John Wiley & Sons Inc (WLY) 2010 Q3 法說會逐字稿

Welcome to the John Wiley and Sons quarterly earnings call.

Before introducing Will Pesce, President and Chief Executive Officer, I would like to remind you this call is being recorded and may include forward looking statements.

You should not rely on such statements as actual results may differ materially and are subject to factors that are discussed in detail in the Company's 10-K and 10-Q filings with the SEC.

The Company does not undertake any obligations to update or advise forward looking statements to reflect subsequent events or circumstances.

Mr.

Pesce, please go ahead.

Good morning and welcome to Wiley's third quarter conference call.

I'm with Ellis Cousens, Chief Financial and Operations Officer, Steve Smith, Executive Vice President and Chief Operating Officer and Brian Campbell, Director Investor Relations.

I'll provide an overview and then we'll respond to your questions.

Wiley's underling performance was solid in the third quarter, revenue of $427 million increased over prior year on a currency neutral basis by 5%, or 14% including the affect of foreign exchange.

All of our global businesses contributed to the growth.

Higher education is enjoying a record setting year outperforming the market with strong results in all regions and subject categories.

Professional trade had a successful holiday season and has rebounded nicely from a difficult fiscal year 2009.

SCNS reported top line growth in the quarter.

As you know, we are navigating through challenging conditions due to tight library funding.

The quality of our content and strong relationships with scholarly societies are contributing positively to Wiley's results.

For the quarter, adjusted EPS is $0.74 increased 30% over prior year, but fell 13% on a currency neutral basis.

Adjusted EPS excludes $0.03 per share asset impairment and restructuring charge primarily for GIT Verlag.

Top line growth and lower interest expense were more than offset by a 14% increase in operating and administrative expenses on a currency neutral basis.

As expected, the significant year on year increase was due to an unfavorable comparison to last year's third quarter, which included a substantial reduction in accrued incentive compensation costs.

In addition, higher depreciation related to technology investments and increased software licensing fees contributed to the expense growth.

Another factor that reduced EPS growth is a higher income tax rate in fiscal year 2010 due to lower foreign tax benefits, which we also expected.

Year to date revenue of $1.3 billion increased on a currency neutral basis by 3% or 5% including the favorable affect of foreign exchange.

Adjusted EPS for the 9 months of $2.12 increased 22% or 3% on a currency neutral basis, excluding asset impairment and restructuring charges of $0.17 per share primarily related to GIT Verlag.

Top line results, lower interest expense and prudent expense management were partly offset by higher accrued incentive compensation costs, increased taxes, and a $5 million insurance receipt in the prior year.

Year to date gross profit is a percent of revenue of 68.8% was up nearly 1 percentage point from prior year.

The improvement was driven by price increases and favorable product mix in higher education, specifically increased sales of higher margin, digital products, and the benefits of off shoring certain journal production.

In addition, some STMS costs were reclassified from cost of sales to operating expenses.

Free cash flow for the 9 months of $173 million was $95 million higher than prior year, reflecting the combined effect of increased cash earnings, journal receipts, and favorable foreign exchange.

Net debt of $570 million was $246 million lower than prior year.

Day sales outstanding improved by two days while inventory decreased from a year ago.

I'd like to provide some additional information about Wiley's three global businesses.

Global STMS revenue for the quarter of $228 million increased 13%, or 2% excluding favorable foreign exchanging.

Journal revenue increased 1% on a currency neutral basis.

Book revenue declined 3% on a currency neutral and comparable basis excluding a prior year sales return reserve adjustment of $3 million.

Online books are performing well.

Adjusted direct contribution to profits for the quarter of $92 million increased 22% or 6% excluding favorable foreign exchange.

The increase reflects top line results, the affect of off shoring initiatives in journal production and expense control offset by the timing of accrued incentive compensation costs.

Adjusted direct contribution to profit excludes asset impairment and restructuring charges of nearly $3 million.

For the 9 months, STMS revenue of $709 million was up 2%, but flat excluding favorable foreign exchange.

Adjusted direct contribution to profit for the 9 months of $292 million was up 6%, but down 2% on a currency neutral basis due to costs associated with new business and a prior year favorable bankruptcy settlement partially mitigated by expense savings, lower production costs, and the completion of Blackwell integration activities.

