JOHN WILEY & SONS, INC. - FORM 8-K

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EX-99.1 - FY18 Q2 PRESS RELEASE - JOHN WILEY & SONS, INC.	fy18q2_pressrelease.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

December 6, 2017

(Date of Report)

(Date of earliest event reported)

JOHN WILEY & SONS, INC.

(Exact name of registrant as specified in its charter)

New York

(State or jurisdiction of incorporation)

	0-11507	13-5593032
	----------------------------------------------------	---------------------------------------------
	Commission File Number	IRS Employer Identification Number
	111 River Street, Hoboken NJ	07030
	----------------------------------------------------	---------------------------------------------
	Address of principal executive offices	Zip Code
	Registrant's telephone number, including area code:	(201) 748-6000
		---------------------------------------------

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act(17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act(17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

(17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

(17 CFR 240.13e-4(c))

ITEM 2.02: RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On December 6, 2017, John Wiley & Sons Inc., a New York corporation (the "Company"), issued a press release announcing the Company's financial results for the second quarter of fiscal year 2018. A copy of the Company's press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

The information in this report, including the exhibits hereto, (x) shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section and (y) shall not be incorporated by reference into any filing of the Company with the Securities and Exchange Commission, whether made before or after the date hereof, regardless of any general incorporation language in such filings (unless the Company specifically states that the information or exhibits in this particular report are incorporated by reference). The furnishing of the information set forth in this report is not intended to, and does not, constitute a determination or admission as to the materiality or completeness of such information.

ITEM 9.01:

FINANCIAL STATEMENTS AND EXHIBITS

Exhibit No. Description

99.1 Press release dated December 6, 2017 titled "Wiley Reports Second Quarter 2018 Results" (furnished and not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and not deemed incorporated by reference in any filing under the Securities Act of 1934, as amended).

JOHN WILEY & SONS, INC.
UNAUDITED SUMMARY OF OPERATIONS
FOR THE SECOND QUARTER AND SIX MONTHS ENDED
OCTOBER 31, 2017 AND 2016
(in thousands, except per share amounts)


SECOND QUARTER ENDED OCTOBER 31,


				2017			2016			% Change
				US GAAP	Adjustments (A)	Adjusted	US GAAP	Adjustments (A)	Adjusted	US GAAP	Adjusted excl. FX

Revenue			$	451,731	-	451,731	425,588	-	425,588	6%	3%

Costs and Expenses
	Cost of Sales			119,865	-	119,865	111,574	-	111,574	7%	4%
	Operating and Administrative			239,318	-	239,318	247,270	(8,842)	238,428	-3%	-1%
	Restructuring and Related (Credits) Charges			(1,406)	1,406	-	6,847	(6,847)	-	NM	0%
	Amortization of Intangibles			11,183	-	11,183	12,253	-	12,253	-9%	-10%

	Total Costs and Expenses			368,960	1,406	370,366	377,944	(15,689)	362,255	-2%	0%

Operating Income				82,771	(1,406)	81,365	47,644	15,689	63,333	74%	16%
	Operating Margin			18.3%		18.0%	11.2%		14.9%

Interest Expense				(3,455)	-	(3,455)	(4,360)	-	(4,360)	-21%	-21%
Foreign Exchange (Losses) Gains				(416)	287	(129)	(360)	1,899	1,539	16%	NM
Interest Income and Other				576	-	576	478	-	478	21%	21%

Income Before Taxes				79,476	(1,119)	78,357	43,402	17,588	60,990	83%	19%

Provision (Benefit) for Income Taxes				19,428	(391)	19,037	54,853	(38,957)	15,896	-65%	12%

Net Income			$	60,048	(728)	59,320	(11,451)	56,545	45,094	NM	21%


Earnings Per Share- Diluted			$	1.04	(0.01)	1.03	(0.20)	0.98	0.78	NM	22%

Average Shares - Diluted				57,554	57,554	57,554	57,538	57,538	57,538


SIX MONTHS ENDED OCTOBER 31,


				2017			2016			% Change
				US GAAP	Adjustments (A)	Adjusted	US GAAP	Adjustments (A)	Adjusted	US GAAP	Adjusted excl. FX

Revenue			$	863,175	-	863,175	829,873	-	829,873	4%	2%

Costs and Expenses
	Cost of Sales			234,653	-	234,653	225,052	-	225,052	4%	3%
	Operating and Administrative			483,126	(3,600)	479,526	482,497	(8,842)	473,655	0%	1%
	Restructuring and Related Charges (Credits)			24,323	(24,323)	-	5,927	(5,927)	-	NM	0%
	Amortization of Intangibles			23,802	-	23,802	24,826	-	24,826	-4%	-4%

	Total Costs and Expenses			765,904	(27,923)	737,981	738,302	(14,769)	723,533	4%	2%

