To Our Shareholders
Stephen M. Smith and Peter Booth Wiley
Wiley is pleased to report another strong performance in fiscal year 2011. The shift to digital continues to enhance all our businesses, resulting in new revenue models, new opportunities in emerging markets, and margin and working capital improvements. While global economies struggled to recover from recession, unemployment levels remained high, and many of our customers faced unprecedented challenges, we succeeded in growing market share and reporting record highs for key financial measures, including revenue, earnings per share, and free cash flow. At the same time, we reduced net debt by almost one-half. Our performance in this rapidly changing market is testament to the success of our strategies, the quality of our content and services, the strength of our relationships, the creativity of our colleagues, and the importance of our mission.
Stephen M. Smith
President and Chief Executive Officer
Peter Booth Wiley
Chairman, Board of Directors

Financial Results for Fiscal Year 2011

Fiscal year 2011 revenue advanced 3% to $1.74 billion, or 4% on a currency neutral basis, resulting from revenue growth in all segments. Adjusted earnings per share (EPS) for the full year increased 12%, or 15% on a currency neutral basis and excluding a $0.10 third quarter bad debt charge related to Borders and $0.17 for impairment and restructuring charges reported in the prior year. These growth rates include a $0.07 non-cash deferred tax benefit related to a reduction in the U.K. statutory tax rate. On a U.S. GAAP reported basis, EPS grew 16%, to $2.80, or 19% on a currency neutral basis. For comparability to our full-year guidance of 10% EPS growth for fiscal year 2011, adjusted EPS on a currency neutral basis grew 12% excluding the charges in both years and the $0.07 per share first quarter U.K. statutory tax benefit.

At $376 million, cash flow from operations was 19% above prior year. The Company continued to reduce net debt (debt less cash and cash equivalents) significantly, to $252 million, down from $495 million at the end of fiscal year 2010 and $720 million at the end of fiscal year 2009. In fiscal year 2011, Wiley repurchased approximately 577,400 shares, at an average price of about $48 per share, and increased its dividend for the 18th consecutive year. For fiscal year 2012 the Company increased its dividend by 25%.

Shared service and administrative costs grew 7% for the year, driven by a 23% increase in technology spending. We made investments in digital product development and infrastructure that support all our businesses (such as content management, eBooks, and customer data/relationship management initiatives) as well as business-specific initiatives such as Wiley Online Library (to further drive our online journals, books, and advertising business) and WileyPLUS (to support next-generation products and services).


Scientific, Technical, Medical, and Scholarly (STMS)

Our STMS business is navigating well through a tight library and corporate budget environment, thanks to the outstanding quality of our content and relationships. Growth continues to come from new society partnerships, content licenses, emerging markets, and incremental business around our content.

The largest of our three businesses, STMS serves the world’s research and scholarly communities and is the largest publisher globally for professional and scholarly societies. STMS programs encompass journals, books, major reference works, databases, and laboratory manuals, offered in print, electronically, and through mobile apps. Wiley Online Library hosts one of the world’s most extensive multidisciplinary collections of online resources covering the life, health, and physical sciences; social sciences; and humanities. It provides seamless, integrated access to more than 4 million articles from 1,500 journals, 10,000 books, and hundreds of multi-volume reference works, laboratory protocols, and databases.

Since last summer, when Wiley Online Library replaced Wiley InterScience (which launched commercially in 1999 as the online home of 300 peer-reviewed journals), Wiley has risen to the position of second-most-visited academic publisher on the Web, according to Alexa Web traffic metrics. Over the past year, article or chapter accesses increased nearly 50%. The growth is attributed to the dramatically improved user experience, functionality, and search offered by Wiley Online Library, as well as the expansion of our customer base and content offering.

Global STMS revenue for fiscal year 2011 increased 1% to $999 million, or 4% on a currency neutral basis, a result of increased journal subscriptions, new society journal business, and digital book growth. Through April 2011, subscription receipts for calendar year 2011 grew approximately 3% over calendar year 2010. Society partnerships continued to thrive, with 37 new journals signed in fiscal year 2011, 100 journal contracts renewed or extended, and only four contracts not renewed.

