SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT 1934 For the quarterly period ended January 31, 2000 Commission File No. 1-11507 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES ACT OF 1934 For the transition period from to JOHN WILEY & SONS, INC. (Exact name of Registrant as specified in its charter) NEW YORK 13-5593032 - ------------------------------- ---------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 605 THIRD AVENUE, NEW YORK, NY 10158-0012 - ------------------------------ ---------- (Address of principal executive offices) Zip Code Registrant's telephone number, including area code (212) 850-6000 -------------- NOT APPLICABLE Former name, former address, and former fiscal year, if changed since last report Indicate by check mark, whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] The number of shares outstanding of each of the Registrant's classes of common stock as of January 31, 2000 were: Class A, par value $1.00 - 49,005,586 Class B, par Value $1.00 - 11,949,656 This is the first page of a 16 page document
JOHN WILEY & SONS, INC. INDEX PART I - FINANCIAL INFORMATION PAGE NO. Item 1. Financial Statements. Condensed Consolidated Statements of Financial Position - Unaudited as of January 31, 2000 and 1999 and April 30, 1999.............. 3 Condensed Consolidated Statements of Income - Unaudited for the Three and Nine Months ended January 31, 2000 and 1999.. 4 Condensed Consolidated Statements of Cash Flow - Unaudited for the Three and Nine Months ended January 31, 2000 and 1999.. 5 Notes to Unaudited Condensed Consolidated Financial Statements... 6-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations......................... 10-13 Item 3. Quantitative and Qualitative Disclosure About Market Risk..........14 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K.................................. 15 "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995........................ 15 SIGNATURES................................................................... 16 EXHIBITS 27 Financial Data Schedule
<TABLE> <CAPTION> JOHN WILEY & SONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (In thousands) (UNAUDITED) January 31, April 30, ----------------------------------------- Assets 2000 1999 1999 ------------------- ----------------- --------------- <S> <C> <C> <C> Current Asset Cash and cash equivalents $ 82,070 182,700 $ 148,970 Accounts receivable 87,299 80,129 53,785 Inventories 39,884 41,306 40,003 Deferred income tax benefits 3,857 446 3,865 Prepaid expenses 6,108 6,254 9,347 ---------------- ----------------- --------------- Total Current Assets 219,218 310,835 255,970 Product Development Assets 40,310 36,938 38,099 Property and Equipment 35,452 33,792 34,726 Intangible Assets 305,965 177,531 174,911 Deferred Income Tax Benefits 10,144 14,180 13,001 Other Assets 13,374 11,296 11,845 ------------------------------------------------------------ Total Assets $ 624,463 584,572 $ 528,552 ============================================================ Liabilities & Shareholders' Equity Current Liabilities Notes payable and current portion of long-term debt $ 30,000 - $ - Accounts and royalties payable 72,910 60,048 34,708 Deferred subscription revenues 139,343 139,327 110,143 Accrued income taxes 9,921 4,369 3,356 Other accrued liabilities 54,766 44,101 46,893 --------------------------------------------------------- Total Current Liabilities 306,940 247,845 195,100 Long-Term Debt 95,000 125,000 125,000 Other Long-Term Liabilities 32,372 28,843 30,271 Deferred Income Taxes 16,476 16,770 15,969 Shareholders' Equity 173,675 166,114 162,212 ------------------------------------------------------------ Total Liabilities & Shareholders' Equity $ 624,463 584,572 $ 528,552 ============================================================ </TABLE> The accompanying Notes are an integral part of the condensed consolidated financial statements.
