-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OqGp1be1yBrKLBMD81iWZzXknUDFIzeBqWYZUvwbrYpgPeWIIbiOGJWx5hIF9pBS 8hzHevjNiEP+XcBrOzc6ng== 0000107140-09-000066.txt : 20090624 0000107140-09-000066.hdr.sgml : 20090624 20090624160333 ACCESSION NUMBER: 0000107140-09-000066 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20090605 FILED AS OF DATE: 20090624 DATE AS OF CHANGE: 20090624 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WILEY JOHN & SONS, INC. CENTRAL INDEX KEY: 0000107140 STANDARD INDUSTRIAL CLASSIFICATION: BOOKS: PUBLISHING OR PUBLISHING AND PRINTING [2731] IRS NUMBER: 135593032 STATE OF INCORPORATION: NY FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11507 FILM NUMBER: 09907552 BUSINESS ADDRESS: STREET 1: 111 RIVER STREET CITY: HOBOKEN STATE: NJ ZIP: 07030 BUSINESS PHONE: 2017486000 MAIL ADDRESS: STREET 1: 111 RIVER STREET CITY: HOBOKEN STATE: NJ ZIP: 07030 FORMER COMPANY: FORMER CONFORMED NAME: WILEY JOHN & SONS INC DATE OF NAME CHANGE: 19920703 10-K 1 fy0910k.htm YEAR END 10K 2009 fy0910k.htm

 
 


 
 
FORM 10-K


SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

[x]           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934


For the fiscal year ended:  April 30, 2009

OR

[  ]           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)


For the transition period from       to
Commission file number     1-11507


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


NEW YORK
 
13-5593032
State or other jurisdiction of 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
 
     
     
Securities registered pursuant to Section 12(b) of the Act: Title of each class
 
Name of each exchange on which registered
Class A Common Stock, par value $1.00 per share
 
New York Stock Exchange
Class B Common Stock, par value $1.00 per share
 
New York Stock Exchange
     
 
Securities registered pursuant to Section 12(g) of the Act:
 
 
None
 
 

 

 
 
1

 

 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
 
 
Yes |X|     No |    |
 
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the    Exchange Act.
 
 
Yes |   |     No |X |
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
 
Yes |X|     No |    |
 
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |   |
 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
 
 
Large accelerated filer   |X|           Accelerated filer   |    |           Non-accelerated filer   |    |
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
 
Yes |    |      No |X|
 
 
The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the closing price as of the last business day of the registrant’s most recently completed second fiscal quarter, October 31, 2008, was approximately $1,536.1 million.  The registrant has no non-voting common stock.
 
 
The number of shares outstanding of the registrant’s Class A and Class B Common Stock as of May 31, 2009 was 48,745,940 and 9,644,115 respectively.
 
DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement for use in connection with its annual meeting of stockholders scheduled to be held on September 18, 2009, are incorporated by reference into Part III of this form 10-K.

 
 
2

 

JOHN WILEY AND SONS, INC. AND SUBSIDIARIES
FORM 10-K
FOR THE FISCAL YEAR ENDED APRIL 30, 2009
INDEX


PART I
 
PAGE
ITEM 1.
Business
4
ITEM 1A.
Risk Factors
4-7
ITEM 1B.
Unresolved Staff Comments
7
ITEM 2.
Properties
8
ITEM 3.
Legal Proceedings
9
ITEM 4
Submission of Matters to a Vote of Security Holders
9
     
PART II
  
 
ITEM 5.
Market for the Company’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities
9
ITEM 6.
Selected Financial Data
9
ITEM 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
9
ITEM 7A.
Quantitative and Qualitative Disclosures About Market Risk
9
ITEM 8.
Financial Statements and Supplemental Data
9
ITEM 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
74
ITEM 9A.
Controls and Procedures
74
ITEM 9B.
Other Information
74
     
PART III
   
ITEM 10.
Directors and Executive Officers of the Registrant
75-76
ITEM 11.
Executive Compensation
76
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
76
ITEM 13.
Certain Relationships and Related Transactions
76
ITEM 14.
Principal Accounting Fees and Services
76
     
PART IV
   
ITEM 15.
Exhibits, Financial Statement Schedules and Reports on Form 8-K
77-79
     
Signatures
 
80-87

 
 
3

 

PART I

Item 1. 
Business
 
The Company, founded in 1807, was incorporated in the state of New York on January 15, 1904. (As used herein the term “Company” means John Wiley & Sons, Inc., and its subsidiaries and affiliated companies, unless the context indicates otherwise.)
 
The Company is a global publisher of print and electronic products, providing content and digital solutions to customers worldwide. Core businesses produce scientific, technical, medical and scholarly journals, encyclopedias, books, online products and services; professional and consumer books, subscription products, training materials, online applications and websites; and educational materials, including integrated online teaching and learning resources, for undergraduate and graduate students, teachers and lifelong learners. The Company takes full advantage of its content from all three core businesses in developing and cross-marketing products to its diverse customer base of professionals, consumers, researchers, students, and educators. The use of technology enables the Company to make its content more accessible to its customers around the world. The Company maintains publishing, marketing, and distribution centers in the United States, Canada, Europe, Asia, and Australia.
 
Further description of the Company’s business is incorporated herein by reference in the Management’s Discussion and Analysis section of this 10-K.
 
Employees
 
As of April 30, 2009, the Company employed approximately 5,100 people on a full-time equivalent basis worldwide.
 
Financial Information About Industry Segments
 
The note entitled “Segment Information” of the Notes to Consolidated Financial Statements and the Management’s Discussion and Analysis section of this 10-K, both listed in the attached index, are incorporated herein by reference.
 
Financial Information About Foreign and Domestic Operations and Export Sales
 
The note entitled “Segment Information” of the Notes to Consolidated Financial Statements and the Management’s Discussion and Analysis section of this 10-K, both listed in the attached index, are incorporated herein by reference.
 
Item 1A.
Risk Factors
 
 
You should carefully consider all of the information set forth in this Form 10-K, including the following risk factors, before deciding to invest in any of the Company’s securities. The risks below are not the only ones the Company faces. Additional risks not currently known to the Company or that the Company presently deems immaterial may also impair its business operations. The Company’s business, financial condition, results of operations or prospects could be materially adversely affected by any of these risks.
 
Cautionary Statement Under the Private Securities Litigation Reform Act of 1995:
 
4

 
 
This 10-K and our Annual Report to Shareholders for the year ending April 30, 2009 report contains certain forward-looking statements concerning the Company’s operations, performance, and financial condition. In addition, the Company provides forward-looking statements in other materials released to the public as well as oral forward-looking information.  Statements which contain the words anticipate, expect, believes, estimate, project, forecast, plan, outlook, intend and similar expressions constitute forward-looking statements that involve risk and uncertainties. Reliance should not be placed on forward-looking statements, as actual results may differ materially from those in any forward-looking statements.
 
Any such forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to uncertainties and contingencies, many of which are beyond the control of the Company, and are subject to change based on many important factors. Such factors include, but are not limited to (i) the level of investment in new technologies and products; (ii) subscriber renewal rates for the Company’s journals; (iii) the financial stability and liquidity of journal subscription agents; (iv) the consolidation of book wholesalers and retail accounts; (v) the market position and financial stability of key retailers; (vi) the impact of the used-book market; (vii) worldwide economic and political conditions; and (viii) the Company’s ability to protect its copyrights and other intellectual property worldwide (ix) other factors detailed from time to time in the Company’s filings with the Securities and Exchange Commission.  The Company undertakes no obligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances.
 
Operating Costs and Expenses
 
The Company has a significant investment, and cost, in its employee base around the world.  The Company offers competitive salaries and benefits in order to attract and retain the highly skilled workforce needed to sustain and develop new products and services required for growth.  Employment and benefit costs are affected by competitive market conditions for qualified individuals, and factors such as healthcare, pension and retirement benefits costs.  The Company is a large paper purchaser, and paper prices may fluctuate significantly from time-to-time.  The Company attempts to moderate the exposure to fluctuations in price by entering into multi-year supply contracts and having alternative suppliers available.  In general, however, any significant increase in the costs of goods and services provided to the Company may adversely affect the Company’s costs of operation.
 
Protection of Intellectual Property Rights
 
Substantially all of the Company’s publications are protected by copyright, held either in the Company’s name, in the name of the author of the work, or in the name of the sponsoring professional society. Such copyrights protect the Company’s exclusive right to publish the work in many countries abroad for specified periods, in most cases the author’s life plus 70 years, but in any event a minimum of 50 years for works published after 1978.  The ability of the Company to continue to achieve its expected results depends, in part, upon the Company’s ability to protect its intellectual property rights. The Company’s results may be adversely affected by lack of legal and/or technological protections for its intellectual property in some jurisdictions and markets.
 
Maintaining the Company’s Reputation
 
Professionals worldwide rely upon many of the Company’s publications to perform their jobs. It is imperative that the Company consistently demonstrates its ability to maintain the integrity of the information included in its publications. Adverse publicity, whether or not valid, may reduce demand for the Company’s publications.
 
5


Trade Concentration and Credit Risk
 
In the journal publishing business, subscriptions are primarily sourced through journal subscription agents who, acting as agents for library customers, facilitate ordering by consolidating the subscription orders/billings of each subscriber with various publishers. Cash is generally collected in advance from subscribers by the subscription agents and is remitted to the journal publisher, including the Company, generally prior to the commencement of the subscriptions. Although at fiscal year-end the Company had minimal credit risk exposure to these agents, future calendar-year subscription receipts from these agents are highly dependent on their financial condition and liquidity. Subscription agents account for approximately 20% of consolidated book and journal revenue and no one agent accounts for more than 9% of total consolidated revenue.
 
The Company’s business is not dependent upon a single customer; however, the industry is concentrated in national, regional, and online bookstore chains. Although no one book customer accounts for more than 7% of consolidated revenue, the top 10 book customers account for approximately 18% of total consolidated revenue and approximately 41% of accounts receivable, before reserves at April 30, 2009.  Payments for the sale of subscription journals are predominantly collected in advance.
 
Changes in Regulation and Accounting Standards
 
The Company maintains publishing, marketing and distribution centers in Asia, Australia, Canada, Europe and the United States. The conduct of our business, including the sourcing of content, distribution, sales, marketing and advertising is subject to various laws and regulations administered by governments around the world. Changes in laws, regulations or government policies, including taxation requirements and accounting standards, may adversely affect the Company’s future financial results.
 
Introduction of New Technologies or Products
 
Media and publishing companies exist in rapidly changing technological and competitive environments. Therefore, the Company must continue to invest in technological and other innovations and adapt in order to continue to add value to its products and services and remain competitive.  There are uncertainties whenever developing new products and services, and it is often possible that such new products and services may not be launched or if launched, may not be profitable or as profitable as existing products and services.
 
Competition for Market Share and Author and Society Relationships
 
The Company operates in highly competitive markets.  Success and continued growth depends greatly on developing new products and the means to deliver them in an environment of rapid technological change.   Attracting new authors and professional societies, while retaining our existing business relationships are also critical to our success.  We believe the Company is well positioned to meet these business challenges with the strength of our brands, our reputation and innovative abilities.
 
Interest Rate and Foreign Exchange Risk
 
Approximately 50% of our total consolidated revenue for fiscal year 2009 was derived from operations outside the United States. These international-based revenues, as well as our substantial international net assets, expose the Company’s results to foreign currency exchange rate changes. In addition, our interest-bearing loans and borrowings are subject to risk from changes in interest rates. These risks and the measures we have taken to help contain them are discussed in the Market Risk section of this 10-K. For additional details, see Note 12 to our consolidated financial statements, Debt and Available Credit Facilities, in this 10-K. Those sections of our 2009 10-K are incorporated by reference.  Not withstanding our efforts to foresee and mitigate the effects of changes in fiscal circumstances, we cannot predict with certainty changes in currency and interest rates, inflation or other related factors affecting our business.
 
6

 
Liquidity and Global Economic Conditions
 
The recent changes in global financial markets have not had, nor do we anticipate they will have, a significant impact on our liquidity. Due to our significant operating cash flow, financial assets, access to capital markets and available lines of credit and revolving credit agreements, we continue to believe that we have the ability to meet our financing needs for the foreseeable future. As market conditions change, we will continue to monitor our liquidity position. However, there can be no assurance that our liquidity or our results of operations will not be affected by recent and possible future changes in global financial markets and global economic conditions. Moreover, like other businesses, we face the potential effects of the global economic recession. Unprecedented market conditions including illiquid credit markets, volatile equity markets, dramatic fluctuations in foreign currency rates and economic recession could affect future results.
 
Effects of Inflation and Cost Increases
 
The Company, from time to time, experiences cost increases reflecting, in part, general inflationary factors. To mitigate the effect of cost increases, the Company may take various steps to reduce development, production and manufacturing costs. In addition, the selling prices for our products may be selectively increased as marketplace conditions permit.
 
Ability to Successfully Integrate Key Acquisitions
 
The Company’s growth strategy includes title, imprint and business acquisitions which complement the Company’s existing businesses; the development of new products and services; designing and implementing new methods of delivering products to our customers, and organic growth of existing brands and titles.  Acquisitions may have a substantial impact on costs, revenues, cash flows, and financial position such as, the Company’s acquisition of Blackwell Publishing (Holdings) Ltd. (“Blackwell”) more fully described in Note 4 of the Notes to Consolidated Financial Statements. Acquisitions involve risks and uncertainties, including difficulties in integrating acquired operations and in realizing expected opportunities, diversions of management resources and loss of key employees, challenges with respect to operating new businesses, debt incurred in financing such acquisitions, and other unanticipated problems and liabilities.
 
Attracting and Retaining Key Employees
 
The Company’s success is highly dependent upon the retention of key employees globally.  In addition, we are dependent upon our ability to continue to attract new employees with key skills to support the continued organic growth of the business.

Item 1B. Unresolved Staff Comments
 
None
 
 
 
7

 

Item 2.    Properties
 
The Company occupies office, warehouse, and distribution facilities in various parts of the world, as listed below (excluding those locations with less than 10,000 square feet of floor area, none of which is considered material property).  All of the buildings and the equipment owned or leased are believed to be in good condition and are generally fully utilized.


