for name in `ls` and filenames with spaces

Just don't use command substitution: use for name in *.

Replace

for name in `ls`

with:

ls | while read name

Notice: bash variable scoping is awful. If you change a variable inside the loop, it won't take effect outside the loop (in my version it won't, in your version it will). In this example, it doesn't matter.

Notice 2: This works for file names with spaces, but fails for some other strange but valid file names. See Charles Duffy's comment below.

Looks like two potential issues:

First, the IFS variable and it's assignment should not have space in them. Instead of

IFS = '\n' it should be IFS=$'\n'

Secondly, for name in ls will cause issues with filename having spaces and newlines. If you just wish to handle filename with spaces then do something like this

for name in *

I don't understand the significance of the line

number=`echo "$name" | grep -o "[0-9]\{1,2\}"`

This will give you numbers found in filename with spaces in new lines. May be that's what you want.