<PAGE>   1






                      THE GOODHEART-WILLCOX COMPANY, INC.
                         QUARTERLY REPORT AND FORM 10-Q
                     FOR THE QUARTER ENDED JANUARY 31, 1996






<PAGE>   2


                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549


                                   FORM 10-Q

(Mark One)


<TABLE>
<S>  <C>
 X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
---  EXCHANGE ACT OF 1934.
      For the quarterly period ended January 31, 1996
</TABLE>


                                       OR

---   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934.
           For the transition period from _______ to _______.

                         Commission file number 0-7276

                     THE GOODHEART-WILLCOX COMPANY, INC.
              (Exact name of registrant as specified in charter)


             Delaware                              36-2135994
       ---------------------------------------------------------------------
       (State or other jurisdiction of             (I.R.S. Employer
         incorporation or organization)              Identification No.)

       123 Taft Drive----, South Holland, Illinois     60473
       ---------------------------------------------------------------------
       (Address of principal executive offices)    (Zip Code)

                                   (708) 333-7200
       ---------------------------------------------------------------------
       (Registrant's telephone number, including area code)


       ---------------------------------------------------------------------
       (Former name, former address and former fiscal year, if changed since 
       last report)


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 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    .
                                               ---     ---

               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDING DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.  Yes      No    .
                           ---     ---

APPLICABLE ONLY TO CORPORATE ISSUERS:  Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date:  February 29, 1996 - 747,900 shares.



<PAGE>   3








                                     INDEX

                      THE GOODHEART-WILLCOX COMPANY, INC.



<TABLE>
<CAPTION>
        PART I    FINANCIAL INFORMATION                                                     PAGE
        ------    ---------------------                                                     ----
<S>               <C>                                                                       <C>
        Item 1.   Financial Statements

                  Consolidated Balance Sheets - January 31, 1996 and April 30, 1995 .....     4

                  Consolidated Statements of Earnings - Three Months Ended January 31,
                    1996 and 1995; Nine Months Ended January 31, 1996 and 1995 ..........     6

                  Consolidated Statements of Stockholders' Equity - Nine Months Ended
                    January 31, 1996 and 1995 ...........................................     7

                  Consolidated Statements of Cash Flows - Nine Months Ended
                    January 31, 1996 and 1995 ...........................................     8

                  Notes to Consolidated Financial Statements - January 31, 1996 .........     9

        Item 2.   Management's Discussion and Analysis of Financial Conditions and
                    Results of Operations ...............................................    15

        SIGNATURES ......................................................................    19
        ----------                                                                             

        PART II.  OTHER INFORMATION
        --------  ----------------- 

        Item 6.   Exhibit 27 - Financial Data Schedule ..................................    20


</TABLE>




<PAGE>   4


PART I - FINANCIAL STATEMENTS
FORM 10-Q
THE GOODHEART-WILLCOX COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)



<TABLE>
<CAPTION>
                                                                   January 31,   April 30,
                            ASSETS                                     1996        1995
                                                                   -----------  ----------
                                                                   (Unaudited)      (Note)
<S>                                                                <C>          <C>
Current assets
  Cash and cash equivalents .....................................  $ 6,832,000  $ 7,460,000
  Accounts receivable - net of allowance for doubtful receivables
    and returns of $233,000 and $183,000 ........................    1,539,000    1,159,000
  Inventories ...................................................    1,802,000    1,649,000
  Deferred income taxes .........................................      513,000      505,000
  Other .........................................................      219,000       86,000
                                                                   -----------   ----------

       Total current assets .....................................   10,905,000   10,859,000

Investment in marketable securities .............................       89,000       89,000
Prepublication costs - net of accumulated amortization of
  $1,058,000 and $892,000 .......................................    1,440,000    1,097,000
Property and equipment - net ....................................    1,699,000      683,000
Cash surrender value of life insurance net of loans of $331,000
  for 1995 and 1996 .............................................      450,000      411,000

Other assets ....................................................            -       53,000
                                                                    -----------  ----------
                                                                   $14,583,000  $13,192,000
                                                                    =========== ===========

</TABLE>

                                                         


Note: The balance sheet at April 30, 1995 has been taken from audited
      financial statement at that date.



