FinanceLooker

Excrept from filing document 2024-04-30

The aggregate market value of the voting stock held by non affiliates of the registrant computed by reference to the closing price as of the last business day of the registrant s most recently completed second fiscal quarter October 31 2023 was approximately 1 286 million The registrant has no non voting common stock
Portions of the registrant s definitive proxy statement for use in connection with its annual meeting of stockholders scheduled to be held on September 26 2024 are incorporated by reference into Part III of this Annual Report on Form 10 K
This report contains forward looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 concerning our business consolidated financial condition and results of operations The Securities and Exchange Commission SEC encourages companies to disclose forward looking information so that investors can better understand a company s prospects and make informed investment decisions Forward looking statements are subject to risks and uncertainties many of which are outside our control which could cause actual results to differ materially from these statements Therefore you should not rely on any of these forward looking statements Forward looking statements can be identified by such words as anticipates believes plan assumes could should estimates expects intends potential seek predict may will and similar references to future periods All statements other than statements of historical facts included in this report regarding our strategies prospects financial condition operations costs plans and objectives are forward looking statements Examples of forward looking statements include among others anticipated restructuring charges and savings operations performance and financial condition Reliance should not be placed on forward looking statements as actual results may differ materially from those described in any forward looking statements Any such forward looking statements are based upon many assumptions and estimates that are inherently subject to uncertainties and contingencies many of which are beyond our control and are subject to change based on many important factors Such factors include but are not limited to i the level of investment by Wiley in new technologies and products ii subscriber renewal rates for our journals iii the financial stability and liquidity of journal subscription agents iv the consolidation of book wholesalers and retail accounts v the market position and financial stability of key retailers vi the seasonal nature of our educational business and the impact of the used book market vii worldwide economic and political conditions viii our ability to protect our copyrights and other intellectual property worldwide ix our ability to successfully integrate acquired operations and realize expected opportunities x the ability to realize operating savings over time and in fiscal year 2025 in connection with our multiyear Global Restructuring Program and planned and completed dispositions xi the possibility that the divestitures will not be pursued failure to obtain necessary regulatory approvals or required financing or to satisfy any of the other conditions to planned dispositions xii cyber risk and the failure to maintain the integrity of our operational or security systems or infrastructure or those of third parties with which we do business xiii as a result of acquisitions we have and may record a significant amount of goodwill and other identifiable intangible assets and we may never realize the full carrying value of these assets xiv our ability to leverage artificial intelligence technologies in our products and services including generative artificial intelligence large language models machine learning and other artificial intelligence tools and xv other factors detailed from time to time in our filings with the SEC We undertake no obligation to update or revise any such forward looking statements to reflect subsequent events or circumstances
Please refer to Part I Item 1A Risk Factors of our Annual Report on Form 10 K for important factors that we believe could cause actual results to differ materially from those in our forward looking statements Any forward looking statement made by us in this report is based only on information currently available to us and speaks only as of the date on which it is made We undertake no obligation to publicly update any forward looking statement whether written or oral that may be made from time to time whether as a result of new information future developments or otherwise
We present financial information that conforms to Generally Accepted Accounting Principles in the United States of America US GAAP We also present financial information that does not conform to US GAAP which we refer to as non GAAP
Management uses these non GAAP performance measures as supplemental indicators of our operating performance and financial position as well as for internal reporting and forecasting purposes when publicly providing our outlook to evaluate our performance and calculate incentive compensation We present these non GAAP performance measures in addition to US GAAP financial results because we believe that these non GAAP performance measures provide useful information to certain investors and financial analysts for operational trends and comparisons over time The use of these non GAAP performance measures may also provide a consistent basis to evaluate operating profitability and performance trends by excluding items that we do not consider to be controllable activities for this purpose
The performance metric used by our chief operating decision maker to evaluate performance of our reportable segments is Adjusted Operating Income We present both Adjusted Operating Income and Adjusted EBITDA for each of our reportable segments as we believe Adjusted EBITDA provides additional useful information to certain investors and financial analysts for operational trends and comparisons over time It removes the impact of depreciation and amortization expense as well as presents a consistent basis to evaluate operating profitability and compare our financial performance to that of our peer companies and competitors
Adjusted EPS Adjusted Revenue Adjusted Operating Income Adjusted Income Before Taxes Adjusted Income Tax Provision Adjusted Effective Tax Rate Adjusted EBITDA and organic revenue excluding acquisitions 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 remove distortion from the effects of foreign currency movements to provide better comparability of our business trends from period to period We measure our performance excluding 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
In addition we have historically provided these or similar non GAAP performance measures and understand that some investors and financial analysts find this information helpful in analyzing our operating margins and net income and in comparing our financial performance to that of our peer companies and competitors Based on interactions with investors we also believe that our non GAAP performance measures are regarded as useful to our investors as supplemental to our US GAAP financial results and that there is no confusion regarding the adjustments or our operating performance to our investors due to the comprehensive nature of our disclosures
Non GAAP performance measures do not have standardized meanings prescribed by US GAAP and therefore may not be comparable to the calculation of similar measures used by other companies and should not be viewed as alternatives to measures of financial results under US GAAP The adjusted metrics have limitations as analytical tools and should not be considered in isolation from or as a substitute for US GAAP information It does not purport to represent any similarly titled US GAAP information and is not an indicator of our performance under US GAAP Non GAAP financial metrics that we present may not be comparable with similarly titled measures used by others Investors are cautioned against placing undue reliance on these non GAAP measures
The Company founded in 1807 was incorporated in the state of New York on January 15 1904 Throughout this report when we refer to Wiley the Company we our or us we are referring to John Wiley Sons Inc and all of our subsidiaries except where the context indicates otherwise
Please refer to Part II Item 8 Financial Statements and Supplementary Data for financial information about the Company and its subsidiaries which is incorporated herein by reference Also when we cross reference to a Note we are referring to our Notes to Consolidated Financial Statements in Part II Item 8 Financial Statements and Supplementary Data unless the context indicates otherwise
Wiley is one of the world s largest publishers and a global leader in research and learning The Company s content services platforms and knowledge networks are tailored to meet the evolving needs of its customers and partners including researchers students instructors professionals institutions and corporations Wiley empowers knowledge seekers to transform today s biggest obstacles into tomorrow s brightest opportunities For more than two centuries the Company has been delivering on its timeless mission to unlock human potential Wiley is a predominantly digital company with over 83 of its revenue for fiscal year 2024 generated by digital products and services excluding the Held for Sale or Sold segment revenue For fiscal year 2024 48 of revenue excluding the Held for Sale or Sold segment revenue is recurring which includes revenue that is contractually obligated or set to recur with a high degree of certainty
On June 1 2023 Wiley s Board of Directors approved a plan to divest certain businesses that we determined are non core businesses Those businesses are University Services Wiley Edge and CrossKnowledge On January 1 2024 we completed the sale of University Services The sale of Wiley Edge with the exception of its India operation was completed on May 31 2024 The sale of Wiley Edge s India operation will be finalized later in calendar year 2024 We expect to complete the sale of CrossKnowledge by the second quarter of fiscal year 2025
As a result in the three months ended July 31 2023 we reorganized our segments and our new structure consists of three reportable segments which includes Research no change Learning and Held for Sale or Sold as well as a Corporate expense category no change Prior period segment results have been recast to the new segment presentation There were no changes to our consolidated financial results
includes businesses held for sale including Wiley Edge and CrossKnowledge as well as those sold in fiscal year 2024 which includes University Services and Tuition Manager and in fiscal year 2023 Test Prep and Advancement Courses
Through the Research segment we provide peer reviewed scientific technical and medical STM publishing content platforms and related services to academic corporate and government customers academic societies and individual researchers The Learning segment provides scientific professional and education print and digital books digital courseware to libraries corporations students professionals and researchers as well as assessment services to businesses and professionals Our operations are primarily located in the United States US United Kingdom UK India Sri Lanka and Germany In the year ended April 30 2024 approximately 47 of our consolidated revenue was from outside the US
Wiley s business strategies are tightly aligned with healthy solid growth trends including ever increasing global research and development R D spend leading to consistent growth in scientific research output the transition to open research and the increasing application of new knowledge into solutions to solve real world problems These strategies include driving publishing output to meet the global demand for peer reviewed research and expanding platform and service offerings for corporations and societies Learning strategies include selectively scaling high value digital content courseware and assessments where the Company sees opportunity We continue to implement strategies to efficiently and effectively manage print revenue declines while driving growth in our digital lines of business
Research s mission is to support researchers professionals and learners in the discovery and use of research knowledge to help them achieve their goals Research provides scientific technical medical and scholarly journals as well as related content and services to academic corporate and government libraries learned societies and individual researchers and other professionals Journal publishing categories include the physical sciences and engineering health sciences social sciences and humanities and life sciences Research customers include academic corporate government and public libraries funders of research researchers scientists clinicians engineers and technologists scholarly and professional societies and students and professors Research products are sold and distributed globally through multiple channels including research libraries and library consortia independent subscription agents direct sales to professional society members and other customers Publishing centers include Australia China Germany India the UK and the US Research revenue accounted for approximately 56 of our consolidated revenue in the year ended April 30 2024 with a 31 8 Adjusted EBITDA margin See Part II Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations in the section Segment Operating Results of this Annual Report on Form 10 K for further details and for the reconciliation of Adjusted Operating Income to Adjusted EBITDA For fiscal year 2024 approximately 96 of Research revenue is generated by digital and online products and services
Key growth strategies for the Research segment include evolving and developing new licensing models for our institutional customers pay to read and publish developing new open access journals and revenue streams pay to publish focusing resources on high growth and emerging markets and developing new digital products services and workflow solutions to meet the needs of researchers authors societies and corporate customers
directly to thousands of research institutions worldwide through our sales representatives indirectly through independent subscription agents through promotional campaigns and through memberships in professional societies for those journals that are sponsored by societies Journal subscriptions are primarily licensed through contracts for digital content available online through our
platform Contracts are negotiated by us directly with customers or their subscription agents Subscription periods typically cover calendar years Subscription revenue is generally collected in advance Approximately 53 of Journal Subscription revenue is derived from publishing rights owned by Wiley Long term publishing alliances also play a major role in Research Publishing s success Approximately 47 of Journal Subscriptions revenue is derived from publication rights that are owned by professional societies and other publishing partners such as charitable organizations or research institutions and are published by us pursuant to long term contracts or owned jointly with such entities
These alliances bring mutual benefit The partners gain Wiley s publishing marketing sales and distribution expertise while Wiley benefits from being affiliated with prestigious organizations and their members Societies that sponsor or own such journals generally receive a royalty and or other financial consideration We may procure editorial services from such societies on a prenegotiated fee basis We also enter into agreements with outside independent editors of journals that define their editorial duties and the fees and expenses for their services Contributors of articles to our journal portfolio transfer publication rights to us or a professional society as applicable We publish the journals of many prestigious societies including the American Cancer Society the American Heart Association the American Anthropological Association the American Geophysical Union and the German Chemical Society
platform provides the user with intuitive navigation enhanced discoverability expanded functionality and a range of personalization options Access to abstracts is free and full content is accessible through licensing agreements or as individual article purchases Large portions of the content are provided free or at nominal cost to developing nations through partnerships with certain nonprofit organizations Our online publishing platforms provide revenue growth opportunities through new applications and business models online advertising deeper market penetration and individual sales and pay per view options
The annual JCR are one of the most widely used sources of citation metrics used to analyze the performance of peer reviewed journals The most prominent of these metrics the Impact Factor is based on the frequency with which an average article is cited in the JCR report year Alongside other metrics this makes it an important tool for evaluating a journal s impact on ongoing research
Under the Open Access business model accepted research articles are published subject to payment of article publication charges APCs and then all open articles are immediately free to access online Contributors of open access articles retain many rights and typically license their work under terms that permit reuse
Open Access offers authors choices in how to share and disseminate their work and it serves the needs of researchers who may be required by their research funder to make articles freely accessible without embargo APCs are typically paid by the individual author or by the author s funder and payments are often mediated by the author s institution We provide specific workflows and infrastructure to authors funders and institutions to support the requirements of Open Access
are published under contract for or in partnership with prestigious societies including the American Geophysical Union the American Heart Association and the British Ecological Society The Open Access portfolio spans life physical medical and social sciences and includes a choice of high impact journals and broad scope titles that offer a responsive author centered service
Transformational agreements read and publish is an innovative model that blends Journal Subscription and Open Access offerings Essentially for a single fee a national or regional consortium of libraries pays for and receives full read access to our journal portfolio and the ability to publish under an open access arrangement Like subscriptions transformational agreements involve recurring revenue under multiyear contracts Transformational models accelerate the transition to open access while maintaining subscription access
license provides access to a historical collection of Wiley journals generally for a one time fee We also engage with international publishers and receive licensing revenue from reproductions translations and other digital uses of our content Through the
programs we provide fee based access to non subscribed journal articles content book chapters and major reference work articles The Research Publishing business is also a provider of content and services in evidence based medicine EBM Through our alliance with The Cochrane Collaboration we publish
a premier source of high quality independent evidence to inform healthcare decision making EBM facilitates the effective management of patients through clinical expertise informed by best practice evidence that is derived from medical literature
our online publishing platform for societies and other research publishers delivers integrated access to more than 10 million articles from approximately 2 100 publishers and societies as well as over 28 000 online books and hundreds of multivolume reference works laboratory protocols and databases
and other websites Journal and article reprints are primarily used by pharmaceutical companies and other industries for marketing and promotional purposes Our recruitment platform and services business provide platform licensing and full service career site management by building custom sites for corporations and societies
Our Learning segment includes Academic and Professional whose products and services include scientific professional and education print and digital books and digital courseware to support libraries corporations students professionals and researchers as well as learning development publishing and assessment services for businesses and professionals Communities served include business finance accounting management leadership technology behavioral health engineering architecture science and medicine and education Products are developed for worldwide distribution through multiple channels including chain and online booksellers libraries colleges and universities corporations direct to consumer websites distributor networks and other online applications Products are sold to brick and mortar and online retailers wholesalers who supply such bookstores college bookstores individual practitioners corporations and government agencies
Publishing centers include Australia Germany India the UK and the US Learning accounted for approximately 31 of our consolidated revenue in the year ended April 30 2024 with a 34 9 Adjusted EBITDA margin See Part II Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations in the section Segment Operating Results of this Annual Report on Form 10 K for further details and for the reconciliation of Adjusted Operating Income to Adjusted EBITDA For fiscal year 2024 approximately 59 of Learning revenue is from digital and online products and services
Key strategies for the Learning business include selectively scaling high value digital content courseware and assessments where the Company sees opportunity We continue to implement strategies to efficiently and effectively manage print revenue declines while driving growth in our digital lines of business
Materials for book publications are obtained from authors throughout most of the world utilizing the efforts of a best in class internal editorial staff external editorial support and advisory boards Most materials originate by the authors themselves or as the result of suggestions or solicitations by editors We enter into agreements with authors that state the terms and conditions under which the materials will be published the name in which the copyright will be registered the basis for any royalties and other matters Author compensation models include royalties which vary depending on the nature of the product and work for hire We may make advance royalty payments against future royalties
We continue to add new titles revise existing titles and discontinue the sale of others in the normal course of our business We also create adaptations of original content for specific markets based on customer demand Our general practice is to revise our textbooks every 3 5 years as warranted and to revise other titles as appropriate Subscription based products are updated on a more frequent basis
We have an agreement to outsource our US based book distribution operations to Cengage Learning with the continued aim of improving efficiency in our distribution activities and moving to a more variable cost model As of April 30 2024 we had one global warehousing and distribution facility remaining which is in the UK
Book sales for Learning are generally made on a returnable basis with certain restrictions We provide for estimated future returns on sales made during the year based on historical return experience and current market trends
Education textbooks related supplementary material and digital products are sold primarily to bookstores and online retailers serving both for profit and nonprofit educational institutions primarily colleges and universities and direct to students We employ sales representatives who call on faculty responsible for selecting books to be used in courses and on the bookstores that serve such institutions and their students The textbook business is seasonal with the majority of textbook sales occurring during the July through October and December through February periods There are various channels to drive affordability for print and digital materials within the higher education market including used rental and inclusive access
Scientific Technical and Medical STM books Reference are sold and distributed globally in digital and print formats through multiple channels including research libraries and library consortia independent subscription agents direct sales to professional society members bookstores online booksellers and other customers
We develop content in a digital format that can be used for both digital and print products resulting in productivity and efficiency savings and enabling print on demand delivery Book content is available online through
and other proprietary platforms Digital books are delivered to intermediaries including Amazon Apple and Google for sale to individuals in various industry standard formats These are now the preferred deliverable for licensees of all types including foreign language publishers Digital books are also licensed to libraries through aggregators Specialized formats for digital textbooks go to distributors servicing the academic market and digital book collections are sold by subscription through independent third party aggregators servicing distinct communities Custom deliverables are provided to corporations institutions and associations to educate their employees generate leads for their products and extend their brands Digital content is also used to create online articles mobile apps newsletters and promotional collateral Continually reusing content improves margins speeds delivery and helps satisfy a wide range of evolving customer needs Our online presence not only enables us to deliver content online but also to sell more books The growth of online booksellers benefits us because they provide unlimited virtual shelf space for our entire backlist Publishing alliances and franchise products are important to our strategy Education and STM publishing alliance partners include IEEE American Institute of Chemical Engineers and many others The ability to join Wiley s product development sales marketing distribution and technology with a partner s content technology and or brand name has contributed to our success
platform enables learners to learn by doing while allowing professors to be more efficient and devote more time to teaching The platform maximizes learner engagement and retention through demonstration and hands on learning experiences using interactive question sets animations tools and embedded labs
brand are sold to brick and mortar and online retailers wholesalers who supply such bookstores college bookstores individual practitioners corporations and government agencies We employ sales representatives who call upon independent bookstores national and regional chain bookstores wholesalers and corporations globally Sales of professional books also result from direct marketing outreach conferences and other industry relevant outreach
We also promote active and growing custom professional and education publishing programs Professional organizations use our custom professional publications for marketing outreach This outreach includes customized digital and print books written for a specific customer and includes custom cover art such as imprints messages and slogans More specific are customized
Our assessments offerings include high demand soft skills training solutions that are delivered to organizational clients and their employees through online digital delivery platforms either directly or through an authorized distributor network of independent consultants trainers and coaches Wiley s branded assessment solutions include Everything DiSC The Five Behaviors based on Patrick Lencioni s perennial bestseller
Licensing and distribution services are made available to other publishers under agency arrangements Wiley also realizes advertising revenue from branded websites e g Dummies com and online applications
Our Held for Sale or Sold segment consists of University Services Wiley Edge CrossKnowledge and other businesses sold in fiscal years 2024 and 2023 Held for Sale or Sold accounted for approximately 13 of our consolidated revenue in the year ended April 30 2024 with a 12 6 Adjusted EBITDA margin See Part II Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations in the section Segment Operating Results of this Annual Report on Form 10 K for further details and for the reconciliation of Adjusted Operating Income to Adjusted EBITDA
offered institutions and their students a rich portfolio of education technology and student and faculty support services allowing the institutions to reach more students online with their own quality academic programs
Wiley Edge sources trains and prepares aspiring students and professionals to meet the skill needs of today s technology and banking services careers and then places them with some of the world s largest financial institutions technology companies and government agencies
We also offer online learning and training solutions for global corporations and small and medium sized enterprises which are sold on a subscription or fee basis Learning experiences formats and modules on topics such as leadership development value creation client orientation change management and corporate strategy are delivered on a cloud based CrossKnowledge Learning Management System LMS platform that hosts more than 20 000 content assets videos digital learning modules written files etc in 18 languages We expect to complete the sale of CrossKnowledge by the second quarter of fiscal year 2025
We view our colleagues as one of our most significant assets and investments to deliver on our mission to unlock human potential and to champion and advocate for our customers who want to make impacts in their fields their workplaces and their lives through knowledge creation use and dissemination Our success depends on our ability to develop attract reward and retain a diverse population of talented qualified and highly skilled colleagues at all levels of our organization and across our global workforce so that they can deliver on our promise to our customers to clear the way to their successes
This includes programs policies and initiatives that promote inclusion and belonging with equity at the core talent acquisition ongoing employee learning and development competitive compensation and benefits health and well being and emphasis on employee satisfaction and engagement
Our culture differentiates us as an organization and our core values define how we work together We ask colleagues to embody our three values Learning Champion Needle Mover and Courageous Teammate and assess their performance against these in addition to what they achieve against their goals These values define who we are as a company and what we stand for
Colleague well being is at the core of our business as it is critical we provide tools and resources to help colleagues and their families be healthy and an environment that allows us to be at our best at work and in life From a global paid parental leave to apps that support mental health we provide the tools and resources that meet the needs of our colleagues in maintaining and achieving healthy physical emotional social and financial well being
We believe that Wiley s best work will be done in a flexible workplace which consists of a careful blend of flexible digitally enabled remote work and purposeful in person connection and collaboration Global Work Model As we continue to evolve Wiley s Global Work Model we remain committed to providing our colleagues flexibility while embracing opportunities to come together for meaningful connections Our approach is intended to support well being while maintaining a culture of innovation and creating an equitable experience for all colleagues
Inclusion and belonging are foundational to our strategy We believe that an inclusive culture is fundamental to our colleagues talent experience When colleagues feel included and valued they are more likely to be engaged productive and innovative An inclusive culture also helps to ensure that everyone has an equal opportunity to impact and contribute at Wiley By prioritizing inclusion and belonging we can create a more innovative productive and engaged workforce that benefits everyone
These pillars reflect our DEI near term priorities to propel a sustainable inclusive organization that embodies inclusion and equity throughout our policies programs and processes and fosters an inclusive culture that celebrates the unique contributions of our colleagues and supports human connectivity In addition we develop partnerships and launch pilot programs to support communities that are underrepresented in higher education the workforce and the field of publishing
Our Employee Resource Groups help amplify our DEI priorities through learning community engagement and allyship and advocacy As a member of the CEO Action for Diversity and Inclusion Wiley demonstrates its commitment to sustained concrete actions that advance inclusive thinking behavior and business practices in the workplace
Investment in colleague development and growth for current and future roles is central to our culture Our goal is to provide colleagues with learning opportunities and experiences during their journey at Wiley We help colleagues upskill and thrive by leveraging the power of our internal products and tapping into our external partnerships We focus on delivering quality curated resources customized learning paths and comprehensive development programs We offer interactive development programs that allow our colleagues to share lessons learned adopt best practices and have interactive opportunities with their peers Through our internal development programs our colleagues get practical advice on updating their internal resumes and honing their interviewing skills and have career conversations with our Talent team Leveraging Wiley s Everything DiSC assessment tools and resources our colleagues can better understand themselves and others creating a common language that makes interactions more collaborative and effective
Through our Pay Wiley journey we continue to enhance our colleague and manager understanding of pay through our education programs and raised transparency by sharing segment in range and publishing our first global equitable pay study Recognizing the great work our colleagues do is an important part of our culture We continue to use Achievers as our recognition platform that is designed so our colleagues can recognize each other to create a culture of recognition and celebrate success In fiscal year 2024 we had over 32 000 recognitions
We conduct a talent review annually focusing on high performing and high potential talent diversity and succession for our most critical roles We are committed to identifying growing and retaining top talent and ensuring we have the right skills for the future We establish key development action planning opportunities for each colleague to build bench strength and review development progress and mobility regularly
Wiley is committed to environmental sustainability as an integral part of its operations and corporate strategy Our environmental strategy is underpinned by our dedication to reducing greenhouse gas emissions developing partnerships to advance environmental action and enhancing environmental stewardship across our value chain
Wiley which for three consecutive years beginning in February 2021 was a CarbonNeutral certified company across our global operations has shifted the priority of our climate strategy to achieving net zero emissions Our science based targets validated by the Science Based Targets initiative SBTi aims to reduce emissions across Scopes 1 2 and 3 with a long term goal to achieve net zero emissions by 2040 Several of our owned and leased offices distribution center and warehouse locations already use renewable electricity and for the remainder we purchase Energy Attribute Certificates EACs We are responding to the SBTi s urgent call for corporate climate action by aligning with 1 5 C and net zero through the Business Ambition for 1 5 C campaign
Our environmental strategy is also focused on sustainable publishing practices optimizing resource use and promoting digital products to minimize our environmental impact We proactively seek to acquire content to publish that supports the UN Sustainable Development Goals We work to reduce print production and consumption through our products wherever possible avoid excess inventory through print on demand and zero inventory model distribution and encourage digital adoption We are actively engaging with our suppliers and have begun implementing measures to ensure our subcontractors who assist us in providing material aspects of the products and services are held to the same high standards as we hold ourselves We are reducing our physical office footprint and working to ensure responsible energy consumption Our commitment to sustainability is supported by our publicly available Environmental Policy and our Paper Selection and Use Policy
This evolving comprehensive strategy reflects Wiley s commitment to making positive impacts on environmental sustainability while continuing to deliver on its mission of empowering knowledge seekers worldwide
Segment Information of the Notes to Consolidated Financial Statements and Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10 K are incorporated herein by reference
website our Annual Reports on Form 10 K Quarterly Reports on Form 10 Q Current Reports on Form 8 K and amendments to those reports that we file or furnish pursuant to Sections 13 a or 15 d of the Securities Exchange Act of 1934 or the Exchange Act as soon as reasonably practicable after we electronically file these materials with or furnish them to the SEC The information contained on or that may be accessed through our website is not incorporated by reference into and is not a part of this Annual Report on Form 10 K
