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 September 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 September 30, 1996, there were 8,919,938 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:
Results of Operations 10
Liquidity and Capital Resources 14
Part II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
Exhibit 11 - Computation of Earnings Per Share 17
Exhibit 15 - Letter re: unaudited interim financial
information 18
Exhibit 27 - Financial Data Schedule 19
<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 September 30, Nine Months Ended September 30,
1996 1995 1996 1995
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Revenues $39,540 100.0% $33,763 100.0% $120,677 100.0% $107,685 100.0%
Costs and expenses
Cost of sales 24,095 60.9 20,622 61.1 73,060 60.5 64,609 60.0
Selling and distribution 9,485 24.0 8,308 24.6 29,362 24.3 25,301 23.5
General and administrative 3,064 7.7 2,360 7.0 9,595 8.0 8,797 8.2
Depreciation and amortization 1,572 4.0 1,367 4.0 4,312 3.6 3,929 3.6
-----------------------------------------------------------------------------------------------------------------------
Total operating expenses 38,216 96.6 32,657 96.7 116,329 96.4 102,636 95.3
Income from operations 1,324 3.4 1,106 3.3 4,348 3.6 5,049 4.7
Other income (expense)
Investment income 234 0.6 256 0.8 745 0.6 1,136 1.1
Interest expense (292) (0.7) (268) (0.8) (744) (0.6) (853) (0.8)
-----------------------------------------------------------------------------------------------------------------------
Total other income (expense) (58) (0.1) (12) 0.0 1 0.0 283 0.3
Income from operations before income
taxes and earnings of affiliated
entities 1,266 3.3 1,094 3.3 4,349 3.6 5,332 5.0
Income tax expense (397) (1.0) (411) (1.2) (1,587) (1.3) (1,976) (1.8)
Equity in the earnings (losses)
of affiliated entities 286 0.7 (88) (0.3) 813 0.7 295 0.3
-----------------------------------------------------------------------------------------------------------------------
Net Income $1,155 3.0 $595 1.8 $3,575 3.0 $3,651 3.5
=======================================================================================================================
Earnings per common share and common
share equivalents:
Net Income $0.12 $0.06 (1) $0.38 $0.40 (1)
=======================================================================================================================
Cash dividends declared per share $0.065 $0.060 (1) $0.190 $0.175 (1)
=======================================================================================================================
Average number of common and common
equivalent shares outstanding 9,362,437 9,247,030 (1) 9,330,772 9,208,074 (1)
=======================================================================================================================
<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)
September 30, December 31, September 30,
1996 1995 1995
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $2,441 $4,580 $815
Accounts receivable, less allowance for doubtful
accounts ($1,119, $796 and $658 respectively) 41,738 37,730 37,977
Inventories 32,108 31,531 28,715
Other current Assets 2,831 1,053 2,929
Current deferred income taxes 3,535 3,042 2,226
----------------------------------------------------------------------------------------------------------
Total current assets 82,653 77,936 72,662
Net property and equipment 8,237 9,300 9,471
Other noncurrent assets 40,852 40,963 40,167
----------------------------------------------------------------------------------------------------------
Total assets $131,742 $128,199 $122,300
==========================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Line of credit borrowings $14,393 $200 $8,771
Current portion of long-term debt 3,711 3,790 2,400
Accounts payable 15,332 16,092 14,635
Accrued expenses 3,613 6,674 4,185
Royalties payable 5,518 9,491 3,819
Unearned subscription revenues 13,512 15,177 12,053
Income taxes payable 3,311 3,109 2,728
Current deferred income taxes 750 1,192 1,026
----------------------------------------------------------------------------------------------------------
Total current liabilities 60,140 55,725 49,617
Long term debt 1,276 3,680 5,076
Unfunded pension obligation 3,386 3,447 3,436
Postretirement benefit obligation 11,814 11,691 11,668
Deferred income taxes 2,671 2,836 3,086
Other liabilities 750 924 922
-----------------------------------------------------------------------------------------------------------
Total liabilities 80,037 78,303 73,805
-----------------------------------------------------------------------------------------------------------
