Brian Campbell - IR Mark Allin - CEO John Kritzmacher - CFO.

Daniel Moore - CJS Securities Drew Crum - Stifel Ian Whittaker - Liberum.

Presentation:.

Good morning and welcome to the Wiley’s Fourth Quarter Earnings Call. As a reminder this call is being recorded. At this time, I would like to introduce Wiley’s Vice President of Investor Relations, Brian Campbell. Please go ahead sir..

Thank you, Jim. Good morning, and welcome to Wiley’s fourth quarter and fiscal year 2016 earnings call. Before we begin, I’d like to just remind you that the call is being recorded and may include forward-looking statements.

You shouldn’t rely on these statements, as actual results may differ materially and are subject to factors discussed in our 10-K and 10-Q filings with the SEC. The Company does not undertake any obligations to update or revise forward-looking statements to reflect subsequent events or circumstances.

For those who prefer to listen to the call over the phone, but still want to view the slides, we recommend that you click on the Gears icon located on the lower portion of the left-hand side window and select Live Phone.

This will eliminate any delays in viewing the slide transitions, as well as remove any potential background noise if you prefer to ask questions. After the call, a copy of this presentation and the playback to the webcast will be available on our Investor Relations page. I’ll turn the call over to Mark Allin, Wiley’s President and CEO..

Thank you, Brian. In addition to Brian, I am joined by John Kritzmacher, CFO and Executive Vice President, Technology & Operations. I will speak to business performance, and John will follow with an update on operations, balance sheets, cash flow. We will both then take you through our outlook before I open it up for questions.

Please note that I’ll be excluding the impacts of foreign exchange and the transitional non-cash impact of shifting to time-based journal subscriptions when commenting on all variances. Foreign exchange was a significant headwinds in fiscal 2016.

For the full year, the unfavorable impact to revenue and EPS was approximately 61 million and $0.13 respectively. The impact moderated in the fourth quarter, however, with a 4 million revenue hit and $0.01 EPS gain.

As anticipated, both revenue and adjusted EPS were flat on a constant currency basis and excluding the transitional impacts to time based earnings. As a reminder, Wiley transitioned from issue based to time based digital journal subscriptions for calendar year 2016 to simplify the contracting and administration of these agreements.

For the year, the adverse transitional impact to this change was 37 million of revenue, 32 million in operating income, and $0.42 of EPS. The change did not impact free cash flow. For the most part, I will be excluding this transitional impact in my discussion, referring to results on an operational basis. It was a year characterized by investment.

We continue to invest in the digital transformation of our publishing business and in our new solutions businesses. We completed the first phase of our ERP deployment to enable improved efficiencies and cost savings, and we commenced the transformation of our headquarters, which will reduce our footprints and enable improved productivity.

We outsourced our U.S. distribution operation to Cengage Learning, and we completed the consolidation of our books businesses. In summary, we continued to make moves that will benefit us in the long run.

At the same time, our foundation remains strong, our journals business making up nearly 50% of our revenue continues to show steady operational performance, up marginally for the year on an operational basis. This includes a $3 million trailing adverse impact from the 2014 Swets agency bankruptcy.

Billings of calendar year 2016 renewals are showing 1% growth with 95% of business closed, while our society business had a small positive gain after a net loss last year. I am proud to say that Wiley, one of the oldest publicly traded companies in the U.S.

is now a digital business with nearly two thirds of revenue coming from digital products and services. Finally, cash flow net expectations with cash from operations flat to prior year and free cash flow down, as anticipated due to investment in the ERP deployment.

Cash generation remains a long term strength of the company and we will continue to return cash to shareholders in the form of dividends and share repurchases while retaining some flexibility to strategic acquisitions.

For the year, revenue growth on an operational basis was even with prior year with steady growth in journals and double digit growth in our solution businesses, offsetting a difficult year for education book publishing and more modest revenue declines in professional and research books.

With the revenue even from an operational standpoint, higher expense related to our ERP deployments and continued investments in growing our solution businesses, adjusted EPS was flat at $2.70. I will touch on segment performance later on in the presentation.

Much of the impact from the shift to time-based subscriptions came in the third quarter, but the fourth quarter saw a remaining revenue impact of 8 million, operating income up -- operating incomes impact of 8 million, and adjusted EPS impact of $0.10. Again all of it is transitional and does not affect free cash flow.

