UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1998
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 0-8493
STEWART & STEVENSON SERVICES, INC.
(Exact name of registrant as specified in its charter)
Texas 74-1051605
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2707 North Loop West, Houston, Texas 77008
(Address of principal executive offices) (Zip Code)
(713) 868-7700
(Registrant's telephone number, including area code)
not applicable
(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.
Common Stock, Without Par Value 27,945,748 Shares
(Class) (Outstanding at June 2, 1997)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The following information required by Rule 10-01 of Regulation S-X is
provided herein for Stewart & Stevenson Services, Inc. and Subsidiaries
(the "Company"):
Consolidated Condensed Statement of Financial Position -- April 30, 1998
and January 31, 1998.
Consolidated Condensed Statement of Earnings -- Three Months Ended April
30, 1998 and 1997.
Consolidated Condensed Statement of Cash Flows -- Three Months Ended April
30, 1998 and 1997.
Notes to Consolidated Condensed Financial Statements.
<TABLE>
STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
(Dollars in thousands)
<CAPTION>
April 30 January 31
1998 1998
---------- ----------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 275,276 $ 18,987
Accounts and notes receivable, net 199,295 185,033
Receivable from sale of Gas Turbine Operations -- 600,000
Recoverable costs and accrued profits
not yet billed 134,375 138,208
Inventories:
Engineered Power Systems 55,102 46,551
Power Products 158,289 166,918
Excess of current cost over LIFO values (46,531) (45,892)
----------- -----------
166,860 167,577
----------- -----------
TOTAL CURRENT ASSETS 775,806 1,109,805
PROPERTY, PLANT AND EQUIPMENT 241,451 227,152
Allowances for depreciation and
amortization (132,874) (129,408)
----------- -----------
108,577 97,744
INVESTMENTS AND OTHER ASSETS 46,678 45,098
----------- -----------
$931,061 $1,252,647
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $493 $ 35,000
Accounts payable 83,371 92,728
Current income taxes 97,755 88,862
Current portion of long-term debt -- 226,000
Other current liabilities 112,014 119,512
----------- -----------
TOTAL CURRENT LIABILITIES 293,633 562,102
----------- -----------
COMMITMENTS AND CONTINGENCIES (SEE NOTE B)
LONG-TERM DEBT 147,649 147,166
DEFERRED INCOME TAXES -- 2,899
ACCRUED POSTRETIREMENT BENEFITS 13,261 13,256
DEFERRED COMPENSATION 4,774 5,517
SHAREHOLDERS' EQUITY
Common Stock, without par value, 100,000,000
shares authorized; 30,338,688 and 33,132,280
shares issued at April 30, 1998 and January
31, 1998, respectively, including 11,820
shares held in treasury 110,009 166,454
Retained earnings 361,768 355,286
----------- -----------
471,777 521,740
Less cost of treasury stock (33) (33)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 471,744 521,707
----------- -----------
$931,061 $1,252,647
=========== ===========
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<TABLE>
STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
(In thousands, except per share data)
<CAPTION>
Three Months Ended
April 30
------------------
1998 1997
---- ----
(Unaudited)
<S> <C> <C>
Sales $305,010 $232,961
Cost of sales 273,976 205,184
---------- ----------
Gross profit 31,034 27,777
Selling and administrative expenses 18,731 16,914
Interest expense 3,150 3,462
Other income, net (6,022) (620)
---------- ----------
15,859 19,756
---------- ----------
Earnings from continuing operations before income taxes 15,175 8,021
Income taxes 5,481 2,756
---------- ----------
Earnings from continuing operations of consolidated companies 9,694 5,265
Equity in net earnings (loss) of unconsolidated affiliates (529) 5
---------- ----------
Net earnings from continuing operations 9,165 5,270
Net earnings from discontinued operations, net of tax of $2,198 -- 4,612
---------- ----------
Net earnings $ 9,165 $ 9,882
========== ==========
Weighted average number of shares of Common Stock outstanding -
Basic 31,976 33,156
Diluted 32,035 33,215
Net earnings (loss) per share: Basic and Diluted
Continuing Operations $ .29 $ .16
Discontinued Operations -- .14
---------- ----------
$ .29 $ .30
========== ==========
Cash dividends per share $ .085 $ .085
========== ==========
See accompanying notes to consolidated condensed financial statements.
