SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended June 30, 1996, Commission File No. 0-6311
WAVERLY, INC.
Incorporated in the State of Maryland
I. R. S. Employer Identification No. 52-0523730
351 West Camden Street, Baltimore, Maryland 21201
Telephone Number: (410) 528-4000
Indicate by check mark whether the Registrant (1) has filed all
reports required by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding twelve months (or for
such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
As of June 30, 1996, there were 8,900,788 shares of the
Registrant's Common Stock outstanding.
<PAGE>
Page No. 2
Waverly, Inc.
Index
-----
PART I. Financial Information
Item 1. Financial Statements
Index Page No.
----- --------
Unaudited Condensed Consolidated Statements of Income 3
Unaudited Condensed Consolidated Balance Sheets 4
Unaudited Condensed Consolidated Statements of Cash Flows 5
Notes to Unaudited Condensed Consolidated Financial Statements 6
Report of Independent Accountants 9
Managements Discussion and Analysis of Financial Condition
and Results of Operations 10
Liquidity and Capital Resources 14
Part II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 17
Exhibit 11 - Computation of Earnings Per Share 18
Exhibit 15 - Letter re: unaudited interim financial
information 19
Exhibit 27 - Financial Data Schedule 20
<PAGE>
<TABLE>
Page No. 3
Waverly, Inc.
Condensed Consolidated Statements of Income (Unaudited)
(in thousands of dollars - except per share amounts)
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Three Months Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Revenues $43,278 100.0% $39,220 100.0% $81,137 100.0% $73,922 100.0%
Costs and expenses
Cost of sales 25,479 58.9 22,524 57.4 48,965 60.3 43,987 59.5
Selling and distribution 10,395 24.0 8,831 22.5 19,877 24.5 16,993 23.0
General and administrative 3,292 7.6 3,358 8.6 6,531 8.0 6,437 8.7
Depreciation and amortization 1,387 3.2 1,303 3.3 2,740 3.4 2,562 3.5
-----------------------------------------------------------------------------------------------------------------
Total operating expenses 40,553 93.7 36,016 91.8 78,113 96.3 69,979 94.7
Income from continuing operations 2,725 6.3 3,204 8.2 3,024 3.7 3,943 5.3
Other income (expense)
Investment income 251 0.6 278 0.7 511 0.6 880 1.2
Interest expense (238) (0.6) (310) (0.8) (452) (0.5) (585) (0.8)
-----------------------------------------------------------------------------------------------------------------
Total other income (expense) 13 0.0 (32) (0.1) 59 0.1 295 0.4
Income from operations before taxes
and earnings of affiliated entities 2,738 6.3 3,172 8.1 3,083 3.8 4,238 5.7
Income tax expense (924) (2.1) (1,060) (2.7) (1,190) (1.5) (1,565) (2.1)
Equity in the earnings (losses)
of affiliated entities 67 0.2 (18) 0.0 527 0.6 383 0.5
-----------------------------------------------------------------------------------------------------------------
Net Income $1,881 4.4 $2,094 5.4 $2,420 2.9 $3,056 4.1
=================================================================================================================
Earnings per common share and common
share equivalent:
Net Income $0.20 $0.24 (1) $0.26 $0.35 (1)
=================================================================================================================
Cash dividends declared per share $0.065 $0.060 (1) $0.125 $0.115 (1)
=================================================================================================================
Average number of common and common
equivalent shares outstanding 9,345,595 8,850,674 9,324,567 8,824,554
=================================================================================================================
<FN>
(1) Restated to reflect two-for-one stock split authorized by the Board of Directors on April 29, 1996.
See Note 3 .
See accompanying notes to the condensed consolidated financial statements
</TABLE>
<PAGE>
Page No. 4
Waverly, Inc.
