QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
(Address of principal executive offices) |
Zip Code |
( |
||
Registrant’s telephone number, including area code |
Not Applicable |
||
Former name, former address and former fiscal year, if changed since last report |
Title of each class |
Trading Symbol |
Name of each exchange on which registered |
||
Accelerated filer ☐ |
|
Non-accelerated filer ☐ |
Smaller reporting company |
Emerging growth company |
Item 1. |
Financial Statements |
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5 |
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6 |
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7 |
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8 |
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9 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
||||
10 |
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10 |
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12 |
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14 |
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15 |
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17 |
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18 |
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18 |
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19 |
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21 |
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22 |
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22 |
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23 |
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23 |
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24 |
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25 |
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25 |
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26 |
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Item 2. |
27 |
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Item 3. |
35 |
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Item 4. |
36 |
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PART II - OTHER INFORMATION |
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Item 1. |
37 |
|||
Item 1a. |
37 |
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Item 2. |
37 |
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Item 6. |
38 |
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39 |
● | Adjusted Earnings Per Share (“Adjusted EPS”); |
● | Free Cash Flow less Product Development Spending; |
● | Adjusted Revenue; |
● | Adjusted Operating Income and margin; |
● | Adjusted Contribution to Profit and margin; |
● | EBITDA, Adjusted EBITDA and margin; |
● | Organic revenue; and |
● | Results on a constant currency basis. |
● | Adjusted EPS, Adjusted Revenue, Adjusted Operating Income, Adjusted Contribution to Profit, Adjusted EBITDA, and organic revenue provide a more comparable basis to analyze operating results and earnings and are measures commonly used by shareholders to measure our performance. |
● | Free Cash Flow less Product Development Spending helps assess our ability, over the long term, to create value for our shareholders as it represents cash available to repay debt, pay common stock dividends and fund share repurchases and acquisitions. |
● | Results on a constant currency basis removes distortion from the effects of foreign currency movements to provide better comparability of our business trends from period to period. We measure our performance before the impact of foreign currency (or at “constant currency”), which means that we apply the same foreign currency exchange rates for the current and equivalent prior period. |
July 31, 2020 |
April 30, 2020 |
|||||||
Assets: |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ |
$ |
||||||
Accounts receivable, net |
||||||||
Inventories, net |
||||||||
Prepaid expenses and other current assets |
||||||||
Total Current Assets |
||||||||
Product Development Assets, net |
||||||||
Royalty Advances, net |
||||||||
Technology, Property and Equipment, net |
||||||||
Intangible Assets, net |
||||||||
Goodwill |
||||||||
Operating Lease Right-of-Use Assets |
||||||||
Other Non-Current Assets |
||||||||
Total Assets |
$ |
$ |
||||||
Liabilities and Shareholders' Equity: |
||||||||
Current Liabilities |
||||||||
Accounts payable |
$ |
$ |
||||||
Accrued royalties |
||||||||
Short-term portion of long-term debt |
||||||||
Contract liabilities |
||||||||
Accrued employment costs |
||||||||
Accrued income taxes |
||||||||
Short-term portion of operating lease liabilities |
||||||||
Other accrued liabilities |
||||||||
Total Current Liabilities |
||||||||
Long-Term Debt |
||||||||
Accrued Pension Liability |
||||||||
Deferred Income Tax Liabilities |
||||||||
Operating Lease Liabilities |
||||||||
Other Long-Term Liabilities |
||||||||
Total Liabilities |
||||||||
Shareholders’ Equity |
||||||||
Preferred Stock, $ |
||||||||
Class A Common Stock, $ |
||||||||
Class B Common Stock, $ |
||||||||
Additional paid-in-capital |
||||||||
Retained earnings |
||||||||
Accumulated other comprehensive loss, net of tax |
( |
) |
( |
) |
||||
Less Treasury Shares At Cost (Class A - |
( |
) |
( |
) |
||||
Total Shareholders’ Equity |
||||||||
Total Liabilities and Shareholders' Equity |
$ |
$ |
Three Months Ended July 31, |
||||||||
2020 |
2019 |
|||||||
Revenue, net |
$ |
$ |
||||||
Costs and Expenses |
||||||||
Cost of sales |
||||||||
Operating and administrative expenses |
||||||||
Restructuring and related charges |
||||||||
Amortization of intangibles |
||||||||
Total Costs and Expenses |
||||||||
Operating Income |
||||||||
Interest Expense |
( |
) |
( |
) |
||||
Foreign Exchange Transaction (Losses) Gains |
( |
) |
||||||
Interest and Other Income |
||||||||
Income Before Taxes |
||||||||
Provision for Income Taxes |
||||||||
Net Income |
$ |
$ |
||||||
Earnings Per Share |
||||||||
Basic |
$ |
$ |
||||||
Diluted |
$ |
$ |
||||||
Weighted Average Number of Common Shares Outstanding |
||||||||
Basic |
||||||||
Diluted |
Three Months Ended July 31, |
||||||||
2020 |
2019 |
|||||||
Net Income |
$ |
$ |
||||||
Other Comprehensive Income (Loss): |
||||||||
Foreign currency translation adjustment |
( |
) |
||||||
Unamortized retirement (costs) credits, net of tax benefit (expense) of $ |
( |
) |
||||||
Unrealized gain on interest rate swaps, net of tax (expense) benefit of $( |
||||||||
Total Other Comprehensive Income (Loss) |
( |
) |
||||||
Comprehensive Income (Loss) |
$ |
$ |
( |
) |
Three Months Ended July 31, |
||||||||
2020 |
2019 |
|||||||
Operating Activities |
||||||||
Net income |
$ |
$ |
||||||
Adjustments to reconcile net income to net cash used in operating activities: |
||||||||
Amortization of intangibles |
||||||||
Amortization of product development assets |
||||||||
Depreciation and amortization of technology, property and equipment |
||||||||
Restructuring and related charges |
||||||||
Stock-based compensation expense |
||||||||
Employee retirement plan expense |
||||||||
Royalty advances |
( |
) |
( |
) |
||||
Earned royalty advances |
||||||||
Foreign exchange transaction losses (gains) |
( |
) |
||||||
Other non-cash charges |
||||||||
Net change in operating assets and liabilities |
( |
) |
( |
) |
||||
Net Cash Used In Operating Activities |
( |
) |
( |
) |
||||
Investing Activities |
||||||||
Product development spending |
( |
) |
( |
) |
||||
Additions to technology, property and equipment |
( |
) |
( |
) |
||||
Businesses acquired in purchase transactions, net of cash acquired |
( |
) |
( |
) |
||||
Acquisitions of publication rights and other |
( |
) |
( |
) |
||||
Net Cash Used In Investing Activities |
( |
) |
( |
) |
||||
Financing Activities |
||||||||
Repayment of long-term debt |
( |
) |
( |
) |
||||
Borrowing of long-term debt |
||||||||
Payment of debt issuance costs |
( |
) |
||||||
Purchase of treasury shares |
( |
) |
||||||
Change in book overdrafts |
( |
) |
( |
) |
||||
Cash dividends |
( |
) |
( |
) |
||||
Net payments from exercise of stock options and other |
( |
) |
( |
) |
||||
Net Cash Provided By Financing Activities |
||||||||
Effects of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash |
( |
) |
||||||
Cash Reconciliation: |
||||||||
Cash and Cash Equivalents |
||||||||
Restricted cash included in Prepaid expenses and other current assets |
||||||||
Balance at Beginning of Period |
||||||||
(Decrease)/Increase for the Period |
( |
) |
||||||
Cash and cash equivalents |
||||||||
Restricted cash included in Prepaid expenses and other current assets |
||||||||
Balance at End of Period |
$ |
$ |
||||||
Cash Paid During the Period for: |
||||||||
Interest |
$ |
$ |
||||||
Income taxes, net of refunds |
$ |
$ |
Common Stock Class A |
Common Stock Class B |
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Treasury Stock |
Total Shareholders' Equity |
||||||||||||||||||||||
Balance at April 30, 2020 |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
|||||||||||||||||
Cumulative Effect of Change in Accounting Principle, Net of Tax |
( |
) |
( |
) |
||||||||||||||||||||||||
Restricted Shares Issued under Stock-based Compensation Plans |
( |
) |
||||||||||||||||||||||||||
Net Proceeds (Payments) from Exercise of Stock Options and Other |
( |
) |
( |
) |
||||||||||||||||||||||||
Stock-based Compensation Expense |
||||||||||||||||||||||||||||
Class A Common Stock Dividends ($ |
— |
( |
) |
( |
) |
|||||||||||||||||||||||
Class B Common Stock Dividends ($ |
— |
( |
) |
( |
) |
|||||||||||||||||||||||
Common Stock Class Conversions |
( |
) |
||||||||||||||||||||||||||
Comprehensive Income, Net of Tax |
||||||||||||||||||||||||||||
Balance at July 31, 2020 |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
Common Stock Class A |
Common Stock Class B |
Additional Paid-in Capital |
Retained Earnings |
Accumulated Other Comprehensive Loss |
Treasury Stock |
Total Shareholders' Equity |
||||||||||||||||||||||
Balance at April 30, 2019 |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
|||||||||||||||||
Restricted Shares Issued under Stock-based Compensation Plans |
( |
) |
( |
) |
||||||||||||||||||||||||
Net Proceeds (Payments) from Exercise of Stock Options and Other |
( |
) |
( |
) |
||||||||||||||||||||||||
Stock-based Compensation Expense |
||||||||||||||||||||||||||||
Purchase of Treasury Shares |
( |
) |
( |
) |
||||||||||||||||||||||||
Class A Common Stock Dividends ($ |
— |
( |
) |
( |
) |
|||||||||||||||||||||||
Class B Common Stock Dividends ($ |
— |
( |
) |
( |
) |
|||||||||||||||||||||||
Common Stock Class Conversions |
( |
) |
||||||||||||||||||||||||||
Comprehensive Income (Loss), Net of Tax |
( |
) |
( |
) |
||||||||||||||||||||||||
Balance at July 31, 2019 |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
Provision for Credit Losses |
||||
Balance as of April 30, 2020 |
$ |
|||
Adjustment due to adoption of new credit losses standard recorded as an adjustment to retained earnings |
||||
Current period provision |
||||
Amounts written off, less recoveries |
( |
) |
||
Foreign exchange translation adjustments and other |
( |
) |
||
Balance as of July 31, 2020 |
$ |
Three Months Ended July 31, |
||||||||
2020 |
2019 |
|||||||
Research Publishing & Platforms: |
||||||||
Research Publishing |
$ |
$ |
||||||
Research Platforms |
||||||||
Total Research Publishing & Platforms |
||||||||
Academic & Professional Learning: |
||||||||
Education Publishing |
||||||||
Professional Learning |
||||||||
Total Academic & Professional Learning |
||||||||
Education Services: |
||||||||
Education Services (1) |
||||||||
mthree (1) |
||||||||
Total Education Services |
||||||||
Total Revenue |
$ |
$ |
(1) |
July 31, 2020 |
April 30, 2020 |
Increase/ (Decrease) |
||||||||||
Balances from contracts with customers: |
||||||||||||
Accounts receivable, net |
$ |
$ |
$ |
( |
) |
|||||||
Contract liabilities (1) |
( |
) |
||||||||||
Contract liabilities (included in Other Long-Term Liabilities) |
$ |
$ |
$ |
(1) |
July 31, 2020 |
April 30, 2020 |
|||||||
Operating lease right-of-use assets |
$ |
$ |
||||||
Short-term portion of operating lease liabilities |
||||||||
Operating lease liabilities, non-current |
$ |
$ |
Three Months Ended July 31, |
||||||||
2020 |
2019 |
|||||||
Operating lease cost |
$ |
$ |
||||||
Variable lease cost |
||||||||
Short-term lease cost |
||||||||
Sublease income |
( |
) |
( |
) |
||||
Total net lease cost (1) |
$ |
$ |
(1) |
Three Months Ended July 31, |
||||||||
2020 |
2019 |
|||||||
Weighted-average remaining contractual lease term (years) |
||||||||
Weighted-average discount rate |
% |
% |
||||||
Cash paid for amounts included in the measurement of lease liabilities: |
||||||||
Operating cash flows from operating leases |
$ |
$ |
Fiscal Year |
Operating Lease Liabilities |
|||
2021 (remaining 9 months) |
$ |
|||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
Thereafter |
||||
Total future undiscounted minimum lease payments |
||||
Less: Imputed interest |
||||
Present Value of Minimum Lease Payments |
||||
Less: Current portion |
||||
Noncurrent portion |
$ |
Three Months Ended July 31, |
||||||||
2020 |
2019 |
|||||||
Restricted Stock: |
||||||||
Awards granted |
||||||||
Weighted average fair value of grant |
$ |
$ |
Foreign Currency Translation |
Unamortized Retirement Costs |
Interest Rate Swaps |
Total |
|||||||||||||
Balance at April 30, 2020 |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
||||
Other comprehensive income (loss) before reclassifications |
( |
) |
( |
) |
||||||||||||
Amounts reclassified from Accumulated Other Comprehensive Loss |
||||||||||||||||
Total other comprehensive (loss) income |
( |
) |
||||||||||||||
Balance at July 31, 2020 |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
||||
Balance at April 30, 2019 |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
||||
Other comprehensive (loss) income before reclassifications |
( |
) |
( |
) |
||||||||||||
Amounts reclassified from Accumulated Other Comprehensive Loss |
( |
) |
||||||||||||||
Total other comprehensive (loss) income |
( |
) |
( |
) |
||||||||||||
Balance at July 31, 2019 |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
Three Months Ended July 31, |
||||||||
2020 |
2019 |
|||||||
Weighted average shares outstanding |
||||||||
Less: Unvested restricted shares |
( |
) |
( |
) |
||||
Shares used for basic earnings per share |
||||||||
Dilutive effect of unvested restricted stock units and other stock awards |
||||||||
Shares used for diluted earnings per share |
Three Months Ended July 31, |
Total Charges |
|||||||||||
2020 |
2019 |
Incurred to Date |
||||||||||
Charges (Credits) by Segment: |
||||||||||||
Research Publishing & Platforms |
$ |
( |
) |
$ |
$ |
|||||||
Academic & Professional Learning |
( |
) |
||||||||||
Education Services |
||||||||||||
Corporate Expenses |
||||||||||||
Total Restructuring and Related Charges |
$ |
$ |
$ |
|||||||||
Charges by Activity: |
||||||||||||
Severance and termination benefits |
$ |
$ |
$ |
|||||||||
Operating lease right-of-use asset impairment |
||||||||||||
Facility related charges |
||||||||||||
Other activities |
||||||||||||
Total Restructuring and Related Charges |
$ |
$ |
$ |
April 30, 2020 |
Charges |
Payments |
Foreign Translation & Other Adjustments |
July 31, 2020 |
||||||||||||||||
Severance and termination benefits |
$ |
$ |
$ |
( |
) |
$ |
$ |
|||||||||||||
Other activities |
( |
) |
( |
) |
||||||||||||||||
Total |
$ |
$ |
$ |
( |
) |
$ |
$ |
Three Months Ended July 31, |
Total Charges |
|||||||||||
2020 |
2019 |
Incurred to Date |
||||||||||
Charges (Credits) by Segment: |
||||||||||||
Research Publishing & Platforms |
$ |
$ |
( |
) |
$ |
|||||||
Academic & Professional Learning |
||||||||||||
Education Services |
( |
) |
||||||||||
Corporate Expenses |
( |
) |
( |
) |
||||||||
Total Restructuring and Related Charges (Credits) |
$ |
$ |
( |
) |
$ |
|||||||
Charges (Credits) by Activity: |
||||||||||||
Severance and termination benefits |
$ |
$ |
( |
) |
$ |
|||||||
Consulting and contract termination costs |
||||||||||||
Other activities |
||||||||||||
Total Restructuring and Related Charges (Credits) |
$ |
$ |
( |
) |
$ |
April 30, 2020 |
Charges |
Payments |
Foreign Translation & Other Adjustments |
July 31, 2020 |
||||||||||||||||
Severance and termination benefits |
$ |
$ |
$ |
( |
) |
$ |
$ |
|||||||||||||
Other activities |
||||||||||||||||||||
Total |
$ |
$ |
$ |
( |
) |
$ |
$ |
Three Months Ended July 31, |
||||||||
2020 |
2019 |
|||||||
Revenue: |
||||||||
Research Publishing & Platforms |
$ |
$ |
||||||
Academic & Professional Learning |
||||||||
Education Services |
||||||||
Total Revenue |
$ |
$ |
||||||
Contribution to Profit: |
||||||||
Research Publishing & Platforms |
$ |
$ |
||||||
Academic & Professional Learning |
( |
) |
||||||
Education Services |
( |
) |
||||||
Total Contribution to Profit |
||||||||
Corporate Expenses |
( |
) |
( |
) |
||||
Operating Income |
$ |
$ |
||||||
Adjusted Contribution to Profit: (1) |
||||||||
Research Publishing & Platforms |
$ |
$ |
||||||
Academic & Professional Learning |
( |
) |
||||||
Education Services |
( |
) |
||||||
Total Adjusted Contribution to Profit |
||||||||
Adjusted Corporate Expenses |
( |
) |
( |
) |
||||
Total Adjusted Operating Income |
$ |
$ |
||||||
Depreciation and Amortization: |
||||||||
Research Publishing & Platforms |
$ |
$ |
||||||
Academic & Professional Learning |
||||||||
Education Services |
||||||||
Total Depreciation and Amortization |
||||||||
Corporate Depreciation and Amortization |
||||||||
Total Depreciation and Amortization |
$ |
$ |
||||||
Adjusted EBITDA:(2) |
||||||||
Research Publishing & Platforms |
$ |
$ |
||||||
Academic & Professional Learning |
||||||||
Education Services |
||||||||
Total Segment Adjusted EBITDA |
||||||||
Corporate Adjusted EBITDA |
( |
) |
( |
) |
||||
Total Adjusted EBITDA |
$ |
$ |
(1) |
(2) |
Three Months Ended July 31, |
||||||||
2020 |
2019 |
|||||||
Net Income |
$ |
$ |
||||||
Interest expense |
||||||||
Provision for income taxes |
||||||||
Depreciation and amortization |
||||||||
Non-GAAP EBITDA |
$ |
$ |
||||||
Restructuring and related charges |
||||||||
Foreign exchange transaction losses (gains) |
( |
) |
||||||
Interest and other income |
( |
) |
( |
) |
||||
Non-GAAP Adjusted EBITDA |
$ |
$ |
July 31, 2020 |
April 30, 2020 |
|||||||
Finished Goods |
$ |
$ |
||||||
Work-in-Process |
||||||||
Paper and Other Materials |
||||||||
Total Inventories Before Estimated Sales Returns and LIFO Reserve |
$ |
$ |
||||||
Inventory Value of Estimated Sales Returns |
||||||||
LIFO Reserve |