<TABLE> <CAPTION> JOHN WILEY & SONS, INC AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED (In thousands except per share information) Three Months Nine Months Ended January 31, Ended January 31, --------------------------------------- ------------------------------------- 2000 1999 2000 1999 -------------------- ---------------- ------------------- --------------- <S> <C> <C> <C> <C> Revenues $ 158,394 137,976 $ 445,712 383,707 Costs and Expenses Cost of sales 52,861 48,592 149,675 133,162 Operating and administrative expenses 72,676 65,671 207,995 189,843 Amortization of intangibles 4,371 2,431 12,073 7,048 -------------------- ---------------- ------------------- --------------- Total Costs and Expenses 129,908 116,694 369,743 330,053 -------------------- ---------------- ------------------- --------------- Operating Income 28,486 21,282 75,969 53,654 Interest Income and Other 478 1,260 1,035 3,838 Interest Expense (2,192) (1,671) (6,338) (5,622) -------------------- ---------------- ------------------- --------------- Interest Income (Expense) - Net (1,714) (411) (5,303) (1,784) -------------------- ---------------- ------------------- --------------- Income Before Taxes 26,772 20,871 70,666 51,870 Provision For Income Taxes 10,040 7,513 26,500 18,673 -------------------- ------------------ ------------------ --------------- Net Income $ 16,732 13,358 $ 44,166 33,197 ==================== ================ =================== =============== Income Per Share Diluted $ 0.26 0.20 $ 0.68 0.50 Basic $ 0.27 0.21 $ 0.72 0.53 Cash Dividends Per Share Class A Common $ 0.035625 0.031875 $ 0.106875 0.095625 Class B Common $ 0.031875 0.028125 $ 0.095625 0.084375 Average Shares Diluted 64,242 66,049 64,951 66,486 Basic 61,201 62,191 61,745 63,023 </TABLE> The accompanying Notes are an integral part of the condensed consolidated financial statements.
<TABLE> <CAPTION> JOHN WILEY & SONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW - UNAUDITED (In thousands) For The Nine Months Ended January 31, ------------------------------------------ 2000 1999 -------------------- ------------------- <S> <C> <C> Operating Activities Net income $ 44,166 33,197 Non-cash items 77,277 54,102 Net change in operating assets and liabilities 22,790 38,063 -------------------- ------------------- Cash Provided by Operating Activities 144,233 125,362 -------------------- ------------------- Investing Activities Additions to product development assets (23,592) (22,719) Additions to property and equipment (8,965) (6,671) Acquisition of publishing assets (145,092) (10,437) -------------------- ------------------- Cash Used in Investing Activities (177,649) (39,827) -------------------- ------------------- Financing Activities Purchase of treasury shares (27,093) (25,055) Cash dividends (6,477) (5,919) Proceeds from exercise of stock options 1,147 1,191 -------------------- ------------------- Cash Used for Financing Activities (32,423) (29,783) -------------------- ------------------- Effects of Exchange Rate Changes on Cash (1,061) (456) -------------------- ------------------- Cash and Cash Equivalents Increase (Decrease) for Period (66,900) 55,296 Balance at Beginning of Period 148,970 127,404 -------------------- ------------------- Balance at End of Period $ 82,070 182,700 ==================== =================== Cash Paid During the Period for Interest $ 6,615 5,895 Income taxes $ 12,998 13,264 </TABLE> The accompanying Notes are an integral part of the condensed consolidated financial statements.
JOHN WILEY & SONS, INC., AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JANUARY 31, 2000 1. 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 Company's consolidated financial position as of January 31, 2000 and 1999, and April 30, 1999, and results of operations and cash flow for the periods ended January 31, 2000 and 1999. These statements should be read in conjunction with the most recent audited financial statements contained in the Company's Form 10-K for the fiscal year ended April 30, 1999. 2. The results for the three and nine months ended January 31, 2000 are not necessarily indicative of the results to be expected for the full year. 3. A reconciliation of the shares used in the computation of income per share follows: <TABLE> <CAPTION> Three Months Nine Months Ended January 31, Ended January 31, ---------------------------------- -- --------------------------------- 2000 1999 2000 1999 --------------- --------------- -------------- --------------- <S> <C> <C> <C> <C> (thousands) Weighted average shares outstanding 61,726 62,995 62,268 63,809 Less: Unearned deferred compensation shares (525) (804) (523) (786) --------------- --------------- -------------- --------------- Shares used for basic income per share 61,201 62,191 61,745 63,023 Dilutive effect of stock options and other stock awards 3,041 3,858 3,206 3,463 --------------- --------------- -------------- ---------------- Shares used for diluted income per share 64,242 66,049 64,951 66,486 --------------- --------------- -------------- --------------- </TABLE> 4. Inventories were as follows: <TABLE> <CAPTION> January 31, April 30, -------------------------------- 2000 1999 1999 -------------- -------------- ------------- <S> <C> <C> <C> (thousands) Finished goods $33,107 34,317 $34,485 Work-in-process 4,055 5,621 5,325 Paper, cloth and other 4,836 3,743 2,007 -------------- -------------- ------------- 41,998 43,681 41,817 LIFO reserve (2,114) (2,375) (1,814) -------------- -------------- ------------- Total inventories $39,884 41,306 $40,003 -------------- -------------- ------------- </TABLE>
