==============================================================================
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____________________ to ____________________
Commission file number 0-8493
A. Full title of the plan and the address of the plan, if different
from that of the issuer named below:
STEWART & STEVENSON 401(k) SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
STEWART & STEVENSON SERVICES, INC.
2707 NORTH LOOP WEST
HOUSTON, TEXAS 77008
==============================================================================
FINANCIAL STATEMENTS
In accordance with Item 4 of the Required Information for Form 11-K, the
following statements of financial condition for the Stewart & Stevenson 401(k)
Savings Plan have been prepared in accordance with the financial reporting
requirements of the Employee Retirement Income Security Act of 1974, as amended,
and the regulations promulgated thereunder.
INDEX TO THE FINANCIAL STATEMENTS AND SCHEDULE
Report of Independent Public Accountants
Item 1. Statement of Net Assets Available for Benefits as of December 31, 1996
and 1995
Item 2. Statement of Changes in Net Assets Available for Benefits for the
Years Ended December 31, 1996 and December 31, 1995.
Notes to Financial Statements
Schedule I - Item 27a - Schedule of Assets Held for Investment Purposes as of
December 31, 1996
Schedule II - Item 27d - Schedule of Reportable Transactions for the Year Ended
December 31, 1996
STEWART & STEVENSON 401(k) SAVINGS PLAN
FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996
TOGETHER WITH AUDITORS' REPORT
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Administrative Committee of the
Stewart & Stevenson 401(k) Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Stewart & Stevenson 401(k) Savings Plan as of December 31, 1996 and 1995,
and the related statements of changes in net assets available for benefits for
the years then ended. These financial statements and the schedules referred to
below are the responsibility of the Plan's administrator. Our responsibility is
to express an opinion on these financial statements and schedules based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Stewart &
Stevenson 401(k) Savings Plan as of December 31, 1996 and 1995, and the changes
in its net assets available for benefits for the years then ended in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes as of December 31, 1996, reportable transactions and
nonexempt transactions for the year ended December 31, 1996, are presented for
purpose of additional analysis and are not a required part of the basic
financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedules
have been subjected to the auditing procedures applied in the audits of the
basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Houston, Texas
May 23, 1997
==============================================================================
==============================================================================
STEWART & STEVENSON 401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
<S> <C> <C>
1996 1995
----------- ------------
ASSETS:
Investments, at fair value-
Common stock of Stewart & Stevenson Services, Inc. $ 1,549,186 $ 778,559
Mutual funds 14,605,987 8,358,175
Common/collective trust fund 2,080,436 1,193,546
Participant loans 522,927 286,595
------------ ------------
Total investments 18,758,536 10,616,875
Receivables-
Employer contributions 25,183 15,487
Participant contributions 134,213 83,145
Cash 170,123 -
------------ ------------
329,519 98,632
------------ ------------
Total assets 19,088,055 10,715,507
LIABILITIES:
Other - 145,108
------------ ------------
- 145,108
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $ 19,088,055 $ 10,570,399
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
STEWART & STEVENSON 401(k) SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
<S> <C> <C>
1996 1995
------------ -----------
ADDITIONS TO NET ASSETS ATTRIBUTED TO:
Investment income-
Dividends $ 1,099,294 $ 570,242
Interest 35,609 11,340
Net appreciation (depreciation) in fair value of common stock 239,784 (205,294)
Net appreciation in fair value of mutual funds 597,965 722,785
------------- ------------
Total investment income 1,972,652 1,099,073
Contributions-
Employer 984,534 775,269
Participant 5,090,204 4,022,402
Participant rollovers 1,036,336 2,490,403
------------- ------------
Total contributions 7,111,074 7,288,074
------------- ------------
Total additions 9,083,726 8,387,147
------------- ------------
DEDUCTIONS FROM NET ASSETS ATTRIBUTED TO:
Distributions to participants 389,799 381,017
Withdrawals 135,870 13,404
Other distributions 36,436 -
Administrative expenses 3,965 -
------------ ------------
Total deductions 566,070 394,421
------------ ------------
NET INCREASE 8,517,656 7,992,726
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 10,570,399 2,577,673
------------ ------------
End of year $ 19,088,055 $ 10,570,399
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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STEWART & STEVENSON 401(k) SAVINGS PLAN
=============================================================================
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN:
General
The Stewart & Stevenson 401(k) Savings Plan (the Plan), adopted effective
January 1, 1994, is a trusteed, defined contribution plan established for the
benefit of all eligible employees of Stewart & Stevenson Services, Inc., and its
subsidiaries, C. Jim Stewart & Stevenson, Inc., Stewart & Stevenson Power, Inc.,
Stewart & Stevenson Operations, Inc., Stewart & Stevenson Transportation, Inc.,
Stewart & Stevenson International Sales, Inc., Stewart & Stevenson Technical
Services, Inc., Stewart & Stevenson de Venezuela, S.A., Creole Stewart &
Stevenson, Inc., Stewart & Stevenson Vehicle Services, Inc. and Pow-R-Quik
Limited. These entities are collectively referred to as "the Company."
