SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
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 0-21730
STECK-VAUGHN PUBLISHING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware I.R.S. No. 33-0556929
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
4515 Seton Center Parkway Suite 300, Austin, Texas 78759
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 512/343-8227
(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
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 14,527,166 common
stock shares outstanding at November 10, 1997.
1 <PAGE>
STECK-VAUGHN PUBLISHING CORPORATION
CONSOLIDATED BALANCE SHEETS
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
Sept 30, December 31, Sept. 30,
(amounts in thousands, except share counts) 1997 1996 1996
-----------------------------------
ASSETS
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $11,741 $4,827 $5,636
Marketable securities 895 1,447 1,399
Receivables, net of allowance of $2,135, $1,342 and $864 22,417 17,492 25,698
Inventories and supplies 25,437 21,776 19,114
Prepaid and deferred marketing expenses 1,203 1,635 849
Deferred plant costs 3,899 3,876 2,916
Other current assets 2,399 2,910 2,731
-----------------------------------
Total current assets 67,991 53,963 58,343
LAND, BUILDINGS AND EQUIPMENT, net 9,887 9,866 9,393
ACQUIRED INTANGIBLE ASSETS, net 14,616 14,655 14,697
DEFERRED PLANT COSTS 4,059 4,042 3,565
OTHER ASSETS 2,428 2,342 799
-----------------------------------
$98,981 $84,868 $86,797
===================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $7,043 $6,618 $7,089
Accrued royalties 2,242 2,296 2,239
Accrued commissions 1,123 736 1,148
Accrued salaries, wages and bonuses 2,314 1,965 2,352
Payable to parent company 1,810 976 1,600
Current portion of long-term debt 489 3,547 3,195
Accrued and deferred income taxes 2,289 2,266 270
Other liabilities 9 49 185
-----------------------------------
Total current liabilities 17,319 18,453 18,078
-----------------------------------
LIABILITIES PAYABLE AFTER ONE YEAR
Long-term debt, less current portion 17,782 6,731 10,204
-----------------------------------
17,782 6,731 10,204
-----------------------------------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 5,000,000 shares - - -
authorized and unissued
Common stock, $.01 par value; 25,000,000 shares authorized; 148 146 146
14,793,000, 14,600,000, and 14,587,000 shares issued
Additional paid-in capital 37,829 36,998 36,891
Retained earnings 27,831 24,313 23,310
Unrealized gain on marketable securities, net of tax effect 100 60 1
-----------------------------------
65,908 61,517 60,348
Treasury stock, at cost (273,000, 255,000 and (2,028) (1,833) (1,833)
255,000 shares) -----------------------------------
Total stockholders' equity 63,880 59,684 58,515
-----------------------------------
$98,981 $84,868 $86,797
===================================
</TABLE>
2 <PAGE>
STECK-VAUGHN PUBLISHING CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30
(amounts in thousands, except per share amounts) 1997 1996 1997 1996
-------------------- --------------------
<S> <C> <C> <C> <C>
NET REVENUES $26,888 $32,419 $65,720 $66,176
Product costs and fulfillment 7,869 8,785 19,503 19,631
-------------------- --------------------
GROSS PROFIT 19,019 23,634 46,217 46,545
Product development 3,654 3,544 10,238 9,408
Selling and marketing 10,570 9,772 22,403 20,559
General and administrative 1,685 2,518 4,514 5,121
Provision for doubtful accounts 116 52 216 97
Amortization of acquired intangible assets 1,146 556 2,306 1,367
Write-off of acquired in-process research
and development costs - - - 4,100
-------------------- -------------------
OPERATING INCOME 1,848 7,192 6,540 5,893
Interest income 79 120 185 710
Interest expense (349) (302) (957) (595)
-------------------- -------------------
INCOME BEFORE INCOME TAXES 1,578 7,010 5,768 6,008
Income taxes 616 2,664 2,250 3,841
-------------------- -------------------
NET INCOME $962 $4,346 $3,518 $2,167
==================== ===================
EARNINGS PER SHARE $0.07 $0.30 $0.24 $0.15
==================== ===================
WEIGHTED AVERAGE SHARES OUTSTANDING 14,624 14,433 14,560 14,419
==================== ===================
</TABLE>
3 <PAGE>