</TABLE>
<TABLE>
STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Dollars in thousands)
<CAPTION>
Three Months Ended
April 30
------------------
1998 1997
---- ----
(Unaudited)
<S> <C> <C>
Operating Activities
Net earnings from continuing operations $ 9,165 $ 5,270
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Accrued postretirement benefits 5 29
Depreciation and amortization 4,193 6,068
Deferred income taxes, net (2,899) (1,701)
Change in operating assets and liabilities
net of the effect of acquisition:
Accounts and notes receivable, net (13,467) 2,090
Recoverable costs and accrued profits not
yet billed 3,833 (33,685)
Inventories 1,723 (3,798)
Accounts payable (9,357) (33,928)
Current income taxes 8,893 10,650
Other current liabilities (7,498) 4,803
Other--principally long-term assets and
liabilities (1,999) 328
----------- -----------
Net Cash Used In Continuing Operations (7,408) (43,874)
Net Cash Provided By Discontinued Operations -- 2,441
----------- -----------
Net Cash Used In Operating Activities (7,408) (41,433)
Investing Activities
Collection of receivable from sale of
Gas Turbine Operations 600,000 --
Expenditures for property, plant and equipment (8,107) (6,930)
Acquisition of business (9,450) (5,029)
Disposal of property, plant and equipment, net 406 1,897
----------- -----------
Net Cash Provided By (Used In) Investing Activities 582,849 (10,062)
Financing Activities
Additions to long-term borrowings 483 50,000
Payments on long-term borrowings (226,000) (70)
Net borrowings and payments on short-term
notes payable (34,507) 50,000
Dividends paid (2,683) (2,815)
Repurchase of common stock (57,060) --
Exercise of stock options 615 1,399
----------- -----------
Net Cash Provided By (Used In) Financing Activities (319,152) 98,514
---------- ----------
Increase in cash and equivalents 256,289 47,019
Cash and equivalents, February 1 18,987 9,132
----------- -----------
Cash and equivalents, April 30 $ 275,276 $ 56,151
=========== ===========
Supplemental disclosure of cash flow information:
Net cash paid during the period for:
Interest payments $ 258 $ 4,202
Income tax payments $ 88 $ 352
See accompanying notes to consolidated condensed financial
statements.
</TABLE>
STEWART & STEVENSON SERVICES, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Note A--Basis of Presentation and Significant Accounting Policies
The accompanying consolidated condensed financial statements have been
prepared in accordance with Rule 10-01 of Regulation S-X for interim
financial statements required to be filed with the Securities and Exchange
Commission and do not include all information and footnotes required by
generally accepted accounting principles for complete financial statements.
However, the information furnished reflects all normal recurring
adjustments which are, in the opinion of management, necessary for a fair
statement of the results for the interim periods. The results of
operations for the three months ended April 30, 1998 are not necessarily
indicative of the results that will be realized for the fiscal year ending
January 31, 1999.
The accounting policies followed by the Company in preparing interim
consolidated financial statements are similar to those described in the
"Notes to Consolidated Financial Statements" in the Company's January 31,
1998 Form 10-K.
The Company's fiscal year begins on February 1 of the year stated and ends
on January 31 of the following year. For example, "Fiscal 1998" commenced
on February 1, 1998 and ends on January 31, 1999.
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS 128 Earnings per Share ("SFAS 128"), which specifies the computation,
presentation, and disclosure requirements for earnings per share ("EPS").
It replaces the presentation of primary and fully diluted EPS with basic
and diluted EPS. Basic EPS excludes all dilution. It is based upon the
weighted average number of common shares outstanding during the period.
