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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT 1934

For the quarterly period ended October 31, 2018

OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_____ to _____
Commission File No. 001-11507


JOHN WILEY & SONS, INC.
(Exact name of Registrant as specified in its charter)

NEW YORK
 
13-5593032
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
     
111 RIVER STREET, HOBOKEN, NJ
 
07030
(Address of principal executive offices)
 
Zip Code

 
(201) 748-6000
 
 
Registrant’s telephone number including area code
 

 
NOT APPLICABLE
 
Former name, former address, and former fiscal year, if changed since last report

Indicate by check mark, whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the securities exchange act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes    No

Indicate by check mark, whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes    No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer 
Accelerated filer 
Non-accelerated filer 
Smaller reporting company 
 
Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes    No

The number of shares outstanding of each of the Registrant’s classes of Common Stock as of November 30, 2018 were:

Class A, par value $1.00 – 48,120,789
Class B, par value $1.00 – 9,142,898

JOHN WILEY & SONS, INC. AND SUBSIDIARIES
INDEX

PART I - FINANCIAL INFORMATION
   
         
Item 1.
 
Financial Statements
   
         
     
5
         
     
6
         
     
7
         
     
8
         
   
Notes to Unaudited Condensed Consolidated Financial Statements
   
      9
      9
      12
      18
      19
      19
      20
      21
      21
      22
      22
      23
      23
      24
      24
         
Item 2.
    25
         
Item 3.
    37
         
Item 4.
    38
         
PART II - OTHER INFORMATION
   
         
Item 1.
    39
         
Item 1a.
    39
         
Item 2.
    39
         
Item 6.
    39
         
  40


2

Cautionary Notice Regarding Forward-Looking Statements “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:

This report contains certain “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 concerning our business, consolidated financial condition and results of operations. The Securities and Exchange Commission (“SEC”) encourages companies to disclose forward-looking information so that investors can better understand a company’s prospects and make informed investment decisions. Forward-looking statements are subject to risks and uncertainties, many of which are outside our control, which could cause actual results to differ materially from these statements. Therefore, you should not rely on any of these forward-looking statements. Forward-looking statements can be identified by such words as “anticipates,” “believes,” “plan,” “assumes,” “could,” “should,” “estimates,” “expects,” “intends,” “potential,” “seek,” “predict,” “may,” “will” and similar references to future periods. All statements other than statements of historical facts included in this report regarding our strategies, prospects, financial condition, operations, costs, plans and objectives are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding our fiscal year 2019 outlook, operations, performance, and financial condition.  Reliance should not be placed on forward-looking statements, as actual results may differ materially from those in any forward-looking statements. Any such forward-looking statements are based upon many assumptions and estimates that are inherently subject to uncertainties and contingencies, many of which are beyond our control, and are subject to change based on many important factors. Such factors include, but are not limited to (i) the level of investment in new technologies and products; (ii) subscriber renewal rates for our journals; (iii) the financial stability and liquidity of journal subscription agents; (iv) the consolidation of book wholesalers and retail accounts; (v) the market position and financial stability of key online retailers; (vi) the seasonal nature of our educational business and the impact of the used book market; (vii) worldwide economic and political conditions; (viii) our ability to protect our copyrights and other intellectual property worldwide; (ix) our ability to successfully integrate acquired operations and realize expected opportunities; (x) achievement of targeted run rate savings through restructuring activities; and (xi) other factors detailed from time to time in our filings with the SEC. We undertake no obligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances.

Please refer to Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for important factors that we believe could cause actual results to differ materially from those in our forward-looking statements. Any forward-looking statement made by us in this report is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Non-GAAP Financial Measures:

We present financial information that conforms to Generally Accepted Accounting Principles in the United States of America (“U.S. GAAP”). We also present financial information that does not conform to U.S. GAAP, which we refer to as non-GAAP.

In this report, we may present the following non-GAAP performance measures:

Adjusted Earnings Per Share “(Adjusted EPS)”;
Free Cash Flow less Product Development Spending;
Adjusted Operating Income and margin;
Adjusted Contribution to Profit and margin; and
Results on a constant currency basis.

Management uses these non-GAAP performance measures as supplemental indicators of our operating performance and financial position as well for internal reporting and forecasting purposes, when publicly providing its outlook, to evaluate our performance and to evaluate and calculate incentive compensation. We present these non-GAAP performance measures in addition to U.S. GAAP financial results because we believe that these non-GAAP performance measures provide useful information to certain investors and financial analysts for operational trends and comparisons across accounting periods. The use of these non-GAAP performance measures provides a consistent basis to evaluate operating profitability and performance trends by excluding items that we do not consider to be controllable activities for this purpose.

For example:

Adjusted EPS, Adjusted Operating Profit, and Adjusted Contribution to Profit provide a more comparable basis to analyze operating results and earnings and are measures commonly used by shareholders to measure our performance.
Free Cash Flow less Product Development Spending helps assess our ability, over the long term, to create value for our shareholders as it represents cash available to repay debt, pay common dividends and fund share repurchases and new acquisitions.
Results on a constant currency basis removes distortion from the effects of foreign currency movements to provide better comparability of our business trends from period to period. We measure our performance before the impact of foreign currency (or at “constant currency”), which means that we apply the same foreign currency exchange rates for the current and equivalent prior period.

3

In addition, we have historically provided these or similar non-GAAP performance measures and understand that some investors and financial analysts find this information helpful in analyzing our operating margins, and net income and comparing our financial performance to that of our peer companies and competitors. Based on interactions with investors, we also believe that our non-GAAP performance measures are regarded as useful to our investors as supplemental to our U.S. GAAP financial results, and that there is no confusion regarding the adjustments or our operating performance to our investors due to the comprehensive nature of our disclosures. We have not provided our 2019 outlook for the most directly comparable U.S. GAAP financial measures, as they are not available without unreasonable effort due to the high variability, complexity, and low visibility with respect to certain items, including restructuring charges and credits, gains and losses on foreign currency, and other gains and losses. These items are uncertain, depend on various factors, and could be material to our consolidated results computed in accordance with U.S. GAAP.

Non-GAAP performance measures do not have standardized meanings prescribed by U.S. GAAP and therefore may not be comparable to the calculation of similar measures used by other companies and should not be viewed as alternatives to measures of financial results under U.S. GAAP. The adjusted metrics have limitations as analytical tools and should not be considered in isolation from or as a substitute for U.S. GAAP information. It does not purport to represent any similarly titled U.S. GAAP information and is not an indicator of our performance under U.S. GAAP. Non-U.S. GAAP financial metrics that we present may not be comparable with similarly titled measures used by others. Investors are cautioned against placing undue reliance on these non-U.S. GAAP measures.

4


JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Dollars in thousands

   
October 31, 2018
   
April 30, 2018
 
   
(Unaudited)
       
Assets:
           
Current Assets
           
Cash and cash equivalents
 
$
115,603
   
$
169,773
 
Accounts receivable, net
   
236,207
     
212,377
 
Inventories, net
   
35,084
     
39,489
 
Prepaid expenses and other current assets
   
61,973
     
58,332
 
Total Current Assets
   
448,867
     
479,971
 
                 
Product Development Assets
   
64,716
     
78,814
 
Royalty Advances, net
   
15,331
     
37,058
 
Technology, Property and Equipment, net
   
286,308
     
289,934
 
Intangible Assets, net
   
787,629
     
848,071
 
Goodwill
   
986,248
     
1,019,801
 
Other Non-Current Assets
   
91,732
     
85,802
 
Total Assets
 
$
2,680,831
   
$
2,839,451
 
                 
Liabilities and Shareholders' Equity:
               
Current Liabilities
               
Accounts payable
 
$
71,555
   
$
90,097
 
Accrued royalties
   
94,438
     
73,007
 
Contract liability (Deferred revenue)
   
237,184
     
486,353
 
Accrued employment costs
   
69,792
     
116,179
 
Accrued income taxes
   
18,436
     
13,927
 
Other accrued liabilities
   
78,651
     
94,748
 
Total Current Liabilities
   
570,056
     
874,311
 
                 
Long-Term Debt
   
537,306
     
360,000
 
Accrued Pension Liability
   
167,722
     
190,301
 
Deferred Income Tax Liabilities
   
140,338
     
143,518
 
Other Long-Term Liabilities
   
96,017
     
80,764
 
Total Liabilities
   
1,511,439
     
1,648,894
 
                 
Shareholders’ Equity
               
Preferred Stock, $1 par value: Authorized – 2 million, Issued 0
   
     
 
Class A Common Stock, $1 par value: Authorized-180 million Issued - 70,124,812 and 70,110,603 as of October 31, 2018 and April 30, 2018, respectively
   
70,125
     
70,111
 
Class B Common Stock, $1 par value: Authorized-72 million Issued - 13,056,858 and 13,071,067 as of October 31, 2018 and April 30, 2018, respectively
   
13,057
     
13,071
 
Additional paid-in-capital
   
417,718
     
407,120
 
Retained earnings
   
1,870,609
     
1,834,057
 
Accumulated other comprehensive loss
   
(488,564
)
   
(439,580
)
Treasury stock (Class A - 22,000,203 and 21,853,257 as of October 31, 2018 and April 30, 2018, respectively; Class B - 3,917,574 and 3,917,574 as of October 31, 2018 and April 30, 2018, respectively)
   
(713,553
)
   
(694,222
)
Total Shareholders’ Equity
   
1,169,392
     
1,190,557
 
Total Liabilities and Shareholders' Equity
 
$
2,680,831
   
$
2,839,451
 

See accompanying notes to the unaudited condensed consolidated financial statements.