The following description of the Plan provides a summary of the Plan.
Participants should refer to the Plan document for a more complete description
of the Plan's provisions.
Plan Administration
The Plan is administered by a committee (the Administrative Committee) which is
appointed by the board of directors of Stewart & Stevenson Services, Inc. This
committee is empowered to act on all matters affecting the Plan including, among
other things, interpreting the Plan's provisions, determining the eligibility of
employees to become participants in the Plan, selecting the funds to be made
available in the Plan and determining any person's right to a benefit under the
Plan. The Administrative Committee members do not receive compensation for
services rendered to the Plan. Custodial safekeeping of Plan assets is performed
by Merrill Lynch Trust Company (the Trustee). Individual participant record
keeping is performed under Merrill Lynch, Pierce, Fenner & Smith Incorporated
(the Recordkeeper). Among other duties, the Trustee is to receive contributions,
collect the income from the Plan's assets and make disbursements from the Plan's
assets as directed by the administrative committee. The Recordkeeper's duties
include processing and maintaining participant data, participant statements, and
contributions and distributions for purposes of record keeping.
Participation
Employee participation in the Plan is voluntary. All employees who are at least
21 years of age are eligible to participate in the Plan after completion of one
year of service during which 1,000 or more hours are worked.
Investments
The following details the investment funds available to each Plan participant:
Fund 1 Merrill Lynch Global Allocation Fund, Inc., Class A (ML Global)
Fund 2 Merrill Lynch Corporate Bond Fund, Inc., Intermediate Term, Class A
(ML Corporate)
Fund 3 Merrill Lynch Retirement Preservation Trust (ML Retirement)
Fund 4 AIM Value Fund (AIM)
Fund 5 American Balanced Fund (American)
Fund 6 Stewart & Stevenson Services, Inc., Common Stock (S&S Services)
Contributions
Participants may elect to contribute 1 percent to 15 percent of their wages as
reported to the Internal Revenue Service, subject to certain limitations, as
defined, in any or all six funds. Contributions from employees are recorded in
the period in which the Company makes payroll deductions from Plan participants.
The matching employer contribution is 25 percent of the first 6 percent of the
participant's contribution. Matching contributions from the Company are recorded
in the same period as the corresponding employee contributions. Participant and
employer contributions are remitted by the employer to the Trustee every two
weeks and are credited directly to the participants' employee accounts by the
Recordkeeper. Participants may also make rollover contributions to the Plan
representing distributions from other qualified defined benefit or contribution
plans. Participants can change the allocation of their contributions in these
six funds or they can discontinue, increase or decrease their contribution rate
within the 1 percent to 15 percent range as permitted by the Plan. All changes
are performed over an automated benefits system.