Operating Income				97,271	27,923	125,194	91,571	14,769	106,340	6%	5%
	Operating Margin			11.3%		14.5%	11.0%		12.8%

Interest Expense				(6,728)	-	(6,728)	(8,431)	-	(8,431)	-20%	-20%
Foreign Exchange (Losses) Gains				(5,552)	6,304	752	(139)	3,228	3,089	NM	NM
Interest Income and Other				581	-	581	728	-	728	-20%	-20%

Income Before Taxes				85,572	34,227	119,799	83,729	17,997	101,726	2%	6%

Provision (Benefit) for Income Taxes				16,288	10,236	26,524	64,180	(39,021)	25,159	-75%	-5%

Net Income			$	69,284	23,991	93,275	19,549	57,018	76,567	NM	10%


Earnings Per Share- Diluted			$	1.20	0.42	1.62	0.34	0.98	1.31	NM	12%

Average Shares - Diluted				57,633	57,633	57,633	58,259	58,259	58,259


		(A) See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment.
		NM- Not Meaningful

JOHN WILEY & SONS, INC.
FOR THE SECOND QUARTER AND SIX MONTHS ENDED
OCTOBER 31, 2017 AND 2016


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


		Second Quarter Ended				Six Months Ended
		October 31,				October 31,
			2017		2016		2017		2016

US GAAP Earnings Per Share - Diluted		$	1.04	$	(0.20)	$	1.20	$	0.34
Adjusted to exclude the following:
	Restructuring and Related (Credits) Charges (A)		(0.02)		0.08		0.33		0.07
	Foreign Exchange Losses on Intercompany Transactions (B)		0.01		0.01		0.09		0.04
	One-time - Pension Settlement (C)		-		0.10		-		0.09
	Unfavorable Tax Settlement (D)		-		0.83		-		0.82
	Deferred Income Tax Benefit on UK Rate Change (E)		-		(0.04)		-		(0.04)
Adjusted Earnings Per Share - Diluted (F)		$	1.03	$	0.78	$	1.62	$	1.31


NOTES TO UNAUDITED FINANCIAL STATEMENTS

Adjustments:
(A)	Adjusted results exclude restructuring (credits) charges and related items associated with the Company's Restructuring and Reinvestment Program. For the three months ended October 31, 2017 and 2016, there were credits of $1.4 million or $(0.02) per share and charges of $6.8 million or $0.08 per share, respectively. For the six months ended October 31, 2017 and 2016, there were charges of $27.9 million or $0.33 per share, and charges of $5.9 million or $0.07 per share, respectively.
(B)	In 2017, we adjusted results to exclude foreign exchange losses associated with intercompany transactions. The prior year adjusted earnings per share amounts have been recasted to conform to current year presentation. For the three months ended October 31, 2017 and 2016, there were gains of $0.3 million or $0.01 per share and gains of $1.9 million or $0.01 per share, respectively. For the six months ended October 31, 2017 and 2016, there were gains of $6.3 million or $0.09 per share, and gains of $3.2 million or $0.04 per share, respectively.
(C)	As previously disclosed and as reported in the Company's SEC filings, the Company announced a voluntary, limited-time opportunity for terminated vested employees who were participants in the U.S. defined benefit retirement plan to elect a single lump sum payment of accumulated benefits. The election period closed on August 29, 2016. The total charge including a prorata portion of the unamortized net actuarial loss was $8.8 million or $0.10 per share for the quarter and, $0.09 per share for the six month period. The aggregate amount of payments under this one time election was $28.3 million, which was paid from Pension Plan assets in October 2016.
(D)	As previously disclosed and as reported in the Company's SEC filings, the Company was appealing an unfavorable tax ruling in Germany related to tax benefits obtained through an increase in the tax deductible basis of certain merged German subsidiaries. In September 2016, the German Federal Fiscal Court issued an unfavorable final judgement in Wiley's longstanding tax appeal. As a result in 2016, the Company recorded a $47.5 million charge, $0.83 per share in the quarter, $0.82 per share for the six month period.
(E)	As previously disclosed and as reported in the Company's SEC filings, the adjusted results for the three and six months ended October 31, 2016 exclude deferred tax benefits of $2.6 million, or $0.04 per share, associated with tax legislation enacted in the second quarter of fiscal year 2017 in the United Kingdom that reduced the U.K. corporate income tax rates by 1 percentage point in 2020. The benefits reflect the remeasurement of the Company's deferred tax balances from 18% to the new income tax rate of 17% effective April 1, 2020 and had no current cash tax impact.
(F)	The Reconciliation of US GAAP to Adjusted EPS - Diluted table may not foot due to rounding.

