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<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>As filed with the Securities and Exchange Commission on May&nbsp;3, 2011  </B></FONT></P>

<P ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Registration No.&nbsp;333-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> <div style="width:100%;border-top:solid #000000 3.0pt;padding:0in 0in 0in 0in;font-size:3.0pt;"></div>
<div style="width:100%;border-top:solid #000000 1.0pt;padding:0in 0in 0in 0in;font-size:4.0pt;"></div>  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=5><B>UNITED STATES<BR>  </B></FONT><FONT SIZE=5><B>SECURITIES AND EXCHANGE COMMISSION<BR>  </B></FONT><FONT SIZE=2><B>Washington, D.C. 20549  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=5><B>Form&nbsp;S-1<BR>  </B></FONT><FONT SIZE=3><B>REGISTRATION STATEMENT<BR>
UNDER<BR>
THE SECURITIES ACT OF&nbsp;1933  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=5><B>Stewart&nbsp;&amp; Stevenson&nbsp;LLC<BR>  </B></FONT><FONT SIZE=2><B>(to be converted under Delaware law to a corporation and renamed Stewart&nbsp;&amp; Stevenson&nbsp;Inc.)<BR>  </B></FONT><FONT SIZE=2>(Exact name
of registrant as specified in its charter) </FONT></P>

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<TD ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Delaware</B></FONT><FONT SIZE=2><BR>
(State of Incorporation)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B> 3533</B></FONT><FONT SIZE=2><BR>
(Primary Standard Industrial<BR>
Classification Code Number)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B> 20-3974034</B></FONT><FONT SIZE=2><BR>
(I.R.S. Employer<BR>
Identification No.)</FONT></TD>
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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>1000 Louisiana St.<BR>
Suite&nbsp;5900<BR>
Houston, TX 77002<BR>
(713)&nbsp;751-2700<BR>  </B></FONT><FONT SIZE=2>(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>John B. Simmons<BR>
Chief Financial Officer<BR>
1000 Louisiana St.<BR>
Suite&nbsp;5900<BR>
Houston, TX 77002<BR>
(713)&nbsp;751-2700<BR>  </B></FONT><FONT SIZE=2>(Name, address, including zip code, and telephone number, including area code, of agent for service) </FONT></P>

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<TD COLSPAN=3 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B> Copies to:</B></FONT></TD>
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<TD ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>William F. Henze, Esq.<BR> </B></FONT><FONT SIZE=2><B>J. Eric Maki, Esq.<BR>
Jones Day</B></FONT><FONT SIZE=2><BR>
222 East 41st&nbsp;Street<BR>
New York, NY 10017<BR>
(212)&nbsp;326-3939</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Stephan J. Feder, Esq.<BR> </B></FONT><FONT SIZE=2><B>John C. Ericson, Esq.<BR>
Simpson Thacher&nbsp;&amp; Bartlett&nbsp;LLP</B></FONT><FONT SIZE=2><BR>
425 Lexington Avenue<BR>
New York, NY 10017<BR>
(212)&nbsp;455-2000</FONT></TD>
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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Approximate date of commencement of proposed sale to the public:<BR>
As soon as practicable after this Registration Statement becomes effective.</B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule&nbsp;415 under the Securities Act of 1933, check the following
box.&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If this Form is filed to register additional securities for an offering pursuant to Rule&nbsp;462(b) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering.&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If this Form is a post-effective amendment filed pursuant to Rule&nbsp;462(c) under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same offering.&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If this Form is a post-effective amendment filed pursuant to Rule&nbsp;462(d) under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same offering.&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule&nbsp;12b-2 of the Exchange Act. </FONT></P>
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<TD ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>Large&nbsp;accelerated&nbsp;filer&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>Accelerated&nbsp;filer&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>Non-accelerated&nbsp;filer&nbsp;<FONT FACE="WINGDINGS">&#253;</FONT><BR></FONT> <FONT  style="font-size:8pt;line-height:9pt;">(Do not check if a<BR>
smaller reporting company)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>Smaller&nbsp;reporting&nbsp;company&nbsp;<FONT FACE="WINGDINGS">&#111;</FONT></FONT></TD>
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 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>CALCULATION OF REGISTRATION FEE  </B></FONT></P>

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<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:5pt;text-indent:-5pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TH ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Title&nbsp;of&nbsp;Each&nbsp;Class&nbsp;of&nbsp;Securities<BR>
to&nbsp;be&nbsp;Registered</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Proposed&nbsp;Maximum<BR>
Aggregate&nbsp;Offering<BR>
Amount(1)(2)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Amount&nbsp;of<BR>
Registration&nbsp;Fee </B></FONT></TH>
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<TD COLSPAN=5 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:5pt;text-indent:-5pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common Stock, par value $0.01 per share</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> $250,000,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> $29,025(3)</FONT></TD>
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<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Includes
shares subject to underwriters' over-allotment option.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(2)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Estimated
solely for the purpose of calculating the registration fee in accordance with Rule&nbsp;457(o) promulgated under the Securities Act
of&nbsp;1933.
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(3)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>A
registration fee of a totaling $38,780 was previously paid in connection with Registration Statement No.&nbsp;333-138952 consisting of
$32,100 paid on November&nbsp;24, 2006 and $6,680 paid on October&nbsp;30, 2007 and pursuant to Rule&nbsp;457(p) is being applied to offset the registration fee payable hereunder. </FONT></DD></DL>
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<P style="font-family:arial;"><FONT SIZE=2><B>The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file&nbsp;a further
amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section&nbsp;8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said section&nbsp;8(a), may determine.  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B> <div style="width:100%;border-top:solid #000000 1.0pt;padding:0in 0in 0in 0in;font-size:3.0pt;"></div>
<div style="width:100%;border-top:solid #000000 3.0pt;padding:0in 0in 0in 0in;font-size:4.0pt;"></div>  </B></FONT></P>

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Subject to completion, dated May&nbsp;3, 2011</B></FONT></P>

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The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy
these securities in any jurisdiction where the offer or sale is not permitted. </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>Preliminary prospectus</B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=5><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares  </I></B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=5><B>
<IMG SRC="g44526.jpg" ALT="GRAPHIC" WIDTH="175" HEIGHT="118">
  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=5><B>Stewart&nbsp;&amp; Stevenson&nbsp;Inc.<BR>  </B></FONT><FONT SIZE=5><B><I>Common Stock  </I></B></FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>This is an initial public offering of shares of our Common Stock. We are offering&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our Common Stock, and the selling
stockholders
identified in this prospectus are selling an additional&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Common Stock. We will not receive any of the proceeds from the sale of shares
by the selling stockholders. We
currently conduct our operations as Stewart&nbsp;&amp; Stevenson&nbsp;LLC. Prior to the consummation of this offering, we will convert under Delaware law to a corporation and change our name to
Stewart&nbsp;&amp; Stevenson&nbsp;Inc. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Prior
to the offering, there has been no public market for our Common Stock. It is currently estimated that the initial public offering price per share of our Common Stock will be between
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;. We intend to apply to have our Common Stock approved for listing on the New York Stock
Exchange under the symbol "&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;."
 </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>Investing in our Common Stock involves risks. See "Risk factors" beginning on page&nbsp;13.</B></FONT></P>
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<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><B>Per share</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><B>Total</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2><B> </B></FONT><FONT SIZE=2>Initial public offering price</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Underwriting discounts and commissions</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Proceeds to us, before expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Proceeds to selling stockholders, before expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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 <P style="font-family:arial;"><FONT SIZE=2>We and the selling stockholders have granted the underwriters an option for a period of 30&nbsp;days to purchase up to an aggregate
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
additional shares of Common Stock. We will not receive any of the proceeds from the sale of additional shares of Common Stock by the selling stockholders. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
underwriters expect to deliver the shares of Common Stock to purchasers on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011.
</FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=5><B> J.P. Morgan  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2011 </FONT></P>

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</FONT> <FONT SIZE=2>
<A NAME="BG72801A_main_toc"></A> </FONT> <FONT SIZE=4><B> Table of contents  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><A
NAME="BG72801_TOC"></A> </FONT></P>
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<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Page</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
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<TD style="font-family:arial;"><A HREF="#ca72801_prospectus_summary"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Prospectus summary</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ca72801_prospectus_summary"><FONT SIZE=2>1</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#cg72801_risk_factors"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Risk factors</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#cg72801_risk_factors"><FONT SIZE=2>13</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#ci72801_special_note_regarding_forward-looking_statements"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Special note regarding forward-looking statements</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ci72801_special_note_regarding_forward-looking_statements"><FONT SIZE=2>28</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#ci72801_market_and_industry_data"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Market and industry data</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ci72801_market_and_industry_data"><FONT SIZE=2>30</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#ci72801_use_of_proceeds"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Use of proceeds</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ci72801_use_of_proceeds"><FONT SIZE=2>31</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#ci72801_dividend_policy"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Dividend policy</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ci72801_dividend_policy"><FONT SIZE=2>32</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#ck72801_capitalization"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Capitalization</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#ck72801_capitalization"><FONT SIZE=2>33</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#cm72801_dilution"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Dilution</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#cm72801_dilution"><FONT SIZE=2>34</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#co72801_selected_historical_consolidated_financial_data"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Selected historical consolidated financial data</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#co72801_selected_historical_consolidated_financial_data"><FONT SIZE=2>36</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#cq72801_management_s_discussion_and_an__man03466"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Management's discussion and analysis of financial condition and results of
operations</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#cq72801_management_s_discussion_and_an__man03466"><FONT SIZE=2>38</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#cw72801_business"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Business</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#cw72801_business"><FONT SIZE=2>59</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#da72801_management"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Management</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#da72801_management"><FONT SIZE=2>77</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<TD style="font-family:arial;"><A HREF="#dc72801_compensation_discussion_and_analysis"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Compensation discussion and analysis</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#dc72801_compensation_discussion_and_analysis"><FONT SIZE=2>81</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#de72801_principal_and_selling_stockholders"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Principal and selling stockholders</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#de72801_principal_and_selling_stockholders"><FONT SIZE=2>87</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#de72801_certain_relationships_and_transactions"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Certain relationships and transactions</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#de72801_certain_relationships_and_transactions"><FONT SIZE=2>89</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#dg72801_description_of_capital_stock"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Description of capital stock</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#dg72801_description_of_capital_stock"><FONT SIZE=2>90</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#di72801_shares_eligible_for_future_sale"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shares eligible for future sale</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#di72801_shares_eligible_for_future_sale"><FONT SIZE=2>96</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#di72801_description_of_indebtedness"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Description of indebtedness</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#di72801_description_of_indebtedness"><FONT SIZE=2>98</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#dk72801_u.s._federal_income_tax_consid__u.s02516"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>U.S. federal income tax considerations applicable to non-U.S. holders</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#dk72801_u.s._federal_income_tax_consid__u.s02516"><FONT SIZE=2>102</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#dm72801_certain_erisa_considerations"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Certain ERISA considerations</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#dm72801_certain_erisa_considerations"><FONT SIZE=2>107</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#dm72801_underwriting_(conflicts_of_interest)"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Underwriting (Conflicts of interest)</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#dm72801_underwriting_(conflicts_of_interest)"><FONT SIZE=2>108</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#dm72801_legal_matters"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Legal matters</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#dm72801_legal_matters"><FONT SIZE=2>114</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#dm72801_experts"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Experts</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#dm72801_experts"><FONT SIZE=2>114</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#dm72801_where_you_can_find_more_information"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Where you can find more information</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#dm72801_where_you_can_find_more_information"><FONT SIZE=2>114</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><A HREF="#Fin_Index"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Index to financial statements</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#Fin_Index"><FONT SIZE=2>F-1</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<P style="font-family:arial;"><FONT SIZE=2>You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of our Common Stock only in jurisdictions where offers and sales are permitted. The information contained in
this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our Common Stock. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><A
NAME="ca72801_prospectus_summary"> </A>
<A NAME="toc_ca72801_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Prospectus summary  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I>This summary highlights selected information contained elsewhere in this prospectus. This summary is not
complete and does not contain all of the information that you should consider before investing in our Common Stock. You should read this prospectus in its entirety before making an investment
decision. Unless otherwise indicated or the context otherwise requires, the terms "we," "our" and "us" refer to Stewart&nbsp;&amp; Stevenson&nbsp;Inc. and its subsidiaries. Our fiscal year begins on
February&nbsp;1 of the year stated and ends on January&nbsp;31 of the following year. For example, "Fiscal 2010" commenced on February&nbsp;1, 2010 and ended on January&nbsp;31, 2011. We
report results on the fiscal quarter method, with each quarter comprising approximately 13&nbsp;weeks. For example, the third quarter of Fiscal 2010 commenced on August&nbsp;1, 2010 and ended on
October&nbsp;30, 2010.</I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Our company  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are a leading designer, manufacturer and provider of specialized equipment and aftermarket parts and service for the oil and gas
industry and other industries that we have served for over 100&nbsp;years. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
the North American region, the oil and gas industry is currently experiencing a significant transformation in the development of unconventional reserves as a result of innovative hydraulic
fracturing technology. As a leading provider of critical equipment used to extract unconventional oil and gas reserves that would otherwise be uneconomical to develop, we believe that we are in a
prime position to benefit from the rapid growth in the development of unconventional oil and gas resources, particularly in North America. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Our
wide range of products covers hydraulic fracturing, well stimulation, workover, intervention and drilling operations. These products include pumping, acidizing, coil tubing, cementing and nitrogen
units, drilling rigs, workover rigs, power generation systems and electrical support and distribution systems, as well as engines, transmissions and material handling equipment. We have a substantial
installed base of products, which provides us with significant opportunities for recurring, higher-margin aftermarket parts and service revenues from customers in the oil and gas, power generation and
various other industries. In addition, we provide rental equipment to our customers, including generator sets, air compressors, rail car movers and material handling equipment. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>With
more than a century of continuous service across diverse industries, we have an established track record of providing a high-quality, technologically advanced series of products using
state-of-the-art components, processes and techniques. We have long-standing relationships with six globally recognized original equipment suppliers, or
OEMs&#151;Detroit Diesel, MTU Friedrichshafen, Electro-Motive Diesel, Hyster, Allison Transmission and Deutz&#151;with which we have conducted business for more than 40&nbsp;years on
average. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Demand
for our products has been driven primarily by capital spending in the oil and gas industry, which accounted for an estimated 76% and 82% of our equipment revenues and an estimated 72% and 78%
of our total revenues in Fiscal 2009 and Fiscal 2010, respectively. Our extensive and diverse customer base includes many of the world's leading oilfield service companies, as well as customers in the
power generation, marine, mining, construction, commercial vehicle and material handling industries. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
of January&nbsp;31, 2011, our equipment order backlog was $375.0&nbsp;million, compared to $203.2&nbsp;million as of January&nbsp;31, 2010. In the fiscal year ended January&nbsp;31, 2011,
we generated </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>1</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>revenues
of $861.2&nbsp;million, operating profit of $10.6&nbsp;million and EBITDA of $59.1&nbsp;million, compared with revenues of $688.7&nbsp;million, operating loss of $2.6&nbsp;million
and EBITDA of $15.8&nbsp;million in the fiscal year ended January&nbsp;31, 2010. For a definition of EBITDA and a reconciliation of EBITDA to net earnings (loss) available for common unit holders,
see "&#151;Summary historical consolidated financial data." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Our business  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We manage our business through the following two segments: </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Manufacturing (representing 40% of revenues for Fiscal 2010).</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We design, manufacture and market equipment for U.S. and international oilfield service providers and
drilling and workover contractors, as well as national oil companies that require integrated and customized product solutions. We manufacture equipment specifically for hydraulic fracturing, well
stimulation, well workover, intervention and drilling operations. Our manufactured products include integrated solutions, which incorporate a variety of components into a single system, for a wide
range of oilfield services and support applications. Our manufacturing segment benefits from our long-standing relationships with our globally recognized OEMs. We have five main
manufacturing facilities across North America, comprising more than 600,000 square feet of space, that are strategically located to effectively service our customers' needs. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Distribution (representing 60% of revenues for Fiscal 2010).</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We provide stand-alone products and aftermarket parts and service for products manufactured by us, our
six key OEMs and other manufacturers. In addition, we provide rental equipment including generator sets, air compressors, rail car movers and material handling equipment to our customers. Our
aftermarket parts and service operations, which provide us with a recurring, higher-margin source of revenue, serve customers engaged in the oil and gas, power generation, marine, mining,
construction, commercial vehicle and material handling industries, as well as other industries. Throughout the period of our relationship with our key OEMs, we have been the
factory-authorized provider of their stand-alone products in specified territories, which include major oil and gas producing regions in the United States. Our arrangements with our six key OEMs
generated approximately 57% of our aftermarket parts and service revenues in the fiscal year ended January&nbsp;31, 2011. Our extensive distribution network is strategically positioned throughout
major oil and gas producing regions, enabling us to effectively support our customers. We provide in-house servicing in close proximity to our customers' operational locations as well as
on-site servicing. As of January&nbsp;31, 2011, we employed over 650 trained and certified technicians utilizing approximately 575 service bays in the United States, Canada and abroad. Additionally,
we provide aftermarket parts through our extensive network of approximately 185 authorized dealers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Industry overview  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We believe that we are well positioned to capitalize on favorable industry conditions in the markets we serve, particularly the oil
and gas industry, as well as the other industries in which our customers operate. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Increasing capital spending in the oil and gas industry.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Growing worldwide demand for energy has resulted in significantly increased capital expenditures by oil
and natural gas producers. According to Spears&nbsp;&amp; Associates,&nbsp;Inc., annual global drilling and completion expenditures (excluding Russia, China and Central Asia) have increased from
$64&nbsp;billion in 2000 to $231&nbsp;billion in 2010, representing a compound annual growth rate of 14%. Although these </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>2</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>capital
expenditures decreased by 28% from 2008 to 2009, they are projected to increase at a compound annual growth rate of 9% from 2010 to 2016, reaching $378&nbsp;billion. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Recovery in global drilling activity.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;As a result of the economic downturn of 2009, there was a dramatic reduction in global drilling activity. However, according
to Baker Hughes,&nbsp;Inc., the global rig count has recovered 63% from its low of 1,983 in May 2009 to 3,227 in December 2010, reflecting, among other things, the recent improvement in the global
economy and the increased development of unconventional oil and gas resources. The global rig count of 3,434 in March 2011 is near its highest point in approximately 25&nbsp;years. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Increasing U.S. onshore horizontal drilling activity.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Advances in drilling and completion technologies, including horizontal drilling and hydraulic fracturing,
have made the development of many unconventional resources, such as oil and natural gas shale formations, economically attractive. This has led to a dramatic increase in the development of
oil- and natural gas-producing shale formations, or "plays," in the United States. According to Baker Hughes,&nbsp;Inc., the North American horizontal rig count has risen
from 335 in January 2007 to 947 in December 2010. Suppliers of products and services to the hydraulic fracturing industry currently are benefiting from drilling and completion trends that require more
fracturing stages per well due to the increased horizontal length of the wells. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Increasing drilling in oil- and liquids-rich formations.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;While the majority of U.S. drilling rigs currently are drilling in natural gas
formations, there is increasing activity in oil- and natural gas liquids-rich formations, such as the Eagle Ford, Bakken and Niobrara Shales, as well as various resources in
Oklahoma, including the Granite Wash. Although the oil and gas industry is cyclical and oil prices historically have been volatile, we believe that many of the oil- and
liquids-rich plays are economically attractive at oil prices substantially below the current price of oil. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> International interest in shale plays.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;There is growing international interest in the development of unconventional oil and natural gas shale plays. This has
resulted in a number of joint ventures between major U.S. and large international exploration and production, or E&amp;P, companies related to shale plays in the United States. We believe that these joint
ventures, which typically require international oil companies to commit cash up front and fund significant future capital expenditures, will generate additional demand for drilling and completion
activity in the coming years. In addition, we believe that such joint ventures will continue to stimulate development of other oil and gas shale reservoirs outside the United States. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Fracturing fleet attrition should positively impact demand.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Existing hydraulic fracturing fleets are currently experiencing significantly higher levels of demand
as the result of a significant increase in the number of fracturing stages per horizontal well and increased pump pressure rates associated with the fracturing stages, which are designed to maximize
shale oil and gas production. This higher level of operation associated with shale oil and gas activity is expected to accelerate the replacement cycle of equipment. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B> Our strengths  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We believe that our operations benefit from a number of competitive strengths, including the following: </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Strong brand recognition.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We believe that the "Stewart&nbsp;&amp; Stevenson" brand has long been recognized in the oil and gas industry, as well as in other
industries we serve, and identified </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>3</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>with
high-quality products, innovative solutions and dependable service. We believe that this brand recognition represents a significant competitive advantage domestically and
internationally. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Experienced provider of integrated solutions.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our product lines include integrated, site-ready solutions, which incorporate a variety of components
into a single system for a wide range of oilfield services and support applications. We believe that our engineered product offerings are highly distinguished in their technical specifications and are
further enhanced by our aftermarket service and support. Our highly trained and experienced mechanical, electrical, electronic, industrial and software engineers and support personnel have core
competencies in product applications and support systems, sophisticated hydraulics and controls, large welded structures, low- to high-voltage electrical power generation and
switchgear, engine-driven machine design, specialty vehicle design and electrical instrumentation, controls and software-driven control packages. We strongly believe in a partnership approach in the
pursuit of our customer objectives, in which our highly qualified engineering and development teams commit to ensure that our products are tailored to meet specific customer requirements. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Established, diversified customer base.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have strong, long-standing relationships with many of our top customers. We maintain a broad and diverse
customer base, including leading oil and gas service companies, drilling contractors, integrated oil companies and national oil companies, as well as customers in the power generation, marine, mining,
construction, commercial vehicles and material handling industries. In the fiscal year ended January&nbsp;31, 2011, no single customer accounted for more than 6% of our total revenues, and our top
10&nbsp;customers, which include domestic and international businesses, collectively represented approximately 31% of our total revenues. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Extensive aftermarket business.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our extensive network of facilities at over 50 strategic locations provides our customers with high-quality parts and
service throughout the lifecycle of our products. Our extensive aftermarket parts and service sales, which are generally less sensitive to economic cycles, provide a source of recurring revenue and
typically generate higher margins than our equipment sales. This business is supported by an experienced sales force of over 200&nbsp;personnel and over 650&nbsp;trained and certified technicians.
Our depth of experience in the industries we serve and our significant, long-standing customer relationships are key components to our success. Combined with superior products, this
knowledge enables us to serve our customers and fully address our markets. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Robust training program.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We are dedicated to training for our employees, dealers and customers utilizing our multiple training facilities, our staff of
full-time trainers and an internet-based learning management system. We maintain over 200&nbsp;instructor-led and internet-based courses. We provide our domestic and
international customers with onsite training, technical documentation and quality control support. In 2010, we provided training to more than 500&nbsp;employees and over 700&nbsp;customers. Our
training efforts ensure that our customers benefit from highly trained and experienced support for the products we offer, and we believe that they provide us a competitive advantage within our
industry. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Highly experienced management team.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have a highly qualified senior management team with extensive global experience in the industries we serve. Our board of
directors includes individuals with extensive global experience in the energy industry and diversified areas of manufacturing, marketing, finance, international trade and international economic
cooperation, who are prominently regarded for their distinguished accomplishments in the United States and abroad as well as their significant business experience. We believe that our </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>4</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>board
of directors provides us with an uncommon strategic resource and competitive advantage. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Our strategy  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We believe that the implementation of the following strategic initiatives by our management team, under the leadership of our board
of directors, will enable our company to take advantage of significant demand for our well-known product lines across the global marketplace. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Leverage the Stewart&nbsp;&amp; Stevenson brand name.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We believe that our brand name enjoys significant domestic and international recognition, particularly in the
oil and gas industry, and reflects our reputation for quality products, innovative solutions and dependable service. We intend to continue to prominently feature our brand name in our sales and
marketing efforts for our core value-added equipment sales and aftermarket parts and service businesses and believe that technological innovations continue to enhance our brand. We believe that the
strength of our brand helps us to cross-sell and diversify our product lines and expand our domestic and international operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Grow our position as a market leader.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We believe that our ability to customize our products to the specific needs of our customers, combined with our comprehensive
aftermarket capabilities and broad geographic reach, position us to satisfy the growing requirements of participants in the oil and gas industry and other industries. We believe that the benefits of
our cost effectiveness programs, combined with our continuing service to industries outside of the oil and gas industry, all of which stand to be beneficiaries in the expected global economic
recovery, will serve as key components to support our ability to grow. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Improve productivity and competitiveness.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We are fully committed to the continued enhancement of our productivity through process improvements and the expansion of
our manufacturing and engineering capabilities. We continue to streamline our operations through an assembly flow line, lean manufacturing techniques, standardization, outsourcing and supply chain
enhancements, while also focusing on opportunities to customize equipment to respond to the specific needs of our customers. We believe that our continued focus on these efforts enhances our
competitive position. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Selectively pursue growth opportunities.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We intend to continue to selectively seek strategic growth opportunities domestically and internationally (particularly in
Brazil, China and the United Arab Emirates), and organically as well as through acquisitions, joint ventures, geographic expansion and the development of additional manufacturing capability. We pursue
a targeted and disciplined acquisition strategy, focused on enhancing our earnings and cash flows, diversifying our supply chain, adding complementary product offerings, improving efficiency and
growing our customer base. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Continue to develop a highly effective workforce.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have a highly trained and experienced workforce. We are dedicated to providing extensive training, education
and career development programs, as well as attractive incentive compensation plans for the benefit of our employees. We are committed to continuing to attract and retain high-quality and
experienced personnel. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=3><B> Risks related to our business and an investment in our common stock  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The risks and uncertainties described under "Risk factors" include, among others, the following factors that could have material
adverse effects on our business, financial condition and operating results and the price of our Common Stock: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Periodic economic and industry downturns may adversely impact our operating results;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>We face competition in each of our businesses;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Our international equipment sales and aftermarket parts and service operations are subject to risks associated with the
political, economic and other uncertainties inherent in foreign operations;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>If our arrangements with our suppliers, including our key OEMs, were to be adversely affected, our equipment sales and
aftermarket parts and service business may suffer;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>We generally quote our customers a fixed price for the equipment that we sell, which exposes us to the risk of cost
overruns;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Increased regulation, including regulation of current fracturing techniques, could reduce demand for our well stimulation
equipment; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Our principal stockholder could exercise control of our affairs through his beneficial ownership of all of our
Class&nbsp;B Common Stock. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>See
"Risk factors" for a discussion of the foregoing factors, as well as other factors that should be carefully considered prior to an investment in our Common Stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Our history  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Stewart&nbsp;&amp; Stevenson&nbsp;LLC was formed in November 2005 for the purpose of acquiring from Stewart&nbsp;&amp; Stevenson
Services,&nbsp;Inc., or SSSI, and its affiliates on January&nbsp;23, 2006, substantially all of their equipment, aftermarket parts and service and rental businesses that primarily served the oil
and gas industry, which we refer to collectively as the
"SSSI Acquisition." Except as otherwise expressly noted, when we refer to financial and other information about us on a historical basis prior to that date, such information reflects the operations we
acquired from SSSI prior to the acquisition. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On
February&nbsp;26, 2007, we acquired substantially all of the operating assets and assumed certain liabilities of Crown Energy Technologies,&nbsp;Inc. and certain of its affiliates, or Crown,
which we refer to as the "Crown Acquisition." Crown, which was headquartered in Calgary, Alberta, had multiple U.S. operations. Crown manufactured drilling, well servicing and workover rigs,
stimulation equipment and provided related parts and services. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> The corporate conversion  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are currently operating as a Delaware limited liability company and, prior to the consummation of this offering, we will convert
under Section&nbsp;265 of the Delaware General Corporation Law into a corporation and change our name from Stewart&nbsp;&amp; Stevenson&nbsp;LLC to Stewart&nbsp;&amp; Stevenson&nbsp;Inc. We refer to
this event as the "Corporate Conversion." Stewart&nbsp;&amp; Stevenson&nbsp;Inc. will for all purposes of Delaware law, and we believe for all purposes of federal securities law, be deemed to be the
same entity as Stewart&nbsp;&amp; Stevenson&nbsp;LLC, and all of the rights, privileges and powers of Stewart&nbsp;&amp; Stevenson&nbsp;LLC, as well as all of its assets and liabilities and other
obligations, will become those of Stewart&nbsp;&amp; Stevenson&nbsp;Inc. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>The
Corporate Conversion will not result in any revaluations or other changes under generally accepted accounting principles, or GAAP. However, as a taxable entity, Stewart and Stevenson&nbsp;Inc.
will accrue and be subject to federal and state income tax obligations on a going forward basis. As of the date of the Corporate Conversion, we will establish deferred taxes representing the
difference between the tax and book basis of our assets and liabilities. Such net tax liability created is currently estimated to be approximately $2.7&nbsp;million at January&nbsp;31, 2011 and
will result in a corresponding adjustment to decrease net earnings from continuing operations. In connection with the Corporate Conversion, we will enter into a tax matters agreement pursuant to which
we will indemnify various persons against any tax-related liability as a result of the Corporate Conversion. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
common units outstanding will, in the case of our largest stockholder, Parman Capital Group&nbsp;LLC, which is controlled by Mr. Ansary, the chairman of our board of directors, convert based on
a one-to-one conversion ratio into Class&nbsp;B Common Stock, representing 51.75% of our outstanding shares of total common stock
(</FONT><FONT SIZE=2><I>i.e.</I></FONT><FONT SIZE=2>, our Common Stock and Class&nbsp;B Common Stock together) without giving effect to this offering, and in respect of all other holders of common
units will convert based on a one-to-one conversion ratio into Common Stock, representing 48.25% of our outstanding shares of total common stock, in each case without giving
effect to this offering. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Subsequent event  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>On March&nbsp;23, 2011, we acquired 100% of the stock of EMDSI-Hunt Power,&nbsp;L.L.C. ("EMDSI") in an all cash
transaction from ITOCHU Corporation of Japan for total consideration of approximately $25.7&nbsp;million, subject to final closing adjustments. The acquisition was funded from available cash and
through borrowings under our revolving credit facility. EMDSI, which is based in Harvey, Louisiana, specializes in the marketing and distribution of medium speed diesel engines for marine propulsion,
drilling and power generation applications and is a provider of aftermarket parts and service. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Additional information  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our principal executive offices are located at 1000 Louisiana St., Suite&nbsp;5900, Houston, TX, 77002, and our telephone number is
(713)&nbsp;751-2700. We also have a website located at </FONT><FONT SIZE=2><I>www.stewartandstevenson.com</I></FONT><FONT SIZE=2>. The information that appears on or is linked to from
our website is not a part of this prospectus. </FONT></P>

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<BR></FONT><FONT SIZE=4><B>  The offering  <BR>  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2><B>


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  </B></FONT></P>

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<TR><!-- TABLE COLUMN WIDTHS SET -->
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<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
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<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><B>Shares of Common Stock offered by us </B></FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><BR><FONT SIZE=2><B>Shares of Common Stock offered by the selling stockholders </B></FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><B><BR>&nbsp;</B></FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><BR><FONT SIZE=2><B>Shares of common stock to be outstanding after this offering </B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><B><BR>&nbsp;</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><BR><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Common Stock</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><B><BR>
&nbsp;</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><B><BR>&nbsp;</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><BR><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Class&nbsp;B Common Stock</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><B><BR>
&nbsp;</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><B><BR>&nbsp;</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><BR><FONT SIZE=2> References in this prospectus to "common stock" mean our Common Stock and Class&nbsp;B Common Stock together.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><BR><FONT SIZE=2><B>Option to purchase additional shares </B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><B><BR>&nbsp;</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><BR><FONT SIZE=2> We and the selling stockholders have granted the underwriters an option for a period of 30&nbsp;days to purchase up to an aggregate
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional shares of Common Stock.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><BR><FONT SIZE=2><B>Use of proceeds </B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><B><BR>&nbsp;</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><BR><FONT SIZE=2> We estimate that the net proceeds to us of this offering, after deducting estimated underwriting discounts and offering expenses, will be approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million. We intend to use the net proceeds to repay amounts outstanding under our revolving credit facility and for general corporate purposes. We will not receive
any of the proceeds from the sale of Common Stock by the selling stockholders, including proceeds from the sale of additional shares of Common Stock by the selling stockholders, if any, upon exercise of the underwriters' option to purchase additional
shares. See "Use of proceeds."</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><BR><FONT SIZE=2><B>Dividend policy </B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><B><BR>&nbsp;</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><BR><FONT SIZE=2> We historically have not paid dividends on our common equity, other than periodic distributions to fund tax payments of our unit holders as a result of our status as a limited liability company, and
there are limitations on our ability to pay such dividends in the future. See "Dividend policy."</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><BR><FONT SIZE=2><B>New York Stock Exchange symbol </B></FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2><B><BR>&nbsp;</B></FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2> "&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><BR><FONT SIZE=2><B>Risk factors </B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><B><BR>&nbsp;</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><BR><FONT SIZE=2> Please read the section entitled "Risk factors" beginning on page&nbsp;13 for a discussion of some of the factors you should carefully consider before deciding to invest in our Common
Stock.</FONT></TD>
</TR>
</TABLE></DIV>
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 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>8</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<A NAME="page_cc72801_1_9"> </A>

<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>
 <DIV style="padding:0pt;position:relative;width:100%;margin-left:0%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2><B>


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  </B></FONT></P>

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<TR><!-- TABLE COLUMN WIDTHS SET -->
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<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
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<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><B>Conflicts of interest </B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> We intend to use at least 5% of the net proceeds of this offering to repay indebtedness owed by us to an affiliate of J.P. Morgan Securities&nbsp;LLC, an underwriter in this offering, that is the
administrative agent and a lender under our revolving credit facility. See "Use of proceeds." Accordingly, this offering will be made in compliance with the applicable provisions of Rule&nbsp;5121 of the Financial Industry Regulatory Authority,
&nbsp;Inc. This rule requires that a "qualified independent underwriter" meeting certain standards participate in the preparation of the registration statement and prospectus and exercise the usual standards of due diligence with respect
thereto.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;has agreed to act as a "qualified independent underwriter" within the meaning of
Rule&nbsp;5121 in connection with this offering. See "Underwriting (Conflicts of interest)" for a more detailed discussion of potential conflicts of interest.</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>The number of shares of our Common Stock and Class&nbsp;B Common Stock outstanding after this offering will reflect the conversion of our currently outstanding limited
liability company units into Common Stock and Class&nbsp;B Common Stock prior to the consummation of this offering in connection with the Corporate Conversion and: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>assumes no exercise of the underwriters' option to purchase up to an aggregate
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional shares of
Common Stock from us and the selling stockholders consisting of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares to be issued by us
and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares to be sold on a pro rata basis by the selling stockholders; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>assumes an initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, the midpoint of the offering range set forth
on
the cover of this prospectus; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>does not reflect a total of 396,000 restricted shares of Common Stock issued to certain of our officers and directors that
will vest upon consummation of this offering. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>9</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
NAME="page_ce72801_1_10"> </A>


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</FONT></P>

<!-- TOC_END -->

<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ce72801_summary_historical_consolidated_financial_data"> </A>
<A NAME="toc_ce72801_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Summary historical consolidated financial data  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table sets forth our summary historical consolidated financial data as of and for each of the years ended
January&nbsp;31, 2009, 2010 and 2011. The summary historical consolidated financial data as of January&nbsp;31, 2010 and 2011 and for the years ended January&nbsp;31, 2009, 2010 and 2011 were
derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary consolidated financial data as of January&nbsp;31, 2009 were derived from our audited
consolidated financial statements not included in this prospectus. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>You
should read the following information in conjunction with "Capitalization" and "Management's discussion and analysis of financial condition and results of operations" and our consolidated
financial statements and related notes included elsewhere in this prospectus. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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 </FONT></P>

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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="61pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Year ended January&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(dollars and units in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Statement of operations data:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,217,142</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>688,676</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>861,234</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of sales</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,002,166</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>577,028</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>715,967</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross profit</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>214,976</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>111,648</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>145,267</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Selling and administrative expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>138,141</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>114,188</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>104,252</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Impairment of goodwill and indefinite-lived intangible assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>31,487</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other (income) expense, net(1)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,311</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>54</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,026</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating profit (loss)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>78,146</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,594</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,554</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>24,931</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>20,489</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,886</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Earnings (loss) before income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>53,215</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(23,083</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(9,332</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income tax expense(2)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,659</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>816</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>700</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net earnings (loss) available for common unit holders</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>50,556</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(23,899</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(10,032</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma tax expense (benefit)(3)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>17,272</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(3,581</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,227</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma net earnings (loss) available for common unit holders(3)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>33,284</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(20,318</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(18,259</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net earnings (loss) available for common unit holders per common unit:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.51</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(0.24</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(0.10</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.51</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(0.24</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(0.10</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma tax effect&#151;basic</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.33</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(0.20</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(0.18</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma tax effect&#151;diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>0.33</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(0.20</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(0.18</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Weighted average units outstanding:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100,005</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100,005</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100,005</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100,005</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100,005</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100,005</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Balance sheet data (end of period):</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Working capital(4)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>313,574</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>245,485</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>238,271</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,006</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,321</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,168</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property, plant and equipment, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>93,170</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>79,206</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>75,077</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>653,962</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>514,525</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>567,603</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total debt</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>285,370</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>228,113</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>192,622</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total shareholders' equity</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>179,944</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>155,622</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>149,034</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Cash flow data:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash provided by (used in) continuing operations:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating activities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>58,470</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>66,321</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>56,864</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Investing activities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(27,776</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,940</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(14,924</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Financing activities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(42,364</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(63,733</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(36,150</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Other continuing operations financial data:</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Depreciation and amortization</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>18,869</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>18,402</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>17,053</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Capital expenditures</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,469</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,536</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(2,211</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Additions to rental equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>22,333</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>777</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(10,747</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>EBITDA(5)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>97,015</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,808</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>59,094</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>10</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
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 </DIV>
<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>
(1)&nbsp;&nbsp;&nbsp;See discussion of this impairment in "Critical accounting policies&#151;Goodwill and indefinite-lived intangible assets." </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>(2)&nbsp;&nbsp;&nbsp;Since
January&nbsp;23, 2006, we have conducted our operations as Stewart&nbsp;&amp; Stevenson&nbsp;LLC, a limited liability company, and, as a result, U.S. federal and certain state
income taxes have been paid by the holders of our equity interests. Therefore, no U.S. federal income tax expense is recorded in our statement of operations for the period from January&nbsp;23, 2006
to January&nbsp;31, 2011. The amounts shown reflect income tax expense associated with foreign jurisdictions and certain state taxes. As of the date of the Corporate Conversion, we will record
deferred taxes representing the difference between the tax and book basis of our assets and liabilities. Such net tax liability created is currently estimated to be approximately $2.7&nbsp;million
at January&nbsp;31, 2011 and will result in a corresponding adjustment to decrease net earnings from continuing operations. In connection with the Corporate Conversion, we expect to distribute cash
to our unit holders consistent with our prior practices to cover tax liabilities that will accrue to them through the date of the conversion. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(3)&nbsp;&nbsp;&nbsp;Represents
the estimated tax effect of our results of operations. We have conducted our operations as Stewart&nbsp;&amp; Stevenson&nbsp;LLC, a limited liability company, with
substantially all earnings taxed at the stockholder level. In connection with the Corporate Conversion, we will be subject to Subchapter&nbsp;C of the Internal Revenue Code of 1986, as amended, and
as a result will become taxable as a corporation and subject to U.S. federal and state income taxes. The tax rate used for pro forma purposes is the U.S. federal income tax rate of 35%, adjusted for
state taxes, federal tax credits earned and other items applied to the pre-tax book income subject to U.S. federal income taxation for the corresponding periods shown. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(4)&nbsp;&nbsp;&nbsp;Working
capital is total current assets minus total current liabilities. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(5)&nbsp;&nbsp;&nbsp;EBITDA
means earnings before interest, taxes, depreciation and amortization and impairment of goodwill and indefinite-lived intangible assets and is a non-GAAP financial
measure. We use EBITDA because we believe that such a measurement is a widely accepted financial indicator used by investors and analysts to analyze and compare companies on the basis of operating
performance and that this measurement may be used by some investors and others to make informed investment decisions. You should not consider it in isolation from or as a substitute for net income or
cash flow measures prepared in accordance with GAAP or as a measure of profitability or liquidity. EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a
substitute for analysis of our results as reported under U.S.&nbsp;GAAP. Some of the limitations are: </FONT></P>
 </DIV>
 <DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>EBITDA does not reflect our cash expenditures, or future requirements for capital
expenditures or contractual commitments;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>EBITDA does not reflect changes in, or cash requirements for, our working capital
needs;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>EBITDA does not reflect the significant interest expense, or the cash requirements
necessary to service interest or principal payments, on our debt; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>although depreciation, amortization and impairment of goodwill and
indefinite-lived intangible assests are non-cash charges, certain of these assets are being depreciated and amortized and will have to be replaced in the future, and EBITDA does not
reflect any cash requirements for such replacements. <BR></FONT>
<BR>

