-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H8Vn/VuUfFymm2uolV/UMyBEzWgHcMsXvl3TV/tBfTBjWm5IAwmeH0Q0gFII+vS0 lR1fA6GHQHrPFPfd2TfRiw== 0000094328-95-000031.txt : 19951215 0000094328-95-000031.hdr.sgml : 19951215 ACCESSION NUMBER: 0000094328-95-000031 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19951214 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: STEWART & STEVENSON SERVICES INC CENTRAL INDEX KEY: 0000094328 STANDARD INDUSTRIAL CLASSIFICATION: ENGINES & TURBINES [3510] IRS NUMBER: 741051605 STATE OF INCORPORATION: TX FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11443 FILM NUMBER: 95601651 BUSINESS ADDRESS: STREET 1: 2707 N LOOP W CITY: HOUSTON STATE: TX ZIP: 77008 BUSINESS PHONE: 7138687700 MAIL ADDRESS: STREET 1: P O BOX 1637 CITY: HOUSTON STATE: TX ZIP: 77251-1637 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 1995 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to _________ Commission file number 0-8493 STEWART & STEVENSON SERVICES, INC. (Exact name of registrant as specified in its charter) Texas 74-1051605 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2707 North Loop West, Houston, Texas 77008 (Address of principal executive offices) (Zip Code) (713) 868-7700 (Registrant's telephone number, including area code) not applicable (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, Without Par Value 33,050,088 Shares (Class) (Outstanding at October 31, 1995) PART I. FINANCIAL INFORMATION Item 1. Financial Statements. The following information required by Rule 10-01 of Regulation S-X is provided herein for Stewart & Stevenson Services, Inc. and Subsidiaries (the "Company"): Consolidated Condensed Statement of Financial Position -- October 31, 1995 and January 31, 1995. Consolidated Condensed Statement of Earnings -- Nine Months and Three Months Ended October 31, 1995 and 1994. Consolidated Condensed Statement of Cash Flows -- Nine Months Ended October 31, 1995 and 1994. Notes to Consolidated Condensed Financial Statements. STEWART & STEVENSON SERVICES, INC. CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION (Dollars in thousands)
October 31 January 31 1995 1995 (Unaudited) ____________ ____________ ASSETS CURRENT ASSETS Cash and equivalents $ 5,108 $ 3,987 Accounts and notes receivable, net 192,081 186,814 Recoverable costs and accrued profits not yet billed 303,030 227,467 Inventories: Engineered Power Systems 244,394 224,729 Distribution 136,255 121,273 Excess of current costs over LIFO values (52,897) (50,135) ____________ ____________ 327,752 295,867 Other 1,059 364 ____________ ____________ TOTAL CURRENT ASSETS 829,030 714,499 PROPERTY, PLANT AND EQUIPMENT 240,757 230,215 Allowances for depreciation and amortization (111,811) (98,355) ____________ ____________ 128,946 131,860 OTHER ASSETS 31,615 29,257 ____________ ____________ $989,591 $875,616 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $115,000 $ 42,000 Accounts payable 144,537 164,474 Billings on uncompleted contracts in excess of incurred costs 10,281 11,284 Current income taxes 64,235 42,240 Other current liabilities 50,136 51,156 ____________ ____________ TOTAL CURRENT LIABILITIES 384,189 311,154 LONG-TERM DEBT 116,833 116,900 DEFERRED INCOME TAXES 7,175 8,038 ACCRUED POSTRETIREMENT BENEFITS 15,251 15,252 DEFERRED COMPENSATION 5,445 5,269 SHAREHOLDERS' EQUITY Common Stock, without par value, 100,000,000 and 50,000,000 shares authorized at October 31, 1995 and January 31, 1995, respectively; 33,061,908 and 33,009,635 shares issued at October 31, 1995 and January 31, 1995, respectively, including 11,820 shares held in treasury 163,410 162,057 Retained earnings 297,321 256,979 ____________ ____________ 460,731 419,036 Less cost of treasury stock (33) (33) ____________ ____________ TOTAL SHAREHOLDERS' EQUITY 460,698 419,003 ____________ ____________ $989,591 $875,616 ============ ============ See accompanying notes to consolidated condensed financial statements.
STEWART & STEVENSON SERVICES, INC. CONSOLIDATED CONDENSED STATEMENT OF EARNINGS (In thousands, except per share data) Nine Months Ended Three Months Ended October 31 October 31 _________________________ _________________________ 1995 1994 1995 1994 _________ _________ _________ _________ (Unaudited) (Unaudited) Sales $932,641 $850,521 $323,779 $304,248 Cost of sales 786,193 718,584 275,822 257,072 _________ _________ _________ _________ Gross profit 146,448 131,937 47,957 47,176 Selling and administrative expenses 67,624 54,619 23,445 19,284 Interest expense 9,642 4,103 3,542 1,804 Other income, net (2,518) (1,568) (1,399) (695) _________ _________ _________ _________ 74,748 57,154 25,588 20,393 _________ _________ _________ _________ Earnings before income taxes 71,700 74,783 22,369 26,783 Income taxes 24,021 25,107 7,458 9,014 _________ _________ _________ _________ Earnings of consolidated companies 47,679 49,676 14,911 17,769 Equity in net earnings (loss) of unconsolidated affiliates 263 (556) 89 (166) _________ _________ _________ _________ Net earnings $ 47,942 $ 49,120 $ 15,000 $ 17,603 ========= ========= ========= ========= Weighted average number of shares of Common Stock outstanding 33,030 32,966 33,045 32,988 ========= ========= ========= ========= Net earnings per share $ 1.45 $ 1.49 $ .45 $ .53 ========= ========= ========= ========= Cash dividends per share $ .23 $ .20 $ .08 $ .07 ========= ========= ========= ========= See accompanying notes to consolidated condensed financial statements.
STEWART & STEVENSON SERVICES, INC. CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (Dollars in thousands) Nine Months Ended October 31 ___________________________ 1995 1994 __________ __________ (Unaudited) Operating Activities Net earnings $ 47,942 $ 49,120 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization 18,222 17,233 Deferred income taxes (863) (1,212) Change in operating assets and liabilities: Receivables (5,174) (17,377) Recoverable costs and accrued profits not yet billed (75,563) (54,024) Inventories (31,885) (21,390) Accounts payable (19,937) 21,621 Billings on uncompleted contracts in excess of incurred costs (1,003) (13,820) Current income taxes 21,995 9,494 Other current liabilities (1,092) 352 Other--principally long-term assets and liabilities (3,123) (3,189) __________ __________ Net Cash Used In Operating Activities (50,481) (13,192) Investing Activities Expenditures for property, plant and equipment (16,003) (21,919) Disposal of property, plant and equipment 942 1,215 __________ __________ Net Cash Used In Investing Activities (15,061) (20,704) Financing Activities Additions to long-term borrowings 71 35,290 Payments on long-term borrowings (67) (36,212) Borrowings and payments on short-term notes payable, net 73,000 36,000 Dividends paid (7,600) (6,594) Exercise of stock options 1,259 1,579 __________ __________ Net Cash Provided By Financing Activities 66,663 30,063 __________ __________ Increase (Decrease) in cash and equivalents 1,121 (3,833) Cash and equivalents, February 1 3,987 7,788 __________ __________ Cash and equivalents, October 31 $ 5,108 $ 3,955 ========== ========== Supplemental disclosure of cash flow information: Net cash paid during the period for: Interest payments $ 8,918 $ 3,880 Income tax payments $ 6,881 $ 16,465 See accompanying notes to consolidated condensed financial statements.
STEWART & STEVENSON SERVICES, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS Note A--Basis of Presentation and Significant Accounting Policies The accompanying consolidated condensed financial statements have been prepared in accordance with Rule 10-01 of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission and do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. However, the information furnished reflects all normal recurring adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods. The results of operations for the nine months and three months ended October 31, 1995 are not necessarily indicative of the results that will be realized for the fiscal year ending January 31, 1996. The accounting policies followed by the Company in preparing interim consolidated financial statements are similar to those described in the "Notes to Consolidated Financial Statements" in the Company's January 31, 1995 Form 10-K. The Company's fiscal year begins on February 1 of the year indicated and ends on January 31 of the following year. For example, "Fiscal 1995" commenced on February 1, 1995 and ends on January 31, 1996. Net earnings per share of Common Stock were computed by dividing net earnings by the weighted average number of shares outstanding. Common Stock equivalents (outstanding options to purchase shares of Common Stock) are excluded from the computations as they are insignificant. The weighted average number of shares outstanding for the nine and three months ended October 31, 1995 includes 52,750 and 7,500, respectively, shares issued pursuant to exercise of stock options. Note B--Commitments and Contingencies Major contracts for military systems are performed over extended periods of time and are subject to changes in scope of work and delivery schedules. Pricing negotiations on changes and settlement of claims often extend over prolonged periods of time. The Company's ultimate profitability on such contracts will depend not only upon the accuracy of the Company's cost projections, but also the eventual outcome of an equitable settlement of contractual issues with the U.S. Government. On May 3, 1995, an indictment was returned by a federal Grand Jury in Houston, Texas, accusing the Company, a former consultant and four employees, including the Company's President, of one count of major fraud against the United States, four counts of false statements and one count of conspiracy to commit major fraud, make false statements and interfere with the administration of a foreign military sale. All of the counts arise from a 1987 subcontract to supply diesel generator sets for installation at long-range radar sites in Saudi Arabia (the "Peace Shield"). The indictment alleges that a former employee of the general contractor for the Peace Shield program, who later became a consultant to the Company, conspired with the Company and the other defendants to award the subcontract to the Company. The indictment also alleges that the government was defrauded out of approximately $5 million in connection with cost savings from a change order under the Peace Shield contract and that the Company made false statements relating to cost estimates in connection with such change order. The Company and each individual have denied all charges under the indictment and the case is pending in the United States District Court, Southern District of Texas, Houston Division. The Company is not able to make a reasonable estimate of the fines or penalties that could be imposed under the Federal Sentencing Guidelines in the event of a conviction under the indictment. Such fines and penalties could be substantial and adversely affect the Company's financial position and results of operations. A conviction could also adversely affect the Company's ability to participate in future government contracts. See Management's Discussion and Analysis of Financial Condition and Results of Operations. Also in connection with the Peace Shield contract, the Company has been advised that the former consultant of the Company referred to above filed a suit in the United States District Court, Southern District of Texas, Houston Division, for himself and the United States of America alleging that the Company supplied false information in violation of the False Claims Act (the "Act"), engaged in common law fraud and misapplied costs. Under the provisions of the Act, the suit has not been served upon the Company pending an investigation of the case by the U. S. Department of Justice and a determination as to whether the Department of Justice will intervene and pursue the matter on behalf of the United States. The suit alleges treble damages of $21 million plus unspecified penalties. Proceedings in this case have been stayed pending resolution of the criminal matter referred to above. The Company cannot predict the outcome of this action or the likelihood that substantial damages will result. However, the Company intends to vigorously defend this case if it is served upon the Company. On May 16, 1995, C. Daniel Chill filed a purported class action suit in the United States District Court, Southern District of Texas, Houston Division, against the Company and three of its officers and directors on behalf of himself and all persons that purchased shares of Common Stock between May 2, 1994 and May 3, 1995. An amended complaint was filed on June 7, 1995. The suit alleges that the Company violated various sections of and rules under the Securities Exchange Act of 1934 and common law by disseminating material false and misleading information, failing to disclose material information and failing to correct earlier statements that were no longer true, all relating to the Peace Shield investigation and indictment. The suit claims unspecified compensatory and punitive damages. The Company cannot predict the outcome of this action or the likelihood that substantial damages will result. However, the Company will vigorously defend this case and believes that this case will be resolved without any material affect on the Company's financial condition or results of operations. The Company has not established any reserves or accruals for any potential liability that may be subsequently found in any of the foregoing cases. The Company is a defendant in a number of other lawsuits relating to contractual, product liability, personal injury and warranty matters and otherwise of the type normally incident to the Company's business. Management is of the opinion that such lawsuits will not result in any material liability to the Company. Note C--Inventories At January 31, 1995, the Engineered Powered Systems segment's inventory included approximately $14,789,000 of costs on a certain U.S. Government contract in excess of contractual authorization. During the second quarter of Fiscal 1995, the Company recognized $3,500,000 of additional costs under such contract based upon preliminary settlement discussions and the opinion of outside legal counsel that the Company will recover a substantial portion of the amount claimed. At October 31, 1995, the Engineered Power Systems segment's inventory included $18,855,000 relating to inventory carrying costs incurred by the Company which management believes will be collectible upon either contractual amendment or approval of claims increasing funding. Note D--Subsequent Events At October 31, 1995, the Company had borrowings of $105,000,000 under its revolving bank credit facility and $115,000,000 under uncommitted short- term bank arrangements. Effective November 30, 1995, the Company entered into an amended revolving credit facility with its banks to increase the principal amount of the facility to $200,000,000. Borrowings under the amended revolving credit facility mature on December 31, 2000. Under the terms of the amended facility, the commitment fee was reduced from .15 of 1% to .125 of 1% on the daily average unused balance. The Company may reduce the committed amount of the revolving credit facility at its option. Borrowings outstanding under the revolving credit loan bear interest at various formulae at the option of the Company. The maximum rate that may be charged is the agent's prime rate. The amended revolving credit facility includes certain financial covenants which, among other things, impose a minimum net worth requirement on the Company and restrict the incurrence of indebtedness. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with the attached condensed consolidated financial statements and notes thereto, and with the Company's audited financial statements and notes thereto for the fiscal year ended January 31, 1995. RESULTS OF OPERATIONS The following table sets forth for the periods indicated the percentage of sales represented by certain items reflected in the Company's Consolidated Condensed Statement of Earnings.
