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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: April, 30, 1996
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
- --------------------------------- --------------------------
State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification No.
605 Third Avenue, New York, NY 10158-0012
- --------------------------------- --------------------------
Address of principal executive Zip Code
offices
Registrant's telephone number (212) 850-6000
including area code --------------------------
Securities registered pursuant to
Section 12(b) of the Act:
Title of each class Name of each exchange on
which registered
Class A Common Stock, par value New York Stock Exchange
$1.00 per share
Class B Common Stock, par value New York Stock Exchange
$1.00 per share
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 X No
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, 1996, was 12,926,878 and 3,206,058
respectively, and the aggregate market value of such
shares of Common Stock held by non-affiliates of the
Registrant as of such date was $402,004,202 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 9, 1996 for
the Annual Meeting of Shareholders to be held on September
19, 1996, (the "1996 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 operates in one business segment, namely
publishing, which develops, publishes, and markets
products in print and electronic formats including
textbooks, professional and reference works, consumer
books, journals, and other subscription-based products,
for the educational, scientific, technical, professional
and trade markets in the United States and
internationally.
Textbooks are produced primarily for use in formal
instruction in the college and university markets, as well
as the secondary school market in Australia, while
professional and reference books, encyclopedias,
dictionaries, and periodicals are intended primarily for
practicing and research professionals and for libraries.
Some of these, as well as nonfiction consumer
publications, are also marketed to the general public. in
addition, the Company markets and distributes books from
other publishers. The Company also develops and markets
electronic versions of certain of its print products, as
well as computer software and electronic data bases for
educational use and professional research and training.
Book publications are primarily in the areas of pure and
applied science, engineering, architecture, the social
sciences, biomedicine, accounting, law, computer science
and business administration. Journal publications are
primarily in the scientific and technical, and biomedical
research areas.
In fiscal 1996, the Company acquired Clinical
Psychology Publishing Company (CPPC), a publisher of
journals and books in the fields of clinical and
educational psychology; Preservation Press consisting of
architectural heritage books, technical preservation
guides and children's architecture books; and certain
other smaller publishing properties. In addition, the
Company became the publisher of Cancer, the American
Cancer Society's medical journal.
Subsequent to the fiscal 1996 year-end, the Company
acquired a 90% interest in the German based VCH Publishing
Group (VCH) for approximately $100 million in cash. VCH
publishes nearly 100 scholarly and professional journals,
as well as more than 500 books annually, with a backlist
of 3,000 titles. VCH is a leading scientific, technical,
and professional publisher in chemistry and related
disciplines. The group also includes Akademie Verlag, a
science and humanities publisher; Ernst & Sohn, an
architecture and civil engineering publisher; Academy
Group, a London-based architecture and design publisher;
and Chemical Concepts, an electronic chemical database
publisher.
The company is on the Internet with a World Wide Web
site located at http://www.wiley.com.
Domestic Publishing Operations
Adopted textbooks (i.e., textbooks prescribed for
course use) are sold primarily to bookstores serving
educational institutions in the United States (i.e.,
college bookstores). The Company employs college sales
representatives who call upon faculty members responsible
for selecting books to be used in courses, and upon the
college bookstores which serve such institutions and their
students. Approximately 2,400 domestic college bookstore
accounts are active customers. 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. Significant amounts of
inventory are acquired prior to those periods in order to
meet customer delivery requirements. There is an active
used textbook market which negatively affects the sales of
new textbooks.
Professional and consumer book sales consist of sales
to trade bookstores 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 in the United
States. 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, and advertising
and reviews in periodicals. The mailings and advertising
are intended to promote sales through bookstores and
jobbers, as well as to solicit sales directly.
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.
The Company also receives licensing revenues from
photocopies and electronic reproductions of journal
articles and other materials.
Domestic publishing products, other than journals,
are distributed from a Company operated warehouse located
in Somerset, New Jersey. Journals are mailed to
subscribers directly from the independent printers.
International Publishing 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 New York. 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 New York 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 40
foreign languages.
Approximately 41% of the Company's fiscal 1996
revenues were derived from non-U.S. markets.
Publishing Procedures
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. The Company
continues to add new titles, revise existing titles, and
discontinue the sale of others in the normal course of its
business.
Most of the authors of the books and other products
published 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.
Materials for publication 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's
general practice is to revise its basic textbooks every
three to five years, if warranted, and to revise other
titles as appropriate. Approximately 36% of the Company's
fiscal 1996 domestic book publishing revenues were from
titles published or revised in that fiscal year.
Subscription-based products, other than journals, are
updated more frequently on a regular schedule.
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 the editors of journals which state the
duties of the editors, and the fees and expenses for their
services. Contributions of journal articles transfer
publication rights to the Company or professional society,
as applicable. Journal revenues represented approximately
31% of the Company's fiscal 1996 revenues.
The Company's publishing business is not dependent
upon a single customer, the loss of whom could have a
material adverse effect. Approximately 86% of the
Company's journal subscription business is sourced through
independent subscription agents. These companies
facilitate the journal ordering process by consolidating
the subscription orders/billings of each subscriber.
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 subscription. Cash receipts from
subscription agents are highly dependent on their
financial position and liquidity. No one agent accounts
for more than 6% of total consolidated revenues.
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.
Like most other publishers, the Company generally
contracts with independent printers and binderies for
their services. The Company purchases its paper from
printers and from independent suppliers. Paper prices
have increased over the past few years. 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.
The Company produces electronic versions of some of
its products including software, video, CD-ROM, and
through on-line services. Approximately 700 products are
available in electronic formats, of which 200 are primary
stand-alone products with the remainder representing
supplemental products in support of other print 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.
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 50 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.
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
texts and, for textbooks and certain trade books, timely
delivery of products to retail outlets. Recent years have
seen a consolidation trend within the publishing industry,
with 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 3% 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 its 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, with the acquisition of VCH, it
is the second largest publisher of scientific and
technical journals worldwide, as well as the leading
commercial chemistry publisher, and one of the three
largest publishers of university and college textbooks for
the "hardside" disciplines, i.e. engineering, sciences and
mathematics.
Employees
As of April 30, 1996, the Company employed
approximately 1,830 persons on a full-time basis
worldwide, none of whom are unionized. Management
considers relations with its employees to be generally
satisfactory.
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, 1996 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.
Officer
Name and Age Since Present Office
- --------------- --------- ----------------
Bradford Wiley II 1993 Chairman of the Board since January
55 1993 and a Director (previously
Editor, College Division)
Charles R. Ellis 1988 President and Chief Executive Officer
61 and a Director since June 1990
Stephen A. Kippur 1986 Senior Vice President, Professional,
49 Reference & Trade Publishing Group
since July 1990
William J. Pesce 1989 Senior Vice President, Educational &
45 International Publishing Group since
February 1996 (previously Senior
Vice President, Educational
Publishing Group)
Richard S. Rudick 1978 Senior Vice President, General
57 Counsel since June 1989 (previously
Vice President, General Counsel and
Secretary)
Robert D. Wilder 1986 Senior Vice President, Chief
48 Financial Officer since June 1990
William Arlington 1990 Vice President, Human Resources since
47 June 1990
Peter W. Clifford 1989 Vice President, Finance and
50 Controller since November 1991
(previously Vice President,
Controller)
Deborah E. Wiley 1982 Vice President and Director of
50 Corporate Communications since June
1994 and a Director (previously Vice
Chairman of the Board)
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).