Diluted EPS reflects the potential dilution that would occur if all
securities or other contracts to issue common stock were exercised or
converted into common stock. During the first quarter of both Fiscal 1998
and 1997, 59,000 unexercised stock options were deemed to be dilutive. The
Company has adopted SFAS 128 as of January 31, 1998, which was required by
the FASB. Accordingly, all periods presented have been restated to disclose
basic and diluted EPS. There is no material difference between SFAS 128
presentation of EPS and the EPS presented in prior reporting periods. The
weighted average number of shares outstanding for the three months ended
April 30, 1998 includes 17,000 shares issued pursuant to exercise of stock
options. In addition, the Company repurchased 2,884,000 shares of its
outstanding Common Stock during the first quarter, which has been
considered in the computation of the weighted average number of shares
outstanding.
The accompanying consolidated financial statements for Fiscal 1997 contain
certain reclassifications to conform with the presentation used in Fiscal
1998. The consolidated financial statements have been restated to reflect
the Company's Gas Turbine Operations as a discontinued operation.
Note B--Commitments and Contingencies
The Company and Engineering Design Group, Inc. ("EDG") were parties to an
arbitration before the American Arbitration Association in Houston, Texas.
On May 12, 1998, the arbitrators awarded EDG the sum of $12,433,000
relating to unpaid amounts under a subcontract to construct a power plant
in Argentina. The award was fully reserved as of January 31, 1998 and did
not affect the Company's financial position or results of operations as of
April 30, 1998.
The Company is a party to an arbitration proceeding before the American
Arbitration Association in San Francisco, California in which Noell, Inc.
has asserted claims of approximately $6 million in damages arising from the
sale of turbine-driven equipment for installation in power plants located
in Ceres, California and Lodi, California. The liability, if any, relating
to these claims was assumed by GE as part of the sale of the Gas Turbine
Operations Division.
The Company is a defendant in a number of other lawsuits relating to
contractual, product liability, personal injury and warranty matters and
otherwise of the type normally incident to the Company's business.
Management is of the opinion that such lawsuits are either fully reserved
or will not result in any material liability to the Company.
The Company has provided certain guarantees in support of its customer's
financing of purchases from the Company in the form of both residual value
guarantees and debt guarantees. The maximum exposure of the Company
related to guarantees at April 30, 1998 is $60.5 million.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion contains forward-looking statements which are
based on assumptions such as timing, volume and pricing of customers'
orders. These forward-looking statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from those outlined in
the forward-looking statements, including the risk of adjustment to the
sale price of the Gas Turbine Operations Division, cancellation or
adjustment of specific orders, termination of significant government
programs, decrease in demand in the markets served, the outcome of pending
and future litigation and governmental proceedings, increasing
product/service competition, risk associated with newly acquired
businesses, or lower-than-anticipated penetration of markets served.
This discussion should be read in conjunction with the attached condensed
consolidated financial statements and notes thereto, and with the Company's
audited financial statements and notes thereto for the fiscal year ended
January 31, 1998.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated the percentage of
sales represented by certain items reflected in the Company's Consolidated
Condensed Statement of Earnings.
<TABLE>
<CAPTION>
Three Months Ended
April 30
------------------
1998 1997
---- ----
<S> <C> <C>
Sales 100.0% 100.0%
Cost of sales 89.8 88.1
------ ------
Gross profit 10.2 11.9
Selling and administrative expenses 6.2 7.3
Interest expense 1.0 1.5
Other income, net (2.0) (.3)
------ ------
5.2 8.5
------ ------
Earnings before income taxes 5.0 3.4
Income taxes 1.8 1.2
------ ------
Earnings from continuing operations of consolidated
companies 3.2 2.2
Equity in net earnings of unconsolidated affiliates (.2) .0
------ ------
Net earnings from continuing operations 3.0% 2.2%
====== ======
</TABLE>
Sales for the first quarter of the year ending January 31, 1999 ("Fiscal
1998") increased 31% to $305 million compared to sales of $233 million for
the same period of the year ended January 31, 1998 ("Fiscal 1997").