For the quarter, revenue grew 1% excluding the time-based shift and the impact of foreign exchange, 2% growth in journals and double-digit growth in online program management, corporate learnings, and WileyPLUS, offset decline in books, particularly textbooks.

Adjusted EPS for the quarter was down 6% operationally due to technology expense and investment to achieve greater scale and strengthen our market positions in online program management and corporate learning.

In the research segment, fiscal year journal revenue was up marginally versus prior year with continued double digit growth in author-funded access, partially offset by the trailing $3 million impact of the Swets agency bankruptcy.

Other journal revenue, which includes licensing, reprints, and backfiles was flat as two large backfile sales in consecutive years offset each other. Calendar year 2016 journal subscription billings were up 1% as of the end of April with 95% targeted business growth.

In terms of our society business, Wiley had an annualized revenue gain of 1 million by signing six new society contracts in the calendar year with combined annual revenue of $12 million versus 18 not been renewed worth $11 million in annual revenue. The $1 million revenue gain compares to an annualized revenue loss of 4 million in calendar year 2015.

Additionally, calendar year 2016 includes renewals of 87 contracts with combined annual revenue of $54 million. Research books and references revenue declined 1%, with print declines offsetting strong digital book sales.

As a remainder, we are integrating our various books businesses to achieve operating synergies and increase focus on areas of growth. Finally, for the year, adjusted contribution to profit or adjusted CTP rose 2% on an operational basis, driven by restructuring savings and product mix.

For the quarter, research revenue and adjusted CTP were flat on an operational basis. For the year, professional development revenue rose 2%, primarily on the strength of our corporate learnings and online test preparation businesses, which saw a growth of 31% and 18% respectively.

Corporate learnings saw growth from new and existing corporate clients notably in France and the U.S. We continue to feel very good about the market opportunity for workplace learning and our position in this space.

Our online test preparation and certification business also had an exceptional year of growth with CFA, CMA, CPA, and GMAP products all contributing. Books revenue declined 4%, from both market pressure and selective portfolio actions.

As noted, we are combining the professional books business with our other books businesses to improve efficiencies and optimize the portfolio. The Assessment business rose 1% with solid post-hire assessment growth, offsetting a managed decline in pre-hire assessment revenue following portfolio actions to optimize longer term profitable growth.

Finally, adjusted contribution to profit for this segment improved significantly, growing 84% or $34 million over prior year from a combination of restructuring savings and significant efficiency gains. For the quarter, professional development revenue and adjusted CTP were up 3% and 71% respectively, excluding the impacts of foreign exchange.

Education had a difficult year in a more challenging market environment with revenue down 2% of constant currency. Textbooks were down 15% and custom materials were only up modestly reflecting the impacts of rentals, lowest student enrollments and some channel disruption.

Digital course workflow for WileyPLUS growth of 10% was driven by solid performance in accounting and engineering programs. Online program management revenue grew 18%. Wiley added four net new programs this quarter for a total program counts of 226, up from 200 programs at the end of last fiscal year.

Our total partner accounts stands at 38 and we have a pipeline of partnership opportunity as we enter the fiscal 2017. For the year the OPM business we’ve diluted to our earnings by $0.16.

And while we expect that to improve considerably in fiscal 2017 we do not expect OPM to be accreted to earnings in the near-term, so we continue to invest with revenue growth to achieve greater scale and long-term profitability.

Adjusted contribution to profit for education declined 17% for the year, reflecting lower print textbook revenues and long-term investments in new online programs. For the quarter, education revenue was up 1% and adjusted CTP improved 6%, both excluding the impact of foreign exchange. John will now take you through our financial position..

Thank you, Mark. Adjusted shared services costs for the year rose 6% driven by 13% increase in technology investment primarily in our multi-year ERP deployments and IT infrastructure.

ERP and related system’s operating expenses was approximately $22 million this year as compared to $9 million in the prior year, representing an EPS impact of $0.16 per share. In fiscal 2017, we expect ERP and related systems investments to increase by roughly another $0.05 per share and then lessen considerably in fiscal 2018.

Other administrator costs rose 13% or $11 million. This was mostly due to discrete employment related costs and higher legal provisions. Those legal provisions were mostly recorded in the third quarter and related to certain copyright matters. In the fourth quarter, we completed the outsourcing of our U.S.

book distribution operation to Cengage, representing another important shift towards a more variable cost model for our print products. For the year and the quarter, Wiley recorded restructuring charges of $29 million and $8 million respectively.

