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Acquisitions and Divestitures | 9 Months Ended
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Jan. 31, 2024
Business Combination and Asset Acquisition [Abstract] |
Acquisitions and Divestitures | Acquisitions and Divestitures Acquisitions Pro forma financial information related to the following acquisition has not been provided as it is not material to our condensed consolidated results of operations. Fiscal Year 2023 On November 1, 2022, we completed the acquisition of an immaterial business included in our Learning segment. The fair value of consideration transferred was $6.1 million, which included $5.2 million of cash at the acquisition date and $0.9 million to be paid after the acquisition date. The acquisition was accounted for using the acquisition method of accounting. We recorded the aggregate excess purchase price over identifiable net tangible and intangible assets acquired and liabilities assumed, which included an allocation of $3.9 million of goodwill allocated to the Learning segment and $3.7 million of intangible assets subject to amortization. The allocation of the total consideration transferred to the assets acquired, including intangible assets and goodwill, and the liabilities assumed was finalized during the three months ended October 31, 2023. Divestitures As part of our ongoing initiatives to simplify our portfolio to drive sustained performance improvement, we have completed certain dispositions as of January 31, 2024, and committed to a plan to divest additional businesses which are expected to be completed by the first quarter of fiscal year 2025. On June 1, 2023, Wiley’s Board of Directors approved a plan to divest certain businesses that we determined are non-core businesses. Those businesses are University Services, Wiley Edge, and CrossKnowledge. In accordance with FASB Accounting Standards Codification (ASC) Topic 205, "Presentation of Financial Statements," we determined that the planned divestitures of University Services, Wiley Edge and CrossKnowledge each do not represent a strategic shift that will have a major effect on our consolidated results of operations, and therefore their results of operations were not reported as discontinued operations. We applied the criteria in ASC 360-10-45-9, "Property, Plant and Equipment - Long-Lived Assets Classified as Held for Sale," to determine whether any of the aforementioned long-lived asset groups would be classified as held-for-sale. Criteria include management commitment to sell the disposal group in its present condition and the sale being deemed probable of being completed within one year. We concluded that the businesses met all the requisite criteria as of June 1, 2023 and, therefore, the related assets and liabilities are reclassified as held-for-sale on the Unaudited Condensed Consolidated Statement of Financial Position until the date of sale. As a result of these planned divestitures, in the three months ended July 31, 2023 we reorganized our segments and our new structure consists of three reportable segments which includes Research (no change), Learning, and Held for Sale or Sold, as well as a Corporate expense category (no change). The operations of University Services, Wiley Edge, and CrossKnowledge are reported in the Held for Sale or Sold segment until the date of sale. See Note 10, "Segment Information" for more details regarding our reportable segments. See Note 12, "Goodwill and Intangible Assets" for more details on the interim goodwill impairment tests and the impairment charges. On January 1, 2024, we sold University Services. On January 8, 2024, we entered into an agreement to sell Wiley Edge. Both Wiley Edge and CrossKnowledge continue to be reported as held-for-sale, and these dispositions are expected to be completed by the first quarter of fiscal year 2025. Completed Divestitures University Services On January 1, 2024, we completed the sale of University Services pursuant to a Membership Interest and Asset Purchase Agreement with Academic Partnerships LLC, a Delaware limited liability company (Academic Partnerships), and Education Services Upper Holdings Corp., a Delaware corporation. The selling price for University Services at the date of sale had a fair value of $122.6 million, paid in the form of (i) an unsecured promissory note with an initial aggregate principal amount of $92.9 million (Seller Note), subject to customary working capital adjustments; (ii) $17.8 million of additional contingent consideration in the form of an earnout recorded at fair value based on revenue targets during each of the two fiscal years in the period from May 1, 2024 through April 30, 2026 (Earnout); and (iii) a number of common units of TVG-Academic Partnerships Holdings, LLC, the ultimate parent company of Academic Partnerships equal to 10% of the total common units outstanding at the date of sale valued at $11.9 million (TVG Investment). The Seller Note, Earnout, and TVG Investment are reflected in Other non-current assets in our Unaudited Condensed Consolidated Statements of Financial Position. The principal amount of the Seller Note is subject to an increase of up to approximately $12 million in the event certain third-party customer consents are obtained prior to January 1, 2025. The maximum amount of the Earnout at the end of the target periods noted above will be impacted by the third-party customer consents up to