The Power Products segment's Fiscal 1998 sales increased $16 million (13%)
in the first quarter of Fiscal 1998 compared to the same period in Fiscal
1997. Increased sales were broad based within the Power Products segment,
with most locations contributing to the favorable results. In particular,
a strengthening oil and gas and marine businesses market served by the
Company's Power Products segment contributed to the sales improvement, as
did the acquisition of additional distribution territories in Northern
California.
The Tactical Vehicle Systems (TVS) segment sales increased $47 million
(60%) for the first quarter of Fiscal 1998 compared to the same period in
Fiscal 1997. The sales increase was due primarily to increased production
of trucks under the FMTV contract. See "Government Contract Status" for
discussion of the second multi-year contract.
The Engineered Power Systems (EPS) segment sales increased to $35 million
in the first quarter of Fiscal 1998 compared to $31 million in the same
period in Fiscal 1997. Sales increased 35% for the Petroleum Equipment
Division, reflecting the strong demand for new equipment by the oilfield
drilling and services industries. These increases were partially offset by
a 15% decline in sales by the Aircraft Ground Support Division, which was
adversely affected by the Asian financial crisis.
The gross profit margin of 10.2% for the first quarter of Fiscal 1998
decreased compared to the 11.9% gross profit margin for the same period in
Fiscal 1997 due to a greater percentage of sales represented by tactical
vehicles, which carry a lower gross margin than the other segments.
Selling and administrative expense increased 11% in the first quarter of
Fiscal 1998, primarily as a result of post closing activity related to the
sale of the Company's Gas Turbine Operations. Selling and administrative
expenses for the first quarter of Fiscal 1998 decreased as a percentage of
sales to 6.2% compared to 7.3% for the same period in Fiscal 1997 due to
the greater sales volumes.
As a result of the sale of the Gas Turbine Operations, the Company has been
able to reduce its debt and has experienced a significant increase in cash.
Accordingly, interest expense for the first quarter of Fiscal 1998
decreased to $3.2 million, down from $3.5 million for the same period in
Fiscal 1997, due primarily to the repayment of $261 million in floating
rate debt from the proceeds of the sale of the Company's Gas Turbine
Operations.
Other income increased to $6 million in the first quarter of Fiscal 1998
compared to $1 million for the same period in Fiscal 1997 due primarily to
increased interest income from short-term investment of the proceeds from
the sale of the Company's Gas Turbine Operations.
Effective as of June 2, 1998, the Company completed its $120,000,000 stock
repurchase program. In total, the Company repurchased and retired
5,265,120 shares of Stewart & Stevenson Common Stock, thereby reducing its
total outstanding shares by 16%. Net earnings from continuing operations
of $9.2 million ($.29 per share) were recorded for the three months ended
April 30, 1998 as compared to net earnings from continuing operations of
$5.3 million ($.16 per share) for the three months ended April 30, 1997.
This is due to increased gross profit and other income and the reduction in
the weighted average number of shares outstanding.
GOVERNMENT CONTRACT STATUS
The FMTV contract is a firm fixed-price multi-year contract whereby the
price paid to the Company is not subject to adjustment to reflect the
Company's actual costs, except costs incurred as a result of actions or
inactions of the government.
As of April 30, 1998, the Company has completed approximately 9,029 of the
11,197 vehicles covered by the original contract plus options and
additional requirements to date. Revenues and profits realized on the FMTV
contract are based on the Company's estimates of total contract sales value
and costs at completion. Stewart & Stevenson has incurred significant cost
overruns and delivery schedule delays on the FMTV contract which the
Company believes are primarily due to the government's decision to delay
the testing of trucks and other government directed changes to the
contract. The Company has and will continue to submit a series of Requests
for Equitable Adjustments (REAs) under the FMTV contract, seeking increases
in the FMTV contract price for those additional costs that relate to
government caused delays and changes. Amounts in excess of agreed upon
contract price for government caused delays, disruptions, unpriced change
orders and government caused additional contract costs are recognized in
contract value when the Company believes it is probable that the claim for
such amounts will result in additional contract revenue and the amount can
be reasonably estimated.
