STECK-VAUGHN PUBLISHING CORPORATION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file number 0-21730
STECK-VAUGHN PUBLISHING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware I.R.S. No. 33-0556929
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
4515 Seton Center Parkway Suite 300, Austin, Texas 78759
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code) 512/343-8227
(Former name, former address and former fiscal year, if changed since last
report)
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 12 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
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 14,499,048 common
stock shares outstanding at July 24, 1997.
STECK-VAUGHN PUBLISHING CORPORATION
CONSOLIDATED BALANCE SHEETS
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
June 30, December 31, June 30,
(amounts in thousands, except share amounts) 1997 1996 1996
----------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 6,820 $ 4,827 $ 1,682
Marketable securities 1,457 1,447 1,399
Receivables, net of allowance of $2,215, $1,342 20,679 17,492 16,864
and $1,421
Inventories and supplies 24,341 21,776 21,090
Prepaid and deferred marketing expenses 4,436 1,635 4,290
Note receivable from parent company - - 3,000
Deferred plant costs 3,713 3,876 2,780
Other current assets 2,618 2,910 2,331
---------------------------------------
Total current assets 64,064 53,963 53,436
LAND, BUILDINGS AND EQUIPMENT, net 9,945 9,866 8,863
ACQUIRED INTANGIBLE ASSETS, net 15,788 14,655 15,274
DEFERRED PLANT COSTS 4,409 4,042 3,398
OTHER ASSETS 2,414 2,342 1,348
-----------------------------------------
$ 96,620 $ 84,868 $ 82,319
=========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 6,490 $ 6,618 $ 6,779
Accrued royalties 2,875 2,296 2,730
Accrued commissions 893 736 984
Accrued salaries, wages and bonuses 1,992 1,965 1,152
Payable to parent company 551 976 631
Current portion of long-term debt 486 3,547 2,345
Accrued and deferred income taxes 2,271 2,266 684
Other liabilities 11 49 189
------------------------------------------
Total current liabilities 15,569 18,453 15,494
LIABILITIES PAYABLE AFTER ONE YEAR
Long-term debt, less current portion 17,907 6,731 12,063
Deferred income taxes - - 629
-----------------------------------------
17,907 6,731 12,692
-----------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 5,000,000 shares - - -
authorized and unissued
Common stock, $.01 par value; 25,000,000 shares 148 146 146
authorized; 14,772,000, 14,600,000, and 14,587,000
shares issued
Additional paid-in capital 38,085 36,998 36,855
Retained earnings 26,869 24,313 18,964
Unrealized gain on marketable securities, net of 70 60 1
tax effect -----------------------------------------
65,172 61,517 55,966
Treasury stock, at cost (273,000, 255,000 and (2,028) (1,833) (1,833)
255,000 shares)
-------------------------------------------
Total stockholders' equity 63,144 59,684 54,133
-------------------------------------------
$ 96,620 $ 84,868 $ 82,319
See Notes to Consolidated Financial Statements.
STECK-VAUGHN PUBLISHING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Three Months Ended Six Months Ended
June 30, June 30,
(amounts in thousands, except per 1997 1996 1997 1996
share amounts) ------------------------- ------------------------
NET REVENUES $ 23,014 $ 18,296 $ 38,832 $ 33,757
Product costs and fulfillment 6,857 5,704 11,634 10,846
------------------------- ------------------------
GROSS PROFIT 16,157 12,592 27,198 22,911
Product development 3,510 3,198 6,584 5,864
Selling and marketing 7,041 5,798 11,833 10,787
General and administrative 1,569 1,335 2,829 2,603
Provision for doubtful accounts 80 30 100 45
Amortization of acquired intangible assets 602 465 1,160 811
Write-off of acquired in-process research
and development costs - 4,100 - 4,100
-------------------------- -------------------------
OPERATING INCOME (LOSS) 3,355 (2,334) 4,692 (1,299)
Interest income 51 265 106 590
Interest expense (347) (218) (608) (293)
-------------------------- -------------------------
INCOME (LOSS) BEFORE INCOME TAXES 3,059 (2,287) 4,190 (1,002)
Income taxes 1,193 689 1,634 1,177
--------------------------- --------------------------
NET INCOME (LOSS) $ 1,866 $ (2,976) $ 2,556 $ (2,179)
=========================== ==========================
EARNINGS (LOSS) PER SHARE $ 0.13 $ (0.21) $ 0.18 $ (0.15)
=========================== ==========================
WEIGHTED AVERAGE SHARES OUTSTANDING 14,722 14,429 14,512 14,407
========================== ==========================
See Notes to Consolidated Financial Statements.