Participants' Benefits
Participants are fully vested in their participant contributions, rollovers and
earnings thereon at all times. Participants shall have a 100 percent vested
interest in their employer contributions upon attaining age 65, the normal
retirement age according to the Plan. Those participants who terminate prior to
normal retirement age are entitled to a benefit pursuant to the value of their
vested interests in their accounts as follows:
Vested
Years of Vesting Service Interest
Less than 3 0%
3 20
4 40
5 60
6 80
7 or more 100
Prior to June 1, 1996, forfeited employer contributions were to be applied as a
reduction of future employer matching contributions, but will be restored to the
participants who previously forfeited the contribution upon reemployment within
five years of termination. Effective June 1, 1996, the Plan was amended to allow
forfeited employer contributions to be used to pay Plan expenses, or to be
applied as a reduction of future employer matching contributions. During 1996,
$3,965 of forfeitures was used to pay Plan expenses. No forfeitures were used in
1995. Forfeitures available at December 31, 1996 and 1995, totaled $31,831 and
$36,436, respectively.
The Company anticipates and believes that the Plan will continue without
interruption but reserves the right to terminate the Plan. In the event of
termination, the assets of the Plan, less expenses of liquidation, will be
allocated to the participants in accordance with the terms of the Plan.
Withdrawals and Loans
Participant benefits are payable to participants or to a designated beneficiary
in the event of their retirement, death or termination of employment. In limited
circumstances, account withdrawals may be made for financial hardship in
accordance with the Plan.
Benefit payments to withdrawing employees are made in lump-sum payments. As of
December 31, 1996, the amount payable to persons who have withdrawn from the
Plan was $166,435.
A participant may borrow from his account up to a maximum equal to the lesser of
$50,000 or 50 percent of his vested account balance. Loan transactions are
treated as a transfer to (from) the investment fund from (to) the participant
loan fund. The minimum loan is $1,000 and will bear interest at a rate of prime
plus 1 percent. Outstanding loans currently bear interest rates from 7 percent
to 10 percent. The loans shall not exceed five years, except for loans for the
purpose of acquiring a principal residence. The loans are secured by the balance
in the participant's account. Principal and interest are paid ratably through
monthly payroll deductions.
2. SUMMARY OF ACCOUNTING POLICIES:
Basis of Accounting
The financial statements of the Plan have been prepared on the accrual basis of
accounting.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Reclassifications
The accompanying financial statements for 1995 contain certain reclassifications
to conform with the presentation used in 1996.
Investment Valuation
The Merrill Lynch Retirement Preservation Trust Fund is a common/collective
trust fund investing primarily in guaranteed investment contracts and U.S.
Government securities. The guaranteed investment contracts are fully benefit
responsive and are recorded at contract value, which approximates fair value.
Contract value is determined based on contributions made under the contract plus
interest earned at the contract's rate less funds used to pay investment fees
and withdrawals. The Plan's investments in mutual funds are recorded at cost
when purchased but are adjusted to market value based upon published data, by
the Trustee, for financial reporting purposes. The net change in the difference
between market value of the investments on hand at December 31, 1996 and 1995,
and the market value of the investments on hand as of the beginning of the year,
is included as unrealized appreciation (depreciation) of investments. Realized
gains or losses on the sale of investments and withdrawals of investments are
based on the value of the assets as of the beginning of the year or the time of
purchase during the year, if later. Unrealized appreciation (depreciation) of
investments and realized gains or losses are recorded in the statement of
changes in net assets available for benefits as net appreciation (depreciation)
in fair value of investments.
Recognition of Income and Expenses
Interest income is reported daily on an accrual basis. Plan income or loss is
allocated to the participants daily in the ratio that each participant's account
balance bears to all account balances. The Company may pay all expenses incurred
in the administration of the Plan, but it shall not be obligated to do so. Any
such expenses and fees not paid by the Company shall be paid from the Plan.
3. FEDERAL INCOME TAXES:
The Plan obtained its latest determination letter on September 3, 1994, in which
the Internal Revenue Service stated that the Plan, as originally established,
was in compliance with the applicable requirements of the Internal Revenue Code
(the Code). Although the Plan has been amended since receiving the determination
letter, the Administrative Committee believes that the Plan is currently
designed and being operated in compliance with the applicable requirements of
the Code. Therefore, the Administrative Committee believes that the Plan is
qualified and is tax-exempt as of December 31, 1996 and 1995.