Location
Purpose
Approx. Sq. Ft.
Lease Expiration
       
Leased
     
Australia
Office
 26,000
2018
 
Office
 33,000
2020
 
Office & Warehouse
 93,000
2019
       
Canada
Office & Warehouse
 87,000
2011
 
Office
 20,000
2010
       
England
Warehouse
 81,000
2012
 
Office
 63,000
2027
 
Office
 17,000
2025
 
Warehouse
 146,000
2021
       
Singapore
Office & Warehouse
 67,000
2011
 
Office
 15,000
2011
       
Germany
Office
 19,000
2013
 
Office
 29,000
2011
       
India
Warehouse
 16,000
2013
       
United States:
     
New Jersey
Corporate Headquarters
 383,000
2017
       
New Jersey
Office & Warehouse
 185,000
2020
       
New Jersey
Warehouse
 380,000
2021
       
Indiana
Office
 123,000
2019
       
California
Office
 38,000
2012
       
Massachusetts
Office
 43,000
2017
       
Owned
     
Germany
Office
 58,000
 
       
England
Office
 49,000
 
 
Office
 21,000
 
       
Iowa
Office & Warehouse
 27,000
 

 
 
8

 

Item 3.    Legal Proceedings
 
The Company is involved in routine litigation in the ordinary course of its business.  In the opinion of management, the ultimate resolution of all pending litigation will not have a material effect upon the financial condition or results of operations of the Company.

Item 4.    Submission of Matters to a Vote of Security Holders
 
No matters were submitted to the Company’s security holders during the last quarter of the fiscal year ended April 30, 2009.


PART II

Item 5.
Market for the Company’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities
 
The Quarterly Share Prices, Dividends, and Related Stockholder Matters listed in the index on page 10 are incorporated herein by reference.


Item 6.
Selected Financial Data

The Selected Financial Data listed in the index on page 10 is incorporated herein by reference.
 

Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Management’s Discussion and Analysis of Financial Condition and Results of Operations listed in the index on page 10 are incorporated herein by reference.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk
 
The information appearing under the caption “Market Risk” in Management’s Discussion and Analysis of Financial Condition and Results of Operations listed in the index on page 10 is incorporated herein by reference.

Item 8.    Financial Statements and Supplemental Data
 
The Financial Statements and Supplemental Data listed in the index on page 10 is incorporated herein by reference.

 
 
9

 

 
JOHN WILEY & SONS, INC., AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES


The following financial statements and information appearing on the pages indicated are filed as part of this report:

 
 
Page(s)
   
Management’s Discussion and Analysis of Business, Financial Condition and Results of Operations
11-38
Results by Quarter (Unaudited)
39
Quarterly Share Prices, Dividends, and Related Stockholder Matters and Issuer Purchases of Equity Securities
40
Selected Financial Data
41
Management’s Report on Internal Control over Financial Reporting
42
Reports of Independent Registered Public Accounting Firm
43-44
Consolidated Statements of Financial Position as of April 30, 2009 and 2008
45
Consolidated Statements of Income for the years ended April 30, 2009, 2008, and 2007
46
Consolidated Statements of Cash Flows for the years ended April 30, 2009, 2008, and 2007
47
Consolidated Statements of Shareholders’ Equity and Comprehensive Income for the years ended April 30, 2009, 2008, and 2007
48
Notes to Consolidated Financial Statements
49-72
Schedule II — Valuation and Qualifying Accounts for the years ended April 30, 2009, 2008, and 2007
73


Other schedules are omitted because of the absence of conditions under which they apply or because the information required is included in the Notes to Consolidated Financial Statements.

 
 
10

 

Management’s Discussion and Analysis of Business,
Financial Condition and Results of Operations
 
The Company is a global publisher of print and electronic products, providing content and digital solutions to customers worldwide. Core businesses produce scientific, technical, medical and scholarly journals, encyclopedias,  books, online products and services; professional and consumer books, subscription products, training materials, online applications and websites; and educational materials, including integrated online teaching and learning resources, for undergraduate and graduate students, teachers and lifelong learners. The Company takes full advantage of its content from all three core businesses in developing and cross-marketing products to its diverse customer base of professionals, consumers, researchers, students, and educators.   The use of technology enables the Company to make its content more accessible to its customers around the world. The Company maintains publishing, marketing, and distribution centers in the United States, Canada, Europe, Asia, and Australia.
 
Business growth comes from a combination of title, imprint and business acquisitions which complement the Company’s existing businesses; from the development of new products and services; from designing and implementing new methods of delivering products to our customers; and from organic growth of existing brands and titles.
 
Core Businesses
 
Scientific, Technical, Medical and Scholarly (STMS):
 
The Company is one of the most diversified leading publishers for the scientific, technical, medical and scholarly communities worldwide, including academic, corporate, government, and public libraries; researchers; scientists; clinicians; engineers and technologists; scholarly and professional societies; and students and professors. STMS products include journals, major reference works, books and protocols. STMS publishing areas include the physical sciences and engineering, medical, social science and humanities, life sciences, technology and professional.  STMS products are sold and distributed globally, online and in print through multiple channels, including research libraries and library consortia, subscription agents, direct sales to professional society members, bookstores, online booksellers and other customers. Global STMS represented approximately 60% of total Company revenue in fiscal year 2009.  STMS’s revenue grew at a compound annual rate of 23% over the past five years, including the acquisition of Blackwell in February 2007.  The graph below presents STMS revenue by product type for fiscal year 2009:
 
stms chart 
 
 
 
11

 
 
Approximately 56% of journal subscription revenue is derived from publishing rights owned by the Company. Publishing alliances also play a major role in STMS’s success. The Company publishes the journals of prestigious societies, including the American Cancer Society, the British Journal of Surgery Society, the Federation of European Biochemical Societies, The European Molecular Biology Organization, American Anthropological Association and the German Chemical Society. Approximately 44% of journal subscription revenue is derived from publication rights which are owned by professional societies and published by the Company pursuant to long-term contract or owned jointly with a professional society. These society alliances bring mutual benefit, with the societies gaining Wiley’s publishing, marketing, sales and distribution expertise, while Wiley benefits from being affiliated with prestigious societies and their members.
 
STMS is a leading provider of evidence-based medicine (EBM).  The Cochrane Collaboration database, a premier source of high-quality independent evidence to inform healthcare decision-making and provides the foundation for the Company’s growing suite of EBM products designed to improve patient healthcare.  EBM facilitates the effective management of patients through clinical expertise informed by best practice evidence that is derived from medical literature.
 
Established commercially in 1999, the company’s web-based publishing platform, Wiley InterScience® (www.interscience.wiley.com) is a leading international resource for scientific, technical, medical and scholarly content. In June 2008, online content formerly hosted on Blackwell’s web-based platform, Synergy, was migrated to Wiley InterScience. The migration included approximately 29,000 customers, over two million licenses and nearly two million journal articles. Wiley InterScience now offers access to nearly 1,500 journals and their backfiles, over 7,000 online books and major reference works (encyclopedias and multi-volume handbooks), a selection of Current Protocols (laboratory manuals) and databases, as well as a suite of professional and management resources.
 
Access to Wiley InterScience is sold through licenses with institutional and corporate libraries, consortia and other academic, government and corporate customers. The Company offers a range of licensing options including customized suites of journal publications for individual customer needs as well as subscriptions for individual journal publications. Licenses are typically sold in durations of one to three years.  The Company also provides fee based access to Wiley InterScience through its Article Select and PayPerView programs which offer non-subscribed journal content, book chapters and major reference work articles.
 
Wiley InterScience takes advantage of technology to update content frequently, and it adds new features and resources on an ongoing basis to increase the productivity of scientists, professionals and students. Two examples are EarlyView, through which customers can access individual articles well in advance of print publication, and MobileEditions, which enables users to view tables of content and abstracts on wireless handheld devices and Web-enabled phones.
 
In 2008, the Company introduced its open access business model, OnlineOpen. Under this open access business model, the author, the author's funding agency, or the author's institution pays a fee to ensure that an article is made available via Wiley InterScience to all non-subscribers including the general public upon publication. The article is also deposited in the funding agency's preferred repository. In return for the service fee, the Company provides its customary publishing, editing and peer review and technology services.
 
In 2005, the Company began a program to digitize its entire historical journal content, dating back to the 1800s.  Wiley’s digitization of legacy content is designed to improve the research pathway and ensure content discovery is as seamless and efficient as possible.  The backfile collection, which is available online through Wiley InterScience, spans two centuries of scientific research and comprise over 14 million pages – one of the largest archives of its kind issued by a single publisher. As of April 30, 2009 approximately 95% of all Wiley’s existing journal content is digitized and made available to customers.
 
12

 
Key Acquisitions: In February 2007, the Company acquired Blackwell Publishing (Holdings) Ltd. (“Blackwell”), a leading publisher of journals and books for the academic, research and professional markets focused on science, technology, medicine and social sciences and humanities.  Headquartered in Oxford, England, Blackwell also maintained publishing locations in the United States, Asia, Australia, Denmark and Germany.  Approximately 50% of Blackwell’s annual revenue was derived from the United States. Blackwell employed approximately 1,000 individuals worldwide with just over half located in the United Kingdom.  The acquisition of Blackwell enhanced Wiley’s global position as a provider of content and services, expanded and added diversity to the journal portfolio, increased both print and on-line advertising revenue and added more professional society relationships.
 
Professional/Trade:
 
The Company’s Professional/Trade business acquires, develops and publishes books and subscription products in all media, in the subject areas of business, technology, architecture, culinary, psychology, education, travel, consumer reference, and general interest. Products are developed for worldwide distribution through multiple channels, including major chains and online booksellers, independent bookstores, libraries, colleges and universities, warehouse clubs, corporations, direct marketing, and web sites. Global Professional/Trade publishing accounted for approximately 26% of total Company revenue in fiscal year 2009. The graph below presents P/T revenue by product type for fiscal year 2009:
 

pt chart

 
Key revenue growth strategies of the Professional/Trade business include adding value to its content, developing its leading brands and franchises, and executing strategic acquisitions. Revenue for the Company’s worldwide Professional/Trade business grew at a compound annual rate of 2% over the past five years.
 
Publishing alliances and franchise products are central to the Company’s strategy.  The ability to bring together Wiley’s product development, sales, marketing, distribution and technological capabilities with a partner’s content and brand name recognition has been a driving factor in its success. Professional/Trade alliance partners include General Mills, the Culinary Institute of America, the American Institute of Architects, the Leader to Leader Institute, Fisher Investments, Meredith Corporation and Weight Watchers, among many others.
 
The Company’s Professional/Trade customers are professionals, consumers, and students worldwide.  Professional Trade brands and extensive backlists are especially well suited for online bookstores such as Amazon.com.  With their unlimited “virtual” shelf space, online retailers offer the Company’s products for longer periods of time than brick-and-mortar bookstores.
 
13

 
The Company promotes an active and growing Professional/Trade custom publishing program. Custom publications are typically used by organizations for internal promotional or incentive programs.  Books that are specifically written for a customer or an existing Professional/Trade publication can be customized, such as having the cover art include custom imprint, messages or slogans.  Of special note are customized For Dummies publications, which leverage the power of this well-known brand to meet the specific information needs of a wide range of organizations around the world.
 
Key Acquisitions: Key Professional/Trade acquisitions in recent years include: (i) In fiscal 2007, WhatsonWhen.com, a provider of travel-related online content, technology, and services which compliment the Company’s travel products.  (ii) In fiscal year 2006, the publishing assets of Sybex, Inc., a leading publisher to the global information technology professional community for nearly 30 years.  Sybex published about 100 new titles a year and maintained a backlist of over 450 titles in digital photography, operating systems, programming and gaming categories. (iii) In fiscal year 2002, the Company acquired Hungry Minds Inc., a leading publisher with an outstanding collection of respected brands, with such product lines as the For Dummies series, the Frommer’s and Unofficial Guide travel series, the Bible and Visual technology series, the CliffsNotes study guides, Webster’s New World dictionaries, and Betty Crocker and Weight Watchers cookbooks.
 
Higher Education:
 
The Company publishes educational materials in all media for two and four-year colleges and universities, for-profit career colleges and advanced placement classes as well as secondary schools in Australia. Higher Education products focus on courses in business and accounting, sciences, engineering, computer science, mathematics, social sciences, and other academic course materials for the professional technology market.
 
Higher Education customers include undergraduate, graduate, and advanced placement students, educators, and lifelong learners worldwide and secondary school students in Australia. Product is delivered online and in print principally through college bookstores, online booksellers, and web sites. Globally, Higher Educational generated approximately 14% of total Company revenue in fiscal year 2009.  The Company’s worldwide Higher Education revenue grew at a compound annual rate of 4% over the past five years.
 
Higher Education’s mission is to help teachers teach and students learn. Our strategy is to provide value-added quality materials and services through textbooks, supplemental study aids, course and homework management tools and more, in print and electronic formats. The Higher Education web site offers online learning materials with links to more than 4,000 companion sub-sites to support and supplement textbooks.

 
 
14

 
 
Higher Education delivers high-quality online learning materials that offer more opportunities for customization and accommodate diverse learning styles.  A prime example is WileyPLUS, an integrated suite of teaching and learning resources. By offering an electronic version of a text along with supplementary materials, content provided by the instructor, and administrative tools, WileyPLUS supports a full range of course-oriented activities, including online-planning, presentations, study, homework, and testing. The graph below presents Higher Education revenue by product type for fiscal year 2009:
 

he chart

The Company also provides the services of the Wiley Faculty Network, a peer-to-peer network of faculty/professors supporting the use of online course material tools and discipline-specific software in the classroom. The Company believes this unique, reliable, and accessible service gives the Company a competitive advantage.
 
Higher Education is also leveraging the web in its sales and marketing efforts.  The web enhances the Company’s ability to have direct contact with students and faculty at universities worldwide through the use of interactive electronic brochures and e-mail campaigns.
 
Key Acquisition/Collaborations: In the fiscal year 2009, the Company acquired the rights to publish a list of business and modern language textbooks from Cengage Learning. The titles provide a strong compliment to Wiley’s existing programs in business and modern language.
 
In fiscal year 2007, Wiley became Microsoft’s sole publishing partner worldwide for all Microsoft Official Academic Course (MOAC) materials. Microsoft and Wiley have begun publishing a co-branded series of textbook and e-learning products on several topics released under Wiley-Microsoft logos. Wiley has also assumed responsibility for the sale of existing MOAC titles.  All titles are marketed globally and available in several languages.  With Microsoft’s position as the world’s leading software company and Wiley’s global presence in higher education, the alliance is an ideal strategic fit.
 
In fiscal year 2003, the Company acquired the assets of Maris Technologies to support the Company’s efforts to produce web-enabled products. This acquisition included the market-leading software Edugen, which provides the underlying technology for WileyPLUS. Located in Moscow, the development facility is staffed by approximately 75 programmers and designers.
 
Publishing Operations
 
Journal Products:
 
The Company now publishes about 1,500 Scientific, Technical, Medical, Scholarly and 60 Professional/Trade journals. Journal subscription revenue and other related publishing income, such as advertising, backfile sales, the sale of publishing rights, and reprints accounted for approximately 51% of the Company’s fiscal year 2009 revenue.  The journal portfolio includes titles owned by the Company, in which case they may or may not be sponsored by a professional society, titles owned jointly with a professional society and titles owned by such societies and published by the Company pursuant to long-term contract.
 
