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): AUGUST 23, 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 August 23, 1999, Stewart & Stevenson Services, Inc. (the "Company") issued
the press release attached hereto as Exhibit 99.1 announcing the Company's
second quarter results.
Item 7. Exhibits.
Exhibit 99.1 Company Press Release dated August 23, 1999 titled
"Stewart & Stevenson Services, Inc. Announces Second 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: August 23, 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 August 23, 1999 titled "Stewart &
Stevenson Services, Inc. Announces Second Quarter 1999 Results."
- ------------------
NEWS FROM: STEWART & STEVENSON
CORPORATE HEADQUARTERS
P.O. BOX 1637
HOUSTON, TX 77251-1637
FOR IMMEDIATE RELEASE:
STEWART & STEVENSON SERVICES, INC. ANNOUNCES SECOND QUARTER 1999 RESULTS
HOUSTON, TX August 23, 1999 - STEWART & STEVENSON SERVICES, INC.
(NASDAQ:SSSS), a leading manufacturer and distributor of industrial and energy
related equipment, announced sales for the fiscal quarter ended July 31, 1999,
totaling $200.6 million compared to sales of $188.9 million in the First Quarter
and $323.5 million for the same period a year ago. Net earnings for the Second
Quarter totaled $3.0 million or $0.11 per share compared to net earnings of $2.1
million or $0.08 per share in the First Quarter and $8.4 million or $0.30 per
share a year ago.
The Power Products segment, which is responsible for marketing and
aftermarket support of a wide range of industrial equipment recorded Second
Quarter sales of $144.9 million compared to $121.3 million in the First Quarter
and $137.7 million for the Second Quarter of 1998. Operating profit for the
Power Products segment totaled $7.7 million for the quarter compared to $3.1
million in the First Quarter and $10.2 million a year ago. The depressed
petroleum market continues to have an adverse impact on equipment, parts and
services sales in selected geographic markets. The Power Products segment
experienced improved earnings at four West Coast branches and from the
acquisition of IPSC Co., as well as benefits from remedial actions taken earlier
this year at other locations.
The Petroleum Equipment segment manufactures equipment for oil and gas
exploration, production, and well stimulation industries. Sales for this segment
totaled $23.6 million for the Second Quarter compared to $28.5 million in the
First Quarter and $27.5 million last year. Operating profit for Petroleum
Equipment totaled $1.7 million compared to $2.0 million in the First Quarter and
$2.4 million last year. The decrease in profits resulted from increased sales of
lower margin marine riser products, offset by a decrease in higher-margin
equipment sales, which remained depressed particularly in the U.S. Market.
The Tactical Vehicle Systems segment, which manufactures tactical
vehicles for the U.S. Army and others, recorded sales of $5.8 million compared
to $6.2 million in the First Quarter and $139.2 million a year ago. Production
on the original contract was completed as of January 31, 1999, and production on
the follow-on contract is anticipated to start in the third quarter of Fiscal
1999. Operating profit for the Second Quarter of 1999 amounted to $2.0 million,
compared to $1.1 million in the First Quarter and $3.1 million a year ago, and
was largely comprised of adjustments to estimated costs to complete the original
truck contract.
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 Second Quarter totaled $26.3 million, compared to $19.2 for
the same period last year. Most of the $7.1 million increase occurred in airline
ground support equipment, associated with the acquisition of Tug Manufacturing
Corporation (Tug) in December 1998. A Second Quarter 1999 operating loss of $1.2
million versus $0.1 million loss a year ago resulted primarily from product
development expenses related to airline ground support equipment and start up of
the gas compression business, partially offset by higher sales and margins
associated with the Tug acquisition.
Other income, net, included interest income earned in 1998 on proceeds
from the sale of Gas Turbine Operations to General Electric Company which
totaled $2.8 million for the Second Quarter and $7.0 million for the first six
months.
Net cash provided by operating activities for the Second Quarter totaled
$73.4 million, largely resulting from a comprehensive asset reduction
initiative. Total debt decreased $67.9 million during the quarter.
"Operating performance for the quarter was again in line with our near
term expectations," said Michael L. Grimes, Chief Executive Officer. He added,
"We are encouraged by prospects for future earnings growth, driven by the
anticipated startup of production on the new FMTV contract in September, the
recovery in the petroleum sector early next year, growth opportunities in the
services businesses, and asset and cost reduction initiatives."