4. RECONCILIATION OF FINANCIAL
STATEMENTS TO FORM 5500:
The following is a reconciliation of net assets available for benefits per the
financial statements to the Form 5500 as of December 31, 1996:
Net assets available for benefits per the financial statements $ 19,088,055
Less- Amounts allocated to withdrawing participants (166,435)
------------
Net assets available for benefits per the Form 5500 $ 18,921,620
============
The following is a reconciliation of distributions to participants and
withdrawals per the financial statements to the Form 5500 for the year ended
December 31, 1996:
Distributions to participants and withdrawals per the
financial statements $525,669
Add- Amounts allocated to withdrawing participants
at December 31, 1996 166,435
Less- Amounts allocated to withdrawing participants
at December 31, 1995 -
--------
Distributions to participants and withdrawals
per the Form 5500 $692,104
=========
Amounts allocated to withdrawing participants are recorded on the Form 5500 for
distributions that have been processed and approved for payment prior to
December 31 but not yet paid as of that date.
5. NONEXEMPT TRANSACTION:
For the year ended December 31, 1996, the reimbursement of certain forfeitures
to the Company constituted a lending of such monies to the Company. As such,
this transaction represented a nonexempt transaction between the Company and the
Plan as identified in Schedule III.
============================================================================
============================================================================
6. ALLOCATION TO INVESTMENT FUNDS:
The following statements reflect the allocation of net assets available for
benefits and changes in net assets available for benefits to the separate
investment funds as of and for the years ended December 31, 1996 and 1995:
Statement of Net Assets Available for Benefits by Investment Fund
December 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Part.
Fund 1 Fund 2 Fund 3 Fund 4 Fund 5 Fund 6 Loan General Total
------ ------- ------- ------ ------ ------ ----- ------- ----------
Assets-
Investments, at fair value-
Common stock $ - $ - $ - $ - $ - $1,549,186 $ - $ - $ 1,549,186
Mutual funds $4,327,018 1,215,995 - 6,466,601 2,596,373 - - - 14,605,987
Common/collective trust - - 2,080,436 - - - - - 2,080,436
Participant loans - - - - - - 522,927 - 522,927
---------- --------- --------- --------- --------- --------- ------- ----- ----------
Total investments 4,327,018 1,215,995 2,080,436 6,466,601 2,596,373 1,549,186 522,927 - 18,758,536
Receivables-
Employer contributions 5,551 2,281 2,568 9,066 3,405 2,312 - - 25,183
Participant contributions 29,997 11,316 13,040 49,271 18,092 12,497 - - 134,213
Cash - - - - - - - 170,123 170,723
---------- --------- --------- ---------- --------- ---------- ------ -------- -----------
35,548 13,597 15,608 58,337 21,497 14,809 - 170,123 329,519
---------- --------- --------- ---------- ---------- ---------- ------ -------- -----------
Net assets available for $4,362,566 $1,229,592 $2,096,044 $6,524,938 $2,617,870 $1,563,995 $522,927 $170,123 $19,088,055
benefits ========== ========== ========== ========== ========== ========== ========= ======== ===========
</TABLE>
==============================================================================
==============================================================================
Statement of Net Assets Available for Benefits by Investment Fund
December 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Part.