The risks described below should be carefully considered before making an investment decision You should carefully consider all the information set forth in this Annual Report on Form 10 K including the following risk factors before deciding to invest in any of our securities This Annual Report on Form 10 K also contains or may incorporate by reference forward looking statements that involve risks and uncertainties See the Cautionary Notice Regarding Forward Looking Statements immediately preceding Part I of this Annual Report on Form 10 K The risks below are not the only risk factors we face Additional risks not currently known to us or that we presently deem insignificant could impact our consolidated financial position and results of operations Our businesses consolidated financial position and results of operations could be materially adversely affected by any of these risks The trading price of our securities could decline due to any of these risks and investors may lose all or part of their investment
We may not be able to realize the expected benefits of our growth strategies which are described in Item 1 Business which could adversely impact our consolidated financial position and results of operations
For Research we may not be able to drive publishing output to meet the global demand for peer reviewed research nor expand platform and service offerings for corporations and societies For Learning we may not be able to scale high value digital content courseware and assessments
We continually evaluate the performance and strategic fit of all of our businesses and may sell businesses or product lines We initiated a strategic review of our non core education businesses which has resulted in the ongoing divestiture of certain assets or businesses that no longer fit with our strategic direction or growth targets Divestitures involve significant risks and uncertainties that could adversely affect our business consolidated financial position and consolidated results of operations These include among others the inability to find potential buyers on favorable terms disruption to our business and or diversion of management attention from other business concerns the potential loss of key employees difficulties in separating the operations of the divested business and retention of certain liabilities related to the divested business Significant time and expenses could be incurred to divest these non core businesses which may adversely affect operations as dispositions may require our continued financial involvement such as through transition service agreements guarantees and indemnities or other current or contingent financial obligations and liabilities
Technological developments in artificial intelligence could disrupt the markets in which we operate and subject us to increased competition cannibalization legal and regulatory risks and compliance costs
Technological developments in artificial intelligence including machine learning technology large language models and generative artificial intelligence collectively AI Technologies and their current and potential future applications are rapidly evolving The full extent of current or future risks related thereto is not possible to predict AI Technologies could significantly disrupt the markets in which we operate and subject us to increased competition legal and regulatory risks which could have a material adverse effect on our business financial condition and results of operations In addition the sale of new products leveraging AI Technologies may result in the cannibalization of sales for existing products which may harm our results of operations
We intend to seek to avail ourselves of the potential benefits insights and efficiencies that are available through the use of AI Technologies which presents a number of potential risks that cannot be fully mitigated If the content analyses or recommendations that AI Technologies assist in producing are or are alleged to be deficient inaccurate biased or otherwise problematic our reputation may be adversely affected In addition the introduction of generative AI tools into our business may negatively impact our workplace culture and ability to attract and retain employees if generative AI tools are viewed as displacing workers
Generative AI also presents emerging legal and ethical issues and terms governing the use of generative AI are subject to change Accordingly our use of or perceptions of the way that we use generative AI could adversely affect our business brand financial condition or results of operations There is also a risk that AI Technologies may be misused or misappropriated by our employees and or third parties engaged
Further we may not be able to control how third party AI Technologies that we choose to use are developed or maintained or how data we input is used or disclosed even where we have sought contractual protections with respect to these matters The misuse or misappropriation of our data could have an adverse impact on our reputation and could subject us to legal and regulatory investigations and or actions
Regulations related to AI Technologies may also impose on us certain obligations and costs related to monitoring and compliance For example in April 2023 the Federal Trade Commission U S Department of Justice Consumer Financial Protection Bureau and U S Equal Employment Opportunity Commission released a joint statement on artificial intelligence demonstrating interest in monitoring the development and use of automated systems and enforcement of their respective laws and regulations In October 2023 the Presidential Administration signed an executive order that establishes new standards for AI safety and security In addition to the U S regulatory framework the EU introduced a new regulation applicable to certain AI Technologies and the data used to train test and deploy them which could impose significant requirements on both the providers and deployers of AI Technologies
Our business depends on our intellectual property including our valuable trademarks and copyrighted content We believe the protection and monetization of our proprietary trademarks and copyrighted content as well as other intellectual property is critical to our continued success and our competitive position Our ability to do so is subject to the inherent limitation in protections available under intellectual property laws in the United States and other applicable jurisdictions Unauthorized parties could unlawfully misappropriate our brand content technology and other intellectual property and may continue to do so and the measures we have taken to protect and enforce our proprietary rights may not be sufficient to fully address or prevent all third party infringement
Advancements in technology including advancements in generative AI technology have made unauthorized copying and wide dissemination of unlicensed content easier Detection of unauthorized use of our intellectual property and enforcement of our intellectual property rights have become more challenging in part due to the increasing volume and sophistication of attempts at unauthorized use of our intellectual property including from generative AI developers As our business and the presence and impact of bad actors become more global in scope we may not be able to protect our proprietary rights in a cost effective manner in other jurisdictions In addition intellectual property protection may not be available in every country in which our products and services are distributed or made available through the internet
If we are unable to protect and enforce our intellectual property rights we may not succeed in realizing the full value of our assets our business and profitability may suffer and our brand may be tarnished by misuse of our intellectual property
A common trend facing each of our businesses is the digitization of content and proliferation of distribution channels through the Internet and other electronic means which are replacing traditional print formats This trend towards digital content has also created contraction in the print book retail market which increases the risk of bankruptcy for certain retail customers potentially leading to the disruption of short term product supply to consumers as well as potential bad debt write offs New distribution channels such as digital formats the Internet online retailers and growing delivery platforms e g tablets and e readers combined with the concentration of retailer power present both risks and opportunities to our traditional publishing models potentially impacting both sales volumes and pricing
As the market has shifted to digital products customer expectations for lower priced products have increased due to customer awareness of reductions in production costs and the availability of free or low cost digital content and products As a result there has been pressure to sell digital versions of products at prices below their print versions Increased customer demand for lower prices could reduce our revenue
We publish educational content for undergraduate graduate and advanced placement students lifelong learners and in Australia for secondary school students Due to growing student demand for less expensive textbooks many college bookstores online retailers and other entities offer used or rental textbooks to students at lower prices than new textbooks
The Internet has made the used and rental textbook markets more efficient and has significantly increased student access to used and rental textbooks Further expansion of the used and rental textbook markets could further adversely affect our sales of print textbooks subsequently affecting our consolidated financial position and results of operations
Enrollment in US colleges and universities can be adversely affected by many factors including changes in government and private student loan and grant programs uncertainty about current and future economic conditions increases in tuition general decreases in family income and net worth and record low unemployment due to an active job market In addition enrollment levels at colleges and universities outside the US are influenced by global and local economic factors local political conditions and other factors that make predicting foreign enrollment levels difficult Reductions in expected levels of enrollment at colleges and universities both within and outside the US could adversely affect demand for our higher education offerings which could adversely impact our consolidated financial position and results of operations
The Company and industry are highly dependent on the loyal engagement of key leaders and colleagues Loss of talent due to inadequate skills and career path development or maintaining competitive salaries and benefits could have a significant impact on Company performance
We are highly dependent on the continued services of key talent who have in depth market and business knowledge and or key relationships with business partners The loss of the services of key talent for any reason and our inability to replace them with suitable candidates quickly or at all as well as any negative market perception resulting from such loss could have a material adverse effect on our business consolidated financial position and results of operations
We have a significant investment in our colleagues around the world We offer competitive salaries and benefits in order to attract and retain the highly skilled workforce needed to sustain and develop new products and services required for growth Employment costs are affected by competitive market conditions for qualified individuals and factors such as healthcare and retirement benefit costs
The competitive pressures we face in our business as well as our ability to retain our business relationships with our authors and professional societies could adversely affect our consolidated financial position and results of operations
The contribution of authors and their professional societies is one of the more important elements of the highly competitive publishing business Success and continued growth depend greatly on developing new products and the means to deliver them in an environment of rapid technological change Attracting new authors and professional societies while retaining our existing business relationships is critical to our success If we are unable to retain our existing business relationships with authors and professional societies this could have an adverse impact on our consolidated financial position and results of operations
Our company is highly dependent on information technology systems and their business management and customer facing capabilities critical for the long term competitive sustainability of the business If we fail to innovate in response to rapidly evolving technological and market developments our competitive position may be negatively impacted
We must continue to invest in technology and other innovations to adapt and add value to our products and services to remain competitive This is particularly true in the current environment where investment in new technology is ongoing and there are rapid changes in the products competitors are offering the products our customers are seeking and our sales and distribution channels In some cases investments will take the form of internal development in others they may take the form of an acquisition There are uncertainties whenever developing or acquiring new products and services and it is often possible that such new products and services may not be launched or if launched may not be profitable or as profitable as existing products and services If we are unable to introduce new technologies products and services our ability to be profitable may be adversely affected
We cannot predict the effect of technological changes on our business Failure to keep pace with these technological developments or otherwise bring to market products that reflect these technologies could have a material adverse impact on our overall business and results of operations We may not be successful in anticipating or responding to these developments on a timely and cost effective basis Additionally the effort to gain technological expertise and develop new technologies in our business requires us to incur significant expenses If we cannot offer new technologies as quickly as our competitors or if our competitors develop more cost effective technologies or product offerings we could experience a material adverse effect on our operating results growth and financial condition
Information technology is a key part of our business strategy and operations As a business strategy Wiley s technology enables us to provide customers with new and enhanced products and services and is critical to our success in migrating from print to digital business models Information technology is also a fundamental component of all our business processes collecting and reporting business data and communicating internally and externally with customers suppliers employees and others We face technological risks associated with digital products and service delivery in our businesses including with respect to information technology capability reliability security enterprise resource planning system implementations and upgrades Across our businesses we hold personal data including that of employees and customers Failures of our information technology systems and products including operational failure natural disaster computer virus or cyberattacks could interrupt the availability of our digital products and services result in corruption or loss of data or breach in security and result in liability or reputational damage to our brands and or adversely impact our consolidated financial position and results of operations
Management has designed and implemented policies processes and controls to mitigate risks of information technology failure and to provide security from unauthorized access to our systems In addition we have disaster recovery plans in place to maintain business continuity for our key financial systems While key financial systems have backup and tested disaster recovery systems other applications and services have limited backup and recovery procedures which may delay or prevent recovery in case of disaster The size and complexity of our information technology and information security systems and those of our third party vendors with whom we contract make such systems potentially vulnerable to cyberattacks common to most industries from inadvertent or intentional actions by employees vendors or malicious third parties While we have taken steps to address these risks there can be no assurance that a system failure disruption or data security breach would not adversely affect our business and could have an adverse impact on our consolidated financial position and results of operations
We are continually improving and upgrading our computer systems and software We have recently initiated a multiyear enterprise modernization program which includes various projects including the consolidation and transformation of our Research publishing infrastructure and the future implementation of an updated global enterprise resource planning ERP system to integrate and upgrade our operational and financial systems and processes Implementation of this program and the related projects involves risks and uncertainties
The risks associated with the transformation of our Research publishing infrastructure could include not realizing our projected business benefits of growing article submissions reducing the time to publication facilitating growth in open access with a modern open access payment infrastructure and reducing the cost per article
Any disruptions delays or deficiencies in the design or implementation of a new ERP system could result in increased costs disruptions in operations or delays in the collection of cash from our customers as well as having an adverse effect on our ability to timely report our financial results all of which could materially adversely affect our business consolidated financial position and results of operations While we have contingency support available any major disruptions while unlikely may require longer remediation time This could impact our ability to process and fulfill orders for those businesses We currently use a legacy platform with limited support for order management of the global Learning business Any defects and disruptions in the legacy systems which cannot be addressed in a timely manner could impact our ability to process orders and reconcile financial statements These legacy platforms are being evaluated as part of the recently initiated enterprise modernization program noted above
Cyber risk and the failure to maintain the integrity of our operational or security systems or infrastructure or those of third parties with which we do business could have a material adverse effect on our business consolidated financial condition and results of operations
The cybersecurity risks we face range from cyberattacks common to most industries such as the development and deployment of malicious software to gain access to our networks and attempt to steal confidential information launch distributed denial of service attacks or attempt other coordinated disruptions to more advanced threats that target us because of our prominence in the global research and advisory field Given that our employees work remotely at least some of the time which magnifies the importance of the integrity of our remote access security measures
Like many multinational corporations we and some third parties upon which we rely have experienced cyberattacks on our computer systems and networks in the past and may experience them in the future likely with more frequency and sophistication and involving a broader range of devices and modes of attack all of which will increase the difficulty of detecting and successfully defending against them To date none have resulted in any material adverse impact to our business operations products services or customers Wiley has invested heavily in cybersecurity tools and resources to keep our systems safe We have implemented various security controls to meet our security obligations while also defending against constantly evolving security threats Our security controls help to secure our information systems including our computer systems intranet proprietary websites email and other telecommunications and data networks and we scrutinize the security of outsourced website s and service providers prior to retaining their services However the security measures implemented by us or by our outside service providers may not be effective and our systems and those of our outside service providers may be vulnerable to theft loss damage and interruption from a number of potential sources and events including unauthorized access or security breaches cyberattacks computer viruses power loss or other disruptive events
The security compliance landscape continues to evolve requiring us to stay apprised of changes in cybersecurity privacy laws and regulations such as the following but not limited to the European Union General Data Protection Regulation GDPR the California Consumer Privacy Act CCPA the Brazilian General Data Protection Law LGPD the Chinese Cybersecurity Data Security and Personal Information Protection laws PIPL The United Kingdom ceased to be an EU Member State on January 31 2020 but enacted the UK data protection law It is unclear how UK data protection laws will continue to develop however contractual clauses have been established regulating data transfers to and from the United Kingdom Some countries also are considering or have enacted legislation requiring local storage and processing of data that could increase the cost and complexity of delivering our services
In addition to new and proposed data protection laws we also stay apprised and adopt certain security standards required by our clients such as International Organization for Standardization ISO National Institute of Standards and Technology NIST and Center for Internet Security CIS Recent well publicized security breaches at other companies have led to enhanced government and regulatory scrutiny of the measures taken by companies to protect against cyberattacks and may in the future result in heightened cybersecurity requirements including additional regulatory expectations for oversight of vendors and service providers
A cyberattack could cause delays in initiating or completing sales impede delivery of our products and services to our clients disrupt other critical client facing or business processes or dislocate our critical internal functions Additionally any material breaches or other technology related catastrophe or media reports of perceived security vulnerabilities to our systems or those of our third parties even if no breach has been attempted or has occurred could cause us to experience reputational harm loss of customers and revenue fines regulatory actions and scrutiny sanctions or other statutory penalties litigation liability for failure to safeguard our customers information or financial losses that are either not insured against or not fully covered through any insurance maintained by us
We continue to transform our business from a traditional publishing model to a global provider of content enabled solutions with a focus on digital products and services We will continue to explore opportunities to develop new business models and enhance the efficiency of our organizational structure The rapid pace and scope of change increases the risk that not all our strategic initiatives will deliver the expected benefits within the anticipated timeframes In addition these efforts may disrupt our business activities which could adversely affect our consolidated financial position and results of operations
We continue to restructure and realign our cost base with current and anticipated future market conditions including our Global Restructuring Program Significant risks associated with these actions that may impair our ability to achieve the anticipated cost savings or that may disrupt our business include delays in the implementation of anticipated workforce reductions in highly regulated locations outside of the US decreases in employee morale the failure to meet operational targets due to the loss of key employees and disruptions of third parties to whom we have outsourced business functions In addition our ability to achieve the anticipated cost savings and other benefits from these actions within the expected timeframe is subject to many estimates and assumptions These estimates and assumptions are subject to significant economic competitive and other uncertainties some of which are beyond our control If these estimates and assumptions are incorrect if we experience delays or if other unforeseen events occur our business and consolidated financial position and results of operations could be adversely affected
We have outsourced certain business functions principally in technology content management printing warehousing fulfillment distribution returns processing and certain other transactional processing functions to third party service providers to achieve cost savings and efficiencies If these third party service providers do not perform effectively we may not be able to achieve the anticipated cost savings and depending on the function involved we may experience business disruption or processing inefficiencies all with potential adverse effects on our consolidated financial position and results of operations
Challenges and uncertainties associated with operating in certain global markets has a higher risk due to political instability economic volatility crime terrorism corruption social and ethnic unrest and other factors which may adversely impact our consolidated financial position and results of operations
We sell our products to customers in certain sanctioned and previously sanctioned developing markets in accordance with such restrictions While sales in these markets are not material to our consolidated financial position and results of operations adverse developments related to the risks associated with these markets may cause actual results to differ from historical and forecasted future consolidated operating results
We have certain technology development operations in Sri Lanka and previously in Russia related to software development and architecture digital content production and system testing services Due to the political instability within these regions there is the potential for future government embargos and sanctions which could disrupt our operations in these areas While we have developed business continuity plans to address these issues further adverse developments in the region could have a material impact on our consolidated financial position and results of operations
In February 2022 the Russian Federation and Belarus commenced a military action with Ukraine As a result the United States as well as other nations instituted economic sanctions against Russia and Belarus The impact of this action and related sanctions on the world economy is not currently determinable but the impact of this conflict has not been material to our consolidated financial position and results of operations
In the third quarter of fiscal year 2023 due to the political instability and military actions between Russia and Ukraine we made the decision to close our operations in Russia which primarily consists of technology development resources We were substantially complete with this closure as of April 30 2023 except for the formal liquidation of our Russian legal entity which we expect to complete in fiscal year 2025 This action did not materially impact our overall operations Prior to the closure the net assets of our Russian operations were not material to our overall consolidated financial position We have customers in Russia primarily for our Research offerings which are not material to our overall consolidated results of operations We do not have operations in Ukraine or Belarus and the business conducted in those countries is also not material to our consolidated financial position and results of operations
In our Research segment approximately 28 of the articles we published in 2023 included a China based author This compares to the industry percentage which is approximately 29 of articles published in 2023 which included a China based author Any restrictions on exporting intellectual property could adversely affect our business and consolidated financial position and results of operations Chinese governments and institutions are producing early warning lists of journals published by non Chinese publishers that have high proportions of Chinese content which could have an impact on future article volumes
In our journal publishing business we have a trade concentration and credit risk related to subscription agents and in our book business the industry has a concentration of customers in national regional and online book resellers Changes in the financial position and liquidity of our subscription agents and customers could adversely impact our consolidated financial position and results of operations
In the journal publishing business subscriptions are primarily sourced through journal subscription agents who acting as agents for library customers facilitate ordering by consolidating the subscription orders billings of each subscriber with various publishers Cash is generally collected in advance from subscribers by the subscription agents and is principally remitted to us between the months of December and April Although at fiscal year end we had minimal credit risk exposure to these agents future calendar year subscription receipts from these agents are highly dependent on their financial condition and liquidity
Our book business is not dependent upon a single customer however the industry is concentrated in national regional and online book resellers Although no book customer accounts for more than 6 of total consolidated revenue and 12 of accounts receivable at April 30 2024 the top 10 book customers account for approximately 11 of total consolidated revenue and approximately 27 of accounts receivable at April 30 2024
We publish research authored by individuals outside our Company The integrity of that research could be compromised due to the manipulation misrepresentation and misconduct by those individuals or other outsiders involved in the publishing process This activity could adversely impact our open access publishing and article output by causing us to potentially pause publication retract articles or halt publication of a journal which could adversely impact our business and consolidated financial position and results of operations
Changes in global financial markets have not had nor do we anticipate they will have a significant impact on our liquidity We continue to believe that we have the ability to meet our financing needs for the foreseeable future We typically generate significant operating cash flow from ongoing operations continue to maintain available cash and other financial assets retain access to the capital markets and have available committed lines of credit through our syndicated credit agreement As market conditions change we will continue to monitor our liquidity position However there can be no assurance that our liquidity or our consolidated financial position and results of operations will not be adversely affected by possible future changes in global financial markets and global economic conditions Unprecedented market conditions including illiquid credit markets volatile equity markets dramatic fluctuations in foreign currency and interest rates and economic recession could have a material adverse effect on our business and future results
Non US revenues as well as our substantial non US net assets expose our consolidated results to volatility from changes in foreign currency exchange rates The percentage of consolidated revenue for the year ended April 30 2024 recognized in the following currencies on an equivalent US dollar basis were approximately 53 US dollar 27 British pound sterling 11 euro and 9 other currencies In addition our floating interest rate loans and borrowings are subject to risk from changes in interest rates We may from time to time use derivative instruments to hedge such risks Notwithstanding our efforts to foresee and mitigate the effects of changes in external financial market or economic conditions we cannot predict with certainty changes in foreign currency exchange rates and interest rates inflation or other related factors affecting our business consolidated financial position and results of operations
From time to time we experience cost increases reflecting in part general inflationary factors There is no guarantee that we can increase selling prices or reduce costs to fully mitigate the effect of inflation on our costs which may adversely impact our consolidated financial position and results of operations
are indefinite lived intangible assets on our Consolidated Statements of Financial Position The intangible assets are principally composed of content and publishing rights customer relationships brands and trademarks and developed technology Failure to achieve business objectives and financial projections could result in an asset impairment which would result in a noncash charge to our consolidated results of operations Goodwill and intangible assets with indefinite lives are tested for impairment on an annual basis and when events or changes in circumstances indicate that impairment may have occurred Intangible assets with definite lives which were
at April 30 2024 are tested for impairment only when events or changes in circumstances indicate that an impairment may have occurred Determining whether an impairment exists can be difficult as a result of increased uncertainty and current market dynamics and requires management to make significant estimates and judgments A noncash intangible asset impairment charge could have a material adverse effect on our consolidated financial position and results of operations
We provide defined benefit pension plans for certain employees worldwide Our Board of Directors approved amendments to the US Canada and UK defined benefit plans that froze the future accumulation of benefits effective June 30 2013 December 31 2015 and April 30 2015 respectively The retirement benefit pension plan in Russia was discontinued on February 28 2023 and we retain no further obligations for retirement benefits in Russia The funding requirements and costs of these plans are dependent upon various factors including the actual return on plan assets discount rates plan participant population demographics and changes in global pension regulations Changes in these factors affect our plan funding consolidated financial position and results of operations
We maintain operations in Asia Australia Canada Europe South America the Middle East and the US The conduct of our business including the sourcing of content distribution sales marketing and advertising is subject to various laws and regulations administered by governments around the world Changes in laws regulations or government policies including tax regulations and accounting standards may adversely affect our future consolidated financial position and results of operations
The scientific research publishing industry generates much of its revenue from paid customer subscriptions to online and print journal content There is interest within government academic and library communities for such journal content to be made available for free immediately or following a period of embargo after publication referred to as open access For instance certain governments and privately held funding bodies have implemented mandates that require journal articles derived from government funded research to be made available to the public at no cost immediately or after an embargo period Open access can be achieved in two ways Green which enables authors to publish articles in subscription based journals and self archive the author accepted version of the article for free public use after any embargo period and Gold which enables authors to publish their articles in journals that provide immediate free access to the final version of the article on the publisher s website and elsewhere under permissive licensing terms following payment or waiver of an APC These mandates have the potential to put pressure on subscription based publications If such regulations are widely implemented our consolidated financial position and results of operations could be adversely affected
To date many of the governments and national research councils that have taken a position on open access have favored the Green model and have generally specified embargo periods of twelve months The publishing community generally takes the view that this period should be sufficient to protect subscription revenues provided that publishers platforms offer sufficient added value to the article Governments in Europe have been more supportive of the Gold model which thus far is generating incremental revenue for publishers with active open access programs Many institutions have signed on to the business model which combines the purchasing of subscription content with the purchase of open access publishing for affiliated authors This development removes an element of risk by fixing revenues from that market provided that the terms price and rate of transition negotiated are acceptable
Changes in global and local tax laws and regulations in and the distribution of income among jurisdictions in which the Company operates could have a material impact on our consolidated financial position and results of operations
We are subject to tax laws in the jurisdictions where we conduct business including the US and many foreign jurisdictions Wiley s future results of operations could be adversely affected by changes in the effective tax rate as a result of a change in the mix of earnings in countries with differing statutory tax rates changes in the valuation of deferred tax assets and liabilities the result of audits of previously filed tax returns or changes in liabilities for uncertain tax positions the cost of repatriation or changes in tax laws and regulations and the interpretations thereof in the jurisdictions where we operate
