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, 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 March 31, 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
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
STV GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
UNAUDITED
March 31, 1996 September 30, 1995
ASSETS
Current Assets
Cash $1,016,000 $668,000
Accounts Receivable 20,905,000 21,758,000
Costs and Estimated Profits of Uncompleted
Contracts in Excess of Related Billings 13,786,000 12,976,000
Income Taxes Recoverable 432,000 486,000
Deferred tax benefit 303,000 344,000
Other Current Assets 1,053,000 2,059,000
--------- ---------
Total Current Assets 37,495,000 38,291,000
Property and Equipment 12,065,000 12,068,000
Less Accumulated Depreciation 10,621,000 10,185,000
---------- ----------
Net Property and Equipment 1,444,000 1,883,000
Deferred Tax Benefit 847,000 847,000
Other Assets 557,000 605,000
------- -------
TOTAL $40,343,000 $41,626,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes and Accounts Payable $17,196,000 $19,845,000
Accrued Wages and Expenses 7,703,000 6,532,000
Billings on Uncompleted Contracts in Excess of
Related Costs 3,604,000 3,344,000
--------- ---------
Total Current Liabilities 28,503,000 29,721,000
Long-Term Debt 1,919,000 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 5,393,000 5,219,000
--------- ---------
Total 10,317,000 10,143,000
Less: Treasury Stock 271,000 271,000
Loans Receivable from Officers 125,000 0
------- -
Total Stockholders' Equity 9,921,000 9,872,000
TOTAL $40,343,000 $41,626,000
=========== ===========
STV GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
SIX MONTHS ENDED
March 31
1996 1995
Operating Activities
Net Income $174,000 $256,000
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and Amortization 549,000 440,000
Deferred Tax Benefit 0 0
Other (151,000) 201,000
Stock contribution to Employee Stock
Ownership Program (ESOP) 0 400,000
Changes in Operating assets and liabilities
Accounts Receivable 853,000 3,803,000
Costs of uncompleted contracts in
excess of billings and prepaid expenses (11,000) 680,000
Accounts Payable and accrued expenses 1,578,000 (2,393,000)
Billing in excess of related costs 260,000 78,000
Current Income Taxes 302,000 (36,000)
------- -------
Net Cash provided by operating activities $3,554,000 $3,429,000
Investing Activities
Purchase of Property and Equipment (62,000) (396,000)
Purchase of Software (1,000) (138,000)
Decrease (Increase) in other assets 2,000 62,000
----- ------
Net Cash provided (used) by investing activities ($61,000) ($472,000)
Financing Activities
Proceeds from line of credit and long term
borrowings 40,350,000 43,505,000
Principal payments on line of credit and long
term borrowings (43,495,000) (46,125,000)
----------- -----------
Net Cash (used) provided by financing
activities ($3,145,000) ($2,620,000)
Increase (decrease) in cash and equivalents 348,000 337,000
Cash and equivalents at beginning of year 668,000 640,000
------- -------
Cash and equivalents at end of period $1,016,000 $977,000
========== ========
STV GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
THREE MONTHS ENDED SIX MONTHS ENDED
March 31 March 31
1996 1995 1996 1995
Revenue
Total Revenue $23,502,000 $21,092,000 $46,485,000 $43,909,000
Less Subcontract and Procurement Costs 5,714,000 3,573,000 10,693,000 9,037,000
--------- --------- ---------- ---------
Operating Revenue $17,788,000 $17,519,000 $35,792,000 $34,872,000
Costs and Expenses
Costs of Services and Sales 16,007,000 15,648,000 32,128,000 31,116,000
General and Administrative 1,225,000 1,178,000 2,430,000 2,331,000
Interest in Joint Venture (22,000) 97,000 (26,000) 201,000
Interest 383,000 368,000 811,000 751,000
------- ------- ------- -------
Total Costs and Expenses 17,593,000 17,291,000 35,343,000 34,399,000
Income Before Income Taxes 195,000 228,000 449,000 473,000
Income Taxes 124,000 133,000 * 275,000 276,000 *
------- ------- ------- -------
Net Income $71,000 $95,000 * $174,000 $197,000 *
======= ======= ======== ========
Earnings per share: $0.04 $0.05 * $0.10 $0.10 *
Weighted Average Common Shares and
Equivalents 1,868,225 1,821,246 1,859,910 1,801,746
*Income taxes, net income and earnings per share for the two 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 or $.02, $.02 per
share in the quarters ended December 31, 1994 and March 31, 1995, respectively.
Notes to Consolidated Condensed Financial Statement
March 31, 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.
Item 2. Management Discussion and Analysis of the Results of Operation
Total revenues for the quarter ended March 31, 1996 (second quarter of fiscal
1996) increased 11.4% as compared to the second quarter of fiscal 1995 and
increased 2.3% as compared to the previous quarter. Operating revenues (total
revenues excluding pass through costs) for the second quarter of fiscal 1996
increased 1.5% as compared to the second quarter of fiscal 1995 and decreased
1.2% as compared to the previous quarter. The second quarter of fiscal 1996 was
negatively impacted by the severe weather experienced in the Northeast U.S.
which reduced the amount of productive time available for projects.
Pass through costs, expressed as a percentage of total revenues, increased to
24.3% compared to 16.9% in the first quarter of fiscal 1995 and 21.7% 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
90.0% for the second quarter of fiscal 1996 from 89.3% for the second quarter of
fiscal 1995 and 89.5% for the first quarter of fiscal 1996. The increase in the
percentage is primarily due to the increase in non-productive labor as a
component of revenue due to the severe weather in the Northeast.
General and administrative expense, expressed as a percentage of operating
revenue, increased slightly to 6.9% in the second quarter of fiscal 1996 from
6.7% in the second quarter of fiscal 1995 and the previous quarter. The increase
is caused by higher legal and accounting costs.
The interest in an architectural joint venture changed from a loss of $97,000 in
the second quarter of fiscal 1995 to a profit of $22,000 in the second quarter
of fiscal 1996. This is an increase over the $4,000 profit reported 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 slightly to
2.2% in the second quarter of fiscal 1996 compared to 2.1% in the second quarter
of fiscal 1995 but is down from the 2.4% incurred in the previous quarter. The
decrease from the previous quarter was due to decreased borrowings.
Income tax expense for the second quarter of fiscal 1996 was 63.5% of pre-tax
income compared to a restated 58.3% of pre-tax income for the same period last
year.
Earnings per common share for the second quarter of fiscal 1996 were 4 cents
based on 1,868,225 shares outstanding compared to 5 cents in fiscal 1995 on
1,821,246 shares outstanding.
Financial Condition
Working capital increased to $8,992,000 from the $8,787,000 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 $4.3
million is available. The Company believes the existing line of credit is
adequate to meet the needs of the Company.
The Company's backlog is approximately $110,700,000.
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 14, 1996 By: /s/ Michael Haratunian
- ---------------- ----------------------
Date Michael Haratunian
Chairman, Chief Executive Officer
May 14, 1996 By: /s/ Peter W. Knipe
- --------------- ------------------
Date Peter W. Knipe
Secretary/Treasurer