Fund 1 Fund 2 Fund 3 Fund 4 Fund 5 Fund 6 Loan General Total
------ ------ ------ ------ ------ ------ ---- ------- -----
Assets-
Investments, at fair value-
Common stock $ - $ - $ - $ - $ - $ 778,559 $ - $ - $ 778,559
Mutual funds 2,536,522 650,802 - 3,692,840 1,478,011 - - - 8,358,175
Common/collective trust fund - - 1,193,546 - - - - - 1,193,546
Participant loans - - - - - - 286,595 - 286,595
---------- -------- ---------- ---------- ---------- ---------- -------- -------- ----------
Total Investments 2,536,522 650,802 1,193,546 3,692,840 1,478,011 778,559 286,595 - 10,616,875
Receivables-
Employer contributions 3,844 1,212 2,038 5,196 1,925 1,272 - - 15,487
Participant contributions 19,753 5,948 10,191 27,764 9,773 9,716 - - 83,145
---------- --------- ----------- --------- ---------- ---------- -------- -------- -----------
23,597 7,160 12,229 32,960 11,698 10,988 - - 98,632
---------- --------- ----------- --------- ---------- ---------- -------- -------- -----------
Total assets 2,560,119 657,962 1,205,775 3,725,800 1,489,709 789,547 286,595 - 10,715,507
Liabilities-
Other - - - - - - - 145,108 145,108
---------- --------- ---------- --------- ------------ -------- -------- -------- -----------
- - - - - - - 145,108 145,108
---------- --------- ---------- --------- ------------ --------- -------- -------- -----------
Net assets available for $2,560,119 $657,962 $1,205,775 $3,725,800 $1,489,709 $789,547 $286,595 $(145,108) $10,570,399
benefits ========== ======== ========== ========== ========== ========== ======== ========== ===========
</TABLE>
Statement of Changes in Net Assets Available for Benefits by Investment Fund
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Part.
Fund 1 Fund 2 Fund 3 Fund 4 Fund 5 Fund 6 Loan General Total
------ ------ ------ ------ ------ ------ ----- ------- -----
Additions to net assets
attributed to-
Investment income-
Dividends $ 400,619 $ 61,421 $ 92,878 $ 315,731 $ 214,022 $ 14,623 $ - $ - $1,099,294
Interest 7,329 1,999 4,303 12,244 5,817 3,917 - - 35,609
Net appreciation
(depreciation) in fair value
of investments 118,966 (23,324) - 450,206 52,122 239,784 - - 837,749
-------- -------- --------- --------- --------- -------- ------- ------ ----------
Total investment income 526,914 40,091 97,181 778,181 271,961 258,324 - - 1,972,652
Contributions-
Employer 207,663 91,641 98,621 359,753 130,143 96,713 - - 984,534
Participant 1,065,412 450,343 489,759 1,907,006 670,267 507,417 - - 5,090,204
Participant rollovers 128,641 101,176 230,277 244,561 156,402 175,279 - - 1,036,336
--------- -------- -------- --------- --------- ------- -------- ------- ----------
Total contributions 1,401,716 643,160 818,657 2,511,320 956,812 779,409 - - 7,111,074
--------- -------- -------- --------- ---------- ------- -------- ------- ----------
Total additions 1,928,630 683,251 915,838 3,289,501 1,228,773 1,037,733 - - 9,083,726
--------- -------- -------- --------- ---------- --------- -------- ------- ----------
Deductions from net assets
attributed to-
Distributions to participants 83,389 16,763 91,425 192,743 61,017 45,930 30,236 (131,704) 389,799
Withdrawals 30,379 9,608 8,855 61,043 16,740 22,649 - (13,404) 135,870
Other distributions - - 36,436 - - - - - 36,436
Administrative expenses - - 3,965 - - - - - 3,965
Interfund transfers, net 12,415 85,250 (115,112) 236,577 22,855 194,706 (266,568) (170,123) -
--------- -------- --------- --------- --------- ------- --------- --------- ----------
Total deductions 126,183 111,621 25,569 490,363 100,612 263,285 (236,332) (315,231) 566,070
--------- -------- --------- --------- --------- ------- --------- --------- ----------
Net increase (decrease) 1,802,447 571,630 890,269 2,799,138 1,128,161 774,448 236,332 315,231 8,517,656
Net assets available for benefits-
Beginning of year 2,560,119 657,962 1,205,775 3,725,800 1,489,709 789,547 286,595 (145,108) 10,570,399
--------- ------- --------- --------- --------- ------- ------- --------- ----------
End of year $4,362,566 $1,229,592 $2,096,044 $6,524,938 $2,617,870 $1,563,995 $522,927 $170,123 $19,088,055
========== ========== ========== ========== ========== ========== ======== ======== ===========
</TABLE>
Statement of Changes in Net Assets Available for Benefits by Investment Fund
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Part.