JOHN WILEY & SONS, INC., AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JANUARY 31, 2000 5. Comprehensive income was as follows: <TABLE> <CAPTION> Three Months Nine Months Ended January 31, Ended January 31, --------------------------------- -------------------------------- 2000 1999 2000 1999 -------------- ------------- ------------- -------------- <S> <C> <C> <C> <C> (thousands) Net Income $16,732 13,358 $44,166 33,197 Other Comprehensive Income (Loss) - Foreign Currency Translation Adjustments (841) 62 (854) (1,099) -------------- ------------- ------------- -------------- Comprehensive Income $15,891 13,420 $43,312 32,098 -------------- ------------- ------------- -------------- </TABLE> 6. During the current fiscal year, the Company acquired certain higher education titles for approximately $57 million in cash, and the Jossey-Bass publishing company for approximately $81 million in cash, from Pearson Inc. The higher education titles include such disciplines as biology/anatomy and physiology, engineering, mathematics, economics/finance and teacher education. Jossey-Bass publishes books and journals for professional and executives in such areas as business, psychology and educational/health management. The Company also acquired the J.K. Lasser tax and financial guides for approximately $5 million in cash. The acquisitions were financed by available cash balances and short-term lines of credit. The acquisitions have been accounted for by the purchase method, and the accompanying financial statements include the net assets acquired and results of operations since the dates of acquisition. The cost of the acquisitions has been allocated on the basis of preliminary estimates of the fair values of the assets acquired and the liabilities assumed. Final asset and liability fair values may differ based on appraisals and tax bases, however, it is anticipated that any changes will not have a material effect in the aggregate on the consolidated financial position of the Company. The excess of cost over the preliminary estimate of the fair value of the tangible assets acquired amounted to approximately $142 million, relating primarily to acquired publication rights and goodwill, and is being amortized on a straight line basis over estimated average lives ranging from 10 to 20 years. 7. In the first quarter of fiscal year 2000, the Company adopted Statement of Position ("SOP") 98-1, "Accounting for the Cost of Computer Software Developed or Obtained for Internal Use" issued by the American Institute of Certified Public Accountants. SOP 98-1 requires that certain costs incurred in developing or obtaining internal use software be capitalized and amortized over the useful life of the software. Previously, the Company expensed most of these costs as incurred. The adoption of SOP 98-1 had the effect of increasing net income in the first nine months of fiscal year 2000 by approximately $1.1 million.
JOHN WILEY & SONS, INC., AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JANUARY 31, 2000 8. Segment information was as follows: <TABLE> <CAPTION> Three Months Ended January 31, ------------------------------------------------------------------------------------ 2000 1999 ---------------------------------------- --------------------------------------- <S> <C> <C> <C> <C> <C> <C> (thousands) Inter- Inter- External segment External segment Revenues Customers Sales Total Customers Sales Total -------------- ------------ ------------ ------------- ------------ ------------ Domestic Segments: Scientific, Technical, and Medical $34,453 $164 $34,617 $32,041 $1,402 $33,443 Professional/Trade 35,303 6,334 41,637 28,025 3,291 31,316 College 32,857 5,371 38,228 26,690 3,802 30,492 European Segment 34,019 3,520 37,539 34,605 2,865 37,470 Other Segments 21,762 182 21,944 16,615 113 16,728 Eliminations 0 (15,571) (15,571) 0 (11,473) (11,473) -------------- ------------ ------------ ------------- ------------ ------------ Total Revenues $158,394 $0 $158,394 $137,976 $0 $137,976 -------------- ------------ ------------ ------------- ------------ ------------ Direct Contribution to Profit Domestic Segments: Scientific, Technical, and Medical $13,779 $12,996 Professional/Trade 8,855 8,069 College 13,545 10,074 European Segment 12,305 10,266 Other Segments 6,076 4,135 ------------ ------------ Total Direct Contribution to Profit 54,560 45,540 Shared Services and Admin. Costs (26,074) (24,258) ------------ ------------ Operating Income 28,486 21,282 Interest Expense - Net (1,714) (411) ------------ ------------ Income Before Taxes $26,772 $20,871 ------------ ------------ </TABLE>
