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John Wiley & Sons (NYSE:JW.A)

Q4 2013 Earnings Call

June 18, 2013 10:00 am ET

Executives

Brian Campbell - Director of Investor Relations

Stephen M. Smith - Chief Executive Officer, President and Director

Ellis E. Cousens - Chief Financial Officer, Chief Operations Officer and Executive Vice President

Analysts

Daniel Moore - CJS Securities, Inc.

Andrew E. Crum - Stifel, Nicolaus & Co., Inc., Research Division

Michael Corty - Morningstar Inc., Research Division

Marc Heilweil - Spectrum Advisory Services, Inc.

Sami Kassab - Exane BNP Paribas, Research Division

Ian Whittaker - Liberum Capital Limited, Research Division

Operator

Good morning, and welcome to Wiley's Fourth Quarter and Year End 2013 Earnings Conference Call. As a reminder, this conference is being recorded. At this time, I'd like to introduce Wiley's Director of Investor Relations, Mr. Brian Campbell. Please go ahead.

Brian Campbell

Thank you. Hello, everyone, and thank you for participating in our call today. Before introducing Steve Smith, President and Chief Executive Officer; and Ellis Cousens, Chief Financial and Operations Officer, I would like to remind you that 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 revise forward-looking statements to reflect subsequent events or circumstances. For those who prefer to listen on the call over the phone, but would still like to view the slides, we recommend clicking on the gears icon located on the lower portion of the left-hand side window and selecting Live Phone. This will eliminate any delays you may experience in viewing the slide transitions, as well as remove any potential background noise should you ask a question on the call. A copy of this presentation will be available on our Investor Relations page at the conclusion of this call. Thank you.

I'd now like to turn the call over to Steve.

Stephen M. Smith

Good morning. Following the positive feedback we received from investors after our third quarter call, we are again presenting visual materials that provide clarity and context around the company's fourth quarter and full year. In addition, we will provide an update on our previously announced restructuring program and close with fiscal '14 guidance and a directional description of our expectations for Wiley's longer-term outlook.

Faced with fundamental change in our business environment, we've been -- we have taken significant steps in fiscal '13 to reposition Wiley for future success. We have refocused human and financial resources on opportunities with the greatest potential and have taken steps to divest or deemphasize certain businesses and activities. We have acquired new businesses, which we believe have the potential to propel Wiley's future growth. We are leveraging our core business, increasing the value we provide to our customers and extending Wiley's reach and capabilities. We have embarked on a wide-reaching restructuring plan, from which Wiley will emerge as a more flexible and agile organization. As a result of these changes, fiscal year '14 will be a year of transition in which we continue to build upon a platform that propels rapid earnings growth in fiscal '15 and beyond as the benefit of cost reduction and new business investments bear fruit.

Wiley's core business has faced strong headwind throughout fiscal year '13. Print book revenues continue to be under pressure across all 3 segments as a result of tight library budgets, changes in student purchasing behavior, shrinking sales in brick-and-mortar sales channels and the continuing migration to digital.

Digital books continued to grow, but the dollar growth is not yet offsetting the pace of decline of print books. Digital book revenues are growing very rapidly in Asia and Europe, although growth rates have moderated a little in the U.S.

Fiscal year journals growth was affected by changes in the timing of new subscription billings and in the timing of issue publication. As a result, journal subscription revenues for fiscal '13, excluding foreign exchange, were essentially flat to prior year despite the fact that subscription sales increased by 1.6% in calendar year 2012, and for the calendar year 2013 at the end of April, were up by over 3%. I will explain the complex combination of variables that affect the timing of journal recognition later in this presentation when discussing segment performance.

Despite these performance challenges, we are pleased with the progress we have made in the year towards Wiley's transformation as a knowledge company that provides essential digital content and services to our customers in research, education and professional practice.

In November 2012, we acquired Deltak, the largest noncontent acquisition in our history. We completed the divestment of a range of consumer publishing assets, and refocused and rebranded our Professional Development business on the needs of practicing professionals in the workplace. Notwithstanding the revenue timing challenges, our journals business is performing well, with over 3% subscription growth in the calendar year 2013 versus 2012 to date and including over $20 million of net new society business, one including the American Geophysical Union, one of our largest ever society contracts and while still maintaining historically attractive levels of profitability and cash flow. Adjusted free cash flow for the company of $270 million was exceptional, equaling our best year ever.

Through the cost restructuring and reinvestment initiative, we are targeting a reduction in run rate operating expenses of $80 million by April 2014. We have made significant progress with restructuring plans across all businesses and functional areas and are well on track to achieve our goals.

In the fourth quarter of fiscal '13, we announced a onetime restructuring charge of $24 million associated with plans to restructure our cost base, associated with approximately $38 million of ongoing annual savings.

During the year, we deployed approximately $74 million to repurchase over 1.8 million shares of Wiley's stock.

At Wiley, we take succession planning for critical leadership positions very seriously. In May, we were very pleased to announce that we have recruited John Kritzmacher, as Wiley's new financial -- Chief Financial Officer with effect from July 1. John is an experienced public company CFO with an impeccable track record as a leader at companies such as Lucent Technologies and Global Crossing. John will succeed Ellis Cousens, who in our last call, formally announced his intention to retire at the end of June 2014. From July onward, Ellis will devote his time to leading the company's restructuring effort until he retires. I believe that this period of overlap, with John focusing on his new responsibilities across finance, business development, mergers and acquisitions and investor relations, while Ellis leads the charge on restructuring, will benefit the company considerably.

Ellis' contribution to Wiley's success over 12 years has been enormous, and we are very grateful to him for his contributions. We will have many opportunities to celebrate and acknowledge his distinguished career in the year ahead.

I'd also like to take a moment at this point to acknowledge the retirement of another long-serving and outstanding executive at Wiley. Bill Arlington is retiring from his position as Senior Vice President of Human Resources at the end of this month after 32 years of highly valued service at Wiley. Bill has worked tirelessly to ensure that Wiley has access to the talent required to prosper in a rapidly changing environment, while also making sure that our culture and human resources policies sustain a high level of engagement in pursuit of our mission and goals. We are greatly indebted to him. Bill will be succeeded by MJ O'Leary, formerly Vice President of Sales and Marketing for our education business. MJ has been shadowing Bill for the past year and assumes her new position from May 1.

