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, 1999                      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 $.50 par value
                                (Title of class)


As of March 31,  1999,  there  were  3,813,818  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>


                                TABLE OF CONTENTS


                                                                            Page

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS......................1

Part I:  FINANCIAL INFORMATION

         Item 1.   Financial Statements and Related Notes......................2

         Item 2.   Management's Discussion and Analysis of Financial Condition
                   and Results of Operation....................................7

         Item 3.   Quantitative and Qualitative Disclosures about Market Risk.10

Part II: OTHER INFORMATION

         Item 1.   Legal Proceedings..........................................11

         Item 2.   Changes in Securities......................................11

         Item 3.   Defaults Upon Senior Securities............................11

         Item 4.   Submission of Matters to a Vote of Security Holders........11

         Item 5.   Other Information..........................................11

         Item 6.   Exhibits and Reports on Form 8-K...........................11

SIGNATURES....................................................................12





<PAGE>
            CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

Certain  oral  statements  made by  management  from  time to time  and  certain
statements  contained  herein,  including  certain  statements in  "Management's
Discussion and Analysis of Financial  Condition and Results of Operations"  such
as  statements  regarding the  Company's  ability to meet its  liquidity  needs,
control costs, backlog and potential revenue growth, certain statements in Notes
to Condensed Consolidated  Financial Statements,  and other statements contained
herein  regarding  matters which are not  historical  facts are forward  looking
statements  (as such term is defined in the  Securities Act of 1933) and because
such  statements  involve  risks and  uncertainties,  actual  results may differ
materially from those  expressed or implied by such forward looking  statements.
Factors that could cause actual results to differ  materially  include,  but are
not limited to those discussed below:

1.   The  Company's  ability to secure the capital and the related  cost of such
     capital necessary to fund its future growth.

2.   The  Company's   continued  ability  to  operate  in  a  heavily  regulated
     government  environment.  The Company's government contracts are subject to
     termination,  reduction  or  modification  as a result  of  changes  in the
     government's   requirements   or  budgetary   restrictions.   In  addition,
     government  contracts are subject to termination at the conveniences of the
     government. Under certain circumstances, the government can also suspend or
     debar  individuals  or  firms  from  obtaining  future  contracts  with the
     government.

3.   The level of competition  in the Company's  industry,  including  companies
     with significantly larger operations and resources than the Company.

4.   The  Company's  ability  to  identify  and  win  suitable  projects  and to
     consummate or complete any such projects.

5.   The Company's  ability to perform  design/build  projects which may include
     the  responsibility of ensuring the actual  construction of a project for a
     guaranteed price.

6.   The  Company's  and its payors' and  suppliers  ability to implement a Year
     2000 readiness program.

These and other  factors  have been  discussed  in more detail in the  Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 1998.



                                       1
<PAGE>


                          PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

                    STV GROUP, INCORPORATED AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                 March 31, 1999     September 30, 1998
<S>                                                            <C>                 <C>

ASSETS
Current Assets
  Cash and Cash Equivalents                                           $7,053,000          $4,444,000
  Accounts Receivable                                                 26,774,000          23,485,000
  Costs and Estimated Profits of Uncompleted
  Contracts in Excess of Related Billings                             16,447,000          13,218,000
  Prepaid Income Taxes                                                    84,000              84,000
  Other Current Assets                                                    92,000           1,065,000
                                                                          ------           ---------

  Total Current Assets                                                50,450,000          42,296,000

Property and Equipment                                                 6,055,000           8,195,000

Less Accumulated Depreciation                                          4,479,000           6,642,000
                                                                       ---------           ---------

    Net Property and Equipment                                         1,576,000           1,553,000

Deferred Income Taxes                                                  1,882,000           1,882,000

Other Assets                                                             729,000             757,000
                                                                         -------             -------

      TOTAL                                                          $54,637,000         $46,488,000
                                                                     ===========         ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
  Current Liabilities
    Accounts Payable                                                  $6,924,000          $6,382,000
    Accrued Expenses                                                  10,988,000           7,772,000
    Billings on Uncompleted Contracts in Excess of
      Related Costs                                                   16,043,000          13,375,000
    Current portion of long term debt                                    108,000             564,000
    Deferred income taxes                                              1,862,000           1,862,000
                                                                       ---------           ---------

      Total Current Liabilities                                       35,925,000          29,955,000

  Long-Term Debt                                                       2,391,000           2,134,000
  Post-retirement Benefits                                               995,000             927,000

  Stockholders' Equity
    Common Stock                                                       2,032,000           2,025,000
    Capital in Excess of Par                                           3,375,000           3,350,000
    Retained Earnings                                                 10,690,000           8,868,000
                                                                      ----------           ---------

      Total                                                           16,097,000          14,243,000
        Less:  Treasury Stock                                            771,000             771,000
                                                                         -------             -------

