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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT 1934
For the quarterly period ended October 31, 2002 Commission File No. 1-11507
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES ACT OF 1934
For the transition period from to
JOHN WILEY & SONS, INC.
(Exact name of Registrant as specified in its charter)
NEW YORK 13-5593032
- ----------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
111 RIVER STREET, HOBOKEN NJ 07030
- ----------------------------- ----------------------------------------
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code (201) 748-6000
NOT APPLICABLE
----------------------------------------------
Former name, former address, and former fiscal year,
if changed since last report
Indicate by check mark, whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
The number of shares outstanding of each of the Registrant's classes of common
stock as of October 31, 2002 were:
Class A, par value $1.00 - 49,960,103
Class B, par value $1.00 - 11,626,664
This is the first page of a 24 page document
JOHN WILEY & SONS, INC.
INDEX
PART I - FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements.
Condensed Consolidated Statements of Financial Position - Unaudited
as of October 31, 2002 and 2001, and April 30, 2002.............. 3
Condensed Consolidated Statements of Income - Unaudited
for the Three and Six Months ended October 31, 2002 and 2001..... 4
Condensed Consolidated Statements of Cash Flows - Unaudited
for the Six Months ended October 31, 2002 and 2001............... 5
Notes to Unaudited Condensed Consolidated Financial Statements.....6-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................12-16
Item 3. Quantitative and Qualitative Disclosures About Market Risk....... 19-20
Item 4. Controls and Procedures............................................ 20
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.................................... 20
SIGNATURES AND CERTIFICATIONS............................................. 21-23
EXHIBITS
99.1 - 18 U.S.C. Section 1350 Certificate by the President
and Chief Executive Officer
99.2 - 18 U.S.C. Section 1350 Certificate by the Chief Financial
and Operations Officer
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands)
(UNAUDITED)
October 31, April 30,
------------------------------------
Assets 2002 2001 2002
---------------- --------------- ----------------
Current Assets
Cash and cash equivalents $ 21,414 21,719 $ 39,705
Accounts receivable 145,470 124,432 101,084
Taxes receivable 5,372 12,282 18,664
Inventories 80,454 73,027 69,799
Deferred income tax benefits 33,496 34,641 34,394
Prepaid expenses 9,480 11,631 11,613
---------------- --------------- ----------------
Total Current Assets 295,686 277,732 275,259
Product Development Assets 59,609 60,627 63,055
Property and Equipment 101,453 60,563 72,127
Intangible Assets 472,333 404,908 464,394
Deferred income tax benefits 12,418 2,786 1,351
Other Assets 20,382 20,777 19,959
---------------- --------------- ----------------
Total Assets $ 961,881 827,393 $ 896,145
================ =============== ================
Liabilities & Shareholders' Equity
Current Liabilities
Notes payable and current portion of long-term debt $ 125,000 80,000 $ 30,000
Accounts and royalties payable 104,850 91,186 67,516
Deferred subscription revenues 51,977 35,658 125,793
Accrued income taxes 17,131 13,971 9,769
Other accrued liabilities 65,163 62,265 87,315
---------------- --------------- ----------------
Total Current Liabilities 364,121 283,080 320,393
Long-Term Debt 200,000 235,000 235,000
Other Long-Term Liabilities 58,166 44,929 49,827
Deferred Income Taxes 14,651 9,457 14,275
Shareholders' Equity 324,943 254,927 276,650
---------------- --------------- ----------------
Total Liabilities & Shareholders' Equity $ 961,881 827,393 $ 896,145
================ =============== ================
The accompanying Notes are an integral part of the condensed consolidated
financial statements.
JOHN WILEY & SONS, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands except per share information)
Three Months Six Months
Ended October 31, Ended October 31,
--------------------------------------- -----------------------------------
2002 2001 2002 2001
-------------------- ---------------- ------------------- -------------
Revenues $ 223,008 176,201 $ 429,445 337,245
Costs and Expenses
Cost of sales 77,251 56,957 145,972 106,885
Operating and administrative expenses 107,371 86,011 209,738 162,244
Amortization of intangibles 2,535 4,320 4,711 8,666
Unusual Item - Relocation related expenses - - 2,465 -
-------------------- ---------------- ------------------- ---------------
Total Costs and Expenses 187,157 147,288 362,886 277,795
-------------------- ---------------- ------------------- ---------------
Operating Income 35,851 28,913 66,559 59,450
Interest Income and Other - Net 228 (181) 521 258
Interest Expense (2,352) (1,816) (4,382) (2,959)
-------------------- ---------------- ------------------- ---------------
Interest Expense - Net (2,124) (1,997) (3,861) (2,701)
-------------------- ---------------- ------------------- ---------------
Income Before Taxes 33,727 26,916 62,698 56,749
Provision (Benefit) For Income Taxes (1,004) 9,002 7,937 19,294
-------------------- ---------------- ------------------- ---------------
Net Income $ 34,731 17,914 $ 54,761 37,455
==================== ================ =================== ===============
Income Per Share
Diluted $ .55 .28 $ 0.86 0.59
Basic $ .57 .29 $ 0.89 0.62
Cash Dividends Per Share
Class A Common $ .05 .05 $ 0.10 0.09
Class B Common $ .05 .05 $ 0.10 0.09
Average Shares
Diluted 63,092 63,175 63,370 62,977
Basic 61,429 60,862 61,580 60,578
The accompanying Notes are an integral part of the condensed consolidated
financial statements.
JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW - UNAUDITED
(In thousands)
For The Six Months
Ended October 31,
---------------------------
2002 2001
-------- -------
Operating Activities
Net income $ 54,761 $ 37,455
Non-cash items
Amortization of Intangibles 4,711 8,666
Amortization of Composition Costs 14,753 12,094
Depreciation of Property and Equipment 11,793 8,337
Other non-cash items 13,796 13,148
Net change in operating assets and liabilities (95,880) (97,952)
Payment of acquisition related liabilities - (11,363)
------ --------
Cash Provided By (Used for) Operating Activities 3,934 (29,615)
------ --------
Investing Activities
Additions to product development assets (22,655) (20,579)
Additions to property and equipment (39,212) (13,014)
Acquisition of publishing assets (7,812) (184,742)
-------- ---------
Cash Used for Investing Activities (69,679) (218,335)
-------- ---------
Financing Activities
Net borrowings of short-term debt 90,000 50,000
Borrowings of long-term debt - 200,000
Repayment of long-term debt (30,000) (30,000)
Purchase of treasury shares (8,117) (1,841)
Cash dividends (6,172) (5,490)
Proceeds from exercise of stock options 1,442 2,690
------- --------
Cash Provided By Financing Activities 47,153 215,359
------- --------
Effects of Exchange Rate Changes on Cash 301 1,363
------- --------
Cash and Cash Equivalents
Decrease for Period (18,291) (31,228)
Balance at Beginning of Period 39,705 52,947
------- --------
Balance at End of Period $ 21,414 $ 21,719
======= ========
Supplemental Information
Business Acquired:
Fair Value of assets acquired $ 7,842 $ 247,611
Liabilities assumed (30) (62,869)
------ --------
Cash paid for businesses acquired $ 7,812 $ 184,742
====== ========
Cash Paid (Refunded) During the Period for:
Interest $ 7,467 $ 3,405
Income taxes - Net $ (1,554) $ 9,029
The accompanying Notes are an integral part of the condensed consolidated
financial statements.
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments, consisting only
of normal recurring adjustments, necessary to present fairly the
consolidated financial position of John Wiley & Sons, Inc., and
Subsidiaries (the "Company") as of October 31, 2002 and 2001, and April 30,
2002, and results of operations and cash flows for the periods ended
October 31, 2002 and 2001. The results for the three months and six months
ended October 31, 2002 are not necessarily indicative of the results to be
expected for the full year. These statements should be read in conjunction
with the most recent audited financial statements contained in the
Company's Form 10-K for the fiscal year ended April 30, 2002.
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.
Certain prior year amounts have been reclassified for comparability
purposes. 2. Comprehensive income was as follows (in thousands):
Three Months Six Months
Ended October 31, Ended October 31,
------------------------------ --------------------------------
2002 2001 2002 2001
----------- ------------- ------------- --------------
Net Income $34,731 17,914 $54,761 37,455
Other Comprehensive Income (Loss) -
Transition adjustment for cash flow
hedges as of May 1, 2001 - - - (583)
Period change in fair value of cash
flow hedges - 47 168 32
Foreign currency translation
adjustments 253 (824) 3,089 (267)
----------- ------------- ------------- --------------
Comprehensive Income $34,984 17,137 $58,018 36,637
=========== ============= ============= ==============
A reconciliation of accumulated other comprehensive gain (loss) follows (in
thousands):
Three Months Ended October 31, 2002 Six Months Ended October 31, 2002
----------------------------------- ---------------------------------
Beginning Change for Ending Beginning Change for Ending
Balance Period Balance Balance Period Balance
------------- ------------ ------------ -------------- ------------ -----------
Foreign currency
translation adjustment $ 302 253 555 $ (2,534) 3,089 555
Cash flow hedge - - - (168) 168 -
------------- ------------ ------------ -------------- ------------ -----------
Total $ 302 253 555 $ (2,702) 3,257 555
============= ============ ============ ============== ============ ===========
3. A reconciliation of the shares used in the computation of income per share
follows (in thousands):
Three Months Six Months
Ended October 31, Ended October 31,
---------------------------------- ---------------------------------
2002 2001 2002 2001
--------------- --------------- -------------- ---------------
Weighted average shares outstanding
61,588 61,135 61,742 60,844
Less: Unearned deferred compensation
shares (159) (273) (162) (266)
--------------- --------------- -------------- ---------------
Shares used for basic income per share 61,429 60,862 61,580 60,578
Dilutive effect of stock options and
other stock awards 1,663 2,313 1,790 2,399
--------------- --------------- -------------- ---------------
Shares used for diluted income per share 63,092 63,175 63,370 62,977
=============== =============== ============== ===============
For the three and six months ended October 31, 2002 and 2001, options to
purchase shares of Class A common stock of 2.1 million and 1.2 million,
respectively, have been excluded from the shares used for diluted income
per share as their inclusion would have been antidilutive.
