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 DECEMBER 31, 1994 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 December 31, 1994, 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>
December 31, 1994 September 30, 1994
<S> <C> <C>
ASSETS
Current Assets
Cash $999,000 $640,000
Accounts Receivable less allowance for doubtful
accounts of $140,000 in 1995 and $90,000 in 1994 22,187,000 24,413,000
Costs and Estimated Profits of Uncompleted
Contracts in Excess of Related Billings 11,819,000 13,045,000
Income Taxes Recoverable 438,000 522,000
Deferred tax benefit 416,000 360,000
Other Current Assets 1,131,000 1,434,000
--------- ---------
Total Current Assets 36,990,000 40,414,000
Property and Equipment 11,381,000 11,374,000
Less Accumulated Depreciation 9,487,000 9,282,000
--------- ---------
Net Property and Equipment 1,894,000 2,092,000
Deferred Tax Benefit 430,000 430,000
Other Assets 936,000 1,024,000
------- ---------
TOTAL $40,250,000 $43,960,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes and Accounts Payable $17,409,000 $22,369,000
Accrued Wages and Expenses 6,572,000 6,774,000
Billings on Uncompleted Contracts in Excess of
Related Costs 4,743,000 3,800,000
--------- ---------
Total Current Liabilities 28,724,000 32,943,000
Long-Term Debt 1,915,000 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 4,958,000 4,825,000
--------- ---------
Total 9,882,000 9,349,000
Less: Treasury Stock 271,000 271,000
------- -------
Total Stockholders' Equity 9,611,000 9,078,000
TOTAL $40,250,000 $43,960,000
=========== ===========
</TABLE>
<PAGE>
STV GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
December 31
1994 1993
<S> <C> <C>
Operating Activities
Net Income $132,000 $237,000
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and Amortization 220,000 174,000
Deferred Tax Benefit 0 (45,000)
Other 104,000 (133,000)
Stock contribution to Employee Stock
Ownership Program (ESOP) 400,000 0
Changes in Operating assets and liabilities
Accounts Receivable 2,226,000 (1,313,000)
Costs of uncompleted contracts in
excess of billings and prepaid expenses 1,530,000 577,000
Accounts Payable and accrued expenses (1,565,000) 587,000
Billing in excess of related costs 943,000 18,000
Current Income Taxes 28,000 125,000
------ -------
Net Cash provided by operating activities $4,018,000 $227,000
Investing Activities
Purchase of Property and Equipment (7,000) (20,000)
Purchase of Software (14,000) (8,000)
Decrease (Increase) in other assets 32,000 8,000
------ -----
Net Cash provided (used) by investing activities $11,000 ($20,000)
Financing Activities
Proceeds from line of credit and long term
borrowings 21,700,000 17,450,000
Principal payments on line of credit and long
term borrowings (25,370,000) (18,333,000)
----------- -----------
Net Cash (used) provided by financing
activities ($3,670,000) ($883,000)
Increase (decrease) in cash and equivalents 359,000 (676,000)
Cash and equivalents at beginning of year 640,000 818,000
------- -------
Cash and equivalents at end of period $999,000 $142,000
======== ========
</TABLE>
<PAGE>
STV GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
December 31
1994 1993
<S> <C> <C>
Revenue
Total Revenue $22,817,000 $21,808,000
Less Subcontract and Procurement Costs 5,464,000 5,427,000
--------- ---------
Operating Revenue $17,353,000 $16,381,000
Costs and Expenses
Costs of Services and Sales 15,468,000 14,604,000
General and Administrative 1,153,000 1,232,000
Interest in Joint Venture 104,000 (133,000)
Interest 383,000 336,000
------- -------
Total Costs and Expenses 17,108,000 16,039,000
Income Before Income Taxes 245,000 342,000
Income Taxes 113,000 105,000
------- -------
Net Income $132,000 $237,000
======== ========
Earnings per share: $0.07 $0.14
Weighted Average Common Shares and
Equivalents 1,798,491 1,743,246
</TABLE>
<PAGE>
Notes to Consolidated Condensed Financial Statement
December 31, 1994
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 December 31, 1994 (first quarter of fiscal
1995) increased 4.6% as compared to the first quarter of fiscal 1994 and
decreased 3.0% as compared to the previous quarter. Operating revenues (total
revenues excluding pass through costs) for the first quarter of fiscal 1995
increased 5.9% as compared to the first quarter of fiscal 1994 and increased
2.4% as compared to the previous quarter. The increase in operating revenues
reflects an increase in the demand for transportation, infrastructure and
facilities engineering.