15

 
Societies that sponsor or own such journals generally receive a royalty and/or other consideration.  The Company usually enters into agreements with outside independent editors of journals that state the duties of the editors, and the fees and expenses for their services.  Contributors of journal articles transfer publication rights to the Company or a professional society, as applicable.  Journal articles may be based on funded research through government or charitable grants.  In certain cases the terms of the grant may require the grantholder to make articles (either the published version or an earlier unedited version) available free of charge to the public, typically after an embargo period.  The Company provides various services, some for a fee, to enable the grantholder to comply.
 
The Company sells journal subscriptions directly through sales representatives; indirectly through subscription agents; through promotional campaigns; and memberships in professional societies for those journals that are sponsored by societies.  Journal subscriptions are primarily licensed through contracts for on-line content delivered through the Company’s web-based platform, Wiley InterScience.  Contracts are negotiated by the Company directly with customers or their subscription agents.  Licenses range from one to three years in duration and typically cover calendar years.  Early in calendar year 2008, the Company announced its plan for a combined enhanced and rebranded online platform to support the Scientific, Technical, Medical and Scholarly business.  The first phase was available to all customers beginning in July 2008.  The final enhancements are expected to be completed in fiscal year 2010.
 
Printed journals are generally mailed to subscribers directly from independent printers.  The Company does not own or manage printing facilities. The print journal content is also available online. Subscription revenue is generally collected in advance, and is deferred and recognized as earned when the related issue is shipped or made available online, or over the term of the subscription as services are rendered.
 
Book Products:
 
Book products and book related publishing revenue, such as advertising revenue and the sale of publishing rights, accounted for approximately 49% of the Company’s fiscal year 2009 revenue.  Materials for book publications are obtained from authors throughout most of the world through the efforts of an editorial staff, outside editorial advisors, and advisory boards. Most materials originate with their authors, or as a result of suggestion or solicitations by editors and advisors. The Company enters into agreements with authors that state the terms and conditions under which the materials will be published, the name in which the copyright will be registered, the basis for any royalties, and other matters.  Most of the authors are compensated by royalties, which vary with the nature of the product and its anticipated potential profitability. The Company may make advance payments against future royalties to authors of certain publications.  Royalty advances are reviewed for recoverability and a reserve for loss is maintained, if appropriate.
 
The Company continues to add new titles, revise existing titles, and discontinue the sale of others in the normal course of its business, also creating adaptations of original content for specific markets fulfilling customer demand. The Company’s general practice is to revise its textbooks every three to five years, if warranted, and to revise other titles as appropriate.  Subscription-based products are updated more frequently on a regular schedule. Approximately 32% of the Company’s fiscal year 2009 U.S. book-publishing revenue was from titles published or revised in the current fiscal year.
 
16

 
Professional and consumer books are sold to bookstores and online booksellers serving the general public; wholesalers who supply such bookstores; warehouse clubs; college bookstores for their non-textbook requirements; individual practitioners; and research institutions, libraries (including public, professional, academic, and other special libraries), industrial organizations, and government agencies.  The Company employs sales representatives who call upon independent bookstores, national and regional chain bookstores and wholesalers.  Trade sales to bookstores and wholesalers are generally made on a returnable basis with certain restrictions. The Company provides for estimated future returns on sales made during the year principally based on historical return experience and current market trends. Sales of professional and consumer books also result from direct mail campaigns, telemarketing, online access, and advertising and reviews in periodicals.
 
Adopted textbooks, related supplementary material, and online products such as WileyPLUS, are sold primarily to bookstores, including online bookstores, serving educational institutions.  The Company employs 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.  Textbook sales are generally made on a fully returnable basis with certain restrictions.  The textbook business is seasonal, with the majority of textbook sales occurring during the June through August and November through January periods.  There is an active used textbook market, which adversely affects the sales of new textbooks.
 
Like most other publishers, the Company generally contracts with independent printers and binderies for their services. The Company purchases its paper from independent suppliers and printers. The fiscal year 2009 weighted average U.S. paper prices increased approximately 4% over fiscal year 2008.  Approximately 58% of Company paper inventory is held in the United States. Management believes that adequate printing and binding facilities, and sources of paper and other required materials are available to it, and that it is not dependent upon any single supplier.   Printed book products are distributed from both Company-operated warehouses and independent distributors.
 
The Company develops content in digital format that can be used for both online and print products, which results in productivity and efficiency savings, as well as enabling the Company to offer customized publishing and print-on-demand products.  Book content is increasingly being made available online through Wiley InterScience, WileyPLUS and other platforms, and in eBook format through licenses with alliance partners.  The Company also sponsors online communities of interest, both on its own and in partnership with others, to expand the market for its products.
 
The Company believes that the demand for new electronic technology products will continue to increase.  Accordingly, to properly service its customers and to remain competitive, the Company anticipates it will be necessary to increase its expenditures related to such new technologies over the next several years.
 
The Internet not only enables the Company to deliver content online, but also helps to sell more books.  The growth of online booksellers benefits the Company because they provide unlimited virtual “shelf space” for the Company’s entire backlist.
 
Marketing and distribution services are made available to other publishers under agency arrangements. The Company also engages in co-publishing of titles with international publishers and in publication of adaptations of works from other publishers for particular markets. The Company also receives licensing revenue from photocopies, reproductions, and electronic uses of its content as well as advertising revenue from web sites such as Frommers.com.
 
17

 
Global Operations
 
The Company’s publications are sold throughout most of the world through operations located in Europe, Canada, Australia, Asia, and the United States.  All operations market their indigenous publications, as well as publications produced by other parts of the Company. The Company also markets publications through agents as well as sales representatives in countries not served by the Company.  John Wiley & Sons International Rights, Inc. sells reprint and translations rights worldwide. The Company publishes or licenses others to publish its products, which are distributed throughout the world in many languages.  Approximately 50% of the Company’s fiscal year 2009 revenue was derived from non-U.S. markets.

The global nature of the Company’s business creates an exposure to foreign currency fluctuations relative to the U.S dollar. Each of the Company’s geographic locations sell products worldwide in multiple currencies. Revenue and deferred revenue, although billed in multiple currencies are accounted for in the local currency of the selling location. Fiscal year 2009 revenue was recognized in the following currencies: approximately 56% U.S dollar; 28% British pound sterling; 8% Euro and 8% other currencies.
 
Competition and Economic Drivers Within the Publishing Industry
 
The sectors of the publishing industry in which the Company is engaged are highly competitive.  The principal competitive criteria for the publishing industry are considered to be the following: product quality, customer service, suitability of format and subject matter, author reputation, price, timely availability of both new titles and revisions of existing books, online availability of published information, and timely delivery of products to customers.
 
The Company is in the top rank of publishers of scientific, technical, medical and scholarly journals worldwide,  a leading commercial research chemistry publisher; the leading society journal publisher; one of the leading publishers of university and college textbooks and related materials for the “hardside” disciplines, (i.e. sciences, engineering, and mathematics), and a leading publisher in its targeted professional/trade markets. The Company knows of no reliable industry statistics that would enable it to determine its share of the various international markets in which it operates.
 
Performance Measurements
 
The Company measures its performance based upon revenue, operating income, earnings per share and cash flow, excluding unusual or one-time events, and considering worldwide and regional economic and market conditions.   The Company evaluates market share statistics for publishing programs in each of its businesses.  STMS uses various reports to monitor competitor performance and industry financial metrics.  Specifically for STMS journal titles, the ISI Impact Factor, published by the Institute for Scientific Information, is used as a key metric of a journal titles influence in scientific publishing.  For Professional/Trade, market share statistics published by BOOKSCAN, a statistical clearinghouse for book industry point of sale data in the United States, are used. The statistics include survey data from all major retail outlets, online booksellers, mass merchandisers, small chain and independent retail outlets.  For Higher Education, the Company subscribes to Management Practices Inc., which publishes customized comparative sales reports.
 
Results of Operations
 
Fiscal Year 2009 Summary Results

Revenue for fiscal year 2009 decreased 4% to $1,611.4 million.  Excluding the unfavorable impact of foreign exchange revenue increased 3%.  Growth in STMS journals, including an acquisition accounting adjustment that reduced prior year STMS revenue by approximately $16.7 million, and growth in Higher Education were partially offset by a decline in P/T revenue due to weak market conditions.
 
18


Gross profit margin in fiscal year 2009 of 68.0% was 0.2% lower than the prior year as lower P/T sales volume and higher inventory obsolescence and royalty advance provisions were partially offset by favorable product mix and lower production costs in Higher Education.  Operating and administrative expenses for fiscal year 2009 of $839.6 million were 4% lower than the prior year, or increased 1% excluding the favorable impact of foreign exchange.  Lower accrued incentive compensation expense and marketing and advertising cost containment programs were more than offset by annual merit increases; higher editorial and distribution costs to support new Higher Education and STMS titles; and higher occupancy, facilities and depreciation costs related to business expansion.

Operating income for fiscal year 2009 decreased 3% to $218.5 million, or improved 11% excluding the unfavorable impact of foreign exchange.  The improvement excluding foreign exchange was mainly due to revenue growth, including the acquisition accounting adjustment last year.  Interest expense decreased $18.3 million to $48.4 million.  Lower interest rates contributed approximately $10.8 million towards the improvement, while lower average outstanding debt contributed approximately $7.5 million. Interest income and other increased $0.3 million to $6.2 million principally due to a $4.6 million ($0.08 per diluted share) non-recurring insurance receipt received in the first quarter of fiscal year 2009, partially offset by higher interest income in the prior year. Losses on foreign currency transactions for fiscal year 2009 and 2008 were $11.8 million and $2.9 million, respectively.  The increase in foreign currency transaction losses was mainly due to the strengthening of the U.S. dollar against the British pound sterling on intercompany payables and U.S. dollar third party debt outstanding in the U.K.

The effective tax rates for fiscal years 2009 and 2008 were 22.0% and 8.7%, respectively.  During fiscal year 2008, the Company recorded an $18.7 million tax benefit associated with new tax legislation enacted in the United Kingdom (UK) and Germany that reduced the corporate income tax rates from approximately 30% to 28% and 39% to 29%, respectively.  The benefits recognized by the Company reflect the adjustments required to restate all applicable deferred tax balances at the new income tax rates.  The new tax rates were effective in Germany as of May 1, 2007 and in the UK as of April 1, 2008.  The effective tax rate for fiscal year 2009 was 22.0% compared to 20.2% for fiscal year 2008, excluding the deferred tax benefits described above. The increase was mainly due to lower foreign tax benefits.

Earnings per diluted share and net income for fiscal year 2009 were $2.15 and $128.3 million, respectively.  Reported earnings per diluted share and net income for fiscal year 2008 were $2.49 and $147.5 million, respectively.  Adjusted to exclude the non-cash deferred tax benefits described above, earnings per diluted share and net income for fiscal year 2008 were $2.17 and $128.9 million, respectively.  See Non-GAAP Financial Measures described below. Excluding the deferred tax benefits and the effect of foreign exchange transaction and translation losses of approximately $0.50 per share, earnings per share increased 22% to $2.15 per share.

Non-GAAP Financial Measures:  The Company’s management internally evaluates its operating performance excluding unusual and/or nonrecurring events. The Company believes excluding such events provides a more effective and comparable measure of current and future performance. We also believe that excluding the effects of the following tax benefits provides a more balances view of the underlying dynamics of our business.

 
 
19

 
 
Deferred Tax Benefit on Changes in Statutory Tax Rates
 
The Company recorded an $18.7 million tax benefit  ($15.6 million for Blackwell) associated with new tax legislation enacted in the United Kingdom (U.K.) and Germany that reduced the corporate income tax rates from approximately 30% to 28% and 39% to 29%, respectively.  The benefits recognized by the Company reflect the adjustments required to restate all applicable deferred tax balances at the new income tax rates. These benefits have been adjusted below due to their infrequent non-recurring nature.
 
Since adjusted net income and adjusted earnings per share are not measures calculated in accordance with US GAAP, they should not be considered as a substitute for other US GAAP measures, including net income and earnings per share as indicators of operating performance. Accordingly, adjusted net income and adjusted earnings per diluted share are reconciled below to net income and earnings per share on a US GAAP basis, for fiscal years 2009 and 2008.

Reconciliation of Non-GAAP Financial Disclosure
     
   
For the Years
Ended April 30,
     
Net Income (in thousands)
 
2009
2008
       
As Reported
 
$128,258
$147,536
       
Deferred Tax Benefit on Changes in Statutory Rates
 
-
(18,663)
       
Adjusted
 
$128,258
$128,873
       
   
For the Years
Ended April 30,
     
Earnings per Diluted Share
 
2009
2008
       
As Reported
 
$2.15
$2.49
       
Deferred Tax Benefit on Changes in Statutory Rates
 
-
(0.31)
       
Adjusted
 
$2.15
$2.17


Fiscal Year 2009 Segment Results

In connection with the integration of Blackwell Publishing Ltd. (“Blackwell”), we have conformed the classification of certain accounts in our Statements of Income and segment reporting and realigned certain product lines in our segment reporting to correspond with management responsibility.  In addition, the Company reclassified foreign exchange transaction gains and losses, previously reported as a component of direct contribution to profit to a separate distinguishable line below operating income.  All prior year periods have been restated for comparability.  These changes had no impact on Wiley’s consolidated revenue, net income or earnings per share.

During fiscal year 2008, the Company began developing a global organizational management structure encompassing Wiley’s three core businesses (Scientific, Technical, Medical and Scholarly; Professional/Trade and Higher Education).  The global organizational structure will enhance the Company’s ability to leverage content, services and capabilities around the world to better serve authors, society partners and customers.  During the first quarter of fiscal year 2009, the transition of all operational and financial systems necessary to support a global organization was finalized.  As a result of this process, in the first quarter of fiscal year 2009 the Company began reporting its financial results for the three global businesses as separate business segments and separately reported financial data for shared service functions which are centrally managed for the benefit of all the global business segments. Prior year segment data has been restated for comparability.

20

 
Scientific, Technical, Medical and Scholarly (STMS):
   
       
% change
Dollars in thousands
 2009
 2008
% change
w/o FX
Revenue
$969,184
$975,797
(1%)
9%
Direct Contribution
$399,156
$384,170
4%
14%
Contribution Margin
   41.2%
    39.4%
   

Global STMS revenue for fiscal year 2009 of $969.2 million declined 1% from prior year mainly due to unfavorable foreign exchange. Excluding the unfavorable impact of foreign exchange revenue increased 9%.  Increased revenue from journal subscription renewals, new business, price increases, global rights and STMS books was partially offset by lower sales of backfiles, reprints and custom publishing.  Also contributing to the increase in journal subscriptions was a $16.7 million acquisition accounting adjustment related to Blackwell that reduced revenue in the prior year.  This adjustment contributed 2% to revenue growth excluding foreign exchange.