4. Inventories were as follows (in thousands):
October 31, April 30,
--------------------------------
2002 2001 2002
-------------- -------------- -------------
Finished goods $70,783 67,797 $62,756
Work-in-process 6,708 4,479 6,845
Paper, cloth and other 6,777 4,042 3,811
-------------- -------------- -------------
84,268 76,318 73,412
LIFO reserve (3,814) (3,291) (3,613)
-------------- -------------- -------------
Total inventories $80,454 73,027 $69,799
============== ============== =============
5. The Company is a global publisher of print and electronic products,
providing must-have content and services to customers worldwide. Core
businesses include professional and consumer books and subscription
services; scientific, technical, and medical journals, encyclopedias, books
and online products and services; and educational materials for
undergraduate and graduate students and 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 is as follows:
Three Months Ended October 31,
-----------------------------------------------------------------------------------
2002 2001
----------------------------------------- --------------------------------------
(thousands)
Inter- Inter-
External segment External segment
Customers Sales Total Customers Sales Total
-------------- ------------- ------------ ------------- ----------- ------------
Revenues
- --------
U.S. Segments:
Professional/Trade $80,506 9,153 89,659 $53,782 3,844 57,626
Scientific, Technical, and Medical 40,339 2,077 42,416 40,215 1,565 41,780
Higher Education 28,954 7,621 36,575 27,835 7,103 34,938
European Segment 51,406 3,671 55,077 38,521 2,695 41,216
Other Segment 21,803 132 21,935 15,848 186 16,034
Eliminations - (22,654) (22,654) - (15,393) (15,393)
-------------- ------------- ------------ ------------- ----------- ------------
Total Revenues $223,008 - 223,008 $176,201 - 176,201
-------------- ------------- ------------ ------------- ----------- ------------
Direct Contribution to Profit
- -----------------------------
U.S. Segments:
Professional/Trade $27,492 $15,018
Scientific, Technical, and Medical 20,400 18,696
Higher Education 8,625 10,997
European Segment 17,039 13,146
Other Segment 4,050 2,952
------------ ------------
Total Direct Contribution to Profit 77,606 60,809
Shared Services and Administrative Costs
- ----------------------------------------
Distribution (11,410) (8,621)
Information Technology (10,665) (6,779)
Finance (6,744) (5,560)
Other Administration (12,936) (10,936)
------------ ------------
Total Shared Services and Administration Costs (41,755) (31,896)
------------ ------------
Operating Income 35,851 28,913
Interest Expense - Net (2,124) (1,997)
------------ ------------
Income Before Taxes $33,727 $26,916
============ ============
Six Months Ended October 31,
-----------------------------------------------------------------------------------
2002 2001
----------------------------------------- --------------------------------------
(thousands)
Inter- Inter-
External segment External segment
Customers Sales Total Customers Sales Total
-------------- ------------- ------------ ------------- ----------- ------------
Revenues
- --------
U.S. Segments:
Professional/Trade $143,903 15,937 159,840 $89,551 7,431 96,982
Scientific, Technical, and Medical 80,977 3,896 84,873 78,769 3,127 81,896
Higher Education 67,001 14,489 81,490 64,229 13,043 77,272
European Segment 94,838 8,131 102,969 72,910 6,061 78,971
Other Segment 42,726 369 43,095 31,786 405 32,191
Eliminations - (42,822) (42,822) - (30,067) (30,067)
-------------- ------------- ------------ ------------- ----------- ------------
Total Revenues $429,445 - 429,445 $337,245 - 337,245
-------------- ------------- ------------ ------------- ----------- ------------
Direct Contribution to Profit
- -----------------------------
U.S. Segments:
Professional/Trade $41,784 $22,282
Scientific, Technical, and Medical 40,717 36,635
Higher Education 26,783 28,114
European Segment 33,075 26,496
Other Segment 7,662 6,372
------------ ------------
Total Direct Contribution to Profit 150,021 119,899
Shared Services and Administrative Costs
- ----------------------------------------
Distribution (22,464) (15,579)
Information Technology (19,187) (13,639)
Finance (14,111) (10,382)
Other Administration (25,235) (20,849)
------------ ------------
Total Shared Services and Administration Costs (80,997) (60,449)
Unusual Items - Relocation Expenses (2,465) -
------------ ------------
Operating Income 66,559 59,450
Interest Expense - Net (3,861) (2,701)
------------ ------------
Income Before Taxes $62,698 $56,749
============ ============
6. Acquisitions
In the first quarter of fiscal year 2003 the Company made three
acquisitions totaling approximately $7.8 million including a $6.5 million
acquisition of teacher education titles from Prentice Hall Direct/Pearson
Education.
In September 2001, the Company acquired 100% of the outstanding shares of
Hungry Minds, Inc. (Hungry Minds) for a total purchase price of
approximately $184.9 million, consisting of approximately $90.2 million in
cash for the common stock of Hungry Minds, $92.5 million in cash to enable
Hungry Minds to repay its outstanding debt, and fees and expenses of
approximately $2.2 million. The acquisition including 2,500 active titles
which are available in 39 languages. Well-known brands include the For
Dummies and Unofficial Guide series, the technological Bible and Visual
series, Frommer's travel guides, CliffsNotes, Webster's New World
Dictionary, Betty Crocker, and Weight Watchers. During the second quarter
of fiscal 2003, the Company finalized its purchase accounting for this
acquisition.
In fiscal year 2002, the Company also acquired four other businesses for
purchase prices aggregating $35.1 million. These included: A&M Publishing
Ltd., a U.K.-based publisher for the pharmaceutical and health care
sectors, GIT Verlag GmbH, a German publisher for the chemical,
pharmaceutical, biotechnology, security and engineering industries; and
Frank J. Fabozzi Publishing and an Australian publisher, Wrightbooks Pty
Ltd., both publishing high-quality finance books for the professional
market.
7. In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 141, "Business Combinations" and
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires all
business combinations initiated after June 30, 2001 to be accounted for by
a single method - the purchase method. In addition, the statement requires
the purchase price to be allocated to identifiable intangible assets in
addition to goodwill if certain criteria are met.
On May 1, 2002, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets." SFAS
No. 142 eliminates the requirement to amortize goodwill and those
intangible assets that have indefinite useful lives, but requires an annual
test for impairment or more frequently if impairment indicators arise.
Intangible assets that have finite useful lives will continue to be
amortized over their useful lives. The Company completed the initial
evaluation and assessment of its goodwill and other intangible assets in
accordance with SFAS 142. No impairment charge was required.