Pass-through costs, expressed as a percentage of total revenues decreased to
23.9% as compared to 24.9% in the first quarter of fiscal 1994 and 29.0% in the
previous quarter. Pass through costs will vary depending on the need for
specialty subconsultants and governmental subcontract requirements.
Cost of services for the first quarter of fiscal 1995 increased 6% from the
first quarter of fiscal 1994 but is comparable when expressed as a percentage of
operating revenue at 89.1% in the first quarter of fiscal 1995 and 89.2% in the
first quarter of fiscal 1994. Labor, labor related expenses, and computer
expense increased due to increase workload and were responsible for a 2.3%
increase in cost of services. Labor related expenses also increased cost of
services 1.6% due to the adoption of the Financial Accounting Standards Board
Statement of Financial Accounting Standards (SFAS) No. 112, "Employers'
Accounting for Postemployment Benefits" and a change in estimate on payroll
taxes. The balance of the increase in cost of services was primarily due to
additional marketing effort. Compared to the previous quarter, cost of services,
expressed as a percentage of net operating revenue, increased from 86.1% to
89.1%. The previous quarter was positively impacted by a change in estimates for
accounts receivable and legal expenses and without that adjustment would have
been comparable at 88.2%.
General and administrative expense, expressed as a percentage of operating
revenue, decreased to 6.6% in the first quarter of fiscal 1995 from 7.5% in the
first quarter of fiscal 1994 and 8.6% in the previous quarter. The decrease from
the first quarter of fiscal 1994 was due to a decrease in legal and accounting
fees and the increased revenues. The decrease from the previous quarter was due
mainly to a decrease in legal costs.
<PAGE>
The interest in an architectural joint venture changed from a loss of $133,000
in the first quarter of fiscal 1994 to a profit of $104,000 in the first quarter
of fiscal 1995. In the fourth quarter of fiscal 1994, the company chose to
wind-down and eventually terminate the joint venture. The Company expects the
joint venture to break-even during the wind-down phase.
Interest, expressed as a percentage of operating revenues for the first quarter
of fiscal 1995 was comparable to the first quarter of 1994 at 2.2% and decreased
from the 2.5% of the previous quarter. This decrease was due to a reduction in
borrowing.
Income tax expense for the first quarter of 1995 was 46% of pre-tax income
compared to 31% in the first quarter of 1994. Included in the 1994 tax rate was
a favorable adjustment of $45,000 due to the adoption of Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." Without this
adjustment income tax expense, expressed as a percentage of pre-tax income,
would have been comparable to the first quarter of fiscal 1995 at 44%.
Earnings per common share for the first quarter of 1995 were 7 cents as compared
to 14 cents for the first quarter of fiscal 1994. The earnings per share in the
first quarter of 1994 included 3 cents due to the cumulative effect of the
adoption of Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes."
Financial Condition
Working capital increased to $8,266,000 from the $7,471,000 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 $4.5
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 $110 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)
February 14, 1995 By: /s/ Michael Haratunian
- - - --------------------- ----------------------
Date Michael Haratunian
Chairman, Chief Executive Officer
February 14, 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, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> DEC-31-1994
<CASH> 999,000
<SECURITIES> 186,000
<RECEIVABLES> 22,327,000
<ALLOWANCES> 140,000
<INVENTORY> 13,045,000
<CURRENT-ASSETS> 40,414,000
<PP&E> 11,374,000
<DEPRECIATION> 9,282,000
<TOTAL-ASSETS> 43,960,000
<CURRENT-LIABILITIES> 32,943,000
<BONDS> 0
<COMMON> 1,921,000
0
0
<OTHER-SE> 7,961,000
<TOTAL-LIABILITY-AND-EQUITY> 43,960,000
<SALES> 22,817,000
<TOTAL-REVENUES> 22,817,000
<CGS> 15,468,000
<TOTAL-COSTS> 17,108,000
<OTHER-EXPENSES> 104,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 383,000
<INCOME-PRETAX> 245,000
<INCOME-TAX> 113,000
<INCOME-CONTINUING> 132,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 132,000
<EPS-PRIMARY> .07
<EPS-DILUTED> 0
</TABLE>