For the full year, revenue increased by 1%, excluding foreign exchange and the divested consumer assets. As mentioned previously, research journal revenue declined due to factors affecting the timing of revenue recognition and lower corporate and backfile sales. Print book sales have declined across the board, particularly -- partially offset by growth in sales of digital books.

Adjusted EPS is down 5% to $2.92, excluding the impact of foreign exchange and the operational results from the divested assets, the gain on sale of travel publishing assets, other unusual onetime items, and all impairment and restructuring charges. The lower EPS performance was due to the decline in top line performance and higher technology costs due to investments in digital products and infrastructure. On a comparable basis to third quarter guidance, EPS was $2.97, which is equivalent to U.S. GAAP but excluded all fourth quarter unusual items. The result was unfavorably impacted in the fourth quarter by $0.02 of additional negative foreign exchange.

For the quarter, adjusted revenue increased by 3% as a result of the contribution from recent acquisitions, but offset the decline in print book sales across all 3 segments. Excluding the impact of acquisitions and foreign exchange, revenue declined by 2%.

Adjusted EPS for the quarter was down 5%, excluding foreign exchange, to $0.71 per share as a result of the lower print book revenue and higher technology expense, partially offset by growth from the Inscape acquisition and contingency cost savings.

Now I'd like to provide a brief commentary on the performance of Wiley's 3 global businesses. Research revenue for the fiscal year was down 2% to $1 billion, excluding the impact of foreign exchange, due to timing and phasing issues around journal subscription orders and publication, a decline in print book sales and a significant drop-off in corporate sales and advertising. Journal subscriptions account for approximately 60% of the research business. This chart shows graphically the major contributing factors to the revenue performance of our research business by product or service type. The declines in print books and other revenues for this segment reflect the priorities of our library customers who, when faced with constrained acquisition budgets, choose to protect their journal collections at the expense of books, backfiles and other products and services.

Print book declines in the year were also affected by destocking in the distribution channel, with major intermediaries moving to lower inventory and just-in-time ordering practices. Customers in important book markets in the Middle East faced significant challenges in fiscal year 2013; and in India, the decline in the value of the rupee was a major inhibiting factor to imported book sales.

Digital book growth was lower in fiscal '13 as a result of a large onetime sale made to a customer in Saudi Arabia in the fourth quarter of the prior year. The sharp decline in advertising revenue stems from a falloff in demand from pharmaceutical manufacturers for print advertising collateral for their declining sales forces, partially offset by increased revenue from online advertising on Wiley Online Library and elsewhere.

To better understand the underlying health of the journals subscription business, a granular understanding of what drove the variance in full year performance versus both the 2% growth expectation we had communicated earlier, and to prior year, should be insightful.

The left column provides an explanation of the factors relative to our 2% or $24 million growth expectation over prior year, most are timing-related. From the top, currency translation was $9 million negative, while our net society win-loss record was as expected. The timing of publication of issues for our big new American Geophysical Union society win with 23 journals did not have the overall linear publication schedule we had anticipated.

Subscription growth for price and volume was as expected, but the timing of both when licenses close and when issues were published in this calendar year were later than expected. The time-based earnings pilot this year and the receipt of 2 years' worth of payment from cash basis customers in the prior year should have been factored into our growth assumption, but they were not. Some of those negative factors accounts for $22 million of the $24 million shortfall to expectation.

The $9 million decline to prior fiscal year is comprised of many of the same elements, partially offset -- or partly offset by $12 million of growth coming from net society wins and organic growth in the business. While the unfortunate confluence of these factors was a net negative, the good news is that all indications are that the business is performing well.

Subscription and license growth is strong overall, with robust growth in the Americas and Asia Pacific, somewhat offset by more anemic growth in EMEA, in Europe, Middle East and Africa, especially Southern Europe and some parts of the Middle East. The proportion of our journal subscription revenue under license continues to grow, up 2% to 81% at the end of April 2013.

In addition to the encouraging subscription performance, we continue to see significant growth in online usage of journals and other products on Wiley Online Library and also continue to add new revenue and content to our portfolio through our success in winning new society clients. In fiscal year '13, we've signed contracts to publish 42 new journals with combined annual revenues of $31 million. We renewed or extended contracts to publish 81 journals with combined revenues of $52 million, and we lost 4 journals with combined annual revenues of $7 million.

Excluding the divested consumer publishing assets from both current and prior year results, the Professional Development business grew 5% to $371 million, excluding foreign exchange, primarily driven by the acquisition of Inscape and ELS, together with the new test preparation and certification revenue from our -- [indiscernible] publishing relationship with the CFA Institute. Divestment of the consumer lines during the course of the year has put the business in a far better position to realize enough growth in the context of Wiley's overarching objective to become a provider of content-enabled services and within Professional Development, to focus on thought leadership, serving professionals across the life cycle of their careers.

Core retained book businesses were largely flat on prior year as digital book growth slowed somewhat and print continued to decline. Overall print revenues, including the divested publishing programs, were 12% or $39 million behind prior year and represent 70% of the overall business. For the print business, the fourth quarter continued the trend of the previous quarter, with some stabilization in resale accounts globally, but with overall inventory in the channel much leaner than prior year.

Ebooks continue to be a source of growth, especially outside the U.S. where the device penetration remains at a lower level but growing quickly. The impact of our 2 acquisitions, Inscape and ELS, has been significant, bringing new capabilities and dramatically accelerating business development. Inscape in its first full year achieved 8% revenue growth and met or surpassed the financial goals for the acquisition. ELS was also on target for the stub year and performed in line with the acquisition model.

Our strategic realignment to focus on providing professional content and services across the career arc is now the primary driver of our growth. With digital and service revenues advancing 35% for the quarter to 54% for the full year, to 20% of the total business or $84 million. We have reorganized the Professional Development business around 4 communities, or professional markets: business, including financial accounting, technology, talent management and professional practice. Additionally, we have brought significant new products to market in test preparation, certification, assessment and eLearning, and secured a number of valuable partnerships with professional associations, notably in finance and accounting. With the restructuring and reinvestment initiative, we are taking steps to reinvigorate the core business while reallocating resources to higher growth and more profitable revenue opportunities.

The percentage of education revenue coming from traditional print textbooks is down to a little over 50%, while digital revenue now makes up almost 1/3 of overall revenues. The U.S. market continues to contract due to declining enrollments, especially in the for-profit sector, increased demand for rentals of print texts and lower inventory held by bookstores due to uncertainty of demand. The decline in demand for traditional printed textbooks has accelerated, reaching 15% in the current fiscal year compared to a slight increase in fiscal '12. Wiley's core business continues to perform slightly above industry trends over the last 12 months.

