SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): November 30, 1999
STEWART & STEVENSON SERVICES, INC.
(Exact name of registrant as specified in its charter)
Texas 0-8493 74-1051605
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
2707 North Loop West
Houston, Texas 77008
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (713) 868-7700
Item 5. Other Events.
On November 30, 1999, Stewart & Stevenson Services, Inc. (the "Company") issued
the press release attached hereto as Exhibit 99.1 announcing the Company's Third
Quarter 1999 Results.
Item 7. Exhibits.
Exhibit 99.1 Company Press Release dated November 30, 1999 titled
"Stewart & Stevenson Services, Inc. Announces
Third Quarter 1999 Results."
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 hereunto duly authorized.
STEWART & STEVENSON SERVICES, INC.
Date: November 30, 1999 By:/s/ LAWRENCE E. WILSON
Name: Lawrence E. Wilson
Title: Vice President, Secretary and
General Counsel
EXHIBIT INDEX
99.1 Company Press Release dated November 30, 1999 titled "Stewart &
Stevenson Services, Inc. Announces Third Quarter 1999 Results."
- ------------------
Exhibit 99.1
News From: Stewart & Stevenson
Corporate Headquarters
P.O. Box 1637
Houston, TX 77251-1637
FOR IMMEDIATE RELEASE:
STEWART & STEVENSON SERVICES, INC. ANNOUNCES THIRD QUARTER 1999 RESULTS
HOUSTON, TX - November 30, 1999 - STEWART & STEVENSON SERVICES, INC.
(NASDAQ:SSSS), a leading manufacturer and distributor of industrial and energy
related equipment, announced sales for the quarter ended October 30,1999,
totaling $234.7 million compared to sales of $ 321.1 million from continuing
operations for the same period a year ago. Net earnings for the Third Quarter
totaled $7.4 million or $0.26 per share compared to a net loss of $26.9 million
and $0.96 per share a year ago. Results for the Third Quarter included a $2.7
million after-tax gain on sale of an investment. Excluding this gain, net income
for the quarter totaled $4.6 million or $0.17 per share.
The Power Products segment, which is responsible for marketing and
after-market support of a wide range of industrial equipment, recorded Third
Quarter sales of $130.4 million compared to $150.2 million for the same period
in 1998. Operating profit for the Power Products segment totaled $4.9 million
for the quarter compared to $6.7 million a year ago. Sales in this segment for
the Second Quarter totaled $144.9 million and included seasonally high sales in
the agricultural market as well as several large international orders that did
not recur in the Third Quarter. This segment is achieving modest volume growth
in selected markets but has not yet experienced improvements from the recent
rebound in oil and gas prices.
The Tactical Vehicle Systems segment, which manufactures tactical
vehicles for the U. S. Army and others, recorded sales of $51.6 million in the
Third Quarter compared to $5.8 million in the Second Quarter and $121.3 million
a year ago. Production on the follow-on contract began in mid-September and
generated an operating profit of $10.1 million for the quarter compared with a
$17.1 million operating loss in the third quarter of 1998. Improved operating
margins resulted from an effective cost reduction program and a higher initial
sales price per truck sold to compensate for costs incurred during the
production shutdown.
The Petroleum Equipment segment manufactures equipment for oil and gas
exploration, production, and well stimulation industries. Sales for this segment
totaled $12.8 million for the Third Quarter compared to $31.1 million last year.
Petroleum Equipment reported a $1.4 million operating loss for the Third Quarter
compared with a profit of $2.7 million a year ago. The decrease in sales
resulted from a depleted order backlog in the depressed oil and gas markets.
However, order activity is starting to improve in the Fourth Quarter.
Other business activities not identified in a specific segment include
airline ground support products and gas compression equipment for sale or lease.
