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 24, 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
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Item 5. Other Events.
On May 24, 2000, Stewart & Stevenson Services, Inc. (the "Company") issued the
press release attached hereto as Exhibit 99.1 announcing the Company's First
Quarter 2000 Results.
Item 7. Exhibits.
Exhibit 99.1 Company Press Release dated May 24, 2000, titled "Stewart &
Stevenson Services, Inc. Announces First Quarter 2000 Results".
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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 18, 2000 By: /s/ JOHN H. DOSTER
Name: John H. Doster
Title: Senior Vice President
and Chief Financial
Officer
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EXHIBIT INDEX
99.1 Company Press Release May 24, 2000, titled "Stewart & Stevenson
Services, Inc. Announces First Quarter 2000 Results."
News From: Stewart & Stevenson
Corporate Headquarters
P.O. Box 1637
Houston, TX 77251-1637
FOR IMMEDIATE RELEASE:
STEWART & STEVENSON SERVICES, INC. ANNOUNCES FIRST QUARTER 2000 RESULTS
HOUSTON, TX May 24, 2000 - STEWART & STEVENSON SERVICES, INC.
(NASDAQ:SSSS), HOUSTON, TX a leading manufacturer and distributor of
industrial, energy related and defense equipment, announced sales for the Fiscal
Quarter ending April 29, 2000, totaling $259.2 million compared to sales of
$188.9 million for the same period a year ago.
Net income from operations for the First Quarter totaled $7.5 million or
$0.27 per share compared to net earnings of $2.1 million and $0.08 per share a
year ago. The Tactical Vehicle Systems segment, which manufactures tactical
vehicles for the U.S. Army and others, recorded sales of $78.7 million in the
First Quarter compared to $6.2 million a year ago. Operating profit for the
quarter totaled $14.6 million, compared with a $1.1 million profit in the First
Quarter of Fiscal 1999. The segment continues to realize improved operating
margins resulting from an effective cost reduction program. In addition, the
current plan is to complete the driveline upgrade program by the end of May,
three months ahead of schedule. The Army's latest shipment schedule has shifted
some truck deliveries from the second quarter to the second half, but the
expected total year volume remains intact.
The Power Products segment, which is responsible for marketing and
aftermarket support of a wide range of industrial equipment, recorded First
Quarter sales of $127.1 million compared to $121.3 million for the same period
in 1999. The Power Products segment reported a $0.8 million loss for the quarter
as the rebound in profitability was overshadowed by special items netting to a
charge of $6.4 million, principally in connection with a potentially
uncollectable account and note receivable. Excluding the special items, the
segment would have reported an operating profit of $5.6 million or 4.4% of
sales. A year ago the segment reported a $3.1 million operating profit or 2.6%
of sales. Power Products is beginning to experience improved sales in domestic
land-based oil and gas markets, and the rebound in profitability is expected to
continue in subsequent quarters.
The Petroleum Equipment segment manufactures equipment for oil and gas
exploration, production, and well stimulation industries. Sales for this segment
totaled $14.9 million for the First Quarter compared to $28.5 million last year.
The operating loss for the First Quarter totaled $0.7 million compared to an
operating profit of $2.0 million in the previous year. The decrease in sales and
operating profit resulted from a depleted order backlog in the oil and gas
markets. We are encouraged by a recent rebound in order activity, and the
segment is well positioned for a turnaround in the second half of Fiscal Year
2000.
The Airline Products segment, known as S&S Tug, which manufactures airline
ground support products and mobile railcar movers, recorded sales of $28.3
million in the First Quarter of Fiscal 2000, compared with $22.3 million in the
same quarter last year. Operating results were breakeven in both years. First
Quarter 2000 operations were impacted by higher costs associated with the
startup of additional airport based service facilities, and new products.
Other business activities not identified in a specific segment include
predominantly gas compression equipment sales or leases. Sales totaled $10.2
million for the First Quarter, compared to $10.7 million for the comparable
period last year. A First Quarter operating loss of $0.6 million included $0.8
million in incentive bonus payments associated with the 1998 acquisition of
Compression Specialties, Inc. An operating profit of $0.8 million was recorded
during the First Quarter of 1999.
Corporate general and administrative expenses for the quarter totaled $2.5
million, versus $0.5 million for the comparable period of 1999. Last year's
quarter was favorably impacted by harbor tax refunds and duty drawback
recoveries.
Interest expense decreased from $3.5 million in the First Quarter of Fiscal
1999 to $2.3 million in the First Quarter of Fiscal 2000 as a direct result of
asset management initiatives.
The Company recorded $4.0 million in interest income in connection with tax
refunds from the Internal Revenue Service for the years ended January 31, 1990,
through January 31, 1993.
Cash flow provided by operating activities during the First Quarter of
Fiscal 2000 totaled $25.5 million or $0.91 per share, which compared favorably
with usage of $28.4 million during the corresponding quarter of Fiscal 1999.
Michael L. Grimes, President and Chief Executive Officer, commented that
"we have delivered five consecutive quarters of earnings improvements; we
continue to make progress in generating cash flow and improving our balance
sheet; the oil and gas markets are beginning to recover; we continue to improve
the leadership team; and supply chain initiatives are resulting in lower
material costs for the future."