Nine Months Ended Three Months Ended October 31 October 31 1995 1994 1995 1994 _________ _________ _________ _________ Sales 100.0% 100.0% 100.0% 100.0% Cost of sales 84.3 84.5 85.2 84.5 _________ _________ _________ _________ Gross profit 15.7 15.5 14.8 15.5 Selling and administrative expenses 7.3 6.4 7.2 6.3 Interest expense 1.0 .5 1.1 .6 Other income, net (.3) (.2) (.4) (.2) _________ _________ _________ _________ 8.0 6.7 7.9 6.7 _________ _________ _________ _________ Earnings before income taxes 7.7 8.8 6.9 8.8 Income taxes 2.6 2.9 2.3 2.9 _________ _________ _________ _________ Earnings of consolidated companies 5.1 5.9 4.6 5.9 Equity in net earnings (loss) .0 (.1) .0 (.1) _________ _________ _________ _________ Net earnings 5.1% 5.8% 4.6% 5.8% ========= ========= ========= =========
Sales for the first nine months of the year ending January 31, 1996 ("Fiscal 1995") increased 9.7% to $932,641,000 compared to sales of $850,521,000 for the same period in the year ended January 31, 1995 ("Fiscal 1994"). The Distribution segment was the primary contributor to the Company's sales growth with an increase in sales of $60,707,000 (25%) in the first nine months of Fiscal 1995 compared to the same period in Fiscal 1994. This increase is primarily attributable to the acquisition of the assets and business of Power Application & Mfg., Co. ("PAMCO"), a Waukesha distributor for the western United States, during the fourth quarter of Fiscal 1994. The distribution of product lines acquired from PAMCO contributed sales of $37,812,000 in the first nine months of Fiscal 1995. Excluding sales relating to the PAMCO acquisition, the Distribution segment's increase of 9% in the first nine months of Fiscal 1995 over the same period in Fiscal 1994 reflects the continued economic growth in the territories serviced by the Company. The Engineered Power Systems (EPS) segment sales decreased $13,229,000 (3%) for the first nine months of Fiscal 1995 compared to the same period in Fiscal 1994. This decline in EPS sales was primarily within the Gas Turbine product lines which continued to experience sharply reduced domestic activity, reflecting the U.S. utility market's uncertain response to deregulation and delays in contract awards in the international markets. The Tactical Vehicle Systems (TVS) segment sales increased $29,524,000 (22%) for the first nine months of Fiscal 1995 compared to the same period in Fiscal 1994. The increase in TVS sales reflects the increase in truck production under the "Family of Medium Tactical Vehicles" (FMTV) contract to 1,444 trucks in the first nine months of Fiscal 1995 compared to 1,046 trucks in the same period in Fiscal 1994. Sales for the third quarter of Fiscal 1995 increased $19,531,000 (6.4%) to $323,779,000 compared to sales of $304,248,000 during the third quarter of Fiscal 1994. The Distribution segment and Tactical Vehicle segment contributed to this increase. The Distribution segment sales increased $23,398,000 (27%) for the third quarter of Fiscal 1995 compared to the same period in Fiscal 1994. Tactical Vehicle segment sales increased $24,373,000 (51%) for the third quarter of Fiscal 1995 compared to the same period in Fiscal 1994. The gross profit margin of 15.7% for the first nine months of Fiscal 1995 improved as compared to 15.5% for the same period in Fiscal 1994. Gross profit margins for the third quarter of Fiscal 1995 were 14.8% compared to 15.5% for the third quarter of 1994. Higher gross profit margins recognized on power generation equipment during the first nine months of Fiscal 1995 were partially offset by lower gross profit margins on compression equipment recognized by the Company in the second and third quarters of Fiscal 1995. Also in the second quarter of Fiscal 1995, the Company recognized $3,500,000 in gross profits based on initial settlement discussions relating to a pending contract dispute. See Note C to the Consolidated Condensed Financial Statements. Selling and administrative expenses for the first nine months of Fiscal 1995 increased as a percentage of sales to 7.3% compared to 6.4% for the same period in Fiscal 1994. The significant portion of this increase is attributable to the acquisition of substantially all of the assets of PAMCO and of certain assets of Creole International, Inc. during the second half of Fiscal 1994 and to the increased administrative costs related to the establishment of an international infrastructure, primarily for gas turbine product support. Interest expense for the first nine months of Fiscal 1995 increased to $9,642,000, up from $4,103,000 for the same period in Fiscal 1994. This increase is due to an increase in both interest rates and outstanding debt required to carry increased inventories of turbine-driven equipment, increased inventories in the Distribution segment necessary to support the territories and product lines acquired from PAMCO, and other working capital items. Net earnings of $47,942,000 ($1.45 per share) for the first nine months of Fiscal 1995 represents a 2.4% decrease compared to $49,120,000 ($1.49 per share) for the same period in Fiscal 1994. GOVERNMENT CONTRACTS STATUS Initial Operational Test and Evaluation under the FMTV Contract was completed in the third quarter and the Company received formal approval for full rate production and type classification of the FMTV on August 25, 1995. Actual fielding of the vehicles to combat troops is scheduled to begin in January, 1996 at Ft. Bragg, North Carolina. Under the terms of the FMTV contract, all vehicles produced before the full rate production decision must be retrofitted with any changes required by test results or specification changes ordered by the government. The retrofit will begin during the fourth quarter of Fiscal 1995 and is expected to be completed in the second quarter of 1996. The Company is currently in low rate initial production. The current fiscal year's planned production quantity is scheduled for completion by the end of the fourth quarter. Full rate production is expected to commence after completion of the retrofit program. The Company has received full funding for the production of approximately 7,364 vehicles through February, 1997. Approximately 3,524 vehicles, scheduled for production after that date have not been funded due to reductions in the U.S. Army's budget for acquisition. The Company has entered into preliminary negotiations with the U.S. Army to modify the existing contract to provide for steady production at lower rates through December, 1998. However, the Company is not able to predict whether any such modification will be forthcoming on terms acceptable to the Company and production of vehicles pursuant to the FMTV contract may be interrupted after February, 1997. EFFECT OF CERTAIN LITIGATION On May 3, 1995, the Company and four employees, including the Company's President, were indicted by a federal Grand Jury on six counts arising out of a 1987 subcontract to supply diesel generator sets for installation in Saudi Arabia. See Note B to the Consolidated Condensed Financial Statements. On May 12, 1995, the U.S. Air Force suspended the Company from contracting with any agency of the U.S. Government and from receiving the benefit of federal assistance programs. This suspension was temporarily terminated on November 8, 1995, pending the resolution of the charges covered by the indictment pursuant to an Interim Administrative Agreement between the Company and the U.S. Air Force. The Interim Administrative Agreement does not have any effect on the indictment. The Interim Administrative Agreement requires the Company to maintain various internal procedures and policies intended to assure the U.S. Government that the Company is a responsible contractor. In the event that the Company or any of the indicted employees are convicted of the charges contained in the indictment, the U.S. Air Force may re-evaluate whether the Company should be suspended or debarred based on all of the facts and circumstances then known. An acquittal of all parties of the charges does not terminate the Interim Administrative Agreement and any failure by the Company to perform its obligations thereunder may also be grounds for suspension or debarment. If the Company is suspended or debarred, either because of a conviction pursuant to the indictment or as a result of a breach of the Interim Administrative Agreement, it would be ineligible to enter into new contracts or subcontracts with agencies of the U.S. Government or receive the benefit of federal assistance payments for the duration of such suspension or debarment. Any such suspension could prevent the Company from receiving a modification to the FMTV to fund additional vehicles or extend the delivery schedule of funded vehicles unless the Secretary of the Army finds a compelling need to enter into such modification. The Company would also be unable to sell equipment and services to customers that depend on loans or financial commitments from the Export Import Bank ("EXIM Bank"), Overseas Private Investment Corporation ("OPIC") and similar government agencies during a suspension or debarment. The EPS segment frequently sells equipment to customers that rely on financial commitments from EXIM and/or OPIC. Any such suspension or debarment could have a material adverse impact on the Company's financial condition and results of operations. UNFILLED ORDERS The Company's unfilled orders consist of written purchase orders, letters of intent, and oral commitments. These unfilled orders are generally subject to cancellation or modification due to customer relationships or other conditions. Purchase options are not included in unfilled orders until exercised. Unfilled orders at October 31, 1995, and at the close of Fiscal 1994 were as follows:
October 31 January 31 1995 1995 __________ __________ (Dollars in millions) Engineered Power Systems Equipment $ 261.5 $ 416.0 Operations and Maintenance 294.9 311.6 __________ __________ 556.4 727.6 Distribution 41.6 40.0 Tactical Vehicle Systems 859.2 1,017.8 __________ __________ Total $1,457.2 $1,785.4 ========== ==========
Although no assurance can be given, the Company expects sales of the Engineered Power Systems segment to continue to be weighted in favor of turbine-driven equipment because of the large number of unfilled orders for these units, the number of proposals that are presently outstanding and the current worldwide need for additional electrical generating capacity. Unfilled orders of the Tactical Vehicle Systems segment consists principally of the contracts awarded in October 1991, by the United States Department of the Army, to manufacture medium tactical vehicles. The contracts are subject to Congressional approval of necessary funding for future program years. Approximately 3,524 vehicles, representing a backlog of approximately $350,000,000, have not been funded due to reductions in the U.S. Army's budget for acquisitions. If funding for such vehicles is not approved or is limited or delayed, the total number of vehicles produced may be reduced. The Company has entered into preliminary negotiations with the U.S. Army to modify the existing contract to provide for steady production of funded vehicles over a longer period. Any such modification could affect the number of vehicles produced in each fiscal year. During the third quarter, unfilled orders of the Engineered Power Systems segment were reduced by $37,800,000 as a result of the cancellation of one order for turbine-driven equipment which was not eligible for EXIM Bank financing because of the suspension of the Company by the U.S. Air Force. See "Effect of Certain Litigation". CAPITAL EXPENDITURES AND COMMITMENTS Capital spending for property, plant and equipment was $16,003,000 for the first nine months of Fiscal 1995 compared to $21,919,000 for the same period in Fiscal 1994. LIQUIDITY AND SOURCES OF CAPITAL Long-term debt at October 31, 1995 was $116,833,000 compared with $116,900,000 as of January 31, 1995. During the same period short-term borrowings increased to $115,000,000 at October 31, 1995 from $42,000,000 at the end of Fiscal 1994. The Company's increased borrowings were primarily incurred to finance both customer contracts in process and inventories. The growth in contract cost and profits in excess of customer billings reflects the absence of customer progress payments and down payments under certain Gas Turbine contracts. Inventory growth of $18,230,000 within the Gas Turbine operations was necessitated by both the expansion of the Gas Turbine product support group's capabilities and the increase in costs related to unsold production. Inventory growth of $11,479,000 within the Distribution segment relates to the additional territories and product lines acquired from PAMCO. As of October 31, 1995, the Company had fully utilized the $105,000,000 of available borrowings under its bank credit facility. The Company's additional borrowings were made pursuant to uncommitted short-term banking relationships. Effective November 30, 1995, the Company amended its bank credit facility to increase the principal amount of the facility to $200,000,000. The purpose of the amendment was to replace a portion of the Company's uncommitted short-term borrowings. Borrowings under the amended bank credit facility mature on December 31, 2000. As a result of the amendment, the commitment fee on the unused portion of the facility was reduced from 0.15% to 0.125% on the daily unused balance during the revolving period. The Company may reduce the committed amount of the revolving credit facility at its option. Borrowings outstanding under the revolving credit facility bear interest at rates under various rate options selected by the Company from time to time. The rate options available to the Company include rates negotiated from time to time with the principal bank, rates based on certificates of deposit or Eurodollar loans plus a margin and the agent's prime rate. The amended credit facility includes certain financial covenants, including covenants which limit the incurrence of additional indebtedness and require the Company to maintain a minimum net worth. The Company is in compliance with all such covenants. The Company's working capital needs can fluctuate significantly depending on the progress payment streams of contracts-in-process. The Company regularly bids on large commercial contracts and turnkey construction contracts that require the Company to finance work-in-process. If awarded to the Company, these contracts could also affect working capital needs. The Company may expand its Distribution and EPS segments by selective acquisition of additional distribution territories and product lines. In the event that such activities create a need for working capital or capital expenditures in excess of existing committed lines of credit, the Company may seek to increase its credit facilities, to borrow from other long-term financing sources or to issue additional equity securities. The Company believes its current credit facilities are adequate to meet its foreseeable capital requirements. PART II. OTHER INFORMATION Item 1. Legal Proceedings. See Note B to the Consolidated Condensed Financial Statements. Item 2. Changes in Securities. (a) Inapplicable (b) Note D to the consolidated condensed financial statements in Part I of this report is incorporated herein by reference. Item 6. Exhibits and Reports on Form 8-K. (a) The following exhibits are filed as a part of this report pursuant to Item 601 of Regulation S-K. 3(a) Third Restated Articles of Incorporation, effective as of September 21, 1995. 