STECK-VAUGHN PUBLISHING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Part I. FINANCIAL STATEMENTS
Item 1. Financial Statements
Three Months Ended Six Months Ended
June 30, June 30,
(amounts in thousands) 1997 1996 1997 1996
-------------------- --------------------
CASH FLOWS FOR OPERATING ACTIVITIES:
Net Income $ 1,866 $ (2,976) $ 2,556 $ (2,179)
Adjustments to reconcile net income to cash
used for operating activities:
Depreciation and amortization 538 283 958 569
Amortization of acquired 602 465 1,160 811
intangible assets
Write-off of acquired in-process research
and development costs - 4,100 - 4,100
Provision for doubtful accounts 80 30 100 45
Loss (gain) on sale of assets - (1) 14 (2)
Change in assets and liabilities net
of effects from acquisitions:
Receivables (4,069) (3,300) (3,287) (4,449)
Inventories and supplies (151) (259) (2,565) (2,875)
Prepaid and deferred 177 388 (2,801) (2,834)
marketing expenses
Deferred plant costs (35) (88) (204) (309)
Receivable from/payable to parent (264) 95 (425) (668)
Accounts payable and accrued expenses 1,555 (3,121) 598 914
Other (397) (66) 220 3
--------------------- ---------------------
NET CASH USED FOR OPERATING ACTIVITIES (98) (4,450) (3,676) (6,874)
--------------------- ---------------------
CASH FLOWS FOR INVESTING ACTIVITIES:
Net sales of marketable securities 4 85 4 333
Note receivable from parent company, net
activity - - - 1,000
Additions to land, buildings and equipment (605) (802) (1,099) (1,537)
Dispositions of land, buildings and equipment 6 4 29 32
Acquisition costs, net of cash acquired (2,293) (10,658) (2,293) (10,749)
-------------------- ---------------------
NET CASH FOR INVESTING ACTIVITIES (2,888) (11,371) (3,359) (10,921)
-------------------- ---------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Changes in current portion of long-term debt - (1,444) (1,900) 456
Additions to long-term debt 5,278 11,024 10,278 11,024
Reductions in long-term debt (126) (85) (244) (2,071)
Proceeds from issuance of common stock 282 4 1,089 27
Purchase of treasury stock - - (195) -
--------------------- ---------------------
NET CASH FROM FINANCING ACTIVITIES 5,434 9,499 9,028 9,436
--------------------- ---------------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 2,448 (6,322) 1,993 (8,359)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 4,372 8,004 4,827 10,041
--------------------- ---------------------
CASH AND CASH EQUIVALENTS AT END OF $ 6,820 $ 1,682 $ 6,820 $ 1,682
PERIOD ===================== ======================
See Notes to Consolidated Financial Statements.
STECK-VAUGHN PUBLISHING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Note 1 - Summary of Accounting Policies
Steck-Vaughn Publishing Corporation (the Company) was incorporated on March
10, 1993, as a wholly-owned subsidiary of National Education Corporation
(NEC). Effective April 2, 1993, NEC made a capital contribution of all of the
stock of Steck-Vaughn Company (SVC) to the Company. The consolidated
financial statements include the accounts of the Company and its wholly owned
subsidiaries, Steck-Vaughn Company, SV Distribution Company (d.b.a. Summit
Learning), and Edunetics Ltd. and Edunetics Corporation (together referred to
as "Edunetics" herein). All significant intercompany balances and
transactions have been eliminated in consolidation.
