Company and to that end to encourage such employees
to acquire or increase their proprietary interest in the Company.
III. ELIGIBILITY
The participant is selected by the Committee in its sole discretion, from among
those employees in key management positions deemed able to make the most
significant contributions to the growth and profitability of the company. The
President and CEO of the company is a participant.
IV. PERFORMANCE MEASUREMENT AND OBJECTIVES
A. Award period objectives are determined by the Committee at its sole
discretion. Award period objectives are set at a level that is
challenging and achievable.
B. Award period objectives established for each participant may include one
or more organizational level's award period objectives (e.g., company and
division), and one or more award period objectives for a particular
organizational unit (e.g., divisional cash flow, divisional operating
income). The weighting of and between the organizational levels' award
period objectives may vary, depending upon the participant's position.
Weighting of the participant's award period objectives is determined by
the committee in its sole discretion.
V. PERFORMANCE EVALUATION
A. Financial Results
1. The attainment of any award period objectives established by the
Committee shall be determined by the Committee at the end of the plan
cycle.
2. In determining the attainment of award period objectives, the
impact of any acquistion or divestiture which closes in the final
year of a plan cycle and which is valued at greater than
$5,000,000, will be excluded in determining the financial results
for the company or a division
B. Award Determination
1. At least threshold performance, in aggregate, of a participant's
organizational level's financial goal is necessary for the
participant to receive a payout for that financial goal. The
achievement of threshold for any single measure will result in a
payout to the participant.
[2. The determination of the performance level achievement (threshold,
target and outstanding, or points in between) for each
organizational level's award period objectives will be made
independently of any other organizational level's award period
objectives a participant may have.] out?
3. If the participant has more than one organizational level's award
period objectives, the achievement of a threshold performance level
of any of the organizational level's award period objectives will
result in a payout for that organizational level award period
objective.
4. The following details the effect of the financial results
performance levels on a participant's payout amount. The actual
payout factors will be determined by the Committee, in accordance
with the following:
a. For below threshold performance, the payout factor is zero.
b. For threshold performance, the payout factor is 25%.
c. For between threshold and target performance, the payout factor is determined
as follows:
(T% - Th% / 1 - ThAch%) x Act% - ThAch% x 100) / 100
+ Th% where,
T% = target payout percentage (100%)
Th% = threshold payout percentage (25%)
ThAch% = threshold achievment level
Act% = actual achievement level
d. For target performance, the payout factor is100%.
e. For between target and outstanding performance, the payout
factor is determined as follows:
1 + (O% - T%) / (OAch% - 1) x (Act% - 1)where,
O% = outstanding payout percentage (200%)
T% = target payout percentage (100%)
OAch% = Outstanding achievment level
Act% = actual achievement level
f. For outstanding performance, the payout factor is 200%.
5. Notwithstanding anything to the contrary, the maximum payout
amount, if any, a participant may receive is 200% of the
target incentive.
VI. RESTRICTED PERFORMANCE SHARES AWARD PROVISIONS
A. Restricted performance shares, if any, shall be awarded at the
beginning of the plan cycle, after the June 23, 1999 the Committee
meeting. The amount of restricted performance shares awarded shall be
based on the proportion of the target incentive allocated to
restricted performance shares, as determined by the the Committee. The
value of each share will be determined based on the stock closing sale
price, as reported by the NYSE, on the date the the Committee acts at
the beginning of the plan cycle (June 23, 1999). In the event the
stock is not traded on June 23, 1999 or the date the the Committee
acts, whichever is later, the closing sales price shall be the price
of the stock on the next day after June 23, 1999 or the date the the
Committee acts on which the stock trades, whichever is later. The
restricted performance shares awarded at the beginning of the plan
cycle are subject to adjustment at the end of the plan cycle as set
forth in Sections VI (B) below. Restricted performance shares, if any,
shall be awarded pursuant to the shareholder plan, as approved by the
the Committee. In addition to the terms and conditions set forth in
the shareholder plan, the restricted period for restricted performance
shares awarded shall be as follows: subject to continued employment
except as otherwise set forth in the shareholder plan, the lapse of
restrictions on one-half of the restricted performance shares awarded
will occur on the first anniversary (April 30, 2003) of the plan end
date at which time the participant will receive a new stock
certificate in a number of shares equal to one-half of the restricted
performance shares awarded with the restrictive legend deleted, and
the lapse of restrictions on the remaining half will occur on the
second anniversary (April 30, 2004) of the plan end date at which time
the participant will receive a new stock certificate in a number of
shares equal to the remaining half with the restrictive legend
deleted. B. The final amount of restricted performance shares will be
determined as follows: The restricted performance shares established
by the the Committee at the beginning of the plan cycle multiplied
times the payout factor equals the number of shares for the plan end
adjusted restricted performance shares award. The result of this
calculation will be compared to the restricted performance shares
awarded at the beginning of the plan cycle, and the appropriate amount
of restricted performance shares will be awarded or forfeited, as
required, to bring the restricted performance shares award to the
number of shares designated as the plan end adjusted restricted
performance shares award.
VII. STOCK OPTION
The participant may be granted a stock option pursuant to the shareholder plan
at the beginning of the plan cycle, representing another incentive vehicle by
which the participant is able to share in the equity growth of the company. The
number of shares in the stock option granted to a participant under this plan is
based on a set of variables and assumptions, applied consistently to all
participants, regarding the monetary value a participant might receive upon
exercise of the stock option. The terms and conditions of the award of the stock
option are contained in the shareholder plan and in the stock option award.
Withholding taxes relating to the gain realized on the exercise of an option may
be satisfied by surrendering to the company the equivalent value of the taxes,
or a portion thereof, in option shares in lieu of cash.
VIII. ADMINISTRATION AND OTHER MATTERS
A. This plan will be administered by the Committee, which will have authority
in its sole discretion to interpret and administer this plan, including,
without limitation, all questions regarding eligibility and status of any
participant, and no participant shall have any right to receive any
restricted performance shares or payment of any kind whatsoever, except as
determined by the the Committee hereunder.
B. The company will have no obligation to reserve or otherwise fund in advance
any amount which may become payable under the plan.
C. Restricted performance shares, stock options awarded and any cash paid out
under this plan shall not be considered as compensation for purposes of
defining compensation for retirement, savings or supplemental executive
retirement plans, or similar type plans.
D. This plan may not be modified or amended except with the approval of the
Committee.
