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, 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)
205 West Welsh Drive, Douglassville, Pennsylvania 19518
(Address of principal executive offices) (Zip Code)
(610) 385-8200
(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, 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
December 31, 1996 September 30, 1996
ASSETS
Current Assets
Cash ($84,000) $28,000
Accounts Receivable 20,589,000 20,504,000
Costs and Estimated Profits of Uncompleted
Contracts in Excess of Related Billings 15,266,000 14,290,000
Deferred tax benefit 180,000 180,000
Other Current Assets 1,641,000 1,577,000
--------- ---------
Total Current Assets 37,592,000 36,579,000
Property and Equipment 12,556,000 12,301,000
Less Accumulated Depreciation 11,185,000 10,987,000
---------- ----------
Net Property and Equipment 1,371,000 1,314,000
Deferred Tax Benefit 1,369,000 1,369,000
Other Assets 698,000 733,000
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TOTAL $41,030,000 $39,995,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes and Accounts Payable $17,125,000 $16,051,000
Accrued Wages and Expenses 6,901,000 7,489,000
Billings on Uncompleted Contracts in Excess of
Related Costs 4,766,000 4,318,000
--------- ---------
Total Current Liabilities 28,792,000 27,858,000
Long-Term Debt 1,738,000 1,795,000
Stockholders' Equity
Preferred Stock 0 0
Common Stock 1,921,000 1,921,000
Capital Surplus 3,003,000 3,003,000
Retained Earnings 5,972,000 5,814,000
--------- ---------
Total 10,896,000 10,738,000
Less: Treasury Stock 271,000 271,000
Loans Receivable from Officers 125,000 125,000
------- -------
Total Stockholders' Equity 10,500,000 10,342,000
TOTAL $41,030,000 $39,995,000
=========== ===========
STV GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
THREE MONTHS ENDED
December 31
1996 1995
Operating Activities
Net Income $158,000 $103,000
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and Amortization 218,000 291,000
Other 0 (129,000)
Changes in Operating assets and liabilities
Accounts Receivable (86,000) (1,972,000)
Costs of uncompleted contracts in
excess of billings and prepaid expenses (1,039,000) 959,000
Accounts Payable and accrued expenses (1,816,000) 621,000
Billing in excess of related costs 448,000 692,000
Current Income Taxes 89,000 110,000
------ -------
Net Cash provided by operating activities ($2,028,000) $675,000
Investing Activities
Purchase of Property and Equipment (255,000) (30,000)
Purchase of Software (3,000) (1,000)
Decrease (Increase) in other assets 17,000 (23,000)
------ -------
Net Cash provided (used) by investing activities ($241,000) ($54,000)
Financing Activities
Proceeds from line of credit and long term
borrowings 24,260,000 19,150,000
Principal payments on line of credit and long
term borrowings (22,103,000) (20,252,000)
----------- -----------
Net Cash (used) provided by financing
activities $2,157,000 ($1,102,000)
Increase (decrease) in cash and equivalents (112,000) (481,000)
Cash and equivalents at beginning of year 28,000 668,000
------ -------
Cash and equivalents at end of period ($84,000) $187,000
======== ========
STV GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
THREE MONTHS ENDED
December 31
1996 1995
Revenue
Total Revenue $22,736,000 $22,983,000
Less Subcontract and Procurement Costs 4,613,000 4,979,000
--------- ---------
Operating Revenue $18,123,000 $18,004,000
Costs and Expenses
Costs of Services and Sales 16,205,000 16,121,000
General and Administrative 1,249,000 1,205,000
Interest in Joint Venture 0 (4,000)
Interest 327,000 428,000
------- -------
Total Costs and Expenses 17,781,000 17,750,000
Income Before Income Taxes 342,000 254,000
Income Taxes 184,000 151,000
------- -------
Net Income $158,000 $103,000
======== ========
Earnings per share: $0.08 $0.06
Weighted Average Common Shares and
Equivalents 1,898,705 1,865,182
Notes to Consolidated Condensed Financial Statement
December 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, 1997 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 December 31, 1996 (first quarter of fiscal
1997) decreased 1.1% as compared to the first quarter of fiscal 1996 and
increased 0.7% as compared to the previous quarter. Operating revenues (total
revenues excluding pass through costs) for the first quarter of fiscal 1997
increased 0.7% as compared to the first quarter of fiscal 1996 and increased
3.9% 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
20.3% as compared to 21.7% in the first quarter of fiscal 1996 and 22.8% 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, remained
constant at 89.5% for the first quarter of fiscal 1997 from the first quarter of
fiscal 1996 and increased from 88.6% in the fourth quarter of fiscal 1996. The
increase in the percentage from the fourth quarter of fiscal 1996 to the first
quarter of fiscal 1997 was due mainly to an increase in salary related expenses
and other indirect expenses as a component of revenue.
General and administrative expense, expressed as a percentage of operating
revenues, increased slightly to 6.9% in the first quarter of fiscal 1997 from
6.7% in the first quarter of fiscal 1996 but was comparable to 6.9% in the
previous quarter.
Interest, expressed as a percentage of operating revenues, decreased to 1.8% for
the first quarter of fiscal 1997 from 2.4% of the first quarter of fiscal 1996
and 2% from the previous quarter. As a dollar amount, interest decreased
$101,000 in the first quarter of fiscal 1997 compared to the first quarter of
fiscal 1996 due primarily to a decrease in borrowing and also lower interest
rates.
Income tax expense for the first quarter of fiscal 1997 was 53.8% of pre-tax
income compared to 59.4% in the first quarter of fiscal 1996. The decrease is
due to lower non-deductible expenses as a percentage of a higher first quarter
pre-tax income.
Earnings per common share for the first quarter of fiscal 1997 were 8 cents
based on 1,898,705 shares outstanding which increased from 6 cents for the first
quarter of fiscal 1996 based on 1,865,182 shares outstanding primarily due to
lower interest costs.
Financial Condition
Working capital increased to $8,800,000 from $8,721,000 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 $3.4 million is
currently available. The Company is in discussions with its lender which may
reduce its line of credit. The Company believes that it and the lender will
maintain a line of credit adequate to meet the current and future financial
needs of the Company. The Company is planning to continue its program of
purchasing computer-assisted design and drafting equipment as well as a new
project management and accounting system.
The Company's backlog is approximately $125 million.
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, 1997 By: /s/ Michael Haratunian
- --------------------- ----------------------
Date Michael Haratunian
Chairman, Chief Executive Officer
February 14, 1997 By: /s/ Peter W. Knipe
- --------------------- -------------------
Date Peter W. Knipe
Secretary/Treasurer