This report contains forward-looking information. The forward-looking
statements, including without limitation statements relating to the Company's
performance and industry conditions for the year, are made pursuant to the Safe
Harbor provisions of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements may be significantly impacted by various factors
described herein and in the Company's Annual Report and Form 10-K filed with the
Securities and Exchange Commission of the year ended January 31, 1999. There can
be no assurance that anticipated developments will occur.
Contact: Mr. David R. Stewart
Treasurer
Phone: (713) 868-7657
Fax: (713) 863-1519
Email: [email protected]
HTTP://www.ssss.com
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STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(In thousands, except per share data)
---------------------------- ----------------------------
SIX MONTHS ENDED THREE MONTHS ENDED
JULY 31, JULY 31,
---------------------------- ----------------------------
1999 1998 1999 1998
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Sales $389,551 $628,549 $200,640 $323,539
Cost of sales 328,410 565,775 169,360 291,799
--------- --------- -------- --------
Gross profit 61,141 62,774 31,280 31,740
Selling and administrative expenses 50,265 38,695 24,774 19,964
Interest expense 6,710 5,956 3,259 2,806
Other income, net (3,439) (10,230) (1,244) (4,208)
-------- -------- ------- --------
53,536 34,421 26,789 18,562
--------- ---------- ------- --------
Earnings before income taxes 7,605 28,353 4,491 13,178
Income tax provision 2,816 10,295 1,663 4,814
---------- ---------- ------- --------
Earnings of consolidated companies 4,789 18,058 2,828 8,364
Equity in net earnings (loss) of unconsolidated
affiliates 334 (456) 175 73
---------- ---------- ------- --------
Net earnings $5,123 $ 17,602 $3,003 $8,437
========== ========= ======= ========
Weighted average shares outstanding:
Basic 27,986 30,046 27,989 28,178
Diluted 28,010 30,137 28,086 28,178
Earnings per share:
Basic $.18 $.59 $.11 $.30
Diluted .18 .59 .11 .30
Cash dividends per share $.17 $.17 $.085 $.085
========== ========== ========== =========
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<CAPTION>
STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION
(In thousands)
JULY 31, 1999 MAY 1, 1999 JANUARY 31, 1999
------------- ----------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 2,181 $ 1,652 $ 12,959
Accounts and notes receivable, net 185,095 178,029 164,547
Recoverable costs and accrued profits
not yet billed 34,847 69,088 99,097
Income tax receivable 34,664 48,002 48,596
Inventories:
Power Products 175,047 189,119 182,894
Petroleum Equipment 25,547 35,586 40,560
Other Business Activities 53,615 45,881 40,222
Excess of current cost over LIFO values (48,718) (48,570) (48,474)
------- ------- -------
205,491 222,016 215,202
------- ------- -------
TOTAL CURRENT ASSETS 462,278 518,787 540,401
PROPERTY, PLANT AND EQUIPMENT 277,687 275,950 271,658
Allowances for depreciation and
amortization (151,036) (146,792) (142,913)
-------- -------- --------
126,651 129,158 128,745
DEFERRED INCOME TAX ASSETS 8,098 7,949 7,904
INVESTMENTS AND OTHER ASSETS 33,927 29,518 28,727
------ ------ ------
$630,954 $685,412 $705,777
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $25,546 $27,192 $17,468
Accounts payable 56,975 45,718 83,127
Accrued payrolls and incentives 13,818 9,279 17,123
Current income taxes 2,931 3,331 2,931
Current portion of long-term debt 23,902 70,220 69,488
Other current liabilities 91,819 94,520 95,349
------ ------ ------
TOTAL CURRENT LIABILITIES 214,991 250,260 285,486
------- ------- -------
COMMITMENTS AND CONTINGENCIES
LONG-TERM DEBT 78,749 98,699 83,530
DEFERRED INCOME TAXES 66 51 43
ACCRUED POSTRETIREMENT BENEFITS 13,735 13,528 13,019
DEFERRED COMPENSATION 2,782 2,866 3,336
SHAREHOLDERS' EQUITY
Common Stock, without par value, 100,000,000
shares authorized; 27,992,203 and 27,984,035
shares issued at July 31, 1999 and January
31, 1999, respectively 47,722 47,723 47,819
Retained earnings 272,909 272,285 272,544
------- ------- -------