Direct contribution to profit for fiscal year 2009 grew 4% from prior year to $399.2 million, or 14% excluding the unfavorable effect of foreign exchange.  Direct contribution margin improved 180 basis points to 41.2%, or 41.1% excluding the unfavorable impact of foreign exchange, mainly due to the prior year acquisition accounting adjustment, a $2.0 million bad debt recovery and cost containment efforts, partially offset by higher performance compensation and other employment costs and editorial costs due to the addition of more society journals.  Margins on professional society journals are lower than margins earned on Company owned journals.

STMS Journals
Journal revenue grew 8% excluding unfavorable foreign exchange and the prior year acquisition accounting adjustment related to Blackwell. All regions exhibited journal sales growth, excluding unfavorable foreign exchange.  The performance is mainly attributed to renewals, new business, price increases and the acquisition accounting adjustment in fiscal year 2008.  Subscription and pay-per-view revenue was up year-over-year, while backfile revenue fell due to the economic climate, particularly in the US.

Society Journal Activity
·  
32 New signings
·  
87 Renewed/extended contracts
·  
9 Contracts not renewed

Key New Agreements
·  
A new journal launch for 2010 – the Journal of Research Synthesis Methods in association with the Society for Research Synthesis Methodology
·  
Family and Consumer Science Research on behalf of the American Association of Family and Consumer Sciences
·  
Design Management Review and Design Management Journal with the Design Management Institute
·  
The Institute of Development Studies at the University of Sussex, one of Europe’s leading research institutions. The journal, IDS Bulletin, was previously self-published.
·  
The Economic Society of Australia for Economic Papers.
·  
Asian Journal of Endoscopic Surgery.

21

 
Key Journal Renewals
·  
Economic Journal and Econometrics Journal (Royal Economic Society)
·  
Journal of Accounting Research (Institute of Professional Accounting at the University of Chicago Booth School of Business)
·  
Cancer Science (Japanese Cancer Association)
·  
ANZ Journal of Surgery (Royal Australasian College of Surgeons)
·  
International Journal of Urology (Japanese Urological Association)
·  
Journal of Neuroendocrinology (European Neuroendocrine Association, the British Society for Neuroendocrinology and the International Neuroendocrine Federation)
·  
Therapeutic Aphaeresis and Dialysis (International Society for Aphaeresis, The Japanese Society for Aphaeresis and The Japanese Society for Dialysis Therapy)
·  
Journal of Philosophy of Education (Philosophy of Education Society of Great Britain)

Journal Licenses
Journal licenses, which represent approximately 60% of fiscal year 2009 journal subscription revenue, provide academic, government and corporate customers with online access to multiple journals. During fiscal year 2009, agreements were signed or renewed with universities, library consortia and government agencies in the US, Norway, Japan, China, Brazil, Canada, Greece, Chile, Denmark and India.

STMS Books and References
Book sales and other related income, which account for approximately 17% of fiscal year 2009 STMS revenue, were up 5% excluding unfavorable foreign exchange. The total number of books published increased slightly.  Online book sales rose approximately 20% to $10 million. During the fiscal year, Wiley acquired the Arnold statistics book program from Hodder Education.  The acquisition, which includes over 50 titles, complements areas of strength in Wiley’s statistics program, while providing growth opportunities.

Wiley InterScience
Wiley achieved an important milestone in the early part of fiscal year 2009 by migrating online journal content, customers and access licenses from Blackwell’s Synergy platform to Wiley InterScience.  The migration included approximately 29,000 customers, over two million licenses and nearly two million journal articles.


 
Professional/Trade (P/T):
   
       
% change
Dollars in thousands
2009
2008
% change
w/o FX
Revenue
$412,674
$471,785
(13%)
(10%)
Direct Contribution
$94,620
$136,619
(31%)
(27%)
Contribution Margin
22.9%
29.0%
   
 
Global P/T revenue for fiscal year 2009 decreased 13% to $412.7 million, or 10% excluding the unfavorable impact of foreign exchange.  The decline in revenue was due to a weak retail environment particularly in the U.S., partially offset by modest growth in the European and Canadian markets.  Also affecting the comparison to last year was the termination of a publishing agreement in the culinary/hospitality publishing program.

Direct contribution to profit decreased 31% to $94.6 million, or 27% excluding the unfavorable impact of foreign exchange.  Direct contribution margin declined 610 basis points to 22.9%, or 540 basis points excluding the unfavorable impact of foreign exchange.  The decline reflects lower sales volume, higher inventory obsolescence and royalty advance provisions and a $2.0 million bad debt recovery in the prior year, partially offset by cost containment efforts in advertising, sales and marketing and lower accrued incentive compensation.

22

 
Notable Alliances
·  
GMAC/Official Guide to the GMAT:  Wiley became the official publisher of the Graduate Management Admission Test® (GMAT®) study guides in October 2008.  In March, the 12th edition of the top-selling Official Guide for GMAT Review was released worldwide.  It will be followed by The Official Guide for GMAT Verbal Review and The Official Guide for GMAT Quantitative.
·  
Meredith: In March 2009, as part of its multi-year agreement, Wiley began publishing Better Homes and Garden book titles and other brands such as Family Circle, as well as Food Network TV, Sandra Lee, Rocco DiSpirito and Tyler Florence.
·  
Kindle (Amazon):  Currently, Wiley has over 9,000 P/T books available on the Kindle 2.
·  
General Mills:  Wiley and General Mills signed an agreement to renew their publishing partnership.  Under the agreement, Wiley will continue to publish the flagship Betty Crocker “Big Red” cookbook and other cookbooks under the Betty Crocker, Pillsbury and other General Mills brands.
·  
Vancouver Olympic Organizing Committee:  Wiley Canada entered into an agreement with VANOC, becoming the official publication partner of the 2010 Winter Olympic and Paralympics Games in Vancouver/Whistler.  In close cooperation with VANOC, Wiley will produce commemorative books, games reports, and custom publications.

Online Initiatives
·  
For the fiscal year, Frommers.com maintained its top position in website traffic by posting 137 million page views and nearly 29 million visits.  The results were lower than last year due to the economy.
·  
Launched in November 2008, the new Dummies.com generated a total of 29 million page views by fiscal year-end, a 23% increase over prior year.  Eleven million unique visitors represented a 21% increase.  Users are spending 17% more time on content pages.  The site now includes 25 topic areas with 250+ pieces of content in each, 950 fully illustrated step-by-step articles, 6,610 articles, and 265 videos.
·  
CliffsNotes.com recorded year-on-year increases of 5% in page views and 21% in unique visitors.

Notable New Titles
Business:
·  
Lee Bolman: Reframing Organizations, Fourth Edition
·  
Jim Kouzes and Barry Posner: Leadership Challenge, Fourth Edition
·  
GAAP 2009
·  
CPA Exam Set, Thirty-fifth edition, Volumes 1 and 2
·  
Mary Kay Ash: Mary Kay Way
·  
Patrick Lencioni: Three Big Questions for  A Frantic Family
Finance:
·  
JK Lasser, Year In Taxes 2009
·  
Fischer: Ten Road to Riches
·  
John Bogle: Enough
·  
Peter Schiff: Little Book of Bull Moves in Bear Markets
·  
Martin Weiss: Depression Survival Guide
·  
Addison Wiggin: I.O.U.S.A.: One Nation. Under Stress. In Debt
Psychology:
·  
Lenore Skenazy: Free Range Kids: Giving Our Children the Freedom We had without Going Nuts with Worry
·  
Michael Gurian: The Purpose of Boys: Helping Our Sons Find Meaning, Significance and Direction in Their Lives
·  
Gary Groth-Marnat: Handbook of Psychological Assessment, Fifth Edition
·  
Richard Lerner: Handbook of Adolescent Psychology, Third Edition
 
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Consumer:
·  
Weight Watchers in 20 Minutes
·  
Mark Bittman: How to Cook Everything, Second Edition
·  
Bob Sehlinger: Unofficial Guide to Walt Disney World 2009
·  
GMAC: The Official Guide to the GMAT, Twelfth Edition
·  
Jack Cafferty: Now Or Never: Getting Down To Business of Saving Our American Dream
·  
Alan Rubin: Diabetes for Dummies
·  
Paul McFedries: iPhone 3G Portable Genius
Architecture:
·  
Edward Allen: Fundamentals of Building Construction, Fifth Edition
·  
Wiley CPE (Continuing Professional Education, a web-based online continuing education system)


Higher Education (HE):
   
       
% change
Dollars in thousands
2009
2008
% change
w/o FX
Revenue
$229,532
$226,152
1%
6%
Direct Contribution
$61,677
$68,270
(10%)
(3%)
Contribution Margin
26.9%
30.2%
   

Global HE revenue for fiscal year 2009 grew 1% from the prior year period, or 6% excluding the unfavorable impact of foreign exchange.  Revenue growth occurred in every region and in nearly every subject category.  Contributing to these results were a strong frontlist; approximately $6.6 million of revenue from recently acquired titles; solid growth from the Microsoft publishing agreement; and the continued success of WileyPLUS.

Direct contribution to profit decreased 10% to $61.7 million, or 3% excluding the unfavorable impact of foreign exchange.  Direct contribution margin declined 330 basis points to 26.9%, or 260 basis points excluding the unfavorable impact of foreign exchange.  The decline reflects prior year cost containment efforts which significantly curtailed expenditures in fiscal year 2008, higher accrued incentive compensation expense and increased marketing, advertising and content development costs to support the large frontlist.

WileyPLUS
·  
Now accounts for 9% of global HE revenue
·  
Global full year billings increased 38%
·  
Digital-only sales grew 70%
·  
Validation/usage rates increased
·  
WileyPLUS sales outside the US represent 15% of the total

Notable Alliances
·  
Microsoft Official Academic Course (MOAC) revenue was up 16% over prior year.
·  
Wiley is partnering with American Hospitality Training Institute, an online provider of hospitality training for students outside the US interested in working for US hotels and resorts.  Twenty-one classes utilizing content from Barrows/Introduction to Management in the Hospitality Industry 9e will begin in June, 2009.
·  
Wiley and Learning House agreed to create highly integrative online courses based on Wiley textbooks.  The courses will be bundled with the book.  We received approval for a licensing agreement for two pilot courses in world regional geography and Spanish 1. Learning House is an online education solutions partner helping small colleges and universities offer and manage their online degree programs.
·  
Wiley expanded its alliance with Amazon to offer select Wiley textbooks for sale through the Kindle DX.   Books are set to go live on the Kindle Store in the summer of 2009.
 
24

 
Acquisitions
·  
In August 2008, Wiley acquired business and modern language textbooks from Cengage Learning and mathematics and statistics textbooks from Key College Publishing.
·  
These acquisitions contributed approximately $6.6 million of revenue in fiscal year 2009, exceeding expectations.

Custom Publishing
·  
Wiley Custom Select was successfully launched in the fourth quarter.  Wiley Custom Select is a custom textbook system that allows instructors to "build" customized higher education course materials that fit their pedagogical needs, enabling users to easily find the content, personalize the material and format, and submit the order.  In fiscal year 2009, custom sales increased approximately 25%.

Shared Service and Administrative Costs

Shared services and administrative costs for fiscal year 2009 decreased 7% to $337.0 million, or 2% excluding the favorable impact of foreign exchange.  The improvement reflects lower accrued incentive compensation expense and lower integration costs, partially offset by planned salary merit increases, higher distribution costs due to increased journal shipping and handling and higher occupancy, facilities and depreciation costs related to business expansion.
 
Results of Operations
 
Fiscal Year 2008 Summary Results
 
Revenue for fiscal year 2008 increased 36% to $1,673.7 million, or 33% excluding the favorable impact of foreign exchange.  Blackwell Publishing Ltd. (“Blackwell”), which was acquired on February 2, 2007, contributed $379.4 million to the revenue growth, increasing from $105.8 million in fiscal year 2007 to $485.2 million in fiscal year 2008. Blackwell is a leading publisher of journals and books for the STMS business. Excluding Blackwell, revenue grew 5% to $1,188.5 million, or 3% excluding the favorable impact of foreign exchange. Strong revenue growth in Europe and Asia was tempered by moderate growth in the U.S. markets.
 
Gross profit margin in fiscal year 2008 of 68.2% was essentially the same as in the prior year.  Operating and administrative expenses for fiscal year 2008 increased 33% to $876.6 million, including $183.8 million of incremental operating expenses for Blackwell. Included in Blackwell operating and administrative expenses are approximately $21 million of costs related to the transition and integration of Blackwell. Operating and administrative expenses for fiscal year 2008 increased 3%, excluding Blackwell and the unfavorable impact of foreign exchange.  The increase was mainly due to higher planned employment and other costs to support business growth; increased editorial and production associated with new journals; and costs associated with the development of indigenous publishing programs.  The Company recorded a $4.4 million bad debt provision in fiscal year 2007 related to the bankruptcy of Advanced Marketing Services and a $1.9 million recovery of that bad debt in the current fiscal year.  Amortization of intangibles increased $18.3 million, principally due to the Blackwell acquisition.
 
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Operating income improved 39% to $225.2 million in fiscal year 2008, including incremental operating income of $60.3 million related to Blackwell, which increased from $6.7 million in fiscal year 2007 to $67.0 million in fiscal year 2008.  Excluding Blackwell, operating income improved 2% to $158.2 million, or 1% excluding the favorable impact of foreign exchange.  Revenue growth was partially offset by higher planned operating expenses.  Interest expense increased $40.6 million to $66.7 million, mainly due to finance costs associated with the Blackwell acquisition.  Losses on foreign currency transactions for fiscal years 2008 and 2007 were $2.9 million and $0.2 million, respectively.
 
The effective tax rate for fiscal year 2008 was 8.7% compared to 28.6% in the prior year period.  During fiscal year 2008, the Company recorded an $18.7 million tax benefit associated with new tax legislation enacted in the United Kingdom (U.K.) and Germany that reduced the corporate income tax rates from approximately 30% to 28% and 39% to 29%, respectively.  The benefits recognized by the Company reflect the adjustments required to restate all applicable deferred tax balances at the new income tax rates.  The new tax rates were effective in Germany as of May 1, 2007 and in the U.K. as of April 1, 2008.  The tax provision for fiscal year 2007 included tax benefits of $5.5 million related to the settlement and resolution of certain tax matters with authorities in the U.S. and abroad.  Excluding Blackwell and the tax benefits described above, the effective tax rates for fiscal years 2008 and 2007 were 30.2% and 35.1%, respectively.  The decrease was principally due to lower taxes on non-U.S. sourced earnings.  Blackwell’s effective tax rate had, and is expected to have, a favorable impact on the Company’s consolidated effective tax rate.
 