As anticipated and noted on our last quarterly earnings call, most of the fourth quarter charge related to real estate liabilities associated with the closure of our U.S. distribution facility in Somerset, New Jersey.

Moving on to our balance sheet, we amended our revolving credit agreement in the second half of the year, increasing its capacity to $1.1 billion and extending its term to March 2021. The facility will continue to be used for general corporate purposes, including seasonal operating cash requirements and strategic acquisitions.

Net debt to EBITDA on a trailing 12 month basis was 0.7 at the end of April as compared to 0.8 at the end of last year. The strength of our balance sheet and cash flow continues to position us well for prudent investments and the execution of our strategies for long-term profitable growth.

As expected cash from operations was flat to prior year at $350 million, free cash flow was $219 million for the year as compared to $247 million in the prior year, driven by $25 million of incremental CapEx related to our ERP deployment and IT infrastructure.

The anticipated benefits from the ERP deployment include improved efficiencies and cost savings, particularly in shared service areas like finance and technology. As a reminder, we expect to see $25 million OpEx savings in fiscal 2018 as we move to a more competitive cost structure enabled by our ERP investment.

Our headquarters office transformation got underway in the fourth quarter. We’re constructing a more productive and collaborative work environment in support of our ongoing shift to digital knowledge and services.

Our new design will also enable us to reduce our Hoboken office footprint by two floors, resulting in significant operating expense savings starting late in fiscal 2018. Meanwhile, we deployed $70 million in the year to repurchase 1.4 million shares at an average per share cost of $48.86.

747,000 shares remain in the current share repurchase authorization. Last June we raised our dividends for the 22nd consecutive year. The next annual dividend review will be conducted at our board meeting next week. I’ll now pass the call back to Mark..

Thank you, John. While our foundation remains strong, there is further work to be done as we transition the business to being a provider of digital products and services.

Our journal’s business continues to provide for our long-term success as we benefit from a leading market position, expansion and global R&D spends, and growth in global content usage and authorship, but the market has also been limited over time due to prolonged budget constraints in a mature global market.

Going forward, we will invest in the platform and capability that will make our research content even more valuable to the millions of users who already access it. We will publish more material and continue to build out authorship in developing countries and globally.

We will launch new services that integrate our databases with analytic software taking advantage of our position in scientific research.

At the same time, we aim to increase scale as a learning business to take advantage of the worldwide demand for high level professional knowledge and skills, as result of knowledge based economies continuing to evolve.

We believe that our strong brand equity combined with the favorable opportunities from the shifts of online platforms and a developing fragmented market bodes very well for us. To that end we will continue to invest in our current solutions businesses to exploit these opportunities and make smart acquisitions that will build scale and filling doubts.

However our near term leverage from revenue growth from the solutions businesses continues to be muted by our investments to achieve greater scale and long term profitability in those businesses. While we will see substantial improvement in terms of their negative contribution in fiscal 2017 compared to fiscal '16 there remained materially dilutive.

Sustained market declines are now evident in many of our book publishing markets and we're not immune. Our objective is to make our books business smaller as we focus our portfolio on high value digital learning and reference content.

We will review our portfolio and make the structural improvements necessary to achieve revenue and profitability goals and we'll update you as we move forward in this process. We will continue to move to a more variable cost structure as you saw with the recent outsourcing of our U.S. distribution operations for Cengage Learning.

In short we will do what it takes to mitigate the long term book declines and optimize the portfolio for improved performance over time. We will continue to focus on improving our overall cost structure.

Our first order of business is to realize the targeted 25 million run rate savings from shared services in fiscal 2018, a results of competitive benchmarking enables by our ERP investments. We remain on schedule to do that.

Additional long term savings will come from a reduced footprint and floor consolidation enabled by our headquarters transformation. But there is more work to be done and we look forward to updating you on our progress. John will now take you through our fiscal year guidance..

Our outlook for fiscal 2017 is operationally for revenue to be flat and adjusted EPS to be down by mid-single digits excluding both foreign exchange and the favorable impact from shifting to time based journal subscription agreements.

Please note that the impact of the shift to time based journal subscriptions will be additive to reported fiscal 2017 revenue and EPS by approximately 37 million and $0.42 respectively.

As you can see in this table, the operational revenue projection anticipates marginal growth in journals and double digit growth in solutions offset by further declines in book publishing.