5


JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED
Dollars in thousands except per share information

   
Three Months Ended
October 31,
   
Six Months Ended
October 31,
 
   
2018
   
2017 (1)
   
2018
   
2017 (1)
 
Revenue, net
 
$
448,622
   
$
451,731
   
$
859,523
   
$
863,175
 
                                 
Costs and Expenses
                               
Cost of sales
   
120,157
     
119,865
     
234,548
     
234,653
 
Operating and administrative expenses (1)
   
248,627
     
241,301
     
502,400
     
487,039
 
Restructuring and related charges (credits)
   
9,996
     
(1,406
)
   
3,910
     
24,323
 
Amortization of intangibles
   
12,367
     
11,183
     
25,050
     
23,802
 
Total Costs and Expenses
   
391,147
     
370,943
     
765,908
     
769,817
 
                                 
Operating Income
   
57,475
     
80,788
     
93,615
     
93,358
 
                                 
Interest Expense
   
(3,608
)
   
(3,455
)
   
(6,404
)
   
(6,728
)
Foreign Exchange Transaction Losses
   
(54
)
   
(416
)
   
(1,783
)
   
(5,552
)
Interest and Other Income
   
2,509
     
2,559
     
4,975
     
4,494
 
                                 
                                 
Income Before Taxes
   
56,322
     
79,476
     
90,403
     
85,572
 
Provision for Income Taxes
   
12,538
     
19,428
     
20,324
     
16,288
 
                                 
Net Income
 
$
43,784
   
$
60,048
   
$
70,079
   
$
69,284
 
                                 
Earnings Per Share
                               
Basic
 
$
0.76
   
$
1.06
   
$
1.22
   
$
1.22
 
Diluted
 
$
0.76
   
$
1.04
   
$
1.21
   
$
1.20
 
                                 
Cash Dividends Per Share
                               
Class A Common
 
$
0.33
   
$
0.32
   
$
0.66
   
$
0.64
 
Class B Common
 
$
0.33
   
$
0.32
   
$
0.66
   
$
0.64
 
                                 
Weighted Average Number of Common Shares Outstanding
                               
Basic
   
57,379
     
56,875
     
57,392
     
56,948
 
Diluted
   
57,870
     
57,554
     
57,955
     
57,633
 

See accompanying notes to the unaudited condensed consolidated financial statements.

(1)
 Due to the retrospective adoption of Accounting Standards Update (“ASU”) 2017-07, total net benefits of $2.0 million and $3.9 million related to the non-service components of defined benefit and other post-employment benefit plans were reclassified from Operating and Administrative Expenses to Interest and Other Income for the three and six months ended October 31, 2017, respectively. Total net benefits related to the non-service components of defined benefit and other post-employment benefit plans were $2.1 million and $4.5 million for the three and six months ended October 31, 2018, respectively. Refer to Note 2, "Recent Accounting Standards," in the Notes to Condensed Consolidated Financial Statements for more information.

6


JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME – UNAUDITED
Dollars in thousands

   
Three Months Ended
October 31,
   
Six Months Ended
October 31,
 
   
2018
   
2017
   
2018
   
2017
 
Net Income
 
$
43,784
   
$
60,048
   
$
70,079
   
$
69,284
 
                                 
Other Comprehensive (Loss) Income:
                               
Foreign currency translation adjustment
   
(20,424
)
   
5,636
     
(60,749
)
   
33,041
 
Unamortized retirement costs, tax provision (benefit) of $1,229, $(131), $3,717, and $(708), respectively
   
4,387
     
(579
)
   
13,198
     
(2,526
)
Unrealized gain on interest rate swaps, tax provision of $245, $249, $449 and $28, respectively
   
(781
)
   
407
     
(1,433
)
   
46
 
Total Other Comprehensive (Loss) Income
   
(16,818
)
   
5,464
     
(48,984
)
   
30,561
 
                                 
Comprehensive Income
 
$
26,966
   
$
65,512
   
$
21,095
   
$
99,845
 

See accompanying notes to the unaudited condensed consolidated financial statements.

7


JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW – UNAUDITED
Dollars in thousands

   
Six Months Ended
October 31,
 
   
2018
   
2017
 
Operating Activities
           
Net income
 
$
70,079
   
$
69,284
 
Adjustments to reconcile net income to net cash used in operating activities:
               
Amortization of intangibles
   
25,050
     
23,802
 
Amortization of product development spending
   
20,093
     
20,246
 
Depreciation and amortization of technology, property and equipment
   
35,845
     
34,775
 
Restructuring charges
   
3,910
     
24,323
 
Stock-based compensation expense
   
8,882
     
2,536
 
Royalty advances
   
(50,580
)
   
(46,860
)
Earned royalty advances
   
71,317
     
62,993
 
Impairment of publishing brand
   
     
3,600
 
Other non-cash credits
   
7,917
     
9,634
 
Net change in operating assets and liabilities
   
(313,610
)
   
(250,145
)
Net Cash Used in Operating Activities
   
(121,097
)
   
(45,812
)
Investing Activities
               
Product development spending
   
(7,815
)
   
(17,927
)
Additions to technology, property and equipment
   
(34,560
)
   
(53,469
)
Acquisitions of publication rights and other
   
(2,795
)
   
(6,097
)
Net Cash Used in Investing Activities
   
(45,170
)
   
(77,493
)
Financing Activities
               
Repayment of long-term debt
   
(65,800
)
   
(78,492
)
Borrowing of long-term debt
   
245,075
     
275,081
 
Purchase of treasury shares
   
(24,994
)
   
(29,257
)
Change in book overdrafts
   
(3,066
)
   
(2,629
)
Cash dividends
   
(38,033
)
   
(36,699
)
Net proceeds from exercise of stock options and other
   
7,283
     
7,347
 
Net Cash Provided by Financing Activities
   
120,465
     
135,351
 
Effects of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash (1)
   
(8,368
)
   
2,855
 
Cash, Cash Equivalents and Restricted Cash (1)
               
(Decrease)/Increase for the Period
   
(54,170
)
   
14,901
 
Balance at Beginning of Period
   
170,257
     
58,516
 
Balance at End of Period
 
$
116,087
   
$
73,417
 
Cash Paid During the Period for:
               
Interest
 
$
5,713
   
$
6,471
 
Income taxes, net of refunds
 
$
18,404
   
$
26,398
 

See the accompanying notes to the unaudited condensed consolidated financial statements.

(1)
Due to the retrospective adoption of ASU 2016-18, we are now required to include restricted cash as part of the change in cash, cash equivalents, and restricted cash. As a result, amounts which were previously classified as cash flows from operating activities have been reclassified as they are recognized in the total change in cash, cash equivalents and restricted cash. Refer to Note 2, "Recent Accounting Standards," in the Notes to Condensed Consolidated Financial Statements for more information.

8


JOHN WILEY & SONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 Basis of Presentation

Throughout this report, when we refer to “Wiley,” the “Company,” “we,” “our,” or “us,” we are referring to John Wiley & Sons, Inc. and all our subsidiaries, except where the context indicates otherwise.

Our unaudited Condensed Consolidated Financial Statements include all the accounts of the Company and our subsidiaries. We have eliminated all significant intercompany transactions and balances in consolidation. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Condensed Consolidated Financial Condition, Results of Operations, Comprehensive Income and Cash Flows for the periods presented. Operating results for the interim period are not necessarily indicative of the results expected for the full year. All amounts are in thousands, except per share amounts, and approximate due to rounding. These financial statements should be read in conjunction with the most recent audited consolidated financial statements included in our Form 10-K for the fiscal year ended April 30, 2018 as filed with the SEC on June 29, 2018 (“2018 Form 10-K”).