Wiley's net sales in the U.S. college market for the fiscal year, excluding Deltak, were down 3.3% in a market that was reportedly down 5.8%.

In March, in a surprising judgment, the Supreme Court overturned a ruling in the Second Circuit that had found in Wiley's favor in a case against a Thai student who was found to have reimported and resold copies of internationally priced textbooks in the U.S. market on a commercial scale. It is important to note that Wiley and other higher education publishers have been dealing with reimportation for decades, since we have never been able to rely solely on litigation to stem the leaks. Over several years, Wiley had implemented business solutions to address the problem, including accelerating the transition to digital products and services, and creating unique international versions of core textbooks that are not susceptible to the kind of arbitrage practiced by Mr. Kirtsaeng.

In the U.S., we're also increasing the proportion of our sales that come from more flexible formats, including custom editions and binder-ready versions. As a result of the Kirtsaeng decision, we will move to a trusted distributor model in certain markets, we will increase the international prices of selected titles, we will continue to differentiate international versions of bestselling titles where it makes sense to continue to do so, and we will continue to accelerate the move to digital that is already well underway.

As an excellent example of the success of our digital strategy in education, WileyPLUS is an integrated teaching and learning solution that helps students to be more -- that helps teachers to be more effective and it helps improve student outcomes. In fiscal 2013, WileyPLUS sales grew by 26%, while ebooks and other digital content sales grew by 17%. Nontraditional revenues, including WileyPLUS, Deltak, ebooks, binder-ready and custom products, now represent over 40% of total education revenue.

The overall decline in the proportion of Wiley's education revenue that is earned from print textbooks, owes a lot to the acquisition of the Deltak Online Program Management business, which you can see here, added $34 million to total revenue in the 6 months since the acquisition was completed in November.

We're very pleased with the performance and future promise of Deltak. In its first 6 months as a Wiley business, Deltak is tracking nicely to our acquisition plans. We have identified significant additional new business opportunities, both in Deltak's core Online Program Management space, as well as in other synergistic areas that build on Wiley's core content, relationships and brands.

In particular, secular challenges to higher education institutions in both the for-profit and the not-for-profit sectors are driving more and more schools to seek partners to help build their online strategy. A recent survey of the Online Program Management market, conducted by consultant group Eduventures, estimated that currently 200 to 300 schools work with Online Program Management providers like Deltak. Over the next 2 years, this number is expected to rise rapidly, as approximately 500 additional schools will consider engaging an Online Program Management partner.

The growth in demand is driven by the pressures on universities and colleges to answer the demand of an evermore savvy and price conscious student population, regulatory pressure in the U.S. and around the world around student debt, return on investment and gainful employment, and the rapid adoption of digital and online learning models as exemplified by the rapid growth of MOOCs.

Deltak continues to show rapid revenue growth as we continue to add new partners. Five new partners were added since the acquisition in November: American University, Case Western University, Queens University of Charlotte, Butler University and the University of Dayton. Since the fiscal year end, we've added a further new partner and have an exceptional pipeline of new opportunities that we will speak about more on our September call.

It is important to note that Deltak's partnership agreements average on a 7- to 10-year duration. In a typical model, it will take from 18 to 24 months for each new partnership to begin generating revenue. While we're in a phase of rapidly building the base of new partners and programs, earnings growth with lag revenue growth, even though the economics of expansion are compelling.

Looking ahead, we expect Deltak to be a major engine of earnings growth in our education business, along with the expected growth from digital products like WileyPLUS and the addition of services that address the needs of the global higher education sector, building on the combination of Deltak's capabilities with Wiley's content, brand and relationships. As with the 2 other businesses, we are making good progress with our plans to restructure the education business and to reallocate resources for future growth opportunities.

I will now ask Ellis to provide a brief summary of Wiley's year-end financial position and an update on the restructuring initiative.

Ellis E. Cousens

Thanks, Steve. Shared service costs increased modestly with all the increase in technology investments over the past year. That investment was focused principally in the areas of content management technology and eLearning capabilities. The acquisition of Deltak mid-year added an expense run rate increase of approximately $2.6 million, mostly in technology and some in other admin for occupancy. The sizable reduction that you see in distribution was driven by lower print volumes in books and journals and significantly lower headcount to support the lower print distribution that we realized in fiscal '13. Lower incentive compensation was a factor as well in all shared service areas.

Looking at the balance sheet, the increase in cash at year end was driven by the strong cash performance of the business and the timing of cash receipts late in the quarter. Deferred revenue was comprised principally 98% of journal subscriptions. While there is some favorable timing related to the strength of subscription cash collection versus prior year, the 6% growth that you see in deferred revenue as of April 30 is a good directional indicator of calendar 2013 journals performance to come and correlates directionally with the 3% growth in subscriptions that Steve noted earlier.

Long-term debt increased almost $200 million and net debt by $124 million due to the acquisitions of Deltak at $220 million; ELS, $24 million; and the repurchase of 1.8 million shares at $74 million. Those together offset by the strong free cash flow performance of the business during the year -- partially offset.

The sharp increase in the accrued pension liability is the net effect of a drop in the discount rate and changes in actuarial assumptions and the expected rate of return on plant assets. Noteworthy is that as of June 30 of this year, as part of the company's $80 million restructuring program, the U.S. defined benefit program will be frozen.

Moving to free cash flow or cash flow. Adjusted free cash flow, as Steve noted, of $270 million was ahead of last year by $10 million. The $270 million is adjusted for unusual or onetime items such as the restructuring and impairment charges, and as noted previously or as noted on the slide and as previously discussed, a disputed tax deposit with the German government of $42 million.

You will recall that we are in a dispute with the German tax authorities as to their adverse audit finding for their interpretation of the reorganization of our German operations over a decade ago. Many companies are disputing the same interpretation. However, we're required by German law to deposit all disputed amounts with the German government until the court decides the issue, which is expected to take a number of years. The company and its advisers firmly believe that we'll be successful in court, at which time all monies deposited plus simple interests will be returned to the company.

On a per share basis, free cash flow was $4.48, up 5.6% from last year. Free cash flow yield improved to 12.1%.

In terms of allocation of cash and borrowed funds, as noted, were principally deployed to acquire Deltak and ELS mid-year following the Inscape acquisition last year. The company also reacquired, over the last 2 years, $161 million of common stock and raised the dividend 20% last June.