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

JOHN WILEY & SONS, INC.
UNAUDITED SEGMENT RESULTS
FOR THE SECOND QUARTER AND SIX MONTHS ENDED
OCTOBER 31, 2017 AND 2016
(in thousands)

SECOND QUARTER ENDED OCTOBER 31,

				2017			2016			% Change
				US GAAP	Adjustments (A)	Adjusted	US GAAP	Adjustments (A)	Adjusted	US GAAP	Adjusted excl. FX
Research
Revenue
	Journal Subscriptions		$	170,163	-	170,163	159,726	-	159,726	7%	0%
	Open Access			9,350	-	9,350	7,423	-	7,423	26%	25%
	Licensing, Reprints, Backfiles and Other			41,329	-	41,329	36,367	-	36,367	14%	11%
		Total Journal Revenue		220,842	-	220,842	203,516	-	203,516	9%	3%
	Publishing Technology Services (Atypon)			8,028	-	8,028	2,478	-	2,478	NM	NM
Total Revenue				228,870	-	228,870	205,994	-	205,994	11%	5%
Contribution to Profit (A)				71,163	(388)	70,775	60,292	229	60,521	18%	4%


Publishing
Revenue
	STM and Professional Publishing		$	71,460	-	71,460	68,130	-	68,130	5%	4%
	Education Publishing			57,711	-	57,711	57,472	-	57,472	0%	-1%
	Course Workflow (WileyPLUS)			16,310	-	16,310	19,840	-	19,840	-18%	-18%
	Test Preparation and Certification			7,919	-	7,919	7,521	-	7,521	5%	5%
	Licensing, Distribution, Advertising and Other			11,585	-	11,585	10,337	-	10,337	12%	11%
Total Revenue				164,985	-	164,985	163,300	-	163,300	1%	0%
Contribution to Profit (A)				42,476	71	42,547	36,490	215	36,705	16%	14%


Solutions
Revenue
	Education Services (OPM)		$	29,737	-	29,737	28,007	-	28,007	6%	6%
	Professional Assessment			15,821	-	15,821	16,146	-	16,146	-2%	-2%
	Corporate Learning			12,318	-	12,318	12,141	-	12,141	1%	-4%
Total Revenue				57,876	-	57,876	56,294	-	56,294	3%	2%
Contribution to Profit (A)				7,309	(625)	6,684	5,359	524	5,883	36%	14%


Corporate Expenses (A)				(38,177)	(464)	(38,641)	(54,497)	14,721	(39,776)	-30%	-4%

Operating Income			$	82,771	(1,406)	81,365	47,644	15,689	63,333	74%	16%

		(A) See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment.
		NM- Not Meaningful

SIX MONTHS ENDED OCTOBER 31,

				2017			2016			% Change
				US GAAP	Adjustments (A)	Adjusted	US GAAP	Adjustments (A)	Adjusted	US GAAP	Adjusted excl. FX
Research
Revenue
	Journal Subscriptions		$	338,488	-	338,488	322,410	-	322,410	5%	0%
	Open Access			18,153	-	18,153	14,936	-	14,936	22%	22%
	Licensing, Reprints, Backfiles and Other			79,559	-	79,559	73,394	-	73,394	8%	9%
		Total Journal Revenue		436,200	-	436,200	410,740	-	410,740	6%	2%
	Publishing Technology Services (Atypon)			16,297	-	16,297	2,478	-	2,478	NM	NM
Total Revenue				452,497	-	452,497	413,218	-	413,218	10%	6%
Contribution to Profit (A)				132,624	4,448	137,072	120,727	160	120,887	10%	2%


Publishing
Revenue
	STM and Professional Publishing		$	135,060	-	135,060	138,835	-	138,835	-3%	-3%
	Education Publishing			103,447	-	103,447	112,326	-	112,326	-8%	-8%
	Course Workflow (WileyPLUS)			17,520	-	17,520	20,706	-	20,706	-15%	-16%
	Test Preparation and Certification			19,409	-	19,409	17,077	-	17,077	14%	14%
	Licensing, Distribution, Advertising and Other			20,827	-	20,827	19,317	-	19,317	8%	8%
Total Revenue				296,263	-	296,263	308,261	-	308,261	-4%	-4%
Contribution to Profit (A)				47,485	10,925	58,410	55,832	569	56,401	-15%	3%


Solutions
Revenue
	Education Services (OPM)		$	56,074	-	56,074	51,179	-	51,179	10%	10%
	Professional Assessment			30,708	-	30,708	29,668	-	29,668	4%	4%
	Corporate Learning			27,633		27,633	27,547	-	27,547	0%	-2%
Total Revenue				114,415	-	114,415	108,394	-	108,394	6%	5%
Contribution to Profit (A)				5,341	2,170	7,511	5,506	524	6,030	-3%	24%


Corporate Expenses (A)				(88,179)	10,380	(77,799)	(90,494)	13,516	(76,978)	-3%	1%