At April 30, 1998, the Company's FMTV contract accounting position reflects
the expected recovery of substantial amounts in excess of the contract
price for government caused delays, disruptions, unpriced change orders and
other government caused additional contract costs. Although management
believes that the contract provides a legal basis for the claims and its
estimates are based on reasonable assumptions and on a reasonable analysis
of contract costs, due to uncertainties inherent in the estimation and
claims negotiations process, no assurances can be given that its estimates
will be accurate, and variances between such estimates and actual results
could be material. In the event that the Company is unable to recover a
substantial portion of the additional costs, the Company may suffer a
material adverse effect on its earnings during the accounting period in
which such contract issues are resolved.
The Company is negotiating a contract with the United States Army that
would provide for continued production of the FMTV through 2002, with a one
year option that would extend the contract through 2003. The Company
expects to sign this agreement in the second quarter of Fiscal 1998 and
estimates that, if all options were exercised, it will have a total value
of $1.36 billion with gross profit margins in excess of the current
contract.
The funding of the contracts are subject to the inherent uncertainties of
congressional appropriations. As is typical of multi-year defense
contracts, the FMTV contracts must be funded annually by the Department of
the Army and may be terminated at any time for the convenience of the
government. The Company has received full funding for the initial 5 year
program. If the FMTV contracts are terminated other than for default, they
provide for termination charges that will reimburse the Company for
allowable costs, but not necessarily all costs.
EFFECT OF ADMINISTRATIVE AGREEMENT
The Company is subject to an Administrative Agreement with the U.S. Air
Force that imposes certain requirements on the Company intended to assure
the U.S. Air Force that the Company is a responsible government contractor.
A default by the Company of the requirements under the Administrative
Agreement could result in the suspension or debarment of the Company from
receiving new government contracts or modifications to existing government
contracts unless the contracting agency finds a compelling need to enter
into such agreement. The Company would also be unable to sell equipment
and services to customers that depend on loans or financial commitments
from the Export Import Bank ("EXIM Bank"), Overseas Private Investment
Corporation ("OPIC") and similar government agencies during a suspension or
debarment. Any such suspension or debarment could have a material adverse impact
on the Company's financial condition and results of operations.
UNFILLED ORDERS
The Company's unfilled orders consist of written purchase orders, letters
of intent, and oral commitments. These unfilled orders are generally
subject to cancellation or modification due to customer relationships or
other conditions. Purchase options are not included in unfilled orders
until exercised. Unfilled orders at April 30, 1998 and at the close of
Fiscal 1997 were as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
April 30 January 31
1998 1998
- -------------------------------------------------------------------------------------------------
(Dollars in millions)
<S> <C> <C>
Power Products $ 62.8 $ 69.6
Tactical Vehicle Systems 341.9 487.0
Engineered Power Systems 112.0 57.5
---------- ----------
$516.7 $614.1
========== ==========
</TABLE>
Unfilled orders of the Tactical Vehicle Systems segment consists
principally of the contracts awarded in October 1991 by the United States
Department of the Army to manufacture medium tactical vehicles, and options
under the FMTV contract that have been exercised by the U.S. Army to
purchase additional vehicles.
CAPITAL EXPENDITURES AND COMMITMENTS
Capital spending for property, plant and equipment of $8.1 million for the
first quarter of Fiscal 1998 was comparable to $6.9 million for the same
period in Fiscal 1997. These amounts are consistent with the historical
capital expenditure levels of the Company.
LIQUIDITY AND SOURCES OF CAPITAL
Proceeds from the sale of Gas Turbine Operations were used to retire $261
million of notes payable and the current portion of long-term debt during
the quarter ended April 30, 1998. The Company has $150 million in committed
credit facilities, all of which are available for the Company's use at
April 30, 1998. The Company has additional banking relationships which
provide uncommitted borrowing arrangements.
In the event that any acquisition of additional operations, growth in
existing operations, changes in inventory levels, new capital investments,
accounts receivable or other working capital items create a permanent need
for working capital or capital expenditures in excess of existing cash and
equivalents and committed lines of credit, the Company may seek to convert
additional uncommitted borrowing arrangements to committed credit
facilities or to issue additional equity securities. Management believes
that the Company's cash and equivalents and current credit facilities and
available options for external sources of funds are adequate to meet its
foreseeable cash requirements.
