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, 1997, 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, 1997, there were 8,935,522 shares of the
Registrant's Common Stock outstanding.
<PAGE>
Page No. 2
Waverly, Inc.
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 15
Item 6. Exhibits and Reports on Form 8-K 16
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>
Page No. 3
Waverly, Inc.
<TABLE>
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,
-----------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Revenues $46,482 100.0% $43,349 100.0% $85,695 100.0% $81,266 100.0%
Costs and expenses
Cost of sales 26,633 57.3 25,479 58.8 50,968 59.5 48,965 60.3
Selling and distribution 10,488 22.6 10,395 24.0 20,083 23.4 19,877 24.5
General and administrative 3,048 6.6 3,224 7.4 5,990 7.0 6,361 7.8
Depreciation and amortization 1,814 3.9 1,387 3.2 3,466 4.0 2,740 3.4
-----------------------------------------------------------------------------------------------------------------
Total operating expenses 41,983 90.4 40,485 93.4 80,507 93.9 77,943 96.0
Income from continuing operations 4,499 9.6 2,864 6.6 5,188 6.1 3,323 4.0
Other income (expense)
Investment income 77 0.2 112 0.3 213 0.2 212 0.3
Interest expense (180) (0.4) (238) (0.5) (331) (0.4) (452) (0.6)
-----------------------------------------------------------------------------------------------------------------
Total other income (expense) (103) (0.2) (126) (0.2) (118) (0.2) (240) (0.3)
Income from operations before taxes
and earnings of affiliated entities 4,396 9.4 2,738 6.4 5,070 5.9 3,083 3.7
Income tax expense (1,624) (3.5) (924) (2.1) (1,908) (2.2) (1,190) (1.5)
Equity in the earnings (losses) of
affiliated entities (299) (0.6) 67 0.2 (5) 0.0 527 0.6
-----------------------------------------------------------------------------------------------------------------
Net Income $2,473 5.3 $1,881 4.5 $3,157 3.7 $2,420 2.8
=================================================================================================================
Earnings per common share and common
share equivalent:
Net Income $0.27 $0.20 $0.34 $0.26
=================================================================================================================
Cash dividends declared per share $0.070 $0.065 $0.135 $0.125
=================================================================================================================
Average number of common and common
equivalent shares outstanding 9,335,266 9,345,595 9,342,815 9,324,567
=================================================================================================================
<FN>
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,
1997 1996 1996
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $1,136 $5,327 $2,009
Accounts receivable, less allowance for doubtful
accounts ($1,446, $1,493 and $934 respectively) 40,949 40,385 37,834
Inventories 28,110 30,910 31,514
Prepaid expenses 4,433 1,172 3,224
Current deferred income taxes 3,292 3,263 3,549
----------------------------------------------------------------------------------------
Total current assets 77,920 81,057 78,130
Net property and equipment 7,053 7,840 8,542
Other noncurrent assets 41,950 40,996 40,786
----------------------------------------------------------------------------------------
Total assets $126,923 $129,893 $127,458
========================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Line of credit borrowings $4,663 $1,366 $4,138
Current portion of long-term debt 1,200 2,400 3,712
Accounts payable 13,772 15,232 14,674
Accrued expenses 4,141 5,299 3,267
Royalties payable 7,085 10,541 5,965
Unearned subscription revenues 20,469 17,791 18,502
Income taxes payable 1,451 1,361 3,807
Current deferred income taxes 203 354 792
----------------------------------------------------------------------------------------
Total current liabilities 52,984 54,344 54,857
Long term debt 1,225 2,595 2,478
Unfunded pension obligation 3,086 3,369 3,346
Postretirement benefit obligation 11,721 11,719 11,801
Deferred income taxes 2,652 2,942 3,287
Other liabilities 532 920 717
----------------------------------------------------------------------------------------
Total liabilities 72,200 75,889 76,486
----------------------------------------------------------------------------------------
Shareholders' equity
Preferred stock-500,000 shares authorized;
none issued
Common stock-$2 par value; 12,000,000 shares
authorized, 8,935,522, 8,923,120 and 8,900,788
shares issued and outstanding, respectively 17,871 17,846 17,802
Additional paid-in capital 12,698 12,574 12,275
Retained earnings 25,014 23,063 20,293
Foreign currency translation adjustment (860) 521 602
----------------------------------------------------------------------------------------
Total shareholders' equity 54,723 54,004 50,972
----------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $126,923 $129,893 $127,458
========================================================================================
<FN>
See accompanying notes to the condensed consolidated financial
statements
</TABLE>
<PAGE>
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, 1997 1996
--------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities
Net income $3,157 $2,420
Adjustments to reconcile net income to