Our Condensed Consolidated Financial Statements were prepared in accordance with the interim reporting requirements of the SEC. As permitted under those rules, annual footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted. The preparation of our Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Certain prior year amounts have been reclassified to conform to the current year’s presentation.

Note 2 Recent Accounting Standards

Recently Adopted Accounting Standards

In May 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting,” which clarifies when changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. Under the new guidance, modification accounting is only required if the fair value, vesting conditions or classification (equity or liability) of the new award are different from the original award immediately before the original award is modified. We adopted ASU 2017-09 on May 1, 2018 and there was no impact to our condensed consolidated financial statements. The new guidance must be applied prospectively to awards modified on or after the adoption date. The future impact of ASU 2017-09 will be dependent on the nature of future stock award modifications.

In March 2017, the FASB issued ASU 2017-07, “Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.” The guidance requires that the service cost component of net pension and postretirement benefit costs be reported in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period, while the other components of net benefit costs must be reported separately from the service cost component and below operating income. The guidance also allows only the service cost component to be eligible for capitalization when applicable. We adopted ASU 2017-07 on May 1, 2018. The new guidance must be applied retrospectively for the presentation of net benefit costs in the income statement and prospectively for the capitalization of the service cost component of net benefit costs.

The effect of retrospectively adopting this guidance resulted in a reclassification of net benefits of $2.0 million and $3.9 million from Operating and Administrative Expenses to Interest and Other Income on the Condensed Consolidated Statement of Operations for the three and six months ended October 31, 2017, respectively. The amount included in Interest and Other Income on the Condensed Consolidated Statement of Operations for the three and six months ended October 31, 2018 was a net benefit of $2.1 million and $4.5 million, respectively. We do not capitalize any service costs.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business”, which clarifies the definition of a business in order to allow for the evaluation of whether transactions should be accounted for as acquisitions or disposals of assets or business. We adopted ASU 2017-01 on May 1, 2018. The future impact of ASU 2017-01 will be dependent upon the nature of future acquisitions or dispositions made by us.

9

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. ASU 2016-18 requires that entities include restricted cash and restricted cash equivalents with cash and cash equivalents in the beginning-of-period and end-of-period total amounts shown on the Statement of Cash Flows. We adopted ASU 2016-18 on May 1, 2018. Retrospective transition method is to be applied to each period presented. As a result of this retrospective adoption, the reclassification of restricted cash into a change in total cash resulted in a reduction in Cash Used in Operating Activities of $0.5 million for the six months ended October 31, 2017. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Statement of Financial Position that sum to the total of the same such amounts shown in the Condensed Consolidated Statement of Cash Flows.

Balance at the Beginning of Period
 
April 30, 2018
   
April 30, 2017
 
Cash and cash equivalents
 
$
169,773
   
$
58,516
 
Restricted cash included in Prepaid expenses and other current assets
   
484
     
 
Total cash, cash equivalents, and restricted cash shown in the Condensed Consolidated Statement of Cash Flows
 
$
170,257
   
$
58,516
 

Balance at the End of Period
 
October 31, 2018
   
October 31, 2017
 
Cash and cash equivalents
 
$
115,603
   
$
72,871
 
Restricted cash included in Prepaid expenses and other current assets
   
484
     
546
 
Total cash, cash equivalents, and restricted cash shown in the Condensed Consolidated Statement of Cash Flows
 
$
116,087
   
$
73,417
 

In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory”, which simplifies the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. Current U.S. GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. The new guidance states that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Consequently, the amendments in this Standard eliminate the exception for an intra-entity transfer of an asset other than inventory. We adopted ASU 2016-16 on May 1, 2018. The adoption of ASU 2016-16 did not have a material impact to our condensed consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which provides clarification on classifying a variety of activities within the Statement of Cash Flows. We adopted ASU 2016-15 on May 1, 2018. The adoption of ASU 2016-15 did not have a material impact to our condensed consolidated statements of cash flows.

In January 2016, the FASB issued ASU 2016-01, “Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.” Subsequently, the FASB issued ASU 2018-03, “Technical Corrections and Improvements to Financial Instruments-Overall.”  ASU 2016-01 requires equity investments except those under the equity method of accounting to be measured at fair value with the changes in fair value recognized in net income. The amendment simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. In addition, it also requires enhanced disclosures about investments. We adopted ASU 2016-01 on May 1, 2018. The adoption of ASU 2016- 01 did not have a material impact to our condensed consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers," (Topic 606) which superseded most existing revenue recognition guidance. We adopted ASU 2014-09 on May 1, 2018. The standard allows for either "full retrospective" adoption, meaning the standard is applied to all periods presented, or "modified retrospective" adoption, meaning the standard is applied only to the most current period presented in the financial statements. Subsequently, the FASB issued ASU 2016-08, "Revenue from Contracts with Customers (Topic 606) – Principal versus Agent Considerations", ASU 2016-10, "Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing", ASU 2016-12, "Revenue from Contracts with Customers (Topic 606) – Narrow Scope Improvements and Practical Expedients", and ASU 2016-20, "Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers," which provide clarification and additional guidance related to ASU 2014-09. We also adopted ASU 2016-08, ASU 2016-10, ASU 2016-12, and ASU 2016-20 with ASU 2014-09 (collectively, the “new revenue standard”) on May 1, 2018.

We utilized a comprehensive approach to assess the impact of the new revenue standard on our contract portfolio by reviewing our current accounting policies and practices to identify differences that would result from applying the new revenue standard to our revenue contracts. Additionally, we reviewed customer agreements representative of our business models and assessed whether changes in revenue recognition were appropriate under the new revenue standard.

10

We adopted the new revenue standard as of May 1, 2018, using the modified retrospective method. The adoption of the new revenue standard did not have a material impact to our consolidated revenues, financial position, or results of operations. Upon adoption, we recorded an immaterial net increase to opening retained earnings resulting from the change in timing of when certain components of our revenue is recognized as required under the new revenue standard as compared to historical policies. Such changes include:

(i)
perpetual licenses granted in connection with other deliverables; revenue that was previously recognized over the life of the associated subscription for future content is now recognized at a point in time, which is when access to content is initially granted,
(ii)
customers’ unexercised rights; revenue which was previously recognized at the end of a pre-determined period for situations where we have received a nonrefundable payment for a customer to receive a good or service and the customer has not exercised such right is now recognized as revenue in proportion to the pattern of rights exercised by the customer,
(iii)
recognition of estimated revenue from royalty agreements in the period of usage, and
(iv)
recognition of revenue for certain arrangements with minimum guarantees on a time-based (straight-line) basis due to a stand-ready obligation to provide additional rights to content.

The adoption of the new revenue standard resulted in the discontinuance of the historical practice of presenting accounts receivable and deferred revenue balances on a net basis for some of our subscription licensing agreements where we have invoiced a customer in advance of the related revenue being recognized and payment has not yet been received. As of April 30, 2018, the amounts that were previously netted down from accounts receivable and deferred revenue were $59.5 million.

In addition, the adoption of the new revenue standard resulted in the reclassification of the sales return reserve provision to Contract Liability (Deferred Revenue) from Accounts Receivable, Net on the Condensed Consolidated Statement of Financial Position. As of April 30, 2018, the amount was $28.3 million.

The cumulative effect of the changes made to our consolidated balance sheet at May 1, 2018 as a result of adoption of the new revenue standard using the modified retrospective method were as follows:

   
April 30, 2018
   
Adjustments due to Adoption
   
May 1, 2018
 
Assets
                 
Accounts receivable, net
 
$
212,377
   
$
93,349
   
$
305,726
 
Product development assets
   
78,814
     
(3,725
)
   
75,089
 
Technology, property and equipment, net
   
289,934
     
(361
)
   
289,573
 
Other non-current assets
   
85,802
     
5,274
     
91,076
 
Liabilities
                       
Accrued royalties
   
73,007
     
(731
)
   
72,276
 
Contract liability (Deferred revenue)
   
486,353
     
89,364
     
575,717
 
Deferred income tax liabilities
   
143,518
     
1,400
     
144,918
 
Retained earnings
 
$
1,834,057
   
$
4,503
   
$
1,838,560
 

The impact of the adoption of the new revenue standard on the Condensed Consolidated Statements of Income was $10.2 million and $11.5 million in revenue, net, for the three months and six months ended October 31, 2018, respectively, and was $2.4 million in cost of sales for both the three and six months ended October 31, 2018. The impact to the Condensed Consolidated Statement of Financial Position was not material by line item, except for the amount related to the netting down of the accounts receivable and deferred revenue as described above and a reclassification of the sales return reserve provision to contract liability from accounts receivable, net. As of October 31, 2018, the amount that would have been netted down from accounts receivable, net and deferred revenue prior to the adoption of the new revenue standard would have been $5.8 million. Due to the adoption of the new revenue standard, the sales return reserve provision amount that is included in Contract Liability (Deferred Revenue) on the Condensed Consolidated Statement of Financial Position as of October 31, 2018 was $31.1 million.

