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, 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 December 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>
December 31, 1995 September 30, 1995
<S> <C> <C>
ASSETS
Current Assets
Cash $187,000 $668,000
Accounts Receivable 23,730,000 21,758,000
Costs and Estimated Profits of Uncompleted
Contracts in Excess of Related Billings 12,693,000 12,976,000
Income Taxes Recoverable 432,000 486,000
Deferred tax benefit 495,000 344,000
Other Current Assets 1,177,000 2,059,000
--------- ---------
Total Current Assets 38,714,000 38,291,000
Property and Equipment 12,016,000 12,068,000
Less Accumulated Depreciation 10,371,000 10,185,000
---------- ----------
Net Property and Equipment 1,645,000 1,883,000
Deferred Tax Benefit 847,000 847,000
Other Assets 605,000 605,000
------- -------
TOTAL $41,811,000 $41,626,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes and Accounts Payable $18,626,000 $19,845,000
Accrued Wages and Expenses 7,266,000 6,532,000
Billings on Uncompleted Contracts in Excess of
Related Costs 4,035,000 3,344,000
--------- ---------
Total Current Liabilities 29,927,000 29,721,000
Long-Term Debt 2,034,000 2,033,000
Stockholders' Equity
Preferred Stock 0 0
Common Stock 1,921,000 1,921,000
Capital Surplus 3,003,000 3,003,000
Retained Earnings 5,322,000 5,219,000
--------- ---------
Total 10,246,000 10,143,000
Less: Treasury Stock 271,000 271,000
Loans Receivable from Officers 125,000 0
------- -
Total Stockholders' Equity 9,850,000 9,872,000
TOTAL $41,811,000 $41,626,000
=========== ===========
</TABLE>
<PAGE>
STV GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
December 31
1995 1994
<S> <C> <C>
Operating Activities
Net Income $103,000 $132,000
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and Amortization 291,000 220,000
Deferred Tax Benefit 0 0
Other (129,000) 104,000
Stock contribution to Employee Stock
Ownership Program (ESOP) 0 400,000
Changes in Operating assets and liabilities
Accounts Receivable (1,972,000) 2,226,000
Costs of uncompleted contracts in
excess of billings and prepaid expenses 959,000 1,530,000
Accounts Payable and accrued expenses 621,000 (1,565,000)
Billing in excess of related costs 692,000 943,000
Current Income Taxes 110,000 28,000
------- ------
Net Cash provided by operating activities $675,000 $4,018,000
Investing Activities
Purchase of Property and Equipment (30,000) (7,000)
Purchase of Software (1,000) (14,000)
Decrease (Increase) in other assets (23,000) 32,000
------- ------
Net Cash provided (used) by investing activities ($54,000) $11,000
Financing Activities
Proceeds from line of credit and long term
borrowings 19,150,000 21,700,000
Principal payments on line of credit and long
term borrowings (20,252,000) (25,370,000)
----------- -----------
Net Cash (used) provided by financing
activities ($1,102,000) ($3,670,000)
Increase (decrease) in cash and equivalents (481,000) 359,000
Cash and equivalents at beginning of year 668,000 640,000
------- -------
Cash and equivalents at end of period $187,000 $999,000
======== ========
</TABLE>
<PAGE>
STV GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED
December 31
1995 1994
<S> <C> <C>
Revenue
Total Revenue $22,983,000 $22,817,000
Less Subcontract and Procurement Costs 4,979,000 5,464,000
--------- ---------
Operating Revenue $18,004,000 $17,353,000
Costs and Expenses
Costs of Services and Sales 16,121,000 15,468,000
General and Administrative 1,205,000 1,153,000
Interest in Joint Venture (4,000) 104,000
Interest 428,000 383,000
------- -------
Total Costs and Expenses 17,750,000 17,108,000
Income Before Income Taxes 254,000 245,000
Income Taxes 151,000 143,000 *
------- -------
Net Income $103,000 $102,000 *
======== ========
Earnings per share: $0.06 $0.05 *
Weighted Average Common Shares and
Equivalents 1,865,182 1,798,491
</TABLE>
* Income taxes, net income and earnings per share for the first quarter of
fiscal year 1995 have been restated from the amounts previously reported. The
restatements reflect a correction in the effective annual income tax rate
which has been applied to the respective fiscal year quarters. The effects of
the restatements were reductions to net income of $30,000, or $.02, per share
in the quarter ended December 31, 1994.
