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): MARCH 22, 2000
STEWART & STEVENSON SERVICES, INC.
(Exact name of registrant as specified in its charter)
TEXAS 0-8493 74-1051605
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction Identification No.)
of incorporation)
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 March 22, 2000, Stewart & Stevenson Services, Inc. (the "Company") issued the
press release attached hereto as Exhibit 99.1 announcing the fourth quarter and
fiscal 1999 year-end results.
Item 7. Exhibits.
Exhibit 99.1 Company Press Release dated March 22, 2000, titled "Stewart
& Stevenson Services, Inc. Announces Results For Fourth
Quarter and Fiscal 1999 Year-End Results."
<PAGE>
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: March 22, 2000 By: /s/ JOHN H. DOSTER
Name: John H. Doster
Title: Senior Vice President
and Chief Financial
Officer
<PAGE>
EXHIBIT INDEX
99.1 Company Press Release dated March 22, 2000, titled "Stewart &
Stevenson Services, Inc. Announces Results For Fourth Quarter and Fiscal
1999 Year-End Results".
- ------------------
Exhibit 99.1
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 RESULTS FOR FOURTH QUARTER AND
FISCAL 1999 YEAR-END RESULTS
HOUSTON, TX - March 22, 2000 - STEWART & STEVENSON SERVICES, INC.
(NASDAQ:SSSS), a leading manufacturer, distributor, and provider of service for
industrial and energy related equipment, and a manufacturer of medium tactical
vehicles for the U.S. Army, announced sales for the quarter ended January 31,
2000 totaling $287.4 million compared to sales of $257.1 million in the same
period a year ago. Net earnings from continuing operations in the Fourth Quarter
of Fiscal 1999 were $4.9 million or $0.17 per share versus a loss of $49.7
million or $1.77 per share in last year's Fourth Quarter. The Fourth Quarter of
Fiscal 1999 included an after-tax charge of $3.3 million or $0.12 per share for
inventory reserves, partially offset by a $1.2 million or $0.04 per share after
tax gain on sale of an investment. Excluding these adjustments, net earnings and
earnings per share would have been $7.1 million and $0.25, respectively.
Sales for Fiscal 1999 totaled $911.7 million compared to $1,206.8 million
in Fiscal 1998, with a planned production hiatus in military trucks accounting
for most of the decrease. Net earnings from continuing operations for the year
amounted to $17.5 million or $0.62 per share compared with a net loss of $39.0
or $1.34 in the prior year. Fiscal 1999 net earnings included a gain on sale of
investments of $3.9 million or $0.14 per share, offset by $4.6 million or $0.17
for inventory charges. Last year's loss included a $56.3 million charge, the
equivalent of $1.94 per share, associated with the initial truck contract with
the U.S. Army, partially offset by interest income of $5.6 million or $0.19 per
share earned on proceeds from the sale of the gas turbine business. Excluding
special items discussed above, net earnings and earnings per share from
continuing operations for Fiscal 1999 would have been $18.2 million and $0.65,
respectively. Comparable results for Fiscal 1998 would have been $11.6 million
and $0.40, respectively.
Net income for the year, including discontinued operations, was $24.3
million or $0.87 per share and included a $6.9 million after-tax reserve
adjustment related primarily to elimination of a debt guaranty obligation
associated with a power generation facility in Argentina that was sold in
January 2000.
The Power Products segment, which is responsible for marketing and
aftermarket support of a wide range of industrial equipment, recorded Fourth
Quarter sales of $139.7 million, a 6% increase over the sales of $131.5 million
in the same period of Fiscal 1998. The operating loss totaled $0.4 million
versus a $3.2 million loss in the comparable period of last year. The current
quarter loss included inventory charges of $1.8 million, and $1.1 million in
costs associated with corporate initiatives to improve business performance.
Sales for the total year were $536.2 million, 3% lower than last year's sales of
$555.5 million. Operating profit for Fiscal 1999 was $15.2 million compared with
$23.6 million last year. Performance in the Power Products segment continues to
vary by market. Equipment and parts sales were adversely impacted by softness in
oil and gas markets. However, eleven branch locations comprising 24% of total
year 1999 sales reported double digit sales growth in 1999.
The Tactical Vehicle Systems segment, which manufactures tactical vehicles
for the U.S. Army and others, recorded sales of $87.3 million in the Fourth
Quarter compared to $70.2 million a year ago. Operating profit for the quarter
totaled $17.0 million, compared with a $66.4 million loss in the Fourth Quarter
of Fiscal 1998. Sales for Fiscal 1999 were $150.9 million versus $455.4 million
a year ago. Total year operating profit for Fiscal 1999 was $30.2 million, which
compared favorably with a $77.7 million loss a year ago that included $86.5
million in special charges. Improved operating margins resulted from an
effective cost reduction program and a higher initial sales price per truck sold
in the third quarter to compensate for costs incurred during the production shut
down.