Location Purpose Approx. Sq. Lease Expiration
Ft. Date
- ----------------------------------------------------------
Leased-
Domestic:
New York, Executive and 230,000 2003
New York Editorial
Offices
Somerset, Distribution 170,000 1998
New Jersey Center and
Office
Somerset, Warehouse 50,000 2000
New Jersey
Colorado Office 17,000 2000
Springs,
Colorado
Leased-
Foreign:
Brisbane, Office 16,000 1998
Australia Warehouse 26,000 2000
Toronto, Office 14,000 2001
Canada Warehouse 41,000 1996
Chichester, Office 52,000 2009
England Warehouse 70,000 2012
Asia Office 53,000 1997
and Warehouse
All of the buildings and the equipment owned or
leased are believed to be in good condition and are
generally fully utilized. The Company considers its
facilities overall to be adequate for its present and near-
term anticipated needs.
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, 1996.
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 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 11 of the 1996 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 12 to 18 of the 1996 Proxy
Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain
Beneficial Owners and Management
The information on pages 3, 4, 10, and 11 of the 1996
Proxy Statement is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information on pages 5 to 6 of the 1996 Proxy
Statement is incorporated herein by reference.
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, 1996.
(c) Exhibits
2.1 Purchase and Assignment Agreement dated May 7,
1996 among the Company and VCH Publishing Limited
Partnership (incorporated by reference to the
Company's report on Form 8-K dated as of June 13,
1996).
2.2 Purchase and Assignment Agreement dated May 7,
1996 among the Company and Gesellschaft Deutscher
Chemiker e.V. and Deutsche Pharmazeutische
Gesellschaft e.V. (incorporated by reference to
the Company's report on Form 8-K dated as of June
13, 1996).
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.
3.3 Restated By-Laws dated as of July 1994
(incorporated by reference to the Company's
report on Form 10-K for the year ended April 30,
1995).
4.1 Form of agreement between the Company and certain
employees restricting transfer of Class B Common
Stock (incorporated by reference to the Company's
Report on Form 10-Q for the quarterly period
ended January 31, 1986).
10.1 Credit Agreement dated as of March 30, 1995 among
the Company, Morgan Guaranty Trust Company of New
York, Chemical Bank, Corestates Bank, N.A., and
Morgan Guaranty Trust Company of New York, as
Agent (incorporated by reference to the Company's
report on Form 10-K for the year ended April 30,
1995).
10.2 Credit Agreement dated as of June 12, 1996 among
the Company and the Banks from time to time
parties hereto and Morgan Guaranty Trust Company
of New York, as Agent.
10.3 1991 Key Employee Stock Plan (incorporated by
reference to the Company's Definitive Proxy
Statement dated August 8, 1991).
10.4 1982 and 1987 Incentive Stock Option and
Performance Stock Plans (incorporated by
reference to the Company's Definitive Proxy
Statements dated July 30, 1982 and August 10,
1987).
10.5 Amendment to 1982 Stock Option and Performance
Stock Plan dated as of September 19, 1985
(incorporated by reference to the Company's
Report on Form 8-K dated as of September 19,
1985).
10.6 Amendment to 1982 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).
10.7 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 10-K for the year ended April 30,
1989).
10.8 1990 Director Stock Plan as Amended and Restated
as of June 22, 1995.
10.9 1989 Supplemental Executive Retirement Plan
(incorporated by reference to the Company's
Report on Form 10-K for the year ended April 30,
1989).
10.10 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).
10.11 Form of the Fiscal Year 1995 Executive Long-Term
Incentive Plan (incorporated by reference to the
Company's Report on Form 10-K for the year ended
April 30, 1994).
10.12 Form of the Fiscal Year 1996 Executive Long-Term
Incentive Plan (incorporated by reference to the
Company's Report on Form 10-K for the year ended
April 30, 1995).
10.13 Form of the Fiscal Year 1997 Executive Long-Term
Incentive Plan.
10.14 Form of the Fiscal Year 1996 Executive Annual
Incentive Plan (incorporated by reference to the
Company's Report on Form 10-K for the year ended
April 30, 1995).
10.15 Form of the Fiscal Year 1997 Executive Annual
Incentive Plan.
10.16 Senior Executive Employment Agreement amended as
of March 29, 1995 between Charles R. Ellis and
the Company (incorporated by reference to the
Company's Report on Form 10-K for the year ended
April 30, 1995).
10.17 Restricted Stock Award Agreement dated as of June
23, 1994 between Charles R. Ellis 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 Senior Executive Employment Agreement dated as of
July 1, 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).
10.22 Amendment No. 1 to William J. Pesce'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).
10.23 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).
10.24 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).
10.25 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).
10.26 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).
22 List of Subsidiaries of the Company.
24 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 16
Consolidated Statements of Financial Position
as of April 30, 1996 and 1995 17
Consolidated Statements of Income and Retained Earnings
for the years ended April 30, 1996, 1995 and 1994 18
Consolidated Statements of Cash Flows for the
years ended April 30, 1996, 1995 and 1994 19
Notes to Consolidated Financial Statements 20-27
Management's Discussion and Analysis of Financial
Condition
and Results of Operations 28-30
Results by Quarter (Unaudited) 31
Quarterly Share Prices, Dividends and Related Stockholders
Matters 31
Selected Financial Data 32
Schedule II - Valuation and Qualifying Accounts 33
Other schedules are omitted because of absence of
conditions under which they apply or because the
information required is included in the Notes to the
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, 1996 and 1995, and the related consolidated
statements of income and retained earnings and cash flows
for each of the three years in the period ended April 30,
1996. 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 generally
accepted auditing standards. 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, 1996 and 1995, and the
results of their operations and their cash flows for each
of the three years in the period ended April 30, 1996 in
conformity with generally accepted accounting principles.
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 the 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 12, 1996
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent
to the incorporation of our report included in the John
Wiley & Sons, Inc. Form 10-K for the year ended April 30,
1996, into the Company's previously filed Registration
Statement File Nos. 33-60268, 2-65296, 2-95104, 33-29372
and 33-62605.
