UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~[X]QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)~~

~~OF THE SECURITIES EXCHANGE ACT 1934~~

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

For the quarterly period ended ~~January~~October 31, 2018

~~Commission File No. 1-11507~~

~~[ ]TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)~~

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

For the transition period from_____ to _____

Commission File No. 001-11507

JOHN WILEY & SONS, INC.

(Exact name of Registrant as specified in its charter)

NEW YORK		13-5593032
(State ofor other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

111 RIVER STREET, HOBOKEN, NJ		07030
(Address of principal executive offices)		Zip Code

~~Registrant's~~	(201) 748-6000
	Registrant’s telephone number including area code	~~(201) 748-6000~~
~~NOT APPLICABLE~~

~~Former name, former address, and former fiscal year, if changed since last report~~

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

Indicate by check mark, whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (~~§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [x] No [ ]~~

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [X] Accelerated filer [ ] Non-accelerated filer [ ]

~~Smaller reporting company [ ]~~

~~Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).~~	NOT APPLICABLE
~~YES [ ] NO [X]~~Former name, former address, and former fiscal year, if changed since last report

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

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

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

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

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

The number of shares outstanding of each of the ~~Registrant's~~Registrant’s classes of Common Stock as of ~~February 28,~~November 30, 2018 were:

Class A, par value $1.00 – ~~48,259,778~~48,120,789

Class B, par value $1.00 – ~~9,156,993~~

9,142,898

JOHN WILEY & SONS, INC. AND SUBSIDIARIES

INDEX

PART I		-	FINANCIAL INFORMATION	~~PAGE NO.~~

Item 1.	Financial Statements

	Condensed Consolidated Statements of Financial Position - Unaudited as of ~~January~~October 31, 2018 and audited as of April 30, ~~2017~~2018		5

	Condensed Consolidated Statements of Income - Unaudited for the three and ~~nine~~six months ended ~~January~~October 31, 2018 and 2017		6

	Condensed Consolidated Statements of Comprehensive Income - Unaudited for the three and ~~nine~~six months ended ~~January~~October 31, 2018 and 2017		7

	Condensed Consolidated Statements of Cash Flow – Unaudited for the ~~nine~~six months ended ~~January~~October 31, 2018 and 2017		8

	Notes to Unaudited Condensed Consolidated Financial Statements
	Note 1. Basis of Presentation		~~9-24~~9
	Note 2. Recent Accounting Standards		9
	Note 3. Revenue Recognition, Contracts with Customers		12
	Note 4. Stock-Based Compensation		18
	Note 5. Accumulated Other Comprehensive Loss		19
	Note 6. Reconciliation of Weighted Average Shares Outstanding and Share Repurchases		19
	Note 7. Restructuring and Related Charges		20
	Note 8. Segment Information		21
	Note 9. Inventories		21
	Note 10. Goodwill and Intangible Assets		22
	Note 11. Income Taxes		22
	Note 12. Retirement Plans		23
	Note 13. Derivative Instruments and Hedging Activities		23
	Note 14. Commitments and Contingencies		24
	Note 15. Subsequent Event		24

Item 2.	~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations		~~25-39~~25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		~~40-42~~37

Item 4.	Controls and Procedures		4238

PART II		-	OTHER INFORMATION

Item 1.	Legal Proceedings		4239

Item 1a.	Risk Factors		4239

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		4339

Item 6.	Exhibits		4339

SIGNATURES			4440

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

This report contains ~~"forward-looking statements"~~certain “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 concerning our business, consolidated financial condition and results of operations. The Securities and Exchange Commission ~~("SEC"~~(“SEC”) encourages companies to disclose forward-looking information so that investors can better understand a ~~company's future~~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"~~“anticipates,” “believes,” “plan,” “assumes,” “could,” “should,” “estimates,” “expects,” “intends,” “potential,” “seek,” “predict,” “may,” “will” and similar references to future periods. All statements other than statements of historical facts included in this report regarding our strategies, prospects, financial condition, operations, costs, plans and objectives are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding ~~the Company's~~our fiscal year ~~2018~~2019 outlook, operations, performance, and financial condition. Reliance should not be placed on forward-looking statements, as actual results may differ materially from those in any forward-looking statements. Any such forward-looking statements are based upon ~~a number of~~many assumptions and estimates that are inherently subject to uncertainties and contingencies, many of which are beyond ~~the~~our control, ~~of the Company,~~ and are subject to change based on many important factors. Such factors include, but are not limited to (i) the level of investment in new technologies and products; (ii) subscriber renewal rates for ~~the Company's~~our journals; (iii) the financial stability and liquidity of journal subscription agents; (iv) the consolidation of book wholesalers and retail accounts; (v) the market position and financial stability of key online retailers; (vi) the seasonal nature of ~~the Company's~~our educational business and the impact of the ~~used-book~~used book market; (vii) worldwide economic and political conditions; (viii) ~~the Company's~~our ability to protect ~~its~~our copyrights and other intellectual property worldwide; (ix) ~~the~~our ability ~~of the Company~~ to successfully integrate acquired operations and realize expected ~~opportunities~~opportunities; (x) achievement of targeted run rate savings through restructuring activities; and ~~(x)~~(xi) other factors detailed from time to time in ~~the Company's~~our filings with the SEC. ~~The Company undertakes~~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~~“Risk Factors,"” of our Annual Report on Form 10-K for important factors that we believe could cause actual results to differ materially from those in our forward-looking statements. Any forward-looking statement made by us in this report is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Non-GAAP Financial Measures:

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

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

~~· Adjusted Earnings Per Share "(Adjusted EPS)";~~

~~· Free Cash Flow less product development spending;~~

~~· Adjusted Operating Income and margin;~~

●

Adjusted Earnings Per Share “(Adjusted EPS)”;

~~· Adjusted Contribution to Profit and margin; and~~

●

Free Cash Flow less Product Development Spending;

●

Adjusted Operating Income and margin;

●

Adjusted Contribution to Profit and margin; and

●

Results on a constant currency basis.

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

For example:

●

Adjusted EPS, Adjusted Operating Profit, and Adjusted Contribution to Profit provide a more comparable basis to analyze operating results and earnings and are measures commonly used by shareholders to measure our performance.

●

Free Cash Flow less ~~product development spending~~Product Development Spending helps assess our ability, over the long term, to create value for our shareholders as it represents cash available to repay debt, pay common dividends and fund share repurchases and new acquisitions.

●

Results on a constant currency basis removes distortion from the effects of foreign currency movements to provide better comparability of our business trends from period to period. We measure our performance before the impact of foreign currency (or at ~~"constant currency"~~“constant currency”), which means that we apply the same foreign currency exchange rates for the current and equivalent prior period.

Index

In addition, ~~the Company has~~we have historically provided these or similar non-GAAP performance measures and ~~understands~~understand that some investors and financial analysts find this information helpful in analyzing ~~the Company's~~our operating margins, and net income and comparing ~~the Company's~~our financial performance to that of ~~its~~our peer companies and competitors. Based on interactions with investors, we also believe that our non-GAAP performance measures are regarded as useful to our investors as supplemental to our U.S. GAAP financial results, and that there is no confusion regarding the adjustments or our operating performance to our investors due to the comprehensive nature of our disclosures. We have not provided our ~~2018~~2019 outlook for the most directly comparable U.S. GAAP financial measures, as they are not available without unreasonable effort due to the high variability, complexity, and low visibility with respect to certain items, including restructuring charges and credits, gains and losses on foreign currency, and other gains and losses. These items are uncertain, depend on various factors, and could be material to our consolidated results computed in accordance with U.S. GAAP.

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

Index

JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands)

January 31, April 30,
2018 2017
(Unaudited)
Assets:
Current Assets
Cash and cash equivalents $ 128,217 $ 58,516
Accounts receivable, net 239,637 188,679
Inventories, net 43,800 47,852
Prepaid and other current assets 64,001 64,688
Total Current Assets 475,655 359,735

Product Development Assets 85,028 80,385
Royalty Advances 37,177 28,320
Technology, Property & Equipment, net 273,634 243,058
Intangible Assets, net 868,631 828,099
Goodwill 1,028,395 982,101
Other Non-Current Assets 90,325 84,519
Total Assets $ 2,858,845 $ 2,606,217

Liabilities & Shareholders' Equity:
Current Liabilities
Accounts and royalties payable 204,606 139,206
Deferred revenue 409,011 436,235
Accrued employment costs 99,317 98,185
Accrued income taxes 18,726 22,222
Accrued pension liability 5,875 5,776
Other accrued liabilities 95,479 86,232
Total Current Liabilities 833,014 787,856

Long-Term Debt 428,200 365,000
Accrued Pension Liability 210,639 214,597
Deferred Income Tax Liabilities 140,395 160,491
Other Long-Term Liabilities 78,271 75,136
Total Liabilities 1,690,519 1,603,080

Shareholders' Equity
Class A Common Stock, $1 par value: Authorized-180 million
Issued – 70,107,103 and 70,086,003 as of January 31, 2018 and April 30, 2017, respectively 70,107 70,086
Class B Common Stock, $1 par value: Authorized-72 million
Issued – 13,074,567 and 13,095,667 as of January 31, 2018 and April 30, 2017, respectively 13,075 13,096
Additional paid-in-capital 405,967 387,896
Retained earnings 1,798,446 1,715,423
Accumulated other comprehensive loss (433,178) (507,287)
Treasury stock (Class A – 21,875,409 and 22,096,970 as of January 31, 2018 and April 30, 2017, respectively;

Class B – 3,917,574 and 3,917,574 as of January 31, 2018 and April 30, 2017, respectively) (686,091) (676,077)
Total Shareholders' Equity 1,168,326 1,003,137
Total Liabilities & Shareholders' Equity $ 2,858,845 $ 2,606,217

See accompanying notes to the unaudited condensed consolidated financial statements.

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

Three Months Nine Months
Ended January 31,
Ended January 31,
2018 2017 2018 2017

Revenue $ 455,675 $ 436,456 $ 1,318,850 $ 1,266,329

Costs and Expenses
Cost of sales 125,127 116,405 359,780 341,457
Operating and administrative expenses 248,746 247,278 731,872 729,775
Restructuring and related charges 2,208 9,118 26,531 15,045
Amortization of intangibles 12,163 12,495 35,965 37,321
Total Costs and Expenses 388,244 385,296      1,154,148 1,123,598

Operating Income 67,431 51,160 164,702 142,731

Interest Expense (3,295) (4,931) (10,023) (13,362)
Foreign Exchange Transaction (Losses) Gains (6,032) 2,118 (11,584) 1,979
Interest Income and Other 163 637 744 1,365

Income Before Taxes 58,267 48,984 143,839 132,713
(Benefit) Provision for Income Taxes (10,575) 1,565 5,713 65,745

Net Income $ 68,842 $   47,419 $ 138,126 $   66,968

Earnings Per Share
Diluted $ 1.19 $ 0.82 $ 2.39 $ 1.15
Basic $ 1.21 $ 0.83 $ 2.42 $ 1.17

Cash Dividends Per Share
Class A Common $ 0.32 $ 0.31 $ 0.96 $ 0.93
Class B Common $ 0.32 $ 0.31 $ 0.96 $ 0.93

Weighted Average Shares Outstanding
Diluted 57,871 58,012 57,736 58,181
Basic 57,035 57,224 56,979 57,405

See accompanying notes to the unaudited condensed consolidated financial statements.

JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME – UNAUDITED
(In thousands)

Three Months Nine Months

Ended January 31,
Ended January 31,
2018 2017 2018 2017

Net Income $ 68,842 $ $47,419 $ 138,126 $ $66,968

Other Comprehensive Income (Loss):
Foreign currency translation adjustment 51,401 7,783 84,442 (62,681)
Unamortized retirement costs, net of tax (benefit) provision of $(2,377), $(444), $(3,085) and $11,012, respectively
(8,587) (1,765) (11,113) 29,390
Unrealized gain on interest rate swaps, net of tax provision of $450, $1,357, $478 and $1,569, respectively 734 2,214 780 2,560
Total Other Comprehensive Income (Loss) 43,548 8,232 74,109 (30,731)

Comprehensive Income $ 112,390 $ $55,651 $ 212,235 $ $36,237

See accompanying notes to the unaudited condensed consolidated financial statements.

JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW – UNAUDITED
(In thousands)
Nine Months
Ended January 31,
2018 2017
Operating Activities

Net income $ 138,126 $ 66,968
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of intangibles 35,965 37,321
Amortization of product development assets 30,314 29,502
Depreciation of technology, property and equipment 48,471 50,520
Restructuring charges 26,531 15,045
Restructuring payments (26,345) (15,740)
Deferred income tax benefit on UK rate change - (2,575)
Unfavorable tax decision - 47,531
One-time pension settlement - 8,842
Stock-based compensation expense 6,510 10,187
Excess tax benefit from stock based compensation - (227)
Royalty advances (89,366) (79,804)
Earned royalty advances 81,976 77,554
Other non-cash charges (1,376) 26,096
Change in deferred revenue (56,265) (7,733)
Net change in operating assets and liabilities (4,419) (34,335)
Net Cash Provided by Operating Activities 190,122 229,152
Investing Activities

Product development spending (30,426) (31,904)
Additions to technology, property and equipment (78,958) (77,722)
Acquisitions, net of cash acquired (25,227) (152,110)
Net Cash Used for Investing Activities (134,611) (261,736)
Financing Activities

Repayments of long-term debt (238,951) (340,207)
Borrowings of long-term debt 305,754 600,900
Change in book overdrafts (8,884) (8,866)
Cash dividends (55,093) (53,638)
Purchase of treasury stock (29,257) (35,362)
Proceeds from exercise of stock options and other 30,606 16,444
Excess tax benefit from stock based compensation - 227
Net Cash Provided by Financing Activities 4,175 179,498
Effects of Foreign Currency Exchange Rate Changes on Cash and Cash Equivalents 10,015 (28,399)
Cash and Cash Equivalents
Increase for the Period 69,701 118,515
Balance at Beginning of Period 58,516 363,806
Balance at End of Period $ 128,217 $ 482,321
Cash Paid During the Period for:
Interest $ 10,766 $ 9,900
Income taxes, net of refunds $ 39,655 $ 22,491

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

JOHN WILEY & SONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Dollars in thousands

	October 31, 2018			April 30, 2018
	(Unaudited)
Assets:
Current Assets
Cash and cash equivalents	$	115,603		$	169,773
Accounts receivable, net		236,207			212,377
Inventories, net		35,084			39,489
Prepaid expenses and other current assets		61,973			58,332
Total Current Assets		448,867			479,971

Product Development Assets		64,716			78,814
Royalty Advances, net		15,331			37,058
Technology, Property and Equipment, net		286,308			289,934
Intangible Assets, net		787,629			848,071
Goodwill		986,248			1,019,801
Other Non-Current Assets		91,732			85,802
Total Assets	$	2,680,831		$	2,839,451

Liabilities and Shareholders' Equity:
Current Liabilities
Accounts payable	$	71,555		$	90,097
Accrued royalties		94,438			73,007
Contract liability (Deferred revenue)		237,184			486,353
Accrued employment costs		69,792			116,179
Accrued income taxes		18,436			13,927
Other accrued liabilities		78,651			94,748
Total Current Liabilities		570,056			874,311

Long-Term Debt		537,306			360,000
Accrued Pension Liability		167,722			190,301
Deferred Income Tax Liabilities		140,338			143,518
Other Long-Term Liabilities		96,017			80,764
Total Liabilities		1,511,439			1,648,894

Shareholders’ Equity
Preferred Stock, $1 par value: Authorized – 2 million, Issued 0		—			—
Class A Common Stock, $1 par value: Authorized-180 million Issued - 70,124,812 and 70,110,603 as of October 31, 2018 and April 30, 2018, respectively		70,125			70,111
Class B Common Stock, $1 par value: Authorized-72 million Issued - 13,056,858 and 13,071,067 as of October 31, 2018 and April 30, 2018, respectively		13,057			13,071
Additional paid-in-capital		417,718			407,120
Retained earnings		1,870,609			1,834,057
Accumulated other comprehensive loss		(488,564	)		(439,580	)
Treasury stock (Class A - 22,000,203 and 21,853,257 as of October 31, 2018 and April 30, 2018, respectively; Class B - 3,917,574 and 3,917,574 as of October 31, 2018 and April 30, 2018, respectively)		(713,553	)		(694,222	)
Total Shareholders’ Equity		1,169,392			1,190,557
Total Liabilities and Shareholders' Equity	$	2,680,831		$	2,839,451

See accompanying notes to the unaudited condensed consolidated financial statements.

Index

JOHN WILEY & SONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED

Dollars in thousands except per share information

	Three Months Ended October 31,						Six Months Ended October 31,
	2018			2017 (1)			2018			2017 (1)
Revenue, net	$	448,622		$	451,731		$	859,523		$	863,175

Costs and Expenses
Cost of sales		120,157			119,865			234,548			234,653
Operating and administrative expenses (1)		248,627			241,301			502,400			487,039
Restructuring and related charges (credits)		9,996			(1,406	)		3,910			24,323
Amortization of intangibles		12,367			11,183			25,050			23,802
Total Costs and Expenses		391,147			370,943			765,908			769,817

Operating Income		57,475			80,788			93,615			93,358

Interest Expense		(3,608	)		(3,455	)		(6,404	)		(6,728	)
Foreign Exchange Transaction Losses		(54	)		(416	)		(1,783	)		(5,552	)
Interest and Other Income		2,509			2,559			4,975			4,494


Income Before Taxes		56,322			79,476			90,403			85,572
Provision for Income Taxes		12,538			19,428			20,324			16,288

Net Income	$	43,784		$	60,048		$	70,079		$	69,284

Earnings Per Share
Basic	$	0.76		$	1.06		$	1.22		$	1.22
Diluted	$	0.76		$	1.04		$	1.21		$	1.20

Cash Dividends Per Share
Class A Common	$	0.33		$	0.32		$	0.66		$	0.64
Class B Common	$	0.33		$	0.32		$	0.66		$	0.64

Weighted Average Number of Common Shares Outstanding
Basic		57,379			56,875			57,392			56,948
Diluted		57,870			57,554			57,955			57,633

See accompanying notes to the unaudited condensed consolidated financial statements.