Sales in the Third Quarter totaled $40.0 million, compared to $18.5 for the same
period last year. Most of the $21.5 million increase occurred in airline ground
support products, which includes sales of Tug Manufacturing Corporation which
was acquired in December 1998. The Third Quarter 1999 operating loss of $1.3
million versus the $0.3 million operating loss a year ago resulted primarily
from start up of the gas compression business, partially offset by higher sales
and margins associated with the Tug acquisition.
Other income, net, for 1998 included interest income earned on the
proceeds from the sale of Gas Turbine Operations to General Electric Company
which totaled $1.6 million for the Third Quarter and $8.7 million for the first
nine months of 1998.
Net cash provided by operating activities totaled $47.9 million during
the Third Quarter and $92.9 million year to date. Net debt decreased $112.1
million during the past three quarters.
"Operating performance for the quarter was again in line with our near
term expectations," said Michael Grimes, Chief Executive Officer. He added, "We
are encouraged by prospects for future earnings growth driven by the recent
start-up of production on the new FMTV, significantly improved cash flow, the
recovery in the petroleum sector early next year, growth opportunities in the
service businesses, and lower material costs resulting from supply chain
initiatives."
Contact: Mr. David R. Stewart
Treasurer
Phone: (713) 868-7657
Fax: (713) 863-1519
Email: [email protected]
HTTP://www.ssss.com
This press release contains forward-looking statements that are based on current
expectations, estimates, and projections about the markets and industries in
which the Company operates, management's beliefs, and assumptions made by
management. These forward-looking statements are made pursuant to the Safe
Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These
statements are not guarantees of future performance and involve certain risks,
uncertainties and assumptions which are difficult to predict, including without
limitation: risks associated with newly acquired businesses; price and
product/service competition by foreign and domestic competitors; technological
developments and changes; the mix of products and services; reliance on large
customers; large, multi-year contracts; the cyclical nature of the markets
served; the outcome of pending and future litigation and governmental
proceedings; the continued availability of financing, financial instruments and
financial resources in the amount, at the times and on the terms required to
support the Company's business; the assessment of unanticipated taxes by foreign
or domestic governmental authorities; cancellation or adjustment of specific
orders and termination of significant government programs. In addition, such
forward-looking statements could be affected by general market conditions and
growth rates, general domestic and international conditions including interest
rates, rates of inflation and currency exchange fluctuations and other future
factors. Actual outcomes and results may differ materially from what is
expressed or forecasted in such forward-looking statements.
<TABLE>
<CAPTION>
STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (LOSS)
(In thousands, except per share data)
--------------------------------- --------------------------------
Nine Months Ended Three Months Ended
--------------------------------- --------------------------------
October 30, October 31, October 30, October 31,
1999 1998 1999 1998
-------------- ---------------- ------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Sales $624,267 $949,670 $234,716 $321,121
Cost of sales 527,505 875,054 199,095 309,279
-------------- -------------- --------------- --------------
Gross profit 96,762 74,616 35,621 11,842
Selling and administrative expenses 76,431 62,011 26,166 23,316
Interest expense 8,812 8,868 2,102 2,912
Other income, net (3,778) (13,097) (339) (2,867)
--------------- -------------- --------------- --------------
81,465 57,782 27,929 23,361
-------------- -------------- --------------- --------------
Earnings (loss) from continuing operations
before income taxes 15,297 16,834 7,692 (11,519)
Income tax provision (benefit) 5,673 5,960 2,857 (4,335)
-------------- -------------- --------------- --------------
Earnings (loss) of consolidated companies 9,624 10,874 4,835 (7,184)
Gain on sale of investment, net of tax provision of $846 2,746 - 2,746 -
Equity in net earnings (loss) of
unconsolidated affiliates 142 (189) (192) 267
-------------- -------------- --------------- --------------
Net earnings (loss) from continuing operations 12,512 10,685 7,389 (6,917)
Net loss from discontinued operations,
net of tax benefit of $11,750 - (20,000) - (20,000)
-------------- -------------- --------------- --------------
Net earnings (loss) $12,512 $ (9,315) $7,389 $ (26,917)
============== ============== =============== ==============
Weighted average shares outstanding:
Basic: 27,988 29,351 27,992 27,984
Diluted: 28,036 29,351 28,082 27,984
Earnings (loss) per share:
Basic:
Continuing operations $0.45 $0.36 $0.26 $(0.25)
Discontinued operations - (0.68) - (0.71)
-------------- -------------- --------------- --------------
$0.45 $(0.32) $0.26 $(0.96)
Diluted:
Continuing operations $0.45 $0.36 $0.26 $(0.25)
Discontinued operations - (0.68) - (0.71)
-------------- -------------- --------------- --------------
$0.45 $(0.32) $0.26 $(0.96)
Cash dividends per share $0.255 $0.255 $0.085 $0.085
============== ============== =============== ==============
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<TABLE>
<CAPTION>
STEWART & STEVENSON SERVICES, INC.
