John Wiley's autumn acquisition of Hungry Minds had a dramatic impact on the company's third-quarter results, especially in its professional/trade division. Revenues for the entire company for the period ended January 31, 2002, increased 27%, to $208 million, while net income rose 24%, to $21.4 million. Excluding Hungry Minds, sales in the period were up 4%.
In the professional/trade segment, sales jumped 82%, to $80 million, and operating profit increased 83%, to $20.8 million. The gains were due almost entirely to the Hungry Minds purchase, as the division suffered lower sales of business and travel books, especially in the first half of the quarter. Wiley president Will Pesce said Hungry Minds is performing better than anticipated, noting that the company now expects revenues from the purchase to be in the $80-million to $85-million range. Wiley is also on track to save $10 million in annual costs by the end of the year. The savings are coming from a combination of improved operating efficiencies and the elimination of some jobs through layoffs and attrition.
Revenues in the higher education division rose 7%, to $41.8 million, and operating profit increased 13%, to $16.7 million. The purchase of an unidentified number of titles from the Thomson Corp. plus good performances in the psychology and geography areas offset weak sales in engineering, where enrollments are down. In the domestic STM segment, sales rose 4%, to $38.7 million, although operating profit dipped 1%, to $15.2 million.
In its international operations, sales in Europe were up 7%, to $41.5 million, and profits increased 20%, to $13.5 million, led by STM journal sales and higher college textbook sales. In the other international segments, sales increased 2%, to $21.1 million, but profits declined 3%, to $6.1 million. Sales were up in Australia and Canada, but were soft throughout Asia.
CDG Books Canada to Close
In other news involving Wiley's purchase of Hungry Minds, CDG Books Canada will be shut down by John Wiley & Sons Canada Ltd. and Gage Learning Corporation in the next few weeks, laying off 17 CDG employees and placing the Macmillan Canada imprint up for sale. An additional 13 CDG people will move to Wiley. Wiley's purchase of Hungry Minds gave the company 49% of CDG Books Canada; Gage owns the remaining 51%.
"When we acquired it, we realized the business was not sustainable in the current economic environment for a variety of reasons, certainly the economy and the book business. It was our goal to acquire 100% of CDG and merge it with Wiley Canada, but as a result of the regulatory environment, we were unable to do that, so really the only business decision for us was to wind up the company," said Wiley Canada's president, Diane Wood. Wiley Canada will take over the Hungry Mind licenses, including the Dummies and Frommer's lines, while CDG's Macmillan properties will be sold.