JOHN WILEY & SONS, INC., AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JANUARY 31, 2000 <TABLE> <CAPTION> Nine Months Ended January 31, -------------------------------------------------------------------------------------- 2000 1999 ----------------------------------------- ---------------------------------------- <S> <C> <C> <C> <C> <C> <C> (thousands) Inter- Inter- External segment External segment Revenues Customers Sales Total Customers Sales Total -------------- ------------ ------------- -------------- ------------ ------------ Domestic Segments: Scientific, Technical, and Medical $102,415 $3,149 $105,564 $93,349 $4,357 $97,706 Professional/Trade 98,027 12,951 110,978 74,574 9,823 84,397 College 91,474 16,801 108,275 74,282 12,493 86,775 European Segment 101,141 7,915 109,056 99,759 7,850 107,609 Other Segments 52,655 460 53,115 41,743 356 42,099 Eliminations 0 (41,276) (41,276) 0 (34,879) (34,879) -------------- ------------ ------------- -------------- ------------ ------------ Total Revenues $445,712 $0 $445,712 $383,707 $0 $383,707 -------------- ------------ ------------- -------------- ------------ ------------ Direct Contribution to Profit Domestic Segments: Scientific, Technical, and Medical $43,940 $38,422 Professional/Trade 22,154 18,754 College 37,279 25,648 European Segment 33,471 32,482 Other Segments 11,210 7,348 ------------- ------------ Total Direct Contribution to Profit 148,054 122,654 Shared Services and Admin. Costs (72,085) (69,000) ------------- ------------ Operating Income 75,969 53,654 Interest Expense - Net (5,303) (1,784) ------------- ------------ Income Before Taxes $70,666 $51,870 ------------- ------------ </TABLE> As a result of recent acquisitions, total assets for the Professional/Trade segment and College segment increased to approximately $167 million and $107 million, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS JANUARY 31, 2000 FINANCIAL CONDITION Operating activities for the first nine months of fiscal 2000 provided $144.2 million of cash, or $18.9 million more than the prior year's comparable period. The generation of cash during this period is consistent with the seasonality of the journal subscription receipts cycle which occurs, for the most part, in the third quarter of the fiscal year. The increase over the prior year was primarily due to higher net income and payable balances, offset to some extent by higher receivable balances. Investing activities used $177.6 million during the current year-to-date, or $137.8 million more than the comparable prior year's period, as the Company continued to expand its core publishing programs through acquisitions including the Jossey-Bass publishing company, certain higher education titles and the J.K. Lasser tax and financial guides, as more fully described in note 6. Financing activities primarily reflect the purchase of treasury shares and dividend payments. RESULTS OF OPERATIONS THIRD QUARTER ENDED JANUARY 31, 2000 Revenues for the third quarter advanced 15% to $158.4 million compared with $138.0 million in the prior year. Revenues were adversely affected somewhat by foreign currency translation due to the strong U.S. dollar. Excluding the acquisitions completed during the current fiscal year and the adverse foreign currency translation effects, as noted above, organic revenue growth for the quarter was approximately 6% over the comparable prior year period. Operating income for the current quarter increased 34% to $28.5 million, compared with $21.3 million in the prior year. Net income advanced 25% to $16.7 million. Diluted earnings per share advanced 30% to $0.26 for the quarter compared with $0.20 in the prior year's third quarter. The Company's overall strategy of gaining market share in its core businesses by growing organically and through targeted acquisitions, while at the same time improving margins, is working. The Company continues to invest in new technologies as it accelerates its migration to the digital world. Cost of sales as a percentage of revenues declined to 33.4% compared with 35.2% in the prior year's third quarter. Operating expenses as a percentage of revenues declined to 45.9% in the current quarter, down from 47.6% in the prior year's third quarter due to synergies achieved on the acquisitions. The operating margin improved to 18.0% in the current quarter, compared with 15.4% in the prior year's third quarter. Interest expense-net increased $1.3 million, as a result of financing costs related to the acquisitions completed during the year. The effective tax rate was 37.5% in the current quarter, compared with 36% in the prior year.