STECK-VAUGHN PUBLISHING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Part I. FINANCIAL STATEMENTS
Item 1. Financial Statements
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
(amounts in thousands) 1997 1996 1997 1996
--------------------- -----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C> <C>
Net Income $962 $4,346 $3,518 $2,167
Adjustments to reconcile net income to cash
used for operating activities:
Depreciation and amortization 463 395 1,421 964
Amortization of acquired intangible assets 1,146 556 2,306 1,367
Write-off of acquired in-process research
and development costs - - - 4,100
Provision for doubtful accounts 116 52 216 97
Loss (gain) on sale of assets - - 14 (2)
Change in assets and liabilities net of effects from
acquisitions:
Receivables (1,854) (8,877) (5,141) (13,326)
Inventories and supplies (1,096) 1,976 (3,661) (899)
Prepaid and deferred marketing expenses 3,233 3,441 432 607
Deferred plant costs 164 (303) (40) (612)
Receivable from/payable to parent company 1,259 969 834 301
Accounts payable and accrued expenses 469 1,178 1,067 2,092
Other 309 (902) 529 (899)
--------------------- ----------------------
NET CASH FROM OPERATING ACTIVITIES 5,171 2,831 1,495 (4,043)
CASH FLOWS FROM INVESTING ACTIVITIES:
Net sales of marketable securities 507 (843) (1,613) (2,380)
Note receivable from parent company, net activity - 27 29 59
Additions to land, buildings and equipment (514) - 511 333
Dispositions of land, buildings and equipment - 3,000 - 4,000
Acquisition costs, net of cash acquired 26 21 (2,267) (10,728)
---------------------- ----------------------
NET CASH FROM INVESTING ACTIVITIES 19 2,205 (3,340) (8,716)
---------------------- ----------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Changes in current portion of long-term debt - 801 (1,900) 1,257
Additions to long-term debt - - 10,278 11,024
Reductions in long-term debt (13) (1,919) (257) (3,990)
Proceeds from issuance of common stock - - (195) -
Purchase of treasury stock (256) 36 833 63
---------------------- ----------------------
NET CASH FROM FINANCING ACTIVITIES (269) (1,082) 8,759 8,354
---------------------- ----------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 4,921 3,954 6,914 (4,405)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 6,820 1,682 4,827 10,041
---------------------- ----------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $11,741 $5,636 $11,741 $5,636
====================== ======================
</TABLE>
4 <PAGE>
STECK-VAUGHN PUBLISHING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Note 1 - Summary of Accounting Policies
Steck-Vaughn Publishing Corporation (the Company) was incorporated on March
10, 1993, as a wholly-owned subsidiary of National Education Corporation
(NEC). Effective April 2, 1993, NEC made a capital contribution of all of the
stock of Steck-Vaughn Company (SVC) to the Company. The consolidated
financial statements include the accounts of the Company and its wholly owned
subsidiaries, Steck-Vaughn Company, SV Distribution Company (d.b.a. Summit
Learning), and Edunetics Ltd. and Edunetics Corporation (together referred to
as "Edunetics" herein). All significant intercompany balances and
transactions have been eliminated in consolidation.
In August 1993, the Company completed an initial public offering in which
2,668,000 shares were sold for net proceeds of $29,775,000. The shares sold
represented 18.3% of the outstanding shares of the Company. The Company
subsequently repurchased 273,000 shares of its outstanding common stock,
increasing NEC's ownership to 82.1% of the common stock of the Company.
In June 1997, Harcourt General, Inc. (Harcourt) completed its tender offer to
acquire all of the outstanding shares of NEC. As a result, Harcourt is now
the owner of the 82.1% of the Company's outstanding common stock previously
held by NEC. In connection with the acquisition of the Company's stock by
Harcourt, all of the officers of the Company resigned their officer
responsibilities and continued in their operational roles, and the executive
officers of Harcourt became officers of the Company. The Company
has retained its historical basis of accounting, and Harcourt has not
reflected its fair value adjustments in these financial statements.