It is important to note that we recorded a 10 million backfile sale in the third quarter of fiscal 2016 and we do not anticipate another sale on this order of magnitude in fiscal 2017. Overall this combination of revenue trends is expected to result in flat revenue performance for fiscal 2017.

In terms of profitability we're projecting marginally lower operating income due to the continued book decline and investment in solutions growth as well as further investments in our ERP and related systems. Adjusted EPS is expected to be adversely impacted by higher taxes and one or more interest rate hikes in the U.S.

Our fiscal 2017 effective tax rate will be in the range of 25% to 26%. The pressure from taxes and interest expense will push our adjusted EPS toward a mid-single digit decline. We expect cash from operations to be flat again in fiscal year 2017 and CapEx to increase by 30 million to 35 million mostly due to our headquarters office transformation.

As noted earlier we're transforming our Hoboken office environment to be more open and collaborative which should benefit us in terms of productivity and efficiency. Change will also allow us to return floor space to the landlord resulting in long term net savings.

Note that two-thirds of the CapEx related to the headquarters investment will be incurred in fiscal 2017 and the remainder in fiscal 2018. Beyond fiscal year 2017 we expect earnings and cash flow to improve substantially over fiscal 2017 as the operational improvement initiatives reach implementation and cost reductions are realized.

However our fiscal 2018 operating margin goal of 17% will push further out in time primarily due to the extended long term decline in book revenue. We expect to achieve an operating margin of 14% in fiscal 2017 and make significant progress in fiscal 2018.

While we expect to reach an operating margin of 17% or greater over time we are not providing further specifics as to when that goal will be achieved. I'll now hand the call back to Mark..

In summary we had a steady year overall as we made investments to benefit us over the long term. Our journals business continues to grow modestly while maintaining its strong margin profile.

Our solutions businesses continues to achieve double-digit top line growth but remain diluted to earnings as we invest to achieve greater scale and long term profitability and our books businesses are declining by mid-single digits.

Our outlook for fiscal 2017 is operationally the revenue to be flat and adjusted EPS to be down by mid-single digits excluding by foreign exchange and the favorable impact from shifting to time based journal subscription agreement.

In the near term earnings gained from marginal revenue growth in journals and double-digit revenue growth in solutions are expected to be offset by further declines in books. The long term view show substantial improvements in earnings and cash flow for fiscal 2018.

We have work to do though, we will work to make the books business smaller but much improved, the solutions business significantly less diluted and the journals business optimized from the revenues and profit standpoint. Our fundamentals remain largely unchanged.

Our research business remains on a strong footing, delivering more assets to more content than ever before. We will benefit from continued global investment in R&D and growth in content usage in authorship. We will continue investing in the technology and capabilities which make our research content valuable for the millions who use it every year.

We are investing in our solutions business to meet the fast growing worldwide demand for high level professional skills the world needs with millions of learners now active on our online programs, corporate learning, certification and assessment platforms.

Wiley's trusted brand gives our customers that confidence they need to seek Wiley’s solutions for their career and professional development.

Our book publishing business are evolving towards digital learning and reference and we will continue to make the structured improvements necessary for those businesses to contribute to our growth and profitability goals.

These foundational strengths put us in a good position for a continued sustainable future as one of the world's leading knowledge and learning businesses. And with that as background we welcome your comments and questions..

Thank you. [Operator Instructions] We will take our first question from Daniel Moore, CJS Securities..

Got bouncing around a little bit my apologies here, but CapEx you mentioned late in your prepared remarks continues to increase, what should CapEx look like as we get out to fiscal year '18? And do you expect it to continue the step down thereafter or are we in sort of a new normal level of higher investment?.

So we are expecting, as I said, CapEx to increase year over year by about $30 million to $35 million with most of that being driven by our investment in our headquarters facility that investment peaks and then makes its way down in fiscal '18.

As well in '18 we will see somewhat lighter capital spending associated with our ERP implementation, so we see fiscal '17 as a peak, again about 30 million to 35 million higher than what we have reported for fiscal '16 and then it will start to come down from there..

Should '18 be below '16?.

I am not going to get that precise Dan, two years out in time, it certain will be coming down. And yes, on balance what you are going to see in '18 is lower spending associated with headquarters and you are going to see lowest spending associated with ERP as compared to '17.

So substantial tick down, but I think I really can't be more precise than that at this point..

Okay, a lot of moving parts, so my apologies here.