Adjusted direct contribution to profit excludes asset impairment and restructuring charges of $14 million for the 9-month period.

STMS is reducing expenses to finance investments in enabling technology and new business.

These savings are the result of off shoring certain activities to Singapore and other countries in Asia.

We anticipate restructuring charges of up to $2 million, principally in the fourth quarter related to such initiatives.

These charges are expected to be fully recovered within 18 months as a result of more efficient work flows and lower costs.

Calendar year 2010 journal licenses are generating modest growth in most regions.

In Asia, growth is exceeding our expectations.

The U.S.

market is performing as expected.

Cancellations are higher than usual at some institutions, but that is being offset by new business.

In the U.

S., we have successfully completed renewals with many key library consortia including the committee on institutional cooperation, which includes the big 10 universities and the University of Chicago, the greater western library alliance, northeast research libraries, the statewide California electronic libraries consortium, Ohio link, the University of Texas, the consortium of academic libraries of Illinois, and the Michigan state library consortium.

Outside the U.S., major renewals were completed during the quarter with consortia in Canada, the UK, Germany, Spain, Austria, the Netherlands and South Africa.

Leading indicators in Russia, France, Eastern Europe and the Middle East are positive while market conditions remain difficult in Greece, Hungary, and Ireland.

Significant new business includes journal licenses in Spain and Romania and backfile sales in the Netherlands, Australia and New Zealand.

During our second quarter conference call, I explained the timing related factors that are affecting STMS' fiscal year results.

I believe calendar year results are more indicative of the underling performance of our journal business.

It is noteworthy that calendar year 2009 journal subscription revenue increased approximately 5% over prior year on a currency neutral basis.

STMS line two, journal agreements in the quarter, bringing the year to date total to 26 and 37 journals were renewed in the quarter bringing the year to date total to 71.

Only two contracts have not been renewed so far this fiscal year.

Wiley interdisciplinary reviews won awards in three categories at the recent American publisher awards for professional and scholarly excellence including the prestigious RR Hawkins Award, which recognizes outstanding scholarly works in all disciplines in the arts and sciences.

It is the first electronic product to win this award.

Global professional trade revenue for the quarter of $107 million increased 10% or 7% on a currency neutral basis.

Sales growth was strong in all regions, especially the U.S.

where the holiday season was solid.

Business publishing was driven by social media books, technology, by books on new Windows operating systems and certification, and consumer by the Meredith agreement and For Dummies brand sales.

Direct contribution of profit for the quarter of $24 million increased 3%, but declined 2% on a currency neutral basis.

Top line results and expense savings were offset by higher incentive compensation cost accruals compared to last year.

As previously reported, last year included reduced, accrued, incentive compensation costs based upon professional trade's performance in a difficult market.

For the 9 months, professional trade revenue of $317 million was up 3% over prior year on a currency neutral and reported basis.

North America exhibited the most growth.

Year to date, direct contribution to profit is $76 million was up 4% on a currency neutral and reported basis reflecting the combined affect of top line growth and expense control.

By region, professional trade revenue is well ahead of prior year in the U.S., the UK, Germany and Australia.

We anticipate revenue growth moving ahead of prior year in Asia and Canada during the fourth quarter.

In the U.S., sales growth is being lead by Amazon.

Borders is ahead of prior year, as is Barnes and Noble.

In the mass market, holiday sales at the clubs, that is Cost-Co, BJ's and Sam's were generally better than expected.

In Asia, Hong Kong, China, Japan, Philippines, and Malaysia reported solid sales growth.

Sales in Singapore, Thailand, and Indonesia were below prior year, and market conditions in India continue to be somewhat difficult.

Third quarter results were soft in Australia reflecting sluggish performance by three major chains.

In Canada we experienced higher than anticipated returns during the quarter, but several accounts reported strong top line growth.

The UK bricks and mortar retail market is soft, but the on-line channel is performing well.

Professional trade is gaining market share in Germany.

Global higher education revenue for the quarter of $92 million increased 23%, 13% on a currency neutral basis.

Strong growth occurred in every region and subject category.

Contributing to these results were a strong front list, particularly in accounting and mathematics, increased enrollment and growth in Wiley Plus, and Custom Publishing.

Revenue for the school business in Australia increased 18% on a performance basis.