A number of international legislative and regulatory bodies have proposed legislation and begun investigations of the tax practices of multinational companies and in the European union the tax policies of certain European Union member states One of these efforts has been led by the Organization for Economic Co operation and Development OECD which has finalized recommendations to revise corporate tax transfer pricing and tax treaty provisions in member countries On December 15 2022 European Union member states unanimously adopted the Minimum Tax Directive ensuring a global minimum level of taxation for multinational companies The enactment of this and the heightened interest in and taxation of large multinational companies increase tax uncertainty and could ultimately have a material effect on our effective tax rate income tax expense net income or cash flows
On August 16 2022 the Inflation Reduction Act of 2022 was enacted into law in the United States which among other things created a new corporate alternative minimum tax of 15 for certain corporations and a 1 excise tax on stock repurchases made by publicly traded US companies after December 31 2022 In addition there are proposals to increase the rate and otherwise change US tax laws which could significantly increase the Company s tax rate Given the unpredictability of possible further changes to and the potential interdependency of the United States or foreign tax laws and regulations it is difficult to predict the cumulative effect of such laws and regulations on Wiley s results of operations
We are also subject to potential taxes in jurisdictions where we have sales even though we do not have a physical presence These potential taxes could have an impact on our consolidated financial position and results of operations as substantially all our taxable income is earned outside the US In addition we are subject to examination by tax authorities and although we believe our tax estimates are reasonable the final determination of tax audits could be materially different from our historical income tax provisions and accruals and could have a material impact on our consolidated financial position and results of operations
A substantial portion of our publications are protected by copyright held either in our name in the name of the author of the work or in the name of a sponsoring professional society Such copyrights protect our exclusive right to publish the work in many countries abroad for specified periods in most cases the author s life plus 70 years Our ability to continue to achieve our expected results depends in part upon our ability to protect our intellectual property rights Our consolidated financial position and results of operations may be adversely affected by lack of legal and or technological protections for its intellectual property in some jurisdictions and markets
Several of our businesses rely extensively upon content and data from external sources Data is obtained from public records governmental authorities customers and other information companies including competitors Legal regulations such as the EU s GDPR relating to Internet communications privacy and data protection e commerce information governance and use of public records are becoming more prevalent worldwide The disruption or loss of data sources either because of changes in the law or because data suppliers decide not to supply them may impose limits on our collection and use of certain kinds of information about individuals and our ability to communicate such information effectively with our customers In addition GDPR imposes a strict data protection compliance regime with severe penalties of up to 4 of worldwide revenue or 20 million whichever is greater
We are subject to the reporting requirements of the Securities Exchange Act of 1934 the Sarbanes Oxley Act Sarbanes Oxley Act and the rules and regulations of the New York Stock Exchange The Sarbanes Oxley Act requires among other things that we maintain effective disclosure controls and procedures and internal control over financial reporting We are required to perform system and process evaluations and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting in our Annual Report on Form 10 K as required by Section 404 of the Sarbanes Oxley Act This may require us to incur substantial additional professional fees and internal costs to further expand our accounting and finance functions and expend significant management efforts
We may in the future discover material weaknesses in our system of internal financial and accounting controls and procedures that could result in a material misstatement of our financial statements In addition our internal control over financial reporting will not prevent or detect all errors and all fraud A control system no matter how well designed and operated can provide only reasonable not absolute assurance that the control system s objectives will be met Because of the inherent limitations in all control systems no evaluation of controls can provide absolute assurance that misstatements due to errors or fraud will not occur or that all control issues and instances of fraud will be detected
If we are not able to comply with the requirements of Section 404 of the Sarbanes Oxley Act in a timely manner or if we are unable to maintain proper and effective internal controls we may not be able to produce timely and accurate financial statements If that were to happen the market price of our stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities
We are exposed to risks and uncertainties caused by factors beyond our control including global economic public health and geopolitical conditions These include economic weakness softness in consumer and corporate spending uncertainty and volatility including the potential for a recession a competitive labor market and evolving workforce expectations inflation rising interest rates public health crisis including pandemics financial stability of the banking industry and political and sociopolitical uncertainties and conflicts The potential escalation of trade tensions between the US and China could slow down China s economy which could impact Research Publishing accelerate China s move towards Transformational Agreements lead to caps on APCs and or pressure to publish in non US journals and increase risks related to exchange rate fluctuations These factors may result in declines and or volatility in our results or stock price Our general business strategy may be adversely affected by any such economic downturn volatile business environment or continued unpredictable and unstable market conditions Our business could also be impacted by volatility caused by geopolitical events such as the conflict in Ukraine In addition the actual or perceived effects of a disease outbreak epidemic pandemic or similar widespread public health concern such as COVID 19 could also materially and adversely affect our results The future impact that global economic public health and geopolitical conditions will have on our business operations and financial results is uncertain and will depend on numerous evolving factors and developments that we are not able to reliably predict or mitigate It is also possible that these conditions may impact other risks discussed in this section
Our stock price may fluctuate materially The stock market in general has experienced significant volatility that has often been unrelated to the operating performance of companies As a result of this volatility investors may not be able to sell their common stock at or above the price paid for the shares The market price for our common stock may be influenced by many factors including
Our professional customers worldwide rely upon many of our publications to perform their jobs It is imperative that we consistently demonstrate our ability to maintain the integrity of the information included in our publications Adverse publicity whether valid or not may reduce demand for our publications and adversely affect our consolidated financial position and results of operations
Wiley is committed to maintaining robust cybersecurity practices to safeguard our operations data and stakeholders interests We monitor our cybersecurity landscape and adapt our strategies and governance practices to mitigate risks in this rapidly evolving area
Wiley adopted the National Institute of Standards and Technology Cybersecurity Framework NIST CSF as a guide for its cybersecurity program to establish and maintain a continuous improvement process for identifying assessing and managing cyber risks and cyber related threats The framework s key domains of identify protect detect respond recover and governance encompass specific controls to be established and maintained by an organization Wiley s controls are monitored and tested on a continuous basis by an external third party to assess the effectiveness of our cyber program
We maintain a cybersecurity risk management program that is designed to identify assess manage and mitigate cybersecurity risks and provides a framework for handling cybersecurity threats and incidents including threats and incidents associated with the use of services provided by third party service providers To secure our technology environment our organization leverages the latest software and security capabilities with a defense in depth and layered strategy We deploy endpoint detection and response network anomaly detection and multi factor authentication across most of our environment We engage with various third party consultants as well as utilize various threat intelligence services to assist in our oversight and to identify risks We require employees with access to our information systems including all corporate employees and consultants to undertake annual data protection and cybersecurity training and ongoing phishing simulation exercises
Based on the information we have as of the date of this Annual Report on Form 10 K we do not believe that any cybersecurity incident experienced by the Company has materially affected or is reasonably likely to materially affect Wiley including our business strategy results of operations or financial condition For additional information about cybersecurity risks see Item 1A Risk Factors
Our Board is responsible for the overall oversight of our enterprise risk management The Board receives regular updates on the key risks to the organization on a quarterly basis The Board has delegated oversight of cybersecurity risks to the Audit Committee The Audit Committee receives quarterly cybersecurity updates from the Company s Chief Information Security Officer CISO which includes updates on the Company s cybersecurity policies and strategies cyber risks and threats the status of projects designed to continuously improve the Company s information security systems assessments of the Company s security program employee training and awareness programs emerging threat landscape and engagement with external cybersecurity experts and advisors as needed
The Company also holds an annual cybersecurity educational session and updates both the Audit Committee and the Digital Product and Technology Committee which oversees the Company s digital product and services and technology strategies initiatives and investments The annual session is dedicated to the Enterprise Security Compliance and Data Protection program which features perspectives on the status of Wiley s Cybersecurity Program including related policies procedures and practices and emerging trends in the cybersecurity space from the Company s CISO complemented by an outside expert
Management is responsible for day to day risk management activities including identifying and assessing cybersecurity risks establishing processes to ensure that potential cybersecurity risk exposures are monitored implementing appropriate mitigation or remediation measures and maintaining cybersecurity programs Risk mitigation strategies and key performance indicators are defined and tracked as part of the quarterly internal reporting The Enterprise Security Compliance and Data Protection team consists of subject matter experts in the field on Information Security Risk Management Compliance and Data Protection Our Security Compliance and Data Protection teams monitor the prevention detection mitigation and remediation of cybersecurity incidents through a variety of technical and operational measures and regularly report to our CISO Our CISO is part of the senior management team and regularly updates the Audit Committee on the company s cybersecurity program including cybersecurity risks incidents and mitigation strategies
The Security Compliance and Data Protection team is led by the CISO who has 25 years in business risk management and cybersecurity and reports to the Chief Information Officer CIO who has over 25 years in information technology and security roles The Security Compliance and Data Protection team has established processes and procedures that guide and enable continuous monitoring detection prevention mitigation and remediation of cybersecurity incidents These processes are carried out using various security platforms tools capabilities and strategies including tests of our information security program tabletop exercises penetration and vulnerability testing disaster recovery DR simulations and other exercises to evaluate the effectiveness of our information security program and improve our security measures and planning Incident Response and Management teams utilize procedures that identify escalation paths when security events are identified Incident priorities dictate escalation of events and how they are reported up from an Incident Commander up to the executive leadership team within Wiley as well as to the Board
Despite our efforts we cannot eliminate all risks from cybersecurity threats or provide assurances that we have not experienced an undetected cybersecurity incident The threat landscape is constantly changing and will continue to as new technologies such as AI evolve
We occupy office warehouse and distribution facilities in various parts of the world as listed below excluding those locations with less than 10 000 square feet of floor area none of which is considered a material property
Due to the increased use of virtual work arrangements for post pandemic operations and our various restructuring programs we exited certain leased office space subleased certain office spaces and reduced occupancy at other facilities In Part II Item 8 Financial Statements and Supplementary Data
We are involved in routine litigation in the ordinary course of our business In the opinion of management the ultimate resolution of all pending litigation will not have a material effect upon our consolidated financial position or results of operations
On a quarterly basis the Board of Directors considers the payment of cash dividends based upon its review of earnings our financial position and other relevant factors As of May 31 2024 the approximate number of holders of our Class A and Class B Common Stock were 684 and 42 respectively based on the holders of record
During the year ended April 30 2020 our Board of Directors approved a share repurchase program of 200 million of Class A or B Common Stock As of April 30 2024 we had authorization from our Board of Directors to purchase up to 117 4 million that was remaining under this program
The below graph provides an indicator of the cumulative total return to shareholders of the Company s Class A Common Stock as compared with the cumulative total return on the Russell 2000 the Dow Jones Publishing Index and the S P 400 Midcap for the period from April 30 2019 to April 30 2024 The Company has elected to use the Russell 2000 Index and the S P 400 Midcap index as its broad equity market indices because it is currently included in these indices Cumulative total return assumes 100 00 invested on April 30 2019 and reinvestment of dividends throughout the period
The information in our Management s Discussion and Analysis of Financial Condition and Results of Operations MD A should be read together with our Consolidated Financial Statements and related notes set forth in Part II Item 8 as well as the discussion included in Part I Item 1 Business Cautionary Notice Regarding Forward Looking Statements Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 and Non GAAP Financial Measures along with Part I Item 1A Risk Factors of this Annual Report on Form 10 K All amounts and percentages are approximate due to rounding and all dollars are in thousands except per share amounts or where otherwise noted When we cross reference to a Note we are referring to our Notes to Consolidated Financial Statements in Part II Item 8 Financial Statements and Supplementary Data unless the context indicates otherwise
s content services platforms and knowledge networks are tailored to meet the evolving needs of its customers and partners including researchers students instructors professionals institutions and corporations Wiley empowers knowledge seekers to transform today s biggest obstacles into tomorrow s brightest opportunities For more than two centuries the Company has been delivering on its timeless mission to unlock human potential Wiley is a predominantly digital company with over 83 of its revenue for the year ended April 30 2024 generated by digital products and services excluding the Held for Sale or Sold segment revenue For the year ended April 30 2024 48 of revenue excluding the Held for Sale or Sold segment revenue is recurring which includes revenue that is contractually obligated or set to recur with a high degree of certainty
On June 1 2023 Wiley s Board of Directors approved a plan to divest certain businesses that we determined are non core businesses Those businesses are University Services Wiley Edge and CrossKnowledge On January 1 2024 we completed the sale of University Services On January 8 2024 we entered into an agreement to sell our Wiley Edge business which closed on May 31 2024 with the exception of its India operations The sale of Wiley Edge
As a result of these planned divestitures in the three months ended July 31 2023 we reorganized our segments and our new structure consists of three reportable segments which includes Research no change Learning and Held for Sale or Sold as well as a Corporate expense category no change Prior period segment results have been recast to the new segment presentation There were no changes to our consolidated financial results
includes businesses held for sale including Wiley Edge and CrossKnowledge as well as those sold in fiscal year 2024 which includes University Services and Tuition Manager and in fiscal year 2023 Test Prep and Advancement Courses
Through the Research segment we provide peer reviewed scientific technical and medical STM publishing content platforms and related services to academic corporate and government customers academic societies and individual researchers The Learning segment provides scientific professional and education print and digital books digital courseware to libraries corporations students professionals and researchers as well as assessment services to businesses and professionals
Wiley s business strategies are tightly aligned with healthy solid growth trends including ever increasing global R D spend leading to consistent growth in scientific research output the transition to open research and the increasing application of new knowledge into solutions to solve real world problems These strategies include driving publishing output to meet the global demand for peer reviewed research and expanding platform and service offerings for corporations and societies Learning strategies include selectively scaling high value digital content courseware and assessments where the Company sees opportunity We continue to implement strategies to efficiently and effectively manage print revenue declines while driving growth in our digital lines of business
Cost of sales for the year ended April 30 2024 of 579 7 million decreased 112 8 million or 16 as compared with the prior year On a constant currency basis cost of sales decreased 17 as compared with the prior year This was primarily due to lower marketing and employee costs for the University Services business and to a lesser extent lower employee costs related to the Wiley Edge business Excluding the cost of sales from the Held for Sale or Sold segment cost of sales decreased 3 on a constant currency basis primarily due to a decrease in revenue
Operating and administrative expenses for the year ended April 30 2024 of 1 013 5 million decreased 23 9 million or 2 as compared with the prior year On a constant currency basis operating and administrative expenses decreased
3 as compared with the prior year primarily reflecting lower employee costs associated with recent restructuring actions and to a lesser extent a 3 7 million charge related to the settlement of a litigation mater related to consideration for a previous acquisition in the three months ended January 31 2023 and lower professional fees These were partially offset by higher amortization due to the decision to discontinue the use of certain capitalized software resulting in accelerated amortization and impairments of 15 9 million partially offset by the cessation of depreciation for held for sale assets Excluding the operating and administrative expenses from the Held for Sale or Sold segment operating and administrative expenses increased 1 on a constant currency basis
Due to the segment realignment in the first quarter of fiscal year 2024 we were required to test goodwill for impairment immediately before and after our segment realignment in accordance with applicable accounting standards Prior to the realignment we concluded that the fair value of the University Services reporting unit within the former Academic segment was below its carrying value which resulted in a pretax noncash goodwill impairment of 11 4 million University Services was adversely impacted by market conditions and headwinds for online degree programs which lead to a decline in projected enrollments from existing partners pricing pressures and revenue share concessions and a decline in new partner additions over both the short term and long term which adversely impacted forecasted revenue growth and operating cash flows
After the realignment we concluded that the fair value of the CrossKnowledge reporting unit within the Held for Sale or Sold segment was below its carrying value which resulted in a pretax noncash goodwill impairment of 15 3 million CrossKnowledge was adversely impacted by a decline in the demand for its offerings which have resulted in lower sales and a decline in average contract value that adversely impacted forecasted revenue growth and operating cash flows
On January 8 2024 we entered into a stock and asset purchase agreement Purchase Agreement with Inspirit Vulcan Bidco Limited a private limited company incorporated in England Wales Inspirit pursuant to which we agreed to sell our emerging talent and reskill training business Wiley Edge Business to Inspirit Transaction The sale of Wiley Edge with the exception of its India operation was completed on May 31 2024 The sale of Wiley Edge
s India operation will be finalized later in calendar year 2024 As a result of signing the Purchase Agreement with Inspirit and the decrease in the fair value of the business which was impacted by a decline in placements in the third quarter of fiscal year 2024 we tested the goodwill of the Wiley Edge reporting unit within the Held for Sale or Sold segment for impairment We concluded that the fair value of the Wiley Edge reporting unit was below its carrying value which resulted in a pretax noncash goodwill impairment of 81 7 million in the three months ended January 31 2024
Due to the segment realignment in the third quarter of fiscal year 2023 we were required to test goodwill for impairment immediately before and after our segment realignment in accordance with applicable accounting standards Prior to the realignment we concluded that the fair value of the Education Services reporting unit was below its carrying value which resulted in a pretax noncash goodwill impairment of 31 0 million Education Services was adversely impacted by market conditions and headwinds for online degree programs This has led to a decline in projected student enrollments from existing partners pricing pressures and revenue share concessions and a decline in new partner additions over both the short term and long term which adversely impacted forecasted revenue growth and operating cash flows This was partially offset by projected growth in talent placements partially due to expansion into new regions and the addition of new corporate clients which were forecasted to have a positive impact on revenue growth and operating cash flows
After the realignment we concluded that the fair value of the University Services reporting unit within the Academic segment was below its carrying value which resulted in an additional pretax noncash goodwill impairment of 68 8 million University Services was adversely impacted by market conditions and headwinds for online degree programs which lead to a decline in projected enrollments from existing partners pricing pressures and revenue share concessions and a decline in new partner additions over both the short term and long term which adversely impacted forecasted revenue growth and operating cash flows
In May 2022 the Company initiated a global program Global Restructuring Program to restructure and align our cost base with current and anticipated future market conditions which was previously referred to as the Fiscal Year 2023 Restructuring Program This program included severance related charges for the elimination of certain positions the exit of certain leased office space and the reduction of our occupancy at other facilities Under this program we reduced our real estate square footage occupancy by approximately 22
In the three months ended July 31 2023 we expanded the scope of the program to include those actions that will focus Wiley on its leading global position in the development and application of new knowledge and drive greater profitability growth and cash flow We will focus on our strongest and most profitable businesses and large market opportunities in Research and Learning as well as streamline our organization and rightsize our cost structure to reflect these portfolio actions As part of the Global Restructuring Program we are further reducing our real estate square footage occupancy by approximately 13
Excluding actions related to the Held for Sale or Sold segment we anticipate to yield annualized cost savings of approximately 65 million with approximately 36 million of that realized this fiscal year
as compared with the prior year On a constant currency basis amortization of intangible assets decreased 35 as compared with the prior year primarily due to the cessation of amortization for held for sale assets and to a lesser extent the prior year period including 4 6 million due to the acceleration of expense related to the discontinued use of the mthree trademark and the completion of amortization of certain acquired intangible assets
Operating income for the year ended April 30 2024 of 52 3 million decreased 3 6 million or 6 as compared with the prior year On a constant currency basis operating income decreased 7 as compared with the prior year The decrease was primarily due to a decrease in revenue partially offset by lower costs of sales and to a lesser extent lower operating and administrative expenses and a decrease in the amortization of intangible assets
We settled a litigation matter related to consideration for a previous acquisition for 3 7 million during the three months ended January 31 2023 This amount is reflected in Operating and administrative expenses on our Consolidated Statements of Loss Income
As described above we determined that a revision of the useful life of the mthree trademark was warranted and the intangible asset was fully amortized over its remaining useful life resulting in accelerated amortization expense of 4 6 million in the three months ended July 31 2022
Foreign exchange transaction losses were 3 0 million for the year ended April 30 2024 and were primarily due to losses on our foreign currency denominated third party receivable and payable balances and to a lesser extent losses on our intercompany accounts receivable and payable balances due to the impact of the change in average foreign exchange rates as compared to the US dollar In fiscal year 2023 due to the closure of our operations in Russia our Russian entity was deemed substantially liquidated As a result cumulative translation adjustments associated with that entity were recognized In the year ended April 30 2024 we wrote off an additional net 1 0 million in cumulative translation adjustments from our Russian entity
Foreign exchange transaction gains were 0 9 million for the year ended April 30 2023 and were primarily due to the write off of the 1 1 million cumulative translation adjustment in earnings since the Russia entity was deemed substantially liquidated As described above we were substantially complete with our exit from Russia as of
The losses on sale of businesses are due to the sale of our University Services and Tuition Manager businesses previously in our Held for Sale or Sold segment which resulted in a pretax loss of approximately 107 0 million and 1 5 million respectively
As of April 30 2024 Wiley Edge and CrossKnowledge continue to be reported as held for sale On January 8 2024 we entered into an agreement to sell our Wiley Edge business which closed on May 31 2024 with the exception of its India operations The sale of Wiley Edge s India operation will be finalized later in calendar year 2024 We expect to complete the sale of CrossKnowledge by the second quarter of fiscal year 2025 We measured each disposal group at the lower of carrying value or fair value less costs to sell We recorded a held for sale pretax impairment of 74 8 million which includes 19 4 million for Wiley Edge and 55 4 million for CrossKnowledge
The pretax gain on sale of businesses for the year ended April 30 2023 was 10 2 million As part of our ongoing initiatives to simplify our portfolio and focus our attention on strategic growth areas we completed two dispositions during the year ended April 30 2023 Both were included in our Held for Sale or Sold segment On February 28 2023 we completed the sale of Wiley s Efficient Learning test prep portfolio business In addition on March 31 2023 we completed the sale of our advancement courses business
of 7 9 million This change was primarily due to pension expense for our defined benefit plans in fiscal year 2024 compared to pension income in fiscal year 2023 partially offset by interest income in fiscal year 2024 related to the sellers note as a result of the sale of University Services
In the three months ended July 31 2021 the UK enacted legislation that increased its statutory rate from 19 to 25 effective April 1 2023 For the year ended April 30 2023 we recorded a 2 4 million noncash deferred tax benefit related to pensions due to the UK statutory rate change These adjustments impacted deferred taxes
In fiscal year 2024 due to temporary differences in the US our deferred taxes reversed from a deferred tax liability position to a deferred tax asset position Due to losses in the US resulting from impairments restructuring and acceleration of amortization expense on capitalized software we concluded it was more likely than not that all or a portion of our deferred tax asset may not be realized As a result we recorded a valuation allowance of 30 2 million
The Company s effective tax rate for the fiscal year ended April 30 2024 was primarily driven by the following items i an increase in the valuation allowance of 30 2 million ii the impairment of goodwill resulting from the segment realignment described in
In fiscal year 2024 due to temporary differences in the US our deferred taxes reversed from a net deferred tax liability position to a net deferred tax asset position Due to losses in the US resulting from impairments restructuring and acceleration of amortization expense on capitalized software we concluded it was more likely than not that all or a portion of our deferred tax asset may not be realized As a result we increased the valuation allowance by 30 2 million
On June 10 2021 the UK increased its statutory corporate tax rate from 19 to 25 effective April 1 2023 The 47 9 effective tax rate for the year ended April 30 2023 included a 2 4 million nonrecurring noncash US GAAP deferred tax benefit relating to the UK statutory tax rate increase
Excluding the 3 0 million tax benefit from the impairment of goodwill and 26 9 million tax benefit of the losses on sale of business and impairment charges related to assets held for sale restructuring and related charges impact of valuation allowance and other adjustments noted in the table above the Non GAAP Adjusted Effective Tax Rate for the year ended April 30 2024 was 21 4 The Non GAAP Adjusted Effective Tax Rate for the year ended April 30 2023 was 17 5 The increase in the Non GAAP Adjusted Effective Tax Rate before these items was primarily due to the mix of earnings by jurisdiction for the year ended April 30 2024
Diluted loss per share for the year ended April 30 2024 was 3 65 per share compared to earnings of 0 31 per share in the prior year This decrease was primarily due to the losses on the sale of businesses and the held for sale impairment charges in the year ended April 30 2024 and to a lesser extent higher interest expense and lower operating income
Below is a reconciliation of our US GAAP Loss Earnings Per Share to Non GAAP Adjusted EPS The amount of the pretax and the related income tax impact for the adjustments included in the table below are presented in the section above Provision for Income Taxes
Represents the impact of using diluted weighted average number of common shares outstanding 55 7 million shares for the year ended April 30 2024 included in the Non GAAP Adjusted EPS calculation in order to apply the dilutive impact on adjusted net income due to the effect of unvested restricted stock units and other stock awards This impact occurs when a US GAAP net loss is reported and the effect of using dilutive shares is antidilutive
On a constant currency basis Adjusted EPS decreased 19 primarily due to lower Adjusted OI and to a lesser extent higher interest expense higher Adjusted Effective Tax Rate and pension expense in fiscal year 2024
Research revenue for the year ended April 30 2024 decreased 37 6 million or 3 as compared with the prior year On a constant currency basis revenue decreased 4 as compared with the prior year This decrease was primarily due to the full year impact related to the carryover of the Hindawi publishing disruption experienced in fiscal year 2023 and to a lesser extent a decrease in Research Solutions due to market conditions On a constant currency basis excluding Hindawi Research revenue was flat as compared with the prior year Hindawi s special issues program was suspended in the third quarter of fiscal year 2023 due to the presence in certain special issues of compromised articles Open access article output declined 23 as compared with the prior year Excluding Hindawi open access article output growth was approximately 18 for the year ended April 30 2024
On a constant currency basis Adjusted EBITDA decreased 13 as compared with the prior year This decrease was primarily due to revenue performance On a constant currency basis excluding Hindawi Research Adjusted EBITDA decreased 4 as compared with the prior year primarily due to higher incentive compensation
Learning revenue increased 28 3 million or 5 as compared with the prior year On a constant currency basis revenue increased 5 as compared with prior year This increase was primarily due to approximately 23 million related to a content rights project for training GenAI large language models in both Academic and Professional and continued growth in Academic digital content and courseware partially offset by a decrease in print book sales On a constant currency basis excluding the GenAI project Learning revenue increased 1 as compared with the prior year
On a constant currency basis Adjusted EBITDA increased 27 as compared with the prior year This increase was primarily due to revenue performance and to a lesser extent a decrease in employee costs after recent restructuring actions
Held for Sale or Sold revenue decreased 137 7 million or 35 as compared with the prior year on a reported basis On a constant currency basis revenue decreased 36 as compared with prior year This was due to a decrease in University Services due the sale of the business on January 1 2024 and lower enrollments prior to the disposition a decline in placement revenues and to a lesser extent the disposition of certain businesses in the fourth quarter of fiscal year 2023 and in the first quarter of fiscal year 2024 For the year ended April 30 2024 placements declined 51
On a constant currency basis Adjusted EBITDA decreased 27 as compared with the prior year This decrease was primarily due to lower revenues partially offset by a decrease in marketing and employment costs in University Services due to the sale of the business on January 1 2024 and restructuring actions and to a lesser extent a decrease in employee costs related to the Wiley Edge business and the impact of the disposition of certain businesses in the fourth quarter of fiscal year 2023 and in fiscal year 2024
On a constant currency basis adjusted corporate expenses of 163 0 million on an Adjusted EBITDA basis increased 4 as compared with the prior year This was primarily due to higher incentive compensation accruals professional fees and to a lesser extent higher executive severance costs partially offset by lower occupancy costs
Revenue for the year ended April 30 2023 decreased 63 0 million or 3 as compared with the prior year On a constant currency basis revenue was flat as compared with the prior year including contributions from acquisitions Excluding the contributions from acquisitions revenue decreased 1 on a constant currency basis Excluding the revenues from the Held for Sale or Sold segment Adjusted Revenue decreased 1 on a constant currency basis