Operating Income			$	97,271	27,923	125,194	91,571	14,769	106,340	6%	5%

		(A) See the accompanying Notes to Unaudited Financial Statements for a description of each Adjustment.
		NM- Not Meaningful

JOHN WILEY & SONS, INC.
UNAUDITED CONDENSED STATEMENTS OF FINANCIAL POSITION
(in thousands)

			October 31,				April 30,
			2017		2016		2017
Current Assets
	Cash and cash equivalents	$	72,871	$	267,410	$	58,516
	Accounts receivable		193,506		212,590		188,679
	Inventories		43,540		51,779		47,852
	Prepaid and other		54,092		147,753		64,688
	Total Current Assets		364,009		679,532		359,735
Product Development Assets			68,124		38,574		70,955
Royalty Advances			12,500		10,353		28,320
Technology, Property and Equipment			274,624		248,281		252,488
Intangible Assets			828,524		822,962		828,099
Goodwill			999,546		974,068		982,101
Other Assets			85,503		79,684		84,519
	Total Assets	$	2,632,830	$	2,853,454	$	2,606,217

Current Liabilities
	Accounts and royalties payable	$	150,888	$	158,985	$	139,206
	Deferred revenue		244,328		223,307		436,235
	Accrued employment costs		79,827		69,072		98,185
	Accrued income taxes		17,711		8,515		22,222
	Accrued pension liability		5,826		5,459		5,776
	Other accrued liabilities		83,615		77,484		86,232
	Total Current Liabilities		582,195		542,822		787,856
Long-Term Debt			562,962		883,992		365,000
Accrued Pension Liability			208,382		181,735		214,597
Deferred Income Tax Liabilities			156,397		191,729		160,491
Other Long-Term Liabilities			75,844		71,675		75,136
Shareholders' Equity			1,047,050		981,501		1,003,137
	Total Liabilities & Shareholders' Equity	$	2,632,830	$	2,853,454	$	2,606,217

JOHN WILEY & SONS, INC.
UNAUDITED CONDENSED STATEMENTS OF FREE CASH FLOW
(in thousands)

			Six Months Ended
			October 31,
			2017	2016
Operating Activities:
	Net income	$	69,284	19,549
	Amortization of intangibles		23,802	24,826
	Amortization of product development spending		20,246	18,701
	Depreciation of technology, property and equipment		34,775	34,092
	Non-cash charges and credits		56,225	113,852
	Net change in operating assets and liabilities		(250,689)	(297,114)
	Cash Used for Operating Activities		(46,357)	(86,094)

Investments in organic growth:
	Additions to technology, property and equipment		(56,252)	(52,728)
	Product development spending		(15,145)	(16,604)
	Free Cash Flow less Product Development Spending		(117,754)	(155,426)

Other Investing and Financing Activities:
	Acquisitions, net of cash		(6,097)	(135,753)
	Net debt borrowings		196,589	278,985
	Change in book overdrafts		(2,629)	(5,861)
	Cash dividends		(36,699)	(35,883)
	Purchase of treasury shares		(29,257)	(21,289)
	Proceeds from exercise of stock options and other		7,347	15,890
	Cash Provided by Investing and Financing Activities		129,254	96,089

Effects of Exchange Rate Changes on Cash			2,855	(37,059)

Increase (Decrease) in Cash and Cash Equivalents for Period		$	14,355	(96,396)

RECONCILIATION TO GAAP PRESENTATION

Investing Activities:
	Product development spending	$	(15,145)	(16,604)
	Additions to technology, property and equipment		(56,252)	(52,728)
	Acquisitions, net of cash		(6,097)	(135,753)
	Cash Used for Investing Activities	$	(77,494)	(205,085)

Financing Activities:
Cash Provided by Investing and Financing Activities		$	129,254	96,089
Excluding:
	Acquisitions, net of cash		(6,097)	(135,753)
	Cash Provided by Financing Activities	$	135,351	231,842


Free Cash Flow less Product Development Spending:

The Company provides financial measures referred to as "Free Cash Flow less Product Development Spending." Free Cash Flow less Product Development Spending is defined as "cash flow from operating activities, less book composition and other product development and capital spending." Management believes this metric provides additional information to investors to facilitate the comparison of past and present results. This metric is also used internally by management in evaluating results. This non-GAAP measure is not intended to replace the financial results reported in accordance with US Generally Accepted Accounting Principles.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, 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/ Brian A. Napack
		Brian A. Napack
		President and
		Chief Executive Officer

	By	/s/ John A. Kritzmacher
		John A. Kritzmacher
		Chief Financial Officer and
		Executive Vice President, Technology and Operations

Dated: December 6, 2017

JOHN WILEY & SONS, INC. - FORM 8-K - December 6, 2017

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