3(b) Fourth Restated Bylaws, effective as of September 13, 1995. 4(a) Loan Agreement effective September 3, 1993, between Stewart & Stevenson Services, Inc. and Texas Commerce Bank National Association, ABN AMRO Bank, N.V., Houston, The Bank of New York and NationsBank of Texas, National Association (Incorporated by reference to exhibit 4.1 to the Form 10-K of Stewart & Stevenson for the fiscal year ended January 31, 1995 under the Commission File No. 0-8493). 4(b) Agreement and First Amendment to Loan Agreement effective July 31, 1994, between Stewart & Stevenson Services, Inc. and Texas Commerce Bank National Association, ABN AMRO Bank, N.V., Houston Agency and The Bank of New York, and NationsBank of Texas, National Association (Incorporated by reference to exhibit 4.2 to the Form 10-K of Stewart & Stevenson for the fiscal year ended January 31, 1995 under the Commission File No. 0-8493. 4(c) Agreement and Second Amendment to Loan Agreement effective December 23, 1994, between Stewart & Stevenson Services, Inc. and Texas Commerce Bank National Association, ABN AMRO Bank, N.V., Houston Agency, The Bank of New York, NationsBank of Texas, National Association, Bank of America Illinois and PNC Bank, National Association (Incorporated by reference to exhibit 4.3 to the Form 10-K of Stewart & Stevenson for the fiscal year ended January 31, 1995 under the Commission File No. 0-8493). 4(d) Agreement and Third Amendment to Loan Agreement effective August 1, 1995, between Stewart & Stevenson Services, Inc. and Texas Commerce Bank National Association, ABN AMRO Bank, N.V., Houston Agency, The Bank of New York, NationsBank of Texas, National Association, Bank of America Illinois and PNC Bank, National Association. 4(e) Agreement and Fourth Amendment to Loan Agreement effective November 30, 1995, between Stewart & Stevenson Services, Inc. and Texas Commerce Bank National Association, ABN AMRO Bank, N.V., Houston Agency, The Bank of New York, NationsBank of Texas, National Association, Bank of America Illinois and PNC Bank, National Association. 10 Interim Administrative Agreement dated November 8, 1995 by and between Stewart & Stevenson Services, Inc. and the United States Department of the Air Force (Incorporated by reference to exhibit 99 to the Form 8-K of Stewart & Stevenson for November 8, 1995 under the Commission File No. 0-8493). 27 Financial Data Schedule (b) No reports on Form 8-K were filed during the three months ended October 31, 1995. 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 thereunto duly authorized. STEWART & STEVENSON SERVICES, INC. Date: 12/13/95 By: /s/ Robert L. Hargrave Robert L. Hargrave Group Vice President, Chief Financial Officer & Treasurer (Principal Financial Officer) EXHIBIT INDEX Exhibit Number and Description 3(a) Articles of Incorporation 3(b) By-laws 4(d) Agreement and Third Amendment to Loan Agreement effective August 1, 1995, between Stewart & Stevenson Services, Inc. and Texas Commerce Bank National Association, ABN AMRO Bank, N.V., Houston Agency, The Bank of New York, NationsBank of Texas, National Association, Bank of America Illinois and PNC Bank, National Association. 4(e) Agreement and Fourth Amendment to Loan Agreement effective November 30, 1995, between Stewart & Stevenson Services, Inc. and Texas Commerce Bank National Association, ABN AMRO Bank, N.V., Houston Agency, The Bank of New York, NationsBank of Texas, National Association, Bank of America Illinois and PNC Bank, National Association. 27 Financial data schedule EX-3.A 2 THIRD RESTATED ARTICLES OF INCORPORATION OF STEWART & STEVENSON SERVICES, INC. 1. Pursuant to the provisions of Article 4.07 of the Texas Business Corporation Act, Stewart & Stevenson Services, Inc. hereby adopts these Third Restated Articles of Incorporation which accurately copy the entire text of the present Second Restated Articles of Incorporation and all amendments thereto that are in effect to date and which contain no change in any provision thereof except that the number of directors now constituting the board of directors and the names and addresses of the persons serving as directors have been inserted in lieu of similar information concerning the initial board of directors and the name and address of each incorporator has been omitted. 2. These Third Restated Articles of Incorporation were adopted by resolution of the board of directors of the corporation on September 13, 1995. 3. The Second Restated Articles of Incorporation and all amendments and supplements thereto are hereby superseded by the following Third Restated Articles of Incorporation which accurately copy the entire text thereof: I. The name of the corporation shall be STEWART & STEVENSON SERVICES, INC. II. Section 1. The purpose for which the corporation is organized is to engage in any lawful business or activity, subject to the limitations hereinafter set forth in Section 2 of this article. Section 2. Nothing in this article is to be construed as authorizing the corporation to transact any business in the State of Texas expressly prohibited by any law of the State of Texas, or to engage in any activity in the State of Texas which cannot lawfully be engaged in by a corporation incorporated under the Texas Business Corporation Act or which cannot lawfully be engaged in without first obtaining a license under the laws of the State of Texas and which license cannot be granted to a corporation organized under the Texas Business Corporation Act, or to operate in Texas any of the businesses referred to in Section B(4) of Article 2.01 of the Texas Business Corporation Act, or to take any action in violation of any of the laws referred to in Section C of Article 2.02 of the Texas Business Corporation Act. III. The post office address of the registered office of the corporation is 400 N. St. Paul, Dallas, Texas 75201, and the name of its registered agent at such address is The Prentice-Hall Corporation System, Inc. subject to change as provided in the Texas Business Corporation Act. IV. The names and addresses of the persons serving as directors of the corporation at the time of the filing of these Third Restated Articles of Incorporation and who shall serve until their successors shall be chosen and shall qualify are: Name Address C. Jim Stewart II 2707 North Loop West Houston, Texas 77008 Bob H. O'Neal 2707 North Loop West Houston, Texas 77008 J. Carsey Manning 2707 North Loop West Houston, Texas 77008 Donald E. Stevenson 2707 North Loop West Houston, Texas 77008 Robert H. Parsey 1600 First Interstate Bank Plaza Houston, Texas 77002 J. W. Lander, Jr. 4200 Westheimer Houston, Texas 77027 Robert L. Hargrave 2707 North Loop West Houston, Texas 77008 Jack T. Currie 515 Post Oak Houston, Texas 77027 Robert S. Sullivan 2815 San Gabriel Austin, Texas 78705 Brian H. Rowe #1 Neumann Way, M\Stop N178 Cincinnati, Ohio 45215 Orson C Clay One Moody Plaza Galveston, Texas 77550 Richard R. Stewart 2707 North Loop West Houston, Texas 77008 The number of directors may be increased or decreased from time to time by amendment to the bylaws, but no decrease shall have the effect of shortening the term of any incumbent director, and the number of directors shall not be decreased to less than three (3) directors nor increased to more than twenty-five (25) directors. In the absence of a bylaw fixing the number of directors, the number shall be six (6). V. The period of duration of the corporation is perpetual. VI. The aggregate number of shares which the corporation shall have authority to issue is one hundred million (100,000,000) shares of common stock, without par value. VII. No shareholder shall be entitled as a matter of right to subscribe for, purchase or receive any shares of stock, rights or options of the corporation which it may issue or sell, whether out of the number of shares authorized by these articles of incorporation or by amendment thereof or out of the shares of stock of the corporation acquired by it after the issuance thereof, nor shall any shareholder be entitled as a matter of right to subscribe for, purchase or receive any bonds, debentures or other securities which the corporation may issue or sell that shall be convertible into or exchangeable for stock or to which shall be attached or appertain any warrant or warrants or other instrument or instruments that shall confer upon the holder or owner of such obligation the right to subscribe for, purchase, or receive from the corporation any shares of its capital stock; but all such additional issues of stock, rights and options, or of bonds, debentures or other securities convertible into or exchangeable for stock or to which warrants shall be attached or appertain or which shall confer upon the holder the right to subscribe for, purchase or receive any shares of stock may be issued and disposed of by the Board of Directors to such persons, firms or corporations as in their absolute discretion may deem advisable. The acceptance of stock in the corporation shall be a waiver of any preemptive or preferential right which in the absence of this provision might otherwise be asserted by shareholders of the corporation or any of them. VIII. At every meeting of the shareholders, every holder of common stock of the corporation shall be entitled to one vote for each share of common stock standing in his name on the books of the corporation. No shareholder shall have the right to cumulate his votes for the election of directors, but each share shall be entitled to one vote in the election of each director. IX. A director of the corporation shall not be liable to the corporation or its shareholders for monetary damages for an act or omission in the director's capacity as a director, except that this Article does not eliminate or limit the liability of a director to the extent the director is found liable for (i) a breach of the director's duty of loyalty to the corporation or its shareholders; (ii) an act or omission not in good faith that constitutes a breach of duty of the director to the corporation or an act or omission that involves intentional misconduct or a knowing violation of the law; (iii) a transaction from which the director received an improper benefit, whether or not the benefit resulted from an action taken within the scope of the director's office; or (iv) an act or omission for which the liability of a director is expressly provided by an applicable statute. Any repeal or amendment of this Article by the shareholders of the corporation shall be prospective only and shall not adversely affect any limitation on the liability of a director of the corporation existing at the time of such repeal or amendment. In addition to the circumstances in which the director of the corporation is not liable as set forth in the preceding sentences, the director shall not be liable to the fullest extent permitted by any provisions of the statutes of Texas hereafter enacted that further limits the liability of a director. Dated this 14th day of September, 1995. STEWART & STEVENSON SERVICES, INC. /s/ Lawrence E. Wilson By: _______________________________ Vice President & Secretary EX-3.B 3 FOURTH RESTATED BYLAWS OF STEWART & STEVENSON SERVICES, INC. Effective September 13, 1995 ARTICLE I Offices Section 1.1. Offices. The principal business office of the Corporation shall be at Houston, Texas or at such other location within the State of Texas as the Board of Directors may, from time to time, establish by resolution. The Corporation may have such other business offices within or without the State of Texas as the Board of Directors may from time to time establish or the business of the Corporation may require. ARTICLE II Capital Stock Section 2.1. Certificates Representing Shares. Certificates representing shares of stock of the Corporation shall be consecutively numbered and in such form or forms as comply with the requirements of law and the Restated Articles of Incorporation and as the Board of Directors shall approve. Such certificates shall be signed by the President or a Vice President, and the Secretary or an Assistant Secretary of the Corporation, and may be sealed with the seal of the Corporation or a