The Petroleum Equipment segment manufactures equipment for oil and gas
exploration, production, and well stimulation industries. Sales in this segment
totaled $17.2 million for the Fourth Quarter compared to $33.5 million last
year. The operating loss for the Fourth Quarter totaled $0.1 million compared to
an operating profit of $3.1 million in the previous year. Fiscal year sales of
$82.1 million and $115.8 million were recorded for Fiscal 1999 and 1998,
respectively. The segment reported a $2.1 million operating profit in 1999 and a
$10.2 million operating profit in 1998. The decrease in sales and operating
profit resulted from a depleted order backlog in the depressed oil and gas
markets. We continue to anticipate a rebound in order activity driven by the
substantial increase in oil and gas prices during the past nine months.
The Airline Products segment, known as S&S Tug, which manufactures airline
ground support products and mobile railcar movers, recorded sales of $29.9
million in the Fourth Quarter of Fiscal 1999, compared with $9.4 million in the
same quarter last year. Operating losses for 1999 and 1998 were $3.2 million and
$1.0 million, respectively. Sales for Fiscal 1999 were $104.8 million versus
$32.6 million the previous year, and reflected the full year impact from the
acquisition of Tug Manufacturing Corporation in December 1998 and improved sales
of previously existing products. Net losses were reported for both years: $3.7
million in 1999 and $0.6 million in 1998. The Fiscal 1999 loss included charges
of $2.4 million in connection with new product development and $2.4 million in
other inventory write offs.
Other business activities not identified in a specific segment include
predominantly gas compression equipment sales or leases. Sales totaled $13.4
million for the Fourth Quarter, compared to $12.4 million for the comparable
period last year. A Fourth Quarter operating profit of $0.4 million included a
$1.9 million gain on sale of an investment, an operating profit on gas
compression, and $2.3 million in charges for inventory reserves and
under-liquidated costs of pooled manufacturing operations. An operating loss of
$5.3 million was recorded during the Fourth Quarter of 1998. Total Fiscal 1999
sales were $37.7 million, a $9.8 million decrease from Fiscal 1998 sales of
$47.5 million, largely due to sale of a Cogen facility in 1998. Operating losses
for Fiscal 1999 and 1998 were $0.7 million and $4.5 million, respectively.
Non-operating interest income for Fiscal 1998 totaled $10.9 million and
represented interest earned on proceeds from the sale of Gas Turbine Operations
to General Electric Company.
Net cash provided by operating activities of continuing operations totaled
$91.6 million for the year and resulted in a $56.7 million decrease in net debt.
A $61 million payment from the U.S. government was received on February 4, 2000.
Michael L. Grimes, President and Chief Executive Officer, stated that "we
have delivered four consecutive quarters of earnings improvement, significantly
improved our balance sheet, and have enjoyed very strong cash flow generation
this year, largely due to considerable progress in our Tactical Vehicle Systems
segment. Further earnings growth will come from a rebound in oil and gas
markets, growth opportunities in the service businesses, and lower material
costs resulting from supply chain initiatives."
This press release contains forward-looking statements that are based on
management's current expectations, estimates, and projections. These statements
are not guarantees of future performance and involve a number of risks,
uncertainties and assumptions and are made pursuant to the Safe Harbor
Provisions of the Private Securities Litigation Reform Act of 1995. Many
factors, including those discussed more fully elsewhere in this release and in
the Company's filings with the Securities and Exchange Commission, particularly
its latest annual report on Form 10-K, as well as others, could cause results
to differ materially from those stated. These factors include, but are not
limited to, risks associated with newly acquired businesses; increasing price
and product/service competition by foreign and domestic competitors; rapid
technological developments and changes; the ability to continue to introduce
competitive new products and services on a timely, cost effective basis; the
mix of products/services; the achievement of lower costs and expenses; reliance
on large customers; technological, implementation and cost/financial risks in
use of 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; the risk of cancellation or adjustment of
specific orders and termination of significant government programs; and failure
of the Company or unrelated third parties on whom the Company relies for
essential products or services to become Year 2000 capable. In addition, such
forward-looking statements could be affected by general industry and market
conditions and growth rates, general domestic and international conditions
including interest rates, inflation and currency exchange rates and other
future factors. Actual outcomes and results may differ materially from what is
expressed or forecasted in such forward-looking statements.