      Total Stockholders' Equity                                      15,326,000          13,472,000

      TOTAL                                                          $54,637,000         $46,488,000
                                                                     ===========         ===========


See notes to condensed consolidated financial statements.
</TABLE>



                                       2
<PAGE>


                    STV GROUP, INCORPORATED AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                  THREE MONTHS ENDED              SIX MONTHS ENDED
                                                                       March 31                       March 31
                                                               1999            1998              1999             1998
<S>                                                   <C>              <C>                <C>              <C>

Revenue

  Total Revenue                                            $33,345,000      $25,986,000       $67,566,000      $50,113,000
    Less Subcontract and Procurement Costs                   9,587,000        6,190,000        20,949,000       11,159,000
                                                             ---------        ---------        ----------       ----------

  Operating Revenue                                        $23,758,000      $19,796,000       $46,617,000      $38,954,000

Costs and Expenses

  Costs of Services and Sales                               19,955,000       17,225,000        39,357,000       33,808,000
  General and Administrative                                 2,115,000        1,492,000         3,863,000        3,022,000
  Interest Expense                                              40,000          100,000           114,000          359,000
  Interest Income                                              (78,000)         (11,000)         (151,000)         (19,000)
                                                               -------          -------          --------          ------- 

Total Costs and Expenses                                    22,032,000       18,806,000        43,183,000       37,170,000

Income Before Income Taxes                                   1,726,000          990,000         3,434,000        1,784,000

Income Taxes                                                   816,000          495,000         1,612,000          877,000
                                                               -------          -------         ---------          -------

Net Income                                                    $910,000         $495,000        $1,822,000         $907,000
                                                              ========         ========        ==========         ========

Basic earnings per share:                                         $.24             $.14              $.48             $.24
Diluted earnings per share:                                       $.22             $.13              $.44             $.23
 

See notes to condensed consolidated financial statements.
</TABLE>



                                       3
<PAGE>


                    STV GROUP, INCORPORATED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                 SIX MONTHS ENDED
                                                                     March 31
                                                                1999            1998
<S>                                                     <C>               <C>

Operating Activities
  Net Income                                                 $1,822,000        $907,000
  Adjustments to reconcile net income to
    net cash provided by operating activities
      Depreciation and Amortization                             421,000         363,000
  Changes in Operating assets and liabilities
      Accounts Receivable                                    (3,289,000)     (1,036,000)
      Costs of uncompleted contracts in
        excess of billings and other current assets          (2,256,000)      1,284,000
      Accounts Payable and accrued expenses                   3,888,000       1,581,000
      Billing in excess of related costs                      2,668,000       4,533,000
      Current Income Taxes                                      195,000         796,000
                                                                -------         -------
        Net Cash provided by operating activities            $3,449,000      $8,428,000

Investing Activities
  Purchase of Property and Equipment                           (364,000)        (97,000)
  Purchase of Software                                         (142,000)        (10,000)
  Decrease in other assets                                       90,000          59,000
                                                                 ------          ------
    Net Cash used in investing activities                     ($416,000)       ($48,000)

Financing Activities
  Proceeds from issuance of common stock                         32,000          46,000
  Proceeds from line of credit and long term
    borrowings                                                        0      48,700,000
  Principal payments on line of credit and long
    term borrowings                                            (456,000)    (56,638,000)
                                                               --------     ----------- 
    Net Cash used in financing activities                     ($424,000)    ($7,892,000)

  Increase in cash and cash equivalents                       2,609,000         488,000
  Cash and cash equivalents at beginning of year              4,444,000       1,153,000
                                                              ---------       ---------
  Cash and cash equivalents at end of period                 $7,053,000      $1,641,000
                                                             ==========      ==========


See notes to condensed consolidated financial statements.
</TABLE>



                                       4
<PAGE>
        Notes to Condensed Consolidated Financial Statements (Unaudited)

                                 March 31, 1999

1.    BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.

In the opinion of management,  all adjustments  (consisting of normal  recurring
accruals)  considered  necessary  for a fair  presentation  have been  included.
Operating  results for the three and six month  periods ended March 31, 1999 are
not  necessarily  indicative  of the results that may be expected for the fiscal
year ending September 30, 1999.

2.    USE OF ESTIMATES

The preparation of financial  statements in conformity  with generally  accepted
accounting  principles require management to make estimates and assumptions that
affect the amounts reported in the financial  statements and accompanying notes.
Actual results could differ from those estimates.

3.    EARNINGS PER SHARE

SFAS No. 128,  "Earnings per Share,"  replaced  primary earnings per share (EPS)
with basic EPS and fully diluted EPS with diluted EPS.  Basic EPS is computed by
dividing  net income by the  weighted  average  number of shares of common stock
outstanding  during the period.  Diluted EPS recognizes  the potential  dilutive
effects of the future exercise of common stock options.