The following table represents unaudited adjusted net income of the
Company, giving effect to SFAS No. 142 as if it were adopted on May 1, 2001
Three Months Ended October 31, Six Months Ended October 31,
----------------------------- ------------------------------
2002 2001 2002 2001
----------- ------------ ----------- -------------
Net income, as reported $34,731 17,914 $54,761 37,455
Add back: amortization expense, net of tax
Indefinite lived intangibles - 1,000 - 2,001
Goodwill - 991 - 1,961
----------- ------------ ----------- -------------
Adjusted net income $34,731 19,905 $54,761 41,417
=========== ============ =========== =============
Income per Diluted Share:
As reported $0.55 0.28 $0.86 0.59
Adjusted $0.55 0.32 $0.86 0.66
Income per Basic Share:
As reported $0.57 0.29 $0.89 0.62
Adjusted $0.57 0.33 $0.89 0.68
The following table summarizes the activity in goodwill by segment (in
thousands):
Cummulative
As of Acquisitions & Translation & As of
April 30, 2002 Dispositions Other Adjustments October 31, 2002
-------------------- ------------------ ------------------ ----------------------
Professional/Trade $146,191 - 2,053 148,244
Scientific, Technical and Medical 23,193 - - 23,193
European 18,010 - 1,580 19,590
Other 1,705 - 42 1,747
-------------------- ------------------ ----------------- ----------------------
Total $189,099 - 3,675 192,774
==================== ================== ================= ======================
The following table summarizes the activity in other intangibles subject to
amortization (in thousands):
As of As of
October 31, 2002 April 30, 2002
--------------------- --------------------
Acquired publication rights $152,295 263,392
Accumulated amortization (38,570) (57,815)
--------------------- --------------------
Net acquired publication rights 113,725 205,577
Covenants not to compete 1,590 1,257
Accumulated amortization (872) (937)
--------------------- --------------------
Net covenants not to compete 718 320
--------------------- --------------------
Total $114,443 205,897
===================== ====================
Based on the current amount of intangible assets subject to amortization,
the estimated amortization expense for each of the succeeding 5 years are
as follows: Fiscal 2003 $9.3 million; 2004 $9.1 million; 2005 $8.9 million,
2006 $8.6 million and 2007 $8.5 million. As acquisitions and dispositions
occur in the future and as purchase price allocations are finalized, these
amounts may vary.
The following table summarizes other intangibles not subject to
amortization (in thousands):
As of As of
October 31, 2002 April 30, 2002
---------------------- ---------------------
Acquired publication rights $107,216 11,498
Branded trademarks 57,900 57,900
---------------------- ---------------------
$165,116 69,398
====================== =====================
8. Recent Accounting Standards
---------------------------
In October 2001, the Financial Accounting Standards Board (FASB) issued
SFAS No. 143, "Accounting for Asset Retirement Obligations". This standard
addresses the financial accounting and reporting for obligations associated
with the retirement of tangible long-lived assets and the associated asset
retirement costs. The standard is effective for fiscal year 2004. The
adoption of SFAS No. 143 is not expected to have a material impact on the
Company's financial position or results of operations.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". This standard addresses
financial accounting and reporting for the impairment or disposal of
long-lived assets. The standard is effective for fiscal year 2003. The
adoption of SFAS No. 144 had no effect on the Company's financial position
or results of operations.
In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities". SFAS 146, which is effective
prospectively for exit or disposal activities initiated after December 31,
2002, applies to costs associated with an exit activity, including
restructurings, or with a disposal of long-lived assets. SFAS 146 requires
that exit or disposal costs are recorded as an operating expense when the
liability is incurred and can be measured at fair value. The adoption of
SFAS 146 is not expected to have a material effect on the Company's
financial position or results of operations.
9. Special Items
--------------
The first quarter fiscal 2003 results include an unusual charge of
approximately $2.5 million, or $1.5 million after taxes, equal to $0.02 per
diluted share relating to the relocation of the Company's headquarters to
Hoboken, New Jersey from New York City, and includes duplicate rent
payments and moving expenses. In fourth quarter of fiscal year 2002, the
Company reported an unusual charge of $12.3 million or $7.7 million after
tax related to the relocation, including lease payments of approximately
$10.2 million on the vacated premises. Included in the balance sheet at
October 31, 2002 is an accrued liability of $5.8 million principally
related to the remaining lease payments on the vacated offices in New York
City.
During the second quarter of fiscal year 2003 the Company merged several of
its European subsidiaries into a new legal entity, which enabled the
Company to increase the tax-deductible asset basis of the merged
subsidiaries to the current market value creating a tax asset greater than
the related book value. The increase in tax basis resulted in a $12.0
million $.19 per diluted share tax benefit recognized as income for the
period and a deferred tax asset in the Consolidated Statement of Financial
Position.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS -
SECOND QUARTER ENDED OCTOBER 31, 2002
Net income for the second quarter increased 27% to $22.7 million or $0.36 per
diluted share excluding a one-time $12.0 million tax benefit and including the
effect of the adoption of Statement of Financial Accounting Standards ("SFAS")
No. 142, compared with $17.9 million or $0.28 per diluted share in the second
quarter of last year. Net income for the second quarter of fiscal year 2003
including the one-time tax benefit, was $34.7 million or $0.55 per diluted
share. The one-time tax benefit of $12.0 million or $0.19 per diluted share
recognized in the second quarter of fiscal year 2003 is described below.
Revenues for the second quarter of 2003 of $223.0 million increased 27%, from
$176.2 million in the prior year's quarter. The second quarter revenue increase
was principally due to the combined effects of contributions from acquisitions,
most notably Hungry Minds, and organic growth in the Professional/Trade
business. Continuing improvement in Asian markets, excluding Japan, also
contributed to the year-to-year revenue growth. Excluding Hungry Minds, revenues
for the quarter advanced 11% over the prior year.