ARTHUR ANDERSEN LLP
New York, New York
June 20, 1996
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
April 30
John Wiley & Sons, Inc. and Subsidiaries
Dollars in thousands 1996 1995
-------------------------
Assets
Current Assets
Cash and cash equivalents $ 55,284 $ 34,410
Accounts receivable 60,276 52,562
Inventories 43,981 41,535
Deferred income tax benefits 7,677 8,004
Prepaid expenses 3,413 4,680
-------------------------
Total Current Assets 170,631 141,191
Product Development Assets 30,282 24,509
Property and Equipment 22,989 21,244
Intangible Assets 52,394 53,351
Other Assets 8,205 7,186
Total Assets $ 284,501 $ 247,481
=========================
Liabilities and Shareholders' Equity
Current Liabilities
Notes payable and current portion
of long-term debt $ - $ 621
Accounts and royalties payable 36,952 34,273
Deferred subscription revenues 71,999 65,749
Accrued income taxes 5,068 4,227
Other accrued liabilities 25,097 25,080
-------------------------
Total Current Liabilities 139,116 129,950
-------------------------
Other Long-Term Liabilities 14,994 13,818
Deferred Income Taxes 12,409 4,881
Shareholders' Equity
Common stock issued
Class A (16,412,343 and 16,173,270 shares 16,412 16,173
Class B (4,086,482 and 4,168,640 shares) 4,086 4,168
Additional paid-in capital 31,615 25,446
Retained earnings 106,716 87,541
Cumulative translation adjustment (3,086) (2,411)
Unearned deferred compensation (4,268) (1,547)
-------------------------
151,475 129,370
Less Treasury shares at cost
(Class A-3,503,109 and 3,551,882;
Class B-871,024 and 871,024 (33,493) (30,538)
-------------------------
Total Shareholders' Equity 117,982 98,832
-------------------------
Total Liabilities and Shareholders' Equity $ 284,501 $ 247,481
=========================
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF INCOME
AND RETAINED EARNINGS
For the years ended April 30
John Wiley & Sons, Inc. and Subsidiaries
Dollars in thousands except per share data
1996 1995 1994
----------------------------------
Revenues $ 362,704 $ 331,091 $ 294,289
Costs and Expenses
Cost of sales 126,718 113,142 99,683
Operating and administrative
expenses 198,494 186,984 170,000
Amortization of intangibles 4,537 4,086 5,723
----------------------------------
Total Costs and Expenses 329,749 304,212 275,406
----------------------------------
Operating Income 32,955 26,879 18,883
Interest Income and Other 6,211 1,768 1,821
Interest Expense (368) (2,854) (3,638)
----------------------------------
Interest Income (Expense)-Net 5,843 (1,086) (1,817)
Income Before Taxes 38,798 25,793 17,066
Provision for Income Taxes 14,118 7,482 4,949
----------------------------------
Net Income 24,680 18,311 12,117
----------------------------------
Retained Earnings at Beginning
of Year 87,541 74,024 66,080
Cash Dividends
Class A Common
($.35, $.31 and $.275 per share) 4,492 3,885 3,358
Class B Common
($.31, $.275 and $.245 per share) 1,013 909 15
----------------------------------
Total Dividends 5,505 4,794 4,173
----------------------------------
Retained Earnings at End of Year $ 106,716 $ 87,541 $ 74,024
==================================
Income Per Share
Primary and Fully Diluted $ 1.49 $ 1.12 $ 0.76
The accompanying notes are an integral part of the consolidated financial
statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended April 30
John Wiley & Sons, Inc. and Subsidiaries
Dollars in thousands 1996 1995 1994
----------------------------------
Operating Activities
Net Income $ 24,680 $ 18,311 $ 12,117
Non-cash Items
Amortization of intangibles 4,537 4,086 5,723
Amortization of composition costs 15,196 12,285 11,979
Depreciation of property
and equipment 7,314 6,589 6,075
Reserves for returns, doubtful
accounts and obsolescence 6,586 4,321 3,679
Deferred income taxes 7,873 2,094 (1,499)
Other 7,583 5,155 3,295
Changes in Operating Assets and
Liabilities
Increase in receivables (12,150) (8,337) (11,863)
Decrease (increase) in inventories (3,734) (3,962) 758
Increase in accounts and
royalties payable 3,821 6,951 5,594
Increase in deferred subscription
revenues 4,996 7,596 6,132
Net change in other operating
assets and liabilities 1,420 (3,198) (2,256)
Cash Provided by Operating
Activities 68,122 51,891 39,734
----------------------------------
Investing Activities
Additions to product development
assets (26,483) (19,705) (16,827)
Additions to property and
equipment (9,310) (7,876) (6,504)
Proceeds from sale of publishing
lines - - 9,210
Acquisition of publishing assets (3,968) (12,268) (8,305)
----------------------------------
Cash Used for Investing Activities (39,761) (39,849) (22,426)
----------------------------------
Financing Activities
Purchase of treasury shares (3,323) (212) -
Repayment of long-term debt - (32,000) (4,000)
Net borrowings (repayments)
of short-term debt (624) 522 (21)
Cash dividends (5,505) (4,794) (4,173)
Proceeds from issuance of stock
on option exercises and other 2,289 590 2,815
----------------------------------
Cash Used for Financing
Activities (7,163) (35,894) (5,379)
----------------------------------
Effects of Exchange Rate Changes
on Cash (324) 805 (787)
----------------------------------
Cash and Cash Equivalents
Increase (Decrease) for Year 20,874 (23,047) 11,142
Balance at Beginning of Year 34,410 57,457 46,315
----------------------------------
Balance at End of Year $ 55,284 $ 34,410 $ 57,457
==================================
Cash Paid During the Year for
Interest $ 647 $ 3,807 $ 3,674
Income Taxes $ 2,799 $ 6,886 $ 3,715
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 items have been eliminated.
Prior year per share data has been restated to reflect the
2-for-1 stock split in October 1995.
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.
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 $26.8 and $22.6 million at
April 30, 1996 and 1995, respectively.
Depreciation and Amortization: Furniture and equipment is
depreciated principally on the straight-line method over
estimated useful lives ranging from 3 to 10 years.
Leasehold improvements and capital leases are amortized
over the lesser of the estimated useful lives of the
assets or the duration of the various leases, using the
straight-line method. 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 3 years.
Intangible Assets: Intangible assets consist of acquired
publication rights, which are principally amortized based
on the projected revenues of titles acquired, non-compete
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 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 would be charged
to operating results.
Income Per Share: Income per share is determined by
dividing income by the weighted average number of common
shares outstanding and common stock equivalents resulting
from the assumed exercise of outstanding dilutive stock
options and other stock awards less shares assumed to be
repurchased with the related proceeds at the average
market price for the period for primary earnings per
share, and at the higher of the average or end of period
market price for fully diluted earnings per share.
Subscription Revenues: Subscription revenues are generally
collected in advance. These revenues are deferred and
recognized as earned when the related issue is shipped to
the subscriber.
Foreign Exchange Contracts: The Company,
from time to time, enters into forward exchange contracts
as a hedge against its overseas subsidiaries' non-
functional currency asset, liability, and commitment
exposures. Such exposures include anticipated annual
journal subscription revenues, as well as that portion of
the revenues and related receivables on sales of book
products, that are denominated in U.S. dollars, while the
foreign subsidiaries' expense structure is denominated in
their own functional currencies. 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, 1996 or 1995.
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 March 1995, the Financial
Accounting Standards Board issued Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets
to be Disposed Of" for fiscal years beginning after
December 15, 1995. The Company intends to adopt SFAS No.