<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED                           SIX MONTHS ENDED
                                 March 31, 1999        March 31, 1998         March 31, 1999        March 31, 1998
                                 --------------        --------------         --------------        --------------
<S>                             <C>                   <C>                    <C>                  <C>

Basic earnings per share                $0.24                 $0.14                  $0.48                $0.24
Shares outstanding                  3,806,546             3,658,608              3,803,432            3,738,616

Diluted earnings per share              $0.22                 $0.13                  $0.44                $0.23
Shares outstanding                  4,149,513             3,916,888              4,112,210            3,864,188
</TABLE>


Earnings per share and average common shares and  equivalents  for prior periods
were adjusted to reflect the 2-for-1 stock split effected April 13, 1998.



                                       5
<PAGE>


  Notes to Condensed Consolidated Financial Statements (Unaudited) (Continued)

4.       RECLASSIFICATIONS

Certain  previously  reported amounts have been reclassified to conform to their
1999 presentation.

5.       NEW ACCOUNTING STANDARDS

In June 1997,  the FASB issued SFAS No. 131,  "Disclosures  about Segments of an
Enterprise and Related  Information." SFAS No. 131 establishes standards for the
way that public business enterprises report information about operating segments
in annual  financial  statements  and  requires  that those  enterprises  report
selected  information  about  operating  segments in interim  financial  reports
issued to stockholders.  It also establishes  standards for related  disclosures
about products and services, geographic areas, and major customers. SFAS No. 131
is effective for financial  statements for fiscal years beginning after December
15,  1997  (fiscal  1999 year end  reporting  for the  Company).  The Company is
evaluating the disclosure  requirements  of SFAS No. 131 and currently  believes
that  its  adoption  will  have no  material  impact  on its  future  disclosure
requirements.



                                       6
<PAGE>


Item 2.  Management Discussion and Analysis of  Financial Condition and Results
         of Operation

Results of Operations

Total  revenues for the quarter  ended March 31, 1999 (second  quarter of fiscal
1999)  increased  28.3% as  compared  to the second  quarter of fiscal  1998 and
decreased 2.6% as compared to the previous  quarter.  Operating  revenues (total
revenues  excluding  pass through  costs) for the second  quarter of fiscal 1999
increased  20.0% as compared to the second  quarter of fiscal 1998 and increased
3.9% as  compared  to the  previous  quarter  due to the  magnitude  of  awarded
contracts.

Pass through costs,  expressed as a percentage of total  revenues,  increased to
28.8%  compared to 23.9% in the second quarter of fiscal 1998 and decreased from
33.2% 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
84.0% for the second quarter of fiscal 1999 from 87.0% for the second quarter of
fiscal 1998 and 84.9% for the first  quarter of fiscal 1999.  While the decrease
in the  percentages  from the first quarter of fiscal 1999 and second quarter of
1998 was due to an increase in operating revenues noted above, the absolute cost
of services  also  increased  from the  previous  quarters due to an increase in
labor related expenses and information technology costs.

General and  administrative  expense,  expressed  as a  percentage  of operating
revenue,  was 8.9% in the second  quarter of fiscal  1999 and is higher than the
7.5%  recorded  in the second  quarter of fiscal  1998 and 7.6% in the  previous
quarter. The increase from the second quarter of fiscal 1998 is due to increased
labor and labor related expenses while the increase from the previous quarter is
primarily due to higher utilization of outside services.

Interest income, net of interest expense, expressed as a percentage of operating
revenues,  increased  to a  positive  .2% in the second  quarter of fiscal  1999
compared to negative .4% in the second  quarter of fiscal 1998 and less than .1%
in the previous quarter. This improvement is due to the



                                       7
<PAGE>


elimination  of bank  borrowings as a result of a continued  improvement in cash
position and interest earned from invested cash.

Income tax  expense  for the second  quarter of fiscal 1999 was 47.3% of pre-tax
income  compared  to 46.6% in the  first  quarter  of  fiscal  1999 and 50.0% of
pre-tax income for the same period last year. The slightly  higher rate from the
first quarter is due to a slightly  higher  effective tax rate.  The decrease is
due to  non-deductible  expenses being lower as a percentage of increased second
quarter pre-tax income from last year.

Diluted earnings per common share for the second quarter of fiscal 1999 was $.22
cents versus $.13 cents for the second  quarter of fiscal 1998. A 2-for-1  stock
split was effective  April 13, 1998 for  stockholders  of record as of March 31,
1998.  Prior period  earnings per share and  weighted  average  number of shares
outstanding have been adjusted to reflect this split.