(1)

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

Index

JOHN WILEY & SONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME – UNAUDITED

Dollars in thousands

	Three Months Ended October 31,						Six Months Ended October 31,
	2018			2017			2018			2017
Net Income	$	43,784		$	60,048		$	70,079		$	69,284

Other Comprehensive (Loss) Income:
Foreign currency translation adjustment		(20,424	)		5,636			(60,749	)		33,041
Unamortized retirement costs, tax provision (benefit) of $1,229, $(131), $3,717, and $(708), respectively		4,387			(579	)		13,198			(2,526	)
Unrealized gain on interest rate swaps, tax provision of $245, $249, $449 and $28, respectively		(781	)		407			(1,433	)		46
Total Other Comprehensive (Loss) Income		(16,818	)		5,464			(48,984	)		30,561

Comprehensive Income	$	26,966		$	65,512		$	21,095		$	99,845

See accompanying notes to the unaudited condensed consolidated financial statements.

Index

JOHN WILEY & SONS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW – UNAUDITED

Dollars in thousands

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

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

(1)

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

Index

JOHN WILEY & SONS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.	Note 1 — Basis of Presentation ~~Basis of Presentation~~

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

Our unaudited Condensed Consolidated Financial Statements include all of the accounts of the Company and our subsidiaries. We have eliminated all significant intercompany transactions and balances in consolidation. In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Condensed Consolidated Financial Condition, Results of Operations, Comprehensive Income and Cash Flows for the periods presented. Operating results for the interim period are not necessarily indicative of the results expected for the full year. All amounts are in thousands, except per share amounts, and approximate due to rounding. These financial statements should be read in conjunction with the most recent audited consolidated financial statements included in ~~the Company's~~our Form 10-K for the fiscal year ended April 30, ~~2017~~2018 as filed with the ~~U.S. Securities and Exchange Commission ("SEC")~~SEC on June 29, ~~2017 ("2017~~2018 (“2018 Form ~~10-K"~~10-K”).

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

2.	Note 2 — Recent Accounting Standards ~~Recent Accounting Standards~~

Recently Adopted Accounting Standards

Effective April 30, 2017, the Company adopted Accounting Standard Update ("ASU") 2015-17 "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes." ASU 2015-17 requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The Company elected to adopt this standard prospectively and thus prior period balances were not adjusted. As of April 30, 2017, there were $0.8 million of current deferred tax assets reported within Prepaid and Other Current Assets in the Condensed Consolidated Statements of Financial Position.

Excess income tax benefits and deficiencies from stock-based compensation are now recognized as a discrete item within the Provision for Income Taxes in the Condensed Consolidated Statements of Income, rather than Additional Paid-In-Capital in the Condensed Consolidated Statements of Financial Position, and amounted to $0.6 million for the nine months ended January 31, 2018.

·	Excess income tax benefits and deficiencies are no longer considered when applying the treasury stock method for computing diluted shares outstanding, which resulted in an increase in diluted shares outstanding of less than 0.1 million.

Excess income tax benefits and deficiencies are now classified as an Operating Activity in the Condensed Consolidated Statements of Cash Flows. There were no excess tax benefits recorded in operating activities for the nine months ended January 31, 2018, while $0.2 million were recorded in Financing Activities for the nine months ended January 31, 2017.

·	~~The Company has elected to continue estimating expected forfeitures in determining stock compensation expense each period.~~

~~Recently Issued Accounting Standards~~

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

In August 2017, the FASB issued ASU 2017-12 "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities", to simplify and improve the application and financial reporting of hedge accounting. The guidance eases the requirements for measuring and reporting hedge ineffectiveness, and clarifies that changes in the fair value of hedging instruments for cash flow, net investment, and fair value hedges should be reflected in the same income statement line item as the earnings effect of the hedged item. The guidance also permits entities to designate specific components in cash flow and interest rate hedges as the hedged risk, instead of using total cash flows. The standard is effective for the Company on May 1, 2019, with early adoption permitted. The Company is currently assessing the impact the new guidance will have on its consolidated financial statements.

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

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

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted ~~Cash ("ASU 2016-18").~~Cash. ASU 2016-18 requires that entities include restricted cash and restricted cash equivalents with cash and cash equivalents in the beginning-of-period and end-of-period total amounts shown on the Statement of Cash Flows. ~~The standard is effective for the Company~~We adopted ASU 2016-18 on May 1, ~~2018, including interim reporting periods within those fiscal years. Early adoption, including adoption in interim periods, is permitted for all entities.~~2018. Retrospective transition method is to be applied to each period presented. As a result of this retrospective adoption, the reclassification of restricted cash into a change in total cash resulted in a reduction in Cash Used in Operating Activities of $0.5 million for the six months ended October 31, 2017. The ~~Company is currently assessing~~following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the ~~impact~~Condensed Consolidated Statement of Financial Position that sum to the ~~new guidance will have on its consolidated financial statements.~~total of the same such amounts shown in the Condensed Consolidated Statement of Cash Flows.

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

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

In October 2016, the FASB issued ASU 2016-16, ~~"Income~~“Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than ~~Inventory"~~Inventory”, which simplifies the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. Current U.S. GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. The new guidance states that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Consequently, the amendments in this Standard eliminate the exception for an intra-entity transfer of an asset other than inventory. ~~The standard is effective for the Company~~We adopted ASU 2016-16 on May 1, ~~2018, with early~~2018. The adoption ~~permitted. The Company expects no initial~~of ASU 2016-16 did not have a material impact ~~on adoption.~~to our condensed consolidated financial statements.

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

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

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

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

Index

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

(i)

perpetual licenses granted in connection with other deliverables; revenue that was previously recognized over the life of the associated subscription for future content is now recognized at a point in time, which is when access to content is initially granted,

(ii)

customers’ unexercised rights; revenue which was previously recognized at the end of a pre-determined period for situations where we have received a nonrefundable payment for a customer to receive a good or service and the customer has not exercised such right is now recognized as revenue in proportion to the pattern of rights exercised by the customer,

(iii)

recognition of estimated revenue from royalty agreements in the period of usage, and

(iv)

recognition of revenue for certain arrangements with minimum guarantees on a time-based (straight-line) basis due to a stand-ready obligation to provide additional rights to content.

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

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

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

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

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

Recently Issued Accounting Standards

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

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

Index

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

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

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

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

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

In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)"”. Subsequently, in July 2018 the FASB issued ASU 2018-11, “Leases (Topic 842): Targeted Improvements” and ASU 2018-10, “Codification Improvements to Topic 842, Leases”. ASU 2016-02 requires ~~lessees~~an entity to recognize ~~most~~a right-of-use asset and lease liability for all leases ~~on the balance sheet which will result in an increase in reported assets~~with terms of more than 12 months. Recognition, measurement, and ~~liabilities. The recognition~~presentation of expenses ~~within the income statement is consistent~~will depend on classification as a finance or operating lease. Similar modifications have been made to lessor accounting in-line with ~~the existing lease accounting standards. There are no significant changes in the new standard for lessors under operating leases.~~revenue recognition guidance. The standard is effective for ~~the Company~~us on May 1, 2019, with early adoption permitted. Adoption requires application of the new guidance to the beginning of the earliest period presented using a modified retrospective approach. ASU 2018-11 provides for ~~all periods presented. The Company is~~an additional (and optional) transition method whereby we can recognize a cumulative-effect adjustment to the opening retained earnings in the period of adoption. In addition, ASU 2018-11 provides for a practical expedient to not separate nonlease components from the associated lease component if certain conditions are met. We are currently assessing the impact the new guidance will have on ~~its~~our consolidated financial statements.

Note 3 — Revenue Recognition, Contracts with Customers

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

Index

Disaggregation of Revenue

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

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

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

Index

Description of Revenue Generating Activities

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

●

Research,

●

Publishing, and

●

Solutions.

Research Segment

Included within the Research segment are the following revenue streams:

●

Journal Subscriptions,

●

Open Access,

●

Licensing, Reprints, Backfiles and Other, and

●

Publishing Technology Services (Atypon).

Journal Subscriptions

We publish approximately 1,700 academic research journals. We sell journal subscriptionsdirectly through our sales representatives, indirectly through independent subscription agents, through promotional campaigns, and through memberships in professional societies for those journals that are sponsored by societies. Journal subscriptions are primarily licensed through contracts for digital content available online through Wiley Online Library. In ~~January 2016, the FASB issued ASU 2016-01, "Financial Instruments—Overall (Subtopic 825-10): Recognition~~March 2018, we migrated our Wiley Online Library platform to our Literatum platform, which we acquired as part of our purchase of Atypon Systems, Inc. (“Atypon”) in fiscal year 2017. Contracts are negotiated by us directly with customers or their subscription agents. Subscription periods typically cover calendar years. Print journals are generally mailed to subscribers directly from independent printers. We do not own or manage printing facilities. Subscription revenue is generally collected in advance.

In a typical journal subscription sale, there is a written agreement between us and ~~Measurement of Financial Assets and Financial Liabilities". ASU 2016-01 requires equity investments except those~~our customer that cover multiple years. However, we typically account for these agreements as one-year contracts because our enforceable rights under the ~~equity method~~agreements are subject to an annual confirmation and negotiation process with the customer.

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

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

Open Access

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

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

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

Index

Licensing, Reprints, Backfiles and Other

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

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

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

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

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

Publishing Technology Services (Atypon)

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

Publishing Segment

Included within the Publishing segment are the following revenue streams:

●

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

●

Education Publishing,

●

Course Workflow (WileyPLUS),

●

Test Preparation and Certification, and

●

Licensing, Distribution, Advertising and Other.

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

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

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

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

Index

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

This revenue stream also includes variable consideration as it relates to discounts and returns for both print and digital books. Discounts are identifiable by performance obligation and therefore are applied at the point of sale by performance obligation. The process that we use to determine our sales returns and the related reserve provision charged against revenue is based on applying an estimated return rate to current year returnable print book sales. This rate is based upon an analysis of actual historical return experience in ~~net income. The amendment simplifies~~ the ~~impairment assessment~~various markets and geographic regions in which we do business. We collect, maintain and analyze significant amounts of ~~equity investments without readily determinable fair values by requiring a qualitative assessment~~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 ~~impairment. In addition,~~the returns by market and to which fiscal year the sales returns apply. This enables management to track the returns in detail and identify and react to trends occurring in the marketplace, with the objective of being able to make the most informed judgments possible in setting reserve rates. Associated with the estimated sales return reserves, we also include a related reduction in inventory and royalty costs as a result of the expected returns.

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

Course Workflow (WileyPLUS)

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

Test Preparation and Certification

The ~~amendments in ASU 2016-01~~Test Preparation and Certification business represents learning solutions and training activities that are ~~effective~~delivered to customers directly through online digital delivery platforms. Products include CPAExcel, a modular, digital platform comprised of online self-study, videos, mobile apps, and sophisticated planning tools to help professionals prepare for the ~~Company~~CPA exam, and test preparation products for the CFA®, CMA, CIA®, CMT®, FRN®, FINRA, Banking, and PMP® exams.

Test Preparation and Certification contracts are generally three-year agreements. This revenue stream includes multiple performance obligations as it relates to the on-line and printed course materials, including such items as text books, e-books, video lectures, flashcards, study guides and test banks. The transaction price is fixed, however, discounts are offered and returns of certain products are allowed. We allocate revenue to each performance obligation based on ~~May 1, 2018, including interim periods within those fiscal years. Early application~~its standalone selling price. Depending on the performance obligation, revenue is recognized at the time the product is delivered and control has passed to the customer or over time due to our stand-ready obligation to provide updates to the customer.

Licensing, Distribution, Advertising and Other

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

Revenue derived from our licensing contracts is primarily comprised of advance payments and sales- or usage-based royalties. Revenue for ~~certain provisions~~advance payments is ~~allowed but early adoption~~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 ~~amendments is not permitted. An entity should apply the amendments by means~~sales or usage of ~~a cumulative-effect adjustment~~these customers and pursuant to the ~~balance sheet as~~terms of the ~~beginning of~~contracts.

Solutions Segment

Included within the ~~fiscal year of adoption. The Company is currently assessing~~Solutions segment are the ~~impact the new guidance will have on its consolidated financial statements.~~following revenue streams:

In May 2014, the FASB issued ASU 2014-09 "Revenue from Contracts with Customers" (Topic 606) ("ASU 2014-09") which will supersede most existing revenue recognition guidance. The standard is effective for the Company on May 1, 2018. The standard allows for either "full retrospective" adoption, meaning the standard is applied to all periods presented, or "modified retrospective" adoption, meaning the standard is applied only to the most current period presented in the financial statements. Subsequently, the FASB issued ASU No. 2016-08, "Revenue from Contracts with Customers (Topic 606) – Principal versus Agent Considerations" ("ASU 2016-08"), ASU No. 2016-10, "Revenue from Contracts with Customers (Topic 606) – Identifying Performance Obligations and Licensing" ("ASU 2016-10"), ASU 2016-12, "Revenue from Contracts with Customers (Topic 606) – Narrow Scope Improvements and Practical Expedients" ("ASU 2016-12"), and ASU 2016-20, "Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers" ("ASU 2016-20"), which provide clarification and additional guidance related to ASU 2014-09. The Company must adopt ASU 2016-08, ASU 2016-10, ASU 2016-12, and ASU 2016-20 with ASU 2014-09.

The Company is utilizing a comprehensive approach to assess the impact of the standard on its contract portfolio by reviewing its current accounting policies and practices to identify potential differences that would result from applying the new standard to its revenue contracts. While this evaluation is ongoing, we currently do not anticipate the impact of the implementation of this standard to be material to our consolidated financial position or results of operations. We currently expect the most significant accounting changes will relate to the following:

Perpetual access licenses – Currently, we recognize revenue for perpetual licenses granted in connection with other deliverables over the life of the associated subscription for future content. Under the new standard it will require us to recognize the revenue allocated to the perpetual access at a point in time, which is at the time when access is granted.●

Education Services (OPM),

Customers' Unexercised Rights – Currently, we recognize revenue at the end of a pre-determined period for situations where we have received a nonrefundable payment for a customer to receive a good or service●

Professional Assessment, and the customer has not exercised such right, referred to as breakage revenue. Under ASU 2014-09, we will now recognize such breakage amounts as revenue in proportion to the pattern of rights exercised by the customer.

●

Corporate Learning.

Index

1216

Education Services (OPM)

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

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

Professional Assessment

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

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

Corporate Learning

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

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

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

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

The following table provides information about receivables and contract liabilities from contracts with customers.

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

⁽¹⁾As noted above, prior period amounts have not been adjusted under the modified retrospective ~~approach~~method.

⁽²⁾Due to ~~adopting~~ the ~~new revenue standards where we recognize the cumulative effect~~adoption of ~~initially applying~~ the new revenue standard, the sales return reserve as ~~an adjustment~~of October 31, 2018 of $31.1 million is recorded in Contract Liability (Deferred Revenue). In prior periods, it was recorded as a reduction to Accounts Receivable, net on the Condensed Consolidated Statement of Financial Position.

Index

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

Remaining Performance Obligations included in Contract Liability (Deferred Revenue)

As of ~~retained earnings based on contracts open at~~October 31, 2018, the ~~date~~aggregate amount of ~~adoption. The Company~~the transaction price allocated to the remaining performance obligations is ~~also~~approximately $249.8 million. We expect that approximately $237.2 million will be recognized in the ~~process~~next twelve months with the remaining $12.6 million to be recognized thereafter.

Assets Recognized for the Costs to Fulfill a Contract

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

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

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

3.	~~Stock-Based Compensation~~

Note 4 — Stock-Based Compensation

~~The Company has~~

We have stock-based compensation plans under which employees may be granted performance-based stock awards and other restricted stock awards. Prior to fiscal year 2017, ~~the Company~~we also granted options to purchase shares of ~~Company~~our common stock at the fair market value at the time of grant. ~~The Company recognizes~~We recognize the grant date fair value of stock-based compensation in net income on a straight-line basis, net of estimated forfeitures over the requisite service period. The measurement of performance for performance-based stock awards is based on actual financial results for targets established three years in advance. For the three months ended ~~January~~October 31, 2018 and 2017, ~~the Company~~we recognized stock-based compensation expense, on a pre-tax basis, of ~~$4.0~~$5.0 million and ~~$5.3~~$4.0 million, respectively. For the ~~nine~~six months ended ~~January~~October 31, 2018 and 2017, ~~the Company~~we recognized stock-based compensation expense, on a pre-tax basis, of ~~$6.5~~$8.9 million and ~~$10.2~~$2.5 million, respectively.

The following table summarizes restricted stock awards ~~granted by the Company:~~

Nine Months
Ended January 31,
2018 2017
Restricted Stock:
Awards granted 528 509
Weighted average fair value of grant $53.27 $50.56

~~For the nine months ended January 31, 2018 and 2017, the Company did not grant stock option awards.~~we granted:

~~President and CEO New Hire Equity Awards~~

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

~~On October 17, 2017, the Company announced Brian A. Napack as the new President and Chief Executive Officer of the Company effective December 4, 2017~~ ~~(the "Commencement Date"). Upon the Commencement Date, Mr. Napack also became a member of the Company's Board of Directors (the "Board").~~ ~~In connection with his appointment, the Company and Mr. Napack entered into an employment offer letter (the "Employment Letter").~~

The Employment Letter provides that beginning with the fiscal year 2018-2020 performance cycle, eligibility to participate in annual grants under the Company's Executive Long-Term Incentive Program (ELTIP). Targeted long-term incentive for this cycle is equal to 300% of base salary, or $2.7 million. Sixty percent of the ELTIP value will be delivered in the form of target performance share units and forty percent in restricted share units. The grant date fair value for restricted share units was $59.15 per share and included 20,611 restricted share units which vest 25% each year starting on April 30, 2018 to April 30, 2021. In addition, there was a performance share unit award with a target of 30,916 units and a grant date fair value of $59.15. The performance metrics are based on cumulative EBITDA for fiscal year 2018-2020 and cumulative normalized free cash flow for fiscal year 2018-2020.