121 in fiscal year 1997, and does not expect the impact on
its financial position or its results of operations to be
material.
In October 1995, the Financial Accounting Standards
Board issued SFAS No. 123, "Accounting for Stock-Based
Compensation" which requires certain disclosures for
fiscal years beginning after December 15, 1995 for those
companies that will continue to use an intrinsic value
based method for measuring compensation cost in connection
with employee stock compensation plans. The Company
currently plans to continue to use the intrinsic value
based method and will adopt the disclosure requirements in
fiscal 1997.
Acquisitions
Subsequent to the fiscal 1996 year-end, the Company
acquired a 90% interest in the German based VCH Publishing
Group (VCH) for approximately $100 million in cash. VCH
has annual revenues of approximately $60 million and
publishes nearly 100 scholarly and professional journals,
as well as more than 500 books annually, with a backlist
of 3,000 titles. VCH is a leading scientific, technical,
and professional publisher in chemistry and related
disciplines. The group also includes Akademie Verlag, a
science and humanities publisher; Ernst & Sohn, an
architecture and civil engineering publisher; Academy
Group, a London-based architecture and design publisher;
and Chemical Concepts, an electronic chemical database
publisher.
In fiscal 1996, the Company acquired Clinical
Psychology Publishing Company (CPPC), a publisher of
journals and books in the fields of clinical and
educational psychology; Preservation Press consisting of
architectural heritage books, technical preservation
guides and children's architecture books; and certain
other smaller publishing properties. In addition, the
Company became the publisher of Cancer, the American
Cancer Society's medical journal. The purchase prices
amounted to $4.0 million in cash plus assumed liabilities
of $1.3 million. The excess of cost over the fair value
of the tangible assets acquired amounted to approximately
$3.7 million, of which $.9 million related to acquired
publication rights, $.2 million related to non-compete
agreements, and $2.6 million represented goodwill and
other intangibles which are being amortized over 5 to 15
years.
In fiscal 1995, the Company acquired the publishing
business of Executive Enterprises, Inc., consisting of
books, journals and newsletters for environmental
management, accounting, law and human resource
professionals; ValuSource, which produces specialized
business valuation software for accountants, entrepreneurs
and corporations; the college engineering list of Houghton
Mifflin; the book publishing program of Oliver Wight
Publications, Inc., consisting of general management and
manufacturing/quality titles; the OS/2 computer-book list
of Van Nostrand Reinhold, Inc., and other smaller
publishing lists, for purchase prices aggregating $12.3
million in cash plus assumed liabilities of $2.9 million.
The excess of cost over the fair value of the tangible
assets acquired amounted to approximately $13.5 million,
of which $6.7 million related to acquired publication
rights, $.5 million related to non-compete agreements, and
$6.3 million represented goodwill and other intangibles
which are being amortized over 10 to 15 years.
In fiscal 1994, the Company acquired the professional
computer book line of QED Information Services in the
United States; Belhaven Press, which publishes earth and
environmental science titles in the United Kingdom; and
the Company's joint venture partner's 30% minority
interest in Protocols, which publishes life science
continuity products, for purchase prices aggregating $8.3
million. The excess of cost over the fair value of the
tangible assets acquired amounted to approximately $6.9
million, of which $.5 million related to acquired
publication rights, $.3 million related to non-compete
agreements, and $6.1 million represented goodwill and
other intangibles which are being amortized over 15 years.
The fiscal 1996 and prior 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. The proforma
effects on the results of operations for these
acquisitions were not material.
Divested and Restructured Operations
In fiscal 1994, the Company divested its Canadian
high school and Australian primary school and certain
agency lines for aggregate proceeds of $9.2 million,
resulting in a gain of $1.8 million, or $1.3 million after
taxes. In addition, in a cost saving initiative, the
Company restructured and consolidated certain distribution
and information technology support functions which
resulted in an unusual charge of $1.8 million, or $1.1
million after taxes. The net effect of the divestitures
and restructurings amounted to an after-tax gain of $.2
million, or $.01 per share in fiscal 1994.
Inventories
Inventories at April 30 were as follows:
Dollars in thousands 1996 1995
--------------------------
Finished Goods $ 39,616 $ 36,467
Work-in-Process 4,865 5,762
Paper, Cloth and Other 3,026 2,769
--------------------------
47,507 44,998
LIFO Reserve (3,526) (3,463)
--------------------------
Total $ 43,981 $ 41,535
--------------------------
Domestic book inventories aggregating $32.2 and $29.0
million at April 30, 1996 and 1995, respectively, are
stated at cost or market, whichever is lower, using the
last-in, first-out method. All other inventories are
stated at cost or market, whichever is lower, using the
first-in, first-out method.
Product Development Assets
Product development assets consisted of the following
at April 30:
Dollars in thousands 1996 1995
--------------------------
Composition Costs $ 21,505 $ 16,685
Royalty Advances 8,777 7,824
--------------------------
Total $ 30,282 $ 24,509
--------------------------
Composition costs are net of accumulated amortization of
$27,199 in 1996 and $23,014 in 1995.
Property and Equipment
Property and equipment consisted of the following at
April 30:
Dollars in thousands 1996 1995
--------------------------
Furniture and Equipment $ 45,765 $ 42,974
Leasehold Improvements 12,045 11,382
--------------------------
57,810 $ 54,356
Accumulated Depreciation (34,821) (33,112)
--------------------------
Total $ 22,989 $ 21,244
--------------------------
Intangible Assets
Intangible assets are stated at cost, net of
accumulated amortization, and consisted of the following
at April 30:
Dollars in thousands 1996 1995
--------------------------
Goodwill and Other Intangibles $ 43,752 $ 43,273
Acquired Publication Rights 8,007 9,037
Non-compete Agreements 635 1,041
--------------------------
Total $ 52,394 $ 53,351
--------------------------
Other Accrued Liabilities
Included in other accrued liabilities is accrued
compensation of approximately $13.5 and $13.3 million for
1996 and 1995, respectively.