In the second quarter, cost of sales and operating and administrative expenses
increased by 36% and 25%, respectively. The increase in cost of sales as a
percent of revenue was principally due to product mix and the addition of Hungry
Minds. While Hungry Minds has attractive financial characteristics, its gross
profit as a percent of revenue is lower than the Company's consolidated gross
margin. Operating and administrative expense increases reflect the incremental
costs related to acquisitions, depreciation on new facilities and other
non-recurring corporate costs.
Operating income for the current quarter increased 24% to $35.9 million,
compared to $28.9 million in the prior year.
During the second quarter, the company merged several of its European
subsidiaries into a new legal entity, which enabled the company to increase the
tax-deductible asset basis of the merged subsidiaries to the current market
value. Under U.S. accounting principles, the tax benefit attributable to the
increase in tax basis is immediately included in income. From an economic
perspective, the cash benefit of this change will be recognized pro-rata over a
15 year period. Excluding the one-time tax benefit in the current quarter, the
effective tax and the effect of SFAS No. 142 rate was 32.7%, compared with 33.4%
in the prior year's quarter.
In the first quarter, the Company adopted SFAS No. 142, which eliminates the
amortization of goodwill and indefinite lived intangible assets. The after-tax
impact of SFAS No. 142 was approximately $2.0 million, or 3 cents per diluted
share for the current quarter.
Operating income and net income for the second quarter excluding the one-time
tax benefit and the elimination of amortization of goodwill and indefinite life
intangibles was as follows (in thousands):
Quarter Ending October 31,
-------------------------------------------
2002 2001
-------------------- -------------------
Operating Income as reported $35,851 28,913
One-time tax benefit - 2,416
-------------------- -------------------
Operating income as adjusted $35,851 31,329
==================== ===================
Net Income as reported 34,731 17,914
SFAS No. 142, net of taxes - 1,991
One-time tax benefit (12,025) -
-------------------- -------------------
Net Income as adjusted 22,706 19,905
==================== ===================
SEGMENT RESULTS
Professional/Trade
- ------------------
U.S. Professional/Trade revenues of $89.7 million for the second quarter
advanced 56% over the comparable prior year period, and the direct contribution
to profit advanced 83% to $27.5 million. The increase was mainly attributable to
the addition of Hungry Minds, which was acquired on September 21, 2001, and
organic growth. Excluding Hungry Minds, Professional/Trade revenues for the
quarter were up 9%. The direct contribution margin increased to 30.7% from 26.1%
in the prior year principally due to the addition of Hungry Minds consumer
titles.
The Company's business program showed strength in a soft marketplace. Eight
titles were on major bestseller lists during the quarter, including
Prechter/Conquer the Crash: You Can Survive and Prosper in a Deflationary
Depression; Lencioni/Five Dysfunctions of a Team: A Leadership Fable; Tyson and
Brown/Home Buying For Dummies; JK Lasser's Your Income Tax 2002;
Kindleberger/Manias, Panics and Crashes: A History of Financial Crises, 4th
Edition; Byron/Martha Inc; Brennan/Straight Talk on Investing; and Fusaro and
Miller/What Went Wrong at Enron. The Company recently published a second book
about Enron, which received positive reviews from The New York Times and
Barrons. Enron: The Rise and Fall was written by Loren Fox, a highly respected
financial writer who follows the energy markets.
The Company announced a strategic alliance with MindLeaders to extend the For
Dummies brand into a high-quality and engaging self-paced online product for the
corporate market. The Company also began a publishing alliance with Morningstar,
Inc., the investment research firm based in Chicago, to publish the 2003
editions of Stocks 500 and Funds 500, as well as new branded titles.
The Company's consumer areas performed well, particularly cooking, reference,
and travel, led by the Betty Crocker, For Dummies, Frommer's, and Webster's New
World brands. Dummies.com re-launched in September, providing a vibrant new
website for this popular brand.
The Company's technology publishing did well with its consumer titles in areas
such as digital photography, digital imaging software, general PC technology,
Windows XP, home networking, eBay, and CD/DVD recording. The Art of Deception by
the infamous hacker Kevin Mitnick launched in October, generating strong sales
worldwide. The Company's professional/academic programs in architecture,
culinary/hospitality, psychology and teacher education had a solid second
quarter. Highlights include successful releases of Chin/Architectural Graphics,
4/e, and Gisslen/Professional Cooking, 5/e, as well as strong backlist sales of
the National Restaurant Association Educational Foundation's food sanitation
books.
Scientific, Technical And Medical (STM)
- --------------------------------------
U.S. STM revenues of $42.4 million increased 2% over the prior year. Journals
continued to perform well as a result of new and renewed Wiley InterScience
licenses and journal subscriptions. Although some key frontlist books, notably
Considine's Van Nostrand Scientific Encyclopedia, are exceeding expectations,
overall book sales have been sluggish. In addition, revenues in the quarter were
affected somewhat by delayed publication schedules. The direct contribution to
profit increased 9% to $20.4 million from $18.7 million mainly due to the same
effects. Globally, STM revenues increased 12% for the second quarter.
Wiley InterScience's momentum in the second quarter reflects the continuing
demand from the research community for its quality content. Over the past year,
the online service experienced a significant increase in the number of journal
articles viewed with 71% growth from the prior year's second quarter. Several
Enhanced Access Licenses were signed during the quarter, including with HeBIS
Consortium in Germany and Kyushu University in Japan.
The Company continues to add content and functionality to Wiley InterScience to
meet customer needs and increase its revenue base. At the end of the quarter,
the British Journal of Surgery MobileEdition launched, delivering surgeons rapid
access to its comprehensive and current research information via the convenience
of their PDA's. As part of the Company's strategy to increase revenue growth
from its online STM book program, three new major reference works were launched
online in October. A new feature called Profiled Alerts was introduced, allowing
registered users to save search queries and trigger e-mail alerts when content
is published that matches the search query.