I think you mentioned your fiscal '17 guidance implies organic growth and pretax operating income a slight decline, is that not quite mid-single digits, may be anymore precision you can or specifically you can help us with?.

So Dan, what we are saying for '17 is that excluding the impact of time-based earnings, the transition and what is in '17 a favorable impact of time-based earnings.

Operationally, we are anticipating that revenue will be flat and that our EPS will be down in the mid-single-digit range driven by marginal decline in operating income which has pressures associated with it around the decline in books and has some pressures associated with the incremental spending for one more year around our ERP and related systems implementation, and then dropping below operating income then, pressure from higher taxes, we are expecting a tax rate in the zone of 25% to 26% for fiscal '17 and what would likely be somewhat higher interest expense due to rate hikes in the U.S..

And what is that dragging the taxes [multiple speakers]?.

Dan if I could, just to round that out, just keep in mind, on a reported basis with the impact of time based journal subscription agreements, we will report an increase in revenue year over year that will be as company in the low-single digits benefiting from 37 million of incremental revenue, and we also will see high-single-digit increase in earnings again with the benefit from the time-based journal agreements as that comes with $0.42 of improvement around time-based earnings, so I just want to make sure what people should expect that our reported revenue results and our reported earnings results will both show substantial gains when including the effect of those journal agreements..

Understood, I just wanted to isolate the operating income versus the EPS, understood.

And then the tax rate, you gave us good color there, is it just simply a shift in geography where the income is coming from or the other factors?.

There are couple of discreet items that have benefited our rate this year, relatively small items, and then there will a bit of a shift in terms of our earnings from geography, but mostly a blend of those two effects..

Okay, one more and I’ll jump back in queue. Fiscal Q4, if I look at operating and admin expense, it jumped 5% year-over-year, an increase of 400 basis points as a percentage of revenue.

I realize there is some accounting given the shift to time base that probably impacted a bit in terms of the percentages, but what are the biggest drivers of that increase, other admin if you look at shared service, other admin was up 30% year-over-year in Q4 and I am just trying to figure out what's going on there?.

So Dan, most of what’s driving that are things that fall into two categories, some employment related discreet items that occurred in the year that will not be repeating, had been related to people leaving the company that were not restructuring charges, and then we had also some legal provisions, I mentioned that were principally in the third quarter related to copyright matters..

Okay thank you, I’ll jump back in queue..

Moving on, we will take our next question from Drew Crum from Stifel..

Okay thanks, good morning everyone. So couple of questions, to start on education.

Your print textbook business was down 23% in the quarter, I think you guys thought that the second half of fiscal ’16 might be a little bit better than the first half, based on what you saw with the spring semester what does that portend to with the fall semester, as you look ahead? And then my second question here is, in an effort to optimize the portfolio which you made reference to on the print side, how far along are you guys around consolidating the education book business? Thanks..

Thanks Drew, hi it's Mark..

Hi Mark..

So in the second half of the year we saw improvement in WileyPLUS revenue, validation and courses in business won, but I think the underlying trend particularly in our quantitative subjects in accounting and engineering was strong.

We do continue to see that in the industry as a whole that the rate of take up digital is very mixed between institutions, between courses, and between instructors, and while print continues to be an option, there are a number of choices that students have, whether it's rental, used, or buying a new textbook.

That combined with some channel consolidation led basically to oversupply in the market as a whole. And whilst we had underlying improvements in the number of students using at courses which you can see in the WileyPLUS number, we were hit by returns as the industry was as a whole.

Print continues to be volatile, Drew, I can’t look forward in September and say that I see those trends reversing significantly, but we certainly do see some calming down as a disruption in the channel which we hope will flow through.

And obviously as we continue to invest in digital and to move as much as our business as possible to WileyPLUS, then that printing print impact will start to decline. But that’s also overtime as well rather than looking forward to September.

In terms of consolidation, we are some way on and we will certainly report back as we make some more progress, obviously the moving of our distribution, Cengage Learning was a step forward in switching to variable cost base for that business and we continue to look for efficiencies across our delivery, manufacture, distribution of print across all our book businesses and education will benefit from that.

So it’s a work in progress and there will be more to report overtime..

Okay.

And then shifting gears, part of your intermediate term guidance that included the solution business comprising about 25% of your revenues, just give us an update there and any thoughts on where you see that over the next couple of years? And how important acquisitions play a role in getting to that threshold?.