( |
) |
( |
) |
||||
Total Inventories |
$ |
$ |
April 30, 2020 |
Acquisitions (1) |
Foreign Translation Adjustment |
July 31, 2020 |
|||||||||||||
Research Publishing & Platforms |
$ |
$ |
( |
) |
$ |
$ |
||||||||||
Academic & Professional Learning |
||||||||||||||||
Education Services |
||||||||||||||||
Total |
$ |
$ |
( |
) |
$ |
$ |
(1) |
July 31, 2020 |
April 30, 2020 |
|||||||
Intangible Assets with Definite Lives, net: |
||||||||
Content and Publishing Rights (1) |
$ |
$ |
||||||
Customer Relationships (1) |
||||||||
Developed Technology (1) |
||||||||
Brands and Trademarks (1) |
||||||||
Covenants not to Compete |
||||||||
Total |
||||||||
Intangible Assets with Indefinite Lives: |
||||||||
Brands and Trademarks |
||||||||
Publishing Rights |
||||||||
Total |
||||||||
Total Intangible Assets, Net |
$ |
$ |
(1) |
Three Months Ended July 31, |
||||||||
2020 |
2019 |
|||||||
Service cost |
$ |
$ |
||||||
Interest cost |
||||||||
Expected return on plan assets |
( |
) |
( |
) |
||||
Amortization of prior service cost |
( |
) |
( |
) |
||||
Amortization of net actuarial loss |
||||||||
Net pension income |
$ |
( |
) |
$ |
( |
) |
July 31, 2020 |
April 30, 2020 |
|||||||
Short-term portion of long-term debt (1) |
$ |
$ |
||||||
Term loan A - Amended and Restated RCA (2) |
||||||||
Revolving credit facility - Amended and Restated RCA |
||||||||
Total long-term debt, less current portion |
||||||||
Total Debt |
$ |
$ |
(1) |
(2) |
Three Months Ended July 31, 2019 |
||||
Shares Repurchased |
||||
Average Price |
$ |
Date of Declaration by Board of Directors |
Quarterly Cash Dividend |
Total Dividend |
Class of Common Stock |
Dividend Paid Date |
Shareholders of Record as of Date |
|||||
$ |
$ |
Class A and Class B |
Changes in Common Stock A: |
2020 |
2019 |
||||||
Number of shares, beginning of year |
||||||||
Common stock class conversions |
||||||||
Number of shares issued, end of period |
||||||||
Changes in Common Stock A in treasury: |
||||||||
Number of shares held, beginning of year |
||||||||
Purchase of treasury shares |
||||||||
Restricted shares issued under stock-based compensation plans - non-PSU Awards |
( |
) |
( |
) |
||||
Restricted shares issued under stock-based compensation plans - PSU Awards |
( |
) |
( |
) |
||||
Restricted shares, forfeited |
||||||||
Restricted shares issued from exercise of stock options |
( |
) |
( |
) |
||||
Shares withheld for taxes |
||||||||
Number of shares held, end of period |
||||||||
Number of Common Stock A outstanding, end of period |
Changes in Common Stock B: |
2020 |
2019 |
||||||
Number of shares, beginning of year |
||||||||
Common stock class conversions |
( |
) |
( |
) |
||||
Number of shares issued, end of period |
||||||||
Changes in Common Stock B in treasury: |
||||||||
Number of shares held, beginning of year |
||||||||
Number of shares held, end of period |
||||||||
Number of Common Stock B outstanding, end of period |
● | an increase of $14.5 million in Education Services, primarily due to the contributions from mthree, which was acquired in January 2020; and |
● | an increase of $12.7 million in Research Publishing & Platforms. |
Three Months Ended July 31, |
||||||||
2020 |
2019 |
|||||||
U.S. GAAP EPS |
$ |
0.29 |
$ |
$ $ 0.06 |
||||
Adjustments: |
||||||||
Restructuring and related charges |
0.03 |
0.14 |
||||||
Foreign exchange (gains) losses on intercompany transactions |
(0.02 |
) |
0.01 |
|||||
Impact of increase in U.K. statutory rate on deferred tax balances in fiscal year 2021 |
0.12 |
— |
||||||
Non-GAAP Adjusted EPS |
$ |
0.42 |
$ |
$ $ 0.21 |
Three Months Ended July 31, |
Constant Currency |
|||||||||||||||
RESEARCH PUBLISHING & PLATFORMS: |
2020 |
2019 |
% Change Favorable (Unfavorable) |
% Change Favorable (Unfavorable) |
||||||||||||
Revenue: |
||||||||||||||||
Research Publishing |
$ |
230,464 |
$ |
219,927 |
5 |
% |
5 |
% |
||||||||
Research Platforms |
10,346 |
9,448 |
10 |
% |
10 |
% |
||||||||||
Total Research Publishing & Platforms Revenue |
240,810 |
229,375 |
5 |
% |
6 |
% |
||||||||||
Cost of Sales |
65,701 |
64,097 |
(3 |
)% |
(3 |
)% |
||||||||||
Operating Expenses |
97,821 |
99,548 |
2 |
% |
1 |
% |
||||||||||
Amortization of Intangibles |
7,667 |
7,464 |
(3 |
)% |
(4 |
)% |
||||||||||
Restructuring (Credits) Charges (see Note 9) |
(197 |
) |
2,620 |
# |
# |
|||||||||||
Contribution to Profit |
69,818 |
55,646 |
25 |
% |
26 |
% |
||||||||||
Restructuring (Credits) Charges (see Note 9) |
(197 |
) |
2,620 |
|||||||||||||
Adjusted Contribution to Profit |
69,621 |
58,266 |
19 |
% |
20 |
% |
||||||||||
Depreciation and amortization |
19,701 |
17,153 |
||||||||||||||
Adjusted EBITDA |
$ |
89,322 |
$ |
75,419 |
18 |
% |
19 |
% |
||||||||
Adjusted EBITDA Margin |
37.1 |
% |
32.9 |
% |
● | 3 new society contracts were signed with a combined annual revenue of approximately $13.4 million, |
● | 24 society contracts were renewed with a combined annual revenue of approximately $31.3 million, |
● | 3 society contracts were not renewed with a combined annual revenue of approximately $0.4 million. |
Three Months Ended July 31, |
Constant Currency |
|||||||||||||||
ACADEMIC & PROFESSIONAL LEARNING: |
2020 |
2019 |
% Change Favorable (Unfavorable) |
% Change Favorable (Unfavorable) |
||||||||||||
Revenue: |
||||||||||||||||
Education Publishing |
$ |
64,084 |
$ |
65,523 |
(2 |
)% |
(2 |
)% |
||||||||
Professional Learning |
62,829 |
79,335 |
(21 |
)% |
(20 |
)% |
||||||||||
Total Academic & Professional Learning |
126,913 |
144,858 |
(12 |
)% |
(12 |
)% |
||||||||||
Cost of Sales |
36,788 |
43,814 |
16 |
% |
16 |
% |
||||||||||
Operating Expenses |
86,334 |
89,530 |
4 |
% |
3 |
% |
||||||||||
Amortization of Intangibles |
4,138 |
3,798 |
(9 |
)% |
(9 |
)% |
||||||||||
Restructuring Charges (see Note 9) |
33 |
2,805 |
99 |
% |
99 |
% |
||||||||||
Contribution to Profit |
(380 |
) |
4,911 |
# |
# |
|||||||||||
Restructuring Charges (see Note 9) |
33 |
2,805 |
||||||||||||||
Adjusted Contribution to Profit |
(347 |
) |
7,716 |
# |
# |
|||||||||||
Depreciation and amortization |
18,804 |
16,524 |
||||||||||||||
Adjusted EBITDA |
$ |
18,457 |
$ |
24,240 |
(24 |
)% |
(23 |
)% |
||||||||
Adjusted EBITDA Margin |
14.5 |
% |
16.7 |
% |
Three Months Ended July 31, |
Constant Currency |
|||||||||||||||
EDUCATION SERVICES: |
2020 |
2019 |
% Change Favorable (Unfavorable) |
% Change Favorable (Unfavorable) |
||||||||||||
Revenue: |
||||||||||||||||
Education Services (1) |
$ |
50,262 |
$ |
48,156 |
4 |
% |
4 |
% |
||||||||
mthree (1) |
13,341 |
1,141 |
# |
# |
||||||||||||
Total Education Services Revenue |
63,603 |
49,297 |
29 |
% |
29 |
% |
||||||||||
Cost of Sales |
42,318 |
35,185 |
(20 |
)% |
(21 |
)% |
||||||||||
Operating Expenses |
15,501 |
15,514 |
— |
— |
||||||||||||
Amortization of Intangibles |
5,087 |
3,708 |
(37 |
)% |
(38 |
)% |
||||||||||
Restructuring Charges (see Note 9) |
139 |
2,089 |
93 |
% |
93 |
% |
||||||||||
Contribution to Profit |
558 |
(7,199 |
) |
# |
# |
|||||||||||
Restructuring Charges (see Note 9) |
139 |
2,089 |
||||||||||||||
Adjusted Contribution to Profit |
697 |
(5,110 |
) |
# |
# |
|||||||||||
Depreciation and amortization |
7,279 |
5,498 |
||||||||||||||
Adjusted EBITDA |
$ |
7,976 |
$ |
388 |
# |
# |
||||||||||
Adjusted EBITDA Margin |
12.5 |
% |
0.8 |
% |
(1) |
• |
In Research Publishing & Platforms, the Company anticipates that COVID-related budget constraints at libraries will result in pricing pressure for 2021, but it is too early to quantify. This pressure is expected to be offset by continued strong growth in open access, research platforms and corporate solutions should offset this pressure. |
• |
In Academic & Professional Learning, print book sales will continue to be challenged by COVID lockdowns and enrollment declines, while digital content and courseware will continue to grow strongly. Recovery in test prep and corporate training will be dependent on the reopening of physical sites. |
• |
In Education Services, universities continue to operate in a hybrid or virtual learning environment while dealing with financial shortfalls related to COVID-related enrollment declines. While navigating through this uncertainty, the Company is encouraged by enrollment trends, new partner opportunities, and expansion of existing partners. |
• |
In the fourth quarter of fiscal year 2020, Wiley recorded a $15 million restructuring charge for actions that will generate annual run rate savings of approximately $30 million. Additional cost savings actions are anticipated in fiscal year 2021. |
• |
The Company announced on June 11, 2020 that the Executive Leadership Team (ELT) and the CEO, along with the Board of Directors, agreed to six-month base pay reductions, ranging from 15% of the base salary of the ELT to 30% of the base salary of the CEO. |
• |
Discretionary spending controls have been implemented across the Company. |
• |
Wiley is reviewing its real estate portfolio for targeted rationalization, given success to date and working from home and the potential workforce benefits. |
• |
Wiley is accelerating its process reengineering and technology in-sourcing initiatives to enable its strategic plans and reduce costs, while planning to further simplify, standardize and automate our workflows for sustainable efficiency gains. |
• |
Capital expenditures for fiscal 2021 are expected to be approximately $100 million with investment focused on the development of tech-enabled services and platforms, as well as workflow automation and process redesign. |
• |
On June 25, 2020, the Company raised its quarterly dividend for the 27th consecutive year to $0.3425 per share on its Class A and Class B common stock. |
• |
As previously announced on April 9, 2020, due to the COVID-19 uncertainty, Wiley has decided to temporarily suspend share repurchases. The Company expects to resume share repurchases as the economic environment improves. |
Three Months Ended July 31, |
||||||||
2020 |
2019 |
|||||||
Net Income |
$ |
16,334 |
$ |
3,624 |
||||
Interest expense |
4,614 |
6,077 |
||||||
Provision for income taxes |
13,400 |
343 |
||||||
Depreciation and amortization |
49,507 |
42,219 |
||||||
Non-GAAP EBITDA |
$ |
83,855 |
$ |
52,263 |
||||
Restructuring and related charges |
2,218 |
10,735 |
||||||
Foreign exchange transaction losses (gains) |
82 |
(2,652 |
) |
|||||
Interest and other income |
(4,391 |
) |
(2,833 |
) |
||||
Non-GAAP Adjusted EBITDA |
$ |
81,764 |
$ |
57,513 |
Three Months Ended July 31, |
||||||||
2020 |
2019 |
|||||||
Net Cash Used In Operating Activities |
$ |
(120,783 |
) |
$ |
(94,168 |
) |
||
Net Cash Used In Investing Activities |
(28,280 |
) |
(105,892 |
) |
||||
Net Cash Provided By Financing Activities |
43,484 |
213,333 |
||||||
Effect of Foreign Currency Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash |
4,500 |
(2,138 |
) |
Three Months Ended July 31, |
||||||||
2020 |
2019 |
|||||||
Net Cash Used In Operating Activities |
$ |
(120,783 |
) |
$ |
(94,168 |
) |
||
Less: Additions to Technology, Property and Equipment |
(18,964 |
) |
(24,202 |
) |
||||
Less: Product Development Spending |
(5,325 |
) |
(6,211 |
) |
||||
Free Cash Flow less Product Development Spending |
$ |
(145,072 |
) |
$ |
(124,581 |
) |
Net Cash Used In Operating Activities – Three Months Ended July 31, 2019 |
$ |
(94.2 |
) |
|
Working Capital Changes: |
||||
Accounts payable and royalties payable - primarily due to the timing of payments |
(31.1 |
) |
||
Accrued income taxes - primarily due to the timing of certain international and U.S. tax payments and refunds |
(7.1 |
) |
||
Accounts receivable, net and contract liabilities - due to the timing of customer payments, including customers payments that were delayed due to the economic downturn |
(6.0 |
) |
||
Other working capital items – primarily due to an increase in restructuring and employee related payments partially offset by lower inventory purchases |
(13.1 |
) |
||
Higher net income adjusted for items to reconcile net income to net cash used in operating activities |
30.7 |
|||
Net Cash Used In Operating Activities – Three Months Ended July 31, 2020 |
$ |
(120.8 |
) |
July 31, 2020 |
April 30, 2020 |
|||||||
Increase in Inventories, net |
$ |
10,967 |
$ |
8,686 |
||||
Decrease in Accrued royalties |
$ |
(5,277 |
) |
$ |
(4,441 |
) |
||
Increase in Contract liabilities |
$ |
39,384 |
$ |
32,769 |
||||
Print book sales return reserve net liability balance |
$ |
(23,140 |
) |
$ |
(19,642 |
) |
Total Number of Shares Purchased |
Average Price Paid Per Share |
Total Number of Shares Purchased as part of a Publicly Announced Program |
Maximum Number of Shares that May be Purchased Under the Program |
Maximum Dollar Value of Shares that May be Purchased Under Additional Plans or Programs (Dollars in millions) |
||||||||||||||||
May 2020 |
— |
$ |
— |
— |
806,758 |
$ |
200 |
|||||||||||||
June 2020 |
— |
— |
— |
806,758 |
$ |
200 |
||||||||||||||
July 2020 |
— |
— |
— |
806,758 |
$ |
200 |
||||||||||||||
Total |
— |
$ |
— |
— |
806,758 |
$ |
200 |
Form of the Fiscal Year 2021 Qualified Executive Annual Incentive Plan. |
|
Form of the Fiscal 2021 Restricted Share Unit Grant Agreement under the Executive Long-Term Incentive Plan, under the Business Officer Equity Program, pursuant to the 2014 Key Employee Stock Plan. |
|
Form of the Fiscal 2021 Restricted Share Unit Grant Agreement with Matthew S. Kissner under the Executive Long-Term Incentive Plan, under the Business Officer Equity Program, pursuant to the 2014 Key Employee Stock Plan. |
|
Employment Letter dated April 20, 2018 between Aref Matin, Executive Vice President and Chief Technology Officer, and the Company. |
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
101.INS |
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document). |
101.SCH |
Inline XBRL Taxonomy Extension Schema Document. |
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
104 |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
JOHN WILEY & SONS, INC. |
||
Registrant |
||
By |
/s/ Brian A. Napack |
|
Brian A. Napack |
||
President and Chief Executive Officer |
||
By |
/s/ John A. Kritzmacher |
|
John A. Kritzmacher |
||
Executive Vice President, Chief Financial Officer, and Interim Chief Accounting Officer |
||
Dated: September 4, 2020 |
1. | I have reviewed this quarterly report on Form 10-Q of John Wiley & Sons, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ Brian A. Napack | ||
Brian A. Napack | |||
President and Chief Executive Officer | |||
September 4, 2020 |
1. | I have reviewed this quarterly report on Form 10-Q of John Wiley & Sons, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
By: | /s/ John A. Kritzmacher | ||
John A. Kritzmacher | |||
Executive Vice President, Chief Financial Officer, and Interim Chief Accounting Officer | |||
September 4, 2020 |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ Brian A. Napack | ||
Brian A. Napack | |||
President and Chief Executive Officer | |||
September 4, 2020 |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: | /s/ John A. Kritzmacher | ||
John A. Kritzmacher | |||
Executive Vice President, Chief Financial Officer, and Interim Chief Accounting Officer | |||
September 4, 2020 |
Section |
Subject
|
Page
|
I. |
Definitions
|
2
|
II. |
Plan Objectives
|
3
|
III. |
Eligibility
|
3
|
IV. |
Performance Measurement
|
3
|
V.
|
Performance Evaluation
|
4
|
VI. |
Payouts
|
4
|
VII. |
Administration and Other Matters
|
5
|
I. DEFINITIONS
|
II. PLAN OBJECTIVES
|
III. ELIGIBILITY
|
IV. PERFORMANCE MEASUREMENT
|
A.
|
Financial Performance
|
1. |
The CEO recommends and the Committee adopts, in its sole
discretion, financial goals and performance
levels for the Company to be used in the plan year.
|
2. |
Each financial goal is assigned a weight, such that the sum of
the weights of all financial goals equals 100%.
|
B.
|
Personal Performance
|
1.
|
Each participant’s objectives are determined
at the beginning of the plan year by the participant and the President & CEO. The President & CEO’s objectives are determined by the President &
CEO and the Committee.
|
2.
|
Objectives may be revised during the plan year, as appropriate.
|
V. PERFORMANCE EVALUATION
|
A. |
Financial Performance
|
1.
|
Actual financial results achieved by the Company will be determined at the end of the plan year, by comparing financial results with previously set financial goals.
|
2.
|
In determining the attainment of financial results,
|
a.
|
the impact of foreign exchange gains or losses will be excluded.
|
b.
|
the impact of any of the events (1) through (9) listed in Section 4(b)(ii) of the shareholder plan will be excluded from the financial results of any affected business unit.
|
3.
|
Funding
|
a.
|
Funding under the plan is determined on a continuum, as follows:
|
1.
|
For performance below the threshold level,
the funding is zero.
|
2.
|
For performance at the threshold level, the
funding is 50%.
|
3.
|
For performance between the threshold and target levels, the funding is
between 50% and 100%, determined on a pro-rata basis.
|
4.
|
For performance at the target level, the funding is 100%.
|
5.
|
For performance between the target and outstanding levels, the funding is
between 100% and 150%, determined on a pro-rata basis.
|
6.
|
For performance at or above the outstanding level, the funding is
150%.
|
b.
|
In the case where the Company misses threshold performance for one or both financial
goals, but achieves 80% of the Company’s full-year operating income target, a minimum funding of 50% will be available for payout under the plan.
|
B.
|
Personal Performance
|
1.
|
At the end of the plan year, each participant’s
performance will be measured by achievement of his/her objectives, with a personal performance modifier in the range of 0-200%. This assessment will be made by the President & CEO, and in the case of the President & CEO, by the Committee. The personal performance modifier is
multiplied by the funding to determine payout under the plan.
|
2.
|
The Committee approves payouts made to all participants
under the plan.
|
A.
|
Payouts will be made within 90 days after
the end of the plan year.
|
B.
|
In the event of a participant's death,
disability, retirement or leave of absence prior to the payout for the plan year, the payout, if any, will be determined by the Committee. Any such payout will be calculated as noted in
Section V.
|
C.
|
A participant must be actively employed by
the Company on the date of payout without having given notice or having been given notice of termination to be eligible for a payout for the plan year.