Now for a brief restructuring update. As noted, we took a restructuring charge of $24.5 million in the fourth quarter. We had signaled that to you in the third quarter that it would be roughly that size. That relates to employee separation benefits, consulting costs and a termination of the U.S. pension plan to come. The activity is expected to yield $38 million, as Steve noted, in terms of ongoing savings towards the $80 million run rate when fully implemented over the course of this year. We expect a similar size charge somewhere around mid-fiscal year, this year, 2014, related to further employee separation benefits, other restructuring activity. We'll update you in advance as far as possible with respect to the size and timing of such charges.

More than half of the $80 million savings that we've noted previously, would be directed towards improving earnings and financial performance, with the remainder to be reinvested in high-growth digital opportunities. The $80 million total program savings is a run rate as noted at the end of the year. We expect that roughly 1/3 of the savings will benefit 2014 results as the programs are implemented this year.

A recap on restructuring as to what the program entails. Focus is principally on the consolidation of business activities and shared services from multiple locations and segments into lower-cost locations and also -- and achieves that through a combination, in some cases, of offshoring and in other cases, outsourcing. We're also eliminating certain activities that provide for marginal benefit to the business and also have made decisions about the continuation or the operation of certain businesses which led to the impairment of certain assets in the fourth quarter.

As a part of some of the consolidation activities, there are significant management delayering in certain operations that will occur over the course of the year and as noted, we've terminated the U.S. defined pension plan in -- effective June 30. The final element is across the board and across the company, strategic sourcing and procurement, which will yield benefits over the course of this year and into next year.

Back over to you, Steve.

Stephen M. Smith

Thanks, Ellis. Now we'd like to provide some thoughts about Wiley's outlook for the years ahead. As stated earlier, fiscal year 2014 will be a transitional year for Wiley as we focus on restructuring and the bedding down of recent new business launches and acquisitions. We're expecting low single-digit revenue growth, excluding the impact of foreign exchange and fiscal year 2013 revenue from divested consumer businesses. Adjusted EPS, excluding all fiscal year 2013 and 2014 restructuring and impairment charges, the full impact of our former consumer publishing programs and onetime tax benefits or charges, will be more or less flat in the range of $2.85 to $2.95.

Expected results for the fiscal year 2014 include ongoing investments in enabling technology, the onetime restoration of incentive plan costs to target levels versus the fiscal '13 expense accrual and investments to accelerate growth in Deltak in line with the extraordinary market opportunity. Partially a benefit from the $80 million restructuring initiative will offset some of this expense growth in fiscal 2014, but not all of it. When fully implemented at year end, the benefit of restructuring in both direct savings and the flexibility of expense management will offset the expected continued decline in print revenues.

Given the transitional nature of fiscal '14, we are pleased to share our expectations for the longer-term performance in Wiley's businesses. For fiscal year 2015, we expect to see a significant jump in earnings based on the full year impact of restructuring savings. These savings result from the actions we are taking to realize $80 million of run rate savings during fiscal '14 and will, of course, be baked into our cost base for future years beyond fiscal '15. Also in fiscal '15, earnings will benefit from the growing contributions from recent acquisitions, Deltak, Inscape and ELS, as well as the contribution from recently launched businesses such as Online Training and Assessment, test preparation and certification, professional services and workflow tools.

From the foundation of accelerated earnings growth in fiscal '15, we believe Wiley will be well positioned for sustained attractive earnings growth as the earnings performance of our recent acquisitions shown here in purple and the new businesses grows rapidly to layer significant growth onto a more efficient, flexible and stable core business. This chart does not consider any future acquisitions we might make, although clearly, with Wiley's strong cash flow generation expected to persist into the future, we will be in a position to make further acquisitions if and when attractive opportunities arise.

Our core business, consisting primarily of print and digital books and journals, and shown here in blue, becomes a smaller contributor, mainly due to the anticipated decline in print books, partially offset by the growth of digital books. We expect the recent downward pressure on core business earnings to stabilize from fiscal '15 onward, as revenues from digital products, including custom products and WileyPLUS, continue to grow, combined with ongoing measures we are taking to address the efficiency of the core business and move to a flexible cost base.

In summary, despite a challenging year in fiscal 2013, we are very optimistic about the potential to deliver sustained earnings growth going forward. In fiscal '14, we will continue to take decisive action to secure Wiley's long-term success. The restructuring initiative is on track. Our recent acquisitions are performing better than expected, newly developed products and services are gaining traction, and our core journals business is performing well.

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

Question-and-Answer Session

Operator

[Operator Instructions] And we'll take our first question from Daniel Moore with CJS Securities.

Daniel Moore - CJS Securities, Inc.

Can you talk about some of the incremental investments around Deltak that are expected? And if possible, can you quantify the EPS impact that's embedded in your fiscal '14 guidance?

Stephen M. Smith

Sure. Let me start, and then Ellis can talk maybe about the EPS impact. So as I mentioned during my remarks, Deltak's primary business is around Online Program Management, which really involves the creation of turnkey online degree programs for partner universities. And the current partner base is 32 partners, of whom about 1/3 are relatively recently acquired partners and are prerevenue. With Deltak, we provide a lot of the upfront investment in terms of both creating those programs, preparing faculty to teach those programs in partnership with the universities and recruiting -- marketing and recruiting the programs to new students. So as we're in a build phase with the business, those partners that are new are obviously consuming resources. And only after the first 1.5 years or so, the partnership will begin to earn as revenues that are then earned out over the 7- to 10-year license period of the business. We see a huge opportunity in the coming years to accelerate the acquisition of new partners and to also launch new programs, new degree programs with existing partners, as well as to grow by attracting more students to existing programs with existing partners. The combination of those things point to very healthy rates of earnings growth in fiscal '15 and beyond. But in fiscal '14, we are still very much in a build stage, and Ellis can talk a little bit about the EPS impact. I would say that at our September investor meeting, we will provide much more granularity around the Deltak business so that people can see the performance, both of the more mature revenue producing partners separated from the performance of new partners and understand the dynamics of that business in a more detailed way.

Ellis E. Cousens

Yes, Dan, so the underlying performance of Deltak would have been flat in '14, but for the acceleration of investment. For the accelerated investment, we again, can manage or modulate that to some degree over the course of the year, but it could have up to a 10-or-so cent negative impact over the course of the year, which is factored into the guidance that we provided.