Reported earnings per diluted share and net income for fiscal year 2008 were $2.49 and $147.5 million, respectively.   Adjusted to exclude the non-cash deferred tax benefits described above, earnings per diluted share and net income for fiscal year 2008 were $2.17 and $128.9 million, respectively. Earnings per diluted share and net income for fiscal year 2007 adjusted to exclude the 2007 tax benefits described above were $1.62 and $94.2 million, respectively.   Excluding the tax benefits, Blackwell’s results were accretive to earnings per diluted share and net income by approximately $0.29 and $17.0 million, respectively. See Non-GAAP Financial Measures described below.
 
Non-GAAP Financial Measures:  The Company’s management internally evaluates its operating performance excluding unusual and/or nonrecurring events. The Company believes excluding such events provides a more effective and comparable measure of current and future performance. We also believe that excluding the effects of the following tax benefits provides a more balanced view of the underlying dynamics of our business.
 
Deferred Tax Benefit on Changes in Statutory Tax Rates
 
The Company recorded an $18.7 million tax benefit  ($15.6 million for Blackwell) associated with new tax legislation enacted in the United Kingdom (U.K.) and Germany that reduced the corporate income tax rates from approximately 30% to 28% and 39% to 29%, respectively.  The benefits recognized by the Company reflect the adjustments required to restate all applicable deferred tax balances at the new income tax rates. These benefits have been adjusted below due to their infrequent non-recurring nature.

Benefits on the Finalization of Tax Audits
 
Fiscal year 2007 includes a $5.5 million tax benefit, or $0.09 per diluted share, which resulted from the favorable resolution and settlements of certain tax matters with authorities in the U.S. and abroad. The Company has excluded these benefits from adjusted net income and adjusted earnings per share due to their significance to both measurements and uncertainty as to their reoccurrence in the future.
 
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Since adjusted net income and adjusted earnings per share are not measures calculated in accordance with GAAP, they should not be considered as a substitute for other GAAP measures, including net income and earnings per share as indicators of operating performance. Accordingly, adjusted net income and adjusted earnings per diluted share are reconciled below to net income and earnings per share on a GAAP basis, for fiscal years 2008 and 2007.


Reconciliation of Non-GAAP Financial Disclosure
   
 
For the Years
Ended April 30,
Net Income (in thousands)
    2008
   2007
 
 
 
As Reported
$147,536
 $99,619
     
Deferred Tax Benefit on Changes in Statutory Rates
  (18,663)
      -
      
Tax Benefits on The Finalization of Audits
       -
   (5,468)
     
Adjusted
$128,873
  $94,151
     
 
For the Years
Ended April 30,
Earnings Per Diluted Share
   2008
 2007
     
As Reported
      $2.49
      $1.71
     
Deferred Tax Benefit on Changes in Statutory Rates
      (0.31)
      -
     
Tax Benefits on The Finalization of Audits
       -
     (0.09)
     
Adjusted
      $2.17
      $1.62

Fiscal Year 2008 Segment Results

During fiscal year 2008, the Company began developing a global organizational management structure encompassing Wiley’s three core businesses (Scientific, Technical, Medical and Scholarly; Professional Trade and Higher Education).  The global organizational structure will enhance the Company’s ability to leverage content, services and capabilities around the world to better serve authors, society partners and customers.  During the first quarter of fiscal year 2009, the transition of all operational and financial systems necessary to support a global organization was finalized.  As a result of this process, in the first quarter of fiscal year 2009 the Company began reporting its financial results for the three global businesses as separate business segments and separately reported financial data for shared service functions which are centrally managed for the benefit of all the global businesses.

In connection with the integration of Blackwell Publishing Ltd. (“Blackwell”), the Company conformed the classification of certain accounts in the Statements of Income and Segment Reporting and realigned certain product lines in our segment reporting to correspond with management responsibility.  In addition, the Company reclassified foreign exchange transaction gains and losses previously reported as a component of direct contribution to profit to a separate distinguishable line below operating income.  All prior year periods have been restated for comparability.  These changes had no impact on Wiley’s consolidated revenue, net income or earnings per share.

 
 
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Scientific, Technical, Medical and Scholarly (STMS):
   
Dollars in thousands
 2008
 2007
% change
Revenue
$975,797
$562,675
73%
Direct Contribution
$384,170
$240,446
60%
Contribution Margin
   39.4%
    42.7%
 
 
 
Global STMS revenue for fiscal year 2008 grew 73% over prior year to $975.8 million, or 71% excluding the favorable impact of foreign exchange.  Revenue growth includes Blackwell’s operating results since February 2, 2007, the date of the acquisition. Blackwell revenue for fiscal years 2008 and 2007 was $485.2 million and $105.8 million, respectively.  Global STMS revenue advanced 4% for the full year, excluding Blackwell and favorable foreign exchange.  Revenue growth was mainly attributable to solid global journal subscription growth and book growth in Asia.
 
Direct contribution to profit for fiscal year 2008 increased 60% over fiscal year 2007 to $384.2 million.  Blackwell direct contribution to profit was $174.1 million and $29.1 million for fiscal years 2008 and 2007, respectively. Included in Blackwell operating and administrative expenses are approximately $21 million of transition and integration related costs.   Global STMS direct contribution to profit excluding Blackwell was $210.1 million. Excluding favorable foreign exchange and Blackwell, direct contribution to profit was flat with the prior year as revenue growth was offset by increased production costs associated with new journal titles, higher marketing costs and consulting fees.
 
Over the course of the year, the Company added 65 society journals, renewed or extended 74 journals, and lost only 3 journals to competitors. In the fourth quarter, the American Cancer Society (ACS) selected the Company to publish CA, beginning in January 2009. Wiley and the ACS already collaborate on Cancer and Cancer Cytopathology.  Wiley was also chosen by the Triological Society to publish The Laryngoscope, a venerable journal first published in 1896, and the Society of Plastics Engineers, to publish Plastics Engineering, a news magazine delivering the latest information for the global market in machinery, materials, plastics processing and all matters relating to the plastics industry.
 
During the fiscal year, Wiley signed agreements with the Society for Science and the Public to electronically distribute its news magazine, Science News, and to designate the Wiley-published journal, Statistical Analysis and Data Mining, as “an official journal of the American Statistical Association (ASA),” The ASA will also collaborate with Wiley on the editorial direction, strategy and process for this new cross-disciplinary publication.   Wiley reached an agreement to publish the quarterly Canadian Journal of Statistics in fiscal year 2009 on behalf of the Statistical Society of Canada.  These two agreements reinforce the Company’s leadership in statistics publishing.
 
The Scandinavian Plant Physiology Society renewed the publishing agreement for one of its key plant science journals, Physiologia Plantarum. A new agreement was signed for Economic Geography, the leading journal in its field.  The Australian Anthropological Society chose STMS as publisher of the Australian Journal of Anthropology.   The Certified Public Accountants of Australia selected STMS to publish Australian Accounting Review.  STMS entered into a collaborative agreement with the Association for the Study of Ethnicity and Nationalism to publish, Studies in Ethnicity and Nationalism and Nations and Nationalism.
 
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In January 2008, legislation was passed in the U.S. mandating the NIH Public Access Policy.  Under this policy, all research funded by the National Institutes of Health (NIH) must be made available to the public free of charge after a 12-month embargo.  Wiley will support its authors by complying on their behalf through posting the accepted journal articles written by NIH grant-holders to PubMedCentral.
 
In fiscal year 2008, Wiley nearly doubled its Online Books offering.  Over 6,000 titles are now available on Wiley InterScience, including approximately 1,700 Blackwell books.
 
STMS published a new edition of the Five Minute Veterinary Consult as a workflow tool on Personal Digital Assistants (PDAs).  This best-selling reference book is now delivered to the point of care, providing veterinarians in the field with easy access to medical data.  The service provides for instant information on diagnostic signs, causes of the disease, treatment protocols, medicines and dosage.
 
Several STMS publications were highlighted by the media and honored with awards during the year.  The British Medical Association recognized eleven STMS publications with book awards and the Association of American Publishers Professional and Scholarly Publishing Awards for Excellence named Mind, Brain, and Education as the “Best New Journal in 2007.”  Blackwell Reference Online, which was enhanced by the addition of many new titles during the year, was cited by Choice as “an outstanding academic resource.”
 
The Hospitalist, which STMS publishes with the Society of Hospital Medicine (SHM), received two awards from the American Society of Healthcare Publication Editors: Bronze for Best Custom Publication and Gold for Best Regular Staff-Written column.  Earlier in the year, in conjunction with SHM, Wiley launched "Wachter's World," a blog written by Dr. Robert M. Wachter, which addresses current issues in hospital care and inpatient medicine.  Dr. Wachter is co-founder of SHM.
 
In Asia, fiscal year 2008 offered the first glimpse of the powerful combination of Blackwell and Wiley.  The efforts undertaken to build Wiley’s newest STMS publishing center in Asia, while consolidating Wiley and Blackwell operations, produced strong book revenue growth, especially in Southeast Asia, China, and India. The Microscopy & Analysis Directory 2008 published during the fourth quarter to strong response.  The Directory is primarily a print product with an online counterpart.  In addition, two new major reference works were launched on Wiley InterScience, following their print publication earlier in the year:  Handbook of Biosensors and Biochips by Robert S. Marks and Encyclopedia of Statistics in Quality and Reliability by Fabrizio Ruggeri, Ron S. Kennett and Frederick W. Faltin.
 
During the year, Wiley signed an agreement with the Novartis Foundation to digitize the Ciba Foundation series from its beginning in 1953 up to 1986 when Wiley became the Foundation’s publisher.  The collection will only be available electronically as a complete set or as separate volumes with individual chapters downloadable from Wiley InterScience.
 

Professional/Trade (P/T):
     
Dollars in thousands
2008
 2007
% change
Revenue
$471,785
$456,820
3%
Direct Contribution
$136,619
$127,841
7%
Contribution Margin
   29.0%
  28.0%
 

Global P/T revenue for fiscal year 2008 advanced 3% to $471.8 million from $456.8 million in the previous year, or 2% excluding the favorable impact of foreign exchange.  Revenue was adversely affected by sluggish market conditions, tight inventory management by some key accounts late in the fiscal year and higher sales returns.  Growth during the year was principally in business, psychology, technology and general interest programs and the sale of rights and brand licensing.  Revenue from indigenous Dummies titles in Europe also contributed to the growth.
 
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Direct contribution to profit for fiscal year 2008 improved 7% to $136.6 million, or 5% excluding favorable foreign exchange.   The improvement for the year was principally due to the favorable year-on-year effect of a $4.4 million bad debt provision recorded in fiscal year 2007 related to the bankruptcy of Advanced Marketing Services and an approximate $2.0 million recovery of that bad debt in the current fiscal year. In addition, the effect of lower variable incentive compensation on direct contribution margin was partially offset by higher inventory obsolescence provisions.
 
Highlights for fiscal year 2008 included the publication of the fifth title in the best-selling Little Book series, The Little Book That Builds Wealth: The Knockout Formula for Finding Great Investments by Pat Dorsey; two firsts from the For Dummies technology list, the inaugural “do-it-yourself” title, Web Sites Do-It-Yourself For Dummies, and the first title targeted at the “over-50” consumer, Computers For Seniors For Dummies.  Quarter highlights also included Jim Hightower’s Swim against the Current: Even a Dead Fish Can Go With the Flow; Heaven and Hell: My Life in the Eagles (1974-2001) by Don Felder; The Architect’s Handbook of Professional Practice, 14th edition, edited by the American Institute of Architects; Clinician’s Guide to Treating Stress After War and Strategies for Managing Stress After War, both by Julia M. Whealin, Lori T. DeCarvalho and Edward M. Vega; and the four-volume reference work, Comprehensive Handbook of Social Work and Social Welfare by Karen M. Sowers and Catherine N. Dulmus.
 
New timely P/T environmental titles, Green Building and Remodeling for Dummies, Green Living for Dummies and Solar Power Your Home for Dummies, sold well during the year. Previously published titles continued to sell well throughout the year, including Weight Watchers New Complete Cookbook and Weight Watchers All-Time Favorites, along with Mark Bittman’s, How to Cook Everything Vegetarian.  The Kouzes/Posner Leadership Challenge and Patrick Lencioni’s suite of leadership titles had strong years. Books featured on major bestseller lists included Five Dysfunctions of a Team by Patrick Lencioni; Ready, Fire, Aim: Zero to $100 Million in No Time Flat by Michael Masterson; J.K. Lasser’s Your Income Tax 2009; Staring at the Sun: Overcoming the Terror of Death by Irvin D. Yalom; How: Why How We Do Anything Means Everything...in Business (and in Life) by Dov Seidman; and Swim against the Current: Even a Dead Fish Can Go With the Flow by Jim Hightower.
 
Several P/T books received considerable media and customer attention during the year, including: Fred Kaplan’s Daydream Believers: How a Few Grand Ideas Wrecked American Power, which was reviewed prominently in the New York Times’s Arts Section, on National Public Radio, MSNBC and in regional media.  Swim against the Current: Even a Dead Fish Can Go with the Flow by Jim Hightower received national radio and newspaper attention.  Mark Bittman’s How to Cook Everything Vegetarian continued to garner national media attention, supported by the author’s regular appearances on the Today Show, the launch of his own New York Times blog, “Bitten,” and a column in Men’s Health magazine.  Pauline Frommer continued to provide expert opinion in local and national media as an authority on budget travel.
 
Several P/T titles were honored with awards during the year. The International Association of Culinary Professionals (IACP) named Fish Forever by Paul Johnson “Cookbook of the Year,” a first for Wiley, and three Wiley cookbooks won best-in-category, How to Cook Everything Vegetarian by Mark Bittman; Chocolates and Confections by Peter C. Greweling and The Culinary Institute of America; and Fish Forever.  The Nautilus Book Awards recognized six Wiley publications that contribute to positive social change, spiritual growth, conscious living, high-level wellness and responsible leadership with silver awards.
 
In fiscal year 2008 Wiley signed a contract with NYSE-Euronext to publish a series of introductory trading titles.  Fiscal year 2008 was a strong year for P/T digital initiatives, including the launch of the Webster’s New World Web site and JKLasser.com.  Frommers.com included its first sponsored microsite, Family Vacations with Sheraton Hotels, as well as a custom site for Rail Europe, and a blog by Arthur Frommer, featuring travel resources, tips, travel bargains, message boards and current events.
 
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In Europe, P/T had a solid year with indigenous For Dummies titles and P/T English language products contributing to the results.  U.K. travel guides accelerated the global expansion of the Frommer’s brand outside North America.  During the year, P/T continued to diversify into corporate sales, custom publishing and travel in Europe, thereby opening new revenue streams.  Centre and in Second Life, the three-dimensional online virtual world.
 
