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): MAY 27, 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 May 27, 1999, Stewart & Stevenson Services, Inc. (the "Company") issued the
press release attached hereto as Exhibit 99.1 announcing the Company's first
quarter results.
Item 7. Exhibits.
Exhibit 99.1 Company Press Release dated May 27, 1999 titled "Stewart &
Stevenson Services, Inc. Announces First 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: May 27, 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 May 27, 1999 titled "Stewart & Stevenson
Services, Inc. Announces First Quarter 1999 Results."
- --------------------
EXHIBIT 99.1 STEWART & STEVENSON
NEWS FROM: CORPORATE HEADQUARTERS
P.O. BOX 1637
HOUSTON, TX 77251-1637
FOR IMMEDIATE RELEASE:
STEWART & STEVENSON SERVICES, INC. ANNOUNCES FIRST QUARTER 1999 RESULTS
HOUSTON, TX May 27 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 May 1, 1999,
totaling $188.9 million compared to sales of $305.0 million for the same period
a year ago. Net income from operations for the first quarter totaled $2.1
million or $0.08 per share compared to net earnings of $9.2 million and $0.29
per share a year ago. Net earnings from operations for the first quarter of 1998
included $2.7 million or $0.08 per share in interest income on cash proceeds
from the sale of Gas Turbine Operations.
The Power Products segment, which is responsible for marketing and
aftermarket support of a wide range of industrial equipment recorded first
quarter sales of $121.3 million compared to $136.2 million for the same period
in 1998. Operating profit for the Power Products segment totaled $3.1 million
for the quarter compared to $9.9 million a year ago. This segment continues to
be adversely impacted by lower equipment, parts and services sales in the
petroleum sensitive branches resulting from depressed oil prices.
The Petroleum Equipment segment manufactures equipment for oil and gas
exploration, production, and well stimulation industries. Sales for this segment
totaled $28.5 million compared to $23.6 million last year. Operating profit for
Petroleum Equipment totaled $2.0 million compared to $2.1 million last year. The
slight decrease in profits resulted from increased sales on 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 (TVS) segment, which manufactures tactical
vehicles for the U.S. Army and others, recorded sales of $6.2 million compared
to $124.7 million a year ago. Most of the production associated with the
original contract was completed as of January 31, 1999, and production on the
follow-on contract is scheduled to start in third quarter 1999. Operating profit
for the first quarter of 1999 amounted to $1.1 million, compared to $2.7 million
a year ago.
Other business activities not identified in a specific segment include
airline ground support equipment, and the fabrication and leasing of gas
compression equipment. Sales totaled $32.9 million, with most of the $12.4
million increase from last year occurring in airline ground support equipment
resulting from acquisition of Tug Manufacturing Corporation in December 1998.
First quarter 1999 operating profit totaled $0.8 million versus $1.5 million a
year ago. Airline profits were adversely impacted by new product development
costs and gas compression continues in a start-up mode.
Lower corporate G&A expenses resulted from harbor tax refunds and duty
drawback recoveries. Michael L. Grimes, Chief Executive Officer, stated "While
operating performance was in line with our near term expectations, we need to
accelerate efforts to improve margins, reduce working capital, and focus on top
line growth."
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 STATEMENT OF EARNINGS
(In thousands, except per share data)
FISCAL QUARTER THREE MONTHS
ENDED ENDED
MAY 1, 1999 APRIL 30, 1998
---------------- ----------------
(UNAUDITED)
<S> <C> <C>
Sales $188,911 $305,010
Cost of sales 159,050 273,976
---------------- ----------------
Gross profit 29,861 31,034
---------------- ----------------
Selling and administrative expenses 25,491 18,731
Interest expense 3,451 3,150
Other income, net (2,195) (6,022)
---------------- ----------------
26,747 15,859
---------------- ----------------
Earnings before income taxes 3,114 15,175
Income tax provision 1,153 5,481
---------------- ----------------
Earnings of consolidated companies 1,961 9,694
Equity in net earnings (loss) of unconsolidated affiliates 159 (529)
---------------- ----------------
Net earnings $2,120 $9,165
================ ================
Weighted average number of shares of Common Stock outstanding -
Basic 27,984 31,976
Diluted 27,984 32,035
Net earnings per share: Basic and Diluted $.08 $.29
================ ================
Cash dividends per share $.085 $.085
================ ================
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STEWART & STEVENSON SERVICES, INC.