YEAR 2000 COMPLIANCE
The Company is currently working to resolve the potential impact of the
year 2000 on the processing of date-sensitive information by the Company's
computerized information systems. Based on preliminary information, costs
of addressing potential problems are not currently expected to have a
material adverse impact on the Company's financial position, results of
operations or cash flows in future periods. However, if the Company, its
customers or vendors are unable to resolve such processing issues in a
timely manner, it could result in a material financial risk. Accordingly,
the Company is devoting the necessary resources to resolve all significant
year 2000 issues in a timely manner.
ACQUISITIONS
On March 30, 1998, the Company acquired the assets of Compression
Specialties, Inc., a compression equipment distributor in the business of
leasing and servicing compression equipment in the State of Wyoming and the
surrounding Rocky Mountain area. The purchase price totaled approximately
$9.45 million. The assets and operations of this business prior to the
acquisition would not have been material to the Company's consolidated
assets or earnings.
On June 1, 1998, the Company acquired the assets of H & H Rubber, Inc., a
manufacturer of rubber replacement parts for the oilfield industry, located
in Houston, Texas. The purchase price totaled approximately $4.0 million.
The assets and operations of this business prior to the acquisition would
not have been material to the Company's consolidated assets or earnings.
The Company intends to continue looking for acquisition opportunities in
its core businesses, and for synergistic opportunities in niche businesses.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
See Note B to the Consolidated Condensed Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are filed as a part of this report pursuant
to Item 601 of Regulation S-K.
3.1 Third Restated Articles of Incorporation of Stewart & Stevenson
Services, Inc., effective as of September 13, 1995
(incorporated by reference to Exhibit 3(a) of the Form 10-Q of
Stewart & Stevenson for the quarterly period ended October 31,
1995 under the Commission File No. 001-11443).
3.2 Fifth Restated Bylaws of Stewart & Stevenson Services, Inc.,
effective as of April 14, 1998 (incorporated by reference to
Exhibit 3.2 of the Form 10-K of Stewart & Stevenson for the
Fiscal year ended January 31, 1998 under the Commission File
No. 0-8493).
4.1 Note Purchase Agreement effective May 30, 1996, between Stewart
& Stevenson Services, Inc. and the Purchasers named therein
(incorporated by reference to Exhibit 4 of the Form 10-Q of
Stewart & Stevenson for the quarterly period ended July 31,
1997 under the Commission File No. 0-8493).
4.2 Rights Agreement effective March 13, 1995, between Stewart &
Stevenson Services, Inc. and The Bank of New York (incorporated
by reference to Exhibit 1 of the Form 8-A Registration
Statement of Stewart & Stevenson under the Commission File No.
001-11443).
10.1 Lease Agreement effective April 15, 1997, between Miles McInnes
and Faye Manning Tosch, as Lessors, and the Company, as Lessee
(incorporated by reference to Exhibit 10.1 of the Form 10-K of
Stewart & Stevenson for the Fiscal year ended January 31, 1997
under Commission File No. 0-8493).
10.2 Distributor Sales and Service Agreement effective January 1,
1996, between the Company and Detroit Diesel Corporation
(incorporated by reference to Exhibit 10.2 of the Form 10-K of
Stewart & Stevenson for the fiscal year ended January 31, 1996
under Commission File No. 0-8493).
10.3 Contract Number DAAE07-92-R001 dated October 11, 1991 between
Stewart & Stevenson Services, Inc. and the United States
Department of Defense, U.S. Army Tank-Automotive Command, as
modified (incorporated by reference to Exhibit 28.1 of the Form
S-3 Registration Statement of Stewart & Stevenson under the
Commission File No. 33-44149).
10.4 Contract Number DAAE07-92-R002 dated October 15, 1991 between
Stewart & Stevenson Services, Inc. and the United States
Department of Defense, U.S. Army Tank-Automotive Command, as
modified (incorporated by reference to Exhibit 28.2 of the Form
S-3 Registration Statement of Stewart & Stevenson under the
Commission File No. 33-44149).