In fiscal year 2008, P/T was strong across most territories in Asia with frontlist performing well in a buoyant retail market.  Sell-through was strong in all categories with business and finance leading the way, but with technology following close behind.  Corporate sales, custom publishing, and translation licensing, involving titles such as The Future and Me: Power of Youth Market in Asia by MasterCard; A Guide to Asian High Yield Bonds: Financing Growth Enterprises by Florian Schmidt and Adam Harper, The Holy Grail of Macro Economics: Lessons from Japan's Great Recession by Richard Koo and Hot Commodities: How Anyone Can Invest Profitably in the World's Best Market by Jim Rogers, also drove growth.
 

Higher Education:
       
Dollars in thousands
 2008
 2007
% change
Revenue
$226,152
$215,146
5%
Direct Contribution
  $68,270
  $62,996
8%
Contribution Margin
    30.2%
   29.3%
 
 
Global Higher Education revenue increased 5% in fiscal year 2008 to $226.2 million, or 2% excluding the favorable impact of foreign exchange.  Solid performances by the science and business/accounting programs; sales of Microsoft Official Academic Course titles; the sale of translation rights and reprints and growth in the Canadian indigenous publishing program were offset by backlist attrition in mathematics, engineering and the social sciences.
 
Direct contribution to profit for fiscal year 2008 advanced 8% to $68.3 million, or 3% excluding the favorable impact of foreign exchange.  Excluding the favorable impact of foreign exchange, direct contribution margin improved 41 basis points to 29.7% mainly due to revenue growth and prudent expense management partially offset by product mix.
 
WileyPLUS delivered strong results in fiscal year 2008 with sales increasing 35% over prior year, and digital-only sales nearly doubling.  Student usage around the world continued to climb sharply, with registered users increasing 10% in the U.S. and more than doubling outside the U.S.  Seventeen percent of WileyPLUS’ user base is located outside the U.S. WileyPLUS gained traction throughout the year, especially in the Middle East, where a new adoption was won earlier this year in Saudi Arabia.  A successful class test was conducted in China in the fourth quarter. WileyPLUS ended the year with a milestone achievement, the validation of the 500,000th student user in April.
 
Online sales directly to students grew significantly during the year.  Wiley built on its successful relationships with online retailers by participating in a number of marketing promotions.  Wiley also continued to utilize CourseSmart to distribute digital complimentary copies to faculty.  CourseSmart is a venture founded by six higher education publishers, with the goal of providing instructors and students access to digital course materials.  Launched in its Beta version this year, CourseSmart provides thousands of textbooks across hundreds of courses in an eTextbook format on a common platform.  Nearly 200 Wiley titles were available to professors through the site for their review.
 
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During the year, Wiley signed an agreement with Economic Modeling Specialists, Inc. (EMSI), a provider of detailed information about regional economies for assessment and planning purposes.  Under the agreement, EMSI will produce co-branded regional reports focusing on the labor market demand for occupations linked to Wiley Pathways curricula, which cover four major fields: business, emergency management, health care management and information technology.  The reports will inform colleges about opportunities for developing, expanding or supporting related programs.
 
Key revisions published in fiscal year 2008 include Psychology, 5th edition, by Robin M. Kowalski and Drew Westen; Introduction to Finance: Markets, Investments, and Financial Management, 13th edition, by Ronald W. Melicher and Edgar A. Norton; Educational Psychology: Reflection for Action, 2nd edition, by Angela O'Donnell, Johnmarshall Reeve, and Jeffrey Smith; Financial Accounting in an Economic Context, 7th edition, by Jamie Pratt; Foundations of Multinational Financial Management, 6th edition, by Alan C. Shapiro and Atulya Sarin; Chemistry: Structure and Dynamics, 4th edition, by James N. Spencer, George M. Bodner and Lyman H. Rickard; and Principles of Anatomy and Physiology, 12th edition, by Gerard J. Tortora and Bryan H. Derrickson.
 
Organizational Behaviour by Dr. Ray French, a European adaptation of a successful U.S. Higher Education textbook by John Schermerhorn, was released during the year.  A showcase Web site, featuring video interviews for Managing Innovation: Integrating Technological, Market and Organizational Change by Joe Tidd, was also launched, in advance of the book’s 4th edition.
 
Higher Education experienced good results in China, Thailand, Japan and Indonesia, but this growth was offset by sluggish markets in Singapore and Taiwan. With several new Wiley Precise Edition textbooks publishing during the year, India delivered strong results.   Wiley experienced considerable success in the Canadian Higher Education channel with a 25% revenue gain from WileyPLUS and excellent results from the indigenous publishing program.

Shared Service and Administrative Costs
 
Shared services and administrative costs for fiscal year 2008 increased 35% to $363.9 million, mainly due to $84.8 million of incremental shared service and administrative costs related to Blackwell.  Included in shared service and administrative costs are Blackwell transition and integration costs of approximately $21 million.  Shared services and administrative costs, excluding Blackwell and unfavorable foreign exchange, increased 5%, mainly due to higher employment costs, higher facility costs to support business growth and professional fees.
 
Liquidity and Capital Resources
 
The Company’s cash and cash equivalents balance was $102.8 million at the end of fiscal year 2009, compared with $59.3 million a year earlier. Cash provided by operating activities in fiscal year 2009 increased $61.1 million to $341.3 million due primarily to lower working capital, lower pension contributions, and higher cash earnings.  The improvement in working capital was principally due to lower accounts receivable on reduced book sales, income tax refunds, and increased accounts and royalties payable due to timing. The reduction in cash provided from Deferred Revenue of $35.3 million was primarily due to the effect of a journal billing delay. Cash flow compared to the prior year was adversely affected by foreign exchange.
 
Pension contributions in fiscal year 2009 were $21.0 million, compared to $59.4 million in the prior year.  In fiscal year 2008, new regulations in the U.S. and the U.K. required companies to fully fund their statutory pension plans, generally within seven years.  Over the seven-year transition funding period, companies face significantly increased levies based upon present funding levels and restricted flexibility in modifying those plans.  The Company determined that it was appropriate, for both participants in the plans and the Company, to accelerate a portion of the newly required funding in fiscal year 2008.  The accelerated funding provides economic and earnings benefits to the Company in the form of a reduction in aggregate future cash funding to the plans and accretion to future earnings over the seven-year funding transition period.  In addition, it will decrease future volatility in earnings and cash flows, and provide the Company flexibility in managing those plans involved.  The accelerated funding was approximately $10 million to the U.S. statutory plan and approximately $15 million to a U.K. statutory plan.  In addition, in fiscal 2008 the Company provided approximately $23 million of funding to the U.K. plan acquired with the Blackwell acquisition as anticipated. The Company anticipates making pension contributions in fiscal year 2010 of approximately $29 million.
 
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Cash used for investing activities for fiscal year 2009 was approximately $201.6 million compared to $170.2 million in fiscal year 2008. The Company invested $24.0 million in the acquisition of publishing businesses, assets and rights compared to $6.8 million in the prior year.  Cash used for property, equipment and technology and product development increased $14.3 million in fiscal year 2009 versus the prior year with product development spending increasing approximately $18.6 million primarily reflecting higher royalty advances to support business growth.
 
Cash used in financing activities was $89.1 million in fiscal year 2009, as compared to $124.5 million in fiscal year 2008. In fiscal 2009, cash was used primarily to repurchase shares, pay dividends to shareholders, and repay debt. During fiscal year 2009, the Company repurchased one million shares at an average price of $34.89. The Company increased its quarterly dividend to shareholders by 18% to $0.13 per share in fiscal year 2009 from $0.11 per share in the prior year.
 
The aggregate notional amount of interest rate swap agreements associated with the Term Loan and Revolving Credit Facility were $500 million as of April 30, 2009.  It is management's intention that the notional amount of the interest rate swap be less than the Term Loan and Revolving Credit Facility outstanding during the life of the derivative.

The Company’s operating cash flow is affected by the seasonality and timing of receipts from its STMS journal subscriptions and its Higher Education business.  Receipts for calendar year STMS subscription journals occur typically from November through January. Due to journal billing delays this year, the principal receipts period will extend into the first quarter of fiscal year 2010. Reference is made to the Credit Risk section, which follows, for a description of the impact on the Company as it relates to journal agents’ financial position and liquidity. Sales primarily in the U.S. higher education market tend to be concentrated in June through August, and again in November through January. Due to this seasonality, the Company normally requires increased funds for working capital from May through September.

Global capital and credit markets have recently experienced increased volatility and disruption.   As of April 30, 2009, we had approximately $822.4 million of debt outstanding and approximately $470.7 million of unused borrowing capacity under the Revolving Credit Facility which is described in Note 12.  We believe that our operating cash flow, together with our revolving credit facilities and other available debt financing, will be adequate to meet our operating, investing and financing needs in the foreseeable future, although there can be no assurance that continued or increased volatility and disruption in the global capital and credit markets will not impair our ability to access these markets on terms commercially acceptable to us or at all.

Working capital at April 30, 2009 was negative $157.4 million. Working capital is negative as a result of including, in current liabilities, deferred revenue related to subscriptions for which cash has been collected in advance. This deferred revenue will be recognized into income as the products are shipped or made available online to the customers over the term of the subscription. Current liabilities as of April 30, 2009 include $246.6 million of such deferred subscription revenue for which cash was collected in advance.
 
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The Company has adequate cash and cash equivalents available, as well as short-term lines of credit to finance its short-term seasonal working capital requirements. The Company does not have any off-balance-sheet debt.
 
Projected product development and property, equipment and technology capital spending for fiscal year 2010 is forecast to be approximately $130 million and $50 million, respectively, primarily to enhance system functionality and drive future business growth.

A summary of contractual obligations and commercial commitments, excluding interest charges on debt, and unrecognized tax benefits further described in Note 11, as of April 30, 2009 is as follows:
 


   
Payments Due by Period
 
   
Within
2-3
4-5
After 5
Contractual Obligations
Total
Year 1
Years
Years
Years
Total Debt
$822.4
$67.5
$421.9
$333.0
-
           
Non-Cancelable Leases
293.4
37.0
63.6
54.3
138.5
           
Minimum Royalty Obligations
193.1
36.4
65.7
48.8
42.2
           
Other Commitments
8.2
6.3
1.9
-
-
           
Total
$1,317.1
$147.2
$553.1
$436.1
$180.7
 
Market Risk
 
The Company is exposed to market risk primarily related to interest rates, foreign exchange, and credit risk. It is the Company’s policy to monitor these exposures and to use derivative financial investments and/or insurance contracts from time to time to reduce fluctuations in earnings and cash flows when it is deemed appropriate to do so. The Company does not use derivative financial instruments for trading or speculative purposes.
 
Interest Rates:
 
The Company had $822.4 million of variable rate loans outstanding at April 30, 2009, which approximated fair value.  On February 16, 2007, the Company entered into an interest rate swap agreement, designated as a cash flow hedge as defined under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”.  The hedge locked-in a portion of the variable interest due on a portion of the Term Loan. Under the terms of the interest rate swap, the Company pays a fixed rate of 5.076% and receives a variable rate of interest based on three month LIBOR (as defined) from the counter party which is reset every three months for a four-year period ending February 8, 2011. The notional amount of the rate swap was initially $660 million which will decline through February 8, 2011, based on the expected amortization of the Term Loan.  As of April 30, 2009, the notional amount of the rate swap was $400 million.
 
On October 19, 2007, the Company entered into an additional interest rate swap agreement designed by the Company as a cash flow hedge that locked-in a portion of the variable interest due on the Revolving Credit Facility.  Under the terms of this interest rate swap, the Company pays a fixed rate of 4.60% and receives a variable rate of interest based on three month LIBOR (as defined) from the counterparty which is reset every three months for a three-year period ending August 8, 2010.  The notional amount of the rate swap is $100 million.
 
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It is management’s intention that the notional amount of interest rate swaps be less than the Term Loan and the Revolving Credit Facility outstanding during the life of the derivatives.  During fiscal year 2009, the Company recognized a loss on its hedge contracts of approximately $17.4 million which is reflected in interest expense.  At April 30, 2009, the aggregate fair value of the interest rate swaps was a net loss of $28.2 million which is included in Other Long Term Liabilities in the Consolidated Statement of Financial Position.  On an annual basis, a hypothetical one percent change in interest rates for the $322.4 million of unhedged variable rate debt as of April 30, 2009 would affect net income and cash flow by approximately $2.0 million.
 
Foreign Exchange Rates:
 
The Company is exposed to foreign exchange movements primarily in British pound sterling, euros, Canadian and Australian dollars, and certain Asian currencies. The Statement of Financial Position of non-U.S. business units are translated into U.S. dollars using period-end exchange rates for assets and liabilities and weighted-average exchange rates for revenues and expenses.  Adjustments resulting from translating net assets are reported as a separate component of accumulated other comprehensive loss within shareholders’ equity under the caption currency translation adjustment.  The Company has significant investments in non-US businesses that are exposed to foreign currency risk.  During fiscal year 2009 the Company recorded $256.3 million of currency translation adjustments in other comprehensive income primarily as a result of the strengthening of the U.S. dollar relative to the British pound sterling.  The U.S. dollar to British pound sterling exchange rate was 1.45 to 1.00 as of April 30, 2009 compared to 1.99 to 1.00 as of April 30, 2008, approximately a 27% increase.
 
Effective November 1, 2008, the Company changed its functional currency reporting basis for the non-Blackwell portion of the Company’s European STMS journal business from U.S. Dollar to local functional currency. As part of the integration of Blackwell and Wiley fulfillment systems and licensing practices, in the third quarter of fiscal year 2009 the Company began pricing journal revenue based on local currency in Europe.  Prior to the integration, journal revenue was principally priced and reported in U.S. Dollars. This change primarily impacted business denominated in Euros and Sterling.
 
Under certain circumstances, the Company may enter into derivative financial instruments in the form of foreign currency forward contracts as a hedge against specific transactions, including intercompany purchases.  The Company does not use derivative financial instruments for trading or speculative purposes.  There were no contracts outstanding at April 30, 2009.
 
Credit Risk:
 
In the journal publishing business, in addition to direct customer sales, subscriptions are sourced through journal subscription agents who, acting as agents for library customers, facilitate ordering and consolidate the subscription orders/billings with various publishers. Subscription agents account for approximately 20% of total consolidated revenue and no one agent accounts for more than 9% of total consolidated revenue. Subscription agents generally collect cash in advance from subscribers and remit payments to journal publishers, including the Company, prior to the commencement of the subscriptions. While at fiscal year-end the Company had minimal credit risk exposure to these agents, future calendar-year subscription receipts from these agents may depend significantly on their financial condition and liquidity. Insurance for payment on these accounts is not commercially feasible and/or available.
 
35

 
The Company’s business is not dependent upon a single customer; however, the industry is concentrated in national, regional, and online bookstore chains. Although no one book customer accounts for more than 7% of consolidated book and journal revenue, the top 10 book customers account for approximately 18% of total consolidated revenue and approximately 41% of total gross trade accounts receivable at April 30, 2009.  Payments for the sale of subscription journals are predominantly collected in advance.