<TABLE>
Condensed Consolidated Balance Sheets
(in thousands of dollars except per share amounts)
<CAPTION>
-------------------------------------------------------------------------------------------------
(unaudited) (unaudited)
June 30, December 31, June 30,
1996 1995 1995
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $2,009 $4,580 $3,707
Accounts receivable, less allowance for doubtful
accounts ($934, $796 and $670 respectively) 37,834 37,730 38,618
Inventories 31,514 31,531 26,713
Prepaid expenses 3,224 1,053 2,657
Current deferred income taxes 3,549 3,042 3,190
--------------------------------------------------------------------------------------------------
Total current assets 78,130 77,936 74,885
Net property and equipment 8,542 9,300 9,175
Other noncurrent assets 40,786 40,963 40,739
--------------------------------------------------------------------------------------------------
Total assets $127,458 $128,199 $124,799
==================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Line of credit borrowings $4,138 $200 $1,905
Current portion of long-term debt 3,712 3,790 2,400
Accounts payable 14,674 16,092 11,889
Accrued expenses 3,267 6,674 6,422
Royalties payable 5,965 9,491 5,424
Unearned subscription revenues 18,502 15,177 17,913
Income taxes payable 3,807 3,109 2,947
Current deferred income taxes 792 1,192 1,534
--------------------------------------------------------------------------------------------------
Total current liabilities 54,857 55,725 50,434
--------------------------------------------------------------------------------------------------
Long term debt 2,478 3,680 6,323
Unfunded pension obligation 3,346 3,447 3,574
Postretirement benefit obligation 11,801 11,691 11,597
Deferred income taxes 3,287 2,836 3,188
Other liabilities 717 924 909
--------------------------------------------------------------------------------------------------
Total liabilities 76,486 78,303 76,025
--------------------------------------------------------------------------------------------------
Shareholders' equity
Preferred stock-500,000 shares authorized; none issued
Common stock-$2 par value; 12,000,000 shares
authorized, 8,900,788, 8,865,968 and 8,855,666 shares
issued and outstanding, respectively (1) 17,802 17,732 17,712
Additional paid-in capital 12,275 11,943 11,479
Retained earnings 20,293 19,017 17,841
Foreign currency translation adjustment 602 1,204 1,742
--------------------------------------------------------------------------------------------------
Total shareholders' equity 50,972 49,896 48,774
--------------------------------------------------------------------------------------------------
Total liabilities and shareholders equity $127,458 $128,199 $124,799
==================================================================================================
<FN>
(1) Shares outstanding reflect two-for-one stock split. See Note 3 .
See accompanying notes to the condensed consolidated financial
statements
</TABLE>
Page No. 5
Waverly, Inc.
<TABLE>
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands of dollars)
<CAPTION>
-----------------------------------------------------------------------------------------
For the six months ended June 30, 1996 1995
-----------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities
Net income $2,420 $3,056
Adjustments to reconcile net income to
net cash used in operating activities
Write-down of property and equipment - 83
Postretirement benefit obligation 110 162
Equity in the earnings of affiliated entities (527) (383)
Depreciation and amortization 2,740 2,562
Deferred income taxes (456) 2,341
Net periodic pension expense(credit) 172 (394)
Other 34 -
Change in assets and liabilities adjusting
for the effect of acquisitions
Accounts receivable (104) (4,853)
Inventories (173) (2,751)
Prepaid expenses (2,171) (1,590)
Accounts payable (1,418) (1,778)
Accrued expenses (3,407) (1,439)
Income taxes payable 698 (733)
Royalties payable (3,526) (2,526)
Unearned subscription revenues 3,325 618
Other long-term liabilities (207) 160
---------------------------------------------------------------------------------------
Net cash used in operations (2,490) (7,465)
---------------------------------------------------------------------------------------
Cash flows from investing activities
Proceeds from sale of discontinued operations - 1,000
Purchase of property and equipment (666) (3,210)
Capitalized electronic product development costs (1,109) (561)
Acquisition of publishing properties (211) (4,725)
Decrease (increase) in investments in affiliated entities 156 (323)
Proceeds from sales of marketable securities - 10,297