E. In the event of a conflict between the provisions of this plan and the
provisions of the shareholder plan, the provisions of the shareholder plan
shall apply.
SUBSIDIARIES OF JOHN WILEY & SONS, INC.
Jurisdiction
In Which
Incorporated
Wiley Europe Limited England
Wiley Heyden Limited England (2)
John Wiley & Sons Limited England (2)
Academy Group Limited England (2)
Chancery Law Publishing Limited England (2)
Wiley Distribution Services Limited England (2)
Wiley Europe (S.A.R.L.) France (2)
John Wiley & Sons Australia, LTD. Australia
John Wiley & Sons (HK) Limited Hong Kong
Wiley Interscience, Inc. New York
John Wiley & Sons International Rights, Inc. Delaware
Wiley-Liss, Inc. Delaware
Wiley Publishing Services, Inc. Delaware
Wiley Subscription Services, Inc. Delaware
Clinical Psychology Publishing Company, Inc. Delaware
John Wiley & Sons Canada Limited Canada
Wiley Foreign Sales Corporation Barbados
John Wiley & Sons (Asia) Pte Ltd. Singapore
Scripta Technica, Inc. District of
Columbia
WWL, Inc. Delaware
Wiley-Japan Y.K. Japan (5)
John Wiley & Sons GmbH Germany
Wiley-VCH Verlag GmbH Germany (3)
Wilhelm Ernst & Sohn, Verlag fur
Architektur und technische
Wissenschaften, GmbH Germany (4)
Wiley-VCH Berlin GmbH Germany (4)
VCH Publishers (U.K.) Limited England (4)
Wiley-VCH Verlags Basel AG Switzerland(4)
Verlag Helvetica Chemica Acka Switzerland(4)
Verlag Chemie GmbH Germany (4)
Physik-Verlag GmbH Germany (4)
(1) The names of other subsidiaries which would not constitute a significant
subsidiary in the aggregate have been omitted.
(2) Subsidiary of Wiley Europe Limited.
(3) Subsidiary of John Wiley & Sons GmbH.
(4) Subsidiary of Wiley-VCH Verlag GmbH.
(5) Subsidiary of WWL, Inc.
Exhibit - 10.14
JOHN WILEY & SONS, INC.
FY 2000 QUALIFED EXECUTIVE ANNUAL INCENTIVE PLAN
PLAN DOCUMENT
CONFIDENTIAL
MAY 1, 1999
CONTENTS
Section Subject Page
------- ------- ----
I. Definitions 2
II. Plan Objectives 3
III. Eligibility 3
IV. Performance Objectives and Measurement 3
V. Performance Evaluation 4
VI. Payouts 5
VII. Status Changes 5
VIII. Administration and Other Matters 5
I. DEFINITIONS
Following are definitions for words and phrases used in this document. Unless
the context clearly indicates otherwise, these words and phrases are considered
to be defined terms and appear in this document in italicized print:
company John Wiley & Sons, Inc.
plan The company's Executive Annual Incentive Plan.
plan year The twelve month period from May 1, 1999 to April 30, 2000.
Governance and Compensation Committee (the Committee) The committee of the
company's Board of Directors (Board) responsible for reviewing executive
compensation.
Performance targets A participant's objective to achieve specific financial
results for FY 2000, as approved and communicated in writing, as described in
Sections IV and V below.
financial results Total company or division achievement against performance
target set for FY 2000.
participant Any person who is eligible to and is selected to participate in the
plan, as defined in Section III.
base salary The participant's base salary as of July 1,1999, or the date of
hire, or promotion into the plan, if later, adjusted for any increases or
decreases during FY 2000, on a prorated basis and adjusted for any amount of
time the participant may not be in the plan for reasons of hire, promotion,
death, disability, retirement and/or termination.
payout Actual gross dollar amount paid to a participant under the plan, if any,
for achievement of performance target, as further discussed in this plan.
target incentive percent The percent applied to the participant's base salary to
determine the target incentive amount.
target incentive amount The amount, if any, that a participant is eligible to
receive if a participant achieves 100% of his/her performance target. The
incentive for performance target should constitute at least 70% of the target
incentive amount for the participant.
performance levels
threshold The minimum acceptable level of achievement of each financial
goal. If threshold performance is achieved against all performance target,
a participant may earn 25% of the target incentive amount for which he/she
is eligible.
target Achievement in aggregate of target performance target. Each
individual financial goal is set at a level which is both challenging and
achievable.
outstanding Superior achievement of performance target, both in quality
and scope, with limited time and resources. If outstanding performance is
achieved against all performance target and, the maximum amount a
participant may earn is 175% of the target incentive amount for which
he/she is eligible.
payout factor Percentage of performance target deemed achieved, applied to the
target incenive amount, used to determine the payout for which a participant is
eligible.
business criteria measures selected from the Plan for the company or division.
For the FY2000 Plan, the business criteria are:
revenue Gross annual revenue, net of provision for returns.
cash flow Net income, excluding unusual items not related to the period
being measured, plus/minus any non-cash items included in net income
and changes in operating assets and liabilities, minus normal
investments in product development assets and property and equipment.
earnings per share Earnings per share, excluding unusual items not
related to the period being measured.
divisional operating income Operating income before allocations for
corporate support services and taxes, excluding the effects of any
unusual items.
divisional cash flow Operating income before allocations and taxes,
excluding unusual items not related to the period being measured,
plus/minus any non-cash items included in divisional operating income
(other than provisions for bad debts), and changes in controllable
assets and liabilities, less normal investments in product development
assets and direct property and equipment additions. Controllable assets
and liabilities are inventory, composition, author advances, other
deferred publication costs, and deferred subscription revenues
II. PLAN OBJECTIVES
The plan is intended to provide the officers and other key employees of the
Company and of its subsidiaries, affiliates and certain Joint Venture Companies,
upon whose judgement, initiative and efforts the Company depends for its growth
and effort the profitable conduct of its business, with additional incentive to
promote the success of the Company
III. ELIGIBILITY
The Committee in its discretion, may grant targe awards to key corporate
management executives for each fiscal year of the Company as it shall determine.
For purposes of the Plan, key corporate management executives shall be defined
as those persons designated as such from time to time by the Committee.
IV. PERFORMANCE TARGETS AND MEASUREMENT
A. Performance targets are determined by the Committee in writing, not later
than 90 days after the commencement of the fiscal year.