Exceptions to this provision shall be made with the approval of the Committee, in its sole discretion.
|
D.
|
A participant who is hired or promoted into
an eligible position during the plan year may receive a prorated payout as determined by the Committee, in its sole discretion.
|
A.
|
The plan will be administered by the Committee, which shall have authority in its sole discretion to interpret and administer this plan, including, without limitation, all questions regarding eligibility and status of any participant, and no participant shall have any right to receive a payout or payment of any kind
whatsoever, except as determined by the Committee hereunder.
|
B.
|
The Company will have no obligation to
reserve or otherwise fund in advance any amount which may become payable under the plan.
|
C.
|
In the event that the Company is required
to file a restatement of its financial results due to fraud, gross negligence or intentional misconduct by one or more employees, and/or material non-compliance with Securities laws, the Company will require reimbursement of any annual incentive compensation awarded to all participants
in the amount by which such compensation exceeded any lower payment that would have been made based on the restated financial results,
for the fiscal year in which the restatement was required, to the full extent required or permitted by law.
|
D.
|
This plan may not be modified or amended
except with the approval of the Committee, in accordance with the provisions of the shareholder plan.
|
E.
|
In the event of a conflict between the provisions of this plan and the provisions of the shareholder plan, the provisions of the shareholder plan shall apply.
|
F.
|
In the event that any provision of this plan
shall be considered illegal or invalid for any reason, such illegality and invalidity shall not affect the remaining provisions of the plan,
but shall be fully severable, and the plan shall be construed and enforced as if such illegal or invalid provision had never been
contained therein.
|
1.
|
Issuance of
Shares and Shareholder Rights. You shall not have any right in, to, or with respect to any of the Shares (including any voting rights or rights
with respect to dividends paid on the Common Stock) issuable under the Award until the Award is settled by the issuance of such Shares to you. The restricted share units shall vest in accordance with the above Vesting Schedule. One Share
shall be issuable for each restricted share unit that vests on such vesting date subject to the terms and provisions of the Plan and this Agreement. On or promptly following those dates, the Company shall transfer such Shares to you upon
satisfaction of any required tax withholding obligations. Following settlement of the Award, and upon satisfaction of all tax withholding obligations, you become a shareholder of record, and shall receive voting rights and rights with
respect to dividends paid thereafter on the Shares awarded.
|
2.
|
Termination of Employment.
|
a.
|
Retirement, Resignation or
Termination with or without Cause or Constructive Discharge. Except as otherwise provided in this Section or in a written agreement
approved by the Executive Compensation and Development Committee (Committee), if you retire, or if you resign, or if your employment is
terminated by the Company with or without Cause or Constructive Discharge before the Award vests, you shall forfeit the right to receive an Award.
|
b.
|
Death or Disability.
In the event of your death or Disability while in employment prior to the vesting of the Shares, all unvested Shares shall immediately become fully vested and payable to you (or, in the event of your death, your estate). “Disability” for
this purpose shall be determined by the Committee pursuant to Section 22(e) (3) of the Code.
|
c.
|
Change in Control.
In the event of a Change in Control, as that term is defined in the Plan, in cases where:
|
i.
|
the acquiring company is not publicly traded, or
|
ii.
|
where the acquiring company is publicly traded and the company does not assume or
replace the outstanding equity, or
|
iii.
|
your employment is terminated due to a without Cause termination or Constructive Discharge within twenty-four (24) months following a Change in Control where the awards were assumed or replaced,
|
3.
|
Restrictions. Except as
otherwise provided for in this Agreement or in the Plan, the restricted share units or rights granted hereunder may not be sold, pledged or otherwise transferred.
|
4.
|
Non-Compete, Non-Solicitation
|
a.
|
During your employment with the Company, you have and will become familiar with the Company’s trade secrets, information
related to the operations, products and services of the Company, and with other Confidential Information concerning the Company, its subsidiaries, affiliates, and companies acquired by the Company. Therefore, during your employment period
and for a period of one year thereafter, you agree that you shall not directly or indirectly own any interest in, manage, control, participate in, consult with, or render services for any Competing Business.
|
b.
|
During your employment and for a period of one year thereafter, you agree that you shall not directly, or indirectly through
another entity, (i) induce or attempt to induce any employee of the Company or any affiliate to leave the employ of the Company or such affiliate, or in any way interfere with the relationship between the Company or any affiliate and any
employee thereof, (ii) hire any person who was an employee of the Company or any affiliate at any time during the last twelve (12) months, or (iii) induce or attempt to induce any customer, supplier, licensee, licensor, franchisee or other
business relation of the Company or any affiliate to cease doing business with the Company or such affiliate, or in any way interfere with the relationship between any such customer, supplier, licensee, licensor, franchisee or business
relation and the Company or any affiliate (including, without limitation, making any negative statements or communications about the Company or its affiliates).
|
5.
|
Taxes.
|
a.
|
Generally. You
are ultimately liable and responsible for all taxes owed in connection with the Award, regardless of any action the Company or UBS takes with respect to any tax withholding obligations that arise in connection with the Award. Neither the
Company nor UBS makes any representation or undertaking regarding the treatment of any tax withholding in connection with the grant or vesting of the Award or the subsequent sale of Shares issuable pursuant to the Award. The Company does
not commit and is under no obligation to structure the Award to reduce or eliminate your tax liability. The Company may refuse to issue any Shares to you until you satisfy the tax withholding obligation. For purposes hereof, “UBS”
includes the Plan third party administrator and any successor thereto.
|
b.
|
Payment of Withholding Taxes.
Prior to each vesting date in connection with the Award that results in any domestic or foreign tax withholding obligation, whether national, federal, state or local, including any social tax obligation, you must arrange for the
satisfaction of the minimum amount of such tax withholding obligation, as required, in a manner acceptable to the Company. You are responsible for obtaining professional advice as appropriate. Prior to the vesting dates in connection with
the Award, you shall be notified by UBS of any tax withholding obligation. You have the option of satisfying your tax withholding obligation in one of two ways:
|
i.
|
By
Surrendering Shares. Unless you choose to satisfy the tax withholding obligation by some other means in accordance with clause (ii) below, your acceptance of this Award constitutes your instruction and authorization to the
Company and UBS to withhold a whole number of Shares from those Shares issuable to you as the Company and UBS determine to be appropriate to satisfy your tax withholding obligation on each vesting date.
|
ii.
|
By Check
(U.S. participants only), Wire Transfer or Other Means.
You may elect to satisfy your tax withholding obligation by remitting to UBS as instructed an amount that the Company and UBS determine is sufficient to satisfy the minimum tax withholding obligation.
|
6.
|
Plan
Information. You agree to receive stockholder information, including copies of any annual report, proxy statement and other periodic reports, from the
Investor Relations section of http://www.wiley.com.
You acknowledge that copies of the Plan and stockholder information are available upon written or telephonic request to the Corporate Secretary.
|
7.
|
Limitation on
Rights; No Right to Future Grants; Extraordinary Item. By entering into this Agreement and accepting the Award, you acknowledge that: (a) the Plan is discretionary and may be modified, suspended or terminated by the Company at any
time as provided in the Plan; (b) the grant of the Award is a one-time benefit and does not create any contractual or other right to receive future grants of awards or benefits in lieu of awards; (c) all determinations with respect to any
such future grants, including, but not limited to, the times when awards shall be granted, the number of shares subject to each award, the award price, if any, and the time or times when each award shall be settled, shall be at the sole
discretion of the Company; (d) your participation in the Plan is voluntary; (e) the value of this Award on an ongoing basis is an extraordinary item which is outside the scope of your terms of employment or your employment contract, if any;
(f) except as otherwise provided for in any Employment Agreement you may participate in, the Award is not part of normal or expected compensation for any purpose, including without limitation for calculating any benefits, severance,
resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; (g) the future value of the Common Stock subject to the Award is unknown and cannot be
predicted with certainty, (h) neither the Plan, the Award nor the issuance of the Shares confers upon you any right to continue in the employ of (or any other relationship with) the Company or any Subsidiary, nor do they limit in any
respect the right of the Company or any Subsidiary to terminate your employment or other relationship with the Company or any Subsidiary, as the case may be, at any time.
|
8.
|
Acceptance
and Acknowledgment. I accept and agree to the terms of the restricted share unit Award described in this Agreement and in the Plan, acknowledge receipt of a copy of this Agreement and the Plan, and acknowledge that I have read
them carefully and that I fully understand their contents.
|
1.
|
Issuance of
Shares and Shareholder Rights. You shall not have any right in, to, or with respect to any of the Shares (including any voting rights or rights
with respect to dividends paid on the Common Stock) issuable under the Award until the Award is settled by the issuance of such Shares to you. The restricted share units shall vest in accordance with the above Vesting Schedule. One Share
shall be issuable for each restricted share unit that vests on such vesting date subject to the terms and provisions of the Plan and this Agreement. On or promptly following those dates, the Company shall transfer such Shares to you upon
satisfaction of any required tax withholding obligations. Following settlement of the Award, and upon satisfaction of all tax withholding obligations, you become a shareholder of record, and shall receive voting rights and rights with
respect to dividends paid thereafter on the Shares awarded.
|
2.
|
Termination of Employment.
|
a.
|
Retirement, Resignation or
Termination with or without Cause or Constructive Discharge. Except as otherwise provided in this Section or in a written agreement
approved by the Executive Compensation and Development Committee (Committee), if you retire, or if you resign, or if your employment is
terminated by the Company with or without Cause or Constructive Discharge before the Award vests, you shall forfeit the right to receive an Award.
|
b.
|
Death or Disability.
In the event of your death or Disability while in employment prior to the vesting of the Shares, all unvested Shares shall immediately become fully vested and payable to you (or, in the event of your death, your estate). “Disability” for
this purpose shall be determined by the Committee pursuant to Section 22(e) (3) of the Code.
|
c.
|
Change in Control.
In the event of a Change in Control, as that term is defined in the Plan, in cases where:
|
i.
|
the acquiring company is not publicly traded, or
|
ii.
|
where the acquiring company is publicly traded and the company does not assume or
replace the outstanding equity, or
|
iii.
|
your employment is terminated due to a without Cause termination or Constructive Discharge within twenty-four months following a Change in Control where the awards were assumed or replaced.
|
3.
|
Restrictions.
Except as otherwise provided for in this Agreement or in the Plan, the restricted share units or rights granted hereunder may not be sold, pledged or otherwise
transferred.
|
4.
|
Non-Compete, Non-Solicitation
|
a.
|
During your employment with the Company, you have and will become familiar with the Company’s trade secrets, information
related to the operations, products and services of the Company, and with other Confidential Information concerning the Company, its subsidiaries, affiliates, and companies acquired by the Company. Therefore, during your employment period
and for a period of one year thereafter, you agree that you shall not directly or indirectly own any interest in, manage, control, participate in, consult with, or render services for any Competing Business.
|
b.
|
During your employment and for a period of one year thereafter, you agree that you shall not directly, or indirectly through
another entity, (i) induce or attempt to induce any employee of the Company or any affiliate to leave the employ of the Company or such affiliate, or in any way interfere with the relationship between the Company or any affiliate and any
employee thereof, (ii) hire any person who was an employee of the Company or any affiliate at any time during the last twelve (12) months, or (iii) induce or attempt to induce any customer, supplier, licensee, licensor, franchisee or other
business relation of the Company or any affiliate to cease doing business with the Company or such affiliate, or in any way interfere with the relationship between any such customer, supplier, licensee, licensor, franchisee or business
relation and the Company or any affiliate (including, without limitation, making any negative statements or communications about the Company or its affiliates).
|
5.
|
Taxes.
|
a.
|
Generally. You
are ultimately liable and responsible for all taxes owed in connection with the Award, regardless of any action the Company or UBS takes with respect to any tax withholding obligations that arise in connection with the Award. Neither the
Company nor UBS makes any representation or undertaking regarding the treatment of any tax withholding in connection with the grant or vesting of the Award or the subsequent sale of Shares issuable pursuant to the Award. The Company does
not commit and is under no obligation to structure the Award to reduce or eliminate your tax liability. The Company may refuse to issue any Shares to you until you satisfy the tax withholding obligation. For purposes hereof, “UBS”
includes the Plan third party administrator and any successor thereto.
|
b.
|
Payment of Withholding Taxes.
Prior to each vesting date in connection with the Award that results in any domestic or foreign tax withholding obligation, whether national, federal, state or local, including any social tax obligation, you must arrange for the
satisfaction of the minimum amount of such tax withholding obligation, as required, in a manner acceptable to the Company. You are responsible for obtaining professional advice as appropriate. Prior to the vesting dates in connection with
the Award, you shall be notified by UBS of any tax withholding obligation. You have the option of satisfying your tax withholding obligation in one of two ways:
|
i.
|
By
Surrendering Shares. Unless you choose to satisfy the tax withholding obligation by some other means in accordance with clause (ii) below, your acceptance of this Award constitutes your instruction and authorization to the
Company and UBS to withhold a whole number of Shares from those Shares issuable to you as the Company and UBS determine to be appropriate to satisfy your tax withholding obligation on each vesting date.
|
ii.
|
By Check
(U.S. participants only), Wire Transfer or Other Means.
You may elect to satisfy your tax withholding obligation by remitting to UBS as instructed an amount that the Company and UBS determine is sufficient to satisfy the minimum tax withholding obligation.
|
6.
|
Plan
Information. You agree to receive stockholder information, including copies of any annual report, proxy statement and other periodic reports, from the
Investor Relations section of http://www.wiley.com.
You acknowledge that copies of the Plan and stockholder information are available upon written or telephonic request to the Corporate Secretary.
|
7.
|
Limitation on
Rights; No Right to Future Grants; Extraordinary Item. By entering into this Agreement and accepting the Award, you acknowledge that: (a) the Plan is discretionary and may be modified, suspended or terminated by the Company at any
time as provided in the Plan; (b) the grant of the Award is a one-time benefit and does not create any contractual or other right to receive future grants of awards or benefits in lieu of awards; (c) all determinations with respect to any
such future grants, including, but not limited to, the times when awards shall be granted, the number of shares subject to each award, the award price, if any, and the time or times when each award shall be settled, shall be at the sole
discretion of the Company; (d) your participation in the Plan is voluntary; (e) the value of this Award on an ongoing basis is an extraordinary item which is outside the scope of your terms of employment or your employment contract, if any;
(f) except as otherwise provided for in any Employment Agreement you may participate in, the Award is not part of normal or expected compensation for any purpose, including without limitation for calculating any benefits, severance,
resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments; (g) the future value of the Common Stock subject to the Award is unknown and cannot be
predicted with certainty, (h) neither the Plan, the Award nor the issuance of the Shares confers upon you any right to continue in the employ of (or any other relationship with) the Company or any Subsidiary, nor do they limit in any
respect the right of the Company or any Subsidiary to terminate your employment or other relationship with the Company or any Subsidiary, as the case may be, at any time.
|
8.
|
Acceptance
and Acknowledgment. I accept and agree to the terms of the restricted share unit Award described in this Agreement and in the Plan, acknowledge receipt of a copy of this Agreement and the Plan, and acknowledge that I have read
them carefully and that I fully understand their contents.
|
•
|
Absent a Change in Control: One month of base salary for each year of employment, subject to a minimum of 12 months and a maximum of 18 months.