Direct contribution to profit for the quarter of $38 million increased 25% or 11% on a currency neutral basis reflecting top line results and increased sales of higher margin digital products partially offset by a higher accrued compensation costs and developments costs to support of new products.

Gross margin continues to improve.

For the nine months, higher education revenue of$238 million increased 17% or 14% on a currency neutral basis.

Double-digit growth was experienced in all regions.

Revenue outside of traditional textbook sales including Wiley Plus, Custom Publishing, desktop and binder editions is up 40% for the 9 months, and now represents 26% of higher education's revenue.

Year to date direct contribution of profit of $92 million increased 25% or 21% on a currency neutral basis, primarily due to top line growth and gross margin improvement.

Higher education's I'm impressive performance throughout 2010 reflects strong growth across the entire program.

On a currency neutral basis, business and accounting revenue exceeded prior year by 16%, engineering and computer science was up 20%, mathematics and statistics by 26%, the sciences by 8%, and the social sciences by 20%.

Fiscal year to date billings of Wiley Plus increased 39% over prior year to $28 million.

Strong growth was reported in the U.S., Asia, Australia, and the UK.

In the U.S., industry sales increased nearly 13% in calendar year 2009.

Wiley higher education outperformed the market with an increase of nearly 16%.

Budget cuts are having a dramatic affect in California as reflected in course cancellations and lower admissions for the Spring semester.

Across the UK and parts of Europe, enrollment has increased by as much as 12%, offsetting this positive trend are severe budget cuts and rising tuition, particularly in the UK.

In Germany, students protested against tuition fees and education reform.

During the quarter an anti-piracy raid in India resulted in authorities seizing 75,000 textbooks from various publishers.

During our year end conference call on June 18th, 2009, I made the following points about the prospects for this fiscal year.

In fiscal year 2010, projected operating performance improvements in each of our businesses and the positive affect of debt reduction will be primarily offset by a higher tax rate and the affect of performance based incentive compensation plans.

While we anticipate revenue growth on a currency neutral basis, top line results will be highly dependent on economic conditions around the world.

While library budgets will be tight, STMS bolstered by Blackwell is well positioned to get its fair share of that business.

We anticipate a slow recovery in retail markets.

Therefore, we expect professional trades revenue growth to be stronger in the second half of fiscal year 2010 than in the first half.

In higher education, we have a large front list featuring several of our franchise brands.

In addition, we believe Wiley Plus growth will continue to be strong around the world.

I cannot predict the future with certainty, but I can state with conviction that we will continue to lead Wiley in the manner in which you are accustomed.

We will execute our plans carefully while managing our expenses and cash prudently.

We will generate strong free cash flow which will be used to reduce debt and pay dividends.

We will make our content more accessible and more discoverable to realize the vision of all Wiley all the time, anywhere.

We will invest in enduring relations with authors, partners, and our colleagues, and we will sustain Wiley's culture because it is a tremendous source of competitive advantage.

All of those points were emphasized nearly a year ago as we began this fiscal year.

With just a few weeks remaining in fiscal year 2010, I am pleased to report that we are well positioned to finish the year essentially as we expected.

Wiley is on track to report full year revenue growth in fiscal year 2010 both including and excluding the favorable affect of foreign exchange.

Excluding asset impairment and restructuring charges, we continue to forecast EPS growth on a reported basis in the mid to high teens from the $2.15 reported in fiscal year 2009.

Free cash flow will meet or exceed our expectations.

Net debt is down significantly from a year ago.

In the fourth quarter, we anticipate that Wiley's overall revenue growth, excluding the affect of foreign exchange, will be comparable to the growth rate we have experienced so far this fiscal year.

Professional trade is projected to be the primary contributor to the top line growth in the fourth quarter.

As a reminder, last year's fourth quarter was particularly strong for STMS.

We anticipate that EPS in the fourth quarter will benefit from the top line growth and improved gross margin, lower incentive compensation cost accruals, and lower interest expense.

As previously mentioned, we anticipate restructuring charges of up to $2 million in the fourth quarter related to STMS cost reduction initiatives.

With that as background, we welcome your comments and questions.

(Operator Instructions).

We have a question from Drew Crum from Stifel Nicolaus.

Go ahead, please.

Great, thanks, good morning, everyone.