Fund 1 Fund 2 Fund 3 Fund 4 Fund 5 Fund 6 Loan General Total
------ ------ ------ ------ ------ ------ ----- ------- -----
Additions to net assets attributed to-
Investment income-
Dividends $ 196,275 $27,395 $ 45,506 $210,246 $ 85,946 $ 4,874 $ - $ - $ 570,242
Interest 2,612 746 1,952 3,390 1,676 964 - - 11,340
Net appreciation
(depreciation) in fair value of
investments 162,760 34,370 - 402,403 123,252 (205,294) - - 517,491
------- ------- -------- -------- -------- --------- -------- ------- ---------
Total investment income 361,647 62,511 47,458 616,039 210,874 (199,456) - - 1,099,073
Contributions-
Employer 185,889 58,835 98,835 251,926 93,336 86,448 - - 775,269
Participant 953,197 288,481 493,326 1,344,174 473,326 469,898 - - 4,022,402
Participant rollovers 569,328 130,368 441,991 716,646 576,178 55,892 - - 2,490,403
--------- ------- -------- --------- --------- -------- -------- ------- ----------
Total contributions 1,708,414 477,684 1,034,152 2,312,746 1,142,840 612,238 - - 7,288,074
--------- ------- --------- --------- --------- -------- -------- ------- ----------
Total additions 2,070,061 540,195 1,081,610 2,928,785 1,353,714 412,782 - - 8,387,147
--------- ------- --------- --------- --------- -------- -------- ------- ----------
Deductions from net assets attributed
to-Distributions to participants 34,358 12,113 38,180 63,013 74,497 25,141 2,011 131,704 381,017
Withdrawals - - - - - - - 13,404 13,404
Interfund transfers, net 187,682 36,207 67,084 (3,935) 63,090 (90,570) (259,558) - -
--------- ------- -------- --------- --------- -------- --------- --------- ----------
Total deductions 222,040 48,320 105,264 59,078 137,587 (65,429) (257,547) 145,108 394,421
--------- ------- -------- --------- ---------- -------- --------- --------- ----------
Net increase (decrease) 1,848,021 491,875 976,346 2,869,707 1,216,127 478,211 257,547 (145,108) 7,992,726
Net assets available for benefits-
Beginning of year 712,098 166,087 229,429 856,093 273,582 311,336 29,048 - 2,577,673
---------- ------- ---------- ---------- ---------- -------- -------- --------- -----------
End of year $2,560,119 $657,962 $1,205,775 3,725,800 $1,489,709 $789,547 $286,595 $(145,108) $10,570,399
========== ======== ========== ========== ========== ======== ======== ========== ===========
</TABLE>
===============================================================================
SCHEDULE I
===============================================================================
STEWART & STEVENSON 401(k) SAVINGS PLAN
ITEM 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Number of
Shares or
Principal Current
Identity of Issue Description Amount Cost Value
---------------- ----------- --------- ---- ------
Merrill Lynch Trust Company* Merrill Lynch Global
Allocation Fund, Inc.,
Class A 297,389.5439 $ 4,130,115 $ 4,327,018
Merrill Lynch Trust Company* Merrill Lynch Corporate Bond
Fund, Inc., Intermediate
Term, Class A
106,759.9202 1,211,383 1,215,995
Merrill Lynch Trust Company* Merrill Lynch Retirement
Preservation Trust 2,080,435.7400 2,080,436 2,080,436
AIM Family of Funds AIM Value Fund 221,838.8023 5,732,757 6,466,601
American Funds Group American Balanced Fund 178,444.9019 2,449,502 2,596,373
Stewart & Stevenson Services,
Inc.* Common stock 53,190.9193 1,510,651 1,549,186
Stewart & Stevenson 401(k) Savings Participant loans (interest
Plan* rates ranging from 7% to
10%)* 522,927 522,927
------------- --------------
Total assets held for investment purposes $ 17,637,771 $ 18,758,536
============= ==============
</TABLE>
*Identified party in interest.
The foregoing notes to the financial statements are an integral part of this
schedule.