Cost of sales for the year ended April 30 2023 of 692 5 million decreased 8 1 million or 1 as compared with the prior year On a constant currency basis cost of sales increased 2 as compared with the prior year This increase was primarily due to higher employee costs to support the growth in placements in the Held for Sale or Sold segment partially offset by lower royalty costs Excluding the cost of sales from the Held for Sale or Sold segment cost of sales decreased 3 as compared with the prior year on a constant currency basis
Operating and administrative expenses for the year ended April 30 2023 of 1 037 4 million decreased 42 2 million or 4 as compared with the prior year On a constant currency basis operating and administrative expenses were flat as compared with the prior year primarily reflecting higher technology related costs travel and entertainment costs and a 3 7 million charge related to the settlement of a litigation matter related to consideration for a previous acquisition These were offset by lower professional fees employment costs and facility related costs Excluding operating and administrative expenses from the Held for Sale or Sold segment expenses increased 1 on a constant currency basis
In accordance with applicable accounting standards we were required to test goodwill for impairment immediately before and after our segment realignment Prior to the realignment we concluded that the fair value of the Education Services reporting unit was below its carrying value which resulted in a pretax noncash goodwill impairment of 31 0 million
Education Services was adversely impacted by market conditions and headwinds for online degree programs This has led to a decline in projected student enrollments from existing partners pricing pressures and revenue share concessions and a decline in new partner additions over both the short term and long term which adversely impacted forecasted revenue growth and operating cash flows This was partially offset by projected growth in talent placements partially due to expansion into new regions and the addition of new corporate clients which are forecasted to have a positive impact on revenue growth and operating cash flows
After the realignment we concluded that the fair value of the University Services reporting unit within the Academic segment was below its carrying value which resulted in an additional pretax noncash goodwill impairment of 68 8 million
University Services was adversely impacted by market conditions and headwinds for online degree programs which lead to a decline in projected enrollments from existing partners pricing pressures and revenue share concessions and a decline in new partner additions over both the short term and long term which adversely impacted forecasted revenue growth and operating cash flows
the exit of certain leased office space which began in the first quarter of fiscal year 2023 and the reduction of our occupancy at other facilities We are reducing our real estate square footage occupancy by approximately 22 We realized 35 million in savings from actions starting in fiscal year 2023
In the three months ended January 31 2023 due to the political instability and military actions between Russia and Ukraine we made the decision to close our operations in Russia which primarily consisted of technology development resources We were substantially complete with our closure as of April 30 2023 except for the formal liquidation of our Russian legal entity
For the year ended April 30 2023 we recorded pretax restructuring charges of 48 9 million related to this program which includes 8 3 million related to the closure of our operations in Russia as described above These charges are reflected in Restructuring and related charges credits on our Consolidated Statements of Loss Income This restructuring charge primarily reflects the following charges
Impairment charges of 12 7 million which included the impairment of operating lease right of use ROU assets of 7 6 million related to certain leases that will be subleased and the related property and equipment of 5 1 million
Acceleration of expense of 2 1 million which included the acceleration of rent expense associated with operating lease ROU assets of 0 9 million related to certain leases that will be abandoned or terminated and the related depreciation and amortization of property and equipment of 1 2 million
Amortization of intangible assets was 84 9 million for the year ended April 30 2023 and was flat as compared to the prior year On a constant currency basis amortization of intangible assets increased 3 as compared with the prior year primarily due to the acceleration of expense of 4 6 million related to the discontinued use of the mthree trademark
On January 1 2020 Wiley acquired mthree a talent placement 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 Held for Sale or Sold segment In late May 2022 Wiley renamed the mthree talent development solution to Wiley Edge and discontinued use of the mthree trademark during the three months ended July 31 2022 As a result of these actions we determined that a revision of the useful life was warranted and the intangible asset was fully amortized over its remaining useful life resulting in accelerated amortization expense of 4 6 million in the three months ended July 31 2022
Operating income for the year ended April 30 2023 of 55 9 million decreased 163 4 million or 75 as compared with the prior year On a constant currency basis operating income decreased 76 as compared with the prior year The decrease was
Adjusted OI and Adjusted EBITDA on a constant currency basis decreased 3 and 1 respectively as compared with the prior year primarily due to lower Adjusted Revenue and to a lesser extent higher operating and administrative expenses partially offset by lower cost of sales
We settled a litigation matter related to consideration for a previous acquisition for 3 7 million during the three months ended January 31 2023 This amount is reflected in Operating and administrative expenses on our Consolidated Statements of Loss Income
As described above we determined that a revision of the useful life of the mthree trademark was warranted and the intangible asset was fully amortized over its remaining useful life resulting in accelerated amortization expense of 4 6 million in the three months ended July 31 2022
Foreign exchange transaction gains were 0 9 million for the year ended April 30 2023 and were primarily due to the write off of the 1 1 million cumulative translation adjustment in earnings since the Russia entity was deemed substantially liquidated As described above we were substantially complete with our exit from Russia as of
Foreign exchange transaction losses were 3 2 million for the year ended April 30 2022 and were primarily due to losses on our foreign currency denominated third party and to a lesser extent intercompany accounts receivable and payable balances due to the impact of the change in average foreign exchange rates as compared to the US dollar
The pretax gain on sale of businesses for the year ended April 30 2023 was 10 2 million As part of our ongoing initiatives to simplify our portfolio and focus our attention on strategic growth areas we have completed two dispositions during the year ended April 30 2023 Both were previously included in our Held for Sale or Sold segment On February 28 2023 we completed the sale of Wiley s Efficient Learning test prep portfolio business In addition on March 31 2023 we completed the sale of our advancement courses business Neither disposition constituted a strategic shift and the impact on our overall operations and financial results was not material Accordingly the operations associated with the dispositions are not reported in discontinued operations
The gain on sale of certain assets for the year ended April 30 2022 was due to the sale of our world languages product portfolio which was previously included in our Learning segment and resulted in a pretax gain of approximately 3 7 million
Other income net was 3 9 million for the year ended April 30 2023 a decrease of 5 8 million or 60 as compared with the prior year On a constant currency basis other income net decreased 51 This decrease was primarily due to
lower pension income for our defined benefit plans partially offset by a decrease in donations and pledges to humanitarian organizations to provide aid to those impacted by the crisis in Ukraine and a curtailment and settlement credit due to the wind up of the Russia pension plan of 1 8 million
In the three months ended July 31 2021 the UK enacted legislation that increased its statutory rate from 19 to 25 effective April 1 2023 This resulted in a 21 4 million noncash deferred tax expense from the re measurement of the Company s applicable UK net deferred tax liabilities during the three months ended July 31 2021 These adjustments impacted deferred taxes For the year ended April 30 2023 we recorded a 2 4 million noncash deferred tax benefit related to pensions due to the UK statutory rate change These adjustments impacted deferred taxes
The effective tax rate was 47 9 for the year ended April 30 2023 compared to 29 3 for the year ended April 30 2022 Our rate for the year ended April 30 2023 was higher due to the rate differential with respect to certain restructuring charges the impairment of non deductible goodwill resulting from the segment realignment described in
Goodwill and Intangible Assets offset by a benefit of 2 4 million relating to the effect of the increase in the UK statutory tax rate on UK pensions On June 10 2021 the UK increased its statutory corporate tax rate from 19 to 25 effective April 1 2023 The 29 3 effective tax rate for the year ended April 30 2022 was increased by a similar 21 4 million nonrecurring noncash US GAAP deferred tax expense relating to the UK statutory tax rate increase described above
Diluted earnings per share for the year ended April 30 2023 was 0 31 per share compared to 2 62 per share in the prior year This decrease was due to lower operating income and to a lesser extent higher interest expense and lower other income These were partially offset by a lower provision for income taxes and to a lesser extent an increase in the gain on sale of businesses and certain assets and foreign exchange transaction gains
Below is a reconciliation of our US GAAP EPS to Non GAAP Adjusted EPS The amount of the pretax and the related income tax impact for the adjustments included in the table below are presented in the section above Provision for Income Taxes
On a constant currency basis Adjusted EPS decreased 9 primarily due to an increase in interest expense lower pension income and lower Adjusted OI These were partially offset by a lower provision for income taxes
Research revenue for the year ended April 30 2023 decreased 31 0 million or 3 as compared with the prior year On a constant currency basis revenue was flat as compared with the prior year Excluding revenue from acquisitions organic revenue decreased 1 on a constant currency basis This decrease was primarily due to lower article volume in Research Publishing notably in Hindawi and to a lesser extent corporate spending headwinds in Research Solutions Starting in the three months ended January 31 2023 open access publishing was adversely impacted by the publishing pause in a Hindawi special issues program The program was suspended temporarily due to the presence in certain special issues of compromised articles As a result Hindawi revenue for the year ended April 30 2023 decreased 3 0 million on a constant currency basis as compared with the prior year We have closed four Hindawi journals and retracted over 1 700 articles
Excluding Hindawi Wiley s Research revenue for the year ended April 30 2023 on a constant currency basis was flat as compared with the prior year Open access article output was flat for the year ended April 30 2023 as compared with the prior year Excluding Hindawi open access article output growth was approximately 6 for the year ended April 30 2023
Learning revenue decreased 34 8 million or 6 as compared with the prior year On a constant currency basis revenue decreased 4 as compared with prior year Academic revenue declined due to a decline in print book sales and digital content partially offset by an increase in digital courseware Professional revenue declined due to a decrease in print and digital trade sales partially offset by an increase in assessments
On a constant currency basis Adjusted EBITDA decreased 6 as compared with the prior year This decrease was primarily due to lower revenues and to a lesser extent inflationary impacts on inventory partially offset by a decrease in royalty costs
Held for Sale or Sold revenue increased 2 8 million or 1 as compared with the prior year on a reported basis On a constant currency basis revenue increased 5 as compared with prior year Excluding revenue from acquisitions organic revenue increased 3 on a constant currency basis This increase was primarily due to double digit growth in placements partially offset by a decrease in University Services and corporate learning For the year ended April 30 2023 we delivered approximately 18 growth in talent placements in Wiley Edge University Services revenue decreased primarily due to continued online enrollment challenges and lower tuition share in services For the year ended April 30 2023 University Services experienced a 5 decline in online enrollment
On a constant currency basis Adjusted EBITDA decreased 9 as compared with the prior year This was due to increased inflationary impacts on placements and investments to scale Wiley Edge partially offset by an increase in revenue and to a lesser extent lower operating expenses
On a constant currency basis adjusted corporate expenses of 155 5 million on an Adjusted EBITDA basis decreased 8 as compared with the prior year This was primarily due to lower employee related costs including lower annual incentive compensation for fiscal year 2023
We believe that our operating cash flow together with our revolving credit facilities and other available debt financing will be adequate to meet our operating investing and financing needs in the next twelve months Operating cash flow provides the primary source of cash to fund operating needs and capital expenditures Excess operating cash is used to fund shareholder dividends Other discretionary uses of cash flow include share repurchases and acquisitions to complement our portfolio of businesses As necessary we may supplement operating cash flow with debt to fund these activities The overall cash position of the Company reflects our durable business results and a global cash management strategy that considers liquidity management economic factors and tax considerations Our cash and cash equivalents are maintained at a number of financial institutions To mitigate the risk of uninsured balances we select financial institutions based on their credit ratings and financial strength and we perform ongoing evaluations of these institutions to limit our concentration risk exposure to any financial institution
As of April 30 2024 we had cash and cash equivalents of 99 4 million including cash and cash equivalents classified as held for sale of 16 2 million of which approximately all was located outside the US Maintenance of these cash and cash equivalent balances outside the US does not have a material impact on the liquidity or capital resources of our operations We intend to repatriate earnings from our non US subsidiaries and to the extent we repatriate these funds to the US we will be required to pay income taxes in various US state and local jurisdictions and applicable non US withholding or similar taxes in the periods in which such repatriation occurs Accordingly as of April 30 2024 we have recorded an approximately 3 1 million deferred tax liability related to the estimated taxes that would be incurred upon repatriating certain non US earnings to the US
Debt and Available Credit Facilities for more details on the amendment The Amended and Restated CA provided for senior unsecured credit facilities comprised of the following i a five year revolving credit facility in an aggregate principal amount up to 1 115 billion ii a five year term loan A facility consisting of 200 million and iii 185 million aggregate principal amount revolving credit facility through May 2024 As of April 30 2024 we had approximately 774 6 million of debt outstanding net of unamortized issuance costs of 0 6 million and approximately 718 3 million of unused borrowing capacity under our Amended and Restated CA and other facilities Our Amended and Restated CA contains certain restrictive covenants related to our consolidated leverage ratio and interest coverage ratio which we were in compliance with as of April 30 2024
Interest on debt includes the effect of our interest rate swap agreements and the estimated future interest payments on our unhedged variable rate debt assuming that the interest rates as of April 30 2024 remain constant until the maturity of the debt
Cash flow from operations is seasonally a use of cash in the first half of Wiley s fiscal year principally due to the timing of collections for annual journal subscriptions which typically occurs in the beginning of the second half of our fiscal year
Free cash flow less product development spending helps assess our ability over the long term to create value for our shareholders as it represents cash available to repay debt pay common dividends and fund share repurchases and acquisitions Below are the details of Free cash flow less product development spending
Net loss adjusted for items to reconcile net loss to net cash provided by operating activities which would include such noncash items as depreciation and amortization impairment of goodwill losses on sale of businesses and impairment charges related to assets held for sale restructuring charges and the change in deferred taxes
The favorable changes in other assets and liabilities noted in the table above was primarily due to lower employee related costs due to lower annual incentive compensation for fiscal year 2023 partially offset by higher restructuring payments in fiscal year 2024 and to a lesser extent unfavorable changes in other receivables due to the timing of collections
Our negative working capital current assets less current liabilities was 419 2 million and 354 3 million as of April 30 2024 and April 30 2023 respectively The primary driver of the negative working capital is the benefit realized from unearned contract liabilities related to subscriptions for which cash has been collected in advance The contract liabilities will be recognized as income when the products are shipped or made available online to the customers over the term of the subscription Current liabilities as of April 30 2024 and as of April 30 2023 include contract liabilities of 483 8 million and 504 7 million respectively primarily related to deferred subscription revenue for which cash was collected in advance
Cash collected in advance for subscriptions is used by us for a number of purposes including funding operations capital expenditures acquisitions debt repayments dividend payments and share repurchases
Net income adjusted for items to reconcile net income to net cash provided by operating activities which would include such noncash items as depreciation and amortization impairment of goodwill restructuring and related charges credits and the change in deferred taxes
The unfavorable changes in other assets and liabilities noted in the table above was primarily due to higher restructuring payments in fiscal year 2023 and lower employee related costs due to lower annual incentive compensation for fiscal year 2023
Our negative working capital current assets less current liabilities was 354 3 million and 418 6 million as of April 30 2023 and April 30 2022 respectively The primary driver of the negative working capital is the benefit realized from unearned contract liabilities related to subscriptions for which cash has been collected in advance The contract liabilities will be recognized as income when the products are shipped or made available online to the customers over the term of the subscription Current liabilities as of April 30 2023 and as of April 30 2022 include contract liabilities of 504 7 million and 538 1 million respectively primarily related to deferred subscription revenue for which cash was collected in advance
Cash collected in advance for subscriptions is used by us for a number of purposes including funding operations capital expenditures acquisitions debt repayments dividend payments and share repurchases
Net cash used in investing activities in the year ended April 30 2024 was 106 6 million compared to 98 4 million in the prior year The increase in cash used in investing activities was primarily due to cash proceeds in fiscal year 2023 of 15 6 million related to the sale of businesses and certain assets compared to costs of 1 8 million in fiscal year 2024 In addition cash used for acquisitions of publications rights increased 5 8 million compared to the prior year
Acquisitions and Divestitures for more information related to the divestitures that occurred in the years ended April 30 2024 and 2023 For additions of technology property and equipment and product development spending decreased 5 1 million and 5 7 million respectively
Net cash used in investing activities in the year ended April 30 2023 was 98 4 million compared to 194 0 million in the prior year The decrease in cash used in investing activities was primarily due to a decrease of 68 4 million in cash used to acquire businesses Additionally cash proceeds related to the sale of businesses and certain assets increased 12 2 million
Acquisitions and Divestitures for more information related to the acquisitions and divestitures that occurred in the years ended April 30 2023 and 2022 For additions of technology property and equipment and product development spending decreased 7 7 million and 4 1 million respectively
Net cash used in financing activities in the year ended April 30 2024 was 107 2 million compared to 168 6 million in the year ended April 30 2023 This change was primarily due to net debt borrowings of 27 8 million in fiscal year 2024 compared to net debt repayments of 38 9 million in fiscal year 2023 This was partially offset by a 10 1 million increase in cash used for purchases of treasury shares
Net cash used in financing activities in the year ended April 30 2023 was 168 6 million compared to 131 6 million in the year ended April 30 2022 This change was primarily due to an increase in net debt repayments of 27 9 million and to a lesser extent a 5 0 million increase in cash used for purchases of treasury shares and 4 5 million of cash used for costs related to the second amendment of the Amended and Restated CA
During the year ended April 30 2020 our Board of Directors approved an additional share repurchase program of 200 million of Class A or B Common Stock As of April 30 2024 we had authorization from our Board of Directors to purchase up to 117 4 million that was remaining under this program The share repurchase program described above is in addition to the share repurchase program approved by our Board of Directors during the year ended April 30 2017 of four million shares of Class A or B Common Stock As of April 30 2022 no additional shares were remaining under this program for purchase
We are subject to numerous recently issued statements of financial accounting standards accounting guidance and disclosure requirements The information set forth in Part II Item 8 Financial Statements and Supplementary Data in
Summary of Significant Accounting Policies Recently Issued and Recently Adopted Accounting Standards of the Notes to Consolidated Financial Statements of this Annual Report on Form 10 K is incorporated by reference and describes these new accounting standards
The preparation of our Consolidated Financial Statements and related disclosures in conformity with US GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities the disclosure of contingent assets and liabilities as of the date of the financial statements and revenue and expenses during the reporting period These estimates include among other items sales return reserves allocation of acquisition purchase price to assets acquired and liabilities assumed assets and liabilities held for sale goodwill and indefinite lived intangible assets intangible assets with definite lives and other long lived assets and retirement plans We review these estimates and assumptions periodically using historical experience and other factors and reflect the effects of any revisions on the Consolidated Financial Statements in the period we determine any revisions to be necessary Actual results could differ from those estimates which could affect the reported results In Part II Item 8 Financial Statements and Supplementary Data in
Summary of Significant Accounting Policies Recently Issued and Recently Adopted Accounting Standards of the Notes to Consolidated Financial Statements includes a summary of the significant accounting policies and methods used in preparation of our Consolidated Financial Statements Set forth below is a discussion of our more critical accounting policies and methods
Summary of Significant Accounting Policies Recently Issued and Recently Adopted Accounting Standards in the section Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of our sales return reserves
In connection with acquisitions we allocate the cost of the acquisition to the assets acquired and the liabilities assumed based on the estimates of fair value for such items including intangible assets The excess of the purchase consideration over the fair value of assets acquired and liabilities assumed is recorded as goodwill The determination of the acquisition date fair value of the assets acquired and liabilities assumed requires us to make significant estimates and assumptions such as if applicable forecasted revenue growth rates and operating cash flows royalty rates customer attrition rates obsolescence rates of developed technology and discount rates We may use a third party valuation consultant to assist in the determination of such estimates
we may also strategically realign our resources and consider disposing of certain businesses We classify assets as held for sale in the period when the following conditions are met i management having the authority to approve the action commits to a plan to sell the disposal group ii the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such disposal group iii an active program to locate a buyer and other actions required to complete the plan to sell the disposal group have been initiated iv the sale of the disposal group is probable and transfer of the disposal group is expected to qualify for recognition as a completed sale within one year except if events or circumstances beyond our control extend the period of time required to sell the disposal group beyond one year v the disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value and vi actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn
The determination of the fair value less costs to sell is based on indicative sales values and may require us to make judgments on significant estimates and assumptions regarding forecasted information such as revenue growth gross profit EBITDA depreciation and amortization capital expenditures and discount rates We may use a third party valuation consultant to assist in the determination of such estimates
The fair value of a disposal group less any costs to sell is assessed each reporting period it remains classified as held for sale and any subsequent change is reported as an adjustment to the carrying value of the disposal group as long as the new carrying value does not exceed the carrying value of the asset at the time it was initially classified as held for sale
The fair value of the disposal group considers the components of the selling price upon the signing of a purchase agreement Included in each of the purchase agreements for the sale of University Services and Wiley Edge was an earnout
This method considers the terms and conditions in the purchase agreement our best estimates of forecasted revenue or gross profit for the earnout periods as applicable and simulates a range of revenue or gross profits over the applicable periods based on an estimate of revenue or gross profit volatility as applicable The fair value of the earnout was estimated as the present value of the potential range of payouts averaged across the range of simulated revenues or gross profits as applicable
Goodwill is reviewed for possible impairment at least annually on a reporting unit level during the fourth quarter of each year Our annual impairment assessment date is February 1 A review of goodwill may be initiated before or after conducting the annual analysis if events or changes in circumstances indicate the carrying value of goodwill may no longer be recoverable
A reporting unit is the operating segment unless at businesses one level below that operating segment the component level discrete financial information is prepared and regularly reviewed by management and the component has economic characteristics that are different from the economic characteristics of the other components of the operating segment in which case the component is the reporting unit
As part of the annual impairment test we may elect to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount In a qualitative assessment we would consider the macroeconomic conditions including any deterioration of general conditions and industry and market conditions including any deterioration in the environment where the reporting unit operates increased competition changes in the products services and regulatory and political developments cost of doing business overall financial performance including any declining cash flows and performance in relation to planned revenues and earnings in past periods other relevant reporting unit specific facts such as changes in management or key personnel or pending litigation and events affecting the reporting unit including changes in the carrying value of net assets
If the results of our qualitative assessment indicate it is more likely than not that the fair value of a reporting unit is less than its carrying amount we are required to perform a quantitative assessment to determine the fair value of the reporting unit
Alternatively if an optional qualitative goodwill impairment assessment is not performed we may perform a quantitative assessment Under the quantitative assessment we compare the fair value of each reporting unit to its carrying value including the goodwill allocated to the reporting unit If the fair value of the reporting unit exceeded its carrying value there would be no indication of impairment If the fair value of the reporting unit were less than the carrying value an impairment charge would be recognized for the difference
We derive an estimate of fair values for each of our reporting units using a combination of an income approach and a market approach Absent an indication of fair value from a potential buyer or similar specific transactions we believe that the use of these methods provides a reasonable estimate of a reporting unit s fair value
Fair value computed by these methods is arrived at using a number of key assumptions including forecasted revenues and related growth rates forecasted operating cash flows the discount rate and the selection of relevant market multiples of comparable publicly traded companies with similar characteristics to the reporting unit There are inherent uncertainties however related to these factors and to our judgment in applying them to this analysis We believe that the combination of these methods provides a reasonable approach to estimate the fair value of our reporting units
The income approach is based upon the present value of expected cash flows Expected cash flows are converted to present value using factors that consider the timing and risk of the future cash flows The estimate of cash flows used is prepared on an unleveraged debt free basis We use a discount rate that reflects a market derived weighted average cost of capital We believe that this approach is appropriate because it provides a fair value estimate based upon the reporting unit s expected long term operating and cash flow performance The projections are based upon our best estimates of forecasted economic and market conditions over the related period including growth rates expected changes in forecasted operating cash flows and cash expenditures Other estimates and assumptions include terminal value long term growth rates provisions for income taxes future capital expenditures and changes in future cashless debt free working capital Changes in any of these assumptions could materially impact the estimated fair value of our reporting units Our forecasts take into account the near and long term expected business performance considering the long term market conditions and business trends within the reporting units However changes in these assumptions may impact our ability to recover the allocated goodwill in the future For further discussion of the factors that could result in a change in our assumptions see Risk Factors in this Annual Report on Form 10 K
The market approach estimates the fair value of the reporting unit by applying multiples of operating performance measures to the reporting unit s operating performance the Guideline Public Company Method These multiples are derived from comparable publicly traded companies with similar investment characteristics to the reporting unit and such comparable data are reviewed and updated as needed annually We believe that this approach is appropriate because it provides a fair value estimate using multiples from entities with operations and economic characteristics comparable to our reporting units and Wiley
The key estimates and assumptions that are used to determine fair value under this market approach include current and forward 12 month revenue and EBITDA results as applicable and the selection of the relevant multiples to be applied Under the Guideline Public Company Method a control premium or an amount that a buyer is usually willing to pay over the current market price of a publicly traded company is considered and applied to the calculated equity values to adjust the public trading value upward for a 100 ownership interest where applicable
In order to assess the reasonableness of the calculated fair values of our reporting units we also compare the sum of the reporting units fair values to our market capitalization and calculate an implied control premium the excess of the sum of the reporting units fair values over the market capitalization We evaluate the control premium by comparing it to control premiums of recent comparable market transactions If the implied control premium is not reasonable in light of these recent transactions we will reevaluate our fair value estimates of the reporting units by adjusting the discount rates and or other assumptions
If our assumptions and related estimates change in the future or if we change our reporting unit structure or other events and circumstances change such as a sustained decrease in the price of our common stock a decline in current market multiples a significant adverse change in legal factors or business climates an adverse action or assessment by a regulator heightened competition strategic decisions made in response to economic or competitive conditions or a more likely than not expectation that a reporting unit or a significant portion of a reporting unit will be sold or disposed of we may be required to record impairment charges in future periods Any impairment charges that we may take in the future could be material to our consolidated results of operations and financial condition
As of February 1 2024 we completed a qualitative assessment for our annual goodwill impairment test for our reporting units within Research and Learning segments This assessment included consideration of key factors including macroeconomic conditions industry and market considerations cost factors financial performance and other relevant entity and reporting unit specific events Based on our qualitative assessment we determined it was not more likely than not that the fair value of any reporting unit was less than its carrying amount As such it was not necessary to perform a quantitative test There have been no significant events or circumstances affecting the valuation of goodwill subsequent to the qualitative assessment performed as of February 1 2024
As of February 1 2023 we completed a quantitative assessment for our annual goodwill impairment test for our University Services reporting unit We concluded that the fair value of the reporting unit was above the carrying value and therefore there was no indication of impairment For our other reporting units we performed a qualitative assessment by reporting unit as of February 1 2023 We determined it was not more likely than not that the fair value of any reporting unit was less than its carrying amount As such it was not necessary to perform a quantitative test
In the first quarter of fiscal year 2024 we began to operate under a new organizational structure which resulted in a change in our composition of our reportable segments which resulted in a change in our reporting units
Segment Information for more details The Learning reportable segment includes two reporting units Academic and Professional and the Held for Sale or Sold reportable segment includes three reporting units University Services Wiley Edge and CrossKnowledge
No changes were made to the Research reportable segment As a result of this realignment we are required to test goodwill for impairment immediately before and after the realignment Since there were no changes to the Research reportable segment no interim impairment test of the Research reportable segment goodwill was required