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
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STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FISCAL QUARTER FISCAL QUARTER
ENDED ENDED
APRIL 29, 2000 MAY 1, 1999
-------------- --------------
(UNAUDITED)
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Sales $ 259,207 $ 188,911
Cost of sales 213,317 159,050
-------------- --------------
Gross profit 45,890 29,861
Selling and administrative expenses 36,091 25,491
Interest expense 2,309 3,451
Other income, net (4,434) (2,195)
-------------- --------------
33,966 26,747
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Earnings before income taxes 11,924 3,114
Income tax provision 4,426 1,153
-------------- --------------
Earnings of consolidated companies 7,498 1,961
Equity in net earnings of unconsolidated affiliates - 159
-------------- --------------
Net earnings $ 7,498 $ 2,120
============== ==============
Weighted average number of shares of Common Stock outstanding -
Basic 27,996 27,984
Diluted 28,075 27,984
Net earnings per share: Basic and Diluted $ 0.27 $ .08
============== ==============
Cash dividends per share $ .085 $ .085
============== ==============
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STEWART & STEVENSON SERVICES, INC.
SEGMENT DATA
(IN THOUSANDS)
- --------------------------------------------------------------------------------
Fiscal Quarter Ended Fiscal Quarter Ended
APRIL 29, 2000 MAY 1, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
Sales
Power Products $ 127,091 $ 121,288
Tactical Vehicles 78,673 6,215
Airline Products 28,271 22,252
Petroleum Equipment 14,927 28,464
Other Business Activities 10,245 10,692
-------------- --------------
Total 259,207 188,911
Operating Profit
Power Products (816) 3,090
Tactical Vehicles 14,636 1,106
Airline Products 4 4
Petroleum Equipment (673) 1,958
Other Business Activities (634) 832
-------------- --------------
Total 12,517 6,990
Corporate expenses (net) (2,476) (452)
Interest expense (2,309) (3,451)
Non-operating interest income 4,192 27
-------------- --------------
Earnings before income taxes $ 11,924 $ 3,114
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STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
FISCAL QUARTER FISCAL QUARTER
ENDED ENDED
APRIL 29, 2000 MAY 1, 1999
-------------- --------------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 7,498 $ 2,120
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Accrued postretirement benefits 248 509
Depreciation and amortization 5,532 5,203
Deferred income taxes, net 36 (37)
Change in operating assets and liabilities
net of the effect of acquisition:
Accounts and notes receivable, net 44,964 (13,482)
Recoverable costs and accrued profits not
yet billed (5,983) 30,009
Inventories (12,314) (6,814)
Accounts payable (10,029) (37,409)
Accrued payrolls and incentives (4,421) (7,844)
Current income taxes 4,291 994
Other current liabilities (2,839) (829)
Other--principally long-term assets and
liabilities (1,469) (819)
-------------- --------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 25,514 (28,399)
INVESTING ACTIVITIES
Expenditures for property, plant and equipment (10,279) (7,821)
Disposal of property, plant and equipment, net 123 1,667
-------------- --------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (10,156) (6,154)
FINANCING ACTIVITIES
Additions to long-term borrowings 20,047 16,234
Payments on long-term borrowings (20,029) (333)
Net short-term borrowings (payments) (9,490) 9,724
Dividends paid (2,379) (2,379)
Exercise of stock options 222 -
-------------- --------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (11,629) 23,246
-------------- --------------
Increase (decrease) in cash and equivalents 3,729 (11,307)
Cash and equivalents, February 1 11,715 12,959
-------------- --------------
Cash and equivalents, end of period $ 15,444 $ 1,652
============== ==============
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<CAPTION>
STEWART & STEVENSON SERVICES, INC.
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
(IN THOUSANDS)
APRIL 29, 2000 JANUARY 31, 2000
-------------- --------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 15,444 $ 11,715
Accounts and notes receivable, net 197,661 242,625
Recoverable costs and accrued profits
not yet billed 14,134 8,151
Income tax receivable 22,508 26,255
Deferred tax asset 8,553 9,076
Inventories:
Power Products 158,254 150,844
Petroleum Equipment 31,588 30,151
Airline Products 32,065 26,029
Other Business Activities 31,123 33,762
Excess of current cost over LIFO values (49,769) (49,839)
-------------- --------------
203,261 190,947
-------------- --------------
TOTAL CURRENT ASSETS 461,561 488,769
PROPERTY, PLANT AND EQUIPMENT 300,325 290,355
Allowances for depreciation and
amortization (166,167) (160,821)
-------------- --------------
134,158 129,534
DEFERRED INCOME TAX ASSETS 89 166
INVESTMENTS AND OTHER ASSETS 25,239 23,881
-------------- --------------
$ 621,047 $ 642,350
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 15,779 $ 25,269
Accounts payable 80,134 90,163
Accrued payrolls and incentives 14,280 18,701
Income tax 3,278 3,257
Current portion of long-term debt 9,097 8,955
Other current liabilities 63,064 65,903
-------------- --------------
TOTAL CURRENT LIABILITIES 185,632 212,248
COMMITMENTS AND CONTINGENCIES
LONG-TERM DEBT 78,157 78,281
DEFERRED INCOME TAX 917 958
ACCRUED POSTRETIREMENT BENEFITS 12,996 12,748
DEFERRED COMPENSATION 2,325 2,436
OTHER LONG-TERM LIABILITIES 600 600
SHAREHOLDERS' EQUITY
Common Stock, without par value, 100,000,000
shares authorized; 28,012,203 and 27,992,203 shares issued
at April 29, 2000 and January 31, 2000, respectively 47,944 47,722
Retained earnings 292,476 287,357
-------------- --------------
TOTAL SHAREHOLDERS' EQUITY 340,420 335,079
-------------- --------------
$ 621,047 $ 642,350
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