SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED JUNE 30, 1995 COMMISSION FILE NO. 0-3415
STV GROUP, INCORPORATED
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1698231
(State or other jurisdiction of (I.R.S. Employer Identification)
incorporation or organization)
11 Robinson Street, Pottstown, Pennsylvania 19464
(Address of principal executive offices) (Zip Code)
(610) 326-4600
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $1.00 par value
(Title of class)
As of June 30, 1995, there were 1,821,246 shares of common stock of the
registrant outstanding.
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 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
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
STV GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
UNAUDITED
<TABLE>
<CAPTION>
June 30, 1995 September 30, 1994
<S> <C> <C>
ASSETS
Current Assets
Cash $1,397,000 $640,000
Accounts Receivable less allowance for doubtful
accounts of $320,000 in 1995 and $50,000 in 1994 19,738,000 24,413,000
Costs and Estimated Profits of Uncompleted
Contracts in Excess of Related Billings 13,254,000 13,045,000
Income Taxes Recoverable 438,000 522,000
Deferred tax benefit 828,000 360,000
Other Current Assets 1,119,000 1,434,000
Total Current Assets 36,774,000 40,414,000
---------- ----------
Property and Equipment 11,800,000 11,374,000
Less Accumulated Depreciation 9,911,000 9,282,000
--------- ---------
Net Property and Equipment 1,889,000 2,092,000
Deferred Tax Benefit 430,000 430,000
Other Assets 1,015,000 1,024,000
--------- ---------
TOTAL $40,108,000 $43,960,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes and Accounts Payable $17,897,000 $22,369,000
Accrued Wages and Expenses 6,696,000 6,774,000
Billings on Uncompleted Contracts in Excess of
Related Costs 3,486,000 3,800,000
--------- ---------
Total Current Liabilities 28,079,000 32,943,000
Long-Term Debt 2,193,000 1,939,000
Stockholders' Equity
Preferred Stock 0 0
Common Stock 1,921,000 1,843,000
Capital Surplus 3,003,000 2,681,000
Retained Earnings 5,183,000 4,825,000
--------- ---------
Total 10,107,000 9,349,000
Less: Treasury Stock 271,000 271,000
------- -------
Total Stockholders' Equity 9,836,000 9,078,000
TOTAL $40,108,000 $43,960,000
=========== ===========
</TABLE>
<PAGE>
STV GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
NINE MONTHS ENDED
June 30
1995 1994
<S> <C> <C>
Operating Activities
Net Income $358,000 $541,000
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and Amortization 684,000 580,000
Deferred Tax Benefit 0 65,000
Other 255,000 (332,000)
Stock contribution to Employee Stock
Ownership Program (ESOP) 400,000 0
Changes in Operating assets and liabilities
Accounts Receivable 4,674,000 (944,000)
Costs of uncompleted contracts in
excess of billings and prepaid expenses 106,000 (491,000)
Accounts Payable and accrued expenses (2,183,000) 1,402,000
Billing in excess of related costs (314,000) 568,000
Current Income Taxes (384,000) 234,000
-------- -------
Net Cash provided by operating activities $3,596,000 $1,623,000
Investing Activities
Purchase of Property and Equipment (426,000) (724,000)
Purchase of Software (144,000) (31,000)
Decrease (Increase) in other assets 44,000 (30,000)
------ -------
Net Cash provided (used) by investing activities ($526,000) ($785,000)
Financing Activities
Proceeds from line of credit and long term
borrowings 64,837,000 59,555,000
Principal payments on line of credit and long
term borrowings (67,150,000) (59,803,000)
----------- -----------
Net Cash (used) provided by financing
activities ($2,313,000) ($248,000)
Increase (decrease) in cash and equivalents 757,000 590,000
Cash and equivalents at beginning of year 640,000 818,000
------- -------
Cash and equivalents at end of period $1,397,000 $1,408,000
========== ==========
</TABLE>
<PAGE>
STV GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
June 30 June 30
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue
Total Revenue $23,187,000 $23,439,000 $67,097,000 $65,934,000
Less Subcontract and Procurement Costs 5,829,000 6,943,000 14,865,000 17,130,000
--------- --------- ---------- ----------
Operating Revenue $17,358,000 $16,496,000 $52,232,000 $48,804,000
Costs and Expenses
Costs of Services and Sales 15,523,000 14,853,000 46,642,000 44,030,000
General and Administrative 1,202,000 1,072,000 3,533,000 3,196,000
Interest in Joint Venture 54,000 (76,000) 255,000 (331,000)
Interest 389,000 361,000 1,140,000 1,025,000
------- ------- --------- ---------
Total Costs and Expenses 17,168,000 16,210,000 51,570,000 47,920,000
Income Before Income Taxes 190,000 286,000 662,000 884,000
Income Taxes 87,000 126,000 304,000 343,000
------ ------- ------- -------
Net Income $103,000 $160,000 $358,000 $541,000
======== ======== ======== ========
Earnings per share: $0.06 $0.09 $0.20 $0.31
Weighted Average Common Shares and
Equivalents 1,821,246 1,757,062 1,808,243 1,756,985
</TABLE>
<PAGE>
Notes to Consolidated Condensed Financial Statement
June 30, 1995
1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with the instruction to Form 10-Q and therefore do not
include all information and footnotes necessary for a fair presentation of
financial position, results of operations, and cash flows in conformity with
generally accepted accounting principles.
It should be understood that the foregoing interim results are not necessarily
indicative of the results of operations for the full fiscal year ending
September 30, 1995 due in part to increased reliance on estimates at interim
dates.