Prior to the realignment we concluded that the fair value of the Academic Publishing Talent Development which includes Wiley Edge and Professional Learning reporting units were above their carrying values Therefore there was no indication of impairment The carrying value of the University Services reporting unit was above its fair value which resulted in a pretax noncash goodwill impairment of 11 4 million Such impairment reduced the goodwill of the University Services reporting unit to zero This charge is reflected in Impairment of goodwill in the Consolidated Statements of Loss Income
University Services was adversely impacted by market conditions and headwinds for online degree programs which lead to a decline in projected enrollments from existing partners pricing pressures and revenue share concessions and a decline in new partner additions over both the short term and long term which adversely impacted forecasted revenue growth and operating cash flows
Future cash flow assumptions the projections for future cash flows utilized in the model were derived from historical experience and assumptions regarding future growth and profitability of the reporting unit These projections include forecasted revenues and related growth rates and forecasted operating cash flows and are consistent with our operating budget and strategic plan We applied a compounded annual growth rate of approximately 4 6 for forecasted sales in our projected cash flows through fiscal year 2031 Beyond the forecasted period a terminal value was determined using a perpetuity growth rate of 3 0 to reflect our estimate of stable and perpetual growth
Discount rate based on the weighted average cost of capital WACC the WACC is the rate used to discount the reporting unit s estimated future cash flows The WACC is calculated based on a proportionate weighting of the cost of debt and equity The cost of equity is based on a capital asset pricing model and includes a company specific risk premium to capture the perceived risks and uncertainties associated with the reporting unit s projected cash flows The cost of debt component is calculated based on the after tax cost of debt of Moody s Baa rated corporate bonds The cost of debt and equity is weighted based on the debt to market capitalization ratio of publicly traded companies with similarities to the University Services reporting unit The WACC applied to the University Services reporting unit was 17
Valuation Multiples for the Guideline Public Company Method we applied relevant current and forward 12 month EBITDA multiples based on an evaluation of multiples of publicly traded companies with similarities to the University Services reporting unit The multiples applied ranged from 4 5x to 6 0x EBITDA
Prior to performing the goodwill impairment test for University Services we also evaluated the recoverability of long lived assets of the reporting unit The carrying value of the long lived assets that were tested for impairment was approximately 231 0 million When indicators of impairment are present we test definite lived and long lived assets for recoverability by comparing the carrying value of an asset group to an estimate of the future undiscounted cash flows expected to result from the use and eventual disposition of the asset group We considered the lower than expected revenue and forecasted operating cash flows over a sustained period of time and downward revisions to our cash flow forecasts for this reporting unit to be indicators of impairment for their long lived assets Based on the results of the recoverability test we determined that the undiscounted cash flows of the asset group of the University Services reporting unit exceeded the carrying value Therefore there was no impairment
After the realignment we concluded that the fair value of the Academic Professional and Wiley Edge reporting units were above their carrying values Therefore there was no indication of impairment As noted above the goodwill of the University Services reporting unit was zero and no further testing of goodwill for impairment was required The carrying value of the CrossKnowledge reporting unit was above its fair value which resulted in a pretax noncash goodwill impairment of 15 3 million This charge is reflected in Impairment of goodwill in the Consolidated Statements of Loss Income
CrossKnowledge was adversely impacted by a decline in the demand for its offerings which have resulted in lower sales and a decline in average contract value that adversely impacted forecasted revenue growth and operating cash flows
Future cash flow assumptions the projections for future cash flows utilized in the model were derived from historical experience and assumptions regarding future growth and profitability of the reporting unit These projections include forecasted revenues and related growth rates and forecasted operating cash flows and are consistent with our operating budget and strategic plan We applied a compounded annual growth rate of approximately 3 3 for forecasted sales in our projected cash flows through fiscal year 2032 Beyond the forecasted period a terminal value was determined using a perpetuity growth rate of 2 0 to reflect our estimate of stable and perpetual growth
Discount rate based on the weighted average cost of capital WACC the WACC is the rate used to discount the reporting unit s estimated future cash flows The WACC is calculated based on a proportionate weighting of the cost of debt and equity The cost of equity is based on a capital asset pricing model and includes a company specific risk premium to capture the perceived risks and uncertainties associated with the reporting unit s projected cash flows The cost of debt component is calculated based on the after tax cost of debt of Moody s Baa rated corporate bonds The cost of debt and equity is weighted based on the debt to market capitalization ratio of publicly traded companies with similarities to the CrossKnowledge reporting unit The WACC applied to the CrossKnowledge reporting unit was 16
Valuation Multiples for the Guideline Public Company Method we applied relevant current and forward 12 month EBITDA multiples based on an evaluation of multiples of publicly traded companies with similarities to the CrossKnowledge reporting unit The multiples applied ranged from 6 0x to 7 0x EBITDA
Prior to performing the goodwill impairment test for CrossKnowledge we also evaluated the recoverability of long lived assets of the reporting unit The carrying value of the long lived assets that were tested for impairment was approximately 50 2 million When indicators of impairment are present we test definite lived and long lived assets for recoverability by comparing the carrying value of an asset group to an estimate of the future undiscounted cash flows expected to result from the use and eventual disposition of the asset group We considered the lower than expected revenue and forecasted operating cash flows over a sustained period of time and downward revisions to our cash flow forecasts for this reporting unit to be indicators of impairment for their long lived assets Based on the results of the recoverability test we determined that the undiscounted cash flows of the asset group of the CrossKnowledge reporting unit exceeded the carrying value Therefore there was no impairment
As a result of signing the Purchase Agreement with Inspirit and the decrease in the fair value of the Business which was impacted by a decline in placements in the third quarter of fiscal year 2024 we tested the goodwill of the Wiley Edge reporting unit for impairment We estimated the fair value of the reporting unit based on the terms and conditions in the Purchase Agreement which reflected a selling price that included
Such impairment reduced the goodwill of the Wiley Edge reporting unit to zero This charge is reflected in Impairment of goodwill in the Consolidated Statements of Loss Income The impairment was due to subsequent changes in the fair value resulting from the continued progression of the selling process indications of changes in the consideration for the business and a decline in placements in the third quarter of fiscal year 2024 as well as changes in the carrying amounts of the disposal group
As described further above in Part I Item 7 Management s Discussion and Analysis of Financial Condition and Results of Operations under the caption Critical Accounting Policies and Estimates Assets and Liabilities Held for Sale of this Annual Report on Form 10 K the fair value of the earnout was based on a Monte Carlo simulation
Prior to performing the goodwill impairment test for Wiley Edge we also evaluated the recoverability of long lived assets of the reporting unit The carrying value of the long lived assets that were tested for impairment was approximately
We considered the changes in the fair value of the consideration for the business due to the continued progression of the selling process to be an indicator of impairment for its long lived assets Based on the results of the recoverability test we determined that the undiscounted cash flows of the asset group of the Wiley Edge reporting unit exceeded the carrying value Therefore there was no impairment
we performed a qualitative assessment for our annual indefinite lived intangible assets impairment test This assessment included consideration of key factors including macroeconomic conditions industry and market considerations cost factors financial performance and other relevant entity and reporting unit specific events Based on our qualitative assessment we determined it was not more likely than not that the fair value of any indefinite lived intangible asset was less than its carrying amount As such it was not necessary to perform a quantitative test
Summary of Significant Accounting Policies Recently Issued and Recently Adopted Accounting Standards in the section Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements for details of definite lived intangible assets and other long lived assets
We provide defined benefit pension plans for certain employees worldwide Our Board of Directors approved amendments to the US Canada and UK defined benefit plans that froze the future accumulation of benefits effective June 30 2013 December 31 2015 and April 30 2015 respectively Under the amendments no new employees will be permitted to enter these plans and no additional benefits for current participants for future services will be accrued after the effective dates of the amendments
The accounting for benefit plans is highly dependent on assumptions concerning the outcome of future events and circumstances including discount rates long term return rates on pension plan assets healthcare cost trends compensation increases and other factors In determining such assumptions we consult with outside actuaries and other advisors
The discount rates for the US Canada and UK pension plans are based on the derivation of a single equivalent discount rate using a standard spot rate curve and the timing of expected benefit payments as of the balance sheet date The spot rate curves are based upon portfolios of corporate bonds rated at Aa or above by a respected rating agency The discount rate for Germany is based on the expected benefit payments for the sample mixed population plan The expected long term rates of return on pension plan assets are estimated using forecasted returns for the asset classifications within the asset portfolio and a composite return assumption range is determined using a weighted average based on each plan s target asset allocation percentage Salary growth and healthcare cost trend assumptions are based on our historical experience and future outlook While we believe that the assumptions used in these calculations are reasonable differences in actual experience or changes in assumptions could materially affect the expense and liabilities related to our defined benefit pension plans
A hypothetical one percent increase in the discount rate would increase net income and decrease the accrued pension liability by approximately 1 0 million and 66 2 million respectively A one percent decrease in the discount rate would decrease net income and increase the accrued pension liability by approximately 0 6 million and 76 8 million respectively A one percent change in the expected long term rate of return would affect net income by approximately 3 8 million
We are exposed to market risk primarily related to interest rates foreign exchange and credit risk It is our policy to monitor these exposures and to use derivative financial investments and or insurance contracts from time to time to reduce fluctuations in earnings and cash flows when it is deemed appropriate to do so We do not use derivative financial instruments for trading or speculative purposes
From time to time we may use interest rate swaps collars or options to manage our exposure to fluctuations in interest rates It is management s intention that the notional amount of interest rate swaps be less than the variable rate loans outstanding during the life of the derivatives
Fluctuations in the currencies of countries where we operate outside the US may have a significant impact on financial results We are primarily exposed to movements in British pound sterling euros Canadian and Australian dollars and certain currencies in Asia The statements of financial position of non US business units are translated into US dollars using period end exchange rates for assets and liabilities and the Statements of Loss Income are translated into US dollars using weighted average exchange rates for revenues and expenses The percentage of consolidated revenue for the year ended April 30 2024 recognized in the following currencies on an equivalent US dollar basis were approximately 53 US dollar 27 British pound sterling 11 euro and 9 other currencies
Our significant investments in non US businesses are exposed to foreign currency risk Adjustments resulting from translating assets and liabilities are reported as a separate component of Total accumulated other comprehensive loss net of tax within Total shareholders equity under the caption Foreign currency translation adjustment During the year ended April 30 2024 we recorded foreign currency translation losses in Total accumulated other comprehensive loss net of tax of approximately 7 5 million primarily as a result of the fluctuations of the US dollar relative to the euro and to a lesser extent the British pound sterling During the year ended April 30 2023 we recorded foreign currency translation gains in Total accumulated other comprehensive loss net of tax of approximately 3 2 million primarily as a result of the fluctuations of the US dollar relative to the euro and the British pound sterling partially offset by fluctuations of the US dollar relative to the Australian dollar During the year ended April 30 2022 we recorded foreign currency translation losses in Total accumulated other comprehensive loss net of tax of approximately 71 6 million primarily as a result of the fluctuations of the US dollar relative to the British pound sterling and to a lesser extent the euro
Exchange rate gains or losses related to foreign currency transactions are recognized as transaction gains or losses on the Consolidated Statements of Loss Income as incurred Under certain circumstances we may enter into derivative financial instruments in the form of foreign currency forward contracts to hedge against specific transactions including intercompany purchases and loans
In the journal publishing business subscriptions are primarily sourced through journal subscription agents who acting as agents for library customers facilitate ordering by consolidating the subscription orders billings of each subscriber with various publishers Cash is generally collected in advance from subscribers by the subscription agents and is principally remitted to us between the months of December and April Although at fiscal year end we had minimal credit risk exposure to these agents future calendar year subscription receipts from these agents are highly dependent on their financial condition and liquidity Subscription agents account for approximately 16 of total annual consolidated revenue and no one agent accounts for more than 10 of total annual consolidated revenue
Our book business is not dependent upon a single customer however the industry is concentrated in national regional and online book resellers Although no book customer accounts for more than 6 of total consolidated revenue and 12 of accounts receivable at April 30 2024 the top 10 book customers account for approximately 11 of total consolidated revenue and approximately 27 of accounts receivable at April 30 2024
We have audited the accompanying consolidated statement of financial position of John Wiley Sons Inc and its subsidiaries the Company as of April 30 2024 and the related consolidated statements of loss income comprehensive loss income shareholders equity and cash flows for the year then ended including the related notes and financial statement schedule listed in the accompanying index collectively referred to as the consolidated financial statements We also have audited the Company s internal control over financial reporting as of April 30 2024 based on criteria established in
In our opinion the consolidated financial statements referred to above present fairly in all material respects the financial position of the Company as of April 30 2024 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America Also in our opinion the Company maintained in all material respects effective internal control over financial reporting as of April 30 2024 based on criteria established in
The Company s management is responsible for these consolidated financial statements for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in Management s Report on Internal Control over Financial Reporting appearing under Item 9A Our responsibility is to express opinions on the Company s consolidated financial statements and on the Company s internal control over financial reporting based on our audit We are a public accounting firm registered with the Public Company Accounting Oversight Board United States PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audit in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement whether due to error or fraud and whether effective internal control over financial reporting was maintained in all material respects
Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the consolidated financial statements Our audit also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the consolidated financial statements Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk Our audit also included performing such other procedures as we considered necessary in the circumstances We believe that our audit provides a reasonable basis for our opinions
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles A company s internal control over financial reporting includes those policies and procedures that i pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company ii provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company and iii provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the company s assets that could have a material effect on the financial statements
Because of its inherent limitations internal control over financial reporting may not prevent or detect misstatements Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that i relate to accounts or disclosures that are material to the consolidated financial statements and ii involved our especially challenging subjective or complex judgments The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements taken as a whole and we are not by communicating the critical audit matters below providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate
million of research publishing revenue for the year ended April 30 2024 of which a majority relates to journal subscriptions The majority of research publishing revenue is recognized over time Journal subscription contracts are negotiated by the Company directly with customers or their subscription agents Subscription periods typically cover calendar years In a typical journal subscription sale there is a written agreement between the Company and the customer that covers multiple years However management typically accounts for these agreements as one year contracts because the enforceable rights under the agreements are subject to an annual confirmation and negotiation process with the customer The transaction price consists of fixed consideration Journal subscription revenue is generally collected in advance when the annual license is granted
The principal considerations for our determination that performing procedures relating to revenue recognition for the journal subscriptions revenue is a critical audit matter are a high degree of auditor effort in performing procedures and evaluating audit evidence related to the Company s revenue recognition
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements These procedures included testing the effectiveness of controls relating to the revenue recognition process including controls over journal subscriptions revenue recognized These procedures also included among others i testing revenue recognized for a sample of journal subscription revenue transactions by obtaining and inspecting source documents such as sales contracts invoices and cash receipts and ii confirming a sample of outstanding customer invoice balances as of April 30 2024 and for confirmations not returned obtaining and inspecting source documents such as sales contracts invoices and subsequent cash receipts
As described in Notes 2 4 and 11 to the consolidated financial statements the Company approved a plan to divest certain businesses determined as non core businesses which included University Services and Wiley Edge collectively referred to as the businesses Management concluded that the businesses met all the requisite held for sale criteria as of June 1 2023 and therefore the related assets and liabilities were reclassified as of that date as held for sale on the consolidated statement of financial position until the date of sale The disposal group that is classified as held for sale is initially measured at the lower of its carrying value or fair value less any costs to sell Any impairment loss resulting from this measurement is recognized in losses gains on sale of businesses and certain assets and impairment charges related to assets held for sale on the consolidated statement of loss income On January 1 2024 the Company completed the sale of University Services The pretax loss on the sale of University Services was
107 0 million consisting of impairment charges recognized in connection with the held for sale classification prior to the sale of 75 4 million and an additional loss of 31 6 million recognized upon completion of the sale due to subsequent changes in the fair value less costs to sell as well as changes in the carrying amount of the disposal group As of April 30 2024 Wiley Edge continues to be reported as held for sale The impairment charge related to assets held for sale for Wiley Edge was 19 4 million The determination of the fair value less costs to sell was based on indicative sales values which includes the value associated with contingent consideration to be received in the form of an earnout The fair value of the earnouts were based on a Monte Carlo simulation and were estimated as the present value of the potential range of payouts averaged across the range of simulated revenues for University Services and simulated gross profits for Wiley Edge The significant assumptions used in determining the fair value of the earnouts primarily include the risk adjusted discount rate for simulated revenues and simulated gross profits
The principal considerations for our determination that performing procedures relating to the valuation of each of the disposal groups University Services and Wiley Edge is a critical audit matter are i the significant judgment by management when determining the fair value less costs to sell of each of the disposal groups which included the fair value estimates associated with the earnouts ii a high degree of auditor judgment and effort in performing procedures and evaluating management s significant assumptions related to the risk adjusted discount rate for the simulated revenues and simulated gross profits used in determining the fair value estimates associated with the earnouts and iii the audit effort involved the use of professionals with specialized skill and knowledge
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements These procedures included testing the effectiveness of controls relating to the determination of the fair value less costs to sell of each of the disposal groups including the fair value estimates associated with the earnouts These procedures also included among others i reading the purchase agreements in place between the parties related to the divestiture of the businesses ii testing management s process for determining the fair value less costs to sell of each of the disposal groups including the fair value estimates associated with the earnouts iii evaluating the reasonableness of management s assessment of the held for sale classification iv testing the completeness and accuracy of underlying data used in the Monte Carlo simulation and v evaluating the reasonableness of the significant assumption used by management related to the risk adjusted discount rate for the simulated revenues and simulated gross profits Evaluating management s significant assumption involved evaluating whether the assumption used by management was reasonable considering the consistency with external market and industry data and whether this assumption was consistent with evidence obtained in other areas of the audit Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of the risk adjusted discount rate for the simulated revenues and simulated gross profits
We have audited the accompanying consolidated statement of financial position of John Wiley Sons Inc and subsidiaries the Company as of April 30 2023 the related consolidated statements of loss income comprehensive loss income cash flows and shareholders equity for each of the years in the two year period ended April 30 2023 and the related notes and financial statement schedule II collectively the consolidated financial statements In our opinion the consolidated financial statements present fairly in all material respects the financial position of the Company as of April 30 2023 and the results of its operations and its cash flows for each of the years in the two year period ended April 30 2023 in conformity with U S generally accepted accounting principles
These consolidated financial statements are the responsibility of the Company s management Our responsibility is to express an opinion on these consolidated financial statements based on our audits We are a public accounting firm registered with the Public Company Accounting Oversight Board United States PCAOB and are required to be independent with respect to the Company in accordance with the U S federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB
We conducted our audits in accordance with the standards of the PCAOB Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement whether due to error or fraud Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements whether due to error or fraud and performing procedures that respond to those risks Such procedures included examining on a test basis evidence regarding the amounts and disclosures in the consolidated financial statements Our audits also included evaluating the accounting principles used and significant estimates made by management as well as evaluating the overall presentation of the consolidated financial statements We believe that our audits provide a reasonable basis for our opinion
The Company founded in 1807 was incorporated in the state of New York on January 15 1904 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
Wiley is one of the world s largest publishers and a global leader in research and learning The Company s content services platforms and knowledge networks are tailored to meet the evolving needs of its customers and partners including researchers students instructors professionals institutions and corporations Wiley empowers knowledge seekers to transform today s biggest obstacles into tomorrow s brightest opportunities For more than two centuries the Company has been delivering on its timeless mission to unlock human potential
On June 1 2023 Wiley s Board of Directors approved a plan to divest certain businesses that we determined are non core businesses Those businesses are University Services Wiley Edge and CrossKnowledge On January 1 2024 we completed the sale of University Services On January 8 2024 we entered into an agreement to sell our Wiley Edge business which closed on May 31 2024 with the exception of its India operations The sale of Wiley Edge s India operation will be finalized later in calendar year 2024 We expect to complete the sale of CrossKnowledge by the second quarter of fiscal year 2025 As a result of these planned divestitures in the three months ended July 31 2023 we reorganized our segments and our new structure consists of three reportable segments which include Research no change Learning and Held for Sale or Sold as well as a Corporate expense category no change Prior period segment results
includes businesses held for sale including Wiley Edge and CrossKnowledge as well as those sold in fiscal year 2024 which includes University Services and Tuition Manager and in fiscal year 2023 Test Prep and Advancement Courses
Through the Research segment we provide peer reviewed scientific technical and medical STM publishing content platforms and related services to academic corporate and government customers academic societies and individual researchers The Learning segment provides scientific professional and education print and digital books digital courseware to libraries corporations students professionals and researchers as well as assessment services to businesses and professionals
Our Consolidated Financial Statements include all the accounts of the Company and our subsidiaries We have eliminated all intercompany transactions and balances in consolidation All amounts are presented in US dollars unless otherwise specified All amounts are in thousands except per share amounts and approximate due to rounding
The preparation of our Consolidated Financial Statements and related disclosures in conformity with US GAAP requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities the disclosure of contingent assets and liabilities as of the date of the financial statements and revenue and expenses during the reporting period These estimates include among other items sales return reserves allocation of acquisition purchase price to assets acquired and liabilities assumed goodwill and indefinite lived intangible assets intangible assets with definite lives and other long lived assets and retirement plans We review these estimates and assumptions periodically using historical experience and other factors and reflect the effects of any revisions on the Consolidated Financial Statements in the period we determine any revisions to be necessary Actual results could differ from those estimates which could affect the reported results
Under our cash management system a book overdraft balance exists for our primary disbursement accounts This overdraft represents uncleared checks in excess of cash balances in individual bank accounts Our funds are transferred from other existing bank account balances or from lines of credit as needed to fund checks presented for payment As of April 30 2024 and 2023 book overdrafts of 10 1 million and 14 6 million respectively were included in Accounts payable on the Consolidated Statements of Financial Position
Revenue from contracts with customers is recognized using a five step model consisting of the following 1 identify the contract with a customer 2 identify the performance obligations in the contract 3 determine the transaction price 4 allocate the transaction price to the performance obligations in the contract and 5 recognize revenue when or as we satisfy a performance obligation Performance obligations are satisfied when we transfer control of a good or service to a customer which can occur over time or at a point in time The amount of revenue recognized is based on the consideration to which we expect to be entitled in exchange for those goods or services including the expected value of variable consideration The customer s ability and intent to pay the transaction price is assessed in determining whether a contract exists with the customer If collectability of substantially all the consideration in a contract is not probable consideration received is not recognized as revenue unless the consideration is nonrefundable and we no longer have an obligation to transfer additional goods or services to the customer or collectability becomes probable
Cash and cash equivalents consist of highly liquid investments with an original maturity of three months or less at the time of purchase and are stated at cost which approximates market value because of the short term maturity of the instruments
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 such as 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 and geopolitical 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 We write off receivables only when deemed no longer collectible
The process that we use to determine our sales returns and the related reserve provision charged against revenue is based on applying an estimated return rate to current year returnable print book sales This rate is based upon an analysis of actual historical return experience in the various markets and geographic regions in which we do business We collect maintain and analyze significant amounts of sales returns data for large volumes of homogeneous transactions This allows us to make reasonable estimates of the amount of future returns All available data is utilized to identify the returns by market and to which fiscal year the sales returns apply This enables management to track the returns in detail and identify and react to trends occurring in the marketplace with the objective of being able to make the most informed judgments possible in setting reserve rates Associated with the estimated sales return reserves we also include a related increase to inventory and a reduction to accrued royalties as a result of the expected returns Print book sales return reserves amounted to a net liability balance of 14 4 million as of both April 30 2024 and 2023
Inventories are carried at the lower of cost or net realizable value US book inventories aggregating 11 4 million and 16 6 million at April 30 2024 and 2023 respectively are valued using the last in first out LIFO method All other inventories are valued using the first in first out FIFO method
Product development assets consist of book composition costs and other product development costs and are included in Other non current assets on the Consolidated Statements of Financial Position Costs associated with developing a book for publication are expensed until the product is determined to be commercially viable Book composition costs represent the costs incurred to bring an edited commercial manuscript to publication which include typesetting proofreading design illustration costs and digital formatting Book composition costs are capitalized and are generally amortized on a double declining basis over their estimated useful lives ranging from 1 to 3 years Other product development costs represent the costs incurred in developing software platforms and digital content to be sold and licensed to third parties Other product development costs are capitalized and amortized on a straight line basis over their estimated useful lives As of April 30 2024 the weighted average estimated useful life of other product development costs was approximately 3 years
Royalty advances are capitalized in Other non current assets on the Consolidated Statements of Financial Position and upon publication are expensed as royalties earned based on sales of the published works Royalty advances are reviewed for recoverability and a reserve for loss is maintained if appropriate
This includes certain advertising and marketing costs incurred by the University Services business previously included in our Held for Sale or Sold segment to fulfill performance obligations from contracts with educational institutions
Technology property and equipment is recorded at cost except for property and equipment that have been impaired for which we reduce the carrying amount to the estimated fair value at the impairment date Major renewals and improvements are capitalized while maintenance and repairs are expensed as incurred
Technology property and equipment is depreciated using the straight line method based upon the following estimated useful lives Computer Software 3 to 10 years Computer Hardware 3 to 5 years Buildings and Leasehold Improvements the lesser of the estimated useful life of the asset up to 40 years or the duration of the lease Furniture Fixtures and Warehouse Equipment 5 to 10 years
Costs incurred for computer software internally developed or obtained for internal use are capitalized during the application development stage and expensed as incurred during the preliminary project and post implementation stages Costs incurred during the application development stage include costs of materials services and payroll and payroll related costs for employees who are directly associated with the software project Such costs are amortized over the expected useful life of the related software which is generally 3 to 5 years Costs related to the investment in our Enterprise Resource Planning and related systems are amortized over an expected useful life of 10 years Maintenance training and upgrade costs that do not result in additional functionality are expensed as incurred