Continued health insurance for the number of months of the cash severance period. If such termination occurs on or before the first anniversary of your employment date, you will be eligible for an accrued benefit as of the following
April 30 under the Executive Long-Term Incentive Plan.
|
•
|
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - UNAUDITED (Parenthetical) - $ / shares shares in Thousands |
Jul. 31, 2020 |
Apr. 30, 2020 |
---|---|---|
Shareholders' Equity | ||
Preferred Stock, par value (in dollars per share) | $ 1 | $ 1 |
Preferred Stock, shares authorized (in shares) | 2,000 | 2,000 |
Preferred Stock, shares issued (in shares) | 0 | 0 |
Class A [Member] | ||
Shareholders' Equity | ||
Common Stock, par value (in dollars per share) | $ 1 | $ 1 |
Common Stock, shares authorized (in shares) | 180,000 | 180,000 |
Common Stock, shares issued (in shares) | 70,177 | 70,166 |
Treasury stock (in shares) | 23,259 | 23,405 |
Class B [Member] | ||
Shareholders' Equity | ||
Common Stock, par value (in dollars per share) | $ 1 | $ 1 |
Common Stock, shares authorized (in shares) | 72,000 | 72,000 |
Common Stock, shares issued (in shares) | 13,005 | 13,016 |
Treasury stock (in shares) | 3,920 | 3,920 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED [Abstract] | ||
Revenue, net | $ 431,326 | $ 423,530 |
Costs and Expenses | ||
Cost of sales | 144,809 | 143,096 |
Operating and administrative expenses | 237,369 | 250,170 |
Restructuring and related charges | 2,218 | 10,735 |
Amortization of intangibles | 16,891 | 14,970 |
Total Costs and Expenses | 401,287 | 418,971 |
Operating Income | 30,039 | 4,559 |
Interest Expense | (4,614) | (6,077) |
Foreign Exchange Transaction (Losses) Gains | (82) | 2,652 |
Interest and Other Income | 4,391 | 2,833 |
Income Before Taxes | 29,734 | 3,967 |
Provision for Income Taxes | 13,400 | 343 |
Net Income | $ 16,334 | $ 3,624 |
Earnings Per Share | ||
Basic (in dollars per share) | $ 0.29 | $ 0.06 |
Diluted (in dollars per share) | $ 0.29 | $ 0.06 |
Weighted Average Number of Common Shares Outstanding | ||
Basic (in shares) | 55,912 | 56,536 |
Diluted (in shares) | 56,193 | 56,905 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - UNAUDITED - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) UNAUDITED [Abstract] | ||
Net income | $ 16,334 | $ 3,624 |
Other Comprehensive Income (Loss): | ||
Foreign currency translation adjustment | 46,853 | (35,539) |
Unamortized retirement (costs) credits, net of tax benefit (expense) of $1,705 and $(2,180), respectively | (5,665) | 8,168 |
Unrealized gain on interest rate swaps, net of tax (expense) benefit of $(30) and $44, respectively | 191 | 85 |
Total Other Comprehensive Income (Loss) | 41,379 | (27,286) |
Comprehensive Income (Loss) | $ 57,713 | $ (23,662) |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - UNAUDITED (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Other Comprehensive Income (Loss): | ||
Unamortized retirement costs, tax benefit (expense) | $ 1,705 | $ (2,180) |
Unrealized (loss) gain on interest rate swaps, tax benefit (expense) | $ (30) | $ 44 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Operating Activities | ||
Net income | $ 16,334 | $ 3,624 |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Amortization of intangibles | 16,891 | 14,970 |
Amortization of product development assets | 9,148 | 8,714 |
Depreciation and amortization of technology, property and equipment | 23,468 | 18,535 |
Restructuring and related charges | 2,218 | 10,735 |
Stock-based compensation expense | 4,314 | 4,604 |
Employee retirement plan expense | 4,033 | 1,841 |
Royalty advances | (28,952) | (25,687) |
Earned royalty advances | 40,125 | 33,886 |
Foreign exchange transaction losses (gains) | 82 | (2,652) |
Other non-cash charges | 15,285 | 3,750 |
Net change in operating assets and liabilities | (223,729) | (166,488) |
Net Cash Used In Operating Activities | (120,783) | (94,168) |
Investing Activities | ||
Product development spending | (5,325) | (6,211) |
Additions to technology, property and equipment | (18,964) | (24,202) |
Businesses acquired in purchase transactions, net of cash acquired | (136) | (73,209) |
Acquisitions of publication rights and other | (3,855) | (2,270) |
Net Cash Used In Investing Activities | (28,280) | (105,892) |
Financing Activities | ||
Repayment of long-term debt | (139,331) | (10,400) |
Borrowing of long-term debt | 206,687 | 264,248 |
Payment of debt issuance costs | 0 | (3,957) |
Purchase of treasury shares | 0 | (10,000) |
Change in book overdrafts | (3,292) | (6,169) |
Cash dividends | (19,261) | (19,252) |
Net payments from exercise of stock options and other | (1,319) | (1,137) |
Net Cash Provided By Financing Activities | 43,484 | 213,333 |
Effects of Exchange Rate Changes on Cash, Cash Equivalents, and Restricted Cash | 4,500 | (2,138) |
Cash Reconciliation: | ||
Cash and Cash Equivalents | 202,464 | 92,890 |
Restricted cash included in Prepaid expenses and other current assets | 583 | 658 |
Balance at Beginning of Period | 203,047 | 93,548 |
(Decrease)/Increase for the Period | (101,079) | 11,135 |
Cash and cash equivalents | 101,385 | 104,025 |
Restricted cash included in Prepaid expenses and other current assets | 583 | 658 |
Balance at End of Period | 101,968 | 104,683 |
Cash Paid During the Period for: | ||
Interest | 4,221 | 5,410 |
Income taxes, net of refunds | $ 25,704 | $ 11,484 |
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - UNAUDITED - USD ($) $ in Thousands |
Common Stock [Member]
Class A [Member]
|
Common Stock [Member]
Class B [Member]
|
Additional Paid-in Capital [Member] |
Additional Paid-in Capital [Member]
Class A [Member]
|
Additional Paid-in Capital [Member]
Class B [Member]
|
Retained Earnings [Member] |
Retained Earnings [Member]
Class A [Member]
|
Retained Earnings [Member]
Class B [Member]
|
Accumulated Other Comprehensive Loss [Member] |
Accumulated Other Comprehensive Loss [Member]
Class A [Member]
|
Accumulated Other Comprehensive Loss [Member]
Class B [Member]
|
Treasury Stock [Member] |
Treasury Stock [Member]
Class A [Member]
|
Treasury Stock [Member]
Class B [Member]
|
Total |
Class A [Member] |
Class B [Member] |
Cumulative Effect, Period of Adoption, Adjustment [Member]
Common Stock [Member]
Class A [Member]
|
Cumulative Effect, Period of Adoption, Adjustment [Member]
Common Stock [Member]
Class B [Member]
|
Cumulative Effect, Period of Adoption, Adjustment [Member]
Additional Paid-in Capital [Member]
|
Cumulative Effect, Period of Adoption, Adjustment [Member]
Retained Earnings [Member]
|
Cumulative Effect, Period of Adoption, Adjustment [Member]
Accumulated Other Comprehensive Loss [Member]
|
Cumulative Effect, Period of Adoption, Adjustment [Member]
Treasury Stock [Member]
|
Cumulative Effect, Period of Adoption, Adjustment [Member] |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at Apr. 30, 2019 | $ 70,127 | $ 13,055 | $ 422,305 | $ 1,931,074 | $ (508,738) | $ (746,476) | $ 1,181,347 | |||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||||
Restricted Shares Issued under Stock-based Compensation Plans | 0 | 0 | (2,112) | (1) | 0 | 2,219 | 106 | |||||||||||||||||
Net Proceeds (Payments) from Exercise of Stock Options and Other | 0 | 0 | 107 | 0 | 0 | (1,244) | (1,137) | |||||||||||||||||
Stock-based Compensation Expense | 0 | 0 | 4,604 | 0 | 0 | 0 | 4,604 | |||||||||||||||||
Purchase of Treasury Shares | 0 | 0 | 0 | 0 | 0 | (10,000) | (10,000) | |||||||||||||||||
Common Stock Dividends | 0 | 0 | $ 0 | $ 0 | $ (16,148) | $ (3,104) | $ 0 | $ 0 | $ 0 | $ 0 | $ (16,148) | $ (3,104) | ||||||||||||
Common Stock Class Conversions | 12 | (12) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||
Comprehensive Income (Loss), Net of Tax | 0 | 0 | 0 | 3,624 | (27,286) | 0 | (23,662) | |||||||||||||||||
Balance at Jul. 31, 2019 | 70,139 | 13,043 | 424,904 | 1,915,445 | (536,024) | (755,501) | 1,132,006 | |||||||||||||||||
Balance at Apr. 30, 2020 | 70,166 | 13,016 | 431,680 | 1,780,129 | (575,497) | (785,870) | 933,624 | $ 0 | $ 0 | $ 0 | $ (1,390) | $ 0 | $ 0 | $ (1,390) | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||||||||||
Restricted Shares Issued under Stock-based Compensation Plans | 0 | 0 | (5,121) | 1 | 0 | 5,184 | 64 | |||||||||||||||||
Net Proceeds (Payments) from Exercise of Stock Options and Other | 0 | 0 | 368 | 0 | 0 | (1,687) | (1,319) | |||||||||||||||||
Stock-based Compensation Expense | 0 | 0 | 4,314 | 0 | 0 | 0 | 4,314 | |||||||||||||||||
Common Stock Dividends | 0 | 0 | $ 0 | $ 0 | $ (16,149) | $ (3,112) | $ 0 | $ 0 | $ 0 | $ 0 | $ (16,149) | $ (3,112) | ||||||||||||
Common Stock Class Conversions | 11 | (11) | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||
Comprehensive Income (Loss), Net of Tax | 0 | 0 | 0 | 16,334 | 41,379 | 0 | 57,713 | |||||||||||||||||
Balance at Jul. 31, 2020 | $ 70,177 | $ 13,005 | $ 431,241 | $ 1,775,813 | $ (534,118) | $ (782,373) | $ 973,745 |
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - UNAUDITED (Parenthetical) - $ / shares |
3 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Class A [Member] | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Common stock dividend (in dollars per share) | $ 0.3425 | $ 0.34 |
Class B [Member] | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Common stock dividend (in dollars per share) | $ 0.3425 | $ 0.34 |
Basis of Presentation |
3 Months Ended |
---|---|
Jul. 31, 2020 | |
Basis of Presentation [Abstract] | |
Basis of Presentation |
Note 1 — Basis of Presentation
Throughout this report, when we refer to “Wiley,” the “Company,” “we,” “our,” or “us,” we are referring to John Wiley & Sons, Inc. and all our subsidiaries, except where the context indicates otherwise.
Our Unaudited Condensed Consolidated Financial Statements include all the accounts of the Company and our subsidiaries. We have eliminated all intercompany transactions and balances in consolidation. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Unaudited Condensed Consolidated Financial Condition, Results of Operations, Comprehensive Income and Cash Flows for the periods presented. Operating results for the interim period are not necessarily indicative of the results expected for the full year. All amounts are in thousands, except per share amounts, and approximate due to rounding. These financial statements should be read in conjunction with the most recent audited consolidated financial statements included in our Form 10-K for the fiscal year ended April 30, 2020 as filed with the SEC on June 26, 2020 (“2020 Form 10-K”).
Our Unaudited Condensed Consolidated Financial Statements were prepared in accordance with the interim reporting requirements of the SEC. As permitted under those rules, annual footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted. The preparation of our Unaudited Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Certain prior year amounts have been reclassified to conform to the current year’s presentation.
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Recent Accounting Standards |
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Recent Accounting Standards [Abstract] | ||||||||||||||||||||||||||||||||||||
Recent Accounting Standards |
Note 2 — Recent Accounting Standards
Recently Adopted Accounting Standards
Intangibles-Goodwill and Other-Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract
In August 2018, the FASB issued ASU 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.” ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We adopted ASU 2018-15 on May 1, 2020 on a prospective basis. There was no impact to our consolidated financial statements at the date of adoption.
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 removes, modifies and added disclosures. We adopted ASU 2018-13 on May 1, 2020. There was no impact to our consolidated financial statements at the date of adoption.
Measurement of Credit Losses on Financial Instruments
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.” Subsequently, in May 2019, the FASB issued ASU 2019-05 - "Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief”, in April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,” in November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” in November 2019, the FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” and in February 2020, the FASB issued ASU 2020-02, “Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842)—Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842) (SEC Update)”. ASU 2016-13 requires entities to measure all expected credit losses for most financial assets held at the reporting date based on an expected loss model which includes historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. ASU 2016-13 also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses. ASU 2016-13, ASU 2019-05, ASU 2019-04, ASU 2018-19, ASU 2019-11 and ASU 2020-02 were effective for us on May 1, 2020, including interim periods within those fiscal periods, with early adoption permitted.
We adopted the new standard on May 1, 2020, with a cumulative effect adjustment to retained earnings as of the beginning of the year of adoption. Based on financial instruments currently held by us, the adoption of ASU 2016-13 primarily impacted our trade receivables, specifically our allowance for doubtful accounts. The adoption of the standard did not have an impact on our Unaudited Condensed Consolidated Statements of Income, or our Unaudited Condensed Consolidated Statements of Cash Flows. See the table below for further details on the immaterial impact to our Unaudited Condensed Consolidated Statements of Financial Position and Unaudited Condensed Consolidated Statements of Shareholders’ Equity.
We are exposed to credit losses through our accounts receivable with customers. Accounts Receivable, net is stated at amortized cost net of provision for credit losses. Our methodology to measure the provision for credit losses requires an estimation of loss rates based upon historical loss experience adjusted for factors that are relevant to determining the expected collectability of accounts receivable including the impact of COVID-19, delinquency trends, aging behavior of receivables, credit and liquidity indicators for industry groups, customer classes or individual customers and reasonable and supportable forecasts of the economic conditions that may exist through the contractual life of the asset. Our provision for credit losses is reviewed and revised periodically. Our accounts receivable is evaluated on a pool basis that is based on customer groups with similar risk characteristics. This includes consideration of the following factors to develop these pools; size of the customer, industry, geographical location, historical risk and types of services or products sold.
Our customer’s ability to pay is assessed through our internal credit review processes. Based on the dollar value of credit extended, we assess our customers' credit by reviewing the total expected receivable exposure, expected timing of payments and the customer’s established credit rating. In determining customer creditworthiness, we assess our customers' credit utilizing different resources including external credit validations and/or our own assessment through analysis of the customers' financial statements and review of trade/bank references. We also consider contract terms and conditions, country and political risk, and the customer's mix of products purchased in our evaluation. A credit limit is established for each customer based on the outcome of this review. Credit limits are periodically reviewed for existing customers and whenever an increase in the credit limit is being considered. When necessary, we utilize collection agencies and legal counsel to pursue recovery of defaulted receivables. We write off receivables only when deemed no longer collectible.
The following table presents the change in provision for credit losses, which is presented net in Accounts Receivable on our Unaudited Condensed Consolidated Statements of Financial Position for the period indicated:
Recently Issued Accounting Standards
In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)”. This ASU reduces the number of accounting models for convertible debt instruments and convertible preferred stock. As well as amend the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related EPS guidance. This standard is effective for us on May 1, 2022, including interim periods within those fiscal years. Adoption is either a modified retrospective method or a fully retrospective method of transition. We are currently assessing the impact the new guidance will have on our consolidated financial statements.
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional guidance for a limited period of time to ease the burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. This would apply to companies meeting certain criteria that have contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This standard is effective for us immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. We are currently assessing the impact the new guidance will have on our consolidated financial statements.
Simplifying the Accounting for Income Taxes
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This ASU is intended to simplify various aspects related to accounting for income taxes, eliminates certain exceptions within Topic 740, “Income Taxes” and clarifies certain aspects of the current guidance to promote consistent application. The standard is effective for us on May 1, 2021, and early adoption is permitted in any interim period for which financial statements have not yet been issued. We are currently assessing the impact the new guidance will have on our consolidated financial statements.
Changes to the Disclosure Requirements for Defined Benefit Plans
In August 2018, the FASB issued ASU 2018-14, “Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans.” ASU 2018-14 removes certain disclosures that are not considered cost beneficial, clarifies certain required disclosures and added additional disclosures. The standard is effective for us on May 1, 2021, with early adoption permitted. The amendments in ASU 2018-14 would need to be applied on a retrospective basis. We are currently assessing the impact the new guidance will have on our disclosures.
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Acquisitions |
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Jul. 31, 2020 | |
Acquisitions [Abstract] | |
Acquisitions |
Note 3 — Acquisitions
Fiscal Year 2020
Pro forma financial information related to these acquisitions has not been provided as it is not material to our consolidated results of operations.
mthree
On January 1, 2020, we completed the acquisition of 100% of the outstanding stock of mthree. mthree is a rapidly growing education services provider that addresses the IT skills gap by finding, training and placing job-ready technology talent in roles with leading corporations worldwide. Its results of operations are included in our Education Services segment.
The preliminary fair value of the consideration transferred at the acquisition date was $128.6 million (£97.5 million) which included $122.2 million of cash and $6.4 million of additional consideration to be paid after the acquisition date. We financed the payment of the cash consideration primarily through borrowings under our Amended and Restated RCA (as defined below in Note 15, “Debt and Available Credit Facilities”) and using cash on hand. The fair value of the cash consideration transferred including those amounts paid after the acquisition date, net of $2.2 million of cash acquired was approximately $126.4 million.
mthree’s revenue included in our Education Services segment results for the three months ended July 31, 2020 was $12.4 million.
During the three months ended July 31, 2020, no revisions were made to the allocation of the consideration transferred to the assets acquired and liabilities assumed. We recorded the preliminary fair value of the assets acquired and liabilities assumed on the acquisition date, which included a preliminary allocation of $82.6 million of goodwill allocated to the Education Services segment, and $56.8 million of intangible assets.
The allocation of the total consideration transferred to the assets acquired and the liabilities assumed is preliminary, and could be revised as a result of additional information obtained due to the finalization of the third-party valuation report, leases and related commitments, tax related matters and contingencies and certain assets and liabilities, including receivables and payables, but such amounts will be finalized within the measurement period, which will not exceed one year from the acquisition date.
Zyante Inc.