                                       4

<PAGE>   5


PART I - FINANCIAL STATEMENTS
FORM 10-Q
THE GOODHEART-WILLCOX COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS - CONTINUED
(UNAUDITED)



<TABLE>
<CAPTION>
                                                                  January 31,   April 30, 
     LIABILITIES AND STOCKHOLDERS' EQUITY                             1996         1995    
                                                                  -----------   --------- 
                                                                  (Unaudited)       (Note) 
<S>                                                               <C>           <C>       
Current liabilities                                                                        
  Accounts payable .............................................  $   660,000  $   978,000 
  Accrued real estate taxes ....................................      102,000       80,000 
  Accrued compensation .........................................      677,000      496,000 
  Accrued profit sharing contribution ..........................      240,000            - 
  Dividends payable ............................................            -      299,000 
  Royalties payable ............................................      309,000      184,000 
  Income taxes payable .........................................      327,000      235,000 
                                                                  -----------    --------- 
                                                                                           
      Total current liabilities ................................    2,315,000    2,272,000 
                                                                                           
Deferred income taxes ..........................................      108,000      108,000 
                                                                                           
Commitments and contingencies ..................................            -            - 
                                                                                           
Redeemable common stock, 163,200 shares at estimated                                       
  redeemable value in excess of insurance proceeds, less                                   
  cash surrender value .........................................    3,682,000    3,643,000 
                                                                                           
Stockholders' equity                                                                       
  Common stock - authorized, 1,000,000 shares of $1 par value;                             
    issued 598,800 shares, exclusive of 163,200 redeemable                                 
    shares .....................................................      599,000      599,000 
                                                                                           
  Retained earnings ............................................    8,161,000    6,852,000 
                                                                  -----------    --------- 
                                                                                           
                                                                    8,760,000    7,451,000 
                                                                                           
  Less cost of 14,100 shares of common stock held in treasury ..     (282,000)    (282,000) 
                                                                  -----------    --------- 
                                                                    8,478,000    7,169,000
                                                                  -----------    --------- 
                                                                  $14,583,000  $13,192,000
                                                                  ===========  =========== 

</TABLE>

Note:  The balance sheet at April 30, 1995 has been taken from audited 
       financial statement at that date.



The accompanying notes are an integral part of these statements.


                                       5

<PAGE>   6


PART I - FINANCIAL STATEMENTS
FORM 10-Q
THE GOODHEART-WILLCOX COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)



<TABLE>
<CAPTION>
                                Three months ended        Nine months ended
                                    January 31,              January 31,
                               ---------------------  ------------------------
                                 1996        1995         1996         1995
                               ---------  ----------  -----------  -----------
<S>                           <C>         <C>         <C>          <C>
 Sales ...................... $2,933,000  $2,737,000  $12,417,000  $13,021,000
                              
 Cost of goods ..............  1,156,000   1,021,000    4,202,000    3,986,000  
                               ---------   ---------   ----------  -----------  
                                                                                
      Gross profit ..........  1,777,000   1,716,000    8,215,000    9,035,000  
                                                                                
 Operating expenses                                                             
  Selling, general and                                                          
    administrative ..........  1,460,000   1,329,000    4,395,000    4,016,000  
  Royalties .................    306,000     313,000    1,283,000    1,395,000  
                               ---------   ---------   ----------  -----------  
                                                                                
                               1,766,000   1,642,000    5,678,000    5,411,000  
                               ---------   ---------   ----------  -----------  
                                                                                
      Operating profit ......     11,000      74,000    2,537,000    3,624,000  
                                                                                
 Other income (expense)                                                         
  Interest ..................     54,000      59,000      154,000      125,000  
  Other .....................      3,000      23,000       19,000       30,000  
                               ---------   ---------   ----------  -----------  
                                  57,000      82,000      173,000      155,000  
                               ---------   ---------   ----------  -----------  
                                                                                
      Earnings before income                                                    
        taxes ...............     68,000     156,000    2,710,000    3,779,000  
                                                                                
 Income tax expense (benefit)                                                   
  Currently payable .........     27,000      63,000    1,071,000    1,549,000  
  Deferred ..................          -      (4,000)      (8,000)     (76,000) 
                               ---------   ---------   ----------  -----------  
                                                                                
                                  27,000      59,000    1,063,000    1,473,000  
                               ---------   ---------   ----------  -----------  
                                                                                
      NET EARNINGS .......... $   41,000  $   97,000  $ 1,647,000  $ 2,306,000  
                               =========   =========   ==========  ===========  
                                                                                
 Earnings per share .........       $.05        $.13        $2.20        $3.08  
                               =========   =========   ==========  =========== 
</TABLE>



The accompanying notes are an integral part of these statements.