Shareholders' equity
Preferred stock-500,000 shares authorized; none issued
Common stock-$2 par value; 12,000,000 shares
authorized, 8,919,938, 8,865,968 and ,8,864,468 shares
issued and outstanding, respectively (1) 17,840 17,732 17,728
Additional paid-in capital 12,414 11,943 11,568
Retained earnings 20,870 19,017 17,895
Foreign currency translation adjustment 581 1,204 1,304
-----------------------------------------------------------------------------------------------------------
Total shareholders' equity 51,705 49,896 48,495
-----------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $131,742 $128,199 $122,300
===========================================================================================================
<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 nine months ended September 30, 1996 1995
-----------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities
Net income $3,575 $3,651
Adjustments to reconcile net income to
net cash used in operating activities
Write-down of property and equipment - 83
Postretirement benefit obligation 123 233
Equity in the earnings of affiliated entities (813) (295)
Depreciation and amortization 4,312 3,929
Deferred income taxes (1,315) 2,695
Net periodic pension expense(credit) 197 (591)
Other 64 -
Change in assets and liabilities adjusting
for the effect of acquisitions
Accounts receivable (4,008) (3,824)
Inventories (873) (4,698)
Prepaid expenses (1,778) (1,849)
Accounts payable (760) 499
Accrued expenses (3,061) (3,693)
Income taxes payable 202 (875)
Royalties payable (3,973) (4,131)
Unearned subscription revenues (1,665) (5,742)
Other long-term liabilities (174) 173
-----------------------------------------------------------------------------------------
Net cash used in operations (9,947) (14,435)
-----------------------------------------------------------------------------------------
Cash flows from investing activities
Proceeds from sale of discontinued operations - 1,000
Purchase of property and equipment (1,001) (3,933)
Capitalized electronic product development costs (1,672) (758)
Acquisition of publishing properties (211) (4,797)
Decrease in investments in affiliated entities 283 414
Proceeds from sales of marketable securities - 10,297
Purchases of marketable securities - (1,000)
-----------------------------------------------------------------------------------------
Net cash flows (used in) provided by investing activities (2,601) 1,223
-----------------------------------------------------------------------------------------
Cash flows from financing activities
Net borrowings under short-term lines of credit 14,193 6,961
Repayment of long-term debt (2,483) (2,272)
Common stock dividends paid (1,690) (1,551)
Proceeds from exercise of stock options 485 1,046
-----------------------------------------------------------------------------------------
Net cash flows provided by financing activities 10,505 4,184
-----------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (2,043) (9,028)
Effect of exchange rates on cash and cash equivalents (96) 241
Cash and cash equivalents at January 1, 4,580 9,602
-----------------------------------------------------------------------------------------
Cash and cash equivalents at September 30, $2,441 $815
=========================================================================================
<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 September 30,
1996 and September 30, 1995, the condensed consolidated
statements of operations for the three and nine month periods
ended September 30, 1996 and September 30, 1995, and the
condensed consolidated statements of cash flows for the nine
month periods ended September 30, 1996 and September 30, 1995
have been prepared by the Company, without audit.
In the opinion of management, all adjustments necessary to
present fairly the financial position, results of operations and
changes in cash flows at September 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 September 30, 1996, are not
necessarily indicative of the operating results for the full
year.
2. (a) Inventories
Inventories consist of the following:
-------------------------------------------------------------------
(unaudited) (unaudited)
September 30, December 31, September 30,
(in thousands) 1996 1995 1995
-------------------------------------------------------------------
Finished goods $23,459 $23,852 $19,454
Work-in-process 8,156 7,296 8,752
Raw materials 493 383 509
-------------------------------------------------------------------
$32,108 $31,531 $28,715
===================================================================
<PAGE>
Page No. 7
Waverly, Inc.