<P style="font-family:arial;"><FONT SIZE=2>EBITDA
calculations by one company may not be comparable to EBITDA calculations made by </FONT></P>

</DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>11</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<UL>

<P style="font-family:arial;"><FONT SIZE=2>another
company. The following table provides a reconciliation of net earnings (loss) (a GAAP financial measure) to EBITDA (a non-GAAP financial measure): </FONT></P>

</UL>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Year ended January&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net earnings (loss) available for common unit holders</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>50,556</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(23,899</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(10,032</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Add:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>24,931</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>20,489</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,886</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income tax expense (benefit)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,659</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>816</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>700</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Depreciation and amortization</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>18,869</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>18,402</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>17,053</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Impairment of goodwill and indefinite-lived intangible assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>31,487</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>EBITDA (unaudited)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>97,015</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,808</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>59,094</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>12</FONT></P>

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<BR></FONT><FONT SIZE=4><B>  Risk factors  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I>An investment in our Common Stock involves a significant degree of risk. Prior to making an investment
decision, you should carefully consider, along with other information set forth in this prospectus, the following risk factors. The following risks and uncertainties could materially adversely affect
our business, financial condition or operating results. In this event, the trading price of our Common Stock could decline, and you could lose part or all of your investment.  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Risks related to our business  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Periodic economic and industry downturns may adversely impact our operating results.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our equipment sales and, to a lesser extent, our aftermarket parts and service sales depend primarily on the level of activity in the oil and gas
industry. The oil and gas industry traditionally has been volatile, is highly sensitive to supply and demand cycles and is influenced by a combination of long-term and cyclical trends
including: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>oil and gas prices and industry perceptions of future price levels;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the cost of exploring for, producing and delivering oil and gas; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the ability of oil and gas companies to generate capital for investment purposes. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>Our
customers in the oil and gas industry historically have tended to delay capital equipment projects, including maintenance and upgrades, during industry downturns. Accordingly, the recent slowdown
in the U.S. and worldwide economic activities that followed the global financial crisis resulted in delays in capital equipment projects, impacting the activities of the industries we serve and
resulting in significantly lower new orders. Difficulty in accessing credit markets diminished product demand, adversely affected activities in manufacturing and put downward pressure on selling
prices. In the United States, producers generally react to
declining oil and gas prices by reducing expenditures. This has in the past, and may in the future, adversely affect our business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>There
can be no assurance that oil and gas prices will remain at current levels or will not decrease significantly. We are unable to predict future oil and gas prices or the level of oil and gas
industry activity. A prolonged low level of activity in the oil and gas industry would adversely affect the demand for our products and services and our business, financial condition and results of
operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We face competition in each of our businesses.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We encounter competition in all areas of our business. The principal factors on which we compete include performance, quality, customer service,
timely delivery of products, product lead times, global reach and presence, brand reputation, breadth of product line, quality of aftermarket service and support and price. In addition, our customers
increasingly demand more technologically advanced and integrated products, and we must continue to develop our expertise and technical capabilities in order to manufacture and market these products
and associated services successfully. To remain competitive, we must invest continuously in the education of our workforce, manufacturing capabilities and efficiencies, marketing, client service and
support, distribution networks and research and development. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>13</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>We
experience our greatest levels of competition in equipment sales, in terms of both engineered equipment and stand-alone products. We compete with a number of large, well-known OEMs,
manufacturers and distributors that, in some cases, have greater financial and human resources, as well as a broader geographical presence, than we do. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>With
respect to aftermarket parts and service sales, we compete with regional and local non-OEM parts and service providers, our customers' in-house service providers,
non-OEM and remanufactured parts and service providers and, for certain product offerings, other factory-authorized providers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
rental operations compete against large, well-recognized companies. Maintaining a rental fleet requires significant investment from year-to-year. If our access
to capital is substantially limited due to contractual restrictions or otherwise, or if capital becomes more costly, we may not be able to make the investments necessary to remain competitive. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Our international equipment sales and aftermarket parts and service operations are subject to risks associated with the political, economic and other uncertainties inherent
in foreign operations.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have significant equipment sales to customers outside the United States and also maintain aftermarket parts and service operations outside the
United States. For Fiscal 2010 and Fiscal 2009, we derived approximately 19% and 30%, respectively, of our revenues from sales of products and services to customers outside the United States,
including sales to U.S. customers for export. We intend to expand our international sales and operations, thereby increasing our exposure to risks associated with operating outside of the United
States. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
international sales, manufacturing and aftermarket parts and service activities are subject to risks associated with the political, economic and other uncertainties inherent in foreign operations,
which include, but are not limited to: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the effect of exchange rates on purchasing decisions and power of our foreign customers;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>changes in exchange rates which could result in increases or decreases in our costs and earnings; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>foreign exchange risks resulting from changes in foreign exchange rates, which could increase or decrease our costs and
earnings, and the implementation of exchange controls;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations
in another country; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>government regulation and the imposition of, or unexpected adverse changes in, foreign laws or regulatory requirements,
including those pertaining to import duties and quotas, taxes, trade and employment restrictions. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>Some
of the markets in which we operate are politically unstable and are subject to civil and communal unrest. Riots, strikes, the outbreak of war or terrorist attacks in locations where we have
operations or conduct business, could also adversely affect our business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Also,
we operate in some countries in which the risk of bribery is recognized. We have clear policies addressing our prohibition against illegal payments and have a comprehensive training and
certification of compliance program. However, a risk remains despite our efforts. In such </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>14</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>circumstances,
we could also face fines, sanctions and other penalties from authorities in the relevant jurisdictions, including prohibition of our participating in or curtailment of business
operations in those jurisdictions. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
occurrence of any of the foregoing factors may have a material adverse effect on our business, financial condition and results of operations. For example, to the extent we make significant
investments in foreign facilities or otherwise expand our overseas presence, the risk that our assets and our income could be adversely affected by fluctuations in the value of local currencies will
increase. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, many of our customers and the end-users of our equipment operate in international jurisdictions and therefore are subject to the foregoing risks, as well as other risks
associated with international operations. The occurrence of any of these factors may have a material adverse impact on the business and operations of our customers and end-users, which in
turn may have a material adverse effect on us. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> If our arrangements with our suppliers, including our key OEMs, were to be adversely affected, our equipment sales and aftermarket parts and service businesses may suffer.  </I></B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We currently depend on a limited number of suppliers for certain important components for our products, which include diesel engines, transmissions,
fluid pumps and material handling equipment. Our purchases from some of these suppliers are not made pursuant to long-term contracts, and our arrangements with these suppliers may be
terminated, in the case of certain arrangements, upon certain notifications and, otherwise, upon the occurrence of certain events, many of which may be beyond our control. The loss of any of these
suppliers could have a material adverse effect on our business, financial condition and results of operations. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>In
addition, a significant portion of the stand-alone equipment that we sell is manufactured by, and, in the case of our engineered equipment, incorporates components provided by, our six key
OEMs: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Detroit Diesel Corporation;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>MTU Friedrichshafen;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Allison Transmission,&nbsp;Inc.;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Electro-Motive Diesel,&nbsp;Inc.;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Hyster Company; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Deutz Corporation. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>Approximately
44% and 37% of our cost of goods sold was attributable to stand-alone products purchased from these OEMs&nbsp;in Fiscal 2010 and Fiscal 2009, respectively. In addition, a material
portion of our revenues was attributable to (1)&nbsp;sales of equipment manufactured by us, including components manufactured by these suppliers and (2)&nbsp;servicing and supplying parts for
certain products provided by these OEMs, including parts and products that are components of the equipment we manufacture. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>15</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>Our
OEM supplier arrangements, pursuant to which we distribute stand-alone products manufactured by these OEMs, which are currently effective for varying periods of time and are not exclusive, are
subject to risks that include: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the nonrenewal or termination, or material change in the terms, of such supplier contracts;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the acquisition of one or more of our six key OEMs&nbsp;by one of our competitors or another entity that could adversely
affect our relationship;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the inability of our suppliers to provide us with sufficient quantities of equipment and parts to meet the demands of our
customers; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the appointment by our suppliers of additional providers in designated territories in which we are currently the only
provider. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>The
occurrence of any of these could have a material adverse effect on our business, financial condition and results of operations. See "Business&#151;Suppliers and raw materials." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We generally quote our customers a fixed price for the equipment that we sell, which exposes us to the risk of cost overruns if we do not accurately estimate the costs
associated with the product.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Most of our engineered equipment sales contracts are "fixed-price" contracts where the original price may be set at an early stage of the process.
The terms of these contracts require us to guarantee the price of products and services that we provide and to assume the risk that the costs to provide such products and services will be greater than
anticipated. The profitability of these contracts is therefore dependent on the ability to reasonably predict the costs associated with performing the contracts. These costs may be affected by a
variety of factors, some of which are beyond our control. Our failure to accurately estimate the resources required for a project or our failure to complete our contractual obligations in a manner
consistent with the project plan upon which our fixed-price contract was based could adversely affect our profitability and could have a material adverse effect on our business, financial condition
and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Amounts included in our backlog may not result in actual revenue or translate into profits.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our backlog may not be realized as revenue or, if realized, may not result in profits. As of January&nbsp;31, 2011, our equipment order backlog was
$375.0&nbsp;million. Reductions in backlog due to cancellation by a customer or for other reasons could significantly reduce the revenue and profit we actually receive from contracts included in
backlog. If our backlog fails to materialize, we could experience a reduction in revenue and a decline in profitability, which would result in a deterioration of our financial condition, profitability
and liquidity. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Increased regulation of current fracturing techniques could reduce demand for our well stimulation equipment.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Fracturing is a process that results in the creation of fractures in geological formations in order to stimulate production from oil and gas wells.
Fracturing seeks to increase the rate and ultimate recovery of oil and natural gas. Concerns have been raised over possible environmental damages related to fluids used in the fracturing process. The
FRAC (Fracturing Responsibility and Awareness of Chemicals) Act was introduced in the U.S.&nbsp;Congress in June 2010 seeks to amend the Safe Drinking Water Act so that hydraulic fracturing would be </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>16</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>regulated
on a federal level. A number of state and provincial regulatory authorities are also considering more stringent regulation of fracturing. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Increased
regulation of hydraulic fracturing would likely delay or halt some projects, including unconventional oil and gas projects. Expanded regulations would likely introduce a period of
uncertainty as companies determine how to proceed. This could result in a reduction of demand for our products and services and could have a material adverse effect on our business, financial
condition and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Our and our customers' operations are subject to a variety of environmental, health and safety laws and regulations that may increase our costs, limit the demand for our
products and services or restrict our operations.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our operations and the operations of our customers are subject to federal, state, local and foreign laws and regulations relating to the protection
of the environment and of human health and safety, including laws and regulations governing the investigation and clean up of contaminated properties, as well as air emissions, water discharges, waste
management and disposal. Such laws and regulations have, and are expected to continue to, become more stringent over time, requiring modifications to our products and operations. These laws and
regulations affect the products and services that we design, market and sell, as well as the facilities where we manufacture and service our products. In addition, environmental laws and regulations
could limit our customers' activities in the oil and gas sector and subsequently the demand for our products. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Environmental
laws and regulations may provide for "strict liability" for damages to the environment or natural resources or threats to public health and safety, rendering a party liable without
regard to negligence of or fault on the part of such party. Sanctions for noncompliance may include revocation of permits, temporary or permanent shutdown of certain operations, corrective action
orders, administrative or civil penalties, and criminal prosecution. Some environmental laws and regulations provide for joint and several strict liability for the investigation or remediation of
spills and releases of hazardous substances, rendering a party potentially responsible for more than its proportionate share of, or responsible for the entire, liability. In addition, we may become
subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances, as well as damage to natural resources. Pursuant to certain environmental laws
and regulations, we may become subject to liability (including with respect to off-site disposal matters or formerly owned or operated facilities) for the conduct of or conditions caused
by others, or for our own acts that were in compliance with all applicable laws and regulations at the time such acts were performed. Any of these laws and regulations could result in claims, fines,
expenditures or other requirements that could have a material adverse effect on our business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
invest financial and managerial resources to comply with environmental laws and regulations and will continue to do so in the future. We cannot determine the future cost of compliance or the impact
of environmental regulation on our future operations. In the future, we and our OEMs&nbsp;may not be able to produce adequate supplies of equipment that are compliant with increasing emission or
other environmental standards to meet existing demand, which would have an adverse effect on us. The modification of, or changes in the interpretation or enforcement of, existing laws or regulations,
or the adoption of new laws or </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>17</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>regulations
imposing more stringent environmental restrictions, could have a material adverse effect on our business, financial condition and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
businesses are subject to a variety of other regulatory restrictions, such as those governing workplace safety and health. The failure to comply with these rules may result in civil penalties and
criminal prosecution. Further, laws and regulations in this and other areas are complex and change frequently. Changes in laws or regulations, or in their enforcement or interpretation, could subject
us to material costs. We cannot determine the extent to which our future operations and earnings may be so affected. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
also expect that scientific examination of and political attention to issues surrounding the existence and extent of climate change will continue. A variety of regulatory developments,
both domestic and international, have been introduced that are focused on restricting or managing the emission of carbon dioxide, methane and other greenhouse gases. These developments and further
legislation that may be enacted, or the development or changes within international accords could adversely affect the demand for or suitability of our products and services. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Our projects are subject to numerous hazards and, our record and reputation for safety is important to our business. If we do not maintain an adequate safety record, we may
be ineligible to bid on certain projects, could be terminated from existing projects and our reputation could be harmed.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our employees and customers are exposed to numerous hazards during the conduct of our business, including electrical contacts and flashes, fires,
natural gas explosions, mechanical failures and transportation accidents. These hazards can cause personal injury and loss of life, severe damage to or destruction of property and equipment and other
consequential damages, and may result in suspension of operations, civil damage claims and criminal fines and penalties that could have a material adverse effect on our business and results of
operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
safety record is important. If serious accidents or fatalities occur or our safety record deteriorates, our reputation or prospects for obtaining future business could be negatively affected. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> The occurrence of an event not fully covered by insurance could have a material adverse effect on our business, financial condition and results of operations.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our insurance does not provide coverage for all risks, and it may not be adequate to cover all claims that may arise. The occurrence of an event not
fully covered by insurance could have a material adverse effect on our business, financial condition and results of operations. Moreover, particular types of insurance coverage may not be available to
us in the future, we may retain additional risk through higher insurance deductibles or we may be unable to continue to obtain our desired level of insurance coverage at commercially reasonable rates. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Because
many of our products and the products that we distribute are complex and utilize many components, processes and techniques, undetected errors and design flaws may occur. Product defects result
in higher product service, warranty and replacement costs and may cause damage to our customer relationships and industry reputation, all of which may negatively impact our results of operations. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>18</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>The
industries that we serve are subject to inherent risks, including equipment defects, malfunctions, failures and natural disasters. These risks may expose our customers to liability for personal
injury, wrongful death, property damage, pollution and other environmental damage. We also may become involved in litigation related to such matters. Any litigation arising from a catastrophic
occurrence involving our equipment or services could result in large claims for damages. Any increase in the frequency or severity of such incidents, or the general level of compensation awards with
respect to such incidents, could affect our ability to obtain projects from our customers or acquire adequate insurance coverage at commercially reasonable rates. In addition to seeking compensation
from us, customers who suffer losses as a result of the occurrence of such events may also reduce or terminate their business with us, which may further harm our results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We are susceptible to adverse weather conditions affecting the Gulf Coast.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Certain areas in and near the Gulf Coast experience hurricanes and other extreme weather conditions on a relatively frequent basis. Our headquarters,
manufacturing and aftermarket parts and service facilities in Houston are susceptible to significant damage, and our New Orleans and other Gulf Coast facilities are subject to significant damage or
total loss by these storms. Damage caused by high winds and floodwater could potentially cause us to curtail operations at these facilities for a significant period of time until damage can be
assessed and repaired. Moreover, even if we do not experience direct damage from any of these storms, we may experience disruptions of our operations because customers may curtail their activities due
to damage to their facilities in and near the Gulf of Mexico. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Due
to the losses as a consequence of the hurricanes that may affect the Gulf Coast in the future, we may not be able to obtain future insurance coverage comparable to our current
coverage, putting us at a greater risk of loss due to severe weather conditions. Future hurricanes in the region may increase costs and deductibles, limit maximum aggregate recoveries under available
policies or decrease the availability of insurance. Any significant uninsured losses could have a material adverse effect on our business, financial condition and results of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We may continue to expand through acquisitions of other businesses, which may divert our management's attention, result in dilution to our stockholders and consume resources
that are necessary to sustain our business. We may not be able to successfully integrate acquired businesses with our business, and we may not realize the anticipated benefits of such acquisitions.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Acquiring complementary businesses from third parties is an important part of our growth strategy. Our acquisition strategy depends on the
availability of suitable acquisition candidates at reasonable prices. This strategy also depends on our ability to resolve challenges associated with integrating acquired businesses into our existing
business. These challenges include: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>integration of product lines, sales forces, customer lists and manufacturing facilities;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>development of management expertise outside of our existing business;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>diversion of management time and resources;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>harm to our existing business relationships; </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>19</FONT></P>

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<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>potential loss of key employees of the acquired business; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>possible divestitures, inventory write-offs and other charges. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>We
cannot be certain that we will find suitable acquisition candidates or that we will be able to meet these challenges successfully. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>An
acquisition could absorb substantial cash resources, require us to incur or assume debt obligations, or issue additional common or preferred equity. Restrictions in the agreements governing our
indebtedness may prohibit us from obtaining additional financing, and, if we are not able to obtain financing, we may not be able to consummate acquisitions. If we issue common equity securities or
other securities convertible into common equity securities in connection with an acquisition, we may dilute your interest as a holder of our Common Stock. If we issue preferred equity, the rights of
holders of that preferred equity may be senior to your rights as a holder of our Common Stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Negotiating
these transactions can be time-consuming, difficult and expensive, and our ability to close these transactions may often be subject to approvals, including from regulatory
authorities, that are beyond our control. Consequently, we can make no assurances that these transactions, once undertaken and announced, will close. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, following an acquisition, we may have higher expenses and therefore may not achieve the results that we anticipated at the time of the acquisition, especially if we are not able to
maintain or increase the revenues of the combined business. Acquired entities also may be highly leveraged, dilutive to our earnings per share or have unknown liabilities. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We may not be able to attract and retain qualified employees.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>There is significant demand in our industry for skilled technicians and other qualified employees, including specialty servicing and material
handling technicians, direct manufacturing labor and engineers. This demand is more pronounced in certain locations in which we operate where the demand for skilled workers is high. The delivery of
our products and services requires personnel with specialized skills. A significant increase in the wages paid by competing employers could result in a reduction of our skilled labor force, increases
in the wage rates that we must pay or both. If either of these events were to occur, our capacity and profitability could be diminished and our growth potential could be impaired. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Failure to maintain key licenses could have a material impact on our operations.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The part of our business that consists of the sale, distribution, installation and warranty repair of large engines and transmissions used in
commercial vehicle applications in Texas requires certain Texas state motor vehicle licenses that are subject to annual renewal. While these licenses historically have been renewed on a regular basis,
there can be no assurance that any particular license will be renewed in the future. The termination of, or failure to renew, licenses could have a material adverse effect on our financial position,
results of operations and cash flows. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>20</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B><I> We may be unable to adequately protect or enforce our intellectual property rights or the value thereof, including our rights to use the "Stewart&nbsp;&amp; Stevenson"
trademark, which could have a material adverse effect on our business.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The protection of our patents, trademarks, service marks, copyrights, trade secrets, domain names and other intellectual property rights, including
know-how, confidential or proprietary technical and business information, is important to our businesses. In particular, our rights to the "Stewart&nbsp;&amp; Stevenson" trademark and logo
are important to our sales and marketing efforts. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>To
protect our intellectual property, including our know-how and other proprietary information, we rely on a combination of copyright, patent, trademark, domain name, trade secret and
unfair competition laws, along with confidentiality procedures, contractual provisions and other similar measures. While we have registrations for some of our trademarks in certain countries,
including the United States, protection for intellectual property rights is territorial, and may not be available or enforceable in every country in which our intellectual property and technology is
used. Accordingly, we cannot ensure our ability to use, on an exclusive basis or otherwise, without risk, our intellectual property, including the "Stewart&nbsp;&amp; Stevenson" trademark and logo,
particularly in countries where we, or our licensors, do not have trademark registrations, patents for our technology or copyright protection. The risks relating to our intellectual property include,
among others, potentially being sued for infringement or other violations, paying related damage awards or other fees and costs or having to redesign or cease use of our intellectual property in a
country where a third party has previously established rights in such intellectual property. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>With
respect to intellectual property for which we or our licensors currently have protection, there is also the risk that: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the patents, copyrights, trademarks, domain names, intellectual property licenses and other intellectual property held by,
used and/or licensed to us, may be challenged, rejected or determined to be invalid; or </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the confidentiality procedures that we have in place for maintaining trade secrets and other proprietary information may
not be properly followed, which may result in the loss of such rights. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>Policing
and enforcing our intellectual property rights, protecting our trade secrets and other know-how, and determining the validity and scope of our intellectual property and related
rights is important, but requires significant resources, particularly if litigation is necessary. Potential litigation could divert our management's time, attention and resources, delay our product
shipments or require us to enter into royalty or license agreements, which may not be available under commercially reasonable terms, if at all. Moreover, the value of our intellectual property rights
may be impaired without infringement occurring. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Our level of indebtedness could negatively affect our financial condition, adversely affect our ability to raise additional capital and harm our ability to react to changes
to our business.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>At January&nbsp;31, 2011, we had approximately $192.6&nbsp;million of indebtedness, consisting of $35.2&nbsp;million outstanding under our
asset-based revolving credit facility, $150.0&nbsp;million of outstanding senior notes and $7.4&nbsp;million of other notes payable. While we intend to use a portion of the proceeds of this
offering to repay amounts outstanding under our revolving </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>21</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>credit
facility, we may make additional borrowings at any time under our revolving credit facility, which provides for maximum borrowings of $250.0&nbsp;million (expandable, subject to certain
conditions and commitments, to $325.0&nbsp;million). Borrowings under our revolving credit facility accrue interest at a floating rate and, accordingly, an increase in interest rates would result in
a corresponding increase in our debt servicing requirements. Subject to restrictions in our revolving credit facility and the indenture governing our senior notes, we may also incur additional
indebtedness. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
level of indebtedness could have important consequences to you, including the following: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our use of a substantial portion of our cash flow from operations to pay interest on our indebtedness will reduce the
funds available to us for operations and other purposes;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our ability to obtain additional debt or equity financing for working capital, capital expenditures, product development,
debt service requirements, acquisitions or general corporate purposes may be impaired;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our level of indebtedness could place us at a competitive disadvantage compared to our competitors that may have
proportionately less debt;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate may be
limited; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our level of indebtedness makes us more vulnerable to economic downturns and adverse developments in our business. </FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Our revolving credit facility and the indenture governing our senior notes impose significant operating and financial restrictions on us, which may prevent us from pursuing
our business strategies or favorable business opportunities.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our revolving credit facility and the indenture governing our senior notes impose significant operating and financial restrictions on us. These
restrictions limit or prohibit, among other things, our ability to: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>incur or assume indebtedness, or provide guarantees in respect of obligations of other persons; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>purchase, redeem or repay subordinated indebtedness prior to stated maturities;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>pay dividends on or redeem or repurchase our stock or make other distributions;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>issue redeemable stock and preferred stock;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>make loans, investments or acquisitions;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>incur liens;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>engage in sale/leaseback transactions;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>restrict dividends, distributions, loans or other payments or asset transfers from our subsidiaries; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>sell or otherwise dispose of assets, including capital stock of our subsidiaries; </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>22</FONT></P>

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<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>enter into certain transactions with affiliates;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>consolidate or merge with or into, or sell substantially all of our assets to, another person;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>enter into new lines of business; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>otherwise conduct necessary corporate activities. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>The
revolving credit facility and the indenture governing the senior notes contain financial and operating covenants with which we must comply during the term of the agreements. These covenants
include the maintenance of certain financial ratios, restrictions related to the incurrence of certain indebtedness and investments, and a prohibition on the creation of certain liens. The financial
covenant for the revolving credit facility requires that we maintain a fixed charge coverage ratio, as defined in the credit agreement, of at least 1.1 to 1.0 at such time that our available borrowing
capacity under the revolving credit facility is $30.0&nbsp;million or less. The financial covenant for the senior notes, which is applicable were we to incur additional indebtedness (subject to
various exceptions set forth in the underlying indenture), requires that, after giving effect to the incurrence of such additional indebtedness, we have a fixed charge coverage ratio, as described in
the indenture, of at least 2.5 to 1.0. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>A
breach of any of these covenants could result in a default under our revolving credit facility or our senior notes. If any such default occurs, the lenders under our revolving credit facility and
the holders of our senior notes may declare all outstanding amounts, together with accrued interest and other amounts payable thereunder, to be immediately due and payable. The lenders under our
revolving credit facility also have the right in these circumstances to terminate any commitments they have to provide further funds. In addition, following an event of default under our revolving
credit facility, the lenders under the revolving credit facility will have the right to proceed against the collateral granted to them to secure the amounts payable thereunder, and which force us into
bankruptcy or liquidation. A default on certain other indebtedness could give rise to cross-default or cross-acceleration rights under our revolving credit facility or our senior notes. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Through his beneficial ownership of all of our Class&nbsp;B Common Stock, Mr.&nbsp;Ansary could exercise control of our affairs, and his interests may not be fully
aligned with the holders of our Common Stock.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Upon consummation of this offering, we will have two classes of common stock, Common Stock and Class&nbsp;B Common Stock. The holders of Common
Stock generally will have rights identical to holders of Class&nbsp;B Common Stock, except that holders of Common Stock will be entitled to one vote per share, whereas holders of Class&nbsp;B
Common Stock will be entitled to ten votes per share. Holders of both classes of common stock generally will vote together as a single class on all matters presented to stockholders for their vote or
approval, except as otherwise required by Delaware law. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Upon
consummation of this offering, all issued and outstanding shares of Class&nbsp;B Common Stock will be owned beneficially by Mr.&nbsp;Hushang Ansary, the chairman of our board of directors and
our largest stockholder, and, through his beneficial ownership of all of our outstanding Class&nbsp;B Common Stock and of Common Stock, he will control approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of total
combined voting power of our outstanding common stock. As such, Mr.&nbsp;Ansary will continue to be able to control our policies and operations, including regarding management and key </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>23</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>strategic
decisions. While the Class&nbsp;B Common Stock will automatically convert into Common Stock if transferred to a third party or upon the death of Mr.&nbsp;Ansary, the Class&nbsp;B
Common Stock will not convert into Common Stock if transferred to Mr. Ansary, entities controlled by Mr.&nbsp;Ansary or to us. Because of the voting rights attendant to the Class&nbsp;B Common
Stock, Mr.&nbsp;Ansary could transfer a substantial portion of his beneficial equity interest and continue to exercise control over our affairs, and his interests may not be fully aligned with those
of the holders of our Common Stock. In addition, the voting power of Mr.&nbsp;Ansary through his ownership of our Class&nbsp;B Common Stock makes his support necessary for any potential mergers,
takeovers or other change of control transactions. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Risks related to this offering, the securities markets and ownership of our Common Stock  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> We may invest or spend our net proceeds from this offering in ways that may not yield an acceptable return to you.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Although we plan to use a portion of our net proceeds from this offering to repay amounts outstanding under our revolving credit facility, we expect
to use the remainder of the net proceeds for general corporate purposes. You will have no advance opportunity to evaluate our decisions and may not agree with the manner in which we spend such
proceeds. We may not be successful investing the proceeds from this offering in either our operations or external investments. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Shares of common stock eligible for future sale may cause the market price of our Common Stock to drop significantly, even if our business is doing well.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>After this offering, we will have&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock outstanding consisting
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Common Stock and
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Class&nbsp;B Common Stock. Of these shares, the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Common Stock we and the
selling stockholders are selling in this offering, or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
shares of Common Stock if the underwriters exercise their option to purchase additional shares in full, will be freely tradable without restriction under the Securities Act of 1933, as amended (the
"Securities Act"), except for any shares of common stock purchased by one of our "affiliates" as defined in Rule&nbsp;144 under the Securities Act. All of the common stock outstanding other than the
shares of Common Stock sold in this offering (a total of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares, or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares if the underwriters
exercise their option to purchase additional shares in full), will be
"restricted securities" within the meaning of Rule&nbsp;144 under the Securities Act and subject to lock-up arrangements. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>In
connection with this offering, we and our executive officers and directors and the holders of all of our outstanding common stock and common stock equivalents have agreed that, during the period
beginning from the date of this prospectus and continuing to and including the date 180&nbsp;days after the date of this prospectus, neither we nor any of them will, directly or indirectly, offer,
sell, offer to sell, contract to sell or otherwise dispose of any shares of our common stock or securities convertible into or exchangeable or exercisable for any common stock without the prior
written consent of J.P. Morgan Securities&nbsp;LLC, on behalf of the underwriters, except in limited circumstances. See "Underwriting (Conflicts of interest)" for a description of these
lock-up arrangements. Upon the expiration of these lock-up agreements,&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock,
or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock if the underwriters
exercise their option to purchase additional shares in full, will be eligible for sale in the public market </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>under
Rule&nbsp;144 of the Securities Act, subject to volume limitations and other restrictions contained in Rule&nbsp;144. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>After
this offering, the holders of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock, or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock if the
underwriters exercise their option to purchase additional shares in full,
will have rights, subject to some limited conditions, to demand, in the case of Parman Capital Group&nbsp;LLC and EC Investments&nbsp;B.V., that we file registration statements on their behalf
and, in the case of Parman Capital Group&nbsp;LLC, EC Investments&nbsp;B.V. and certain other holders, to include their shares of common stock in registration statements that we file on our behalf
or on behalf of other stockholders. By exercising their registration rights and selling a large number of shares of common stock, these holders could cause the price of our Common Stock to decline.
Furthermore, if we file&nbsp;a registration statement to offer additional shares of our Common Stock and have to include shares of common stock held by those holders, it could impair our ability to
raise needed capital by depressing the price at which we could sell our Common Stock. See "Shares eligible for future sale&#151;Registration rights." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Also,
in the future, we may issue our securities in connection with investments and acquisitions. Common Stock issued in connection with an investment or acquisition could constitute a material
portion of our then outstanding common stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> An active market for our Common Stock may not develop, and the initial public offering price of our Common Stock may not be indicative of the market price of our Common
Stock after this offering.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Prior to this offering, there has been no public market for our Common Stock. An active market for our Common Stock may not develop or be sustained
after this offering. If an active market for our Common Stock does not development, the price or our Common Stock may not be maintained or could decrease. The initial public offering price of our
Common Stock will be determined by negotiations among us, the selling stockholders and the representatives of the underwriter, based on numerous factors that we discuss in the "Underwriting (Conflicts
of interest)" section of this prospectus. This price may not be indicative of the market price at which our Common Stock will trade after this offering. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> We may not pay regular dividends on our Common Stock, so you may not receive funds without selling your Common Stock.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We historically have not paid dividends on our common equity, other than periodic distributions to fund tax payments of our unit holders as a result
of our status as a limited liability company. Subject to Delaware law, our board of directors will determine the payment of future dividends on our Common Stock, if any, and the amount of any
dividends in light of any applicable contractual restrictions limiting our ability to pay dividends, our earnings and cash flows, our capital requirements, our financial condition and other factors
our board of directors deems relevant. The terms of our revolving credit facility and the indenture governing our senior notes restrict our ability to pay dividends or other distributions on our
equity securities. In addition, the payment of dividends is subject to approval of the holders of a majority of the combined voting power of Common Stock and Class&nbsp;B Common Stock, voting
together as a single class. Accordingly, you may have to sell some or all of your Common Stock in order to generate cash from your investment. You may not receive a gain on your investment when you
sell our Common Stock, and may lose all or the entire amount of your investment. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>25</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B><I> The price of our Common Stock may be volatile.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The market price of our Common Stock could be subject to significant fluctuations after this offering and may decline below the initial public
offering price. You may not be able to resell your shares at or above the initial public offering price. Among the factors, many of which are beyond our control, that could affect our stock price
are: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>industry developments, such as the price of oil, levels of capital expenditures by oil and natural gas producers,
increased regulation and global rig count;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our operating and financial performance and prospects;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>quarterly variations in the rate of growth of our financial indicators, such as earnings per share, net income and
revenues;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>changes in revenue or earnings estimates;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>publication of research reports by analysts;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>speculation in the press or investment community;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>strategic actions by us or our competitors, such as acquisitions or restructurings;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>sales of our Common Stock by us or our stockholders;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>actions by institutional investors;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>general market conditions; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>U.S. and international economic, legal and regulatory factors unrelated to our performance. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>The
stock markets in general have experienced extreme volatility that has at times been unrelated to the operating performance of particular companies, and companies experiencing extremely volatile
stock price have been the subject of securities class actions. These broad market fluctuations may adversely affect the trading price of our Common Stock, and any legal actions against us could have
an adverse affect on our financial condition. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> As a publicly traded company, we will become subject to additional regulation and incur additional administrative costs relating to compliance with U.S. securities laws and
New York Stock Exchange requirements.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We prepare and file annual, quarterly and current reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As a publicly
traded company, we will be required to comply with additional rules and regulations promulgated by the Securities and Exchange Commission (the "SEC"), including additional requirements mandated by the
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and the rules and regulations of the New York Stock Exchange. For example, we will be required to include in our annual reports on
Form&nbsp;10-K an attestation report from our auditors as to our management's assessment of our internal control over financial reporting. Compliance with these rules and regulations
will result in an ongoing increase in our legal, audit and financial compliance costs and could result in the diversion of management attention from operations and strategic opportunities and will
make legal, accounting and administrative activities more time consuming and costly. As a result of this offering, we expect to incur higher general and administrative expenses relating to companies </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>26</FONT></P>

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<BR>

<P style="font-family:arial;"><FONT SIZE=2>with
publicly traded equity securities, including, among other things, increased costs to maintain insurance for directors and officers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> If we fail to maintain an effective system of internal controls, we may not be able to report our financial results accurately or prevent fraud.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We produce our financial statements in accordance with the requirements of U.S.&nbsp;GAAP; however, while we have performed our own analysis as to
the effectiveness of our internal control over financial reporting, our independent registered public accounting firm has not attested to the effectiveness of our internal control over financial
reporting pursuant to Section&nbsp;404 of the Sarbanes-Oxley Act ("Section&nbsp;404"). Effective internal controls are necessary for us to provide reliable financial reports and to prevent fraud
and to operate successfully as a publicly traded company. Our efforts to maintain an effective system of internal controls may not be successful, and we may be unable to maintain adequate internal
controls over our financial processes and reporting in the future, including compliance with the obligations under Section&nbsp;404. Any failure to maintain effective internal controls, difficulties
encountered in their implementation or other effective improvement of our internal controls could impact our operating results or cause us to fail to meet our reporting
obligations. Given the difficulties inherent in the design and operation of internal controls over financial reporting, in the future, we or our independent registered public accounting firm may not
be able to conclude that our internal control over financial reporting are effective. Ineffective internal controls may subject us to regulatory scrutiny and a loss of confidence in our reported
financial information, which could have an adverse effect on our business and a negative effect on the trading price of our Common Stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Provisions in our charter documents or Delaware law, as well as Mr.&nbsp;Ansary's beneficial ownership of all of our outstanding Class&nbsp;B Common Stock, may inhibit a
takeover, which could adversely affect the value of our Common Stock.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our certificate of incorporation and bylaws and Delaware corporate law will contain provisions that could delay or prevent a change of control or
changes in our management that a stockholder might consider favorable. These provisions will apply even if the offer may be considered beneficial by some of our stockholders. See "Description of
capital stock" for a description of these provisions. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, upon consummation of this offering, Mr.&nbsp;Ansary, through his beneficial ownership of all of our outstanding Class&nbsp;B Common Stock and of Common Stock, will control
approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of the total combined voting power of our outstanding common stock, which will give him the ability to prevent a potential takeover of our company. If a change of control
or change in management is delayed or prevented, the market price of our Common Stock could decline. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Purchasers in this offering will experience immediate and substantial dilution in net tangible book value per share.  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If you purchase shares of our Common Stock in this offering, you will experience immediate and substantial dilution of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share
based on an assumed offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, the midpoint of the estimated price range shown on the cover page of this prospectus, because the price that you pay will
be
substantially greater than the net tangible book value per share of the shares you acquire. This dilution is due in large part to the fact that our earlier investors paid substantially less than the
initial public offering price when they purchased their shares. If the underwriters exercise their option to purchase additional shares, there will be further dilution to new investors. See "Dilution"
for more information. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>27</FONT></P>

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<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ci72801_special_note_regarding_forward-looking_statements"> </A>
<A NAME="toc_ci72801_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Special note regarding forward-looking statements  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This prospectus includes statements that are, or may deemed to be, "forward-looking statements." These forward-looking statements can
be identified by the use of forward-looking terminology, including the terms "believes," "estimates," "anticipates," "expects," "intends," "plans," "may," "will" or "should" or, in each case, their
negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts and are not limited to the outlook for our future business
and financial performance. They appear in a number of places throughout this prospectus and include statements regarding our intentions, beliefs or current expectations concerning, among other things,
our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>By
their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and some of which are
beyond our control. We believe that these risks and uncertainties include: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>periodic economic and industry downturns affecting the oil and gas industry;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>competitive pressures in the industries that we serve;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>factors affecting our international sales and operations;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the potential loss of a key OEM supplier;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our failure to accurately estimate costs associated with products produced under fixed-price contracts; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our ability to translate backlog into revenue and profit;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the effect of regulation of hydraulic fracturing on the demand for our products;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the impact of governmental laws and regulations, including environmental laws and regulations;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the hazards to which our employees and customers are exposed during the conduct of our business; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the occurrence of events not covered by insurance;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our susceptibility to adverse weather conditions affecting the Gulf Coast;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>unforeseen difficulties relating to acquisitions;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our ability to attract and retain qualified employees;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our failure to maintain key licenses;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our ability to protect our intellectual property;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our level of indebtedness and restrictions on our activities imposed by our debt instruments; </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>28</FONT></P>

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<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our principal stockholder could exercise control of our affairs through his beneficial ownership of all of our
Class&nbsp;B Common Stock; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the other factors described under "Risk factors." </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>These
factors should not be construed as exhaustive and should be read with the other cautionary statements in this prospectus. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We
caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry
in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this prospectus. In addition, even if our results of operations, financial
condition, liquidity and growth, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this prospectus, those results or developments may
not be indicative of results or developments in subsequent periods. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Any
forward-looking statements which we make in this prospectus speak only as of the dates of such statements, and, except as required under the federal securities laws and the rules and regulations
of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements after we distribute this prospectus, whether as a result of new information, future events or
otherwise. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be
viewed as historical data. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>29</FONT></P>

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<BR></FONT><FONT SIZE=4><B>  Market and industry data  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This prospectus includes market share and industry data and forecasts that we obtained from industry publications and surveys and
internal company sources. As noted in this prospectus, Baker Hughes,&nbsp;Inc. and Spears&nbsp;&amp; Associates,&nbsp;Inc. were the primary sources for third-party industry data and forecasts.
Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. While we have no reason to believe that
this information is not accurate or unreliable, we have not independently verified any of the data from third-party sources, nor have we ascertained the underlying economic assumptions relied upon
therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding the industry data presented herein, estimates
included in such data involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading "Risk factors" in this prospectus. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>30</FONT></P>

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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ci72801_use_of_proceeds"> </A>
<A NAME="toc_ci72801_3"> </A>
<BR></FONT><FONT SIZE=4><B>  Use of proceeds  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We estimate that the net proceeds from this offering with respect to the shares of Common Stock to be sold by us will be
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, after deducting underwriting discounts and commissions and estimated expenses payable by us in connection with this offering and assuming a public offering
price of
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share (the midpoint of the price range
set forth on the cover of this prospectus). We will not receive any of the proceeds from the sale of shares by the selling stockholders. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
intend to use the net proceeds to repay amounts outstanding under our revolving credit facility and for general corporate purposes. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>An
affiliate of J.P.&nbsp;Morgan Securities&nbsp;LLC, an underwriter in this offering, is the administrative agent and a lender under our revolving credit facility and will, accordingly, receive
portions of the proceeds used to repay borrowings thereunder. See "Underwriting (Conflicts of interest)." The revolving credit facility is an asset-based facility that matures on February&nbsp;13,
2012, provides for borrowings of up to $250.0&nbsp;million and accrues interest at LIBOR plus a margin ranging from 1.25% to 2.0% per annum, based on our leverage ratio. As of January&nbsp;31,
2011, approximately $35.2&nbsp;million of borrowings were outstanding under the revolving credit facility and bore interest at a weighted average interest rate of LIBOR plus 1.5%, or 2.02%. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>A
$1.00 increase (decrease) in the assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share would increase (decrease) the net proceeds to us from this offering by
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated
underwriting
discounts and commissions and estimated offering expenses payable by us. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>31</FONT></P>