                                       6

<PAGE>   7


PART I - FINANCIAL STATEMENTS
FORM 10-Q
THE GOODHEART-WILLCOX COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED JANUARY 31, 1996 AND 1995
(UNAUDITED)



<TABLE>
<CAPTION>
                                         Common     Retained      Treasury
                                          stock     earnings       stock       Total
                                       --------   ------------  ----------   ----------      
<S>                                    <C>       <C>            <C>         <C>
Balance at April 30, 1995 ...........  $599,000   $6,852,000    $(282,000)  $7,169,000    
                                                                                           
Net earnings for period .............         -    1,647,000            -    1,647,000    
                                                                                           
Change in estimated value of                                                               
  redeemable common stock in                                                               
  excess of insurance proceeds based                                                       
  on increase in cash surrender value                                                      
  of life insurance .................         -      (39,000)           -      (39,000)   
                                                                                           
Net change in unrealized loss on                                                           
  marketable equity securities ......         -            -            -            -    
                                                                                           
Cash dividends declared                                                                    
  ($.40 per share) ..................         -     (299,000)           -     (299,000)     
                                        -------    ---------     --------    ---------   
                                                                                           
Balance at January 31, 1996 .........  $599,000   $8,161,000    $(282,000)  $8,478,000      
                                        =======    =========     ========    =========   
                                                                                           
Balance at April 30, 1994 ...........  $599,000   $6,380,000    $(282,000)  $6,697,000      
                                                                                           
Net earnings for period .............         -    2,306,000            -    2,306,000      
                                                                                           
Change in estimated value of                                                               
  redeemable common stock in                                                               
  excess of insurance proceeds based                                                       
  on increase in cash surrender value                                                      
  of life insurance .................         -      (56,000)           -      (56,000)     
                                                                                           
Cash dividends declared                                                                    
  ($.40 per share) ..................         -     (299,000)           -     (299,000)       
                                        -------    ---------     --------    ---------   
                                                                                           
Balance at January 31, 1995 .........  $599,000   $8,331,000    $(282,000)  $8,648,000    
                                        =======    =========     ========    =========   
</TABLE>



The accompanying notes are an integral part of these statements.



                                       7

<PAGE>   8


PART I - FINANCIAL STATEMENTS
FORM 10-Q
THE GOODHEART-WILLCOX COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED JANUARY 31,
(UNAUDITED)



<TABLE>
<CAPTION>
                                                                      1996        1995
                                                                   -----------  ----------
<S>                                                                <C>          <C>
Cash flows from operating activities:
  Net earnings ..................................................   $1,647,000  $2,306,000
  Adjustments to reconcile net earnings to net cash provided by
    operating activities
      Depreciation expense ......................................       67,000      55,000
      Amortization of prepublication costs ......................      605,000     450,000
      Deferred income taxes .....................................       (8,000)    (76,000)
      Other .....................................................            -       1,000
      Changes in operating assets and liabilities
         Accounts receivable ....................................     (380,000)    (34,000)
         Inventories ............................................     (153,000)    452,000
         Other assets ...........................................     (133,000)    (14,000)
         Accounts payable .......................................     (318,000)   (265,000)
         Accrued expenses .......................................      443,000     588,000
         Royalties payable ......................................      125,000      78,000
         Income taxes ...........................................       92,000     728,000
                                                                   -----------  ----------

            Net cash provided by operating activities ...........    1,987,000   4,269,000

Cash flows from investing activities:
  Purchase of property and equipment ............................   (1,030,000)    (63,000)
  Purchases of prepublication costs .............................     (948,000)   (530,000)
  Increase in cash surrender value of officer's life insurance ..      (39,000)    (56,000)
                                                                   -----------  ----------

            Net cash used in investing activities ...............   (2,017,000)   (649,000)

Cash flows from financing activities:
  Dividends paid ................................................     (598,000)   (561,000)
                                                                   -----------  ----------