===============================================================================
SCHEDULE II
===============================================================================
STEWART & STEVENSON 401(k) SAVINGS PLAN
ITEM 27(d) - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Current Value
Number of Asset on
Identity of of Purchase Selling Cost of Transaction Gain
Party Involved Description Trans. Price** Price** Asset Date (Loss)
- -------------- ----------- ------ -------- ------- ------- ------------- ------
Merrill Lynch Trust Company* Merrill Lynch Global
Allocation Fund, Inc.
Class A 220 $ 2,068,436 $ - $ 2,068,436 $ 2,068,436 $ -
Merrill Lynch Trust Company* Merrill Lynch Global
Allocation Fund, Inc.,
Class A 163 - 396,906 375,318 396,906 21,588
Merrill Lynch Trust Company* Merrill Lynch Corporate
Bond Fund, Inc.,
Intermediate Term,
Class A 144 732,971 - 732,971 732,971 -
Merrill Lynch Trust Company* Merrill Lynch Corporate
Bond Fund, Inc.,
Intermediate Term,
Class A 119 - 144,449 145,476 144,449 (1,027)
Merrill Lynch Trust Company* Merrill Lynch Retirement
Preservation Trust 258 1,332,942 - 1,332,942 1,332,942 -
Merrill Lynch Trust Company* Merrill Lynch Retirement
Preservation Trust 150 - 446,052 446,052 446,052 -
AIM Family of Funds AIM Value Fund 250 3,099,323 - 3,099,323 3,099,323 -
AIM Family of Funds AIM Value Fund 190 - 775,768 707,120 775,768 68,648
American Funds Group American Balanced Fund 189 1,292,602 - 1,292,602 1,292,602 -
American Funds Group American Balanced Fund 142 - 226,362 212,907 226,362 13,455
Stewart & Stevenson Services,
Inc.* Common stock 185 995,645 - 995,645 995,645 -
Stewart & Stevenson Services,
Inc.* Common stock 129 - 464,802 495,221 464,802 (30,419)
*Identified party in interest.
**Amounts are net of purchase/selling expenses.
</TABLE>
NOTE: This schedule includes each series transaction involving the same
investment activity which, in the aggregate, amounts to more
than 5 percent of the current value of Plan assets at
the beginning of the Plan year.
==============================================================================
SCHEDULE III
==============================================================================
STEWART & STEVENSON 401(k) SAVINGS PLAN
ITEM 27(e) - SCHEDULE OF NONEXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C>
Amount Amount of
Identity of Party Involved Description of Transaction of Loan Interest
- -------------------------- -------------------------- -------- ----------
Stewart & Stevenson Services, Inc. Deemed loan to the Company dated July
(Company) 24, 1996, maturity June 25, 1997,
interest rate 5.7% $36,435.61 $910
</TABLE>
NOTE: The deemed loan to the Company plus accrued interest was paid to the
Plan on June 25, 1997.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Stewart & Stevenson 401(k) Savings Plan Administrative Committee which
administers the Stewart & Stevenson 401(k) Savings Plan has duly caused this
annual report to be signed on its behalf by the undersigned thereunto duly
authorized in the City of Houston and the State of Texas, on the 30th day of
June, 1997.
Stewart & Stevenson 401(k) Savings Plan
Administrative Committee
/s/ Robert L. Hargrave
_________________________ _________________________
Robert L. Hargrave Jack T. Currie
Member Member
/s/ Donald E. Stevenson /s/ David R. Stewart
_________________________ _________________________
Donald E. Stevnson David R. Stewart
Member Member
/s/ J. Carsey Manning
_________________________
J. Carsey Manning
Member
==============================================================================
==============================================================================
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated May 23, 1997, on the financial statements and
schedules of Stewart & Stevenson 401(k) Savings Plan as of and for the year
ended December 31, 1996, included in this Form 11-K, into the previously filed
Stewart & Stevenson Services, Inc., Form S-8 Registration Statement file No.
33-52903.
/s/ Arthur Andersen
Houston, Texas
June 30, 1997