net cash used in operating activities
Postretirement benefit obligation 173 327
Equity in the (earnings) losses of affiliated
entities 5 (527)
Depreciation and amortization 3,466 2,740
Deferred income taxes (635) (456)
Net periodic pension expense 100 261
Other 30 34
Change in assets and liabilities adjusting
for the effect of acquisitions
Accounts receivable 394 (104)
Inventories 1,966 (173)
Prepaid expenses (2,688) (2,171)
Accounts payable (2,358) (1,418)
Accrued expenses (1,393) (3,407)
Income taxes payable 175 698
Royalties payable (3,315) (3,526)
Unearned subscription revenues 2,683 3,325
Other long-term liabilities (559) (513)
----------------------------------------------------------------------------
Net cash provided by (used in) operations 1,201 (2,490)
----------------------------------------------------------------------------
Cash flows from investing activities
Purchase of property and equipment (944) (666)
Additions to electronic product development assets (961) (1,109)
Acquisition of publishing properties (3,531) (211)
Decrease in investments in affiliated entities 136 156
----------------------------------------------------------------------------
Net cash flows (used in) investing activities (5,300) (1,830)
----------------------------------------------------------------------------
Cash flows from financing activities
Net borrowings under lines of credit 3,477 3,938
Repayment of long-term debt (2,404) (1,280)
Common stock dividends paid (1,205) (1,112)
Proceeds from exercise of stock options 148 335
----------------------------------------------------------------------------
Net cash flows provided by financing activities 16 1,881
----------------------------------------------------------------------------
Net decrease in cash and cash equivalents (4,083) (2,439)
Effect of exchange rates on cash and cash equivalents (108) (132)
Cash and cash equivalents at January 1, 5,327 4,580
----------------------------------------------------------------------------
Cash and cash equivalents at June 30, $1,136 $2,009
============================================================================
<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, 1997 and
June 30, 1996, the condensed consolidated statements of
operations for the three and six month periods ended June 30,
1997 and June 30, 1996, and the condensed consolidated statements
of cash flows for the six month periods ended June 30, 1997 and
June 30, 1996 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 at June 30, 1997 and the results of operations
and changes in cash flows 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, 1997, are not
necessarily indicative of the operating results for the full
year.
2. New Accounting Standards
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128
regarding earnings per share which requires the Company to
present basic and diluted earnings per share in the financial
statements. The Company must adopt the requirements of this
standard in its financial statements for the year ending December
31, 1997. Adoption of this standard is not expected to have a
material impact on the Companys earnings per share.
Statement of Financial Accounting Standards No. 129, "Disclosure
of Information about Capital Structure" (SFAS 129) becomes effective
for fiscal years ending after December 15, 1997. The Company is
reviewing SFAS 129 and will adopt the requirements of this standard
by the required date.
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" (SFAS 130) and Statement of Financial
Accounting Standards No. 131, "Disclosures about
<PAGE>
Page No. 7
Waverly, Inc.
Segments of an Enterprise and Related Information" (SFAS 131)
were issued in June 1997. The disclosures required by these
statements must be reported by the Company in 1998. The Company
is reviewing the financial statement impact of SFAS 130 and SFAS 131
and will adopt them by the required dates.
3. Reclassifications
Certain amounts in the prior period consolidated financial
statements have been reclassified to conform to the current
period presentation.
4. (a) Inventories
Inventories consist of the following:
----------------------------------------------------------------
(unaudited) (unaudited)
June 30, December 31, June 30,
(in thousands) 1997 1996 1997
----------------------------------------------------------------
Finished Goods $20,976 $24,318 $22,986
Work-in-process 6,774 6,116 8,079
Raw materials 360 476 449
----------------------------------------------------------------
$28,110 $30,910 $31,514
================================================================
4. (b) Property and equipment
------------------------------------------------------------------
(unaudited) (unaudited)
June 30, December 31, June 30,
(in thousands) 1997 1996 1996
------------------------------------------------------------------
Land $698 $792 $800
Buildings 2,228 2,393 2,459
Office equipment, computers,
and related software 11,693 11,356 11,455
------------------------------------------------------------------
Total, at cost 14,619 14,541 14,714
Less: accumulated depreciation (7,566) (6,701) (6,172)
------------------------------------------------------------------
Net property and equipment $7,053 $7,840 $8,542
==================================================================
<PAGE>
Page No. 8
Waverly, Inc.