Contact: Mr. David R. Stewart, Treasurer
Phone: (713) 868-7657
Fax: (713) 863-1519
Email: [email protected]
HTTP://www.ssss.com
<PAGE>
STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (LOSS)
(In thousands, except per share data)
<TABLE>
<CAPTION>
---------------------------------- ----------------------------------
TWELVE MONTHS ENDED THREE MONTHS ENDED
JANUARY 31, JANUARY 31,
--------------------------------- ----------------------------------
2000 1999 2000 1999
--------------------------------- ----------------------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Sales $911,702 $1,206,772 $287,435 $ 257,102
Cost of sales 776,864 1,178,088 249,359 303,034
-------------- -------------- -------------- --------------
Gross profit 134,838 28,684 38,076 (45,932)
Selling and administrative expenses 109,038 90,857 32,607 28,846
Interest expense 9,991 12,244 1,179 3,376
Other income, net (7,396) (12,706) (3,618) 391
-------------- -------------- -------------- --------------
111,633 90,395 30,168 32,613
-------------- -------------- -------------- --------------
Earnings (loss) from continuing operations before
income taxes 23,205 (61,711) 7,908 (78,545)
Income tax expense (benefit) 8,642 (22,804) 2,969 (28,764)
-------------- -------------- -------------- --------------
Earnings (loss) from continuing operations of
consolidated companies 14,563 (38,907) 4,939 (49,781)
Equity in net earnings (loss) of unconsolidated affiliates 142 (98) - 91
Gain on sale of investment, net of tax of $846 2,746 - - -
-------------- -------------- -------------- --------------
Net earnings (loss) from continuing operations 17,451 (39,005) 4,939 (49,690)
Gain (loss) on disposal of discontinued operations,
net of tax of $4,112, $(21,985), $4,112, and $(10,235) 6,879 (33,979) 6,879 (13,979)
-------------- ---------------- ---------------- ----------------
Net earnings (loss) $ 24,330 $(72,984) $ 11,818 $(63,669)
============== ================ ================ ================
Weighted average shares outstanding:
Basic 27,989 29,006 27,992 27,984
Diluted 28,042 29,006 28,059 27,984
Earnings (loss) per share: Basic and Diluted
Continuing operations $ 0.62 $ (1.34) $ 0.17 $ (1.77)
Gain (loss) on disposal of discontinued operations 0.25 (1.17) 0.25 (0.50)
-------------- -------------- ---------------- ---------------
$ 0.87 $ (2.51) $ 0.42 $ (2.27)
============== ============== =============== ================
Cash dividends per share $ 0.34 $ 0.34 $ 0.085 $ 0.085
============== =============== ================ ================
</TABLE>
<PAGE>
STEWART & STEVENSON SERVICES, INC.
SEGMENT INFORMATION
(In thousands)
<TABLE>
<CAPTION>
-------------------------------------------------------
Twelve Months Ended Three Months Ended
January 31, January 31,
--------------------------- --------------------------
--------------------------- --------------------------
2000 1999 2000 1999
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Sales
Power Products $536,236 $ 555,507 $139,658 $ 131,502
Tactical Vehicle Systems 150,884 455,399 87,296 70,239
Petroleum Equipment 82,085 115,800 17,186 33,540
Airline Products 104,785 32,603 29,922 9,416
Other Business Activities 37,712 47,463 13,373 12,405
------------ ------------ ------------ ------------
Total $911,702 $1,206,772 $287,435 $ 257,102
============ ============ ============ ============
Operating Profit (Loss)
Power Products $ 15,244 $ 23,638 $ (416) $ (3,161)
Tactical Vehicle Systems 30,217 (77,717) 16,969 (66,354)
Petroleum Equipment 2,099 10,245 (123) 3,110
Airline Products (3,697) (630) (3,150) (950)
Other Business Activities (652) (4,476) 424 (5,334)
------------ ------------ ------------ ------------
Total $ 43,211 $ (48,940) $ 13,704 $ (72,689)
============ ============ ============ ============
Corporate expense, net (10,044) (11,452) (4,617) (4,716)
Non-operating interest income 29 10,925 - 2,236
Interest expense (9,991) (12,244) (1,179) (3,376)
------------ ------------ ------------ ------------
Earnings (loss) from continuing
operations before income taxes $ 23,205 $ (61,711) $ 7,908 $ (78,545)
============ ============ ============ ============
</TABLE>
<PAGE>
STEWART & & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
-------------------- --------------------
Twelve Months Ended Three Months Ended
January 31, January 31,
-------------------- --------------------
-------------------- --------------------
2000 1999 2000 1999
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings (loss) from continuing operations $17,451 $(39,005) $ 4,939 $(49,690)