In September 1997, Harcourt entered into a definitive merger agreement with
the Company to acquire all of the outstanding shares of common stock of the
Company not currently owned by Harcourt at a price per share of $14.75.
The transaction is expected to close by December 31, 1997.
Due to the seasonal nature of the Company's traditional selling cycle, a
substantial portion of selling and marketing costs of the Company are deferred
in the first half of the year and fully amortized later in the calendar year
to match the costs with revenues.
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments of a normal recurring nature
necessary to present fairly the financial position, results of operations, and
cash flows of the Company. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange
Commission. It is suggested that these financial statements be read in
conjunction with the financial statements and the notes thereto included in
the Company's 1996 Form 10-K. The results of operations for interim periods
are not necessarily indicative of the results of operations expected for the
year.
5<PAGE>
STECK-VAUGHN PUBLISHING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Note 2 Investments
All marketable securities are classified as available-for-sale securities.
During the nine months ended September 30, 1997 and 1996, the Company did not
realize a material gain or loss from the sale of available-for-sale
securities.
Note 3 Inventories and Supplies
<TABLE>
<CAPTION>
Sept 30, December 31, Sept 30,
(amounts in thousands) 1997 1996 1996
-------------------------------------------
<S> <C> <C> <C>
Finished Goods $24,449 $21,213 $18,341
Work in process 72 72 79
Raw materials and supplies 916 491 694
-------------------------------------------
Total $25,437 $21,776 $19,114
===========================================
</TABLE>
Note 4 Business Combinations
On May 23, 1997, the Company acquired substantially all of the rights to The
Integrator product from The Conover Company, Ltd. for cash consideration of
$2,250,000. The Integrator is a technology-based product which provides basic
skills training customized to the aptitude and career interests of adult
students. The acquisition was accounted for using the purchase method of
accounting.
On April 30, 1996, the Company acquired all of the stock of Edunetics Ltd., an
Israel corporation engaged in the development of educational software, for
cash consideration of $12,000,000. At closing, the purchase price was funded
by cash on hand and borrowings of $9,000,000 under the revolving bank credit
agreement. The acquisition was accounted for using the purchase method of
accounting.
Note 5 Earnings Per Share
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128, "Earnings per Share," establishing new
methodology for the calculation of earnings per share. If earnings per share
had been determined under the new standard, both basic and diluted earnings
per share would be unchanged from the current presentation on the Statements
of Income.
6<PAGE>
STECK-VAUGHN PUBLISHING CORPORATION
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
<TABLE>
<CAPTION>
Percentage of Percentage of
Net Revenues Net Revenues Percentage
Three Months Ended Nine Months Ended Change From
Sept. 30, Sept. 30, Prior Year Period
1997 1996 1997 1996 Q3 YTD
Net Revenues: ------- ------- ------- ------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Core Business:
Elementary/High School 63.9% 58.3% 54.1% 49.9% (9.2)% 7.5 %
Adult education 14.3 14.4 16.7 16.4 (17.6) 1.3
Library 10.9 13.8 15.7 18.8 (34.1) (17.2)
------- ------- ------- -------
89.1 86.5 86.5 85.1 (14.5) 0.9
Summit Learning 9.5 8.3 10.5 10.6 (5.5) (1.2)
Edunetics 1.4 5.2 3.0 4.3 (77.4) (30.4)
------- ------- ------- -------
Total Net Revenues 100.0 100.0 100.0 100.0 (17.1) (0.7)
Product costs and fulfillment 29.3 27.1 29.7 29.7 (10.4) (0.7)
------- ------- ------- -------