            Net cash used in financing activities ...............     (598,000)   (561,000)
                                                                   -----------  ----------

            Increase (decrease) in cash and cash equivalents ....     (628,000)  3,059,000

Cash and cash equivalents at beginning of period ................    7,460,000   5,570,000
                                                                   -----------  ----------

Cash and cash equivalents at end of period ......................   $6,832,000  $8,629,000
                                                                   ===========  ==========

Supplemental disclosure of cash flow information:
  Cash paid during the year for:
    Income taxes - net ..........................................   $  978,000  $  815,000
                                                                   ===========  ==========
</TABLE>


The accompanying notes are an integral part of these statements.

                                       8

<PAGE>   9


PART I - FINANCIAL STATEMENTS
FORM 10-Q
THE GOODHEART-WILLCOX COMPANY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1996
(UNAUDITED)


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X.  In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included.  The Company's business is seasonal, and operating results for
the three and nine month periods ended January 31, 1996 are not necessarily
indicative of the results that may be expected for the year ended April 30,
1996.  For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's Annual Report on Form 10-K for
the year ended April 30, 1995.

BUSINESS ACTIVITY

The Company publishes textbooks on technology, trade and technical, vocational
subjects, and family and consumer sciences.  The Company's activities include
the search for authors, the procurement and editing of manuscripts, and the
design, illustration and marketing of its textbooks.  Printing and binding of
books is done by outside contractors.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary, G/W Investment Company, Inc.  All significant
intercompany transactions have been eliminated in consolidation.

REVENUE RECOGNITION

The Company recognizes revenue at time of shipment from Company warehouse or
outside depositories.  A provision for estimated returns, consisting of sales
value less related inventory value and royalty costs, is made at time of sale.


                                       9

<PAGE>   10


PART I - FINANCIAL STATEMENTS
FORM 10-Q
THE GOODHEART-WILLCOX COMPANY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
JANUARY 31, 1996
(UNAUDITED)


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

INVENTORIES

Inventories are valued at the lower of cost or market.  Cost of inventories was
determined by the last-in, first-out (LIFO) and the first-in, first-out (FIFO)
methods as summarized below (see note B):


<TABLE>
<CAPTION>
                                             January 31,   April 30, 
                                                1996        1995     
                                             -----------  ---------- 
<S>                                          <C>          <C>        
Last-in, first-out method ...                 $1,758,000  $1,612,000 
First-in, first-out method ..                     44,000      37,000 
                                               ---------   --------- 
                                                                     
                                              $1,802,000  $1,649,000
                                               =========   =========
</TABLE>


Cost includes the purchase of paper, printing and binding from outside sources.
No allocation of selling and administrative expenses is included in
inventories.

Even though some books will not be sold in the current period, large quantities
of books are printed initially for stock, due to economies of scale.
Management feels that substantially all books will be sold in the current
period and, therefore, classifies all inventories as a current asset.

INVESTMENT SECURITIES

During fiscal 1995, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and
Equity Securities."  The adoption of SFAS No. 115 did not have a material
effect on the financial statements for the year ended April 30, 1995.


PROPERTY AND EQUIPMENT

Property and equipment are carried at cost less accumulated depreciation.
Depreciation is provided on the straight-line and accelerated methods over the
estimated useful lives of the assets.  Annual depreciation rates range from 20%
to 40% for equipment and from 3% to 20% for buildings and improvements.


                                       10

<PAGE>   11


PART I - FINANCIAL STATEMENTS
FORM 10-Q
THE GOODHEART-WILLCOX COMPANY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
JANUARY 31, 1996
(UNAUDITED)


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Expenditures for repairs and maintenance are charged against income when
incurred, and replacements are capitalized.  Gains or losses on dispositions of
property and equipment are included in income.

PREPUBLICATION COSTS

The Company capitalizes certain outside contractor costs, primarily artwork,
film and preparation costs, associated with creation of the textbooks and
supplements.  Prepublication costs are amortized over a period of three years,
under the straight-line method.

ADVERTISING COSTS

During fiscal 1995, the Company adopted Statement of Position (SOP) 93-7,
"Reporting on Advertising Costs," and has elected to expense advertising costs
annually.  The impact of adopting the SOP was not material to the financial
statements for the year ended April 30, 1995.

