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 MARCH 31, 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 March 31, 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>
March 31, 1995 September 30,1994
<S> <C> <C>
ASSETS
Current Assets
Cash $977,000 $640,000
Accounts Receivable less allowance for doubtful
accounts of $230,000 in 1995 and $50,000 in 1994 20,610,000 24,413,000
Costs and Estimated Profits of Uncompleted
Contracts in Excess of Related Billings 13,066,000 13,045,000
Income Taxes Recoverable 438,000 522,000
Deferred tax benefit 480,000 360,000
Other Current Assets 733,000 1,434,000
------- ---------
Total Current Assets 36,304,000 40,414,000
Property and Equipment 11,770,000 11,374,000
Less Accumulated Depreciation 9,693,000 9,282,000
--------- ---------
Net Property and Equipment 2,077,000 2,092,000
Deferred Tax Benefit 430,000 430,000
Other Assets 1,016,000 1,024,000
--------- ---------
TOTAL $39,827,000 $43,960,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes and Accounts Payable $17,116,000 $22,369,000
Accrued Wages and Expenses 6,849,000 6,774,000
Billings on Uncompleted Contracts in Excess of
Related Costs 3,878,000 3,800,000
--------- ---------
Total Current Liabilities 27,843,000 32,943,000
Long-Term Debt 2,250,000 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 5,081,000 4,825,000
--------- ---------
Total 10,005,000 9,349,000
Less: Treasury Stock 271,000 271,000
------- -------
Total Stockholders' Equity 9,734,000 9,078,000
TOTAL $39,827,000 $43,960,000
=========== ===========
</TABLE>
<PAGE>
STV GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
SIX MONTHS ENDED
March 31
1995 1994
<S> <C> <C>
Operating Activities
Net Income $256,000 $381,000
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and Amortization 440,000 360,000
Deferred Tax Benefit 0 247,000
Other 201,000 (256,000)
Stock contribution to Employee Stock
Ownership Program (ESOP) 400,000 0
Changes in Operating assets and liabilities
Accounts Receivable 3,803,000 (664,000)
Costs of uncompleted contracts in
excess of billings and prepaid expenses 680,000 898,000
Accounts Payable and accrued expenses (2,393,000) 1,466,000
Billing in excess of related costs 78,000 (224,000)
Current Income Taxes (36,000) 134,000
------- -------
Net Cash provided by operating activities $3,429,000 $2,342,000
Investing Activities
Purchase of Property and Equipment (396,000) (337,000)
Purchase of Software (138,000) (9,000)
Decrease (Increase) in other assets 62,000 (1,000)
------ ------
Net Cash provided (used) by investing activities ($472,000) ($347,000)
Financing Activities
Proceeds from line of credit and long term
borrowings 43,505,000 37,201,000
Principal payments on line of credit and long
term borrowings (46,125,000) (38,867,000)
----------- -----------
Net Cash (used) provided by financing
activities ($2,620,000) ($1,666,000)
Increase (decrease) in cash and equivalents 337,000 329,000
Cash and equivalents at beginning of year 640,000 818,000
------- -------
Cash and equivalents at end of period $977,000 $1,147,000
======== ==========
</TABLE>
<PAGE>
STV GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
March 31 March 31
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenue
Total Revenue $21,092,000 $20,687,000 $43,909,000 $42,494,000
Less Subcontract and Procurement Costs 3,573,000 4,759,000 9,037,000 10,186,000
--------- --------- --------- ----------
Operating Revenue $17,519,000 $15,928,000 $34,872,000 $32,308,000
Costs and Expenses
Costs of Services and Sales 15,648,000 14,575,000 31,116,000 29,179,000
General and Administrative 1,178,000 891,000 2,331,000 2,123,000
Interest in Joint Venture 97,000 (122,000) 201,000 (256,000)
Interest 368,000 327,000 751,000 663,000
------- ------- ------- -------
Total Costs and Expenses 17,291,000 15,671,000 34,399,000 31,709,000
Income Before Income Taxes 228,000 257,000 473,000 599,000
Income Taxes 104,000 113,000 217,000 218,000
------- ------- ------- -------
Net Income $124,000 $144,000 $256,000 $381,000
======== ======== ======== ========
Earnings per share: $0.07 $0.08 $0.14 $0.22
Weighted Average Common Shares and
Equivalents 1,821,246 1,762,868 1,801,746 1,756,946
</TABLE>
<PAGE>
Notes to Consolidated Condensed Financial Statement
March 31, 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 March 31, 1995 (second quarter fiscal 1995)
increased 1.9% as compared to the second quarter of fiscal 1994 and decreased
7.6% as compared to the previous quarter. Operating revenues (total revenues
excluding pass-through costs) increased 10.0% as compared to the second quarter
of fiscal 1994 and increased 1.0% as compared to the previous quarter. The
increase in revenues reflects a continued demand for transportation,
infrastructure and facilities engineering.
