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, 1997 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 March 31, 1997, 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, 1997 September 30, 1996
ASSETS
Current Assets
Cash $455,000 $28,000
Accounts Receivable 18,270,000 20,504,000
Costs and Estimated Profits of Uncompleted
Contracts in Excess of Related Billings 14,939,000 14,290,000
Deferred tax benefit 180,000 180,000
Other Current Assets 2,297,000 1,577,000
--------- ---------
Total Current Assets 36,141,000 36,579,000
Property and Equipment 11,543,000 12,301,000
Less Accumulated Depreciation 10,171,000 10,987,000
---------- ----------
Net Property and Equipment 1,372,000 1,314,000
Deferred Tax Benefit 1,369,000 1,369,000
Other Assets 943,000 733,000
------- -------
TOTAL $39,825,000 $39,995,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes and Accounts Payable $15,784,000 $16,051,000
Accrued Wages and Expenses 7,415,000 7,489,000
Billings on Uncompleted Contracts in Excess of
Related Costs 4,145,000 4,318,000
--------- ---------
Total Current Liabilities 27,344,000 27,858,000
Long-Term Debt 1,798,000 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 6,155,000 5,814,000
--------- ---------
Total 11,079,000 10,738,000
Less: Treasury Stock 271,000 271,000
Loans Receivable from Officers 125,000 125,000
------- -------
Total Stockholders' Equity 10,683,000 10,342,000
TOTAL $39,825,000 $39,995,000
=========== ===========
STV GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
SIX MONTHS ENDED
March 31
1997 1996
Operating Activities
Net Income $341,000 $174,000
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and Amortization 452,000 549,000
Other 0 (151,000)
Changes in Operating assets and liabilities
Accounts Receivable 2,234,000 853,000
Costs of uncompleted contracts in
excess of billings and prepaid expenses (1,369,000) (11,000)
Accounts Payable and accrued expenses (513,000) 1,578,000
Billing in excess of related costs (173,000) 260,000
Current Income Taxes (274,000) 302,000
-------- -------
Net Cash provided by operating activities $698,000 $3,554,000
Investing Activities
Purchase of Property and Equipment (468,000) (62,000)
Purchase of Software (23,000) (1,000)
Decrease (Increase) in other assets (230,000) 2,000
-------- -----
Net Cash provided (used) by investing activities ($721,000) ($61,000)
Financing Activities
Proceeds from line of credit and long term
borrowings 46,760,000 40,350,000
Principal payments on line of credit and long
term borrowings (46,310,000) (43,495,000)
----------- -----------
Net Cash (used) provided by financing
activities $450,000 ($3,145,000)
Increase (decrease) in cash and equivalents 427,000 348,000
Cash and equivalents at beginning of year 28,000 668,000
------ -------
Cash and equivalents at end of period $455,000 $1,016,000
======== ==========
STV GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
THREE MONTHS ENDED SIX MONTHS ENDED
March 31 March 31
1997 1996 1997 1996
Revenue
Total Revenue $22,311,000 $23,502,000 $45,047,000 $46,485,000
Less Subcontract and Procurement Costs 4,130,000 5,714,000 8,743,000 10,693,000
--------- --------- --------- ----------
Operating Revenue $18,181,000 $17,788,000 $36,304,000 $35,792,000
Costs and Expenses
Costs of Services and Sales 16,089,000 16,007,000 32,294,000 32,128,000
General and Administrative 1,350,000 1,225,000 2,599,000 2,430,000
Interest in Joint Venture 0 (22,000) 0 (26,000)
Interest 358,000 383,000 685,000 811,000
------- ------- ------- -------
Total Costs and Expenses 17,797,000 17,593,000 35,578,000 35,343,000
Income Before Income Taxes 384,000 195,000 726,000 449,000
Income Taxes 201,000 124,000 385,000 275,000
------- ------- ------- -------
Net Income $183,000 $71,000 $341,000 $174,000
======== ======= ======== ========
Earnings per share: $0.10 $0.04 $0.18 $0.10
Weighted Average Common Shares and
Equivalents 1,902,851 1,868,225 1,900,778 1,859,910
Notes to Consolidated Condensed Financial Statement
March 31, 1997
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 March 31, 1997 (second quarter of fiscal
1997) decreased 5.1% as compared to the second quarter of fiscal 1996 and
decreased 1.9% as compared to the previous quarter. Operating revenues (total
revenues excluding pass through costs) for the second quarter of fiscal 1997
increased 2.2% as compared to the second quarter of fiscal 1996 and increased
.3% 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
18.5% compared to 24.3% in the second quarter of fiscal 1996 and 20.3% in the
previous quarter. Pass through costs will vary depending on the need for
specialty subconsultants and governmental subcontract requirements.
Costs of services, expressed as a percentage of operating revenues, decreased to
88.6% for the second quarter of fiscal 1997 from 90.0% for the second quarter of
fiscal 1996 and 89.5% for the first quarter of fiscal 1997. The decreases in the
percentage for both quarters is primarily due to a decrease in non-productive
labor and labor related costs.
General and administrative expense, expressed as a percentage of operating
revenue, increased to 7.4% in the second quarter of fiscal 1997 from 6.9% in the
second quarter of fiscal 1996 and the previous quarter. The increase is caused
by higher travel and salary related expenses.
Interest, expressed as a percentage of operating revenues, decreased slightly to
2.0% in the second quarter of fiscal 1997 compared to 2.2% in the second quarter
of fiscal 1996 but increased from the 1.8% incurred in the previous quarter. The
increase from the previous quarter was due to a higher average loan balance.
Income tax expense for the second quarter of fiscal 1997 was 52.3% of pre-tax
income compared to 63.6% of pre-tax income for the same period last year. The
decrease is due to lower non-deductible expenses as a percentage of a higher
second quarter pre-tax income.
Earnings per common share, calculated using the Treasury Stock Method, for the
second quarter of fiscal 1997 were 10 cents based on 1,902,851 shares
outstanding compared to 4 cents in fiscal 1996 on 1,868,225 shares outstanding.
During the second quarter, certain assets of the International Region were sold.
However, this had an immaterial financial effect on the operations of the
Company. The Company continues to have an active international presence through
its subsidiary, STV International.
Financial Condition
Working capital decreased to $8,797,000 from $8,800,000 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 $4.6 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 $115 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)
May 8, 1997 By: /s/ Michael Haratunian
- --------------- ----------------------
Date Michael Haratunian
Chairman, Chief Executive Officer
May 8, 1997 By: /s/ Peter W. Knipe
- --------------- ----------------------
Date Peter W. Knipe
Secretary/Treasurer