Direct contribution to profit in fiscal year 2011 rose 5% both on a reported basis and on a currency neutral basis and excluding the previous year’s impairment/restructuring charges of $15 million. Revenue growth and margin improvement due to outsourcing journal production were partially offset by higher operating costs from business growth. Including the impairment/restructuring charges, direct contribution grew 9% on a currency neutral basis.

Revenue from digital products represented 59% of total STMS revenue in fiscal year 2011. Digital journal revenue was 81% of total journal revenue, up from 79% a year earlier, while digital book revenue increased 74% and now accounts for 16% of total STMS book sales.

Professional/Trade (P/T)

Even with the Borders disruption, P/T showed year-over-year growth and positive trends. Borders represented approximately 5% of projected fiscal year 2011 P/T sales. Our multi-channel strategy to provide customers with flexibility and choice regarding where and how to purchase our products and our deep reservoir of quality content continue to serve us well, and eBooks continue to show outstanding growth.

Wiley’s P/T business serves professionals and consumers alike, producing books, subscription content, and information services, in all media. Our portfolio of global brands includes For Dummies, Frommer’s, Betty Crocker, Pillsbury, Better Homes and Gardens, Family Circle, CliffsNotes, Webster’s New World, J.K. Lasser, Jossey-Bass, Pfeiffer, Sybex, Weight Watchers, and Bloomberg Press®.

Global P/T revenue grew 2% in fiscal year 2011, to $437 million, or 1% on a currency neutral basis. Growth in business/finance and professional education was offset by lower consumer sales due to the Borders disruption. Excluding the Borders bad debt charge of $9 million ($6 million after tax) in the third quarter, fiscal year 2011 direct contribution to profit increased 5% to $105 million due to revenue growth and improved margins from higher eBook sales. On a reported basis, direct contribution to profit declined 5% to $95 million.

Digital revenue represented 10% of total P/T revenue, up from 7% the previous year. Digital revenue includes eBooks, online advertising, and content licensing. Fiscal year 2011 eBook sales reached $23 million, or 5% of total P/T revenue.

With the rapid uptake of eBook readers, tablets, and smartphones, consumer demand for eBooks and interactive apps has grown explosively, and we tapped into Wiley’s deep reservoir of content and capacity for innovation to meet that need. Anticipating the popularity of these devices as 2010 holiday gifts, Wiley converted thousands more backlist titles into eBook format in time for the season. Their success is proof of the enduring demand for our rich backlist across all three businesses — a Wiley hallmark. We also released more than 40 Dummies mobile apps, several Frommer’s mobile apps, and a range of enhanced eBooks (which include multimedia elements), as well as interactive iApps such as Lights, Camera, Capture for iPad, which reached the number one spot for photography on the iTunes App Store, and Mark Bittman’s How to Cook Everything for iPad.

Global Education

Global Education had another strong year, with growth and market share gains in all regions. Gross margin continued its upward trend, increasing to 66.7% through the full year from 65.5% a year ago, reflecting increased sales of high-margin digital products such as WileyPLUS and eBooks.

The mission of Global Education is to help teachers teach and students learn. Global Education serves teachers; undergraduate, graduate, and advanced placement students; and lifelong learners worldwide, as well as secondary school students in Australia. We publish educational materials in all media, notably through WileyPLUS, our integrated online suite of teaching and learning resources. Wiley publishes materials in the sciences, engineering, mathematics, business/accounting, geography, computer science, statistics, education, psychology, and modern languages.

For the full year, Global Education revenue was up 9% to $307 million, or 7% on a currency neutral basis, with growth in all regions. The results were driven by increased student enrollment, a strong front list in the engineering/computer science and science categories, and strong backlist sales reflecting revenue growth in non-traditional and digital products. Non-traditional and digital revenue includes WileyPLUS, eBooks, digital content sold directly to institutions, binder editions, and custom publishing. Direct contribution to profit increased 17% to $101 million, or 15% on a currency neutral basis. Top-line growth, improved gross margin from higher digital revenue, and cost containment drove the results.