On July 1, 2019, we completed the acquisition of Zyante Inc. (“zyBooks”), a leading provider of computer science and STEM education courseware. The results of operations of zyBooks is included in our Academic & Professional Learning segment results. The fair value of the consideration transferred at the acquisition date was $57.1 million which included $55.9 million of cash and $1.2 million of additional consideration to be paid after the acquisition date, inclusive of purchase price adjustments which were finalized in the three months ended January 31, 2020. The fair value of the cash consideration transferred after the acquisition date, that was paid during the three months ended July 31, 2020 was $0.1 million.
zyBooks incremental revenue included in our Academic & Professional Learning segment results for the three months ended July 31, 2020 was $1.3 million.
The allocation of the consideration transferred to the assets acquired and the liabilities assumed was final as of April 30, 2020. This included goodwill of $36.9 million allocated to the Academic & Professional Learning segment, and $24.5 million of intangible assets.
Other Acquisitions in Fiscal Year 2020
The preliminary fair value of cash consideration transferred during the year ended April 30, 2020 for all other acquisitions was approximately $48.5 million. These other acquisitions were accounted for using the acquisition method of accounting as of their respective acquisition dates.
During the three months ended July 31, 2020, a revision of $11.7 million from goodwill to intangibles assets was made to the allocation of the consideration transferred to the assets acquired and liabilities assumed for the Informatics and Madgex acquisitions, due to additional information obtained related to the third-party valuation. The excess purchase price over identifiable net tangible and intangible assets of $16.6 million has been recorded to Goodwill on our Condensed Consolidated Statements of Financial Position as of July 31, 2020, and $39.4 million of intangible assets subject to amortization have been recorded, including customer relationships, developed technology, content and trademarks that are being amortized over estimated weighted average useful lives of 7, 8, 10, and 10 years, respectively. The fair value assessed for the majority of the tangible assets acquired and liabilities assumed equaled their carrying value. Goodwill represents synergies and economies of scale expected from the combination of services. Goodwill of $8.5 million has been allocated to the Academic & Professional Learning segment, and $8.1 million has been allocated to the Research Publishing & Platforms segment. The incremental revenue for the three months ended July 31, 2020 related to these other acquisitions was approximately $2.3 million.
On April 1, 2020, we completed the acquisition of Bio-Rad Laboratories Inc.’s Informatics products including the company’s spectroscopy software and spectral databases (“Informatics”). The results of Informatics are included in our Research Publishing & Platforms segment results.
On March 2, 2020, we completed the acquisition of Madgex Holdings Limited (“Madgex”), a market-leading provider of advanced job board software and career center services. The results of Madgex are included in our Research Publishing & Platforms segment results.
The allocation of the total consideration transferred to the assets acquired and the liabilities assumed for Informatics and Madgex is preliminary, and could be revised as a result of additional information obtained due to the finalization of the third-party valuation report, leases and related commitments, tax related matters and contingencies and certain assets and liabilities, including receivables and payables, but such amounts will be finalized within the measurement period, which will not exceed one year from the acquisition dates.
On May 31, 2019, we completed the acquisition of certain assets of Knewton, Inc. (“Knewton”). Knewton is a provider of affordable courseware and adaptive learning technology. The results of Knewton are included in our Academic & Professional Learning segment results. The allocation of the consideration transferred to the assets acquired and the liabilities assumed for Knewton was final as of April 30, 2020.
We also completed in fiscal year 2020 the acquisition of two immaterial businesses, which are included in our Research Publishing & Platforms segment, one immaterial business included in our Academic & Professional Learning segment results and one immaterial business in our Education Services business.
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Revenue Recognition, Contracts with Customers |
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Revenue Recognition, Contracts with Customers [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition, Contracts with Customers |
Note 4 — Revenue Recognition, Contracts with Customers
Disaggregation of Revenue
The following table presents our revenue from contracts with customers disaggregated by segment and product type.
Accounts Receivable, net and Contract Liability Balances
When consideration is received, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a contract, a contract liability is recorded. Contract liabilities are recognized as revenue when, or as, control of the products or services are transferred to the customer and all revenue recognition criteria have been met.
The following table provides information about receivables and contract liabilities from contracts with customers.
For the three months ended July 31, 2020, we estimate that we recognized revenue of approximately 38% that was included in the current contract liability at April 30, 2020.
The decrease in contract liabilities as of July 31, 2020 was driven by revenue earned primarily on journal subscriptions, open access and comprehensive agreements, and test preparation and certification offerings, partially offset by renewals of journal subscription agreements, and comprehensive agreements, and the impact of foreign exchange.
Remaining Performance Obligations included in Contract Liability
As of July 31, 2020, the aggregate amount of the transaction price allocated to the remaining performance obligations is approximately $424.3 million, which included the sales return reserve of $39.4 million. Excluding the sales return reserve, we expect that approximately $369.5 million will be recognized in the next twelve months with the remaining $15.4 million to be recognized
.Assets Recognized for the Costs to Fulfill a Contract
Costs to fulfill a contract are directly related to a contract that will be used to satisfy a performance obligation in the future and are expected to be recovered. These costs are amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates. These types of costs are incurred in the following revenue streams, (1) Research Platforms and (2) Education Services.
Our assets associated with incremental costs to fulfill a contract were $11.6 million and $11.5 million at July 31, 2020 and April 30, 2020, respectively, and are included within Other Non-Current Assets on our Unaudited Condensed Consolidated Statements of Financial Position. We recorded amortization expense of $1.2 million and $1.0 million during the three months ended July 31, 2020 and 2019, respectively, related to these assets within Cost of Sales on our Unaudited Condensed Consolidated Statements of Income.
Sales and value-added taxes are excluded from revenues. Shipping and handling costs, which are primarily incurred within the Academic & Professional Learning segment, occur before the transfer of control of the related goods. Therefore, in accordance with the revenue standard, it is not considered a promised service to the customer and would be considered a cost to fulfill our promise to transfer the goods. Costs incurred for third party shipping and handling are primarily reflected in Operating and Administrative Expenses on our Unaudited Condensed Consolidated Statements of Income. We incurred $6.7 million and $7.4 million in shipping and handling costs in the three months ended July 31, 2020 and 2019, respectively.
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Operating Leases |
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Operating Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Leases |
Note 5 — Operating Leases
We have contractual obligations as a lessee with respect to offices, warehouses and distribution centers, automobiles, and office equipment.
We determine if an arrangement is a lease at inception of the contract in accordance with guidance detailed in the lease standard and we perform the lease classification test as of the lease commencement date. Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term.
The present value of the lease payments is calculated using an incremental borrowing rate, which was determined based on the rate of interest that we would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. We use an unsecured borrowing rate and risk-adjust that rate to approximate a collateralized rate.
Under the leasing standard, leases that are more than one year in duration are capitalized and recorded on our Unaudited Condensed Consolidated Statements of Financial Position. Some of our leases offer an option to extend the term of such leases. We utilize the reasonably certain threshold criteria in determining which options we will exercise. Furthermore, some of our lease payments are based on index rates with minimum annual increases. These represent fixed payments and are captured in the future minimum lease payments calculation.
For operating leases, the ROU assets and lease liabilities are presented on our Unaudited Condensed Consolidated Statement of Financial Position as follows:
During the three months ended July 31, 2020, we added $0.3 million to the ROU assets and $0.3 million to the operating lease liabilities due to new leases as well as modifications and remeasurements to our existing operating leases.
Our total net lease costs are as follows:
Other supplemental information includes the following for our operating leases:
The table below reconciles the undiscounted cash flows for the first five years and total of the remaining years to the operating lease liabilities recorded in our Unaudited Condensed Consolidated Statement of Financial Position as of July 31, 2020:
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Stock-Based Compensation |
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Stock-Based Compensation |
Note 6 — Stock-Based Compensation
We have stock-based compensation plans under which employees may be granted performance-based stock awards and other restricted stock awards. Prior to fiscal year 2017, we also granted options to purchase shares of our common stock at the fair market value at the time of grant. We recognize the grant date fair value of stock-based compensation in net income on a straight-line basis, net of estimated forfeitures over the requisite service period. The measurement of performance for performance-based stock awards is based on actual financial results for targets established three years in advance. For the three months ended July 31, 2020 and 2019, we recognized stock-based compensation expense, on a pre-tax basis, of $4.3 million and $4.6 million, respectively.
The following table summarizes restricted stock awards we granted to employees (shares in thousands):
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Accumulated Other Comprehensive Loss |
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Accumulated Other Comprehensive Loss |
Note 7 — Accumulated Other Comprehensive Loss
Changes in Accumulated Other Comprehensive Loss by component, net of tax, for the three months ended July 31, 2020 and 2019 were as follows:
During the three months ended July 31, 2020 and 2019, pre-tax actuarial losses included in Unamortized Retirement Costs of approximately $1.9 million and $1.3 million, respectively, were amortized from Accumulated Other Comprehensive Loss and recognized as pension and post-retirement benefit expense primarily in Operating and Administrative Expenses and Interest and Other Income on our Unaudited Condensed Consolidated Statements of Income.
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Reconciliation of Weighted Average Shares Outstanding |
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Reconciliation of Weighted Average Shares Outstanding |
Note 8 — Reconciliation of Weighted Average Shares Outstanding
A reconciliation of the shares used in the computation of earnings per share follows:
Since their inclusion in the calculation of diluted earnings per share would have been anti-dilutive, options to purchase 201,743 and 252,704 shares of Class A Common Stock have been excluded for the three months ended July 31, 2020 and 2019, respectively.
There were no restricted shares excluded in the calculation of diluted earnings per share for the three months ended July 31, 2020 and 2019.
Warrants to purchase 528,452 and 511,094 shares of Class A Common Stock have been excluded in the calculation of diluted earnings per share for the three months ended July 31, 2020 and 2019, respectively as their inclusion would have been anti-dilutive.
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Restructuring and Related Charges |
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Restructuring and Related Charges [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Charges |
Note 9 — Restructuring and Related Charges
Business Optimization Program
Beginning in fiscal year 2020, we initiated a multi-year Business Optimization Program (the “Business Optimization Program”) to drive efficiency improvement and operating savings.
The following tables summarize the pre-tax restructuring charges (credits) related to this program:
The following table summarizes the activity for the Business Optimization Program liability for the three months ended July 31, 2020:
Approximately $12.0 million of the restructuring liability for accrued severance and termination benefits is reflected in Accrued Employment Costs and approximately $0.3 million is reflected in Other Long-Term Liabilities on our Unaudited Condensed Consolidated Statement of Financial Position.
The amount included in Other Long-Term Liabilities that relates to severance and termination benefits is expected to be paid in the year ended April 30, 2022.
The restructuring liability as of July 31, 2020 for other activities is reflected in Other Accrued Liabilities on our Unaudited Condensed Consolidated Statement of Financial Position.
Restructuring and Reinvestment Program
Beginning in the year ended April 30, 2013, we initiated a global program (the “Restructuring and Reinvestment Program”) to restructure and realign our cost base with current and anticipated future market conditions. We are targeting a majority of the expected cost savings achieved to improve margins and earnings, while the remainder will be reinvested in high-growth digital business opportunities.
The following tables summarize the pre-tax restructuring charges (credits) related to this program:
The credits in severance and termination benefits activities for the three months ended July 31, 2019 primarily reflect changes in the number of headcount reductions and estimates for previously accrued benefit costs. Other activities for the three months ended July 31, 2019 include facility related costs.
The following table summarizes the activity for the Restructuring and Reinvestment Program liability for the three months ended July 31, 2020:
The restructuring liability as of July 31, 2020 for accrued severance and termination benefits is reflected in Accrued Employment Costs on our Unaudited Condensed Consolidated Statement of Financial Position.
The restructuring liability as of July 31, 2020 of $0.4 million of other activities are reflected in Other Long-Term Liabilities on our Unaudited Condensed Consolidated Statement of Financial Position and mainly relate to facility related costs. The amount included in Other Long-Term Liabilities is expected to be paid in the year ended April 30, 2022.
We currently do not anticipate any further material charges related to the Restructuring and Reinvestment Program.
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Segment Information |
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Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information |
Note 10 — Segment Information
We report our segment information in accordance with the provisions of FASB ASC Topic 280, “Segment Reporting”. These segments reflect the way our chief operating decision maker evaluates our business performance and manages the operations.
Segment information is as follows:
The following table shows a reconciliation of our consolidated U.S. GAAP net income to Non-GAAP EBITDA and Adjusted EBITDA:
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Inventories |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories |
Note 11 — Inventories
Inventories, net consisted of the following:
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Goodwill and Intangible Assets |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Goodwill and Intangible Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets |
Note 12 — Goodwill and Intangible Assets
Goodwill
The following table summarizes the activity in goodwill by segment as of July 31, 2020:
Intangible Assets
Intangible assets, net were as follows:
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Income Taxes |
3 Months Ended |
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Jul. 31, 2020 | |
Income Taxes [Abstract] | |
Income Taxes |
Note 13 — Income Taxes
The effective tax rate for the three months ended July 31, 2020 was 45.1% compared to 8.6% for the three months ended July 31, 2019. The rate for the three months ended July 31, 2020 was greater than the rate for the corresponding prior period due to an increase in the UK statutory rate discussed below and a $0.5 million discrete item relating to compensation deductions from restricted stock which vested at lower values than the values at time of grant.
During the first quarter of fiscal 2021, the U.K. officially enacted legislation that increased its statutory rate from 17% to 19%. This resulted in a $6.7 million non-cash deferred tax expense from the re-measurement of our applicable U.K. net deferred tax liabilities.
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Retirement Plans |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Plans [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Retirement Plans |
Note 14 — Retirement Plans
The components of net pension income for the defined benefit plans were as follows:
The service cost component of net pension income is reflected in Operating and Administrative Expenses on our Unaudited Condensed Consolidated Statements of Income. The other components of net benefit costs are reported separately from the service cost component and below Operating Income. Such amounts are reflected in Interest and Other Income on our Unaudited Condensed Consolidated Statements of Income.
Employer defined benefit pension plan contributions were $5.1 million and $4.7 million for the three months ended July 31, 2020 and 2019, respectively.
Defined Contribution Savings Plans
The expense for employer defined contribution savings plans was $6.6 million and $4.3 million for the three months ended July 31, 2020 and 2019, respectively.
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Debt and Available Credit Facilities |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Available Credit Facilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt and Available Credit Facilities |
Note 15 — Debt and Available Credit Facilities
Our total debt outstanding consisted of the amounts set forth in the following table:
Amended and Restated RCA
On May 30, 2019, we entered into a credit agreement that amended and restated our existing revolving credit agreement (“Amended and Restated RCA”). The Amended and Restated RCA provides for senior unsecured credit facilities comprised of a (i) five-year revolving credit facility in an aggregate principal amount up to $1.25 billion, and (ii) a five-year term loan A facility consisting of $250 million.
Under the terms of the Amended and Restated RCA, which can be drawn in multiple currencies, we have the option of borrowing at the following floating interest rates: (i) at a rate based on the London Interbank Offered Rate (“LIBOR”) plus an applicable margin ranging from 0.98% to 1.50%, depending on our consolidated net leverage ratio, as defined, or (ii) at the lender’s base rate plus an applicable margin ranging from
to 0.50%, depending on our consolidated net leverage ratio. The lender’s base rate is defined as the highest of (i) the U.S. federal funds effective rate plus a 0.50% margin, (ii) the Eurocurrency rate, as defined, plus a 1.00% margin, or (iii) the Bank of America prime lending rate. In addition, we pay a facility fee for the revolving credit facility ranging from 0.15% to 0.25% depending on our consolidated net leverage ratio. We also have the option to request an increase in the revolving credit facility by an amount not to exceed $500 million, in minimum increments of $50 million, subject to the approval of the lenders.The Amended and Restated RCA contains certain customary affirmative and negative covenants, including a financial covenant in the form of a consolidated net leverage ratio and consolidated interest coverage ratio, which we were in compliance with as of July 31, 2020.
In the three months ended July 31, 2019, we incurred an immaterial loss on the write-off of unamortized deferred costs in connection with the refinancing of our revolving credit agreement at that time which is reflected in Interest and Other Income on our Unaudited Condensed Consolidated Statements of Income for the three months ended July 31, 2019.
In the three months ended July 31, 2019, we incurred $4.0 million of costs related to the Amended and Restated RCA which resulted in total costs capitalized of $5.2 million. The amount related to the term loan A facility was $0.9 million, consisting of $0.8 million of lender fees and recorded as a reduction to Long-Term Debt and $0.1 million of non-lender fees included in Other Non-Current Assets on our Unaudited Condensed Consolidated Statement of Financial Position. The amount related to the five-year revolving credit facility was $4.3 million, all of which is included in Other Non-Current Assets on our Unaudited Condensed Consolidated Statement of Financial Position.
The amortization expense of the lender and non-lender fees is recognized over the five-year term of the Amended and Restated RCA. Total amortization expense in the three months ended July 31, 2020 and 2019 was $0.3 million and $0.2 million respectively, and is included in Interest Expense on our Unaudited Condensed Consolidated Statement of Income.
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Derivative Instruments and Hedging Activities |
3 Months Ended |
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Jul. 31, 2020 | |
Derivative Instruments and Hedging Activities [Abstract] | |
Derivative Instruments and Hedging Activities |
Note 16 — Derivative Instruments and Hedging Activities
From time-to-time, we enter into forward exchange and interest rate swap contracts as a hedge against foreign currency asset and liability commitments, changes in interest rates and anticipated transaction exposures, including intercompany purchases. All derivatives are recognized as assets or liabilities and measured at fair value on our Unaudited Condensed Consolidated Statements of Financial Position. Derivatives that are not determined to be effective hedges are adjusted to fair value with a corresponding adjustment to earnings. We do not use financial instruments for trading or speculative purposes.
Interest Rate Contracts
As of July 31, 2020, we had total debt outstanding of $846.7 million, net of unamortized issuance costs of $0.6 million of which $847.3 million are variable rate loans outstanding under the Amended and Restated RCA, which approximated fair value.
We had outstanding interest rate swap agreements with combined notional amounts of $300.0 million as of July 31, 2020 and April 30, 2020. These agreements were accounted for as cash flow hedges which fixed a portion of the variable interest due on our Amended and Restated RCA.