In August 1993, the Company completed an initial public offering in which
2,668,000 shares were sold for net proceeds of $29,775,000. The shares sold
represented 18.3% of the outstanding shares of the Company. The Company
subsequently repurchased 273,000 shares of its outstanding common stock,
increasing NEC's ownership to 82.1% of the common stock of the Company.
In June 1997, Harcourt General, Inc. (Harcourt) completed its tender offer to
acquire all of the outstanding shares of NEC. As a result, Harcourt is now
the owner of the 82.1% of the Company's outstanding common stock previously
held by NEC. In connection with the acquisition of the Company's stock by
Harcourt, all of the officers of the Company resigned their officer
responsibilities and continued in their operational roles, with the exception
of the president, and the Chairman and Executive Officers of Harcourt became
officers of the Company. The Company has retained its historical basis of
accounting, and Harcourt has not reflected its fair value adjustments in
these financial statements.
In July 1997, Harcourt submitted an offer for all of the outstanding shares of
common stock of the Company not currently owned by Harcourt at a price per
share of $14.00. The independent directors of the Company have been
considering that offer, but no merger agreement has been signed.
Due to the seasonal naany's traditional selling cycle, a substantial portion
of selling and marketing costs of the Company are deferred in the first half
of the year and fully amortized later in the calendar year to properly match
the costs with revenues.
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments of a normal recurring nature
necessary to present fairly the financial position, results of operations, and
cash flows of the Company. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange
Commission. It is suggested that these financial statements be read in
conjunction with the financial statements and the notes thereto included in
the Company's 1996 Form 10-K. The results of operations for interim periods
are not necessarily indicative of the results of operations expected for the
year.
STECK-VAUGHN PUBLISHING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Note 2 - Investments
All marketable securities are classified as available-for-sale securities.
During the six months ended June 30, 1997 and 1996, the Company did not
realize a material gain or loss from the sale of available-for-sale
securities.
Note 3 - Inventories and Supplies
June 30, December 31, June 30,
(amounts in thousands) 1997 1996 1996
----------------------------------------
Finished Goods $ 23,605 $ 21,213 $ 20,365
Work in process 72 72 72
Raw materials and supplies 664 491 653
----------------------------------------
Total $ 24,341 $ 21,776 $ 21,090
========================================
Note 4 - Business Combinations
On May 23, 1997, the Company acquired substantially all of the rights to The
Integrator product from The Conover Company, Ltd. for cash consideration of
$2,250,000. The Integrator is a technology-based product which provides basic
skills training customized to the aptitude and career interests of adult
students. The acquisition was accounted for using the purchase method of
accounting.
On April 30, 1996, the Company acquired all of the stock of Edunetics Ltd., an
Israel corporation engaged in the development of educational software, for
cash consideration of $12,000,000. At closing, the purchase price was funded
by cash on hand and borrowings of $9,000,000 under the revolving bank credit
agreement. The acquisition was accounted for using the purchase method of
accounting.
Note 5 - Earnings Per Share
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128, "Earnings per Share," establishing new
methodology for the calculation of earnings per share. If earnings per share
had been determined under the new standard, both basic and diluted earnings
per share would be unchanged from the current presentation on the Consolidated
Statements of Operations.