SEGMENT INFORMATION (Unaudited)
(In thousands)
-------------------------------------- -------------------------------------
Nine Months Ended Three Months Ended
-------------------------------------- -------------------------------------
October 30, October 31, October 30, October 31,
1999 1998 1999 1998
----------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Sales
Power Products $396,578 $424,005 $130,381 $150,177
Tactical Vehicle Systems 63,588 385,160 51,555 121,312
Petroleum Equipment 64,899 82,260 12,787 31,138
Other Business Activities 99,202 58,245 39,993 18,494
----------------- ----------------- ----------------- ----------------
Total $624,267 $949,670 $234,716 $321,121
================= ================= ================= ================
Operating Profit (Loss)
Power Products $ 15,660 $ 26,799 $4,869 $ 6,726
Tactical Vehicle Systems 13,248 (11,363) 10,105 (17,140)
Petroleum Equipment 2,222 7,135 (1,427) 2,650
Other Business Activities (1,623) 1,178 (1,262) (266)
----------------- ----------------- ----------------- ----------------
Total $ 29,507 $ 23,749 $ 12,285 $(8,030)
================= ================= ================= ================
Corporate expense, net (5,427) (6,736) (2,491) (2,201)
Non-operating interest income 29 8,689 - 1,624
Interest expense (8,812) (8,868) (2,102) (2,912)
----------------- ----------------- ----------------- ----------------
(Loss) earnings from continuing
operations before income taxes $ 15,297 $ 16,834 $ 7,692 $(11,519)
================= ================= ================= ================
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<TABLE>
<CAPTION>
STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION
(In thousands)
-------------------------- ------------------------
October 30, 1999 January 31, 1999
-------------------------- ------------------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $19,935 $12,959
Accounts and notes receivable, net 198,041 164,547
Recoverable costs and accrued profits
not yet billed 8,408 99,097
Income tax receivable 32,587 48,596
Inventories:
Power Products 156,402 182,894
Petroleum Equipment 25,277 40,560
Other Business Activities 58,727 40,222
Excess of current cost over LIFO values (49,104) (48,474)
------------ ------------
191,302 215,202
------------ ------------
TOTAL CURRENT ASSETS 450,273 540,401
PROPERTY, PLANT AND EQUIPMENT 279,314 271,658
Allowances for depreciation and
amortization (155,828) (142,913)
------------ ------------
123,486 128,745
DEFERRED INCOME TAX ASSETS 8,144 7,904
INVESTMENTS AND OTHER ASSETS 36,619 28,727
------------ ------------
$618,522 $705,777
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $14,961 $17,468
Accounts payable 72,744 83,127
Accrued payrolls and incentives 12,058 17,123
Current income taxes 2,920 2,931
Current portion of long-term debt 8,920 69,488
Other current liabilities 86,145 95,349
------------ ------------
TOTAL CURRENT LIABILITIES 197,748 285,486
------------ ------------
COMMITMENTS AND CONTINGENCIES
LONG-TERM DEBT 78,436 83,530
DEFERRED INCOME TAX LIABILITIES 58 43
ACCRUED POSTRETIREMENT BENEFITS 13,794 13,019
DEFERRED COMPENSATION 2,846 3,336
SHAREHOLDERS' EQUITY
Common Stock, without par value, 100,000,000
shares authorized; 27,992,203 and 27,984,035
shares issued, respectively 47,722 47,819