Well clearly they do, we have said before the goals that we set were somewhat dependent on us continuing to make acquisitions to achieve scale and revenue growth in that business. So I think two things, Drew, one is we are happy with the performance of those businesses, as we were continuing to report double digit growth.

We are confident in the market position that we are establishing, that Wiley is adding real values, both in the corporate learning talent business and in the education services online program business.

And we continue to actively look for acquisition that will fill gaps in that education to employment value change, but we will do that with continued discipline and ensuring those are acquisitions which we know Wiley can add significant value too.

So we remain active but we doing need as you know acquisitions to take us towards increasing the percentage of revenue that comes from solution and we continue to be active in pursuing those..

Okay.

And then just one last question, more housekeeping John, can you remind us from a quarterly phasing perspective when we’ll see, or what quarters we’ll see the benefit or I guess the reversal from a shift to the time based internal subscription agreements? Any magnitude by quarter?.

So, the benefit that will now come back will unwind in our principally in our first quarter and in our third quarter. The order of magnitude in the first quarter, you should expect will be something around 20%ish of the unwinding and most of the balance than occurring out inside of the third quarter..

[Operator Instructions] Moving on, we’ll take our next question from Ian Whittaker from Liberum..

Two questions, first of all, just going back on the education business and naturally coming to the answers just in the previous questions. One of your peers in U.S.

higher education had suggested the issues you face are mainly cyclical or the issues that you anticipate are mainly cyclical and it’s all down to enrolment trends? And when these improve, that essentially the revenue should come back.

I mean it sounds as though you’re a little bit more structurally bearish than that? I mean would that be a fair assessment of how much you think enrolment are actually part of the problem here and how much is it just that you think is changing student buying patterns? And the second thing is, there has been some proposal put forward by the European Union just in terms of scientific journals with open access, perhaps suggesting an accelerated push? Now I just wondered if you have any thoughts on those proposals..

So on the first point, I would say yes there are a number of factors that have impacted performance in the education segment and certainly enrolments is one of those. Over the last two or three years, though are numbers that are publicly available, you can see what the impacts has been.

And to the extent that those begin to unwind over time than clearly there is a positive impact on the number of students taking courses and therefore having access to content and digital quarters.

I think the additional color I was adding was that as we continue to see business models of old, as we continue to see students having choice around a number of different price points and as we simply continue to see channel disruptions there are other -- hopefully those are also relative short term disruptions, but they’re also contributing factors.

And some of those a are little uncertain, more I would say overtime as to how long it takes for those to unwind.

From a perspective of open access, I wouldn’t comment publicly on policy, I would say for Wiley open access has become an important part of our research business both through offering open access options in our traditional journal programs and launching new open access journals.

We continue to collaborate very closely with funding agencies, with government and higher education institutions around ensuring that all of us have options, whether they want to go down the traditional publishing route or through gold or green open access and we remain committed to open access being a viable business model for the industry, which I believe continues to evolve, but we do partner closely as I said both with government and with funding agencies and involving that..

Can I just ask you a quick follow up, just on the first question, I mean, is that -- just coming back to this whole issue of enrollments, obviously there is a lot of uncertainty. But just yet again, is there any trends, data points, et cetera, that we should be looking for in terms to see how enrolment trends should go.

I mean the point that’s been made before is that it's related to the economy, although it looks maybe in recent years back when they ship and start to breakdown. But is there anything such as that, is there any data points in terms of the demographics coming from the high school.

Sort of anything that for us will be quite useful to just look at in order to have a view on when the reversal of enrolment should as it were reverse out?.

So I think just to say it again, I think this is -- it’s a little too complex and wide ranging from me to comment on at this point.

I mean clearly enrolments are impacted by demographics, by the strength of the economy, by the demand for post-secondary education and though are all variables and are all subject to political uncertainty and to economic uncertainty.

So I don’t think at this point it's possible to really think -- to be precise or even specific about how those are going to evolve over time..

Moving no, we’ll take a follow up from Daniel Moore from CJS Securities..

At today’s current exchange rates, FX rates, what would the likely impact be on revenue and EPS in fiscal ’17 relative to ’16?.

Dan at current rates, thankfully the impact would be much smaller than what we’ve seen in the last couple of years. At current rates we would expect to see still some revenue and EPS erosion, but the erosion would be more on the order of about $10 million to revenue and about $0.04 to EPS, somewhere in that range..