2. (b) Property and equipment
-------------------------------------------------------------------
(unaudited) (unaudited)
September 30, December 31, September 30,
(in thousands) 1996 1995 1995
-------------------------------------------------------------------
Land $799 $849 $854
Buildings 2,439 2,549 2,502
Office equipment, computers,
and related software 11,332 11,713 12,704
-------------------------------------------------------------------
Total, at cost 14,570 15,111 16,060
Less: accumulated
depreciation (6,333) (5,811) (6,589)
-------------------------------------------------------------------
Net property and equipment $8,237 $9,300 $9,471
===================================================================
<TABLE>
2. (c) Other noncurrent assets
<CAPTION>
------------------------------------------------------------------------------------
(unaudited) (unaudited)
September 30, December 31, September 30,
(in thousands of dollars) 1995 1995 1996
------------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity investment in affiliated entities $2,626 $2,438 $3,076
Goodwill 8,658 9,083 9,121
Publication agreements 14,640 15,698 14,102
Electronic product
development costs 4,210 2,908 2,400
Other intangible assets 1,120 1,351 1,370
Prepaid pension 5,860 5,967 5,770
Noncurrent deferred income taxes 3,586 3,371 3,805
Other 152 147 523
------------------------------------------------------------------------------------
Total other noncurrent assets $40,852 $40,963 $40,167
====================================================================================
</TABLE>
<PAGE>
Page No. 8
Waverly, Inc.
3. Stock Split
On April 29, 1996, the Company's 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 September 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
sheets of Waverly, Inc. and its subsidiaries as of September 30,
1996 and 1995, and the related condensed consolidated statements
of income for the three month and nine month periods then ended
and the condensed consolidated statements of cash flows for the
nine 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.
October 25, 1996
Baltimore, Maryland
<PAGE>
Page No. 10
Waverly, Inc.
Part I. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations: Three Months Ended September 30,
1996 Compared With The Three Months
Ended September 30, 1995
Net Sales were $39.5 million for the three months ended September
30, 1996 compared with $33.8 million for the three months ended
September 30, 1995, an increase of 17.1%. Worldwide book publishing
revenues increased 18.1% over the prior year period, generated by a
greater number of new publications. Periodical revenues increased
13.6% from the prior-year period. Subscription-based revenue
increased 8.0% from the prior year as a result of rate increases.
Advertising revenue increased 37.8% from greater volume in space
advertising, commercial reprints and special publications. Revenues
from the Company's Professional Learning System (PLS) group increased
35.4% over the prior year principally due to new product releases
and the inclusion of the June 1995 acquisition of deMedici, an
interactive training system.
Cost of Sales was $24.1 million, or 60.9% of net sales for the
three months ended September 30, 1996 compared to $20.6 million,
or 61.1% of net sales for the same period last year, an increase
of 15.9%. Book publishing cost margin was 59.6% this period
compared to 59.2% in the prior year. Periodical publishing cost
margin was 68.3% this period compared to 70.5% 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
44.8% this year compared to 53.0% last year. The inclusion of
the deMedici product line is the reason for the year to year
change.
Selling and Distribution expenses were $9.5 million for the three
months ended September 30, 1996 compared to $8.3 million for the
same period last year, an increase of 14.2%. As percentage of
sales, expenses were 24.0% this year compared to 24.6% for the
same period last year. Promotional and other marketing costs for
large front list books to be published in the fourth quarter and
the inclusion of costs incurred for the national roll out of the
deMedici health care systems are the primary reasons for the
increase.
General and Administrative expenses were $3.1 million for the
three months ended September 30, 1996 compared to $2.4 million
for the same period last year. As a percentage of sales, expenses
were 7.7% this year compared with 7.0% last year. Higher medical
and pension expenses, as well as increased incentive compensation
expense recorded this year compared to last year were the primary
reasons for the increase.