<TABLE>
4. (c) Other noncurrent assets
<CAPTION>
----------------------------------------------------------------------------
(unaudited) (unaudited)
June 30, December 31, June 30,
(in thousands of dollars) 1997 1996 1996
----------------------------------------------------------------------------
<S> <C> <C> <C>
Publication agreements $22,772 $21,386 $21,431
Goodwill 11,611 10,961 10,797
Other intangible assets 3,391 2,417 2,417
----------------------------------------------------------------------------
Subtotal 37,774 34,764 34,645
Accumulated amortization (12,957) (10,852) (9,644)
----------------------------------------------------------------------------
24,817 23,912 25,001
Prepaid pension 5,845 5,825 5,896
Noncurrent deferred income taxes 3,603 3,604 3,371
Equity investment in affiliated entities 3,142 3,065 2,632
Electronic product development assets
(net of accumulated amortization of
$4,401, $3,506 and $2,483,
respectively) 4,391 4,439 3,736
Other 152 151 150
----------------------------------------------------------------------------
Total other noncurrent assets $41,950 $40,996 $40,786
===========================================================================
</TABLE>
<PAGE>
Page No. 9
Waverly, Inc.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of Waverly, Inc.
We have reviewed the condensed consolidated balance sheets of
Waverly, Inc. and subsidiaries as of June 30, 1997 and the related
condensed consolidated statements of income and cash flows for the
three and six month periods ended June 30, 1997 and 1996. These
financial statements are the responsibility of the Company's
management.
We conducted our reviews 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 sheets as of December
31, 1996, and the related consolidated statements of income, retained
earnings, and cash flows for the year then ended (not
presented herein), and in our report dated January 31, 1997 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, 1996, 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.
Baltimore, Maryland
July 25, 1997
<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 June 30, 1997 Compared
With The Three Months Ended June 30, 1996
Net Sales were $46.5 million for the three months ended June 30,
1997 compared with $43.3 million for the three months ended June
30, 1996, an increase of 7.2%. Book publishing revenues
increased by 1.6%, with domestic revenues 13% higher than the
prior year and international revenues 12% lower than the prior
year. Domestic book publishing revenues increased from improved
growth in backlist sales, the January 1997 acquisition of U.S.
based English language titles of Igaku-Shoin Medical Publishers,
Ltd. and strong industry sales, mostly to pharmaceutical
companies. The weakening of the German deutsche mark against the
dollar accounted for the majority of the reduction in
international revenue.
Periodical publishing revenues increased 17% over the prior year.
This increase was due to higher advertising-related revenue from
the pharmaceutical industry. Professional Learning Systems
Division (PLS) revenues increased 12% over the prior year
principally from new product releases.
Cost of Sales was $26.6 million, or 57.3% of net sales for the
three months ended June 30, 1997 compared to $25.5 million, or
58.8% of net sales for the same period last year, an increase of
4.5 %. Book publishing cost margin was 54.9% this period
compared to 56.9% in the prior year. A larger mix of backlist
sales in 1997 generated the lower cost margin. Periodical publishing
cost margin was 66.3% this period compared to 66.7% in the prior
year. PLS cost margin was 29.5% this year compared to 33.1%
last year.
Selling and Distribution expenses were $10.5 million for the
three months ended June 30, 1997 compared to $10.4 million for
the same period last year, an increase of 1%. As a percentage of
sales, expenses were 22.6% this year compared to 24.0% for the
same period last year. During the second quarter of 1997,
spending remain unchanged for all operating segments while sales
in each unit increased.
General and Administrative expenses were $3.0 million for the
three months ended June 30, 1997 compared to $3.2 million for the
same period last year. As a percentage of sales, expenses were
6.6% this year compared with 7.4% last year. Lower employee
benefit costs in 1997 is the reason for the year to year change.
<PAGE>
Page No. 11
Waverly, Inc.
Depreciation and Amortization expenses were $1.8 million for the
three months ended June 30, 1997 compared to $1.4 million for
the same period last year. Amortization of increased electronic
product development assets is the reason for the year-to-year
change.