facsimile thereof. The signatures of the President or Vice President and the Secretary or Assistant Secretary may be facsimiles, engraved or printed, if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the Corporation itself or an employee of the Corporation. In case any officer or officers who have signed or whose facsimile signature or signatures have been placed upon such certificate shall have ceased to be such officer or officers before such certificate is issued, it may be adopted and issued by the Corporation with the same effect as if he or they had not ceased to be such officer or officers as of the date of its issuance, and the issuance and delivery thereof by the Corporation shall constitute adoption thereof by the Corporation. Section 2.2. Stock Certificate Register and Shareholders of Record. The Secretary of the Corporation shall keep at the registered office of the Corporation, or cause a duly appointed transfer agent or registrar to keep at its principal office, a share register showing the names of the shareholders and their addresses, the number of shares held by each, the number and date of issue of all certificates representing shares of the Corporation, the number and date of cancellation of every certificate surrendered for cancellation and whether such certificates originated from original issue or transfer. Such information may be kept in any medium capable of reproducing the information in clearly legible form and shall be the official list of shareholders of record of the Corporation for all purposes. The Corporation shall be entitled to treat the holder of record of any shares of the Corporation as the owner thereof for all purposes, and shall not be bound to recognize any equitable or other claim to, or interest in, such shares or any rights deriving from such shares on the part of any other person, including (but without limitation) a purchaser, assignee, or transferee, unless and until such other person becomes the holder of record of such shares, whether or not the Corporation shall have either actual or constructive notice of the interest of such other person. Section 2.3. Transfer of Stock. The shares represented by any share certificates of the Corporation are transferable only on the stock certificate register of the Corporation by the holder of record thereof in person or by a duly authorized attorney or legal representative upon surrender of the certificate for such shares properly endorsed or assigned. Section 2.4. Transfer Agent and Registrar. The Board of Directors may appoint one or more transfer agents or registrars of the shares, or both, and may require all share certificates to bear the signature of a transfer agent or registrar or both. Section 2.5. Lost, Stolen or Destroyed Certificates. The Corporation may issue a new certificate for shares of stock in the place of any certificate theretofore issued and alleged to have been lost, stolen or destroyed, but the Board of Directors may require the owner of such lost, stolen or destroyed certificate, or his legal representative, to furnish an affidavit as to such loss, theft, or destruction and to give a bond in such form and substance, and with such surety or sureties, with fixed or open penalty, as it may direct, to indemnify the Corporation, and the transfer agents and registrars, if any, against any claim that may be made on account of the alleged loss, theft or destruction of such certificate. Any such new certificate shall be plainly marked "Duplicate" on its face. ARTICLE III The Shareholders Section 3.1. Annual Meetings. An annual meeting of the shareholders, for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place, within or without the State of Texas, as may be designated by the Board of Directors or officer calling the meeting at 10:00 in the morning of the second Tuesday in June, or on such other date and time as the Board of Directors or officer calling such meeting shall fix and set forth in the notice of the meeting. At the annual meeting of the shareholders, only such business shall be conducted as shall have been properly brought before the annual meeting. To be properly brought before the annual meeting of shareholders, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (iii) otherwise properly brought before the meeting by a shareholder of the Corporation who is a shareholder of record at the time of giving of notice provided for in this Section 3.1, who shall be entitled to vote at such meeting and who complies with the notice procedures set forth in this Section 3.1. For business to be properly brought before an annual meeting by a shareholder, the shareholder, in addition to any other applicable requirements, must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than ninety (90) days prior to the anniversary date of the immediately preceding annual meeting of shareholders of the Corporation. A shareholder's notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before the annual meeting: (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the Corporation's books, of the shareholder proposing such business, (c) the class and number of shares of voting stock of the Corporation which are beneficially owned by the shareholder, (d) a representation that the shareholder intends to appear in person or by proxy at the meeting to bring the proposed business before the annual meeting, and (e) a description of any material interest of the shareholder in such business. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section 3.1. The presiding officer of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 3.1, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Notwithstanding the foregoing provisions of this Section 3.1, a shareholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth in this Section 3.1. Section 3.2. Special Meetings. Except as otherwise provided by law or by the Restated Articles of Incorporation, special meetings of the shareholders may be called by the Chairman of the Board, the President, the Board of Directors, or the holders of not less than one-tenth of all the shares having voting power at such meeting, and shall be held at the principal office of the Corporation, at such time as is stated in the notice calling such meeting, or at such other place as the person or body calling such meeting may determine and state in such notice. Section 3.3. Notice of Meetings - Waiver. Written or printed notice, stating the place, day and hour of any meeting and, in case of a special shareholders' meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) nor more than fifty (50) days before the date of the meeting, either personally or by mail, by or at the direction of the Chairman of the Board, the President, or the officer, body or person calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at his address as it appears on the stock certificate register of the Corporation, with postage thereon prepaid. Such further or earlier notice shall be given as may be required by law. Waiver by a shareholder of notice in writing of a shareholders' meeting, signed by him, whether before or after the time stated therein, shall be equivalent to the giving of such notice. No notice shall be necessary for any adjourned meeting. Section 3.4. Closing of Stock Certificate Register and Fixing Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend or in order to make a determination of shareholders for any other proper purpose, the Board of Directors of the Corporation may provide that the stock certificate register shall be closed for a stated period but not to exceed, in any case, fifty (50) days. If the stock certificate register shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such registers shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the stock certificate register, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than fifty (50) days and, in case of a meeting of shareholders, not less than ten (10) days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. If the stock certificate register is not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made, as provided in this Section, such determination shall apply to any adjournment thereof except where the determination has been made through the closing of the stock certificate register and the stated period of closing has expired. Section 3.5. Voting List. The officer or agent having charge of the stock certificate register for shares of the Corporation shall make, at least ten (10) days before such meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of ten (10) days prior to such meeting, shall be kept on file at the registered office of the Corporation and shall be subject to inspection by any shareholder at any time during the usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. Failure to comply with this Section shall not effect the validity of any action taken at such meeting. Section 3.6. Quorum and Officers. Except as otherwise provided by law, by the Restated Articles of Incorporation or by these Bylaws, the holders of a majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders, but the shareholders present at any meeting, although less than a quorum, may from time to time adjourn the meeting to some other day and hour, without notice other than announcement at the meeting. The vote of the holders of a majority of the shares entitled to vote and thus represented at a meeting at which a quorum is present shall be the act of the shareholders' meeting, unless the vote of a greater number is required by law, the Restated Articles of Incorporation or these Bylaws. The Chairman of the Board, or in his absence, the President, shall preside at and the Secretary, or in his absence, any Assistant Secretary shall keep the records of each meeting of shareholders, and in the absence of all such officers, their respective duties shall be performed by persons appointed by the meeting. Section 3.7. Proxies. A shareholder may vote either in person or by proxy executed in writing by the shareholder, or by his duly authorized attorney-infact. Proxies shall be dated but need not be sealed, witnessed or acknowledged. No proxy shall be valid after eleven (11) months from the date of its execution unless otherwise provided in the proxy. Each proxy shall be revocable unless provided expressly therein to be irrevocable, and unless otherwise made irrevocable by law. Proxies shall be filed with the Secretary of the Corporation before or at the time of the meeting. Section 3.8. Balloting. Upon the demand of any shareholder, the vote upon any question before the meeting shall be by ballot. At each meeting inspectors of election may be appointed by the presiding officer of the meeting, and at any meeting for the election of directors, inspectors shall be so appointed on the demand of any shareholder present or represented by proxy and entitled to vote at the election of directors. No director or candidate for the office of directors shall be appointed as such inspector. Section 3.9. Voting Rights; Voting for Directors. Each outstanding share of common stock shall be entitled to one (1) vote upon each matter submitted to a vote at a meeting of shareholders. No shareholder shall have the right to cumulate his votes for the election of directors, but each share shall be entitled to one vote in the election of each director. Section 3.10 Nominations for Election as a Director. Only persons who are nominated in accordance with the procedures set forth in these Bylaws and qualify for nomination pursuant to Section 4.1 shall be eligible for election by shareholders as, and to serve as, directors. Nominations of persons for election to the Board of Directors of the Corporation may be made at a meeting of shareholders (a) by or at the direction of the Board of Directors or a duly constituted committee thereof or (b) by any shareholder of the Corporation who is a shareholder of record at the time of giving of notice provided for in this Section 3.10, who shall be entitled to vote for the election of directors at the meeting and who complies with the notice procedures set forth in this Section 3.10. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a shareholder's notice shall be delivered to or mailed and received at the principal executive offices of the Corporation (i) with respect to an election to be held at the annual meeting of the shareholders of the Corporation, not less than ninety (90) days prior to the anniversary date of the immediately preceding annual meeting of shareholders of the Corporation, and (ii) with respect to an election to be held at a special meeting of shareholders of the Corporation for the election of directors not later than the close of business on the tenth (10th) day following the day on which notice of the date of the special meeting was mailed to shareholders of the Corporation as provided in Section 3.3 or public disclosure of the date of the special meeting was made, whichever first occurs. Such shareholder's notice to the Secretary shall set forth (x) as to each person whom the shareholder proposes to nominate for election or re-election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person's written consent to being named in the proxy statement as a nominee and to serve as a director if elected), and (y) as to the shareholder giving the notice (i) the name and address, as they appear on the Corporation's books, of such shareholder and (ii) the class and number of shares of voting stock of the Corporation which are beneficially owned by such shareholder. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in a shareholder's notice of nomination which pertains to the nominee. In the event that a person is validly designated as a nominee to the Board of Directors in accordance with the procedures set forth in this Section 3.10 and shall thereafter become unable or unwilling to stand for election to the Board of Directors, the Board of Directors or the shareholder who proposed such nominee, as the case may be, may designate a substitute nominee. Other than directors chosen pursuant to the provisions of Section 4.3, no person shall be eligible to serve as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 3.10. The presiding officer of the meeting of shareholders shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by these Bylaws, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. Notwithstanding the foregoing provisions of this Section 3.10, a shareholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth in this Section 3.10. ARTICLE IV The Board of Directors Section 4.1. Number and Qualifications. The business and affairs of the Corporation shall be managed and controlled by the Board of Directors, and subject to any restrictions imposed by law, by the Restated Articles of Incorporation, or by these Bylaws, the Board of Directors may exercise all the powers of the Corporation. The Board of Directors shall consist of twelve (12) members. The number thereof may be increased or decreased from time to time by amendment to these Bylaws, but no decrease shall have the effect of shortening the term of any incumbent director. Directors need not be residents of Texas and need not be shareholders. No person shall be qualified for election or reelection as a director of the Corporation if: (i) he was originally elected as a director of the Corporation on or before June 19, 1981 and has attained the age of 75 years prior to the date that such qualification is determined; or (ii) he was originally elected or nominated for election as a director for the Corporation after June 19, 1981, and has attained the age of 73 prior to the date that such qualification is determined; or (iii) he is an incumbent director and has attended fewer than fifty (50%) percent of the meetings of the Board of Directors held during any fiscal year commencing after January 31, 1981, which such incumbent was entitled to attend as a director. Section 4.2. Classification and Term. The Board of Directors shall be divided into three classes, each class consisting as nearly as possible of one third (1/3) of the number of directors that make up the full Board of Directors. At each annual meeting of shareholders, the number of directors equal to the number of the class whose term expires at the time of such meeting shall be elected to hold office until the third succeeding annual meeting of shareholders. Section 4.3. Vacancies. Any vacancy on the Board of Directors may be filled by the vote of a majority of the remaining directors though less than a quorum of the Board of Directors; provided, that the Board of Directors may not fill more than two (2) vacancies caused by an increase in the number of directors during any period between two (2) successive annual meetings of shareholders. A director elected to fill a vacancy shall hold office for the unexpired portion of his predecessor's term if such vacancy was created by the death, resignation, disqualification or removal of a director or until the next annual meeting of shareholders if such vacancy was created by an increase in the size of the Board of Directors. Section 4.4. Place of Meeting. Meetings of the Board of Directors may be held either within or without the State of Texas, at whatsoever place is specified by the officer or director calling the meeting. In the absence of other designation, the meeting shall be held at the principal business office of the Corporation. Section 4.5. Regular Meetings. The Board of Directors shall hold no fewer than four (4) regular meetings in each fiscal year. One such regular meeting (the "Annual Meeting of Directors") shall be held immediately following the annual meeting of shareholders, at the place of such shareholder meeting, and the other regular meetings shall be held at such times and places as the Board of Directors shall establish by resolution at the regular meeting following the annual meeting of shareholders. No notice of any kind of such regular meetings shall be necessary to either old or new members of the Board of Directors. Section 4.6. Special Meetings. Special meetings of the Board of Directors shall be held at any time by call of the Chairman of the Board, the President (if a director) or by a majority of the directors. The Secretary or officer performing his duties shall give notice of special meetings to each director at his usual business or residence address by mailing such notice at least five (5) days or one hundred twenty (120) hours before the meeting or by delivering the same at least one (1) day or twenty-four (24) hours before the meeting. No notice shall be necessary for any adjourned meeting. A waiver of notice of any special meeting, in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be equivalent to the giving of such notice. Such notice or waiver thereof need not specify the business to be transacted at, or the purpose of, such meeting. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express and announced purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Section 4.7. Quorum. Three-fourths (3/4) of the number of directors fixed by these Bylaws shall constitute a quorum for the transaction of business, but any one or more directors, although less than a quorum, may adjourn the meeting to some other day or hour. The act of a majority of the directors present at a meeting at which a quorum is in attendance shall be the act of the Board of Directors unless a larger number is required by applicable law, the Restated Articles of Incorporation or these Bylaws. Section 4.8. Chairman of the Board. At each Annual Meeting of Directors, the Board of Directors shall elect from its membership a Chairman of the Board who shall serve in such capacity until the next Annual Meeting of Directors or until his death, resignation, disqualification or removal if sooner. The Chairman of the Board shall preside at all meetings of the Board of Directors and at all meetings of the shareholders of the Company. Section 4.9. Procedure at Meetings. The Chairman of the Board shall preside at meetings of the Board of Directors. In his absence at any meeting, the President (if a director) shall preside, and in the absence of both the Chairman of the Board and the President, a member of the Board of Directors selected by the members present shall preside. The Secretary of the Corporation shall act as secretary at all meetings of the Board, or in his absence the presiding officer of the meeting may designate any person to act as secretary. At meetings of the Board of Directors, business shall be transacted in such order as from time to time the Board of Directors may determine. Section 4.10. Presumption of Assent. A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action. Section 4.11. Compensation. Directors as such shall not receive any stated salary for their service, but by resolution of the Board of Directors (a) an annual directors fee and (b) a fixed sum and expenses for attendance, if any, may be allowed to each director who is not an officer or employee of the Corporation for attendance at each regular or special meeting of the Board of Directors or of any Committee thereof; but nothing herein shall preclude any director from serving the Corporation in any other capacity or receiving compensation therefor. Section 4.12. Standing Committees. The Board of Directors by resolution adopted by a majority of the number of directors fixed by the Bylaws shall designate from their number an Executive Committee and an Audit Committee. The Executive Committee shall consist of five (5) persons. Each member shall serve until the next annual meeting of shareholders or until such director's retirement, removal, disqualification, or death. The Executive Committee shall meet upon the call of the chairman of such committee or any two (2) members thereof and shall have and may exercise all of the authority of the Board of Directors in the business and affairs of the Corporation except (a) the power to authorize or approve the sale or other transfer of any real property now owned or hereafter acquired by the Corporation; (b) the power to vote, direct the vote or grant proxies relating to any stock owned by the Corporation; (c) the power to authorize or approve purchases or commitments for goods or services with an aggregate market value in any single transaction or group of related transactions exceeding $5,000,000 except for goods and services purchased in the ordinary course of business for inventory or pursuant to capital expenditure budgets approved by the Board of Directors; (d) the power to authorize or approve the incurrence or guaranty of indebtedness with an original principal amount in excess of $1,000,000 and a maturity of longer than one (1) year; (e) the power to make loans, guaranties, investments, or other commitments outside the ordinary course of business in excess of $5,000,000 at any time outstanding to any one person or group of persons; and (f) where action of the Board of Directors is specified by the Texas Business Corporation Act or by other applicable law. The Audit Committee shall consist of four (4) persons, all of whom shall be independent of management and free of any relationship that, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment as a committee member. Each member shall serve until the next annual meeting of shareholders or until such director's retirement, removal, disqualification, or death. The Audit Committee shall meet no fewer than two (2) times in each fiscal year of the Corporation upon the call of the chairman of such committee or any two (2) members thereof and shall have and may exercise such responsibilities, authority and power as the Board of Directors specifies. The designation of Standing Committees and delegation of authority thereto shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility imposed upon it or him by law. Section 4.13. Other Committees of the Board of Directors. The Board of Directors, by resolution adopted by a majority of the number of directors fixed by the Bylaws, may designate from their number such compensation, nominating and other committees as they shall, from time to time, deem necessary and proper. Such committees shall be composed of not less than three members and shall have and exercise such of the Board of Directors' authority as shall by resolution, be delegated to it. The designation of such other committees and the delegation of authority thereto shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility imposed upon it or him by law. Section 4.14. Meetings and Reports of the Committees. The Committees shall meet from time to time as set forth in the Bylaws and on call of the Chairman or any two or more members thereof. Notice of each such meeting, stating the place, day and hour thereof, shall be served personally on each member of such Committee, or shall be mailed, delivered or telephoned to his address on the books of the Corporation, at least twenty-four (24) hours before the meeting. No such notice need state the business proposed to be transacted at the meeting. No notice of the time or place of any meeting of such Committee need be given to any member thereof who attends in person or who, in writing executed and filed with the records of the meeting either before or after the holding thereof, waives such notice. No notice need be given of an adjourned meeting of any Committee. Meetings of the Committees may be held at such place or places, either within or outside of the State of Texas, as such Committee shall determine, or as may be specified or fixed in the respective notices or waivers thereof. Each Committee may fix its own rules of procedure. They shall keep record of their proceedings and shall report these proceedings to the Board of Directors at the regular meetings thereof held next after they have been taken. Section 4.15. Advisory Directors. The Board of Directors, by resolution adopted by a majority of the number of directors fixed by the Bylaws, may appoint from those persons who have previously served as a director of the Corporation, such advisory directors as the Board of Directors may, from time to time, determine to be desirable. Such advisory directors shall be ex-officio members of the Board of Directors, shall hold office from the date elected until the next following annual meeting of the Board of Directors unless sooner removed in the manner provided for the removal of Directors, shall be entitled to receive notice of and to attend all meetings of the Board of Directors and shall be reimbursed for all out-of-pocket expenses incurred to attend meetings of the Board of Directors. Advisory directors shall not be a member of any committee of the Board of Directors, vote on any matter brought before the Board of Directors for action or be counted for the purposes of determining whether a quorum exists. Failure to notify the advisory directors of any meeting shall not render any meeting or any action taken at such meeting void. ARTICLE V Officers Section 5.1. Number. The officers of the Corporation shall consist of the President, a Secretary and a Treasurer; and, in addition, such Vice Presidents, other officers and assistant officers and agents as may be deemed necessary and elected or appointed by the Board of Directors. Any two or more offices may be held by the same person except that the President and Secretary shall not be the same person. Section 5.2. Election; Term; Qualification. Officers shall be chosen by the Board of Directors at the Annual Meeting of the Directors and may be chosen at any other meeting of the Board of Directors. Each officer shall hold office until the next following Annual Meeting of Directors, or until his death, resignation, retirement or removal. Section 