Professional/trade publishing accounted for about 28% of Wiley's worldwide revenues in fiscal 1997. Our professional/trade program encompasses books and subscription products for accountants, architects, engineers, lawyers, psychologists, and other professionals, together with quality nonfiction books in areas such as business, finance, computers, science, and general interest. We control our risks and seek to maximize returns by focusing on the publication of need-to-know information and quality nonfiction, and by eschewing higher-risk books requiring large author advances. Although below expectations, professional/trade revenue increased in fiscal 1997 and exceeded the performance of the industry. The largest single factor contributing to our revenue shortfall was a change in the inventory practices of some major distributors. By the fourth fiscal quarter, these conditions appeared to have run their course, and the market was rebounding. SUCCESS IN BUSINESS PUBLISHING We have systematically built a leading position in business book publishing. Sales of these titles continued their excellent growth in fiscal 1997. Business books sell well not only in North America, but also in Asia, Europe, and other markets worldwide. Several of our 1997 titles, including The Education of a Speculator, by Victor Niederhoffer, and Against the Gods: The Remarkable Story of Risk, by Peter L. Bernstein, appeared on bestseller lists. Business biographies are an important part of our program. An example is Bloomberg by Bloomberg, the autobiography of media mogul Michael Bloomberg, written with Matthew Winkler. In addition, we continue to build product and corporate brand identity with series including Wiley Frontiers in Finance, Wiley Trading Advantage, Wiley Trading Exchange, and Wiley Investment Classics. The latter consists of modern editions of business and investment titles from the past, such as Extraordinary Popular Delusions and the Madness of Crowds, by Charles Mackay, a classic first issued in 1841. A GLOBAL PUBLISHING STRATEGY As in STM and college publishing, our perspective in professional/trade publishing is increasingly global. Tremendous worldwide interest exists in American business practices and software technology. Consequently, we are exporting substantial amounts of U.S. product, including business and computer books. In addition to selling U.S. product worldwide, we are developing a professional/trade program in Europe. We also publish business titles in Canada, led in 1997 by the bestseller, You Can't Take It With You: The Common-Sense Guide to Estate Planning for Canadians, by Sandra E. Foster. During the year, we acquired publishing rights to three business journals from the National University of Singapore's Faculty of Business Administration. The flagship journal in this program is the Asia Pacific Journal of Management, which has established a reputation as a quality academic journal since its inauguration in 1984. KEY MARKETPLACE CHANGES We are well positioned to benefit from major changes taking place in the professional/trade market. One change is the growth of "superstore" retail book outlets, not only in the United States but also in Europe, Canada, Australia, and Asia. We market books through all types of stores, including independents and superstores. The latter typically carry a breadth of product, including the types of books we publish. We have developed a more identifiable look for Wiley titles to enhance our brand image and increase the visual presence of our books on store shelves. We believe we will ultimately benefit from the changing inventory patterns of distributors. Tighter distributor inventory controls allow us to make more efficient print runs and, thereby, reduce working capital requirements and minimize book returns. Wiley's state-of-the-art distribution centers receive orders electronically from distributors and retailers. We continue to work closely with customers, reviewing our inventory and delivery practices to ensure they coincide with customers' needs. We stand to benefit also from new types of distributors, including booksellers on the Internet. Many Wiley titles, not just those in professional/trade, are available on Amazon.com, a leading online bookseller, as well as through America Online and other venues. Online booksellers are increasingly asking for more information about our products, such as reviews and graphic images, to display these products attractively on the World Wide Web. We are developing a digital database of Wiley professional/trade products, including précis, cover images, and reviews. This database will be used to generate Wiley print catalogs, marketing materials, and an online catalog on the Wiley Web site, and also will be supplied to online booksellers for their use. MARKETING IN CYBERSPACE The Wiley Web site continues to grow as a marketing vehicle for product-related information. Examples include the Therascribe site, and the Ernst & Young Tax and Financial Planning Center. The latter offers information on Ernst & Young tax products, electronic spreadsheets for personal record-keeping, weekly tax tips, and even copies of blank federal tax return forms, which can be downloaded and printed. We actively promote and sell computer books online. The Wiley Web site offers sample print material and software for computer books. In addition, the prototype of a Wiley online ordering system is now live on the Web. NEW PRODUCTS Fiscal 1997 was a robust year of new product introductions in the professional/ trade division. These products, print and electronic, ran the gamut from subscription services for professionals to business titles to books for children. ValuSource Pro is a new generation of business valuation software for accountants, entrepreneurs, and consultants. Also for the professional market, we introduced a CD-ROM version of the ninth edition of Architectural Graphic Standards, the authoritative source for the building design industry, originally by George Ramsey and Harold Sleeper, and edited by the American Institute of Architects. Scenarios: The Art of Strategic Conversation, by Kees van der Heijden, is an award-winning management book published by Wiley-Europe. It shows companies how to use scenario planning to imagine and prepare for discontinuous change. The Ernst & Young Tax Guide, one of our flagship products, continued to gain market share. This year, for the first time, we packaged the book with software, further strengthening its sales. Since we began publishing this annual in 1991, it has become the top-seller in its field, now outselling its nearest rival by approximately two-to-one. Our computer book program is focused on emerging technologies in areas such as the Internet and client server technology. New titles included Client Server Programming with Java and Corba, by Robert Orfali and Dan Harkey; The Web Navigator, by Paul Gilster; and Exploiting the Internet, by Andrew Frost and Mark Norris. Wiley's strong presence in the STM and college publishing markets provides synergies with professional/trade. Are We Unique?: A Scientist Explores the Unparalleled Intelligence of the Human Mind, by James Trefil, is a "crossover" book - a trade title by a Wiley college author. In addition, we publish many professional/trade books, such as those for professional chefs, that sell equally well in college, professional, and trade markets. We are publishing selectively in new areas, such as books by and about African Americans, a rapidly expanding market sector. Have No Fear: The Charles Evers Story, by Charles Evers and Andrew Szanton, is the autobiography of Charles Evers, the well-known civil rights pioneer. We plan to publish about a dozen new nonfiction titles in this sector in the coming year. GROWTH OF PUBLISHING ALLIANCES Wiley continues to leverage its resources by forming publishing alliances with high-level partners that have brand recognition and loyal customer followings. Wiley and Sun User Group and its Java Special Interest Group are collaborating on a series of books, CD-ROMs, and online products to provide authoritative consumer and system management information for the Sun/SPARC community. One of the first works is Java-SIG's Best 100 Applets, edited by Tom Courtney, published early in calendar 1997. Wiley and Mecklermedia Corporation, a leading provider of Internet information, are collaborating on books about the Internet. As part of the agreement, Mecklermedia is licensing its Internet World, Web Week, Web Developer, and Internet Shopper trademarks to Wiley for this series. Eight books per year are planned, with the first scheduled to be released in fall 1997. Wiley and Upside Publishing Co., publisher of Upside magazine, are collaborating on books related to business technology. These alliances are in addition to those previously formed with Adweek Magazines, America Online, Autodesk, Inc., Entrepreneur Magazine, Ernst & Young, Forbes, IndustryWeek, the National Association of Manufacturers, National Business Employment Weekly, and The New York Public Library. Our alliance programs are producing a stream of successful books. Examples in fiscal 1997 included Forbes Greatest Business Stories of All Time, by Daniel Gross and the Editors of Forbes magazine, and The New York Public Library Amazing Space: A Book of Answers for Kids, by Ann-Jeanette Campbell.