Daniel Moore - CJS Securities, Inc.

That's helpful. And on the same subject, just talk about the capacity for growth at Deltak. Obviously, you put up that chart where you have 500 potential customer opportunities. But how quickly can you grow on an annual basis?

Stephen M. Smith

Yes. As often is the case, the pace at which we grow will depend on the competitive terrain in the environment, but also on our ability to scale up organizations in order to meet the opportunity. We are very focused on developing our relationship with high-quality partners and vital to the future success of Deltak, maintaining the excellent relationships they have with partners, and the results of those partnerships in terms of improved student outcomes and a strong return on investment for the student tuition dollar. So we believe that we are moving at a pace that both reflects the opportunity that is there, but also balanced by the need to maintain quality and really, the integrity of the partnerships. Right now, we are focused on the U.S. only because that has been the -- that's where the early opportunities exist, although there are clearly opportunities to take this model and the capability and expand outside of the U.S. where we have considerable reach in Europe and Asia. So I wouldn't say that we have our arms around the full scale of the potential out there for the future, but it is very exciting. It's attractive and the economics of the business look really solid. So we will certainly share more of our plans with that with you in the future.

Daniel Moore - CJS Securities, Inc.

Helpful. And can you quantify the impact of, on a year-over-year basis, of the increase in incentive plan accruals for '14?

Ellis E. Cousens

$24 million is to restore incentives from what was paid in fiscal '13. As you know, we underperformed relative to not only our guidance, which is formed off the basis of our plan. So we had a significant underpayment with respect to incentives. To restore that back to target, it's $24 million.

Daniel Moore - CJS Securities, Inc.

That's helpful. One more, I'll switch gears and then jump back in queue. Just focusing on books, I guess as a -- I can look at each segment, but in general, anything you can tell us about the accelerated decline, particularly in the global education piece? How much of it is inventory that you can tell versus actual consumer declines and what are your expectations for the rate of declines going forward?

Stephen M. Smith

Again, more granularity in September when we talk about individual segments and those, it is a pretty complex combination of factors, most of which are negative in fiscal '13. And some of which, we believe, will moderate in fiscal '14 and beyond, and some of which are probably more changes in customer preference and customer behavior. So you asked specifically about the education segment, really, what we're seeing there is continued student reluctance to pay the full price of a traditional textbook. We anticipated that, of course, with the introduction of all of the new options and the flexible options that we give to students, whether that's through digital versions of the book, WileyPLUS, custom and binder-ready versions. And so I mentioned the 15% decline in sales of the traditional textbook. Some of that business has clearly gone to rental over the years. Some of it has now moved to our more flexible formats. The good news is, in the traditional textbook, was the book that after its first use, then went back into the marketplace as used books for year after year. And so we had a business that was used to selling in large volumes in the first time the course ran, but then with very heavy attrition in the years that followed. Under the new more flexible models, the initial purchase price is lower, but we have more opportunities to sell something to every student, every semester, as we do with WileyPLUS. So we'd expect that traditional print business to continue to decline and frankly, would be delighted if we moved more quickly to digital and other more flexible business models. In the global research -- in the research segment, as I mentioned in my remarks, some of what we've seen in fiscal '13 relates to challenges in particular geographies, particularly the Middle East and parts of Asia. Some of it relates to changes in stocking policies and inventory levels at major intermediaries, but some of it also reflects the fact that library budgets remain under pressure. And faced with difficult choices, librarians are choosing to retain their journal collections and often at the expense of buying books and more [indiscernible] in buying digital books as well. So we're adjusting both the resources and the cost base of support staff print business, as well as some of our strategies around the number of titles that we publish and how we think about the growth of that business going forward.

Operator

And we'll take our next question from Drew Crum with Stifel.

Andrew E. Crum - Stifel, Nicolaus & Co., Inc., Research Division

So I wanted to ask about the calendar '13 journal subscription renewals. Steve, you noted that that's up 3% year-on-year, can you talk about how firm that number is, what are the risks to that number moving down or is there opportunity to move that number higher? And in the context of the research business, you've got a good number there, what needs to change in order to see some growth from the business in fiscal '14?

Stephen M. Smith

Yes. So the underlying calendar year 2013 performance of the journals, as I said, over 3% and it's somewhere between 3% and 4% at the end of -- actually at the end of April, and holding out well as we look forward. At this point in the year, somewhere around 96%, 97% of the full year business is completed. So there is still around $20 million, $25 million worth of revenue to finalize in terms of licensing and billing. Our indications are that we will hold up certainly better than prior year in terms of overall subscription growth, and that comes from, partly from the strength of renewals in, particularly, in North America and Asia. As I said in my remarks, partially offset by declines particularly in Southern Europe and in parts of the Middle East. And the strength of the new society starts that we had in calendar year 2013 that are also helping fuel that. So we have pretty good visibility into the first 8 months of fiscal '14 based on our expectations of good steady growth for 2013 journal subscription. We don't have the same visibility into calendar year 2014 that will influence the performance of the journals business in the last 4 months of this fiscal year. But again, there's no reason to expect any sudden changes of direction around the journals business. And I think, Ellis, would you like to...

Ellis E. Cousens

I would just add, Drew, that the elements that could affect that certainly could be, as they were in '13 over '12, could be the timing of, in '14, that is calendar '14, the timing of closing those licenses, completing orders and being able to book the revenue. And then therefore, the ability to recognize revenue and earnings, and then also the timing of production of issues. The earnings pilot, which we piloted in fiscal -- sorry, in calendar 2012 -- sorry, into '13, is not increasing in size, so it shouldn't be a factor year-on-year. It really is down to 3 things that Steve noted, or 4 things, it's the completion of that last few percentage points of calendar 2013 business, what '14 looks like from a calendar year perspective. And then therefore, the timing of completion of license agreements, orders, meaning billings, and then production of issues in the first 4 months of the calendar year, meaning the last 4 months of the fiscal year. Those are the variables that, unfortunately, all negatively lined up together against the prior year in '13. So that's '12 -- '13 against '12, which doesn't have any sort of follow-on impact, so to speak, into '14.

Andrew E. Crum - Stifel, Nicolaus & Co., Inc., Research Division

Okay. Very helpful. And then I want to circle back to Deltak and a couple of questions there. In your prepared remarks, you suggest that there are about 200 schools that currently work with online program management providers. And then there's going -- your expectation is that there'll be an additional 500 schools over the next 2 years. Of that 700, what is your addressable market, what is the market opportunity for Deltak? I guess, that's my first question. And the second question pertains to the 46 programs you currently have under contract that are not yet revenue generating. When would we -- when should we expect to see those programs convert revenue-generating accounts?