5.3. Removal. Any officer or agent elected or appointed by the Board of Directors may be removed by the Board of Directors at its pleasure, but such removal shall be without prejudice to other contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create any contract rights. Section 5.4. Retirement. No person may serve as an officer of the Corporation after the last day of the fiscal year in which such officer celebrates his sixty-fifth birthday or such later date as is necessary to comply with applicable laws. Section 5.5. Vacancies. Any vacancy in any office for any cause may be filled by the Board of Directors at any meeting. Section 5.6. Duties. The officers of the Corporation shall have such powers and duties, except as modified by the Board of Directors, as generally pertain to their offices, respectively, as well as such powers and duties as from time to time shall be conferred by the Board of Directors and by these Bylaws. Section 5.7. The President. The President shall, subject to the control of the Board of Directors, have general supervision and control over all of the business, assets and affairs of the Corporation. All other officers shall report as directed by the President. In the absence of the Chairman of the Board, the President shall perform all of the duties of the Chairman of the Board, and when so acting shall have all of the powers of, and be subject to all restrictions upon, the Chairman of the Board. Section 5.8. Secretary. The Secretary shall: (a) keep the minutes of all meetings of the shareholders, of the Board of Directors, and of all committees of the Board of Directors, in one or more books provided for that purpose and shall distribute a copy of all such minutes to the members of the Board of Directors immediately on receipt thereof, (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law, (c) be custodian of the corporate records and of the seal of the Corporation and see that the seal of the Corporation is affixed to all documents the execution of which on behalf of the Corporation under its seal is duly authorized, (d) have general charge of the stock certificate register, transfer books and stock ledgers, and such other books and papers as the Board of Directors may direct, of the Corporation, all of which shall, at all reasonable times, be open to the examination of any director, upon application at the office of the Corporation during business hours, and (e) in general perform all duties and exercise all powers incident to the office of the Secretary and such other duties and powers as the Board of Directors or the President from time to time may assign to or confer on him. Section 5.9. Treasurer. The Treasurer shall be the Chief Financial Officer and shall keep complete and accurate records of account, showing accurately at all times the financial condition of the Corporation. He shall be the legal custodian of all monies, notes, securities, and other valuables which may from time to time come into the possession of the Corporation. He shall furnish at meetings of the Board of Directors, or whenever requested, a statement of the financial condition of the Corporation, and shall perform such other duties as the Bylaws may require or the Board of Directors may prescribe. The Treasurer shall have the power and authority to incur or guaranty indebtedness on behalf of the Corporation without the prior approval of the Board of Directors provided that the original principal amount thereof is less than $1,000,000 and the original maturity is less than one year. Section 5.10. The Vice Presidents. The Board of Directors may from time to time elect such Vice Presidents as the Board of Directors deems appropriate and assign thereto such general or specific powers, authority and responsibility as the Board of Directors deems appropriate. The Board of Directors may specify the order in which the Vice Presidents may act in the absence of the President. Any action taken by a Vice President in the performance of the duties of President shall be conclusive evidence of the absence of the President. The Vice Presidents shall perform such other duties as may, from time to time, be assigned to them by the Board of Directors or the President. A Vice President may also sign with the Secretary or an Assistant Secretary certificates of stock of the Corporation. Section 5.11. Assistant Officers. Any Assistant Secretary or Assistant Treasurer appointed by the Board of Directors shall have power to perform, and shall perform, all duties incumbent upon the Secretary or the Treasurer of the Corporation, respectively, subject to the general direction of such officers, and shall perform such other duties as the Bylaws may require or the Board of Directors may prescribe. Section 5.12. Salaries. The salaries or other compensation of the officers shall be fixed from time to time by the Board of Directors. No officer shall be prevented from receiving such salary or other compensation by reason of the fact that he is also a director of the Corporation. Section 5.13. Bonds of Officers. The Board of Directors may secure the fidelity of any or all of such officers by bond or otherwise, in such terms and with such surety or sureties, conditions, penalties or securities as shall be required by the Board of Directors. Section 5.14. Delegation. The Board of Directors may delegate temporarily the powers and duties of any officer of the Corporation, in case of his absence or for any other reason, to any other officer, and may authorize the delegation by any officer of the Corporation of any of his powers and duties to any agent or employee subject to the general supervision of such officer. ARTICLE VI Miscellaneous Section 6.1. Contracts. The Board of Directors may authorize any officer or officers, agent or agents, of the Corporation to enter into any contract or execute and deliver any instrument in the name of or on behalf of the Corporation, and such authority may be general or confined to specific instances; and, unless so authorized by the Board of Directors or by these Bylaws, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement, or to pledge its credit or to render it liable pecuniarily for any purpose or to any amount. Section 6.2. Checks, Drafts, etc. All checks, drafts, or other orders for the payment of money, notes, or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officers or employees of the Corporation as shall from time to time be authorized pursuant to these Bylaws or by resolution of the Board of Directors. Section 6.3. Depositories. All funds of the Corporation shall be deposited from time to time to the credit of the Corporation in such banks, trust companies, or other depositories as the Board of Directors may from time to time designate, upon such terms and conditions as shall be fixed by the Board of Directors. The Board of Directors may from time to time authorize the opening and keeping with any such depository as it may designate of general and special bank accounts, and may make such special rules and regulations with respect thereto, not inconsistent with the provisions of these Bylaws, as it may deem expedient. Section 6.4. Endorsement of Stock Certificates. Subject to the specific directions of the Board of Directors, any share or shares of stock issued by any corporation and owned by the Corporation (including reacquired shares of the Corporation) may, for sale or transfer, be endorsed in the name of the Corporation by the President or any Vice President, and attested or witnessed by the Secretary or any Assistant Secretary either with or without affixing the corporate seal. Section 6.5. Voting of Shares Owned by the Corporation. Subject to the direction of the Board of Directors, the President, the Secretary and the Treasurer, or any of them, shall have the power and authority on behalf of the Corporation to attend and to vote and to grant proxies to be used at any meeting of shareholders of any corporation in which the Corporation may hold stock. The Board of Directors may confer like powers upon any other person or persons. Section 6.6. Corporate Seal. The corporate seal shall be in the form of a five pointed star surrounded by the words "Stewart & Stevenson Services, Inc.," and such seal, or a facsimile thereof, may be impressed on, affixed to, or in any manner reproduced upon, instruments of any nature required to be executed by officers of the Corporation. Section 6.7. Fiscal Year. The fiscal year of the Corporation shall begin on February 1 and end on January 31 of the next following year, or on such other dates as the Board of Directors at any time shall determine. Section 6.8. Resignations. Any director or officer may resign at any time. Such resignations shall be made in writing and shall take effect at the time specified therein, or, if no time be specified, at the time of its receipt by the Chairman of the Board, President or Secretary. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation. Section 6.9. Indemnification of Officers and Directors. The Corporation shall indemnify any person against any judgment, penalty, fine, settlement and reasonable expenses incurred by him in connection with any threatened, pending or completed action, suit or proceeding in which such person is or is threatened to be made a party because he is or was serving as an officer or director of the Corporation or at the request of the Corporation as an officer, director, partner, venturer, proprietor, trustee, employee, agent or other functionary of another entity and (i) such person is wholly successful in the defense thereof, or (ii) it is determined in the manner required by law that such person conducted himself in good faith, reasonably believed that his conduct was in the best interest of the Corporation and had no reasonable cause to believe that his conduct was unlawful; provided, however, that no person shall be indemnified with respect to any matter as to which such person is found liable to the Corporation. Any such indemnification shall be reported in writing to the shareholders of the Corporation on or before the notice or waiver of notice of the next shareholders' meeting and in any event within twelve (12) months of the indemnification. The right of indemnification under this Section 6.9 shall be in addition to any other rights to which such persons may be entitled. Section 6.10. Loans to and Guaranties for Officers and Directors. The Corporation shall not lend money to or guaranty the indebtedness of any of its officers or directors unless such loan or guaranty is approved by the number of directors equal to a majority of the full Board of Directors none of whom are then or will become as a result of such action indebted to the Corporation and on the express finding by such directors that such loan or guaranty is reasonably expected to directly or indirectly benefit the Corporation. ARTICLE VII Amendments Section 7.1. Amendments. The Board of Directors, by the affirmative vote of the number of directors which is equal to three-fourths (3/4) of the number who would constitute a full Board of Directors at the time of such action, may alter, amend or repeal these Bylaws or adopt new Bylaws. The shareholders by affirmative vote of two-thirds (2/3) of the issued and outstanding shares entitled to vote may alter, amend or repeal these Bylaws or adopt new Bylaws, without notice at any regular meeting, or if notice of the proposed amendment be contained in the notice of any special meeting. EX-4.D 4 TO LETTER OF CREDIT AGREEMENT (November 30, 1995) THIS AGREEMENT AND THIRD AMENDMENT TO LETTER OF CREDIT AGREEMENT (this "Amendment"), dated as of November 30, 1995, is made and entered into by and among STEWART & STEVENSON SERVICES, INC. (the "Borrower"), a Texas corporation; the financial institutions listed on the signature pages hereto (collectively, the "Lenders"), and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association domiciled in Houston, Harris County, Texas acting in its capacity as agent for the Lenders (in such capacity, the "Agent"). The Borrower, the Lenders and the Agent are herein sometimes called the "Parties". Recitals: 1. The Parties entered into a Letter of Credit Agreement dated as of September 3, 1993 (which Letter of Credit Agreement, as amended to the date hereof, is herein called the "Letter of Credit Agreement"). 2. The Parties desire to amend the Letter of Credit Agreement to extend the Letter of Credit Termination Date. Agreements: NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged by the Parties, the Parties agree as follows: 1. Letter of Credit Termination Date Amended. The following definition in Section 1 of the Letter of Credit Agreement is amended as follows: "Letter of Credit Termination Date" means the date which is the earlier of (a) December 31, 2000 or (b) the date of which the Agent gives written notice to the Borrower that no additional Letters of Credit may be requested hereunder. 2. Conditions Precedent. This Amendment shall be effective November 30, 1995 subject to the satisfaction, in a manner satisfactory to the Agent, of each of the following conditions precedent: (a) The Agent shall have received the following, each of which shall be in form and substance satisfactory to the Agent in its sole discretion and duly and validly executed: (1) A certificate of the Secretary or any Assistant Secretary of the Borrower, dated as of the date hereof, as to (A) the resolutions of the Board of Directors of the Borrower authorizing the execution, delivery and performance of this Amendment (a copy of such resolutions to be attached to such certificate), such certificate to state that said copy is a true and correct copy of such resolutions and that such resolutions were duly adopted and have not been amended, superseded, revoked or modified in any respect and remain in full force and effect as of the date of such certificate, and (B) the absence of any change since September 3, 1993, in any of (x) the incumbency and signatures of the officer or officers of the Borrower; (y) the Articles of Incorporation of the Borrower, or (z) the Bylaws of the Borrower; (2) this Amendment, duly executed by the Borrower, the Lenders and the Agent; and (3) a current certificate from the Secretary of State or other appropriate official of the State of Texas as to the continued existence and good standing of Borrower. (b) Borrower shall have paid all accrued and unpaid fees and other amounts in connection with this Amendment. (c) No Default shall have occurred and be continuing. (d) Such effectiveness shall not violate any legal requirement applicable to the Agent or any Lender. 