Critical Accounting Policies
 
The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Management continually evaluates the basis for its estimates. Actual results could differ from those estimates, which could affect the reported results.
 
Financial Reporting Release No. 60, released by the Securities and Exchange Commission, requires all companies to discuss critical accounting policies or methods used in the preparation of financial statements.  Note 2 of the “Notes to Consolidated Financial Statements” includes a summary of the significant accounting policies and methods used in preparation of our Consolidated Financial Statements.  Set forth below is a discussion of the Company’s more critical accounting policies and methods.
 
Revenue Recognition: In accordance with SEC Staff Accounting Bulletin No. 104, “Revenue Recognition in Financial Statements,” the Company recognizes revenue when the following criteria are met: persuasive evidence that an arrangement exists; delivery has occurred or services have been rendered; the price to the customer is fixed or determinable; and collectability is reasonably assured.  If all of the above criteria have been met, revenue is principally recognized upon shipment of products or when services have been rendered.  Subscription revenue is generally collected in advance.  The prepayment is deferred and recognized as earned when the related issue is shipped or made available online over the term of the subscription.  Where a product has been sold with multiple deliverables, the Company follows EITF No. 00-21 “Accounting for Revenue Relationships with Multiple Deliverables” to determine the timing of revenue recognition.  Collectability is evaluated based on the amount involved, the credit history of the customer, and the status of the customer’s account with the Company.  Revenue is reported net of any amounts billed to customers for taxes which are remitted to government authorities.
 
Allowance for Doubtful Accounts: The estimated allowance for doubtful accounts is based on a review of the aging of the accounts receivable balances, the historical write-off experience, and a credit evaluation of the customer.  A change in the evaluation of a customer’s credit could affect the estimated allowance.  The allowance for doubtful accounts is shown as a reduction of accounts receivable in the Consolidated Statement of Financial Position and amounted to $5.7 million and $8.0 million at April 30, 2009 and 2008, respectively.
 
Sales Return Reserve:  The estimated allowance for sales returns is based on a review of the historical return patterns, as well as current market trends in the businesses in which we operate. Sales return reserves, net of estimated inventory and royalty costs, are reported as a reduction of accounts receivable in the Consolidated Statement of Financial Position and amounted to $55.2 million and $55.5 million at April 30, 2009 and 2008, respectively.  A one percent change in the estimated sales return rate could affect net income by approximately $4.1 million.  A change in the pattern or trends in returns could affect the estimated allowance.
 
Reserve for Inventory Obsolescence:  Inventories are carried at cost or market whichever is lower.  A reserve for inventory obsolescence is estimated based on a review of damaged, obsolete, or otherwise unsalable inventory. The review encompasses historical unit sales trends by title; current market conditions, including estimates of customer demand; and publication revision cycles. A change in sales trends could affect the estimated reserve.  The inventory obsolescence reserve is reported as a reduction of the inventory balance in the Consolidated Statement of Financial Position and amounted to $36.3 million and $35.4 million as of April 30, 2009 and 2008, respectively.
 
36

 
Allocation of Acquisition Purchase Price to Assets Acquired and Liabilities Assumed: In connection with acquisitions, the Company allocates the cost of the acquisition to the assets acquired and the liabilities assumed based on estimates of the fair value of such items including goodwill and other intangible assets. Such estimates include expected cash flows to be generated by those assets and the expected useful lives based on historical experience, current market trends, and synergies to be achieved from the acquisition and expected tax basis of assets acquired. For significant acquisitions, the Company uses independent appraisers to confirm the reasonableness of such estimates.
 
Goodwill and Other Intangible Assets:  Goodwill is the excess of the purchase price paid over the fair value of the net assets of the business acquired. Other intangible assets principally consist of branded trademarks, acquired publication rights, customer relationships and non-compete agreements. In accordance with SFAS 142, goodwill and indefinite-lived intangible assets are no longer amortized but are reviewed at least annually for impairment, or more often if events or circumstances occur which would more likely than not reduce the fair value of a reporting unit below its carrying amount.  Other finite-lived intangible assets continue to be amortized over their useful lives. Acquired publication rights with definitive lives are amortized on a straight-line basis over periods ranging from 5 to 40 years. Non-compete agreements are amortized over the terms of the individual agreement.
 
Impairment of Long-Lived Assets: Depreciable and amortizable assets are only evaluated for impairment upon a significant change in the operating or macroeconomic environment.  In these circumstances, if an evaluation of the undiscounted cash flows indicates impairment, the asset is written down to its estimated fair value based on discounted future cash flow.

Recently Issued Accounting Pronouncements:  In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements” (“SFAS 157”). In February 2008, the FASB issued a partial deferral of the statement’s effective date. SFAS 157 provides a new single authoritative definition of fair value and provides enhanced guidance for measuring the fair value of assets and liabilities and requires additional disclosures related to the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurements on earnings. As part of the deferral, the FASB agreed to a one-year delay of the fair value measurement requirement for certain nonfinancial assets and liabilities. The Company adopted SFAS 157 as of May 1, 2008 for assets and liabilities not subject to the deferral (see Note 18). The adoption did not have a significant impact on the Company’s consolidated financial statements. The Company plans to adopt SFAS 157 as of May 1, 2009 for those nonfinancial assets and liabilities subject to the deferral. The adoption of the deferred portion of SFAS157 will not have a significant impact on its consolidated financial statements.  The major categories of assets that the Company held in fiscal year 2009 for which application of SFAS 157 has been deferred are Goodwill and Other Intangible Assets and Long-lived Assets Held and Used.  The Company currently holds no liabilities that are measured at fair value which were subject to the deferral.

In February 2007, the FASB issued SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 provides companies with an option to irrevocably elect to measure certain financial assets and financial liabilities at fair value on an instrument-by-instrument basis with the resulting changes in fair value recorded in earnings. The Company’s adoption of SFAS 159 as of May 1, 2008 did not have a significant impact on its consolidated financial statements since the Company did not apply the fair value option of SFAS 159 to any of its existing assets and liabilities.
 
37


In December 2007, the FASB issued SFAS No. 141R, “Business Combinations(“SFAS 141R”). SFAS 141R expands the scope of acquisition accounting to all transactions under which control of a business is obtained. Principally, SFAS 141R requires that contingent consideration be recorded at fair value on the acquisition date and that certain transaction and restructuring costs be expensed. SFAS 141R is effective for acquisitions made on and after May 1, 2009. While the Company is currently assessing the impact of SFAS 141(R) on its consolidated financial statements, the Company expects that upon adoption of SFAS 141(R), the application of the new standard is likely to have a significant impact on how the Company allocates the purchase price of any future acquired businesses.

In April 2008, the FASB issued FASB Staff Position No. FSP SFAS 142-3 “Determination of the Useful Life of Intangible Assets” (“SFAS 142-3”). SFAS 142-3 amends the factors that must be considered in developing renewal or extension assumptions used to determine the useful life over which to amortize the cost of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets.” SFAS 142-3 requires an entity to consider its own experience with the renewal or extension of the terms of a contractual arrangement, consistent with its expected use of the asset. SFAS 142-3 also requires several incremental disclosures for renewable intangible assets. The Company is required to adopt SFAS 142-3 as of May 1, 2009. The guidance for determining the useful life of an intangible asset must be applied prospectively to intangible assets acquired after the effective date. The Company does not expect that the application of this new standard will significantly impact the process currently used to determine useful lives of its intangible assets.

There have been no other new accounting pronouncements issued that have had, or are expected to have a material impact on the Company’s consolidated financial statements.
 
“Safe Harbor” Statement Under the
Private Securities Litigation Reform Act of 1995
 
This report contains certain forward-looking statements concerning the Company’s operations, performance, and financial condition.  Reliance should not be placed on forward-looking statements, as actual results may differ materially from those in any forward-looking statements.  Any such forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to uncertainties and contingencies, many of which are beyond the control of the Company, and are subject to change based on many important factors. Such factors include, but are not limited to (i) the level of investment in new technologies and products; (ii) subscriber renewal rates for the Company’s journals; (iii) the financial stability and liquidity of journal subscription agents; (iv) the consolidation of book wholesalers and retail accounts; (v) the market position and financial stability of key online retailers; (vi) the seasonal nature of the Company’s educational business and the impact of the used-book market; (vii) worldwide economic and political conditions; and (viii) the Company’s ability to protect its copyrights and other intellectual property worldwide (ix) other factors detailed from time to time in the Company’s filings with the Securities and Exchange Commission.  The Company undertakes no obligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances.

 
 
38

 
 
Results By Quarter (Unaudited)

Dollars in millions, except per share data
       
                   
     
  2009
     
  2008
   
Revenue
               
First Quarter
$
401.7
   
$
388.7
   
Second Quarter
 
431.9
     
423.2
   
Third Quarter
 
374.4
     
429.4
   
Fourth Quarter
 
403.4
     
432.4
   
Fiscal Year
$
1,611.4
   
$
   1,673.7
   
                   
Operating Income (a)
               
First Quarter
$
 44.3
   
$
 46.9
   
Second Quarter
 
 70.2
     
 62.1
   
Third Quarter
 
 63.3
     
 68.0
   
Fourth Quarter
 
 40.7
     
 48.2
   
Fiscal Year
$
     218.5
   
$
      225.2
   
                   
Net Income
               
First Quarter
$
  30.2
   
$
  40.2
   
Second Quarter (b)
 
  40.1
     
  38.3
   
Third Quarter (c)
 
  33.4
     
  40.0
   
Fourth Quarter
 
  24.6
     
  29.0
   
Fiscal Year
$
128.3
   
$
147.5
   
                   
Income Per Share
 
Diluted
 
Basic
 
Diluted
 
Basic
First Quarter
$
    0.50
$
    0.52
$
    0.68
$
0.70
Second Quarter (b)
 
    0.67
 
    0.68
 
    0.65
 
0.67
Third Quarter (c)
 
    0.57
 
    0.58
 
    0.67
 
0.69
Fourth Quarter
 
    0.42
 
   0.42
 
    0.49
 
0.49
Fiscal Year
$
    2.15
$
   2.20
$
    2.49
$
2.55

(a)
In fiscal year 2009, the Company reclassified foreign exchange transaction gains and losses from operating and administrative expenses to a distinct line below operating income. Prior period results have been restated for comparability.

(b)
In the second quarter of fiscal year 2008, the Company recognized a net tax benefit of $15.3 million, or $0.26 per diluted share, associated with a new tax law enacted in the United Kingdom on July 19, 2008 that reduced the corporate income tax rate from 30% to 28%. The benefit recognized by the Company reflects the adjustment required to record all UK-related deferred tax balances at the new UK corporate income tax rate of 28%.

(c)
In the third quarter of fiscal year 2008, the Company recognized a $3.4 million, or $0.06 per diluted share, tax benefit associated with new tax laws enacted in Germany that reduced the corporate income tax rate from 39% to 29%.  The benefits recognized by the Company reflect the adjustments required to record all Germany-related deferred tax balances at the new corporate income tax rates.

 
 
39

 
 
Quarterly Share Prices, Dividends, and Related Stockholder Matters
 
The Company’s Class A and Class B shares are listed on the New York Stock Exchange under the symbols JWa and JWb, respectively.  Dividends per share and the market price range by fiscal quarter for the past two fiscal years were as follows:
 
 
Class A Common Stock
Class B Common Stock
   
Market Price
 
Market Price
 
Dividends
High
Low
Dividends
High
Low
2009
           
First Quarter
 $0.13
$49.76
$43.39
$0.13
$49.52
$43.53
Second Quarter
  0.13
48.88
  27.75
    0.13
49.11
28.02
Third Quarter
  0.13
37.60
26.21
    0.13
37.58
26.05
Fourth Quarter
  0.13
36.72
27.55
    0.13
36.63
27.50
2008
           
First Quarter
     $0.11
   $49.35
   $38.01
    $0.11
 $49.03
   $38.00
Second Quarter
  0.11
45.24
40.00
    0.11
  45.21
40.22
Third Quarter
  0.11
44.33
35.98
    0.11
43.72
36.14
Fourth Quarter
  0.11
46.54
36.01
    0.11
46.63
36.02

As of April 30, 2009, the approximate number of holders of the Company’s Class A and Class B Common Stock were 1,212 and 111 respectively, based on the holders of record.
 
The Company did not repurchase any common stock during the fourth quarter of fiscal year 2009.
 
The Company’s credit agreement contains certain restrictive covenants related to the payment of dividends and share repurchases. Under the most restrictive covenant, approximately $59.0 million was available for such restricted payments as of April 30, 2009.  Subject to the foregoing, the Board of Directors considers quarterly the payment of cash dividends based upon its review of earnings, the financial position of the Company, and other relevant factors.

 
 
40

 

 
Selected Financial Data

 
For the Years Ended April 30,
Dollars in millions
(except per share data)
2009
2008
2007
2006
2005
           
Revenue
$1,611.4
$1,673.7
$1,234.6
$1,043.9
$974.0
Operating Income (a-b)
218.5
225.2
161.5
152.9
139.6
Net Income (b-c)
128.3
147.5
99.6
110.3
83.8
Working Capital (d)
(157.4)
(243.6)
(199.7)
(35.8)
(2.4)
Total Assets
2,223.7
2,576.2
2,553.1
1,026.0
1,032.6
Long-Term Debt
754.9
797.3
977.7
160.5
196.2
Shareholders’ Equity
513.5
689.1
529.5
401.8
396.6
Per Share Data
         
Income Per Share (b-c)
         
Diluted
        $2.15
        $2.49
          $1.71
          $1.85
       $1.35
Basic
        $2.20
        $2.55
          $1.75
          $1.90
         $1.38
Cash Dividends
         
Class A Common
        $0.52
        $0.44
          $0.40
          $0.36
         $0.30
Class B Common
        $0.52
        $0.44
          $0.40
          $0.36
         $0.30


NOTE:
The Company acquired Blackwell Publishing (Holdings) Ltd.  (“Blackwell”) on February 2, 2007.

(a)  
In fiscal year 2009, the Company reclassified foreign exchange transaction gains and losses from operating and administrative expenses to a distinct line below operating income. Prior period results have been restated for comparability.

(b)  
Tax benefits included in fiscal year results are as follows:

·  
Fiscal year 2008 includes a $18.7 million tax benefit, or $0.32 per diluted share, associated with new tax legislation enacted in the United Kingdom and Germany that reduced the corporate income tax rates from 30% to 28% and from 39% to 29%, respectively.  The benefits recognized by the Company reflect the adjustments required to record all U.K. and Germany-related deferred tax balances at the new corporate income tax rates.

·  
Fiscal year 2007 includes a $5.5 million tax benefit, or $0.09 per diluted share. This benefit coincides with the resolution and settlements of certain tax matters with authorities in the U.S. and abroad.

·  
Fiscal year 2006 includes a net tax benefit of $6.8 million, or $0.11 per diluted share, related to the favorable resolution of certain matters with tax authorities.