B. Performance targets are set for the company as a whole and for each
division, and are comprised of one or more business criteria for each
unit. The participant will be given specific performance targets, based
on an appropriate mix of company and/or division objectives.
C. Performance target include defining levels of performance (threshold,
target and outstanding) for each business crtieria and the measures of
each.
V. PERFORMANCE EVALUATION
A. Actual financial results achieved by the company and by each division
will be determined at the end of the plan year, and will compared with
previously set performance target by the Committee to determine a payout
factor for each participant.
B. Award Determination
1. A performance target, established for each participant, may include
one or more organizational unit's performance targets (e.g. company
and division), and one or more business criteria for an
organizational unit. At least threshold performance, in aggregate,
for each organizational unit is necessary for the participant to
receive a payout for that organizational unit. The achievement of
threshold for any single buisiness criteria will result in a payout
to the participant
2. Payout eligibility will be determined by calculating the amount for
achievement of performance target, as follows:
Base Salary x Target Incentive Payout x Weighting of Financial Goal
x Payout Factor = Financial Goals Payout Eligibility
3. The following details the effect of the financial results
performance levels on a participant's payout amount. The actual
payout factors will be determined by the Committee, in accordance
with the following:
a. For below threshold performance, the payout factor is zero.
b. For threshold performance, the payout factor is 25%.
c. For between threshold and target performance, the payout
factor is determined as follows:
(T% - Th% / 1 - ThAch%) x Act% - ThAch% x 100) / 100
+ Th% where,
T% = target payout percentage (100%)
Th% = threshold payout percentage (25%)
ThAch% = threshold achievment level
Act% = actual achievement level
d. For target performance, the payout factor is 100%.
e. For between target and outstanding performance, the payout
factor is determined as follows:
1 + (O% - T%) / (OAch% - 1) x (Act% - 1)where,
O% = outstanding payout percentage (175%)
T% = target payout percentage (100%)
OAch% = Outstanding achievment level
Act% = actual achievement level
f. For outstanding performance, the payout factor is 175%.
4. Notwithstanding anything to the contrary, the maximum payout
amount, if any, a participant may receive is 175% of the
target incentive.
VI. PAYOUTS
Payouts will be made within 90 days after the end of the plan year and will be
based on audited financial results.
VII. STATUS CHANGES
A. In the event of a participant's death, disability, retirement or leave of
absence prior to payout from the plan, the payout, if
any, will be determined by the Committee
B. A participant who resigns, or whose employment is terminated by the
company, with or without cause, before payout from the plan is
distributed, will not receive a payout. Exception to this provision shall
be made only with the approval of the GCC, in its sole discretion.
C. A participant who transfers between divisions of the company, will have
his/her payout prorated to the nearest fiscal quarter for the time spent
in each division, based on the achievement of performance target
established for the position in each division.
D. A participant who is appointed to a position with a different target
incentive percent will have his/her payout prorated to the nearest fiscal
quarter for the time spent in each position, based on the achievement of
performance target established for each position.
E. A participant who is hired or promoted into an eligible position during
the plan year may receive a prorated payout as determined by the GCC, in
its sole discretion.
VIII. ADMINISTRATION AND OTHER MATTERS
A. The plan is effective for the plan year. It will terminate, subject to
payout, if any, in accordance with and subject to the provisions of this
plan unless renewed by the company in writing in its sole discretion.
B. This plan will be administered by the GCC who will have authority to
interpret and administer this plan, including, without limitation, all
questions regarding eligibility and status of the participant.
C. This plan may be withdrawn, amended or modified at any time, for any
reason, in writing, by the company.
D. The determination of an award and payout under this plan, if any, is
subject to the approval of the GCC, in their sole discretion. This plan
does not confer upon any participant the right to receive any payout, or
payment of any kind whatsoever.
E. No participant shall have any vested rights under this plan. This plan
does not constitute a contract.
F. All deductions and other withholdings required by law shall be made to
the participant's payout, if any.
Exhibit - 10.15
JOHN WILEY & SONS, INC.
FY 2000 EXECUTIVE ANNUAL STRATEGIC MILESTONES INCENTIVE PLAN
PLAN DOCUMENT
CONFIDENTIAL
MAY 1, 1998
CONTENTS
Section Subject Page
------- ------- ----
I. Definitions 2
II. Plan Objectives 3
III. Eligibility 3
IV. Performance Objectives and Measurement 3
V. Performance Evaluation 3
VI. Payouts 4
VII. Status Changes 4
VIII. Administration and Other Matters 5
I. DEFINITIONS
Following are definitions for words and phrases used in this document. Unless
the context clearly indicates otherwise, these words and phrases are considered
to be defined terms and appear in this document in italicized print:
company John Wiley & Sons, Inc.
plan The company's Fiscal Year 2000 Executive Annual Strategic Milestones
Incentive Plan described in this document and any written amendments to this
document.
plan year The twelve month period from May 1, 1999 to April 30, 2000.
Governance and Compensation Committee (the Committee) The committee of the
company's Board of Directors (Board) responsible for reviewing executive
compensation.
strategic milestone A participant's objective to achieve specific results for FY
1999, including interim revised strategic milestones, if any, as approved and
communicated in writing, as described in Sections IV and V below. Strategic
milestones are leading indicators of performance.
participant Any person who is eligible to and is selected to participate in the
plan, as defined in Section III.
base salary The participant's base salary as of July 1,1999, or the date of
hire, or promotion into the plan, if later, adjusted for any increases or
decreases during FY 2000, on a prorated basis and adjusted for any amount of
time the participant may not be in the plan for reasons of hire, promotion,
death, disability, retirement and/or termination.
payout Actual gross dollar amount paid to a participant under the plan, if any,
for achievement of financial goals and strategic milestones, as further
discussed in this plan.
target incentive percent The percent applied to the participant's base salary to
determine the target incentive amount.
target incentive amount The amount, if any, that a participant is eligible to
receive if a participant achieves 100% of his/her financial goals and strategic
milestones. The incentive for financial goals should constitute at least 70% of
the target incentive amount for the participant.
performance levels
threshold The minimum acceptable level of achievement of strategic
milestones. If threshold performance is achieved against all strategic
milestones, a participant may earn 25% of the target incentive amount for
which he/she is eligible.
target Achievement in aggregate of target strategic milestones. Each
individual strategic milestone is set at a level which is both challenging
and achievable.
outstanding Superior achievement of strategic milestones, both in quality
and scope, with limited time and resources. If outstanding performance is
achieved against strategic milestones, the maximum amount a participant
may earn is 175% of the target incentive amount.
payout factor Percentage of strategic milestones deemed achieved, applied to the
target incenive amount, used to determine the payout for which a participant is
eligible.