TOTAL SHAREHOLDERS' EQUITY 320,631 320,008 320,363
------- ------- -------
$630,954 $685,412 $705,777
======== ======== ========
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<CAPTION>
STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
----------------------------- -----------------------------
SIX MONTHS ENDED THREE MONTHS ENDED
JULY 31, JULY 31,
----------------------------- -----------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 5,123 $ 17,602 $ 3,003 $8,437
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Accrued postretirement benefits 716 (190) 207 (195)
Depreciation and amortization 10,826 9,963 5,623 5,770
Deferred income taxes, net (171) (2,899) (134) -
Change in operating assets and liabilities
net of the effect of acquisition:
Accounts and notes receivable, net (20,548) 42,347 (7,066) 55,814
Recoverable costs and accrued profits
not yet billed 64,250 (6,713) 34,241 (10,546)
Inventories 9,711 (14,433) 16,525 (16,156)
Accounts payable (29,457) (14,378) 15,796 1,570
Current income taxes 13,932 (30,739) 12,938 (39,632)
Other current liabilities (3,530) (24,761) (2,701) (23,854)
Other--principally long-term assets and
liabilities (5,851) 4,536 (5,032) 6,535
------ ----- ------ -----
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 45,001 (19,665) 73,400 (12,257)
INVESTING ACTIVITIES
Collection of receivable from sale of
Gas Turbine Operations - 600,000 -
Expenditures for property, plant and
equipment (16,685) (15,633) (8,864) (7,526)
Acquisition of businesses - (18,750) - (9,300)
Disposal of property, plant and equipment, net 7,953 665 6,286 259
----- --- ----- ---
NET CASH (USED IN) PROVIDED BY INVESTING
ACTIVITIES (8,732) 566,282 (2,578) (16,567)
FINANCING ACTIVITIES
Additions to long-term borrowings 16,234 - - -
Payments on long-term borrowings (66,601) (226,124) (66,268) (607)
Net short-term borrowings (payments) 8,078 (34,178) (1,646) 329
Dividends paid (4,758) (5,001) (2,379) (2,318)
Repurchase of common stock - (120,000) - (62,940)
Exercise of stock options - 589 - (26)
------- -------- ------- --------
NET CASH USED IN FINANCING ACTIVITIES (47,047) (384,714) (70,293) (65,562)
-------- -------- ------- --------
(Decrease) increase in cash and equivalents (10,778) 161,903 529 (94,386)
Cash and cash equivalents, beginning of period 12,959 18,987 1,652 275,276
------- ------- ------ --------
Cash and cash equivalents, end of period $ 2,181 180,890 $ 2,181 $ 180,890
======= ======= ======= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Net cash paid during the period for:
Interest payments $ 7,162 $ 4,922 $6,176 $ 4,664
Income tax payments 733 $44,877 314 44,789
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<CAPTION>
STEWART & STEVENSON SERVICES, INC.
SEGMENT INFORMATION
(In thousands)
SIX MONTHS ENDED JULY 31, THREE MONTHS ENDED JULY 31,
------------------------------ -- -------------------------------
1999 1998 1999 1998
------------- -- ------------- -- -------------- - --------------
<S> <C> <C> <C> <C>
SALES
Power Products $266,197 $273,829 $144,909 $137,661
Tactical Vehicle Systems 12,033 263,848 5,818 139,188
Petroleum Equipment 52,112 51,122 23,648 27,530
Other Business Activities 59,209 39,750 26,265 19,160
============= ============= ============== ==============
Total $389,551 $628,549 $200,640 $323,539
============= ============= ============== ==============
OPERATING PROFIT
Power Products $ 10,791 $ 20,073 $7,701 10,168
Tactical Vehicle Systems 3,143 5,777 2,037 3,058
Petroleum Equipment 3,649 4,485 1,691 2,382
Other Business Activities (361) 1,444 (1,197) (52)
============= ============= ============== ==============
Total $17,222 $ 31,779 $ 10,232 $ 15,556
============= ============= ============== ==============
Corporate expense, net (2,936) (4,535) (2,484) (2,414)
Non-operating interest income 29 7,065 2 2,842
Interest expense (6,710) (5,956) (3,259) (2,806)
============= ============= ============== ==============
Earnings before income taxes $ 7,605 $28,353 $ 4,491 $13,178
============= ============= ============== ==============
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