Pass-through costs, expressed as a percentage of total revenues, decreased 16.9%
as compared to 23.0% in the second quarter of 1994 and 23.9% 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
89.3% for the second quarter of fiscal 1995 from 91.5% in the second quarter of
fiscal 1994 and is comparable to the 89.1% in the previous quarter. The decrease
in the percentage from the second quarter of 1994 to the second quarter of 1995
was due mainly to the increase in revenues. As a dollar amount, cost of services
increased $1,073,000 in the second quarter of fiscal 1995. This increase was
primarily due to an increase in labor and labor related expenses in response to
increased demand.
General and administrative expense, expressed as a percentage of operating
revenues, increased to 6.7% in the second quarter of fiscal 1995 from 5.6% in
the second quarter of fiscal 1994 and was comparable to the 6.6% in the previous
quarter. The increase from the second quarter of fiscal 1994 was due to an
increase in salaries and legal and accounting fees.
The interest in an architectural joint venture changed from a loss of $122,000
in the second quarter of fiscal 1994 to a profit of $83,000 in the second
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 2.1% for the
second quarter of fiscal 1995 which is comparable to the 2.1% of the second
quarter of fiscal 1994 and the 2.2% of the previous quarter. As a dollar amount
interest increased $41,000 in the
<PAGE>
second quarter of fiscal 1995 compared to the second quarter of fiscal 1994 due
to an increase in the borrowing rate.
Income tax expense for the second quarter of fiscal 1995 was 45.6% of pre-tax
income compared to 44.0% in the second quarter of fiscal 1994.
Earnings per common share for the second quarter of fiscal 1995 were 7 cents,
based on 1,821,246 shares outstanding, which is comparable to the 8 cents for
the second quarter of fiscal 1994, based on 1,762,868 shares outstanding.
Financial Condition
Working capital increased to $8,461,000 from the $8,266,000 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 $3.5
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 $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)
May 9, 1995 By: /s/ Michael Haratunian
- --------------- ----------------------
Date Michael Haratunian
Chairman, Chief Executive Officer
May 9, 1995 By: /s/ Peter W. Knipe
- --------------- -----------------------
Date Peter W. Knipe
Secretary/Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Read the entire Form 10Q for full financial picture.
</LEGEND>
<CIK> 0000095045
<NAME> STV GROUP, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> MAR-31-1995
<CASH> 977,000
<SECURITIES> 186,000
<RECEIVABLES> 20,840,000
<ALLOWANCES> 230,000
<INVENTORY> 13,066,000
<CURRENT-ASSETS> 36,304,000
<PP&E> 11,770,000
<DEPRECIATION> 9,693,000
<TOTAL-ASSETS> 39,827,000
<CURRENT-LIABILITIES> 28,724,000
<BONDS> 0
<COMMON> 1,921,000
0
0
<OTHER-SE> 8,084,000
<TOTAL-LIABILITY-AND-EQUITY> 39,827,000
<SALES> 43,909,000
<TOTAL-REVENUES> 43,909,000
<CGS> 31,116,000
<TOTAL-COSTS> 34,399,000
<OTHER-EXPENSES> 201,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 751,000
<INCOME-PRETAX> 473,000
<INCOME-TAX> 217,000
<INCOME-CONTINUING> 256,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 256,000
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0
</TABLE>