Stephen M. Smith

So the data that I provided there was from a report on the Online Program Management segment by Eduventures, it's a consultant. So of the 200, we currently have 32, if those numbers match up well. There are 4 or 5 major competitors to Deltak in that market space. The competition for new business remains intense, but we're delighted with the performance and our ability to continue to win new business in a competitive circumstance. The 500 additional partners, I think the words in Eduventures report were, these were from interviews with Chief Academic Officers in institutions. Those 500 academic officers and university provosts are going to consider working with Online Program Management providers, it doesn't mean to say that they will. All 500 of those are addressable by Deltak. We have a pretty rigorous process based on looking at employment opportunities around specific institutions because we are very focused on providing return on investment and employability as a student outcome. So based on market research, we've identified which are the highest priority among those 500. We certainly won't chase after all of them with equal vigor, but we would expect to win our share of that business. And for that share to represent some of the highest quality partnerships that have the greatest potential for sustainable long-term earnings growth. With regard to your question about the 46 programs and how quickly they will start to generate revenues, some in fiscal '14, many, many more in fiscal '15. Ellis, I don't know if you've got anything more you can add on the timing?

Ellis E. Cousens

No.

Stephen M. Smith

So the exact timing of that. We will provide, as I mentioned earlier, we will provide some detail in terms of breaking down between current programs that generate revenue and profit, the performance of those new programs and new partners, when we meet with investors in September so you can really understand the timing and the trajectory of the business and why we feel so excited about it.

Andrew E. Crum - Stifel, Nicolaus & Co., Inc., Research Division

Okay. Also, I just have one more question around cash flow, actually it's a 2-part question. The first of which is, what is the expectation for income tax deposits in fiscal '14, $42 million expended in '13, should we expect more in the current fiscal year? And then I don't think there was any announcement around the dividend. Has the board met? Does the company plan to increase the dividend in fiscal '14 or are you not going to increase the dividend?

Ellis E. Cousens

So let me take up both of those in the order that you asked. In terms of additional deposits with the German government, we expect something on the order of about $3 million to $4 million of additional deposits this year and maybe a similar amount next year or so. So I think the 42 represents the vast, vast majority of what we expect to deposit with the German government over the entirety of the point until we get to a decision from the court. In terms of dividend, the board meets later this week and will consider whether or not to increase the dividend. I can't really indicate whether or not the company is recommending an increase, but it comes later this week if it does.

Operator

And we'll take our next question from Michael Corty with Morningstar.

Michael Corty - Morningstar Inc., Research Division

Just had a few questions. On the restructuring slide, in terms of the use of savings, half was identified for high-growth opportunities, I'm assuming that's external. If it is, how would you measure those types of growth opportunities versus actually investing more in Deltak, which would be an internal investment? And how do you think about that in terms of digital growth?

Ellis E. Cousens

Michael, I can address that. The $80 million in savings is targeted in 2 components. The majority, not an indication of how much of the majority, is actually earmarked for improving the performance of the company, so less than a majority is earmarked for investment. That is internal investment, so that would include Deltak, ELS, Inscape, in terms of acquisitions, new businesses that we've discussed around transformational opportunities and the like. So it is devoted towards entirely organic or internal, I should say, organic, meaning, that we have made those acquisitions. To the extent that there are additional acquisitions to come, those would be funded through use of either additional leverage or cash that the company generates over time. As Steve noted, the company had, in the past year, we have no expectation to see any reason for, other than a solid performance in terms of cash flow going forward. So we certainly do continue to have an appetite to making acquisitions, as Steve said, of course, to the extent that they're available and make sense from an economic and a strategic perspective, and fit well with our forward strategy. Does that answer it, Mike?

Michael Corty - Morningstar Inc., Research Division

Yes, it does. And then on the journals business, on the slide, it talked about, for the year, I think the print book sales were down 12% for the year. But in the fourth quarter, they were down 24%, obviously, not a huge portion of that business. Is there anything going on in the fourth quarter, in particular, that will go away in the following quarters? Any way to quantify that?

Stephen M. Smith

I don't have anything in front of me that explains why the fourth quarter was as sharp and the things that I would look at there was anything in the fourth quarter of fiscal '12 that was unusual. Our book business tends to be -- it doesn't follow an even trajectory throughout the year and a little bit unpredictable about when certain large orders may be completed. So I don't want to hazard a guess at that. But there's no reason to think that the fourth quarter indicates a start of any trend of much accelerated revenue decline. In fact, the full year decline of 12%, we believe, includes certain and factors that are specific to fiscal '13 around the changes in inventory management practice in major intermediaries.

Michael Corty - Morningstar Inc., Research Division

Great. And then just one more on stock buybacks, will these be opportunistic? I guess, there's a timing issue here where the earnings performance is expected to grow in fiscal 2015. In the meantime, with the stock undervalued, how are you going to think about buying back the shares?

Ellis E. Cousens

Michael, share repurchase sort of remains the focus over the course of this period in transition. As Steve described, '14 is a transitional year. So as in '13, there's no commitment here with respect to share repurchase, but as you know, opportunistically, we believe in the forward performance of the company and business, and reflect that with respect to current performance. So it features within the use of cash as a major factor.

Operator

And we'll take our next question from Marc Heilweil with Spectrum Advisory Services.

Marc Heilweil - Spectrum Advisory Services, Inc.

Do you have any view on when the downturn in enrollment at the for-profit colleges should begin to level off? Are there any rules that you're looking at?

Stephen M. Smith

So, thanks, Marc. I mean, we work closely with for-profit schools as our customers, have frequent dialogue with them. The issue really around enrollment at this point for the for-profit schools seems to be one of student value and return on investment. So as I mentioned in my remarks, students are an increasingly savvy customer. They are looking at the cost of education and comparing that to the value of their education in terms of return on investment, and related to future employment needs. I think that the more forward-looking for-profit schools have already begun to make significant changes to their operations to offer more flexibility, to offer lower-priced qualifications that better meet the needs of employers. With our Deltak business, we're actually in, to a certain extent, in a similar marketplace, working with both for-profit and not-for-profit institutions. I think the next 3 years in higher education in this country are going to be really interesting. As the market reshapes itself to meet the demands of a growingly sophisticated student audience and tying the cost of education much more closely to better educational outcomes, better employment opportunities, better return on investment. And through our investments in Deltak and other digital products and services, we are in a really good position to validate that working with Wiley helps improve those student outcomes and so represents return on earlier, and a good value for money.