In addition, the Employment Letter provides for a sign-on grant of restricted share units, with a grant value of $4.0 million, converted to shares using the Company's Class A closing stock price as of the Commencement Date, and vesting in two equal installments on the first and second anniversaries of the employment date. The grant date fair value for this award was $59.15 per share and included 67,625 units at the date of grant. Grants are subject to forfeiture in the case of voluntary termination prior to vesting and accelerated vesting in the case of earlier termination of employment without Cause, due to death or Disability or Constructive Discharge, or upon a Change in Control (as such terms are defined in the Employment Letter).

Index

1318

~~The awards are described in further detail in Mr. Napack's Employment Letter filed with the SEC as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on October 17, 2017.~~

4.Note 5 —Accumulated Other Comprehensive Loss

Changes in Accumulated Other Comprehensive Loss by component, net of tax, for the three and ~~nine~~six months ended ~~January~~October 31, 2018 and 2017 were as follows:

	Foreign	Unamortized	Interest		Foreign Currency Translation			Unamortized Retirement Costs			Interest Rate Swaps			Total
Balance at July 31, 2018					$	(291,898	)	$	(182,215	)	$	2,367		$	(471,746	)
Other comprehensive (loss) income before reclassifications						(20,424	)		3,273			543			(16,608	)
Amounts reclassified from accumulated other comprehensive loss						—			1,114			(1,324	)		(210	)
Total other comprehensive (loss) income						(20,424	)		4,387			(781	)		(16,818	)
Balance at October 31, 2018					$	(312,322	)	$	(177,828	)	$	1,586		$	(488,564	)
	Currency	Retirement	Rate
	Translation	Costs	Swaps	Total

Balance at October 31, 2017	$(286,171)	$(193,028)	$2,473	$(476,726)
Balance at April 30, 2018					$	(251,573	)	$	(191,026	)	$	3,019		$	(439,580	)
Other comprehensive income (loss) before reclassifications	51,401	(9,686)	509	42,224		(60,749	)		10,993			613			(49,143	)
Amounts reclassified from accumulated other comprehensive loss	-	1,099	225	1,324		—			2,205			(2,046	)		159
Total other comprehensive income (loss)	51,401	(8,587)	734	43,548		(60,749	)		13,198			(1,433	)		(48,984	)
Balance at January 31, 2018	$(234,770)	$(201,615)	$3,207	$(433,178)

Balance at April 30, 2017	$(319,212)	$(190,502)	$2,427	$(507,287)
Other comprehensive income (loss) before reclassifications	84,442	(14,376)	315	70,381
Amounts reclassified from accumulated other comprehensive loss	-	3,263	465	3,728
Total other comprehensive income (loss)	84,442	(11,113)	780	74,109
Balance at January 31, 2018	$(234,770)	$(201,615)	$3,207	$(433,178)
Balance at October 31, 2018					$	(312,322	)	$	(177,828	)	$	1,586		$	(488,564	)

	Foreign Currency Translation			Unamortized Retirement Costs			Interest Rate Swaps			Total

Balance at July 31, 2017	$	(291,807	)	$	(192,449	)	$	2,066		$	(482,190	)
Other comprehensive income (loss) before reclassifications		5,636			(1,673	)		238			4,201
Amounts reclassified from accumulated other comprehensive loss		—			1,094			169			1,263
Total other comprehensive income (loss)		5,636			(579	)		407			5,464
Balance at October 31, 2017	$	(286,171	)	$	(193,028	)	$	2,473		$	(476,726	)

Balance at April 30, 2017	$	(319,212	)	$	(190,502	)	$	2,427		$	(507,287	)
Other comprehensive income (loss) before reclassifications		33,041			(4,690	)		(194	)		28,157
Amounts reclassified from accumulated other comprehensive loss		—			2,164			240			2,404
Total other comprehensive income (loss)		33,041			(2,526	)		46			30,561
Balance at October 31, 2017	$	(286,171	)	$	(193,028	)	$	2,473		$	(476,726	)

Foreign Unamortized Interest
Currency Retirement Rate
Translation Costs Swaps Total

Balance at October 31, 2016 $(338,384) $(148,250) $(15) $(486,649)
Other comprehensive income (loss) before reclassifications 7,783 (2,603) 2,284 7,464
Amounts reclassified from accumulated other comprehensive loss - 838 (70) 768
Total other comprehensive income (loss) 7,783 (1,765) 2,214 8,232
Balance at January 31, 2017 $(330,601) $(150,015) $2,199 $(478,417)

Balance at April 30, 2016 $(267,920) $(179,405) $(361) $(447,686)
Other comprehensive (loss) income before reclassifications (62,681) 22,891 2,381 (37,409)
Amounts reclassified from accumulated other comprehensive loss - 6,499 179 6,678
Total other comprehensive (loss) income (62,681) 29,390 2,560 (30,731)
Balance at January 31, 2017 $(330,601) $(150,015) $2,199 $(478,417)

During the three months ended ~~January~~October 31, 2018 and 2017, pre-tax actuarial losses included in Unamortized Retirement Costs of approximately $1.4 million and $1.5 million, ~~and $1.2 million,~~ respectively, in each period were amortized from Accumulated Other Comprehensive Loss and recognized as pension expense in Operating and Administrative Expenses and Interest and Other Income in the Condensed Consolidated Statements of Income. During the ~~nine~~six months ended ~~January~~October 31, 2018 and 2017, pre-tax actuarial losses of approximately ~~$4.4~~$2.8 million and ~~$9.9~~$2.9 million, respectively, were amortized.

5.Note 6 —Reconciliation of Weighted Average Shares Outstanding and Share Repurchases

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

	Three Months Ended January 31,		Nine Months Ended January 31,
	2018	2017	2018	2017	Three Months Ended October 31,				Six Months Ended October 31,
					2018		2017		2018		2017
Weighted average shares outstanding	57,170	57,434	57,123	57,624		57,426		57,013		57,451		57,100
Less: Unvested restricted shares	(135)	(210)	(144)	(219)		(47)		(138)		(59)		(152)
Shares used for basic earnings per share	57,035	57,224	56,979	57,405		57,379		56,875		57,392		56,948
Dilutive effect of stock options and other stock awards	836	788	757	776		491		679		563		685
Shares used for diluted earnings per share	57,871	58,012	57,736	58,181		57,870		57,554		57,955		57,633

Since their inclusion in the calculation of diluted earnings per share would have been anti-dilutive, options to purchase ~~0.3 million~~157,167 shares of Class A Common Stock have been excluded for the ~~nine~~three and six months ended ~~January~~October 31, 2018, respectively and ~~2017, respectively. There were no options~~284,787 shares of Class A Common Stock have been excluded for the three and six months ended ~~January~~October 31, ~~2018 and 0.3 million options were excluded for the three months ended January 31, 2017.~~2017, respectively.

~~In addition, for the nine months ended January 31, 2018 and 2017, less than 0.1 million unvested restricted shares have been excluded as their inclusion would have been antidilutive, respectively.~~

Index

There were no ~~unvested~~ restricted shares excluded for the three and six months ended ~~January~~October 31, ~~2018 and 0.1 million unvested~~2018. There were 26,740 restricted shares ~~were~~ excluded for the three and six months ended ~~January~~October 31, ~~2017.~~2017, respectively.

Share Repurchases and Dividends

During the three months ended ~~January~~October 31, 2018 ~~the Company did not repurchase any~~and 2017, we repurchased 299,188 and 285,599 shares of Class A common ~~stock.~~ stock at an average price of $56.82 and $53.37, respectively. During the ~~three~~six months ended ~~January~~October 31, 2018 and 2017, the Company repurchased ~~0.3 million~~425,120 and 550,757 shares of common stock at an average price of ~~$55.14. During the nine months ended January 31,~~$58.79 and $53.12, respectively.

On June 21, 2018, our Board of Directors declared a quarterly cash dividend of $0.33 per common share, or $19.0 million, on our Class A and ~~2017, the Company repurchased 0.6 million and 0.7 million shares~~Class B common stock. The dividend was paid on July 18, 2018 to shareholders of ~~common stock at an average price of $53.12 and $52.74, respectively.~~record on July 3, 2018.

6. ~~Acquisitions~~

On September ~~30, 2016, the Company acquired the net assets~~26, 2018, our Board of ~~Atypon Systems, Inc. ("Atypon"),~~Directors declared a ~~Silicon Valley-based publishing-software company, for approximately $121~~quarterly cash dividend of $0.33 per common share, or $18.9 million, ~~in cash, net~~on our Class A and Class B common stock. The dividend was paid on October 24, 2018 to shareholders of ~~cash acquired. The Company finalized its purchase accounting for Atypon~~record on ~~July 31, 2017. Atypon's revenue~~October 9, 2018.

Note 7 — Restructuring and operating loss included in the Company's results for the three months ended January 31, 2018 were $8.3 million and $0.8 million, respectively. Atypon's revenue and operating loss included in the Company's results for the nine months ended January 31, 2018 were $24.6 million and $1.8 million, respectively. Atypon's revenue and operating loss included in the Company's results for the three months ended January 31, 2017 were $8.0 million and $1.5 million, respectively. Atypon's revenue and operating loss included in the Company's results for the nine months ended January 31, 2017 were $10.4 million and $2.0 million, respectively.Related Charges

7. ~~Restructuring Charges~~

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

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

					Cumulative
					Program
	Three Months		Nine Months		Charges
	Ended January 31,		Ended January 31,		to Date	Three Months Ended October 31,					Six Months Ended October 31,					Total Charges
	2018	2017	2018	2017		2018		2017			2018		2017			Incurred to Date
Charges (Credits) by Segment:
Research	$690	$517	$5,138	$677	$25,294	$	2,282	$	(388	)	$	1,302	$	4,448		$	26,715
Publishing	(392)	1,027	6,933	1,596	39,422		1,407		71			739		7,325			39,670
Solutions	1,277	1,095	3,447	1,619	5,998		1,097		(625	)		840		2,170			7,087
Shared Services	633	6,479	11,013	11,153	93,761
Total	$2,208	$9,118	$26,531	$15,045	$164,475
Corporate Expenses							5,210		(464	)		1,029		10,380			96,948
Total Restructuring and Related Charges (Credits)						$	9,996	$	(1,406	)	$	3,910	$	24,323		$	170,420

Charges (Credits) by Activity:
Severance	$1,781	$3,420	$25,047	$7,999	$112,637	$	8,672	$	(1,455	)	$	2,894	$	23,266		$	117,697
Process Reengineering Consulting	427	10	1,948	16	20,762		90		—			225		1,521			20,854
Other Activities	-	5,688	(464)	7,030	31,076		1,234		49			791		(464	)		31,869
Total	$2,208	$9,118	$26,531	$15,045	$164,475
Total Restructuring and Related Charges (Credits)						$	9,996	$	(1,406	)	$	3,910	$	24,323		$	170,420

Other Activities ~~reflects leased facility consolidations, contract termination costs~~for the three and ~~the curtailment of certain defined benefit pension plans.~~six months ended October 31, 2018 and 2017 include lease impairment related costs. The credits in Other Activities for the ~~nine~~six months ended ~~January~~October 31, ~~2018~~2017 mainly reflect changes in estimates for previously accrued restructuring charges related to facility lease reserves.

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

				Foreign
				Translation &
	April 30, 2017	Charges	Payments	Reclassifications	January 31, 2018	April 30, 2018		Charges		Payments			Foreign Translation & Reclassifications			October 31, 2018
Severance	$10,082	$25,047	$(17,435)	$732	$18,426	$	17,279	$	2,894	$	(8,295	)	$	(446	)	$	11,432
Process Reengineering Consulting	-	1,948	(1,749)	-	199		—		225		(175	)		—			50
Other Activities	12,708	(464)	(7,161)	(1,876)	3,207		2,772		791		(825	)		210			2,948
Total	$22,790	$26,531	$(26,345)	$(1,144)	$21,832	$	20,051	$	3,910	$	(9,295	)	$	(236	)	$	14,430

The restructuring liability as of ~~January~~October 31, 2018 for accrued ~~Severance~~severance costs is reflected in Accrued Employment Costs in the Condensed Consolidated ~~Statements~~Statement of Financial Position. The liability as of ~~January~~October 31, 2018, for Process Reengineering Consulting costs is reflected in Other Accrued Liabilities. As of ~~January~~October 31, 2018, approximately ~~$1.0~~$1.2 million and ~~$2.2~~$1.7 million of the Other Activities are reflected in Other Accrued Liabilities and Other Long-Term Liabilities, ~~respectively.~~respectively, and mainly relate to facility relocation and lease impairment related costs. We currently do not anticipate any further material charges related to the Restructuring and Reinvestment Program.

8. ~~Segment Information~~

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

Index

Note 8 — Segment Information

We report our segment information in accordance with the provisions of FASB ~~Accounting Standards Codification ("ASC")~~ASC Topic ~~280, "Segment Reporting,".~~280.

Segment information is as follows:

	Three Months		Nine Months
	Ended January 31,		Ended January 31,		Three Months Ended October 31,						Six Months Ended October 31,
	2018	2017	2018	2017	2018			2017 ⁽¹⁾			2018			2017 ⁽¹⁾
Revenue:
Research	$223,489	$205,769	$675,986	$618,987	$	228,645		$	228,870		$	453,637		$	452,497
Publishing	170,244	171,440	466,507	479,701		157,499			164,985			282,420			296,263
Solutions	61,942	59,247	176,357	167,641		62,478			57,876			123,466			114,415
Total Revenue	$455,675	$436,456	$1,318,850	$1,266,329	$	448,622		$	451,731		$	859,523		$	863,175

Contribution to Profit:
Research	$59,299	$52,508	$191,923	$173,235	$	58,907		$	70,146		$	116,033		$	130,608
Publishing	48,472	38,807	95,957	94,639		39,455			41,913			53,175			46,383
Solutions	6,403	3,591	11,744	9,097		7,049			7,309			10,273			5,341
Total Contribution to Profit	$114,174	$94,906	$299,624	$276,971
Total Contribution to Profit ⁽¹⁾					$	105,411		$	119,368		$	179,481		$	182,332
Corporate Expenses	(46,743)	(43,746)	(134,922)	(134,240)		(47,936	)		(38,580	)		(85,866	)		(88,974	)
Operating Income	$67,431	$51,160	$164,702	$142,731
Operating Income ⁽¹⁾					$	57,475		$	80,788		$	93,615		$	93,358

9.(1)

~~Inventories~~

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

Note 9 — Inventories

Inventories were as follows:

	January 31,	April 30,
	2018	2017	October 31, 2018			April 30, 2018
Finished goods	$35,822	$38,329	$	32,388		$	36,503
Work-in-process	3,292	7,078		2,473			2,139
Paper and other materials	626	650		441			550
	$39,740	$46,057	$	35,302		$	39,192
Inventory value of estimated sales returns	7,217	4,727		4,261			4,626
LIFO reserve	(3,157)	(2,932)		(4,479	)		(4,329	)
Total inventories	$43,800	$47,852	$	35,084		$	39,489

Index

1721

~~10.~~

~~Goodwill and Intangible Assets~~

Note 10 —Goodwill and Intangible Assets

Goodwill

The following table summarizes the activity in goodwill by segment as of ~~January~~October 31, 2018:

Foreign
Translation
April 30, 2017 Adjustment January 31, 2018
Research $437,928 $31,751 $469,679
Publishing 283,192 14,543 297,735
Solutions 260,981 - 260,981
Total $982,101 $46,294 $1,028,395

We review goodwill for impairment on a reporting unit basis annually during the third quarter of each year, using a measurement date of January 31, and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. While we are permitted to conduct a qualitative assessment to determine whether it is necessary to perform a two-step quantitative goodwill impairment test, for our annual goodwill impairment test in the third quarter of 2018, 2017 and 2016, we performed a quantitative test for all of our reporting units.

The goodwill impairment test involves a two-step process. In step one, we compare the fair value of each of our reporting units to its carrying value, including the goodwill allocated to the reporting unit. If the fair value of the reporting unit exceeds its carrying value, there is no indication of impairment and no further testing is required. If the fair value of the reporting unit is less than the carrying value, we must perform step two of the impairment test to measure the amount of impairment loss, if any. In step two, the reporting unit's fair value is allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination. If the implied fair value of the reporting unit's goodwill is less than the carrying value, the difference is recorded as an impairment loss.

2~~018 Annual Impairment Test as of January 31, 2018~~

During the third quarter of 2018, we completed step one of our annual goodwill impairment test for our reporting units. We concluded that the fair values of these reporting units were above their carrying values and, therefore, there was no indication of impairment.

We estimated the fair value of these 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 management's estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. 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 operating performance results, as applicable derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit.

~~The excess of estimated fair values over carrying value, including goodwill for each of our reporting units as of the 2018 annual impairment test were the following:~~

	~~% by Which Estimated Fair value~~
~~Reporting Unit~~	~~exceeds Carrying Value~~
~~Research~~	~~504.9%~~
~~Publishing~~	~~151.3%~~
~~Solutions~~	~~34.0%~~

As noted above, the fair value determined under step one of the goodwill impairment test completed in the third quarter of 2018 exceeded the carrying value for each reporting unit. Therefore, there was no impairment of goodwill. However, if the fair value decreases in future periods, the Company may fail step one of the goodwill impairment test and be required to perform step two. In performing step two, the fair value would have to be allocated to all of the assets and liabilities of the reporting unit. Therefore, any potential goodwill impairment charge would be dependent upon the estimated fair value of the reporting unit at that time and the outcome of step two of the impairment test. The fair values of the assets and liabilities of the reporting unit, including the intangible assets could vary depending on various factors.

