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, 1998                   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 December  31,  1998,  there were  3,800,318  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.......................................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.9

Part II:  OTHER INFORMATION

          Item 1.   Legal Proceedings.........................................10

          Item 2.   Changes in Securities.....................................10

          Item 3.   Defaults Upon Senior Securities...........................10

          Item 4.   Submission of Matters to a Vote of Security Holders.......10

          Item 5.   Other Information.........................................10

          Item 6.   Exhibits and Reports on Form 8-K..........................10

SIGNATURES....................................................................11





<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 and
control costs, 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>

                                                                December 31, 1998   September 30, 1998
<S>                                                             <C>                 <C>

ASSETS
Current Assets
  Cash and Cash Equivalents                                           $3,985,000          $4,444,000
  Accounts Receivable                                                 24,366,000          23,485,000
  Costs and Estimated Profits of Uncompleted
  Contracts in Excess of Related Billings                             14,046,000          13,218,000
  Prepaid Income Taxes                                                    84,000              84,000
  Other Current Assets                                                   523,000           1,065,000
                                                                         -------           ---------

  Total Current Assets                                                43,004,000          42,296,000

Property and Equipment                                                 8,384,000           8,195,000

Less Accumulated Depreciation                                          6,805,000           6,642,000
                                                                       ---------           ---------

    Net Property and Equipment                                         1,579,000           1,553,000

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

Other Assets                                                             848,000             757,000
                                                                         -------             -------

      TOTAL                                                          $47,313,000         $46,488,000
                                                                     ===========         ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
  Current Liabilities
    Accounts Payable                                                  $6,712,000          $6,382,000
    Accrued Expenses                                                   7,643,000           7,772,000
    Billings on Uncompleted Contracts in Excess of
      Related Costs                                                   13,094,000          13,375,000
    Current portion of long term debt                                    304,000             564,000
    Deferred income taxes                                              1,862,000           1,862,000
                                                                       ---------           ---------

      Total Current Liabilities                                       29,615,000          29,955,000

  Long-Term Debt                                                       2,374,000           2,134,000
  Post-retirement Benefits                                               940,000             927,000

  Stockholders' Equity
    Common Stock                                                       2,025,000           2,025,000
    Capital in Excess of Par                                           3,350,000           3,350,000
    Retained Earnings                                                  9,780,000           8,868,000
                                                                       ---------           ---------

      Total                                                           15,155,000          14,243,000
        Less:  Treasury Stock                                            771,000             771,000
                                                                         -------             -------

      Total Stockholders' Equity                                      14,384,000          13,472,000

      TOTAL                                                          $47,313,000         $46,488,000
                                                                     ===========         ===========
</TABLE>


See notes to condensed consolidated financial statements.


                                       2
<PAGE>


                    STV GROUP, INCORPORATED AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME

                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                THREE MONTHS ENDED
                                                                    December 31
                                                           1998                  1997
<S>                                                <C>                   <C>

Revenue

  Total Revenue                                        $34,221,000           $24,127,000
    Less Subcontract and Procurement Costs              11,362,000             4,969,000
                                                        ----------             ---------

  Operating Revenue                                    $22,859,000           $19,158,000

Costs and Expenses

  Costs of Services and Sales                           19,402,000            16,583,000
  General and Administrative                             1,748,000             1,530,000
  Interest Expense                                          74,000               259,000
  Interest Income                                          (73,000)               (8,000)
                                                           -------                ------ 

Total Costs and Expenses                                21,151,000            18,364,000

Income Before Income Taxes                               1,708,000               794,000

Income Taxes                                               796,000               382,000
                                                           -------               -------

Net Income                                                $912,000              $412,000
                                                          ========              ========

Basic earnings per share:                                     $.24                  $.11
Diluted earnings per share:                                   $.22                  $.11

</TABLE>

See notes to condensed consolidated financial statements.


                                       3
<PAGE>


                    STV GROUP, INCORPORATED AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                    THREE MONTHS ENDED
                                                                        December 31
                                                                1998                1997
<S>                                                      <C>                 <C>

Operating Activities
  Net Income                                                   $912,000           $412,000
  Adjustments to reconcile net income to
    net cash provided by operating activities
      Depreciation and Amortization                             189,000            185,000
  Changes in Operating assets and liabilities
      Accounts Receivable                                      (881,000)          (184,000)
      Costs of uncompleted contracts in
        excess of billings and other current assets            (286,000)         3,103,000
      Accounts Payable and accrued expenses                      19,000           (843,000)
      Billing in excess of related costs                       (281,000)         4,064,000
      Current Income Taxes                                      435,000            371,000
                                                                -------            -------
        Net Cash provided by operating activities              $107,000         $7,108,000

Investing Activities
  Purchase of Property and Equipment                           (189,000)           (69,000)
  Purchase of Software                                         (119,000)            (7,000)
  Decrease (Increase) in other assets                             2,000             45,000
                                                                  -----             ------
    Net Cash provided (used) by investing activities          ($306,000)          ($31,000)

Financing Activities
  Proceeds from line of credit and long term
    borrowings                                                   -              24,125,000
  Principal payments on line of credit and long
    term borrowings                                            (260,000)       (31,484,000)
                                                               --------        ----------- 
    Net Cash used in financing activities                     ($260,000)       ($7,359,000)

  Increase (decrease) in cash and equivalents                  (459,000)          (282,000)
  Cash and equivalents at beginning of year                   4,444,000          1,153,000
                                                              ---------          ---------
  Cash and equivalents at end of period                      $3,985,000           $871,000
                                                             ==========           ========
</TABLE>


See notes to condensed consolidated financial statements.