Marc Heilweil - Spectrum Advisory Services, Inc.

I don't think I got an answer to the question, but...

Stephen M. Smith

Yes, sorry. You asked what do you think is going to happen to enrollment? I mean, right now, talking to the for-profit institutions, that most of them are expecting a leveling out, but not necessarily a rapid return to growth in terms of enrollment. And there is still pressure on enrollments in the not-for-profit institutions coming from the factors that I mentioned. So I guess, I gave you the reason for the -- the reasons for the answer without giving you the answer itself, so apologies for that.

Ellis E. Cousens

Though I would add, at the for-profit sector has probably predicted a bottoming for, what, 2, 3 years now and that continues to decline, albeit somewhat more modestly. So take that with that.

Marc Heilweil - Spectrum Advisory Services, Inc.

Okay. I realize predictions about the future are inherently difficult to make. But can you talk -- just give a little background on what are some of the competitive factors in competing for online courses? And the contract length is maybe 3 to 5 years, has there been any evidence that incumbents can be unseated in that? And maybe, I'm not sure I was specific enough on that first part of the question, but what -- in talking about the competitive factors, where does Wiley think that it has a competitive edge over some of the other players?

Stephen M. Smith

I'll give a relatively quick answer this time because the last one was long. A lot of our contracts are 7 to 10 years. We've seen no sign of people interrupting periods of contract either in either direction. We haven't taken -- I don't think we have caused any university to change courses in midstream and we've not seen any partners change, so they're all new stuff. In terms of competitive advantage and our competitive position, I think I spoke to that, but it's really around focusing on the outcome, focusing on quality and what it delivers. It's not enough just to create the course, it's also essential that we attract the right students, we support those students through their education, that they come out of it with good degrees, and those good degrees lead to jobs.

Operator

And we'll take our next question from Sami Kassab with Exane Investments.

Sami Kassab - Exane BNP Paribas, Research Division

Can you comment on the print textbook revenue decline that you would expect for fiscal '14? We've seen an acceleration in Q4 to 26%. Again, as previously asked for the research part, do you see any reason why print textbook revenue decline has accelerated in Q4? Or in other words, should we think of the minus 14%, minus 15% as a trend going into fiscal '14, please? And secondly, can you comment as to why custom print materials are still growing and how sustainable do you think custom print revenue growth is in '14 and forward, please?

Stephen M. Smith

Yes, Sami, this is Steve, thank you for your question. So as you know, fourth quarter for us, the period from February to April, is a very low season for the global ed business, for the Higher Education business, it's not a period where you've got any new semesters starting. So reading anything from fourth quarter performance as a trend would be a mistake. In some years, during the month of April, we have worked with some distributors who are on early stock orders for the coming semester, and we didn't do much of that this year, and that explains the variance for the fourth quarter itself. So as I said again earlier, we're quite content to see the traditional print book decline, that doesn't mean to say that print overall is declining, but we are moving to more flexible business and pricing models, as well as the move to digital. Custom print is still something that many customers still prefer. What's important for us is that we manage that business. It's a digital business where the content itself is presented digitally in order to make the custom publishing decision. It's then up to the customer, frankly, whether they want a custom e-book or a custom print book. While customers continue to demand custom print books, and some students and some professors still prefer them, we will continue to provide them with that option.

Sami Kassab - Exane BNP Paribas, Research Division

So should we think of the print textbook revenue to decline in the same vicinity than in fiscal '13, i.e. say, between 10% and 20% in the upcoming 12 months?

Stephen M. Smith

You'd have to differentiate between the traditional textbook model, that is the full-price, hardcover, 900-page introductory textbook, and all of the other formats, some of which are print. If you aggregate all of those together, we don't believe that there will be anything like that, but the traditional print book model could continue to decline. I wouldn't comment on whether it's going to be at the levels that you [indiscernible].

Operator

And we'll take our follow-up question from Daniel Moore with CJS Securities.

Daniel Moore - CJS Securities, Inc.

What are your expectations for growth or moderation around Advertising/Corporate Reprints given the high-incremental margins of that business?

Stephen M. Smith

Yes. So that business has always been one of the most cyclical businesses. It depends on new drug discovery, it depends on when a particular generic -- when particular drugs go into generic and patents expire. Overall, the pharmaceutical industry, as you probably have seen, has not been in a high-growth mode over the last couple of years. And it is new drug-related and drug discovery that has fueled the print advertising and the creation of print supplements which is really pharmaceutical companies recognizing scientific evidence in our journal publications that supports the efficacy of a drug and taking a reprint, a sponsored reprint from us so that they could distribute it to their clients. We saw a pretty rapid decline through fiscal '12 and into '13. We do feel that right now that, that business has hit something of a new level. At the same time, we are seeing increasing interest in moving from print to online, because obviously, for a drug marketer or pharmaceutical marketer, they get much better evidence in terms of the return on investment from their advertising dollars from advertising in digital products and being able to see the actual usage of the online advertising. So we expect to see a continued transition from print to digital. We're seeing more growth in some parts of the world than others. So Asia is a little more -- the opportunities are a little better in Asia than they are in other parts of the world. Overall, we think that, that business is stabilizing in fiscal '14.

Ellis E. Cousens

If I could add just one more dimension to that, Dan, to sort of more broadly answer the question. With respect to research, as part of the restructuring effort we identified in the fourth quarter is that we took an impairment charge with respect to, I think it was about $9.9 million, $10 million worth of publishing assets associated with control [ph] journals, which roll up into advertising, recognizing, just as Steve said, this sort of accelerate or transition from print to digital. So focusing less on print in the future, aligning costs around that and focusing more on digital. So we would expect to see, out of that decision, a decline in advertising of a print nature generated by our own look at how we're managing those businesses going forward in '14 and beyond.

Daniel Moore - CJS Securities, Inc.

That's helpful. And Ellis, you mentioned roughly 1/3 of the $80 million cost savings would come in '14. Is it safe to assume that's largely back-half loaded?