II. PLAN OBJECTIVES
The purpose of the FY 2000 Executive Annual Strategic Milestones Incentive Plan
is to enable the company to reinforce and sustain a culture devoted to excellent
performance, reward significant contributions to the success of Wiley, and
attract and retain highly qualified executives.
III. ELIGIBILITY
The participant is selected by the President and CEO of the company, from among
those employees in key management positions deemed able to make the most
significant contributions to the growth and profitability of the company, with
the approval of the Committee. The President and CEO of the company is a
participant.
IV. PERFORMANCE OBJECTIVES AND MEASUREMENT
A. Strategic milestones are non-financial individual objectives over which
the participant has a large measure of control, which lead to, or are
expected to lead to improved performance for the company in the future.
Strategic milestones are determined near the beginning of the plan year
by the participant, and approved by the participant's manager, if the
President and CEO is not the participant's manager.
B. The strategic milestones for the President and CEO are reviewed and
approved by the Committee.
C. The strategic milestones for the President and CEO should be
appropriately reflected in those of all other employees at all
levels. Each participant collaborates with his/her manager in setting
strategic milestones. The strategic milestones may be revised in the
interim, as appropriate.
D. The determination of strategic milestones includes defining a target
level of performance and the measure of such, and may include defining
threshold and outstanding levels of performance and the measures of such.
V. PERFORMANCE EVALUATION
A. Achievement of a participant's strategic milestones will be determined at
the end of the plan year by comparing results achieved to previously set
objectives.
B. Each participant's manager will recommend a payout factor for achievement
of all strategic milestones compared with the previously set objectives.
In determining the payout factor, the overall performance on all
strategic milestones will be considered. This payout factor is subject to
the review and approval of the President and CEO, the Committee and the
Board. The Committee will recommend to the Board for approval the payout
factor for the President and CEO's achievement of his/her strategic
milestones based on the Committee's evaluation of his/her achievement
compared with the previously set objectives.
C. Award Determination
STRATEGIC MILESTONES PAYOUT AMOUNT
Base Salary X Target Incentive Percent
X Weighting of Strategic Milestones X Payout Factor
= Strategic Milestones Payout Eligibility
1. Notwithstanding anything to the contrary, the maximum payout, if
any, a participant may receive is 175% of the target incentive
amount.
2. The foregoing Strategic Milestones payout eligibility calculation
is intended to set forth general guidelines on how awards are to be
determined. The purpose of this plan is to motivate the participant
to perform in an outstanding manner. The President and CEO has
discretion under this plan to take into consideration the
contribution of the participant, the participant's management of
his/her organizational unit and other relevant factors, positive or
negative, which impact the company's, the participant's
organizational unit(s), and the participant's performance overall
in determining whether to recommend granting or denying an award,
and the amount of the award, if any. If the participant is the
President and CEO, such discretion is to be exercised by the
Committee and the Board.
VI. PAYOUTS
Payouts will be made within 90 days after the end of the plan year and will be
based on audited financial results.
VII. STATUS CHANGES
A. In the event of a participant's death, disability, retirement or leave of
absence prior to payout from the plan, the payout, if any, will be
determined by the President and CEO in his/her sole discretion, subject
to any approval of the Committee in its sole discretion, subject to any
required Board approvals. If the participant is the President and CEO,
such approval is required by the Board, in its sole discretion.
B. A participant who resigns, or whose employment is terminated by the
company, with or without cause, before payout from the plan is
distributed, will not receive a payout. Exception to this provision shall
be made only with the approval of the Committee, in its sole discretion,
subject to any required Board approvals. If the participant is the
President and CEO, such approval is required by the Board in its sole
discretion.
C. A participant who transfers between divisions of the company, will have
his/her payout prorated to the nearest fiscal quarter for the time spent
in each division, based on the achievement of strategic milestones
established for the position in each division, and based upon a judgment
of the participant's contribution to the achievement of goals in each
position, including interim revisions, if appropriate.
D. A participant who is appointed to a position with a different target
incentive percent will have his/her payout prorated to the nearest fiscal
quarter for the time spent in each position, based on the achievement of
financial goals and strategic milestones established for each position.
E. A participant who is hired or promoted into an eligible position during
the plan year may receive a prorated payout as determined by the
President and CEO, in his/her sole discretion, subject to the approval of
the Committee.
VIII. ADMINISTRATION AND OTHER MATTERS
A. The plan is effective for the plan year. It will terminate, subject to
payout, if any, in accordance with and subject to the provisions of this
plan unless renewed by the company in writing in its sole discretion.
C. This plan will be administered by the President and CEO, who will have
authority to interpret and administer this plan, including, without
limitation, all questions regarding eligibility and status of the
participant, subject to the approval of the Committee required under this
plan or the by-laws of the company.
C. This plan may be withdrawn, amended or modified at any time, for any
reason, in writing, by the company.
D. The determination of an award and payout under this plan, if any, is
subject to the approval of the President and CEO, the Committee, and the
Board in their sole discretion. This plan does not confer upon any
participant the right to receive any payout, or payment of any kind
whatsoever.
E. No participant shall have any vested rights under this plan. This plan
does not constitute a contract.
All deductions and other withholdings required by law shall be made to the
participant's payout, if any.
Exhibit 10.21
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 15th day of June 2000, by and between
John Wiley & Sons, Inc., a New York corporation, with offices at 605 Third
Avenue, New York, New York 10158 (hereinafter referred to as the "Corporation"),
and Robert D. Wilder presently residing at 10 Forest Glen Drive, Highland Park,
New Jersey 08904 (hereinafter referred to as the "Employee").
W I T N E S S E T H :
- - - - - - - - - -
Employee is presently employed by the Corporation and has
requested a modification of his existing employment agreement. The Corporation
has agreed to Employee's request and the parties mutually desire to enter into
an agreement of employment for the period from May 1, 2000 through June 4, 2003
on the terms and subject to the conditions hereinafter set forth.