Purchases of marketable securities - (1,000)
---------------------------------------------------------------------------------------
Net cash flows provided by (used in) investing (1,830) 1,478
---------------------------------------------------------------------------------------
Cash flows from financing activities
Net borrowings under short-term lines of credit 3,938 745
Repayment of long-term debt (1,280) (1,025)
Common stock dividends paid (1,112) (1,018)
Proceeds from exercise of stock options 335 1,000
---------------------------------------------------------------------------------------
Net cash flows provided by (used in) financing 1,881 (298)
---------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (2,439) (6,285)
Effect of exchange rates on cash and cash equivalents (132) 390
Cash and cash equivalents at January 1, 4,580 9,602
---------------------------------------------------------------------------------------
Cash and cash equivalents at June 30, $2,009 $3,707
=======================================================================================
<FN>
See accompanying notes to the condensed consolidated financial
statements
</TABLE>
<PAGE>
Page No. 6
Waverly, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
(amounts in thousands of dollars except earnings per share)
1. Condensed Consolidated Financial Statements
Waverly and its subsidiaries (the Company) are worldwide
publishers of print and electronic media in the fields of
medicine, allied health, and related disciplines. Products are
distributed worldwide and the Company has operating offices in
the United States and foreign locations.
The condensed consolidated balance sheets as of June 30, 1996
and June 30, 1995, the condensed consolidated statements of
operations for the three and six month periods ended June 30,
1996 and June 30, 1995, and the condensed consolidated
statements of cash flows for the six month periods ended June
30, 1996 and June 30, 1995 have been prepared by the Company,
without audit.
In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and changes in
cash flows at June 30, 1996, and for all periods presented have
been made.
This financial information should be read in conjunction with
the Company's annual report on Form 10-K. Certain information
and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The
results of operations for the periods ended June 30, 1996, are
not necessarily indicative of the operating results for the full
year.
2. (a) Inventories
Inventories consist of the following:
-----------------------------------------------------------------
(unaudited) (unaudited)
June 30, December 31, June 30,
(in thousands) 1996 1995 1995
-----------------------------------------------------------------
Finished goods $22,986 $23,852 $19,755
Work-in-process 8,079 7,296 6,548
Raw materials 449 383 410
-----------------------------------------------------------------
$31,514 $31,531 $26,713
=================================================================
<PAGE>
Page No. 7
Waverly, Inc.
2. (b) Property and equipment
-------------------------------------------------------------------
(unaudited) (unaudited)
June 30, December 31, June 30,
(in thousands) 1996 1995 1996
-------------------------------------------------------------------
Land $800 $849 $882
Buildings 2,459 2,549 1,755
Office equipment, computers, and
related software 11,455 11,713 10,977
-------------------------------------------------------------------
Total, at cost 14,714 15,111 13,614
Less: accumulated depreciation (6,172) (5,811) (4,439)
-------------------------------------------------------------------
Net property and equipment $8,542 $9,300 $9,175
===================================================================
<TABLE>
2. (c) Other noncurrent assets
<CAPTION>
--------------------------------------------------------------------------------
(unaudited) (unaudited)
June 30, December 31, June 30,
(in thousands of dollars) 1996 1995 1995
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity investment in affiliated entities $2,632 $2,438 $3,212
Goodwill 8,743 9,083 8,412
Publication agreements 15,067 15,698 15,990
Electronic product development costs 3,736 2,908 2,408
Other intangible assets 1,191 1,351 1,249
Prepaid pension 5,896 5,967 5,573
Noncurrent deferred income taxes 3,371 3,371 3,359
Other 150 147 536
--------------------------------------------------------------------------------
Total other noncurrent assets $40,786 $40,963 $40,739
================================================================================
</TABLE>
<PAGE>
Page No. 8
Waverly, Inc.