EDITORIAL COSTS

Editorial costs are charged to expense as incurred.

INCOME TAXES

The Company accounts for taxes under the provision of Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes."  SFAS No.
109 utilizes the liability method, and deferred taxes are determined based on
the estimated future tax effects of differences between the financial statement
and tax bases of assets and liabilities given the provisions of the enacted tax
laws.

EARNINGS PER SHARE

Earnings per share is computed on the weighted average number of shares
outstanding of 747,900 for the periods ended January 31, 1996 and 1995.


                                       11

<PAGE>   12


PART I - FINANCIAL STATEMENTS
FORM 10-Q
THE GOODHEART-WILLCOX COMPANY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
JANUARY 31, 1996
(UNAUDITED)


NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

CASH EQUIVALENTS

The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.  The carrying value of
such assets approximates their fair value.



NOTE B - INVENTORIES

Inventories consist of the following:


<TABLE>
<CAPTION>
                                       January 31,    April 30,
                                          1996           1995
                                       ----------     ----------
<S>                                    <C>            <C>

Raw materials ....                     $   51,000     $  105,000
Work-in-process ..                         44,000         37,000
Finished goods ...                      1,707,000      1,507,000
                                       ----------     ----------

                                       $1,802,000     $1,649,000
                                       ==========     ==========
</TABLE>


Inventories would have been $2,492,000 and $2,301,000 higher at January 31, 1996
and April 30, 1995, respectively, if the FIFO method of accounting had been used
on all inventories.

An actual valuation of inventory under the LIFO method can be made only at the
end of each year based on the inventory levels and costs at that time.
Accordingly, interim LIFO calculations must necessarily be based on
management's estimates of expected year-end inventory levels and costs.  Since
these are subject to many forces beyond management's control, interim results
are subject to the final year-end LIFO inventory valuation.


                                       12

<PAGE>   13


PART I - FINANCIAL STATEMENTS
FORM 10-Q
THE GOODHEART-WILLCOX COMPANY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
JANUARY 31, 1996
(UNAUDITED)


NOTE C - PROPERTY AND EQUIPMENT

Property and equipment consist of the following:


<TABLE>
<CAPTION>
                                              January 31,     April 30,
                                                 1996          1995
                                              -----------     ---------
<S>                                           <C>            <C>
Land ...........................               $  813,000    $   75,000
Building and improvements ......                1,320,000     1,026,000
Equipment ......................                  804,000       754,000
                                              -----------     ---------

                                                2,937,000     1,855,000
            Less accumulated depreciation ..    1,238,000     1,172,000
                                              -----------     ---------

                                               $1,699,000    $  683,000
                                              ===========     =========
</TABLE>




NOTE D - INCOME TAXES

Income tax expense varies from the amount computed by applying the statutory
Federal income tax rate to earnings before income taxes primarily because of
state income taxes, tax-exempt interest income, and officer's life insurance.



NOTE E - EMPLOYEE BENEFIT PLANS

The Company has a profit sharing plan, covering all full-time employees, to
which the Company may contribute.  Company contributions are voluntary and at
the discretion of the Board of Directors.  Annual contributions by the Company
cannot exceed 15% of eligible compensation.

Effective May 1, 1994, the Company adopted The Goodheart-Willcox Company, Inc.
Supplemental Executive Retirement Plan for the benefit of certain management
employees as determined by the Board of Directors.  The purpose of the plan is
to provide additional benefits for those participants who have profit sharing
benefits limited by the Internal Revenue Code.


                                       13

<PAGE>   14


PART I - FINANCIAL STATEMENTS
FORM 10-Q
THE GOODHEART-WILLCOX COMPANY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
JANUARY 31, 1996
(UNAUDITED)


NOTE E - EMPLOYEE BENEFIT PLANS - CONTINUED

The Company has recorded contributions amounting to $240,000 and $221,000 for
the nine months ended January 31, 1996 and 1995, respectively.



NOTE F - COMMITMENTS AND CONTINGENCIES

Under an agreement between the Company and a principal stockholder/officer, the
Company will purchase 163,200 shares of the Company's stock owned by him upon
his death.  The purchase price will be based on the fair market value of the
Company's shares at that time, as determined by a named third party.  The
excess of the estimated fair market value of the mandatorily redeemable shares
over the amount of life insurance, net of cash surrender value, carried to meet
a portion of the Company's obligation under this agreement has been segregated
from stockholders' equity as of January 31, 1996 and April 30, 1995.