Income Taxes
The provision for income taxes was as follows:
Dollars in thousands 1996 1995 1994
---------------------------------
Currently Payable
Federal $ 1,122 $ 1,184 $ 1,471
Foreign 4,142 3,675 4,772
State and local 1,000 314 115
-------------------------------
Total Current Provision 6,264 5,173 6,358
-------------------------------
Deferred Provision
Federal 5,270 1,716 (174)
Foreign 1,687 451 (1,277)
State and Local 897 142 42
-------------------------------
Total Deferred
Provision (Benefit) 7,854 2,309 (1,409)
-------------------------------
Total Provision $ 14,118 $ 7,482 $ 4,949
-------------------------------
The Company's effective income tax rate as a percent
of pre-tax income differed from the U.S. federal statutory
rate as shown below:
1996 1995 1994
------------------------------
U.S. Federal Statutory Rate 35.0% 35.0% 35.0%
State and Local Income Taxes
Net of Federal Income Tax Benefit 3.2 .8 .4
Tax Benefit Derived from FSC Income (3.1) (6.1) (4.8)
Foreign Source Earnings Taxed at
Other than U.S. Statutory Rate 1.1 (1.0) (2.1)
Nondeductible Amortization
of Intangibles .7 1.1 1.7
Other-Net (.5) (.8) (1.2)
-----------------------------
Effective Income Tax Rate 36.4% 29.0% 29.0%
-----------------------------
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 1996 1995 1994
--------------------------------------
Depreciation and Amortization $(3,684) $ 1,451 $ 6
Accrued Expenses 6,100 1,197 715
Circulation Costs 1,471 1,614 (1,800)
Provision for Sales Returns
and Doubtful Accounts (1,391) (255) 547
Inventory 578 (1,150) 1,076
Retirement Benefits (66) (224) 116
Divested Operations (3,386) _ _
Long-Term Liabilities 5,102 _ 329
Alternative Minimum Tax Credit
and Other Carryforwards 1,869 (722) (1,770)
Tax Law Rate Change _ _ (470)
Other-Net 1,261 398 (158)
--------------------------------------
Total Deferred Provision (Benefit) $ 7,854 $ 2,309 $ (1,409)
--------------------------------------
The significant components of deferred tax assets and
liabilities were as follows:
1996 1995
Dollars in thousands Current Long-Term Current Long-Term
--------------------------------------------
Deferred Tax Assets
Reserve for Sales Returns
and doubtful Accounts $ 7,100 $ _ $ 5,603 $ _
Circulation and Other Costs
Capitalized for Taxes _ 2,951 _ 3,624
Retirement and Post-
Employment Benefit _ 2,517 _ 2,510
Alternative Minimum
Tax Credit and Other Carryforwards (252) _ 1,315 _
Accrued Compensation 192 _ 1,592
Accrued Liabilities and Other 30 _ 213
---------------------------------------
Total Deferred Tax Assets 7,070 5,468 8,723 6,134
---------------------------------------
Deferred Tax Liabilities
Depreciation and amortization _ (3,278) _ (6,954)
Divested Operations _ 248 _ (2,156)
Accrued Expenses _ (5,664) _ _
Long-Term Liabilities _ (6,557) _ (83)
Other 607 (2,626) (719) (1,822)
---------------------------------------
Total Deferred Tax liabilities 607 (17,877) (719) (11,015)
---------------------------------------
Net Deferred Tax Asset (Liability) $ 7,677 $(12,409) $ 8,004 $(4,881)
---------------------------------------
In fiscal 1996, the Company received approximately $6
million of net federal, state and local tax refunds
including interest on the favorable resolution of amended
tax return claims of prior years primarily relating to
timing differences. Net income for fiscal 1996 includes
interest income related thereto of $4.4 million, or $2.6
million after taxes, equal to $.16 per share.
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 which would be payable if such earnings were
distributed. At April 30, 1996, the undistributed earnings
of foreign subsidiaries approximated $26.3 million and, if
remitted currently, would result in additional taxes
approximating $1.8 million.
Notes Payable and Debt
The Company has a revolving credit agreement with
three banks providing a line of credit of $50 million
until March 30, 2000. The Company has the option of
borrowing Eurodollars at a rate based on the London
Interbank Offered Rate (LIBOR) or dollars at the banks'
prime rate or at a rate based on the current certificate
of deposit rate. A facility fee ranging from .125% to
.25% depending on certain coverage ratios is charged on
the total commitment. 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. The Company and its subsidiaries also
have other short-term lines of credit aggregating $51
million at various interest rates. Information relating to
short-term lines of credit follows:
Dollars in thousands 1996 1995 1994
-------------------------------------
End of Year
Amount outstanding $ _ $ 621 $ 79
Weighted average interest rate _ 8.5% 7.3%
During the Year
Maximum amount outstanding $ 18,909 $ 1,351 $ 7,390
Average amount outstanding $ 5,960 $ 529 $ 1,184
Weighted average interest rate 7.0% 8.7% 7.0%
-------------------------------------
The Company's revolving credit agreement
contains certain restrictive covenants related to minimum
net worth, funded debt levels, financial ratios, and
restricted payments, including a cumulative limitation for
dividends paid. Under the most restrictive covenant,
approximately $48 million was available for the payment of
future dividends as of April 30, 1996.
Subsequent to the fiscal 1996 year-end, the Company
obtained bridge financing for the VCH acquisition by
entering into a credit agreement with a bank and its
assigns providing a line of credit of $75 million thru
June 11, 1997 on terms similar to the above mentioned
revolving credit agreement.
In fiscal 1995, the Company prepaid the remaining $26
million of the 10.31% long-term notes outstanding.
Although the Company incurred prepayment costs of $1.6
million, which was included in interest income and other,
the Company benefits by eliminating the negative interest
rate spread between the higher interest rate on the debt
retired compared with the current interest rates being
earned on short-term investments. Also included in
interest income and other were a gain of $1.5 million
related to the sale of shares of Nippon Wilson Learning
which were received in connection with the sale of the
Company's training business in fiscal 1991.
Retirement Plans
The Company and its principal subsidiaries have
contributory and noncontributory retirement plans which
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. In fiscal 1995, the
domestic plan was amended to provide that final average
compensation be based on the highest three consecutive
years ended December 31, 1993. 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 1995 by approximately $.2
million. Funds are contributed as necessary to provide for
current service and for a portion of any unfunded
projected benefit obligation. To the extent these
requirements are exceeded by plan assets, a contribution
may not be made in a particular year. Plan assets consist
principally of investments in corporate stocks and bonds
and government obligations.
Pension costs for the defined benefit plans were as follows:
Dollars in thousands 1996 1995 1994
-----------------------------------
Service Cost $ 2,598 $ 2,418 $ 2,095
Interest Cost on Projected
Benefit Obligation 3,757 3,440 3,073
Return on Assets (6,331) (2,937) (3,685)
Net Amortization and Deferral 1,430 (1,764) (731)
-----------------------------------
Net Periodic Pension Expense $ 1,454 $ 1,157 $ 752
-----------------------------------
The net pension expense included above for the
international plans amounted to approximately $1.1, $1.0,
and $1.0 million for 1996, 1995, and 1994, respectively.
The following table sets forth the status of the
plans and the amounts recognized in the Company's
consolidated statements of financial position.
1996 1995
Domestic Int'l. Domestic Int'l.
Dollars in thousands Plan Plans Plan Plans
------------------------------------------
Fair Value of Plan Assets $ 41,846 $ 19,230 $ 37,340 $ 15,978
Accumulated Benefit Obligation
Vested Benefits (31,789) (13,835) (29,758) (11,579)
Nonvested Benefits (2,728) (99) (2,456) (91)
------------------------------------------
(34,517) (13,934) (32,214) (11,670)
Projected Compensation Increases (809) (2,631) (728) (2,696)
------------------------------------------
Projected Benefit Obligation (35,326) (16,565) (32,942) (14,366)
------------------------------------------
Funded Status 6,520 2,665 4,398 1,612
Unrecognized Net Asset (2,991) (1,433) (3,590) (1,737)
Unrecognized Prior Service Cost 1,018 1,247 105 1,456
Unrecognized Net Loss (Gain) (3,578) (3,118) 362 (2,408)
------------------------------------------
Prepaid (Accrued) Pension Cost $ 969 $ (639) $ 1,275 $ (1,077)
------------------------------------------
The range of assumptions used in 1996 and 1995 were:
1996 1995
Domestic Int'l. Domestic Int'l.