NOW THEREFORE, the parties agree as follows:
1. Employment.
1.1 From May 1, 2000 until such time as Employee's title and
duties are transferred to a successor (hereinafter referred to as the
"Transition Date") the Corporation shall continue Employee's current
employment as Executive Vice President and Chief Financial and Operations
Officer. From the Transition Date through and including June 4, 2003, the
Corporation shall employ Employee as a consultant, with such responsibility
and authority as may from time to time be designated by the Corporation.
1.2 Employee hereby accepts such employment and shall devote his attention,
knowledge and skills faithfully, diligently and to the best of his ability
to
the performance of his duties at such times as the Corporation
regularly conducts its business in accordance with the following schedule:
(a) from June 15, 2000 through and including the Transition Date, five days
per week;
(b) from the Transition Date through April 30, 2001, up to five
days per month; and
(c) from May 1, 2001 until June 4, 2003, approximately one day per month.
Employee shall do such traveling as may be reasonably required of him in
the performance of his duties. Employee shall be subject to and shall
observe and carry out such reasonable rules, regulations, policies,
directions and restrictions consistent with the duties to be
performed by him hereunder as the Corporation shall from time to time
establish. Employee shall be entitled to expense reimbursement in
accordance with the policies of the Corporation, as established from time
to time, secretarial and other office support as needed for work performed
on premises, and computer equipment to interface with the Corporation's
systems as necessary for work performed off premises.
1.3 Employee shall not be entitled to compensation other than the
compensation provided for (or otherwise referred to) in this Agreement for
any services he may render with respect to any of the Corporation's
subsidiaries.
1.4 Prior to the Transition Date, Employee shall not without the prior
written approval of the Corporation accept employment or compensation from
or perform services of any nature for any business enterprise other than
the Corporation or any of its subsidiaries or joint-venture entities.
After the Transition Date, Employee may accept
employment or compensation from or perform services for any business
enterprise that is not a Restricted Business as that term is defined in
Section 7.1.
1.5 Employee shall not without the prior written approval of the
Corporation invest in any business enterprise:
1.5.1 if such enterprise engages in or involves a "Restricted Business"
as that term is hereinafter defined in Section 7.1;
1.5.2 if such investment interferes with the performance of Employee's
duties hereunder; or
1.5.3 if such investment would violate the Corporation's announced
business policy with respect to employee interests in suppliers of goods or
services to the Corporation or any of its subsidiaries. Notwithstanding the
foregoing, Employee may invest in securities of any company if such
securities are listed for trading on a national stock exchange or traded on
the over-the-counter market and Employee's investment therein represents
less than one percent (1%) of the total number of outstanding shares of the
class of shares or outstanding principal amount of the class of other
securities of such company, as the case may be.
1.6 Prior to the Transition Date, Employee shall not without the prior
written approval of the Corporation serve on the board of directors of
any business enterprise other than the Corporation or any of its
subsidiaries. After the Transition Date, Employee may serve on the board
of directors of any business enterprise that is not a Restricted
Business as that term is hereinafter defined in Section 7.1.
2. Term.
2.1 Employee's term of employment hereunder shall commence as of May 1,
2000 and shall continue through June 4, 2003, unless sooner terminated in
accordance with this Agreement, at which time Employee's employment by the
Corporation shall terminate. The Employee's term of employment as defined
in the immediately preceding sentence shall be referred to herein as the
"Term."
3. Compensation.
3.1 The Corporation shall pay Employee the amounts set forth below:
(a) from June 15, 2000 through and including the Transition Date at
the Employee's current base salary rate ($10,576.92 bi-weekly);
(b) from the Transition Date through and including June 4, 2003, total
biweekly payments shall be calculated as follows: $475,421.00 divided by
the number of pay periods between the Transition Date and June 4, 2003.
From the Transition Date (if prior to April 30, 2001) through April 30,
2001, $2,307.69 in each pay period shall constitute base salary.
From May 1, 2001 (or the Transition Date, if later)until June 4, 2003,
$461.54 in each pay period shall constitute base salary. The remainder of
each biweekly payment shall constitute a transition payment.
3.2 Except as otherwise set forth in this Section 3.2, Employee's
participation in all executive compensation plans of the Corporation shall
terminate as follows:
3.2.1 Effective on the Transition Date, Employee's participation in the
Executive Annual Incentive Plan ("EAIP") shall terminate. If the
Transition Date is later than September 30, 2000, the Employee shall
receive an additional lump sum payment equal to x/12 of the
participant's FY 2000 EAIP Target, where "x" is equal to the number of
whole or partial months after September 30, 2000, not to exceed 7. Such
payment will be made as soon as practicable after the Transition Date.
3.2.2 Effective immediately, Employee's participation in the Executive
Long Term Incentive Plan ("ELTIP") shall terminate and the Employee
shall receive a cash payment as follows (subject to approval
by the Governance and Compensation Committee of the Board of Directors
of the Corporation), on the basis of the April 30, 2000 share
price of $17.4375, in lieu of the following shares of Class A stock:
(a) 2334 shares with respect to fiscal year 1997: $ 40,699
(b) 11824 shares with respect to fiscal year 1998: $206,181
--------
Total $246,880
Employee shall receive no payments under the ELTIP with respect to fiscal
years 1999, 2000 or any subsequent years.
3.2.3 Employee shall continue to participate in the Supplemental Executive
Retirement Plan ("SERP") until June 4, 2003.
3.2.4 During the Term Employee shall not be awarded any
additional stock under the 1991 Key Employee Stock Option Plan or the
current Long Term Incentive Plan. During the Term and thereafter, options
previously awarded under the 1987 and 1991 Key Employee Stock Option Plans
shall continue to vest and/or be forfeited in accordance with their terms.
3.2.5 Employee shall cease making contributions under the Deferred
Compensation Plan on the Transition Date.
3.3 During the Term, Employee shall be included to the extent eligible
under any and all plans providing enefits generally for the Corporation's
employees,
including, but not limited to, pension, group life insurance,
hospitalization, medical and disability plans. The Employee shall also
continue to be eligible for the Senior Executive Physical Examination
program during the term of this Agreement and, until April 30, 2001, for
the financial planning service currently provided by Ayco to senior
executives. The Corporation shall not be under any obligation to continue
the existence of any executive compensation or other employee benefit plan
referred to in Section 3.2 or this Section 3.3.