approximately $4 million. The fair value of the Earnout will be impacted by these third-party customer consents until settled. Our total common units in the TVG Investment will also increase as certain third-party customer consents are obtained. The Seller Note has a maturity date that is the earlier of (i) one year after the maturity date of Academic Partnerships’ material secured indebtedness for borrowed money and (ii) January 1, 2031. The Seller Note bears interest at the rate of 10% per annum commencing on January 2, 2024, increasing to 12% per annum on and after January 1, 2026. The maximum Earnout amount is $40.0 million, subject to adjustments for the third-party customer consents as noted above. We elected to record the fair value of the Earnout as of the date of the sale, and will update that fair value as applicable until settled. The fair value of the Earnout was based on a Monte Carlo simulation. This fair value was categorized as Level 3 within the FASB ASC Topic 820, “Fair Value Measurements” (ASC Topic 820) fair value hierarchy. This method considers the terms and conditions in the Membership Interest and Asset Purchase Agreement, our best estimates of forecasted revenue for the Earnout periods and simulates a range of revenues over the applicable periods based on an estimate of revenue volatility. The fair value of the Earnout was estimated as the present value of the potential range of payouts averaged across the range of simulated revenues. The other key assumptions include a weighted average cost of capital for the reporting unit based on the risk associated with the business and its projections. In addition, a risk-adjusted discount rate for the simulated revenue was determined by adjusting the weighted average cost of capital to reflect term risk and an implied operational leverage factor. The assumptions included in the operational leverage factor include estimates of asset volatility and revenue volatility. The Earnout amount is subject to change based on final results and calculations. Our TVG Investment will be accounted for under the cost method minus impairment. The pretax loss on sale was $101.4 million after accounting for the assets sold, liabilities transferred upon sale, and transaction costs. In connection with the held-for-sale classification prior to the sale, we recognized cumulative impairment charges of $75.4 million in the six months ended October 31, 2023 on the remeasurement of the disposal group at the lower of carrying value or fair value less cost to sell. This resulted in an additional loss of $26.0 million in the three months ended January 31, 2024. The additional loss in the three months ended January 31, 2024 was due to subsequent changes in the fair value less costs to sell resulting from the completion of the sale, as well as changes in the carrying amount of the disposal group. These losses and impairments are included in Losses on sale of businesses and impairment charges related to assets held-for-sale in our Unaudited Condensed Consolidated Statements of Net Loss for the three and nine months ended January 31, 2024. The assets and liabilities related to certain third-party customers will continue to be presented as held-for-sale until those consents are obtained. We entered into a transition services agreement (TSA) to facilitate the transition of the divested business. Fees we receive are recognized as other income within our Corporate expense category. In the three and nine months ended January 31, 2024, we recorded TSA fees of $0.6 million in Operating and administrative expenses in our Unaudited Condensed Consolidated Statements of Net Loss. Tuition Manager On May 31, 2023, we completed the sale of our tuition manager business (Tuition Manager), which was included in our Held for Sale or Sold segment. The divestiture did not represent a strategic shift that would have a major effect on our consolidated results of operations, and t herefore its results of operations were not reported as discontinued operations. The cash received net of transaction costs at the date of sale was $0.5 million, and $0.5 million of additional cash was received after the date of sale. The pretax loss on sale was $1.5 million after accounting for the assets sold, liabilities transferred upon sale, and transaction costs and is included in Losses on sale of businesses and impairment charges related to assets held-for-sale in our Unaudited Condensed Consolidated Statements of Net Loss for the nine months ended January 31, 2024. The carrying value of the net assets included in the pretax loss on sale was $2.5 million, including intangible assets of $1.0 million and no goodwill. Assets and Liabilities Held-for-Sale As of January 31, 2024, Wiley Edge, CrossKnowledge, and the assets and liabilities related to certain third-party customers who have not yet consented related to University Services continue to be reported as held-for-sale. We measured each disposal group at the lower of carrying value or fair value less cost to sell. In the three and nine months ended January 31, 2024, we recorded a held-for-sale pretax impairment of $26.4 million and $76.8 million, respectively. The impairment charge for Wiley Edge in both the three and nine months ended January 31, 2024 was $20.6 million. The total impairment charge for CrossKnowledge in the nine months ended January 31, 2024 was $56.2 million, which includes $5.8 million in the three months ended