·  
In the fourth quarter of fiscal year 2005, the Company elected to repatriate approximately $94 million of dividends from its European subsidiaries under the American Jobs Creation Act of 2004. The law provided for a favorable one-time tax rate on dividends from foreign subsidiaries.  The tax accrued on the dividend in the fourth quarter of fiscal year 2005 was approximately $7.5 million, or $0.12 per diluted share.  Pursuant to guidance issued by the Internal Revenue Service in May 2005, the Company recorded a tax benefit in the first quarter of fiscal year 2006 reversing the accrued tax recorded in the previous year.  Neither the first quarter fiscal year 2006 tax benefit nor the corresponding fourth quarter fiscal year 2005 tax accrual had a cash impact on the Company.

(c)  
Effective May 1, 2006, the Company adopted SFAS 123R which required that companies recognize share-based compensation to employees in the Statement of Income based on the fair value of the share-based awards.  The adoption of SFAS 123R resulted in the recognition of an incremental share-based compensation expense of $11.3 million ($7.0 million after taxes) or $0.12 per diluted share for the full year ended April 30, 2007.

(d)  
Working capital is reduced or negative as a result of including in current liabilities the deferred revenue related to journal subscriptions for which the cash has been received.  The deferred revenue will be recognized into income as the journals are shipped or made available online to the customers over the term of the subscription.

 
 
 
41

 


Financial Statements and Supplementary Data
 


MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

To our Shareholders
John Wiley and Sons, Inc.:
 
The management of John Wiley and Sons, Inc. and subsidiaries is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).
 
Under the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based on our evaluation under the framework in Internal Control – Integrated Framework issued by COSO, our management concluded that our internal control over financial reporting was effective as of April 30, 2009.
 
Changes in Internal Control over Financial Reporting: There were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during fiscal year 2009.
 
The effectiveness of our internal control over financial reporting as of April 30, 2009 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which is included herein.
 
The Company’s Corporate Governance Principles, Committee Charters, Business Conduct and Ethics Policy and the Code of Ethics for Senior Financial Officers are published on our web site at www.wiley.com under the “About Wiley—Investor Relations—Corporate Governance” captions.  Copies are also available free of charge to shareholders on request to the Corporate Secretary, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774.
 

/s/           William J. Pesce
 
William J. Pesce
 
President and Chief Executive Officer
 
   
/s/           Ellis E. Cousens
 
Ellis E. Cousens
 
Executive Vice President and
 
Chief Financial and Operations Officer
 
   
/s/           Edward J. Melando
 
Edward J. Melando
 
Vice President, Controller and
 
Chief Accounting Officer
 
   
June 24, 2009
 


 
 
42

 


 
 Report of Independent Registered Public Accounting Firm
 
The Board of Directors and Stockholders
John Wiley & Sons, Inc.:
 
 
We have audited the accompanying consolidated statements of financial position of John Wiley & Sons, Inc. (the “Company”) and subsidiaries as of April 30, 2009 and 2008, and the related consolidated statements of income, stockholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended April 30, 2009. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule (as listed in the index to Item 8).  These consolidated financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of John Wiley & Sons, Inc. and subsidiaries as of April 30, 2009 and 2008, and the results of their operations and their cash flows for each of the years in the three-year period ended April 30, 2009, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
 
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), John Wiley & Sons, Inc.’s internal control over financial reporting as of April 30, 2009, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)”), and our report dated June 24, 2009 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
 

 
(signed) KPMG LLP
 
New York, New York
June 24, 2009
 

 
 
43

 


 
Report of Independent Registered Public Accounting Firm
 
The Board of Directors and Stockholders
John Wiley & Sons, Inc.:
 

We have audited John Wiley & Sons, Inc.’s internal control over financial reporting as of April 30, 2009, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). John Wiley & Sons, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
 
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
In our opinion, John Wiley & Sons, Inc. maintained, in all material respects, effective internal control over financial reporting as of April 30, 2009, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
 
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of financial position of John Wiley & Sons, Inc. and subsidiaries as of April 30, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended April 30, 2009, and our report dated June 24, 2009 expressed an unqualified opinion on those consolidated financial statements.
 
(signed) KPMG LLP
 
New York, New York
June 24, 2009
 
44


CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 
John Wiley & Sons, Inc., and Subsidiaries
 
 April 30
Dollars in thousands
 
        2009
 
 2008
Assets:
       
Current Assets
       
Cash and cash equivalents
$
102,828
$
59,311
Accounts receivable
 
178,550
 
212,158
Inventories
 
111,267
 
118,209
Prepaid and other
 
46,924
 
45,303
Total Current Assets
 
439,569
 
434,981
         
Product Development Assets
 
89,662
 
95,126
Property, Equipment and Technology
 
141,196
 
145,709
Intangible Assets
 
919,375
 
1,120,398
Goodwill
 
589,993
 
708,233
Deferred Income Tax Benefits
 
14,065
 
29,136
Other Assets
 
29,848
 
42,632
Total Assets
$
2,223,708
$
2,576,215
         
Liabilities and Shareholders’ Equity:
       
Current Liabilities
       
Accounts and royalties payable
$
160,275
$
189,332
Deferred revenue
 
246,584
 
303,231
Accrued income taxes
 
4,281
 
1,633
Accrued pension liability
 
2,483
 
2,499
Other accrued liabilities
 
115,844
 
136,867
Current portion of long-term debt
 
67,500
 
45,000
Total Current Liabilities
 
596,967
 
678,562
         
Long-Term Debt
 
754,900
 
797,318
Accrued Pension Liability
 
90,621
 
82,755
Other Long-Term Liabilities
 
91,292
 
100,421
Deferred Income Taxes
 
176,412
 
228,041
Shareholders’ Equity
       
Preferred Stock, $1 par value: Authorized - 2 million, Issued - zero
 
-
 
-
Class A Common Stock, $1 par value: Authorized - 180 million,
       
Issued – 69,643,571 and 69,641,921
 
69,644
 
69,642
Class B Common Stock, $1 par value:  Authorized - 72 million,
       
Issued – 13,546,691 and 13,548,341
 
13,547
 
13,549
Additional paid-in capital
 
164,592
 
140,723
Retained earnings
 
892,542
 
794,762
Accumulated other comprehensive gain (loss):
       
Foreign currency translation adjustment
 
(203,023)
 
53,292
Unamortized pension and retiree medical
 
(41,978)
 
(26,813)
Unrealized gain (loss) on interest rate swap
 
(13,397)
 
(13,831)
   
881,927
 
1,031,324
Less Treasury Shares At Cost (Class A – 20,907,317 and 20,661,469;
       
Class B – 3,902,576 and 3,902,576)
 
(368,411)
 
(342,206)
Total Shareholders’ Equity
 
513,516
 
689,118
Total Liabilities and Shareholders’ Equity
$
2,223,708
$
2,576,215
 
The accompanying notes are an integral part of the consolidated financial statements.

 
 
45

 


 
CONSOLIDATED STATEMENTS OF INCOME
             
John Wiley & Sons, Inc., and Subsidiaries
 
For the years ended April 30
Dollars in thousands, except per share data
 
   2009
 
   2008
 
 2007
             
Revenue
$
1,611,390
$
1,673,734
$
1,234,641
             
Costs and Expenses
           
Cost of sales
 
516,420
 
532,908
 
392,692
Operating and administrative expenses
 
839,648
 
876,635
 
659,793
Amortization of intangibles
 
36,844
 
38,980
 
20,675
Total Costs and Expenses
 
1,392,912
 
1,448,523
 
1,073,160
             
Operating Income
 
218,478
 
225,211
 
161,481
             
Interest expense
 
(48,424)
 
(66,738)
 
(26,188)
Foreign exchange losses
 
(11,759)
 
(2,863)
 
(177)
Interest income and other, net
 
6,180
 
5,918
 
4,386
Net Interest Expense and Other
 
(54,003)
 
(63,683)
 
(21,979)
             
Income Before Taxes
 
164,475
 
161,528
 
139,502
Provision for Income Taxes
 
36,217
 
13,992
 
39,883
             
Net Income
$
128,258
$
147,536
$
99,619
             
Income Per Share
           
Diluted
$
2.15
$
2.49
$
1.71
Basic
 
2.20
 
2.55
 
1.75
             
Cash Dividends Per Share
           
Class A Common
$
0.52
$
0.44
$
0.40
Class B Common
 
0.52
 
0.44
 
0.40
             
Average Shares
           
Diluted
 
59,610
 
59,323
 
58,287
Basic
 
58,419
 
57,921
 
56,932
 
The accompanying notes are an integral part of the consolidated financial statements.


 
 
46

 


CONSOLIDATED STATEMENTS OF CASH FLOWS
 
John Wiley & Sons, Inc., and Subsidiaries
 
For the years ended April 30
Dollars in thousands
 
   2009
 
  2008
 
2007
             
Operating Activities
           
Net Income
$
128,258
$
147,536
$
  99,619
Noncash Items
           
Amortization of intangibles
 
36,844
 
     38,980
 
    20,675
Amortization of composition costs
 
43,767
 
     43,613
 
     38,722
Depreciation of property, equipment and technology
 
35,134
 
     33,330
 
     28,926
Stock-based compensation (net of tax)
 
10,625
 
     17,475
 
     12,559
Excess tax benefits from stock-based compensation
 
(5,350)
 
     (11,223)
 
     (4,455)
Non-cash tax benefits
 
-
 
     (18,663)
 
     (5,468)
Reserves for returns, doubtful accounts, and obsolescence
 
13,355
 
         6,419
 
       6,931
Deferred income taxes
 
17,141
 
       10,784
 
       3,604
Pension expense
 
18,324
 
       22,894
 
     16,710
Earned royalty advances and other
 
76,175
 
       58,100
 
     40,662
Changes in Operating Assets and Liabilities
           
Increase/(Decrease), excluding acquisitions
           
Accounts receivable
 
(25,937)
 
     (47,427)
 
       1,167
Inventories
 
(6,696)
 
     (10,038)
 
     (4,060)
Accounts and royalties payable
 
8,070
 
        4,421
 
   (22,465)
Deferred revenue
 
2,430
 
      37,697
 
   (15,872)
Net taxes payable
 
11,411
 
      20,311
 
        (956)
Other accrued liabilities
 
(2,657)
 
     (10,838)
 
    11,543
Pension contributions
 
(21,020)
 
     (59,360)
 
     (8,338)
Other
 
1,381
 
       (3,876)
 
       1,090
Cash Provided by Operating Activities
 
341,255
 
   280,135
 
  220,594
Investing Activities
           
Additions to product development assets
 
(131,666)
 
   (113,069)
 
   (76,225)
Additions to property, equipment and technology
 
(46,009)
 
     (50,315)
 
   (31,445)
Blackwell acquisition, net of cash acquired
 
-
 
               -
 
 (953,197)
Acquisition of other publishing businesses, assets and rights
 
(23,960)
 
       (6,802)
 
   (19,712)
Sale of marketable securities
 
-
 
              -
 
     42,334
Cash Used for Investing Activities
 
(201,635)
 
   (170,186)
 
(1,038,245)
Financing Activities
           
Repayment of long-term debt
 
(618,512)
 
(1,049,360)
 
   (620,678)
Borrowings of long-term debt
 
598,594
 
   891,476
 
1,458,400
Purchase of treasury stock
 
(35,110)
 
       (3,679)
 
       (7,278)
Change in book overdrafts
 
(20,522)
 
     36,253
 
       6,754
Debt financing costs
 
-
 
              -
 
       (8,315)
Cash dividends
 
(30,478)
 
     (25,613)
 
     (22,839)
Proceeds from exercise of stock options and other
 
11,623
 
     15,190
 
       6,462
Excess tax benefit from stock-based compensation
 
5,350
 
     11,223
 
       4,455
Cash (Used for)/Provided by Financing Activities
 
(89,055)
 
   (124,510)
 
   816,961
Effects of Exchange Rate Changes on Cash
 
(7,048)
 
       2,379
 
       2,437
Cash and Cash Equivalents
           
Increase/(Decrease) for year
 
43,517
 
     (12,182)
 
        1,747
Balance at beginning of year
 
59,311
 
     71,493
 
      69,746
Balance at end of year
$
102,828
$
     59,311
$
      71,493
Cash paid During the Year for
           
Interest
$
50,108
$
     69,071
$
      12,294
Income taxes, net
$
15,942
$
     24,679
$
      40,422
         
The accompanying notes are an integral part of the consolidated financial statements.        

47


CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME
                 
 
Common
Stock
Class A
Common
Stock
Class B
Additional
Paid-in
Capital
Retained
Earnings
Treasury
Stock
Unearned
Deferred
Comp-
ensation
Accumulated
Other Comp-
rehensive
Income
 (Loss)
 
 
Total
Share-
holder’s
Equity
 
John Wiley & Sons, Inc., and Subsidiaries
Dollars in thousands
                 
Balance at May 1, 2006
$69,035
$14,156
$69,587
$596,474
$(351,569)
$(3,512)
$7,669
$401,840
                 
Shares Issued Under Employee Benefit Plans
   
8,149
 
2,976
   
11,125
Purchase of Treasury Shares
       
(7,278)
   
(7,278)
Exercise of Stock Options, including taxes
   
5,663
 
3,964
   
9,627
Stock-based compensation expense
   
20,126
       
20,126
Class A Common Stock Dividends
     
(18,806)
     
(18,806)
Class B Common Stock Dividends
     
(4,033)
     
(4,033)
Other
353
(353)
(3,512)
   
3,512
   
Adoption of FASB Statement No. 158, net of a
    $6,025 tax benefit
           
(8,078)
(8,078)
Comprehensive Income:
               
Net income
     
99,619
     
99,619
Foreign currency translation adjustments
           
31,484
31,484
Unamortized pension and retiree medical, net of a $3,217 tax benefit
           
(4,316)
(4,316)
Unrealized loss on interest rate swap, net of a $1,086 tax benefit
           
(1,802)
(1,802)
Total Comprehensive Income
             
124,985
                 
Balance at April 30, 2007
$69,388
$13,803
$100,013
$673,254
$(351,907)
$ -
$24,957
$529,508
                 
Shares Issued Under Employee Benefit Plans
   
(2,665)
 
3,590
   
925
Purchase of Treasury Shares
       
(3,679)
   
(3,679)
Exercise of Stock Options, including taxes
   
15,334
 
9,790
   
25,124
Stock-based compensation expense
   
28,041
       
28,041
Class A Common Stock Dividends
     
(21,263)
     
(21,263)
Class B Common Stock Dividends
     
(4,350)
     
(4,350)
Other
254
(254)
           
Adoption of FIN 48, tax liability adjustment
     
(415)
     
(415)
Comprehensive Income:
               
Net income
     
147,536
     
147,536
Foreign currency translation adjustments