Got it, that’s helpful.

And then if this is on your slide and I missed it, I apologize, how much of decline in print book revenue is embedded in the fiscal '17 or contemplated in the fiscal '17 revenue guidance?.

We're continuing to anticipate across book publishing, decline in revenue that’s in the mid-single digit range. I think it’s in the table that we used on the '17 outlook there..

I’ll refer to it, but not continued mid-teens declines, it's more of a moderation if you will?.

Well, I was just pointing out, Dan that overall our publishing businesses sort of mixed, and we didn't see decline in the mid-teens across all of our publishing businesses here in short we were substantially flatter in the research and publishing business and the professional development book publishing business, where we saw steep declines that really was around higher education..

And I know Mark mentioned twice that online program management would get -- would not be as dilutive in '17, what would be the dilution in EPS in '16 and how much of the delta should we expect in '17?.

So, the OPM business was $0.16 dilutive to our earnings in fiscal '16 and we're anticipating that'll improve to around $0.10 dilutive in fiscal '17..

A couple of more and I'll let you go.

The 25 million cost savings previously I think you'd said half in '17, half in '18, do you still expect to get half in '17?.

Yes we do..

Okay, your guidance, there's no change there?.

Yes, and it's inclusive of those savings. So you've got other things that are driving pressure on operating income as we noted including the greater change inside of the publishing business as well as incremental spending on European systems in the year..

And two more and I'd be done.

Buybacks, I guess, it just in terms of capital allocation, stocks just kind of pulling back here and we still think long term free cash flow is somewhere well north of $4 a share, you expect to be more aggressive in terms of returning cash to shareholders, are you opportunistic?.

I wouldn't suggest, that we're going to any more or less aggressive, we still see our stock at these trading prices being great buy for our shareholders and we continue to plan to repurchase shares, but in terms of momentum I wouldn't call a shift in momentum right now.

Spend a little bit more on shares in fiscal '16 then we did in '15, and we continue to believe it's an important way to return cash to shareholders..

Last question, it sort of philosophical, going back historically what you gave, not precise, but a range of earnings guidance -- sort of more hard and fast that goal posts.

Year and half ago you gave fiscal '18 outlook of 17% operating margin, now we're sort of -- things are a little bit fussier in terms of guidance and we don't really have a timeframe around those goals.

Is it simply the change in the speed of the decline in print that makes it difficult or why, is there other factors that have sort of driven the change in ferocity and your approach to guidance and setting more defined goals if you will, that shareholders can look to it?.

So, fair questions Dan. So our practice that's been established for a long period of time has been to provide guidance on an annual basis and generally speaking actually not to provide guidance beyond the coming year.

That we've maintained and I think we've been very transparent in terms of completeness of that information that we've been sharing around the business.

And then we back in 2000 -- beginning of our fiscal 2014, so, September of 2013 from the calendar perspective, we set goals for '17, three year goals around the evolution of the business and those goals included expectations to evolve our business to more solutions, to get solutions to be about 25% of our revenue, those acquisitions would enable us to get to revenue growth in the mid-single digits and then we would -- that would help propel us to operating income of 17% of greater.

Underlying those goals was an expectation back in September of '13 that we would see more stability inside of book publishing then we have seen over that period of time. And then we've talked about still believing that this 17% goal or greater is entirely achievable, but would push out in time.

What's in the information we’ve issued today caused us to push that out further in time, as we're seeing a sustained rate of decline and we saw a higher rate of decline in Higher Ed that has become more challenging for us and we're preparing to again address that, but the biggest change is what's happening in books.

And frankly the pressure that we saw on books in our fiscal '16 was greater than we anticipated. So, we're reluctant to start putting out a 17% or greater operating margin goal at a specific point in time, we've put it out there and then it's pushed out in time.

So, from the credibility perspective we're acknowledging that we can’t call it, at a specific point in time.

We can call when we are going to get there, but we prefer not to say when and instead to focus on our normal one year guidance executing that well, giving you as much insight as we can as to trends in the business, but not putting another stake in the ground overtime..

Understood, I appreciate the color..

Alright Dan, thank you..

[Operator Instructions] And at this time it appears there are no further questions. I'd like to hand the conference back over to Mark for any additional or closing remarks..

So we thank you for joining us on the call today and look forward to speaking with you again in September..

Thank you. That will conclude today's conference. We thank you all for your participation..