Revenue from digital products now accounts for 16% of the Global Education business, up from 13% the previous fiscal year. Non-traditional and digital revenue combined grew 26% to $84 million, representing approximately 27% of Global Education revenue, compared to 24% the previous year. Revenue from eBooks grew 122% to $13 million. Gross margin was up for the third consecutive year due to increased digital-only sales.

The transformation of Global Education’s business from print to digital is well under way. WileyPLUS, our online teaching and learning environment that activates textbook content with tutorials and self-quizzes and provides instant feedback on homework and practice activities, has been the primary driver in this transformation. In fiscal year 2011, WileyPLUS surpassed one million users in more than 20 countries. Global full-year sales of WileyPLUS grew 12% to $33 million. WileyPLUS digital-only sales (not packaged with a print textbook) grew 18% to $13 million and now represent approximately 40% of total WileyPLUS billings. In the U.S., student validation rates for WileyPLUS increased to 78% from approximately 73% the previous year.

Leadership Transition

During the past year, the Company transitioned to a new generation of leaders, each of whom has been a key contributor to Wiley’s success and is the product of a careful succession planning and leadership development process.

Stephen M. Smith became Wiley’s 11th President and Chief Executive Officer on May 1, 2011, succeeding William J. Pesce, who retired on April 30, 2011, after 13 years as President and Chief Executive Officer and 22 years with the Company. Steve joined the Company in September 1992 as Vice President, Wiley Asia. In the following years, his portfolio grew to include International Development, and his leadership responsibilities were extended to Australia and Europe before his appointment as Executive Vice President and Chief Operating Officer in 2009.

Peter Booth Wiley
Steve’s leadership skills and extensive global experience will be critically important to the Company’s continued success.

The leadership of Wiley’s three businesses also transitioned over the past year. The appointments of these new leaders represent important milestones in Wiley’s remarkable history.  Each of them has contributed to Wiley’s unique culture and was developed within the Company.

> Mark Allin became Senior Vice President, Professional/Trade, in August 2010. Mark joined Wiley in 2000 with the acquisition of Capstone, a publishing company he co-founded in 1996. He relocated to Asia in April 2003 to lead Wiley's business in that region. He was named Vice President and Chief Operating Officer of Wiley's global P/T business in January 2010.

> Steven Miron became Senior Vice President, Scientific, Technical, Medical, and Scholarly, in November 2010. Steve joined Wiley in 1993 as Regional Manager for Taiwan and Korea. After serving for eight years as Vice President and Managing Director of Wiley Asia, he was appointed leader of global STM book publishing. Following the acquisition of Blackwell in 2007, Steve assumed the role of Vice President and Managing Director of the global STMS Physical Sciences business. He was promoted to Vice President and Chief Operating Officer of STMS in 2009.

> Joseph Heider became Senior Vice President, Global Education, in May 2011. Joe joined Wiley in 1994 and was promoted to Vice President and Executive Publisher in 1999; Vice President, Product and eBusiness Development, in 2000; and Vice President and Chief Operating Officer of global Higher Education in May 2010.


Moving forward, the ongoing shift to knowledge-based economies, robust demand for outcomes-based learning, and worldwide investments in research and development are key drivers for us. On a currency neutral basis, we expect mid-single-digit revenue growth and EPS in a range from $3.15 to $3.20.

Wiley benefits from a legacy of great leadership, a deep reservoir of high-quality content, and a global team comprising many of the most talented individuals in our industry. Our Company is admired for our culture and our sustained track record of success. While markets have not yet returned to their pre-recession levels of stability and growth, we are confident in our ability to continue to compete successfully and to thrive in the years ahead. We will do this by staying true to our mission and values, maintaining our strategic direction, focusing on the needs of our customers, and galvanizing the vision, dedication, and creativity of a diverse group of colleagues, partners, and authors around the world.

Stephen Smith
Stephen M. Smith
President and Chief Executive Officer
Peter Booth Wiley
Peter Booth Wiley
Chairman, Board of Directors

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