Adjustments to reconcile net earnings (loss) to net
cash provided by (used in) operating activities:
Accrued postretirement benefits (271) (237) (1,046) (237)
Depreciation and amortization 22,298 19,636 6,403 5,590
Deferred income taxes, net (2,310) (10,760) (2,085) (7,861)
(Gain) loss on sale of business assets (5,804) 53 (1,850) (190)
Change in operating assets and liabilities net of the effect
of acquisition, divestiture and discontinued operations:
Accounts and notes receivable, net (76,192) 31,318 (46,291) 45,413
Recoverable costs and accrued profits not
yet billed 90,946 39,111 257 79,257
Inventories 24,839 (35,711) 1,617 (11,459)
Accounts payable 8,077 (14,465) 23,512 (14,506)
Current income taxes, net 20,442 (122,815) 4,444 (61,514)
Other current liabilities (13,805) 33,421 (4,601) 54,390
Other--principally long-term assets and
liabilities 5,890 11,529 13,924 8,983
----------- ---------- ----------- ----------
NET CASH PROVIDED BY (USED IN) CONTINUING OPERATIONS 91,561 (87,925) (777) 48,176
NET CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS (3,287) 516,000 (3,287) -
----------- ----------- ----------- ----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 88,274 428,075 (4,064) 48,176
INVESTING ACTIVITIES
Expenditures for property, plant and equipment (38,573) (39,565) (13,883) (15,953)
Proceeds from sale of business assets 8,303 4,597 7,628 (13,708)
Acquisition of businesses (5,832) (33,659) (5,832) (3)
Disposal of property, plant and equipment, net 14,082 3,378 122 1,447
----------- ----------- ----------- ----------
NET CASH USED IN INVESTING ACTIVITIES (22,020) (65,249) (11,965) (28,217)
FINANCING ACTIVITIES
Additions to long-term borrowings 16,234 25,000 - -
Payments on long-term borrowings (82,016) (242,780) (120) (16,321)
Net short-term borrowings (payments) 7,801 (22,714) 10,308 5,323
Dividends paid (9,517) (9,758) (2,379) (2,378)
Repurchase of common stock - (120,000) - -
Exercise of stock options - 1,398 - 639
----------- ----------- ----------- ---------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (67,498) (368,854) 7,809 (12,737)
----------- ----------- --------------- --------------
(Decrease) increase in cash and cash equivalents (1,244) (6,028) (8,220) 7,222
Cash and cash equivalents, beginning of period 12,959 18,987 19,935 5,737
----------- ----------- --------------- --------------
Cash and cash equivalents, end of period $ 11,715 $ 12,959 $ 11,715 $ 12,959
=========== =========== =============== ==============
</TABLE>
<PAGE>
STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL POSITION
(In thousands)
<TABLE>
<CAPTION>
January 31, 2000 January 31, 1999
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 11,715 $ 12,959
Accounts and notes receivable, net 242,625 164,547
Recoverable costs and accrued profits not yet billed 8,151 99,097
Income tax receivable 35,331 48,596
Inventories:
Power Products 150,844 182,894
Petroleum Equipment 30,151 40,560
Airline Products 26,029 10,079
Other Business Activities 33,762 30,143
Excess of current cost over LIFO values (49,839) (48,474)
-------------- -------------
190,947 215,202
Prepaid expense 728 1,413
-------------- -------------
TOTAL CURRENT ASSETS 489,497 541,814
PROPERTY, PLANT AND EQUIPMENT 290,355 271,658
Allowances for depreciation and amortization (160,821) (142,913)
-------------- -------------
129,534 128,745
DEFERRED INCOME TAX ASSET 166 7,904
INVESTMENTS AND OTHER ASSETS 23,153 27,314
-------------- -------------
$642,350 $705,777
============== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 25,269 $ 17,468
Accounts payable 90,163 83,127
Accrued payrolls and incentives 18,701 17,123
Current income taxes 3,257 2,931
Current portion of long-term debt 8,955 69,488
Other current liabilities 65,903 95,349
-------------- -------------
TOTAL CURRENT LIABILITIES 212,248 285,486
-------------- -------------
COMMITMENTS AND CONTINGENCIES
LONG-TERM DEBT 78,281 83,530
DEFERRED INCOME TAXES 958 43
ACCRUED POSTRETIREMENT BENEFITS 12,748 13,019
DEFERRED COMPENSATION 2,436 3,336
OTHER LONG-TERM LIABILITIES 600 -
SHAREHOLDERS' EQUITY
Common Stock, without par value, 100,000,000
shares authorized; 27,992,203 and 27,984,035
shares issued at January 31, 2000 and 1999,
respectively 47,722 47,819
Retained earnings 287,357 272,544
-------------- -------------
TOTAL SHAREHOLDERS' EQUITY 335,079 320,363
-------------- -------------
$642,350 $705,777
============== =============
</TABLE>