We record the fair value of our interest rate swaps on a recurring basis using Level 2 inputs of quoted prices for similar assets or liabilities in active markets. The fair value of the interest rate swaps as of July 31, 2020 and April 30, 2020 was a deferred loss of $8.2 million and $8.3 million, respectively. Based on the maturity dates of the contracts, the entire deferred loss as of July 31, 2020 and April 30, 2020 was recorded within Other Long-Term Liabilities. The pre-tax (losses) gains that were reclassified from Accumulated Other Comprehensive Loss into Interest Expense for the three months ended July 31, 2020 and 2019 were $(0.9) million and $0.2 million, respectively.
Foreign Currency Contracts
We may enter into forward exchange contracts to manage our exposure on certain foreign currency denominated assets and liabilities. The forward exchange contracts are marked to market through Foreign Exchange Transaction (Losses) Gains on our Unaudited Condensed Consolidated Statements of Income and carried at their fair value on our Unaudited Condensed Consolidated Statements of Financial Position. Foreign currency denominated assets and liabilities are remeasured at spot rates in effect on the balance sheet date, with the effects of changes in spot rates reported in Foreign Exchange Transaction (Losses) Gains on our Unaudited Condensed Consolidated Statements of Income.
As of July 31, 2020, and April 30, 2020, we did not maintain any open forward exchange contracts. In addition, we did not maintain any open forward contracts during the three months ended July 31, 2020 and 2019.
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Capital Stock and Changes in Capital Accounts |
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Capital Stock and Changes in Capital Accounts [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Stock and Changes in Capital Accounts |
Note 17 — Capital Stock and Changes in Capital Accounts
Share Repurchases
The following table summarizes the shares repurchased of Class A Common Stock for the three months ended July 31, 2019. There were no share repurchases during the three months ended July 31, 2020.
Dividends
The following table summarizes the cash dividends paid during the three months ended July 31, 2020:
Changes in Common Stock
The following is a summary of changes during the three months ended July 31, in shares of our common stock and common stock in treasury (shares in thousands):
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Commitments and Contingencies |
3 Months Ended |
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Jul. 31, 2020 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies |
Note 18 — Commitments and Contingencies
We are involved in routine litigation in the ordinary course of our business. A provision for litigation is accrued when information available to us indicates that it is probable a liability has been incurred and the amount of loss can be reasonably estimated. Significant judgment may be required to determine both the probability and estimates of loss. When the amount of the loss can only be estimated within a range, the most likely outcome within that range is accrued. If no amount within the range is a better estimate than any other amount, the minimum amount within the range is accrued. When uncertainties exist related to the probable outcome of litigation and/or the amount or range of loss, we do not record a liability, but disclose facts related to the nature of the contingency and possible losses if management considers the information to be material. Reserves for legal defense costs are recognized when incurred. The accruals for loss contingencies and legal costs are reviewed regularly and may be adjusted to reflect updated information on the status of litigation and advice of legal counsel. In the opinion of management, the ultimate resolution of all pending litigation as of July 31, 2020, will not have a material effect upon our Unaudited Condensed Consolidated Statements of Financial Position or Unaudited Condensed Consolidated Statements of Income.
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Basis of Presentation (Policies) |
3 Months Ended |
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Jul. 31, 2020 | |
Basis of Presentation [Abstract] | |
Basis of Presentation |
Throughout this report, when we refer to “Wiley,” the “Company,” “we,” “our,” or “us,” we are referring to John Wiley & Sons, Inc. and all our subsidiaries, except where the context indicates otherwise.
Our Unaudited Condensed Consolidated Financial Statements include all the accounts of the Company and our subsidiaries. We have eliminated all intercompany transactions and balances in consolidation. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Unaudited Condensed Consolidated Financial Condition, Results of Operations, Comprehensive Income and Cash Flows for the periods presented. Operating results for the interim period are not necessarily indicative of the results expected for the full year. All amounts are in thousands, except per share amounts, and approximate due to rounding. These financial statements should be read in conjunction with the most recent audited consolidated financial statements included in our Form 10-K for the fiscal year ended April 30, 2020 as filed with the SEC on June 26, 2020 (“2020 Form 10-K”).
Our Unaudited Condensed Consolidated Financial Statements were prepared in accordance with the interim reporting requirements of the SEC. As permitted under those rules, annual footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted. The preparation of our Unaudited Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Certain prior year amounts have been reclassified to conform to the current year’s presentation.
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Recent Accounting Standards (Policies) |
3 Months Ended | |||||||||||||||||||||||||||||||||||
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Jul. 31, 2020 | ||||||||||||||||||||||||||||||||||||
Recent Accounting Standards [Abstract] | ||||||||||||||||||||||||||||||||||||
Recently Adopted and Issued Accounting Standards |
Recently Adopted Accounting Standards
Intangibles-Goodwill and Other-Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract
In August 2018, the FASB issued ASU 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.” ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We adopted ASU 2018-15 on May 1, 2020 on a prospective basis. There was no impact to our consolidated financial statements at the date of adoption.
Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement.” ASU 2018-13 removes, modifies and added disclosures. We adopted ASU 2018-13 on May 1, 2020. There was no impact to our consolidated financial statements at the date of adoption.
Measurement of Credit Losses on Financial Instruments
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.” Subsequently, in May 2019, the FASB issued ASU 2019-05 - "Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief”, in April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments,” in November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” in November 2019, the FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments-Credit Losses,” and in February 2020, the FASB issued ASU 2020-02, “Financial Instruments—Credit Losses (Topic 326) and Leases (Topic 842)—Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842) (SEC Update)”. ASU 2016-13 requires entities to measure all expected credit losses for most financial assets held at the reporting date based on an expected loss model which includes historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. ASU 2016-13 also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses. ASU 2016-13, ASU 2019-05, ASU 2019-04, ASU 2018-19, ASU 2019-11 and ASU 2020-02 were effective for us on May 1, 2020, including interim periods within those fiscal periods, with early adoption permitted.
We adopted the new standard on May 1, 2020, with a cumulative effect adjustment to retained earnings as of the beginning of the year of adoption. Based on financial instruments currently held by us, the adoption of ASU 2016-13 primarily impacted our trade receivables, specifically our allowance for doubtful accounts. The adoption of the standard did not have an impact on our Unaudited Condensed Consolidated Statements of Income, or our Unaudited Condensed Consolidated Statements of Cash Flows. See the table below for further details on the immaterial impact to our Unaudited Condensed Consolidated Statements of Financial Position and Unaudited Condensed Consolidated Statements of Shareholders’ Equity.
We are exposed to credit losses through our accounts receivable with customers. Accounts Receivable, net is stated at amortized cost net of provision for credit losses. Our methodology to measure the provision for credit losses requires an estimation of loss rates based upon historical loss experience adjusted for factors that are relevant to determining the expected collectability of accounts receivable including the impact of COVID-19, delinquency trends, aging behavior of receivables, credit and liquidity indicators for industry groups, customer classes or individual customers and reasonable and supportable forecasts of the economic conditions that may exist through the contractual life of the asset. Our provision for credit losses is reviewed and revised periodically. Our accounts receivable is evaluated on a pool basis that is based on customer groups with similar risk characteristics. This includes consideration of the following factors to develop these pools; size of the customer, industry, geographical location, historical risk and types of services or products sold.
Our customer’s ability to pay is assessed through our internal credit review processes. Based on the dollar value of credit extended, we assess our customers' credit by reviewing the total expected receivable exposure, expected timing of payments and the customer’s established credit rating. In determining customer creditworthiness, we assess our customers' credit utilizing different resources including external credit validations and/or our own assessment through analysis of the customers' financial statements and review of trade/bank references. We also consider contract terms and conditions, country and political risk, and the customer's mix of products purchased in our evaluation. A credit limit is established for each customer based on the outcome of this review. Credit limits are periodically reviewed for existing customers and whenever an increase in the credit limit is being considered. When necessary, we utilize collection agencies and legal counsel to pursue recovery of defaulted receivables. We write off receivables only when deemed no longer collectible.
The following table presents the change in provision for credit losses, which is presented net in Accounts Receivable on our Unaudited Condensed Consolidated Statements of Financial Position for the period indicated:
Recently Issued Accounting Standards
In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)”. This ASU reduces the number of accounting models for convertible debt instruments and convertible preferred stock. As well as amend the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related EPS guidance. This standard is effective for us on May 1, 2022, including interim periods within those fiscal years. Adoption is either a modified retrospective method or a fully retrospective method of transition. We are currently assessing the impact the new guidance will have on our consolidated financial statements.
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” This ASU provides optional guidance for a limited period of time to ease the burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. This would apply to companies meeting certain criteria that have contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This standard is effective for us immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. We are currently assessing the impact the new guidance will have on our consolidated financial statements.
Simplifying the Accounting for Income Taxes
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This ASU is intended to simplify various aspects related to accounting for income taxes, eliminates certain exceptions within Topic 740, “Income Taxes” and clarifies certain aspects of the current guidance to promote consistent application. The standard is effective for us on May 1, 2021, and early adoption is permitted in any interim period for which financial statements have not yet been issued. We are currently assessing the impact the new guidance will have on our consolidated financial statements.
Changes to the Disclosure Requirements for Defined Benefit Plans
In August 2018, the FASB issued ASU 2018-14, “Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans.” ASU 2018-14 removes certain disclosures that are not considered cost beneficial, clarifies certain required disclosures and added additional disclosures. The standard is effective for us on May 1, 2021, with early adoption permitted. The amendments in ASU 2018-14 would need to be applied on a retrospective basis. We are currently assessing the impact the new guidance will have on our disclosures.
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Recent Accounting Standards (Tables) |
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Recent Accounting Standards [Abstract] | ||||||||||||||||||||||||||||||||||||
Change in Provision for Credit Losses |
The following table presents the change in provision for credit losses, which is presented net in Accounts Receivable on our Unaudited Condensed Consolidated Statements of Financial Position for the period indicated:
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Revenue Recognition, Contracts with Customers (Tables) |
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Revenue Recognition, Contracts with Customers [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contracts With Customers Disaggregated by Segment and Product Type |
The following table presents our revenue from contracts with customers disaggregated by segment and product type.
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Receivables and Contract Liabilities from Contracts with Customers |
The following table provides information about receivables and contract liabilities from contracts with customers.
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Operating Leases (Tables) |
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Operating Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ROU Assets and Lease Liabilities |
For operating leases, the ROU assets and lease liabilities are presented on our Unaudited Condensed Consolidated Statement of Financial Position as follows:
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Total Net Lease Costs |
Our total net lease costs are as follows:
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Other Supplemental Information for Operating Leases |
Other supplemental information includes the following for our operating leases:
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Reconciliation of Undiscounted Cash Flows to Operating Lease Liabilities |
The table below reconciles the undiscounted cash flows for the first five years and total of the remaining years to the operating lease liabilities recorded in our Unaudited Condensed Consolidated Statement of Financial Position as of July 31, 2020:
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Stock-Based Compensation (Tables) |
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Restricted Stock Awards Granted to Employees |
The following table summarizes restricted stock awards we granted to employees (shares in thousands):
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Accumulated Other Comprehensive Loss (Tables) |
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Changes in Accumulated Other Comprehensive Loss by Component, Net of Tax |
Changes in Accumulated Other Comprehensive Loss by component, net of tax, for the three months ended July 31, 2020 and 2019 were as follows:
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Reconciliation of Weighted Average Shares Outstanding (Tables) |
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Reconciliation of Shares used in Computation of Earnings Per Share |
A reconciliation of the shares used in the computation of earnings per share follows:
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Restructuring and Related Charges (Tables) |
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Business Optimization Program [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Pre-tax Restructuring (Credits) Charges |
The following tables summarize the pre-tax restructuring charges (credits) related to this program:
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Activity for Restructuring Program Liability |
The following table summarizes the activity for the Business Optimization Program liability for the three months ended July 31, 2020:
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Pre-tax Restructuring (Credits) Charges |
The following tables summarize the pre-tax restructuring charges (credits) related to this program:
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Activity for Restructuring Program Liability |
The following table summarizes the activity for the Restructuring and Reinvestment Program liability for the three months ended July 31, 2020:
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Segment Information (Tables) |
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Segment Information |
Segment information is as follows:
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Reconciliation of GAAP Net Income to Non-GAAP EBITDA and Adjusted EBITDA |
The following table shows a reconciliation of our consolidated U.S. GAAP net income to Non-GAAP EBITDA and Adjusted EBITDA:
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Inventories (Tables) |
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Inventories |
Inventories, net consisted of the following:
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Goodwill and Intangible Assets (Tables) |
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Activity in Goodwill by Segment |
The following table summarizes the activity in goodwill by segment as of July 31, 2020:
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Intangible Assets, Net |
Intangible assets, net were as follows:
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Retirement Plans (Tables) |
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Components of Net Periodic Pension Income for Defined Benefit Plans |
The components of net pension income for the defined benefit plans were as follows:
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Debt and Available Credit Facilities (Tables) |
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Total Debt Outstanding |
Our total debt outstanding consisted of the amounts set forth in the following table:
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Capital Stock and Changes in Capital Accounts (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jul. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Stock and Changes in Capital Accounts [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Shares Repurchased |
The following table summarizes the shares repurchased of Class A Common Stock for the three months ended July 31, 2019. There were no share repurchases during the three months ended July 31, 2020.