3.4 The Employee agrees that the Corporation shall withhold from any and
all compensation required to be paid to the Employee pursuant to this
Agreement all federal, state, local and/or other taxes which the
Corporation determines are required to be withheld in accordance with
applicable statutes and/or regulations from time to time in effect and all
amounts required to be deducted in respect of the Employee's coverage under
applicable employee benefit plans.
4. Vacation.
4.1 During the Term, Employee shall not be entitled to any paid vacation.
Employee shall be paid a lump sum equal to the value of any earned but
unused vacation pay as of the Transition Date.
5. Termination of Employment By Corporation.
5.1 The Corporation may terminate Employee's employment hereunder at any
time for cause without further obligation or liability except as
hereinbelow stated in this Section 5.1. For purposes of this Agreement,
the term "cause" shall be limited to the following grounds:
5.1.1 Employee's refusal to substantially perform his duties as reasonably
required or otherwise fulfill his material obligations under this Agreement
(for reasons other than death or disability),
in any such case after due written notice thereof, or serious willful
misconduct in respect of his obligations hereunder;
5.1.2 Conviction of a felony crime;
5.1.3 Perpetration of a fraud against the Corporation or
misappropriation of the Corporation's property; Habitual intoxication or
illegal use of habit forming substances;
or 5.1.4 Knowingly making a material false statement to the Corporation's
Board of Directors or management regarding the affairs of the
Corporation. In the event Employee's employment is terminated for
cause, no further payments of salary or benefits of any kind or nature
(except to the extent accrued to the date of termination) shall be paid to
Employee, and Employee shall have no further claim against the Corporation
under the terms of this Agreement or otherwise relating to his employment.
5.2 The Corporation shall not terminate Employee's employment hereunder
without cause.
5.3 As a condition to receiving any transition payments pursuant to
Section 3.1(b) of this Agreement, Employee agrees to execute a release
of claims both
(a) at the time he signs this Agreement and
(b) promptly after expiration of the Term, each in the form attached hereto
as Exhibit A. In the event the Employee fails or refuses to sign a release
of claims at the times specified in this Section 5.3 or either of such
releases do no become effective due to their revocation in accordance with
their terms, the Employee shall be obligated immediately to repay all
transition payments paid to him by the Corporation pursuant to
Section 3.1(b).
5.4 If Employee voluntarily resigns, the Corporation shall have no further
obligation to Employee except for salary and any other payments accrued to
the effective date of such resignation, and Employee's duties under Section
1 shall cease hereunder except as therwise provided in Section 5.5 below.
5.5 The Employee shall assist in the orderly transfer of his authority and
responsibility as Executive Vice President of the Corporation to his
successor. In the event the Corporation terminates Employee's employment
for cause, or in the event of Employee's voluntary resignation, if so
requested by the Corporation, Employee shall assist in the orderly transfer
of his then existing authority and responsibility to his successor. 6.
Death or Disability.
6.1 In the event of the death of Employee during the term of employment
under this Agreement, this Agreement shall terminate and all obligations to
Employee shall cease as of the date of death except that
a) the Corporation will pay to his estate the then base salary under
Section 3.1 until the end of the month in which Employee dies,
(b) the Corporation will pay to his estate all transition payments
specified in Section 3.1(b), and
(c) the Corporation will honor any rights and benefits of Employee under
the benefit plans and programs of the Corporation including, without
limitation, the SERP, in which Employee is a participant, as
determined in accordance with the terms and provisions of such plans and
programs. If the Employee's death occurs before the Transition Date,
the payment provided in this Agreement under the ELTIP for fiscal years
1997 and 1998 shall be paid at the normal time to Employee's estate.
6.2 In the event that Employee shall become entitled to salary
continuation payments under the Corporation's Group Long-Term Disability
Insurance Plan or under any generally similar plan then in effect, the
Corporation may, during the period covered by such payments at its option,
cease all payments to the Employee under Section 3.1 hereunder without
further obligation or liability on the part of the Corporation under the
terms of this Agreement.
7. Restrictive Covenant.
7.1 In consideration of the Corporation entering into this Agreement,
Employee shall not, directly or indirectly, for a period of 12 months
after termination of such employment for any reason whatsoever, whethe
because the term of employment has ended by its terms or otherwise (unless
compliance herewith is excused pursuant to Section 7.2), be employed by,
render services to or participate in the management,operation or
control of, or serve as advisor or consultant to or otherwise become
financially interested in any business of the same nature as that now (or
hereafter during the term of this Agreement) carried on by the Corporation
or any of its subsidiaries (a "Restricted Business"), it being understood
that teaching activities at educational institutions are deemed not to
constitute engaging in a Restricted Business.
7.2 Should a Change of Control(as defined in the Corporation's Supplemental
Employee Retirement Plan) occur during the Term and should the Employee
terminate his employment for "Good Reason" (as defined in said Plan)
during the Term and within a period of 18 months following such Change
of Control such termination by Employee shall constitute a waiver by the
Corporation of the restrictive covenant set forth in Section 7.1 and
Employee shall have no further obligation to comply with its terms.
7.3 Employee acknowledges and agrees that in the event of any violation of
the restrictive covenant set forth in Section 7.1, the Corporation shall be
authorized and entitled to obtain from any court of competent jurisdiction
temporary, preliminary or
permanent injunctive relief as well as an equitable accounting of all
profits or benefits arising out of such violation and any damages for the
breach of this Agreement which may be applicable. The aforesaid rights and
remedies shall be independent, severable and cumulative and shall be in
addition to any other rights or remedies to which the Corporation may be
entitled.
7.4 The restrictions contained in this Section 7 are intended to be
reasonable. In the event that any restriction contained herein is held by
any court of competent jurisdiction or arbitrator to be in any respect
unreasonable, the court so holding may limit the territory to which it
pertains or the period of time in which it operates, or affect any other
change to the extent necessary to make it enforceable. The remaining
provisions shall not be affected, but shall, subject to the discretion of
such court, remain in full force and effect and any invalid and
unenforceable provision shall be deemed without further action on the part
of the parties hereto modified, amended and limited to the extent necessary
to render the same valid and enforceable to the maximum extent permissible.
7.5 Employee shall hold in a fiduciary capacity for the benefit of the
Corporation all confidential information, knowledge and data relating to or
concerned with the Corporation's products, operations, sales, business and
affairs which are proprietary and not readily ascertainable from trade
sources or other publicly available data, and he shall not, at any time
hereafter, use, disclose or divulge any such confidential information,
knowledge or data to any person, firm or corporation other than to the
Corporation, its subsidiaries or its designees or except as may otherwise
be required in connection with the business and affairs of the Corporation.