Gross Profit 70.7 72.9 70.3 70.3 (19.5) (0.7)
Product development 13.6 10.9 15.6 14.2 3.1 8.8
Selling and marketing 39.2 30.1 34.0 31.1 8.2 9.0
General and administrative 6.3 7.8 6.9 7.7 (33.1) (11.9)
Provision for doubtful accounts 0.4 0.2 0.3 0.1 123.1 122.7
Amortization of acquired
intangible assets 4.3 1.7 3.5 2.1 106.1 68.7
Write-off of acquired in-process
research and development costs - - - 6.2 - -
------- ------- ------- -------
Operating Income 6.9 22.2 10.0 8.9 (74.3) 11.0
Interest income 0.3 0.4 0.3 1.1 (34.2) (73.9)
Interest expense (1.3) (1.0) (1.5) (0.9) 15.6 60.8
------- ------- ------- -------
Income Before Income Taxes 5.9 21.6 8.8 9.1 (77.5) (4.0)
Income taxes 2.3 8.2 3.4 5.8 (76.9) (41.4)
------- ------- ------- -------
Net Income 3.6% 13.4% 5.4% 3.3% (77.9) 62.3
======= ======= ======= =======
</TABLE>
The discussion in this document contains trend analysis and other forward-
looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities and Exchange Act of 1934,
as amended. Actual results could differ materially from those projected in
the forward-looking statements throughout this document.
7 <PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Net Revenues
<TABLE>
<CAPTION>
Revenues by Product Line Three Months Ended Nine Months Ended
Sept. 30, 1996 Sept. 30
(amounts in thousands) 1997 1996 (pro forma) 1997 1996
-------------------------------- ------------------
<S> <C> <C> <C> <C> <C>
Core Business
Elementary and High School (El/Hi) $17,173 $18,910 $16,474 $35,545 $33,062
Adult Education 3,847 4,667 4,124 10,965 10,827
Library 2,943 4,465 4,244 10,318 12,456
-------------------------------- ------------------
23,963 28,042 24,842 56,828 56,345
Summit Learning 2,544 2,691 2,691 6,939 7,025
Edunetics 381 1,686 1,686 1,953 2,806
------------------------------- ------------------
Total $26,888 $32,419 $29,219 $65,720 $66,176
=============================== ==================
</TABLE>
For the third quarter of 1996, the Company reported pro forma revenues which
excluded $3,200,000 of revenues attributable to the backlog of shippable
orders at June 30, 1996, resulting from the installation of a new warehouse
management system. These pro forma revenues are reported above and referenced
below for consistency.
Revenues decreased 17.1% (8.0% on a pro forma basis) as compared to the third
quarter last year as revenues in all core business segments declined,
particularly in Library. Contract sales of Edunetics products in 1996 which
did not repeat in 1997 also adversely affected the quarter's revenues. Year-
to-date sales are essentially flat with last year, with El/Hi sales gains
offsetting shortfalls in Library.
El/Hi revenues decreased 9.2% but increased 4.2% on a pro forma basis versus
last year s third quarter. The pro forma increase is primarily a result of
increasing sales of the Company's new products: Pair-It Books, a 50-title
series for emergent readers, and revised versions of World History and You and
America's Story. The results for the quarter were negatively affected by the
conversion in 1997 to a calendar-year commission year from a 1996 sales year
that ended on September 30.
Adult product sales were down 17.6% (6.7% pro forma) as compared to the same
three months in 1996 as all core markets in the segment were weak. The
segment was also affected by the change in the commission year.
Library sales were down 34.1% (30.7% pro forma) for the quarter against 1996
as school districts have trimmed library budgets and sales to public libraries
did not offset the decrease in sales to schools.
8<PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Summit sales are essentially flat for both the third quarter and year-to-date.
Revenues were increased by orders from this season's science catalog and
residual business from last fall's catalogs. These positive results were
offset by lower responses to the spring math catalogs.