3. Stock Split
On April 29, 1996, the Companys Board of Directors authorized a
two-for-one stock split effected in the form of a 100% tax-free
stock dividend which was distributed on June 12, 1996, to
shareholders of record as of May 28, 1996. Shareholders equity
at December 31, 1995 and June 30, 1995, has been adjusted to
give retroactive effect to the stock split by reclassifying from
retained earnings to common stock the par value of the
additional shares arising from the split. In addition, all
references in the financial statements to the per-share amounts
in all years, number of shares and stock option data of the
companys common stock have been restated.
<PAGE>
Page No. 9
Waverly, Inc.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of Waverly, Inc.
We have reviewed the accompanying condensed consolidated balance
sheet and the related condensed consolidated statements of
income and cash flows of Waverly, Inc. and its subsidiaries as
of June 30, 1996 and June 30, 1995, and for the three month and
six month periods then ended. These financial statements are
the responsibility of the company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the accompanying financial
statements for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally
accepted auditing standards, the consolidated balance sheet as
of December 31, 1995, and the related consolidated statements of
income, cash flows and shareholders' equity for the year then
ended (not presented herein), and in our report dated February
1, 1996 we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated
balance sheet as of December 31, 1995, is fairly stated, in all
material respects, in relation to the consolidated balance sheet
from which it has been derived.
/s/Coopers & Lybrand L.L.P.
---------------------------
Coopers & Lybrand L.L.P.
July 25, 1996
Baltimore, Maryland
<PAGE>
Page No. 10
Waverly, Inc.
Part I. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
Results of Operations: Three Months Ended June 30, 1996
Compared With The Three Months Ended
June 30, 1995
Net Sales were $ 43.3 million for the three months ended June
30, 1996 compared with $ 39.2 million for the three months
ended June 30, 1995, an increase of 10.5%. Worldwide book
publishing revenues increased 7.1% over the prior year period,
from gains in both the domestic and international markets.
Periodical revenues increased 15.6% from the prior-year period.
Subscription-based revenue increased 12.7% from the prior year
as a result of rate increases. Advertising revenue increased
20.6% from greater volume. Revenues from the Company's
Professional Learning System (PLS) group increased 19.1 % over
the prior year principally due to new product release and the
inclusion of the June 1995 acquisition of de'Medici, an
interactive training system.
Cost of Sales was $ 25.5 million, or 58.9% of net sales for the
three months ended June 30, 1996 compared to $ 22.5 million, or
57.4% of net sales for the same period last year, an increase of
1.5%. Book publishing cost margin was 57.7% this period
compared to 55.6% in the prior year. A higher percentage of
front list sales, which carry higher initial composition and
printing costs, created the higher cost ratio. Periodical
publishing cost margin was 67.9% this period compared to 69.7%
in the prior year. Margins improved from price increases, the
slowdown of industry-wide paper price increases, lower page
usage, and higher proportion of advertising-related revenues.
PLS cost margin was 43.5% this year compared to 36.7% last year.
The inclusion of the de'Medici product line is the reason for
the year to year change.
Selling and Distribution expenses were $ 10.4 million for the
three months ended June 30, 1996 compared to $ 8.8 million for
the same period last year, an increase of 18.1%. As percentage
of sales, expenses were 24.0% this year compared to 22.5% for
the same period last year. Promotional and other marketing
costs for large front list books published during the second
quarter and the higher startup costs incurred for the national
roll out of the de'Medici health care systems are the primary
reasons for the increase.
General and Administrative expenses were $ 3.3 million for the
three months ended June 30, 1996 compared to $ 3.3 million
for the same period last year. As a percentage of sales,
expenses were 7.6% this year compared with 8.6% last year.
Higher legal and pension expenses were offset by lower incentive
compensation this year compared to last year.
<PAGE>
Page No. 11
Waverly, Inc.