Plan Plans Plan Plans
---------------------------------------
Discount Rate 7.5% 8.5% 7.5% 8.5%
Expected Long-Term Rate of Return
on Plan Assets 8.0% 7.0-8.0% 8.0% 7.0-8.0%
Rate of Increase in Compensation Levels _% 5.5-7.0% _% 5.5-7.0%
---------------------------------------
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 cost of these benefits is being
charged to expense on a present value basis over the
estimated term of employment and amounted to approximately
$1.0, $.9 and $.7 million in 1996, 1995 and 1994,
respectively.
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 are funded on a pay-as-you-go, cash basis. The
accumulated post-retirement benefit obligation amounted to
$.3 and $.2 million at April 30, 1996 and 1995,
respectively, and the amount expensed in fiscal 1996 and
prior years was not material.
Commitments and Contingencies
The following schedule shows the composition of rent
expense for operating leases:
Dollars in thousands 1996 1995 1994
-----------------------------------------
Minimum Rental $ 12,550 $ 12,202 $ 11,885
Lease Escalation 1,913 1,848 1,756
Less: Sublease Rentals (19) (63) (55)
-----------------------------------------
Total $ 14,444 $ 13,987 $ 13,586
-----------------------------------------
Future minimum payments under operating leases
aggregated $97.2 million at April 30, 1996. Annual
payments under these leases are $14.4, $13.4, $13.1,
$12.9, and $12.4 million for fiscal years 1997 through
2001, respectively. The Company is guarantor through 1998
of certain lease obligations assumed by the buyer of the
domestic training operations which were divested in fiscal
1991, aggregating approximately $2.0 million, which is net
of the 50% guarantee provided by the parent of the buyer.
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.
Segment Information
The Company operates in one business segment, namely
publishing, and develops, publishes and markets products
in print and electronic formats including textbooks,
professional and reference works, consumer books, and
periodicals including journals and other subscription-
based products, for the educational, scientific,
technical, professional and trade markets around the
world.
The Company's international operations are located in
Europe, Canada, Australia and Asia. The following table
presents revenues, operating income and identifiable
assets for the domestic and international operations.
Dollars in thousands 1996 1995 1994
------------------------------------
Revenues
Domestic $ 279,998 $ 258,464 $ 229,061
International 112,299 102,907 89,235
Interarea transfers (29,593) (30,280) (24,007)
------------------------------------
Total $ 362,704 $ 331,091 $ 294,289
------------------------------------
Operating Income
Domestic $ 20,180 $ 15,242 $ 8,957
International 12,775 11,637 9,926
------------------------------------
Total $ 32,955 $ 26,879 $ 18,883
------------------------------------
Identifiable Assets
Domestic $ 178,442 $ 166,478 $ 144,624
International 50,775 46,593 41,859
Corporate 55,284 34,410 57,457
--------------------------------------
Total $ 284,501 $ 247,481 $ 243,940
--------------------------------------
[FN]
Includes a pretax unusual items gain of $1,819 in
international operations and a pretax unusual items charge
of $1,768 in domestic operations in 1994.
Transfers between geographic areas are generally made
at a fixed discount from list price and principally
represent sales from the United States to the Company's
international operations. Export sales from the United
States to unaffiliated international customers amounted to
approximately $47.5, $41.2 and $33.9 million in 1996, 1995
and 1994, respectively. The pre-tax income for
consolidated international operations was approximately
$13.0, $11.6 and $10.0 million in 1996, 1995 and 1994,
respectively.
Included in operating and administrative expenses
were net foreign exchange gains (losses) of approximately
$.2, $(.2) and $.2 million in 1996, 1995 and 1994,
respectively.
Changes in the cumulative translation adjustment account were as
follows:
Dollars in thousands 1996 1995
------------------------------
Balance, May 1 $ (2,411) $ (3,805)
Aggregate Translation
Adjustments for the Year (675) 1,394
------------------------------
Balance, April 30 $ (3,086) $ (2,411)
------------------------------
Stock Option and Other Plans
Options were granted on the Company's Class A Common
stock and are exercisable, in part or in full, over a
maximum period of 10 years from the date of grant under
various stock option plans. Outstanding options were
granted at prices not less than 100% of the fair market
value of the stock at the date the options were granted.
Under certain circumstances relating to a change of
control, as defined, the right to exercise options
outstanding could be accelerated.
Option activity under existing plans was as follows:
1996 1995
-----------------------------
Outstanding at Beginning of Year
1,070,038 878,192
Granted 133,224 285,800
Exercised (157,099) (69,402)
Canceled (17,500) (24,552)
------------------------------
Outstanding at End of Year 1,028,663 1,070,038
------------------------------
Exercisable at End of Year 570,170 595,754
Available for Future Grant 1,229,592 1,356,568
Price Range of Options
Exercised $ 6.75 to 28.25 $ 7.00 to 20.69
Price Range of Options
Outstanding $ 6.75 to 31.63 $ 6.75 to 26.25
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 cash and/or restricted shares of the Company's
Class A Common stock at the end of the plan cycle. The
restricted shares vest equally as to 50% on the first and
second anniversary date after the date the award is
earned. The amount charged to expense for such plans was
approximately $.9, $.8 and $.7 million in 1996, 1995 and
1994, respectively. Restricted shares earned under the
plans amounted to 8,650, 11,084 and 33,640 in 1996, 1995
and 1994, respectively.
In both fiscal 1996 and 1995, the Company granted in
each year a total of 90,000 restricted shares of the
Company's Class A Common stock to four key executive
officers in connection with their employment agreements.
The restricted shares 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 aggregating $4.4 million is being
charged to earnings ratably over five years, or sooner if
vesting is accelerated, from the dates of grant, and
amounted to $.9 and $.3 million in fiscal 1996 and 1995,
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 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. Compensation cost related to this plan charged to
expense amounted to approximately $.2 million in 1996,
1995 and 1994, respectively. Under this plan 5,752, 8,662
and 13,692 shares were issued in 1996, 1995, and 1994,
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 30,000,000
authorized shares of Class A Common, $1 par value, and
12,000,000 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.