Product Cost and Fulfillment Expense
Product cost and fulfillment expense as a percentage of revenues increased for
the three-month period ended September 30, 1997, as compared to 1996. Product
cost and fulfillment for the Company's core business operations for the three
months ended September 30, 1997, represented 25.3% of core business revenues,
as compared to 24.6% for the same period in the previous year, primarily due
to the new policy of expensing inbound freight. Summit Learning's product and
fulfillment costs, at 70.8% of revenues compared to 62.0% for the same period
of the prior year, increased over the prior year period primarily due to
product mix.
Product Development Expense
The following table reconciles product development investment to product
development expense for each of the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 30, Percentage Sept. 30, Percentage
(amounts in thousands) 1997 1996 Change 1997 1996 Change
--------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
Product development investment $3,663 $3,846 (4.8)% $10,452 $10,020 4.3 %
Plant and software costs capitalized (1,354) (1,383) (2.1) (3,179) (3,389) (6.2)
Plant costs amortized 1,345 1,081 24.4 2,965 2,777 6.8
----------------- -------------------
Product development expense $3,654 $3,544 3.1 $10,238 $9,408 8.8
================= ===================
</TABLE>
Product development investment for the three months ended September 30, 1997,
decreased 4.8% as compared to the prior year, primarily attributable to the
timing of expenditures. Amortization expense was higher due to the
implementation of the amortization rate schedule for new products.
9 <PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Selling and Marketing Expense
The following table reconciles selling and marketing costs to selling and
marketing expense for each of the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 30, Percentage Sept. 30, Percentage
(amounts in thousands) 1997 1996 Change 1997 1996 Change
-------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
Selling and marketing costs $ 8,001 $6,843 16.9% $22,329 $19,757 13.0%
Amortization of deferred
selling and marketing costs 2,569 2,929 (12.3) 74 802 (90.8)
-------------------------- --------------------------------
Net selling and marketing expense $10,570 $9,772 8.2 $22,403 $20,559 9.0
================ ===================
</TABLE>
Selling and marketing costs increased 16.9% for the three months ended
September 30, 1997, and 13.0% year-to-date as compared to the prior year,
primarily due to additional marketing programs, expansion of Summit's catalog
offerings, and the new curriculum integration sales group formed to facilitate
the sale of technology products.
General and Administrative Expense
General and administrative expense decreased 33.1% for the three months ended
September 30, 1997, as compared to the prior year, due to the inclusion of a
charge for the former Chief Executive Officer last year.
Amortization of Acquired Intangible Assets
Amortization expense increased due to the acquisition of The Integrator in May
1997 and Edunetics in April 1996.
Operating Income by Product Line
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Sept 30, Sept. 30,
(amount in thousands) 1997 1996 1997 1996
------------------- --------------------
<S> <C> <C> <C> <C>
Core Business $4,696 $7,965 $11,168 $11,154
Summit Learning (787) (156) (836) (356)
Edunetics (2,061) (617) (3,792) (805)
------------------- --------------------
1,848 7,192 6,540 9,993
Write-off of research
and development - - - (4,100)
___________________ ____________________
Operating Income $1,848 $7,192 $6,540 $5,893
=================== ====================
</TABLE>
10 <PAGE>
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Operating income as a percentage of revenues for the three months ended
September 30, 1997, as compared to 1996, decreased for the core business
primarily due to lower revenues. The decrease in Summit Learning's operating
income was due to higher product cost and increased catalogs. Edunetics
reported an operating loss due to lower than expected sales.
Interest Income and Expense
Interest income for the three-month period ended September 30, 1997 was lower
than the previous year, reflecting termination of the Company's loans to NEC.
Interest expense for the period was higher than prior year due to debt
incurred for the acquisition of The Integrator product line.
Liquidity and Capital Resources
The Company's primary sources of liquidity are cash, marketable securities,
cash provided from operations and the Company's bank line of credit. The
Company's uses of cash include product development, capital expenditures,
working capital requirements, and selected acquisitions of complementary
businesses and product lines.
At September 30, 1997, the Company had $12,636,000 in cash and marketable
securities versus $7,035,000 at September 30, 1996. The prior year
balance reflected the use of cash on hand to purchase Edunetics last
year.