Recently Issued Accounting Standards

In August 2018, the FASB issued ASU 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.” ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective for us on May 1, 2020, and interim periods within that fiscal year, with early adoption permitted. We are currently assessing the impact the new guidance will have on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-14, “Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans.” ASU 2018-14 removes certain disclosures that are not considered cost beneficial, clarifies certain required disclosures and added additional disclosures. The standard is effective for us on May 1, 2021, with early adoption permitted. The amendments in ASU 2018-14 would need to be applied on a retrospective basis.  We are currently assessing the impact the new guidance will have on our disclosures.

11

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 removes certain disclosures, modifies certain disclosures and added additional disclosures. The standard is effective for us on May 1, 2020, with early adoption permitted. Certain disclosures in ASU 2018-13 would need to be applied on a retrospective basis and others on a prospective basis. We are currently assessing the impact the new guidance will have on our disclosures.

In February 2018, the FASB issued ASU 2018-02 “Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The standard is effective for us on May 1, 2019, and interim periods within that fiscal year, with early adoption permitted. We are currently assessing the impact the new guidance will have on our consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities,” to simplify and improve the application and financial reporting of hedge accounting. Subsequently, in November 2018, the FASB issued ASU 2018-16, “Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes”.  ASU 2017-12 eases the requirements for measuring and reporting hedge ineffectiveness and clarifies that changes in the fair value of hedging instruments for cash flow, net investment, and fair value hedges should be reflected in the same income statement line item as the earnings effect of the hedged item. The guidance also permits entities to designate specific components in cash flow and interest rate hedges as the hedged risk, instead of using total cash flows. ASU 2018-16 allows the use of the OIS rate based on the SOFR as a U.S. benchmark interest rate for hedge accounting purposes. These ASUs are effective for us on May 1, 2019, with early adoption permitted. We are currently assessing the impact the new guidance will have on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, “Intangibles–Goodwill and Other (Topic 350): “Simplifying the Test for Goodwill Impairment”, which simplifies the measurement of a potential goodwill impairment charge by eliminating the requirement to calculate an implied fair value of the goodwill based on the fair value of a reporting unit’s other assets and liabilities. The new guidance eliminates the implied fair value method and instead measures a potential impairment charge based on the excess of a reporting unit’s carrying value compared to its fair value. The impairment charge cannot exceed the total amount of goodwill allocated to that reporting unit. The standard is effective for us on May 1, 2020, with early adoption permitted. Based on our most recent annual goodwill impairment test completed in fiscal year 2018, we expect no initial impact on adoption.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.” Subsequently, in November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses”.  ASU 2016-13 requires entities to measure all expected credit losses for most financial assets held at the reporting date based on an expected loss model which includes historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. ASU 2016-13 also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. ASU 2016-13 and ASU 2018-19 are effective for us on May 1, 2020, including interim periods within those fiscal periods, with early adoption permitted. We are currently assessing the impact the new guidance will have on our consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)”. Subsequently, in July 2018 the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements” and ASU 2018-10, “Codification Improvements to Topic 842, Leases”.  ASU 2016-02 requires an entity to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement, and presentation of expenses will depend on classification as a finance or operating lease. Similar modifications have been made to lessor accounting in-line with revenue recognition guidance. The standard is effective for us on May 1, 2019, with early adoption permitted. Adoption requires application of the new guidance to the beginning of the earliest period presented using a modified retrospective approach. ASU 2018-11 provides for an additional (and optional) transition method whereby we can recognize a cumulative-effect adjustment to the opening retained earnings in the period of adoption. In addition, ASU 2018-11 provides for a practical expedient to not separate nonlease components from the associated lease component if certain conditions are met. We are currently assessing the impact the new guidance will have on our consolidated financial statements.

Note 3 Revenue Recognition, Contracts with Customers

Revenue from contracts with customers is recognized using a five-step model consisting of the following: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) we satisfy a performance obligation. Performance obligations are satisfied when we transfer control of a good or service to a customer, which can occur over time or at a point in time. The amount of revenue recognized is based on the consideration to which we expect to be entitled in exchange for those goods or services, including the expected value of variable consideration. The customer’s ability and intent to pay the transaction price is assessed in determining whether a contract exists with the customer. If collectability of substantially all the consideration in a contract is not probable, consideration received is not recognized as revenue unless the consideration is nonrefundable, and we no longer have an obligation to transfer additional goods or services to the customer or collectability becomes probable.

12

Disaggregation of Revenue

The following tables present our revenue from contracts with customers disaggregated by segment and product type for the three and six months ended October 31, 2018 and 2017:

   
Three Months Ended October 31,
 
   
2018
   
2017
 
   
Research
   
Publishing
   
Solutions
   
Total
   
Research
   
Publishing
   
Solutions
   
Total
 
Research:
                                               
Journals Subscriptions
 
$
163,751
   
$
   
$
   
$
163,751
   
$
170,163
   
$
   
$
   
$
170,163
 
Open Access
   
13,780
     
     
     
13,780
     
9,350
     
     
     
9,350
 
Licensing, Reprints, Backfiles and Other
   
41,749
     
     
     
41,749
     
41,329
     
     
     
41,329
 
Publishing Technology Services (Atypon)
   
9,365
     
     
     
9,365
     
8,028
     
     
     
8,028
 
Publishing:
                                                               
STM and Professional Publishing
   
     
66,902
     
     
66,902
     
     
71,460
     
     
71,460
 
Education Publishing
   
     
52,068
     
     
52,068
     
     
57,711
     
     
57,711
 
Course Workflow (WileyPLUS)
   
     
18,429
     
     
18,429
     
     
16,310
     
     
16,310
 
Test Preparation and Certification
   
     
8,377
     
     
8,377
     
     
7,919
     
     
7,919
 
Licensing, Distribution, Advertising and Other
   
     
11,723
     
     
11,723
     
     
11,585
     
     
11,585
 
Solutions:
                                                               
Education Services (OPM)
   
     
     
29,877
     
29,877
     
     
     
29,737
     
29,737
 
Professional Assessment
   
     
     
17,268
     
17,268
     
     
     
15,821
     
15,821
 
Corporate Learning
   
     
     
15,333
     
15,333
     
     
     
12,318
     
12,318
 
Total
 
$
228,645
   
$
157,499
   
$
62,478
   
$
448,622
   
$
228,870
   
$
164,985
   
$
57,876
   
$
451,731
 

   
Six Months Ended October 31,
 
   
2018
   
2017
 
   
Research
   
Publishing
   
Solutions
   
Total
   
Research
   
Publishing
   
Solutions
   
Total
 
Research:
                                               
Journals Subscriptions
 
$
329,709
   
$
   
$
   
$
329,709
   
$
338,488
   
$
   
$
   
$
338,488
 
Open Access
   
24,723
     
     
     
24,723
     
18,153
     
     
     
18,153
 
Licensing, Reprints, Backfiles and Other
   
81,237
     
     
     
81,237
     
79,559
     
     
     
79,559
 
Publishing Technology Services (Atypon)
   
17,968
     
     
     
17,968
     
16,297
     
     
     
16,297
 
Publishing:
                                                               
STM and Professional Publishing
   
     
132,966
     
     
132,966
     
     
135,060
     
     
135,060
 
Education Publishing
   
     
90,299
     
     
90,299
     
     
103,447
     
     
103,447
 
Course Workflow (WileyPLUS)
   
     
19,207
     
     
19,207
     
     
17,520
     
     
17,520
 
Test Preparation and Certification
   
     
19,783
     
     
19,783
     
     
19,409
     
     
19,409
 
Licensing, Distribution, Advertising and Other
   
     
20,165
     
     
20,165
     
     
20,827
     
     
20,827
 
Solutions:
                                                               
Education Services (OPM)
   
     
     
59,037
     
59,037
     
     
     
56,074
     
56,074
 
Professional Assessment
   
     
     
33,067
     
33,067
     
     
     
30,708
     
30,708
 
Corporate Learning
   
     
     
31,362
     
31,362
     
     
     
27,633
     
27,633
 
Total
 
$
453,637
   
$
282,420
   
$
123,466
   
$
859,523
   
$
452,497
   
$
296,263
   
$
114,415
   
$
863,175
 

13

Description of Revenue Generating Activities

We generate our revenues from sales from our three reportable segments. We report our segment information in accordance with the provisions of FASB ASC Topic 280, “Segment Reporting” (“FASB ASC Topic 280”). Our segment reporting structure consists of three reportable segments, which are listed below, and a Corporate category:
Research,
Publishing, and
Solutions.