10.5 Stewart & Stevenson Services, Inc. Deferred Compensation Plan
dated as of December 31, 1979 (incorporated by reference to
Exhibit 10.8 of the Form 10-K of Stewart & Stevenson for the
fiscal year ended January 31, 1994 under the Commission File
No. 0-8493).
10.6 Stewart & Stevenson Services, Inc. 1988 Nonstatutory Stock
Option Plan (as amended and restated effective as of June 10,
1997) (incorporated by reference to Exhibit B of the Proxy
Statement of Stewart & Stevenson filed with the Commission on
May 9, 1997).
10.7 Stewart & Stevenson Services, Inc. Supplemental Executive
Retirement Plan (incorporated by reference to Exhibit 10.11 of
the Form 10-K of Stewart & Stevenson for the fiscal year ended
January 31, 1994 under the Commission File No. 0-8493).
10.8 Stewart & Stevenson Services, Inc. 1996 Director Stock Plan
(incorporated by reference to Exhibit A the Proxy Statement of
Stewart & Stevenson filed with the Commission on May 9, 1997).
23.1 Consent of Arthur Andersen LLP, Independent Public Accountants
(incorporated by reference to Exhibit 23.1 of the Form 10-K of
Stewart & Stevenson for the Fiscal year ended January 31, 1998
under Commission File No. 0-8493).
27.1 Financial Data Schedule.
__________
*Filed with this report.
(b) Form 8-K Report Date - February 16, 1998 (GE Transaction completed)
Items reported - Item 2. Disposition of Assets
Item 7. Financial Statements
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.
STEWART & STEVENSON SERVICES, INC.
Date: June 12, 1998 By: /s/ Robert L. Hargrave
Robert L. Hargrave
President and Chief Executive Officer
(as authorized officer)
By: /s/ Patrick G. O'Rourke
Patrick G. O'Rourke
Controller (as chief accounting officer)
EXHIBIT INDEX
Exhibit Number and Description
3.1 Third Restated Articles of Incorporation of Stewart &
Stevenson Services, Inc.
3.2 Fifth Restated Bylaws of Stewart & Stevenson Services,
Inc.
4.1 Note Purchase Agreement.
4.2 Rights Agreement.
10.1 Lease Agreement.
10.2 Distributor Sales and Services Agreement.
10.3 Contract Number DAAE07-92-R001.
10.4 Contract Number DAAE07-92-R002.
10.5 Stewart & Stevenson Services, Inc. Deferred
Compensation Plan.
10.6 Stewart & Stevenson Services, Inc. 1988 Nonstatutory
Stock Option Plan (as amended and restated effective
as of June 10, 1997).
10.7 Stewart & Stevenson Services, Inc. Supplemental
Executive Retirement Plan.
10.8 Stewart & Stevenson Services, Inc. 1996 Director Stock
Plan.
23.1 Consent of Arthur Andersen LLP, Independent Public
Accountants.
27.1 Financial data schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. </LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> APR-30-1998
<CASH> 275,276
<SECURITIES> 0
<RECEIVABLES> 202,126
<ALLOWANCES> (2,831)
<INVENTORY> 166,860
<CURRENT-ASSETS> 775,806
<PP&E> 241,451
<DEPRECIATION> (132,874)
<TOTAL-ASSETS> 931,061
<CURRENT-LIABILITIES> 293,633
<BONDS> 147,649
<COMMON> 110,009
0
0
<OTHER-SE> 361,768
<TOTAL-LIABILITY-AND-EQUITY> 931,061
<SALES> 305,010
<TOTAL-REVENUES> 305,010
<CGS> 273,976
<TOTAL-COSTS> 273,976
<OTHER-EXPENSES> 15,859
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,150
<INCOME-PRETAX> 15,175
<INCOME-TAX> 5,481
<INCOME-CONTINUING> 9,165
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,165
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
</TABLE>