Wiley author and longstanding journal editorial board member, Kurt Wuthrich, was
awarded the Nobel Prize in Chemistry in October. Also named, as a Nobel Laureate
in Physiology or Medicine was H. Robert Horvitz, co-recipient of the first Wiley
Prize in the BioMedical Sciences.
As part of the Company's strategy to accelerate growth in its journal program
and leverage its Wiley InterScience investment, the Company's renewed its
journal publishing agreements with several societies during the quarter,
including Cancer, a publication of the American Cancer Society; Arthritis &
Rheumatism; Arthritis Care & Research; Environmental and Molecular Mutagenesis;
Muscle & Nerve; Clinical Anatomy; and Teratology.
In August, building on an existing relationship with IEEE Press, the Company
signed an agreement with the IEEE Computer Society, the world's leading
organization of computer professionals, to develop and publish a co-branded
imprint of books in the fields of computer science and software engineering, as
well as to distribute IEEE Computer Society Press backlist titles.
Higher Education
- ----------------
Second quarter U.S. Higher Education revenues of $36.6 million increased 5% as
compared to the prior year. Driving this growth were sales of Tortora/Principles
Of Anatomy and Physiology 10/e; Kieso/Intermediate Accounting 10/e Update;
Halliday/Fundamentals Of Physics 6/e; Hughes-Hallet/Calculus 3/e;
Cutnell/Physics 7/e; and the titles acquired last year from Thomson Learning.
Revenue growth in the U.S. continued to be slowed by sluggish market conditions
in engineering. The direct contribution to profit decreased 22% to $8.6 million,
principally due to product development costs, product mix and investment in an
e-learning initiative. Globally, Higher Education revenues increased 8% for the
second quarter.
Several new textbooks were published during the second quarter, including
Barnett/Analytic Trigonometry with Applications, 8/e; Botkin/Environmental
Science, 4/e; DeBlij/Concepts and Regions in Geography; DeBlij/Human Geography,
7/e; Haykin/Signals and Systems, 2/e; Kieso/Fundamentals of Intermediate
Accounting with CD; Schermerhorn/Organizational Behavior, 8/e; and Stern/Cobol,
10/e.
Traffic on our Higher Education website, which offers online learning materials
on more than 2,000 subsites to support and supplement textbooks, has increased
significantly. The traffic was driven by the increased number of student
companion sites, as well as the enhanced value of the materials on these sites.
Europe
- ------
European segment revenues of $55.1 million advanced 34% over the prior year's
second quarter driven by acquisition and organic growth. Excluding acquisitions
(Hungry Minds, GIT Verlag, and A&M Publishing), revenues for the quarter were up
12%. The direct contribution to profit of $17.0 million was 30% over the prior
year. The direct contribution margin was 30.9% in the current period compared
with 31.9% in the prior year mainly due to product mix. Revenue growth was
fueled by strong performances in the journals program, as well
professional/trade titles and acquisitions. Top-selling Wiley titles in Europe
during the quarter included: Prechter /Conquer the Crash; Tortora/Principles of
Anatomy and Physiology; Devlin/Textbook of Biochemistry with Clinical
Correlations, and the journal, Numerical Methods in Engineering. Higher
Education sales were also healthy, with especially strong growth from indigenous
textbooks.
The Company's European segment published the first issue of Wilmott, a new
magazine for quantitative finance professionals. The magazine, which is a
subscription publication with some advertising, is being marketed successfully
on Paul Wilmott's website. Mr. Wilmott, who has written or co-authored four
Wiley books, has been described by the Financial Times as a "cult derivatives
lecturer" and commands a large following.
Other Segment
- -------------
The other segment revenues advanced 37% for the quarter due to strong revenue
from the journals program, as well as the book businesses outside of Japan and
Australia, where the markets have been soft. Rapid growth of the Company's
subscription and translation rights businesses continued in Asia, notably in
China. In India, the Company's joint-venture company has performed well with its
sales of technology and For Dummies titles.
The Company's Asia subsidiary published its first indigenous title with the
World Economic Forum, Recreating Asia, was launched in September at the Forum's
Asian conference in Kuala Lumpur with support from the Malaysian Prime Minister,
Dr. Mahathir. The second title, China: Enabling a New Era, will publish in
January 2003.
The Company's Australia subsidiary was awarded an "Employer of Choice for Women"
citation by the Australian Federal Government's Equal Opportunity for Women in
the Workplace Agency. Only one hundred companies received this much-coveted
designation out of the nearly 3,000 that applied.
Shared Services and Administrative Costs
- ----------------------------------------
Shared services and administrative costs increased $9.9 million to $41.8 million
over the prior years second quarter mainly due to acquisitions, most notably
Hungry Minds and other corporate costs.
RESULTS OF OPERATIONS -
SIX MONTHS ENDED OCTOBER 31, 2002
Revenues for the first six months of $429.4 million advanced 27% compared with
$337.2 million in the prior year period. Operating income increased 16% to $69.0
million, compared with $59.5 million in the prior year excluding $2.5 million of
unusual charges related to the relocation of the company's headquarters in the
first quarter of fiscal year 2003 and including the effect of the adoption of
SFAS No. 142. Including the relocation charge, operating income for the first
half of fiscal year 2003 was $66.6 million.