Net cash flow from operating activities for the three months ended September
30, 1997, of $5,171,000 was $2,340,000 higher than the prior year period. The
increase reflects changes in working capital, principally the lower increase
in receivables relative to last year.
On May 23, 1997, the Company acquired substantially all of the rights to The
Integrator product line from The Conover Company, Ltd. for cash consideration
of $2,250,000. On April 30, 1996, the Company acquired all of the stock of
Edunetics Ltd. for cash consideration of $12,000,000. At closing, the
purchase prices for both transactions were funded by cash on hand and
borrowings under the Company's bank line of credit.
In April 1997, the Company extended its revolving bank credit agreement to
$20,000,000 and the maturity date to April 10, 1999. The agreement provides
for borrowings at prime or, at the Company's option, LIBOR plus 1.5 percent.
At September 30, 1997, $17,278,000 was outstanding under the bank credit
facility.
The Company expects that cash, cash provided from operations, and the
revolving credit facility will be sufficient to provide for investment in
product development, planned working capital requirements, debt service, and
capital expenditures for the foreseeable future.
11<PAGE>
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Restated Certificate of Incorporation of the Company (1)
3.2 By-Laws of the Company. (1)
4.1 Specimen of Common Stock Certificate of the Company. (1)
10.1 Modification and Renewal of Note, dated December 28, 1992,
between NationsBank of Texas, N.A., as holder, and Steck-
Vaughn Company, as borrower, secured by and as purchase money for
the Company's distribution center in Austin, Texas. (2)
10.2 Agreement, dated June 1, 1990, between the American Council on
Education and Steck-Vaughn Company, granting exclusive license for
reproduction and distribution of official GED Practice
Tests and Addendum effective July 28, 1992. (3)
10.3 Form of Intercompany Agreement between the Company and National
Education Corporation. (4)
10.4 First Amendment to Intercompany Agreement between the Company and
National Education Corporation dated June 10, 1994. (5)
10.5 Form of Tax Sharing Agreement between the Company and National
Education Corporation. (6)
10.6 Form of Indemnification Agreements between the Company and its
Officers and Directors. (7)
10.7 The Company's 1993 Stock Option Plan as amended. (8)
10.8 National Education Corporation Supplemental Executive Retirement
Plan (9)
10.9 Revolving Line of Credit Note and Option Agreement between the
Company and National Education Corporation, dated February 28,
1995 (10)
10.10 Addendum to Agreement between the American Council on Education
and Steck-Vaughn Company extending the expiration of the
Agreement to August 31, 2001 (11)
10.11 The Company's 1995 Directors' Stock Option and Award Plan (12)
10.12 Renewal and Extension Agreement between the Company and National
Education Corporation, effective December 31, 1995 (13)
10.13 First Amendment to Stock Option Agreement between the Company and
National Education Corporation, effective December 31, 1995. (14)
10.14 Letter Amendment to Stock Option Agreement between the Company and
National Education Corporation, dated February 1, 1996. (15)
10.15 Agreement between the Company and Edunetics Ltd. dated February
29, 1996. (16)
12 <PAGE>
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
10.16 Second Renewal and Extension Agreement between the Company and
National Education Corporation, effective March 31, 1996. (17)
10.17 Second Amendment to Stock Option Agreement between the Company and
National Education Corporation, effective March 31, 1996. (18)
10.18 Third Renewal and Extension Agreement between the Company and
National Education Corporation, effective June 30, 1996. (19)
10.19 Third Amendment to Stock Option Agreement between the Company and
National Education Corporation, effective June 30, 1996 .(20)
10.20 Employment Agreement between the Company and Anita Kopec dated
September 10, 1996 .(21)
10.21 Revised and Restated Office Lease dated January 30, 1997, between
Quarry Lake Business Center, Ltd., as landlord and Steck-Vaughn
company, as tenant, for the Company's principal offices in Austin,
Texas, beginning November 1, 1996 (22)
10.22 Agreement entered into July 1, 1997, among Harcourt General, Inc.
and the Independent Directors of Steck-Vaughn Publishing
Corporation(23).