Research Segment

Included within the Research segment are the following revenue streams:
Journal Subscriptions,
Open Access,
Licensing, Reprints, Backfiles and Other, and
Publishing Technology Services (Atypon).

Journal Subscriptions

We publish approximately 1,700 academic research journals. We sell journal subscriptions directly through our sales representatives, indirectly through independent subscription agents, through promotional campaigns, and through memberships in professional societies for those journals that are sponsored by societies. Journal subscriptions are primarily licensed through contracts for digital content available online through Wiley Online Library. In March 2018, we migrated our Wiley Online Library platform to our Literatum platform, which we acquired as part of our purchase of Atypon Systems, Inc. (Atypon) in fiscal year 2017. Contracts are negotiated by us directly with customers or their subscription agents. Subscription periods typically cover calendar years. Print journals are generally mailed to subscribers directly from independent printers. We do not own or manage printing facilities. Subscription revenue is generally collected in advance.

In a typical journal subscription sale, there is a written agreement between us and our customer that cover multiple years.  However, we typically account for these agreements as one-year contracts because our enforceable rights under the agreements are subject to an annual confirmation and negotiation process with the customer.

In journal subscriptions, multiple performance obligations exist, which include a stand-ready promise to provide access to new content for one year and a perpetual license for access to historical journal content. The transaction price consists of fixed consideration.

We allocate revenue to the stand-ready promise to provide access to new content for one year based on its standalone selling price and the revenue for new content is recognized over time as we have a continuous stand-ready obligation to provide the right of access to additional intellectual property. The allocation of revenue to the perpetual licenses for access to historical journal content is done using the expected cost plus a margin approach as permitted by the new revenue standard. Revenue is recognized at the point in time when access to historical content is initially granted.

Open Access

Under the Author-Funded Access business model, accepted research articles are published subject to payment of Article Publication Charges (“APC”). All Author-Funded Access articles are immediately free to access online. Contributors of Author-Funded Access articles retain many rights and typically license their work under terms that permit re-use. Author-Funded Access offers authors choices in how to share and disseminate their work, and it serves the needs of researchers who may be required by their research funder to make articles freely accessible without embargo. APCs are typically paid by the individual author or by the author’s funder, and payments are often mediated by the author’s institution. We provide specific workflows and infrastructure to authors, funders and institutions to support the requirements of the Author-Funded Access model.

Customers in open access are typically individual educational institutions or a consortium of universities. Under the Author-Funded Access model, we have a signed contract with the customer that contains enforceable rights.

The Author-Funded Access model in a typical model includes an over-time single performance obligation that combines a promise to host the customer’s content on our open access platform, and a promise to provide a discount on APCs of eligible users (as defined in the contract) in exchange for an upfront payment. Enforceable right to payment occurs over time as we fulfill our obligation to provide a discount to eligible users, as defined, on future APCs. Therefore, the upfront payment is deferred and recognized over time.

14

Licensing, Reprints, Backfiles and Other

Licensing, Reprints, Backfiles, and Other includes advertising, backfile sales, the licensing of publishing rights, journal and article reprints, and individual article sales. A backfile license provides access to a historical collection of Wiley journals, generally for a one-time fee. 

Within Licensing, the revenue derived from these contracts is primarily comprised of advance payments, including minimum guarantees and sales- or usage-based royalty agreements. For our sales-or usage-based royalty agreements, we recognize revenue in the period of usage based on the amounts earned. We record revenue under these arrangements for the amounts due and not yet reported to us based on estimates of the sales or usage of these customers and pursuant to the terms of the contracts. We also have certain licenses whereby we receive a non-refundable minimum guarantee against a volume-based royalty throughout the term of the agreement. We recognize revenue for the minimum guarantee on a straight-line basis over the term of the agreement because of the stand-ready promise to provide updates during the subscription period. We recognize volume-based royalty income only when cumulative consideration exceeds the minimum guarantee.

Reprints contracts generally contain a single performance obligation which is the delivery of printed articles. Revenue is recognized at the time of delivery of the printed articles.

For Backfiles, the performance obligation is the granting of a functional intellectual property license. Revenue is recognized at the time the functional intellectual property license is granted.

Other includes our Article Select offering, whereby we have a single performance obligation to our customers to give access to an article through the purchase of a token. The customer redeems the token for access to the article for a 24-hour period. The customer purchases the tokens with an upfront cash payment. Revenue is recognized when access to the article is provided.

Publishing Technology Services (Atypon)

Atypon is a publishing software and service provider that enables scholarly and professional societies and publishers to deliver, host, enhance, market, and manage their content on the web through the Literatum platform. The duration of these contracts is generally multi-year ranging from 2-5 years. Atypon contracts typically include a single performance obligation for the implementation and hosting subscription services. The transaction price is fixed which may include price escalators that are fixed increases per year, and therefore, revenue is recognized upon the initiation of the subscription period and straight-lined over the contract period.

Publishing Segment

Included within the Publishing segment are the following revenue streams:
STM (Scientific, Technical and Medical) and Professional Publishing,
Education Publishing,
Course Workflow (WileyPLUS),
Test Preparation and Certification, and
Licensing, Distribution, Advertising and Other.

STM (Scientific, Technical and Medical) and Professional Publishing and Education Publishing

STM books are sold and distributed globally in digital and print formats through multiple channels, including research libraries and library consortia, independent subscription agents, direct sales to professional society members, bookstores, online booksellers, and other customers.

Professional books, which include business and finance, technology, and other professional categories, as well as the For Dummies brand, are sold to bookstores and online booksellers serving the general public, wholesalers who supply such bookstores, warehouse clubs, college bookstores, individual practitioners, industrial organizations and government agencies. We employ sales representatives who call upon independent bookstores, national and regional chain bookstores, and wholesalers. Sales of professional books also result from direct mail campaigns, telemarketing, online access, advertising, and reviews in periodicals.

Education textbooks and related supplementary material and digital products are sold primarily to bookstores and online booksellers serving both for-profit and nonprofit educational institutions (primarily colleges and universities), and direct-to-students. We employ sales representatives who call on faculty responsible for selecting books to be used in courses, and on the bookstores that serve such institutions and their students. The textbook business is seasonal, with the majority of textbook sales occurring during the July-through-October and December-through-January periods. Book sales for STM, Professional and Education Publishing are generally made on a returnable basis with certain restrictions.

15

Our performance obligations as it relates to STM, Professional and Education Publishing are primarily book products delivered in both print and digital form which could include a single or multiple performance obligations based on the number of International Standard Book Number (“ISBN’s”) purchased.

This revenue stream also includes variable consideration as it relates to discounts and returns for both print and digital books.  Discounts are identifiable by performance obligation and therefore are applied at the point of sale by performance obligation. The process that we use to determine our sales returns and the related reserve provision charged against revenue is based on applying an estimated return rate to current year returnable print book sales. This rate is based upon an analysis of actual historical return experience in the various markets and geographic regions in which we do business. We collect, maintain and analyze significant amounts of sales returns data for large volumes of homogeneous transactions. This allows us to make reasonable estimates of the amount of future returns. All available data is utilized to identify the returns by market and to which fiscal year the sales returns apply. This enables management to track the returns in detail and identify and react to trends occurring in the marketplace, with the objective of being able to make the most informed judgments possible in setting reserve rates. Associated with the estimated sales return reserves, we also include a related reduction in inventory and royalty costs as a result of the expected returns.

As it relates to print and digital books within the STM, Professional and Education Publishing, revenue is recognized at the point when control of product transfers, which for print is upon shipment or for digital when fulfillment of the products has been rendered.