The Company has entered into employment agreements with two officers that
provide for annual compensation and certain other benefits including death
benefit payments equal to two years salary.  The present value of the estimated
death benefit payable under these agreements of approximately $160,000 is
included in accrued compensation at January 31, 1996 and April 30, 1995.

In May, 1995, the Company acquired property in Tinley Park, Illinois, for
approximately $738,000 (for which a deposit of $50,000 was recorded in other
assets at April 30, 1995) upon which it is constructing a warehouse and office
building.  It is anticipated the building will be completed for occupancy in
early fiscal 1997 at a total cost exclusive of land of approximately
$2,762,000.


                                       14

<PAGE>   15


                      THE GOODHEART-WILLCOX COMPANY, INC.
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITIONS AND RESULTS OF OPERATIONS

   OPERATING RESULTS

   The Company's net sales for the third quarter of fiscal 1996 increased
   $196,000, or approximately 7% from the same quarter in the previous
   fiscal year due to increased orders from open territories coupled with
   selective price increases.  For the nine months ending January 31, 1996,
   net sales decreased $604,000, or approximately 5% compared to the
   previous nine month period ending January 31, 1995.  The net sales
   decrease for the first three quarters of fiscal 1996 is attributed to
   the lack of significant state textbook adoptions and weaker orders from
   open territories during the first two quarters of the fiscal year when a
   majority of the seasonal sales are recorded.  In the third quarter of
   fiscal 1995, net sales increased $383,000, or approximately 16% from the
   same quarter in the previous fiscal year due to increased orders from
   open territories and from selective price increases.  For the nine
   months ending January 31, 1995, net sales increased $2,378,000, or
   approximately 22% compared to the previous nine month period ending
   January 31, 1994 due to strong adoption orders from a state where the
   Company does not use a schoolbook depository, additional orders from
   open territories, and selective price increases.  Price increases are
   made each year on a product by product basis after considering the cost
   of paper, printing, and binding, the overhead contribution, and
   competitive pricing.  The selective price increases will not totally
   offset any significant decline in school expenditures for textbooks and
   supplements as witnessed in the first two quarters of fiscal 1996.  In
   the third quarter of fiscal 1995, the reserve for future returns was
   increased as the sales product mix continued to shift from middle and
   senior high schools to community college bookstores, where the number of
   books and supplements returned occur with greater volume.  The reserve
   for future returns may experience minor fluctuation to reflect current
   business practices and expectations of the return rate for various
   product categories and markets.

   The cost of goods sold as a percentage of sales in the third quarter of
   fiscal 1996 was 39% compared to 37% in the third quarter of fiscal 1995
   and 27% in the third quarter of fiscal 1994.  For the nine months ending
   January 31, 1996, the cost of goods sold as a percentage of sales was
   34% compared to 31% for both of the nine month periods ending January
   31, 1995 and 1994.  The change in the ratio of the cost of goods sold as
   a percentage of sales for the first three quarters was primarily
   attributed to the increased cost of paper with an added influence
   attributable to the substantial investment in the revision of major
   backlist titles.  As stated in the annual report for the year ending
   April 30, 1995, "It is possible that the Company will not be able to
   pass through all of the paper price increases to our customers."
   Factors affecting the ratio of the cost of goods sold as a percentage of
   sales are the result of decisions regarding selective selling price
   increases, adjustments to the print and reprint quantities, and the
   application of computer technology by outside suppliers permitting more
   rapid creative preparation, shorter press runs, reduction in
   manufacturing time, and consistently high quality allowing
   Goodheart-Willcox to better control the unit cost of textbooks and
   supplements.


                                       15

<PAGE>   16



   Operating expenses consisting of royalties as well as selling, general,
   and administrative expenses increased $124,000 or approximately 8% over
   the third quarter of fiscal 1995.  This compares to an increase of
   $148,000 or approximately 10% in the third quarter of fiscal 1995 over
   the previous third quarter of fiscal 1994.  For the nine months ending
   January 31, 1996, the operating expenses consisting of royalties as well
   as selling, general, and administrative expenses increased $267,000 or
   approximately 5% compared to an increase of $687,000 or approximately
   15% for the previous nine month period  of fiscal 1995.