STECK-VAUGHN PUBLISHING CORPORATION
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Percentage of Percentage of Percentage
Net Revenues Net Revenues Change From
Three Months Ended Six Months Ended Prior Year
June 30, June 30 Period
1997 1996 1997 1996 Q2 YTD
------ ------- ------ ------ ------ ------
Net Revenues:
Core Business:
Elementary/High School 49.3% 38.3% 47.3% 41.9% 62.0% 29.8%
Adult education 18.6 18.3 18.3 18.3 28.1 15.6
Library 18.1 23.3 19.0 23.7 (2.3) (7.7)
------ ------- ------ ------ ------ ------
86.0 79.9 84.6 83.9 35.4 16.1
Summit Learning 11.0 14.0 11.4 12.8 (1.4) 1.4
Edunetics 3.0 6.1 4.0 3.3 (37.9) 40.4
------ ------ ------ ------ ------ ------
Total Net Revenues 100.0 100.0 100.0 100.0 25.8 15.0
Product costs and fulfillment 29.8 31.2 30.0 32.1 20.2 7.3
------ ------ ------ ------ ------ ------
Gross Profit 70.2 68.8 70.0 67.9 28.3 18.7
Product development 15.3 17.5 17.0 17.4 9.8 12.3
Selling and marketing 30.6 31.7 30.4 32.0 21.4 9.7
General and administrative 6.8 7.3 7.3 7.7 17.5 8.7
Provision for doubtful accounts 0.3 0.2 0.2 0.1 166.7 122.2
Amortization of acquired
intangible assets 2.6 2.5 3.0 2.4 29.5 43.0
Write-off of acquired in-process
research and development costs - 22.4 - 12.1 - -
------ ------ ------ ------ ------ ------
Operating Income 14.6 (12.8) 12.1 (3.8) - -
Interest income 0.2 1.5 0.3 1.7 (80.8)(82.0)
Interest expense (1.5) (1.2) (1.6) (0.9) 59.2 107.5
------ ------ ------ ------- ------ ------
Income Before Income Taxes 13.3 (12.5) 10.8 (3.0) - -
Income taxes 5.2 3.8 4 3.5 73.1 38.8
------ ------ ------- -------- ------ ------
Net Income 8.1% (16.3%) 6.6% (6.5)% - -
====== ====== ======= ======= ====== ======
The discussion in this document contains trend analysis and other
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of
1934, as amended. Actual results could differ materially from those projected
in the forward-looking statements throughout this document.
STECK-VAUGHN PUBLISHING CORPORATION
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Net Revenues
Revenues by Product Line Three Months Ended Six Months Ended
June 30, 1996 June 30, 1996
(amounts in thousands) 1997 1996 (pro forma) 1997 1996 (pro forma)
=============================== ==============================
Core Business
Elementary and High School $ 11,337 $ 7,000 $ 8,856 $ 18,372 $ 14,152 $ 16,008
(El/Hi)
Adult Education 4,278 3,339 3,986 7,118 6,160 6,807
Library 4,175 4,272 4,969 7,375 7,991 8,688
------------------------------ -----------------------------
19,790 14,611 17,811 32,865 28,303 31,503
Summit Learning 2,529 2,565 2,565 4,395 4,334 4,334
Edunetics 695 1,120 1,120 1,572 1,120 1,120
------------------------------ ------------------------------
Total $ 23,014 $ 18,296 $ 21,496 $ 38,832 $ 33,757 $ 36,957
============================== ==============================
For the second quarter of 1996, the Company reported pro forma revenues which
included an additional $3,200,000 of revenues attributable to the backlog of
shippable orders at June 30, 1996, resulting from the installation of a new
warehouse management system. These pro forma revenues are reported above and
referenced below for consistency.
Revenues increased 25.8% (7.1% on a pro forma basis) over the second quarter
last year as revenues in both El/Hi and Adult were strong. Year-to-date,
sales are up 15.0% (5.1% pro forma) primarily due to strength in El/Hi and a
full six months of selling Edunetics products.
El/Hi revenues rose 62.0% (28.0% pro forma) versus last year's second quarter
primarily as a result of increasing sales of the Company's core products.
Basic skills products such as Phonics and Reading Comprehension and the
Company's test preparation and assessment products provided much of the
increase. In addition, the Company successfully introduced Pair-It Books, a
50-title series for emergent readers, and revised versions of World History
and You and America's Story.