Excluding the relocation charges and the one-time tax benefit of $12.0 million,
net income advanced 18% to $44.2 million, and income per diluted share increased
19% to $.70. Operating income and net income excluding the relocation charges,
the one-time tax benefit and the elimination of amortization of goodwill and
indefinite life intangibles for the six month period were as follows (in
thousands):
Six Months Ended October 31,
------------------------------------------
2002 2001
-------------------- ------------------
Operating Income as reported $ 66,559 59,450
Unusual relocation charges 2,465 -
SFAS No. 142 - 4,810
-------------------- ------------------
Operating income as adjusted $ 69,024 64,260
==================== ==================
Net Income as reported $ 54,761 37,455
Unusual relocation charges, net of taxes 1,479 -
SFAS No. 142, net of taxes - 3,962
One-time tax benefit (12,025) -
-------------------- -----------------
Net income as adjusted $ 44,215 41,417
==================== =================
Cost of sales as a percentage of revenues was 34.0% compared with 31.7% in the
prior year. Operating and administrative expenses as a percentage of revenues
were 48.8%, compared with 48.1% in the prior year's first six months. Operating
expenses increased 29% over the prior year. The operating margin was 16.1%
compared with 17.6% in the prior year period, excluding the unusual relocation
charge and including the effects of SFAS No. 142. The reduction in gross margin
was principally due to the Hungry Minds acquisition. While Hungry Minds has
attractive financial characteristics, its gross margin is lower than the
Company's consolidated gross margin.
Interest expense net of interest income increased $1.2 million as a result of
higher debt mainly due to the financing of the Hungry Minds acquisition.
Excluding the one-time tax benefit of $12.0 million, the effective tax rate was
31.8% in the current six month period compared with 34.0% in the prior year. The
decline is mainly due to lower foreign taxes. In addition, the absence of
nondeductible goodwill amortization related to the adoption of SFAS No. 142
reduced the effective tax rate for the quarter.
SEGMENT RESULTS
Professional/Trade
- ------------------
U.S. Professional/Trade revenues of $159.8 million for the first six months
advanced 65% over the comparable prior year period and the direct contribution
to profit advanced 88% to $41.8 million, reflecting the positive effect of the
Hungry Minds acquisition and organic growth. Excluding Hungry Minds, revenue
grew by 4%. The direct contribution margin in the first six months of fiscal
year 2003 was 26.1% as compared to 23.0% in the prior year.
Scientific, Technical and Medical (STM)
- ---------------------------------------
U.S. STM revenues of $84.9 million increased 4% over the prior year led by
stronger renewal rates in the journal programs and the addition of three new
society journals. The direct contribution to profit increased 11% to $40.7
million. Globally, STM revenue for the first half of the year increased 12% over
the prior year period.
Higher Education
- ----------------
U.S. Higher Education revenues of $81.5 million increased 5% from the prior
year. The direct contribution to profit decreased 5% to $26.8 million mainly due
to product mix, product development costs and investment in an e-learning
initiative. The direct contribution margin decreased to 32.9% compared with
36.4% in the prior year. Globally Higher Education revenue for the first half of
the year increased 7% over the prior year period.
Europe
- ------
European revenues of $103.0 million for the first six months advanced 30% and
the direct contribution to profit of $33.1 million increased 25% over the prior
year. The improvement was principally due to the strong sales of journal and
professional/trade titles in addition to revenue from acquisitions.
Other Segments
- --------------
The other segment revenues of $43.1 million for the first six months advanced
34% and the direct contribution margin increased 20% over the prior year. The
improvement was mainly due to additional revenue from the sale of Hungry Mind
titles, higher sales of Canadian professional/trade and higher education titles
and growth of the Company's subscription and translation rights business in
Asia.
LIQUIDITY AND CAPITAL RESOURCES
Operating activities for the first half of fiscal 2003 provided $3.9 million of
cash, as compared to a use of $29.6 million in the prior period. The improvement
reflected higher net income and lower acquisition related payments this year.
The first six months of the Company's fiscal year is a period of cash use
consistent with the cyclicality of the journal subscription business and the
Higher Education segments receipts.
Investing activities used $69.7 million for the first half of fiscal 2003 as
compared to $218.3 million in the prior year period. Investing activities in the
current six month period included the acquisition of titles from Prentice Hall
Direct/Pearson Education for $6.5 million and $27.4 million capital expenditures
for the purchase of a building in the United Kingdom and leasehold improvements
at the Company's new Hoboken, NJ headquarters. Capital expenditures excluding
acquisitions for the full fiscal year 2003 are projected to be approximately
$131 million, including $45 million of relocation expenditures in the U.S. and
Europe.
Current year financing activities primarily reflect the purchase of treasury
shares, dividend payments, and borrowings of $90.0 million from our line of
credit to finance the investing activities and the payment of $30.0 million
against long-term debt. As expected, the Company's cash requirements peaked
during the second quarter due to the cyclicality of the Company's business and
expenditures related to the relocation of the Company's headquarters to Hoboken,
New Jersey. The Company expects borrowing to decline for the remainder of the
year.
Although the statement of financial condition indicates a negative working
capital of $68.4 million, current liabilities include $52.0 million of deferred
income related to journal subscriptions for which the cash has been received and
which will be recognized in income as the journals are delivered to customers.
The Company believes its cash balances together with existing credit facilities
are sufficient to meet its obligations. The Company had $325.0 million of
variable rate loans outstanding at October 31, 2002, which approximated fair
value. The Company had $60.0 million available under its revolving credit
facilities at October 31, 2002.