Depreciation and Amortization expenses were $1.4 million for the
three months ended June 30, 1996 compared to $1.3 million for
the same period last year. Investments in new computer hardware
and amortization for 1995 acquisitions are the reasons for the
year-to-year increase.
Other Income ( Expense ) was $13,000 for the three months
ended June 30,1996 compared to ($32,000) for the comparable
period last year. Increased income from international
co-publishing ventures accounted for the increase from year to
year.
Income taxes were $924,000 in 1996 or 33.7% of pretax income
compared with $1,060,000 or 33.4% of pretax income in 1995.
Equity in Earnings of Affiliated Entities was a $67,000 gain for
the current period compared to a loss of $18,000 for the prior-
year period. Included in the gain for this year is the
recognition of $100,000 in tax benefits associated with a prior
year write-off of the 20% equity minority interest in Quality
Medical Publishing.
Net Income for the three months ended June 30, 1996 was $1.9
million or $0.20 per share compared to $2.1 million or $0.24 per
share in the prior- year period, a decrease of 9.5%. Net income
was below the comparable period last year because of a sharp
decrease in Book Publishing profits. Margins eroded because of
high development and marketing expenses for several major
textbooks published in the second quarter. The Company has also
incurred higher costs for the national roll out of de'Medici.
Higher pension expense and one-time legal charges totaling $0.03
per share also affected year-to-year comparisons.
<PAGE>
Page No. 12
Waverly, Inc.
Results of Operations: Six Months Ended June 30,
1996 Compared With The Six
Months Ended June 30, 1995
Net Sales for the six months ended June 30, 1996 were $81.1
million compared with $73.9 million for the comparable period
last year, an increase of 9.7%. Worldwide book publishing
revenues increased 6.3%, with domestic revenues increasing by
3.3% and international revenues rising 9.0% over last year.
The increase in international revenues is derived from the
inclusion of Williams & Wilkins Asia-Pacific Ltd. (formerly
known as Waverly Info-Med Ltd.) acquired in April 1995.
Periodical revenues were 15.9% higher due to subscription price
increases and increased advertising volume. Professional
Learning System's revenue advanced 12.5% due to the introduction
of new product and the inclusion of the recent acquisition of
de'Medici, an interactive training system.
Cost of Sales was $49.0 million, or 60.3% of net sales, for the
current period compared to $44.0 million or 59.5% of net sales
for the prior year period. Book publishing cost margin was 60.2%
this period compared to 57.2% in the prior year. The change in
gross margin is a result of a higher proportion of front list
titles, which carry higher initial composition and printing
costs, being sold this year compared to last year. Periodical
publishing cost margin was 68.1% this period compared to 71.2%
in the prior year. Margins improved from price increases and
the slowdown of industry-wide paper increases. PLS cost margin
was 46.6% this year compared to 39.0% in the prior year. The
inclusion of the de'Medici product line is the reason for the
year to year change.
Selling and Distribution expenses were $19.9 million or 24.5 %
of net sales for the six months ended June 30, 1996 compared
with $17.0 million or 23% of net sales for the prior year
period. Promotional spending for large new books published
during the first half of the year and the higher startup costs
incurred for the national roll out of the de'Medici health care
systems are the primary reasons for the increase.
General and Administrative expenses were $6.5 million for the
current period, or 8.1% of net sales, compared to $6.4 million
or 8.7% of net sales for the prior period. Costs have not
increased proportionately with revenues. Higher legal and
pension expenses were offset by lower incentive compensation
this year compared to last year.
Depreciation and Amortization expenses were $2.7 million for the
first six months of 1996 compared to $2.6 million for the same
period last year. Amortization for recent acquisitions is the
reason for the year-to-year increase.
<PAGE>
Page No. 13
Waverly, Inc.