In connection with acquisitions we allocate the cost of the acquisition to the assets acquired and the liabilities assumed based on the estimates of fair value for such items including intangible assets and technology acquired The excess of the purchase consideration over the fair value of assets acquired and liabilities assumed is recorded as goodwill The determination of the acquisition date fair value of the assets acquired and liabilities assumed requires us to make significant estimates and assumptions such as forecasted revenue growth rates and operating cash flows royalty rates customer attrition rates obsolescence rates of developed technology and discount rates We may use a third party valuation consultant to assist in the determination of such estimates
We classify assets as held for sale in the period when the following conditions are met i management having the authority to approve the action commits to a plan to sell the disposal group ii the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such disposal group iii an active program to locate a buyer and other actions required to complete the plan to sell the disposal group have been initiated iv the sale of the disposal group is probable and transfer of the disposal group is expected to qualify for recognition as a completed sale within one year except if events or circumstances beyond our control extend the period of time required to sell the disposal group beyond one year v the disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value and vi actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn
The determination of the fair value less costs to sell is based on indicative sales values and may require us to make judgments on significant estimates and assumptions regarding forecasted information such as revenue growth EBITDA depreciation and amortization and capital expenditures and discount rates The fair value less costs to sell is also subject to changes from the continued progression of the selling process and indications of changes in the consideration for the business as well as changes in the carrying amounts of the disposal group We may use a third party valuation consultant to assist in the determination of such estimates
Any impairment loss resulting from this measurement is recognized in Losses gains on sale of businesses and certain assets and impairment charges related to assets held for sale on the Consolidated Statements of Loss Income and is
The fair value of a disposal group less any costs to sell is assessed each reporting period it remains classified as held for sale and any subsequent change is reported as an adjustment to the carrying value of the disposal group as long as the new carrying value does not exceed the carrying value of the asset at the time it was initially classified as held for sale Upon determining that a disposal group meets the criteria to be classified as held for sale we report the assets and liabilities of the disposal group as held for sale in the Consolidated Statements of Financial Position
Goodwill represents the excess of the aggregate of the following 1 consideration transferred 2 the fair value of any noncontrolling interest in the acquiree and 3 if the business combination is achieved in stages the acquisition date fair value of our previously held equity interest in the acquiree over the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed
Indefinite lived intangible assets primarily consist of brands and trademarks and publishing rights and are typically characterized by intellectual property with a long and well established revenue stream resulting from strong and well established imprint brand recognition in the market
We use the acquisition method of accounting for all business combinations and do not amortize goodwill or intangible assets with indefinite useful lives Goodwill and intangible assets with indefinite useful lives are tested for possible impairment annually during the fourth quarter of each fiscal year or more frequently if events or changes in circumstances indicate that the asset might be impaired
Definite lived intangible assets principally consist of content and publishing rights customer relationships developed technology brands and trademarks and covenants not to compete agreements and are amortized over their estimated useful lives The most significant factors in determining the estimated lives of these intangibles are the history and longevity combined with the strength and pattern of projected cash flows
Intangible assets with definite lives as of April 30 2024 are amortized on a straight line basis over the following weighted average estimated useful lives content and publishing rights 27 years customer relationships 16 years developed technology 7 years brands and trademarks 16 years and covenants not to compete agreements 4 years
Assets with definite lives are evaluated for indicators of impairment upon a significant change in the operating or macroeconomic environment When indicators of impairment are present we test definite lived and long lived assets for recoverability by comparing the carrying value of an asset group to an estimate of the future undiscounted cash flows expected to result from the use and eventual disposition of the asset group In these circumstances if an evaluation of the projected undiscounted cash flows indicates impairment the asset is written down to its estimated fair value based on the discounted future cash flows
We provide various defined benefit plans to our employees We use actuarial assumptions to calculate pension and benefit costs as well as pension assets and liabilities included in the consolidated financial statements
Income taxes are recorded using the asset and liability method Under this method deferred income taxes are recognized for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes Deferred taxes are measured using rates the Company expects to apply to taxable income in years in which those temporary differences are expected to reverse The financial effect of changes in tax laws or rates is accounted for in the period of enactment Future tax benefits are recognized to the extent that the realization of such benefits is more likely than not Valuation allowances are established when management determines that it is more likely than not that some or all of a deferred tax asset will not be realized
From time to time the Company engages in transactions in which the tax consequences may be subject to uncertainty Judgment is required in assessing and estimating the tax consequences of these transactions The Company prepares and files tax returns based on its interpretation of tax laws and regulations In the normal course of business the Company s tax returns are subject to examination by various taxing authorities Such examinations may result in future tax and interest assessments by these taxing authorities
In determining the Company s tax provision for financial reporting purposes the Company establishes a reserve for uncertain tax positions unless such positions are determined to be more likely than not of being sustained upon examination based on their technical merits including the resolution of any appeals or litigation processes The Company includes interest and where appropriate penalties as a component of income tax expense There is judgment involved in determining whether positions taken on the Company s tax returns are more likely than not of being sustained which involve the use of estimates and assumptions with respect to the potential outcome of positions taken on tax returns that may be reviewed by tax authorities
From time to time we enter into foreign exchange forward 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 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
Under FASB ASC Topic 815 Derivatives and Hedging ASC Topic 815 derivative instruments that are designated as cash flow hedges have changes in their fair value recorded initially within Accumulated other comprehensive loss on the Consolidated Statements of Financial Position As interest expense is recognized based on the variable rate loan agreements the corresponding deferred gain or loss on the interest rate swaps is reclassified from Accumulated other comprehensive loss to Interest expense on the Consolidated Statements of Loss Income The interest settlement payments associated with the interest rate swap agreements are classified as cash flows from operating activities in the Consolidated Statements of Cash Flows
We maintain operations in many non US locations Assets and liabilities are translated into US dollars using end of period exchange rates and revenues and expenses are translated into US dollars using weighted average rates Our significant investments in non US businesses are exposed to foreign currency risk Foreign currency translation adjustments are reported as a separate component of Accumulated Other Comprehensive Loss within Shareholders Equity Foreign currency transaction gains or losses are recognized on the Consolidated Statements of Loss Income as incurred
We recognize stock based compensation expense based on the fair value of the stock based awards on the grant date reduced by an estimate for future forfeited awards As such stock based compensation expense is only recognized for those awards that are expected to ultimately vest The fair value of stock based awards is recognized in net income generally on a straight line basis over the requisite service period Stock based compensation expense associated with performance based stock awards is based on actual financial results for targets established up to three years in advance or less The cumulative effect on current and prior periods of a change in the estimated number of performance share awards or estimated forfeiture rate is recognized as an adjustment to earnings in the period of the revision If actual results differ significantly from estimates our stock based compensation expense and Consolidated Statements of Loss Income could be impacted We accelerate expense on performance based awards using a graded vesting schedule for employees who meet retirement eligibility requirements prior to the end of the award s service period
The grant date fair value for stock options is estimated using the Black Scholes option pricing model The determination of the assumptions used in the Black Scholes model include the expected life of an option the expected volatility of our common stock over the estimated life of the option a risk free interest rate and the expected dividend yield Judgment was also required in estimating the number of stock based awards that may be forfeited
The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value at the end of every reporting period Financial assets and liabilities measured on a non recurring basis are those that are adjusted to fair value when a significant event occurs
In accordance with FASB ASC 820 Fair Value Measurements and Disclosures ASC Topic 820 assets and liabilities subject to fair value measurement disclosures are classified according to the three level fair value hierarchy with respect to the inputs used to determine fair value The level in which an asset or liability is disclosed within the fair value hierarchy is based on the lowest level input that is significant to the related fair value measurement in its entirety The levels of input are defined as follows
Level 2 Quoted prices for similar assets or liabilities in an active market quoted prices for identical similar assets or liabilities in markets that are not active inputs other than quoted prices that are observable and market corroborated inputs which are derived principally from or corroborated by observable market data
In October 2021 the Financial Accounting Standards Board FASB issued ASU 2021 08 Business Combinations Topic 805 Accounting for Contract Assets and Contract Liabilities from Contracts with Customers This ASU requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with FASB Accounting Standards Codification ASC 606 Revenue from Contracts with Customers Topic 606 as if it had originated the contracts Generally this would result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree s financial statements if the acquiree prepared financial statements in accordance with US GAAP We adopted ASU 2021 08 on May 1 2023 The standard is applied prospectively to business combinations occurring on or after the effective date of the amendments The adoption did not have an impact on our consolidated financial statements at the time of adoption
In December 2023 the FASB issued ASU 2023 09 Income Taxes Topic 740 Improvements to Income Tax Disclosures This ASU enhances the transparency effectiveness and comparability of income tax disclosures by requiring consistent categories and greater disaggregation of information related to income tax rate reconciliations and the jurisdictions in which income taxes are paid This ASU is effective for our annual disclosures starting fiscal year 2026 Early adoption is permitted A public entity should apply the amendments in this ASU on a prospective basis with the option to apply the standard retrospectively We are currently assessing the impact of the disclosure requirements on our consolidated financial statements
In November 2023 the FASB issued ASU 2023 07 Segment Reporting Topic 280 Improvements to Reportable Segment Disclosures This ASU improves reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses This ASU is effective for our annual fiscal year 2025 and interim periods starting in fiscal year 2026 Early adoption is permitted A public entity should apply the amendments in this ASU retrospectively to all prior periods presented in the financial statements We are currently assessing the impact of the disclosure requirements on our consolidated financial statements
we have reorganized our segments Our new segment structure consists of three reportable segments which includes 1 Research no change 2 Learning 3 Held for Sale or Sold as well as a Corporate expense category no change which includes certain costs that are not allocated to the reportable segments Research includes reporting lines of Research Publishing and Research Solutions Learning includes reporting lines of Academic and Professional Held for Sale or Sold includes those non core businesses which we have sold or previously announced we are divesting Prior period segment results and disclosures within the Notes to Consolidated Financial Statements have been recast to the new segment presentation There were no changes to our consolidated financial results
Total Research revenue was 1 042 7 million in the year ended April 30 2024 Research products are sold and distributed globally through multiple channels The majority of revenue generated from Research products is recognized over time
Research Publishing products provide scientific technical medical and scholarly journals as well as related content and services to academic corporate and government libraries learned societies and individual researchers and other professionals Research Publishing revenue was 892 8 million in the year ended April 30 2024 and the majority is recognized over time
ts generated approximately 86 of its revenue from contracts with its customers from Journal Subscriptions pay to read Open Access pay to publish and Transformational Agreements read and publish and the remainder from Licensing and other revenue streams
Journal subscription contracts are negotiated by us directly with customers or their subscription agents Subscription periods typically cover calendar years In a typical journal subscription sale there is a written agreement between us and our customer that covers multiple years However we typically account for these agreements as one year contracts because our enforceable rights under the agreements are subject to an annual confirmation and negotiation process with the customer
In journal subscriptions there are generally two performance obligations a functional intellectual property license with a stand ready obligation to provide access to new content for one year which includes online hosting of the content collectively referred to as Read which is recognized over time and a functional intellectual property perpetual license for access to historical journal content Perpetual License which is recognized at the point in time when access to the historical content is initially granted The transaction price consists of fixed consideration Journal subscription revenue is generally collected in advance when the annual license is granted
The total transaction price is allocated to each performance obligation based on its relative standalone selling price using a combination of observable and estimated stand alone selling prices which includes the expected cost plus a margin approach We allocate revenue to the stand ready obligation to provide access to new content for one year based on its observable standalone selling price to provide the right of access to additional intellectual property The allocation of revenue to the perpetual licenses for access to historical journal content is done using the expected cost plus a margin approach as applicable
Under the open access business model there is generally one performance obligation whereby accepted research articles are published and all open articles are immediately free to access online The transaction price is fixed based on payment of an article publication charge APC which under certain contracts can be variable due to discounts Revenue is recognized at a point in time which is upon publication which is when Wiley s obligation is complete
Transformational agreements read and publish blend journal subscription and open access offerings Generally for a single fee a national or regional consortium of libraries pays for and receives full read access to our journal portfolio and the ability to publish under an open access arrangement Transformational agreements include multiple performance obligations and depending upon the model can include a combination of Read which is recognized over time Perpetual License which is recognized at a point in time and a publishing right that allows for articles to be published in hybrid and or gold open access journals which is recognized point in time or over time depending upon the model The total transaction price is generally fixed and allocated to each performance obligation based on its relative stand alone selling price using a combination of observable and estimated stand alone selling prices Estimated stand alone selling prices include the expected cost plus a margin approach and a residual approach
Within licensing the revenue derived from these contracts is primarily comprised of advance payments including minimum guarantees and sales or usage based royalty agreements Our intellectual property is considered to be functional intellectual property Due to the stand ready obligation to provide updates during the subscription period which is generally an annual period revenue for the minimum guarantee is recognized on a straight line basis over the term of the agreement For our sales or usage based royalty agreements we recognize revenue in the period of usage based on the amounts earned We record revenue under these arrangements for the amounts due and not yet reported to us based on estimates of the sales or usage of these customers and pursuant to the terms of the contracts We also have certain licenses whereby we receive a non refundable minimum guarantee in advance recorded over time as described above against a volume based royalty throughout the term of the agreement When the cumulative consideration exceeds the minimum guarantee it is recognized as the subsequent sales or usage occurs
Research Solutions revenue was 149 9 million in the year ended April 30 2024 and the majority is recognized over time In the year ended April 30 2024 Research Solutions products and services generated approximately 67 of their revenue from contracts with their customers from corporate and society offerings and 33 from Atypon platforms and services
Corporate and society service offerings includes advertising spectroscopy software and spectral databases job board software and career center services publishing services including editorial operations production copyediting system support and consulting and journal submission and peer management systems
platforms and services primarily includes a single performance obligation for the implementation and hosting of subscription services The transaction price is fixed which may include price escalators that are fixed increases per year and therefore revenue is recognized upon the initiation of the subscription period and recognized on a straight line basis over the time of the contractual period The duration of these contracts is generally multiyear ranging from 2 to 5 years
Products and services include scientific professional and education print and digital books and digital courseware to libraries corporations students professionals and researchers Products are developed for worldwide distribution through multiple channels including chain and online booksellers libraries colleges and universities corporations direct to consumer websites distributor networks and other online applications
In the year ended April 30 2024 Academic products generated approximately 56 of their revenue from contracts with their customers for print and digital publishing which is recognized at a point in time Digital Courseware products generate approximately
of their revenue from contracts with their customers which is recognized over time The remainder of their revenues were from Licensing and other revenue streams which have a mix of revenue recognized at a point in time and over time
Our performance obligations as they relate to print and digital publishing are primarily book products delivered in both print and digital form which could include single or multiple performance obligations based on the number of print or digital books purchased Each is represented by an International Standard Book Number ISBN with each ISBN representing a performance obligation Each ISBN has an observable stand alone selling price as Wiley sells the books separately
This revenue stream also includes variable consideration as it relates to discounts and returns for both print and digital books Discounts are identifiable by performance obligation and therefore are applied at the point of sale by performance obligation The process that we use to determine our sales returns and the related reserve provision charged against revenue is based on applying an estimated return rate to current year returnable print book sales This rate is based upon an analysis of tracking actual historical return experience in the various markets and geographic regions in which we do business and make reasonable estimates of the amount of future returns All available data is utilized to identify the returns by market and to which fiscal year the sales returns apply Associated with the estimated sales return reserves we also include a related increase to inventory and reduction to accrued royalties as a result of the expected returns
As it relates to print and digital books revenue is recognized at the point when control of the product transfers which for print is upon shipment or for digital when fulfillment of the products has been rendered
Courseware customers purchase access codes to utilize the product This could include single or multiple performance obligations based on the number of course ISBNs purchased Revenue is recognized over time in the period from when the access codes are activated over the applicable semester term to which such product relates
Revenue derived from our licensing contracts is primarily comprised of advance payments and sales or usage based royalties Revenue for advance payments is recognized at the point in time that the functional intellectual property license is granted For sales or usage based royalties we record revenue under these arrangements for the amounts due and not yet reported to us based on estimates of the sales or usage of these customers and pursuant to the terms of the contracts We also have certain licenses whereby we receive a non refundable minimum guarantee recognized at a point in time as described above against a volume based royalty throughout the term of the agreement We recognize volume based royalty income only when cumulative consideration exceeds the minimum guarantee and the subsequent sales or usage occurs
Professional provides learning development publishing and assessment services for businesses and professionals Our trade publishing produces professional books which includes business and finance technology professional development for educators test preparation books and other professional categories as well as the
of their revenue from contracts with its customers which has a mix of revenue recognized at a point in time and over time The remainder of Professional revenues were from Licensing and other revenue streams which has a mix of revenue recognized at a point in time and over time
Professional print and digital publishing have the same performance obligations as Academic print and digital publishing which is described above In addition this revenue stream also has variable consideration as it relates to discounts and returns for both print and digital books which is described above in Academic print and digital publishing
As it relates to print and digital books revenue is recognized at the point when control of the product transfers which for print is upon shipment or for digital when fulfillment of the products has been rendered
Our assessments offering includes high demand soft skills training solutions that are delivered to organizational clients through online digital delivery platforms either directly or through an authorized distributor network of independent consultants trainers and coaches
ncludes multiple performance obligations This includes a performance obligation that includes an annual membership which is recognized over time as we have an obligation to stand ready for the customer s use of the services In addition there are performance obligations for the assessments and related products or services which are recognized at a point in time when the assessment product or service is provided or delivered The transaction price is allocated to each performance obligation based on its relative standalone selling price which is observable
Revenue derived from our licensing contracts is primarily comprised of advance payments and sales or usage based royalties Revenue for advance payments is recognized at the point in time that the functional intellectual property license is granted For sales or usage based royalties we record revenue under these arrangements for the amounts due and not yet reported to us based on estimates of the sales or usage of these customers and pursuant to the terms of the contracts We also have certain licenses whereby we receive a non refundable minimum guarantee recognized at a point in time as described above against a volume based royalty throughout the term of the agreement We recognize volume based royalty income only when cumulative consideration exceeds the minimum guarantee and the subsequent sales or usage occurs
The University Services business was sold on January 1 2024 and it previously offered institutions and their students a rich portfolio of education technology and student and faculty support services allowing the institutions to reach more students online with their own quality academic programs University Services revenue was mainly recognized over time
University Services revenue share contracts include a single performance obligation for the services provided because of the integrated technology and services our institutional clients need to attract enroll educate and support students Consideration is variable since it is based on the number of students enrolled in a program We begin to recognize revenue at the start of the delivery of the class within a semester overtime which is also when the variable consideration contingency is resolved
Wiley Edge sources trains and prepares aspiring students and professionals to meet the skill needs of today s technology careers and then places them with some of the world s largest financial institutions technology companies and government agencies Wiley Edge revenue is recognized at the point in time the services are provided to its customers
CrossKnowledge services includes online learning and training solutions for global corporations universities and small and medium sized enterprises sold on a subscription or fee basis The transaction price for these corporate learning services consists of fixed consideration that is determined at the beginning of each year and received at the same time There are multiple performance obligations which include the licenses to learning content and the learning application Revenue is recognized over time as we have a continuous obligation to provide the right of access to the intellectual property which includes the licenses and learning applications
Held for Sale or Sold also includes the revenue associated with those businesses which have been sold which includes Wiley s Efficient Learning test prep portfolio business and our advancement courses business which were both sold in fiscal year 2023 and our Tuition Manager business which was sold in the three months ended July 31 2023
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 decrease in contract liabilities excluding the sales return reserve was primarily driven by the reclassification of the held for sale amounts to Current liabilities held for sale on the Consolidated Statement of Financial Position in the first quarter of fiscal year 2024 including the sale of University Services in the third quarter of fiscal year 2024 Excluding the held for sale and disposition activity described above the change in contract liabilities was flat primarily due to revenue earned on journal subscription agreements transformational agreements and open access offset by renewals of journal subscription agreements transformational agreements and open access
As of April 30 2024 the aggregate amount of the transaction price allocated to the remaining performance obligations is approximately 498 6 million which includes the sales return reserve of 25 4 million Excluding the sales return reserve we expect that approximately 458 4 million will be recognized in the next twelve months with the remaining 14 8 million to be recognized thereafter
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 product types 1 Research Solutions services which includes customer specific implementation costs per the terms of the contract and 2 University Services which is included in the Held for Sale or Sold segment and includes customer specific costs to develop courses per the terms of the contract As of April 30 2024 we no longer have costs to fulfill related to the University Services business since it was sold on January 1 2024
Our assets associated with incremental costs to fulfill a contract were 3 1 million and 10 6 million at April 30 2024 and 2023 respectively and are included within Other non current assets on our Consolidated Statements of Financial Position We recorded amortization expense of 4 5 million 4 5 million and 5 2 million in the years ended April 30 2024 2023 and 2022 respectively related to these assets within Cost of sales on the Consolidated Statements of Loss Income
Sales and value added taxes are excluded from revenues Shipping and handling costs which are primarily incurred within the 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 the Consolidated Statements of Loss Income We incurred 25 9 million 27 1 million and 29 0 million in shipping and handling costs in the years ended April 30 2024 2023 and 2022 respectively
On November 1 2022 we completed the acquisition of an immaterial business included in our Learning segment The fair value of consideration transferred was 6 1 million which included 5 2 million of cash at the acquisition date and 0 9 million to be paid after the acquisition date The acquisition was accounted for using the acquisition method of accounting We recorded the aggregate excess purchase price over identifiable net tangible and intangible assets acquired and liabilities assumed which included an allocation of 3 9 million of goodwill allocated to the Learning segment and 3 7 million of intangible assets subject to amortization
The allocation of the total consideration transferred to the assets acquired including intangible assets and goodwill and the liabilities assumed was finalized during the three months ended October 31 2023
As part of our ongoing initiatives to simplify our portfolio to drive sustained performance improvement we have completed certain dispositions as of April 30 2024 and committed to a plan to divest additional businesses which are expected to be substantially completed by the second quarter of fiscal year 2025
On June 1 2023 Wiley s Board of Directors approved a plan to divest certain businesses that we determined are non core businesses Those businesses are University Services Wiley Edge and CrossKnowledge In accordance with FASB ASC Topic 205 Presentation of Financial Statements we determined that the planned divestitures of University Services Wiley Edge and CrossKnowledge each do not represent a strategic shift that will have a major effect on our consolidated results of operations and therefore their results of operations were not reported as discontinued operations We concluded that the businesses met all the requisite held for sale criteria as of June 1 2023 Therefore the related assets and liabilities were reclassified as of that date as held for sale on the Consolidated Statement of Financial Position until the date of sale
As a result of these planned divestitures in the three months ended July 31 2023 we reorganized our segments and our new structure consists of three reportable segments which includes Research no change Learning and Held for Sale or Sold as well as a Corporate expense category no change The operations of University Services Wiley Edge and CrossKnowledge are reported in the Held for Sale or Sold segment until the date of sale
On January 1 2024 we completed the sale of University Services On January 8 2024 we entered into an agreement to sell our Wiley Edge business which closed on May 31 2024 with the exception of its India operations The sale of Wiley Edge s India operation will be finalized later in calendar year 2024
On January 1 2024 we completed the sale of University Services which was included in our Held for Sale or Sold segment pursuant to a Membership Interest and Asset Purchase Agreement with Academic Partnerships LLC a Delaware limited liability company Academic Partnerships and Education Services Upper Holdings Corp a Delaware corporation The selling price for University Services at the date of sale which was updated during the three months ended April 30 2024 for an estimation of the working capital adjustment had a fair value of
of additional contingent consideration in the form of an earnout recorded at fair value based on revenue targets during each of the two fiscal years in the period from May 1 2024 through April 30 2026 Earnout and iii a number of common units of TVG Academic Partnerships Holdings LLC the ultimate parent company of Academic Partnerships equal to 10 of the total common units outstanding at the date of sale valued at
The principal amount of the Seller Note is subject to an increase of up to approximately 12 million in the event certain third party customer consents are obtained prior to January 1 2025 The maximum amount of the Earnout at the end of the target periods noted above will be impacted by the third party customer consents up to approximately 4 million The fair value of the Earnout will be impacted by these third party customer consents until settled Our total common units in the TVG Investment will also increase as certain third party customer consents are obtained
The Seller Note has a maturity date that is the earlier of i one year after the maturity date of Academic Partnerships material secured indebtedness for borrowed money and ii January 1 2031 The Seller Note bears interest at the rate of
The maximum Earnout amount is 40 million subject to adjustments for the third party customer consents as noted above We elected to record the fair value of the Earnout as of the date of the sale and will update that fair value as applicable until settled The fair value of the Earnout was based on a Monte Carlo simulation This fair value was categorized as Level 3 within the ASC Topic 820 fair value hierarchy This method considers the terms and conditions in the Membership Interest and Asset Purchase Agreement our best estimates of forecasted revenue for the Earnout periods and simulates a range of revenues over the applicable periods based on an estimate of revenue volatility The fair value of the Earnout was estimated as the present value of the potential range of payouts averaged across the range of simulated revenues
The pretax loss on sale was 107 0 million after accounting for the assets sold liabilities transferred upon sale and transaction costs and is included in Losses gains on sale of businesses and certain assets and impairment charges related to assets held for sale in our Consolidated Statements of Loss Income for the year ended April 30 2024 The loss was updated during the three months ended April 30 2024 due to an estimation of the working capital adjustment and the disposal of certain customers asset and liability balances In connection with the held for sale classification we recognized cumulative impairment charges of 75 4 million on the remeasurement of the disposal group at the lower of carrying value or fair value less costs to sell Upon the completion of the sale we recognized an additional loss of 31 6 million due to subsequent changes in the fair value less costs to sell as well as changes in the carrying amount of the disposal group
On May 31 2023 we completed the sale of our tuition manager business Tuition Manager which was included in our Held for Sale or Sold segment The divestiture did not represent a strategic shift that would have a major effect on our consolidated results of operations and therefore its results of operations were not reported as discontinued operations The cash received net of transaction costs at the date of sale was 0 5 million and 0 5 million of additional cash was received after the date of sale The pretax loss on sale was 1 5 million after accounting for the assets sold liabilities transferred upon sale and transaction costs and is included in Losses gains on sale of businesses and certain assets and impairment charges related to assets held for sale in our Consolidated Statements of Loss Income for the year ended April 30 2024 The carrying value of the net assets included in the pretax loss on sale was 2 5 million including intangible assets of 1 0 million and no goodwill