Want to better understand your comments on adjusted EPS growth of double digits on a performance basis, X the increase in incentive comp.

What is that base, or what is that EPS number on a performance basis?

What period are you talking about, Drew?

For the third quarter, that comment was made in the press release, and just want to better understand that.

Well, the EPS that we're looking at versus third quarter last year was $0.57 cents, right.

So the adjusted EPS is $0.74, excluding foreign exchange as we noted, it would be down.

But that was driven by the incentive comp.

Right.

Okay.

And care to elaborate on double-digits, what the impact was from the increase in incentive comp?

Not numerically, just to say essentially that last year you might recall in the third quarter we spoke about the significant benefit from two things.

One is that we reversed some accruals for the long-term plans in the third quarter realizing that we were not going to make some of our longer term goals, and that also we had been accruing for the annual plan at a rate which was at that point in time.

In the third quarter realized we were going to under perform what our expectations were.

So those two reversals, plus the fact we accrued at a lower rate in the third quarter means that from a year to year perspective, this year having somewhat normal accruals versus last year, significant reductions in accruals from previous periods, plus a lower accrual because of the performance last year is well noted and particularly related to professional trade that year on year comparison is quite difficult.

Okay.

And now when do the accruals hit the cash flow statement?

When the cash is actually paid out, which would be after the end of the fiscal year, be that in the first quarter.

Now, Will did note that in the fourth quarter the comparisons wouldn't be that difficult, quite frankly because we had a slightly better fourth quarter last year coming principally out of STMS.

As you recall, we had a strong fourth quarter in STMS.

We, in fact, had somewhat normal accruals, shall we say in the fourth quarter of last year.

Okay.

This is Will.

For your benefit, and maybe the benefit of others, just to remind you, as Ellis is talking about our plans, and I think it is important to reinforce there are two basic plans that we are talking about here.

When Ellis refers to a long-term incentive plan, that's an equity based plan that includes options and restricted performance shares and then the annual incentive plans which is basically all cash plans.

And the longer term incentive plans are based on EPS and communicative cash flow.

So when Ellis refers to what happened a year ago and that we didn't achieve some longer term goals, he's referring to longer term goals that had been set three years before.

Okay.

So you go back three years.

We did a strategic plan that we said we were going to generate a certain amount of EPS and cumulative cash flow for a period ending at the end of fiscal year 09, and we have the same thing for fiscal year 10-11.

As a result of the economic slow down, we fell short of those expectations, and that's when we reversed those accruals and also affected in that particular year the cash count.

It is really important for you to understand that this has nothing to do with our current guidance about what we think we are going to do relative to plans.

This goes back to goals we had set three years before, and we didn't anticipate, frankly, the depth of the economic crisis.

And it doesn't have anything to do with the change in the structure of the plans themselves.

The plans in terms of structure remain the same.

We just didn't anticipate the recession of this severity when we formed those longer term plans years ago.

Got it, thanks, guys.

And then just shifting gears to the STMS business, Will, can you talk a little more detail behind the dynamics of the subscription renewals in terms of what you've experienced in terms of price increases and volume?

As I said in the past, I really do think where price increase information historically had been pretty useful to have because of the nature of the business, when you are negotiating licenses over a pretty comprehensive body of work, and some having to do with 1-year and 2-year and 3-year licenses, and some content going in and some going out, quoting one specific price increase isn't really as meaningful as it was before.

But I will tell you a few more things about my view of how this is all going, which I think at the end of the day I would hope what you are mainly interested in, is how are the calendar year 2010 renewals are going according to our expectations.

Just a couple of things about that.

One, I want to keep emphasizing where we ended up in calendar year 2009 because it is a good base to build off of.

That 5% growth on a currency neutral basis that I commented about earlier, while that doesn't coincide directly with our fiscal years, it is how the Business really works in terms of calendar year renewals.

That 5% was a very solid number in our opinion and we were very pleased with that outcome.

In terms of calendar year 2010, as you know based on the timing of this, we are actively engaged in license renewals.

As we expected, some of those negotiations are taking longer than they have in the past.

The reason they are taking longer is these major institutions are dealing with some new budgets and some new constraints.

Some of these state budgets get affected and then get revised.

And so it is a very fluid situation.