10.23 Agreement dated May 30, 1997, between Harcourt General, Inc. and
Steck-Vaughn Publishing Corporation(24).
10.24 Loan Agreement between NationsBank of Texas, N.A., and Steck-
Vaughn Company, dated April 10, 1997(25)
10.25 Agreement and Plan of the Merger, dated as of September 29, 1997, by
among Steck-Vaughn Publishing Corporation, Harcourt General, Inc.,
National Education Corporation and SV Acquisition Corporation.(26)
11.1 Statement re Calculation of Earnings Per Share.(26)
27 Financial Data Schedule. (27)
(b) Reports on Form 8-K
None were filed during the period.
13 <PAGE>
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(1) Incorporated by reference to the identically numbered exhibit in
Amendment No. 1 to the Company's Registration Statement on Form S-
1, File No. 33-62334, filed with the Securities and Exchange
Commission on June 17, 1993 ("Amendment No. 1 to S-1 Registration
Statement").
(2) Incorporated by reference to Exhibit 10.1 to the Company's
Registration Statement on Form S-1, File No. 33-62334, filed with
the Securities and Exchange Commission on May 7, 1993 (the "S-1
Registration Statement").
(3) Incorporated by reference to Exhibit 10.7 to the Company's
Amendment No. 1 to S-1 Registration Statement.
(4) Incorporated by reference to Exhibit 10.8 to the Company's
Amendment No. 1 to S-1 Registration Statement.
(5) Incorporated by reference to Exhibit 10.15 in the Company's Form
10-Q for the quarterly period ended June 30, 1994, filed with the
Securities and Exchange Commission on August 11, 1994.
(6) Incorporated by reference to Exhibit 10.9 to the Company's
Amendment No. 1 to S-1 Registration Statement.
(7) Incorporated by reference to Exhibit 10.10 to the Company's
Amendment No. 1 to S-1 Registration Statement.
(8) Incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-8, file no. 333-22235, filed with
the Securities and Exchange Commission on February 24, 1997.
(9) Incorporated by reference to Exhibit 10.12 to the Company's S-1
Registration Statement.
(10) Incorporated by reference to Exhibit 10.12 in the Company's Form
10-K for the year ended December 31, 1994, filed with the
Securities and Exchange Commission on March 29, 1995.
(11) Incorporated by reference to Exhibit 10.13 in the Company's Form
10-Q for the quarterly period ended March 31, 1995, filed with the
Securities and Exchange Commission on May 12, 1995.
(12) Incorporated by reference to Exhibit A in the Company's Proxy
Statement furnished in connection with the Annual Meeting of
Stockholders held May 17, 1995, filed with the Securities and
Exchange Commission on March 29, 1995.
(13) Incorporated by reference to Exhibit 10.16 in the Company's Form
10-K for the year ended December 31, 1995, filed with the
Securities and Exchange Commission on March 25, 1996.
15<PAGE>
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(14) Incorporated by reference to Exhibit 10.17 in the Company's Form
10-K for the year ended December 31, 1995, filed with the
Securities and Exchange Commission on March 25, 1996.
(15) Incorporated by reference to Exhibit 10.18 in the Company's Form
10-K for the year ended December 31, 1995, filed with the
Securities and Exchange Commission on March 25, 1996.
(16) Incorporated by reference to Exhibit 10.19 in the Company's Form
10-K for the year ended December 31, 1995, filed with the
Securities and Exchange Commission on March 25, 1996.
(17) Incorporated by reference to Exhibit 10.19 in the Company's Form
10-Q for the quarterly period ended March 31, 1996, filed with the
Securities and Exchange Commission on May 14, 1996.
(18) Incorporated by reference to Exhibit 10.20 in the Company's Form
10-Q for the quarterly period ended March 31, 1996, filed with the
Securities and Exchange Commission on May 14, 1996.