SEGMENT RESULTS Domestic Professional/Trade segment revenues advanced 33% for the third quarter over the prior year, benefiting from recent acquisitions of Jossey-Bass, a San Francisco-based professional publisher, and the J.K. Lasser tax and financial guides, as well as strong backlist titles, including increased demand from online Internet suppliers. The direct contribution to profit advanced 10%. The direct contribution margin declined from 25.8% in the prior year's third quarter to 21.3% as a result of one-time integration costs related to the current year acquisitions. The Professional/Trade business is taking advantage of the dramatic growth of e-commerce. Online selling plays to the division's strength as a niche publisher with a deep backlist serving the professional needs of its customers. There is a growing demand for electronic products among the professional markets that it serves, notably computing, accounting, finance, psychology and architecture. The division is capitalizing on these opportunities with a combination of print and web-based products and services, as well as through the formation of strategic alliances. During the quarter, the domestic professional/trade business launched Wiley Virtual CPA Exam Review, an interactive multimedia course on the Web which is based on the Company's well known Delaney CPA Examination Review. This subscription-based 24/7 learning environment uses streaming video and audio lectures with self-assessment tests and extensive graphics. The Wiley Virtual CPA Exam Review is only one example of the Professional/Trade segments strategy to leverage the deep reservoir of "must have" content on the Internet. Domestic College segment revenues increased 25% for the quarter compared with the prior year, primarily related to the acquisition of certain higher education titles during the year, as well as a strong frontlist. The direct contribution to profit increased 34%, and the direct contribution margin improved to 35.4% during the current quarter compared with 33.0% in the prior year's third quarter. The college publishing market is as robust as it has been during the past decade. The College segment continued to invest in new technological tools to help teachers teach and students learn. For example, through alliances the College segment is providing web-based course management tools for professors and online tutorial, quiz and homework management tools for students. Every major college textbook now has a technology component designed to facilitate teaching and learning. The College business has over 300 web-sites serving the needs of professors and students. These web-sites are being redesigned to generate content dynamically from existing databases, as well as linking them to key portals. Alliances are also being formed to provide many of our top-selling textbooks in the e-book format. Domestic Scientific, Technical and Medical (STM) revenues increased 4%, for the third quarter compared with the prior year mainly due to the subscription journals business. The direct contribution to profit increased 6%. The direct contribution margin was 39.8% in the current quarter compared with 38.9% in the prior year's second quarter. Wiley InterScience, the Company's web-based service, is being expanded by adding the content of some of our best-selling major reference works and increasing the number of dedicated sales staff. The investment in Wiley InterScience is beginning to pay off. Customers such as OhioLink, the University of California system's California Digital Library, Hoffman LaRoche, Glaxo Wellcome, the University of Toronto and the University of Hong Kong have signed licenses that are attractive to them and to Wiley. CrossRef, the reference linking service, continued to sign-up new publishers. Twenty-three publishers are now participating in this important initiative to serve customers better. Wiley is a founding member of CrossRef and co-developer of the technology on which the service is based. European segment revenues were essentially flat for the quarter, as the translation effects of a stronger U.S. dollar adversely impacted revenue growth. The direct contribution margin was 32.8% in the current quarter compared with 27.4% in the prior year's third quarter. The improvement in the Other segment's results of operations was due to strong local product revenues in Canada and Australia and the strengthening of many of the Asian economies.