The reason I have emphasized that we are experienced, and I use the word modest growth in basically almost every region, and the reason I emphasize that Asia is going better than expected is I would like to communicate that all markets are not the same.

We expected the U.

S.

market to be a bit more challenging than perhaps certain parts of Europe and Asia and that has played out as we expected.

We expected some of these negotiations to take longer.

That has played out.

However, I listed about 6 or 7 examples of major consortia negotiations we have completed.

I wouldn't have listed those if they were kind of lost of the in the rounding.

These are major consortia in the United States.

When I use the term "modest growth," each account, each institution is a little different.

When you look at the collection, we are experiencing modest growth in those licenses when you look at them, and the negotiations that haven't been completed yet, and there are many that we are still working on, we are encouraged by the outcome of it.

We just have to put the time and effort into actually closing them out.

So there is nothing that we have experienced to date that really changes our outlook about how we see calendar year 2010 renewals.

The whole issue here for us is the timing of this from month to month, from quarter to quarter, and we are in far better shape than we were a year ago when we had to catch up because of the renewal processing delays.

That was an internal issue we are not experiencing at all.

The longer than anticipated really relates to the budgets of these individual customers.

I know it just sounds like one of these maybe throw away comments.

When I say the quality of our content and strong relationships with societies are contributing to the results, and when I said at the beginning of this fiscal year, that I thought Wiley would get its fair share of the business, quality has always mattered in this business, even more so today.

When you have people who have to pick and choose and make trade off decisions.

So this combination of Wiley and Blackwell content and the addition of high impact journals with major society partners has really helped us.

So I feel pretty good about all this.

Under the circumstances, and based on the market reality, this is a challenging market situation.

We have been talking about that for well over a year.

We are on pace to report growth in calendar year 2010 renewals on a currency neutral basis.

We feel good about that.

We also anticipate that there may be some recovery in other non journal subscription revenue streams which will help STMS growth as we go from one fiscal year to another.

So far so good is my very broad and probably too detailed answer.

Will, just a follow-up, how big is Asia for the STMS business today?

About 20% or so.

Okay.

And growing as a percent.

There are several of those markets have been established, but some are growing pretty significantly for us.

That's another point that maybe gets lost in all this.

There are renewals and of course renewals are critically important.

I want you to know, we are opening new business.

We are signing new licenses that are generating incremental growth that we didn't have before.

Another thing is a back file collections which we haven't talked a lot about.

Some people might understandably assume that in a really tight economic environment that money will dry up.

We are closing significant back file deals as well which is factoring into the top line performance.

Challenging but some good news there.

And Will, you guys mentioned you had a decent holiday in professional trade.

Can you talk about the inventory levels exiting the fiscal third quarter and what you are seeing in terms of buying patterns from book retailers, you know de-stocking, restocking?

I think we are generally kind of in a more normal pattern.

So I would call it normal stocking levels for the most part for the large retailers.

So they are balanced between sell-through and inventory levels.

Annd you guys are comfortable with your inventory levels exiting the quarter.

Yes.

Last question, Ellis, you mentioned, or Will mentioned, the net debt has been reduced by $246 million from a year ago.

Is there a target, or updated target for fiscal '10 end?

Well, there isn't.

You know, it is a significant reduction versus prior year in part because as you recall, whereas we had caught up on some of the journal license renewals by the end of January, we had just caught up at the end of the month.

In fact the cash wasn't there.

That was some $30 odd million dollars of cash, that is a benefit to the 9 months year to date.

So certainly we are having kind of a good year on a cash basis as Will noted at the beginning of the year and again in his comments that cash is performing quite well.

We are feeling good as how the licenses and renewals, the pace of them.

It is a little bit difficult because as Will described and you know, the cutoff in terms of April 30th versus where we might conclude certain licenses, you only need a couple of fairly large consortia licenses to move a week or two in one direction or another, and it could swing cash very significantly.

And that's just not with respect to April 30th because there is a collection period.

So if we close the license and build on March 30th even though it's due upon receipt, the invoice, typically it might take an institute or consortia 30 days plus or something like that to cut a check and get it to us.

So it's a tough call, Drew.

I really wouldn't want to go out at this stage.

Let's wait and see how it goes.