Course Workflow (WileyPLUS)

We offer high-quality online learning solutions, including WileyPLUS, a research-based, online environment for effective teaching and learning that is integrated with a complete digital textbook. Course Workflow customers purchase access codes to utilize the product.  This could include a single or multiple performance obligations based on the number of course ISBN’s purchased. Revenue is recognized from the point in time when the access codes are activated and then over the applicable semester term such product relates to.

Test Preparation and Certification

The Test Preparation and Certification business represents learning solutions and training activities that are delivered to customers directly through online digital delivery platforms. Products include CPAExcel, a modular, digital platform comprised of online self-study, videos, mobile apps, and sophisticated planning tools to help professionals prepare for the CPA exam, and test preparation products for the CFA®, CMA, CIA®, CMT®, FRN®, FINRA, Banking, and PMP® exams.

Test Preparation and Certification contracts are generally three-year agreements. This revenue stream includes multiple performance obligations as it relates to the on-line and printed course materials, including such items as text books, e-books, video lectures, flashcards, study guides and test banks. The transaction price is fixed, however, discounts are offered and returns of certain products are allowed. We allocate revenue to each performance obligation based on its standalone selling price.  Depending on the performance obligation, revenue is recognized at the time the product is delivered and control has passed to the customer or over time due to our stand-ready obligation to provide updates to the customer.

Licensing, Distribution, Advertising and Other

Licensing and distribution services are made available to other publishers under agency arrangements. We also engage in co-publishing titles with international publishers and receive licensing revenue from photocopies, reproductions, translations, and digital uses of our content. Wiley also realizes advertising revenue from branded Web sites (e.g., Dummies.com, etc.) and online applications. Licensing, Distribution, Advertising and Other contracts are generally multi-year agreements.

Revenue derived from our licensing contracts is primarily comprised of advance payments and sales- or usage-based royalties. Revenue for advance payments is recognized at the point in time that the functional intellectual property license is granted. For sales- or usage- based royalties, we record revenue under these arrangements for the amounts due and not yet reported to us based on estimates of the sales or usage of these customers and pursuant to the terms of the contracts.

Solutions Segment

Included within the Solutions segment are the following revenue streams:
Education Services (OPM),
Professional Assessment, and
Corporate Learning.

16

Education Services (OPM)

As student demand for online degree and certificate programs continues to increase, traditional institutions are partnering with Online Program Management (“OPM”) providers to develop and support these programs. Education Services (OPM) include market research, marketing, student recruitment, enrollment support, proactive retention support, academic services to design courses, faculty support, and access to the Engage Learning Management System, which facilitates the online education experience. Revenue is derived from pre-negotiated contracts with institutions that provide for a share of tuition generated from students who enroll in a program. The duration of Education Services (OPM) contracts are generally multi-year agreements ranging from a period of 7-10 years, with some having optional renewal periods.

Education Services (OPM) includes a single performance obligation for the services provided because of the integrated technology and services our institutional clients need to attract, enroll, educate and support students. Consideration is variable since it is based on the number of students enrolled in a program. We begin to recognize revenue at the start of the delivery of the class within a semester, which is also the point at which the variable consideration contingency is resolved.

Professional Assessment

Our Professional Assessment services include pre-hire screening and post-hire personality assessments, which are delivered to business customers through online digital delivery platforms, either directly or through an authorized distributor network of independent consultants, trainers, and coaches. Professional Assessment services contracts are generally one year.

Professional Assessment includes a performance obligation to stand ready to provide assessments to our distributor’s customers or to provide assessments direct to a customer. Revenue for Professional Assessments is recognized at the time the product or service is provided or delivered. Consideration is allocated to assessments based on standalone selling prices. In addition, as it relates to Professional Assessments customers' unexercised rights for situations where we have received a nonrefundable payment for a customer to receive a good or service and the customer is not expected to exercise such right, we will recognize such “breakage” amounts as revenue in proportion to the pattern of rights exercised by the customer.

Corporate Learning

The Corporate Learning business offers online learning and training solutions for global corporations, universities, and small and medium-sized enterprises, which are sold on a subscription or fee basis. Learning formats and modules on topics such as leadership development, value creation, client orientation, change management and corporate strategy are delivered on a cloud-based Learning Management System (“LMS”) platform that hosts over 20,000 content assets (videos, digital learning modules, written files, etc.) in 17 languages. Its Mohive offering also provides a collaborative e-learning publishing and program creation system. Revenue growth is derived from legacy markets, such as France, England, and other European markets, and newer markets, such as the U.S. and Brazil. In addition, content and LMS offerings are continuously refreshed and expanded to serve a wider variety of customer needs. These digital learning solutions are sold directly to corporate customers either direct or through our partners. Corporate Learning contracts are generally multi-year agreements.

The transaction price consists of fixed consideration that is determined at the beginning of each year and received at the same time. Within Corporate Learning there are multiple performance obligations which includes the licenses to learning content and the learning application. Revenue is recognized over time as we have a continuous obligation to provide the right of access to the intellectual property which includes the licenses and learning applications.

Accounts Receivable, net and Contract Liability (Deferred Revenue) Balances

When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue when, or as, control of the products or services are transferred to the customer and all revenue recognition criteria have been met.

The following table provides information about receivables and contract liabilities from contracts with customers.
   
October 31, 2018
   
April 30, 2018 (1)
   
Increase/
(Decrease)
 
Balances from contracts with customers:
                 
Accounts receivable, net (2)
 
$
236,207
   
$
212,377
   
$
23,830
 
Contract liability (Deferred revenue) (2)
   
237,184
     
486,353
     
(249,169
)
Contract liability (Deferred revenue) (included in Other Long-Term Liabilities)
 
$
12,568
   
$
   
$
12,568
 

(1) As noted above, prior period amounts have not been adjusted under the modified retrospective method.
(2) Due to the adoption of the new revenue standard, the sales return reserve as of October 31, 2018 of $31.1 million is recorded in Contract Liability (Deferred Revenue). In prior periods, it was recorded as a reduction to Accounts Receivable, net on the Condensed Consolidated Statement of Financial Position.

17

Revenue recognized for the three and six months ended October 31, 2018 relating to the contract liability at April 30, 2018 was $190.5 million and $386.8 million, respectively.

Remaining Performance Obligations included in Contract Liability (Deferred Revenue)

As of October 31, 2018, the aggregate amount of the transaction price allocated to the remaining performance obligations is approximately $249.8 million. We expect that approximately $237.2 million will be recognized in the next twelve months with the remaining $12.6 million to be recognized thereafter.

Assets Recognized for the Costs to Fulfill a Contract

Costs to fulfill a contract are directly related to a contract that will be used to satisfy a performance obligation in the future and are expected to be recovered. These types of costs are incurred in the following revenue streams, (1) Publishing Technology Services (Atypon) and (2) Education Services (OPM).

Our assets associated with incremental costs to fulfill a contract were $6.6 million at October 31, 2018 and are included within Other Non-Current Assets on our Condensed Consolidated Balance Sheet. We recorded amortization expense of $0.4 million and $1.2 million during the three and six months ended October 31, 2018 related to these assets within Cost of Sales on the Condensed Consolidated Statements of Income, respectively. The costs related to Education Services (OPM) were previously included in Product Development Assets on our Condensed Consolidated Statement of Financial Position. Certain costs related to Publishing Technology Services (Atypon) were previously included in Technology, Property and Equipment, net on our Condensed Consolidated Statement of Financial Position.

Sales and value-added taxes are excluded from revenues. Shipping and handling costs, which are primarily incurred within the Publishing segment, occur before the transfer of control of the related goods. Therefore, in accordance with the new revenue standard, it is not considered a promised service to the customer and would be considered a cost to fulfill our promise to transfer the goods. Costs incurred for third party shipping and handling are reflected in Operating and Administrative Expenses on the Condensed Consolidated Statements of Income. We incurred $8.6 million and $16.5 million in shipping and handling costs in the three and six months ended October 31, 2018, respectively. We incurred $8.8 million and $16.6 million in shipping and handling costs in the three and six months ended October 31, 2017, respectively.

Note 4 Stock-Based Compensation

We have stock-based compensation plans under which employees may be granted performance-based stock awards and other restricted stock awards.  Prior to fiscal year 2017, we also granted options to purchase shares of our common stock at the fair market value at the time of grant. We recognize the grant date fair value of stock-based compensation in net income on a straight-line basis, net of estimated forfeitures over the requisite service period. The measurement of performance for performance-based stock awards is based on actual financial results for targets established three years in advance. For the three months ended October 31, 2018 and 2017, we recognized stock-based compensation expense, on a pre-tax basis, of $5.0 million and $4.0 million, respectively. For the six months ended October 31, 2018 and 2017, we recognized stock-based compensation expense, on a pre-tax basis, of $8.9 million and $2.5 million, respectively.