3. Representations True; No Default. The Borrower represents and warrants to the Agent and each Lender that (a) the representations and warranties contained in the Letter of Credit Agreement and in the other Loan Documents are true and correct on and as of the date hereof as though made on and as of such date (except to the extent such representations and warranties are expressly stated to be made solely as of an earlier date) and (b) no event has occurred and is continuing which constitutes an Event of Default under the Letter of Credit Agreement or any of the other Credit Documents or which upon the giving of notice or the lapse of time or both would constitute such an Event of Default. 4. Ratification. Except as expressly amended hereby, the Letter of Credit Agreement, as hereby amended, and the other Credit Documents are in all respects ratified and confirmed and are, and shall continue to be, in full force and effect. The Borrower hereby agrees and acknowledges that all of its liabilities and obligations under the Letter of Credit Agreement, the other Credit Documents, or otherwise, remain in full force and effect as of the date of this Amendment. 5. Definitions and References. Unless otherwise defined herein, terms used herein which are defined in the Letter of Credit Agreement or in the other Credit Documents shall have the meanings therein ascribed to them. The term "Agreement" as used in the Letter of Credit Agreement and the term "Letter of Credit Agreement" as used in the other Loan Documents or any other instrument, document or writing furnished to the Agent or any Lender by or on behalf of the Borrower shall mean the Letter of Credit Agreement as hereby amended. 6. Expenses; Additional Information. The Borrower shall pay to the Agent on demand all expenses (including reasonable counsel's fees) incurred in connection with the preparation, reproduction, execution and delivery of this Amendment and with respect to advising the Agent as to its rights and responsibilities under the Letter of Credit Agreement, as hereby amended. In addition, the Borrower shall pay all costs and expenses of the Agent, the Issuer and each Lender (including counsel's fees) in connection with the enforcement of this Amendment. 7. Severability. If any term or provision of this Amendment or the application thereof to any person or circumstances shall, to any extent, be deemed invalid or unenforceable, the remainder of this Amendment, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and this Amendment shall be valid and enforced to the fullest extent permitted by applicable law. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions thereof or affecting the validity or enforceability of such provision in any other jurisdiction and, to this end, the provisions of this Amendment are severable. 8. BORROWER'S INDEMNITY. The Borrower hereby indemnifies and holds harmless the Issuer, the Agent and each Lender from and against any and all claims and damages, losses, liabilities, costs or expenses which the Issuer, the Agent or any Lender may incur (or which may be claimed against the Issuer, the Agent or any Lender by any Person whatsoever) BY REASON OF ITS OWN NEGLIGENCE OR OTHERWISE, in connection with the execution and delivery of any Letter of Credit or transfer of or payment or failure to pay under any Letter of Credit; provided that the Borrower shall not be required to indemnify the Issuer, the Agent or any Lender for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by the willful misconduct or gross negligence of the Issuer, the Agent or the applicable Lender. Any amount to be paid under this Section by the Borrower shall bear interest until paid at the Past Due Rate. 9. DTPA WAIVER. The Borrower hereby waives all rights, remedies, claims, demands and causes of action based upon or related to the Texas Deceptive Trade Practices-Consumer Protection Act as described in Sections 17.41 et seq. of the Texas Business & Commerce Code, as the same pertains or may pertain to any Credit Document or any of the transactions contemplated therein, to the maximum extent that such rights, etc. may lawfully and effectively be waived. In furtherance of this waiver, the Borrower hereby represents and warrants to the Agent, the Issuer and the Lenders that (a) the Borrower is represented by legal counsel in connection with the negotiations, execution and delivery of this Amendment; (b) the Borrower has a choice other than to enter into this waiver in that it can obtain the Letters of Credit from another institution or institutions, and (c) the Borrower does not consider itself to be in a significantly disparate bargaining position relative to the Agent, the Issuer and the Lenders with respect to this Amendment. 10. RELEASE OF CLAIMS. The Borrower hereby releases, discharges and acquits forever the Agent, the Issuer and the Lenders and their respective officers, directors, trustees, agents, employees and counsel (in each case, past, present or future) from any and all Claims existing as of the date hereof (or the date of actual execution hereof by the Borrower, if later). As used herein, the term "Claim" shall mean any and all liabilities, claims, defenses, demands, actions, causes of action, judgments, deficiencies, interest, liens, costs or expenses (including court costs, penalties, attorneys' fees and disbursements, and amounts paid in settlement) of any kind and character whatsoever, including claims for usury, breach of contract, breach of commitment, negligent misrepresentation or failure to act in good faith, in each case whether now known or unknown, suspected or unsuspected, asserted or unasserted or primary or contingent, and whether arising out of written documents, unwritten undertakings, course of conduct, tort, violations of laws or regulations or otherwise. 11. Miscellaneous. This Amendment (a) shall be binding upon and inure to the benefit of the Borrower, the Agent, the Issuer and the Lenders and their respective successors, assigns, receivers and trustees (however, the Borrower may not assign its rights hereunder without the express prior written consent of the Lenders); (b) may be modified or amended only by a writing signed by each party; (c) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES) AND OF THE UNITED STATES OF AMERICA; (d) may be executed in several counterparts, and by the Parties on separate counterparts, and each counterpart, when so executed and delivered, shall constitute an original agreement, and all such separate counterparts shall constitute but one and the same agreement, and (e) embodies the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersedes all prior agreements, consents and understandings relating to such subject matter. The headings herein shall be accorded no significance in interpreting this Amendment. 12. THIS AMENDMENT TOGETHER WITH ALL OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AS TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES. IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by their respective duly authorized officers effective as of the date written above. STEWART & STEVENSON SERVICES, INC., a Texas corporation /s/ Robert L. Hargrave By:______________________________ Robert L. Hargrave Chief Executive Officer The undersigned legal counsel for the Borrower signs this Amendment not as a party to it but solely for the purpose of complying with the provisions of Section 17.42(a)(3) of the Texas Deceptive Trade Practices-Consumer Protection Act described in Section 9. /s/ Lawrence E. Wilson _________________________________ Lawrence E. Wilson Vice President and General Counsel Texas Bar No.: 21704000 TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association acting in its individual capacity and as the Agent for the Lenders named herein /s/ Mona M. Foch By:_______________________________ Mona M. Foch Vice President NATIONSBANK OF TEXAS, NATIONAL ASSOCIATION, a national banking association /s/ C. Todd Kulp By:____________________________ C. Todd Kulp Vice President ABN AMRO BANK, N.V., HOUSTON AGENCY /s/ Timothy M. Schneider By:_______________________________ Timothy M. Schneider Corporate Banking Officer /s/ Ronald A. Mahle By:_______________________________ Ronald A. Mahle Group Vice President THE BANK OF NEW YORK, a New York banking corporation /s/ Alan F. Lyster, Jr. By:_______________________________ Alan F. Lyster, Jr. Vice President BANK OF AMERICA ILLINOIS, an Illinois banking association /s/ Claire Liu By:________________________________ Claire Lui Vice President PNC BANK, NATIONAL ASSOCIATION, a national banking association /s/ Greg Gaschler By:_____________________________ Greg Gaschler Vice President EX-4.E 5 AGREEMENT AND FOURTH AMENDMENT TO LOAN AGREEMENT (November 30, 1995) THIS AGREEMENT AND FOURTH AMENDMENT TO LOAN AGREEMENT (this "Amendment"), dated as of November 30, 1995, is made and entered into by and among STEWART & STEVENSON SERVICES, INC. (the "Borrower"), a Texas corporation; the financial institutions listed on the signature pages hereto (collectively, the "Lenders") and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association domiciled in Houston, Harris County, Texas, acting in its capacity as agent for the Lenders (in such capacity, the "Agent"). The Borrower, the Lenders and the Agent are herein sometimes called the "Parties". Recitals: 1. The Parties have entered into a Loan Agreement dated as of September 3, 1993 (which Loan Agreement, as amended to the date hereof, is herein called the "Loan Agreement"). 2. The Parties desire to amend the Loan Agreement in certain respects to extend the maturity date of the Notes thereunder; to increase the amount of credit available thereunder; to change certain financial covenants; to permit Borrower to repurchase a limited amount of its own stock; to change the basis for computing applicable interest rates and to change the basis for computing the commitment fee. Agreements: NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged by the Parties, the Parties agree as follows: 1. Amendment of Certain Definitions in Section 1 of the Loan Agreement. The following definitions in Section 1 of the Loan Agreement are hereby amended as follows: Margin Percentage means, on any day, the per annum percentage corresponding to the Interest Bearing Debt to Total Capitalization Ratio (determined as of the most recent Calculation Date) on such day as provided below: Interest Bearing Debt Per Annum to Total Capitalization Ratio Percentage 40% or greater 40.0 basis points 20% to, but not including, 40% 32.5 basis points less than 20% 25.0 basis points Maturity Date means the maturity of the Notes, December 31, 2000, as the same may hereafter be accelerated pursuant to the provisions of any of the Credit Documents. Maximum Commitment means Two Hundred Million Dollars ($200,000,000). Permitted Investments means: (a) readily marketable securities issued or fully guaranteed by the United States of America with maturities of not more than one year, (b) financial instruments (including commercial paper) with maturities of not more than 270 days of Persons, in each case, rated "Prime 2" or better by Moody's Investors Service, Inc. or "A-2" or better by Standard and Poor's Corporation; (c) certificates of deposit, eurodollar deposits or repurchase obligations having a maturity of not more than one year from the date of issuance thereof, or tax exempt bonds backed by letters of credit, in each case, issued by any U.S. domestic bank having capital surplus of at least $100,000,000 or by any other financial institution acceptable to Majority Lenders, all of the foregoing; (d) readily marketable shares of any money market fund having total assets in excess of $250,000,000 and not disapproved in writing by Majority Lenders; and (e) common stock of the Borrower, not to exceed $50,000,000 in aggregate cost; provided, that the aggregate value of the assets subject to Section 7(a) consisting of "margin stock" (as defined from time to time in or pursuant to Regulation U of the Board of Governors of the Federal Reserve System, or any successor regulation) shall never exceed 25% of the aggregate value of all assets subject to Section 7(a). 2. Amendment of Section 2(c) of the Loan Agreement. Section 2(c) of the Loan Agreement is amended to provide as follows: "(c) Commitment Fee. In consideration of the Commitment, Borrower agrees to pay a commitment fee (computed on the basis of the actual number of days elapsed in a year composed of 365 or 366 days, as the case may be) equal to 12.5 basis points per annum on the daily average difference between the Commitment and the aggregate principal balance of the Notes, such fee to be due and payable to Agent for the account of Lenders on each Interest Payment Date for Base Rate Borrowings before the Termination Date, and on the Termination Date, in addition to the installments of interest on the Notes. All past due commitment fees shall bear interest at the Past Due Rate. Lenders and Borrower agree that Chapter 15 of the Texas Credit Code shall not apply to this Agreement, the Notes or any Loan." 3. Amendment of Section 6(c) of the Loan Agreement. Section 6(c) of the Loan Agreement is amended to provide as follows: "(c) Borrower and its Subsidiaries shall have and maintain, on a consolidated basis, at all times: (1) an Interest Bearing Debt to Total Capitalization Ratio for Borrower of not greater than 0.50 to 1.00. (2) a Tangible Net Worth for Borrower of not less than $350,000,000. (3) an Interest Coverage Ratio for Borrower of not less than 2.00 to 1.00." 