|
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Summary of Cash Dividends |
The following table summarizes the cash dividends paid during the three months ended July 31, 2020:
|
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Summary of Changes of Common Stock and Common Stock in Treasury |
The following is a summary of changes during the three months ended July 31, in shares of our common stock and common stock in treasury (shares in thousands):
|
Recent Accounting Standards (Details) - ASU 2016-13 [Member] $ in Thousands |
3 Months Ended |
---|---|
Jul. 31, 2020
USD ($)
| |
Change in Provision for Credit Losses [Roll Forward] | |
Balance, beginning of period | $ 18,335 |
Current period provision | 2,678 |
Amounts written off, less recoveries | (1,327) |
Foreign exchange translation adjustments and other | (1,398) |
Balance, end of period | 20,064 |
Cumulative Effect, Period of Adoption, Adjustment [Member] | |
Change in Provision for Credit Losses [Roll Forward] | |
Balance, beginning of period | $ 1,776 |
Acquisitions (Details) $ in Thousands, € in Millions |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Jan. 01, 2020
USD ($)
|
Jan. 01, 2020
EUR (€)
|
Jul. 01, 2019
USD ($)
|
Jul. 31, 2020
USD ($)
Business
|
Apr. 30, 2020
USD ($)
|
Jul. 31, 2019
USD ($)
|
|
Acquisitions [Abstract] | ||||||
Fair value of cash consideration transferred, including those amounts paid after acquisition, net of cash acquired | $ 136 | $ 73,209 | ||||
Revenue | 431,326 | 423,530 | ||||
Assets [Abstract] | ||||||
Goodwill | 1,133,610 | $ 1,116,790 | ||||
Research Publishing & Platforms [Member] | ||||||
Acquisitions [Abstract] | ||||||
Revenue | 240,810 | 229,375 | ||||
Assets [Abstract] | ||||||
Goodwill | 452,408 | 448,130 | ||||
Academic & Professional Learning [Member] | ||||||
Acquisitions [Abstract] | ||||||
Revenue | 126,913 | 144,858 | ||||
Assets [Abstract] | ||||||
Goodwill | 509,885 | 501,091 | ||||
Education Services [Member] | ||||||
Acquisitions [Abstract] | ||||||
Revenue | 63,603 | $ 49,297 | ||||
Assets [Abstract] | ||||||
Goodwill | 171,317 | 167,569 | ||||
Mthree [Member] | ||||||
Acquisitions [Abstract] | ||||||
Percentage of ownership interest acquired | 100.00% | |||||
Fair value of consideration transferred | $ 128,600 | € 97.5 | ||||
Total cash consideration transferred at the acquisition date | 122,200 | |||||
Fair value of additional consideration to be paid after the acquisition date | 6,400 | |||||
Cash acquired | 2,200 | |||||
Fair value of cash consideration transferred, including those amounts paid after acquisition, net of cash acquired | 126,400 | |||||
Assets [Abstract] | ||||||
Intangible Assets, net | 56,800 | |||||
Mthree [Member] | Education Services [Member] | ||||||
Acquisitions [Abstract] | ||||||
Revenue | 12,400 | |||||
Assets [Abstract] | ||||||
Goodwill | $ 82,600 | |||||
zybooks [Member] | ||||||
Acquisitions [Abstract] | ||||||
Total cash consideration transferred at the acquisition date | $ 55,900 | |||||
Identifiable intangible assets acquired and weighted-average useful life [Abstract] | ||||||
Identifiable intangible assets acquired | 24,500 | |||||
zybooks [Member] | Academic & Professional Learning [Member] | ||||||
Acquisitions [Abstract] | ||||||
Fair value of consideration transferred | 57,100 | |||||
Total cash consideration transferred at the acquisition date | 100 | |||||
Fair value of additional consideration to be paid after the acquisition date | $ 1,200 | |||||
Revenue | 1,300 | |||||
Assets [Abstract] | ||||||
Goodwill | $ 36,900 | |||||
Other Acquisitions [Member] | ||||||
Acquisitions [Abstract] | ||||||
Fair value of consideration transferred | 11,700 | |||||
Fair value of cash consideration transferred, including those amounts paid after acquisition, net of cash acquired | 48,500 | |||||
Revenue | 2,300 | |||||
Assets [Abstract] | ||||||
Goodwill | 16,600 | |||||
Identifiable intangible assets acquired and weighted-average useful life [Abstract] | ||||||
Identifiable intangible assets acquired | 39,400 | |||||
Other Acquisitions [Member] | Research Publishing & Platforms [Member] | ||||||
Assets [Abstract] | ||||||
Goodwill | $ 8,100 | |||||
Identifiable intangible assets acquired and weighted-average useful life [Abstract] | ||||||
Number of immaterial businesses acquired | Business | 2 | |||||
Other Acquisitions [Member] | Academic & Professional Learning [Member] | ||||||
Assets [Abstract] | ||||||
Goodwill | $ 8,500 | |||||
Identifiable intangible assets acquired and weighted-average useful life [Abstract] | ||||||
Number of immaterial businesses acquired | Business | 1 | |||||
Other Acquisitions [Member] | Education Services [Member] | ||||||
Identifiable intangible assets acquired and weighted-average useful life [Abstract] | ||||||
Number of immaterial businesses acquired | Business | 1 | |||||
Other Acquisitions [Member] | Customer Relationships [Member] | ||||||
Identifiable intangible assets acquired and weighted-average useful life [Abstract] | ||||||
Weighted-average useful life | 7 years | |||||
Other Acquisitions [Member] | Developed Technology [Member] | ||||||
Identifiable intangible assets acquired and weighted-average useful life [Abstract] | ||||||
Weighted-average useful life | 8 years | |||||
Other Acquisitions [Member] | Content [Member] | ||||||
Identifiable intangible assets acquired and weighted-average useful life [Abstract] | ||||||
Weighted-average useful life | 10 years | |||||
Other Acquisitions [Member] | Trademarks [Member] | ||||||
Identifiable intangible assets acquired and weighted-average useful life [Abstract] | ||||||
Weighted-average useful life | 10 years |
Revenue Recognition, Contracts with Customers, Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
|||
Revenue from contracts with customers disaggregated by segment and product type [Abstract] | ||||
Revenue | $ 431,326 | $ 423,530 | ||
Research Publishing & Platforms [Member] | ||||
Revenue from contracts with customers disaggregated by segment and product type [Abstract] | ||||
Revenue | 240,810 | 229,375 | ||
Research Publishing & Platforms [Member] | Research Publishing [Member] | ||||
Revenue from contracts with customers disaggregated by segment and product type [Abstract] | ||||
Revenue | 230,464 | 219,927 | ||
Research Publishing & Platforms [Member] | Research Platforms [Member] | ||||
Revenue from contracts with customers disaggregated by segment and product type [Abstract] | ||||
Revenue | 10,346 | 9,448 | ||
Academic & Professional Learning [Member] | ||||
Revenue from contracts with customers disaggregated by segment and product type [Abstract] | ||||
Revenue | 126,913 | 144,858 | ||
Academic & Professional Learning [Member] | Education Publishing [Member] | ||||
Revenue from contracts with customers disaggregated by segment and product type [Abstract] | ||||
Revenue | 64,084 | 65,523 | ||
Academic & Professional Learning [Member] | Professional Learning [Member] | ||||
Revenue from contracts with customers disaggregated by segment and product type [Abstract] | ||||
Revenue | 62,829 | 79,335 | ||
Education Services [Member] | ||||
Revenue from contracts with customers disaggregated by segment and product type [Abstract] | ||||
Revenue | 63,603 | 49,297 | ||
Education Services [Member] | Education Services [Member] | ||||
Revenue from contracts with customers disaggregated by segment and product type [Abstract] | ||||
Revenue | [1] | 50,262 | 48,156 | |
Education Services [Member] | Mthree [Member] | ||||
Revenue from contracts with customers disaggregated by segment and product type [Abstract] | ||||
Revenue | [1] | 13,341 | 1,141 | |
Operating Segments [Member] | Research Publishing & Platforms [Member] | ||||
Revenue from contracts with customers disaggregated by segment and product type [Abstract] | ||||
Revenue | 240,810 | 229,375 | ||
Operating Segments [Member] | Academic & Professional Learning [Member] | ||||
Revenue from contracts with customers disaggregated by segment and product type [Abstract] | ||||
Revenue | 126,913 | 144,858 | ||
Operating Segments [Member] | Education Services [Member] | ||||
Revenue from contracts with customers disaggregated by segment and product type [Abstract] | ||||
Revenue | $ 63,603 | $ 49,297 | ||
|
Revenue Recognition, Contracts with Customers, Accounts Receivable, net and Contract Liability Balances (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Jul. 31, 2020 |
Apr. 30, 2020 |
|||
Balances from contracts with customers [Abstract] | ||||
Accounts receivable, net | $ 282,412 | $ 309,384 | ||
Contract liabilities | [1] | 408,954 | 520,214 | |
Contract liabilities (included in Other Long-Term Liabilities) | 15,357 | 14,949 | ||
Increase/(decrease) [Abstract] | ||||
Accounts receivable, net | (26,972) | |||
Contract liabilities | [1] | (111,260) | ||
Contract liabilities (included in Other Long-Term Liabilities) | 408 | |||
Sales return reserve recorded in contract liability | $ 39,400 | $ 32,800 | ||
Revenue recognized from beginning contract liability, percentage | 38.00% | |||
|
Revenue Recognition, Contracts with Customers, Remaining Performance Obligations (Details) - USD ($) $ in Millions |
Jul. 31, 2020 |
Apr. 30, 2020 |
---|---|---|
Remaining Performance Obligations [Abstract] | ||
Remaining performance obligations | $ 424.3 | |
Sales return reserve recorded in contract liability | 39.4 | $ 32.8 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-08-01 | ||
Remaining Performance Obligations [Abstract] | ||
Remaining performance obligations excluding sales return reserve | $ 369.5 | |
Expected timing of satisfaction, period | 12 months | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-08-01 | ||
Remaining Performance Obligations [Abstract] | ||
Remaining performance obligations | $ 15.4 | |
Expected timing of satisfaction, period |
Revenue Recognition, Contracts with Customers, Assets Recognized for the Costs to Fulfill a Contract (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
Apr. 30, 2020 |
|
Assets Recognized for the Costs to Obtain or Fulfill a Contract [Abstract] | |||
Costs capitalized | $ 11,600 | $ 11,500 | |
Amortization | 1,200 | $ 1,000 | |
Cost of revenue [Abstract] | |||
Operating and administrative expenses | 237,369 | 250,170 | |
Shipping and Handling [Member] | |||
Cost of revenue [Abstract] | |||
Operating and administrative expenses | $ 6,700 | $ 7,400 |
Operating Leases (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Apr. 30, 2020 |
|
ROU Assets and Lease Liabilities [Abstract] | ||
Operating lease right-of-use assets | $ 139,798 | $ 142,716 |
Short-term portion of operating lease liabilities | 20,647 | 21,810 |
Operating lease liabilities, non-current | 156,644 | $ 159,782 |
Increase (decrease) in right of use assets | 300 | |
Increase (decrease) in operating lease liabilities | $ 300 |
Operating Leases, Total Net Lease Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
|||
Net Lease Costs [Abstract] | ||||
Operating lease cost | [1] | $ 6,635 | $ 6,861 | |
Variable lease cost | 521 | 1,203 | ||
Short-term lease cost | 88 | 0 | ||
Sublease income | (170) | (523) | ||
Total net lease cost | [1] | $ 7,074 | $ 7,541 | |
|
Operating Leases, Other Supplemental Information for Operating Leases (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Other Supplemental Information for Operating Leases [Abstract] | ||
Weighted-average remaining contractual lease term | 10 years | 10 years |
Weighted-average discount rate | 5.89% | 5.82% |
Cash paid for amounts included in the measurement of lease liabilities [Abstract] | ||
Operating cash flows from operating leases | $ 8,974 | $ 7,300 |
Operating Leases, Reconciliation of Undiscounted Cash Flows to Operating Lease Liabilities (Details) - USD ($) $ in Thousands |
Jul. 31, 2020 |
Apr. 30, 2020 |
---|---|---|
Reconciliation of Undiscounted Cash Flows to Operating Lease Liabilities [Abstract] | ||
2021 (remaining 9 months) | $ 23,531 | |
2022 | 27,903 | |
2023 | 25,038 | |
2024 | 23,526 | |
2025 | 22,233 | |
Thereafter | 114,078 | |
Total future undiscounted minimum lease payments | 236,309 | |
Less: Imputed interest | 59,018 | |
Present Value of Minimum Lease Payments | 177,291 | |
Less: Current portion | 20,647 | $ 21,810 |
Noncurrent portion | $ 156,644 | $ 159,782 |
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Stock-based Compensation [Abstract] | ||
Share-based compensation expense | $ 4,314 | $ 4,604 |
Restricted Stock [Member] | ||
Restricted Stock [Abstract] | ||
Awards granted (in shares) | 358 | 500 |
Weighted average fair value of grant (in dollars per share) | $ 38.88 | $ 45.31 |
Performance-based Stock Awards [Member] | ||
Stock-based Compensation [Abstract] | ||
Period for achievement of performance-based targets | 3 years |
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
|
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance | $ 933,624 | $ 1,181,347 |
Other comprehensive income (loss) before reclassifications | 38,994 | (28,081) |
Amounts reclassified from Accumulated Other Comprehensive Loss | 2,385 | 795 |
Total Other Comprehensive Income (Loss) | 41,379 | (27,286) |
Balance | 973,745 | 1,132,006 |
Accumulated Other Comprehensive Loss [Member] | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance | (575,497) | (508,738) |
Balance | (534,118) | (536,024) |
Foreign Currency Translation [Member] | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance | (340,703) | (312,107) |
Other comprehensive income (loss) before reclassifications | 46,853 | (35,539) |
Amounts reclassified from Accumulated Other Comprehensive Loss | 0 | 0 |
Total Other Comprehensive Income (Loss) | 46,853 | (35,539) |
Balance | (293,850) | (347,646) |
Unamortized Retirement Costs [Member] | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance | (227,920) | (196,057) |
Other comprehensive income (loss) before reclassifications | (7,190) | 7,130 |
Amounts reclassified from Accumulated Other Comprehensive Loss | 1,525 | 1,038 |
Total Other Comprehensive Income (Loss) | (5,665) | 8,168 |
Balance | (233,585) | (187,889) |
Interest Rate Swaps [Member] | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Balance | (6,874) | (574) |
Other comprehensive income (loss) before reclassifications | (669) | 328 |
Amounts reclassified from Accumulated Other Comprehensive Loss | 860 | (243) |
Total Other Comprehensive Income (Loss) | 191 | 85 |
Balance | $ (6,683) | $ (489) |
Accumulated Other Comprehensive Loss, Reclassification out of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Amortization from Accumulated Other Comprehensive Loss [Abstract] | ||
Pension expense | $ (2,562) | $ (2,420) |
Reclassification out of Accumulated Other Comprehensive Loss [Member] | ||
Amortization from Accumulated Other Comprehensive Loss [Abstract] | ||
Pension expense | $ 1,900 | $ 1,300 |
Reconciliation of Weighted Average Shares Outstanding (Details) - shares |
3 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Reconciliation of Weighted Average Shares Outstanding [Abstract] | ||
Weighted average shares outstanding (in shares) | 55,916,000 | 56,564,000 |
Less: Unvested restricted shares (in shares) | (4,000) | (28,000) |
Shares used for basic earnings per share (in shares) | 55,912,000 | 56,536,000 |
Dilutive effect of unvested restricted stock units and other stock awards (in shares) | 281,000 | 369,000 |
Shares used for diluted earnings per share (in shares) | 56,193,000 | 56,905,000 |
Stock Options [Member] | Class A Common Stock [Member] | ||
Reconciliation of Weighted Average Shares Outstanding and Share Repurchases [Abstract] | ||
Anti-dilutive shares excluded from diluted EPS calculation (in shares) | 201,743 | 252,704 |
Restricted Stock [Member] | ||
Reconciliation of Weighted Average Shares Outstanding and Share Repurchases [Abstract] | ||
Anti-dilutive shares excluded from diluted EPS calculation (in shares) | 0 | 0 |
Warrants [Member] | Class A Common Stock [Member] | ||
Reconciliation of Weighted Average Shares Outstanding and Share Repurchases [Abstract] | ||
Anti-dilutive shares excluded from diluted EPS calculation (in shares) | 528,452 | 511,094 |
Restructuring and Related Charges, Pre-tax Restructuring Charges (Credits) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Summary of pre-tax restructuring charges (credits) [Abstract] | ||
Restructuring and related charges (credits) | $ 2,218 | $ 10,735 |
Business Optimization Program [Member] | ||
Summary of pre-tax restructuring charges (credits) [Abstract] | ||
Restructuring and related charges (credits) | 2,185 | 10,870 |
Restructuring and related charges incurred to date | 34,998 | |
Business Optimization Program [Member] | Severance and Termination Benefits [Member] | ||
Summary of pre-tax restructuring charges (credits) [Abstract] | ||
Restructuring and related charges (credits) | 1,110 | 10,709 |
Restructuring and related charges incurred to date | 27,974 | |
Business Optimization Program [Member] | Operating Lease Right-of-use Asset Impairment [Member] | ||
Summary of pre-tax restructuring charges (credits) [Abstract] | ||
Restructuring and related charges (credits) | 0 | 161 |
Restructuring and related charges incurred to date | 161 | |
Business Optimization Program [Member] | Facility Related Charges [Member] | ||
Summary of pre-tax restructuring charges (credits) [Abstract] | ||
Restructuring and related charges (credits) | 1,075 | 0 |
Restructuring and related charges incurred to date | 5,061 | |
Business Optimization Program [Member] | Other Activities [Member] | ||
Summary of pre-tax restructuring charges (credits) [Abstract] | ||
Restructuring and related charges (credits) | 0 | 0 |
Restructuring and related charges incurred to date | 1,802 | |
Restructuring and Reinvestment Program [Member] | ||
Summary of pre-tax restructuring charges (credits) [Abstract] | ||
Restructuring and related charges (credits) | 33 | (135) |
Restructuring and related charges incurred to date | 169,455 | |
Restructuring and Reinvestment Program [Member] | Severance and Termination Benefits [Member] | ||
Summary of pre-tax restructuring charges (credits) [Abstract] | ||
Restructuring and related charges (credits) | 33 | (350) |
Restructuring and related charges incurred to date | 116,042 | |
Restructuring and Reinvestment Program [Member] | Consulting and Contract Termination Costs [Member] | ||
Summary of pre-tax restructuring charges (credits) [Abstract] | ||
Restructuring and related charges (credits) | 0 | 0 |
Restructuring and related charges incurred to date | 20,984 | |
Restructuring and Reinvestment Program [Member] | Other Activities [Member] | ||
Summary of pre-tax restructuring charges (credits) [Abstract] | ||
Restructuring and related charges (credits) | 0 | 215 |
Restructuring and related charges incurred to date | 32,429 | |
Research Publishing & Platforms [Member] | Business Optimization Program [Member] | ||
Summary of pre-tax restructuring charges (credits) [Abstract] | ||
Restructuring and related charges (credits) | (197) | 2,636 |
Restructuring and related charges incurred to date | 3,349 | |
Research Publishing & Platforms [Member] | Restructuring and Reinvestment Program [Member] | ||
Summary of pre-tax restructuring charges (credits) [Abstract] | ||
Restructuring and related charges (credits) | 0 | (16) |
Restructuring and related charges incurred to date | 26,884 | |
Academic & Professional Learning [Member] | Business Optimization Program [Member] | ||
Summary of pre-tax restructuring charges (credits) [Abstract] | ||
Restructuring and related charges (credits) | (227) | 2,777 |
Restructuring and related charges incurred to date | 10,248 | |
Academic & Professional Learning [Member] | Restructuring and Reinvestment Program [Member] | ||
Summary of pre-tax restructuring charges (credits) [Abstract] | ||