Ellis E. Cousens

It is. A piece of that is centered around June 30, as I've discussed that decision that we've made and has been communicated internally to freeze the U.S. defined benefit pension plan. That will lead to a linear savings from June 30 forward, much of what remains outside of that savings, so that is part of the third is, yes, very much back-end weighted, whereas we've identified programs, activities and locations, for the most part, the ability to execute on those plans, do them in a way that's not disruptive to the business over the course of '14, will mean that we'll need a runway to be able to do that. So yes, those are more back-end loaded over the course of '14. And then as I described earlier, there will be more to talk to the remainder of the program around midyear or so, that is, represents the balance between the $38 million, that will be generated out of actions already identified and the charge taken at the end of the fourth quarter of '13. And then what will impact fiscal '14 that will make up the balance of the savings over the year and then, therefore, being able to exit the year with an $80 million run rate savings.

Daniel Moore - CJS Securities, Inc.

And lastly, just elaborate on -- you've mentioned the strategy behind the pilot for an alternative subscription license model for some customers and journals. Is that something that's being requested by customers? Is it something that you are pushing? What's coming out of that, if anything?

Ellis E. Cousens

It's both. Actually both customers, but it's primarily from a Wiley perspective. Customers, quite frankly, the effect of it to them is not meaningful. Today, we recognize revenue on issue publication, that's a bit of a fuzzy definition because of the release of journal content in an online environment versus print issues. Licenses, which represent 80% of subscription business, have historically been based upon issues published. So we commit to customers for a certain number of issues for a journal for a period of time. And the pilot speaks to supplying content for a 12-month period beginning January 1, ending December 31. And therefore, you recognize 1/12 of your revenue per month as you fulfill the terms of that contract. So it is really an effort on our part to, quite frankly, recognize and reflect the reality of a digital business or a principally digital business, where content is continuously, so to speak, released into an online environment. And at the same time, to mitigate some these issues with respect to publication scheduling, in as much as publication scheduling means less than it used to mean, quite frankly, now in digital formerly in print.

Daniel Moore - CJS Securities, Inc.

And based on what you're seeing so far, do you expect a higher percentage to move to a flat...

Stephen M. Smith

We have no plans to extend the pilot at this point, Dan, we'll let it run for another year, at least, and then we'll see what makes sense. But it does have, as we've explained, in the year that you make that change, it has an impact of delaying revenue because more than 1/3 of our revenue is typically earned on issue publication in the first 4 months of fiscal year. So the impact of that is to push revenue back later in the year. So we'll think carefully before we make that -- before we extend the pilot any further.

Operator

[Operator Instructions] We'll take our next question from Ian Whittaker with Liberum.

Ian Whittaker - Liberum Capital Limited, Research Division

Just 2 questions, just around the education model. First of all, I think in previous times, yourself or maybe some of your peers have provided impact of rentals on the U.S. higher education market somewhere in the range of around 2% to 3% impacted market growth. Can you give us an idea whether that figure is stabilized around that level or whether you're seeing an acceleration or indeed, a deceleration of rentals impact on overall market growth? And the second question related to that is can you -- again, so the business items before, advanced really by all publishers, that book rentals will only pretty much sort of eventually into the used book market and that we're approaching the -- we're at the point of which its major effects should really be coming to an end. When we speak with some of the retailers, they seem to have somewhat of an opposite view in saying that book rentals for them have only really started to be something of a business model now, sort of thinking there's a lot of potential growth to come through from book rentals and higher education. So can you give us your current thoughts on that, please?

Stephen M. Smith

Yes. You didn't see the chart from us, so that wasn't a Wiley schedule. And I think you -- did I hear you say, an estimate of 2% to 3% on...

Ian Whittaker - Liberum Capital Limited, Research Division

Yes. It might be Cengage who gave that out.

Stephen M. Smith

Right. Look, that seems plausible enough. Certainly, rental grew very rapidly in what was our fiscal '12 and continued to grow a bit in '13. And I think it affected -- it particularly affected that traditional textbook line, the chart, the bar that we showed declining at 12% over the course of the fiscal year '13. And some of that business was clearly in earlier years was done to provide the inventory that support rental. And we've probably seen, across the whole market, the 6% decline in the U.S. higher education market in the course of our fiscal year, probably has some of that rental impact in it. So while I don't have a figure for the actual amount, it seems reasonable enough. And our strategy, as I've said on several occasions, is to move the whole business rapidly away from the traditional textbook model to more flexible price points, to more flexible offerings, including custom- and binder-ready versions, neither of which lend themselves at all to the rental market, as well as to digital, which again, is not a rental proposition under the kind of licenses that we have around digital products. So rental has certainly clouded the picture a lot in the last couple of years. We continue to work with our retail accounts, as well as with some of the providers of rental services. We don't see it as being a long-term challenge to the business. We don't see it being a big part of the future of our business as we move more to flexible price points and digital business models.

Ian Whittaker - Liberum Capital Limited, Research Division

Just as a follow-up, if you look at some of the, the sort of, I guess, polling data on students' preferences, there still seems to be a surprisingly large percentage of students who prefer print. Now obviously, you said you've got custom, but sort of what are the implications there in terms of ebooks? How do you manage to persuade those students who are still wedded to the print model, presumably for convenience's sake, to switch over to ebooks?

Stephen M. Smith

Well, without getting into sort of the details of how we think about educational products, to me, the answer would be in providing additional value in the digital version that goes way beyond the value of the print. And again, the perfect example of a value-added digital product would be WileyPLUS, which is not an ebook, it's an online course, it's an integrated learning solution that at its heart includes an ebook, but that also includes the opportunity for remediated learning, adaptive learning. It provides enrichment materials. It provides professors with the opportunity to set homework assignments and to automatically grade them, so students get realtime feedback on their work and are also pointed to revisit concepts that they struggled with. It's so much more valuable to teachers, and to students, if we can create those kind of digital products. WileyPLUS resonates well with our customers. It's grown really strongly in the last year. Many of our competitors have other offerings that are attempting to do similar things. We think that's very much -- again, that's very much the way the future is oriented. And if students still want print for parts of their course, we should be able to give them that flexibly through custom print options or -- and in the future, perhaps, with print-on-demand options as well.

Operator

It appears that we have no further questions. At this time, I would like to turn the conference back to Mr. Smith for any additional or closing remarks.

Stephen M. Smith

Well, we thank you for your comments and questions. We are very focused on the year ahead. We look forward to sharing our results of the first quarter with you at our September call and hopefully, talking to many of you in much more detail about our business and its future prospects at the September Investor Conference. Thank you.

Operator

This concludes today's conference. We thank you for your participation.

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