A breach of Employee's obligations hereunder shall entitle the
Corporation to seek injunctive or equitable relief and/or damages from any
court of competent jurisdiction.
7.6 Employee agrees not to disparage the Corporation or any of its
officers, directors, employees or agents.
8. Change of Control Agreements.
8.1 It is understood and agreed that none of the benefits accruing to
Employee under the 1987 and 1991 Key Employee Stock Option Plans or
Supplemental Employee Retirement Plan resulting from a "change of control"
shall derogate from the rights granted to Employee under this Agreement,
and the rights granted to him thereunder shall, subject to the
triggering events thereof, be supplementary to and not in substitution
for his rights hereunder.
9. General.
9.1 Subject to Section 7.2 and Section 8 hereof, this Agreement constitutes
the entire agreement concerning Employee's employment, and no amendment
or modification hereof shall be valid or binding unless made in writing
and signed by the party against whom enforcement thereof is sought.
9.2 The provisions of Section 7 hereof shall survive the termination or
expiration of this Agreement.
9.3 Any notice required, permitted, or desired to be given pursuant to any
of the provisions of this Agreement shall be deemed to have been
sufficiently given or served for all purposes if delivered in person
or sent by registered or certified mail, return receipt requested, postage
and fees prepaid, as follows:
If to the Corporation, at:
605 Third Avenue
New York, New York 10158
Attention: William J. Pesce
with a copy to:
Richard S. Rudick, Esq.
John Wiley & Sons, Inc.
605 Third Avenue
New York, New York 10158
If to Employee, at:
10 Forest Glen Drive
Highland Park, New Jersey 08904
Either of the parties hereto may at any time and from time to time change
the address to which notices shall be sent hereunder by notice to the other
party.
9.4 No course of dealing or any delay on the part of the Corporation
or Employee in exercising any rights hereunder shall operate as a waiver of
any such rights. No waiver of any default or breach of this Agreement shall
be deemed a continuing waiver of any other breach or default. Nothing in
this Agreement or in the release attached as Exhibit A is intended to be
nor shall be deemed an admission of liability by any party, or an admission
of the existence of any facts upon which liability could be based.
9.5 This Agreement relates to services to be performed principally
in, and accordingly shall be governed, interpreted and construed in
accordance with the laws of the State of New York. 9.6 If any provision
or part of this Agreement shall be held or declared to be void, invalid or
illegal for any reason by any court of competent jurisdiction, such
provision or part shall be ineffective but shall not in any way invalidate
or affect any other provision or part of this Agreement.
9.7 This Agreement, and the respective rights and obligations of the
parties hereunder, shall inure to the benefit of, and shall be binding
upon, the Corporation and its successors and assigns.
9.8 Should there arise any claim, dispute or controversy relating to this
Agreement, or the breach thereof, the parties shall use their best
efforts and good will to settle such claim, dispute or controversy by
amicable negotiations. Except as provided in Sections 7.2 and 7.4, any
such claim, dispute or controversy that arises between the parties
relating to this Agreement that is not amicably settled shall be resolved
by arbitration, as follows.
9.8.1 Any such arbitration shall be heard in New York, New York,
before a panel consisting of one (1) to three (3) arbitrators, each of
whom shall be impartial. Except as the parties may otherwise agree, all
arbitrators shall be appointed in the first instance by the President of
the Association of the Bar of the City of New York or, in the event of his
unavailability by reason of disqualification or otherwise, by the
Chairman of the Employee Committee of the Association of the Bar of the
City of New York. In determining the number and appropriate background
of the arbitrators, the appointing authority shall give due consideration
to the issues to be resolved, but his decision as to the number of
arbitrators and their identity shall be final. Except as otherwise provided
in this Section 9.8, or as the parties may otherwise agree, arbitration
hereunder shall be governed by the rules of the American Arbitration
Association, as they then exist.
9.8.2 An arbitration may be commenced by any party to this Agreement
by the service of a written Request for Arbitration upon the other affected
parties. Such Request for Arbitration shall summarize the controversy or
claim to be arbitrated, and
shall be referred by the complaining party to the appointing authority for
appointment of arbitrators ten (10) days following such service or
thereafter. If the panel of arbitrators is not appointed by the appointing
authority within thirty (30) days following such reference, any party may
apply to any court within the State of New York for an order appointing
arbitrators qualified as set forth below. No Request for Arbitration shall
be valid if it relates to a claim, dispute, disagreement or controversy
that would have been time barred under the applicable statute of
limitations had such claim, dispute or controversy been submitted to the
Supreme Court of the State of New York.
9.8.3 All attorneys' fees and costs of the arbitration shall in the first
instance be borne by the respective party incurring such costs and fees,
but the arbitrators shall have the discretion to award costs and/or
attorneys' fees as they deem appropriate under the circumstances. In
addition to the waiver set forth in Section 5.3 above, the parties hereby
expressly waive punitive damages, and under no circumstances shall an award
contain any amount that in any way reflects punitive damages.
9.8.4 Judgment on the award rendered by the arbitrators may be entered in
any court having jurisdiction thereof.
9.8.5 It is intended that claims, disputes or controversies submitted to
arbitration under this Section 9.8 shall remain confidential, and to
that end it is agreed by the parties that neither the facts disclosed in
the arbitration, the issues arbitrated, nor the views or opinions of any
persons concerning them, shall be disclosed to third persons at any time,
except to the extent necessary to enforce an award or judgment or
as required by law or in response to legal process or in connection with
such arbitration. IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
JOHN WILEY & SONS, INC.