Other Income ( Expense) was $59,000 for the six months ended
June 30, 1996 compared with $295,000 for the comparable period
last year. Interest income was $185,000 lower this year due to
the use of cash to fund 1995 acquisitions. In addition, foreign
currency transaction losses in 1996 were $23,000 compared to
$185,000 in gains recognized in 1995.
Equity in Earnings of Affiliated Entities was $527,000 for the
current period compared with $383,000 for the same period last
year. Earnings from the Japanese affiliate were higher than last
year. In addition, a $100,000 tax benefit was recognized for a
prior-year write-off of the 20% equity minority interest in
Quality Medical Publishing.
Net Income was $2.4 million or $0.26 per share for the six
months ended June 30, 1996 compared to $3.1 million or $0.35 per
share for the six months ended June 30, 1995, a decrease of
20.8%. The decrease in earnings is attributed to several
factors including (a) the inclusion last year of the new edition
of the flagship product, Stedman's Medical Dictionary, (b) high
development and marketing expenses for several major textbooks
published in the first half of the year and (c) higher costs
incurred for the national roll out of de'Medici.
<PAGE>
Page No. 14
Waverly, Inc.
Liquidity and Capital Resources
-------------------------------
Total assets were $127.4 million at June 30, 1996 compared with
$128.2 million at December 31, 1995 and $124.8 million at June
30, 1995. The increase in assets from one year ago is a result
of increased inventory for the inclusion of 1995 acquisitions
as well as the increase in book inventory attributed to the
expanded number of new publications introduced in the past
twelve months. Working capital ratio is 1.4 to 1 at the end of
the current period compared to 1.5 to 1 at the end of the same
period last year. The decline in the ratio is due to the cash
used to reduce long term debt from $6.3 million at June 30, 1995
to $2.5 million at June 30, 1996.
At June 30, 1996 the Company carried a net borrowing position [
defined as cash less short term and long term borrowings ] of
$8.3 million compared with a net borrowing position of $3.1
million at December 31, 1995 and a net borrowing position of
$6.9 million at June, 1995. The increase in net borrowing since
the start of the year is due primarily to the normal seasonal
use of cash to pay semiannual author and periodical royalties
and periodical editorial allowances. The increase in net
borrowings since June, 1995 is due to cash used to fund the
de'Medici acquisition and finance inventory.
The Company's long term debt is $2.5 million or 5% of
shareholders equity at June 30, 1996 compared with $9.9 million
or 13% of shareholders equity at June 30, 1995. The Company
currently pays a dividend of $0.065 per share per quarter, or
$0.26 per year .
At June 30, 1996 the Company recorded $6.9 million as a deferred
U.S. tax asset . This asset is a result of the recognition in
prior years of post retirement benefit obligations and reserves
for future inventory deductions. The Company expects the
deferred tax asset to be realized through future profitable
operations, based on the long term earnings record and thus has
recorded the asset free of any valuation allowance.
The Company continues to search for investments in publishing
properties and expects to fund such acquisitions through
internally generated cash flow.
<PAGE>
Page No. 15
Waverly, Inc.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
No change
Item 2. Changes in Securities
No change
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders On
April 29, 1996, the following items were submitted to a
vote at the Companys annual meeting of shareholders:
1. Election of directors:
NOMINEE FOR (a)
------- ----------
Samuel G. Macfarlane 3,877,491
Ackneil M. Muldrow II 3,877,491
Joseph M. Palazzolo 3,877,491
William M. Passano, Jr. 3,877,491
(a) Equal to 87.26% of total shares, less than 1% of
the outstanding shares were withheld.
2. Ratification of the appointment by the Board of
Directors of Coopers & Lybrand, L.L.P. as the
Independent Accountants of the Company for the year
1996:
FOR 3,878,117
AGAINST 50
ABSTAINED 110
<PAGE>
Page No. 16
Waverly, Inc.