On February 28 2023 we completed the sale of Wiley s Efficient Learning test prep portfolio business In addition on March 31 2023 we completed the sale of our advancement courses business Both were included in our Held for Sale or Sold segment Neither disposition constituted a strategic shift and the impact on our overall operations and financial results was not material Accordingly the operations associated with the dispositions are not reported in discontinued operations The selling price for both dispositions was 16 5 million which included 15 5 million of cash received net of transaction costs at the date of disposition and 1 0 million to be received after the disposition date The pretax gain on sale was 10 2 million after accounting for the assets sold liabilities transferred upon sale and transaction costs and is included in Losses gains on sale of businesses and certain assets and impairment charges related to assets held for sale in our Consolidated Statements of Loss Income for the year ended April 30 2023 As a result of the closing of the transactions we derecognized net assets of 6 4 million including goodwill of 5 3 million and intangible assets of 2 4 million
As of April 30 2024 Wiley Edge and CrossKnowledge continue to be reported as held for sale We measured each disposal group at the lower of carrying value or fair value less costs to sell The determination of the fair value less costs to sell is based on the indicative sales values and includes value associated with contingent consideration to be received in the form of an earnout for Wiley Edge This fair value was categorized as Level 3 within the ASC Topic 820 fair value hierarchy In the year ended April 30 2024 we recorded held for sale pretax noncash impairment charges of 74 8 million The total impairment charge for Wiley Edge in the year ended April 30 2024 was 19 4 million The total impairment charge for CrossKnowledge in the year ended April 30 2024 was 55 4 million The pretax noncash impairment charges are reflected in Losses gains on sale of businesses and certain assets and impairment charges related to assets held for sale on the Consolidated Statements of Loss Income for the year ended April 30 2024 The impairments are included as a valuation allowance or contra asset account within Current assets held for sale and Non current assets held for sale on the Consolidated Statement of Financial Position as of April 30 2024
The following table shows a reconciliation of our cash cash equivalents and restricted cash included in current assets held for sale in our Consolidated Statement of Financial Position to our Consolidated Statement of Cash Flows for the year ended
On January 8 2024 we entered into a stock and asset purchase agreement Purchase Agreement with Inspirit Vulcan Bidco Limited a private limited company incorporated in England Wales Inspirit pursuant to which we agreed to sell our emerging talent and reskill training business Wiley Edge Business to Inspirit Transaction We closed on the Transaction on May 31 2024 with the exception of our India operation The sale of Wiley Edge s India operation will be finalized later in calendar year 2024
The results of Wiley Edge will continue to be reported in our operating results in the Held for Sale or Sold segment until the date of sale We entered into a TSA to facilitate the transition of the divested business
Basic loss earnings per share is computed by dividing net loss income by the weighted average number of common shares outstanding during the period Diluted loss earnings per share further includes any common shares available to be issued upon the exercise of unvested outstanding restricted stock units and other stock awards if such inclusions would be dilutive The shares associated with performance based stock awards PSU are considered contingently issuable shares and are included in the diluted weighted average number of common shares outstanding based on when they have met the performance conditions and when their effect is dilutive We determine the potentially dilutive common shares for all awards using the treasury stock method
In calculating diluted net loss per common share for the year ended April 30 2024 our diluted weighted average number of common shares outstanding excludes the effect of unvested restricted stock units and other stock awards as the effect was anti dilutive This occurs when a net loss is reported and the effect of using dilutive shares is antidilutive
For the years ended April 30 2024 2023 and 2022 pretax actuarial losses included in Unamortized Retirement Costs of approximately 7 9 million 6 0 million and 7 2 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 Other expense income net on our Consolidated Statements of Loss Income
Our policy for releasing the income tax effects from accumulated other comprehensive loss income is to release when the corresponding pretax accumulated other comprehensive loss income items are reclassified to earnings
In May 2022 the Company initiated a global program Global Restructuring Program to restructure and align our cost base with current and anticipated future market conditions which was previously referred to as the Fiscal Year 2023 Restructuring Program This program included severance related charges for the elimination of certain positions the exit of certain leased office space and the reduction of our occupancy at other facilities Under this program we reduced our real estate square footage occupancy by approximately
we expanded the scope of the program to include those actions that will focus Wiley on its leading global position in the development and application of new knowledge and drive greater profitability growth and cash flow We will focus on our strongest and most profitable businesses and large market opportunities in Research and Learning as well as streamline our organization and right size our cost structure to reflect these portfolio actions As part of the Global Restructuring Program we are further reducing our real estate square footage occupancy by approximately 13 due to actions taken in the year ended April 30 2024
The impairment charges include the impairment of operating lease ROU assets related to certain leases that will be subleased and the related property and equipment described further below In the year ended
these charges were recorded in Corporate Expenses In addition in fiscal year 2024 the impairment charges include the impairment of certain work in process capitalized software because it is no longer probable that the software being developed will be completed and the work in process capitalized software was reported at the lower of its carrying amount or fair value which was zero In the year ended
Due to the actions taken above we tested the operating lease ROU assets and the related property and equipment for those being subleased for recoverability by comparing the carrying value of the asset group to an estimate of the future undiscounted cash flows expected to result from the use and eventual disposition of the asset group Based on the results of the recoverability test we determined that the undiscounted cash flows of the asset groups were below the carrying values Therefore there was an indication of impairment We then determined the fair value of the asset groups by utilizing the present value of the estimated future cash flows attributable to the assets The fair value of these operating lease ROU assets and the property and equipment immediately subsequent to the impairment was 8 7 million and 12 1 million in the years ended
The acceleration of expense includes the acceleration of rent expense associated with operating lease ROU assets related to certain leases that will be abandoned or terminated and the related depreciation and amortization of property and equipment In addition in fiscal year 2024 the acceleration of expense includes the acceleration of amortization expense of certain capitalized software as a result of our decision to discontinue the use of those assets We determined that a revision of the useful lives was warranted and certain capitalized software was fully amortized over its remaining useful life
In addition we incurred ongoing facility related costs associated with certain properties consulting costs and other costs for other activities which includes relocation and other employee related costs
In the three months ended January 31 2023 due to the political instability and military actions between Russia and Ukraine we made the decision to close our operations in Russia which primarily consists of technology development resources We were substantially complete with our closure as of April 30 2023 except for the formal liquidation of the Russian legal entity which we expect to complete in fiscal year 2025 Since we were
1 4 million respectively related to this program The net credits for the year ended April 30 2022 are primarily due to changes in the number of headcount reductions and estimates for previously accrued costs As of April 30 2023 we substantially completed this program and we have no restructuring liability outstanding We currently anticipate immaterial ongoing facility charges and do not anticipate any further material charges related to the Business Optimization Program
Summary of Significant Accounting Policies Recently Issued and Recently Adopted Accounting Standards under the caption Sales Return Reserves for a discussion of the Inventory value of estimated sales returns
As a result of our decision to discontinue the use of certain capitalized software we determined that a revision of the useful lives was warranted and certain capitalized software was fully amortized over its remaining useful life In addition certain work in process capitalized software was impaired since it is no longer probable that the software being developed will be completed and was reported at the lower of its carrying amount or fair value which was zero The total amount was 20 3 million which included 15 9 million of accelerated expense reflected in depreciation and amortization in Operating and administrative expenses and 4 4 million in Restructuring and related charges credits reflected on our Consolidated Statements of Loss Income for the year end April 30 2024 These charges were recorded in the Research and Learning segments as well as Corporate Expenses
In the three months ended July 31 2023 we reorganized our segments Our new segment reporting structure consists of three reportable segments which includes Research no changes Learning and Held for Sale or Sold as well as a Corporate expense category no change which includes certain costs that are not allocated to the reportable segments
Segment Information for more details The Learning reportable segment includes two reporting units Academic and Professional The Held for Sale or Sold reportable segment includes three reporting units University Services Wiley Edge and CrossKnowledge No changes were made to the Research reportable segment
As a result of this realignment we are required to test goodwill for impairment immediately before and after the realignment Since there were no changes to the Research reportable segment no impairment test of the Research segment goodwill was required
We estimated the fair value of the reporting units using a weighting of fair values derived from an income and a market approach Under the income approach we determined the fair value of a reporting unit based on the present value of estimated future cash flows Cash flow projections are based on our best estimates of forecasted economic and market conditions over the period including growth rates expected changes in operating cash flows and cash expenditures The discount rate used is based on a weighted average cost of capital adjusted for the relevant risk associated with the characteristics of the business and the projected cash flows The market approach estimates fair value based on market multiples of current and forward 12 month revenue or EBITDA as applicable derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit
Prior to the realignment we concluded that the fair value of the Academic Publishing Talent Development which includes Wiley Edge and Professional Learning reporting units were above their carrying values Therefore there was no indication of impairment The carrying value of the University Services reporting unit was above its fair value which resulted in a pretax noncash goodwill impairment of
University Services was adversely impacted by market conditions and headwinds for online degree programs which lead to a decline in projected enrollments from existing partners pricing pressures and revenue share concessions and a decline in new partner additions over both the short term and long term which adversely impacted forecasted revenue growth and operating cash flows
Prior to performing the goodwill impairment test for University Services we also evaluated the recoverability of long lived assets of the reporting unit The carrying value of the long lived assets that were tested for impairment was approximately
We considered the lower than expected revenue and forecasted operating cash flows over a sustained period of time and downward revisions to our cash flow forecasts for this reporting unit to be indicators of impairment for their long lived assets Based on the results of the recoverability test we determined that the undiscounted cash flows of the asset group of the University Services reporting unit exceeded the carrying value Therefore there was no impairment
After the realignment we concluded that the fair value of the Academic Professional and Wiley Edge reporting units were above their carrying values Therefore there was no indication of impairment As noted above the goodwill of the University Services reporting unit was zero and no further testing of goodwill for impairment was required The carrying value of the CrossKnowledge reporting unit was above its fair value which resulted in a pretax noncash goodwill impairment of
CrossKnowledge was adversely impacted by a decline in the demand for its offerings which have resulted in lower sales and a decline in average contract value that adversely impacted forecasted revenue growth and operating cash flows
Prior to performing the goodwill impairment test for CrossKnowledge we also evaluated the recoverability of long lived assets of the reporting unit The carrying value of the long lived assets that were tested for impairment was approximately
We considered the lower than expected revenue and forecasted operating cash flows over a sustained period of time and downward revisions to our cash flow forecasts for this reporting unit to be indicators of impairment for their long lived assets Based on the results of the recoverability test we determined that the undiscounted cash flows of the asset group of the CrossKnowledge reporting unit exceeded the carrying value Therefore there was no impairment
As a result of signing the Purchase Agreement with Inspirit and the decrease in the fair value of the Business which was impacted by a decline in placements in the third quarter of fiscal year 2024 we tested the goodwill of the Wiley Edge reporting unit for impairment We estimated the fair value of the reporting unit based on the terms and conditions in the Purchase Agreement which reflected a selling price that included
Such impairment reduced the goodwill of the Wiley Edge reporting unit to zero This charge is reflected in Impairment of goodwill in the Consolidated Statements of Loss Income The impairment was due to subsequent changes in the fair value resulting from the continued progression of the selling process indications of changes in the consideration for the business and a decline in placements in the third quarter of fiscal year 2024 as well as changes in the carrying amounts of the disposal group
This method considers the terms and conditions in the Purchase Agreement our best estimates of forecasted gross profit for the earnout periods and simulates a range of gross profits over the applicable periods based on an estimate of gross profit volatility The fair value of the earnout was estimated as the present value of the potential range of payouts averaged across the range of simulated gross profits
Prior to performing the goodwill impairment test for Wiley Edge we also evaluated the recoverability of long lived assets of the reporting unit The carrying value of the long lived assets that were tested for impairment was approximately
We considered the changes in the fair value of the consideration for the business due to the continued progression of the selling process to be an indicator of impairment for its long lived assets Based on the results of the recoverability test we determined that the undiscounted cash flows of the asset group of the Wiley Edge reporting unit exceeded the carrying value Therefore there was no impairment
For our reporting units within the Research and Learning segments we performed a qualitative assessment by reporting unit as of February 1 2024 This assessment included consideration of key factors including macroeconomic conditions industry and market considerations financial performance WACC market multiples of current and forward 12 month revenue or EBITDA as applicable and other relevant entity and reporting unit specific events Based on our qualitative assessment we determined it was not more likely than not that the fair value of any reporting unit was less than its carrying amount As such it was not necessary to perform a quantitative test There have been no significant events or circumstances affecting the valuation of goodwill subsequent to the qualitative assessment performed as of February 1 2024
If the fair value of these reporting units decreases in future periods we could potentially have an impairment The future occurrence of a potential indicator of impairment such as a decrease in expected net earnings changes in assumptions adverse equity market conditions a decline in current market multiples a decline in our common stock price a significant adverse change in legal factors or business climates an adverse action or assessment by a regulator unanticipated competition strategic decisions made in response to economic or competitive conditions or a more likely than not expectation that a reporting unit or a significant portion of a reporting unit will be sold or disposed of could require an interim assessment for some or all of the reporting units before the next required annual assessment
In the three months ended January 31 2023 we reorganized our Education lines of business into two new customer centric segments Our new segment reporting structure consisted of three reportable segments which included Research no changes Academic and Talent as well as a Corporate expense category no change which includes certain costs that are not allocated to the reportable segments The Academic reportable segment included two reporting units Academic Publishing and University Services and the Talent reportable segment included two reporting units Talent Development and Professional Learning
As a result of this realignment we were required to test goodwill for impairment immediately before and after the realignment Since there were no changes to the Research reportable segment no interim impairment test of the Research segment goodwill was required
We estimated the fair value of the reporting units using a weighting of fair values derived from an income and a market approach Fair value computed by these methods is arrived at using a number of key assumptions including forecasted revenues and related growth rates forecasted operating cash flows the discount rate and the selection of relevant market multiples of comparable publicly traded companies with similar characteristics to the reporting unit Under the income approach we determined the fair value of a reporting unit based on the present value of estimated future cash flows Cash flow projections are based on our best estimates of forecasted economic and market conditions over the period including growth rates expected changes in operating cash flows The discount rate used is based on a weighted average cost of capital adjusted for the relevant risk associated with the characteristics of the business and the projected cash flows The market approach estimates fair value based on market multiples of current and forward 12 month revenue or EBITDA as applicable derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit
Prior to the realignment we concluded that the fair value of the Academic Professional Learning reporting unit was above its carrying value Therefore there was no indication of impairment The carrying value of the Education Services reporting unit was above its fair value which resulted in a pretax noncash goodwill impairment of 31 0 million This charge is reflected in Impairment of goodwill in the Consolidated Statements of Loss Income
Education Services was adversely impacted by market conditions and headwinds for online degree programs This has led to a decline in projected student enrollments from existing partners pricing pressures and revenue share concessions and a decline in new partner additions over both the short term and long term which adversely impacted forecasted revenue growth and operating cash flows This was partially offset by projected growth in talent placements partially due to expansion into new regions and the addition of new corporate clients which are forecasted to have a positive impact on revenue growth and operating cash flows
Prior to performing the goodwill impairment test for Education Services we also evaluated the recoverability of long lived assets of the reporting unit The carrying value of the long lived assets that were tested for impairment was approximately 467 0 million When indicators of impairment are present we test definite lived and long lived assets for recoverability by comparing the carrying value of an asset group to an estimate of the future undiscounted cash flows expected to result from the use and eventual disposition of the asset group We considered the lower than expected revenue and forecasted operating cash flows over a sustained period of time and downward revisions to our cash flow forecasts for this reporting unit to be indicators of impairment for their long lived assets Based on the results of the recoverability test we determined that the undiscounted cash flows of the asset group of the Education Services reporting unit exceeded the carrying value Therefore there was no impairment
After the realignment we concluded that the fair value of the Academic Publishing Talent Development and Professional Learning reporting units were above their carrying values Therefore there was no indication of impairment The carrying value of the University Services reporting unit was above its fair value which resulted in a pretax noncash goodwill impairment of 68 8 million This charge is reflected in Impairment of goodwill in the Consolidated Statements of Loss Income
University Services was adversely impacted by market conditions and headwinds for online degree programs which led to a decline in projected enrollments from existing partners pricing pressures and revenue share concessions and a decline in new partner additions over both the short term and long term which adversely impacted forecasted revenue growth and operating cash flows
Prior to performing the goodwill impairment test for University Services we also evaluated the recoverability of long lived assets of the reporting unit The carrying value of the long lived assets that were tested for impairment was approximately 326 0 million When indicators of impairment are present we test definite lived and long lived assets for recoverability by comparing the carrying value of an asset group to an estimate of the future undiscounted cash flows expected to result from the use and eventual disposition of the asset group We considered the lower than expected revenue and forecasted operating cash flows over a sustained period of time and downward revisions to our cash flow forecasts for this reporting unit to be indicators of impairment for their long lived assets Based on the results of the recoverability test we determined that the undiscounted cash flows of the asset group of the University Services reporting unit exceeded the carrying value Therefore there was no impairment
As of February 1 2023 we completed a quantitative assessment for our annual goodwill impairment test for our University Services reporting unit We concluded that the fair value of the reporting unit was above the carrying value and therefore there was no indication of impairment For our other reporting units we performed a qualitative assessment by reporting unit as of February 1 2023 This assessment included consideration of key factors including macroeconomic conditions industry and market considerations cost factors financial performance weighted average cost of capital WACC market multiples of current and forward 12 month revenue or EBITDA as applicable and other relevant entity and reporting unit specific events Based on our qualitative assessment we determined it was not more likely than not that the fair value of any reporting unit was less than its carrying amount As such it was not necessary to perform a quantitative test
We estimated the fair value of the University Services reporting unit using a weighting of fair values derived from an income and a market approach Under the income approach we determined the fair value of the reporting unit based on the present value of estimated future cash flows Cash flow projections are based on our best estimates of forecasted economic and market conditions over the period including growth rates expected changes in operating cash flows The discount rate used is based on a weighted average cost of capital adjusted for the relevant risk associated with the characteristics of the business and the projected cash flows The market approach estimates fair value based on market multiples of current and forward 12 month revenue or EBITDA as applicable derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit
The developed technology balance as of April 30 2024 and 2023 is presented net of accumulated impairments and write offs of 2 8 million The indefinite lived brands and trademarks balance as of April 30 2024 and 2023 is net of accumulated impairments of 93 1 million
For fiscal years 2024 and 2023 we performed a qualitative assessment for our annual indefinite lived intangible assets impairment test This assessment included consideration of key factors including macroeconomic conditions industry and market considerations financial performance WACC and other relevant entity and reporting unit specific events Based on our qualitative assessment we determined it was not more likely than not that the fair value of any indefinite lived intangible asset was less than its carrying amount As such it was not necessary to perform a quantitative test
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 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
We recognize operating lease expense on a straight line basis over the term of the lease Lease payments may be fixed or variable Only lease payments that are fixed in substance fixed or depend on a rate or index are included in determining the lease liability Variable lease payments include payments made to the lessor for taxes insurance and maintenance of the leased asset and are recognized as operating costs as incurred
We apply certain practical expedients allowed by ASC Topic 842 Leases Leases that are more than one year in duration are capitalized and recorded on our Consolidated Statements of Financial Position Leases with an initial term of 12 months or less are recognized as short term lease operating costs on a straight line basis over the term We have also elected to account for the lease and non lease components as a single component 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
During the year ended April 30 2024 we added 2 4 million to the ROU assets and 2 2 million to the operating lease liabilities due to lease renewals as well as modifications to our existing operating leases
As a result of the Global Restructuring Program which included the exit of certain leased office space we recorded restructuring and related charges which included impairment charges and the acceleration of expense associated with certain operating lease ROU assets
Total net lease cost does not include those costs and sublease income for operating leases we had identified as part of our restructuring programs that would be subleased The costs and sublease income for those leases are included in Restructuring and related charges credits on our Consolidated Statements of Loss Income See Note 7 Restructuring and Related Charges Credits for more information on these programs
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 the Consolidated Statement of Financial Position as of April 30 2024
The Company s effective tax rate for the fiscal year ended April 30 2024 was primarily driven by the following items i an increase in the valuation allowance of 30 2 million ii the impairment of goodwill resulting from the segment realignment described in
As of April 30 2024 and April 30 2023 the total amount of unrecognized tax benefits was 9 2 million and 9 4 million respectively of which 0 2 million and 0 3 million represented accruals for interest and penalties recorded as additional tax expense in accordance with our accounting policy We recorded net interest expense on reserves for unrecognized and recognized tax benefits of 0 2 million in each of the years ended April 30 2024 and 2023 As of April 30 2024 and April 30 2023 the total amounts of unrecognized tax benefits that would reduce our income tax provision if recognized were approximately 9 2 million and 9 4 million respectively We do not expect any significant changes to the unrecognized tax benefits within the next twelve months
We file income tax returns in the US and various states and non US tax jurisdictions Our major taxing jurisdictions are the United States the United Kingdom and Germany We are no longer subject to income tax examinations for years prior to fiscal year 2014 in the major jurisdictions in which we are subject to tax
The change in net deferred taxes was primarily due to the decrease in net deferred tax liabilities primarily attributable to a decrease in tax liabilities in intangibles and fixed assets In addition we had a decrease in net deferred tax assets related to an increase in the valuation allowance In assessing the need for a valuation allowance we take into account prior earnings history expected future earnings reversal of existing taxable temporary differences carry back and carry forward periods and tax planning strategies that could potentially enhance the likelihood of the realization of a deferred tax asset Changes to tax laws and statutory tax rates can also have an impact on our valuation allowances Changes in valuation allowances are included in the Company s income tax provision in the period of change
We have provided a 53 5 million valuation allowance as of April 30 2024 In fiscal year 2024 due to temporary differences in the US our deferred taxes reversed from a net deferred tax liability position to a net deferred tax asset position Due to losses in the US resulting from impairments restructuring and acceleration of amortization expense on capitalized software we concluded it was more likely than not that a portion of our deferred tax asset may not be realized As a result we increased the valuation allowance by 30 2 million
As of April 30 2024 we have apportioned state net operating loss carryforwards totaling approximately 113 million with a tax effected value of 6 4 million net of federal benefits We have foreign net operating loss carryforwards totaling approximately 47 2 million with a tax effected value of 11 8 million and federal net operating loss carryforwards totaling 2 9 million with a tax effected value of 0 6 million Our state foreign and federal NOLs and credits to the extent they expire expire in various amounts from 1 year to indefinite
We intend to repatriate earnings from our non US subsidiaries and to the extent we repatriate these funds to the US we will be required to pay income taxes in various US state and local jurisdictions and applicable non US withholding or similar taxes in the periods in which such repatriation occurs As of April 30 2024 we have recorded a 3 1 million liability related to the estimated taxes that would be incurred upon repatriating certain non US earnings to the US
The following table summarizes the scheduled annual maturities for the next four years of our long term debt including the short term portion of long term debt This schedule represents the principal portion amount of debt outstanding and therefore excludes unamortized issuance costs
On November 30 2022 we entered into the second amendment to the Third Amended and Restated Credit Agreement collectively the Amended and Restated CA The Amended and Restated CA as of November 30 2022 provided for senior unsecured credit facilities comprised of the following i a five year revolving credit facility in an aggregate principal amount up to 1 115 billion ii a five year term loan A facility consisting of 200 million and iii 185 million aggregate principal amount revolving credit facility through May 2024
Under the terms of the Amended and Restated CA which can be drawn in multiple currencies we have the option of borrowing at the following floating interest rates depending on the currency borrowed i at a rate based on the US Secured Overnight Financing Rate SOFR the Sterling Overnight Index Average Rate SONIA or a EURIBOR based rate each rate 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 zero to 0 50 depending on our consolidated net leverage ratio With respect to SOFR loans there is a SOFR adjustment of between 0 10 and 0 25 depending on the duration of the loan The lender s base rate is defined as the highest of i the US federal funds effective rate plus a 0 50 margin ii the Daily SOFR 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 Amended and Restated CA 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 CA 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
In the three months ended January 31 2023 we incurred 4 5 million of costs related to the second amendment of the Amended and Restated CA which resulted in total costs capitalized of 5 8 million for the Amended and Restated CA The amount related to the term loan A facility was 0 8 million consisting of lender fees of 0 8 million was recorded as a reduction to Long term debt and non lender fees of less than 0 1 million was included in Other non current assets on our Consolidated Statement of Financial Position The amount related to the revolving credit facility was 5 0 million and was included in Other non current assets on our Consolidated Statement of Financial Position
In the three months ended January 31 2023 we incurred a loss of 0 2 million on the write off of unamortized deferred costs in connection with the second amendment of the Amended and Restated CA which is reflected in Other expense income net on our Consolidated Statements of Loss Income for the year ended April 30 2023
The amortization expense of the costs incurred related to the Amended and Restated CA related to the lender and non lender fees is recognized over a five year term for credit commitments that mature in November 2027 and an 18 month term for credit commitments that mature in May 2024 Total amortization expense was 1 2 million 1 1 million and 1 1 million for the years ended
Our total available lines of credit as of April 30 2024 were approximately 1 493 5 million which includes the Amended and Restated CA of which approximately 718 3 million was unused The weighted average interest rates on total debt outstanding during the years ended April 30 2024 and 2023 were 5 52 and 4 05 respectively As of April 30 2024 and 2023 the weighted average interest rates for total debt were 6 07 and 4 76 respectively
As of April 30 2024 we had total debt outstanding of 774 6 million net of unamortized issuance costs of 0 6 million The 775 2 million of debt outstanding are variable rate loans under the Amended and Restated CA The carrying value of the debt approximates fair value
As of April 30 2024 and 2023 the interest rate swap agreements we maintained were designated as fully effective cash flow hedges as defined under ASC Topic 815 As a result the impact on our Consolidated Statements of Loss Income from changes in the fair value of the interest rate swaps was fully offset by changes in the interest expense on the underlying variable rate debt instruments It is management s intention that the notional amount of interest rate swaps be less than the variable rate loans outstanding during the life of the derivatives
During the fourth quarter of fiscal 2024 we entered into a 50 0 million notional amount of forward starting interest rate swap agreement to hedge the cash flow risk of variability in interest payments on our variable rate borrowings The effective date of the forward starting interest rate swap agreement is July 15 2024 As of April 30 2024 this contract met the criteria of a cash flow hedge
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 our interest rate swaps designated as cash flow hedges as of April 30 are reflected in our Consolidated Statements of Financial Position as follows
We may enter into foreign currency forward contracts to manage our exposure on certain foreign currency denominated assets and liabilities The foreign currency forward exchange contracts are marked to market through Foreign exchange transaction losses gains on our Consolidated Statements of Loss Income and carried at fair value on our 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 Consolidated Statements of Loss Income