January 31, 2024. The additional impairment charges in the three months ended January 31, 2024 was due to subsequent changes in the fair value less costs to sell resulting from the continued progression of the selling process and indications of changes in the consideration for the business, as well as changes in the carrying amounts of the disposal group. The pretax noncash impairment charges are reflected in Losses on sale of businesses and impairment charges related to assets held-for-sale on the Unaudited Condensed Consolidated Statements of Net Loss. The impairments are included as a valuation allowance or contra-asset account within Current assets held-for-sale and Non-current assets held-for-sale on the Unaudited Condensed Consolidated Statement of Financial Position as of January 31, 2024. The major categories of assets and liabilities that have been classified as held-for-sale on the Unaudited Condensed Consolidated Statement of Financial Position as of January 31, 2024 were as follows:
| University Services |  | Cross Knowledge |  | Wiley Edge |  | Total
Assets held-for-sale: |  |  |  |  |  |  |
Current assets |  |  |  |  |  |  |
Cash and cash equivalents (1) | $ | — |  |  | $ | 6,031 |  |  | $ | 9,672 |  |  | $ | 15,703 |
Accounts receivable, net | 1,024 |  |  | 8,354 |  |  | 15,207 |  |  | 24,585 |
Prepaid expenses and other current assets (1) | 61 |  |  | 3,704 |  |  | 6,684 |  |  | 10,449 |
Valuation allowance | — |  |  | (18,089) |  |  | — |  |  | (18,089) |
Total current assets held-for-sale | $ | 1,085 |  |  | $ | — |  |  | $ | 31,563 |  |  | $ | 32,648 |
Technology, property and equipment, net | — |  |  | 2,906 |  |  | 2,783 |  |  | 5,689 |
Intangible assets, net | — |  |  | 18,001 |  |  | 34,766 |  |  | 52,767 |
Operating lease right-of-use assets | — |  |  | 321 |  |  | 1,021 |  |  | 1,342 |
Other non-current assets | 1,426 |  |  | 16,840 |  |  | 179 |  |  | 18,445 |
Valuation allowance | — |  |  | (38,068) |  |  | (20,676) |  |  | (58,744) |
Total non-current assets held-for-sale | $ | 1,426 |  |  | $ | — |  |  | $ | 18,073 |  |  | $ | 19,499 |
Liabilities held-for-sale: |  |  |  |  |  |  |
Current liabilities |  |  |  |  |  |  |
Accounts payable | $ | 32 |  |  | $ | 559 |  |  | $ | 77 |  |  | $ | 668 |
Accrued royalties | — |  |  | 815 |  |  | — |  |  | 815 |
Contract liabilities | 111 |  |  | 12,332 |  |  | 19 |  |  | 12,462 |
Accrued employment costs | — |  |  | 6,556 |  |  | 3,558 |  |  | 10,114 |
Short-term portion of operating lease liabilities | — |  |  | — |  |  | 479 |  |  | 479 |
Other accrued liabilities | 45 |  |  | 3,691 |  |  | 5,634 |  |  | 9,370 |
Total current liabilities held-for-sale | $ | 188 |  |  | $ | 23,953 |  |  | $ | 9,767 |  |  | $ | 33,908 |
Accrued pension liability | — |  |  | 707 |  |  | — |  |  | 707 |
Deferred income tax liabilities | — |  |  | 4,133 |  |  | 3,447 |  |  | 7,580 |
Operating lease liabilities | — |  |  | — |  |  | 273 |  |  | 273 |
Other long-term liabilities | 11 |  |  | 674 |  |  | 459 |  |  | 1,144 |
Total long-term liabilities held-for-sale | $ | 11 |  |  | $ | 5,514 |  |  | $ | 4,179 |  |  | $ | 9,704 |
(1) | The following table shows a reconciliation of our cash, cash equivalents, and restricted cash included in current assets held-for-sale in our Unaudited Condensed Consolidated Statement of Financial Position to our Unaudited Condensed Consolidated Statement of Cash Flows for the nine months ended January 31, 2024:
Cash and cash equivalents | $ | 93,100 |
Restricted cash included in Prepaid expenses and other current assets | 50 |
Total cash, cash equivalents, and restricted cash per Unaudited Condensed Consolidated Statement of Financial Position as of January 31, 2024 | 93,150 |
Cash and cash equivalents held-for-sale | 15,703 |
Restricted cash held-for-sale included in Prepaid expenses and other current assets | 54 |
Total cash, cash equivalents, and restricted cash held-for-sale as of January 31, 2024 | 15,757 |
Total cash, cash equivalents, and restricted cash per Unaudited Condensed Consolidated Statement of Cash Flows for the nine months ended January 31, 2024 | $ | 108,907 |
On January 8, 2024, we entered into a stock and asset purchase agreement (Purchase Agreement) with Inspirit Vulcan Bidco Limited, a private limited company incorporated in England & Wales (Inspirit), pursuant to which we agreed to sell our emerging talent and reskill training business, Wiley Edge (Business), to Inspirit (Transaction). We expect the Transaction to close in the first quarter of fiscal year 2025. The selling price for the Business includes total consideration of up to $62.2 million and will consist of: (i) $10 million in cash, (ii) $18.3 million in the form of a loan note to be issued by Inspirit, subject to a customary purchase price adjustments, including for working capital, and (iii) up to $33.9 million in the form of an earnout based on the gross profit generated by the Business relative to mutually agreed profit targets during each of the three fiscal years in the period beginning May 1, 2024 and ending April 30, 2027. The results of Wiley Edge will continue to be reported in our operating results in the Held for Sale or Sold segment until the sale is finalized. We will enter into a transition services agreement to facilitate the transition of the divested business.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205-20/tableOfContent + Details
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