Adult product sales were up 28.1% (7.3% pro forma) over the same three months
in 1996 primarily due to the availability of increased Federal funding and the
improvement in sales of the Educational Development Laboratories (EDL)
technology product line. The increase in the second quarter, after being flat
in the previous quarter, reflects the stabilization of the sales force
following the consolidation of territories in the first quarter of 1997.
Library sales were down 2.3% (down 16.0% pro forma) for the quarter against
1996 as school districts have trimmed library budgets and the new independent
sales force has not made up for the loss of school business with significant
increases in sales to public libraries.
STECK-VAUGHN PUBLISHING CORPORATION
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Summit sales are essentially flat for both the second quarter and
year-to-date. Revenues were increased by orders from this season's science
catalog and residual business from last fall's catalogs. In addition, Summit
issued its first language arts catalog in March and its first spring consumer
catalog in April, both of which contributed incremental revenues this quarter.
These positive results were offset by lower responses to the spring math
catalogs.
Product Cost and Fulfillment Expense
Product cost and fulfillment expense as a percentage of revenues decreased for
the three-month period ended June 30, 1997, as compared to 1996. Product cost
and fulfillment for the Company's core business operations for the three
months ended June 30, 1997, represented 26.3% of core business revenues, as
compared to 28.2% for the same period in the previous year, primarily due to
reduced library sales, increased sales of EDL technology products, and the
reduction of paper prices last year. Product costs of Edunetics products for
the three months ended June 30, 1997, represented 12.2% of Edunetics revenue,
reflecting the higher margins earned on technology products. Summit Learning's
product and fulfillment costs, at 62.1% of revenues, compared to 56.7% for the
same period of the prior year, reflect the non-proprietary nature of the
product line and increased over the prior year period primarily due to product
mix.
Product Development Expense
The following table reconciles product development investment to product
development expense for each of the periods indicated:
Three Months Ended Six Months Ended
June 30, Percentage June 30, Percentage
(amounts in thousands) 1997 1996 Change 1997 1996 Change
-------------------------------- -------------------------------
Product development investment $ 3,572 $ 3,287 8.7% $ 6,789 $ 6,174 10.0%
Plant and software costs capitalized (994) (809) 22.9 (1,825) (2,006) (9.0)
Plant costs amortized 932 720 29.4 1,620 1,696 (4.5)
----------------- -----------------
Product development expense $ 3,510 $ 3,198 9.8 $ 6,584 $ 5,864 12.3
================= =================
Product development investment for the three months ended June 30, 1997,
increased 8.7% as compared to the prior year, primarily attributable to the
expansion of the Company's technology development unit, both in the Company's
main office as well as the Edunetics development operation in Israel.
Capitalized costs were higher than last year due to the timing of development
costs in 1997, and amortization expense was higher due to the implementation
of a new amortization rate schedule for new products.
STECK-VAUGHN PUBLISHING CORPORATION
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Selling and Marketing Expense
The following table reconciles selling and marketing costs to selling and
marketing expense for each of the periods indicated:
Three Months Ended Six Months Ended
June 30, Percentage June 30, Percentage
(amounts in thousands) 1997 1996 Change 1997 1996 Change
--------------------------- ------------------------------
Selling and marketing costs $ 7,035 $ 6,253 12.5% $ 14,328 $ 12,914 10.9%
Selling and marketing deferred 6 (455) - (2,495) (2,127) (17.3)
------------------- ---------------------
Net selling and marketing expense $ 7,041 $ 5,798 21.4 $ 11,833 $ 10,787 9.7
=================== =====================
Selling and marketing costs increased 12.5% for the three months ended June
30, 1997, as compared to the prior year, primarily due to additional marketing
programs and the new curriculum integration sales group formed to facilitate
the sale of technology products. Net selling and marketing expense increased
21.4% for the three months ended June 30, 1997, as compared to the prior year,
primarily due to the timing of revenues attributable to the Company's policy
of deferring a portion of the Company's selling and marketing costs.