4. Amendment of Exhibit D to the Loan Agreement. Exhibit D to the Loan Agreement is amended to be identical to Exhibit D to this Amendment. 5. Conditions Precedent. This Amendment shall be effective November 30, 1995, subject to the satisfaction, in a manner satisfactory to the Agent, of each of the following conditions precedent: (a) The Agent shall have received the following, each of which shall be in form and substance satisfactory to the Agent in its sole discretion and duly and validly executed: (1) A certificate of the Secretary or any Assistant Secretary of the Borrower, dated as of the date hereof, as to (A) the resolutions of the Board of Directors of the Borrower authorizing the execution, delivery and performance of this Amendment and the Notes (a copy of such resolutions to be attached to such certificate), such certificate to state that said copy is a true and correct copy of such resolutions and that such resolutions were duly adopted and have not been amended, superseded, revoked or modified in any respect and remain in full force and effect as of the date of such certificate, (B) the incumbency and signatures of the officer or officers of the Borrower; and (C) true and correct copies the Articles of Incorporation of the Borrower, and the Bylaws of the Borrower; (2) this Amendment, duly executed by the Borrower, the Lenders and the Agent; (3) Notes (the "New Notes"), in the aggregate principal amount of $200,000,000, payable to the order of each Lender in the amount of its Percentage of the Maximum Commitment; (4) a current certificate from the Secretary of State or other appropriate official of the State of Texas as to the continued existence and good standing of Borrower; and (5) a legal opinion from the general counsel for Borrower acceptable to Agent and Majority Lenders. (b) Borrower shall have paid all accrued and unpaid fees and other amounts in connection with this Amendment. (c) No Default shall have occurred and be continuing. (d) Such effectiveness shall not violate any legal requirement applicable to the Agent or any Lender. 6. Percentages. The dollar amount of each Lender's interest in the Maximum Commitment as of the date hereof is set forth opposite such Lender's name on the signature pages of this Amendment. As defined in the Loan Agreement, each Lender's Percentage is such Lender's interest in the Maximum Commitment. 7. Representations True; No Default. The Borrower represents and warrants to the Agent and each Lender that (a) the representations and warranties contained in the Loan Agreement and in the other Credit Documents are true and correct on and as of the date hereof as though made on and as of such date (except to the extent such representations and warranties are expressly stated to be made solely as of an earlier date); (b) the most recent financial statements for Borrower and its Subsidiaries furnished to Lenders as of the date hereof fairly present the financial condition of Borrower and its Subsidiaries as of their date and for the period then ended in accordance with GAAP; (c) the proceeds of the Loans will be used to refinance existing debt, to fund ongoing working capital requirements and for general corporate purposes; and (d) no event has occurred and is continuing which constitutes an Event of Default under the Loan Agreement or any of the other Credit Documents or which upon the giving of notice or the lapse of time or both would constitute such an Event of Default. 8. Ratification. Except as expressly amended hereby, the Loan Agreement, as hereby amended, and the other Credit Documents are in all respects ratified and confirmed and are, and shall continue to be, in full force and effect. The Borrower hereby agrees and acknowledges that all of its liabilities and obligations under the Loan Agreement, the other Credit Documents, or otherwise, remain in full force and effect as of the date of this Amendment. 9. Definitions and References. Unless otherwise defined herein, terms used herein which are defined in the Loan Agreement or in the other Credit Documents shall have the meanings therein ascribed to them. The term "Agreement" as used in the Loan Agreement and the term "Loan Agreement" as used in the other Credit Documents or any other instrument, document or writing furnished to the Agent or any Lender by or on behalf of the Borrower shall mean the Loan Agreement as hereby amended. The term "Notes" as used in the Loan Agreement and in the other Credit Documents or any other instrument, agreement, document or writing furnished to the Agent or any Lender by or on behalf of the Borrower shall mean the New Notes executed pursuant to this Amendment. 10. Expenses; Additional Information. The Borrower shall pay to the Agent on demand all expenses (including reasonable counsel's fees) incurred in connection with the preparation, reproduction, execution and delivery of this Amendment and the new Notes and with respect to advising the Agent as to its rights and responsibilities under the Loan Agreement, as hereby amended. In addition, the Borrower shall pay all costs and expenses of the Agent and each Lender (including counsel's fees) in connection with the enforcement of this Amendment and the New Notes. 11. Severability. If any term or provision of this Amendment or the application thereof to any person or circumstances shall, to any extent, be deemed invalid or unenforceable, the remainder of this Amendment, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and this Amendment shall be valid and enforced to the fullest extent permitted by applicable law. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions thereof or affecting the validity or enforceability of such provision in any other jurisdiction and, to this end, the provisions of this Amendment are severable. 12. INDEMNIFICATION. The Borrower shall indemnify the Agent, the Lenders and each Affiliate thereof and their respective directors, officers, employees and agents from, and hold each of them harmless against, any and all losses, liabilities (including Environmental Liabilities), claims (including Environmental Claims), expenses (including reasonable attorneys' fees) or damages to which any of them may become subject, insofar as such losses, liabilities, claims, expenses or damages arise out of or result from (a) any actual or proposed use by the Borrower of the proceeds of any Loan made or Letter of Credit issued by any Lender or growing out of or resulting from any Credit Document or any transaction or event contemplated therein; (b) violation by the Borrower or any of its Subsidiaries of any law, rule, regulation or order including those relating to Hazardous Substances, petroleum, petroleum products or petroleum wastes; (c) any Lender or the Agent being deemed an operator of any of the Borrower's real or personal Property by a court or other regulatory or administrative agency or tribunal or other third party, to the extent such losses, liabilities, claims or damages arise out of or result from any Hazardous Substance, petroleum, petroleum product or petroleum waste located in on or under such property, or (d) any investigation, litigation or other proceeding (including any threatened investigation or proceeding) relating to any of the foregoing. The obligations of the Borrower under this Section shall survive the termination of the Loan Agreement (as amended by this Amendment and as it may otherwise be amended, restated, modified and supplemented from time to time) and the repayment and expiry of the Loans and all Letter of Credit Liabilities. Any amount to be paid under this Section by the Borrower to the Agent or any Lender shall be a demand obligation owing by the Borrower to the Agent or such Lender and shall bear interest from the date of expenditure until paid at the Past Due Rate. 13. DTPA WAIVER. The Borrower hereby waives all rights, remedies, claims, demands and causes of action based upon or related to the Texas Deceptive Trade Practices-Consumer Protection Act as described in Sections 17.41 et seq. of the Texas Business & Commerce Code, as the same pertains or may pertain to any Credit Document or any of the transactions contemplated therein, to the maximum extent that such rights, etc. may lawfully and effectively be waived. In furtherance of this waiver, the Borrower hereby represents and warrants to the Agent and the Lenders that (a) the Borrower is represented by legal counsel in connection with the negotiations, execution and delivery of this Amendment; (b) the Borrower has a choice other than to enter into this waiver in that it can obtain the Loans from another institution or institutions, and (c) the Borrower does not consider itself to be in a significantly disparate bargaining position relative to the Agent and the Lenders with respect to this Amendment. 14. RELEASE OF CLAIMS. The Borrower hereby releases, discharges and acquits forever the Agent and the Lenders and their respective officers, directors, trustees, agents, employees and counsel (in each case, past, present or future) from any and all Claims existing as of the date hereof (or the date of actual execution hereof by the Borrower, if later). As used herein, the term "Claim" shall mean any and all liabilities, claims, defenses, demands, actions, causes of action, judgments, deficiencies, interest, liens, costs or expenses (including court costs, penalties, attorneys' fees and disbursements, and amounts paid in settlement) of any kind and character whatsoever, including claims for usury, breach of contract, breach of commitment, negligent misrepresentation or failure to act in good faith, in each case whether now known or unknown, suspected or unsuspected, asserted or unasserted or primary or contingent, and whether arising out of written documents, unwritten undertakings, course of conduct, tort, violations of laws or regulations or otherwise. 15. Miscellaneous. This Amendment (a) shall be binding upon and inure to the benefit of the Borrower, the Agent and the Lenders and their respective successors, assigns, receivers and trustees (however, the Borrower may not assign its rights hereunder without the express prior written consent of the Lenders); (b) may be modified or amended only by a writing signed by each party; (c) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES) AND OF THE UNITED STATES OF AMERICA; (d) may be executed in several counterparts, and by the Parties on separate counterparts, and each counterpart, when so executed and delivered, shall constitute an original agreement, and all such separate counterparts shall constitute but one and the same agreement, and (e) embodies the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersedes all prior agreements, consents and understandings relating to such subject matter. The headings herein shall be accorded no significance in interpreting this Amendment. 16. THIS AMENDMENT AND THE NEW NOTES, TOGETHER WITH ALL OF THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AS TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES. IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by their respective duly authorized officers effective as of the date written above. STEWART & STEVENSON SERVICES, INC., a Texas corporation /s/ Robert L. Hargrave By:_______________________________ Robert L. Hargrave Chief Executive Officer The undersigned legal counsel for the Borrower signs this Amendment not as a party to it but solely for the purpose of complying with the provisions of Section 17.42(a)(3) of the Texas Deceptive Trade Practices-Consumer Protection Act described in Section 13. /s/ Lawrence E. Wilson __________________________________ Lawrence E. Wilson Vice President and General Counsel Texas Bar No.: 21704000 Interest in Maximum Commitment: TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association, $50,000,000.00 acting in its individual capacity and as the Agent for the Lenders named herein /s/ Mona M. Foch By:_____________________________ Mona M. Foch Vice President Interest in Maximum Commitment: NATIONSBANK OF TEXAS,NATIONAL ASSOCIATION, a national banking association $40,000,000.00 /s/ C. Todd Kulp By:__________________________ C. Todd Kulp Vice President Interest in Maximum Commitment: ABN AMRO BANK N.V. HOUSTON AGENCY $30,000,000.00 /s/ Timothy M. Schneider By:______________________________ Timothy M. Schneider Corporate Banking Officer /s/ Ronald A. Mahle By:______________________________ Ronald A. Mahle Group Vice President Interest in Maximum Commitment: BANK OF AMERICA ILLINOIS, an Illinois banking association $30,000,000.00 /s/ Claire Liu By:________________________________ Claire Liu Vice President Interest in Maximum Commitment: THE BANK OF NEW YORK a New York banking Corporation $30,000,000.00 /s/ Alan F. Lyster, Jr. By:________________________________ Alan F. Lyster, Jr. Vice President Interest in Maximum Commitment: PNC BANK, NATIONAL ASSOCIATION, a national banking association $20,000,000.00 /a/ Greg Gaschler By:______________________________ Greg Gaschler Vice President EX-27 6
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEC FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS JAN-31-1996 OCT-31-1995 5,108 0 194,302 (2,221) 630,782 829,030 240,757 (111,811) 989,591 384,189 116,833 163,410 0 0 297,288 989,591 932,641 932,641 786,193 786,193 74,748 0 9,642 71,700 24,021 47,942 0 0 0 47,942 1.45 1.45
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