RESULTS OF OPERATIONS NINE MONTHS ENDED JANUARY 31, 2000 Revenues for the first nine months advanced 16% to $445.7 million compared with $383.7 million in the prior year. Revenues were again adversely affected somewhat by foreign currency translation due to the strong U.S. dollar. Excluding the acquisitions completed during the current fiscal year and the adverse foreign currency translation effects, as noted above, organic revenue growth for the first nine months was approximately 7% over the comparable prior year period. Operating income for the nine months increased 42% to $76.0 million, compared with $53.7 million in the prior year. Net income advanced 33% to $44.2 million. Diluted earnings per share advanced 36% to $0.68 for the first nine months of the year compared with $0.50 in the prior year. After financing costs, the current year acquisitions were accretive to earnings by approximately $2.4 million. Costs of sales as a percentage of revenues for the nine months declined to 33.6% from 34.7% in the prior year. Operating expenses as a percentage of revenues declined to 46.7% in the current period, down from 49.5% in the prior year due to synergies achieved on the acquisitions. The operating margin improved to 17.0% in the current period compared with 14.0% in the prior year. Interest expense-net increased $3.5 million as a result of financing costs related to the acquisitions completed during the year. The effective tax rate was 37.5% in the current period, compared with 36% in the prior year. SEGMENT RESULTS Domestic Professional/Trade revenues advanced 31% for the nine months over the prior year, benefiting from the recent acquisitions of Jossey-Bass, a San Francisco-based professional publisher, and the J.K. Lasser tax and financial guides, as well as strong backlist titles, including increased demand from online Internet suppliers. The direct contribution to profit advanced 18%. The direct contribution margin declined from 22.2% in the prior year to 20.0% due to one-time integration costs related to the current year acquisitions. Domestic College revenues increased 25% for the nine months compared with the prior year, primarily related to the acquisition of certain higher education titles during the year, as well as a strong frontlist The direct contribution to profit increased 45%, and the direct contribution margin improved to 34.4% during the period compared with 29.6% in the prior year. Domestic Scientific, Technical and Medical (STM) revenues increased 8% for the first nine months compared with the prior year mainly due to the subscription journals business. The direct contribution to profit increased 14%. The direct contribution margin was 41.6% in the current period compared with 39.3% in the prior year. European segment revenues increased 1%, as the translation effects of a stronger U.S. dollar adversely impacted revenue growth. The direct contribution margin was 30.7% in the current period compared with 30.2% in the prior year. The improvement in the Other segment's results of operations was due to strong local product in Canada and Australia and the strengthening of many of the Asian economies.
NEW ACCOUNTING STANDARDS The Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 133 "Accounting for Derivative Instruments and Hedging Activities", which specifies the accounting and disclosure requirements for such instruments, and is effective for the Company's fiscal year beginning on May 1, 2001. It is anticipated that the adoption of this new accounting standard will not have a material effect on the consolidated financial statements of the Company. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Market Risk The Company is exposed to market risk primarily related to interest rates and foreign exchange. It is the Company's policy to monitor these exposures and to use derivative financial instruments from time to time to reduce fluctuation in earnings and cash flow when it is deemed appropriate to do so. The Company does not use derivative financial instruments for trading or speculative purposes. Interest Rates The Company had a $125 million variable rate long-term loan outstanding at January 31, 2000, which approximated fair value. The weighted average interest rate as of January 31, 2000 was approximately 6.4%. The Company did not use any derivative financial instruments to manage this exposure. Foreign Exchange Rates The Company is exposed to foreign currency exchange movements primarily in European, Asian, Canadian and Australian currencies. Consequently, the Company, from time to time, enters into foreign exchange forward contracts as a hedge against its overseas subsidiaries' foreign currency asset, liability, commitment, and anticipated transaction exposures, including intercompany purchases. At January 31, 2000, the Company had open foreign exchange forward contracts expiring through April 30, 2000 as follows: Average Currency Sold U.S. $ Value Contract ---------------- ------------- ------------ Canadian Dollars $1.6 million $.6834 Australian Dollars $0.4 million $.6612
PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27 - Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended January 31, 2000 "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995 - ------------------------------------------------ This report contains certain forward-looking statements concerning the Company's operations, performance and financial condition. Reliance should not be placed on forward-looking statements, as actual results may differ materially from those in any forward-looking statements. Any such forward-looking statements are based upon a number of assumptions and estimates that are inherently subject to uncertainties and contingencies, many of which are beyond the control of the Company, and are subject to change based on many important factors. Such factors include, but are not limited to: (i) the pace, acceptance, and level of investment in emerging new electronic technologies and products; (ii) subscriber renewal rates for the Company's journals; (iii) the consolidation of the retail book trade market; (iv) the seasonal nature of the Company's educational business and the impact of the used book market; (v) worldwide economic and political conditions; and (vi) other factors detailed from time to time in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any such forward-looking statements to reflect subsequent events or circumstances.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. JOHN WILEY & SONS, INC. Registrant By /s/William J. Pesce -------------- William J. Pesce President and Chief Executive Officer By /s/Robert D. Wilder -------------- Robert D. Wilder Executive Vice President and Chief Financial Officer Dated: March 13, 2000