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<A NAME="toc_ci72801_4"> </A>
<BR></FONT><FONT SIZE=4><B>  Dividend policy  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We historically have not paid dividends on our common equity, other than periodic distributions to fund tax payments of our unit
holders as a result of our status as a limited liability company. Our future decisions concerning the payment of dividends on our Common Stock will depend upon our results of operations, financial
condition, contractual obligations, business prospects and capital expenditure plans, as well as any other factors that our board of directors may consider relevant. Our ability to pay dividends is
subject
to covenants contained in our revolving credit facility and the indenture governing our senior notes. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>32</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ck72801_capitalization"> </A>
<A NAME="toc_ck72801_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Capitalization  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The table below shows our cash and cash equivalents and capitalization as of January&nbsp;31, 2011. The table also shows such
capitalization as adjusted to give effect to (1)&nbsp;the Corporate Conversion and (2)&nbsp;this offering, assuming a public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, and our receipt
and
application of the estimated net proceeds of this offering and does not give effect to (a)&nbsp;the tax impact estimated to be approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million for deferred taxes from
our conversion from a limited liability company to a corporation in connection with the Corporate Conversion or (b)&nbsp;the distribution to our unit holders to fund tax payments of such unit
holders as a result of our status as a limited liability company prior to the Corporate Conversion. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>You
should read the table in conjunction with the information set forth under "Use of proceeds," "Selected historical consolidated financial data" and "Management's discussion and
analysis of financial condition and results of operations" and our consolidated financial statements and related notes included elsewhere in this prospectus. </FONT></P>
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<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="65pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="82pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=8 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>As of January&nbsp;31, 2011 </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Actual</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>As adjusted(1)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=8 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,168</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current debt:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current portion of long-term debt</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>40</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Notes payable</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,401</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total current debt</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,441</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term debt:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Revolving credit facility(2)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35,181</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Senior notes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>150,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total long-term debt</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>185,181</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total debt</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>192,622</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shareholders' equity:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common units, 100,005,000 units issued and outstanding</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>74,113</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>(3)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Preferred stock, 100,000,000 shares authorized, 0 issued and outstanding</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common Stock, $0.01 par value; 600,000,000 shares authorized,
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares issued and outstanding as adjusted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Class&nbsp;B Common Stock, $0.01 par value; 300,000,000 shares authorized,
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares issued and outstanding as adjusted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Additional paid-in capital</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accumulated other comprehensive income</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,092</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Retained earnings</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>69,829</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total shareholders' equity</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>149,034</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total capitalization</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>341,656</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=8 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>
(1)&nbsp;&nbsp;&nbsp;A $1.00 increase (decrease) in the assumed initial public offering price per share would increase (decrease) each of as adjusted cash and cash equivalents, total shareholders' equity
and total capitalization by $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after
deducting
underwriting discounts and estimated offering expenses payable by us. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(2)&nbsp;&nbsp;&nbsp;Our
revolving credit facility provides for up to $250.0&nbsp;million of borrowings. As of January&nbsp;31, 2011, we had approximately $35.2&nbsp;million drawn under our
revolving credit facility. We expect to repay all amounts outstanding under our revolving credit facility with a portion of the proceeds of this offering. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(3)&nbsp;&nbsp;&nbsp;Reflects
the conversion of our common units based on a one-to-one conversion ratio into common stock in connection with the Corporate Conversion. </FONT></P>
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>33</FONT></P>

<HR NOSHADE>
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</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="cm72801_dilution"> </A>
<A NAME="toc_cm72801_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Dilution  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If you invest in our Common Stock in this offering, your ownership interest will be diluted to the extent of the difference between
the initial public offering price per share and the as adjusted net tangible book value per share of our common stock upon the completion of this offering and the Corporate Conversion. Dilution
results from the fact that the per share offering price of our Common Stock in this offering will be substantially in excess of the book value per share attributable to the shares of our common stock
to be held by our existing stockholders following the Corporate Conversion. Net tangible book value per share represents our total tangible assets less total liabilities divided by the total number of
shares of our common stock outstanding (excluding shares of Common Stock to be issued in connection with this offering), after giving effect to the Corporate Conversion. After giving effect to the
Corporate Conversion, our net tangible book value as of January&nbsp;31, 2011 was approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, or approximately
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>After
giving effect to the sale of the shares of Common Stock at an assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share (the midpoint of the price range set forth on the cover of
this
prospectus) and after deducting underwriting discounts and commissions and estimated expenses payable by us in connection with this offering, our as adjusted net tangible book value as of
January&nbsp;31, 2011 would have been approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, or $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share of Common
Stock. This represents an immediate increase in net tangible book value
of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share to our existing stockholders and an immediate dilution of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share to new
investors purchasing shares of Common Stock in this offering at the assumed
initial offering price. The following table illustrates this dilution on a per share basis: </FONT></P>
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<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="46pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="46pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=8 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Assumed initial public offering price per share</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net tangible book value per share as of January&nbsp;31, 2011</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Increase per share attributable to new investors</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net tangible book value per share after this offering</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Dilution in as adjusted net tangible book value per share to new investors</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=8 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>A $1.00 increase (decrease) in the assumed initial public offering price per share of Common Stock would increase (decrease) our as adjusted net tangible book value by
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, our as adjusted net tangible book value per share by $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share and the
dilution in as adjusted net tangible book value to new investors in this
offering by $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, assuming the number of shares of Common Stock offered by us, as set forth on the cover page of this prospectus, remains the same. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following table summarizes on an as adjusted basis as of January&nbsp;31, 2011, giving effect to the Corporate Conversion and this offering, the number of shares of our Common Stock purchased
from us, the effective cash contribution paid to us, and the average price per share paid to us by our existing stockholders and to be paid by new investors purchasing shares of our Common Stock from
us in this offering. The table is based on an assumed initial public </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>34</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>offering
price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share before deduction of underwriting discounts and commissions and estimated expenses payable by us in connection with this offering: </FONT></P>
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<TD WIDTH="61pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="53pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="55pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="55pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
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<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Shares purchased </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Total consideration </B></FONT></TH>
<TH ROWSPAN=2 style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ROWSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Average<BR>
price per<BR>
share</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Number(1)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Percent</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Amount</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Percent</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Existing stockholders</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>New investors</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>100.0%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>100.0%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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 </DIV>
<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>
(1)&nbsp;&nbsp;&nbsp;Reflects shares owned by the selling stockholders that will be purchased by new investors as a result of this offering. </FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>The
above discussion and tables assume no exercise of the underwriters' option to purchase up to an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional shares of Common Stock from us and the selling
stockholders
consisting of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares issued by us and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares to be sold on a pro rata basis by the selling
stockholders. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If
the underwriters exercise their option to purchase additional shares in full: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the percentage of our shares of common stock held by our existing stockholders will decrease to approximately
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of the total outstanding amount of our shares of common stock after the Corporate Conversion and this offering;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the Common Stock held by new investors will represent approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of the total outstanding amount of our
shares of common stock after the Corporate Conversion and this offering; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>there will be an immediate dilution of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share of Common Stock to new investors.
</FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>35</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="co72801_selected_historical_consolidated_financial_data"> </A>
<A NAME="toc_co72801_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Selected historical consolidated financial data  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table sets forth our selected historical consolidated financial data as of and for each of the years ended
January&nbsp;31, 2007, 2008, 2009, 2010 and 2011. The selected historical consolidated financial data as of January&nbsp;31, 2010 and 2011 and for the years ended January&nbsp;31, 2009, 2010 and
2011 were derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected historical consolidated financial data as of January&nbsp;31, 2009, 2008 and
2007 and the years ended January&nbsp;31, 2008 and 2007 were derived from our audited consolidated financial statements that are not included in this prospectus. The selected historical consolidated
financial data for the year ended January&nbsp;31, 2008 includes the results of Crown from the date of its acquisition on February&nbsp;26, 2007. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>You
should read the following information in conjunction with "Capitalization" and "Management's discussion and analysis of financial condition and results of operations" and our consolidated
financial statements and related notes included elsewhere in this prospectus. </FONT></P>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Year ended January&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>(dollars and units in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2007</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2008(5)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:8pt;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"><B> Statement of operations data:</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Sales</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">942,148</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,335,427</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,217,142</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">688,676</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">861,234</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Cost of sales</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">774,060</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,070,396</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1,002,166</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">577,028</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">715,967</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Gross profit</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">168,088</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">265,031</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">214,976</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">111,648</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">145,267</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Selling and administrative expenses</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">108,005</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">139,947</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">138,141</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">114,188</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">104,252</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Impairment of goodwill and indefinite-lived intangible assets(1)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">31,487</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Other (income) expense, net</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1,900</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(989</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1,311</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">54</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(1,026</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Operating profit (loss)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">61,983</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">126,073</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">78,146</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(2,594</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">10,554</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Interest expense, net</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">19,756</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">29,058</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">24,931</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">20,489</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">19,886</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Earnings (loss) before income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">42,227</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">97,015</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">53,215</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(23,083</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(9,332</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Income tax expense(2)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">742</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5,192</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,659</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">816</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">700</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net earnings (loss)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">41,485</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">91,823</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">50,556</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(23,899</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(10,032</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net earnings (loss)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">41,485</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">91,823</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">50,556</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(23,899</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(10,032</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Preferred dividends</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(4,017</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net earnings (loss) available for common unit holders</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">37,468</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">91,823</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">50,556</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(23,899</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(10,032</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Pro forma tax expense (benefit)(3)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">14,318</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">31,628</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">17,272</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(3,581</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">8,227</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Pro forma net earnings (loss) available for common unit holders(3)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">23,150</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">60,195</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">33,284</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(20,318</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(18,259</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net earnings (loss) per unit:</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Basic</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.51</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.92</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.51</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(0.24</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(0.10</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.41</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.92</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.51</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(0.24</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(0.10</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Net earnings (loss) available for common unit holders per common unit:</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Basic</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.46</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.92</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.51</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(0.24</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(0.10</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.41</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.92</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.51</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(0.24</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(0.10</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Pro forma tax effect&#151;basic</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.29</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.60</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.33</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(0.20</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(0.18</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Pro forma tax effect&#151;diluted</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.27</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.60</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">0.33</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(0.20</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">(0.18</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=14 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Weighted average units outstanding:</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Basic</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">80,745</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100,005</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100,005</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100,005</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100,005</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100,005</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100,005</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100,005</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100,005</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">100,005</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;"><B>Balance sheet data (end of period):</B></FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Working capital(4)</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">214,718</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">318,072</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">313,574</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">245,485</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">238,271</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Cash and cash equivalents</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">5,852</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">12,382</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2,006</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">3,321</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">9,168</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Property, plant and equipment, net</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">61,303</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">82,606</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">93,170</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">79,206</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">75,077</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total assets</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">456,801</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">673,621</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">653,962</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">514,525</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">567,603</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total debt</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">204,474</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">294,592</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">285,370</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">228,113</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">192,622</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Total shareholders' equity</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">94,872</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">174,941</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">179,944</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">155,622</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">149,034</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>
(1)&nbsp;&nbsp;&nbsp;See discussion of this impairment in "Critical accounting policies&#151;Goodwill and indefinite-lived intangible assets." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(2)&nbsp;&nbsp;&nbsp;Since
January&nbsp;23, 2006, we have conducted our operations as Stewart&nbsp;&amp; Stevenson&nbsp;LLC, a limited liability company, and, as a result, U.S. federal and certain state
income taxes have been paid by the
</font></p>
</DIV>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>36</FONT></P>

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 <DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:arial;"></FONT><FONT SIZE=2>
holders of our equity interests. Therefore, no U.S. federal income tax expense is recorded in our statement of operations for the period from January&nbsp;23, 2006 to January&nbsp;31, 2011. The
amounts shown reflect income tax expense associated with foreign jurisdictions and certain state taxes. As of the date of the Corporate Conversion, we will record deferred taxes representing the
difference between the tax and book basis of our assets and liabilities. Such net tax liability created is currently estimated to be approximately $2.7&nbsp;million at January&nbsp;31, 2011 and
will result in a corresponding adjustment to decrease net earnings from continuing operations. In connection with the Corporate Conversion, we expect to distribute cash to our unit holders consistent
with our prior practices to cover tax liabilities that will accrue to them through the date of the conversion. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(3)&nbsp;&nbsp;&nbsp;Represents
the estimated tax effect of our results of operations. We have conducted our operations as Stewart&nbsp;&amp; Stevenson&nbsp;LLC, a limited liability company, with
substantially all earnings taxed at the stockholder level. In connection with the Corporate Conversion, we will be subject to Subchapter&nbsp;C of the Internal Revenue Code, and as a result will
become taxable as a corporation and subject to U.S. federal and state income taxes. The tax rate used for pro forma purposes is the U.S. federal income tax rate of 35%, adjusted for state taxes,
federal tax credits earned and other items applied to the pre-tax book income subject to U.S. federal income taxation for the corresponding periods shown. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(4)&nbsp;&nbsp;&nbsp;Working
capital is total current assets minus total current liabilities. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(5)&nbsp;&nbsp;&nbsp;Our
results of operations for the year ended January&nbsp;31, 2008 include the results of operations of Crown from February&nbsp;26, 2007, the date we consummated the Crown
Acquisition. </FONT></P>
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>37</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="cq72801_management_s_discussion_and_an__man03466"> </A>
<A NAME="toc_cq72801_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Management's discussion and analysis of<BR>  financial condition and results of operations  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I>The following discussion should be read in conjunction with "Selected historical consolidated financial data"
and our consolidated financial statements and related notes thereto included elsewhere in this prospectus. The following information contains forward-looking statements, which are subject to risks and
uncertainties. Should one or more of these risks or uncertainties materialize, our actual results may differ from those expressed or implied by the forward-looking statements. See "Special note
regarding forward-looking statements."  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Overview  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are a leading designer, manufacturer and provider of specialized equipment and aftermarket parts and service for the oil and gas
industry and other industries that we have served for over 100&nbsp;years. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
wide range of products covers hydraulic fracturing, well stimulation, workover, intervention and drilling operations. These products include well stimulation equipment; pumping, acidizing, coiled
tubing, cementing and nitrogen units; drilling rigs and workover rigs; power generation systems; and electrical support and distribution systems, as well as engines, transmissions, prime movers and
material handling equipment. We have a substantial installed base of products, which provides us with significant opportunities for recurring, higher-margin aftermarket parts and service revenues from
customers in the oil and gas, power generation and various other industries. In addition, we provide rental equipment to our customers, including generator sets, air compressors, rail car movers and
material handling equipment. See "Business&#151;Products and services" for further information on our product lines and related descriptions. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
Fiscal 2010, we generated revenues of $861.2&nbsp;million, operating profit of $10.6&nbsp;million and EBITDA of $59.1&nbsp;million, compared with revenues of $688.7&nbsp;million, operating
loss of $2.6&nbsp;million and EBITDA of $15.8&nbsp;million in Fiscal 2009. For a definition of EBITDA and a reconciliation of EBITDA to net earnings (loss) available for common unit holders, see
"Prospectus summary&#151;Summary historical consolidated financial data." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Business drivers and measures  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Revenue factors  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Oil and gas industry capital expenditures.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Sales of our equipment are significantly driven by the capital spending programs of our customers. Growing worldwide
demand for energy has resulted in significantly increased capital expenditures by oil and gas producers in recent years. We believe that we are well positioned for the rapid growth in the development
of unconventional oil and gas resources, particularly in North America, which require utilization of technologically advanced well stimulation equipment of the nature that we provide. Although
commodity price fluctuations may impact the level of oil and gas exploration activity in the long term, we believe the capital spending programs of our customers at this time continue to be strong. A
decrease in the capital spending programs of our customers would adversely impact our equipment sales and, to a lesser extent, our aftermarket parts and service and </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>38</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>rental
sales. Approximately 78% and 72% of our revenues in Fiscal 2010 and Fiscal 2009, respectively, came from customers in the oil and gas industry. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><I> Non-oil and gas industries.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We believe that many of the non-oil and gas industries we serve, particularly the commercial vehicle and
material handling industries, provide us with opportunities to continue to grow our business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Aftermarket parts and service demand.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In addition, we provide aftermarket parts and service and rent equipment to customers in the oil and gas, power generation,
marine, mining, construction, commercial vehicle and material handling industries. These sales generated approximately 35% and 40% of our revenues during Fiscal 2010 and Fiscal 2009, respectively. We
provide aftermarket parts and service for equipment manufactured by approximately 100&nbsp;manufacturers, including products manufactured by us and our key OEMs, and our aftermarket business
provides us with a recurring revenue stream. Our rental revenue includes generators, compressors and material handling equipment. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Backlog.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Among the metrics we track to monitor demand in our business is equipment order backlog. We define backlog as unfilled equipment orders that consist of
written purchase orders or signed contracts accompanied, if required by our credit policies, by credit support (typically down payments or letters of credit). As of January&nbsp;31, 2011, our
equipment order
backlog was $375.0&nbsp;million, compared to $203.2&nbsp;million as of January&nbsp;31, 2010. For more information about our backlog, see "Business&#151;Backlog." </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Backlog
of $375.0&nbsp;million as of January&nbsp;31, 2011 includes $37.5&nbsp;million of related party transactions reflecting an order in Fiscal 2009 from an affiliate. Revenue recognition
from this transaction will be deferred until title to the product passes to a third party and all other revenue recognition criteria have been met. A deposit in the amount of $31.2&nbsp;million is
recorded as a customer deposit in our consolidated balance sheet. Included in inventories, net is $29.5&nbsp;million in costs related to this contract, and no amounts have been recorded in the
consolidated statements of operations through January&nbsp;31, 2011. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Seasonality.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our revenues are not significantly affected by seasonality. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Operational factors  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Ensuring timely supply of components.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;While we believe that the opportunities to grow our business are significant, there are also challenges and uncertainties we
face in executing our business plans. In the current environment of strong demand for products and services of the type we provide, our ability to procure certain components on a timely basis to meet
the delivery needs of our customers is a concern. A substantial portion of the products we sell includes components provided by our six key OEMs and on occasion we need to rely upon alternative
sources of supply for those components because of the current levels of high demand for the components we require. Our ability to satisfy the delivery requirements of a customer on a timely basis is
critical to our success. For more information, see "Business&#151;Suppliers and raw materials." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Labor market constraints.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Although we have the benefit of a highly trained and experienced workforce, we believe that attracting and retaining high quality and
experienced personnel is a significant challenge in the current competitive environment, particularly in oil- and gas-related
activities. Accordingly, we place particular emphasis on career development programs that seek to improve the retention of employees, including senior and middle management. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>39</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=3><B> Presentation of historical financial information  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our fiscal year begins on February&nbsp;1 of the stated year and ends on January&nbsp;31 of the following year. For example,
Fiscal 2010 began on February&nbsp;1, 2010 and ended on January&nbsp;31, 2011. We report results on the fiscal quarter method, with each quarter comprising approximately 13&nbsp;weeks. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Historical operation as an LLC  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For the period from January&nbsp;23, 2006 to immediately prior to the consummation of this offering, we have conducted our operations though
Stewart&nbsp;&amp; Stevenson&nbsp;LLC, a limited liability company, and, as a result, U.S. federal and certain state income taxes were paid by the holders of our equity interests. Therefore, no U.S.
federal income tax expense is recorded in our statement of operations for the years ended January&nbsp;31, 2007, 2008, 2009, 2010 and 2011. The amounts shown under "income taxes" in our audited
consolidated financial statements reflect taxes paid to foreign jurisdictions and certain state taxes. As of the date of the Corporate Conversion, we will record deferred taxes representing the
difference between the tax and book basis of our assets and liabilities. Such net tax liability created is currently estimated to be approximately $2.7&nbsp;million at January&nbsp;31, 2011 and
will result in a corresponding adjustment to decrease net earnings from continuing operations. In connection with the Corporate Conversion, we expect to distribute cash to our unit holders consistent
with our prior practices to cover tax liabilities that will accrue to them through the date of the conversion. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Segment presentation  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We recently revised our segment presentation to present the following reportable segments: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Manufacturing</I></FONT><FONT SIZE=2>, which includes the design, manufacture and marketing of
equipment for oilfield service providers, drilling and workover contractors, U.S. and international oilfield service companies, and national oil companies. We provide parts and service to customers
primarily in the oil and gas industry.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Distribution</I></FONT><FONT SIZE=2>, which includes the distribution of stand-alone products and
the provision of aftermarket parts and service for products manufactured by us, our key OEMs and other manufacturers, as well as the renting of equipment, including generator sets, rail car movers and
material handling equipment.  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2><I>Corporate and shared services</I></FONT><FONT SIZE=2>, which includes administrative overhead
normally not associated with specific activities within our operating segments. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>For
more information on our segments, see "&#151;Segment data." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
our prior reports filed with the SEC, we presented four segments: equipment, aftermarket parts and service, rental and corporate. The audited consolidated financial statements included elsewhere in
this prospectus have been recast to reflect our new segment presentation. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>40</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=3><B> Critical accounting policies  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Use of estimates and assumptions  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The preparation of financial statements in conformance with accounting principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of sales and expense during the reporting period. We evaluate our estimates on an ongoing basis, based on historical experience and various other assumptions that we believe to be reasonable
under the circumstances. Actual results may differ from these estimates. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Revenue recognition  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Revenue from equipment and parts sales is recognized when the product is shipped, collection is reasonably assured, risks of ownership have been
transferred to and accepted by the customer and contract terms are met. Cash discounts or other incentives to customers are recorded as a reduction of revenue. Revenue from service agreements is
recognized as earned when services have been rendered. Revenue from rental agreements is recognized on a straight-line basis over the rental period. We report revenue net of any
revenue-based taxes assessed by governmental authorities. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>With
respect to long-term equipment contracts, revenue is recognized using the percentage-of-completion method. The majority of our contracts are fixed-price contracts, and
measurement of progress toward completion is based on direct labor hours incurred. For long-term equipment contracts to build land-based drilling, work over and service rigs, measurement of progress
toward completion is based on the cost-to-cost method. Changes in estimates for revenues, costs to complete and profit margins are recognized in the period in which they are reasonably determinable.
Any anticipated losses on uncompleted contracts are recognized whenever evidence indicates that the estimated total cost of a contract exceeds its estimated total revenue. With respect to
cost-plus-fixed-fee contracts, we recognize the fee ratably as the actual costs are incurred, based upon the total fee amounts expected to be realized upon
completion of the contracts. Bid and proposal costs are expensed as incurred. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Recoverable
costs and accrued profits not yet billed ("Unbilled Revenue") represent the cumulative revenue recognized less the cumulative billings to the customer. Any billed revenue that has not been
collected is reported as accounts receivable. The timing of when we bill our customers is generally based upon advance billing terms or contingent upon completion of certain phases of the work, as
stipulated in the contract. Billings in excess of incurred costs represent progress billings in excess of Unbilled Revenue. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
frequently sell equipment together with "start-up" services, which typically involve adding fuel to the engine, starting the equipment for the first time and observing it to ensure that
it is operating properly. In cases where start-up services are required on an equipment sale, the estimated start-up costs are accrued when revenue from the equipment sale is
recognized. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Accounts receivable  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Accounts receivable are recorded when billed and represent claims against third parties that will be settled in cash. The carrying value of our
accounts receivable, net of the allowance for doubtful accounts, represents the estimated net realizable value. We maintain an allowance for </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>41</FONT></P>

<HR NOSHADE>
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<BR>

<P style="font-family:arial;"><FONT SIZE=2>doubtful
accounts for estimated losses related to credit extended to our customers. We base such estimates on our current accounts receivable aging and historical collections and settlements
experience, existing economic conditions and any specific customer collection issues
we have identified. Uncollectible accounts receivable are written off when we determine that the balance cannot be collected. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Inventories  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Inventories are stated at the lower of cost or market, with cost primarily determined on a first-in, first-out ("FIFO") basis
and market determined on the basis of estimated realizable values. We purchase a considerable amount of our inventory for resale from independent manufacturers pursuant to distribution agreements.
Cost represents invoice or production cost for new items and original cost less allowance for condition for used equipment inventory. Production cost includes material, labor and manufacturing
overhead. When circumstances dictate, we write inventory down to its estimated realizable value based upon assumptions about future demand, technological innovations, market conditions, plans for
disposal and the physical condition of products. Shipping and handling costs are expensed as incurred in cost of sales. Shipping and handling costs billed to customers are recorded as sales. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Goodwill and indefinite-lived intangible assets  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We perform an impairment test for goodwill and indefinite-lived intangible assets annually during the fourth quarter, or earlier if indicators of
potential impairment exist. Our goodwill impairment test involves a comparison of the fair value of each of our reporting units with their carrying value. Our impairment test for indefinite-lived
intangible assets involves the comparison of the fair value of the intangible asset and its carrying value. The fair value is determined using discounted cash flows ("income approach") and other
market-related valuation models, including earnings multiples ("public company market approach") and comparable asset market values ("transaction approach"). Certain estimates and judgments are
required in the application of these fair value models. The income approach consists of estimating the future cash flows that are directly associated with each of our reporting units. There are
significant inherent uncertainties and management judgment involved in estimating the fair value of each reporting unit, including historical experience and future expectations such as budgets and
industry projections. We believe we have made reasonable estimates and assumptions to estimate the fair value of our reporting units. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We
performed the first step for our annual impairment test, which compares the fair value of our reporting units to their carrying values, during the Fiscal 2010 fourth quarter and the result of this
test indicated that a probable impairment existed for our Crown reporting unit. The
Fiscal 2010 results of operations for the Crown reporting unit did not achieve our expectations. In particular, the anticipated rebound for and growth in rig and well stimulation equipment sales and
backlog growth for the Crown reporting unit have not reached pre-2009 levels. These assumptions had been factored into our budgets and forecasts and specific sales were anticipated to
occur during Fiscal 2010, including the fourth quarter, coupled with growth in backlog for these products. Because oil prices have risen, it was anticipated that capital spending for land-based
drilling, work over and service rigs would return and be reflected in backlog and equipment ordering trends. As a result of this prolonged downturn, our cash flow projections for Crown have been
substantially revised downward. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>42</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2>The
Crown reporting unit had goodwill of $28.7&nbsp;million and indefinite-lived intangible assets (trademarks) of $4.1&nbsp;million subject to this annual impairment test. In determining the fair
value in the step one test, the material assumptions used for the income approach included a weighted average cost of capital of 21.4% and a long-term growth rate of 4.1%. Based on our
future cash flow projections for the Crown reporting unit, the result of the income approach indicated the carrying amount of the Crown reporting unit exceeded its estimated fair value. In addition,
these cash flow projections did not result in meaningful market-related comparisons under the public company market and transaction approaches. Therefore, under the second step of the impairment test,
we allocated the estimated fair value indicated by the income approach to the identifiable tangible and intangible assets and liabilities based on their respective values. This allocation indicated a
partial impairment for the indefinite-lived intangible assets and no residual value for goodwill. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
below table details the impact of this impairment charge, which resulted in an overall decrease to goodwill and intangibles, net in our consolidated balance sheets of $31.5&nbsp;million as
follows: </FONT></P>
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<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="87pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Indefinite-Lived<BR>
Intangible Assets</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Goodwill</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Crown reporting unit before impairment test</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4,084</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>28,653</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Impairment charges</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(2,834</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(28,653</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Crown reporting unit after impairment test</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,250</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 <P style="font-family:arial;"><FONT SIZE=2>We recorded a $31.5&nbsp;million impairment charge in our consolidated results of operations for Fiscal 2010. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Long-lived assets  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Long-lived assets, which include property, plant and equipment and acquired definite-lived intangibles assets, comprise a significant
amount of our total assets. We carry our property, plant and equipment at cost less accumulated depreciation. Maintenance and repairs are expensed as incurred and expenditures for renewals,
replacements and improvements are capitalized. We depreciate our property, plant and equipment on a straight-line basis over their estimated useful lives. Definite-lived intangibles are
amortized on a straight-line basis over their estimated useful lives. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
accounting for long-lived assets, we must make estimates about the expected useful lives of the assets and the potential for impairment based on the fair value of the assets and the
cash flows they are expected to generate. The value of the long-lived assets is then amortized over their expected useful lives. A change in the estimated useful lives
of our long-lived assets would have an impact on our results of operations. We estimate the useful lives of our long-lived asset groups as follows: </FONT></P>
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<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="197pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Buildings</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>10-25&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Leasehold improvements</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Lesser of lease term or asset life</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Rental equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2-8&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Machinery and equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4-7&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Computer hardware and software</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3-4&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Intangible assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>4&nbsp;months-27&nbsp;years</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
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 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>43</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>In
estimating the useful lives of our property, plant and equipment, we rely primarily on our actual experience with the same or similar assets. The useful lives of our definite-lived intangible
assets are determined by the years over which we expect the assets to generate a benefit based on legal, contractual or regulatory terms. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
assess the valuation of components of our property, plant and equipment and definite-lived intangible assets whenever events or circumstances dictate that the carrying value might not be
recoverable. We base our evaluation on indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external
market conditions or factors that may be present. If such factors indicate that the carrying amount of an asset or asset group may not be recoverable, we determine whether impairment has occurred by
analyzing an estimate of undiscounted future cash flows at the lowest level for which identifiable cash flows exist. If our estimate of undiscounted future cash flows during the estimated useful life
of the asset is less than the carrying value of the asset, we recognize a loss for the difference between the carrying value of the asset and its estimated fair value, measured by the present value of
estimated future cash flows or other means, as appropriate under the circumstances. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Warranty costs  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Generally, the only warranty provided to our customers for products we sell that were originally manufactured by others, including our key OEMs, is
the warranty provided by those original manufacturers. We warrant products manufactured, and services provided, by us for periods of three to 18&nbsp;months. Based on historical experience and
contract terms, we accrue the estimated cost of our product and service warranties at the time of sale or, in some cases, when specific warranty exposures are identified and quantifiable. Accrued
warranty costs are adjusted periodically to reflect actual experience. Certain warranty and other related claims involve matters of dispute that ultimately are resolved by negotiation, arbitration or
litigation. Occasionally, a material warranty issue can arise that is beyond our historical experience. We accrue for any such warranty issues as they become known and estimable. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Customer deposits  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We sometimes collect advance customer deposits to secure customers' obligations to pay the purchase price of ordered equipment. For
long-term construction contracts, these customer deposits are recorded as current liabilities until construction begins. During construction, the deposit liability is reclassified into
billings in excess of incurred costs and, ultimately, recognized into revenue under the percentage-of-completion method. For all other sales, these deposits are recorded as
current liabilities until revenue is recognized. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Insurance  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We maintain a variety of insurance for our operations that we believe to be customary and reasonable. We are self-insured up to certain
levels in the form of deductibles and retentions for general liability, vehicle liability, group medical and workers' compensation claims. Other than normal business and contractual risks that are not
insurable, our risks are commonly insured against and the effect of a loss occurrence is not expected to be significant. We accrue for estimated self-insurance costs and uninsured
exposures based on estimated development of claims filed and an estimate of claims incurred but not reported as of each balance sheet date. We regularly review estimates of reported and unreported
claims and provide for losses accordingly. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>44</FONT></P>

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<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=3><B> Comparison of results of operations&#151;Fiscal 2010 and Fiscal 2009  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Sales  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In Fiscal 2010, our sales were $861.2&nbsp;million, an increase of $172.6&nbsp;million, or 25.1%, compared to the same period of Fiscal 2009
sales of $688.7&nbsp;million. The increase in sales impacted both segments and was attributable primarily to an overall increase in equipment sales in the manufacturing segment to customers in the
oil and gas industry for our well stimulation equipment. Parts and service sales increased in both segments and higher transmission sales for oilfield equipment were primarily responsible for the
increase in equipment sales for the distribution segment. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>A
breakdown of sales for the periods is as follows: </FONT></P>
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<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>For the year ended<BR>
January&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Change </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>$</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>%</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Manufacturing segment</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>321,008</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>230,796</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>90,212</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 39.1%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Parts and Service</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>21,386</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>15,558</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5,828</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 37.5%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total manufacturing sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>342,394</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>246,354</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>96,040</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 39.0%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Distribution segment</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>216,251</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>164,846</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>51,405</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 31.2%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Parts and Service</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>279,341</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>258,082</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>21,259</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 8.2%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Rentals</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>23,248</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>19,394</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,854</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 19.9%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total distribution sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>518,840</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>442,322</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>76,518</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 17.3%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>861,234</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>688,676</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>172,558</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 25.1%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Operating profit (loss)</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Manufacturing(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11,277</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>15,875</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(4,598</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (29.0)%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distribution</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>37,481</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>23,640</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>13,841</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 58.5%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Corporate and shared services</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(38,204</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(42,109</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,905</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (9.3)%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total operating profit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>10,554</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(2,594</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>13,148</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Operating profit percentage</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Manufacturing(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 3.3%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 6.4%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distribution</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 7.2%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 5.3%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> 1.2%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (0.4)%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>
(1)&nbsp;&nbsp;&nbsp;The Fiscal 2010 operating profit for the manufacturing segment includes the impact of the $31.5&nbsp;million goodwill and indefinite-lived intangible assets impairment charge for
Crown. </FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>Manufacturing
sales increased by 39.0%, or $96.0&nbsp;million, during Fiscal 2010 compared to Fiscal 2009, of which $90.2&nbsp;million of this increase was related to equipment sales and
$5.8&nbsp;million was related to an increase in parts and service sales. The increase in equipment sales was primarily attributable to higher sales volumes for well stimulation equipment, which was </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>45</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>partially
offset by lower sales volumes in power generation (associated with deepwater drilling rig build cycles) and rigs as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="41pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>For the year ended January&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Change </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>$</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>%</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Manufacturing equipments sales</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Well stimulation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>275,271</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>60,016</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>215,255</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>358.7</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Power generation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>17,889</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>116,749</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(98,860</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (84.7</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Rigs</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>14,673</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>42,215</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(27,542</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (65.2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Seismic products</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6,192</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,220</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,972</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>178.9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Electric products</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5,382</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6,931</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(1,549</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (22.3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,601</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,665</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(1,064</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (39.9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total equipment sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>321,008</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>230,796</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>90,212</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>39.1</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>Distribution
sales increased by $76.5&nbsp;million to $518.8&nbsp;million in Fiscal 2010 compared to $442.3&nbsp;million in Fiscal 2009. The increase in distribution sales was due to increased
equipment sales of $51.4&nbsp;million, parts and service of $21.3&nbsp;million and rentals of $3.8&nbsp;million. The increase in transmissions is due to higher sales volumes for oilfield
equipment. Equipment sales increased due to the following changes in our distribution products: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="36pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>For the year ended January&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Change </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>$</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>%</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Distribution equipment sales</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Power generation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>48,427</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>48,348</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>79</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>0.2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Engines</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>28,845</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>32,631</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(3,786</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (11.6</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Transmissions</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>47,661</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>17,769</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>29,892</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>168.2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Prime movers</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>34,488</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>26,962</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>7,526</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>27.9</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Material handling</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>31,099</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>24,609</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6,490</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>26.4</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Rail car movers</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>11,638</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8,390</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>3,248</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>38.7</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>14,093</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6,137</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>7,956</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>129.6</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total equipment sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>216,251</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>164,846</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>51,405</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>31.2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2><B><I> Gross profit  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our gross profit was $145.3&nbsp;million for Fiscal 2010 compared to $111.6&nbsp;million for Fiscal 2009, reflecting an increase in gross profit
margin from 16.2% to 16.9%. Our gross profit margin increased by 0.7 points due to higher sales volumes and product mix. The manufacturing segment gross profit margin increased from 15.4% to 17.0%, an
increase of 1.6 points. The distribution segment gross profit margin remained flat at 16.8%. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Selling and administrative expenses  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Selling and administrative expenses decreased by $9.9&nbsp;million to $104.3&nbsp;million for Fiscal 2010, primarily as a result of the following
items, which impacted Fiscal 2009: (1) an accrual for a probable sales tax liability ($3.4&nbsp;million); (2)&nbsp;the settlement and defense of a claim ($3.5&nbsp;million); and (3)&nbsp;the
closure of a facility ($0.9&nbsp;million). Further decreases in overall selling and administrative expenses in Fiscal 2010, including lower professional and legal fees, bad </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>46</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<BR>

<P style="font-family:arial;"><FONT SIZE=2>debt
expense and depreciation, partially offset by higher compensation expense. As a result, selling and administrative expenses as a percentage of sales decreased to 12.1% in Fiscal 2010 from 16.6%
for Fiscal 2009. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Other (income) expense, net  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Other income increased by $1.1&nbsp;million to $1.0&nbsp;million for Fiscal 2010, mainly as the result of gains associated with foreign currency
derivative instruments in Fiscal 2010, lower foreign currency transaction losses associated with our foreign subsidiaries in Fiscal 2010 as compared to Fiscal 2009. Our foreign subsidiaries in Canada,
Colombia and Venezuela generated 4.0%, 3.9% and 0.3%, respectively, of our sales for Fiscal 2010. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Operating profit  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our operating profit increased to $10.6&nbsp;million, or 1.2% of sales, during Fiscal 2010 from an operating loss of $2.6&nbsp;million, or 0.4%
of sales, volumes, gross profit margins in Fiscal 2009, primarily as the result of higher sales and lower selling and administrative expenses; however, operating profit margin was significantly
reduced by the impact of the goodwill and indefinite-lived intangible assets impairment charge of $31.5&nbsp;million. See discussion of this impairment in "Critical accounting
policies&#151;Goodwill and indefinite-lived intangible assets." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Interest expense, net  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Interest expense, net for Fiscal 2010 decreased by $0.6&nbsp;million compared to Fiscal 2009, primarily as a result of lower outstanding borrowings
and interest rates for our revolving credit facility during Fiscal 2010, partially offset by higher interest income during Fiscal 2009. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>47</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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</FONT> <FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Comparison of the results of operations&#151;Fiscal 2009 and Fiscal 2008  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Sales  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For Fiscal 2009, our sales were $688.7&nbsp;million, a decrease of $528.5&nbsp;million, or 43.4%, compared to Fiscal 2008 sales of
$1,217.1&nbsp;million. The decrease in sales impacted both segments and resulted from low customer confidence due to the weak U.S. and global economies, tight credit markets and unstable gas and oil
prices. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>A
breakdown of sales for these periods is as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="68pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="61pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="64pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Year ended January&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Change </B></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>$</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>%</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Manufacturing segment</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>230,796</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>485,165</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(254,369</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(52.4)%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Parts and service</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>15,558</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>34,890</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(19,332</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(55.4)%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total manufacturing sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>246,354</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>520,055</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(273,701</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(52.6)%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Distribution segment</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>164,846</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>307,754</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(142,908</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(46.4)%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Parts and service</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>258,082</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>347,898</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(89,816</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(25.8)%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Rentals</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>19,394</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>41,435</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(22,041</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(53.2)%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total distribution sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>442,322</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>697,087</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(254,765</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(36.5)%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>688,676</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,217,142</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(528,466</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(43.4)%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Operating profit (loss)</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Manufacturing</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>15,875</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>50,110</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(34,235</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(68.3)%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distribution</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>23,640</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>66,456</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(42,816</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(64.4)%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Corporate and shared services</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(42,109)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(38,420)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(3,689</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9.6%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total operating profit (loss)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(2,594)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>78,146</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(80,740</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(103.3)%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Operating profit percentage</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Manufacturing</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6.4%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9.6%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distribution</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>5.3%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>9.5%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(0.4)%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6.4%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>Manufacturing sales decreased by 52.6%, or $273.7&nbsp;million, during Fiscal 2009 compared to Fiscal 2008. The decrease in sales was attributable to lower
equipment sales of $254.4&nbsp;million and net decreases in parts and service of $19.3&nbsp;million. Equipment sales decreased for all </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>48</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>products,
except power generation equipment (due to higher demand associated with deepwater drilling rig build cycles) and other equipment, as indicated in the following chart: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="61pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="64pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Year ended January&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Change </B></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>$</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>%</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Manufacturing equipment sales</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Well stimulation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>60,016</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>255,343</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(195,327</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (76.5)%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Rigs</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>42,215</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>121,145</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(78,930</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (65.2)%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Power generation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>116,749</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>58,141</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>58,608</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>100.8%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Seismic products</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,220</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>36,776</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(34,556</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (94.0)%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Electric products</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6,931</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>12,131</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(5,200</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (42.9)%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>2,665</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,629</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>1,036</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>63.6%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total equipment sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>230,796</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>485,165</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(254,369</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (52.4)%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>Distribution sales fell by 36.5%, or $254.8&nbsp;million, to $442.3&nbsp;million during Fiscal 2009 from $697.1&nbsp;million in Fiscal 2008. Equipment
sales fell by $142.9&nbsp;million, parts and service sales fell by $89.8&nbsp;million, and rental sales fell by $22.1&nbsp;million. Rental sales during Fiscal 2008 included revenues of
approximately $11.2&nbsp;million related to Hurricanes Gustav and Ike, which were not repeated during Fiscal 2009. Sales of equipment by product decreased as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="61pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="64pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Year ended January&nbsp;31, </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Change </B></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>$</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>%</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Distribution equipment sales</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Power generation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>48,348</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>58,358</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(10,010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (17.2)%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Engines</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>32,631</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>65,344</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(32,713</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (50.1)%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Transmissions</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>17,769</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>49,757</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(31,988</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (64.3)%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Prime movers</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>26,962</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>52,658</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(25,696</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (48.8)%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Material handling</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>24,609</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>52,468</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(27,859</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (53.1)%</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Rail car movers</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8,390</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>20,230</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(11,840</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (58.5)%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>6,137</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>8,939</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(2,802</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (31.3)%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=8 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total equipment sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>164,846</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>307,754</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(142,908</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2> (46.4)%</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2><B><I> Gross profit  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our gross profit was $111.6&nbsp;million for Fiscal 2009, a decrease of $103.4&nbsp;million, compared to $215.0&nbsp;million in Fiscal 2008,
reflecting a decline in gross profit margin from 17.7% to 16.2%, due to lower sales volumes, product mix and pricing pressures. The manufacturing segment gross profit margin increased slightly from
14.6% to 15.4%, primarily driven by changes in product mix. The distribution segment gross profit margin decreased from 20.1% to 16.8%, as a result of changes in product mix, pricing pressures and
increases in indirect costs such as inventory reserves. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Selling and administrative expenses  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Selling and administrative expenses decreased by $23.9&nbsp;million to $114.2&nbsp;million in Fiscal 2009 compared to $138.1&nbsp;million in
Fiscal 2008. Selling and administrative expenses as a percentage of sales increased to 16.6% from 11.3% for Fiscal 2009, primarily as a result of the impact of </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>49</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<BR>