(19) Incorporated by reference to Exhibit 10.22 in the Company's Form
10-Q for the quarterly period ended June 30, 1996, filed with the
Securities and Exchange Commission on August 13, 1996.
(20) Incorporated by reference to Exhibit 10.23 in the Company's Form
10-Q for the quarterly period ended June 30, 1996, filed with the
Securities and Exchange Commission on August 13, 1996.
(21) Incorporated by reference to Exhibit 10.24 in the Company's Form
10-Q for the quarterly period ended September 30, 1996, filed with
the Securities and Exchange Commission on November 13, 1996.
(22) Incorporated by reference to Exhibit 10.22 in the Company's Form
10-K for the year ended December 31, 1996, filed with the
Securities and Exchange Commission on March 31, 1997.
(23) Incorporated by reference to Exhibit 99.4 of a Schedule 13D/A
dated July 10, 1997 filed by Harcourt General, Inc. and National
Education Corporation.
(24) Incorporated by reference to Exhibit 11(a)(21) to Amendment No. 5
to Schedule 14D-1 of Harcourt General, Inc., dated July 5, 1997.
(25) Incorporated by reference to Exhibit 10.24 in the Company's Form
10-Q for the quarterly period ended June 30, 1997, filed with the
Securities and Exchange Commission on August 15, 1997.
(26) Incorporated by reference to Appendix A to the Information Statement
of Steck-Vaughn Publishing Corporation, which is Exhibit 13E-3
Transaction Statement of Steck-Vaughn Publishing Corporation filed
with the Securities and Exchange Commission on 10/06/97.
(27) Filed only with electronic version of Form 10-Q.
15<PAGE>
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.
STECK-VAUGHN PUBLISHING CORPORATION
Date: November 14, 1997 By /s/ John Cook
John Cook
Vice President, Finance and
Chief Financial Officer
By /s/ Stephen C. Richards
Stephen C. Richards
Vice President - Controller
Principal Accounting Officer
16<PAGE>
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT PAGE NO.
11.1 Statement re Calculation of Earnings Per Share.
27.1 Financial Data Schedule.
17<PAGE>
<TABLE>
STECK-VAUGHN PUBLISHING CORPORATION
EXHIBIT 11.1
To Form 10-Q dated September 30, 1997
CALCULATION OF EARNINGS PER SHARE
(amounts in thousands, except per share amounts)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
------------------ --------------------
<S> <C> <C> <C> <C>
Net Income $962 $4,346 $3,518 $2,167
================== ====================
Common Stock:
Shares outstanding from the beginning
of the period 14,499 14,329 14,345 14,318
Shares issued,weighted for period held 4 - 116 7
Assumed exercise of stock options using the
treasury stock method 121 104 113 94
Purchase of treasury shares,
weighted for period held - - (14) -
------------------- ------------------
Weighted Average Shares Outstanding 14,624 14,433 14,560 14,419
=================== ==================
Earnings Per Share $0.07 $0.30 $0.24 $0.15
------------------- ------------------
<PAGE>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains a summary of financial information extracted from the
Condensed Consolidated Balance Sheet and Condensed Consolidated Statement of
Operations and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 11,741
<SECURITIES> 895
<RECEIVABLES> 24,552
<ALLOWANCES> (2,135)
<INVENTORY> 25,437
<CURRENT-ASSETS> 67,991
<PP&E> 18,828
<DEPRECIATION> (8,441)
<TOTAL-ASSETS> 98,981
<CURRENT-LIABILITIES> 17,319
<BONDS> 0
0
0
<COMMON> 37,977
<OTHER-SE> (2,028)
<TOTAL-LIABILITY-AND-EQUITY> 98,981
<SALES> 26,888
<TOTAL-REVENUES> 26,888
<CGS> 7,869
<TOTAL-COSTS> 15,909
<OTHER-EXPENSES> 1,146
<LOSS-PROVISION> 116
<INTEREST-EXPENSE> 349
<INCOME-PRETAX> 1,578
<INCOME-TAX> 616
<INCOME-CONTINUING> 962
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 962
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