<PAGE>
Page No. 11
Waverly, Inc.
Depreciation and Amortization expenses were $1.6 million for the
three months ended September 30, 1996 compared to $1.4 million
for the same period last year. Amortization of development cost
for a larger number of electronic products is the reason for the
year-to-year increase.
Other Income ( Expense ) was ($58,000) for the three months
ended September 30, 1996 compared to ($12,000) for the comparable
period last year. Foreign exchange gains recorded in 1995 accounted
for the year to year change.
Income taxes were $397,000 in 1996 or 31.4% of pretax income
compared with $411,000 or 37.6% of pretax income in 1995.
Equity in Earnings of Affiliated Entities was a $286,000 gain for
the current period compared to a loss of $88,000 for the prior-
year period. Higher income from international joint ventures and
tax benefits associated with the write-off of the 20% equity
minority interest in Quality Medical Publishing are the principal
factors.
<PAGE>
Page No. 12
Waverly, Inc.
Results of Operations: Nine Months Ended September 30, 1996
Compared With The Nine Months Ended
September 30, 1995
Net Sales for the nine months ended September 30, 1996 were
$120.7 million compared with $107.7 million for the comparable
period last year, an increase of 11.9%. Worldwide book publishing
revenues increased 9.9%, with domestic revenues increasing by
14.6% and international revenues rising 6.2% over last year.
The increase was derived from a greater number of books published
this year compared to last year. Periodical revenues were 15.1%
higher due to subscription price increases and increased
advertising volume. Professional Learning Systems revenue
advanced 19.1% due to the introduction of new product and the
inclusion of the recent acquisition of deMedici, an interactive
training system.
Cost of Sales was $73.1 million, or 60.5% of net sales, for the
current period compared to $64.6 million or 60.0% of net sales
for the prior year period. Book publishing cost margin was 60.0%
this period compared to 57.8% in the prior year. The change in
gross margin is due to a larger number of new books, including
large comprehensive textbooks, published in 1996 than in 1995.
New titles are normally burdened with all composition costs and
other initial development charges in the first print run.
Periodical publishing cost margin was 68.2% this period compared
to 70.9% in the prior year. Margins improved due to rate
increases and a higher proportion of advertising-related revenue
this year compared to last. PLS cost margin was 45.5% this year
compared to 41.7% in the prior year. The inclusion of the
deMedici product line is the reason for the year to year change.
Selling and Distribution expenses were $29.4 million or 24.3 % of
net sales for the nine months ended September 30, 1996 compared
with $25.3 million or 23.5% 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 deMedici health care training
system are the primary reasons for the increase.
General and Administrative expenses were $9.6 million for the
current period, or 8.0% of net sales, compared to $8.8 million or
8.2% of net sales for the prior period. Higher legal, pension
and medical expenses are the reasons for the year to year
increase.
Depreciation and Amortization expenses were $4.3 million for the
nine months of 1996 compared to $3.9 million for the same period
last year. Amortization for 1995 acquisitions and development
cost for a greater number of electronic products number is the
reason for the year-to-year increase.
<PAGE>
Page No. 13
Waverly, Inc.
Other Income ( Expense) was $1,000 for the nine months ended
September 30, 1996 compared with $283,000 for the comparable period
last year. Interest income was $220,000 lower this year due to the
use of cash to fund 1995 acquisitions. In addition, foreign currency
transaction losses in 1996 were $40,000 compared to $185,000 in
gains recognized in 1995.
Income Taxes were $1.6 million or 36.5% of pretax income in the
current period compared to $2.0 million or 37.1% of pretax income
in the prior year period.
Equity in Earnings of Affiliated Entities was $813,000 for the
current period compared with
$295,000 for the same period last year. Earnings from the
Japanese, German and South American affiliates were higher than
last year. In addition, a $270,000 tax benefit was recognized
for a prior-year write-off of the 20% equity minority interest in
Quality Medical Publishing.