<P style="font-family:arial;"><FONT SIZE=2>lower
sales volumes and our fixed costs. The decrease of $23.9&nbsp;million during Fiscal 2009 was partially offset by approximately $3.4&nbsp;million related to an accrual for a probable sales
tax liability and $3.5&nbsp;million related to the settlement and defense of a claim. Fiscal 2008 included legal and professional expenses of approximately $2.6&nbsp;million associated with the
pursuit of strategic alternatives, $1.6&nbsp;million related to Sarbanes-Oxley 404 internal controls implementation costs, and $3.2&nbsp;million of non-cash amortization of other
intangible assets. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Other expense (income), net  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Other expense was $0.1&nbsp;million in Fiscal 2009, a decrease of $1.4&nbsp;million compared to other income of $1.3&nbsp;million in Fiscal
2008, mainly as the result of foreign currency transaction losses associated with our Canadian subsidiary, partially offset by realized gains associated with our foreign currency derivative
instruments in place at that time. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Operating (loss) profit  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our operating loss was $2.6&nbsp;million, or 0.4% of sales, in Fiscal 2009, compared to operating profit of $78.1&nbsp;million, or 6.4% of sales,
in Fiscal 2008, primarily as the result of lower sales and gross profit margins. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Interest expense, net  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Net interest expense was $20.5&nbsp;million in Fiscal 2009, a decrease of $4.4&nbsp;million compared to net interest expense of
$24.9&nbsp;million in Fiscal 2008. The decrease in interest expense was primarily a result of lower outstanding balances and lower interest rates for our revolving credit facility and an increase in
interest income as compared to Fiscal 2008. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Segment data  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In our prior reports filed with the SEC, we presented four segments: equipment, aftermarket parts and service, rental and corporate.
We have revised our segments to the following three segments: manufacturing, distribution and corporate and shared services. The audited consolidated financial statements included elsewhere in this
prospectus have been presented on this basis. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Through
our two operating segments, we design, manufacture and market a wide range of equipment and provide aftermarket parts and service to a broad range of customers. We also provide rental
equipment through our distribution segment. These products and services are consistent with our activities in prior periods and were reported in prior periods as three distinct operating segments. We
now report these same product categories within our two operating segments, which reflect our internal management structure. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This
operational and management structure was clarified and defined in the fourth quarter of Fiscal 2010 as the result of senior management's assessment and recommendations made to the board of
directors. This operational and management realignment was approved by our board and is reflected in the segments we now report. We believe that the two operating segment presentation continues to
report the products and services we provide, while also providing a view of how we manage our business and a better platform from which to explain the key activities within, and drivers for, our
business. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>50</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>Our
reportable segments are as follows: </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Manufacturing  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We design, manufacture and market equipment for U.S. and international oilfield service providers and drilling and workover contractors, as well as
national oil companies that require integrated and customized product solutions. We manufacture equipment specifically for hydraulic fracturing, well stimulation, well workover, intervention and
drilling operations. Our manufactured products include integrated solutions, which incorporate a variety of components into a single system, for a wide range of oilfield services and support
applications. In addition, we provide parts and service to customers primarily in the oil and gas industry. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Distribution  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We provide stand-alone products and aftermarket parts and service for products manufactured by us, our six key OEMs&nbsp;and other manufacturers.
In addition, we provide rental equipment including generator sets, air compressors, rail car movers and material handling equipment to our customers. Our aftermarket parts and service operations,
which provide us with a recurring, higher-margin source of revenue, serve customers engaged in the oil and gas, power generation, marine, mining, construction, commercial vehicle and material handling
industries, as well as other industries. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Corporate and shared services  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our corporate and shared services segment includes administrative overhead normally not associated with specific activities within the operating
segments. These expenses include legal, finance and accounting, internal audit, human resources, information technology, marketing, supply chain and similar corporate office costs. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Intra-segment
revenues and costs are eliminated, and operating profit (loss) represents earnings (loss) before interest and income taxes. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Segment results comparison&#151;Fiscal 2010 and Fiscal 2009  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Manufacturing  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Operating profit generated by our manufacturing segment decreased to $11.3&nbsp;million, or 3.3% of sales, for Fiscal 2010, from
$15.9&nbsp;million, or 6.4% of sales for Fiscal 2009. The $4.6&nbsp;million decrease in operating profit was attributable to a goodwill and indefinite-lived intangible asset impairment charge of
$31.5&nbsp;million. This impairment charge was offset by increases of $14.8&nbsp;million in sales volume, $5.5&nbsp;million in increases due to a higher average profit margin, a
$3.8&nbsp;million decrease in selling and administrative expenses and a $2.8&nbsp;million decrease in other expense. The decrease in selling and administrative expenses primarily related to lower
depreciation, rent and facility-related costs and lower bad debt expense. The decrease in other expense was the result of foreign currency transaction losses attributable to our Canadian subsidiary in
Fiscal 2009 that were lower in Fiscal 2010. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
manufacturing backlog as of January&nbsp;31, 2011 was $273.6&nbsp;million, as compared to $158.6&nbsp;million on January&nbsp;31, 2010, an increase of 72.5%. Backlog of
$273.6&nbsp;million as of January&nbsp;31, 2011 includes a $37.5&nbsp;million related party transaction, reflecting an order in Fiscal 2009 from an affiliate. Revenue recognition from this
transaction will be deferred until title to the product passes to a third party and all other revenue recognition criteria have been met. Cash payments received pursuant to this transaction are
recorded as customer deposits in the </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>51</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>consolidated
balance sheet and amounted to $31.2&nbsp;million as of January&nbsp;31, 2011. Included in inventories, net is $29.5&nbsp;million of costs related to this transaction, and no amounts
have been recorded in the consolidated statement of operations for this transaction to date. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Distribution  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Operating profit generated by the distribution segment increased to $37.5&nbsp;million in Fiscal 2010 from $23.6&nbsp;million in Fiscal 2009,
representing an increase in operating profit percentage from 5.3% to 7.2%. The $13.9&nbsp;million increase in operating profit was attributable to increases of $12.9&nbsp;million in sales volume
and decreases of $1.7&nbsp;million in selling and administrative expenses, partially offset by a $0.2&nbsp;million decrease in average gross profit margin and an increase of $0.5&nbsp;million in
other expense. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
distribution backlog as of January&nbsp;31, 2011 was $101.4&nbsp;million, as compared to $44.7&nbsp;million on January&nbsp;31, 2010, an increase of 126.8%. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Corporate and shared services  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Corporate and shared services expenses decreased to $38.2&nbsp;million in Fiscal 2010 compared to $42.1&nbsp;million in Fiscal 2009, primarily as
a result of the following items that impacted Fiscal 2009: an accrual for a probable sales tax liability ($3.4&nbsp;million) and the settlement and defense of a claim ($3.5&nbsp;million). These
decreases were offset by an increase in bonuses ($2.8&nbsp;million). As a result of these decreases, and due to higher sales volumes, corporate and shared services expenses decreased from 6.1% to
4.4% as a percentage of sales. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Segment results comparison&#151;Fiscal 2009 and Fiscal 2008  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Manufacturing  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Operating profit generated by the manufacturing segment decreased to $15.9&nbsp;million in Fiscal 2009 from $50.1&nbsp;million in Fiscal 2008, a
decrease in operating profit margin from 9.6% to 6.4%, primarily due to higher costs and lower sales volumes. The $34.2&nbsp;million decrease in operating profit was attributable to a decrease of
$39.9&nbsp;million in sales volume and an increase in other expense of $7.3&nbsp;million, partially offset by $10.9&nbsp;million decrease in selling and administrative expenses and an increase
of $2.1&nbsp;million in our average profit margin. The increase in other expense resulted from foreign currency transaction gains in Fiscal 2008 for our Canadian subsidiary, while foreign currency
transaction losses occurred in Fiscal 2009. Selling and administrative expenses decreased as a result of lower salaries and wages, including the impact of headcount reductions, depreciation,
facilities costs and other items. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
manufacturing backlog as of January&nbsp;31, 2010 was $158.6&nbsp;million compared to $223.7&nbsp;million as of January&nbsp;31, 2009, a decrease of 31.7%. We experienced significant
declines in demand in fiscal 2009 for our well stimulation and drilling rig products as a result of lower oil and gas prices, the tight credit markets and the weak U.S. and global economies. Backlog
of $158.6&nbsp;million as of January&nbsp;31, 2010 includes a $37.5&nbsp;million related party transaction reflecting an order in Fiscal 2009 from an affiliate. Revenue recognition from this
transaction will be deferred until title to the product passes to a third party and all other revenue recognition criteria have been met. A deposit in the amount of $9.4&nbsp;million is recorded as
a customer deposit in our consolidated balance sheet. Included in inventories, net is $5.8&nbsp;million in costs related to this contract, and no amounts have been recorded in the consolidated
statements of operations through January&nbsp;31, 2010. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>52</FONT></P>

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</FONT> <FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Distribution  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Operating profit generated by the distribution segment decreased to $23.6&nbsp;million in Fiscal 2009 from $66.4&nbsp;million in Fiscal 2008,
while operating profit margin decreased from 9.5% to 5.3%. The $42.8&nbsp;million decrease in operating profit was attributable to decreases of $51.2&nbsp;million in sales volume and
$14.6&nbsp;million in our average profit margin. Decreases in selling and administrative expenses of $21.7&nbsp;million and $1.3&nbsp;million in other expense partially offset the overall
decrease in operating profit. Selling and administrative expenses decreased due to lower salaries and wages, including the impact of headcount reductions, depreciation, rent and facility costs, among
other items. The decrease in other expense is primarily attributable to foreign currency transaction losses occurring in our Venezuelan subsidiary in Fiscal 2008 that did not occur in Fiscal 2009. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
distribution backlog as of January&nbsp;31, 2010 was $44.7&nbsp;million, as compared to $64.2&nbsp;million on January&nbsp;31, 2009, a decrease of 30.4%. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Corporate and shared services  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Corporate and shared services expenses increased to $42.1&nbsp;million in Fiscal 2009 compared to $38.4&nbsp;million in Fiscal 2008 and increased
as a percentage of sales from 3.2% to 6.1% as a result of lower sales volumes. Corporate and shared services expenses in Fiscal 2009 included $3.4&nbsp;million of charges related to the accrual for
a probable sales tax liability, $3.5&nbsp;million in defense and settlement of a claim, an increase of $2.7&nbsp;million in facility related expenses and an increase of $1.0&nbsp;million in
warranty expense. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Liquidity and capital resources  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our principal source of liquidity is cash generated by operations. We also have a $250.0&nbsp;million asset-based revolving credit
facility, which we draw upon when necessary to satisfy our working capital needs and generally pay down with available cash. Our liquidity needs are primarily driven by changes in working capital
associated with execution of large manufacturing projects. While many of our contracts include advance customer deposits and progress billings, some international contracts provide for substantial
portions of funding under confirmed letters of credit upon delivery of the products. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
have funded, and expect to continue to fund, operations through cash flows generated by operating activities and borrowings under our revolving credit facility. We also expect that ongoing
requirements for debt service and capital expenditures will be funded from these sources. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
future liquidity requirements will be for working capital, capital expenditures, debt service and general corporate purposes. Our borrowing capacity under the revolving credit facility is impacted
by, among other factors, the amount of working capital and qualifying assets therein. Based on our current level of operations, we believe that cash flow from operations and available cash, together
with available borrowings under our revolving credit facility, will be adequate to meet our short-term and long-term liquidity needs. However, our ability to meet our working
capital and debt service requirements is subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. If we are not able to meet such
requirements, we may be required to seek additional sources of capital. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>53</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Cash flows  </I></B></FONT></P>
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<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="54pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Year ended January&nbsp;31,</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;">&nbsp;<BR></TH>
<TH style="font-family:arial;">&nbsp;</TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TH>
<TH style="font-family:arial;">&nbsp;</TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>2009</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash provided by operating activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>56,864</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>66,321</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>58,470</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash used in investing activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(14,924</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(2,940</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(27,776</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash used in financing activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(36,150</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(63,733</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(42,364</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 <P style="font-family:arial;"><FONT SIZE=2>As of January&nbsp;31, 2011, our cash and cash equivalent balance was $9.2&nbsp;million. The level of cash and cash equivalents is impacted by the timing of
cash receipts, disbursements and borrowings and payments under our revolving credit facility. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Fiscal 2010 compared to Fiscal 2009  </I></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Operating cash flow for Fiscal 2010 decreased by $9.5&nbsp;million compared to Fiscal 2009. Fiscal 2009 reflects the conversion of working capital
to cash given the completion of large jobs and the overall decrease in business activity. Fiscal 2010 reflects the overall increase in business activity and resultant build-up for
long-term contracts and inventory. These increases were funded in large part by customer deposits, thus offsetting the cash outlays. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Cash
flow used in investing activities increased by $12.0&nbsp;million for Fiscal 2010 compared to Fiscal 2009. This increase is due to the substantial curtailment of capital expenditures during
Fiscal 2009 as a result of the overall economic and business conditions due to the global recession, tight credit markets and volatile gas and oil prices. Given the increase in our business activity,
capital spending increased in Fiscal 2010, particularly for our rental business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Cash
flow used in financing activities decreased by $27.6&nbsp;million for Fiscal 2010 compared to Fiscal 2009 and primarily relates to lower payments in Fiscal 2010 under our revolving credit
facility. This overall decrease in payments under our revolving credit facility results from the use of cash flow for investing activities and lower overall cash flow from operations in Fiscal 2010,
whereas cash flow was used to pay down our revolving credit facility in Fiscal 2009. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Fiscal 2009 compared to Fiscal 2008  </I></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Operating cash flow increased by $7.9&nbsp;million in Fiscal 2009 as compared Fiscal 2008, despite a net loss of $23.9&nbsp;million. This
increase stems from working capital being converted to cash flow as large projects were completed and paid and a lack of further build-up of inventory due to the slow-down in
business activity. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Cash
flow used in investing activities decreased by $24.9&nbsp;million in Fiscal 2009 as compared to Fiscal 2008. This decrease was due to the substantial curtailment of capital expenditures during
Fiscal 2009 as a result of overall economic and business conditions due to the global recession, tight credit markets and unstable gas and oil prices. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Cash
flow used in financing activities increased by $21.4&nbsp;million in Fiscal 2009 as compared to Fiscal 2008. This increase was attributable to increased payments under our revolving credit
facility of $49.0&nbsp;million as a result of increased available cash flow from operations and lower investments of cash outflows. This increase was partially offset by a $28.0&nbsp;million
decrease in distributions to shareholders for tax obligations, which was attributable to the overall net loss for Fiscal 2009. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>54</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Financing sources  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have an asset-based revolving credit facility in the amount of $250.0&nbsp;million with a $25.0&nbsp;million sub-facility to be
used by our Canadian subsidiary. The $250.0&nbsp;million revolving credit facility, which matures in February 2012, is secured by substantially all accounts receivable, inventory and property, plant
and equipment and provides for borrowings at LIBOR, plus a margin ranging from 1.25% to 2.00% per annum, based on our leverage ratios, as specified in the credit agreement. Based on the outstanding
borrowings, letters of credit issued and the terms of the asset-based revolving credit facility, our available borrowing capacity was approximately $124.3&nbsp;million at January&nbsp;31, 2011.
While we expect to be able to refinance or renew our revolving credit facility, there are no guarantees we will be able to do so, at all or on substantially similar terms and conditions. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
June 2006, we issued $150.0&nbsp;million in principal amount of 10% Senior Notes due 2014. The senior notes are unsecured and are guaranteed on an unsecured basis by our domestic restricted
subsidiaries. The senior notes mature on July&nbsp;15, 2014, and interest is payable semi-annually on January&nbsp;15 and July&nbsp;15. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Borrowings
under our revolving credit facility and our senior notes were as follows as of the dates indicated: </FONT></P>
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<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="98pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="98pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>As of<BR>
January&nbsp;31,<BR>
2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>As of<BR>
January&nbsp;31,<BR>
2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Revolving credit facility</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>35,181</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>70,870</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unsecured senior notes</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>150,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>150,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=5 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>185,181</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>220,870</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>The revolving credit facility and the senior notes contain financial and operating covenants with which we must comply during the terms of the agreements. These
covenants include the maintenance of certain financial ratios, restrictions related to the incurrence of certain indebtedness and investments, and prohibition of the creation of certain liens. We were
in compliance with all covenants as of January&nbsp;31, 2011. The financial covenant for the revolving credit facility requires that we maintain a fixed charge coverage ratio, as defined in the
agreement, of at least 1.1 to 1.0; however, this covenant does not take effect until our available borrowing capacity is $30.0&nbsp;million or less. The covenants in the senior notes indenture
require that, if were we to incur additional indebtedness, pay dividends or make certain other restricted payments (in each case, subject to various exceptions set forth in the indenture), after
giving effect to the incurrence of such additional indebtedness, we have a fixed charge coverage ratio, as described in the indenture, of at least 2.5 to 1.0. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>See
"Description of indebtedness" for more details about our revolving credit facility and senior notes. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Capital expenditures  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our estimated capital expenditures for Fiscal 2011 are not anticipated to exceed $30.0&nbsp;million, and up to $19.0&nbsp;million of this amount
is available for rental equipment additions. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>55</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Contractual obligations and commitments  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table summarizes the scheduled maturities under our revolving credit facility and our senior notes and our expected payments for other
significant contractual obligations as of January&nbsp;31, 2011: </FONT></P>
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<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="60pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="56pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=24 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Fiscal<BR>
2011</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Fiscal<BR>
2012</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Fiscal<BR>
2013</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Fiscal<BR>
2014</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Fiscal<BR>
2015</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Thereafter</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Total</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=24 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Senior notes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>150,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>150,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Revolving credit facility</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35,181</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>35,181</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Notes payable(1)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,441</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,441</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest on senior debt(1)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>16,516</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,063</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,500</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>54,079</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating leases:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,267</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>590</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>482</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>66</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>17</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,422</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,958</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,897</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,848</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,323</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>896</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>192</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>13,114</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Vehicles</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,245</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,166</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>530</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>364</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>24</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,329</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=20 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total operating leases</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,470</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,653</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>2,860</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1,753</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>937</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>192</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,865</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=20 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>33,427</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>54,897</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>17,860</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>159,253</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>937</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>192</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>266,566</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=24 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(1)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Interest
in respect of our revolving credit facility and notes payable is calculated assuming the outstanding balance and the current average borrowing rate
at January&nbsp;31, 2011 remain unchanged over the terms of the agreements. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Off-balance sheet arrangements  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We did not have material off-balance sheet arrangements as of January&nbsp;31, 2011. We lease certain facilities and equipment from
third parties under operating lease arrangements. For more information about these leases, see Note&nbsp;13 to our audited consolidated financial statements included elsewhere in this prospectus. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Effects of inflation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We do not believe that inflation has had a material adverse effect on our financial condition or results of operations in recent
years. However, to the extent that the cost of components and other supplies that we purchase rise and we are unable to pass those price increases on to our customers, our financial condition and
results of operations would be adversely affected. In instances in which we enter into contracts, such as for the manufacture of certain equipment that requires lead time between the placing of the
order and delivery, the majority of those contracts are at a fixed price. Any increase in component and other supply costs over the term of these contracts would reduce our profit margin on those
products. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Quantitative and qualitative disclosures about market risk  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are exposed to certain market risks as part of our ongoing business operations, including risks from changes in interest rates and
commodity prices, which could impact our financial condition, results of operations and cash flows. We plan to manage our exposure to these and other market risks through regular operating and
financing activities and on a limited basis, the use of derivative financial instruments. We intend to use such derivative financial instruments as risk management tools and not for speculative
investment purposes. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>56</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B><I> Foreign exchange risk  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our international subsidiaries in Colombia and Venezuela transact most of their business in their respective local currencies, while our Canadian
subsidiary
conducts its business in both Canadian and U.S. dollars. Revenues generated by our Canadian, Colombian and Venezuelan subsidiaries comprised 4.0%, 3.9% and 0.3%, respectively, of our total revenue
during Fiscal 2010. Our results of operations were not significantly impacted by changes in currency exchange rates. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>During
the second quarter of Fiscal 2010, we entered into four short-term foreign currency exchange rate contracts to manage our exposure to fluctuations in foreign currency for certain
purchase orders that were denominated in Euros. As of October&nbsp;30, 2010, all of these contracts were closed and we have recognized a $0.8&nbsp;million realized gain, which was recorded in
other (income) expense, net within our consolidated statement of operations. We did not apply hedge accounting for these derivative instruments. We entered into a short-term foreign
currency exchange rate derivative instrument in January 2009 to manage our exposure to fluctuations in foreign currency exchange rates for certain contracts of our Canadian subsidiary that were not
denominated in its functional currency. This derivative was settled in the second quarter of Fiscal 2009 and resulted in a realized gain of $1.4&nbsp;million, which was recorded in other (income)
expense, net within our consolidated statement of operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>A
10% depreciation of the Canadian dollar with respect to the U.S. dollar would have caused our Canadian subsidiary's assets and sales as of and for the year ended January&nbsp;31, 2011 to decrease
in U.S. dollar terms by approximately $5.5&nbsp;million and $4.3&nbsp;million, respectively. A 10% depreciation of the Colombian peso with respect to the U.S. dollar would have caused our
Colombian subsidiary's assets and sales as of and for the year ended January&nbsp;31, 2011 to decrease in U.S. dollar terms by approximately $2.0&nbsp;million and $3.1&nbsp;million,
respectively. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On
January&nbsp;10, 2010, the Venezuelan government devalued its currency from 2.15 Bolivars per U.S. dollar to 4.30 Bolivars per U.S. dollar (the "official rate"), and the Venezuelan economy has
since been designated as hyperinflationary. We historically have utilized the official rate for our Venezuelan operations. Beginning February&nbsp;1, 2010, we utilized the U.S. dollar as the
functional currency for our Venezuelan subsidiary and remeasured its financial statements into U.S. dollars at the official rate. Accordingly, using hyperinflationary accounting, we recognized the
related losses or gains from such remeasurement of its balance sheet in the consolidated statements of its operations. During Fiscal 2010, the official rate for Venezuela did not fluctuate
significantly. As a result, the effect of remeasuring our Venezuelan subsidiary was insignificant. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>At
January&nbsp;31, 2011, we evaluated the rate at which we remeasure our Venezuelan subsidiary and concluded that based on the continued slow-down of its economy and resultant
constraints presently impacting the banking environment and associated limitations therein, that the SITME rate of 5.30 Bolivars per U.S. dollar was a more appropriate remeasurement rate. The result
of this change in remeasurement rate did not have a material impact to our financial statements. The total assets for our Venezuela subsidiary are approximately $4.0&nbsp;million. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>57</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B><I> Interest rate risk  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We use variable-rate debt to finance certain of our operations and capital expenditures. Assuming the entire $250.0&nbsp;million
revolving credit facility were drawn, each quarter point change in interest rates would result in a $0.6&nbsp;million change in annual interest expense. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Recent accounting pronouncements  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Revenue recognition for arrangements with multiple deliverables  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In October 2009, the Financial Accounting Standards Board issued an update to existing guidance on revenue recognition for arrangements with multiple
deliverables. This update will allow companies to allocate consideration received for qualified separate deliverables using estimated selling price for both delivered and undelivered items when
vendor-specific objective evidence or third-party evidence is unavailable. Additional disclosures discussing the nature of multiple element arrangements, the types of deliverables under the
arrangements, the general timing of their delivery, and significant factors and estimates used to determine estimated selling prices are required. We will adopt this update for new revenue
arrangements entered into beginning, or materially modified on or after, February&nbsp;1, 2011. We do not expect the provisions of this update to have a material impact on our consolidated financial
statements. </FONT></P>

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<BR></FONT><FONT SIZE=4><B>  Business  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Our company  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are a leading designer, manufacturer and provider of specialized equipment and aftermarket parts and service for the oil and gas
industry and other industries that we have served for over 100&nbsp;years. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
wide range of products covers hydraulic fracturing, well stimulation, workover, intervention and drilling operations. These products include pumping, acidizing, coil tubing, cementing and nitrogen
units, drilling rigs, workover rigs, power generation systems and electrical support and distribution systems, as well as engines, transmissions and material handling equipment. We have a substantial
installed base of products, which provides us with significant opportunities for recurring, higher-margin aftermarket parts and service revenues from customers in the oil and gas, power generation and
various other industries. In addition, we provide rental equipment to our customers, including generator sets, air compressors, rail car movers and material handling equipment. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>With
more than a century of continuous service across diverse industries, we have an established track record of providing a high-quality, technologically advanced series of products using
state-of-the-art components, processes and techniques. We have long-standing relationships with six globally recognized original equipment suppliers, or
OEMs&#151;Detroit Diesel, MTU Friedrichshafen, Electro-Motive Diesel, Hyster, Allison Transmission and Deutz&#151;with which we have conducted business for more than 40&nbsp;years on
average. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Demand
for our products has been driven primarily by capital spending in the oil and gas industry, which accounted for an estimated 82% and 76% of our equipment revenues and an estimated 78% and 72%
of our total revenues in Fiscal 2010 and Fiscal 2009, respectively. Our extensive and diverse customer base includes many of the world's leading oilfield service companies, as well as customers in the
power generation, marine, mining, construction, commercial vehicle and material handling industries. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Our business  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We manage our business through the following two principal segments: </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Manufacturing (representing 43%, 36% and 40% of revenues for the fiscal years ended January&nbsp;31, 2009, 2010 and 2011, respectively).</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We design, manufacture
and market equipment for U.S. and international oilfield service providers and drilling and workover contractors, as well as national oil companies that require integrated and customized product
solutions. We manufacture equipment specifically for hydraulic fracturing, well stimulation, well workover, intervention and drilling operations. Our manufactured products include integrated
solutions,
which incorporate a variety of components into a single system, for a wide range of oilfield services and support applications. Our manufactured products provide integrated solutions, which can
incorporate a variety of components into a single system, for a wide range of oilfield services and support applications. Our manufacturing segment benefits from our long-standing
relationships with globally recognized OEMs. We have five main manufacturing facilities across North America, comprising more than 600,000 square feet of space that are strategically located to
effectively service our customers' needs. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>59</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B><I> Distribution (representing 57%, 64% and 60% of revenues for the fiscal years ended January&nbsp;31, 2009, 2010 and 2011, respectively).</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We provide stand-alone
products and aftermarket parts and service for products manufactured by us, our six key OEMs and other manufacturers. In addition, we provide rental equipment including generator sets, air
compressors, rail car movers and material handling equipment to our customers. Our aftermarket parts and service operations, which provide us with a recurring, higher-margin source of revenue, serve
customers engaged in the oil and gas, power generation, marine, mining, construction, commercial vehicle and material handling industries, as well as other industries. Throughout the period of our
relationship with our key OEMs, we have been the factory-authorized provider of their stand-alone products in specified territories, which include major oil and gas producing regions in the United
States. Our arrangements with our six key OEMs generated approximately 57%, 56% and 55% of our aftermarket parts and service revenues in Fiscal 2010, Fiscal 2009 and Fiscal 2008, respectively. Our
extensive distribution network is strategically positioned throughout major oil and gas producing regions, enabling us to effectively support our customers. We provide in-house servicing
in close proximity to our customers' operational locations as well as on-site servicing. As of January&nbsp;31, 2011, we employed over 650 trained and certified service technicians utilizing
approximately 575 service bays in the United States, Canada and abroad. Additionally, we provide aftermarket parts through our extensive network of approximately 185 authorized dealers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Our strengths  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We believe that our operations benefit from a number of competitive strengths, including the following: </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Strong brand recognition.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We believe that the "Stewart&nbsp;&amp; Stevenson" brand has long been recognized in the oil and gas industry, as well as in other
industries we serve, and identified with high-quality products, innovative solutions and dependable service. We believe that this brand recognition represents a significant competitive
advantage domestically and internationally. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Experienced provider of integrated solutions.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our product lines include integrated, site-ready solutions, which incorporate a variety of components
into a single system for a wide range of oilfield services and support applications. We believe that our engineered product offerings are highly distinguished in their technical specifications and are
further enhanced by our aftermarket service and support. Our highly trained and experienced mechanical, electrical, electronic, industrial and software engineers and support personnel have core
competencies in product applications and support systems, sophisticated hydraulics and controls, large welded structures, low- to high-voltage electrical power generation and
switchgear, engine-driven machine design, specialty vehicle design and electrical instrumentation, controls and software-driven control packages. We strongly believe in a partnership approach in the
pursuit of our customer objectives, in which our highly qualified engineering and development teams commit to ensure that our products are tailored to meet specific customer requirements. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Established, diversified customer base.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have strong, long-standing relationships with many of our top customers. We maintain a broad and diverse
customer base, including leading oil and gas service companies, drilling contractors, integrated oil companies and national oil companies, as well as customers in the power generation, marine, mining,
construction, commercial vehicles and material handling industries. As of January&nbsp;31, 2011, no single </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>60</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>customer
accounted for more than 6% of our total revenues, and our top 10 customers, which include domestic and international businesses, collectively represented approximately 31% of our total
revenues. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Extensive aftermarket business.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our extensive network of facilities, at over 50 strategic locations provides our customers with high-quality parts and
service throughout the lifecycle of our products. Our extensive aftermarket parts and service sales, which is generally less sensitive to economic cycles, provide a source of recurring revenue and
typically generate higher margins than our equipment sales. This business is supported by an experienced sales force of over 200 personnel and over 650 trained and certified technicians. Our depth of
experience in the industries we serve and our significant, long-standing customer relationships are key components to our success. Combined with superior products, this knowledge enables
us to serve our customers and fully address our markets. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Robust training program.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We are dedicated to training for our employees, dealers and customers utilizing our multiple training facilities, our staff of
full-time trainers and an internet-based learning management system. We maintain over 200 instructor-led and internet-based courses. We provide our domestic and international
customers with onsite training, technical documentation and quality control support. In 2010, we provided training to more than 500 employees and over 700 customers. Our training efforts ensure that
our customers benefit from highly trained and experienced support for the products we offer, and we believe that they provide us a competitive advantage within our industry. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Highly experienced management team.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have a highly qualified senior management team with extensive global experience in the industries we serve. Our board of
directors includes individuals with extensive global experience in the energy industry and diversified areas of manufacturing, marketing, finance, international trade and international economic
cooperation who are prominently regarded for their distinguished accomplishments in the United States and abroad as well as their significant business experience. We believe that our board of
directors provides us with an uncommon strategic resource and competitive advantage. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Our strategy  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We believe that the implementation of the following strategic initiatives by our management team, under the leadership of our board
of directors, will enable our company to take advantage of significant demand for our well-known product lines across the global marketplace. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Leverage the Stewart&nbsp;&amp; Stevenson brand name.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We believe that our brand name enjoys significant domestic and international recognition, particularly in the
oil and gas industry, and reflects our reputation for quality products, innovative solutions and dependable service. We intend to continue to prominently feature our brand name in our sales and
marketing efforts for our core value-added equipment sales and aftermarket parts and service businesses and to pursue technological innovations. We believe that the strength of our brand helps us to
cross-sell and diversify our product lines and expand our domestic and international operations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Grow our position as a market leader.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We believe that our ability to customize our products to the specific needs of our customers, combined with our comprehensive
aftermarket capabilities and broad geographic reach, positions us to satisfy the growing requirements of </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>participants
in the oil and gas industry and other industries. We believe that the benefits of our cost effectiveness programs, combined with our continuing service to industries outside of the oil
and gas industry, all of which stand to be beneficiaries in the expected global economic recovery, will serve as key components to support our ability to grow. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Improve productivity and competitiveness.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We are fully committed to the continued enhancement of our productivity through process improvements and the expansion of
our manufacturing and engineering capabilities. We continue to streamline our operations through an assembly flow line, lean manufacturing techniques, standardization, outsourcing and supply chain
enhancements, while also focusing on opportunities to customize equipment to respond to the specific needs of our customers. We believe that our continued focus on these efforts enhances our
competitive position. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Selectively pursue growth opportunities.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We intend to continue to selectively seek strategic growth opportunities domestically and internationally (particularly in
Brazil, China and the United Arab Emirates), and organically as well as through acquisitions, joint ventures, geographic expansion and the development of additional manufacturing capability. We pursue
a targeted and disciplined acquisition strategy, focused on enhancing our earnings and cash
flows, diversifying our supply chain, adding complementary product offerings, improving efficiency and growing our customer base. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Continue to develop a highly effective workforce.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We have a highly trained and experienced workforce. We are dedicated to providing extensive training, education
and career development programs, as well as attractive incentive compensation plans for the benefit of our employees. We are committed to continuing to attract and retain high-quality and
experienced personnel. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Industry overview  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We believe that we are well positioned to capitalize on favorable industry conditions in the markets we serve, particularly the oil
and gas industry, as well as the other industries in which our customers operate. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Increasing capital spending in the oil and gas industry.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Growing worldwide demand for energy has resulted in significantly increased capital expenditures by oil
and natural gas producers. According to Spears&nbsp;&amp; Associates,&nbsp;Inc., annual global drilling and completion expenditures (excluding Russia, China and Central Asia) have increased from
$64&nbsp;billion in 2000 to $231&nbsp;billion in 2010, representing a compound annual growth rate of 14%. Although these capital expenditures decreased by 28% from 2008 to 2009, they are projected
to increase at a compound annual growth rate of 9% from 2010 to 2016, reaching $378&nbsp;billion. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Recovery in global drilling activity.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;As a result of the economic downturn of 2009, there was a dramatic reduction in global drilling activity. However, according
to Baker Hughes,&nbsp;Inc., the global rig count has recovered 63% from its low of 1,983 in May 2009 to 3,227 in December 2010, reflecting, among other things, the recent improvement in the global
economy and the increased development of unconventional oil and gas resources. The global rig count of 3,434 in March 2011 is near its highest point in approximately 25&nbsp;years. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Increasing U.S. onshore horizontal drilling activity.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Advances in drilling and completion technologies, including horizontal drilling and hydraulic fracturing,
have made the </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>development
of many unconventional resources, such as oil and natural gas shale formations, economically attractive. This has led to a dramatic increase in the development of oil- and
natural gas-producing shale formations, or "plays," in the United States. According to Baker Hughes,&nbsp;Inc., the North American horizontal rig count has risen from 335 in January 2007
to 947 in December 2010. Suppliers of products and services to the hydraulic fracturing industry currently benefit from drilling and completion trends that require more fracturing stages per well due
to the increased horizontal length of the wells. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Increasing drilling in oil- and liquids-rich formations.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;While the majority of U.S. drilling rigs currently are drilling in natural gas
formations, there is increasing activity in oil- and natural gas liquids-rich formations, such as the Eagle Ford, Bakken and Niobrara Shales, as well as various resources in
Oklahoma, including the Granite Wash. Although the oil and gas industry is cyclical and oil prices historically have been volatile, we believe that many of the oil- and
liquids-rich plays are economically attractive at oil prices substantially below the current price of oil. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> International interest in shale plays.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;There is growing international interest in the development of unconventional oil and natural gas shale plays. This has
resulted in a number of joint ventures between major U.S. and large international exploration and production, or E&amp;P, companies related to shale plays in the United States. We believe that these joint
ventures, which typically require international oil companies to commit cash up front and fund significant future capital expenditures, will generate additional demand for drilling and completion
activity in the coming years. In addition, we believe that such joint ventures will continue to stimulate development of other oil and gas shale reservoirs outside the United States. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Fracturing fleet attrition should positively impact demand.</I></B></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Existing hydraulic fracturing fleets are currently experiencing significantly higher levels of demand
as the result of a significant increase in the number of fracturing stages per horizontal well and increased pump pressure
rates associated with the fracturing stages, which are designed to maximize shale oil and gas production. This higher level of operation associated with shale oil and gas activity is expected to
accelerate the replacement cycle of equipment. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Our history  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Stewart&nbsp;&amp; Stevenson&nbsp;LLC was formed in November 2005 for the purpose of acquiring from Stewart&nbsp;&amp; Stevenson
Services,&nbsp;Inc., or SSSI, and its affiliates on January&nbsp;23, 2006, substantially all of their equipment, aftermarket parts and service and rental businesses that primarily served the oil
and gas industry, which we refer to collectively as the "SSSI Acquisition." Except as otherwise expressly noted, when we refer to financial and other information about us on a historical basis prior
to that date, such information reflects the operations we acquired from SSSI prior to the acquisition. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On
February&nbsp;26, 2007, we acquired substantially all of the operating assets and assumed certain liabilities of Crown Energy Technologies,&nbsp;Inc. and certain of its affiliates, which we
refer to as "Crown." Crown, which was headquartered in Calgary, Alberta, had multiple U.S. operations. Crown manufactured drilling, well servicing and workover rigs, stimulation equipment and provided
related parts and services. As a result of the Crown Acquisition, we increased our manufacturing capabilities and broadened the markets we serve. The Crown Acquisition </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>63</FONT></P>

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<BR>

<P style="font-family:arial;"><FONT SIZE=2>allowed
us to better serve the growing Canadian oil and gas market and to expand more rapidly into global markets. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Products and services  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Through our two operating segments, we design, manufacture, and market a wide-range of equipment, provide aftermarket
parts and service, and provide rental equipment to a broad range of customers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Equipment  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We design, manufacture and market equipment for well stimulation, drilling and well servicing rigs, coiled tubing, cementing, nitrogen pumping, power
generation and electrical systems. We record sales of these products in our manufacturing segment. We distribute stand-alone products manufactured by us. We record sales of these products in our
distribution segment. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>A
substantial portion of the products we sell in both the manufacturing and distribution segments includes components provided by our six key OEMs. Our relationships with these OEMs generally enable
us to sell their products globally as components of our engineered equipment and in specified territories as stand-alone products. We have been the factory-authorized provider of stand-alone products
of our six key OEMs in these territories, which principally cover major oil and gas producing regions in the United States, for an average of approximately 40&nbsp;years. For Fiscal 2010,
approximately 76.1% and 23.9% of our equipment sales revenues were derived from engineered products and stand-alone products, respectively. Approximately 40.4% of our product costs for Fiscal 2010
represented equipment supplied to us by these OEMs, which we use in combination with our design, engineering, and manufacturing expertise to deliver a value-added, integrated solution to our
customers. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>64</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following table lists the equipment we provide: </FONT></P>
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<TD WIDTH="126pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="96pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="157pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Product line</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Percentage of<BR>
total equipment<BR>
revenues in<BR>
Fiscal 2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Product description</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Segment</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Well stimulation</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>49.1%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Equipment that includes fracturing pumps, blenders, hydration, chemical additive systems and control systems and software used to enhance oil and gas production.</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Manufacturing</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Power generation</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
12.3%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Standby emergency back-up, fire suppression and prime power in a variety of configurations and capacities, using natural gas and
diesel engines.</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Manufacturing and Distribution</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Transmissions</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
8.9%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Automatic transmissions and related products.</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distribution</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Prime movers</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
6.4%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Engineered packages, mating internal combustion engines to a transmission or torque converter to power specific customer
applications.</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distribution</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Material handling</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
5.8%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fork lift trucks and ancillary equipment.</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distribution</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Engines</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
5.4%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Internal combustion diesel and natural gas engines.</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distribution</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Rigs</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
2.7%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equipment used in drilling, workover and well servicing, and exploration and enhancement of oil and gas production.</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Manufacturing</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Rail car movers</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
2.2%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Engine-driven equipment used in rail car switching operations.</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distribution</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Coiled tubing</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
1.8%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Well workover, stimulation and drilling equipment used on land and offshore applications.</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Manufacturing</FONT></TD>
</TR>
</TABLE></DIV>
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 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>65</FONT></P>