2 - ACCOUNTING CHANGES
Effective October 1, 1994, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 112, "Employers' Accounting for Postemployment Benefits,"
in accounting for disability benefits. Prior to October 1, 1994, the Company
recognized the cost of providing these benefits on a cash basis. Under the new
method of accounting, the Company accrues the benefits when it becomes probable
that such benefits will be paid and when sufficient information exists to make
reasonable estimates of the amounts to be paid. This accounting change had no
material effect on net income or net worth. As required by the Statement, prior
year financial statements have not been restated to reflect the change in
accounting method.
Effective October 1, 1993, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 109, "Accounting for Income Taxes," and Statement of
Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions." These accounting changes did not
have a material effect on net income or net worth. Certain prior year amounts
have been reclassified to conform to the presentation in the Company's 1994
Annual Report on Form 10-K. These reclassifications had no effect on the results
of operations or no overall financial position.
<PAGE>
Item 2. Management Discussion and Analysis of the Results of Operation
Total revenues for the quarter ended June 30, 1995 (third quarter fiscal 1995)
decreased 1.1% as compared to the third quarter of fiscal 1994 and increased
9.9% as compared to the previous quarter. Operating revenues (total revenues
excluding pass-through costs) increased 5.2% as compared to the third quarter of
fiscal 1994 and decreased .9% as compared to the previous quarter.
Pass-through costs, expressed as a percentage of total revenues, decreased to
25.1% as compared to 29.6% in the third quarter of fiscal 1994 and increased
from 16.9% in the previous quarter. Pass-through costs will vary depending on
the need for specialty subconsultants and governmental subcontract requirements.
Cost of services, expressed as a percentage of operating revenues, decreased to
89.4% for the third quarter of fiscal 1995 from 90.1% in the third quarter of
fiscal 1994 and are comparable to the 89.3% in the previous quarter. The
decrease in the percentage from the third quarter fiscal 1995 was due mainly to
the increase in revenue. As a dollar amount, cost of services increased $670,000
in the third quarter of fiscal 1995. This increase was primarily due to an
increase in costs to support the increased sales.
General and administrative expense, expressed as a percentage of operating
revenues, increased to 6.9% in the third quarter of fiscal 1995 from 6.5% in the
third quarter of fiscal 1994 and was comparable to the 6.7% in the previous
quarter. The increase from the third quarter of fiscal 1994 was due to an
increase in salaries and insurance costs.
The interest in an architectural joint venture changed from a loss of $76,000 in
the third quarter of fiscal 1994 to a profit of $54,000 in the third quarter of
fiscal 1995. The Company has chosen to wind-down and eventually terminate the
joint venture. The Company expects the joint venture to break-even at the end of
the wind-down phase.
Interest, expressed as a percentage of operating revenues, is 2.2% for the third
quarter of fiscal 1995 which is comparable to the 2.2% of the third quarter of
fiscal 1994 and the 2.1% of the previous quarter. As a dollar amount, interest
increased $28,000 in the third quarter of fiscal 1995 compared to the third
quarter of fiscal 1994 due to the increase in the interest rate.
<PAGE>
Income tax expense for the third quarter of fiscal 1995 was 45.8% of pre-tax
income compared to 44.1% in the third quarter of fiscal 1994.
Earnings per common share for the third quarter of fiscal 1995 were 6 cents
based on 1,821,246 shares outstanding which is comparable to the 9 cents for the
third quarter of fiscal 1994 based on 1,757,062 shares outstanding.
Financial Condition
Working capital increased to $8,695,000 from the $8,461,000 in the previous
quarter. Capital resources available to the Company include an existing line of
credit for working capital. The current limit is a maximum of $16.5 million
based on accounts receivable and work-in-progress of which approximately $3.8
million is currently available. The Company believes the existing line of credit
is adequate to meet the financial needs of the Company. The Company is planning
to continue its program of purchasing computer-assisted design and drafting
equipment.
The Company's backlog remains strong at approximately $122 million.
<PAGE>
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.
STV GROUP, INCORPORATED
(Registrant)
August 11, 1995 By: /s/ Michael Haratunian
---------------------- ----------------------
Date Michael Haratunian
Chairman, Chief Executive Officer
August 11, 1995 By: /s/ Peter W. Knipe
----------------------- ------------------
Date Peter W. Knipe
Secretary/Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
READ THE ENTIRE FORM 10-Q FOR FULL FINANCIAL PICTURE.
</LEGEND>
<CIK> 0000095045
<NAME> STV GROUP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,397,000
<SECURITIES> 186,000
<RECEIVABLES> 20,058,000
<ALLOWANCES> 320,000
<INVENTORY> 13,254,000
<CURRENT-ASSETS> 36,774,000
<PP&E> 11,800,000
<DEPRECIATION> 9,911,000
<TOTAL-ASSETS> 40,108,000
<CURRENT-LIABILITIES> 28,079,000
<BONDS> 0
<COMMON> 1,921,000
0
0
<OTHER-SE> 8,186,000
<TOTAL-LIABILITY-AND-EQUITY> 40,108,000
<SALES> 67,097,000
<TOTAL-REVENUES> 67,097,000
<CGS> 46,642,000
<TOTAL-COSTS> 51,570,000
<OTHER-EXPENSES> 255,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,140,000
<INCOME-PRETAX> 662,000
<INCOME-TAX> 304,000
<INCOME-CONTINUING> 358,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 358,000
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0
</TABLE>