"Safe Harbor" Statement under the
Private Securities Litigation Reform Act of 1995
- ------------------------------------------------
This report contains certain forward-looking statements concerning the Company's
operations, performance, and financial condition. Reliance should not be placed
on forward-looking statements, as actual results may differ materially from
those in any forward-looking statements. Any such forward-looking statements are
based upon a number of assumptions and estimates that are inherently subject to
uncertainties and contingencies, many of which are beyond the control of the
Company, and are subject to change based on many important factors. Such factors
include, but are not limited to (i) the level of investment in new technologies
and products; (ii) subscriber renewal rates for the Company's journals; (iii)
the financial stability and liquidity of journal subscription agents; (iv) the
consolidation of book wholesalers and retail accounts; (v) the market position
and financial stability of key online retailers; (vi) the seasonal nature of the
Company's educational business and the impact of the used book market; (vii)
worldwide economic and political conditions; and (viii) 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk
The Company is exposed to market risk primarily related to interest rates,
foreign exchange and credit risk. It is the Company's policy to monitor these
exposures and to use derivative financial instruments and/or insurance contracts
from time to time to reduce fluctuations in earning 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 did not use any derivative financial investments to manage this
exposure. The weighted average interest rate as of October 31, 2002 was
approximately 2.60%. A hypothetical 1% change in interest rates for the variable
rate debt would affect annual net income and cash flow by approximately $1.7
million.
Foreign Exchange Rates
The Company is exposed to foreign currency exchange movements primarily in
European, Asian, Canadian and Australian currencies. Consequently, the Company
and its subsidiaries, from time to time, enter into foreign exchange forward
contracts as a hedge against foreign currency asset, liability, commitment, and
anticipated transaction exposures, including intercompany purchases. At October
31, 2002 the Company has no outstanding foreign exchange contracts. The Company
does not use derivative financial instruments for trading or speculative
purposes.
Credit Risk
The Company's business is not dependent upon a single customer; however, the
industry has experienced a significant concentration in national, regional, and
online bookstore chains in recent years. Although no one book customer accounts
for more than 8% of total fiscal 2002 consolidated revenues, the top ten book
customers account for approximately 31% of total fiscal 2002 consolidated
revenues and approximately 48% of total gross trade accounts receivable at April
30, 2002. To mitigate its credit risk exposure, the Company obtains credit
insurance where available and economically justifiable. In the journal
publishing business, subscriptions are primarily sourced through independent
subscription agents who, acting as agents for library customers, facilitate
ordering by consolidating the subscription orders/billings of each subscriber
with various publishers. Monies are generally collected in advance from
subscribers by the subscription agents and are remitted to the journal
publisher, 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 condition and liquidity.
Subscription agents account for approximately 25% of total fiscal 2002
consolidated revenues and no one agent accounts for more than 7% of total fiscal
2002 consolidated revenues. Insurance for these accounts is not commercially
feasible and/or available.
ITEM 4. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures designed to ensure that
information required to be disclosed in reports filed or submitted under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized
and reported within the time periods specified by the Securities and Exchange
Commission's rules and regulations. The Company's Chief Executive Officer and
Chief Financial Officer, together with the Chief Accounting Officer and other
members of the Company's management, have conducted an evaluation of these
disclosure controls and procedures as of a date within 90 days prior to the date
of filing this report. Based on this evaluation, the Chief Executive Officer and
Chief Financial Officer have concluded that the Company's disclosure controls
and procedures are effective. There were no significant changes in the Company's
internal controls or in other factors that could significantly affect such
internal controls subsequent to this evaluation. Accordingly, no corrective
actions were required or undertaken with respect to the internal controls.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
99.1 - 18 U.S.C. Section 1350 Certificate by the President and Chief
Executive Officer
99.2 - 18 U.S.C. Section 1350 Certificate by the Chief Financial and
Operations Officer
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended October 31,
2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized
JOHN WILEY & SONS, INC.
Registrant
By /s/ William J. Pesce
-----------------------
William J. Pesce
President and
Chief Executive Officer
By /s/ Ellis E. Cousens
-----------------------
Ellis E. Cousens
Executive Vice President and
Chief Financial & Operations Officer
By /s/ Edward J. Melando
-----------------------
Edward J. Melando
Vice President, Controller and
Chief Accounting Officer
Dated: December 12, 2002
CERTIFICATIONS
I, William J. Pesce, certify that:
- I have reviewed this quarterly report on Form 10-Q of John Wiley &
Sons, Inc.;
- Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report; and
- Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report.
- The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within
90 days prior to the filing date of this quarterly
report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;
- The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation
of internal controls which would adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
- The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weakness.
By /s/ William J. Pesce
-----------------------
William J. Pesce
President and
Chief Executive Officer
Dated: December 12, 2002
I, Ellis E. Cousens, certify that
- I have reviewed this quarterly report on Form 10-Q of John Wiley &
Sons, Inc.;
- Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report; and
- Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report.
- The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within
90 days prior to the filing date of this quarterly
report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;
- The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a) all significant deficiencies in the design or operation
of internal controls which would adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
- The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weakness.
By /s/ Ellis E. Cousens
-----------------------
Ellis E. Cousens
Executive Vice President and
Chief Financial & Operations Officer
Dated: December 12, 2002
Exhibit 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of John Wiley & Sons, Inc.
(the "Company") on Form 10-Q for the period ending October 31, 2002 as
filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, William J. Pesce, President and Chief Executive
Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that based on my knowledge:
(1) The Report fully complies with the requirements of section
13(a) or 15 (d) of the Securities Exchange Act of 1934 (as
amended), as applicable; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and results
of operations of the Company.
/s/William J. Pesce
------------------
William J. Pesce
President and
Chief Executive Officer
December 12, 2002
Exhibit 99.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of John Wiley & Sons, Inc.
(the "Company") on Form 10-Q for the period ending October 31, 2002 as
filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Ellis E. Cousens, Executive Vice President and
Chief Financial & Operations Officer of the Company, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that based on my knowledge:
(1) The Report fully complies with the requirements of section
13(a) or 15 (d) of the Securities Exchange Act of 1934 (as
amended), as applicable; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and results
of operations of the Company.
/s/Ellis E. Cousens
-------------------
Ellis E. Cousens
Executive Vice President and
Chief Financial & Operations Officer
December 12, 2002