	April 30, 2018		Foreign Translation Adjustment			October 31, 2018
Research	$	463,419	$	(25,832	)	$	437,587
Publishing		283,851		(726	)		283,125
Solutions		272,531		(6,995	)		265,536
Total	$	1,019,801	$	(33,553	)	$	986,248

The ~~future occurrence~~April 30, 2018 goodwill balances for Publishing and Solutions have been revised to reflect foreign translation adjustments of a potential indicator of impairment, such as a decrease in expected net earnings, 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 event of significant adverse changes of the nature described above, we might have to recognize a non-cash impairment of goodwill, which could have a material adverse effect on our consolidated financial condition.$11.6 million.

We also review our indefinite lived intangible assets for impairment annually, which consists of brands and trademarks and certain acquired publishing rights. During the third quarter of 2018, we completed our annual impairment test related to the indefinite lived intangible assets. We concluded that the fair values of these indefinite lived intangible assets were above their carrying values and, therefore, there was no indication of impairment.

~~Change in Annual Impairment Assessment Date~~

During the fourth quarter of 2018, the Company voluntarily changed its annual impairment assessment date from January 31 to February 1 for all of its reporting units and its indefinite lived intangible assets. This change is being made to improve alignment of impairment testing procedures with year-end financial reporting, the Company's annual business planning and budgeting process and the multi-year strategic forecast, which begins in the fourth quarter of each year. As a result, the goodwill and indefinite lived intangible asset impairment testing will reflect the result of inputs from each of the businesses in the development of the budget and forecast process, including the impact of seasonality of the Company's financial results. Accordingly, management considers this accounting change preferable. This change does not accelerate, delay, avoid, or cause an impairment charge, nor does this change result in adjustments to previously issued financial statements.

In connection with the change in the date of the annual goodwill impairment test, the Company also completed step one of our goodwill impairment test as of February 1, 2018. We concluded that the fair values of the reporting units were above their carrying values and, therefore, there was no indication of impairment as of February 1, 2018. In addition, we also completed our annual impairment test related to the indefinite lived intangible assets as of February 1, 2018. We concluded that the fair values of the indefinite lived intangible assets were above their carrying values and, therefore, there was no indication of impairment as of February 1, 2018.

Intangible Assets

Identifiable intangible assets, net consisted of the following:

January 31, April 30,
2018 2017
Intangible assets with indefinite lives:
Brands and trademarks $140,127 $135,061
Content and publishing rights 96,082 84,173
$236,209 $219,234

Net intangible assets with determinable lives:
Content and publishing rights $449,358 $421,597
Customer relationships 165,572 169,116
Brands and trademarks 16,784 17,195
Covenants not to compete 708 957
$632,422 $608,865
Total $868,631 $828,099

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

In conjunction with a business review performed in the Publishing segment associated with the restructuring activities ~~discussed above,~~disclosed in Note 7, “Restructuring and Related Charges”, in the ~~first quarter of fiscal year 2018, the Company~~three months ended July 31, 2017, we identified an indefinite lived brand with forecasted cash flows that did not support its carrying value. As a result, an impairment charge of $3.6 million was recorded in the ~~first quarter of fiscal year 2018~~three months ended July 31, 2017 to reduce the carrying value of the brand to its fair value of $1.2 million, which ~~will now be~~is being amortized over anits estimated remaining useful ~~life of 5 years.~~life. This impairment charge iswas included in Operating and Administrative Expenses in the Condensed Consolidated Statements of ~~Income.~~Income for fiscal year 2018.

~~11.~~

~~Income Taxes~~

Note 11 — Income Taxes

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

Three Months Ended Nine Months Ended
January 31, January 31,
2018 2017 2018 2017
Effective Tax Rate as Reported (18.1)% 3.2% 4.0% 49.5%
Estimated net impact in fiscal 2018 of non-recurring items from Tax Act 42.9% - 17.4% -
Impact of unfavorable German court decision in fiscal 2017 - - - (35.8)%
Impact of reduction in U.K. statutory rate on deferred tax balances in fiscal 2017 - - - 4.4%
Effective Tax Rate excluding the impact of non-recurring items from the Tax Act in fiscal 2018 and the unfavorable German court decision and UK tax rate reduction in fiscal 2017 24.8% 3.2% 21.4% 18.1%

Index

The Tax Act

On December 22, 2017, the U.S. government enacted comprehensive Federal tax legislation originally known as the Tax Cuts and Jobs Act of 2017 (the "Tax Act"). The Tax Act significantly revised the future ongoing U.S. corporate income tax system by, among other changes, the following:

lowering the U.S. federal corporate income tax rate to 21% with a potentially lower rate for certain foreign derived income,

accelerating deductions for certain business assets,

changing the U.S. system from a worldwide tax system,

requiring companies to pay a one-time transition tax on post-1986 unrepatriated cumulative non-U.S. earnings and profits ("E&P") of foreign subsidiaries,

eliminating certain deductions such as the domestic production deduction,

establishing limitations on the deductibility of certain expenses including interest and executive compensation, and

creating new taxes on certain foreign earnings.

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

The effective tax rates for the three and nine month periods were lower in fiscal 2018 than fiscal 2017 due to the estimated net tax benefit from non-recurring items in the Tax Act. As described in more detail below, estimated non-recurring items in the Tax Act reduced our income tax expense by $25 million ($0.43/share) or a reduction in our effective tax rate of 42.9 percentage points for the three months and 17.4 percentage points for the nine months ended January 31, 2018. Excluding the effect of those non-recurring items, the rate was 24.8% and 21.4% for the three month and nine month periods ended January 31, 2018, respectively.

The rate excluding the benefit from the non-recurring items in the Tax Act was lower than the U.S. statutory rate for the year ended April 30, 2018 primarily due to lower foreign rates applicable to non-U.S. earnings. The nine month period also benefitted from the lower federal statutory blended tax rate of 30.4% in the Tax Act retroactive to the beginning of the fiscal year.

The effective tax rate for the three and nine months ended January 31, 2017 was 3.2% and 49.5%, respectively. The rate for the nine months ended January 31, 2017 was increased by an unfavorable German court decision in September 2016 and decreased by a non-cash deferred tax benefit related to a decrease in the U.K. statutory tax rate from 18% to 17% beginning on April 1, 2020. Excluding the impact of the unfavorable German court decision and the benefit from a future U.K. statutory tax rate reduction, the rate for the nine month period was 18.1%. The rates for the three month and nine month periods excluding the German court decision and U.K. tax rate change were lower than the U.S. statutory rate of 35% primarily due to lower foreign tax rates applicable to non-U.S. earnings. The rates were also lower than the U.S. statutory rate as well as the fiscal 2018 rates excluding the effects of the non-recurring benefits from the Tax Act, due to non-recurring foreign tax benefits in the three month period ended January 31, 2018.

~~The Tax Act~~

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

The key impacts for the period were the re-measurement of U.S. deferred tax balances to the new U.S. corporate tax rate and the accrual for the one-time transition tax liability. While we have not yet completed our assessment of the effects of the Tax Act, we are able to determine reasonable estimates for the impacts of these key items and reported provisional amounts for these items. In accordance with SAB 118, we are providing additional disclosures related to these provisional amounts.

Deferred tax balances – We remeasured our U.S. deferred tax assets and liabilities based on the federal rate at which they are expected to reverse in the future, generally 21% for reversals anticipated to occur after April 30, 2018. We are still analyzing certain aspects of the Tax Act and refining our calculations, including our estimates of expected reversals, which could affect the measurement of these balances and give rise to new deferred tax amounts. The provisional amount recorded related to the re-measurement of our net deferred tax liability was a benefit of $40 million.

Foreign tax effects – In connection with the transition from a global to a modified territorial tax system, the Tax Act establishes a mandatory deemed repatriation tax. The tax is computed using our post-1986 E&P that was previously deferred from U.S. income taxes. The tax is based on the amount of foreign earnings held in cash equivalents and certain net assets, which are taxed at 15.5%, and those held in other assets, which are taxed at 8%. We recorded a provisional amount of $14.5 million. This resulted in a corresponding decrease in deferred tax assets due to the utilization of foreign tax credit carryforwards. The determination of the transition tax requires further guidance as to its applicability to non-calendar year end taxpayers and analysis regarding the amount and composition of our historical foreign earnings. In addition, we accrued a $0.5 million provisional state tax liability, pending further guidance and legislative action from various states regarding conformity with the Tax Act.

We have not determined a reasonable estimate of the tax liability, if any, under the Tax Act for our remaining outside basis difference or evaluated how the Tax Act will affect our existing accounting position to indefinitely reinvest unremitted earnings. We will continue to evaluate our position for this matter as we finalize our Tax Act calculations.

~~The Tax Act creates~~created new taxes, effective for us on May 1, 2018, including a provision designed to tax certain global ~~low taxed~~ income ("GILTI") ~~and~~, a ~~provision establishing new minimum taxes, such as the~~ base erosion anti-abuse tax ("BEAT") as well as a new deduction for certain foreign derived intangible income (“FDII”). We ~~continue~~recorded a minor provisional benefit during the six months ended October 31, 2018. We expect to ~~evaluate the Tax Act, but due to the complexity and incomplete~~adjust this provisional amount as additional guidance of various provisions, we have not completed our accounting for the income tax effects of certain elements of the Tax Act, including the new GILTI and BEAT taxes. We have not yet determined whether such taxes should be recorded as a current-period expense when incurred or factored into the measurement of our deferred taxes. As a result, we have not included an estimate of any tax expense or benefit related to these items for the periods ended January 31, 2018.is provided.

~~12.~~Note 12 —Retirement Plans

The components of net pension expense (income) ~~expense~~ for ~~the Company's~~our global defined benefit plans were as follows:

	Three Months Ended January 31,		Nine Months Ended January 31,		Three Months Ended October 31,						Six Months Ended October 31,
	2018	2017	2018	2017	2018			2017			2018			2017
Service cost	$243	$241	$715	$744	$	229		$	242		$	462		$	472
Interest cost	6,407	6,565	19,005	20,269		6,169			6,346			12,381			12,598
Expected return on plan assets	(9,924)	(8,588)	(29,363)	(26,619)		(9,720	)		(9,782	)		(19,622	)		(19,439	)
Net amortization of prior service cost	(24)	(26)	(72)	(75)		(24	)		(23	)		(48	)		(48	)
Recognized net actuarial loss	1,536	1,268	4,550	3,900
Pension plan actuarial loss	-	-	21	8,842
Net pension (income) expense	$(1,762)	$(540)	$(5,144)	$7,061
Unrecognized net actuarial loss						1,474			1,534			2,908			3,035
Net pension income					$	(1,872	)	$	(1,683	)	$	(3,919	)	$	(3,382	)

We adopted ASU 2017-07, “Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” on May 1, 2018. Refer to Note 2, "Recent Accounting Standards," in the Notes to Condensed Consolidated Financial Statements for more information. The guidance requires that the service cost component of net pension and postretirement benefit costs be reported in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. Such amounts are reflected in Operating and Administrative Expenses on our Condensed Consolidated Statement of Operations. The guidance requires that the other components of net benefit costs be reported separately from the service cost component and below operating income. Such amounts are reflected in Interest Income and Other on our Condensed Consolidated Statement of Operations. We were required to retrospectively adopt this guidance.

Employer defined benefit pension plan contributions were ~~$2.8~~$3.5 million and ~~$3.2~~$2.8 million for the three months ended ~~January~~October 31, 2018 and 2017, respectively, and ~~$8.4~~$7.1 million and ~~$13.8~~$5.6 million for the ~~nine~~six months ended ~~January~~October 31, 2018 and 2017, respectively.

~~Contributions~~

The expense for employer defined contribution plans were approximately ~~$3.4~~$2.8 million and ~~$3.1~~$3.0 million for the three months ended ~~January~~October 31, 2018 and 2017, respectively, and ~~$11.3~~$7.3 million and ~~$11.6~~$7.9 million for the ~~nine~~six months ended ~~January~~October 31, 2018 and 2017 ~~respectively.~~, respectively.

22Note 13 — Derivative Instruments and Hedging Activities

~~13.~~

~~Derivative Instruments and Hedging Activities~~

~~The Company, from~~From time-to-time, ~~enters~~we enter into forward exchange and interest rate swap contracts as a hedge against foreign currency asset and liability commitments, changes in interest rates and anticipated transaction exposures, including intercompany purchases. All derivatives are recognized as assets or liabilities and measured at fair value on our Condensed Consolidated Balance Sheets. Derivatives that are not determined to be effective hedges are adjusted to fair value with a corresponding adjustment to earnings. ~~The Company does~~We do not use financial instruments for trading or speculative purposes.

Index

Interest Rate Contracts

~~The Company~~

We had ~~$428.2~~$537.3 million of variable rate loans outstanding at ~~January~~October 31, 2018, which approximated fair value. ~~The Company had $865.7 million of variable rate loans outstanding at January 31, 2017, which approximated fair value.~~

As of ~~January~~October 31, 2018 and 2017 the interest rate swap agreements maintained by ~~the Company~~us were designated as cash flow hedges as defined under ASC 815 ~~"Derivatives~~“Derivatives and ~~Hedging".~~Hedging.” As a result, there was no impact on ~~the Company's~~our Condensed Consolidated Statements of Income for changes in the fair value of the interest rate swaps as they were fully offset by changes in the interest expense on the underlying variable rate debt instruments.

On April 4, 2016, ~~the Company~~we entered into a forward starting interest rate swap agreement which fixed a portion of the variable interest due on a variable rate debt renewal on May 16, 2016. Under the terms of the agreement, ~~the Company pays~~we pay a fixed rate of 0.92% and ~~receives~~receive a variable rate of interest based on one-month LIBOR from the counterparty which is reset every month for a three-year period ending May 15, 2019. As of ~~January~~October 31, 2018 and ~~January 31, 2017,~~April 30, 2018, the notional amount of the interest rate swap was ~~$350~~$350.0 million.

~~The Company records~~

We record the fair value of ~~its~~our interest rate swaps on a recurring basis using Level 2 inputs of quoted prices for similar assets or liabilities in active markets. The fair value of the interest rate swaps as of ~~January~~October 31, 2018 and April ~~31, 2017~~30, 2018 was a deferred gain of ~~$5.1~~$3.3 million and ~~$3.9~~$5.1 million, respectively. Based on the maturity dates of the contracts, the entire deferred ~~gains~~gain as of ~~January~~October 31, 2018 was recorded within Prepaid Expenses and Other Current Assets and as of April 30, ~~2017 were~~2018 was recorded within Other ~~Long-Term~~Non-Current Assets. The pre-tax gains that were reclassified from Accumulated Other Comprehensive Loss into Interest Expense for the three months ~~and nine months~~ ended ~~January~~October 31, 2018 and 2017 were ~~$0.4~~$1.1 million and ~~$0.8~~$0.3 million, respectively. The pre-tax ~~losses~~gains that were reclassified from Accumulated Other ~~Comprehensive~~Compensation Loss into Interest Expense for the ~~fiscal year~~six months ended ~~April 30,~~October 31, 2018 and 2017 were ~~$1.1 million.~~$2.0 million and $0.4 million, respectively.

Foreign Currency Contracts

~~The Company~~

We may enter into forward exchange contracts to manage ~~the Company's~~our exposure on certain foreign currency denominated assets and liabilities. The forward exchange contracts are marked to market through Foreign Exchange Transaction (Losses) Gains in the Condensed Consolidated Statements of Income and carried at their fair value in the Condensed Consolidated Statements of Financial Position. Foreign currency denominated assets and liabilities are remeasured at spot rates in effect on the balance sheet date, with the effects of changes in spot rates reported in Foreign Exchange Transaction (Losses) Gains.

As of ~~January~~October 31, 2018, and April 30, ~~2017, the Company~~2018, we did not maintain any open forward exchange contracts. ~~As of January 31, 2017, the fair value of the~~In addition, we did not maintain any open forward ~~exchange~~ contracts ~~was a gain of approximately $54.5 million and recorded within Prepaid and Other Current Assets in~~during the ~~Condensed Consolidated Statement of Financial Position. The fair value was measured on a recurring basis using Level 2 inputs. For the three and nine~~six months ended ~~January~~October 31, ~~2017, the loss recognized on the forward contracts were $11.5 million~~2018 and ~~$53.2 million, respectively.~~2017.

23Note 14 — Commitments and Contingencies

~~14.~~

~~Commitments and Contingencies~~

~~The Company is~~We are involved in routine litigation in the ordinary course of ~~its~~our business. A provision for litigation is accrued when information available to ~~the Company~~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, ~~the Company does~~we do not record a liability, but ~~discloses~~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 ~~January~~October 31, 2018, will not have a material effect upon ~~the~~our Condensed Consolidated Financial Condition or Results of ~~Operations~~Operations.

Note 15 – Subsequent Event

On November 1, 2018, we completed the acquisition of ~~the Company.~~The Learning House, Inc. (“Learning House”) a diversified education services provider for $200 million in cash. Headquartered in Louisville, KY, Learning House provides online program management (OPM) services including graduate and undergraduate programs; short courses, boot camps, and other skills training and credentialing for students and professionals; pathway services for international students; professional development services for teachers; and learning solutions for corporate clients. The results of operations of Learning House will be included in our Solutions segment.

Over the past few years, the Company has from time to time faced claims from photographers or agencies that the Company has used photographs without licenses or beyond licensed permissions. The Company has insurance coverage for a significant portion of such claims. The Company does not believe that its exposure to such claims either individually or in the aggregate is material.