Item 5. Other Information
On April 29, 1996, the Company's Board of Directors
declared a two-for-one stock split of Waverly's Common
Stock, $2.00 par value, (the "Common Stock") to be
effected in the form of a stock dividend. One share of
Common Stock was issued on June 12, 1996, with respect
to each share of Common Stock held by stockholders of
record as of the close of business on May 28, 1996.
Immediately following the stock split, the number of
shares of Common Stock issued and outstanding doubled.
The Company's outstanding grants under its employee
stock option plans and the number of shares available
for grant under the 1995 Employee Stock Option
Plan will be adjusted to give effect to the
stock split.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits required by Item 601
of Regulation S-K are filed herewith:
Exhibit 11 - Computation of Earnings Per Share
Exhibit 15 - Letter from Coopers & Lybrand L.L.P.,
independent accountants, re
unaudited financial information.
(b) The reports on Form 8K for the quarter ended
June 30, 1996:
None
All other items are omitted because they are not applicable or
the answers are none.
<PAGE>
Page No. 17
Waverly, Inc.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, this statement is being signed by a duly authorized
officer of the Registrant and in the capacity as the principal
financial officer.
WAVERLY, INC.
/s/E. Philip Hanlon
-------------------
E. Philip Hanlon
Date: August 1, 1996 Vice President, Finance
<PAGE>
<TABLE>
Page No. 17
Waverly, Inc.
EXHIBIT 11
----------
Computation of Earnings Per Share
(in thousands of dollars - except per share amounts)
<CAPTION>
----------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Earnings: $1,881 $2,094 $2,420 $3,056
Primary earnings $1,881 $2,094 $2,420 $3,056
----------------------------------------------------------------------------------
Fully diluted earnings $1,881 $2,094 $2,420 $3,056
----------------------------------------------------------------------------------
Weighted average shares outstanding 8,895 8,851 8,889 8,824
Dilutive common stock equivalents for
primary earnings per share 450 - 436 -
-----------------------------------------------------------------------------------
Weighted average shares and common
equivalent shares outstanding
for primary earnings per share 9,345 8,851 9,325 8,824
Additional equivalent shares
assuming full dilution 6 - 10 -
-----------------------------------------------------------------------------------
Weighted average shares and common
equivalent shares for fully
diluted earnings per share 9,351 8,851 9,335 8,824
-----------------------------------------------------------------------------------
Earnings per share
Primary $0.20 $0.24 $0.26 $0.35
===================================================================================
Fully diluted (1) $0.20 $0.24 $0.26 $0.35
===================================================================================
<FN>
(1) Not presented on the Consolidated Statements of Income because
fully diluted earnings per share had a differential less
than 3% of primary earnings per share.
</TABLE>
Page No. 19
Waverly, Inc.
EXHIBIT 15
----------
July 25, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sirs:
We are aware that Waverly, Inc. has incorporated by reference
our report dated July 25, 1996 (issued pursuant to the
provisions of Statement on Auditing Standards No. 71) in the
Prospectus constituting part of its Registration Statements on
Forms S-8 (File Nos. 33-41925 and 33-61705). We are also aware
of our responsibilities under the Securities Act of 1933.
Very truly yours,
/s/Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Baltimore, Maryland
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2009
<SECURITIES> 0
<RECEIVABLES> 38768
<ALLOWANCES> (934)
<INVENTORY> 31514
<CURRENT-ASSETS> 78130
<PP&E> 14714
<DEPRECIATION> (6172)
<TOTAL-ASSETS> 127458
<CURRENT-LIABILITIES> 54857
<BONDS> 0
0
0
<COMMON> 17802
<OTHER-SE> 33890
<TOTAL-LIABILITY-AND-EQUITY> 127458
<SALES> 81137
<TOTAL-REVENUES> 82175
<CGS> 48965
<TOTAL-COSTS> 78113
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 452
<INCOME-PRETAX> 3610
<INCOME-TAX> 1190
<INCOME-CONTINUING> 2420
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2420
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
</TABLE>