But from a leading indicator perspective in terms of how the business is moving, in terms of the pace of closing licenses and deals, where we are in existing negotiations, we're feeling pretty good about where we started out the year in terms of our comments and where we are feeling now at the end of the third quarter and today as we sit in March.

Thanks, guys.

Our next question is from Dave Lewis from JP Morgan.

Go ahead, please.

Hi, good morning, guys.

Just a few questions.

The first is could you, Will, could you give us an update, what percentage of journal licenses have been renewed at this point?

I assume it is high double digits from 20% last quarter.

But where is that roughly?

Yeah, I'll answer the question.

Thus far it is a little difficult to decipher what we have renewed as a percentage of business that rolls over, because mixed in with how it is , we are sort of tracking performance includes new business that Will eluded to.

So there is some level of attrition principal in customers who are subscribing on a title by title basis.

So it is not an attrition of the customer, but a reduction in their holdings.

But again in the context of increased pricing with respect to the titles that they do hold.

So whereas there might be cancellations and losses of certain title by title subscriptions, the value of that customer, is in fact, generally increasing as Will noted.

And that statement about modest increases, it is not in every case that there is an increase.

I think it is one looks at is on average and I'm saying even average or median sort of looking customers most licenses in title by title are essentially renewing at higher value to Wiley.

So higher value in terms of revenue ultimately recognized over the course of calendar year 2010 and also in terms of cash.

I will simply say we are doing better and we are in a better place than we were at the end of January.

And I can say we are in a better place as of sort of the early part of March.

I will also note that March was a particularly strong month last year.

When we had this call last year we were feeling good about where we were because we knew we were doing quite well and cashing up with respect to some of the processing delays that had plagued us into January, mostly in December and January.

But as we sat there, recall we made a comment about our current situation of March of 2009 and we are feeling better about that.

So again to say that, we're feeling well as to where we are now.

We are ahead of the pace where we were last year at this point in time.

And we were, as of the end of January, ahead of where we were January of last year, but that's not saying a lot, because we were suffering from processing delays at the end of January.

I wouldn't want to give you a number but just simply to say we are ahead of where we were last year and on a good pace to get to where we expect to by the end of the fiscal

Great.

Thanks, Ellis.

And a question specific to STMS in Europe, is there an incremental concern based upon what's been going in Greece in particular?

I imagine that's a very small market for you guys, but I'm just trying to get a sense for are there budget issues that could pressure some of those contracts, most likely not this year, but perhaps next year?

Yeah.

In the case of Greece, Greece is covered principally by a single consortia.

You are right, it is not a large market for us, but it is snot inconsequential.

Greece has been difficult for years.

This year is quite frankly not a lot different, but somewhat different.

Maybe protest and rioting in the streets today in particular, I think there is another national strike, the second of recent times.

Clearly we don't have high expectations in Greece.

That does not figure prominently into anything we have said thus far.

If we closed business in Greece it would be just that, kind of closed business in Greece, but not necessarily a driver of any of what we expect either in EMEA or in total.

Okay.

And can you talk a little about the PNT front list, what the outlook for is for new books for 2010 and perhaps in the context of partnerships that appear to have been very successful in the past year, specifically Meredith.

Dave, this is Will.

Nothing out of the ordinary that I could say about that.

We recovered, as you can tell, very positively, and hopefully it wasn't lost in all the detail.

I made comments about our sales to Borders being up.

Our sales to Barnes and Noble being up.

I emphasized Amazon as well.

When you look at their overall Company performance and the kind of growth they are experiencing, that means those accounts are down for some major publishers.

That's a statement about the depth and quality of our lists and some of our market leading brands.

I can tell you that one of the things that I'm really proud about with our colleagues in PNT is no matter how tough it got out there, and it was tough in the last fiscal year, and any momentum they experienced and it was generated by them.

It was not in the marketplace.

They had to adjust on the fly in some cases.

What I mean by that is shift some editorial priorities and get some more books that were relevant to the market they were currently navigating through which is different than the one they bought 6 or 9 months before.

They adjusted on the fly and I think got us a really good outcome.

That momentum is continuing.

We are leading into our May sales conference.

And that group is really feeling good about gaining market share as they have been and the momentum they have.

I can also tell you that it has been a long standing strength of this business to form strategic partnerships and alliances.