Index

ITEM 2. ~~MANAGEMENT'S~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS – ~~THIRD QUARTER~~THREE MONTHS ENDED ~~JANUARY~~OCTOBER 31, 2018

CONSOLIDATED OPERATING RESULTS

Revenue:

Revenue for the ~~third quarter of fiscal year~~three months ended October 31, 2018 ~~increased $19.2~~decreased $3.1 million or ~~4% to $455.7 million~~1% as compared with prior year. On a constant currency basis, revenue ~~decreased $2.4~~increased $5.6 million, or 1%, mainly driven by increases in Research segment, driven by Open Access and Publishing Technology Services (Atypon) offerings, as well as higher revenue in our Solutions segment, primarily from our Corporate Learning and Professional Assessment businesses. These increases were partially offset by declines in Education Publishing ~~Course Workflow (WileyPLUS)~~ and ~~Journal Subscriptions, partially offset by growth in Open Access, Licensing, reprints, Backfiles~~STM and ~~Other~~Professional Publishing in our ~~Research segment, and Education Services (OPM).~~Publishing segment.

See the ~~"Segment~~“Segment Operating ~~Results"~~Results” below for additional details on each ~~segment's~~segment’s revenue and contribution to profit performance.

Cost of Sales:

Cost of sales for the ~~third quarter~~three months ended October 31, 2018 approximated that of ~~fiscal year 2018 increased $8.7 million, or 7%, to $125.1 million as compared with~~the prior year. On a constant currency basis, cost of sales increased ~~$3.1~~$2.3 million, or 3%2%. The constant currency increase was primarily a result of higher revenue, higher royalty ~~costs due to mix of Journal Subscriptions' revenue.~~and employment related costs. These factors were partially offset by lower inventory costs.

Gross Profit Margin:

Gross profit margin was 73.2% and 73.5% for the ~~third quarter of fiscal year~~three months ended October 31, 2018 ~~declined to 72.5% of sales from 73.3% in the prior year.~~and 2017, respectively. On a constant currency basis, gross profit margin ~~declined by 2% reflecting higher royalty costs.~~remained the same.

Operating and Administrative Expenses:

Operating and administrative expenses for the ~~third quarter of fiscal year~~three months ended October 31, 2018 increased ~~$1.5~~$7.3 million, or 1%3% to ~~$248.7~~$248.6 million as compared with prior year. On a constant currency basis, operating and administrative expenses ~~decreased $7.0~~increased $10.1 million, or 2%4%. The ~~decrease~~increase was ~~mainly driven by savings from operational excellence~~primarily due to higher costs related to investments in growth initiatives, including resources in editorial, sales, advertising and ~~restructuring activities and lower technology~~marketing of $8.2 million, as well as, costs ~~and other reductions in depreciation, outsourcing and systems development consulting costs~~associated with strategic planning of ~~approximately $1.6~~$2.0 million. ~~These factors were partially offset by higher incentive compensation expenses of $2.4 million, which reflected the expected achievement of certain full year 2018 financial and sales goals.~~

Restructuring ~~Charges:~~and Related Charges (Credits):

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

Index

In25

For the ~~third quarter of fiscal years~~three months ended October 31, 2018 and 2017, ~~the Company~~we recorded pre-tax restructuring charges (credits) of ~~$2.2~~$10.0 million and ~~$9.1~~$(1.4) million, respectively, related to this program. These charges (credits) are reflected in Restructuring and Related Charges (Credits) in the Condensed Consolidated Statements of Income and summarized in the following table:

			Cumulative
			Program
	Three Months		Charges
	Ended January 31,		to Date	Three Months Ended October 31,					Total Charges
	2018	2017		2018		2017			Incurred to Date
Charges (Credits) by Segment:
Research	$690	$517	$25,294	$	2,282	$	(388	)	$	26,715
Publishing	(392)	1,027	39,422		1,407		71			39,670
Solutions	1,277	1,095	5,998		1,097		(625	)		7,087
Shared Services	633	6,479	93,761
Total	$2,208	$9,118	$164,475
Corporate Expenses					5,210		(464	)		96,948
Total Restructuring and Related Charges (Credits)				$	9,996	$	(1,406	)	$	170,420

Charges by Activity:
Charges (Credits) by Activity:
Severance	$1,781	$3,420	$112,637	$	8,672	$	(1,455	)	$	117,697
Process Reengineering Consulting	427	10	20,762		90		-			20,854
Other Activities	-	5,688	31,076		1,234		49			31,869
Total	$2,208	$9,118	$164,475
Total Restructuring and Related Charges (Credits)				$	9,996	$	(1,406	)	$	170,420

Other Activities for the three months ended October 31, 2018 and 2017 include lease impairment related costs.

The additional restructuring actions taken in the ~~third quarter~~three months ended October 31, 2018 are expected to yield approximately $15.0 million in run rate savings commencing in the second half of fiscal ~~year 2017 reflects leased facility consolidations, contract termination costs~~2020. We currently do not anticipate any further material charges related to the Restructuring and ~~the curtailment of certain defined benefit pension plans.~~Reinvestment Program.

Amortization of Intangibles:

Amortization of intangibles was ~~$12.2~~$12.4 million for the three months ended October 31, 2018, an increase of $1.2 million or 11% as compared with prior year and on a constant currency basis. The increase in amortization was in the ~~third quarter~~Research segment primarily due to the timing of ~~fiscal~~the acquisitions of publishing rights in the second half of 2018.

Operating Income:

Operating income declined 29% to $57.5 million due to the timing of restructuring charges and credits, as well as higher operating expenses and the unfavorable impact of foreign exchange. Excluding restructuring charges and credits, our Adjusted Operating Income at constant currency decreased 10% due primarily to higher operating and administrative expenses.

Interest Expense:

Interest expense for the three months ended October 31, 2018 was $3.6 million, an increase of 4% as compared with prior year of $3.5 million. Interest expense increased 5% on a constant currency basis. This increase was due to a higher weighted average effective borrowing rate, partially offset by lower average debt balances outstanding.

Foreign Exchange Transaction Losses:

Foreign exchange transaction losses were less than $0.1 million for the three months ended October 31, 2018 and less than $0.5 million for the three months ended October 31, 2017.

Provision for Income Taxes:

The effective tax rate for the three months ended October 31, 2018 was 22.3%, compared to 24.4% for the three months ended October 31, 2017. The decrease was primarily due to the reduced statutory tax rate in the U.S. as a result of The Tax Act, as well as, to a smaller extent, a more favorable earnings mix.

The Tax Act

The information set forth in Note 11, "Income Taxes” of the Notes to Condensed Consolidated Financial Statements under the caption "The Tax Act," is incorporated herein by reference and further describes the impact of the Tax Act.

Index

Diluted Earnings per Share (“EPS”):

EPS for the three months ended October 31, 2018 was $0.76 per share compared with $1.04 per share in the prior year. Excluding the impact of the items included in the table below, Adjusted EPS for the three months ended October 31, 2018 decreased 14% to $0.89 per share compared with $1.03 per share in the prior year. On a constant currency basis, Adjusted EPS decreased 9% due to lower Adjusted Operating Income.

	Three Months Ended October 31,
	2018		2017
GAAP EPS	$	0.76	$	1.04
Adjustments:
Restructuring charges (credits)		0.13		(0.02	)
Foreign exchange losses on intercompany transactions		—		0.01
Non-GAAP Adjusted EPS	$	0.89	$	1.03

SEGMENT OPERATING RESULTS

	Three Months Ended October 31,									% Change
RESEARCH:	2018			2017 (a)			% Change			w/o FX (b)
Revenue:
Journal Subscriptions	$	163,751		$	170,163			(4	)%		—
Open Access		13,780			9,350			47	%		50	%
Licensing, Reprints, Backfiles, and Other		41,749			41,329			1	%		2	%
Total Journal Revenue		219,280			220,842			(1	)%		2	%

Publishing Technology Services (Atypon)		9,365			8,028			17	%		17	%

Total Research Revenue		228,645			228,870			—			3	%

Cost of Sales		63,105			60,917			4	%		6	%

Gross Profit		165,540			167,953			(1	)%		2	%
Gross Profit Margin		72.4	%		73.4	%

Operating Expenses		(97,384	)		(92,344	)		5	%		7	%
Amortization of Intangibles		(6,967	)		(5,851	)		19	%		20	%
Restructuring (Charges) Credits (See Note 7)		(2,282	)		388			#			#

Contribution to Profit	$	58,907		$	70,146			(16	)%		(7	)%
Contribution Margin		25.8	%		30.6	%

(a)

Due to the retrospective adoption of ASU 2017-07, total net benefits related to defined benefit and other post-employment benefit plans were reclassified from Operating and Administrative Expenses to Interest and Other Income. The amount for the three months ended October 31, 2017 for the Research segment was $1.0 million. Refer to Note 2, "Recent Accounting Standards," for more information.

(b)	Adjusted to exclude FX impact and Restructuring (Charges) Credits.

# Not meaningful

Revenue:

Research revenue was flat as compared with prior year and increased 3% on a constant currency basis, primarily due to continued strong growth in publication volumes for Open Access, particularly hybrid journals, and, to a lesser extent, an increase in Publishing Technology Services (Atypon).

Index

Gross Profit:

Gross profit for the three months ended October 31, 2018 decreased 1% to $165.5 million. Excluding the unfavorable impact of foreign exchange, gross profit increased 2%. This increase was driven by higher revenues partially offset by an increase in royalty costs. Gross profit margin was 72.4% compared with prior year of 73.4%. On a constant currency basis, gross profit margin decreased to 71.6% compared with prior year.

Contribution to Profit:

Contribution to profit decreased 16% to $58.9 million for the three months ended October 31, 2018 as compared with the prior year. On a constant currency basis and excluding restructuring (charges) credits, contribution to profit decreased 7% compared with prior year. This decrease was due to higher operating costs, which reflected investments in additional resources in editorial to support increased journal publishing of ~~$0.3~~$3.8 million. These factors were partially offset by the increase in gross profit on a constant currency basis.

Society Partnerships:

For the three months ended October 31, 2018:

●

2 new society journals were signed with combined annual revenue of $1.8 million,

●	6 society journals were renewed with a combined annual revenue of $1.3 million,

●

4 society journals were not renewed with $0.4 million in combined annual revenue.

	Three Months Ended October 31,									% Change
PUBLISHING:	2018			2017 (a)			% Change			w/o FX (b)
Revenue:
STM and Professional Publishing	$	66,902		$	71,460			(6	)%		(5	)%
Education Publishing		52,068			57,711			(10	)%		(8	)%
Course Workflow (WileyPLUS)		18,429			16,310			13	%		14	%
Test Preparation and Certification		8,377			7,919			6	%		7	%
Licensing, Distribution, Advertising and Other		11,723			11,585			1	%		2	%

Total Publishing Revenue		157,499			164,985			(5	)%		(3	)%

Cost of Sales		45,438			49,956			(9	)%		(8	)%

Gross Profit		112,061			115,029			(3	)%		(1	)%
Gross Profit Margin		71.2	%		69.7	%

Operating Expenses		(69,157	)		(71,195	)		(3	)%		(1	)%
Amortization of Intangibles		(2,042	)		(1,850	)		10	%		10	%
Restructuring Charges (see Note 7)		(1,407	)		(71	)		#			#

Contribution to Profit	$	39,455		$	41,913			(6	)%		(2	)%
Contribution Margin		25.1	%		25.4	%

(a)

Due to the retrospective adoption of ASU 2017-07, total net benefits related to defined benefit and other post-employment benefit plans were reclassified from Operating and Administrative Expenses to Interest and Other Income. The amount for the three months ended October 31, 2017 for the Publishing segment was $0.6 million. Refer to Note 2, "Recent Accounting Standards," for more information.

(b) Adjusted to exclude FX impact and Restructuring Charges.

# Not meaningful

Revenue:

Publishing revenue decreased 5% to $157.5 million on a reported basis and decreased 3% on a constant currency basis as compared with prior year. This decrease was primarily due to a decline in Education Publishing due to a continued shift in market demand for print and, to a lesser extent, a decline in STM and Professional Publishing. These declines were partially offset by an increase in Course Workflow (WileyPlus) mainly due to timing of revenue recognition associated with multi-semester offerings, which are recognized in periods extending across two semesters.

Index

Gross Profit:

Gross profit decreased 3% as compared with prior year, and 1% on a constant currency basis, due to the decline in Education Publishing and STM and Professional Publishing revenue, partially offset by lower inventory and other costs.

Contribution to Profit:

Contribution to profit decreased 6% to $39.5 million for the three months ended October 31, 2018 as compared with the prior year. On a constant currency basis and excluding restructuring charges, contribution to profit decreased 2% as compared with the prior year. This decrease was primarily due to lower gross profit.

	Three Months Ended October 31,									% Change
SOLUTIONS:	2018			2017			% Change			w/o FX (a)
Revenue:
Education Services (OPM)	$	29,877		$	29,737			—			1	%
Professional Assessment		17,268			15,821			9	%		9	%
Corporate Learning		15,333			12,318			24	%		28	%

Total Solutions Revenue		62,478			57,876			8	%		9	%

Cost of Sales		11,623			8,992			29	%		31	%

Gross Profit		50,855			48,884			4	%		5	%
Gross Profit Margin		81.4	%		84.5	%

Operating Expenses		(39,351	)		(38,718	)		2	%		3	%
Amortization of Intangibles		(3,358	)		(3,482	)		(4	)%		(3	)%
Restructuring (Charges) Credits (see Note 7)		(1,097	)		625			#			#

Contribution to Profit	$	7,049		$	7,309			(4	)%		22	%
Contribution Margin		11.3	%		12.6	%

(a)	Adjusted to exclude FX impact and Restructuring (Charges) Credits.

# Not meaningful

Revenue:

Solutions revenue increased 8% to $62.5 million, or 9% on a constant currency basis, as compared with prior year. The increase was mainly driven by higher revenue in Corporate Learning, and to a lesser extent, in Professional Assessment. Education Services (OPM) revenue was impacted by the termination of certain underperforming partnerships as part of previously announced partner portfolio optimization.

Gross Profit:

Gross profit increased 4% to $50.9 million, or 5% on a constant currency basis, as compared with prior year. The increase primarily reflected the impact of higher revenues and efficiency gains.

Contribution to Profit:

Contribution to profit decreased 4% to $7.0 million for the three months ended October 31, 2018 as compared with the prior year. On a constant currency basis and excluding restructuring (charges) credits, contribution to profit increased 22% as compared with prior year due to higher gross profit, partially offset by higher content development and sales related costs in support of Education Services (OPM) enrollment growth.

Index

Education Services (OPM) Partners and Programs:

As of October 31, 2018, Wiley had 36 university partners and 247 programs under contract, As of October 31, 2017, the Company had 39 university partners and 254 programs under contract.

CORPORATE EXPENSES:

Corporate expenses for the three months ended October 31, 2018 increased 24% to $47.9 million as compared with prior year. On a constant currency basis and excluding restructuring charges (credits), these expenses increased 10%. This increase was primarily due to higher costs associated with strategic planning of $2.0 million.

RESULTS OF OPERATIONS – SIX MONTHS ENDED OCTOBER 31, 2018

CONSOLIDATED OPERATING RESULTS

Revenue:

Revenue for the six months ended October 31, 2018 was consistent with the prior year on a reported and on a constant currency basis. This was mainly driven by increases in Open Access revenues in our Research business and increases in each of our Solutions businesses. These increases were offset by declines in our print revenues in our Publishing segment and lower Journal Subscription revenues.

See the “Segment Operating Results” below for additional details on each segment’s revenue and contribution to profit performance.

Cost of Sales:

Cost of sales for the six months ended October 31, 2018 approximated that of the prior year and on a constant currency basis. Cost of sales increased due to higher royalty and employment related costs, offset by lower inventory costs.

Gross Profit Margin:

Gross profit margin for the six months ended October 31, 2018 was 72.7% compared with 72.8% in the prior year. On a constant currency basis, it remained the same at 72.7%.

Operating and Administrative Expenses:

Operating and administrative expenses for the six months ended October 31, 2018 increased $15.4 million, or 3.2% as compared with prior year and 3.3% on a constant currency basis. The increase was primarily due to higher costs related to increased resources in marketing, advertising and editorial management of $10.5 million, higher technology costs of $3.0 million due to the timing of spending, and higher costs associated with strategic planning of $2.4 million. These factors were partially offset by an impairment charge in the prior year related to one of our Publishing brands of $3.6 million.

Restructuring and Related Charges (Credits):

For the six months ended October 31, 2018 and 2017, we recorded pre-tax restructuring charges of $3.9 million and $24.3 million, respectively, related to the Restructuring and Reinvestment Program. The restructuring and related charges in the six months ended October 31, 2018 include credits in severance activities recorded in the three months ended July 31, 2018, primarily reflecting changes in the number of headcount reductions and estimates for previously accrued benefit costs.

Index

These charges are reflected in Restructuring and Related Charges (Credits) in the Condensed Consolidated Statements of Income and summarized in the following table:

	Six Months Ended October 31,					Total Charges
	2018		2017			Incurred to Date
Charges by Segment:
Research	$	1,302	$	4,448		$	26,715
Publishing		739		7,325			39,670
Solutions		840		2,170			7,087
Corporate Expenses		1,029		10,380			96,948
Total Restructuring and Related Charges	$	3,910	$	24,323		$	170,420

Charges (Credits) by Activity:
Severance		2,894	$	23,266			117,697
Process Reengineering Consulting		225		1,521			20,854
Other Activities		791		(464	)		31,869
Total Restructuring and Related Charges (Credits)	$	3,910	$	24,323		$	170,420

Other Activities for the six months ended October 31, 2018 include lease impairment related costs. The credits in Other Activities for the six months ended October 31, 2017 mainly reflect changes in estimates for previously accrued restructuring charges related to facility lease reserves. We currently do not anticipate any further material charges related to the Restructuring and Reinvestment Program.

Amortization of Intangibles:

Amortization of intangibles was $25.1 million for the six months ended October 31, 2018, an increase of $1.2 million as compared with prior year. On a constant currency basis, amortization of intangibles increased 5%. The increase in amortization was ~~flat.~~in the Research segment primarily due to the timing of the acquisitions of publishing rights in the second half of 2018.