                                       4
<PAGE>


        Notes to Condensed Consolidated Financial Statements (Unaudited)

                                December 31, 1998

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 month  period  ended  December 31, 1998 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," has been adopted by the Company.  SFAS 128
replaces  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
                                  Dec. 31, 1998         Dec. 31, 1997

<S>                             <C>                  <C>

Basic earnings per share                $0.24                 $0.11
Shares outstanding                  3,800,318             3,642,492

Diluted earnings per share              $0.22                 $0.11
Shares outstanding                  4,074,906             3,811,488
</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  December 31, 1998 (first  quarter  fiscal
1999)  increased  42% as  compared  to the  first  quarter  of  fiscal  1998 and
increased 15.7% as compared to the previous quarter.  Operating  revenues (total
revenues excluding  pass-through costs) increased 19.3% as compared to the first
quarter of fiscal 1998 and  increased  5.6% as compared to the previous  quarter
due to the magnitude of awarded contracts.

Pass-through costs increased 128.7% compared to the first quarter of fiscal 1998
and increased 43.5% from the previous quarter. Pass-through costs vary depending
on  the  need  for  specialty   subconsultants   and  governmental   subcontract
requirements.

Cost of services,  expressed as a percentage of operating revenues, decreased to
84.9% for the first  quarter of fiscal  1999 from 86.6% in the first  quarter of
fiscal 1998 and from 85.4% in the  previous  quarter.  While the decrease in the
percentage  from the fourth  quarter of fiscal  1998 was due to an  increase  in
operating  revenues  noted above,  the costs of services also increased from the
previous quarter due to an increase in engineering services costs.

General and  administrative  expense,  expressed  as a  percentage  of operating
revenue,  is 7.6% in the first quarter of fiscal 1999 and is lower than the 8.0%
recorded in the first  quarter of fiscal 1998 and 8.1% in the  previous  quarter
again primarily due to an increase in operating revenues.

Interest expense, net of interest income, expressed as a percentage of operating
revenues,  decreased to less than .1% for the first  quarter of fiscal 1999 from
1.3% in the first quarter of fiscal 1998 and decreased  from .5% in the previous
quarter.  This decrease is due to the elimination in bank borrowings as a result
of continued  improvement  in cash  position and interest  earned from  invested
cash.


                                       7
<PAGE>


Income tax  expense  for the first  quarter of fiscal  1999 was 46.6% of pre-tax
income  compared  to 48.1% in the first  quarter of fiscal 1998 and 48.4% in the
previous quarter. The decrease is due to non-deductible  expenses being lower as
a percentage of increased first quarter pre-tax income.

Diluted  earnings per common share for the first quarter of fiscal 1999 was $.22
cents versus $.11 for the first  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  $13,389,000  from  $12,341,000  in the previous
quarter.  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 $13.3
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 a
new project management and accounting system.

The Company has been  notified  by NASDAQ  that NASDAQ has  determined  that the
Company  meets the listing  requirements  for  inclusion in the National  Market
System.

The Company's backlog at December 31, 1998 is approximately $145 million.

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.


                                       8
<PAGE>
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 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 standards and to prevent interruptions to STV operations.  The Company
is taking action to obtain certification from its suppliers, including suppliers
of IT and non-IT systems, and its clients of their Year 2000 compliance,  and to
test the Company's  existing  equipment and software  under  simulated Year 2000
conditions to further ensure that normal  operation will continue beyond 2000. A
steering  committee of senior  managers has been formed 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
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 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. 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  and  financial  assets to make such  corrections  on a near  real-time
basis.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

Not Applicable.


                                       9
<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

           Not applicable.

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 10.38 - First Amendment To Employment Agreement with
                 Dominick M. Servedio

                 Exhibit 10.39 - First Amendment To Employment Agreement with
                 Michael Haratunian

                 Exhibit 27 - Financial Data Schedule

           (b)   Reports on Form 8-K

                 The Company  filed no reports on Form 8-K for the quarter ended
                 December 31, 1998.


                                       10
<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)




  February 16, 1999                   By:  /s/ Dominick M. Servedio
---------------------                      -------------------------------------
       Date                                Dominick M. Servedio
                                           President and Chief Executive Officer






  February 16, 1999                   By:  /s/ Peter W. Knipe
---------------------                      -------------------------------------
     Date                                  Peter W. Knipe
                                           Secretary/Treasurer


                                       11