The following table summarizes restricted stock awards we granted:

   
Six Months Ended
October 31,
 
   
2018
   
2017
 
Restricted Stock:
           
Awards granted
   
397
     
405
 
Weighted average fair value of grant
 
$
63.33
   
$
51.44
 

18

Note 5 Accumulated Other Comprehensive Loss

Changes in Accumulated Other Comprehensive Loss by component, net of tax, for the three and six months ended October 31, 2018 and 2017 were as follows:
   
Foreign
Currency Translation
   
Unamortized
Retirement Costs
   
Interest
Rate Swaps
   
Total
 
Balance at July 31, 2018
 
$
(291,898
)
 
$
(182,215
)
 
$
2,367
   
$
(471,746
)
Other comprehensive (loss) income before reclassifications
   
(20,424
)
   
3,273
     
543
     
(16,608
)
Amounts reclassified from accumulated other comprehensive loss
   
     
1,114
     
(1,324
)
   
(210
)
Total other comprehensive (loss) income
   
(20,424
)
   
4,387
     
(781
)
   
(16,818
)
Balance at October 31, 2018
 
$
(312,322
)
 
$
(177,828
)
 
$
1,586
   
$
(488,564
)
                                 
Balance at April 30, 2018
 
$
(251,573
)
 
$
(191,026
)
 
$
3,019
   
$
(439,580
)
Other comprehensive income (loss) before reclassifications
   
(60,749
)
   
10,993
     
613
     
(49,143
)
Amounts reclassified from accumulated other comprehensive loss
   
     
2,205
     
(2,046
)
   
159
 
Total other comprehensive income (loss)
   
(60,749
)
   
13,198
     
(1,433
)
   
(48,984
)
Balance at October 31, 2018
 
$
(312,322
)
 
$
(177,828
)
 
$
1,586
   
$
(488,564
)

   
Foreign
Currency Translation
   
Unamortized
Retirement Costs
   
Interest
Rate Swaps
   
Total
 
                         
Balance at July 31, 2017
 
$
(291,807
)
 
$
(192,449
)
 
$
2,066
   
$
(482,190
)
Other comprehensive income (loss) before reclassifications
   
5,636
     
(1,673
)
   
238
     
4,201
 
Amounts reclassified from accumulated other comprehensive loss
   
     
1,094
     
169
     
1,263
 
Total other comprehensive income (loss)
   
5,636
     
(579
)
   
407
     
5,464
 
Balance at October 31, 2017
 
$
(286,171
)
 
$
(193,028
)
 
$
2,473
   
$
(476,726
)
                                 
Balance at April 30, 2017
 
$
(319,212
)
 
$
(190,502
)
 
$
2,427
   
$
(507,287
)
Other comprehensive income (loss) before reclassifications
   
33,041
     
(4,690
)
   
(194
)
   
28,157
 
Amounts reclassified from accumulated other comprehensive loss
   
     
2,164
     
240
     
2,404
 
Total other comprehensive income (loss)
   
33,041
     
(2,526
)
   
46
     
30,561
 
Balance at October 31, 2017
 
$
(286,171
)
 
$
(193,028
)
 
$
2,473
   
$
(476,726
)

During the three months ended October 31, 2018 and 2017, pre-tax actuarial losses included in Unamortized Retirement Costs of approximately $1.4 million and $1.5 million, respectively, in each period were amortized from Accumulated Other Comprehensive Loss and recognized as pension expense in Operating and Administrative Expenses and Interest and Other Income in the Condensed Consolidated Statements of Income. During the six months ended October 31, 2018 and 2017, pre-tax actuarial losses of approximately $2.8 million and $2.9 million, respectively, were amortized.

Note 6 Reconciliation of Weighted Average Shares Outstanding and Share Repurchases

A reconciliation of the shares used in the computation of earnings per share follows:

 
Three Months Ended
October 31,
 
Six Months Ended
October 31,
 
2018
 
2017
 
2018
 
2017
Weighted average shares outstanding
 
57,426
   
57,013
   
57,451
   
57,100
Less: Unvested restricted shares
 
(47)
   
(138)
   
(59)
   
(152)
Shares used for basic earnings per share
 
57,379
   
56,875
   
57,392
   
56,948
Dilutive effect of stock options and other stock awards
 
491
   
679
   
563
   
685
Shares used for diluted earnings per share
 
57,870
   
57,554
   
57,955
   
57,633

Since their inclusion in the calculation of diluted earnings per share would have been anti-dilutive, options to purchase 157,167 shares of Class A Common Stock have been excluded for the three and six months ended October 31, 2018, respectively and 284,787 shares of Class A Common Stock have been excluded for the three and six months ended October 31, 2017, respectively.

19

There were no restricted shares excluded for the three and six months ended October 31, 2018. There were 26,740 restricted shares excluded for the three and six months ended October 31, 2017, respectively.

Share Repurchases and Dividends

During the three months ended October 31, 2018 and 2017, we repurchased 299,188 and 285,599 shares of Class A common stock at an average price of $56.82 and $53.37, respectively. During the six months ended October 31, 2018 and 2017, the Company repurchased 425,120 and 550,757 shares of common stock at an average price of $58.79 and $53.12, respectively.

On June 21, 2018, our Board of Directors declared a quarterly cash dividend of $0.33 per common share, or $19.0 million, on our Class A and Class B common stock. The dividend was paid on July 18, 2018 to shareholders of record on July 3, 2018.

On September 26, 2018, our Board of Directors declared a quarterly cash dividend of $0.33 per common share, or $18.9 million, on our Class A and Class B common stock. The dividend was paid on October 24, 2018 to shareholders of record on October 9, 2018.

Note 7 Restructuring and Related Charges

Beginning in fiscal year 2013, we initiated a program (the “Restructuring and Reinvestment Program”) to restructure and realign our cost base with current and anticipated future market conditions. We are targeting most of the cost savings achieved to improve margins and earnings, with the remainder reinvested in growth opportunities.

The following tables summarize the pre-tax restructuring charges (credits) related to this program:

   
Three Months Ended
October 31,
   
Six Months Ended
October 31,
   
Total Charges
 
   
2018
   
2017
   
2018
   
2017
   
Incurred to Date
 
Charges (Credits) by Segment:
                             
Research
 
$
2,282
   
$
(388
)
 
$
1,302
   
$
4,448
   
$
26,715
 
Publishing
   
1,407
     
71
     
739
     
7,325
     
39,670
 
Solutions
   
1,097
     
(625
)
   
840
     
2,170
     
7,087
 
Corporate Expenses
   
5,210
     
(464
)
   
1,029
     
10,380
     
96,948
 
Total Restructuring and Related Charges (Credits)
 
$
9,996
   
$
(1,406
)
 
$
3,910
   
$
24,323
   
$
170,420
 
                                         
Charges (Credits) by Activity:
                                       
Severance
 
$
8,672
   
$
(1,455
)
 
$
2,894
   
$
23,266
   
$
117,697
 
Process Reengineering Consulting
   
90
     
     
225
     
1,521
     
20,854
 
Other Activities
   
1,234
     
49
     
791
     
(464
)
   
31,869
 
Total Restructuring and Related Charges (Credits)
 
$
9,996
   
$
(1,406
)
 
$
3,910
   
$
24,323
   
$
170,420
 

Other Activities for the three and six months ended October 31, 2018 and 2017 include lease impairment related costs. The credits in Other Activities for the six months ended October 31, 2017 mainly reflect changes in estimates for previously accrued restructuring charges related to facility lease reserves.

The following table summarizes the activity for the Restructuring and Reinvestment Program liability for the six months ended October 31, 2018:

   
April 30, 2018
   
Charges
   
Payments
   
Foreign
Translation &
Reclassifications
   
October 31, 2018
 
Severance
 
$
17,279
   
$
2,894
   
$
(8,295
)
 
$
(446
)
 
$
11,432
 
Process Reengineering Consulting
   
     
225
     
(175
)
   
     
50
 
Other Activities
   
2,772
     
791
     
(825
)
   
210
     
2,948
 
Total
 
$
20,051
   
$
3,910
   
$
(9,295
)
 
$
(236
)
 
$
14,430
 

The restructuring liability as of October 31, 2018 for accrued severance costs is reflected in Accrued Employment Costs in the Condensed Consolidated Statement of Financial Position. The liability as of October 31, 2018, for Process Reengineering Consulting costs is reflected in Other Accrued Liabilities. As of October 31, 2018, approximately $1.2 million and $1.7 million of the Other Activities are reflected in Other Accrued Liabilities and Other Long-Term Liabilities, respectively, and mainly relate to facility relocation and lease impairment related costs. We currently do not anticipate any further material charges related to the Restructuring and Reinvestment Program.