Operating Income:

Operating income of $93.6 million was flat as compared with prior year as the impact from the timing of restructuring charges and credits offset higher operating expenses and the unfavorable impact of foreign exchange. Excluding restructuring charges and credits, our Adjusted Operating Income at constant currency decreased 16% due to higher operating and administrative expenses.

Interest ~~Expense/Income, Foreign Exchange and Other:~~Expense:

Interest expense for the ~~third quarter of fiscal year~~six months ended October 31, 2018 decreased ~~$1.6~~$0.3 million to ~~$3.3~~$6.4 million on a reported and on a constant currency basis. This decrease was due to lower average debt balances outstanding, ~~and~~partially offset by a ~~lower~~higher weighted average effective borrowing rate.

~~The Company reported foreign~~

Foreign Exchange Transaction Losses:

Foreign exchange transaction ~~(losses) of $6.0~~losses were $1.8 million infor the ~~third quarter of fiscal year~~six months ended October 31, 2018 ~~compared to gains of $2.1 million in the prior year. The losses in the third quarter of fiscal year 2018~~and were primarily due to the net impact of the change in average foreign exchange rates as compared to the U.S. dollar on our intercompany ~~accounts~~and third-party receivable and payable balances. For the six months ended October 31, 2017, foreign exchange transaction losses were $5.6 million which were primarily related to the impact of changes in foreign exchange rates on foreign denominated intercompany loans.

Provision for Income Taxes:

~~The following table summarizes the effective tax rate for the three months ended January 31, 2018 and 2017:~~

Three Months Ended
January 31,
2018 2017
Effective Tax Rate as Reported (18.1)% 3.2%
Estimated net impact in fiscal 2018 of non-recurring items from Tax Act 42.9% -
Effective Tax Rate excluding the impact of non-recurring items from the Tax Act in fiscal 2018 24.8% 3.2%

On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (the "Tax Act"). In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act ("SAB 118"), which allows us to record provisional amounts related to the effect of the Tax Act during a measurement period not to extend beyond one year of the enactment date. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation are expected over the next 12 months, we consider the accounting of the transition tax, deferred tax re-measurements and other items to be provisional due to the forthcoming guidance and our ongoing analysis of final data and tax positions. We expect to complete our analysis within the measurement period in accordance with SAB 118.

The effective tax rate for the ~~three~~six months ended ~~January~~October 31, 2018 was ~~lower in fiscal 2018 than fiscal~~22.5%, compared to 19.0% for the six months ended October 31, 2017. The rate for the six months ended October 31, 2017 ~~due to the estimated net tax benefit~~benefitted from non-recurring items in the Tax Act. As described in more detail below, estimated non-recurring items in the Tax Act reduced our income tax expense by $25 million ($0.43/share) or a reduction in our effective tax ratelarge equity compensation deductions from significant vesting of ~~42.9 percentage points.~~restricted stock and other one-time adjustments. Excluding ~~the effect of~~ those ~~non-recurring~~ items, the rate ~~was 24.8%~~would have been 24.4% compared to 22.5% for the ~~three month period~~six months ended ~~January~~October 31, ~~2018.~~

~~The rate excluding the benefit from the non-recurring items in the Tax Act was lower than the U.S. statutory rate for the year ended April 30,~~ 2018, primarily due to ~~lower foreign rates applicable to non-U.S. earnings.~~

~~The effective~~the reduced statutory tax rate ~~for the three months ended January 31, 2017 was 3.2%. The rate was lower than~~in the U.S. ~~statutory rate of 35% primarily due to lower foreign tax rates applicable to non-U.S. earnings. The rates were also lower than~~and more favorable earnings mix during the ~~U.S. statutory rate as well as the fiscal 2018 rates excluding the effects of the non-recurring benefits from the Tax Act, due to non-recurring foreign tax benefits.~~current period.

~~The Tax Act~~

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

Index

2731

The Tax Act reduces the Federal statutory tax rate from 35% to 21% effective January 1, 2018. As a result, our U.S. federal statutory tax rate for our fiscal year ended April 30, 2018 is a blended rate of 30.4%. The reduced rate did not have a significant impact on our effective tax rate for the three month or nine month periods ended January 31, 2018. We have not determined a reasonable estimate of the tax liability, if any, under the Tax Act for our remaining outside basis difference or evaluated how the Tax Act will affect our existing accounting position to indefinitely reinvest unremitted earnings. We will continue to evaluate our position for this matter as we finalize our Tax Act calculations.

The Tax Act creates new taxes, effective for us on May 1, 2018, including a provision designed to tax global low taxed income ("GILTI") and a provision establishing new minimum taxes, such as the base erosion anti-abuse tax ("BEAT"). We continue to evaluate the Tax Act, but due to the complexity and incomplete guidance of various provisions, we have not completed our accounting for the income tax effects of certain elements of the Tax Act, including the new GILTI and BEAT taxes. We have not yet determined whether such taxes should be recorded as a current-period expense when incurred or factored into the measurement of our deferred taxes. As a result, we have not included an estimate of any tax expense or benefit related to these items for the periods ended January 31, 2018.

As a result of our estimated benefit from the Tax Act as well as other factors, we expect an approximate estimated effective tax rate of 23% - 24% in fiscal year 2019. This effective tax rate excludes the tax impact of certain items we cannot yet provide, as they are not available without unreasonable effort due to the high variability, complexity, and low visibility with respect to certain items and the tax impact of certain items, including restructuring charges and credits, gains and losses on foreign currency, and other gains and losses.

Diluted Earnings per ~~Diluted~~ Share ~~("EPS"~~(“EPS”):

EPS for the ~~third quarter of fiscal year~~six months ended October 31, 2018 was ~~$1.19~~$1.21 per share compared with ~~$0.82~~$1.20 per share in the prior year. ~~EPS results included the following items, which impacted comparability:~~

Three Months
Ended January 31,
2018 2017
Restructuring charges $ (0.04) $ (0.10)
Foreign exchange (losses) gains on intercompany transactions (0.07) 0.03
Estimated impact of the Tax Act 0.43 -
Total net impact $ 0.32 $ (0.07)

Excluding the impact of the items included ~~above,~~in the table below, Adjusted EPS for the ~~third quarter of fiscal year~~six months ended October 31, 2018 decreased 2%19% to ~~$0.87~~$1.31 per share compared with ~~$0.89~~$1.62 per share in the prior year. On a constant currency basis, Adjusted EPS decreased ~~14%.~~17% primarily due to lower Adjusted Operating Income.

	Six Months Ended October 31,
	2018		2017
GAAP EPS	$	1.21	$	1.20
Adjustments:
Restructuring charges		0.05		0.33
Foreign exchange losses on intercompany transactions		0.05		0.09
Non-GAAP Adjusted EPS	$	1.31	$	1.62

SEGMENT OPERATING RESULTS

· ●	~~Licensing, Reprints, Backfiles and Other.~~an increase in Publishing Technology Services (Atypon).

~~The Company anticipates the completion of the migration from the~~ ~~Wiley Online Library~~ ~~platform~~Subscriptions’ revenue due to the ~~Literatum~~ ~~platform in the current fiscal year. Once the migration is complete, we anticipate realizing annualized operational savings~~timing of ~~approximately $10 million a year.~~publications.

Contribution to Profit:

Society Partnerships:

9 new society journals were signed with combined annual revenue of $3.7 million,

22 renewals/extensions were signed with $9.2 million in combined annual revenue,

There were four journal contracts that were not renewed with combined annual revenue of $0.4 million.

(b) Adjusted to exclude FX impact and Restructuring Charges.

Contribution to Profit:

·	~~54 renewals/extensions were signed with $34.9 million in combined annual revenue.~~

·	~~2 journal contracts were not renewed.~~

Three Months
Ended January 31, % change
PUBLISHING: 2018 2017 % change w/o FX (a)
Revenue:
STM and Professional Publishing $80,775 $76,899 5% 2%
Education Publishing 48,446 50,343 -4% -6%
Course Workflow (WileyPLUS) 21,406 23,464 -9% -9%
Test Preparation and Certification 7,758 8,508 -9% -9%
Licensing, Distribution, Advertising and Other 11,859 12,226 -3% -6%

Total Publishing Revenue $170,244 $171,440 -1% -3%

Cost of Sales 52,158 53,258 -2% 5%

Gross Profit $118,086 $118,182 -% -3%
Gross Profit Margin 69.4% 68.9%

Operating Expenses (67,984) (76,084) -11% -12%
Amortization of Intangibles (2,022) (2,264) -11% 11%
Restructuring Credits (Charges) (see Note 7) 392 (1,027)

Contribution to Profit $48,472 $38,807 25% 16%
Contribution Margin
28.5% 22.6%

·	~~Education Publishing due to a continued shift in market demand for print;~~

·	~~Course Workflow (WileyPLUS) due to timing of revenue recognition associated with multi-semester offerings, which are recognized in periods extending across two semesters.~~

~~Contribution to Profit:~~

Three Months
Ended January 31, % change
SOLUTIONS: 2018 2017 % change w/o FX (a)
Revenue:
Education Services (OPM) $32,242 $30,016 7% 7%
Professional Assessment 13,228 13,783 -4% -5%
Corporate Learning 16,472 15,448 7% -4%

Total Solutions Revenue $61,942 $59,247 5% 2%

Cost of Sales 10,433 10,952 -5% -9%

Gross Profit $51,509 $48,295 7% 4%
Gross Profit Margin 83.2% 81.5%

Operating Expenses (40,424) (40,213) 1% 3%
Amortization of Intangibles (3,405) (3,396) 0% 3%
Restructuring Charges (see Note 7) (1,277) (1,095)

Contribution to Profit $6,403 $3,591 78% 67%
Contribution Margin 10.3% 6.1%

~~(a) Adjusted to exclude Restructuring Charges~~

Gross profit increased 7%6% to ~~$51.5~~$100.2 million, ~~or 4%~~and on a constant currency basis, as compared with prior year. The increase primarily reflected the impact of higher ~~revenues. A 170 basis points improvement in gross profit margin was~~revenues, partially offset by higher costs of sales due to ~~increased efficiency in recruiting Education Services (OPM) students, which resulted in lower recruitment~~higher amortization expense and employment related costs.

Contribution to Profit:

~~Wiley signed three new programs and discontinued ten this quarter. As of January 31, 2018, Wiley had 38 university partners and 247 programs under contract.~~

~~CONSOLIDATED OPERATING RESULTS~~

~~Revenue for the nine months of fiscal year 2018 increased 4% to $1,318.9 million, or 1% on a constant currency basis as compared with prior year. The increase was mainly driven by~~ ~~incremental revenue from the Atypon acquisition, Open Access revenue growth and higher Education Service (OPM) revenue in Solutions. This was partially offset by a decline in Publishing revenue.~~

~~See the "Segment Operating Results" below for additional details on each segment's revenue and contribution to profit performance.~~

Cost of sales for the nine months of fiscal year 2018 increased 5% to $359.8 million, or 3% on a constant currency basis as compared with prior year. The increase was primarily a result of higher revenues and higher royalty costs on Research journals due to title mix and an increase in new titles at a higher royalty rate.

~~Gross Profit Margin:~~

~~Gross profit margin for the nine months of fiscal year 2018 was 72.7% and decreased slightly compared with the prior year period on a constant currency basis.~~

~~Operating and Administrative Expenses:~~

~~Operating and administrative expenses for the nine months of fiscal year 2018 of $731.9 million approximated the prior year on a reported and on a constant currency basis reflecting :~~

·	~~a one-time pension settlement charge in the prior year related to changes in the Company's retiree and long-term disability plans of $8.8 million;~~

·	~~lower technology costs in the current year of $14.9 million related to the Company's ERP implementation and other reductions in depreciation, outsourcing and system development consulting costs; and~~

·	~~savings from operational excellence initiatives and restructuring activities.~~

~~These factors were partially offset by:~~

·	~~one-time benefits in the prior year related to changes in the Company's retiree and long-term disability plans of $4.2 million and a life insurance recovery of $1.7 million;~~

·	~~incremental costs associated with the Atypon acquisition of $8.7 million;~~

·	~~executive transition and strategy consultation costs in the current year of $4.9 million;~~

·	~~higher~~ ~~incentive compensation expenses in the current year of $1.9 million, which reflected the expected achievement of certain full year 2018 financial and sales goals; and~~

·	~~an impairment charge in the current year related to one of the Company's Publishing brands as a result of a business review performed on the Publishing segment's products and services of $3.6 million.~~

~~Restructuring Charges:~~

Cumulative
Program
Nine Months Charges
Ended January 31, to Date
2018 2017
Charges by Segment:
Research $5,138 $677 $25,294
Publishing 6,933 1,596 39,422
Solutions 3,447 1,619 5,998
Shared Services 11,013 11,153 93,761
Total $26,531 $15,045 $164,475

Charges (Credits) by Activity:
Severance $25,047 $7,999 $112,637
Process Reengineering Consulting 1,948 16 20,762
Other Activities (464) 7,030 31,076
Total $26,531 $15,045 $164,475

~~Other Activities reflects leased facility consolidations, contract termination costs and the curtailment of certain defined~~a share-based compensation benefit pension plans. The credits in Other Activities for the nine months ended January 31, 2018 mainly reflect changes in estimates for previously accrued restructuring charges related to facility lease reserves.

~~Amortization of Intangibles:~~

Amortization of intangibles was $36.0 million for the nine months of fiscal year 2018, a decline of 4% from the prior year on a reported and constant currency basis. The decrease was a result of the completion of amortization of certain acquired intangible assets.

~~Interest Expense/Income, Foreign Exchange and Other:~~

Interest expense for the nine months of fiscal year 2018 decreased $3.3 million to $10.0 million on a reported and constant currency basis. This decrease was due to lower average debt balances outstanding and a lower average effective borrowing rate.

~~The Company reported foreign exchange transaction losses of $11.6 million for the nine months of fiscal year 2018 compared to gains of $2.0 million~~ in the prior year.

FISCAL YEAR 2019 OUTLOOK:

The ~~losses in~~Company reaffirmed its fiscal 2019 guidance. Fiscal 2019 guidance excludes the ~~nine months of fiscal year 2018 were primarily due to the impact~~results of the ~~change~~acquisition of Learning House, which closed on November 1, 2018. For fiscal 2019, we anticipate Learning House to contribute approximately $30 million in ~~average foreign exchange rates as compared~~revenue and be dilutive to ~~the U.S. dollar on our intercompany accounts receivable and payable balances.~~EPS by approximately $0.10.

Metric (amounts in millions, except EPS)	Fiscal Year 2018 Actual		Fiscal Year 2019 Expectation Constant Currency
Revenue	$	1,796.1	Even with prior year
Adjusted EPS	$	3.43	Mid-single digit decline
Cash Provided by Operating Activities	$	381.8	High-single digit decline
Capital Expenditures	$	150.7	Lower

~~Provision for Income Taxes:~~

~~The following table summarizes the effective tax rate for the nine months ended January 31, 2018 and 2017:~~

Nine Months Ended
January 31,
2018 2017
Effective Tax Rate as Reported 4.0% 49.5%
Estimated net impact in fiscal 2018 of non-recurring items from Tax Act 17.4% -
Impact of unfavorable German court decision in fiscal 2017 - (35.8)%
Impact of reduction in U.K. statutory rate on deferred tax balances in fiscal 2017 - 4.4%
Effective Tax Rate excluding the impact of non-recurring items from the Tax Act in fiscal 2018 and the unfavorable German court decision and UK tax rate reduction in fiscal 2017 21.4% 18.1%

The effective tax rate for the nine month period was lower in fiscal 2018 than fiscal 2017 due to the estimated net tax benefit from non-recurring items in the Tax Act. As described in Note 11, "Income Taxes", of the Notes to the Condensed Consolidated Financial Statements, estimated non-recurring items in the Tax Act reduced our income tax expense by $25 million ($0.43/share) or a reduction in our effective tax rate of 17.4 percentage points. Excluding the effect of those non-recurring items, the rate was 21.4%.

The rate excluding the benefit from the non-recurring items in the Tax Act was lower than the U.S. statutory rate for the year ended April 30, 2018 primarily due to lower foreign rates applicable to non-US earnings. The nine month period also benefitted from the lower federal statutory tax rate of 30.4% in the Tax Act retroactive to the beginning of the fiscal year.

The effective tax rate for the nine months ended January 31, 2017 was 49.5%. The rate for the nine months ended January 31, 2017 was increased by an unfavorable German court decision in September 2016 and decreased by a non-cash deferred tax benefit related to a decrease in the U.K. statutory tax rate from 18% to 17% beginning on April 1, 2020. Excluding the impact of the unfavorable German court decision and the benefit from a future U.K. statutory tax rate reduction, the rate for the nine month period was 18.1%. The rate excluding the German court decision and U.K. tax rate change was lower than the U.S. statutory rate of 35% primarily due to lower foreign tax rates applicable to non-U.S. earnings. The rate was also lower than the U.S. statutory rate as well as the fiscal 2018 rates excluding the effects of non-recurring benefits from the Tax Act, due to non-recurring foreign tax benefits.

~~EPS:~~

~~EPS for the first nine months of fiscal year 2018 was $2.39 per share compared with $1.15 per share in the prior year. The increase was mainly driven by:~~

●

Wiley anticipates low-single digit revenue growth in Research and Solutions offset by a low-single digit revenue decline in Publishing.

●

Adjusted EPS is expected to decline primarily due to increased investment in growth initiatives, including publishing more in Research and driving enrollment growth in Education Services.

●

Cash Provided by Operating Activities reflects the ~~estimated~~ impact of growth investments and substantially lower gains in working capital. In addition, the ~~Tax Act;~~adoption of Topic 606 will result in the reclassification of certain spending for costs to fulfill of approximately $10 million from Capital Expenditures to Cash Provided by Operating Activities.

