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, 1996 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, 1996, 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, 1996 September 30, 1995
<S> <C> <C>
ASSETS
Current Assets
Cash $38,000 $668,000
Accounts Receivable 23,334,000 21,758,000
Costs and Estimated Profits of Uncompleted
Contracts in Excess of Related Billings 12,955,000 12,976,000
Income Taxes Recoverable 432,000 486,000
Deferred tax benefit 106,000 344,000
Other Current Assets 971,000 2,059,000
------- ---------
Total Current Assets 37,836,000 38,291,000
Property and Equipment 12,148,000 12,068,000
Less Accumulated Depreciation 10,783,000 10,185,000
---------- ----------
Net Property and Equipment 1,365,000 1,883,000
Deferred Tax Benefit 847,000 847,000
Other Assets 550,000 605,000
------- -------
TOTAL $40,598,000 $41,626,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes and Accounts Payable $17,326,000 $19,845,000
Accrued Wages and Expenses 7,111,000 6,532,000
Billings on Uncompleted Contracts in Excess of
Related Costs 4,233,000 3,344,000
--------- ---------
Total Current Liabilities 28,670,000 29,721,000
Long-Term Debt 1,849,000 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 5,551,000 5,219,000
--------- ---------
Total 10,475,000 10,143,000
Less: Treasury Stock 271,000 271,000
Loans Receivable from Officers 125,000 0
------- -
Total Stockholders' Equity 10,079,000 9,872,000
TOTAL $40,598,000 $41,626,000
=========== ===========
</TABLE>
<PAGE>
STV GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
NINE MONTHS ENDED
June 30
1996 1995
<S> <C> <C>
Operating Activities
Net Income $333,000 $358,000
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and Amortization 794,000 684,000
Deferred Tax Benefit 0 0
Other (163,000) 255,000
Stock contribution to Employee Stock
Ownership Program (ESOP) 0 400,000
Changes in Operating assets and liabilities
Accounts Receivable (1,576,000) 4,674,000
Costs of uncompleted contracts in
excess of billings and prepaid expenses 902,000 106,000
Accounts Payable and accrued expenses 1,597,000 (2,183,000)
Billing in excess of related costs 889,000 (314,000)
Current Income Taxes 499,000 (384,000)
------- --------
Net Cash provided by operating activities $3,275,000 $3,596,000
Investing Activities
Purchase of Property and Equipment (199,000) (426,000)
Purchase of Software (12,000) (144,000)
Decrease (Increase) in other assets (11,000) 44,000
------- ------
Net Cash provided (used) by investing activities ($222,000) ($526,000)
Financing Activities
Proceeds from line of credit and long term
borrowings 62,250,000 64,837,000
Principal payments on line of credit and long
term borrowings (65,933,000) (67,150,000)
----------- -----------
Net Cash (used) provided by financing
activities ($3,683,000) ($2,313,000)
Increase (decrease) in cash and equivalents (630,000) 757,000
Cash and equivalents at beginning of year 668,000 640,000
------- -------
Cash and equivalents at end of period $38,000 $1,397,000
======= ==========
</TABLE>
<PAGE>
STV GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
June 30 June 30
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenue
Total Revenue $24,949,000 $23,187,000 $71,434,000 $67,097,000
Less Subcontract and Procurement Costs 6,967,000 5,829,000 17,660,000 14,865,000
--------- --------- ---------- ----------
Operating Revenue $17,982,000 $17,358,000 $53,774,000 $52,232,000
Costs and Expenses
Costs of Services and Sales 16,003,000 15,523,000 48,131,000 46,642,000
General and Administrative 1,272,000 1,202,000 3,702,000 3,533,000
Interest in Joint Venture (12,000) 54,000 (38,000) 255,000
Interest 350,000 389,000 1,161,000 1,140,000
------- ------- --------- ---------
Total Costs and Expenses 17,613,000 17,168,000 52,956,000 51,570,000
Income Before Income Taxes 369,000 190,000 818,000 662,000
Income Taxes 210,000 111,000 * 485,000 386,000 *
------- ------- ------- -------
Net Income $159,000 $79,000 * $333,000 $276,000 *
======== ======= ======== ========
Earnings per share: $0.08 $0.05 * $0.18 $0.15 *
Weighted Average Common Shares and
Equivalents 1,877,512 1,821,246 1,865,777 1,808,243
</TABLE>
*Income taxes, net income and earnings per share for the three quarters 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, $29,000 and $24,000 or
$.02, $.02 and $.01 per share in the quarters ended December 31, 1994, March 31,
1995 and June 30, 1995, respectively.