<HR NOSHADE>
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<TD WIDTH="126pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="96pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Product line</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Percentage of<BR>
total equipment<BR>
revenues in<BR>
Fiscal 2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Product description</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Segment</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5.4%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Various equipment utilized in the oil and gas services industry, such as cementing, nitrogen pumping, fluid pumping and contract manufacturing of
seismic and electric equipment.</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Manufacturing and Distribution</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
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 <P style="font-family:arial;"><FONT SIZE=2><B><I> Aftermarket parts and service  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We provide aftermarket parts and service to customers in the oil and gas industry, as well as customers in the power generation, marine, mining,
construction, commercial vehicle and material handling industries. Our aftermarket parts and service business supports equipment manufactured by approximately 100&nbsp;manufacturers, and in certain
cases, including for our product offerings from our six key OEMs, we have been the factory-authorized parts and service provider for specified territories, principally in major oil and gas producing
regions in the United States. Approximately 35% of our total revenues for Fiscal 2010 were from aftermarket parts and service operations. For Fiscal 2010, approximately 57% of the aftermarket parts
and service revenues pertained to products sourced from our six key OEMs. Both our manufacturing and distribution segments generate revenues from aftermarket parts and service. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
believe there are a number of factors which affect a customer's choice of its supplier of aftermarket parts and service, including the customer's preference to use factory-authorized parts and
service, price, parts availability, level and number of experienced technicians, proximity to the customer's location and flexibility to service products in the field. As of
January&nbsp;31, 2011, we employed over 650 highly trained service technicians, utilizing approximately 575 service bays in the United States, Canada and abroad. We also have significant
capabilities to service customers at their sites, due to our large number of technicians and our close proximity to the customer. Additionally, we maintain a substantial investment in parts inventory
managed by our experienced parts personnel, and we provide aftermarket parts through our extensive network of approximately 185 authorized dealers. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>66</FONT></P>

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<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following map represents our manufacturing facilities and service locations, as well as the states in which we have an OEM supply agreement. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>
<IMG SRC="g138929.jpg" ALT="GRAPHIC" WIDTH="732" HEIGHT="516">
  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Rental  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our rental products primarily consist of generator sets, air compressors, rail car movers and material handling equipment that are offered to a wide
range of end markets and are principally rented on a short-term basis as a
complementary solution to equipment sales. Our rental fleet consists of over 1,300&nbsp;units as of January&nbsp;31, 2011, and we are able to complement our equipment offering by providing our
customers the flexibility of renting versus purchasing certain equipment. Revenues for Fiscal 2010 represented approximately 2.7% of our total revenues, and our rental products generate our highest
margins and provide us with a strong return on our investment. We record these revenues within our distribution segment. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>67</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
following table lists our rental products: </FONT></P>
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<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Product line</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Percentage of<BR>
total rental<BR>
revenues in<BR>
Fiscal 2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Product description</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Generators</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
41.8%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Engines/generators ranging from 25 to 2,000 kilowatts.</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Material handling equipment</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
36.0%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fork lift trucks, rail car movers and ancillary equipment.</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Air compressors</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
22.2%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Air compressors ranging from 375 to 1,600 cubic feet per minute.</FONT></TD>
</TR>
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<TD COLSPAN=5 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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 <P style="font-family:arial;"><FONT SIZE=2>Our
utilization rate for Fiscal 2010 and Fiscal 2009 was approximately 49% and 44%, respectively, of our available rental fleet, and we generally recover our costs to acquire rental equipment over a
three-year period. The average useful life of our rental equipment is approximately five years, and our practice is to sell a unit out of the rental fleet upon reaching its useful life. We
closely monitor our utilization rate before making capital investments used to replenish or grow the rental fleet. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B> Customers and markets  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We maintain a broad and diverse customer base, including leading oil and gas service companies, drilling contractors, integrated oil
companies and national oil companies, as well as customers in the power generation, marine, mining, construction, commercial vehicles and material handling industries. We are not dependent on any
single customer, and during Fiscal 2010, our ten largest customers accounted for approximately 31% of our total sales and no single customer accounted for more than 6% of our total sales. The demand
of our customers for the products we provide has not historically been characterized by seasonality. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>68</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2><A
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<P style="font-family:arial;"><FONT SIZE=2>The
following table lists the markets and types of customers we serve: </FONT></P>
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<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Market</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Percentage of<BR>
total revenues<BR>
in Fiscal 2010</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Types of customers</B></FONT><BR></TH>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Oil and gas services</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>81.5%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Well stimulation providers, drilling contractors, well servicing companies, integrated oil companies and national oil companies.</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Material handling</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
4.3%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Warehouse/distribution companies, manufacturing companies, chemical companies and various other companies that utilize fork lifts
and rail car spotters.</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Power generation</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
3.5%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Commercial facilities that need back-up power generation capabilities.</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Commercial vehicles</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
2.5%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Freight transportation companies, emergency services, transit authorities and recreational vehicle users. Primarily aftermarket
parts and service.</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Construction</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
1.0%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Commercial building and home construction companies, and highway construction companies.</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Mining</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
0.2%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Companies involved in the extraction of raw materials through various mining methods.</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Government</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
0.2%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Federal agencies (</FONT><FONT SIZE=2><I>e.g.</I></FONT><FONT SIZE=2>, the U.S. Department of Defense), state agencies
(</FONT><FONT SIZE=2><I>e.g.</I></FONT><FONT SIZE=2>, departments of transportation) and local agencies (</FONT><FONT SIZE=2><I>e.g.</I></FONT><FONT SIZE=2>, departments of public works).</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Marine</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
0.1%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Offshore work boat providers, tug boat operators and recreational boat users.</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:13pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
6.7%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:13pt;margin-left:0pt;text-indent:0pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Primarily authorized dealers and distributors of our products in various markets, including the primary markets we serve and
various other industries.</FONT></TD>
</TR>
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 <P style="font-family:arial;"><FONT SIZE=2>We
believe that our wide range of high-quality standard products, demonstrated by our ISO&nbsp;9001:2000 certifications, and our partnership-based approach generate high levels of
customer satisfaction and result in repeat business. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
sell a significant portion of our equipment and parts and service to our customers pursuant to purchase orders subject to our standard terms and conditions, which generally provide for </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>69</FONT></P>

<HR NOSHADE>
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<BR>

<P style="font-family:arial;"><FONT SIZE=2>payment
within 30&nbsp;days. Historically, cancellations are infrequent, but customers generally have the right to cancel an order until it is filled. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For
larger equipment, particularly for customers in the oil and gas industry, we often enter into fixed-price contracts, and the measurement of progress toward completion is based on direct labor
hours incurred. Many of these contracts require downpayments from the customer or, for international customers, credit support. Some of our contracts are
cost-plus-fixed-fee contracts, which provide for reimbursement of specified costs plus a fixed fee. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>For
Fiscal 2010 and Fiscal 2009, we derived approximately 19% and 30%, respectively, of our revenues from sales of products and services to customers outside the United States, including sales to U.S.
customers for export. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Manufacturing and engineering design  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our manufacturing processes generally consist of fabrication, machining, assembly and testing. Many of our products are designed,
manufactured and produced to clients' specifications, often for long-life and harsh environment applications. To facilitate quality and productivity, we are continuing to implement a
variety of manufacturing strategies, including inventory management, flow line manufacturing and integrated supply chain management. As a result of these manufacturing strategies, we have increased
our capacity throughput, reduced our production costs and lowered manufacturing cycle times for our products. In addition, we have been successful in outsourcing the fabrication of subassemblies and
components of our products, such as trailers, whenever costs are significantly lower and quality is comparable to our own manufacturing. Our manufacturing operations are principally conducted in 10
locations throughout the United States and Canada. See "&#151;Facilities." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
strive to manufacture the highest quality products and are committed to improving the quality and efficiency of our products and processes. We are certified in compliance with ISO&nbsp;9001:2000. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Although
we manufacture some of the components included in our products, the principal raw materials required for the manufacture of our products are purchased from our six key OEMs, and we believe
that available sources of supply generally will be sufficient for our needs for the foreseeable future. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Sales and marketing  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We primarily sell and market our products directly to our customers through our sales and service centers in the United States and
abroad with a direct sales force of approximately 200&nbsp;employees. We also utilize a network of approximately 185 authorized dealers and approximately 16 independent overseas sales
representatives to market and distribute our products. Our equipment product lines are generally sold directly to the end users, and in certain international markets we may use authorized sales
representatives to help facilitate the marketing of our products. Our aftermarket parts and service and rental product lines are also provided to our customers on a direct basis. We also utilize a
network of authorized dealers to market and distribute parts. During Fiscal 2010, 97% of our total sales resulted from direct sales to the customer, while 3% was derived from sales to our dealer
network. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>70</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>Our
authorized dealers and our independent overseas sales representatives are independent contractors and are not our employees. Our authorized dealers buy our products and resell to their end
customers. Our independent overseas sales representatives assist in arranging for sales to international customers and generally do not take resale risk with respect to our products but receive
commissions based on completed sales. We provide training to our authorized dealers and independent overseas sales representatives. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Backlog  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our unfilled equipment orders that we include in equipment order backlog consist of written purchase orders and signed contracts
accompanied, if required by our credit policies, by credit support (typically downpayments or letters of credit), determined in accordance with our credit policies. Historically, cancellations are
infrequent; however, these unfilled orders are generally subject to cancellation. Purchase options are not included in equipment order backlog until exercised. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
unfilled equipment order backlog has increased since the third quarter of Fiscal 2009 and, as of January&nbsp;31, 2011, was $375.0&nbsp;million. We expect to recognize most of this backlog in
Fiscal 2011. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Backlog
of $375.0&nbsp;million as of January&nbsp;31, 2011 includes a $37.5&nbsp;million related party transaction, reflecting an order in Fiscal 2009 from an affiliate. Revenue recognition from
this transaction will be deferred until title to the product passes to a third party and all other revenue recognition criteria have been met. A deposit in the amount of $31.2&nbsp;million is
recorded as a customer deposit in our consolidated balance sheet. Included in inventories, net is $29.5&nbsp;million in costs related to this contract, and no amounts have been recorded in the
consolidated statements of operations for this transaction to date. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
equipment order backlog over the past 11&nbsp;quarters has been as follows at period end (dollars in millions): </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>
<IMG SRC="g51133.jpg" ALT="GRAPHIC" WIDTH="564" HEIGHT="342">
  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>71</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=3><B> Competition  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We operate in highly fragmented and very competitive markets, and, as a result, we compete against numerous businesses. Some of our
competitors have achieved substantially more market penetration with respect to certain products, such as coiled tubing and generators, and some of our competitors are larger and have greater
financial and other resources. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Major
competitors for well stimulation equipment include Enerflow Industries Inc., United Engines Manufacturing (a subsidiary of United Holdings LLC), Dragon Products (a division of Modern Group Inc.)
and National Oilwell Varco, Inc. For our well servicing, drilling and coiled tubing products, our major competitor is National Oilwell Varco, Inc. In our rail car mover product line, we compete
against Trackmobile, Inc. and Central Manufacturing Inc., and we compete with Cummins Inc. and Caterpillar, Inc. and their distributors for generators and other types of engine-driven products. ZF
Industries Inc. and Twin Disc Incorporated are our primary competitors for transmissions. We believe that our customers base their decisions to purchase equipment based on price, lead time and
delivery, quality, and aftermarket parts and service capabilities. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For
aftermarket parts sales, we compete with distributors of factory-authorized OEM parts, with providers of non-OEM parts and remanufactured parts, and other distributors of OEM parts.
For aftermarket service sales, the market is highly fragmented and characterized by numerous small, independent providers. We believe there are a number of factors that affect our customers' decisions
when choosing their supplier of aftermarket parts and service, including the customer's preference to use factory-authorized OEM parts and service. Customers also consider price, parts availability,
level and number of experienced technicians, proximity to the customer's location and flexibility to service products in the field. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Our
rental business focuses on generators, material handling equipment and air compressors and we compete with much larger companies, including United Rentals&nbsp;Inc., NationsRent
Companies&nbsp;Inc., Hertz Equipment Rental Corporation and Aggreko&nbsp;plc. We believe our customers base their decisions to rent equipment based on price, availability and aftermarket parts,
support and service. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
believe that the significant capital required to obtain and operate manufacturing facilities, acquire and maintain adequate inventory levels, and hire and maintain a highly skilled labor force,
along with our long-standing relationships with our six key OEMs, is a disincentive for new market entrants. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B> Suppliers and raw materials  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In Fiscal 2010, approximately 77% of our cost of goods sold consisted of raw materials and component parts, with the other 23% being
labor and overhead. Approximately 44% of the raw materials and component parts in cost of goods sold were obtained from our six key OEMs pursuant to long-standing relationships, and 56%
were obtained from a variety of other suppliers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
supply agreements with our six key OEMs are non-exclusive and typically short-term and have been renewed on an ongoing basis, but no assurances can be given that they will be renewed
beyond their expiration dates. We have been the factory-authorized provider of our product offerings from these OEMs in the territories below for many years, and our </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>72</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>relationships
with these OEMs average approximately 40&nbsp;years. The following table lists our key OEMs, the products they provide, the designated geographic territories that we serve and the
expiration date of our current supply agreements: </FONT></P>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>OEM</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Supplier<BR>
since</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Products</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Designated geographic territories</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><B>Expiration<BR>
date</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=10 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Detroit Diesel Corporation</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">1938</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Parts for high-speed diesel engines</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">Texas, Colorado, New Mexico, Wyoming, Western Nebraska, South Louisiana, Coastal Mississippi, Coastal Alabama and Colombia</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">2017</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:11pt;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">MTU Friedrichshafen</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
1938</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:11pt;margin-left:0pt;text-indent:0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Heavy duty high-speed diesel and natural gas engines</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:11pt;margin-left:0pt;text-indent:0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Texas, Colorado, New Mexico, Wyoming, Western Nebraska, South Louisiana, Coastal Mississippi, Coastal Alabama and
Colombia</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
2011(1) (Colombia 2012)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:11pt;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Electro-Motive Diesel,&nbsp;Inc.&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
1956</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:11pt;margin-left:0pt;text-indent:0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Heavy duty medium-speed diesel engines</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:11pt;margin-left:0pt;text-indent:0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Texas, Colorado, New Mexico, Oklahoma, Arkansas, Louisiana, Tennessee, Mississippi, Alabama, Mexico, Central America and parts of
South America</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
2013</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:11pt;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Hyster Company</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
1959</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:11pt;margin-left:0pt;text-indent:0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Material handling equipment</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:11pt;margin-left:0pt;text-indent:0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Texas and New Mexico</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
No expiration date</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:11pt;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Allison Transmission,&nbsp;Inc.&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
1973</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:11pt;margin-left:0pt;text-indent:0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Automatic transmissions, power shift transmissions and torque converters</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:11pt;margin-left:0pt;text-indent:0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Texas, Colorado, New Mexico, Wyoming, Western Nebraska, South Louisiana, Coastal Mississippi, Coastal Alabama, parts of Utah and
Arizona and Colombia</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
2013</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-top:11pt;margin-left:8pt;text-indent:-8pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Deutz Corporation</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
1996</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:11pt;margin-left:0pt;text-indent:0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Diesel and natural gas engines</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p align=left style="font-family:arial;margin-top:11pt;margin-left:0pt;text-indent:0pt;"><FONT  style="font-size:8pt;line-height:9pt;"> </FONT><FONT  style="font-size:8pt;line-height:9pt;">Colorado, Eastern Wyoming, Arizona, New Mexico, Texas, Oklahoma, Kansas, Arkansas, Louisiana, Mississippi, Western Tennessee,
Venezuela and Colombia</FONT></TD>
<TD style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><BR>
No expiration date</FONT></TD>
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<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">
(1)&nbsp;&nbsp;&nbsp;We continue to operate under our prior agreement and are in the process of renewing this agreement. </FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>Our six key OEMs supply us with diesel engines, transmissions, material handling equipment and natural gas engines, as well as the aftermarket parts used to
support those components. We also purchase large fluid pumps, generators and hydraulic and electrical components, among many other items, from an extensive supplier base. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We
generally have been able to recover component price increases by raising the prices of our goods and services. We expect to continue the practice of raising our prices to offset these increases,
but we can give no assurance that we will be able to do so. Our ability to raise our prices depends on market conditions and prices for similar products in the market. In addition, for larger
equipment, particularly for customers in the oil and gas industry, we often enter into </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>73</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2>fixed-price
contracts, which are typically performed within one year. Our ability to raise prices on fixed-price contracts is limited. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Facilities  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In addition to our leased headquarters in the central business district of Houston, Texas, we also maintain over 2.5&nbsp;million
square feet of manufacturing, service and sales facilities throughout the central United States, Canada, Colombia and Venezuela, as well as sales offices in Beijing and Moscow. We have a total of
57&nbsp;facilities, of which 48 are located in the United States and Canada (17 are owned and 31 are leased), and the remaining nine, all of which are leased, are located abroad. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Our
facilities are located close to major onshore and offshore petroleum producing regions in the United States and in a number of the world's energy producing nations. A summary of our major
locations is shown below: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="97pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Location</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Leased / owned</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Segment</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Dallas, TX</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Owned</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Distribution</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Houston, TX (East)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Owned</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Distribution</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Houston, TX (Northwest)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Owned</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Manufacturing</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Odessa, TX</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Owned</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Distribution</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Denver, CO</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Owned</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Distribution</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>San Antonio, TX</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Owned</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Distribution</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>New Orleans, LA</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Owned/Leased</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Distribution</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Farmington, NM</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Owned</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Distribution</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Corpus Christi, TX</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Owned</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Distribution</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Odessa, TX</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Leased</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Manufacturing</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Edmond, OK</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Leased</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Manufacturing</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Victoria, TX</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Leased</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Manufacturing</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Calgary, Canada</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Leased</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Manufacturing</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=5 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
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 <P style="font-family:arial;"><FONT SIZE=2>For
the fiscal year ended January&nbsp;31, 2011, our international assets represented approximately 11% of our total assets. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Employees  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As of January&nbsp;31, 2011, we had approximately 2,300&nbsp;employees, of whom approximately 2,000 were employed in the United
States and Canada and approximately 300 were employed abroad. Of the approximately 2,000 U.S. and Canadian employees, we have approximately 70&nbsp;engineers, 575 service technicians, 170 sales and
marketing employees and 1,200 aftermarket, manufacturing and administrative employees. We consider our current labor relations to be good and do not have any employees in the United States and Canada
that are represented by labor unions. See "Risk factors&#151;Risks related to our business&#151;We may not be able to attract and retain qualified employees." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Trademarks and patents  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We rely on a combination of patent, trademark, copyright, unfair competition and trade secret laws in the United States and other
jurisdictions, as well as employee and third-party </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>74</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>non-disclosure
agreements, license arrangements and domain name registrations, as well as unpatented proprietary know-how and other trade secrets, to protect our products,
components, processes and applications. With the exception of the "Stewart&nbsp;&amp;
Stevenson" trademark and logo, we do not believe any single patent, copyright, trademark or trade name is material to our business as a whole. Any issued patents that cover our proprietary technology
and any of our other intellectual property rights may not provide us with adequate protection or be commercially beneficial to us and, if applied for, may not be issued. The issuance of a patent is
not conclusive as to its validity or its enforceability. Competitors may also be able to design around our patents. If we are unable to protect our patented technologies, our competitors could
commercialize technologies or products which are substantially similar to ours. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>With
respect to proprietary know-how and other proprietary information, we rely on trade secret laws in the United States and other jurisdictions and confidentiality agreements. Monitoring
the unauthorized use of our technology is difficult, and the steps we have taken may not prevent unauthorized use of our technology. The disclosure or misappropriation of our intellectual property
could harm our ability to protect our rights and our competitive position. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B> Environmental, health and safety matters and other regulatory matters  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are subject to a variety of federal, state, local, foreign and provincial environmental laws and regulations, including those
governing the discharge of pollutants into the air or water, the management and disposal of hazardous substances and wastes and the responsibility to investigate and remediate contaminated sites that
are or were owned, leased, operated or used by us or our predecessors. Many of our operations require environmental permits and controls to prevent and limit air and water pollution. These permits
contain terms and conditions that impose limitations on our manufacturing activities, production levels and associated activities and periodically may be subject to modification, renewal and
revocation by issuing authorities. Fines and penalties may be imposed for non-compliance with applicable environmental laws and regulations and the failure to have or to comply with the
terms and conditions of required permits. We believe that we are currently in compliance in all material respects with the terms and conditions of our permits. We are also subject to the federal
Occupational Safety and Health Act and similar state and foreign laws, which impose requirements and standards of conduct on our operations for the health and safety of our workers. We periodically
review our procedures and policies for compliance with environmental and health and safety requirements. We believe that our operations are generally in compliance with applicable environmental and
health and safety regulatory requirements or that any non-compliance will not result in a material liability or cost to achieve compliance. Historically, the costs of achieving and
maintaining compliance with environmental and health and safety requirements have not been material. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Certain
environmental laws in the United States, such as the federal Superfund law and similar state laws, impose liability for investigating and remediating contaminated sites on "responsible
parties." These parties include, for example: current owners and operators of the site; parties who owned or operated the site at the time hazardous substances were released or spilled at the site;
parties who generated wastes and arranged to send them to the site for disposal; and parties who transported wastes to the site. Liability under such laws is strict, meaning, for example, that current
owners or operators can be liable even if all releases of </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>75</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>hazardous
substances occurred before they owned or operated the site, regardless of the lawfulness of the original disposal activities. Liability under such laws is also joint and several, meaning
that a responsible party might be held liable for more than its fair share of investigation or cleanup costs. As a practical matter, however, when more than one responsible party is involved at a
site, the costs of investigation and remediation are often allocated among the viable responsible parties on some form of equitable basis. In connection with each of the SSSI Acquisition and the Crown
Acquisition, the previous owner retained environmental liabilities relating to pre-closing conditions or occurrences, subject to certain dollar limitations and caps. However, for the
reasons set forth above, there could be contamination at some of our current or formerly owned or operated facilities for which we could be liable under applicable environmental laws. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
addition to the environmental health and safety measures described above, the part of our business that consists of the sale, distribution, installation and warranty repair of large engines and
transmissions used in commercial vehicle applications in Texas requires certain Texas state motor vehicle licenses, which are subject to annual renewal. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Legal matters  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We are also a defendant in a number of lawsuits relating to matters normally incident to our business. No individual case, or group
of cases presenting substantially similar issues of law or fact, is expected to have a material effect on the manner in which we conduct our business or on our consolidated results of operations,
financial position or liquidity. We maintain certain insurance policies that provide coverage for product liability and personal injury cases. These insurance policies are subject to a
self-insured retention for which we are responsible, which is generally $500,000 for newer cases and $1&nbsp;million for cases initiated before Fiscal 2009. We have established reserves
that we believe to be adequate based on current evaluations and our experience in these types of claim situations. Nevertheless, an unexpected outcome or adverse development in any such case could
have a
material adverse impact on our consolidated results of operations in the period in which it occurs. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>76</FONT></P>

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<BR></FONT><FONT SIZE=4><B>  Management  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Executive officers and directors  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table sets forth information with respect to our directors and executive officers as of April&nbsp;30, 2011. </FONT></P>
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<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="26pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="45%" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=6 style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Name</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Age</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Position(s)</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=6 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Hushang Ansary</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>83</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Chairman of the Board of Directors</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Frank Carlucci</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>80</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Vice Chairman and Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Robert L. Hargrave</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>70</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Vice Chairman and Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Steve Fulgham</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>50</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Chief Executive Officer and Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>John B. Simmons</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>58</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Chief Financial Officer and Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Andrew M. Cannon</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>37</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Chief Accounting Officer</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Jack L. Pieper</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>40</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Vice President&#151;Operational Finance</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>David C. Sulkis</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>54</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>General Counsel</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Kenneth W. Simmons</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>55</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Vice President&#151;Domestic Sales and Aftermarket</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Charles T. Hatcher</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>62</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Vice President&#151;Human Resources</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>David E. Christensen</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>56</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Senior Vice President&#151;Manufacturing and Engineering</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Nina Ansary</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>44</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>James Crystal</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>73</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Munawar H. Hidayatallah</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>66</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>John Macomber</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>83</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Anthony G. Petrello</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>56</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>J. Robinson West</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>64</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
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 <P style="font-family:arial;"><FONT SIZE=2><I> Hushang Ansary</I></FONT><FONT SIZE=2> (Chairman).&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Ansary is a Houston oil industry entrepreneur and philanthropist. He has been our Chairman of the Board since January 2006.
He has served as Chairman of the Board of Parman Capital Group&nbsp;LLC since December 2005 and is our principal stockholder. From March 1995 to June 2000, Mr.&nbsp;Ansary was Chairman and Chief
Executive Officer of IRI International Corporation (IRI), a New York Stock Exchange oilfield equipment company. From June 2000 to March 2005, Mr.&nbsp;Ansary served on the board of directors of
National Oilwell,&nbsp;Inc. Mr.&nbsp;Ansary is a former Economic and Finance Minister of Iran, Iranian Ambassador to the United States and Chairman and Chief Executive Officer of National Iranian
Oil Company. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Frank&nbsp;C. Carlucci</I></FONT><FONT SIZE=2> (Vice Chairman and Director).&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Carlucci has been a member of our board of directors since January 2006 and the Vice Chairman of
our board of directors since March&nbsp;2006. From 1993 to January 2003, Mr.&nbsp;Carlucci was Chairman, and from 2003 to 2005, Chairman Emeritus, of The Carlyle Group, a private equity firm. From
June 2000 to November 2005, he was a member of the board of directors of IRI. Mr.&nbsp;Carlucci served as National Security Advisor to the U.S. President and the U.S. Secretary of Defense in the
Reagan Administration. Mr.&nbsp;Carlucci is a Trustee of the RAND Corporation. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Robert L. Hargrave</I></FONT><FONT SIZE=2> (Vice Chairman and Director).&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Hargrave has been our Vice Chairman since February 2011. Prior to that, he was our Chief Executive
Officer from January 2007 to January 2011. From 1999 to 2007, he was a private entrepreneur. He served as President and </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>77</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>Chief
Executive Officer of Stewart&nbsp;&amp; Stevenson Services,&nbsp;Inc. from 1997 to 1999 and its Chief Financial Officer from 1983 to 1997. Mr.&nbsp;Hargrave served as Vice Chairman and Chief
Financial Officer at IRI from 1999 to 2000. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Steve Fulgham</I></FONT><FONT SIZE=2> (Chief Executive Officer and Director).&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Fulgham has been our Chief Executive Officer and Director since February 2011. He was most
recently with Schlumberger, where he served for 27&nbsp;years in several capacities, most recently as President&#151;Schlumberger North America Land. His other management positions covered
locations in Africa, Asia and Europe. He holds a B.S. in Petroleum Engineering and is a member of several oil and gas associations. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><I> John B. Simmons</I></FONT><FONT SIZE=2> (Chief Financial Officer and Director).&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Simmons has been our Chief Financial Officer and Director since September 2010. From
February&nbsp;2007 to August&nbsp;2010, Mr.&nbsp;Simmons was a private entrepreneur. From January&nbsp;2006 to January&nbsp;2007, Mr.&nbsp;Simmons was our Vice Chairman and Chief Executive
Officer. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Andrew M. Cannon</I></FONT><FONT SIZE=2> (Chief Accounting Officer).&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Cannon has been our Chief Accounting Officer since January 2009. Mr.&nbsp;Cannon is a Certified Public
Accountant, most recently with Ernst&nbsp;&amp; Young&nbsp;LLP from November 2002 through December 2008, and has worked primarily with the oilfield services, energy and related supporting industries. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><I> Jack L. Pieper</I></FONT><FONT SIZE=2> (Vice President&#151;Operational Finance).&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Pieper has been our Vice President&#151;Operational Finance since January 2009.
Prior to that, he was our Corporate Controller and has served in several roles in his 15&nbsp;year tenure with Stewart&nbsp;&amp; Stevenson. He is a Certified Public Accountant. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> David C. Sulkis</I></FONT><FONT SIZE=2> (General Counsel).&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Sulkis has been our General Counsel since January 2007. From 2002 to 2007, Mr.&nbsp;Sulkis practiced law at Baker
Botts&nbsp;L.L.P. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Kenneth W. Simmons</I></FONT><FONT SIZE=2> (Vice President, Domestic Sales and Aftermarket).&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Simmons has been our Vice President of Domestic Sales and Aftermarket since
November 2006. From January 2006 to October 2006, he served as Vice President of North Region Distribution and Rental Operations. From January 2005 to January 2006, Mr.&nbsp;Simmons was Vice
President of North Region Distribution Rental Operations and from August 2003 to December 2004, Regional Operations Manager at Stewart&nbsp;&amp; Stevenson&nbsp;&amp; Stevenson Services,&nbsp;Inc.
Mr.&nbsp;Simmons was Chief Operating Officer of USA Compression from March 2001 to March 2003. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Charles T. Hatcher</I></FONT><FONT SIZE=2> (Vice President&#151;Human Resources).&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Hatcher has been our Vice President&#151;Human Resources since May 2006.
Mr.&nbsp;Hatcher was Vice President of
Human Resources for the Power Products Division of Stewart&nbsp;&amp; Stevenson Services,&nbsp;Inc. from September 2003 to May 2006. From January 2000 to June 2003, Mr.&nbsp;Hatcher was employed by
GE Oil&nbsp;&amp; Gas Pipeline Inspection&nbsp;&amp; Integrity Services, North America, a pipeline inspection company, as its Director of Human Resources. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> David E. Christensen</I></FONT><FONT SIZE=2> (Senior Vice President&#151;Manufacturing and Engineering).&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Christensen has been our Senior Vice
President&#151;Manufacturing and Engineering since May 2008. Prior to that, he was our Vice President of Engineering, from May 2006 to April 2008. From June 2001 to April 2006, he served as the
General Manager of the Utility Equipment Division of Stewart&nbsp;&amp; Stevenson Services,&nbsp;Inc. Mr.&nbsp;Christensen has been employed with Stewart&nbsp;&amp; Stevenson for 29&nbsp;years. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>78</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><I> Nina Ansary</I></FONT><FONT SIZE=2> (Director).&nbsp;&nbsp;&nbsp;&nbsp;Ms.&nbsp;Ansary has been a member of our board of directors since January 2006. Since April 1997, she has served as President of The
Ansary Foundation, an organization dedicated to philanthropic activities. She is also a member of the board of trustees of the Pacific Region of the Boys and Girls Clubs of America. Ms.&nbsp;Ansary
is the daughter of Mr.&nbsp;Ansary, our Chairman of the Board of Directors. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> James W. Crystal</I></FONT><FONT SIZE=2> (Director).&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Crystal has been a member of our board of directors since March 2006. For more than the past five years, Mr.&nbsp;Crystal
has been Chairman and Chief Executive Officer of Frank Crystal&nbsp;&amp; Company, an insurance brokerage firm. He is Vice Chairman and Trustee of Mount Sinai Medical Center,&nbsp;Inc., a medical
service provider. He is a director of Global Indemnity plc. Mr.&nbsp;Crystal was a director of Blockbuster&nbsp;Inc. from February&nbsp;2008 until May&nbsp;2010. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Munawar H. Hidayatallah</I></FONT><FONT SIZE=2> (Director).&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Hidayatallah has been a member of our board of directors since March 2011. Mr.&nbsp;Hidayatallah served as
Chairman and Chief Executive Officer of Allis Chalmers Energy&nbsp;Inc. from 2001 to 2011. He was Chief Financial Officer of IRI from 1994 to
1999 and served as a director of that company prior to its merger with National Oilwell Varco,&nbsp;Inc. in 2000. Mr.&nbsp;Hidayatallah is a member of the Institute of Chartered Accountants. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> John D. Macomber</I></FONT><FONT SIZE=2> (Director).&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Macomber has been a member of our board of directors since January 2006. He has been a Principal of JDM Investment Group, a
private investment firm, since 1992. From June 2000 to November 2005, he was a member of the board of directors of IRI. He was Chairman and Chief Executive Officer of Celanese Corporation from 1973 to
1986 and a Senior Partner at McKinsey&nbsp;&amp; Company from 1954 to 1973. Mr.&nbsp;Macomber is Vice Chairman of The Atlantic Council. He has been a Director of Lehman Brothers Holdings&nbsp;Inc.,
which filed for bankruptcy in 2008. He was Chairman and President of the Export-Import Bank of the U.S. from 1989 to 1992. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Anthony G. Petrello</I></FONT><FONT SIZE=2> (Director).&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Petrello has been a member of our board of directors since March 2011. Mr.&nbsp;Petrello has been President and Chief
Operating Officer of Nabors Industries&nbsp;Ltd. since 1992, a director of that company since 1991 and its Deputy Chairman since 2003. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> J. Robinson West</I></FONT><FONT SIZE=2> (Director).&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;West has been a member of our board of directors since March 2011. Mr.&nbsp;West has been Chairman and Chief Executive
Officer of PFC Energy,&nbsp;Inc., an international energy consulting firm, since 1985. He is a director of Key Energy,&nbsp;Inc. and Chairman of Magellan Petroleum Corporation. Mr.&nbsp;West is
Chairman of the U.S. Institute of Peace and served as Assistant Secretary of the Interior in the Reagan Administration. He is a member of the National Petroleum Council and the Council on Foreign
Relations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Director independence  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our board of directors has determined that each of Messrs.&nbsp;Carlucci, Crystal, Hidayatallah, Macomber, Petrello and West is an
"independent" director within the meaning of the applicable rules of the SEC and the New York Stock Exchange. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Board committees  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The standing committees of our board of directors are the executive committee, the audit committee, the compensation committee and,
upon consummation of this offering, the nominating and governance committee. These committees are described below. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>79</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B><I> Executive committee  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our executive committee consists of Mr.&nbsp;Ansary, as Chairman, Ms.&nbsp;Ansary and Messrs.&nbsp;Carlucci, Macomber and Petrello. Except as
limited by Delaware law, the executive committee will exercise the authority of our board of directors when the full board of directors is not in session. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Audit committee  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our audit committee consists of Mr.&nbsp;Hidayatallah, as Chairman, and Messrs.&nbsp;Carlucci and Crystal. Mr.&nbsp;Hidayatallah and
Mr.&nbsp;Crystal serve as audit committee financial experts. This committee is concerned primarily with the accuracy and effectiveness of the audits of our financial statements by our internal audit
staff and by our independent auditors. Its duties include: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>selecting independent auditors;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>reviewing the scope of the audit to be conducted by them, as well as the results of their audit; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>approving non-audit services provided to us by our independent auditor;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>reviewing the organization and scope of our internal system of audit, financial and disclosure controls; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>appraising our financial reporting activities, including our annual report, and the accounting standards and principles
followed; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>conducting other reviews relating to compliance by our employees with our policies and applicable laws. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Compensation committee  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our compensation committee consists of Mr.&nbsp;Macomber, as Chairman, and Messrs.&nbsp;Carlucci and Hidayatallah. Our compensation committee
reviews and recommends policy relating to compensation and benefits of our directors and executive officers, including evaluating executive officer performance, reviewing and approving executive
officer compensation, reviewing director compensation, making recommendations to the board with respect to the approval, adoption and amendment of incentive compensation plans, administering
equity-based incentive compensation and other plans and reviewing executive officer employment agreements and severance arrangements. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Nominating and governance committee  </I></B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Upon consummation of this offering, our nominating and governance committee will consist of Mr.&nbsp;Petrello, as Chairman, and
Messrs.&nbsp;Crystal and West. The nominating and governance committee's responsibilities are expected to include, among other things (1)&nbsp;responsibility for establishing our corporate
governance guidelines, (2)&nbsp;overseeing the board of director's operations and effectiveness and (3)&nbsp;identifying, screening and recommending qualified candidates to serve on the board of
directors. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Compensation committee interlocks and insider participation  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>None of our executive officers has served as a member of a compensation committee (or if no committee performs that function, the
board of directors) of any other entity that has an executive officer serving as a member of our compensation committee. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>80</FONT></P>