Net Income was $3.6 million or $0.38 per share for the nine
months ended September 30, 1996 compared to $3.7 million or $0.40
per share for the nine months ended September 30, 1995, a
decrease of 2.1%. Increased profit generated by Periodical
Publishing substantially offset the decrease in Book Publishing
earnings which lagged the prior year due to several factors
including the inclusion last year of the new edition of the
flagship product, Stedmans Medical Dictionary and high promotion
and marketing expenses for several major textbooks published in
the first half of 1996. In addition, during 1996 the Company
incurred higher marketing and selling costs incurred this year
for the startup of the deMedici hospital training system acquired
last year.
<PAGE>
Page No. 14
Waverly, Inc.
Liquidity and Capital Resources
-------------------------------
Total assets were $131.7 million at September 30, 1996 compared
with $128.2 million at December 31, 1995 and $122.3 million at
September 30, 1995. The increase in assets from one year ago is a
result of an expanded book publishing operation throughout the
world. As a result, trade receivables and inventory have
increased to finance the higher level of activity. 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 reduction of long term
debt from $5.0 million at September 30, 1995 to $1.3 million at
September 30, 1996.
At September 30, 1996 the Company carried a net borrowing
position [ defined as cash less short term and long term
borrowings ] of $16.9 million compared with a net borrowing
position of $3.1 million at December 31, 1995 and a net
borrowing position of $15.4 million at September, 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, society royalties and society editorial allowances. The
increase in net borrowings since September, 1995 is due to the
use of cash to finance higher levels of inventory and receivables
and new electronic products.
The Company's long term debt is $1.3 million or 2.5% of
shareholders equity at September 30, 1996 compared with $5.1
million or 10.5% of shareholders equity at September 30, 1995.
The Company currently pays a dividend of $0.065 per share per
quarter, or $0.26 per year .
At September 30, 1996 the Company had a $7.1 million as a
deferred tax asset . This asset is a result of the recognition
in prior years of post retirement benefit obligations, reserves
for future inventory deductions and reserves for undistributed
profits in Germany. The Company expects the deferred tax asset to
be realized through future profitable operations, based on its
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
None
Item 5. Other Information
On April 29, 1996, the Company's Board of Directors
declared a two-for-one stock split of Waverlys 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
September 30, 1996:
None
All other items are omitted because they are not applicable or
the answers are none.
<PAGE>
Page No. 16
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
-------------------
Date: October 25, 1996 E. Philip Hanlon
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 Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Earnings: $1,155 $595 $3,575 $3,651
Primary earnings $1,155 $595 $3,575 $3,651
-----------------------------------------------------------------------------------------
Fully diluted earnings $1,155 $595 $3,575 $3,651
-----------------------------------------------------------------------------------------
Weighted average shares outstanding 8,909 8,862 8,896 8,838
Dilutive common stock equivalents for
primary earnings per share 453 385 435 370
-----------------------------------------------------------------------------------------
Weighted average shares and common
equivalent shares outstanding
for primary earnings per share 9,362 9,247 9,331 9,208
Additional equivalent shares
assuming full dilution 68 12 86 26
-----------------------------------------------------------------------------------------
Weighted average shares and common
equivalent shares for fully
diluted earnings per share 9,430 9,259 9,417 9,234
-----------------------------------------------------------------------------------------
Earnings per share
Primary $0.12 $0.06 $0.38 $0.40
=========================================================================================
Fully diluted (1) $0.12 $0.06 $0.38 $0.40
=========================================================================================
<FN>
(1) Not presented on the Condensed Consolidated Statements of Income because
fully diluted earnings per share had a differential less than
3% of primary earnings per share.
</TABLE>
Page No. 18
Waverly, Inc.
EXHIBIT 15
----------
October 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 October 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
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