General and Administrative Expense
General and administrative expense increased 17.5% for the three months ended
June 30,1997, as compared to the prior year, due to the inclusion of Edunetics
for the full quarter.
Amortization of Acquired Intangible Assets
Amortization expense increased due to the acquisition of Edunetics in April
1996.
Operating Income by Product Line
Three Months Ended Six Months Ended
June 30, June 30,
(amounts in thousands) 1997 1996 1997 1996
------------------- --------------------
Core Business $ 4,124 $ 1,939 $ 6,472 $ 3,189
Summit Learning 188 15 (49) (200)
Edunetics (957) (188) (1,731) (188)
------------------- --------------------
3,355 1,766 4,692 2,801
Write-off of research
and development - (4,100) (4,100)
__________________ ____________________
Operating Income $ 3,355 $ (2,334) $ 4,692 $(1,299)
================== ====================
STECK-VAUGHN PUBLISHING CORPORATION
Part I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Operating income as a percentage of revenues for the three months ended June
30, 1997, as compared to 1996, increased for the core business primarily due
to higher revenues and lower relative product costs. The increase in Summit
Learning's operating income was due to savings on catalogs. Edunetics
reported an operating loss due to lower than expected sales as the
recently-hired curriculum integration sales specialists worked to identify
potential major accounts and cultivate sales.
Interest Income and Expense
Interest income for the three-month period ended June 30, 1997 was lower than
the previous year, reflecting termination of the Company's loans to NEC.
Interest expense for the period was higher than prior year due to debt
incurred for the acquisition of Edunetics.
Liquidity and Capital Resources
The Company's primary sources of liquidity are cash, marketable securities,
cash provided from operations and the Company's bank line of credit. The
Company's uses of cash include product development, capital expenditures,
working capital requirements, and selected acquisitions of complementary
businesses and product lines.
At June 30, 1997, the Company had $8,277,000 in cash and marketable securities
versus $3,081,000 at June 30, 1996. The increase was primarily attributable
to the use of cash on hand to purchase Edunetics last year.
Net cash outflow for operating activities for the three months ended June 30,
1997, of $98,000 was $4,352,000 lower than the prior year period. The
decrease reflects the payment in the second quarter of 1996 of accrued
liabilities relating to the start-up of Summit Learning and inventory
purchases under the new distribution agreements with Wayland Publishers and
Abdo.
On May 23, 1997, the Company acquired substantially all of the rights to The
Integrator product line from The Conover Company, Ltd. for cash consideration
of $2,250,000. 96, the Company acquired all of the stock of Edunetics Ltd. for
cash consideration of $12,000,000. At closing, the purchase prices for both
transactions were funded by cash on hand and borrowings under the Company's
bank line of credit.
During the second quarter, the Company extended its revolving bank credit
agreement to $20,000,000 and the maturity date to April 10, 1999. The
agreement provides for borrowings at prime or, at the Company's option, LIBOR
plus 1.5 percent. At June 30, 1997, $17,000,000 was outstanding under the
bank credit facility.
The Company expects that cash, cash provided from operations, and the
revolving credit facility will be sufficient to provide for investment in
product development, planned working capital requirements, debt service, and
capital expenditures for the foreseeable future.