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<BR></FONT><FONT SIZE=4><B>  Compensation discussion and analysis  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Compensation philosophy and objectives  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The primary objectives of our compensation policies with respect to executive compensation are to attract and retain the best
possible executives to lead us and to properly motivate these executives to perform at the highest levels of which they are capable. Compensation levels established for our executives are designed to
promote loyalty and long-term commitment to us and the achievement of our goals, to motivate the
best possible performance and to award achievement of budgetary goals to the extent such responsibility is within the executive's job description. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><B><I> Role of compensation committee  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our compensation committee is responsible for reviewing, and modifying when appropriate, the overall goals and objectives of our executive
compensation programs, as well as our levels of compensation. In addition, our compensation committee is responsible for evaluating the performance and approving the compensation level of each of our
executive officers, taking into account the Chairman's recommendations, who does not participate in the Incentive Plan. Our compensation committee did not engage the services of an independent
compensation advisor in connection with compensation decisions made in Fiscal 2010. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Compensation components  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our executive compensation program consists of the following elements: </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Base salary  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The primary component of compensation of our executives is base salary. We believe that the base salary element is required in order to provide our
executive officers with a stable income stream that is commensurate with their responsibilities and the competitive market conditions. The base salary levels of our executives with respect to Fiscal
2010 were established based upon: (1)&nbsp;the individual's particular background and circumstances, including experience and skills, (2)&nbsp;our knowledge of competitive factors within the
industry in which we operate, (3)&nbsp;the job responsibilities of the individual, (4)&nbsp;our expectations as to the performance and contribution of the individual and our judgment as to the
individual's potential future value to us and (v)&nbsp;existing base salary levels. In establishing the current base salary levels, we did not engage in any particular benchmarking activities or
engage any outside compensation advisors. Base salaries remained unchanged from the end of Fiscal 2008 through Fiscal 2010, although an across the board pay cut, ranging from 5% to 20%, was
implemented in March 2009 as a response to the economic downturn in the global economy. In August&nbsp;2010, due to improved economic conditions affecting our industry, our compensation committee
restored the base salaries of all of our employees, including our named executive officers, to previous levels, except for Mr.&nbsp;Ansary and Mr.&nbsp;Hargrave, who voluntarily continued their
salary reductions. In addition, effective January, 2011, Mr.&nbsp;Ansary voluntarily reduced his salary a further $0.5&nbsp;million on an annual basis, in order to offset increases in the costs of
certain health insurance benefits for all employees. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
expect that in future years, base salary levels will be established based upon these factors as well as additional factors including prior year's performance, the individual's length of </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>81</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>service
to us and other elements. Mr.&nbsp;Ansary plays a major role creating our organic and acquisitive growth opportunities, expanding our international presence and the achieving of our global
strategic objectives. Mr.&nbsp;Ansary's base salary for Fiscal 2010, before giving effect to the reduction effected in Fiscal 2009 and voluntarily continued in Fiscal 2010 and to the further
voluntary reduction in Fiscal 2010, was established in light of his unique role in our company. Pursuant to the terms of our revolving credit facility, Mr.&nbsp;Ansary's total compensation for any
fiscal year commencing in Fiscal 2007 may not exceed $5&nbsp;million, provided that after consummation of an initial public equity offering, any change in Mr.&nbsp;Ansary's total compensation will
be subject only to the approval of our board of directors. On November&nbsp;6, 2007, we entered into an employment agreement with Mr.&nbsp;Ansary pursuant to which Mr.&nbsp;Ansary's annual base
salary will continue, subject to voluntary reductions, to be not less than $2.0&nbsp;million. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Bonus  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In the face of the global financial turmoil and economic downturn, we have discontinued our previously reported bonus practice of awarding our
executives discretionary cash bonuses. Accordingly, no cash bonuses or discretionary cash bonuses were awarded to the named executive officers for Fiscal 2009 or Fiscal 2008. We resumed cash and
discretionary cash bonuses in Fiscal 2010. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>With
respect to executive bonuses for Fiscal 2011 and future years, absent extraordinary circumstances, it will be our practice to provide our executives discretionary cash bonuses and equity awards
in years when our Board-approved EBITDA target is achieved. Any such cash bonuses and equity awards are expected to be comparable to the median of those generally awarded by a peer group of companies,
currently consisting of Schlumberger,&nbsp;Ltd., National
Oilwell Varco,&nbsp;Inc., Weatherford International&nbsp;Ltd. and Baker Hughes Incorporated, to their executives for achievement of performance measures. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Equity awards  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On September&nbsp;5, 2007, our board of directors adopted the 2007 Incentive Compensation Plan ("Incentive Plan"). The Incentive Plan received the
required approval of a majority of our unit holders and became effective on September&nbsp;27, 2007. In connection with the adoption and approval of the Incentive Plan, the compensation committee of
the board, which has the responsibility to administer the Incentive Plan, made certain grants of restricted shares to our non-executive directors and certain members of our senior
executive management. The grants to our four non-executive directors totaled 240,000 restricted shares vesting in five (5)&nbsp;48,000 share tranches, with each such tranche vesting upon
board service for a complete fiscal year. In addition, approximately 112,000 of the restricted shares granted to three former directors were earned as part of their service to us with the balance of
their grants being forfeited. The executive grants total 60,000 restricted shares vesting in five (5)&nbsp;12,000 share tranches, with each tranche vesting upon employment for a complete fiscal
year. In addition, approximately 20,000 of the restricted shares granted to a former executive were earned before his resignation from the Company with the balance being forfeited. The executive
grants are subject to the achievement of net pre-tax income growth in the relevant fiscal year that exceeds the median net pre-tax income growth of a peer group of companies
consisting of Schlumberger,&nbsp;Ltd., National Oilwell Varco,&nbsp;Inc., Weatherford International&nbsp;Ltd., and Cameron International Corp. and are subject to acceleration in the case of an
executive's death or </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>disability.
This performance condition was met for Fiscal 2010 and 12,000&nbsp;shares vested; however, this performance condition was not met for Fiscal 2009 or Fiscal 2008 and those tranches were
forfeited. All grants are subject to (i)&nbsp;the completion of an initial public equity offering and (ii)&nbsp;accelerated vesting upon a change-in-control of the company.
No expense has been recognized for these grants because the contingent condition has not occurred and as of January&nbsp;31, 2011, diluted earnings per share excluded the approximately 408,000
contingent unvested restricted shares. A total of 396,000 restricted shares will vest upon completion of an initial public equity offering, and we will record a non-cash compensation
expense in connection therewith in an amount equal to the grant-date fair value of such vested shares, estimated to be approximately $5.0&nbsp;million. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> 401(k) plan  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We maintain a retirement savings plan, or a 401(k) Plan, for the benefit of all eligible employees. Currently, employees may elect to defer their
compensation up to the statutorily prescribed limit. During Fiscal 2010, we matched 35% of employee contributions to the 401(k) Plan, capped at 6% of the employee's salary. An employee's interests in
his or her deferrals are 100% vested when contributed. The 401(k) Plan is intended to qualify under Sections&nbsp;401(a) and 501(a) of the Internal Revenue Code. As such, contributions to the 401(k)
Plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) Plan, and all contributions are deductible by us when made. We provide this benefit to our
executive officers because it is a benefit we provide to all of our eligible employees and it is provided to our executive officers on the same basis as all other eligible employees. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Executive Officer Benefits  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We provided our executive officers with the following benefits: (1)&nbsp;payment of life insurance premiums, (2)&nbsp;payment of medical
insurance premiums, (3)&nbsp;payment of accidental death and dismemberment insurance premiums and (4)&nbsp;payment of long term disability insurance premiums in previous years and for a portion of
Fiscal 2010, but have discontinued this practice due to recent regulatory changes. We pay for the parking expenses of our executive officers at our headquarters. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> 2007 Incentive Compensation Plan  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The purpose of the Incentive Plan is to attract, reward and retain qualified personnel, and to provide incentives for our directors, officers and
employees to set forth maximum efforts for the success of our business. Our Incentive Plan permits the granting of awards in the form of options to purchase common stock or units, stock appreciation
rights, restricted shares of common stock or units, restricted stock units, performance shares, performance units and senior executive plan bonuses (which may be in shares of common stock or units
and/or cash). </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Subject
to certain adjustments that may be required from time to time to prevent dilution or enlargement of the rights of participants in the Incentive Plan, a maximum of 5,000,000 shares (which may
be in the form of units prior to our conversion to a corporation) are available for grants of all equity awards under the Incentive Plan. The shares of common stock or units to be issued under the
Incentive Plan consist of authorized but unissued shares of our common stock or units. If any shares are subject to an award that expires or are forfeited, then such shares will, to the extent of any
forfeiture or termination, again be available for making awards under the Incentive Plan. To the extent any awards granted are subject to the </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>achievement
of a performance goal in respect of a fiscal year or other period, upon the occurrence of a change of control during the period, the performance goal shall be deemed satisfied. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
performance goals applicable to any award under the Incentive Plan in respect of any participant who is or is likely to become a "covered employee" within the meaning of Section&nbsp;162(m) of
the Internal Revenue Code will be based on specified levels of, growth in, or performance relative to peer company or peer company group performance in one or more of the following categories
(excluding extraordinary or non-recurring items unless otherwise specified): (1)&nbsp;profitability measures; (2)&nbsp;revenue, sales and same store sales measures; (3)&nbsp;business
unit performance; (4)&nbsp;leverage measures; (5)&nbsp;stockholder return; (6)&nbsp;expense management; (7)&nbsp;asset and liability measures; (8)&nbsp;individual performance;
(9)&nbsp;supply chain efficiency; (10)&nbsp;customer satisfaction; (11)&nbsp;productivity measures; (12)&nbsp;cash flow measures; (13)&nbsp;return measures; and (14)&nbsp;product
development and/or performance. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Awards
under the Incentive Plan are subject to the following limitations: (1)&nbsp;the maximum number of shares of common stock or units that (a)&nbsp;may be subject to stock options or
appreciation rights granted to a participant during any calendar year is 400,000 shares plus an additional 100,000 shares in respect of a participant who has not previously been employed by us and
(b)&nbsp;may be subject to performance shares, restricted shares or restricted stock units granted to a participant during any calendar year is 200,000 shares plus an additional 50,000 shares in
respect of a participant who has not previously been employed by us and (2)&nbsp;the maximum aggregate cash value of payments to any participant for any performance period pursuant to an award of
performance units and the payment of a senior executive plan bonus to any participant in respect of any fiscal year may not in either case exceed 2% of EBITDA (excluding the effects of discontinued
operations or extraordinary or non-recurring items). </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
compensation committee administers the Incentive Plan. The compensation committee has the ability to: select individuals to receive awards; select the types of awards to be granted; determine the
terms and conditions of the awards, including the number of shares, the
purchase price or exercise price of the awards, if any, and restrictions and performance goals, if any, relating to any award; establish the time when the awards and/or restrictions become
exercisable, vest or lapse; and make all other determinations deemed necessary or advisable for the administration of the plan. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>While
our board of directors may terminate or amend the Incentive Plan at any time, no amendment may adversely impair the rights of grantees with respect to outstanding awards. In addition, an
amendment will be contingent on approval of our stockholders to the extent required by law. Unless terminated earlier, the Incentive Plan will terminate on the tenth anniversary of the date on which
it was approved by our stockholders, after which no further awards may be made under the Incentive Plan, but will continue to govern unexpired awards. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Employment Agreements  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have a written employment agreement with Mr.&nbsp;Ansary. In addition, we entered into an employment agreement with Mr.&nbsp;Fulgham in
connection with his hiring in February 2011. None of our other executive officers are party to written or unwritten employment agreements or severance or change in control arrangements with us. For a
description of the material terms of the employment agreement with Mr.&nbsp;Ansary, see "Compensation Components&#151;Base Salary." </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>84</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Summary compensation table  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>The following table sets forth the compensation of our most highly compensated executive officers, which include our chief executive
officer, for Fiscal 2010, 2009 and 2008. We refer to these individuals as our named executive officers. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:54%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"150%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="150%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="9pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="32pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="61pt" style="font-family:arial;"></TD>
<TD WIDTH="16pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="51pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="93pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="61pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=20 style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Name and principal position</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Fiscal<BR>
Year</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Salary</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Cash<BR>
Bonus</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Equity<BR>
awards</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>All other<BR>
compensation(1)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Total</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=20 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Hushang Ansary</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>2010</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>2,008,894</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>45,009</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>2,053,903</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Chairman of the Board of</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>2009</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>2,082,572</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>40,525</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>2,123,097</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Directors and of the</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>2008</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>2,500,000</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>42,431</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>2,542,431</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Executive Committee</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Robert L. Hargrave (2)</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>2010</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>508,125</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>500,000</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>36,570</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>1,044,695</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Vice Chairman</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>2009</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>518,726</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>32,212</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>550,938</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>2008</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>600,000</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>33,425</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>633,425</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 John B Simmons (3)</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>2010</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>183,569</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>250,000</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>15,196</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>448,765</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Chief Financial Officer</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>David E. Christensen</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>2010</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>190,914</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>157,381</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>25,629</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>373,924</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Senior Vice President&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Manufacturing and</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2> Engineering</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>



<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Kenneth W. Simmons</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>2010</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>190,914</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>105,381</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>20,726</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>317,021</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>



<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Vice President&#151;Domestic</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>2009</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>185,072</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>15,728</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>200,800</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:9pt;text-indent:-9pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Sales &amp; Aftermarket</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>2008</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>200,000</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>16,828</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>216,828</FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=20 style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>
(1)&nbsp;&nbsp;&nbsp;Consists of executive officer benefits listed above and 401(k) matching contributions. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(2)&nbsp;&nbsp;&nbsp;Mr.&nbsp;Hargrave
was our Chief Executive Officer through January 2011. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(3)&nbsp;&nbsp;&nbsp;Mr.&nbsp;Simmons
became our Chief Financial Officer effective September&nbsp;14, 2010. </FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=3><B> Grants of Plan-Based Awards  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We did not grant any incentive awards or equity awards to our named executive officers in Fiscal 2010. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Outstanding Equity Awards at Fiscal Year-End  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Mr.&nbsp;Hargrave holds 36,000 restricted shares, of which 12,000 are subject to forfeiture if certain performance goals are not
achieved in Fiscal 2011. See "Compensation components&#151;Equity Awards" for a discussion. All restricted shares held by Mr.&nbsp;Hargrave, if not previously forfeited, will vest upon
(1)&nbsp;the completion of an initial public equity offering or (2)&nbsp;a change-in-control of the Company. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Option Exercises and Stock Vested  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our named executive officers did not exercise any options and did not have any stock awards vest during Fiscal 2010. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Potential Payments upon Termination or Change-in-Control  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have not entered into any agreement with any of our named executive officers that would provide for severance payments upon a
termination of employment or payments made in connection with a change in control. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>85</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Mr.&nbsp;Hargrave
holds 36,000 restricted shares, of which 12,000 are subject to forfeiture if certain performance goals are not achieved in Fiscal 2011. See "Compensation
components&#151;Equity Awards" in for a discussion. All restricted shares held by
Mr.&nbsp;Hargrave, if not previously forfeited, will vest upon (1)&nbsp;the completion of an initial public equity offering or (2)&nbsp;a change-in-control of us. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B> Director compensation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Directors who are also full-time officers or employees of our company receive no additional compensation for serving as
directors. All other directors receive an annual retainer of $60,000. For a discussion of equity awards made to our non-executive directors in anticipation of our initial public offering,
see Equity Awards above. Each non-employee director also receives an annual fee of $10,000 for serving as the chair of a standing committee, with the exception of the chair of the audit
committee, who receives an annual fee of $15,000. In addition, each director who otherwise serves on a committee receives an annual fee of $5,000. The following table sets forth compensation earned by
our non-employee directors in Fiscal 2010. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="81pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Name&nbsp;of&nbsp;director</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Fees&nbsp;earned<BR>
or<BR>
paid&nbsp;in&nbsp;cash</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Total</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Nina&nbsp;Ansary</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>65,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>65,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Frank&nbsp;C.&nbsp;Carlucci</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>70,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>70,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 James&nbsp;W.&nbsp;Crystal</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>75,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>75,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>John&nbsp;D.&nbsp;Macomber</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>70,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>70,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR bgcolor="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>


<!-- COMMAND=ADD_ROWSHADECOLOR,"#CCEEFF" -->


 Stephen&nbsp;Solarz(1)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>65,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>65,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>
(1)&nbsp;&nbsp;&nbsp;Mr.&nbsp;Solarz passed away in November 2010. </FONT></P>
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>86</FONT></P>

<HR NOSHADE>
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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="de72801_principal_and_selling_stockholders"> </A>
<A NAME="toc_de72801_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Principal and selling stockholders  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table sets forth certain information as of April&nbsp;30, 2011 regarding the beneficial ownership of our outstanding
common equity, by: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>each person or entity known by us to beneficially own more than 5% of our outstanding common stock; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>each of our directors and named executive officers; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>all of our directors and executive officers as a group. </FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=2>Beneficial
ownership of shares is determined under rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power. In computing the number
of shares beneficially owned by a person and the percentage ownership of that person, shares of Common Stock subject to options held by that person that are currently exercisable or exercisable within
60&nbsp;days of April&nbsp;30, 2011 are deemed outstanding. These shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as
indicated in the footnotes to this table and as provided pursuant to applicable community property laws, the stockholders named in the table have sole voting and investment power with respect to the
shares set forth opposite each stockholder's name. This table assumes no exercise of the underwriters' option to purchase up to an aggregate
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional shares of Common Stock from
us and the selling stockholders consisting of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares issued by us
and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares to be sold on a pro rata basis by the selling stockholders. Unless otherwise indicated, the
address for each of the persons listed below is: c/o Stewart&nbsp;&amp; Stevenson&nbsp;LLC, 1000 Louisiana St., Suite&nbsp;5900, Houston, Texas 77002. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:54%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="150%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="88pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="88pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="49pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="81pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="81pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Number of units<BR>
beneficially<BR>
owned prior to this offering(1) </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Number of shares<BR>
beneficially<BR>
owned after this offering(1) </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Name and address of beneficial owner</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Number of<BR>
units</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Percentage</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Shares<BR>
offered</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Number of<BR>
shares</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Percentage</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Parman Capital Group&nbsp;LLC(2)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>51,750,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>51.75%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>EC Investments&nbsp;B.V.(3)(4)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>40,005,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>40.00%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Hushang Ansary(2)(4)(5)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>91,755,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>91.75%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Steve Fulgham</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Robert L. Hargrave(8)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>John B. Simmons</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>David&nbsp;E. Christensen</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Kenneth W. Simmons</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Nina Ansary(4)(6)(8)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,300,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4.30%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Frank C. Carlucci(4)(7)(8)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3,950,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>3.95%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>James W. Crystal(4)(8)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Munawar H. Hidayatallah</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>John D. Macomber(4)(8)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Anthony G. Petrello</FONT></TD>
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<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>J. Robinson West</FONT></TD>
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<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&#151;</FONT></TD>
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<TD COLSPAN=16 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Number of units<BR>
beneficially<BR>
owned prior to this offering(1) </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Number of shares<BR>
beneficially<BR>
owned after this offering(1) </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Name and address of beneficial owner</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Number of<BR>
units</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Percentage</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Shares<BR>
offered</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Number of<BR>
shares</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Percentage</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>All directors and executive officers as a group (16&nbsp;persons)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100,005,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100.00%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>%</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
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<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>
(1)&nbsp;&nbsp;&nbsp;Immediately prior to consummation of this offering, we will convert to a corporation and units will convert on a one-to-one basis into shares. Upon
consummation of this offering, Parman Capital Group&nbsp;LLC will hold all outstanding shares of Class&nbsp;B Common Stock and all other investors will hold shares of Common Stock. Excludes
12,000,000 units which Parman Capital Group LLC has the right to reacquire from EC Investments B.V. until April 2011. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(2)&nbsp;&nbsp;&nbsp;Mr.&nbsp;Ansary
and his wife are the sole members of Parman Capital Group&nbsp;LLC. Mr.&nbsp;Ansary has sole voting and dispositive power with respect to the units held by
Parman Capital Group&nbsp;LLC. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(3)&nbsp;&nbsp;&nbsp;Includes
12,000,000 units that Parman Capital Group&nbsp;LLC has the right to reacquire, 1,700,000 units that Ms.&nbsp;Ansary has the right to reacquire and 1,300,000 units that
the Frank C. Carlucci III Revocable Trust has the right to reacquire from EC&nbsp;Investments&nbsp;B.V. until April 2011. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(4)&nbsp;&nbsp;&nbsp;EC&nbsp;Investments&nbsp;B.V.
is a wholly owned subsidiary of Ennia Caribe Holding&nbsp;N.V., which is in turn a wholly-owned subsidiary of Parman International B.V., a private
investment company in which Mr.&nbsp;Ansary owns a controlling equity interest and Mr.&nbsp;Carlucci and Ms.&nbsp;Ansary each own a minority equity interest. Mr.&nbsp;Ansary is Chairman of the
Supervisory Board of Ennia Caribe Holding&nbsp;N.V. Messrs.&nbsp;Carlucci, Crystal and Macomber and Ms.&nbsp;Ansary are also members of the Supervisory Board of Ennia Caribe Holding&nbsp;N.V.
Each of Messrs.&nbsp;Carlucci, Crystal and Macomber and Ms.&nbsp;Ansary disclaim beneficial ownership of such units. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(5)&nbsp;&nbsp;&nbsp;Reflects
beneficial ownership of units held by Parman Capital Group&nbsp;LLC and EC Investments B.V. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(6)&nbsp;&nbsp;&nbsp;Excludes
1,700,000 units which Ms.&nbsp;Ansary has the right to reacquire from EC&nbsp;Investments&nbsp;B.V. until April 2011. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(7)&nbsp;&nbsp;&nbsp;Reflects
units held by Frank C. Carlucci III Revocable Trust. Excludes 1,300,000 units which the Frank C. Carlucci III Revocable Trust has the right to reacquire from
EC&nbsp;Investments&nbsp;B.V. until April 2011. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(8)&nbsp;&nbsp;&nbsp;Number
of shares beneficially owned after this offering does not include an aggregate of 396,000 shares of Common Stock granted to various officers and directors under the Incentive
Plan which will vest upon the completion of this offering. See "Compensation discussion and analysis&#151;2007 Incentive Compensation Plan." </FONT></P>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="de72801_certain_relationships_and_transactions"> </A>
<A NAME="toc_de72801_2"> </A>
<BR></FONT><FONT SIZE=4><B>  Certain relationships and transactions  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>James W. Crystal, a member of our board of directors, is also the Chairman and Chief Executive Officer of Frank Crystal&nbsp;&amp;
Company,&nbsp;Inc., an insurance brokerage firm. In Fiscal 2010, 2009 and 2008, we purchased insurance coverage through Frank Crystal&nbsp;&amp; Company,&nbsp;Inc., generating commissions to Frank
Crystal &amp; Company,&nbsp;Inc. of $477,799, $358,426 and $360,662, respectively. The purchase of this coverage was negotiated on an arms' length basis, and we believe that the premium was within the
range of market prices for similar types of insurance coverage. We currently anticipate that we will continue to procure insurance from Frank Crystal&nbsp;&amp; Company,&nbsp;Inc. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Backlog
of $375.0&nbsp;million as of January&nbsp;31, 2011 includes a $37.5&nbsp;million related party transaction, reflecting an order in Fiscal 2009 from EC Investments B.V., an entity
indirectly controlled by a private investment company in which Mr.&nbsp;Ansary holds a controlling equity interest and in which Mr.&nbsp;Carlucci and Ms.&nbsp;Ansary, each of whom is a member of
our board of directors, each hold minority interests. Revenue recognition from this transaction will be deferred until title to the product passes to a third party and all other revenue recognition
criteria have been met. A deposit in the amount of $31.2&nbsp;million is recorded as a customer deposit in our consolidated balance sheet. Included in inventories, net is $29.5&nbsp;million in
costs related to this contract, and no amounts had been recorded in the consolidated statements of operations for this transaction as of January&nbsp;31, 2011. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
current practice with respect to related party transactions is as follows: (1)&nbsp;transactions with a value not exceeding $10,000 are subject to approval by our Chairman (other than
transactions in which our Chairman may be a party); (2)&nbsp;transactions in which our Chairman may be a party or transactions with a value in excess of $10,000 but not exceeding $100,000 are
subject to approval by our Executive Committee (excluding, as appropriate, the participation of a member of the Executive Committee who may be a party to such transactions); and (3)&nbsp;all other
transactions are subject to approval of our board of directors (excluding, as appropriate, the participation of a member of board of directors who may be a party to such transactions). </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>89</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="dg72801_description_of_capital_stock"> </A>
<A NAME="toc_dg72801_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Description of capital stock  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This description is a summary only, assumes that the Corporate Conversion has occurred and is subject to our certificate of
incorporation and bylaws as they will be adopted upon the Corporate Conversion, which we will file as exhibits to the registration statement of which this prospectus is a part. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Our
authorized capital stock consists of 600&nbsp;million shares of Common Stock, $0.01 par value, 300&nbsp;million shares of Class&nbsp;B Common Stock, $0.01 par value, and 100&nbsp;million
shares of preferred stock, $0.01 par value. The following summary of certain provisions relating to the Common Stock, Class&nbsp;B Common Stock and preferred stock does not purport to be complete
and is subject to, and qualified in its entirety by, the provisions of applicable Delaware law and the provisions of our certificate of incorporation and our bylaws. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B> Common Stock and Class&nbsp;B Common Stock  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> General.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The holders of Common Stock and Class&nbsp;B Common Stock have identical rights except with respect to voting, conversion and transfer. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Voting rights.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Holders of our Common Stock are entitled to one vote per share on all matters to be voted on by stockholders, while holders of Class&nbsp;B Common
Stock are entitled to ten votes per share. Generally, except as may be provided by law, all matters to be voted on by stockholders must be approved by a majority of the votes entitled to be cast by
all holders of Common Stock and Class&nbsp;B Common Stock present in person or represented by proxy, voting together as a single class, subject to any voting rights granted to holders of any
preferred stock. However, amendments to our certificate of incorporation that would alter or change the powers, preferences or special rights of the Common Stock or Class&nbsp;B Common Stock so as
to affect them adversely also must be approved by a majority of the votes entitled to be cast by the holders of the Common Stock or Class&nbsp;B Common Stock (as the case may be), voting as a
separate class. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Dividends.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Subject to the rights of holders of our preferred stock, holders of our Common Stock and Class&nbsp;B Common Stock are entitled to such dividends as
our board of directors may declare out of funds legally available therefor. Holders of our Common Stock and Class&nbsp;B Common Stock will share equally on a per share basis in any dividend declared
by the board of directors, subject to any preferential rights of any outstanding preferred stock. Dividends consisting of shares of Common Stock and Class&nbsp;B Common Stock may be paid only as
follows: (1)&nbsp;shares of Common Stock may be paid only to holders of Common Stock, and shares of Class&nbsp;B Common Stock may be paid only to holders of Class&nbsp;B Common Stock; and
(2)&nbsp;the number of shares so paid will be equal on a per share basis with respect to each outstanding share of Common Stock and Class&nbsp;B Common Stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
may not reclassify, subdivide or combine shares of either class of common stock without at the same time proportionally reclassifying, subdividing or combining shares of the other class. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2><I> Other provisions.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The holders of our Common Stock and Class&nbsp;B Common Stock will share equally on a per share basis, upon liquidation or dissolution of all
of the assets available for distribution to holders of common stock. The holders of our Common Stock and Class&nbsp;B Common Stock have no preemptive or other subscription rights, and there are no
redemption </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>or
sinking fund provisions with respect to these shares. Additional shares of Class&nbsp;B Common Stock may only be issued to Mr.&nbsp;Ansary and entities controlled by Mr.&nbsp;Ansary. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Merger or consolidation.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In the event of a merger or consolidation, the holders of Common Stock and Class&nbsp;B Common Stock generally will be entitled to
receive the same per share consideration, if any. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Conversion/transfer of Class&nbsp;B Common Stock.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our Class&nbsp;B Common Stock will be convertible into Common Stock on a
share-for-share basis at the option of the holder at any time, or automatically upon transfer to a person or entity which is not a permitted transferee or upon the death of
Mr.&nbsp;Ansary. In general, permitted transferees will include us, Mr.&nbsp;Ansary and entities controlled by Mr.&nbsp;Ansary. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Preferred stock  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our board of directors will have the authority, with the approval of a majority of the combined voting power of our Common Stock and
Class&nbsp;B Common Stock, voting together as a single class, to issue shares of preferred stock from time to time in one or more series and to fix the number of shares and terms of each such
series. The board may (subject to such stockholder approval) determine the designation and other terms of each series, including, among others: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>dividend rates;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>whether dividends will be cumulative or non-cumulative;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>redemption rights;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>liquidation rights;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>sinking fund provisions;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>conversion or exchange rights; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>voting rights. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>The
issuance of preferred stock, while providing us with flexibility in connection with possible acquisitions and other corporate purposes, could reduce the relative voting power of holders of our
Common Stock and Class&nbsp;B Common Stock. It could also affect the likelihood that holders of our Common Stock and Class&nbsp;B Common Stock will receive dividend payments and payments upon
liquidation. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
issuance of shares of capital stock could be used to discourage an attempt to obtain control of our company. For example, if, in the exercise of its fiduciary obligations, our board of directors
determined that a takeover proposal was not in the best interest of our stockholders, our board of directors could authorize the issuance of preferred stock, subject to approval of the holders of a
majority of the voting power of our Common Stock and Class&nbsp;B Common Stock, voting together as a single class. The shares could be issued in one or more </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>transactions
that might prevent or make the completion of the change of control transaction more difficult or costly by: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>diluting the voting or other rights of the proposed acquiror or insurgent stockholder group;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>creating a substantial voting block in institutional or other hands that might undertake to support the position of the
incumbent board; or </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>effecting an acquisition that might complicate or preclude the takeover. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>In
this regard, our certificate of incorporation will grant our board of directors broad power to establish the rights and preferences of the authorized and unissued preferred stock. Our board of
directors, subject to approval of the holders of a majority of the voting power of our Common Stock and Class&nbsp;B Common Stock, voting together as a single class, could establish one or more
series of preferred stock that entitle holders to: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>vote separately as a class on any proposed merger or consolidation;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>cast a proportionately larger vote than our common stock on any transaction or for all purposes; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>elect directors having terms of office or voting rights greater than those of other directors;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>convert preferred stock into a greater number of common stock or other securities;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>demand redemption at a specified price under prescribed circumstances related to a change of control of our company;
or </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>exercise other rights designed to impede a takeover. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=3><B> Certificate of incorporation and bylaws  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Election and removal of directors  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The exact number of directors will be fixed from time to time by an affirmative vote (or written consent) of a majority of the combined voting power
of our outstanding Common Stock and Class&nbsp;B Common Stock, voting together as a single class. Directors may be removed with or without cause by an affirmative vote of a majority of the combined
voting power of our outstanding Common Stock and Class&nbsp;B Common Stock, voting together as a single class. Any vacancy occurring on the board of directors and any newly
created directorship may be filled only by vote of a majority of the combined voting power of our outstanding Common Stock and Class&nbsp;B Common Stock, voting together as a single class. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Stockholder meetings  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our certificate of incorporation and our bylaws will provide that special meetings of our stockholders may be called (1)&nbsp;by the Chairman,
(2)&nbsp;at the request of a majority of the directors, by our Secretary, or (3)&nbsp;by a majority of the combined voting power Common Stock and Class&nbsp;B Common Stock, voting together as a
single class. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Stockholder action by written consent  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our certificate of incorporation and our bylaws will provide that holders of our Common Stock and Class&nbsp;B Common Stock will be able to act by
written consent without a meeting. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><B><I> Amendment of certificate of incorporation  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our certificate of incorporation generally may be amended only by the affirmative vote of holders of at least a majority of the combined voting power
of our Common Stock and Class&nbsp;B Common Stock, voting together as a single class; provided, however, that the holders of our Common Stock and Class&nbsp;B Common Stock will each be entitled to
vote separately as a class with respect to amendments to our certificate of incorporation that change the powers, preferences or special rights of their respective class so as to affect them
adversely. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B><I> Amendment of bylaws  </I></B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our bylaws generally may be altered, amended or repealed by our board of directors, provided that certain bylaws relating to stockholder meetings and
the election and removal of our directors may not be amended or repealed without the affirmative vote (or written consent) of holders of a majority of the combined voting power of our Common Stock and
Class&nbsp;B Common Stock, voting together as a single class. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Limitation of liability of directors and officers  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We intend to complete our Corporate Conversion prior to the completion of this offering. Section&nbsp;145 of the Delaware General
Corporation Law, or DGCL, authorizes a court to award, or a corporation's board of directors to grant, indemnity to directors and officers in terms sufficiently broad to permit such indemnification
under certain circumstances for liabilities, including reimbursement for expenses incurred, arising under the Securities Act. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
permitted by the DGCL, we anticipate that our Delaware certificate of incorporation, which will be effective upon the closing of this offering, will include a provision that permits the elimination
of personal liability of our directors for monetary damages for breach of fiduciary duty as a director, to the fullest extent permitted by the DGCL as it now exists or as it may be amended. The DGCL
permits limitations of liability for a director's breach of fiduciary duty other than liability: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>for any breach of the director's duty of loyalty to us or our stockholders;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of the law; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>for unlawful payments of dividends or unlawful stock repurchases or redemptions, as provided under Section&nbsp;174 of
the DGCL; or </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>for any transaction from which the director derived an improper personal benefit. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>Such
limitation of liability may not apply to liabilities arising under the federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission.
In addition and as permitted under the DGCL, our certificate of incorporation will also permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability
arising out of his or her actions in such capacity, regardless of whether indemnification would be permitted under the DGCL. We intend to obtain liability insurance for our directors and officers. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Upon
completion of this offering, our certificate of incorporation and bylaws will provide that we shall indemnify our officers and directors and anyone serving at the request of the </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>93</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>Company
as an officer, director, employee or agent of another entity, and may indemnify our employees and agents, to the fullest extent permitted by the DGCL. Section&nbsp;145 of the DGCL also
empowers us to enter into indemnification agreements with our officers, directors, employees and agents. Prior to the completion of this offering, we expect to enter into indemnification agreements
with our directors and executive officers to give such directors and executive officers additional contractual assurances regarding our indemnification obligations set forth in our certificate of
incorporation and bylaws and to provide additional procedural protections, which contractual rights may, in some cases, be broader than the specific indemnification provisions contained in the DGCL.
The indemnification agreements may require us, among other things, to indemnify such directors and executive officers against liabilities that may arise by reason of their status or service as
directors or executive officers and to advance expenses they incur as a result of any proceeding against them as to which they could be indemnified. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>At
present, there is no pending litigation or proceeding involving any of our directors, executive officers, other employees or agents for which indemnification is sought, and we are not aware of any
threatened litigation or proceeding that may result in a claim for such indemnification. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Anti-takeover effects of some provisions  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Some provisions of our certificate of incorporation and bylaws could make the following more difficult: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>acquisition of control of us by means of a proxy contest or otherwise, or </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>removal of our incumbent officers and directors. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>These
provisions, as well as our ability to issue preferred stock, are designed to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage
persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection give us the potential ability to negotiate with the
proponent of an unfriendly or unsolicited proposal to acquire or restructure us, and that the benefits of this increased protection outweigh the disadvantages of discouraging those proposals, because
negotiation of those proposals could result in an improvement of their terms. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Delaware business combination statute  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We will elect to be subject to Section&nbsp;203 of the DGCL, which regulates corporate acquisitions. Section&nbsp;203 prevents an
"interested stockholder," which is defined generally as a person owning 15% or more of a corporation's voting stock, or any affiliate or associate of that person, from engaging in a broad range of
"business combinations" with the corporation for three years after becoming an interested stockholder unless: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the board of directors of the corporation had previously approved either the business combination or the transaction that
resulted in the stockholder's becoming an interested stockholder; </FONT></DD></DL>
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<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, that person owned
at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, other than statutorily excluded shares;&nbsp;or </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>following the transaction in which that person became an interested stockholder, the business combination is approved by
the board of directors of the corporation and holders of at least two-thirds of the outstanding voting stock not owned by the interested stockholder. </FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=2>Generally,
a "business combination" includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. Under Section&nbsp;203, the
restrictions described above also do not apply to specific business combinations proposed by an interested stockholder following the announcement or notification of designated extraordinary
transactions involving the corporation and a person who had not been an interested stockholder during the previous three years or who became an interested stockholder with the approval of a majority
of the corporation's directors, if such extraordinary transaction is approved or not opposed by a majority of the directors who were directors prior to any person becoming an interested stockholder
during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Section&nbsp;203
may make it more difficult for a person who would be an interested stockholder to effect various business combinations with us for a three-year period after such person
became an interested stockholder. Section&nbsp;203 also may have the effect of preventing changes in our management and could make it more difficult to accomplish transactions which our stockholders
may otherwise deem to be in their best interests. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Listing of Common Stock  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We intend to apply to list our Common Stock on the New York Stock Exchange under the symbol "&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;." </FONT></P>


<P style="font-family:arial;"><FONT SIZE=3><B> Transfer agent and registrar  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The transfer agent and registrar for our Common Stock is Continental Stock Transfer&nbsp;&amp; Trust Company. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>95</FONT></P>

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<BR></FONT><FONT SIZE=4><B>  Shares eligible for future sale  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Until the consummation of this offering, there will be no market for our Common Stock. We can make no predictions as to the effect,
if any, that sales of shares of Common Stock or the availability of shares of Common Stock for sale will have on the market price shares of our Common Stock prevailing from time to time. Nevertheless,
sales of significant amounts of our Common Stock in the public market, or the perception that such sales may occur, could adversely affect prevailing market prices. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If
permitted under our current and future agreements, including agreements governing our debt, we may issue shares of Common Stock from time to time as consideration for acquisitions, investments or
other transactions. In the event any such acquisition, investment or other transaction is significant, the number of shares that we may issue may be significant, which may have an adverse effect on
the market price of our Common Stock. In addition, we
may also grant registration rights covering those shares of Common Stock issued in connection with any such acquisition, investment or other transaction. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Sale of restricted shares  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>After giving effect to this offering, we will have&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock outstanding, consisting
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
shares of Common Stock and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Class&nbsp;B Common Stock. Of these shares of common stock,
the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Common Stock being sold in this offering, plus any
shares issued upon exercise of the underwriters' option to purchase additional shares, will be freely tradeable without restriction under the Securities Act, except for any such shares that may be
held or acquired by an "affiliate" of ours, as that term is defined in Rule&nbsp;144 promulgated under the Securities Act, which shares will be subject to the volume limitations and other
restrictions of Rule&nbsp;144 described below. The remaining&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock, consisting
of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Common Stock and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Class&nbsp;B
Common Stock held by our existing stockholders upon completion of this offering, other than those subject to the underwriters' option to purchase additional shares to the extent it is exercised, will
be "restricted securities" as that phrase is defined in Rule&nbsp;144, and may not be resold, in the absence of registration under the Securities Act, except pursuant to an exemption from such
registration, including among others, the exemption provided by Rule&nbsp;144 under the Securities Act, which rule is summarized below. All of these restricted securities will be subject to the
lock-up agreements described below. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Beginning
180&nbsp;days after the date of this prospectus, subject to certain exceptions, shares of Common Stock that are subject to lock-up agreements will be eligible for sale pursuant
to the holding period requirements and, in the case of our affiliates, the volume limitations, imposed by Rule&nbsp;144. See "Underwriting (Conflicts of interest)." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Rule&nbsp;144  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In general, under Rule&nbsp;144, as currently in effect, once we have been subject to public company reporting requirements for at
least 90&nbsp;days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the three months preceding a sale and who has beneficially
owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those shares without complying with the
manner of sale, volume limitation or notice provisions of Rule&nbsp;144, subject to compliance with the public information requirements of Rule&nbsp;144. If </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>such
a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person is entitled to
sell those shares under Rule&nbsp;144 without complying with any of the other requirements of Rule&nbsp;144. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>In
general, under Rule&nbsp;144, as currently in effect, once we have been subject to public company reporting requirements for at least 90&nbsp;days, our affiliates or persons selling shares on
behalf of our affiliates who have beneficially owned the shares proposed to be sold for at least six months are entitled to sell upon expiration of the lock-up agreements described below,
within any three-month period, a number of shares that does not exceed the greater of: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>1% of the number of shares of Common Stock then outstanding, which will equal approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares
immediately after this offering; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the average weekly trading volume of the Common Stock during the four calendar weeks preceding the filing of a notice on
Form&nbsp;144 with respect to that sale. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>Sales
under Rule&nbsp;144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the
availability of current public information about us. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Lock-up agreements  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Notwithstanding the foregoing, we, our executive officers, directors and certain existing stockholders have agreed not to offer,
sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of our Common Stock or securities convertible into or exchangeable or exercisable for shares of our Common
Stock for a period of 180&nbsp;days after the date of this prospectus subject to certain exceptions, without the prior written consent of J.P. Morgan Securities&nbsp;LLC, on behalf of the
underwriters. This lock-up period may be extended in certain circumstances. See "Underwriting (Conflicts of interest)." </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Registration rights  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Upon consummation of this offering, we will become party to a registration rights agreement with certain holders of our common stock.
The agreement will provide that Parman Capital Group&nbsp;LLC and EC Investments&nbsp;B.V., which upon consummation of this offering will own in the aggregate approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our
outstanding Common Stock, may require us to register under the Securities Act all or any portion of their shares, a so-called "demand request." The demand registration rights are subject
to certain limitations, including that we are not obligated to effect: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>more than three demand registrations in total or more than one demand registration in any twelve-month period; </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a demand registration within 180&nbsp;days after the effective date of the registration statement of which this
prospectus is a part; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a demand registration unless the demand request is for a number of shares with a market value equal to at least
$25&nbsp;million. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>In
addition, Parman Capital Group&nbsp;LLC, EC Investments&nbsp;B.V. and two of our directors, Mr.&nbsp;Frank Carlucci and Ms.&nbsp;Nina Ansary, will have so-called "piggyback"
registration rights, which means that they may include their respective shares in any future registration of our Common Stock, whether or not that registration relates to a primary offering by us or a
secondary offering by or on behalf of any of our stockholders. The demand and piggyback registration rights will be subject to standard market cut-back exceptions. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>97</FONT></P>