SEGMENT DATA
(Dollars in thousands)
FISCAL QUARTER THREE MONTHS
ENDED ENDED
MAY 1, 1999 APRIL 30, 1998
-------------------------------------
<S> <C> <C>
Sales: (UNAUDITED)
Power Products $121,288 $136,169
Petroleum Equipment 28,464 23,592
Tactical Vehicle Systems 6,215 124,660
Other Business Activities 32,944 20,589
--------------------------------------
$188,911 $305,010
=====================================
Operating Profit:
Power Products $3,090 $9,905
Petroleum Equipment 1,958 2,103
Tactical Vehicle Systems 1,106 2,719
Other Business Activities 836 1,496
-------------------------------------
6,990 16,223
Corporate expenses, net (452) (2,121)
Interest expense (3,451) (3,150)
Non-operating interest income 27 4,223
-------------------------------------
Earnings before income taxes $3,114 $15,175
=====================================
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STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(Dollars in thousands)
FISCAL QUARTER THREE MONTHS
ENDED ENDED
MAY 1,1999 APRIL 30, 1998
----------------- ----------------
<S> <C> <C>
(UNAUDITED)
OPERATING ACTIVITIES
Net earnings $ 2,120 $ 9,165
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Accrued postretirement benefits 509 5
Depreciation and amortization 5,203 4,193
Deferred income taxes, net (37) (2,899)
Change in operating assets and liabilities
net of the effect of acquisition:
Accounts and notes receivable, net (13,482) (13,467)
Recoverable costs and accrued profits not
yet billed 30,009 3,833
Inventories (6,814) 1,723
Accounts payable (37,409) (9,357)
Accrued payrolls and incentives (7,844) (6,591)
Current income taxes 994 8,893
Other current liabilities (824) (907)
Other--principally long-term assets and
liabilities (824) (1,999)
----------------- ----------------
NET CASH USED IN OPERATING ACTIVITIES (28,399) (7,408)
INVESTING ACTIVITIES
Collection of receivable from sale of
Gas Turbine Operations -- 600,000
Expenditures for property, plant and equipment (7,821) (8,107)
Acquisition of businesses -- (9,450)
Disposal of property, plant and equipment, net 1,667 406
----------------- ----------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (6,154) 582,849
FINANCING ACTIVITIES
Additions to long-term borrowings 16,234 483
Payments on long-term borrowings (333) (226,000)
Net short-term borrowings (payments) 9,724 (34,507)
Dividends paid (2,379) (2,683)
Repurchase of common stock -- (57,060)
Exercise of stock options -- 615
----------------- ----------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 23,246 (319,152)
----------------- ----------------
Increase (decrease) in cash and equivalents (11,307) 256,289
Cash and equivalents, February 1 12,959 18,987
----------------- ----------------
Cash and equivalents, end of period $ 1,652 $ 275,276
================= ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Net cash paid during the Period for:
Interest payments $986 $258
Income tax payments $419 $88
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STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
(Dollars in thousands)
MAY 1, 1999 JANUARY 31, 1999
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 1,652 $ 12,959
Accounts and notes receivable, net 178,029 164,547
Recoverable costs and accrued profits
not yet billed 69,088 99,097
Income tax receivable 48,002 48,596
Inventories:
Power Products 189,119 182,894
Petroleum Equipment 35,586 40,560
Other Business Activities 45,881 40,222
Excess of current cost over LIFO values (48,570) (48,474)
---------------------------------------
222,016 215,202
---------------------------------------
TOTAL CURRENT ASSETS 518,787 540,401
PROPERTY, PLANT AND EQUIPMENT 275,950 271,658
Allowances for depreciation and
amortization (146,792) (142,913)
---------------------------------------
129,158 128,745
DEFERRED INCOME TAX ASSETS 7,949 7,904
INVESTMENTS AND OTHER ASSETS 29,518 28,727
---------------------------------------
$685,412 $705,777
=======================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $27,192 $17,468
Accounts payable 45,718 83,127
Accrued payrolls and incentives 9,279 17,123
Current income taxes 3,331 2,931
Current portion of long-term debt 70,220 69,488
Other current liabilities 94,520 95,349
---------------------------------------
TOTAL CURRENT LIABILITIES 250,260 285,486
LONG-TERM DEBT 98,699 83,530
DEFERRED INCOME TAXES 51 43
ACCRUED POSTRETIREMENT BENEFITS 13,528 13,019
DEFERRED COMPENSATION 2,866 3,336
SHAREHOLDERS' EQUITY
Common Stock, without par value, 100,000,000
shares authorized; 27,984,035, shares issued
at May 1, 1999 and January 31, 1999 47,723 47,819
Retained earnings 272,285 272,544
---------------------------------------
TOTAL SHAREHOLDERS' EQUITY 320,008 320,363
---------------------------------------
$685,412 $705,777
=======================================
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