STECK-VAUGHN PUBLISHING CORPORATION
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Restated Certificate of Incorporation of the Company (1)
3.2 By-Laws of the Company. (1)
4.1 Specimen of Common Stock Certificate of the Company. (1)
10.1 Modification and Renewal of Note, dated December 28, 1992, between
NationsBank of Texas, N.A., as holder, and Steck-Vaughn Company,
as borrower, secured by and as purchase money for the Company's
distribution center in Austin, Texas. (2)
10.2 Agreement, dated June 1, 1990, between the American Council on
Education and Steck-Vaughn Company, granting exclusive license for
reproduction and distribution of official GED Practice
Tests and Addendum effective July 28, 1992. (3)
10.3 Form of Intercompany Agreement between the Company and National
Education Corporation. (4)
10.4 First Amendment to Intercompany Agreement between the Company and
National Education Corporation dated June 10, 1994. (5)
10.5 Form of Tax Sharing Agreement between the Company and National
Education Corporation. (6)
10.6 Form of Indemnification Agreements between the Company and its
Officers and Directors. (7)
10.7 The Company's 1993 Stock Option Plan as amended. (8)
10.8 National Education Corporation Supplemental Executive Retirement
Plan (9)
10.9 Revolving Line of Credit Note and Option Agreement between the
Company and National Education Corporation, dated February 28, 1995
(10)
10.10 Addendum to Agreement between the American Council on Education
and Steck-Vaughn Company extending the expiration of the Agreement
to August 31, 2001 (11)
10.11 The Company's 1995 Directors' Stock Option and Award Plan (12)
10.12 Renewal and Extension Agreement between the Company and National
Education Corporation, effective December 31, 1995 (13)
10.13 First Amendment to Stock Option Agreement between the Company and
National Education Corporation, effective December 31, 1995. (14)
10.14 Letter Amendment to Stock Option Agreement between the Company and
National Education Corporation, dated February 1, 1996. (15)
10.15 Agreement between the Company and Edunetics Ltd. dated February
29, 1996. (16)
STECK-VAUGHN PUBLISHING CORPORATION
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
10.16 Second Renewal and Extension Agreement between the Company and
NationalEducation Corporation, effective March 31, 1996. (17)
10.17 Second Amendment to Stock Option Agreement between the Company and
National Education Corporation, effective March 31, 1996. (18)
10.18 Third Renewal and Extension Agreement between the Company and
National Education Corporation, effective June 30, 1996. (19)
10.19 Third Amendment to Stock Option Agreement between the Company and
National Education Corporation, effective June 30, 1996 .(20)
10.20 Employment Agreement between the Company and Anita Kopec dated
September 10, 1996 .(21)
10.21 Revised and Restated Office Lease dated January 30, 1997, between
Quarry Lake Business Center, Ltd., as landlord and Steck-Vaughn
company, as tenant, for the Company's principal offices in Austin,
Texas, beginning November 1, 1996 (22)
10.22 Agreement entered into July 1, 1997, among Harcourt General, Inc.
and the Independent Directors of Steck-Vaughn Publishing
Corporation(23) .
10.23 Agreement dated May 30, 1997, between Harcourt General, Inc. and
Steck-Vaughn Publishing Corporation(24).
10.24 Loan Agreement between NationsBank of Texas, N.A., and
Steck-Vaughn Company, dated April 10, 1997(25)
11.1 Statement re Calculation of Earnings Per Share.(25)
27.1 Financial Data Schedule. (26)
(b) Reports on Form 8-K
A Form 8-K was filed on June 19, 1997, reporting Harcourt
General's acquisition of 82% of the Company's outstanding shares.
STECK-VAUGHN PUBLISHING CORPORATION
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(1) Incorporated by reference to the identically numbered exhibit in
Amendment No. 1 to the Company's Registration Statement on Form
S-1, File No. 33-62334, filed with the Securities and Exchange
Commission on June 17, 1993 ("Amendment No. 1 to S-1 Registration
Statement").
(2) Incorporated by reference to Exhibit 10.1 to the Company's
Registration Statement on Form S-1, File No. 33-62334, filed with
the Securities and Exchange Commission on May 7, 1993 (the "S-1
Registration Statement").
(3) Incorporated by reference to Exhibit 10.7 to the Company's
Amendment No. 1 to S-1 Registration Statement.
(4) Incorporated by reference to Exhibit 10.8 to the Company's
Amendment No. 1 to S-1 Registration Statement.
(5) Incorporated by reference to Exhibit 10.15 in the Company's Form
10-Q for the quarterly period ended June 30, 1994, filed with the
Securities and Exchange Commission on August 11, 1994.
(6) Incorporated by reference to Exhibit 10.9 to the Company's
Amendment No. 1 to S-1 Registration Statement.