   Selling, general, and administrative costs as a percentage of sales for
   the third quarter of fiscal 1996 were 50% compared to 49% in the third
   quarter of fiscal 1995 and 53% in  the third quarter of fiscal 1994.
   For the nine month period ending January 31, 1996, the selling, general,
   and administrative costs as a percentage of sales were 35% compared to
   31% in fiscal 1995 and 34% in fiscal 1994. The ratios for the first
   three quarters of fiscal 1996 reflect added investment in editorial
   capacity, staffing an additional sales territory with the associated
   sampling cost, and the addition of personnel in the administrative area.
   A major component of the operating expenses is the distribution of
   sample textbooks and supplements as a marketing tool which is unique to
   the textbook publishing industry.  In the first nine months of fiscal
   1996 due to the large number of new and revised titles, the sampling
   expenses increased to $261,000 from $184,000 for the first nine months
   of the previous fiscal year.

   The 7% increase in net sales during the third quarter of fiscal 1996
   coupled with a 2% increase in the cost of goods sold as a percentage of
   sales and a 8% greater operating expense, decreased the Company's income
   from operations by $63,000, or approximately 85%, to $11,000.  For the
   third quarter of fiscal 1995, the 16% increase in net sales coupled with
   a 10% increase in the cost of goods sold as a percentage of sales (due
   in large part to the revised accounting estimates for the expected
   end-of-year inventory levels under the LIFO method the previous year)
   and an approximate 10% increase in the operating expenses resulted in
   income from operations of $74,000, or a decline of approximately 66%
   from the previous third quarter's income from operations of $215,000.
   For the nine months ending January 31, 1996, the 5% decline in net sales
   coupled with the 3% increase in the cost of goods sold as a percentage
   of sales and a 5% greater operating expense, decreased the Company's
   income from operations by $1,087,000, or approximately 30%, to
   $2,537,000.  For the nine months ending January 31, 1995, the 22% sales
   increase and the 15% increase in operating expenses tied to lower cost
   of goods sold at 31% improved the Company's income from operations by
   $1,005,000, or approximately 38%, to $3,624,000.  Other income for the
   third quarter of fiscal 1996 was $57,000 compared to $82,000 in the
   third quarter of fiscal 1995.  For the nine month period ending January
   31, 1996, other income was $173,000 compared to $155,000 in the similar
   period of the previous fiscal year.  The Company's fiscal year ending
   April 30 divides the purchasing patterns of its school customers such
   that the major marketing and inventory buildup efforts occur at the end
   of the fiscal year, while the resulting sales primarily follow in the
   first two quarters of the next fiscal year.



                                       16

<PAGE>   17





   LIQUIDITY

   Cash and cash equivalents totaled $6,832,000 at January 31, 1996, a
   decrease of $628,000 from the year ended April 30, 1995.  The Company
   has no outstanding long term debt.  As shown in the cash flow
   statements, the cash provided by the operating activities of the Company
   for the first nine months of fiscal 1996 amounted to $1,987,000, as
   compared to $4,269,000 for the first nine months of fiscal 1995, a
   change which is attributed to the decrease in net earnings after
   adjustments to accounts covering amortization of prepublication costs,
   accounts receivable, inventories, accrued expenses, and income taxes
   payable.  The cash provided by the operating activities of the Company
   for the first nine months of fiscal 1995 amounted to $4,269,000, as
   compared to $2,725,000 for the first nine months of fiscal 1994, an
   improvement of $1,544,000 which is attributed principally to the
   increase in net earnings with other adjustments to accounts covering
   deferred income taxes, inventories, accounts payable, accrued expenses,
   and income taxes payable.  The changes in the assets and liabilities for
   the first nine months of  fiscal 1996 include a decrease of cash and
   cash equivalents, an increase in accounts receivable, an increase in
   inventories attributable to the addition of new and revised products, an
   increase of prepublication services for new and revised products under
   development, an increase in property and equipment from the construction
   of the new facility, a reduction in accounts payable, and an increase in
   income taxes payable.  There have been no changes in business practices
   including credit terms or collection efforts from previous years.