The amount included in Other Long-Term Liabilities that relates to Other Activities is expected to be paid starting in 2020 until 2022.

20

Note 8 Segment Information

We report our segment information in accordance with the provisions of FASB ASC Topic 280.

Segment information is as follows:

   
Three Months Ended
October 31,
   
Six Months Ended
October 31,
 
   
2018
   
2017 (1)
   
2018
   
2017 (1)
 
Revenue:
                       
Research
 
$
228,645
   
$
228,870
   
$
453,637
   
$
452,497
 
Publishing
   
157,499
     
164,985
     
282,420
     
296,263
 
Solutions
   
62,478
     
57,876
     
123,466
     
114,415
 
Total Revenue
 
$
448,622
   
$
451,731
   
$
859,523
   
$
863,175
 
                                 
Contribution to Profit:
                               
Research
 
$
58,907
   
$
70,146
   
$
116,033
   
$
130,608
 
Publishing
   
39,455
     
41,913
     
53,175
     
46,383
 
Solutions
   
7,049
     
7,309
     
10,273
     
5,341
 
Total Contribution to Profit (1)
 
$
105,411
   
$
119,368
   
$
179,481
   
$
182,332
 
Corporate Expenses
   
(47,936
)
   
(38,580
)
   
(85,866
)
   
(88,974
)
Operating Income (1)
 
$
57,475
   
$
80,788
   
$
93,615
   
$
93,358
 

(1)
Due to the retrospective adoption of ASU 2017-07, total net benefits of $2.0 million and $3.9 million related to the non-service components of defined benefit and other post-employment benefit plans were reclassified from Operating and Administrative Expenses to Interest Income and Other for the three and six months ended October 31, 2017, respectively. Refer to Note 2, "Recent Accounting Standards," in the Notes to Condensed Consolidated Financial Statements for more information. The impact of the reclassification on Contribution to Profit by segment for the three months ended October 31, 2017 was $1.0 million in Research, $0.6 million in Publishing, and $0.4 million in Corporate expenses. The impact of the reclassification on Contribution to Profit by segment for the six months ended October 31, 2017 was $2.0 million in Research, $1.1 million in Publishing, and $0.8 million in Corporate expenses.

Note 9 Inventories

Inventories were as follows:

   
October 31, 2018
   
April 30, 2018
 
Finished goods
 
$
32,388
   
$
36,503
 
Work-in-process
   
2,473
     
2,139
 
Paper and other materials
   
441
     
550
 
   
$
35,302
   
$
39,192
 
Inventory value of estimated sales returns
   
4,261
     
4,626
 
LIFO reserve
   
(4,479
)
   
(4,329
)
Total inventories
 
$
35,084
   
$
39,489
 

21

Note 10 Goodwill and Intangible Assets

Goodwill

The following table summarizes the activity in goodwill by segment as of October 31, 2018:
   
April 30, 2018
   
Foreign
Translation
Adjustment
   
October 31, 2018
 
Research
 
$
463,419
   
$
(25,832
)
 
$
437,587
 
Publishing
   
283,851
     
(726
)
   
283,125
 
Solutions
   
272,531
     
(6,995
)
   
265,536
 
Total
 
$
1,019,801
   
$
(33,553
)
 
$
986,248
 

The April 30, 2018 goodwill balances for Publishing and Solutions have been revised to reflect foreign translation adjustments of $11.6 million.

Intangible Assets

Identifiable intangible assets, net consisted of the following:

   
October 31, 2018
   
April 30, 2018
 
Intangible Assets with Determinable Lives, net:
           
Content and Publishing Rights
 
$
401,341
   
$
436,760
 
Customer Relationships
   
152,803
     
161,729
 
Brands and Trademarks
   
14,340
     
16,100
 
Covenants not to Compete
   
550
     
655
 
Total
   
569,034
     
615,244
 
Intangible Assets with Indefinite Lives:
               
Brands and Trademarks
   
130,460
     
138,589
 
Content and Publishing Rights
   
88,135
     
94,238
 
Total
   
218,595
     
232,827
 
Total Intangible Assets, Net
 
$
787,629
   
$
848,071
 

In conjunction with a business review performed in the Publishing segment associated with the restructuring activities disclosed in Note 7, “Restructuring and Related Charges”, in the three months ended July 31, 2017, we identified an indefinite lived brand with forecasted cash flows that did not support its carrying value. As a result, an impairment charge of $3.6 million was recorded in the three months ended July 31, 2017 to reduce the carrying value of the brand to its fair value of $1.2 million, which is being amortized over its estimated remaining useful life. This impairment charge was included in Operating and Administrative Expenses in the Condensed Consolidated Statements of Income for fiscal year 2018.

Note 11 Income Taxes

The effective tax rate for the three months ended October 31, 2018 was 22.3%, compared to 24.4% for the three months ended October 31, 2017. The effective tax rate for the six months ended October 31, 2018 was 22.5% compared to 19.0% in the prior year period. The rate for the three months ended October 31, 2018 was lower than the prior year’s rate for the same period primarily due to the reduced statutory tax rate in the U.S., as well as, to a smaller extent, a more favorable earnings mix. The rate for the six months ended October 31, 2017 benefitted from large equity compensation deductions from significant vesting of restricted stock and other one-time adjustments. Excluding those items, the rate would have been 24.4% for the six months ended October 31, 2017 compared to 22.5% in the six months ended October 31, 2018, primarily due to the reduced statutory tax rate in the U.S. and more favorable earnings mix during the current period.

22

The Tax Act

On December 22, 2017, the U.S. government enacted comprehensive Federal tax legislation originally known as the Tax Cuts and Jobs Act of 2017 (the "Tax Act").  The Tax Act significantly revised the future ongoing U.S. corporate income tax system by, among other changes, the following:
·
lowering the U.S. federal corporate income tax rate to 21% with a potentially lower rate for certain foreign derived income,
·
accelerating deductions for certain business assets,
·
changing the U.S. system from a worldwide tax system,
·
requiring companies to pay a one-time transition tax on post-1986 unrepatriated cumulative non-U.S. earnings and profits ("E&P") of foreign subsidiaries,
·
eliminating certain deductions such as the domestic production deduction,
·
establishing limitations on the deductibility of certain expenses including interest and executive compensation, and
·
creating new taxes on certain foreign earnings.

In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”), which allows us to record provisional amounts related to the Tax Act during a measurement period not to extend beyond one year of the enactment date. In fiscal year 2018, we estimated a provisional estimated net tax benefit of $25.1 million related to the Tax Act. We are still analyzing certain aspects of the Tax Act, including without limitation certain foreign tax credit related calculations and the state and local tax effect of deemed and actual repatriation as well as the new provisions mentioned below, and refining our calculations, including our estimates of expected reversals, which could affect the measurement of these balances and give rise to new deferred tax amounts. As the Tax Act was passed late in December 2017 and ongoing guidance and accounting interpretation are expected over the 12 months following enactment, we consider the accounting for the transition tax and other items included last year, as well as items described below which were included in the six months ended October 31, 2018, to be provisional due to the forthcoming guidance and our ongoing analysis of final data and tax positions. We expect to complete our analysis within the measurement period in accordance with SAB 118.

The Tax Act created new taxes, effective for us on May 1, 2018, including a provision designed to tax certain global income ("GILTI"), a base erosion anti-abuse tax ("BEAT") as well as a new deduction for certain foreign derived intangible income (“FDII”). We recorded a minor provisional benefit during the six months ended October 31, 2018. We expect to adjust this provisional amount as additional guidance is provided.

Note 12 Retirement Plans

The components of net pension expense (income) for our global defined benefit plans were as follows:

   
Three Months Ended
October 31,
   
Six Months Ended
October 31,
 
   
2018
   
2017
   
2018
   
2017
 
Service cost
 
$
229
   
$
242
   
$
462
   
$
472
 
Interest cost
   
6,169
     
6,346
     
12,381
     
12,598
 
Expected return on plan assets
   
(9,720
)
   
(9,782
)
   
(19,622
)
   
(19,439
)
Net amortization of prior service cost
   
(24
)
   
(23
)
   
(48
)