(7) Incorporated by reference to Exhibit 10.10 to the Company's
Amendment No. 1 to S-1 Registration Statement.
(8) Incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-8, file no. 333-22235, filed with
the Securities and Exchange Commission on February 24, 1997.
(9) Incorporated by reference to Exhibit 10.12 to the Company's S-1
Registration Statement.
(10) Incorporated by reference to Exhibit 10.12 in the Company's Form
10-K for the year ended December 31, 1994, filed with the
Securities and Exchange Commission on March 29, 1995.
(11) Incorporated by reference to Exhibit 10.13 in the Company's Form
10-Q for the quarterly period ended March 31, 1995, filed with the
Securities and Exchange Commission on May 12, 1995.
(12) Incorporated by reference to Exhibit A in the Company's Proxy
Statement furnished in connection with the Annual Meeting of
Stockholders held May 17, 1995, filed with the Securities and
Exchange Commission on March 29, 1995.
(13) Incorporated by reference to Exhibit 10.16 in the Company's Form
10-K for the year ended December 31, 1995, filed with the
Securities and Exchange Commission on March 25, 1996.
STECK-VAUGHN PUBLISHING CORPORATION
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(14) Incorporated by reference to Exhibit 10.17 in the Company's Form
10-K for the year ended December 31, 1995, filed with the
Securities and Exchange Commission on March 25, 1996.
(15) Incorporated by reference to Exhibit 10.18 in the Company's Form
10-K for the year ended December 31, 1995, filed with the
Securities and Exchange Commission on March 25, 1996.
(16) Incorporated by reference to Exhibit 10.19 in the Company's Form
10-K for the year ended December 31, 1995, filed with the
Securities and Exchange Commission on March 25, 1996.
(17) Incorporated by reference to Exhibit 10.19 in the Company's Form
10-Q for the quarterly period ended March 31, 1996, filed with the
Securities and Exchange Commission on May 14, 1996.
(18) Incorporated by reference to Exhibit 10.20 in the Company's Form
10-Q for the quarterly period ended March 31, 1996, filed with the
Securities and Exchange Commission on May 14, 1996.
(19) Incorporated by reference to Exhibit 10.22 in the Company's Form
10-Q for the quarterly period ended June 30, 1996, filed with the
Securities and Exchange Commission on August 13, 1996.
(20) Incorporated by reference to Exhibit 10.23 in the Company's Form
10-Q for the quarterly period ended June 30, 1996, filed with the
Securities and Exchange Commission on August 13, 1996.
(21) Incorporated by reference to Exhibit 10.24 in the Company's Form
10-Q for the quarterly period ended September 30, 1996, filed with
the Securities and Exchange Commission on November 13, 1996.
(22) Incorporated by reference to Exhibit 10.22 in the Company's Form
10-K for the year ended December 31, 1996, filed with the
Securities and Exchange Commission on March 31, 1997.
(23) Incorporated by reference to Exhibit 99.4 of a Schedule 13D/A
dated July 10, 1997 filed by Harcourt General, Inc. and National
Education Corporation.
(24) Incorporated by reference to Exhibit 11(a)(21) to Amendment No. 5
to Schedule 14D-1 of Harcourt General, Inc., dated July 5, 1997.
(25) Filed herewith.
(26) Filed only with electronic version of Form 10-Q.
STECK-VAUGHN PUBLISHING CORPORATION
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.
STECK-VAUGHN PUBLISHING CORPORATION
Date: August 13, 1997 By /s/ John Cook
John Cook
Vice President, Finance and
Chief Financial Officer
By /s/ Stephen C. Richards
Stephen C. Richards
Vice President - Controller
Principal Accounting Officer
STECK-VAUGHN PUBLISHING CORPORATION
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT
10.22 Loan Agreement between NationsBank of Texas, N.A.,
and Steck-Vaughn Company, dated April 10, 1997.
11.1 Statement re Calculation of Earnings Per Share.
27.1 Financial Data Schedule.