Other Income (Expense) was ($103,000) this year compared to
($126,000) for the same period last year. Interest expense was
$58,000 lower this year due to the less cash needed for borrowing
than in 1996.
Income taxes were $1,624,000 in 1997 or 37% of pretax income
compared with $924,000 or 34% of pretax income in 1996.
Equity in Earnings (Losses) of Affiliated Entities was ($299,000)
this year compared with $67,000 in the prior year period. Lower
earnings from the Japanese J.V. due to the lower value of the
yen, losses incurred by the Company's French joint venture and a
one-time charge for relocation from the Companys German affiliate
are the principal reasons.
Net Income was $2,473,000 or $ 0.27 per share in the current
period compared to $1,881,000 or $0.20 per share in the prior year
period, an increase of 32%. The increase in earnings is attributed
to continued strong performance in periodical publishing and improved
operating margins from domestic book publishing aided by the
January 1997 acquisition of titles from Igaku-Shoin Medical
Publishers, Ltd. (our partner in Japan).
<PAGE>
Page No. 12
Waverly, Inc.
Results of Operations: Six Months Ended June 30, 1997 Compared
With The Six Months Ended June 30, 1996
Net Sales for the six months ended June 30, 1997 were $85.7
million compared with $81.3 million for the comparable period
last year, an increase of 5.5%. Domestic book publishing revenues
increased 12.1%, while international revenues declined by 9.2%
over last year. The increase in domestic revenues is derived
from strong backlist sales as well as the inclusion of the
January 1997 acquisition of U. S. based English language titles
of Igaku-Shoin Medical Publishers, Ltd.. The sluggish
international market and the impact of the deutsche mark exchange
rate are the primary reasons for the decline in international
book revenues. Periodical revenues were 12.6% higher due
primarily to a sharp increase in the volume of advertising
related revenue. Professional Learning Systems revenue advanced
17.9% due to the introduction of new product and increased volume
in the de'Medici line, an interactive training system.
Cost of Sales was $51.0 million, or 59.5% of net sales, for the
current period compared to $49.0 million or 60.3% of net sales
for the prior year period. Book publishing cost margin was 57.9%
this period compared to 59.4% in the prior year. The change in
cost margin is a result of a higher proportion of backlist
titles, which are not burdened with initial first printing,
composition and editing costs, sold this year compared to last
year. Periodical publishing cost margin was 66.2% this period
compared to 67.0% in the prior year. PLS cost margin was 33.1%
this year compared to 35.0% in the prior year.
Selling and Distribution expenses were $20.1 million or 23.4 % of
net sales for the six months ended June 30, 1997 compared with
$19.9 million or 24.5% of net sales for the prior year period.
In 1997 expenses have been generally at the same level as 1996
for all operating divisions within the Company.
General and Administrative expenses were $6.0 million for the
current period, or 7.0% of net sales, compared to $6.4 million or
7.8% of net sales for the prior period. Costs have not increased
proportionately with the revenue growth. Lower employee benefit
care costs is the primary reason for the year to year change.
Depreciation and Amortization expenses were $3.5 million for the
first six months of 1997 compared to $2.7 million for the same
period last year. Amortization for a greater number of electronic
products is the reason for the year-to-year increase.
<PAGE>
Page No. 13
Waverly, Inc.
Other Income ( Expense) was ($118,000) for the six months ended
June 30, 1997 compared with ($240,000) for the comparable period
last year. Interest expense was $121,000 lower this year due to the
need for less short term borrowing than in 1996.
Equity in Earnings (Losses) of Affiliated Entities was ($5,000)
for the current period compared with $527,000 for the same period
last year. Lower earnings from the Japanese affiliate due to the
lower currency value of the yen, losses from the Company's French
joint venture and a one-time relocation charge incurred by the
Company's German affiliate are the principal reasons. In
addition, a $100,000 tax benefit was recognized in 1996 for a
prior-year write-off of the 20% equity minority interest in
Quality Medical Publishing.
Net Income was $3.2 million or $0.34 per share for the six months
ended June 30, 1997 compared to $2.4 million or $0.26 per share
for the six months ended June 30, 1996, an increase of 30.5%.