Retained earnings 277,918 272,544
------------
------------
TOTAL SHAREHOLDERS' EQUITY 325,640 320,363
------------
============
$618,522 $705,777
============ ============
</TABLE>
<TABLE>
<CAPTION>
STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
----------------------------- ---------------------------
Nine Months Ended Three Months Ended
----------------------------- ---------------------------
October 30, October 31, October 30, October 31,
1999 1998 1999 1998
------------ ------------- ------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Operating Activities
Net earnings (loss) from continuing operations $12,512 $ 10,685 $ 7,389 $(6,917)
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Accrued postretirement benefits 775 - 59 190
Depreciation and amortization 15,895 14,046 5,069 4,083
Deferred income taxes, net (225) (2,899) (54) -
Loss on sale of business - 243 - 243
Change in operating assets and liabilities,
net of the effect of acquisition:
Accounts and notes receivable, net (33,494) (14,095) (12,946) (56,442)
Recoverable costs and accrued profits not
yet billed 90,689 (40,146) 26,439 (33,433)
Inventories 23,900 (24,252) 14,189 (9,819)
Accounts payable (15,448) 41 14,009 14,419
Current income taxes, net 15,998 (61,301) 2,066 (30,562)
Other current liabilities (9,204) (20,969) (5,674) 3,792
Other--principally long-term assets and
liabilities 2,546 (2,628) (1,990)
(8,479)
(8,478)
------------ ------------- ------------ ------------
Net Cash Provided By (Used In) Continuing Operations 92,919 (136,101) 47,918 (116,436)
Operations (136,101)
Net Cash Provided By (Used In) Discontinued Operations - 516,000 - (84,000)
------------ ------------- ------------ ------------
Net Cash Provided By (Used in) Operating Activities 92,919 379,899 47,918 (200,436)
Investing Activities
Expenditures for property, plant and equipment (24,690) (23,612) (8,005) (7,979)
Acquisition of businesses - (19,951) - (1,201)
Proceeds from sale of business - 4,600 - 4,600
Disposal of property, plant and equipment, net 14,054 1,931 6,101
1,266
------------ ------------- ------------ ------------
Net Cash Used In Investing Activities (10,636) (37,032) (1,904) (3,314)
Financing Activities
Additions to long-term borrowings 16,234 25,000 - 25,000
Payments on long-term borrowings (81,896) (226,459) (15,295) (335)
Net short-term (payments) borrowings (2,507) (28,037) (10,585) 6,141
Dividends paid (7,138) (7,380) (2,380) (2,379)
Repurchase of common stock - (120,000) - -
Exercise of stock options - 759 - 170
------------ ------------- ------------ ------------
Net Cash (Used In) Provided By Financing Activities (75,307) (356,117) (28,260) 28,597
Increase (decrease) in cash and cash equivalents 6,976 (13,250) 17,754 (175,153)
Cash and cash equivalents, beginning of period 12,959 18,987 2,181 180,890
------------ ------------- ------------ ------------
Cash and cash equivalents, end of period $19,935 $ 5,737 $19,935 $ 5,737
------------ ------------- ------------ ------------
Supplemental disclosure of cash flow information: Net cash paid during the
period for:
Interest payments $ 7,775 $ 7,308 $ 613 $ 2,386
Income tax payments $ 2,609 $75,483 $ 1,876 $30,606
Non-cash investing activities:
Issuance of notes receivable in sale of investment $ 4,224 $ 4,224
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