By: __________/s/__________________
William J. Pesce
President and Chief Executive Officer
______________/s/_________________
Robert D. Wilder
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EXHIBIT A
ROBERT D. WILDER
WAIVER AND RELEASE OF CLAIMS
In consideration of, and subject to, the payment to be made to me by John Wiley
& Sons, Inc. (the "Corporation") of the transition payments specified in Section
3.1(b) of the Employment Agreement dated June 15, 2000, I hereby waive any
claims I may have for employment or re-employment by the Corporation, and its
affiliated and subsidiary companies other than during the Term of the Employment
Agreement as defined therein, and I further agree to and do release and forever
discharge the Corporation and its affiliated and subsidiary companies, and their
respective past and present officers, directors, shareholders, employees and
agents from any and all claims and causes of action, known or unknown, arising
out of or relating to my employment with the Corporation, its parent, affiliated
and subsidiary companies, or the termination thereof, including, but not limited
to, wrongful discharge, breach of contract, tort, fraud, the Civil Rights Acts,
Worker Adjustment and Retraining Notification Act, Age Discrimination in
Employment Act, Employee Retirement Income Security Act, Americans with
Disabilities Act, or any other federal, state or local legislation or common law
relating to employment or discrimination in employment or otherwise.
This Release does not include any claims relating to (i) earned but unpaid
salary owing for the period through the effective date of this release; (ii)
accrued and vested benefits payable under any Corporation pension plan under
which I am a participant; and (iii) subject to compliance with Section 5.3 of
the Employment Agreement, the payment of any payments specified in the
Employment Agreement.
By signing this Waiver and Release of Claims, I acknowledge and agree as
follows:
(1) I have had the opportunity to consult with an attorney or other advisor of
my choice about this matter, and have been advised by the Corporation to do so
if I choose;
(2) the transition payments are greater than any other payment or benefit to
which I otherwise would have been legally entitled after the Transition Date in
the absence of my execution of the Employment Agreement and this release;
(3) I have signed this Waiver and Release of Claims of my own free will and no
promises or representations have been made to me by any person to induce me to
do so other than the Employment Agreement dated June 15, 2000;
(4) I have been given twenty-one (21) days to review and consider this Waiver
and Release of Claims; and
(5) I may revoke this Waiver and Release of Claims after signing it, by
delivering a written revocation to the Corporation's Vice President of Human
Resources no later than seven (7) days after the date I sign it as shown below.
-------------------------
Employee's Signature
-------------------------
Print Name
-------------------------
Date Signed
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Exhibit - 10.25
EMPLOYMENT AGREEMENT LETTER DATED AS OF JANUARY 16, 1997
BETWEEN TIMOTHY B. KING AND THE COMPANY
January 16, 1997
This letter, when signed by both of us, will confirm our understanding as
follows regarding certain matters relating to your employment.
Your employment as a Senior Vice President of the Company is "at will", and may
be terminated by the Company or by you at any time, for any reason, subject
however to the provisions of this agreement.
If your employment is terminated by the Company other than for cause as defined
below, you shall be entitled to severance as follows:
Continuation of base salary then in effect for 15 months ("the
Severance Period") from the date of termination. If during the
Severance Period you obtain regular employment, you agree to
promptly notify the Company, and the payments due hereunder shall
be reduced dollar for dollar by the amount of cash compensation in
excess of $90,000 from such employment during the Severance
Period. If as a result of any such offset, the Company has
overpaid you, you agree to promptly reimburse the Company.
Coverage during the Severance Period (at the levels in effect for
comparable employees from time to time,) under the following
employee benefit plans or provisions for comparable benefits
outside such plans, but only to the extent comparable coverage is
not provided by any new employer: (1) Group Health Insurance
Program; (2) Group Life and Accidental Death and Dismemberment
Insurance, taking into account any waiver of coverage under the
Supplemental Executive Retirement Plan ("SERP") in which you
participate.
Outplacement services, in accordance with the policy of the Company for senior
executives at the time of termination.
If within 18 months following a "change of control" as defined in the SERP, you
are terminated by the Company other than for cause as defined below, or elect to
terminate your contract for "good reason" as defined in the SERP, in either case
you shall, in addition to the amounts specified above, be entitled to your
"target incentive amount" under the Executive Annual Incentive Plan ("EAIP") for
a fiscal year ending during the Severance Period, (and if not otherwise
determined prior to termination, for any prior fiscal year) and the same amount
(pro-rated to the end of the Severance Period), for the EAIP for a fiscal year
beginning during the Severance Period, or the equivalent under any comparable
bonus or variable compensation plan which may hereafter be adopted by the
Company in lieu of the EAIP.
You agree that the payments and benefits set forth above shall be full and
adequate compensation for all damages you may suffer as result of termination of
your employment.
If, without cause or your consent, or other than on account of disability as
defined in the Company's programs, your cash compensation is reduced from the
current levels (other than as a result of targets not being met in any EAIP or
equivalent program) and within 30 days thereafter you elect to terminate your
employment by written notice, or if you elect to terminate your employment for
"good reason" within 18 months following a "change of control", in either case
such termination shall be treated as a termination by the Company without cause
for purposes of this agreement.
Notwithstanding the foregoing, any rights or benefits you may have under the
employment and benefit plans and programs of the Company (other than for
severance, which shall be determined hereunder), including without limitation
the SERP shall be determined in accordance with such plans and programs, and
nothing in this agreement shall modify or reduce any rights you may have
resulting from a "change of control" as defined in the SERP.
For purposed of this agreement, "cause" shall be limited to:
a substantial failure or refusal to devote your full business
time, and your knowledge and skills, to the best of your ability,
to the performance of you duties, after notice by the Company, or
serious willful misconduct relating to your duties and obligations
as an employee.
Conviction of a crime, perpetuation of a fraud, habitual
intoxication or illegal use of controlled or habit forming
substances, or knowingly making a material false statement to the
Company's board or management.
In consideration of your entering into this agreement, you agree that for period
of five months after termination of your employment for any reason other than
termination by the Company without cause, or termination by you for "good reason
following a "change of control" as defined in the SERP, you will not directly or
indirectly be employed by, render services to, or participate in the management,
operation or control (as a consultant or otherwise), of a business of the same
nature as that carried on by the Company or any of its subsidiaries. You further
agree that for one year after termination of your employment for any reason
(including termination by the company without cause) except for a termination by
the company, or by your for "good reason within 18 months following a change of
control", you will not directly or indirectly solicit for employment or hire any
employee of the company, without our prior written consent.
Except as otherwise provided above, this is our entire agreement concerning your
employment, and no modification shall be binding unless it is in writing and
signed by the party against whom enforcement is sought. This agreement shall be
interpreted and construed in accordance with the laws of the State of New York,
without giving effect to its conflict of laws provisions, and shall be binding
upon the Corporation and its successors and assigns.
Please sign and return the enclosed copy of this letter to confirm our
agreement.
Sincerely,
JOHN WILEY & SONS, INC.