<PAGE>
Notes to Consolidated Condensed Financial Statement
December 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.
<PAGE>
Item 2. Management Discussion and Analysis of the Results of Operation
Total revenues for the quarter ended December 31, 1995 (first quarter of fiscal
1996) increased 0.7% as compared to the first quarter of fiscal 1995 and
increased 3.8% as compared to the previous quarter. Operating revenues (total
revenues excluding pass through costs) for the first quarter of fiscal 1995
increased 3.8% as compared to the first quarter of fiscal 1995 and increased
4.9% as compared to the previous quarter. The increase in operating revenues
reflects an increase in the demand for transportation engineering.
Pass-through costs, expressed as a percentage of total revenues decreased to
21.7% as compared to 23.9% in the first quarter of fiscal 1995 and 22.5% 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, increased to
89.5% for the first quarter of fiscal 1996 from 89.1% in the first quarter of
fiscal 1995 and 89.1% in the fourth quarter of fiscal 1995. The increase in the
percentage from the first and fourth quarter of fiscal 1995 was due mainly to
the increase in direct labor as a component of revenue.
General and administrative expense, expressed as a percentage of operating
revenues, increased slightly to 6.7% in the first quarter of fiscal 1996 from
6.6% in the first quarter of fiscal 1995 but decreased from 8.3% in the previous
quarter. The decrease from the previous quarter of fiscal 1995 was due to an
increase in revenues and lower legal costs.
The interest in a architectural joint venture changed from a loss of $104,000 in
the first quarter of fiscal 1995 to a profit of $4,000 in the first quarter of
fiscal 1996. The Company has chosen to wind-down and eventually terminate the
joint venture.
Interest, expressed as a percentage of operating revenues, increased to 2.4% for
the first quarter of fiscal 1995 from 2.2% of the first quarter of fiscal 1995
but was comparable to 2.4% of the previous quarter. As a dollar amount, interest
increased $41,000 in the first quarter of fiscal 1996 compared to the first
quarter of fiscal 1995 due to the increase in borrowings during the quarter.
<PAGE>
Income tax expense for the first quarter of fiscal 1996 was 59.4% of pre-tax
income compared to a restated 58.4% in the first quarter of fiscal 1995.
Earnings per common share for the first quarter of fiscal 1996 were 6 cents
based on 1,865,182 shares outstanding which is comparable to the 5 cents for the
first quarter of fiscal 1995 based on 1,798,491 shares outstanding.
Financial Condition
Working capital increased to $8,787,000 from the $8,570,000 in the previous
quarter. Capital resources available to the Company included 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 $2.6
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 is approximately $117 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, 1996 By: /s/ Michael Haratunian
- --------------------- ----------------------
Date Michael Haratunian
Chairman, Chief Executive Officer
February 14, 1996 By: /s/ Peter W. Knipe
- ---------------------- --------------------
Date Peter W. Knipe
Secretary/Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Transmitting STV Group's First Quarter 10Q. Period ending 12/31/95.
</LEGEND>
<CIK> 0000095045
<NAME> STV GROUP, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 187,000
<SECURITIES> 136,000
<RECEIVABLES> 23,820,000
<ALLOWANCES> 90,000
<INVENTORY> 12,693,000
<CURRENT-ASSETS> 38,714,000
<PP&E> 12,016,000
<DEPRECIATION> 10,371,000
<TOTAL-ASSETS> 41,811,000
<CURRENT-LIABILITIES> 29,927,000
<BONDS> 0
0
0
<COMMON> 1,921,000
<OTHER-SE> 8,443,000
<TOTAL-LIABILITY-AND-EQUITY> 41,811,000
<SALES> 22,983,000
<TOTAL-REVENUES> 22,983,000
<CGS> 16,121,000
<TOTAL-COSTS> 17,750,000
<OTHER-EXPENSES> (4,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 428,000
<INCOME-PRETAX> 254,000
<INCOME-TAX> 151,000
<INCOME-CONTINUING> 103,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 103,000
<EPS-PRIMARY> .06
<EPS-DILUTED> 0
</TABLE>