·	~~favorable impact of currency; and~~

~~prior year charges~~●

Capital Expenditures are expected to be lower by $30 million primarily due to the ~~unfavorable German court decision and a large pension settlement.~~

~~These factors were partially offset by higher restructuring charges and foreign exchange losses associated with intercompany transactions in the current fiscal year.~~

34completion of the Company’s headquarters transformation. In addition, the adoption of Topic 606 will result in the reclassification of certain spending for costs to fulfill of approximately $10 million from Capital Expenditures to Cash Provided by Operating Activities.

~~EPS results included the following items, which impacted comparability:~~

Nine Months
Ended January 31,
2018 2017
Restructuring charges $ (0.37) $ (0.17)
Foreign exchange losses on intercompany transactions (0.16) (0.01)
Estimated impact of Tax Act 0.43 -
Pension settlement - (0.09)
Unfavorable German court decision - (0.82)
U.K. tax rate change - 0.04
Total net impact $ (0.10) $ (1.05)

Excluding the impact of the items included above, Adjusted EPS for the first nine months of fiscal year 2018 increased 13% to $2.49 per share compared to $2.20 per share in the prior year. On a constant currency basis, Adjusted EPS increased 1%.

~~SEGMENT OPERATING RESULTS~~

Nine Months
Ended January 31, % change
RESEARCH: 2018 2017 % change w/o FX (a)
Revenue:
Journal Subscriptions $498,775 $472,401 6% -1%
Open Access 28,058 21,851 28% 27%
Licensing, Reprints, Backfiles, and Other 124,594 114,295 9% 7%
Total Journal Revenue $651,427 $608,547 7% 2%

Publishing Technology Services (Atypon) 24,559 10,440

Total Research Revenue $675,986 $618,987 9% 4%

Cost of Sales 182,942 157,818 16% 11%

Gross Profit $493,044 $461,169 7% 2%
Gross Profit Margin 72.9% 74.5%

Operating Expenses (276,429) (267,741) 3% 2%
Amortization of Intangibles (19,554) (19,516) 0% 1%
Restructuring Charges (See Note 7) (5,138) (677)

Contribution to Profit $191,923 $173,235 11% 1%
Contribution Margin 28.4% 28.0%

~~(a) Adjusted to exclude Restructuring Charges~~

~~Revenue:~~

~~Research revenue increased 9% to $676.0 million, or 4% on a constant currency basis as compared with prior year. The increase was primarily due to:~~

·	~~incremental revenue from the recent acquisition of Atypon of $14.1 million;~~

·	~~Open Access growth driven by the strong performance of existing titles and new title launches; and~~

·	~~other Journal revenue increases particularly in advertising, backfiles and the licensing of intellectual content.~~

~~We expect Journal Subscriptions' revenue to be flat for full year fiscal 2018 as compared to the prior year.~~

~~Gross Profit:~~

Gross profit increased 7% to $493.0 million, or 2% on a constant currency basis as compared with prior year. The increase was driven by higher revenues. However, gross profit margin declined by 160 basis points due primarily to higher journal royalty costs associated with title mix and an increase in new titles at a higher royalty rate. We anticipate that we will continue to experience gross margin pressure due to higher journal royalty rates for the remainder of fiscal 2018. However, we will offset this margin pressure with additional operational efficiencies.

~~Contribution to Profit:~~

~~Contribution to profit increased 11% to $191.9 million as compared with prior year. On a constant currency basis and excluding restructuring charges, contribution to profit increased 1%.~~

~~Society Partnerships~~

~~12 new society journals were signed in~~●

Non-GAAP effective tax rate for the ~~nine months with combined annual revenue of $10.3 million.~~year is expected to be approximately 23-24%.

·	~~83 renewals/extensions were signed with $53.2 million in combined annual revenue.~~

·	6 ~~journal contacts were not renewed with annual revenue of $1.2 million.~~

Nine Months
Ended January 31, % change
PUBLISHING: 2018 2017 % change w/o FX (a)
Revenue:
STM and Professional Publishing $215,835 $215,734 -% -1%
Education Publishing 151,893 162,669 -7% -8%
Course Workflow (WileyPLUS) 38,926 44,170 -12% -12%
Test Preparation and Certification 27,167 25,585 6% 6%
Licensing, Distribution, Advertising and Other 32,686 31,543 4% 2%

Total Publishing Revenue $466,507 $479,701 -3% -4%

Cost of Sales 146,491 150,991 -3% -4%

Gross Profit $320,016 $328,710 -3% -4%
Gross Profit Margin 68.6% 68.5%

Operating Expenses (211,042) (225,022) -6% -8%
Amortization of Intangibles (6,084) (7,453) -18% -18%
Restructuring Charges (see Note 7) (6,933) (1,596)

Contribution to Profit $95,957 $94,639 1% 8%
Contribution Margin
20.6% 19.7%

~~(a) Adjusted to exclude Restructuring Charges~~

~~Revenue:~~

Publishing revenue decreased 3% to $466.5 million, or 4% on a constant currency basis as compared with prior year. The decline was driven by lower print book revenues, particularly in Education Publishing, due to overall softness in the market as well as other retail options such as rental and digital. The Company expects softness to continue for the current fiscal year. Also contributing to the decline in Publishing revenue was a decline in Course Workflow (WileyPLUS) primarily due to the timing of revenue recognition associated with multi-semester offerings, which are recognized in periods extending across two semesters. These factors were partially offset by growth in Test Preparation and Certification revenues driven by proprietary sales of the Company's professional test certification products.

~~Gross Profit:~~

Gross profit decreased 3% to $320.0 million, or 4% on a constant currency basis as compared with prior year. The gross profit margin approximated that of the prior year as cost of sales decreased in line with revenues.

~~Contribution to Profit:~~

Contribution to profit increased 1% to $96.0 million as compared with prior year. On a constant currency basis and excluding restructuring charges, contribution to profit increased 8% primarily due to lower operating expenses, which reflected savings from operational excellence initiatives and restructuring activities.

Nine Months
Ended January 31, % Change
SOLUTIONS: 2018 2017 % change w/o FX (a)
Revenue:
Education Services (OPM) $88,316 $81,195 9% 9%
Professional Assessment 43,936 43,451 1% 1%
Corporate Learning 44,105 42,995 3% -3%

Total Solutions Revenue $176,357 $167,641 5% 4%

Cost of Sales 30,346 $32,648 -7% -9%

Gross Profit $146,011 $134,993 8% 7%
Gross Profit Margin 82.8% 80.5%

Operating Expenses (120,494) (113,925) 6% 4%
Amortization of Intangibles (10,326) (10,352) 0% 2%
Restructuring Charges (see Note 7) (3,447) (1,619)

Contribution to Profit $11,744 $9,097 29% 43%
Contribution Margin 6.7% 5.4%

~~(a) Adjusted to exclude Restructuring Charges~~

~~Revenue:~~

Solutions revenue increased 5% to $176.4 million, or 4%, on a constant currency basis as compared with prior year, mainly driven by growth in Education Services (OPM) tuition revenue growth due to higher enrollments, partially offset by a decline in Corporate Learning (CrossKnowledge) where French government funding slowed for unemployment initiatives and blended learning programs.

~~Gross Profit:~~

Gross profit increased 8% to $146.0 million, or 7% on a constant currency basis as compared with prior year. The increase primarily reflected higher revenues. A 230 basis points improvement in gross profit margin was due to increased efficiency in recruiting Education Services (OPM) students, which resulted in lower recruitment costs.

~~Contribution to Profit:~~

Contribution to profit increased 29% to $11.7 million as compared with prior year. On a constant currency basis and excluding restructuring charges, contribution to profit increased 43% primarily due to the improvement in gross profit.

~~Education Services (OPM) Partners and Programs~~

In the nine months of fiscal year 2018, the Company signed one new university partner (Winthrop University) and thirteen new programs. As of January 31, 2018, the Company had 38 university partners and 247 programs under contract.

~~CORPORATE EXPENSES:~~

Corporate Expenses were $134.9 million and $134.2 million in the nine months of fiscal years 2018 and 2017, respectively. On a constant currency basis and excluding restructuring charges and a one-time pension settlement charge in the prior year, these expenses increased 7%, primarily due to the following:

·	~~one-time benefits in the prior year related to changes in the Company's retiree and long-term disability plans of $4.2 million and a life insurance recovery of $1.7 million;~~

·	~~executive transition and strategy consultation costs in the current year of $4.9 million; and~~

·	~~higher support costs of $12.6 million, including~~ ~~incentive compensation expenses in the current year, which reflected the expected achievement of certain full year 2018 financial goals.~~

These factors were partially offset by lower technology costs of approximately $8.5 million driven by reduced spending on the Company's ERP system and other reductions in depreciation, outsourcing and systems development consulting costs.

~~FISCAL YEAR 2018 OUTLOOK:~~

~~The Company's fiscal year 2018~~ ~~guidance~~ ~~is as follows:~~

~~Metric (in millions, except share data)~~	~~FY17 Actual~~	~~FY18 Expectation (at constant currency)~~
~~Revenue~~	~~$1,718.5~~	~~Approximately even~~
~~Adjusted Operating Income~~	~~$228.4~~	~~Approximately even~~
~~Adjusted EPS~~	~~$3.01~~	~~Low-single digit % decline~~
~~Cash from Operations~~	~~$314.5~~	~~$350.0 million or higher~~
~~Capital Expenditures~~	~~$148.3~~	~~Slightly lower~~

Foreign exchange was beneficial to the first nine months of 2018 revenue and EPS by $40.0 million and $0.26 per share, respectively. If current exchange rates were to hold through fiscal year-end 2018, we would record positive foreign currency variances in the fiscal year of approximately $49.0 million in revenue, $27.0 million in operating income, and $0.34 per share due to changes in exchange rates and functional currency gains related to calendar year 2017 journal subscriptions in the UK.

LIQUIDITY AND CAPITAL RESOURCES

The Company's Cash and Cash Equivalents balance was $128.2 million at January 31, 2018 compared with $482.3 million at January 31, 2017. Net Cash Provided by Operating Activities in the first nine months

Principal Sources of fiscal year 2018 decreased $39.0 million compared to the first nine months of fiscal year 2017 to $190.1 million principally due to the timing of journal subscription cash collections mainly driven by the acceleration of renewals and billings in the prior year and higher income tax payments in the current year.Liquidity

The Company's negative working capital was $357.4 million and $428.1 million as of January 31, 2018 and April 30, 2017, respectively, due to the seasonality of its businesses. The primary driver of the negative working capital is unearned deferred revenue related to subscriptions for which cash has been collected in advance. Cash received in advance for subscriptions is used by the Company for a number of purposes including acquisitions; debt repayments; funding operations; dividend payments; and purchasing treasury shares. The deferred revenue 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 January 31, 2018 and as of April 30, 2017 includes $409.0 million and $436.2, respectively, of such deferred subscription revenue for which cash was collected in advance.

Net Cash Used for Investing Activities in the first nine months of fiscal year 2018 was $134.6 million compared to $261.7 million in the prior year. Product Development Spending was $30.4 million in the first nine months of fiscal year 2018 compared to $31.9 million in the prior year. Cash used for Technology, Property and Equipment was $79.0 million in the first nine months of fiscal year 2018 compared to $77.7 million in the prior year. The increase mainly reflects capital spending related to investments in product technology and business applications. The first nine months of fiscal year 2018 includes spending for the acquisition of publication rights for society journals of $25.2 million compared to $26.2 million in the prior year. Acquisitions, net of cash acquired in the first nine months of 2017 includes $121 million used for the acquisition of Atypon.

Projected capital spending for Technology, Property and Equipment and Product Development Spending for fiscal year 2018 is forecast to be approximately $110 million and $40 million, respectively. Projected spending for author advances, which is classified as an operating activity, is forecast to be approximately $120 million for fiscal year 2018.

Net Cash Provided by Financing Activities was $4.2 million in the first nine months of fiscal year 2018 compared to $179.5 million in the prior year. During the first nine months of fiscal year 2018, net debt borrowings were $66.8 million compared to $260.7 million in the prior year. The Company's net debt (debt less cash and cash equivalents) decreased $6.5 million from April 30, 2017 to $300.0 million.

During the first nine months of fiscal year 2018, the Company repurchased 550,757 shares of common stock at an average price of $53.12 compared to 670,460 shares at an average price of $52.74 in the prior year. In the first nine months of fiscal year 2018, the Company increased its quarterly dividend to shareholders by 3% to $0.96 per share versus $0.93 per share in the prior year. Higher proceeds from the exercise of stock options mainly reflected a higher volume of stock option exercises in the first nine months of fiscal year 2018 compared to the prior year.

Cash and Cash Equivalents held outside the U.S. were approximately $122 million as of January 31, 2018. The balances in equivalent U.S. dollars were comprised primarily of British pound sterling ($51 million), euros ($30 million), Singapore dollars ($5 million), Australian dollars ($10 million), and other ($26 million). Maintenance of these cash and cash equivalent balances outside the U.S. does not have a material impact on the liquidity or capital resources of the Company's global, including U.S., operations. Notwithstanding the Tax Act which generally eliminated Federal income tax on cash repatriation to the U.S., cash repatriation may be subject to state and local taxes or withholding or similar taxes. The Company intends to reinvest cash outside the U.S. except in instances where repatriating such earnings would result in no significant additional income tax. As described in Note 11, "Income Taxes," of the Notes to the Condensed Consolidated Financial Statements, we accrued a provisional $0.5 million for state taxes related to the Tax Act, in addition to using foreign tax credits to offset a provisional deemed repatriation tax of $14.5 million. We ~~have no additional accrued liability for U.S. income tax on the repatriation of non-U.S. earnings and estimate~~believe that ~~if such earnings were repatriated, the U.S. income tax liability would not be material to~~ our ~~consolidated financial position or results of operations.~~

As of January 31, 2018, the Company had approximately $428 million of debt outstanding and approximately $679 million of unused borrowing capacity under its Revolving Credit and other facilities. The Company's credit agreement contains certain restrictive covenants related to the Company's consolidated leverage ratio and interest coverage ratio, which the Company was in compliance with as of January 31, 2018. The Company believes that its operating cash flow, together with ~~its~~our revolving credit facilities and other available debt financing, will be adequate to meet ~~its~~our operating, investing and financing needs in the foreseeable future, although there can be no assurance that continued or increased volatility in the global capital and credit markets will not impair ~~its~~our ability to access these markets on terms commercially acceptable. ~~The Company does~~We do not have any off-balance-sheet debt.

As of October 31, 2018, we had cash and cash equivalents of $115.6 million, of which approximately $93.9 million, or 81%, was located outside the U.S. Maintenance of these cash and cash equivalent balances outside the U.S. does not have a material impact on the liquidity or capital resources of our operations. Notwithstanding the Tax Act which generally eliminated federal income tax on future cash repatriation to the U.S., cash repatriation may be subject to state and local taxes or withholding or similar taxes. We no longer intend to permanently reinvest cash outside the U.S. and include in our accrued liabilities our estimated cost of $2 million to repatriate our non-U.S. earnings.

As of October 31, 2018, we had approximately $537.3 million of debt outstanding and approximately $565.5 million of unused borrowing capacity under our Revolving Credit and other facilities. Our credit agreement contains certain restrictive covenants related to our consolidated leverage ratio and interest coverage ratio, which we were in compliance with as of October 31, 2018.

Analysis of Historical Cash Flow

The following table shows the changes in our Condensed Consolidated Statement of Cash Flows for the six months ended October 31, 2018 and 2017.

	Six Months Ended October 31,
	2018			2017
Net Cash Used in Operating Activities	$	(121,097	)	$	(45,812	)
Net Cash Used in Investing Activities		(45,170	)		(77,493	)
Net Cash Provided by Financing Activities		120,465			135,351
Effect of Foreign Currency Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash		(8,368	)		2,855

Index

3935

Free Cash Flow less Product Development Spending helps assess our ability, over the long term, to create value for our shareholders, as it represents cash available to repay debt, pay common dividends, and fund share repurchases and new acquisitions. Below are the details of Free Cash Flow less Product Development Spending for the six months ended October 31, 2018 and 2017.

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 occurs in the beginning of the second half of our fiscal year.

	Six Months Ended October 31,
	2018			2017
Net Cash Used in Operating Activities	$	(121,097	)	$	(45,812	)
Less: Additions to Technology, Property and Equipment		(34,560	)		(53,469	)
Less: Product Development Spending		(7,815	)		(17,927	)
Free Cash Flow less Product Development Spending	$	(163,472	)	$	(117,208	)

Net Cash Used in Operating Activities for the six months ended October 31, 2018 increased $75.3 million compared to the six months ended October 31, 2017 to $121.1 million primarily due to the timing of working capital items, including a delay in billings and subsequent cash collections for calendar year 2019 subscriptions and, to a lesser extent, higher payments for expenses.

Our negative working capital was $121.2 million and $394.3 million as of October 31, 2018 and April 30, 2018, respectively, due to the seasonality of our businesses. The primary driver of the negative working capital is unearned contract liabilities (deferred revenue) related to subscriptions for which cash has been collected in advance. Cash received in advance for subscriptions is used by us for a number of purposes including acquisitions, debt repayments, funding operations, dividend payments and purchasing treasury shares.

The contract liabilities (deferred revenue) 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 October 31, 2018 and as of April 30, 2018 includes $237.2 million and $486.4 million, respectively, primarily related to deferred subscription revenue for which cash was collected in advance.

Net Cash Used in Investing Activities for the six months ended October 31, 2018 was $45.2 million compared to $77.5 million in the prior year. The decrease was primarily due to a $18.9 million decrease in spending for technology, property and equipment in the six months ended October 31, 2018 as a result of the May 2018 implementation of our enterprise resource planning system (“ERP”) order to cash release for journal subscriptions and the completion of our headquarters renovations. In addition, a $10.1 million decrease in product development spending was due to the adoption of Topic 606 whereby certain costs to fulfill contracts, which were previously included in product development spending are now included in cash flow used in operating activities.

Projected capital spending for Technology, Property and Equipment and Product Development Spending for fiscal year 2019 is forecast to be approximately $110 million. Projected spending for author advances, which is classified as an operating activity, is forecast to be approximately $130 million for fiscal year 2019.

