In a difficult economy, Wiley posted a 2% revenue decline for the quarter, reflecting declines in our STMS and Global Education businesses, partially offset by an increase in P/T. On a U.S. GAAP basis, earnings per share fell 26% to $0.60. U.S. GAAP EPS includes deferred tax benefits of $0.14 per share for both fiscal years 2013 and 2012 and a 6% share restructuring charge in fiscal year 2013. Tax benefits were derived from 2 consecutive legislative reductions in the United Kingdom corporate income tax rates. The benefit had no current cash tax impact.Adjusted EPS of $0.52 declined by $0.16, both including and excluding the effects of foreign exchange. Lower revenues and higher operating and administrative expenses offset the lower tax rate. Adjusted EPS excludes the deferred tax benefit and the restructuring charge. Shared services and administrative costs of $95 million were flat to prior year, including foreign exchange. Excluding a $500,000 restructuring charge and foreign exchange, shared service costs increased by 1%, driven mostly by higher technology costs to support investments in digital product and infrastructure, partially offset by lower distribution costs. Free cash flow for the first quarter was the use of $106 million, that's $47 million greater than the prior year. A $30 million contested German income tax deposit was the main driver. As reported previously, tax authorities in Germany notified Wiley in May 2012 that they are challenging the company's tax position with respect to the amortization of the stepped up assets. Under German tax law, the company must deposit with the German government all contested taxes and their related interests and have the right to defend its position as challenged by the authorities. The company's management and its advisers believe that the tax treatment is valid and in accordance with German tax regulations and that it will be successful in court. The circumstances are not unique to the company.
First quarter free cash flow was also affected by lower cash earnings as a result of decline in revenues, acceleration of calendar year 2012 cash collections into fiscal year 2012 and higher capital spending on technology. And debt was $365 million at the end of the quarter compared to $353 million a year earlier. During the quarter, Wiley re-published -- repurchased 218,000 shares at a cost of $10.6 million. In June, Wiley increased its quarterly dividend by 20% to $0.24. It was the 19th consecutive annual increase.Now, I'd like to provide some information regarding performance of Wiley's global businesses. You will note that the company now includes a report on segment performance after the allocation of certain direct shared service and administrative costs for the purposes of assessing performance and making resource allocation decisions. STMS revenue of $236 million for the quarter declined by $9 million or 4%. General subscription revenue declined by 2% from prior year, mainly due to publication timing. Rights, backfile and corporate sales revenue also declined in the quarter against a very strong performance in the first quarter of fiscal year 2012. Calendar year 2012 subscription growth rates moderated during the quarter as we saw fewer major license deals compared with the year earlier. At the end of July, institutional subscriptions for calendar year 2012 are up approximately 2% compared with calendar year 2011 at the same time. Particular renewals in Europe, Middle East and Africa driven by cuts in public funding and non-renewable subscriptions in some Middle East markets have slowed our revenue growth. Our business in the U.S. and Asia is performing well. The STMS book business increased 1% to $37 million. Digital revenues grew 54% as a result of strong sales of e-books and digital licensing. This growth was offset somewhat by a decline in print revenue. Digital sales now comprise 23% of total STMS book sales compared with 15% a year ago. Adjusted direct contribution to profit for the quarter of $94 million was down 9% from prior year. Adjusted direct contribution to profit excludes a $3 million restructuring charge related to the discontinuation, outsourcing and/or relocation of certain STMS activities that will result in a reduction in ongoing operating costs. Restructuring charges are expected to be fully recovered within 18 months. Read the rest of this transcript for free on seekingalpha.com