Financial Condition and Liquidity

Working capital  increased to $14,525,000 at March 31, 1999 from  $13,389,000 at
December  31,  1998.  Capital  resources  available  to the  Company  include an
existing line of credit for working  capital.  The current limit is a maximum of
$15.5  million  based  on  accounts  receivable  and  work-in-progress  of which
approximately $14.2 million is currently available. 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 and has
purchased and converted to a new project management and accounting system.

The  Company's  backlog at March 31,  1999 is  approximately  $200  million,  in
principal  part,  reflecting  STV's  award,  in a joint  venture,  of the tunnel
engineering  contract for the New York Metropolitan  Transportation  Authority's
East Side Access  project.  This $2.3 billion  project  extends Long Island Rail
Road service to Manhattan's East Side into Grand Central  Terminal.  The Company
expects  that the  magnitude of this project will provide the impetus for future
revenue growth.



                                       8
<PAGE>
Year 2000

The Year 2000 issue, or "The Y2K Bug" as it is sometimes  called,  is the result
of computer programs and equipment that were written and manufactured  using two
digits rather than four to define the applicable year.  Date-sensitive  computer
programs and equipment may recognize a date using only the last two digits. This
could result in the year 2000 being recognized as the year 1900. System failures
or miscalculations can occur, which would cause disruptions in operations and/or
the inability to process normal business transactions.

STV has recently  acquired and installed  new  financial and project  management
systems that are certified Year  2000-compliant.  The Company is also continuing
on a normal basis to replace or upgrade other systems that may not be compliant.
This process will be completed in 1999.  Costs of becoming 2000  compliant  will
not be materially  more than normal  information  technology  (IT) purchases and
associated IT costs. However, STV has taken and will continue to take reasonable
and prudent  actions,  consistent  with the  standards of care  prevalent in the
industry,  to comply with Year 2000 requirements and to prevent interruptions to
STV operations.  The Company has taken action to obtain  certification  from its
suppliers,  including  suppliers of IT and non-IT  systems.  These responses are
currently  being analyzed and remedial action will be taken with those suppliers
who are deemed non-compliant.  In addition, STV has notified its clients of Year
2000 compliance  actions and issues,  and is now beginning to test the Company's
in-house  equipment and software under simulated Year 2000 conditions to further
ensure that normal operation will continue beyond 2000. Finally,  STV operations
managers have informed all design  personnel of Y2K  requirements to ensure that
all STV design  products  meet Y2K  standards.  A steering  committee  of senior
managers  meets  monthly to  coordinate  and manage all Year 2000  issues,  both
internally  and  externally.  The cost of this  endeavor  is not  believed to be
material.

The maximum potential risk exposure to STV is as follows:  (a) Disruptions could
occur  with the  failure of  project-specific  applications  or unique  computer
assisted  design and  drafting  and other  software  products  that are not Year
2000-compliant.   This  would  halt  or  delay   completion  of  engineering  or
construction designs and could subject STV to litigation for failure to complete
designs according to contract  timetables;  and (b) There is the potential for a
governmental unit or



                                       9
<PAGE>
other large client to have 2000 compliance  problems in remitting to the Company
or otherwise interrupting collections or bank processes. The amount of potential
liability and lost revenue cannot be reasonably  estimated at this time. Ongoing
testing of equipment and software will considerably  lessen the risk of failure,
and the Company  currently has a  contingency  plan to  immediately  replace any
defective computer or software system.  This plan is considered adequate because
all STV systems are  PC-based,  and STV has  sufficient  hardware,  software and
financial assets to make such corrections on a near real-time basis.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

Not Applicable.



                                       10
<PAGE>
                           PART II: OTHER INFORMATION

Item 1.    Legal Proceedings

           Not applicable.

Item 2.    Changes in Securities

           Not applicable.

Item 3.    Defaults Upon Senior Securities

           Not applicable.

Item 4.    Submission of Matters to Vote of Security Holders

           The Annual Meeting of  Shareholders  of STV Group,  Incorporated  was
           held Tuesday,  March 30, 1999 at which the following  Directors  were
           elected for a term of three (3) years:

           Ray M. Monti
           G. Michael Stakias

Item 5.    Other Information

           Not applicable.

Item 6.    Exhibits and Reports on Form 8-K

           (a)   Exhibits

                 The following are filed as exhibits to Part I of this Form 10Q:

                 Exhibit 27 - Financial Data Schedule

           (b)   Reports on Form 8-K

                 The Company  filed no reports on Form 8-K for the quarter ended
                 March 31, 1999.



                                       11
<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)




  May 14, 1999                        By:  /s/ Dominick M. Servedio
----------------                           -------------------------------------
     Date                                  Dominick M. Servedio
                                           President and Chief Executive Officer






  May 14, 1999                        By:  /s/ Peter W. Knipe
----------------                           -------------------------------------
     Date                                  Peter W. Knipe
                                           Secretary/Treasurer



                                       12