<PAGE>
Notes to Consolidated Condensed Financial Statement
June 30, 1996
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, 1996 due in part to increased reliance on estimates at interim
dates.
<PAGE>
Item 2. Management Discussion and Analysis of the Results of Operation
Total revenues for the quarter ended June 30, 1996 (third quarter fiscal 1996)
increased 0.8% as compared to the third quarter of fiscal 1995 and increased
0.6% as compared to the previous quarter. Operating revenues (total revenues
excluding pass-through costs) increased 3.6% as compared to the third quarter of
fiscal 1995 and increased 1.1% as compared to the previous quarter.
Pass-through costs, expressed as a percentage of total revenues, increased to
27.9% as compared to 25.1% in the third quarter of fiscal 1995 and increased
from 24.3% 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
89.0% for the third quarter of fiscal 1996 from 89.4% in the third quarter of
fiscal 1995 and decreased from 90.0% in the previous quarter. The decrease in
this percentage from the third quarter fiscal 1995 was due to overhead
efficiencies. The decrease from the second quarter of 1996 was primarily due to
the severe weather conditions in the Northeast which had negatively impacted
revenues in that quarter.
General and administrative expense, expressed as a percentage of operating
revenue, is 7.1% in the third quarter of fiscal 1996 and is comparable to the
6.9% recorded in the third quarter of fiscal 1995 and the previous quarter.
The interest in an architectural joint venture changed from a profit of $54,000
in the third quarter of fiscal 1995 to a loss of $12,000 in the third quarter of
fiscal 1996. 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, decreased to 1.9% for
the third quarter of fiscal 1996 from 2.2% of the third quarter of fiscal 1995
and 2.2% the previous quarter. The decrease from the previous quarters was due
to lower borrowings which decreased interest costs by $33,000 and $39,000
respectively.
<PAGE>
Income tax expense for the third quarter of fiscal 1996 was 56.9% of pre-tax
income compared to a restated 58.4% in the third quarter of fiscal 1995.
Earnings per common share for the third quarter of fiscal 1996 were 8 cents
based on 1,877,512 shares outstanding versus the 5 cents for the third quarter
of fiscal 1995 based on 1,821,246 shares outstanding.
Financial Condition
Working capital increased to $9,166,000 from the $8,992,000 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 $4.7
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 $102 million.
<PAGE>
PART II - OTHER INFORMATION
Item 5. Other Information
The Company was recently selected to provide engineering design and construction
management for maintenance facilities on Amtrak's Northeast Corridor route from
Washington, D.C., to New York to Boston. STV will be subcontractor to Bombardier
and GEC Alsthom, the consortium Amtrak chose to provide the equipment it needs
to introduce high-speed rail service on the Northeast Corridor.
Bombardier/GEC Alsthom's contract will call for the design and manufacture of 18
trainsets, each consisting of two power cars and six coaches, and 15 electric
locomotives to be used with other Amtrak equipment in the Northeast Corridor
fleet. The contract will also include STV's services for the design and
installation of three maintenance facilities for the rolling stock in
Washington, D.C., New York and Boston. STV will be responsible for the turn-key
services.
The Company has received a notice to proceed and is concurrently negotiating a
contract which it expects to finalize shortly.
<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 14, 1996 By: /s/ Michael Haratunian
- ---------------------- ----------------------
Date Michael Haratunian
Chairman, Chief Executive Officer
August 14, 1996 By: /s/ Peter W. Knipe
- ---------------------- -------------------------
Date Peter W. Knipe
Secretary/Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
PLEASE READ ENTIRE 10Q FOR FULL FINANCIAL PICTURE.
</LEGEND>
<CIK> 0000095045
<NAME> STV GROUP, INCORPORATED
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 38,000
<SECURITIES> 137,000
<RECEIVABLES> 23,604,000
<ALLOWANCES> 270,000
<INVENTORY> 12,955,000
<CURRENT-ASSETS> 37,836,000
<PP&E> 12,148,000
<DEPRECIATION> 10,783,000
<TOTAL-ASSETS> 40,598,000
<CURRENT-LIABILITIES> 28,670,000
<BONDS> 0
0
0
<COMMON> 1,921,000
<OTHER-SE> 8,158,000
<TOTAL-LIABILITY-AND-EQUITY> 40,598,000
<SALES> 71,434,000
<TOTAL-REVENUES> 71,434,000
<CGS> 48,131,000
<TOTAL-COSTS> 51,833,000
<OTHER-EXPENSES> (38,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,161,000
<INCOME-PRETAX> 818,000
<INCOME-TAX> 485,000
<INCOME-CONTINUING> 333,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 333,000
<EPS-PRIMARY> .18
<EPS-DILUTED> 0
</TABLE>