   Investment in new and revised products in the first nine months of
   fiscal 1996 was $948,000, or an increase of $418,000 over the first nine
   months of fiscal 1995 when $530,000 was used for the purchase of
   prepublication services.  The rate of investment in new and revised
   products as a percentage of sales for the first nine months of fiscal
   1996 was approximately 8%, compared to an investment rate of 4% for the
   similar period of the previous fiscal year. The Company currently
   intends to continue an aggressive pace of prepublication investment to
   maintain a publishing program of adding new titles while revising a
   backlist of products to match market needs.  With advances in general
   technology, the magnitude of revision efforts required to keep the
   industrial and technical books up to date has increased the investment
   allocations.  In the third quarter of fiscal 1996, there were no
   investing activities related to marketable securities, as was also the
   case in the first and second quarters.

   The primary financing use of cash in the nine months ending January 31,
   1996 was the payment of dividends at $.80 per share.  For the previous
   nine month period ending  January 31, 1995,  the primary financing use
   of cash was the payment of dividends at the rate of $.75 per share.

   The first and second quarters historically have displayed increased
   shipments and increased growth in  accounts receivable while inventory
   declines.  This past third quarter, the strength of the Company's product
   line also contributed to increased sales.   The fourth quarter has
   historically displayed an anticipated growth in inventory as new and revised
   products are published for the next calendar/copyright year and for the next

                                     17

<PAGE>   18

   marketing cycle.  The seasonal and cyclical nature of selling products
   such as textbooks and supplements into the school market with two
   separate semesters tends to affect the periodic liquidity of the
   Company.

   CAPITAL RESOURCES

   It is anticipated that the future capital needs of the Company will be
   met from internally generated funds.  The investment in computer
   hardware and software for various departments within Goodheart-Willcox
   will be met from cash flow from operating activities.  In fiscal 1996,
   the investment in prepublication products and services is expected to
   increase over the pattern established in previous years with plans to
   revise popular backlist titles while adding new titles and products to
   the Company's line.

   In the first quarter of fiscal 1996, the Company acquired 5.9 acres in
   Tinley Park, Illinois, for approximately $738,000 on which it is
   constructing a warehouse and office facility.  The Company intends to
   relocate the entire business operation including editorial, creative,
   sales and marketing, and distribution to this new facility which is
   located approximately eight miles from the current South Holland
   facility.  The site was selected with the intention of retaining all of
   the present talented employees as a productive workforce for future
   growth.  At the close of the third quarter, the architectural plans were
   nearly complete.  The current facility has been placed on the market for
   sale.  It is anticipated the new structure will be completed for
   occupancy in late Spring/early Summer at a total cost of approximately
   $2,762,000 using existing capital resources.

   THE EFFECTS OF INFLATION

   Inflation affects the Company due to increases in the cost of materials
   and services.  In fiscal 1995 and in the first three quarters of fiscal
   1996, the Company experienced some tightening of suppliers schedules and
   some price increases which appear to be more inflationary than patterns
   experienced in previous fiscal years.  Paper used to replenish inventory
   and to print new products or reprint existing products has experienced
   dramatic price increases.  Products printed and bound in the third and
   fourth quarters of fiscal 1996 using the more costly paper available
   will be sold primarily in the first and second quarters of the following
   fiscal year. By advanced planning and by shifting grades of paper, the
   effect of the paper price increases may be delayed. At the close of the
   third quarter, some lead times for paper orders were shortening and
   there was some softening of paper pricing. The ability to reflect such
   price increases in the selling price of Goodheart-Willcox products
   depends upon the pricing of competing product lines and general market
   conditions, which may require the Company to absorb part or all of these
   paper price increases.  The Company continues to manage its costs of
   doing business in these uncertain times by using various suppliers with
   specialized graphic arts equipment and production capabilities, by
   obtaining quotations from new suppliers, by reviewing the variety of paper 
   grades appropriate for various titles, by scheduling press runs in batches,
   and by staying alert to outside opportunities to meet key deadlines.

 

                                       18
<PAGE>   19



                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                      THE GOODHEART-WILLCOX COMPANY, INC.
                                  (Registrant)

Date 
     ----------------       --------------------------------------------------
                                            John F. Flanagan
                                               President

Date
     ----------------       --------------------------------------------------
                                            Donald A. Massucci
                                Vice President, Administration and Treasurer



                                       19