Changes in selected capital accounts were as follows:
Additional
Common Stock Paid-In Treasury
Dollars in thousands Class A Class B Capital Stock
--------------------------------------------
Balance
May 1, 1993 $ 7,873 $ 2,102 $ 29,114 $(31,159)
Director Stock Plan Issuance _ _ 64 94
Executive Long-Term
Incentive Plan Issuance _ _ 174 230
Exercise of Stock Options 161 _ 2,852 (198)
Other 11 (11) 804 _
----------------------------------------------
Balance
April 30, 1994 $ 8,045 $ 2,091 $ 33,008 $ (31,033)
Restricted Share Issuance _ _ 1,266 618
Director Stock Plan Issuance _ _ 124 59
Executive Long-Term
Incentive Plan Issuance _ _ 162 76
Exercise of Stock Options 35 _ 601 (46)
Purchase of Treasury Shares _ _ _ (212)
Other 7 (7) 455 _
Retroactive effect of
2 for 1 stock split 8,086 2,084 (10,170) _
----------------------------------------------
Balance
April 30, 1995 $ 16,173 $ 4,168 $ 25,446 $(30,538)
Director Stock Plan Issuance 124 41
Executive Long-Term
Incentive Plan Issuance 182 60
Purchase of Treasury Shares (3,323)
Restricted Share Issuance 3,054 948
Issuance of Shares Under
Employee Savings Plan 674 208
Exercise of Stock Options 157 1,354 (889)
Other 82 (82) 781 _
---------------------------------------------
Balance April 30, 1996 $ 16,412 $ 4,086 $ 31,615 $(33,493)
---------------------------------------------
Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Results of Operations:
Fiscal 1996 Compared to Fiscal 1995
In 1996, the Company continued to expand its global
operations and grow its core businesses, while at the same
time improving its profitability, cash flows and return on
investment.
The Company invested a total of $4.0 million during
the year to acquire the Clinical Psychology Publishing
Company (CPPC), a publisher of journals and books in the
fields of clinical and educational psychology;
Preservation Press consisting of architectural heritage
books, technical preservation guides and children's
architecture books; and certain other smaller publishing
properties. The Company also became the publisher of
Cancer, the American Cancer Society's medical journal.
Subsequent to the fiscal 1996 year-end, the Company
acquired a 90% interest in the German based VCH Publishing
Group (VCH) for approximately $100 million in cash. VCH
has annual revenues of approximately $60 million and
publishes nearly 100 scholarly and professional journals,
as well as more than 500 books annually, with a backlist
of 3,000 titles. VCH is a leading scientific, technical,
and professional publisher in chemistry and related
disciplines. The group also includes Akademie Verlag, a
science and humanities publisher; Ernst & Sohn, an
architecture and civil engineering publisher; Academy
Group, a London-based architecture and design publisher;
and Chemical Concepts, an electronic chemical database
publisher. The Company currently anticipates that the
acquisition will dilute income per share for approximately
two years following the acquisition. The extent and
duration of the dilution will depend primarily on the
amortization of intangibles, financing costs, and VCH's
future operating results.
Revenues for the year advanced 10% to $362.7 million
led by the Company's worldwide scientific, technical and
medical journal programs, college texts and the
professional/trade computer and business book lines. The
domestic scientific, technical and medical division
registered a 14% increase in revenues and the domestic
professional/trade division revenues increased 9% over the
prior year. The domestic college division again
outperformed the industry as a whole with a 9% increase in
revenues over the prior year. The international divisions
also registered a 9% improvement in revenues paced by
European and Asian operations.
Cost of sales as a percentage of revenues was 34.9%
in 1996 compared with 34.2% in the prior year primarily
reflecting increased paper costs.
Operating and administrative expenses increased by
6.2% but declined as a percentage of revenues to 54.7% in
1996 from 56.5% as the rate of growth in expenses was
contained at less than the revenue growth rate.
Operating income increased 23% over the prior year to
$33.0 million primarily due to the effects of the higher
revenue base coupled with a cost contained infrastructure.
Operating income margins improved to 9.1% of revenue from
8.1% in the prior year.
Net interest income increased by $6.9 million over
the prior year primarily as a result of interest received
on the favorable resolution of amended tax return claims
amounting to $4.4 million, or $2.6 million after taxes,
equal to $.16 per share. The improvement was also due to
the prepayment of high cost long-term debt at the end of
fiscal 1995.
The effective tax rate was 36.4% compared with 29.0%
in the prior year due to higher effective tax rates on
state, local and foreign sourced earnings.
Results of Operations:
Fiscal 1995 Compared to Fiscal 1994
The Company invested $12.3 million during the year to
acquire the publishing business of Executive Enterprises,
Inc., consisting of books, journals and newsletters for
environmental management, accounting, law and human
resource professionals; ValuSource, which produces
specialized business valuation software for accountants,
entrepreneurs and corporations; the college engineering
list of Houghton Mifflin; the book publishing program of
Oliver Wight Publications, Inc., consisting of general
management and manufacturing/quality titles; and the OS/2
computer-book list of Van Nostrand Reinhold, Inc.
Revenues for the year advanced 13% to $331.1 million
led by the domestic professional and trade division, where
revenues increased 20% based on the strength of the
business and computer-book lines. The domestic
scientific, technical and medical division registered a
10% improvement attributable to increased journal
revenues. The domestic college division increased its
market share and outperformed the industry as a whole in
what was considered a difficult market environment.
International revenues reflected significant increases
over the prior year led by the Company's European and
Asian operations.
Cost of sales as a percentage of revenues was 34.2%
in 1995 compared with 33.9% in the prior year primarily
reflecting increased paper costs.
Operating and administrative expenses as a percentage
of revenues declined to 56.5% in 1995 from 57.8% as the
rate of growth in expenses was contained at less than the
revenue growth rate. This improvement was offset to some
degree by unfavorable foreign exchange rates.
Operating income increased 42% over the prior year to
$26.9 million as revenues increased at a greater rate than
operating expenses.
Interest expense declined by $.8 million due to the
repayment of long-term debt. The effective tax rate was
29% in both years due to the benefits derived from lower
taxed foreign source earnings.
Net income increased 51% over 1994 due to the
operating income gains and lower interest expense.
Liquidity and Capital Resources
The Company's cash and cash equivalents balance was
$55.3 million at the end of fiscal 1996, compared with
$34.4 at the end of the prior year. Cash provided by
operating activities was $68.1 million in fiscal 1996, an
increase of $16.2 million over the prior year, of which
approximately $6 million resulted from tax refunds and
interest received on the favorable resolution of amended
tax return claims of prior years.
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.
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 subscription. Remittances are highly
dependent upon the financial position and liquidity of
such companies.
Sales to the domestic college market tend to be
concentrated in June through August, and again in November
through January. Cash disbursements for inventory are
relatively large during the spring in anticipation of
these college sales. 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 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 acquisition of the VCH Publishing Group will be
financed by new debt facilities.
The capital expenditures of the Company consist
primarily of investments in product development and
property and equipment. Capital expenditures for fiscal
1997 are expected to increase approximately 10% over 1996,
primarily representing increased investments in product
development, including electronic media products, and
computer equipment upgrades to support the higher volume
of business to ensure efficient, quality-driven customer
service. These investments will be funded primarily from
internal cash generation or from the liquidation of cash
equivalents.