As of April 30 2024 and 2023 we did not maintain any open foreign currency forward contracts In addition we did not maintain any open foreign currency forward contracts during the years ended April 30 2024 and 2023
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 April 30 2024 will not have a material effect upon our consolidated financial condition or results of operations
We have retirement plans that cover substantially all employees The plans generally provide for employee retirement between the ages 60 and 65 and benefits based on length of service and compensation as defined
We maintain the Supplemental Executive Retirement Plan for certain officers and senior management which provides for the payment of supplemental retirement benefits after the termination of employment for 10 years or in a lifetime annuity Under certain circumstances including a change of control as defined the payment of such amounts could be accelerated on a present value basis Future accrued benefits to this plan have been discontinued as noted above
due to the closure of our operations in Russia there was a curtailment and a settlement credit due to the wind up of the Russia Pension Plan of 1 5 million which is primarily reflected in Other expense income net on our Consolidated Statements of Loss Income
In the year ended April 30 2022 because of a reduction in force there was a curtailment credit of less than 0 1 million related to the Retirement Indemnity Plan for the Employees of Cross Knowledge a France pension Plan which is reflected in Restructuring and related charges credits on the Consolidated Statements of Loss Income
The service cost component of net pension expense income is reflected in Operating and administrative expenses on our Consolidated Statements of Loss Income The other components of net pension expense income are reported separately from the service cost component and below Operating income Such amounts are reflected in Other expense income net on our Consolidated Statements of Loss Income
The recognized net actuarial loss for each fiscal year is calculated using the corridor method which reflects the amortization of the net loss at the beginning of the fiscal year in excess of 10 of the greater of the market value of plan assets or the projected benefit obligation The amortization period is based on the average expected life of plan participants for plans with all or almost all inactive participants and frozen plans and on the average remaining working lifetime of active plan participants for all other plans
We recognize the overfunded or underfunded status of defined benefit postretirement plans measured as the difference between the fair value of plan assets and the projected benefit obligation on the Consolidated Statements of Financial Position The change in the funded status of the plan is recognized in Accumulated other comprehensive loss on the Consolidated Statements of Financial Position Plan assets and obligations are measured at fair value as of our Consolidated Statements of Financial Position date
Actuarial gains in the US resulting in a decrease to our projected benefit obligation for the year ended April 30 2024 were primarily due to an increase in the discount rate Actuarial gains for the non US plans resulting in a decrease to our projected benefit obligation for the year ended April 30 2024 were primarily due to increases in the discount rates
Actuarial gains in the US resulting in a decrease to our projected benefit obligation for the year ended April 30 2023 were primarily due to an increase in the discount rate Actuarial gains in non US countries resulting in a decrease to our projected benefit obligation for the year ended April 30 2023 were primarily due to significant increases in the discount rates
The investment guidelines for the defined benefit pension plans are established based upon an evaluation of market conditions plan liabilities cash requirements for benefit payments and tolerance for risk Investment guidelines include the use of actively and passively managed securities The investment objective is to ensure that funds are available to meet the plans benefit obligations when they are due The investment strategy is to invest in high quality and diversified equity and debt securities to achieve our long term expectation The plans risk management practices provide guidance to the investment managers including guidelines for asset concentration credit rating and liquidity For those plan assets measured at NAV as defined below a redemption request can be executed within a 7 day notice Asset allocation favors a balanced portfolio with a global aggregated target allocation of approximately 30 equity securities and 70 fixed income securities and cash Due to volatility in the market the target allocation is not always desirable and asset allocations will fluctuate between acceptable ranges of plus or minus 5 We regularly review the investment allocations and periodically rebalance investments to the target allocations We categorize our pension assets into three levels based upon the assumptions inputs used to price the assets Level 1 provides the most reliable measure of fair value whereas Level 3 generally requires significant management judgment The three levels are defined as follows
Measurement Topic 820 Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share or Its Equivalent certain investments that are measured at fair value using the net asset value NAV per share or its equivalent practical expedient do not have to be classified in the fair value hierarchy The fair value amounts presented in the following tables are intended to permit reconciliation of the fair value hierarchy to the amounts presented for the total pension benefit plan assets
will be approximately 15 0 million including 11 8 million of minimum amounts required for our non US plans From time to time we may elect to make voluntary contributions to our defined benefit plans to improve their funded status
We provide contributory life insurance and health care benefits subject to certain dollar limitations for substantially all of our eligible retired US employees The retiree health benefit is no longer available for any employee who retires after December 31 2017 The cost of such benefits is expensed over the years the employee renders service and is not funded in advance The accumulated post retirement benefit obligation recognized on the Consolidated Statements of Financial Position as of April 30 2024 and 2023 was 0 6 million and 0 7 million respectively Annual credits for these plans were 0 1 million for each of the years ended April 30 2024 2023 and 2022
We have defined contribution savings plans Our contribution is based on employee contributions and the level of our match We may make discretionary contributions to all employees as a group The expense recorded for these plans was approximately 27 0 million 30 7 million and 30 3 million in the years ended April 30 2024 2023 and 2022 respectively
The Company provides stock based compensation to its employees and non employee directors which may include restricted stock units RSUs PSU and stock options collectively stock based awards All equity compensation plans have been approved by shareholders On September 29 2022 the Company s shareholders approved the 2022 Omnibus Stock and Long Term Incentive Plan the 2022 Plan which replaced with respect to new award grants our 2014 Key Employee Stock Plan and 2018 Director Stock Plan the Prior Plans that were previously in effect Following the approval of the 2022 Plan no further awards were available to be issued under the Prior Plans but awards outstanding under the Prior Plans as of that date remain outstanding in accordance with their terms A total numb
er of 6 2 million shares of our Class A stock was authorized under the 2022 Plan In addition any outstanding awards cancelled from the Prior Plans are added to the shares available under the 2022 Plan As of April 30 2024 there were approximately 5 6 million securities remaining that are available for future issuance under the 2022 Plan We issue treasury shares to fund awards issued under the 2022 Plan
Under the terms of our stock option plan the exercise price of stock options granted may not be less than 100 of the fair market value of the stock at the date of grant Options are exercisable over a maximum period of ten years from the date of grant For the options granted in the years ended April 30 2024 2023 and 2022 such options generally vest 10 20 30 and 40 on April 30 or on each anniversary date after the award is granted
The following table provides the estimated weighted average fair value for options granted during the years ended April 30 using the Black Scholes option pricing model and the significant weighted average assumptions used in their determination
As of April 30 2024 there was 1 5 million of unrecognized share based compensation cost related to options which is expected to be recognized over a period up to 4 years or 2 3 years on a weighted average basis
The intrinsic value is the difference between our common stock price and the option grant price There were no options exercised during the year ended April 30 2024 The total intrinsic value of options exercised during the years ended April 30 2023 and 2022 was 0 1 million and 0 4 million respectively The total grant date fair value of stock options vested during the years ended April 30 2024 2023 and 2022 was 0 9 million 0 5 million and 1 3 million respectively
Under the terms of our long term incentive plans performance based restricted unit awards are payable in restricted shares of our Class A Common Stock upon the achievement of certain three year or less financial performance based targets During each three year period or less we adjust compensation expense based upon our best estimate of expected performance Restricted performance share units vest 100 on June 30 following the end of the three year performance cycle
We may also grant individual restricted unit awards payable in restricted shares of our Class A Common Stock to key employees in connection with their employment Restricted shares generally vest ratably 25 per year
As of April 30 2024 there was 29 4 million of unrecognized share based compensation cost related to performance based and other restricted stock awards which is expected to be recognized over a period up to 4 years or 2 3 years on a weighted average basis
Compensation expense for restricted stock awards is measured using the closing market price of our Class A Common Stock at the date of grant The total grant date value of shares vested during the years ended April 30 2024 2023 and 2022 was 29 9 million 25 7 million and 22 0 million respectively
On October 10 2023 the Company named Mr Matthew Kissner interim President and CEO and entered into an employment agreement Employment Agreement with him Under the Employment Agreement Mr Kissner will be eligible to participate in the 2024 Executive Long Term Incentive Plan ELTIP with a target long term incentive equal to 1 8 million
on June 30 2026 Awards are subject to forfeiture in the case of voluntary termination prior to vesting and continued vesting in the case of earlier termination of employment without cause or due to constructive discharge All other terms and conditions are the same as for other executives as outlined in the ELTIP grant agreements
Under the terms of the 2022 Plan each nonemployee director is eligible to receive an annual award of restricted shares of our Class A Common Stock equal in value to 100 of the annual director stock retainer fee based on the stock price at the close of the New York Stock Exchange on the date of grant Such restricted shares will vest on the earliest of i the day before the next annual meeting of stockholders following the grant ii the nonemployee director s death or disability as determined by the Governance Committee of the Board of Directors Governance Committee or iii a change in control as defined in the 2022 Plan The granted shares may not be sold or transferred during the time the nonemployee director remains a director There were 25 744 30 706 and 18 384 restricted shares awarded under the 2022 Plan or the 2018 Plan as the case may be for the years ended April 30 2024 2023 and 2022 respectively In addition pursuant to the John Wiley Sons Inc Deferred Compensation Plan for Directors 2005 After Compensation as amended through September 20 2022 Deferred Compensation Plan each nonemployee director has the option of receiving all or part of the annual cash retainer in the form of deferred stock and receive dividends in the form of deferred stock The annual cash retainers deferred as stock and the dividends received in the form of deferred stock all pursuant to the Deferred Compensation Plan are nominal
Wiley has two classes of common stock Class A and Class B Each share of our Class B Common Stock is convertible into one share of Class A Common Stock The holders of Class A stock are entitled to elect 30 of the entire Board of Directors and the holders of Class B stock are entitled to elect the remainder On all other matters each share of Class A stock is entitled to one tenth of one vote and each share of Class B stock is entitled to one vote
During the year ended April 30 2020 our Board of Directors approved a share repurchase program of 200 million of Class A or B Common Stock As of April 30 2024 we had authorization from our Board of Directors to purchase up to 117 4 million that was remaining under this program
The share repurchase program described above is in addition to the share repurchase program approved by our Board of Directors during the year ended April 30 2017 of four million shares of Class A or B Common Stock As of April 30 2022 no additional shares were remaining under this program for purchase
We report our segment information in accordance with the provisions of FASB ASC Topic 280 Segment Reporting We determine our operating and reportable segments based on how our chief operating decision maker CODM evaluates our business performance manages the operations makes operating decisions and allocates resources
On June 1 2023 Wiley s Board of Directors approved a plan to divest certain businesses that we determined are non core businesses Those businesses are University Services Wiley Edge and CrossKnowledge On January 1 2024 we completed the sale of University Services On January 8 2024 we entered into an agreement to sell our Wiley Edge business which closed on May 31 2024 with the exception of its India operations The sale of Wiley Edge s India operation will be finalized later in calendar year 2024 We expect to complete the sale of CrossKnowledge by the second quarter of fiscal year 2025 As a result of these planned divestitures in the three months ended July 31 2023 we reorganized our segments in a manner consistent with the way management evaluates the businesses and our new structure consists of three operating segments and reportable segments which includes Research no change Learning and Held for Sale or Sold as well as a Corporate expense category no change which includes certain costs that are not allocated to the reportable segments Prior period segment results and disclosures within the Notes to Consolidated Financial Statements have been recast to the new segment presentation There were no changes to our consolidated financial results
includes the reporting lines of Research Publishing and Research Solutions and provides peer reviewed scientific technical and medical STM publishing content platforms and related services to academic corporate and government customers academic societies and individual researchers
includes the reporting lines of Academic and Professional and provides scientific professional and education print and digital books digital courseware to libraries corporations students professionals and researchers as well as assessment services to businesses and professionals
includes businesses held for sale including Wiley Edge and CrossKnowledge as well as those sold in fiscal year 2024 which includes University Services and Tuition Manager and in fiscal year 2023 Test Prep and Advancement Courses The operations of University Services Wiley Edge and CrossKnowledge are reported in the Held for Sale or Sold segment until sold
The performance metric used by our chief operating decision maker to evaluate performance of our reportable segments is Adjusted Operating Income In the fourth quarter of fiscal year 2024 we renamed the performance metric from Adjusted Contribution to Profit to Adjusted Operating Income with no changes in the calculation of this metric
We discontinued use of the mthree trademark that resulted in a change in the useful life and accelerated amortization expense of 4 6 million in the three months ended July 31 2022 This amortization expense was an adjustment to the Held for Sale or Sold Adjusted operating income In addition it was included in Depreciation and amortization in the table above
In the three months ended January 31 2023 we settled a litigation matter related to consideration for a previous acquisition for 3 7 million which is included in Corporate Operating and administrative expenses
The Company s Chief Executive Officer and Chief Financial Officer together with the Chief Accounting Officer and other members of the Company s management have conducted an evaluation of the Company s disclosure controls and procedures as defined in Rules 13a 15 e and 15d 15 e under the Securities Exchange Act of 1934 the Exchange Act as of the end of the period covered by this report Based on this evaluation the Chief Executive Officer and Chief Financial Officer have concluded that the Company s disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in reports filed or submitted under the Exchange Act is i recorded processed summarized and reported within the time periods specified by the Securities and Exchange Commission s rules and forms and ii accumulated and communicated to the Company s management including its Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure
There were no changes in our internal control over financial reporting in the fourth quarter of fiscal year 2024 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Rule 13a 15 f of the Exchange Act Under the supervision and with the participation of our management including our Chief Executive Officer and Chief Financial Officer management conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework in Internal Control Integrated Framework 2013 issued by the Committee of Sponsoring Organizations of the Treadway Commission Based on their evaluation our management concluded that our internal control over financial reporting was effective as of April 30 2024
The effectiveness of our internal control over financial reporting as of April 30 2024 has been audited by PricewaterhouseCoopers LLP an independent registered public accounting firm as stated in their report which is included herein
During the fiscal quarter ended April 30 2024 none of our directors or officers adopted modified or terminated a Rule 10b5 1 trading arrangement or a non Rule 10b5 1 trading arrangement as such terms are defined under Item 408 of Regulation S K
is a 7th generation member of the Wiley family and brings to the Board deep knowledge and appreciation of the contributions Wiley makes to research learning and knowledge His alignment with shareholder and stakeholder interests makes Mr Wiley an important part of the Board s governance processes along with a majority of independent directors Mr Wiley has broad and deep experience in Wiley s industries with partners and customers in the markets Wiley serves He also brings in depth knowledge of numerous businesses functions and initiatives within Wiley including in digital publishing and platforms and new product and business development partnerships and global business and M A Mr Wiley was elected Chair of the Board of Directors of Wiley in 2019 having served as a director since 2012 Prior to being elected as Chair Mr Wiley was an employee since 2003 Before becoming Chair Mr Wiley worked in Wiley s Research division on business development including building partnerships with academic and professional societies and in China Previously he worked in corporate M A and strategy development on international business development digital and new business initiatives and product development Prior to that he worked as a marketer and editor of professional books and products
has over 30 years of board service in public private and non profit environments She is an experienced general manager and business leader and has held a number of executive officer positions in public and private companies primarily in technology fields including roles as Chief Executive Officer of PlayFirst Inc and Navigenics Inc Chief Operating Officer of Velti plc Nasdaq VELT President of BabyCenter Inc a Johnson and Johnson company NYSE JNJ and SVP General Manager at Intuit Inc Nasdaq INTU She has also been involved in venture capital higher education and executive leadership communities in various capacities including serving on the Board of Trustees of Stanford University Ms Baker also currently serves on the board of Blue Shield of California where she chairs the Audit Committee
has more than 30 years of entrepreneurial experience in creating and growing consumer facing and software businesses as a chief executive officer as well as significant experience and insights in technological advancement and operations Mr Bell has been Senior Partner at Archer Venture Capital since 2018 He was affiliated with General Catalyst Partners a venture capital and private equity firm as a Managing Director and then an Executive in Residence from 2006 to 2017 Mr Bell is also the founder of The Outdoor Life Network now NBC Sports Network a recipient of the Ernst Young Entrepreneur of the Year Award for California and New England and a four time Emmy Award winning producer and writer of documentaries on adventure wildlife and vanishing cultures Mr Bell serves on the boards of several private companies including Later formerly Mavrck and the Association of College and University Educators He also serves on the boards of several non profit organizations including the Gulf of Maine Research Institute and Squash Busters
is a senior technology leader with over 20 years of experience in product general management operations and strategy Most recently Ms Birnbaum served as Chief Operating Officer from 2017 to 2018 at PlayFab prior to its acquisition by Microsoft Corporation Nasdaq MSFT Prior to PlayFab Ms Birnbaum served in a variety of roles at GrubHub NYSE GRUB from 2011 to 2016 most recently as Senior Vice President of product and led product management user experience and design during GrubHub s growth from a startup to a public company She currently serves on the board of directors of Root Inc Nasdaq ROOT the parent company of Root Insurance Company Ms Birnbaum also serves on the board of directors of several private companies including Bridge Legal Holdings Fandom Inc and Recycle Track Systems Inc She also serves on the board of non profit Forterra NW and as a trustee of Partners In Health Ms Birnbaum is Diligent Climate Leadership Certified
has over 30 years of experience in transforming and building global technology and service organizations as well as extensive experience in senior leadership positions Mr Dobson has been Chief Executive Officer of Epiq a global provider of legal and business services since 2019 and also serves on its board of directors Previously Mr Dobson was the Chief Executive Officer of Digital River from 2013 to 2018 and served as Vice Chairman of the Digital River s board of directors until 2019 From 2010 to 2012 Mr Dobson served as Executive Vice President and Group Executive Global Lines of Business at CA Technologies From 2009 to 2010 Mr Dobson served as President of Pitney Bowes Management Services Inc a wholly owned subsidiary of Pitney Bowes Inc
has extensive executive leadership experience in academia bringing insight into the needs and practices of the academic community critical for developing and innovating new business models in our key businesses Dr Hemphill has served as Old Dominion University s ODU ninth president since 2021 and previously served as Radford University s seventh president from 2016 to 2021 Dr Hemphill has also held senior roles at various educational institutions earlier in his career including the University of Arkansas Fayetteville Northern Illinois University and West Virginia State University In his role as President of ODU Dr Hemphill serves on various boards and commissions He also serves on the boards of Jefferson Science Associates LLC and Preston Hollow Community Capital
is a seasoned non executive director having served as the non executive chairman of the board of directors of Moody s Corporation from 2005 to 2012 and again from 2021 to 2023 and a member of the board from 2003 to 2023 Mr McDaniel is also a global leader with extensive strategic and operational knowledge in a highly regulated financial services environment and experience in implementing international business expansion including the launch of new products He previously served as the Chief Executive Officer of Moody s Corporation for over 15 years from 2005 through 2020 as well as held additional roles in senior leadership including as President and Chief Operating Officer of Moody s Corporation Mr McDaniel serves on the board of directors of Raymond James Financial NYSE RJF and as a Trustee on the Muhlenberg College Board
has extensive experience with leading a global public company strategic planning financial planning and analysis acquisitions and partnerships and investor relations In addition through his active engagement in the academic community and investing in early stage companies he has exposure to innovative technology enabled business models He has served as Wiley s 10th President and Chief Executive Officer for 13 years from 1998 to 2011 when he retired after nearly 22 years Mr Pesce is a member of the Board of Trustees of William Paterson University Mr Pesce is also a benefactor and advisor to the Pesce Family Mentoring Institute at William Paterson University He served on the Board of Overseers of New York University s Stern School of Business for 17 years until 2005 Mr Pesce also launched Pesce Family Ventures LLC in 2015 with the aim to invest in early stage companies particularly entities that leverage enabling technology to serve customers
has extensive finance and corporate management experience as well as knowledge in the technology and infrastructure sectors in both developed and emerging markets having served as Executive Vice President and Chief Financial Officer of Arm Limited from 2019 to 2022 From 2016 to 2019 Mr Singh served as Senior Vice President and Chief Financial Officer and in 2016 as Chief Strategy and Marketing Officer of Unisys Corp Prior to that Mr Singh was a Managing Director at SunTrust Bank s equities unit from 2013 to 2016 and a Senior Vice President in finance at Comcast Corporation from 2012 to 2013 Mr Singh is currently a member of the board of directors of IonQ NYSE IONQ ICEYE and Axelera AI He also recently joined the advisory board of Resonance He has advised startups as a member of Columbia University s Entrepreneurship Advisory Board and Engineering Development Council He has also participated as a project advisor for the U S Department of Homeland Security and other agencies on national security and critical infrastructure matters
The following information will be included in the Company s Proxy Statement for our 2024 Annual Meeting of Shareholders to be filed within 120 days of the Company s fiscal year end of April 30 2024 2024 Proxy Statement and is incorporated herein by reference
s committees of the Board of Directors including the audit committee and designated financial experts is contained under the captions Report of the Audit Committee and Committees of the Board of Directors
Information on the beneficial ownership reporting for all other shareholders that own 5 or more of the Company s Class A or Class B Common Stock is contained under the caption Stock Ownership of Certain Beneficial Owners
Per the terms of the 2022 Plan a total of 6 200 000 shares shall be authorized for awards granted under the 2022 Plan less one 1 share for every one 1 share that was subject to an award granted under a Prior Plan after July 13 2022 and prior to the approval of the 2022 Plan on September 29 2022 Effective Date In addition after July 13 2022 if any shares subject to an award under any Prior Plans are forfeited or an award under any Prior Plans expires or is settled for cash then in each such case the shares subject to such award or award under any Prior Plan shall be added to the shares available for awards under the Plan on a one for one basis After the Effective Date of the 2022 Plan no awards may be granted under any Prior Plan
Information on related party transactions and the policies and procedures for reviewing and approving related party transactions will be contained under the caption Transactions with Related Persons within the Corporate Governance section of the
Certificate of Amendment of the Certificate of Incorporation dated as of September 1998 incorporated by reference to the Company s Quarterly Report on Form 10 Q for the quarterly period ended October 31 1998
Certificate of Amendment of the Certificate of Incorporation dated as of September 1999 incorporated by reference to the Company s Quarterly Report on Form 10 Q for the quarterly period ended October 31 1999
Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934 as amended incorporated by reference to the Company s Annual Report on Form 10 K A Amendment No 1 for the year ended April 30 2020
Restricted Share Unit Grant Agreement Under the Executive Long Term Incentive Plan Under the Business Officer Equity Program Pursuant to the 2022 Omnibus Stock Plan and Long Term Incentive Plan incorporated by reference to the Company s Report on Form 10 Q for the quarterly period ended July 31 2023
Performance Share Unit Grant Agreement Under the Executive Long Term Incentive Plan Under the Business Officer Equity Program Pursuant to the 2022 Omnibus Stock Plan and Long Term Incentive Plan incorporated by reference to the Company s Report on Form 10 Q for the quarterly period ended October 31 2023
Restricted Share Unit Grant Agreement for Matthew Kissner Under the Executive Long Term Incentive Plan Pursuant to the 2022 Omnibus Stock Plan and Long Term Incentive Plan incorporated by reference to the Company s Report on Form 10 Q for the quarterly period ended October 31 2023
Form of the Fiscal Year 2024 Non Qualified Premium Stock Option Grant Agreement Pursuant to the 2022 Omnibus Stock Plan and Long Term Incentive Plan incorporated by reference to the Company s Quarterly Report on Form 10 Q for the quarterly period ended October 31 2023
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 incorporated by reference to the Company s Report on Form 10 Q for the quarterly period ended July 31 2022
Performance 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 incorporated by reference to the Company s Report on Form 10 Q for the quarterly period ended July 31 2022
John Wiley Sons Inc Deferred Compensation Plan for Directors 2005 After Compensation Amended and Restated as of September 29 2022 incorporated by reference to the Company s Report on Form 10 Q for the quarterly period ended October 31 2022
Second Amendment to the Third Amended and Restated Credit Agreement dated as of November 30 2022 among John Wiley Sons Inc John Wiley Sons Limited J Wiley Limited Wiley Europe Investment Holdings Limited and Wiley VCH GmbH as borrowers Bank of America N A as Administrative Agent L C Issuer and Swing Line Lender and the other Lenders party thereto which amends the Third Amended and Restated Credit Agreement dated as of May 30 2019 incorporated by reference to the Company s Report on Form 8 K dated as of December 6 2022
Revised as of November 30 2022 Third Amended and Restated Credit Agreement among John Wiley Sons Inc John Wiley Sons Limited J Wiley Limited Wiley Europe Investment Holdings Limited and Wiley VCH GmbH as borrowers Bank of America N A as Administrative Agent L C Issuer and Swing Line Lender and the other Lenders party thereto which amends the Third Amended and Restated Credit Agreement dated as of May 30 2019 incorporated by reference to the Company s Report on Form 8 K dated as December 6 2022
Agreement of the Lease dated as of July 14 2014 between Hub Properties Trust as Landlord an independent third party and John Wiley Sons Inc as Tenant incorporated by reference to the Company s Quarterly Report on Form 10 Q for the quarterly period ended July 31 2014
Form of the Fiscal Year 2022 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 incorporated by reference to the Company s Quarterly Report on Form 10 Q for the quarterly period ended July 31 2021
Form of the Fiscal Year 2022 Performance 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 incorporated by reference to the Company s Quarterly Report on Form 10 Q for the quarterly period ended July 31 2021
Form of the Fiscal Year 2022 Non Qualified Premium Stock Option Grant Agreement Pursuant to the 2014 Key Employee Stock Plan incorporated by reference to the Company s Quarterly Report on Form 10 Q for the quarterly period ended July 31 2021
Executive Severance Plan ESP with an effective date of June 20 2016 as amended September 22 2023 incorporated by reference to the Company s Report on Form 10 Q for the quarterly period ended October 31 2023
Employment Letter dated October 12 2017 between Brian A Napack President and Chief Executive Officer and the Company incorporated by reference to the Company s Quarterly Report on Form 10 Q for the period ended October 31 2017
Employment Letter dated October 9 2023 between Matthew Kissner Interim President and Chief Executive Officer and the Company incorporated by reference to the Company s Current Report on Form 8 K filed on October 10 2023
Employment Letter dated April 20 2018 between Aref Matin Executive Vice President and Chief Technology Officer and the Company incorporated by reference to the Company s Quarterly Report on Form 10 Q for the period ended July 31 2020
Senior Executive Employment Agreement dated as of October 25 2021 between Christina Van Tassell and the Company incorporated by reference to the Company s Current Report on Form 8 K dated as of October 28 2021
Employment Agreement dated August 7 2020 between Todd Zipper Executive Vice President General Manager Education Services and the Company incorporated by reference to the Company s Quarterly Report on Form 10 Q for the quarterly period ended October 31 2021
Employment Agreement dated August 18 2018 between Matthew Leavy Senior Vice President Business Development and the Company incorporated by reference to the Company s Annual Report on Form 10 K for the year ended April 30 2023
John Wiley Sons Inc Supplemental Executive Retirement Plan as Amended and Restated effective as of January 1 2014 incorporated by reference to the Company s Annual Report on Form 10 K for the year ended April 30 2021
Deferred Compensation Plan of John Wiley Sons Inc as Amended and Restated Effective as of January 1 2016 including amendments through December 31 2016 incorporated by reference to the Company s Annual Report on Form 10 K for the year ended April 30 2021
Amendment to the Deferred Compensation Plan of John Wiley Sons Inc effective January 1 2022 incorporated by reference to the Company s Quarterly Report on Form 10 Q for the quarterly period ended January 31 2022
John Wiley Sons Inc Employees Savings Plan Amended and Restated Effective July 1 2013 including amendments through January 1 2014 incorporated by reference to the Company s Annual Report on Form 10 K for the year ended April 30 2021
Amendment to the John Wiley Sons Inc Employees Savings Plan effective September 1 2020 and January 1 2021 incorporated by reference to the Company s Annual Report on Form 10 K for the year ended April 30 2021
Amendment to the John Wiley Sons Inc Employees Savings Plan effective January 1 2022 incorporated by reference to the Company s Quarterly Report on Form 10 Q for the quarterly period ended January 31 2022
Deductions From Reserves and Other for the years ended April 30 2024 2023 and 2022 include foreign exchange translation adjustments Included in Allowance for doubtful accounts are accounts written off less recoveries as well as amounts reclassified as held for sale or sold as of April 30 2024 Included in Allowance for inventory obsolescence are items removed from inventory
Included in Valuation allowance on deferred tax assets for the years ended April 30 2024 2023 and 2022 are valuation allowances related to and required with respect to foreign tax credits generated by tax reform enacted in December 2017 In connection with a 5 year loss carryback and a subsequent audit certain foreign tax credits requiring a valuation allowance were reinstated
In fiscal year 2024 due to temporary differences in the US our deferred taxes reversed from a net deferred tax liability position to a net deferred tax asset position Due to losses in the US resulting from impairments restructuring and acceleration of amortization expense on capitalized software we concluded it was more likely than not that a portion of our deferred tax asset may not be realized As a result we increased the valuation allowance by 30 2 million
Allowance for sales returns represents anticipated returns net of a recovery of inventory and royalty costs The provision is reported as a reduction of gross sales to arrive at revenue and the reserve balance is reported as an increase in Contract liabilities with a corresponding increase in Inventories net and a reduction in Accrued royalties for the years ended April 30 2024 2023 and 2022
Pursuant to the requirements of Section 13 or 15 d of the Securities Exchange Act of 1934 the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized

Company Name	JOHN WILEY & SONS, INC. Vist SEC web-site
Category	BOOKS: PUBLISHING OR PUBLISHING AND PRINTING
Trading Symbol	WLY