And I can tell you I am encouraged about the prospects there, and it would really surprise me if we didn't have some good news to talk about there in the near term.

We have that underway as well.

We are feeling good about the depth and quality of the list, and we feel we have some real momentum that's going to carry into fiscal year 11.

Just to add, Dave, one thing is that specifically with respect to Meredith, which I think you might have eluded to in your question, that's performing at least as well as our expectations in part driven by the performance we have seen in the U.S.

that Will spoke to, and is in the press release, particularly in the holiday season.

So Meredith is performing quite well for us.

It is a nice arrangement agreement and working on some other things as well that might sort of come to fruition over the balance of the year for the future.

Terrific.

Thanks, guys.

Just one last one from me, Will, can you give us an update on electronic devices specifically referencing the i-pad plans and what your latest thoughts are there?

I know this is going to sound repetitive, or maybe even boring, I often say to people if consistency is boring, we'll be boring.

What I can tell you about this is we really feel good about our underling philosophy here.

And that is that we want to be at the table talking to various partners about opportunities to deliver our content to more people around the world than ever before in our history.

We have been working on this in various markets well over a decade now by making investments in underling technology to have that happen.

We are at the table with major partners discussing many different ways.

Not only in terms of the particular device, but also the business models and ways in which we can deliver more, and it is important to us, obviously, that we participate in arrangements that we feel are sustainable over the long run.

Another aspect of this is that we recognize that in many cases it is not entirely clear in the early days how some of this is going to develop and evolve.

We have a culture in place in this organization where we will take responsible risks.

It is not important that, and I say this frequently to our colleagues, you don't have to have it all figured out to participate.

I would rather us be at the table with flexible terms, take responsible risks, be out in the market place, and adjust and adapt based upon what consumers need.

And That's what we're doing.

So the fact that there seems like there is not a week that goes by where someone is coming out with another device, That's fine.

In fact, I think it is a good thing.

The more devices out there, the more opportunities for people to gain access to our content.

We actually feel very good about that.

Now, each device has some little differences about them as far as how the content is delivered.

My hope, over time, is that process will become easier to convert the content so it works on several different devices.

So that's basically where we are.

Obviously it is still a small percentage of the total business.

However, we are making more and more of our titles each and every day available to a whole range of devices.

We are finding, and I want to keep emphasizing a couple things about this.

First is we are finding that many of our customers, because of the content we publish, are interested in getting it on mobile devices.

That there is use for that when they are traveling or whatever where they can gain access to an article, to a chapter, to a piece of information.

So in many ways, these devices are helping us accomplish an objective.

People don't have to necessarily go immediately to the bookstore.

They can gain access to it while they are on the road and then maybe go to the bookstore and either buy the print version or something else.

We're finding that it is helping us, again, get this content to more people for different purposes.

The other thing, as important as it is for us to be platform agnostic, that's one key thing.

The other thing is, we feel very strongly that not all content is the same.

We feel very strongly that consumers value content differently.

We feel very strongly that, for example, newspaper content is different than fiction content, which is different than medical scholarly educational, professional content, and we believe over time business models will emerge that recognize that.

And it will be determined by publishers like us, the partners we work with, but even more importantly by the consumers who value what we do.

You may be unaware, but I also want to emphasize this point, none of this is huge for us yet, but it is growing.

And you should know, for example, there are prices out there that people here.

I hear $9.99, as though the whole world is focused on just one price.

We're selling Wiley content on e-book readers well above $9.99 and getting a favorable market reaction to that, for example, there is right now not a one price fits all approach to this.

So evolving will continue to evolve.

There is not a day that goes by at Wiley where there are not some discussions either with existing partners or others.

Thanks, Will.

And I promise my last follow-up, will Wiley content be available on the i-pad when it is rolled out next month?

I cannot comment on that because of the nature of discussions.

We are having discussions.

There is no reason why you shouldn't know that.

I suspect that's not a surprise to you, but I'm not in a position to make that statement.

Thanks a lot, guys.

Thanks for taking the questions.

(Operator Instructions).

There are no more questions.

Now I will turn the call back over to Mr.

Will Pesce.

Thank you very much for your interest and support, and we look forward to speaking with you again in June to discuss the fourth quarter and full year results.

Thank you.

This concludes today's call.

Have a wonderful day.

Thank you.