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<BR></FONT><FONT SIZE=4><B>  Description of indebtedness  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Revolving credit facility  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our revolver credit facility is a $250.0&nbsp;million (expandable to $325.0&nbsp;million) senior asset-based facility, subject to
availability, which includes a $25.0&nbsp;million (expandable to $35.0&nbsp;million) sub-limit for a Canadian revolving credit sub-facility (which is only available to
Canadian borrowers), a $30.0&nbsp;million sub-limit for letters of credit, a $25.0&nbsp;million sub-limit for an export-related sub-facility and a
$30.0&nbsp;million sub-limit for swingline loans. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
revolving credit facility also provides for a $15.0&nbsp;million sub-limit for protective advances, which are loans that are unilaterally made by the administrative agent that it
deems are necessary or desirable for reasons in its discretion (based upon its determination made in good faith and in the exercise of reasonable business judgment), including to preserve or protect
the collateral and to enhance the likelihood of repayment of all of the loans. In addition, the administrative agent may in its sole discretion make overadvance loans at the borrowers' request in an
amount not to exceed $15.0&nbsp;million. Overadvance loans may be made at the administrative agent's sole discretion in excess of the amount that is available under the revolving credit facility.
The Canadian revolving credit sub-facility similarly provides for a $2.5&nbsp;million sub-limit for Canadian protective advances and a $2.5&nbsp;million limit on Canadian
overadvance loans. Borrowings by us pursuant to protective advances and overadvances are treated no differently than any other loans under the revolving credit facility in determining the remaining
amount of credit available under the facility. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
availability and the revolving credit facility is based on a formula that calculates the domestic borrowing base and the Canadian borrowing base, which are based on a percentage of the value of
accounts receivable and inventory plus a fixed asset component, if applicable, of the domestic borrowers and their domestic subsidiaries and the Canadian borrowers and their Canadian subsidiaries,
respectively, subject to customary eligibility requirements and net of customary reserves. All borrowings are subject to the satisfaction of customary conditions, including delivery of a borrowing
notice, the accuracy of representations and warranties in all material respects and the absence of defaults. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Interest.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Borrowings under the revolving credit facility (other than borrowings in Canadian dollars under the Canadian revolving credit sub-facility)
bear interest, at our option, at either the alternate base rate or the adjusted LIBOR Rate, plus the applicable percentage for revolving credit loans, which ranges from 0.00% to 0.25%, in the case of
alternate base rate loans, and from 1.25% to 2.00%, in the case of Eurodollar loans, in each case, depending on our leverage ratio. Swingline loans bear interest at the alternate base rate plus the
applicable percentage for revolving credit loans. Protective advances and overadvances bear interest at the alternate base rate plus the applicable percentage for revolving credit loans plus 2.00%. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Bankers'
acceptances and Canadian prime rate interest options will be available for Canadian dollar borrowings under the Canadian revolving credit sub-facility. Under the bankers'
acceptances option, the Canadian borrowers pay the lenders accepting bankers' acceptances an acceptance fee calculated at the applicable percentage for U.S. dollar Eurodollar loans referred to above.
In addition, the lenders accepting bankers' acceptances are entitled to purchase the bankers' acceptances on a discounted basis at the discount rate. Borrowings under Canadian </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>98</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>prime
rate interest option bear interest at the Canadian prime rate plus 0.75% plus the applicable percentage for U.S. dollar alternate base rate loans referred to above. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
revolving credit facility may be borrowed, repaid and reborrowed from time to time until February 2012, subject to satisfaction of certain customary conditions on the date of any such borrowing,
including availability under the borrowing base. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Guarantees and security.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;At present, all of our domestic subsidiaries, other than the borrower under our floor plan facility (see "&#151;Floor plan
financing agreement"), are borrowers under our revolving credit facility. Any of our subsequently acquired or organized domestic subsidiaries that do not become borrowers, which we refer to as the
guarantors, are required to guarantee on a senior secured basis the borrowers' obligations under our revolving credit facility. In addition, our obligations, along with the obligations of the other
borrowers under our revolving credit facility, and these guarantees are secured by substantially all the borrowers' and guarantors' assets, including but not limited to: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a first-priority pledge of all the capital stock of subsidiaries held by the borrowers or any guarantor which, in the case
of capital stock of any foreign subsidiary pledged to secure a loan to a domestic borrower, is limited to only first-tier foreign subsidiaries and then only 65% of the voting capital stock
of such first-tier foreign subsidiary; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>first-priority security interests in substantially all of the borrowers' and the guarantors' tangible and intangible
assets, including accounts receivable, inventory, equipment, general intangibles, investment property, intellectual property, cash and proceeds of such assets. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2><I> Covenants.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The revolving credit facility contains a financial covenant requiring us to maintain, except during periods when availability under the revolving credit
facility is at least $30.0&nbsp;million, a fixed charge coverage ratio of at least 1.1 to 1.0. The revolving credit facility also contains restrictive covenants pertaining to the management and
operation of the borrowers and the guarantors and their subsidiaries. These restrictive covenants include significant limitations on asset sales, indebtedness (excluding the notes), creation of liens,
mergers and acquisitions, fundamental changes, investments and loans, dividends, payment of indebtedness, transactions with affiliates, sale and lease-back transactions, inter-borrower
transactions and amendment of material documents. In addition, incurrence of additional debt, receipt of casualty and condemnation payments and sale of assets would require mandatory repayment of the
loans. The revolving credit facility also contains customary affirmative covenants, including furnishing financial statements, providing notice of material events, maintaining the existence and
conduct of business, paying third party obligations, maintaining properties, complying with laws, using loan proceeds for working capital, general corporate and other specified purposes, maintaining
adequate insurance and the providing of additional collateral by newly formed subsidiaries. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><I> Events of default.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The revolving credit facility provides for customary events of default (relating, in certain cases, to both us and our subsidiaries),
including: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>failure to make payments when due;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>breach of covenants;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>breach of representations and warranties; </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>99</FONT></P>

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<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>default under any agreement relating to material indebtedness (which includes debt for borrowed money and obligations in
respect of hedge transactions) in excess of $10.0&nbsp;million;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>bankruptcy and other insolvency events;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>judgment defaults;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>defaults under the Employee Retirement Income Security Act of 1974, as amended; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>certain change of control events. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>Change
of control events include (1)&nbsp;the current controlling holders of common units ceasing to hold a certain threshold percentage (which threshold reduces after the completion of a qualified
public offering) of voting equity interests in Stewart&nbsp;&amp; Stevenson&nbsp;LLC, (2)&nbsp;Stewart&nbsp;&amp; Stevenson&nbsp;LLC ceasing to hold, directly or indirectly, 100% of the other
borrowers or any guarantors, subject to certain exceptions, (3)&nbsp;occupation of a majority of the board of directors by persons who were neither nominated board of directors of Stewart&nbsp;&amp;
Stevenson&nbsp;LLC nor appointed by directors so nominated, (4)&nbsp;the acquisition of direct or indirect control of any loan party by any person or group other than the current controlling
holders of common units or (e)&nbsp;so long as any of the senior notes are outstanding, any "change in control" or other similar term described the indenture. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> 10% Senior Notes due 2014  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In June 2006, we issued $150,000,000 of our 10% Senior Notes due 2014, which we refer to as the senior notes. The senior notes rank
equally in right of payment with all of our existing and future senior indebtedness and rank senior in right of payment to all of our existing and future subordinated indebtedness. These notes are not
secured, and as such, have no underlying assets to secure the payment of principal or interest. The senior notes are guaranteed on a senior unsecured basis by our domestic restricted subsidiaries. The
senior notes mature on July&nbsp;15, 2014, with interest at a rate of 10% payable semi-annually in arrears on January&nbsp;15 and July&nbsp;15. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
senior notes may be redeemed at any time, in whole or in part, at a redemption price equal to 105.0% of the principal amount of the notes in the first year, declining yearly to par at
July&nbsp;15, 2012, plus accrued and unpaid interest, if any, to the date of redemption. The indenture does not contain any mandatory prepayment provisions. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Upon
the occurrence of a change of control, each holder of the senior notes will have the right to require us to repurchase that holder's senior notes at a price equal to 101% of their principal
amount, plus accrued and unpaid interest, if any, to the date of purchase. Under the indenture governing the senior notes, a change of control will have occurred following the consummation of this
offering if: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>any person or group of related persons other than Mr.&nbsp;Ansary and his family members or entities wholly owned or
controlled by Mr.&nbsp;Ansary and his family members, which we refer to as permitted holders, owns over 35% of the total voting power of the voting stock of our company, the permitted holders
beneficially own less of the voting power of the voting stock of our company than such other person or group of related persons and the permitted holders do not have the right or ability by voting
power, contract or otherwise, to elect or designate for election a majority of the board of directors; </FONT></DD></DL>
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<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a majority of the members of the board of directors are not continuing directors, which the indenture governing the senior
notes defines as being either directors on the issue date of the senior notes or directors nominated for election or elected to the board of directors with the approval of a majority of the continuing
directors who were members of the board of directors at the time of such nomination or election;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the disposition other than by way of merger or consolidation of all or substantially all of our assets to any person other
than a permitted holder; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the adoption by our stockholders of a plan or proposal for the liquidation or dissolution of the company. </FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=2>The
indenture governing the senior notes contains covenants that, among other things, limit our ability, subject to certain qualifications and exceptions, to: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>incur or guarantee additional indebtedness;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>sell assets;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>pay dividends and make other equity distributions;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>purchase or redeem capital stock;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>make investments;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>consolidate or merge with or into other companies; and  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>engage in transactions with affiliates. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>The
senior notes contain certain events of default, including failure to pay principal and interest on the notes, failure to comply with covenants, subject to a 60-day grace period in
certain instances, and certain bankruptcy, insolvency or reorganization events with respect to us or the subsidiary guarantors. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Floor plan financing agreement  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We have had a floor plan facility with Amegy Bank National Association since 2006 to facilitate the purchase of new and used
inventory for our Freightliner truck dealership that allows our subsidiary, Stewart&nbsp;&amp; Stevenson Truck Holdings&nbsp;LLC, to borrow up to $5.0&nbsp;million and is secured by
$5.0&nbsp;million of cash collateral. The floor plan facility has a one-year maturity, and we have renewed it annually since 2006. As of January&nbsp;31, 2011, $0.7&nbsp;million in advances were
outstanding under this floor plan facility. Advances under this floor plan facility bear interest at the prime rate. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>101</FONT></P>

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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
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<BR></FONT><FONT SIZE=4><B>  U.S. federal income tax considerations<BR>  applicable to non-U.S. holders  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following is a summary of the material U.S. federal income tax considerations related to the purchase, ownership and disposition
of our Common Stock by non-U.S. holders (as defined below) of our Common Stock, but does not purport to be a complete analysis of all the potential tax considerations relating thereto.
This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended, or the "Code," the applicable U.S. federal income tax regulations promulgated or proposed under the Code,
which we refer to as the "Treasury Regulations," current administrative rulings and practice and judicial decisions, all as of the date hereof. These authorities are subject to change and differing
interpretations at any time, possibly with retroactive effect, so as to result in U.S. federal income tax consequences different from those set forth below. This summary is applicable only to
non-U.S. holders (as defined below) who hold our Common Stock as a capital asset for U.S. federal income tax purposes. We have not sought any ruling
from the Internal Revenue Service, or the "IRS," with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS would not assert,
or that a court would not sustain, a position contrary to such statements and conclusions. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This
summary also does not address any possible applicability of any U.S. federal tax other than the income tax, including but not limited to the U.S. federal estate tax or gift tax, U.S. alternative
minimum tax, or the tax considerations arising under the laws of any non-U.S., state or local jurisdiction. In addition, this discussion does not address tax considerations applicable to
an investor's particular circumstances or to investors that may be subject to special tax rules, including, without limitation: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>banks, financial institutions, insurance companies, brokers and certain dealers and traders;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>persons who hold our Common Stock as part of a position in a hedging or constructive sale transaction, "straddle,
"conversion" or other integrated transaction for tax purposes;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>investors subject to the alternative minimum tax;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>"controlled foreign corporations" and "passive foreign investment companies";  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>persons who are partnerships or other pass-through entities; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>certain former citizens or expatriates of the United States. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2><B>THIS SUMMARY OF UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY AND IS NOT LEGAL OR TAX ADVICE. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH
RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATION, AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK ARISING
UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX RULES, THE U.S. ALTERNATIVE MINIMUM TAX RULES, OR UNDER THE LAWS OF ANY STATE, LOCAL, NON- U.S. OR OTHER TAXING JURISDICTION OR UNDER ANY
APPLICABLE TAX TREATY.</B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>102</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=3><B> Non-U.S. holder defined  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>For purposes of this discussion, you are a non-U.S. holder if you are a beneficial holder of our Common Stock and, for
U.S. federal income tax purposes, are neither a "United States person" nor a partnership (or an entity or arrangement treated as a partnership for U.S. federal income tax purposes). A "United States
person" is: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>an individual citizen or resident of the United States;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a corporation or other entity taxable as a corporation for U.S. federal income tax purposes that is created or organized
in or under the laws of the United States, any state thereof or the District of Columbia;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>an estate whose income is subject to U.S. federal income tax regardless of its source; or </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>a trust if it (1)&nbsp;is subject to the primary supervision of a court within the United States and one or more United
States persons have the authority to control all substantial decisions of the trust or (2)&nbsp;has a valid election in effect under applicable Treasury Regulations to be treated as a United States
person. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>If
a partnership, including any entity or arrangement treated as a partnership for U.S. federal income tax purposes, is a holder of our Common Stock, then the tax treatment of a partner in such
partnership generally will depend upon the status of the partner and the activities of the partnership. Persons who are partners of a partnership holding our Common Stock should consult their own tax
advisors concerning the tax consequences of holding and disposing of our Common Stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Distributions  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Following this offering, we do not intend to make any distributions on shares of our Common Stock. However, if we do make
distributions on our Common Stock, other than certain pro rata distributions of Common Stock, then those payments would constitute dividends for U.S. federal income tax purposes to the extent payable
from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles, as of the end of the taxable year of the distribution. To the extent those distributions
exceed both our current and our accumulated earnings and profits, such distributions would first constitute a non-taxable return of capital, which would reduce your tax basis in your
shares of our Common Stock, but not below zero, and thereafter would be treated as gain from the sale of stock. See the discussion under "&#151;Gain on the sale or disposition of Common Stock"
below. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Any
dividend on our Common Stock paid to you generally will be subject to U.S. withholding tax at a rate of 30% of the gross amount of the dividend, subject to any exemption or lower rate as may be
specified by an applicable tax treaty, unless the dividends are effectively connected with the conduct by you of a trade or business within the United States. We may withhold 30% of either
(1)&nbsp;the gross amount of the entire distribution, even if the amount of the distribution is greater than the amount constituting a dividend once determined, as described above, or (2)&nbsp;the
amount of the distribution we project will be a dividend, based upon a reasonable estimate of both our current and our accumulated earnings and profits for the taxable year in which the distribution
is made, in each case as provided for in the Treasury Regulations. If it is subsequently determined that the amount of tax withheld exceeds the </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>103</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>amount
of withholding tax applicable to the portion of the distribution constituting a dividend, then you may obtain a refund of any such excess amounts if you timely file an appropriate claim for
refund with the IRS. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
order to receive a reduced rate of or an exemption from withholding tax under an income tax treaty, you are required (1)&nbsp;to satisfy certain certification requirements, which may be met by
providing us or our agent with an IRS Form&nbsp;W-8BEN (or other applicable form) certifying, under penalty of perjury, as to your qualification for the reduced rate or exemption and
that you are not a United States person or (2)&nbsp;if you hold our Common Stock through certain non-U.S. intermediaries, to satisfy the relevant certification requirements of the
Treasury Regulations. Special certification and other requirements apply to certain non-U.S. holders that are partnerships or other pass-through entities. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Dividends
received by you that are effectively connected with your conduct of a U.S. trade or business (and, if provided for in an applicable income tax treaty, are attributable to a permanent
establishment or, in the case of an individual, a fixed base maintained by you in the United States) are not subject to withholding tax, provided that you satisfy certain certification requirements,
which may be met by providing us or our agent with an IRS Form&nbsp;W-8ECI properly certifying, under penalty of perjury, such exemption. Such effectively connected dividends, although
not subject to withholding tax, generally are subject to U.S. federal income tax and are taxed at the same graduated rates applicable to United States persons, net of certain deductions and credits.
In addition, if you are a corporate non-U.S. holder receiving effectively connected dividends, your earnings and profits for the taxable year that are effectively connected with your
conduct of a U.S. trade or business may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable tax treaty. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>If
you are eligible for a reduced rate of or an exemption from withholding tax pursuant to an income tax treaty, then you may obtain a refund of any excess amounts withheld if you timely file an
appropriate claim for refund with the IRS. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Gain on the sale or disposition of Common Stock  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Subject to the discussion regarding backup withholding below, you generally will not be subject to U.S. federal income or withholding
tax on any gain realized upon the sale or other disposition of our Common Stock unless: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>that gain is effectively connected with your conduct of a U.S. trade or business and, if required by an applicable income
tax treaty, is attributable to a permanent establishment (or, in the case of an individual, a fixed base) maintained by you in the United States;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>you are a nonresident alien individual who is present in the United States for a period or periods aggregating
183&nbsp;days or more during the calendar year in which the sale or disposition occurs and certain other conditions are met; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our Common Stock constitutes a U.S. real property interest by reason of our status as a "United States real property
holding corporation" for U.S. federal income tax purposes, which we refer to as a "USRPHC," at any time within the shorter of the five-year period preceding the disposition or your holding
period for our Common Stock. </FONT></DD></DL>
<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>104</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>If
you are a non-U.S. holder described in the first bullet above, you generally will be required to pay tax on the net gain derived from the sale or disposition under regular graduated
U.S. federal income tax rates, as if you were a United States person, except as otherwise required by an applicable income tax treaty. In addition, corporate non-U.S. holders described in
the first bullet above may be subject to an additional branch profits tax at a 30% rate, subject to any exemption or lower rate as may be specified by an applicable tax treaty. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>If
you are an individual non-U.S. holder described in the second bullet above, you will be subject to tax at a gross rate of 30% on the amount by which your capital gains allocable to U.S.
sources, including gain from the sale or other disposition of our Common Stock, exceed capital losses allocable to U.S. sources, except as otherwise provided in an applicable income tax treaty. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>We
believe that we are not currently and will not become a USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property interests
relative to the fair market value of our business assets, there can be no assurance that we will not become a USRPHC in the future. Even if we become a USRPHC, however, so long as our Common Stock is
regularly traded on an established securities market, our Common Stock will be treated as a U.S. real property interest only if you actually or constructively hold more than 5% of such regularly
traded Common Stock at any time within the shorter of the five-year period preceding the disposition or your holding period for the Common Stock. If you are a non-U.S. holder
who may own more than 5% of our Common Stock, you are encouraged to consult your tax advisor with respect to the U.S. tax consequences of a disposition of our Common Stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Backup withholding and information reporting  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We will, where required, report to the IRS and to you the amount of dividends, if any, paid to you on our Common Stock, your name and
address and the amount of tax withheld, if any. Pursuant to tax treaties or other agreements, the IRS may make its reports available to tax authorities in your country of residence. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Payments
of dividends made to you generally will be subject to backup withholding unless you establish an exemption, for example by properly certifying your non-U.S. status on a
Form&nbsp;W-8BEN or another appropriate version of IRS Form&nbsp;W-8. Notwithstanding the foregoing, backup withholding generally will apply if either we or our paying
agent has actual knowledge, or reason to know, that you are a United States person
that is not an exempt recipient or that the conditions of any other exemption are not, in fact, satisfied. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Information
reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale of our Common Stock within the United States or conducted through certain
U.S.-related financial intermediaries, unless you certify under penalty of perjury as to your non-U.S. person status or you otherwise establishes an exemption (and neither we nor the
paying agent has actual knowledge or reason to know that you are a United States person or that the conditions of any other exemptions are not, in fact, satisfied). </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Backup
withholding is not an additional tax. Amounts withheld from payments to non-U.S. holders under the backup withholding rules will be allowed as a credit against the holder's U.S. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>105</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>federal
income tax liability and may entitle the holder to a refund, provided that the required information is furnished to the IRS in a timely manner. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Recent legislation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The recently enacted Hiring Incentives to Restore Employment Act (the "HIRE Act"), which was signed into law on March&nbsp;18,
2010, modifies some of the rules described above, including with respect to certification requirements and information reporting, for certain stock held through a "foreign financial institution" or
"non-financial foreign entity." In the event of non-compliance with those revised requirements, a 30% U.S. withholding tax could be imposed on payments of dividends and sale
proceeds in respect of our Common Stock made after December&nbsp;31, 2012. Congress delegated broad authority to the U.S. Treasury Department to promulgate regulations to implement the new
withholding and reporting regime. It cannot be predicted whether or how any regulations promulgated by the U.S. Treasury Department pursuant to this broad delegation of regulatory authority will
affect holders of our stock. Prospective investors are urged to consult their own tax advisors regarding the HIRE Act and legislative proposals that may be relevant to their investment in our stock. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>106</FONT></P>

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<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
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<A NAME="toc_dm72801_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Certain ERISA considerations  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following is a summary of certain considerations associated with the purchase of our Common Stock by employee benefit plans that
are subject to Title I of the U.S. Employee Retirement Income Security Act of 1974, as amended ("ERISA"), plans, individual retirement accounts and other arrangements that are subject to
Section&nbsp;4975 of the Code or provisions under any federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code ("Similar
Laws"), and entities whose underlying assets are considered to include "plan assets" of such plans, accounts and arrangements (each, a "Plan"). </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>ERISA
and the Code impose certain duties on persons who are fiduciaries of a Plan subject to Title I of ERISA or Section&nbsp;4975 of the Code (each, an "ERISA Plan") and prohibit certain
transactions involving the assets of an ERISA Plan and its fiduciaries or other interested parties. Under ERISA and the Code, any person who exercises any discretionary authority or control
over the administration of such an ERISA Plan or the management or disposition of the assets of such an ERISA Plan, or who renders investment advice for a fee or other compensation to such an ERISA
Plan, is generally considered to be a fiduciary of the ERISA Plan. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
considering an investment in our Common Stock using a portion of the assets of any Plan, a fiduciary should determine whether the investment is in accordance with the documents and instruments
governing the Plan and the applicable provisions of ERISA, the Code or any Similar Law relating to a fiduciary's duties to the Plan including, without limitation, the prudence, diversification,
delegation of control and prohibited transaction provisions of ERISA, the Code and any other applicable Similar Laws. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Representation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Accordingly, by acceptance of the Common Stock, each buyer and subsequent transferee of the Common Stock will be deemed to have
represented and warranted that either (1)&nbsp;no portion of the assets used by such buyer or transferee to acquire and hold the Common Stock constitutes assets of any Plan or (2)&nbsp;the
purchase and holding of the Common Stock by such buyer or transferee will not constitute a non-exempt prohibited transaction under ERISA or the Code or a similar violation of any
applicable Similar Laws. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in
non-exempt prohibited transactions, it is particularly important that fiduciaries, or other persons considering purchasing the Common Stock on behalf of, or with the assets of, any Plan,
consult with their counsel regarding the matters described herein. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>107</FONT></P>

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<BR></FONT><FONT SIZE=4><B>  Underwriting (Conflicts of interest)  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We and the selling stockholders are offering the shares of Common Stock described in this prospectus through a number of
underwriters. J.P. Morgan Securities&nbsp;LLC is acting as sole book-running manager of the offering and as the representative of the underwriters. We and the selling stockholders will
enter into an underwriting agreement with the underwriters. Subject to the terms and conditions of the underwriting agreement, we and the selling stockholders will agree to sell to the underwriters,
and each underwriter will severally agree to purchase, at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus, the number of shares
of Common Stock listed next to its name in the following table: </FONT></P>
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<TH COLSPAN=2 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Name</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
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<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>J.P. Morgan Securities&nbsp;LLC</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
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 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>The underwriters are committed to purchase all the shares of Common Stock offered by us and the selling stockholders if they purchase any shares, other than the
shares covered by the option described below unless and until this option is exercised. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of
non-defaulting underwriters may also be increased or the offering may be terminated. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
underwriters propose to offer the shares of Common Stock directly to the public at the initial public offering price set forth on the cover page of this prospectus and to certain dealers at that
price less a concession not in excess of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share. Any such dealers may resell shares to certain other brokers or dealers at a discount of up to
$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share from the
initial public offering price. After the initial public offering of the shares, the offering price and other selling terms may be changed by the underwriters. Sales of shares made outside of the
United States may be made by affiliates of the underwriters. The representative has advised us and the
selling stockholders that the underwriters do not intend to confirm discretionary sales in excess of 5% of the shares of Common Stock offered in this offering. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>The
underwriters have an option to buy up to an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;additional shares of Common Stock from us and the selling stockholders to cover sales of shares by the underwriters
which
exceed the number of shares specified in the table above. The underwriters have 30&nbsp;days from the date of this prospectus to exercise this option to purchase additional shares. If any shares are
purchased with this option to purchase additional shares, the underwriters severally will purchase shares in approximately the same proportion as shown in the table above. If any additional shares of
Common Stock are purchased, the underwriters will offer the additional shares on the same terms as those on which the initial shares of Common Stock are being offered. </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>The
underwriting fee is equal to the public offering price per share of Common Stock less the amount paid by the underwriters to us and the selling stockholders per share of Common Stock. The
following table shows the per share and total underwriting discounts and </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>108</FONT></P>

<HR NOSHADE>
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<BR>

<P style="font-family:arial;"><FONT SIZE=2>commissions
to be paid to the underwriters assuming both no exercise and full exercise of the underwriters' option to purchase additional shares. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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 </FONT></P>

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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="88pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="86pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Paid by us</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Without option<BR>
exercise<BR> </B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>With full<BR>
option exercise<BR> </B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Per share</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">&nbsp;<BR></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="88pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="86pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Paid by the selling stockholders</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Without option<BR>
exercise<BR> </B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>With full<BR>
option exercise<BR> </B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Per share</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=7 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:arial;"><FONT SIZE=2>We estimate that the total expenses of this offering, including registration, filing and listing, printing fees and legal and accounting expenses, but excluding
the underwriting discounts and commissions, will be approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>A
prospectus in electronic format may be made available on the websites maintained by one or more underwriters, or selling group members, if any, participating in the offering. The representative may
agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the representative to
underwriters and selling group members that may make Internet distributions on the same basis as other allocations. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
have agreed that, subject to certain limited exceptions, we will not (1)&nbsp;pledge, announce the intention to sell, offer, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise dispose of, directly or indirectly, or file with the SEC a registration statement under the
Securities Act relating to, any shares of our Common Stock or securities convertible into or exchangeable or exercisable for any shares of our Common Stock, or publicly disclose the intention to make
any offer, sale, pledge, disposition or filing, or (2)&nbsp;enter into any swap or other arrangement that transfers all or a portion of the economic consequences associated with the ownership of any
shares of Common Stock or any such other securities (regardless of whether any of these transactions are to be settled by the delivery of shares of Common Stock or such other securities, in cash or
otherwise), in each case without the prior written consent of
J.P. Morgan Securities&nbsp;LLC, on behalf of the underwriters, for a period of 180&nbsp;days after the date of this prospectus. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Our
directors, executive officers and certain of our stockholders, including the selling stockholders, have entered into lock-up agreements with the underwriters prior to the commencement
of this offering pursuant to which we and each of these persons or entities, for a period of 180&nbsp;days after the date of this prospectus, may not, subject to certain limited exceptions, without
the prior written consent of J.P. Morgan Securities&nbsp;LLC, (1)&nbsp;offer, pledge, announce the intention to sell, sell contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of our Common Stock (including, without limitation,
Common Stock which may be deemed to be beneficially owned by such directors, executive officers and stockholders in accordance with the rules and regulations of the SEC and securities which may be
issued upon exercise of a stock option or </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>109</FONT></P>

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<BR>

<P style="font-family:arial;"><FONT SIZE=2>warrant)
or (2)&nbsp;enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction
described in clause&nbsp;(1) or (2)&nbsp;above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise, or (3)&nbsp;make any demand for or exercise any right
with respect to the registration of any shares of Common Stock or any security convertible into or exercisable or exchangeable for our Common Stock. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Notwithstanding
the foregoing, if (1)&nbsp;during the last 17&nbsp;days of the 180-day restricted period, we issue an earnings release or material news or a material event relating to
our company occurs; or (2)&nbsp;prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning
on the last day of the 180-day period, the restrictions described in the two preceding paragraphs shall continue to apply until the expiration of the 18-day period beginning on
the issuance of the earnings release or the occurrence of the material news or material event. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We
intend to apply to have our Common Stock approved for listing on the New York Stock Exchange under the symbol "&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;." </FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>In
connection with this offering, the underwriters may engage in stabilizing transactions, which involves making bids for, purchasing and selling shares of Common Stock in the open market for the
purpose of preventing or retarding a decline in the market price of the Common Stock while this offering is in progress. These stabilizing transactions may include making short sales of the Common
Stock, which involves the sale by the underwriters of a greater number of shares of Common Stock than they are required to purchase in this offering, and purchasing shares of Common Stock on the open
market to cover positions created by short sales. Short sales may be "covered" shorts, which are short positions in an amount not greater than the underwriters' option to purchase additional shares
referred to above, or may be "naked" shorts, which are short positions in excess of that amount. The underwriters may close out any covered short position either by exercising their option to purchase
additional shares, in whole or in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things, the price of shares available for
purchase in the open market compared to the price at which the underwriters may purchase shares through the option to purchase additional shares. A naked short position is more likely to be created if
the underwriters are concerned that there may be downward pressure on the price of the Common Stock in the open market that could adversely affect investors who purchase in this offering. To the
extent that the underwriters create a naked short position, they will purchase shares in the open market to cover the position. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
underwriters have advised us that, pursuant to Regulation&nbsp;M of the Securities Act, they may also engage in other activities that stabilize, maintain or otherwise affect the price of the
Common Stock, including the imposition of penalty bids. This means that if the representative of the underwriters purchases Common Stock in the open market in stabilizing transactions or to cover
short sales, the representative can require the underwriters that sold those shares as part of this offering to repay the underwriting discounts and commissions received by them. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>These
activities may have the effect of raising or maintaining the market price of the Common Stock or preventing or retarding a decline in the market price of the Common Stock, and, as a </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>110</FONT></P>

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<BR>

<P style="font-family:arial;"><FONT SIZE=2>result,
the price of the Common Stock may be higher than the price that otherwise might exist in the open market. If the underwriters commence these activities, they may discontinue them at any time.
The underwriters may carry out these transactions on the New York Stock Exchange, in the over-the-counter market or otherwise. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Prior
to this offering, there has been no public market for our Common Stock. The initial public offering price will be determined by negotiations among us, the selling stockholders and the
representative of the underwriters. In determining the initial public offering price, we, the
selling stockholders and the representative of the underwriters expect to consider a number of factors including: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the information set forth in this prospectus and otherwise available to the representative;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our prospects and the history and prospects for the industry in which we compete;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>an assessment of our management;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>our prospects for future earnings;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the general condition of the securities markets at the time of this offering;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>other factors deemed relevant by the underwriters, the selling stockholders and us. </FONT></DD></DL>


<P style="font-family:arial;"><FONT SIZE=2>Neither
we nor the selling stockholders nor the underwriters can assure investors that an active trading market will develop for our Common Stock, or that our Common Stock will trade in the public
market at or above the initial public offering price. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> European Economic Area  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Each underwriter has represented that (1)&nbsp;it has only communicated or caused to be communicated and will only communicate or
cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section&nbsp;21 of the Financial Services and Markets Act 2000 (UK) ("FSMA") received by
it in connection with the issue or sale of any Common Stock in circumstances in which Section&nbsp;21(1) of the FSMA does not apply to us and (2)&nbsp;it has complied and will comply with all
applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>In
relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, which on the date hereof includes the European Union plus Iceland, Norway and
Liechtenstein (each, a "Relevant Member State"), each underwriter has represented and agreed that with effect from and including the date on which the European Union Prospectus Directive (the "EU
Prospectus Directive") is implemented in that Relevant Member State (the "Relevant Implementation Date") it has not made and will not make an offer of Common Stock to the public in that Relevant
Member State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in
another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the EU Prospectus Directive, except that it may, with effect from and
including the </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>111</FONT></P>

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<BR>

<P style="font-family:arial;"><FONT SIZE=2>Relevant
Implementation Date, make an offer of shares to the public in that Relevant Member State at any time: </FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or
regulated, whose corporate purpose is solely to invest in securities;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>to any legal entity which has two or more of (1)&nbsp;an average of at least 250 employees during the last financial
year; (2)&nbsp;a total balance sheet of more than &euro;43,000,000 and (3)&nbsp;an annual net turnover of more than &euro;50,000,000, as shown in its last annual or
consolidated accounts;  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>to fewer than 100 natural or legal persons (other than qualified investors as defined in the EU Prospectus Directive)
subject to obtaining the prior consent of the sole book-running manager for such offer; or  </FONT> <FONT SIZE=2>
<BR><BR></FONT></DD><DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>&#149;</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>in any other circumstances which do not require the publication by us of a prospectus pursuant to Article&nbsp;3 of the
Prospectus Directive. </FONT></DD></DL>

<P style="font-family:arial;"><FONT SIZE=2>For
the purposes of this provision, the expression an "offer of shares to the public" in relation to any shares in any Relevant Member State means the communication in any form and by any means of
sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in that Member State
by any measure implementing the EU Prospectus Directive in that Member State and the expression EU Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in
each Relevant Member State. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Notes to prospective investors in Switzerland  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>This document does not constitute an issue prospectus within the meaning of Art. 652a of the Swiss Code of Obligations. The shares of
Common Stock may not be sold directly or indirectly in or into Switzerland except in a manner which will not result in a public offering within the meaning of the Swiss Code of Obligations. Our Common
Stock will not be listed on the SWX Swiss Exchange and, therefore, the documents relating to our Common Stock, including, but not limited to, this document, do not claim to comply with the disclosure
standards of the listing rules of SWX Swiss Exchange and corresponding prospectus schemes annexed to the listing rules of the SWX Swiss Exchange. This document as well as any other material relating
to our Common Stock is personal and confidential and does not constitute an offer to any other person. This document may only be used in Switzerland by those investors to whom it has been handed out
in connection with the offering described
herein and may neither directly nor indirectly be distributed or made available to other persons without our express consent. It may not be used in connection with any other offer and shall in
particular not be copied and/or distributed to the public in (or from) Switzerland. Neither this document nor any other offering materials relating to the shares of Common Stock may be distributed,
published, or otherwise made available in Switzerland except in a manner which will not constitute a public offer of the shares of Common Stock in Switzerland. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Relationships with underwriters and their affiliates  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Certain
of the underwriters and their respective affiliates have provided in the past to us and our affiliates and may provide, from time to time, in the future certain commercial banking, financial
advisory, investment banking and other services for us and such affiliates in the ordinary course of their business, for which they have received or will to receive customary fees and commissions. An
affiliate of J.P. Morgan Securites&nbsp;LLC is the administrative agent and a lender under our revolving credit facility. See "&#151;Conflicts of interest." In addition, from time to </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>time,
certain of the underwriters and their affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short
positions in our debt or equity securities or loans, and may do so in the future. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Conflicts of interest  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>An
affiliate of J.P. Morgan Securities&nbsp;LLC, an underwriter in this offering, acts as administrative agent and a lender under our revolving credit facility and will receive more than 5% of the
net proceeds of this offering in connection with the repayment of amounts under our revolving
credit facility. Accordingly, this offering is being made in compliance with the requirements of Rule&nbsp;5121 of the Financial Industry Regulatory Authority,&nbsp;Inc. In accordance with this
rule,&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;has assumed the responsibilities of acting as a "qualified independent
underwriter." In its role as a qualified independent underwriter,&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;has participated in due
diligence and the preparation of the registration statement of which this prospectus is a
part.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;will not receive any additional fees for serving as a qualified independent
underwriter
in connection with this offering. J.P. Morgan Securities&nbsp;LLC will not confirm sales of the shares to any account over which it exercises discretionary authority without the prior written
approval of the customer. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>113</FONT></P>

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<A NAME="toc_dm72801_3"> </A>
<BR></FONT><FONT SIZE=4><B>  Legal matters  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Certain legal matters in connection with the sale of the shares of Common Stock offered hereby will be passed upon for us by Jones
Day, New York, New York. The validity of the shares of Common Stock offered hereby will be passed upon for the underwriters by Simpson Thacher&nbsp;&amp; Bartlett&nbsp;LLP, New York, New York. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
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<A NAME="toc_dm72801_4"> </A>
<BR></FONT><FONT SIZE=4><B>  Experts  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The consolidated financial statements of Stewart&nbsp;&amp; Stevenson&nbsp;LLC and its subsidiaries at January&nbsp;31, 2011 and
2010, and for each of the three years in the period ended January&nbsp;31, 2011, appearing in this prospectus and the registration statement have been audited by Ernst&nbsp;&amp; Young&nbsp;LLP,
independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as
experts in accounting and auditing. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="dm72801_where_you_can_find_more_information"> </A>
<A NAME="toc_dm72801_5"> </A>
<BR></FONT><FONT SIZE=4><B>  Where you can find more information  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We file periodic and current reports pursuant to the reporting requirements of the Exchange Act. We have filed with the SEC a
registration statement on Form&nbsp;S-1 under the Securities Act that registers the shares of our Common Stock to be sold in this offering. This prospectus, filed as a part of the
registration statement, does not contain all of the information set forth in the registration statement and exhibits and schedules, certain parts of which are omitted in accordance with the rules and
regulations of the SEC. For further information about us and the Common Stock to be sold in this offering, please refer to the registration statement. Statements contained in this prospectus as to the
contents of any agreement or any other document referred to are not necessarily complete and, in each instance, we refer you to the copy of the agreement or other document filed as an exhibit to the
registration statement. Each of these statements is qualified in all respects by this reference. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>You
may read and copy the registration statement and the exhibits and schedules to the registration statement at the public reference room maintained by the SEC at 100&nbsp;F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information regarding the public reference room. You may also obtain copies of all or part
of the registration statement by mail from the Public Reference Section of the SEC at prescribed rates. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
SEC also maintains a website that contains reports, proxy and information statements and other information about issuers, including our company, that file electronically with the SEC. The address
of that website is </FONT><FONT SIZE=2><I>www.sec.gov</I></FONT><FONT SIZE=2>. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>114</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=3><B> <A NAME="Fin_Index"></A></B></FONT><FONT SIZE=4><B>Index to financial statements  </B></FONT></P>
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<TD VALIGN="TOP" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Stewart&nbsp;&amp; Stevenson&nbsp;LLC and subsidiaries consolidated financial statements year ended January&nbsp;31, 2011</B></FONT></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#Report"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Report of independent registered public accounting firm</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#Report"><FONT SIZE=2>F-2</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#Balance"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated balance sheets as of January&nbsp;31, 2011 and 2010</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#Balance"><FONT SIZE=2>F-3</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#Operations"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated statements of operations for the years ended January&nbsp;31, 2011, 2010 and 2009</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#Operations"><FONT SIZE=2>F-4</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#Statement"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated statements of shareholders' equity for the years ended January&nbsp;31, 2011, 2010 and
2009</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#Statement"><FONT SIZE=2>F-5</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#Cash"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated statements of cash flows for the years ended January&nbsp;31, 2011, 2010 and 2009</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#Cash"><FONT SIZE=2>F-6</FONT></A></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD VALIGN="TOP" style="font-family:arial;"><A HREF="#Notes"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Notes to consolidated financial statements</FONT></A></TD>
<TD VALIGN="TOP" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#Notes"><FONT SIZE=2>F-7</FONT></A></TD>
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 <P style="font-family:arial;"><FONT SIZE=4><B>Index to unaudited pro forma condensed combined<BR>
financial statements  </B></FONT></P>

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<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Page</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
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<TD style="font-family:arial;"><A HREF="#Unaudited_cond_fin_stmts"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unaudited pro forma condensed combined financial statements</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#Unaudited_cond_fin_stmts"><FONT SIZE=2>F-34</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><A HREF="#Unaudited_cond_bal_sheet"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unaudited pro forma condensed combined balance sheet as of January&nbsp;31, 2011</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#Unaudited_cond_bal_sheet"><FONT SIZE=2>F-36</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><A HREF="#Unaudited_cond_stmt_of_ops"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unaudited pro forma condensed combined statement of operations for the fiscal year ended January&nbsp;31,
2011</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><A HREF="#Unaudited_cond_stmt_of_ops"><FONT SIZE=2>F-37</FONT></A></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
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<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Notes to unaudited pro forma condensed combined financial statements</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>F-&nbsp;&nbsp;</FONT></TD>
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<P style="font-family:times;"><FONT SIZE=2><A
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Report of Independent Registered Public Accounting Firm  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>The
Board of Directors and Shareholders<BR>
Stewart&nbsp;&amp; Stevenson&nbsp;LLC </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have audited the accompanying consolidated balance sheets of Stewart&nbsp;&amp; Stevenson&nbsp;LLC and subsidiaries as of January&nbsp;31, 2011 and 2010, and the related
consolidated statements of operations, shareholders' equity and cash flows for each of the three years in the period ended January&nbsp;31, 2011. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Stewart&nbsp;&amp; Stevenson&nbsp;LLC and
subsidiaries at January&nbsp;31, 2011 and 2010, and the consolidated results of their operations and their cash flows for each of the three years in the period ended January&nbsp;31, 2011, in
conformity with U.S. generally accepted accounting principles. </FONT></P>
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<TD style="font-family:times;"><BR><FONT SIZE=2>/s/ Ernst&nbsp;&amp; Young LLP</FONT></TD>
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 <P style="font-family:times;"><FONT SIZE=2>Houston,
Texas<BR>
May 2, 2011<BR></FONT></P>

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<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="Balance"></A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Stewart&nbsp;&amp; Stevenson&nbsp;LLC and Subsidiaries  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Consolidated Balance Sheets  </B></FONT></P>
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<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="79pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
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<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>January&nbsp;31, 2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>January&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Assets</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current assets:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,168</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,321</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restricted cash</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts receivable, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>85,236</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>81,626</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Recoverable costs and accrued profits not yet billed</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>78,934</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>38,042</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Inventories, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>285,909</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>248,313</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other current assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,186</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,626</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total current assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>471,433</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>381,928</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property, plant and equipment, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
75,077</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
79,206</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Goodwill and intangibles, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>16,064</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>46,616</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred financing costs and other assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,029</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6,775</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>567,603</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>514,525</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Liabilities and shareholders' equity</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current liabilities:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Bank notes payable</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,401</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,122</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current portion of long-term debt</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>40</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>65</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts payable</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>81,198</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>52,994</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accrued payrolls and incentives</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,913</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,714</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Billings in excess of incurred costs</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,285</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>115</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Customer deposits</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>80,346</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>26,307</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other current liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>43,979</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>41,126</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total current liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>233,162</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>136,443</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term debt, net of current portion</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
185,181</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
220,926</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other long-term liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>226</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,534</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>418,569</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>358,903</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Commitments and contingencies</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shareholders' equity:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common units, 100,005,000 units issued and outstanding</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>74,113</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>74,113</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accumulated other comprehensive income</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,092</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,383</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Retained earnings</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>69,829</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>80,126</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total shareholders' equity</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>149,034</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>155,622</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total liabilities and shareholders' equity</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>567,603</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>514,525</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>See
accompanying Notes to Consolidated Financial Statements </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-3</FONT></P>