The increase in earnings is attributed to a sharp increase in
periodical advertising volume as well as an improvement in
operating margins from domestic book publishing aided by the
January 1997 acquisition of titles from Igaku-Shoin Medical
Publishers, Ltd. (our partner in Japan).
<PAGE>
Page No. 14
Waverly, Inc.
Liquidity and Capital Resources
Total assets were $126.9 million at June 30, 1997 compared to
$129.9 million at December 31, 1996 and $127.5 million at June
30, 1996. Working capital ratio is 1.5 to 1 at June 30, 1997,
1.5 to 1 at December 31, 1997 and 1.4 to 1 at June 30, 1996.
At June 30, 1997, the Company carried a net borrowing position [
defined as cash less short term and long term borrowings ] of
$6.0 million compared with a net borrowing position of
$8.3 million at June 30, 1996, and $1.0 million at December 31,
1996. The increase in net borrowing since the start of the year
is due to the normal seasonal use of cash to pay semiannual
author and society royalties and society editorial allowances.
In addition, the Company acquired the U.S. based English language
titles and certain assets of Igaku-Shoin Medical Publishers, Ltd.
for $2.3 million in January 1997. The year to year improvement
is due to profitable operations and reduced inventory levels.
The Company's long term debt, net of the current portion, is $1.2
million or 2% of shareholders equity at June 30, 1997, compared
with $2.6 million or 5% of shareholders equity at December 31,
1996. The Company currently pays a dividend of $0.07 per share
per quarter, equal to an annual rate of $0.28 per share.
At June 30, 1997, the Company had recorded $6.9 million as a
deferred U.S. based tax asset related primarily to postretirement
benefit obligations and future inventory-related deductions. The
Company expects the deferred tax asset to be realized through
future profitable operations, based on the long term earnings
record and therefore has recorded the asset free of any valuation
allowance.
In 1997, the Company expects to fund capital expenditures for
existing operations and payment of dividends from internally
generated cash flows. The seasonal trend in subscription
renewals and domestic book publishing cause certain fluctuations
in the Company's cash position during the year and impact the use
of credit lines. The Company expects to have minimal
line-of-credit borrowings at December 31, 1997, barring a
significant acquisition.
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 28, 1997 the following items were submitted to a
vote at the Company's annual meeting of shareholders:
1. Election of directors:
NOMINEE FOR (a)
------- ---------
David J. Callard 7,384,639
Edward B. Hutton, Jr. 7,384,539
Michael E. Johns 7,274,677
John F. Spahr, Jr. 7,381,109
Michael Urban 7,384,539
(a) Affirmative was 82% or more of total shares outstanding.
Less than 2% of the outstanding shares were abstained.
2. Ratification of the appointment by the Board of
Directors of Coopers & Lybrand L.L.P. as independent
accountants of the Company for the fiscal year ending
December 31, 1997:
FOR 7,395,661
AGAINST 270
ABSTAINED 178
<PAGE>
Page No. 16
Waverly, Inc.
Item 5. Other Information
None
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, 1997:
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
-------------------
Date: July 25, 1997 E. Philip Hanlon
Vice President, Finance
<PAGE>
Page No. 18
Waverly, Inc.
<TABLE>
EXHIBIT 11
----------
Computation of Earnings Per Share
(in thousands of dollars - except per share amounts)
----------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30, 30,
----------------------------------------------------------------------------------
1997 1996 1997 1996
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Earnings: $2,473 $1,881 $3,157 $2,420
Primary earnings $2,473 $1,881 $3,157 $2,420
----------------------------------------------------------------------------------
Fully diluted earnings $2,473 $1,881 $3,157 $2,420
----------------------------------------------------------------------------------
Weighted average shares outstanding 8,931 8,895 8,929 8,889
Dilutive common stock equivalents for
primary earnings per share 404 451 414 436
----------------------------------------------------------------------------------
Weighted average shares and common
equivalent shares outstanding
for primary earnings per share 9,335 9,346 9,343 9,325
Additional equivalent shares
assuming full dilution 8 6 0 10
----------------------------------------------------------------------------------
Weighted average shares and common
equivalent shares for fully
diluted earnings per share 9,343 9,352 9,343 9,335
----------------------------------------------------------------------------------
Earnings per share
Primary $0.27 $0.20 $0.34 $0.26
==================================================================================
Fully Diluted (1) $0.27 $0.20 $0.34 $0.26
==================================================================================
<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, 1997
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, 1997 (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.
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