Restructuring and related charges (credits) | 260 | 28 |
Restructuring and related charges incurred to date | 43,094 | |
Education Services [Member] | Business Optimization Program [Member] | ||
Summary of pre-tax restructuring charges (credits) [Abstract] | ||
Restructuring and related charges (credits) | 139 | 2,192 |
Restructuring and related charges incurred to date | 3,913 | |
Education Services [Member] | Restructuring and Reinvestment Program [Member] | ||
Summary of pre-tax restructuring charges (credits) [Abstract] | ||
Restructuring and related charges (credits) | 0 | (103) |
Restructuring and related charges incurred to date | 3,764 | |
Corporate Expenses [Member] | Business Optimization Program [Member] | ||
Summary of pre-tax restructuring charges (credits) [Abstract] | ||
Restructuring and related charges (credits) | 2,470 | 3,265 |
Restructuring and related charges incurred to date | 17,488 | |
Corporate Expenses [Member] | Restructuring and Reinvestment Program [Member] | ||
Summary of pre-tax restructuring charges (credits) [Abstract] | ||
Restructuring and related charges (credits) | (227) | $ (44) |
Restructuring and related charges incurred to date | $ 95,713 |
Restructuring and Related Charges, Activity for Restructuring and Reinvestment Program Liability (Details) $ in Thousands |
3 Months Ended |
---|---|
Jul. 31, 2020
USD ($)
| |
Business Optimization Program [Member] | |
Activity for Restructuring and Related Charges Liability [Roll Forward] | |
Restructuring liability, beginning of period | $ 18,062 |
Charges | 1,110 |
Payments | (7,172) |
Foreign translation & other adjustments | 476 |
Restructuring liability, end of period | 12,476 |
Business Optimization Program [Member] | Accrued Employment Costs [Member] | |
Activity for Restructuring and Related Charges Liability [Roll Forward] | |
Restructuring liability, end of period | 12,000 |
Business Optimization Program [Member] | Other Long-term Liabilities [Member] | |
Activity for Restructuring and Related Charges Liability [Roll Forward] | |
Restructuring liability, end of period | 300 |
Business Optimization Program [Member] | Severance and Termination Benefits [Member] | |
Activity for Restructuring and Related Charges Liability [Roll Forward] | |
Restructuring liability, beginning of period | 17,632 |
Charges | 1,110 |
Payments | (6,966) |
Foreign translation & other adjustments | 478 |
Restructuring liability, end of period | 12,254 |
Business Optimization Program [Member] | Other Activities [Member] | |
Activity for Restructuring and Related Charges Liability [Roll Forward] | |
Restructuring liability, beginning of period | 430 |
Charges | 0 |
Payments | (206) |
Foreign translation & other adjustments | (2) |
Restructuring liability, end of period | 222 |
Restructuring and Reinvestment Program [Member] | |
Activity for Restructuring and Related Charges Liability [Roll Forward] | |
Restructuring liability, beginning of period | 1,590 |
Charges | 33 |
Payments | (888) |
Foreign translation & other adjustments | 190 |
Restructuring liability, end of period | 925 |
Restructuring and Reinvestment Program [Member] | Severance and Termination Benefits [Member] | |
Activity for Restructuring and Related Charges Liability [Roll Forward] | |
Restructuring liability, beginning of period | 1,360 |
Charges | 33 |
Payments | (888) |
Foreign translation & other adjustments | 62 |
Restructuring liability, end of period | 567 |
Restructuring and Reinvestment Program [Member] | Other Activities [Member] | |
Activity for Restructuring and Related Charges Liability [Roll Forward] | |
Restructuring liability, beginning of period | 230 |
Charges | 0 |
Payments | 0 |
Foreign translation & other adjustments | 128 |
Restructuring liability, end of period | 358 |
Restructuring and Reinvestment Program [Member] | Other Activities [Member] | Other Long-term Liabilities [Member] | |
Activity for Restructuring and Related Charges Liability [Roll Forward] | |
Restructuring liability, end of period | $ 400 |
Segment Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
|||||
Segment Information [Abstract] | ||||||
Revenue | $ 431,326 | $ 423,530 | ||||
Corporate Expenses | (39,957) | (48,799) | ||||
Operating Income | 30,039 | 4,559 | ||||
Adjusted Operating Income | [1] | 32,257 | 15,294 | |||
Depreciation and Amortization | 49,507 | 42,219 | ||||
Adjusted EBITDA | [2] | 81,764 | 57,513 | |||
Research Publishing & Platforms [Member] | ||||||
Segment Information [Abstract] | ||||||
Revenue | 240,810 | 229,375 | ||||
Academic & Professional Learning [Member] | ||||||
Segment Information [Abstract] | ||||||
Revenue | 126,913 | 144,858 | ||||
Education Services [Member] | ||||||
Segment Information [Abstract] | ||||||
Revenue | 63,603 | 49,297 | ||||
Operating Segments [Member] | ||||||
Segment Information [Abstract] | ||||||
Contribution to Profit | 69,996 | 53,358 | ||||
Adjusted Contribution to Profit | [1] | 69,971 | 60,872 | |||
Depreciation and Amortization | 45,784 | 39,175 | ||||
Adjusted EBITDA | [2] | 115,755 | 100,047 | |||
Operating Segments [Member] | Research Publishing & Platforms [Member] | ||||||
Segment Information [Abstract] | ||||||
Revenue | 240,810 | 229,375 | ||||
Contribution to Profit | 69,818 | 55,646 | ||||
Adjusted Contribution to Profit | [1] | 69,621 | 58,266 | |||
Depreciation and Amortization | 19,701 | 17,153 | ||||
Adjusted EBITDA | [2] | 89,322 | 75,419 | |||
Operating Segments [Member] | Academic & Professional Learning [Member] | ||||||
Segment Information [Abstract] | ||||||
Revenue | 126,913 | 144,858 | ||||
Contribution to Profit | (380) | 4,911 | ||||
Adjusted Contribution to Profit | [1] | (347) | 7,716 | |||
Depreciation and Amortization | 18,804 | 16,524 | ||||
Adjusted EBITDA | [2] | 18,457 | 24,240 | |||
Operating Segments [Member] | Education Services [Member] | ||||||
Segment Information [Abstract] | ||||||
Revenue | 63,603 | 49,297 | ||||
Contribution to Profit | 558 | (7,199) | ||||
Adjusted Contribution to Profit | [1] | 697 | (5,110) | |||
Depreciation and Amortization | 7,279 | 5,498 | ||||
Adjusted EBITDA | [2] | 7,976 | 388 | |||
Corporate [Member] | ||||||
Segment Information [Abstract] | ||||||
Adjusted Corporate Expenses | [1] | (37,714) | (45,578) | |||
Depreciation and Amortization | 3,723 | 3,044 | ||||
Adjusted EBITDA | [2] | $ (33,991) | $ (42,534) | |||
|
Segment Information, Reconciliation of GAAP Net Income to Non-GAAP EBITDA and Adjusted EBITDA (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
|||
Reconciliation of GAAP Net Income to Non-GAAP EBITDA and Adjusted EBITDA [Abstract] | ||||
Net Income | $ 16,334 | $ 3,624 | ||
Interest expense | 4,614 | 6,077 | ||
Provision for Income Taxes | 13,400 | 343 | ||
Depreciation and Amortization | 49,507 | 42,219 | ||
Non-GAAP EBITDA | 83,855 | 52,263 | ||
Restructuring and related charges | 2,218 | 10,735 | ||
Foreign exchange transaction losses (gains) | 82 | (2,652) | ||
Interest and other income | (4,391) | (2,833) | ||
Non-GAAP Adjusted EBITDA | [1] | $ 81,764 | $ 57,513 | |
|
Inventories (Details) - USD ($) $ in Thousands |
Jul. 31, 2020 |
Apr. 30, 2020 |
---|---|---|
Inventories [Abstract] | ||
Finished Goods | $ 34,975 | $ 36,014 |
Work-in-Process | 1,688 | 1,398 |
Paper and Other Materials | 312 | 331 |
Total Inventories Before Estimated Sales Returns and LIFO Reserve | 36,975 | 37,743 |
Inventory Value of Estimated Sales Returns | 10,967 | 8,686 |
LIFO Reserve | (2,891) | (2,815) |
Total Inventories | $ 45,051 | $ 43,614 |
Goodwill and Intangible Assets, Goodwill (Details) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Jul. 31, 2020
USD ($)
| ||||
Goodwill [Roll Forward] | ||||
Beginning balance | $ 1,116,790 | |||
Acquisitions | (11,212) | [1] | ||
Foreign translation adjustment | 28,032 | |||
Ending balance | 1,133,610 | |||
Research Publishing & Platforms [Member] | ||||
Goodwill [Roll Forward] | ||||
Beginning balance | 448,130 | |||
Acquisitions | (11,212) | [1] | ||
Foreign translation adjustment | 15,490 | |||
Ending balance | 452,408 | |||
Academic & Professional Learning [Member] | ||||
Goodwill [Roll Forward] | ||||
Beginning balance | 501,091 | |||
Acquisitions | 0 | [1] | ||
Foreign translation adjustment | 8,794 | |||
Ending balance | 509,885 | |||
Education Services [Member] | ||||
Goodwill [Roll Forward] | ||||
Beginning balance | 167,569 | |||
Acquisitions | 0 | [1] | ||
Foreign translation adjustment | 3,748 | |||
Ending balance | $ 171,317 | |||
|
Goodwill and Intangible Assets, Intangible Assets (Details) - USD ($) $ in Thousands |
Jul. 31, 2020 |
Apr. 30, 2020 |
||
---|---|---|---|---|
Intangible Assets with Definite Lives, net [Abstract] | ||||
Total | $ 700,623 | $ 686,069 | ||
Intangible Assets with Indefinite Lives [Abstract] | ||||
Total | 128,608 | 121,336 | ||
Intangible assets (excluding goodwill) [Abstract] | ||||
Total Intangible Assets, Net | 829,231 | 807,405 | ||
Brands and Trademarks [Member] | ||||
Intangible Assets with Indefinite Lives [Abstract] | ||||
Total | 37,000 | 37,000 | ||
Content and Publishing Rights [Member] | ||||
Intangible Assets with Indefinite Lives [Abstract] | ||||
Total | 91,608 | 84,336 | ||
Content and Publishing Rights [Member] | ||||
Intangible Assets with Definite Lives, net [Abstract] | ||||
Total | [1] | 366,888 | 362,106 | |
Customer Relationships [Member] | ||||
Intangible Assets with Definite Lives, net [Abstract] | ||||
Total | [1] | 284,433 | 290,418 | |
Developed Technology [Member] | ||||
Intangible Assets with Definite Lives, net [Abstract] | ||||
Total | [1] | 28,734 | 13,111 | |
Brands and Trademarks [Member] | ||||
Intangible Assets with Definite Lives, net [Abstract] | ||||
Total | [1] | 20,371 | 20,188 | |
Covenants Not to Compete [Member] | ||||
Intangible Assets with Definite Lives, net [Abstract] | ||||
Total | $ 197 | $ 246 | ||
|
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Effective income tax rate [Abstract] | ||
Effective tax rate as reported | 45.10% | 8.60% |
Certain discrete items | $ 0.5 | |
U.K. [Member] | ||
Effective income tax rate [Abstract] | ||
Tax expense from the re-measurement legislation enacted | $ 6.7 | |
Minimum [Member] | U.K. [Member] | ||
Effective income tax rate [Abstract] | ||
Foreign statutory tax rate | 17.00% | |
Maximum [Member] | U.K. [Member] | ||
Effective income tax rate [Abstract] | ||
Foreign statutory tax rate | 19.00% |
Retirement Plans (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Components of net pension income for defined benefit plans [Abstract] | ||
Service cost | $ 333 | $ 224 |
Interest cost | 4,521 | 5,834 |
Expected return on plan assets | (9,378) | (10,059) |
Amortization of prior service cost | (25) | (19) |
Amortization of net actuarial loss | 1,987 | 1,600 |
Net pension income | (2,562) | (2,420) |
Employer defined benefit pension plan contributions | 5,100 | 4,700 |
Defined Contribution Savings Plans [Abstract] | ||
Expense for employer defined contribution savings plans | $ 6,600 | $ 4,300 |
Debt and Available Credit Facilities (Details) - USD ($) $ in Thousands |
3 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
Apr. 30, 2020 |
May 30, 2019 |
|||||
Components of Total Debt Outstanding [Abstract] | ||||||||
Short-term portion of long-term debt | [1] | $ 10,938 | $ 9,375 | |||||
Total long-term debt, less current portion | 835,763 | 765,650 | ||||||
Total Debt | 846,701 | 775,025 | ||||||
Amended and Restated RCA [Member] | ||||||||
Debt and Available Credit Facilities [Abstract] | ||||||||
Costs incurred | $ 4,000 | |||||||
Credit agreement issuance costs capitalized | 5,200 | |||||||
Amortization expense of the lender and non-lender fees in interest expense | 300 | 200 | ||||||
Term Loan A Facility [Member] | Amended and Restated RCA [Member] | ||||||||
Components of Total Debt Outstanding [Abstract] | ||||||||
Total long-term debt, less current portion | [2] | 232,179 | 235,263 | |||||
Unamortized issuance costs | $ 600 | 700 | ||||||
Debt and Available Credit Facilities [Abstract] | ||||||||
Term of credit facility | 5 years | |||||||
Credit agreement face amount | $ 250,000 | |||||||
Credit agreement issuance costs capitalized | 900 | |||||||
Term Loan amount related to lender fees as a reduction to debt | 800 | |||||||
Term Loan amount related to non-lender fees in Other NC Assets | 100 | |||||||
Revolving Credit Facility [Member] | Amended and Restated RCA [Member] | ||||||||
Components of Total Debt Outstanding [Abstract] | ||||||||
Total long-term debt, less current portion | $ 603,584 | $ 530,387 | ||||||
Debt and Available Credit Facilities [Abstract] | ||||||||
Term of credit facility | 5 years | |||||||
Amount of financing available under credit facilities | $ 1,250,000 | |||||||
Credit agreement issuance costs capitalized | $ 4,300 | |||||||
Revolving Credit Facility [Member] | Syndicate Bank Group led by Bank of America [Member] | Amended and Restated RCA [Member] | ||||||||
Debt and Available Credit Facilities [Abstract] | ||||||||
Optional credit limit increase available on request | $ 500,000 | |||||||
Minimum increments in which optional credit limit increase may be requested | $ 50,000 | |||||||
Revolving Credit Facility [Member] | Syndicate Bank Group led by Bank of America [Member] | Amended and Restated RCA [Member] | Minimum [Member] | ||||||||
Debt and Available Credit Facilities [Abstract] | ||||||||
Line of credit facility fee percentage | 0.15% | |||||||
Revolving Credit Facility [Member] | Syndicate Bank Group led by Bank of America [Member] | Amended and Restated RCA [Member] | Maximum [Member] | ||||||||
Debt and Available Credit Facilities [Abstract] | ||||||||
Line of credit facility fee percentage | 0.25% | |||||||
Revolving Credit Facility [Member] | Syndicate Bank Group led by Bank of America [Member] | Amended and Restated RCA [Member] | LIBOR [Member] | Minimum [Member] | ||||||||
Debt and Available Credit Facilities [Abstract] | ||||||||
Applicable margin | 0.98% | |||||||
Revolving Credit Facility [Member] | Syndicate Bank Group led by Bank of America [Member] | Amended and Restated RCA [Member] | LIBOR [Member] | Maximum [Member] | ||||||||
Debt and Available Credit Facilities [Abstract] | ||||||||
Applicable margin | 1.50% | |||||||
Revolving Credit Facility [Member] | Syndicate Bank Group led by Bank of America [Member] | Amended and Restated RCA [Member] | Base Rate [Member] | Minimum [Member] | ||||||||
Debt and Available Credit Facilities [Abstract] | ||||||||
Applicable margin | 0.00% | |||||||
Revolving Credit Facility [Member] | Syndicate Bank Group led by Bank of America [Member] | Amended and Restated RCA [Member] | Base Rate [Member] | Maximum [Member] | ||||||||
Debt and Available Credit Facilities [Abstract] | ||||||||
Applicable margin | 0.50% | |||||||
Revolving Credit Facility [Member] | Syndicate Bank Group led by Bank of America [Member] | Amended and Restated RCA [Member] | Federal Funds Effective Rate [Member] | ||||||||
Debt and Available Credit Facilities [Abstract] | ||||||||
Margin rate over reference rate used in determining base rate | 0.50% | |||||||
Revolving Credit Facility [Member] | Syndicate Bank Group led by Bank of America [Member] | Amended and Restated RCA [Member] | Eurocurrency Rate [Member] | ||||||||
Debt and Available Credit Facilities [Abstract] | ||||||||
Margin rate over reference rate used in determining base rate | 1.00% | |||||||
|
Derivative Instruments and Hedging Activities (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
Apr. 30, 2020 |
|
Derivative Instruments and Hedging Activities [Abstract] | |||
Total debt outstanding | $ 846,701 | $ 775,025 | |
Unamortized debt issuance costs | 600 | ||
Variable rate loans outstanding | 847,300 | ||
Interest Rate Swaps [Member] | Cash Flow Hedging [Member] | |||
Derivative Instruments and Hedging Activities [Abstract] | |||
Notional amount of derivative liability | 300,000 | 300,000 | |
Interest Rate Swaps [Member] | Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | Interest Expense [Member] | |||
Derivative Instruments and Hedging Activities [Abstract] | |||
Net gain (losses) reclassified from Accumulated Other Comprehensive Loss | (900) | $ 200 | |
Interest Rate Swaps [Member] | Recurring [Member] | Level 2 [Member] | Designated as Hedging Instrument [Member] | Cash Flow Hedging [Member] | |||
Derivative Instruments and Hedging Activities [Abstract] | |||
Assets fair value of derivative instrument | $ 8,200 | $ 8,300 |
Capital Stock and Changes in Capital Accounts, Share Repurchases (Details) - Class A [Member] - $ / shares |
3 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Share Repurchases [Abstract] | ||
Shares Repurchased (in shares) | 0 | 217,511 |
Average Price (in dollars per share) | $ 45.97 |
Capital Stock and Changes in Capital Accounts, Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Jul. 22, 2020 |
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Cash Dividends [Abstract] | |||
Total Dividend | $ 19,261 | $ 19,252 | |
Class A [Member] | |||
Cash Dividends [Abstract] | |||
Quarterly Cash Dividend (in dollars per share) | $ 0.3425 | $ 0.34 | |
Class B [Member] | |||
Cash Dividends [Abstract] | |||
Quarterly Cash Dividend (in dollars per share) | $ 0.3425 | $ 0.34 | |
Dividend Declared in Q1 2021 [Member] | Class A [Member] | |||
Cash Dividends [Abstract] | |||
Date of Declaration by Board of Directors | Jun. 25, 2020 | ||
Quarterly Cash Dividend (in dollars per share) | $ 0.3425 | ||
Total Dividend | $ 19,200 | ||
Dividend Paid Date | Jul. 22, 2020 | ||
Shareholders of Record as of Date | Jul. 07, 2020 | ||
Dividend Declared in Q1 2021 [Member] | Class B [Member] | |||
Cash Dividends [Abstract] | |||
Date of Declaration by Board of Directors | Jun. 25, 2020 | ||
Quarterly Cash Dividend (in dollars per share) | $ 0.3425 | ||
Total Dividend | $ 19,200 | ||
Dividend Paid Date | Jul. 22, 2020 | ||
Shareholders of Record as of Date | Jul. 07, 2020 |
Capital Stock and Changes in Capital Accounts, Changes in Common Stock (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Jul. 31, 2020 |
Jul. 31, 2019 |
|
Class A [Member] | ||
Changes in Common Stock [Abstract] | ||
Number of shares, beginning of year (in shares) | 70,166 | 70,127 |
Common stock class conversions (in shares) | 11 | 12 |
Number of shares issued, end of period (in shares) | 70,177 | 70,139 |
Changes in Common Stock in Treasury [Abstract] | ||
Number of shares held, beginning of year (in shares) | 23,405 | 22,634 |
Purchase of treasury shares (in shares) | 0 | 218 |
Restricted shares, forfeited (in shares) | 0 | 1 |
Restricted shares issued from exercise of stock options (in shares) | (33) | (12) |
Shares withheld for taxes (in shares) | 67 | 33 |
Number of shares held, end of period (in shares) | 23,259 | 22,795 |
Number of Common Stock outstanding, end of period (in shares) | 46,918 | 47,344 |
Class A [Member] | Non-PSU Awards [Member] | ||
Changes in Common Stock in Treasury [Abstract] | ||
Restricted shares issued under stock-based compensation plans (in shares) | (94) | (36) |
Class A [Member] | PSU Awards [Member] | ||
Changes in Common Stock in Treasury [Abstract] | ||
Restricted shares issued under stock-based compensation plans (in shares) | (86) | (43) |
Class B [Member] | ||
Changes in Common Stock [Abstract] | ||
Number of shares, beginning of year (in shares) | 13,016 | 13,055 |
Common stock class conversions (in shares) | (11) | (12) |
Number of shares issued, end of period (in shares) | 13,005 | 13,043 |
Changes in Common Stock in Treasury [Abstract] | ||
Number of shares held, beginning of year (in shares) | 3,920 | 3,918 |
Number of shares held, end of period (in shares) | 3,920 | 3,918 |
Number of Common Stock outstanding, end of period (in shares) | 9,085 | 9,125 |
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