Net Cash Provided by Financing Activities was $120.5 million for the six months ended October 31, 2018 compared to $135.4 million for the six months ended October 31, 2017. This decrease in cash provided by financing activities was due to lower net borrowings for the six months ended October 31, 2018 compared to the six months ended October 31, 2017.

During the six months ended October 31, 2018, we repurchased 425,120 shares of Class A common stock at an average price of $58.79 compared to 550,757 shares of Class A common stock at an average price of $53.12 in the prior year. In the six months ended October 31, 2018, we increased our quarterly dividend to shareholders by 3% to $1.32 per share annualized versus $1.28 per share annualized in the prior year.

Index

~~ITEM 3.~~

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

~~The Company is~~

We are exposed to market risk primarily related to interest rates, foreign exchange and credit risk. It is ~~the Company's~~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. ~~The Company does~~We do not use derivative financial instruments for trading or speculative purposes.

Interest Rates

~~The Company~~

From time to time, we may use interest rate swaps, collars, or options to manage our exposure to fluctuations in interest rates.

We had ~~$428.2~~$537.3 million of variable rate loans outstanding at ~~January~~October 31, 2018, which approximated fair value.

The information set forth in Note 13, "Derivatives Instruments and Hedging Activities," of the Notes to Condensed Consolidated Financial Statements under the caption "Interest Rate Contracts," is incorporated herein by reference.

On April 4, 2016, ~~the Company~~we entered into a forward starting interest rate swap agreement which fixed a portion of the variable interest due on a variable rate debt renewal on May 16, 2016. Under the terms of the agreement, ~~the Company pays~~we pay a fixed rate of 0.92% and ~~receives~~receive a variable rate of interest based on one-month LIBOR from the counterparty which is reset every month for a three-year period ending May 15, 2019. As of ~~January~~October 31, 2018, and April 30, 2018, the notional amount of the interest rate swap was $350.0 million.

It is ~~management's~~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 three and ~~nine~~six months ended ~~January~~October 31, 2018, ~~the Company~~we recognized a gain on ~~its~~our hedge contracts of approximately ~~$0.4~~$1.1 million and ~~$0.8~~$2.0 million, respectively, and during the three and six months ended October 31, 2017, we recognized a gain on our hedge contracts of approximately $0.3 million and $0.4 million, respectively, which ~~are~~is reflected in Interest Expense in the Condensed Consolidated Statements of Income.

At ~~January~~October 31, 2018 and April 30, 2018, the fair value of the outstanding interest rate swaps was a deferred gain of $3.3 million and $5.1 ~~million.~~million, respectively. Based on the maturity dates of the ~~contract,~~contracts, the entire deferred gain as of ~~$5.1 million~~October 31, 2018 was recorded inwithin Prepaid Expenses and Other ~~Long-Term~~Current Assets and as of April 30, 2018 was recorded within Other Non-Current Assets.

On an annual basis, a hypothetical one percent change in interest rates for the ~~$78.0~~$187.3 million of unhedged variable rate debt as of ~~January~~October 31, 2018 would affect net income and cash flow by approximately ~~$0.6~~$1.4 million.

Foreign Exchange Rates

Fluctuations in the currencies of countries where ~~the Company operates~~we operate outside the U.S. may have a significant impact on financial results. ~~The Company is~~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-U.S. business units are translated into U.S. dollars using period-end exchange rates for assets and liabilities and the Statements of Income are translated into U.S. dollars using weighted-average exchange rates for revenues and expenses.

~~The Company's~~

Our significant investments in non-U.S. businesses are exposed to foreign currency risk. Adjustments resulting from translating assets and liabilities are reported as a separate component of Accumulated Other Comprehensive Loss within ~~Shareholders'~~Shareholders’ Equity under the caption Foreign Currency Translation Adjustment. During the three and ~~nine~~six months ended ~~January~~October 31, 2018, we recorded foreign currency translation losses in Other Comprehensive Income of approximately $20.4 million and $60.7 million, respectively, primarily as a result of the ~~Company~~fluctuations of the U.S. dollar relative to the British pound sterling and, to a lesser extent, the euro. During the three and six months ended October 31, 2017, we recorded foreign currency translation gains in Other Comprehensive Income of approximately ~~$51.4~~$5.6 million and ~~$84.4~~$33.0 million, respectively, primarily as a result of the fluctuations of the U.S. dollar relative to the British pound sterling and euro.

Exchange rate gains or losses related to foreign currency transactions are recognized as transaction gains or losses in the Condensed Consolidated Statements of Income as incurred. Under certain circumstances, ~~the Company~~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.

~~The Company~~We may enter into forward exchange contracts to manage ~~the Company's~~our exposure on certain foreign currency denominated assets and liabilities. The forward exchange contracts are marked to market through Foreign Exchange Transaction (Losses) Gains on the Condensed Consolidated Statements of Income and carried at their fair value on the Condensed Consolidated Statements of Financial Position. Foreign currency denominated assets and liabilities are remeasured at spot rates in effect on the balance sheet date, with the effects of changes in spot rates reported in Foreign Exchange Transaction (Losses) Gains. ~~The Company~~As of October 31, 2018, and April 30, 2018, we did not maintain any open forward exchange contracts. In addition, we did not maintain any open forward contracts during the ~~first nine~~six months ~~of fiscal year 2018.~~ended October 31, 2018 and 2017.

Index

Sales Return Reserves

The estimated allowance for print book sales returns is based upon historical return patterns, as well as current market trends in the businesses in which we operate. In connection with the estimated sales return reserves, ~~the Company~~we also ~~includes~~include a related ~~reduction~~increase to inventory and ~~royalty costs~~a reduction to accrued royalties as a result of the expected returns.

The reserves are reflected in the following accounts of the Condensed Consolidated Statements of Financial Position – increase (decrease):

January 31, 2018 April 30, 2017
Accounts Receivable $(45,256) $(34,769)
Inventories 7,217 4,727
Accounts and Royalties Payable (7,774) (5,741)
Decrease in Net Assets $(30,265) $(24,300)

	October 31, 2018			April 30, 2018
Accounts receivable, net ⁽¹⁾	$	—		$	(28,302	)
Inventories, net		4,261			4,626
Accrued royalties		(3,934	)		(5,048	)
Contract liability (Deferred revenue) ⁽¹⁾		31,142			—
Decrease in Net Assets	$	(22,947	)	$	(18,628	)

(1)

Due to the adoption of the new revenue standard, the sales return reserve as of October 31, 2018 of $31.1 million is recorded in Contract Liability (Deferred Revenue). In prior periods, it was recorded as a reduction to Accounts Receivable, net on the Condensed Consolidated Statement of Financial Position.

A one percent change in the estimated sales return rate could affect net income by approximately ~~$2.0~~$0.6 million. A change in the pattern or trends in returns could affect the estimated allowance.

Customer Credit Risk

In the journal publishing business, subscriptions are primarily sourced through journal subscription agents who, acting as agents for library customers, facilitate ordering by consolidating the subscription orders/billings of each subscriber with various publishers. Cash is generally collected in advance from subscribers by the subscription agents and is principally remitted to ~~the Company~~us between the months of December and April. Future calendar-year subscription receipts from these agents are highly dependent on their financial condition and liquidity. Subscription agents account for approximately ~~22%~~20% of total annual consolidated revenue and no one agent accounts for more than 10% of total annual consolidated revenue.

~~The Company's~~

Our book business is not dependent upon a single customer; however, the industry is concentrated in national, regional, and online bookstore chains. Although no one book customer accounts for more than 9%10% of total annual consolidated revenue and ~~19%~~17% of accounts receivable at ~~January~~October 31, 2018, the top 10 book customers account for approximately ~~16%~~19% of total annual consolidated revenue and approximately ~~41%~~38% of accounts receivable at ~~January~~October 31, 2018.

Disclosure of Certain Activities Relating to Iran

The European Union, Canada and United States have imposed sanctions on business relationships with Iran, including restrictions on financial transactions and prohibitions on direct and indirect trading with listed ~~"designated~~“designated persons."” In the ~~first nine~~six months ~~of fiscal year~~ended October 31, 2018, ~~the Company's~~we did not record any revenue ~~and~~or net ~~profits~~earnings related to the sale of scientific and medical content to certain publicly funded universities, hospitals and institutions that meet the definition of the ~~"Government~~“Government of ~~Iran"~~Iran” as defined under section 560.304 of title 31, Code of Federal ~~Regulations were both under $2.5 million. The Company has~~Regulations. We assessed ~~its~~our business relationship and transactions with Iran and ~~believes it is~~believe we are in compliance with the regulations governing the sanctions. ~~The Company intends~~We intend to continue in these or similar sales as long as they continue to be consistent with all applicable sanction-related regulations.

ITEM 4. CONTROLS AND PROCEDURES

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~~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"~~“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~~Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Index

We are in the process of implementing a new global ~~enterprise resource planning system ("ERP")~~ERP that will enhance our business and financial processes and standardize our information systems. WeAs previously disclosed, we have completed the implementation of record-to-report, purchase-to-pay and several other business processes within all locations through fiscal year 2017. We completed the implementation of order-to-cash for certain businesses in May 2018 and ~~will~~may continue to roll out additional processes and functionality of the ERP in phases ~~over~~in the ~~next twelve months.~~foreseeable future.

As with any new information system we implement, this application, along with the internal controls over financial reporting included in this process, will require testing for effectiveness. In connection with this ERP implementation, we are updating our internal controls over financial reporting, as necessary, to accommodate modifications to our business processes and accounting procedures. We do not believe that the ERP implementation will have an adverse effect on our internal control over financial reporting.

Except as described above, there were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) during the quarter ended ~~January~~October 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There have been no significant developments related to legal proceedings during the three months ended ~~January~~October 31, 2018. For information regarding legal proceedings, see ~~the Company's~~our Annual Report on Form 10-K for the fiscal year ended April 30, ~~2017~~2018 Note 14, ~~" Commitment~~“Commitment and ~~Contingencies"~~Contingencies”.

ITEM 1a. RISK FACTORS

~~The final impacts of the Tax Act could be materially different from our current estimates.~~

The Tax Act was enacted on December 22, 2017. The provisions are broad and complex and depend upon future guidance as well any legislative action to address questions. Our estimated amounts are based on information available at this time, including estimates of results at April 30, 2018 and our current understanding of the Tax Act. The final transition impacts of the Tax Act may differ from our estimate, possibly materially.

See Part I, Item 1A, "Risk Factors," of our Annual Report on Form 10-K for the fiscal year ended April 30, ~~2017.~~2018. Except as required by the federal securities law, we undertake no obligation to update or revise any risk factor, whether as a result of new information, future events or otherwise.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended ~~January~~October 31, 2018, ~~the Company~~we made the following purchases of Class A Common Stock under ~~its~~our stock repurchase program:

	~~Total Number of Shares Purchased~~	~~Average Price Paid Per Share~~	~~Total Number of Shares Purchased as part of a Publicly Announced Program~~	~~Maximum Number of Shares that May be Purchased Under the Program~~
~~November 2017~~	-	-	-	~~3,242,891~~
~~December 2017~~	-	-	-	~~3,242,891~~
~~January 2018~~	-	-	-	~~3,242,891~~
~~Total~~	-	-	-

	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as part of a Publicly Announced Program		Maximum Number of Shares that May be Purchased Under the Program
August 2018		—	$	—		—		2,954,539
September 2018		245,081		56.64		245,081		2,709,458
October 2018		54,107		57.65		54,107		2,655,351
Total		299,188	$	56.82		299,188		2,655,351

ITEM 6. EXHIBITS

~~31.1 – Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes – Oxley Act of 2002~~

31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	18 U.S.C. Section 1350 Certificate by the President and Chief Executive Officer.
32.2*	18 U.S.C. Section 1350 Certificate by the Chief Financial and Operations Officer.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

~~31.2 – Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes – Oxley Act of 2002~~

~~32.1 – 18 U.S.C. Section 1350 Certificate by the President and Chief Executive Officer~~

~~32.2 – 18 U.S.C. Section 1350 Certificate by the Chief Financial and Operations Officer~~

101.INS – XBRL Instance Document*

101.SCH – XBRL Taxonomy Extension Schema Document*

101.CAL – XBRL Taxonomy Extension Calculation Linkbase Document*

101.LAB – XBRL Taxonomy Extension Label Linkbase Document*

101.PRE – XBRL Taxonomy Extension Presentation Linkbase Document*

101.DEF – XBRL Taxonomy Extension Definition Linkbase Document*

Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

*Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

Index

4339

SIGNATURES~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized

		JOHN WILEY & SONS, INC.
		Registrant


	By	/s/ Brian A. Napack
		Brian A. Napack
		President and Chief Executive Officer
		~~Chief Executive Officer~~

	By	/s/ John A. Kritzmacher
		John A. Kritzmacher
		Chief Financial Officer and Executive Vice President, Operations
		~~Executive Vice President, Technology and Operations~~

	By	/s/ Christopher F. Caridi
		Christopher F. Caridi
		Senior Vice President, Corporate Controller and Chief Accounting Officer
		~~Chief Accounting Officer~~

Dated: ~~March 7,~~December 6, 2018

Index

4440

JOHN WILEY & SONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(In thousands)

		January 31,		April 30,
		2018		2017
		(Unaudited)
Assets:
Current Assets
Cash and cash equivalents	$	128,217	$	58,516
Accounts receivable, net		239,637		188,679
Inventories, net		43,800		47,852
Prepaid and other current assets		64,001		64,688
Total Current Assets		475,655		359,735

Product Development Assets		85,028		80,385
Royalty Advances		37,177		28,320
Technology, Property & Equipment, net		273,634		243,058
Intangible Assets, net		868,631		828,099
Goodwill		1,028,395		982,101
Other Non-Current Assets		90,325		84,519
Total Assets	$	2,858,845	$	2,606,217

Liabilities & Shareholders' Equity:
Current Liabilities
Accounts and royalties payable		204,606		139,206
Deferred revenue		409,011		436,235
Accrued employment costs		99,317		98,185
Accrued income taxes		18,726		22,222
Accrued pension liability		5,875		5,776
Other accrued liabilities		95,479		86,232
Total Current Liabilities		833,014		787,856

Long-Term Debt		428,200		365,000
Accrued Pension Liability		210,639		214,597
Deferred Income Tax Liabilities		140,395		160,491
Other Long-Term Liabilities		78,271		75,136
Total Liabilities		1,690,519		1,603,080

Shareholders' Equity
Class A Common Stock, $1 par value: Authorized-180 million
Issued – 70,107,103 and 70,086,003 as of January 31, 2018 and April 30, 2017, respectively		70,107		70,086
Class B Common Stock, $1 par value: Authorized-72 million
Issued – 13,074,567 and 13,095,667 as of January 31, 2018 and April 30, 2017, respectively		13,075		13,096
Additional paid-in-capital		405,967		387,896
Retained earnings		1,798,446		1,715,423
Accumulated other comprehensive loss		(433,178)		(507,287)
Treasury stock (Class A – 21,875,409 and 22,096,970 as of January 31, 2018 and April 30, 2017, respectively;
Class B – 3,917,574 and 3,917,574 as of January 31, 2018 and April 30, 2017, respectively)		(686,091)		(676,077)
Total Shareholders' Equity		1,168,326		1,003,137
Total Liabilities & Shareholders' Equity	$	2,858,845	$	2,606,217

See accompanying notes to the unaudited condensed consolidated financial statements.

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

		Three Months				Nine Months
		Ended January 31,				Ended January 31,
		2018		2017		2018		2017

Revenue	$	455,675	$	436,456	$	1,318,850	$	1,266,329

Costs and Expenses
Cost of sales		125,127		116,405		359,780		341,457
Operating and administrative expenses		248,746		247,278		731,872		729,775
Restructuring and related charges		2,208		9,118		26,531		15,045
Amortization of intangibles		12,163		12,495		35,965		37,321
Total Costs and Expenses		388,244		385,296		1,154,148		1,123,598

Operating Income		67,431		51,160		164,702		142,731

Interest Expense		(3,295)		(4,931)		(10,023)		(13,362)
Foreign Exchange Transaction (Losses) Gains		(6,032)		2,118		(11,584)		1,979
Interest Income and Other		163		637		744		1,365


Income Before Taxes		58,267		48,984		143,839		132,713
(Benefit) Provision for Income Taxes		(10,575)		1,565		5,713		65,745

Net Income	$	68,842	$	47,419	$	138,126	$	66,968

Earnings Per Share
Diluted	$	1.19	$	0.82	$	2.39	$	1.15
Basic	$	1.21	$	0.83	$	2.42	$	1.17

Cash Dividends Per Share
Class A Common	$	0.32	$	0.31	$	0.96	$	0.93
Class B Common	$	0.32	$	0.31	$	0.96	$	0.93

Weighted Average Shares Outstanding
Diluted		57,871		58,012		57,736		58,181
Basic		57,035		57,224		56,979		57,405

See accompanying notes to the unaudited condensed consolidated financial statements.

	Three Months Ended		Nine Months Ended
	January 31,		January 31,
	2018	2017	2018	2017
Effective Tax Rate as Reported	(18.1)%	3.2%	4.0%	49.5%
Estimated net impact in fiscal 2018 of non-recurring items from Tax Act	42.9%	-	17.4%	-
Impact of unfavorable German court decision in fiscal 2017	-	-	-	(35.8)%
Impact of reduction in U.K. statutory rate on deferred tax balances in fiscal 2017	-	-	-	4.4%
Effective Tax Rate excluding the impact of non-recurring items from the Tax Act in fiscal 2018 and the unfavorable German court decision and UK tax rate reduction in fiscal 2017	24.8%	3.2%	21.4%	18.1%

	January 31, 2018	April 30, 2017
Accounts Receivable	$(45,256)	$(34,769)
Inventories	7,217	4,727
Accounts and Royalties Payable	(7,774)	(5,741)
Decrease in Net Assets	$(30,265)	$(24,300)