Effects of Inflation and Cost Increases
Although the impact of inflation is somewhat
minimized, as the business does not require a high level
of investment in property and equipment, the Company does
experience continuing cost increases reflecting, in part,
general inflationary factors. Fiscal 1996 and 1995
witnessed an increase in paper prices after years of a
stable to decreasing price environment. To mitigate the
effects of paper and other cost increases, the Company has
taken a number of initiatives including various steps to
lower overall production and manufacturing costs including
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
In March 1995, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards
(SFAS) No. 121, "Accounting for the Impairment of Long-
lived Assets and for Long-lived Assets to be Disposed Of"
for fiscal years beginning after December 15, 1995. The
Company intends to adopt SFAS No. 121 in fiscal year 1997,
and does not expect the impact on its financial position
or its results of operations to be material.
In October 1995, the Financial Accounting Standards
Board issued SFAS No. 123, "Accounting for Stock-Based
Compensation" which requires certain disclosures for
fiscal years beginning after December 15, 1995 for those
companies that will continue to use an intrinsic value
based method for measuring compensation cost in connection
with employee stock compensation plans. The Company
currently plans to continue to use the intrinsic value
based method and will adopt the disclosure requirements in
fiscal 1997.
Results by Quarter (Unaudited)
John Wiley & Sons, Inc. and Subsidiaries
Dollars in thousands except per share data
1996 1995
----------------------------
Revenues
First quarter $ 88,092 $ 80,787
Second quarter 86,831 78,558
Third quarter 97,409 91,930
Fourth quarter 90,372 79,816
----------------------------
Fiscal year $ 362,704 $ 331,091
---------------------------
Operating Income
First quarter $ 11,496 $ 10,450
Second quarter 7,119 5,652
Third quarter 10,710 10,240
Fourth quarter 3,630 537
---------------------------
Fiscal year $ 32,955 $ 26,879
---------------------------
Net Income
First quarter $ 7,118 $ 6,067
Second quarter 4,240 3,082
Third quarter1 9,835 6,530
Fourth quarter 3,487 2,632
--------------------------
Fiscal year $ 24,680 $ 18,311
--------------------------
Income Per Share
Primary and Fully Diluted
First quarter $ .43 $ .37
Second quarter .26 .19
Third quarter1 .59 .40
Fourth quarter .21 .16
Fiscal year $ 1.49 $ 1.12
1 Includes interest income after taxes in 1996 of $2.6
million, equal to $.16 per share, relating to interest
received on the favorable resolution of amended tax
return claims.
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
--------------------------------------------------------
1996
First quarter $.0875 $28.75 $27.13 $.0775 $29.00 $27.75
Second quarter .0875 30.50 27.13 .0775 30.00 28.00
Third quarter .0875 35.00 28.88 .0775 34.75 28.75
Fourth quarter .0875 35.00 29.63 .0775 34.63 29.50
--------------------------------------------------------
1995
First quarter $.0775 $21.63 $20.50 $.06875 $21.25 $20.50
Second quarter .0775 22.13 20.13 .06875 21.75 20.38
Third quarter .0775 25.75 21.38 .06875 25.63 21.38
Fourth quarter .0775 28.00 25.13 .06875 27.75 25.25
--------------------------------------------------------
As of April 30, 1996, the approximate number of
holders of the Company's Class A and Class B Common Stock
were 1,278 and 200, respectively, based on the holders of
record and other information available to the Company.
The Company's revolving credit agreements contain
certain restrictive covenants related to the payment of
dividends. Under the most restrictive covenant,
approximately $48 million was available for the payment of
future dividends. 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
1996 1995 1994 1993 1992
----------------------------------------------------
Revenues $ 362,704 $ 331,091 $ 294,289 $ 272,894 $ 248,151
Income Before
Extraordinary Item 24,680 18,311 12,117 7,718 3,576
Extraordinary Item _ _ _ _ (495)
Net Income1 24,680 18,311 12,117 7,718 3,081
Working Capital 31,515 11,241 35,059 31,804 30,800
Total Assets 284,501 247,481 243,940 220,593 213,744
Long-Term Debt _ _ 26,000 32,000 36,000
Shareholders' Equity 117,982 98,832 82,330 71,276 69,552
----------------------------------------------------
Per Share Data
Income Before
Extraordinary Item
Primary and Fully Diluted 1.49 1.1 2 .76 .50 .23
Net Income
Primary and Fully Diluted 1.49 1.12 .76 .50 .20
Cash Dividends
Class A Common .35 .31 .275 .275 .275
Class B Common .31 .275 .245 .245 .245
Book Value-End of Year 7.32 6.21 5.23 4.63 4.56
Fiscal 1996 includes interest income after taxes of $2.6 million, or
$.16 per 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, 1996, 1995 AND 1994
(Dollars in Thousands)
Balance at Additions Deductions Balance
Beginning Charged to From at End of
Description of Period Income Reserves Period
-------------------------------------------------
Year Ended April 30, 1996
Allowance for sales
returns $ 17,519 $ 17,744 $ 14,477 $ 20,786
Allowance for doubtful
accounts $ 5,114 $ 5,499 $ 4,564 $ 6,049
Year Ended April 30, 1995
Allowance for sales
returns $ 15,558 $ 16,110 $ 14,149 $ 17,519
Allowance for doubtful
accounts $ 4,385 $ 4,014 $ 3,285$ 5,114
Year Ended April 30, 1994
Allowance for sales
returns $ 13,424 $ 13,470 $ 11,336 $ 15,558
Allowance for doubtful
accounts $ 3,409 $ 4,081 $ 3,105$ 4,385
Allowance for sales returns represents anticipated returns net of
inventory and royalty costs.
Accounts writen 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/ Charles R. Ellis
----------------------------------------
Charles R. Ellis
President and Chief Executive Officer
By: /s/ Robert D. Wilder
----------------------------------------
Robert D. Wilder
Executive Vice President and
Chief Financial & Operations Officer
By: /s/ Peter W. Clifford
----------------------------------------
Peter W. Clifford
Senior Vice President, Finance
Corporate Controller
& Chief Accounting Officer
Dated: June 20, 1996
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 20, 1996.
- ----------------------------- ----------------------------
Franklin E. Agnew Chester O. Macey
/s/ Warren J. Baker /s/ William R. Sutherland
- ----------------------------- ----------------------------
Warren J. Baker William R. Sutherland
/s/ Charles R. Ellis
- ----------------------------- ----------------------------
Charles R. Ellis Thomas M. Taylor
/s/ H. Allen Fernald /s/ Leo J. Thomas
- ----------------------------- ----------------------------
H. Allen Fernald Leo J. Thomas
/s/ Gary J. Fernandes /s/ Bradford Wiley II
- ----------------------------- ----------------------------
Gary J. Fernandes Bradford Wiley II
/s/ Larry Franklin /s/ Deborah E. Wiley
- ----------------------------- ----------------------------
Larry Franklin Deborah E. Wiley
/s/ John S. Herrington /s/ Peter Booth Wiley
- ----------------------------- ----------------------------
John S. Herrington Peter Booth Wiley