<HR NOSHADE>
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</FONT> <FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="Operations"></A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Stewart&nbsp;&amp; Stevenson&nbsp;LLC and Subsidiaries  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Consolidated Statements of Operations  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="79pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="79pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="79pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Fiscal Year Ended </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars and units in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>January&nbsp;31, 2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>January&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>January&nbsp;31, 2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>861,234</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>688,676</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,217,142</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of sales</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>715,967</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>577,028</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,002,166</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross profit</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>145,267</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>111,648</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>214,976</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Selling and administrative expenses</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
104,252</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
114,188</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
138,141</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Impairment of goodwill and indefinite-lived intangible assets</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>31,487</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other (income) expense, net</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1,026</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>54</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1,311</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating profit (loss)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>10,554</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2,594</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>78,146</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense, net</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
19,886</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
20,489</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
24,931</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>(Loss) earnings before income taxes</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(9,332</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(23,083</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>53,215</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income tax expense</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
700</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
816</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
2,659</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net (loss) earnings</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(10,032</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(23,899</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>50,556</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma tax expense (benefit) (unaudited)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>8,227</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(3,581</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17,272</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma net (loss) earnings (unaudited)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(18,259</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(20,318</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>33,284</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Weighted average units outstanding:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>100,005</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>100,005</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>100,005</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>100,005</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>100,005</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>100,005</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net (loss) earnings per common unit</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(0.10</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(0.24</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0.51</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(0.10</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(0.24</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0.51</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma tax effect&#151;basic (unaudited)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(0.18</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(0.20</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0.33</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma tax effect&#151;diluted (unaudited)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(0.18</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(0.20</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>0.33</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>See
accompanying Notes to Consolidated Financial Statements </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-4</FONT></P>

<HR NOSHADE>
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<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="Statement"></A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Stewart&nbsp;&amp; Stevenson&nbsp;LLC and Subsidiaries  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Consolidated Statements of Shareholders' Equity  </B></FONT></P>
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<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="91pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Common<BR>
Units </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Accumulated Other<BR>
Comprehensive<BR>
Income (Loss) </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Retained<BR>
Earnings </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Total </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance, January&nbsp;31, 2008</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>74,113</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,233</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>92,595</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>174,941</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net earnings</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>50,556</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>50,556</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other comprehensive loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(11,995</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(11,995</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distributions to unit holders for tax obligations</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(33,558</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(33,558</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance, January&nbsp;31, 2009</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>74,113</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(3,762</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>109,593</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>179,944</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(23,899</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(23,899</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other comprehensive income</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,145</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,145</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distributions to unit holders for tax obligations</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(5,568</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(5,568</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance, January&nbsp;31, 2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>74,113</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,383</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>80,126</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>155,622</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(10,032</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(10,032</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other comprehensive income</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,709</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,709</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distributions to unit holders for tax obligations</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(265</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(265</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Balance January&nbsp;31, 2011</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>74,113</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,092</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>69,829</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>149,034</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>See
accompanying Notes to Consolidated Financial Statements </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-5</FONT></P>

<HR NOSHADE>
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 </FONT> <FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="Cash"></A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
Stewart&nbsp;&amp; Stevenson&nbsp;LLC and Subsidiaries  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> Consolidated Statements of Cash Flows  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="79pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="79pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="6pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="79pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=4 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Fiscal Year Ended </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=4 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>January&nbsp;31, 2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>January&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>January&nbsp;31, 2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Operating activities</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net (loss) earnings</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(10,032</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(23,899</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>50,556</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amortization of deferred financing costs</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,668</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,011</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,980</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Depreciation and amortization</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17,053</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>18,402</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>18,869</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Impairment of goodwill and indefinite-lived intangible assets</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>31,487</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Non-cash foreign exchange (gains) losses</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(71</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>29</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(3,017</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Change in operating assets and liabilities net of the effect of acquisitions:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts receivable, net</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2,985</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>68,413</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7,879</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Recoverable costs and accrued profits not yet billed</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(40,857</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>19,091</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4,182</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Inventories, net</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(34,108</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>49,464</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(7,300</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts payable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>27,695</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(35,627</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(29,045</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accrued payrolls and incentives</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7,237</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2,381</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1,755</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Billings in excess of incurred costs</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4,088</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(27,889</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(3,370</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Customer deposits</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>53,840</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5,500</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5,143</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other current assets and liabilities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,989</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(3,274</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>17,225</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other, net</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1,140</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(3,519</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2,877</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash provided by operating activities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>56,864</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>66,321</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>58,470</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Investing activities</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Capital expenditures</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2,211</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2,536</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(5,469</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Additions to rental equipment</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(10,747</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(777</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(22,333</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Increase in restricted cash</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2,000</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Proceeds from sale of property, plant and equipment, net</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>34</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>373</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>26</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash used in investing activities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(14,924</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2,940</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(27,776</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Financing activities</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Change in short-term notes payable</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(108</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,525</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,836</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred financing costs</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(375</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(375</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Changes in long-term revolving loans</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(35,777</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(59,315</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(10,267</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distributions to shareholders for tax obligations</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(265</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(5,568</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(33,558</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash used in financing activities</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(36,150</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(63,733</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(42,364</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Effect of exchange rate on cash</B></FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>57</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,667</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,294</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4 style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Increase (decrease) in cash and cash equivalents</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
5,847</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
1,315</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
(10,376</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents, beginning of fiscal period</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,321</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,006</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>12,382</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents, end of fiscal period</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9,168</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,321</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,006</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash paid for:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=4 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>18,187</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>19,709</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>22,883</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=4 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income taxes</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,169</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,278</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4,346</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
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See accompanying Notes to Consolidated Financial Statements </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-6</FONT></P>

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 </FONT> <FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><A
NAME="Notes"></A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;1. Company Overview  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stewart&nbsp;&amp; Stevenson&nbsp;LLC, headquartered in Houston, Texas was formed for the purpose of acquiring from Stewart&nbsp;&amp; Stevenson Services,&nbsp;Inc. ("SSSI") and its
affiliates on January&nbsp;23, 2006 substantially all of their equipment, aftermarket parts and service and rental businesses that primarily served the oil and gas industry (the "SSSI Acquisition").
Unless otherwise indicated or the context otherwise requires, the terms "Stewart&nbsp;&amp; Stevenson," the "Company," "we," "our" and "us" refer to Stewart&nbsp;&amp; Stevenson&nbsp;LLC and its
subsidiaries. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
February&nbsp;26, 2007, we acquired substantially all of the operating assets and assumed certain liabilities of Crown Energy Technologies,&nbsp;Inc. and certain of its affiliates
(collectively, "Crown"), which we refer to as the "Crown Acquisition." Crown, which was headquartered in Calgary, Alberta, had multiple U.S. operations. Crown manufactured drilling, well servicing and
workover rigs, stimulation equipment and provided related parts and services. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are a leading designer, manufacturer and provider of specialized equipment and aftermarket parts and service for the oil and gas and other industries. Our wide range of products
covers hydraulic fracturing, well stimulation, workover, intervention and drilling operations. These products include well stimulation equipment, pumping, acidizing, coiled tubing, cementing and
nitrogen units, drilling rigs and workover rigs, power generation systems, and electrical support and distribution systems, as well as engines, transmissions, prime movers and material handling
equipment. We have a substantial installed base of products, which provides us with significant opportunities for recurring, higher-margin aftermarket parts and service revenues from customers in the
oil and gas, power generation and various other industries. In addition, we provide rental equipment to our customers, including generator sets, air compressors, rail car movers and material handling
equipment. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;2. Summary of Significant Accounting Policies  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Use of Estimates and Assumptions:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The preparation of financial statements in conformity with generally accepted accounting principles
in the United
States ("GAAP") requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenue and expenses during the reporting period. We evaluate our estimates on an ongoing basis, based on historical experience and various other
assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fiscal Year:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our fiscal year begins on February&nbsp;1 of the year stated and ends on January&nbsp;31 of the following year. For
example, our
"Fiscal 2010" commenced on February&nbsp;1, 2010 and ended on January&nbsp;31, 2011. We report results on the fiscal quarter method with each quarter comprising approximately 13&nbsp;weeks. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Consolidation:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements include the accounts of Stewart&nbsp;&amp; Stevenson&nbsp;LLC and all enterprises
in which we
have a controlling interest. All intercompany accounts and transactions have been eliminated. We do not have any variable-interest entities. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reclassifications:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Certain reclassifications have been made in the prior year consolidated financial statements to conform to the
current period
presentation. In our prior reports filed with the SEC, we presented four segments: equipment, aftermarket parts and service, rental and corporate. We have revised our segments to the following three
segments: manufacturing, distribution and corporate and shared services. The audited consolidated financial statements have been recast to reflect our new segment presentation. See "Note
6&#151;</FONT><FONT SIZE=2><I>Segment Data</I></FONT><FONT SIZE=2>." </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-7</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><A
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;2. Summary of Significant Accounting Policies (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash Equivalents:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Interest-bearing deposits, investments in government securities, commercial paper, money market funds and other
highly liquid
investments with original maturities of three months or less are considered cash equivalents. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts Receivable:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable are recorded when billed and represent claims against third parties that will be settled in
cash. The
carrying value of our accounts receivable, net of the allowance for doubtful accounts, represents the estimated net realizable value. We maintain an allowance for doubtful accounts for estimated
losses related to credit extended to our customers. We base such estimates on our current accounts receivable aging and historical collections and settlements experience, existing economic conditions
and any specific customer collection issues we have identified. Uncollectible accounts receivable are written off when we determine that the balance cannot be collected. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative financial instruments:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;On occasion, we enter into derivative financial instruments to manage certain exposures to our
operations; however,
this activity has been relatively insignificant to our financial statements. During the second quarter of Fiscal 2010, we entered into four short-term foreign currency exchange rate
contracts to manage our exposure to fluctuations in foreign currency for certain purchase orders that were denominated in Euros. As of October 30, 2010, all of these contracts were closed and the
Company recognized a $0.8&nbsp;million realized gain, which was recorded in other (income) expense, net within our consolidated statements of operations. A short-term foreign currency
exchange rate derivative instrument was entered in January 2009 to manage our exposure to fluctuations in foreign currency exchange rates for certain contracts of our Canadian subsidiary that were not
denominated in its functional currency. The derivative was settled in the second quarter of Fiscal 2009 and resulted in a gain of $1.4&nbsp;million, which was recorded in other (income) expense, net
within our consolidated statements of operations. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Inventories are stated at the lower of cost or market, with cost primarily determined on a first-in, first-out
("FIFO") basis and market determined on the basis of estimated realizable values. We purchase a considerable amount of our inventory for resale from independent manufacturers pursuant to distribution
agreements. Cost represents invoice or production cost for new items and original cost less allowance for condition for used equipment inventory. Production cost includes material, labor and
manufacturing overhead. When circumstances dictate, we write inventory down to its estimated realizable value based upon assumptions about future demand, technological innovations, market conditions,
plans for disposal and the physical condition of products. Shipping and handling costs are expensed as incurred in cost of sales. Shipping and handling costs billed to customers are recorded as sales. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue Recognition:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Revenue from equipment and parts sales is recognized when the product is shipped, collection is reasonably assured,
 risks of
ownership have been transferred to and accepted by the customer and contract terms are met. Cash discounts or other incentives to customers are recorded as a reduction of revenue. Revenue from service
agreements is recognized as earned, when services have been rendered. Revenue from rental agreements is recognized on a straight-line basis over the rental period. We report revenue net of
any revenue-based taxes assessed by governmental authorities. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-8</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;2. Summary of Significant Accounting Policies (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;With
respect to long-term equipment contracts, which accounted for approximately 28.7% of total sales in Fiscal 2010, revenue is recognized using the
percentage-of-completion method. The majority of our contracts are fixed-price contracts, and measurement of progress toward completion is based on direct labor hours incurred.
For long-term equipment contracts to build land-based drilling, workover and service rigs, measurement of progress toward completion is based on the cost-to-cost method. Changes in estimates for
revenues, costs to complete and profit margins are recognized in the period in which they are reasonably determinable. Any anticipated losses on uncompleted contracts are recognized whenever evidence
indicates that the estimated total cost of a contract exceeds its estimated total revenue. With respect to cost-plus-fixed-fee contracts, we recognize the fee
ratably as the actual costs are incurred, based upon the total fee amounts expected to be realized upon completion of the contracts. Bid and proposal costs are expensed as incurred. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recoverable
costs and accrued profits not yet billed ("Unbilled Revenue") represent the cumulative revenue recognized less the cumulative billings to the customer. Any billed revenue
that has not been collected is reported as accounts receivable. The timing of when we bill our customers is generally based upon advance billing terms or contingent upon completion of certain phases
of the work, as stipulated in the contract. Progress billings in accounts receivable at January&nbsp;31, 2011 and 2010 included contract retentions totaling $3.5&nbsp;million and
$7.6&nbsp;million, respectively, which are anticipated to be collected within one year. Billings in excess of incurred costs represent progress billings in excess of Unbilled Revenue. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
frequently sell equipment together with "start-up" services, which typically involve adding fuel to the engine, starting the equipment for the first time, and observing it
to ensure that it is operating properly. In cases where start-up services are required on an equipment sale, the estimated start-up costs are accrued when revenue from the
equipment sale is recognized. We had approximately $2.6&nbsp;million and $1.1&nbsp;million of accrued start-up costs that had not yet been performed as of January&nbsp;31, 2011 and
January&nbsp;31, 2010, respectively. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Customer Deposits:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We sometimes collect advance customer deposits to secure customers' obligations to pay the purchase price of ordered
equipment.
For long-term construction contracts, these customer deposits are recorded as current liabilities until construction begins. During construction, the deposit liability is reclassified into
billings in excess of incurred costs and, ultimately, recognized into revenue under the percentage-of-completion method. For all other sales, these deposits are recorded as
current liabilities until revenue is recognized. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-Lived Assets:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Long-lived assets, which include property, plant and equipment and acquired definite-lived intangible
assets, comprise a significant amount of our total assets. We carry our property, plant and equipment at cost less accumulated depreciation. Maintenance and repairs are expensed as incurred and
expenditures for renewals, replacements and improvements are capitalized. We depreciate our property, plant and equipment on a straight-line basis
over their estimated useful lives. Definite-lived intangibles are amortized on a straight-line basis over their estimated useful lives. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-9</FONT></P>

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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;2. Summary of Significant Accounting Policies (Continued) </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
accounting for long-lived assets, we must make estimates about the expected useful lives of the assets and the potential for impairment based on the fair value of the
assets and the cash flows they are expected to generate. The value of the long-lived assets is then amortized over their expected useful lives. A change in the estimated useful lives of
our long-lived assets would have an impact on our results of operations. We estimate the useful lives of our long-lived asset groups as follows: </FONT></P>
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<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Buildings</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>10 - 25&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Leasehold improvements</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>Lesser of lease term or asset life</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Rental equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2 - 8&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Machinery and equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4 - 7&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Computer hardware and software</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3 - 4&nbsp;years</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Intangible assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4&nbsp;months - 27&nbsp;years</FONT></TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
estimating the useful lives of our property, plant and equipment, we rely primarily on our actual experience with the same or similar assets. The useful lives of our definite-lived
intangible assets are determined by the years over which we expect the assets to generate a benefit based on legal, contractual or regulatory terms. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
assess the valuation of components of our property, plant and equipment and definite-lived intangible assets whenever events or circumstances dictate that the carrying value might not
be recoverable. We base our evaluation on indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external
market conditions or factors that may be present. If such factors indicate that the carrying amount of an asset or asset group may not be recoverable, we determine whether impairment has occurred by
analyzing an estimate of undiscounted future cash flows at the lowest level for which identifiable cash flows exist. If the estimate of undiscounted future cash flows during the estimated useful life
of the asset is less than the carrying value of the asset, we recognize a loss for the difference between the carrying value of the asset and its estimated fair value, measured by the present value of
estimated future cash flows or third party appraisal, as appropriate under the circumstances. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill and indefinite-lived intangible assets:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We perform an impairment test for goodwill and indefinite-lived intangible assets
annually during
the fourth quarter, or earlier if indicators of potential impairment exist. Our goodwill impairment test involves a comparison of the fair value of each of our reporting units with their carrying
value. Our impairment test for indefinite-lived intangible assets involves the comparison of the fair value of the intangible asset and its carrying value. The fair value is determined using
discounted cash flows ("income approach") and other market-related valuation
models, including earnings multiples ("public company market approach") and comparable asset market values ("transaction approach"). Certain estimates and judgments are required in the application of
these fair value models. The income approach consists of estimating the future cash flows that are directly associated with each of our reporting units. There are significant inherent uncertainties
and management judgment involved in estimating the fair value of each reporting unit, including historical experience and future expectations such as budgets and industry projections. We believe we
have made reasonable estimates and assumptions to estimate the fair value of our reporting units. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-10</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;2. Summary of Significant Accounting Policies (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
performed the first step for our annual impairment test, which compares the fair value of our reporting units to their carrying values, during the Fiscal 2010 fourth quarter and the
result of this test indicated that a probable impairment existed for our Crown reporting unit. The Fiscal 2010 results of operations for the Crown reporting unit did not achieve our expectations. In
particular, the anticipated rebound for and growth in rig and well stimulation equipment sales and backlog growth for the Crown reporting unit have not reached pre-2009 levels. These
assumptions had been factored into our budgets and forecasts and specific sales were anticipated to occur during Fiscal 2010, including the fourth quarter, coupled with growth in backlog for these
products. Because oil prices have risen, it was anticipated that capital spending for land-based drilling, workover and service rigs would return and be reflected in backlog and equipment
ordering trends. As a result of this prolonged downturn, our cash flow projections for Crown have been substantially revised downward. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Crown reporting unit had goodwill of $28.7&nbsp;million and indefinite-lived intangible assets (trademarks) of $4.1&nbsp;million subject to this annual impairment test. In
determining the fair value in the step one test, the material assumptions used for the income approach included a weighted average cost of capital of 21.4% and a long-term growth rate of
4.1%. Based on our future cash flow projections for the Crown reporting unit, the result of the income approach indicated the carrying amount of the Crown reporting unit exceeded its estimated fair
value. In addition, these cash flow projections did not result in meaningful market-related comparisons under the public company market and transaction approaches. Therefore, under the second step of
the impairment test, we allocated the estimated fair value indicated by the income approach to the identifiable tangible and intangible assets and liabilities based on their respective values. This
allocation indicated a partial impairment for the indefinite-lived intangible assets and no residual value for goodwill. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
below table details the impact of this impairment charge, which resulted in an overall decrease to goodwill and intangibles, net in our consolidated balance sheets of
$31.5&nbsp;million as follows: </FONT></P>
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<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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</FONT></P>

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<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="81pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Indefinite-Lived<BR>
Intangible Assets </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Goodwill </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Crown reporting unit before impairment test</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,084</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>28,653</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Impairment charges</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(2,834</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(28,653</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Crown reporting unit after impairment test</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,250</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
recorded a $31.5&nbsp;million impairment charge in our consolidated results of operations for Fiscal 2010. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insurance:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We maintain a variety of insurance for our operations that we believe to be customary and reasonable. We are self-insured up
to certain levels in the form of deductibles and retentions for general liability, vehicle liability, group medical and workers compensation claims. Other than normal business and contractual risks
that are not insurable, our risk is commonly insured and the effect of a loss occurrence is not expected to be significant. We accrue for estimated self-insurance costs and uninsured
exposures based on estimated development of claims filed and an estimate of claims incurred but not reported. We regularly review estimates of reported and unreported claims and provide for losses
accordingly. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-11</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_fk72801_1_12"> </A>


<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;2. Summary of Significant Accounting Policies (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advertising:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Advertising costs are included in selling and administrative expenses and are expensed as incurred. These expenses totaled
$1.7&nbsp;million, $1.4&nbsp;million and $2.8&nbsp;million for Fiscal 2010, 2009 and 2008, respectively. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and Development:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Expenditures for research and development activities are charged to expense as incurred and were
$0.6&nbsp;million,
$1.0&nbsp;million and $3.3&nbsp;million in Fiscal 2010, 2009 and 2008, respectively. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Translation of Foreign Currency:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The local currency is the functional currency for our Canadian and Colombian subsidiaries and, as such,
 assets and
liabilities are translated into U.S. dollars at year end exchange rates. Income and expense items are translated at average exchange rates during the year. Translation adjustments resulting from
changes in exchange rates are reported in accumulated other comprehensive income. Gains or losses from foreign currency transactions are recognized in current earnings as a component of other expense
(income), net in our consolidated statements of operations. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
January&nbsp;10, 2010, the Venezuelan government devalued its currency from 2.15 Bolivars per U.S. dollar to 4.30 Bolivars per U.S. dollar ("the official rate") and the Venezuelan
economy has since been designated as hyperinflationary. The Company recognized a translation loss of $3.1&nbsp;million as of January&nbsp;31, 2010, which was recorded in currency translation
adjustment, a component of accumulated other comprehensive income (loss) in our consolidated balance sheets. We have historically utilized the official rate for our Venezuelan operations. Beginning
February&nbsp;1, 2010, we utilized the U.S. dollar as the functional currency for our Venezuelan subsidiary and remeasured its financial statements into U.S. dollars at the official rate.
Accordingly, using "hyperinflationary accounting," we recognized the related losses or gains from such remeasurement of its balance sheet in the consolidated statements of its operations. During
Fiscal 2010, the official rate for Venezuela did not fluctuate significantly. As a result, the effect of remeasuring our Venezuelan subsidiary was insignificant. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
January&nbsp;31, 2011, we evaluated the rate at which we remeasure our Venezuelan subsidiary and concluded that based on the continued slow-down of its economy and
resultant constraints presently impacting the banking environment and associated limitations therein, that the SITME rate of 5.30 Bolivars per U.S. dollar was a more appropriate remeasurement rate.
The result of this change in remeasurement rate did not have a material impact to our financial statements. The total assets for our Venezuela subsidiary are approximately $4.0&nbsp;million. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fair Value of Financial Instruments:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Our financial instruments consist primarily of cash equivalents, trade
receivables, trade payables and debt instruments. The recorded values of cash equivalents, trade receivables and trade payables are considered to be representative of their respective fair values.
Generally, our notes payable and revolving credit facility have interest rates which are tied to current market rates, and thus, their fair value is consistent with their recorded amounts. The
estimated fair value of our senior notes is based on quoted market prices (Level&nbsp;1). At January&nbsp;31, 2011, our senior notes with a carrying value of $150.0&nbsp;million had a fair value
of $153.2&nbsp;million. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-12</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;2. Summary of Significant Accounting Policies (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Warranty Costs:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Generally, the only warranty provided to our customers for products we sell that were originally manufactured by others,
 including
our key OEMs, is the warranty provided by those original manufacturers. We warrant products manufactured, and services provided, by us for periods of three to 18&nbsp;months. Based on historical
experience and contract terms, we accrue the estimated cost of our product and service warranties at the time of sale or, in some cases, when specific warranty exposures are identified and
quantifiable. Accrued warranty costs are adjusted periodically to reflect actual experience. Certain warranty and other related claims involve matters of dispute that ultimately are resolved by
negotiation, arbitration or litigation. Occasionally, a material warranty issue can arise that is beyond our historical experience. We accrue for any such warranty issues as they become known and
estimable.See Note&nbsp;8&#151;"</FONT><FONT SIZE=2><I>Significant Balance Sheet Accounts.</I></FONT><FONT SIZE=2>" </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income Taxes:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;As a limited liability company, income is reported for federal and state income tax purposes by our unit holders.
Generally, we make
quarterly distributions to our unit holders to fund their tax obligations. We are responsible, however, for paying taxes such as Texas Margins tax and other foreign income taxes. To provide financial
statement users comparable information as a taxable entity as contemplated in the Corporate Conversion, we have included pro forma estimated federal and certain states' income tax expense for all
periods presented. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;3. Income Taxes  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our effective tax rate for Fiscal 2010 was approximately 7.5%, which excludes our tax distributions to the unit holders of our limited liability company. As a limited liability company,
income is reported for federal and state income tax purposes (except for the Texas Margins tax and foreign taxes reported at the entity level) by our unit holders. During Fiscal 2010, we recorded
$1.4&nbsp;million of Texas Margins tax and $0.7&nbsp;million of income tax benefit associated with foreign jurisdictions. Generally, we make quarterly distributions to the unit holders to fund
their tax obligations. During Fiscal 2010, 2009 and 2008, we made tax distributions of $0.3&nbsp;million, $5.6&nbsp;million and $33.6&nbsp;million, respectively, to our unit holders. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table lists the pre-tax earnings by geographic area: </FONT></P>
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<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Fiscal Year Ended January&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net earnings (loss) before income taxes:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>U.S.&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>25,570</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(6,205</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>52,970</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Foreign</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(34,902</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(16,878</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>245</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(9,332</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(23,083</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>53,215</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-13</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;3. Income Taxes (Continued) </B></FONT></P>
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
provision for income taxes consisted of the following: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


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<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="39pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="39pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Fiscal Year Ended January&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current expense (benefit)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>U.S.</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Federal</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>State</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,297</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,285</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,684</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total U.S.&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,297</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,285</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,684</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Foreign</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
208</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
(1,446</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
1,502</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total current (benefit) expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,505</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(161</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,186</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred expense (benefit)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>U.S.</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Federal</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>State</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>54</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(84</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(104</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total U.S.&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>54</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(84</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(104</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Foreign</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
(859</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
1,061</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
(423</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total deferred expense (benefit)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(805</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>977</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(527</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income tax expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>700</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>816</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,659</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
reconciliation between the provision for income taxes and income taxes computed by applying the statutory rate is as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Fiscal Year Ended January&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Tax (benefit) provision at statutory rate</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(3,266</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(8,079</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>18,625</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Add (deduct):</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>State income tax</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,351</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,201</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,580</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Valuation allowance</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5,145</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,114</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Foreign credits</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>76</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(41</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Benefit (tax) on&nbsp;LLC income not subject to taxation at the statutory rate</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2,606</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4,621</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(17,553</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income tax expense</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>700</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>816</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,659</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-14</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;3. Income Taxes (Continued) </B></FONT></P>
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
tax effects of temporary differences that give rise to the deferred tax assets and liabilities were as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


</FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>As of January&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred tax assets:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net operating loss carryforward</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,263</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,808</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Reserves, allowances and accruals</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>756</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>389</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Amortizable intangible assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>720</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>745</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Non-amortizable intangible assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,184</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property and equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>336</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>172</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,259</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,114</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Valuation allowance</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(8,259</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(3,114</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred tax liabilities:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Goodwill and non-amortizable intangibles</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1,046</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net deferred tax assets (liabilities)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1,046</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
of January&nbsp;31, 2011, the Company had a gross Canadian net operating loss carry forward of $9.1&nbsp;million which expires in 2031. A full valuation allowance has been
provided for this asset and other deferred tax assets and the valuation allowance increased $5.1&nbsp;million in Fiscal 2010. We have established valuation allowances for uncertainties in realizing
the benefit of this tax loss carry forward and other deferred tax assets. Changes in estimates of future taxable income or in tax laws may alter this expectation. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;4. Net Earnings Per Share  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounting standards require dual presentation of earnings per share ("EPS"): Basic EPS and Diluted EPS. Basic EPS is computed by dividing net earnings or loss available to common unit
holders by the weighted average number of common units outstanding for the period. For purposes of EPS, one unit is equivalent to one share. Diluted EPS excludes 408,000 contingent dilutive unvested
restricted shares that would be considered common stock equivalents using the treasury stock method because as of
January&nbsp;31, 2011, the contingent condition had not occurred. See "Note&nbsp;9&#151;</FONT><FONT SIZE=2><I>Equity</I></FONT><FONT SIZE=2>" for a discussion of the outstanding
restricted share grants. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-15</FONT></P>

<HR NOSHADE>
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</FONT> <FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;4. Net Earnings Per Share (Continued)  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the computation of basic and diluted earnings per common unit: </FONT></P>
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<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Fiscal Year Ended January&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars and units in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Numerator:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net (loss) earnings</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(10,032</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(23,899</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>50,556</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Denominator:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic weighted average units outstanding</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>100,005</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>100,005</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>100,005</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Effect of dilutive securities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted weighted average units outstanding</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>100,005</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>100,005</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>100,005</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic (loss) earnings per unit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.10</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.24</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.51</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted (loss) earnings per unit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.10</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.24</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.51</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;5. Comprehensive Income  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total comprehensive income was as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Fiscal Year Ended January&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net (loss) earnings</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(10,032</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(23,899</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>50,556</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Currency translation gain (loss)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,709</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,145</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(11,995</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Comprehensive (loss) income</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(6,323</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(18,754</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>38,561</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Translation
adjustments resulting from changes in exchange rates are reported in other comprehensive income. As of January&nbsp;31, 2011, 2010 and 2009, the entire accumulated other
comprehensive gain (loss) balance consisted of currency translation adjustments. Foreign currency transaction exchange gains (losses) are recorded in other expense (income), net in the consolidated
statements of operations and were $0.1&nbsp;million, ($1.7) million and $1.3&nbsp;million during Fiscal 2010, 2009 and 2008, respectively. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;6. Segment Data  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In our prior reports filed with the SEC, we presented four segments: equipment, aftermarket parts and service, rental and corporate. We have revised our segments to the following three
segments: manufacturing, distribution and corporate and shared services. The consolidated financial statements have been recast to reflect our new segment presentation. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Through
our two operating segments, we design, manufacture and market a wide range of equipment and provide aftermarket parts and service to a broad range of customers. We also provide
rental equipment through our distribution segment. These products and services are consistent with our activities in prior periods and were reported in prior periods as three distinct operating
segments. We now report these same product categories within our two operating segments, which reflects our internal management structure. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-16</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
<!-- ZEQ.=1,SEQ=133,EFW="2203551",CP="STEWART & STEVENSON LLC",DN="1",CHK=954248,FOLIO='F-16',FILE='DISK112:[11ZAW1.11ZAW72801]FM72801A.;6',USER='VRIVERA',CD=';3-MAY-2011;00:03' -->
<A NAME="page_fm72801_1_17"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;6. Segment Data (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
operational and management structure was clarified and defined in the fourth quarter of Fiscal 2010 as the result of senior management's assessment and recommendations made to the
board of directors. This operational and management realignment was approved by our board and is reflected in the segments we now report. We believe that the two operating segment presentation
continues to report the products and services we provide, while also providing a view of how we manage our business and a better platform from which to explain the key activities within, and drivers
for, our business. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Crown results are included in our manufacturing segment and are aligned with our internal management structure. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
reportable segments are as follows: </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Manufacturing  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We design, manufacture and market equipment for U.S. and international oilfield service providers and drilling and workover
contractors, as well as national oil companies that require integrated and customized product solutions. We manufacture equipment specifically for hydraulic fracturing, well stimulation, well
workover, intervention and drilling operations. Our manufactured products include integrated solutions, which incorporate a variety of components into a single system, for a wide range of oilfield
services and support applications. In addition, we provide parts and service to customers primarily in the oil and gas industry. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Distribution  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We provide stand-alone products and aftermarket parts and service for products manufactured by us, our six key OEMs&nbsp;and other
manufacturers. In addition, we provide rental equipment including generator sets, air compressors, rail car movers and material handling equipment to our customers. Our aftermarket parts and service
operations, which provide us with a recurring, higher-margin source of revenue, serve customers engaged in the oil and gas, power generation, marine, mining, construction, commercial vehicle and
material handling industries, as well as other industries. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B><I> Corporate and shared services  </I></B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our corporate and shared services segment includes administrative overhead normally not associated with specific activities within the
operating segments. These expenses include legal, finance and accounting, internal audit, human resources, information technology, marketing, supply chain and similar corporate office costs. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-17</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_fm72801_1_18"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;6. Segment Data (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intra-segment
revenues and costs are eliminated, and operating profit (loss) represents earnings (loss) before interest and income taxes. Operating results by segment were as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Fiscal Year Ended January&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Sales</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Manufacturing</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>342,394</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>246,354</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>520,055</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distribution</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>518,840</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>442,322</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>697,087</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>861,234</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>688,676</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,217,142</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Operating profit (loss)</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Manufacturing</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>11,277</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,875</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>50,110</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distribution</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>37,481</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>23,640</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>66,456</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Corporate and shared services</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(38,204</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(42,109</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(38,420</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total operating profit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>10,554</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(2,594</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>78,146</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Operating profit percentage</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Manufacturing</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3.3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6.4</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9.6</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distribution</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7.2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5.3</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9.5</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Consolidated</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1.2</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2> (0.4</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)%</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6.4</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>%</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Fiscal 2010 operating profit for the manufacturing segment includes the impact of the $31.5 million goodwill and indefinite-lived intangible assets impairment charge for Crown. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Assets
by segment were as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Fiscal Year Ended January&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Assets</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Manufacturing</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>274,183</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>254,070</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>309,255</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distribution</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>278,382</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>248,178</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>327,935</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Corporate and shared services</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,038</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>12,277</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>16,772</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total Assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>567,603</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>514,525</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>653,962</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital
expenditures by segment were as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="39pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Fiscal Year Ended January&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Capital Expenditures</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Manufacturing</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>238</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>784</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>346</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distribution</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>12,071</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,998</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>25,821</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Corporate and shared services</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>649</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>531</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,635</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total capital expenditures</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>12,958</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,313</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>27,802</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-18</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;6. Segment Data (Continued) </B></FONT></P>
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation
and amortization by segment were as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Fiscal Year Ended January&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Depreciation&nbsp;&amp; amortization</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Manufacturing</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,672</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6,388</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,218</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distribution</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>10,729</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>10,970</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>10,479</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Corporate and shared services</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>652</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,044</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,172</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total deprecation&nbsp;&amp; amortization</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>17,053</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>18,402</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>18,869</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Geographic
Information for the periods presented is shown below: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Fiscal Year Ended January&nbsp;31 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Sales</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>United States</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>694,506</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>483,078</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>786,641</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>International</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>166,728</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>205,598</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>430,501</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>861,234</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>688,676</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,217,142</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;International
sales reflects sales in and to countries outside the United States, including sales to U.S. customers for export. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>As of January&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Assets</B></FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>United States</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>506,670</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>431,684</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>International</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>60,933</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>82,841</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>567,603</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>514,525</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;7. Long-Term Debt  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="79pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="79pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>As of </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>January&nbsp;31, 2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>January&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other debt</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,441</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,243</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Revolving credit facility</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>35,181</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>70,870</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Unsecured senior notes</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>150,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>150,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>192,622</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>228,113</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less: current portion of other debt</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(7,441</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(7,187</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term debt, net of current portion</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>185,181</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>220,926</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-19</FONT></P>

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<P style='font-family:times;page-break-before:always'></p>
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<A NAME="page_fm72801_1_20"> </A>

<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;7. Long-Term Debt (Continued) </B></FONT></P>
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Future
maturities of debt by year at January&nbsp;31, 2011 are as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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 </FONT></P>

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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fiscal 2011</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,441</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fiscal 2012</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>35,181</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fiscal 2013</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fiscal 2014</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>150,000</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fiscal 2015 and thereafter</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>192,622</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other debt:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Other debt includes certain short-term secured loans within our South American operations, a floor plan financing agreement
and other
equipment loans. The restricted cash on our balance sheet relates to collateral securing certain of this debt. The weighted average interest rate for the South American operations debt was 5.7%,
11.1%, and 11.7% in Fiscal 2010, 2009 and 2008, respectively. The interest rate for the floor plan financing agreement was 3.3% in each of Fiscal 2010, 2009 and 2008. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revolving Credit Facility:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In February 2007, we amended our senior credit facility, increased the revolving credit facility to
$250.0&nbsp;million
and added a $25.0&nbsp;million sub-facility to be used by our Canadian operations. The amended $250.0&nbsp;million revolving credit facility, which matures in February 2012, is an
asset-based revolving credit facility which is secured by substantially all accounts receivable, inventory and property, plant and equipment and provides for borrowings at LIBOR plus a margin ranging
from 1.25% to 2.00% per annum, based on our leverage ratios, as specified in the credit agreement. Borrowings under the facility bear interest at a weighted average interest rate of 2.02%, 2.59% and
2.71% as of January&nbsp;31, 2011, 2010 and 2009, respectively. A commitment fee of 0.30% to 0.375% per annum is payable on all unused portions of the revolving credit facility based on our
leverage ratios. Interest payments are due monthly, or as LIBOR contracts expire. The revolving credit facility also has a $30.0&nbsp;million sub-facility which may be used for letters
of credit. The credit agreement limits available borrowings to certain percentages of our assets. As of January&nbsp;31, 2011, there were $19.5&nbsp;million of letters of credit outstanding. Based
on the outstanding borrowings, letters of credit issued and the terms of the asset-based revolving credit facility, our available borrowing capacity was approximately $124.3&nbsp;million and
$68.3&nbsp;million at January&nbsp;31, 2011 and 2010, respectively. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unsecured Senior Notes:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;During the second quarter of Fiscal 2006, we issued $150.0&nbsp;million of senior unsecured notes, bearing
interest at
10.0% per annum and maturing in July 2014. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
revolving credit facility and the senior notes contain financial and operating covenants with which we must comply during the terms of the agreements. These covenants include the
maintenance of certain financial ratios, restrictions related to the incurrence of certain indebtedness and investments, and prohibition of the creation of certain liens. We were in compliance with
all covenants as of January&nbsp;31, 2011. The financial covenant for the revolving credit facility requires that we maintain a fixed charge coverage ratio, as defined in the agreement, of at least
1.1 to 1.0; however, this covenant does not take effect until our available borrowing capacity is $30.0&nbsp;million or less. The financial covenant for the senior notes indenture requires that,
were we to incur additional indebtedness (subject to various exceptions set forth in the indenture), after giving effect to the incurrence of such additional indebtedness, we have a consolidated
coverage ratio, as defined in the indenture, of at least 2.5 to 1.0. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-20</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;7. Long-Term Debt (Continued)  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We incurred $3.3&nbsp;million of capitalized legal and financing charges associated with establishing the original $250.0&nbsp;million senior credit facility, which are being
amortized over the five year term of the facility. As a result of the amendment reducing the facility to $125.0&nbsp;million in June 2006, we recorded a $1.5&nbsp;million non-cash
charge during the second quarter of Fiscal 2006 as interest expense. We also incurred $5.1&nbsp;million of capitalized legal and financing charges associated with the issuance of the
$150.0&nbsp;million senior unsecured notes during the second quarter of Fiscal 2006. These costs are being amortized over the eight year term of the notes. During the first quarter of Fiscal 2007,
we incurred $2.2&nbsp;million of capitalized legal and financing costs associated with the February 2007 amendment to the senior credit facility. As of January&nbsp;31, 2011, $3.9&nbsp;million
of unamortized costs are included in the balance sheet. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Guarantor entities:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The senior notes were co-issued by Stewart&nbsp;&amp; Stevenson,&nbsp;LLC and Stewart&nbsp;&amp; Stevenson Funding
Corp. and are guaranteed by all of our subsidiaries except one domestic subsidiary, one subsidiary in Canada and two subsidiaries in South America. Stewart&nbsp;&amp; Stevenson&nbsp;LLC and all of its
subsidiaries except one domestic subsidiary, one subsidiary in Canada and two subsidiaries in South America are co-borrowers on the $250.0&nbsp;million revolving credit facility. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following condensed consolidating financial statements present separately the financial position, results of operations and cash flows of the co-issuers/guarantors
("Guarantor Entities"), and all non-guarantor subsidiaries of the Company ("Non-Guarantor Entities") based on the equity method of accounting. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fo72801_condensed_consolidating_balance_sheets"> </A>
<A NAME="toc_fo72801_1"> </A>
<BR></FONT><FONT SIZE=2><B>  Condensed Consolidating Balance Sheets    <BR>    </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="72pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="60pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>As of January&nbsp;31, 2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Guarantor<BR>
Entities </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Non-Guarantor<BR>
Entities </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Eliminations </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Consolidated<BR>
Totals </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>414,311</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>57,122</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>471,433</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property, plant and equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>72,246</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,831</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>75,077</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>881</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,827</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,385</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>21,093</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>487,438</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>64,780</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,385</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>567,603</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>200,693</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>32,469</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>233,162</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Intercompany payables (receivables)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(47,606</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>47,606</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>185,317</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>90</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>185,407</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shareholders' equity</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>149,034</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(15,385</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,385</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>149,034</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total liabilities and shareholders' equity</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>487,438</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>64,780</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,385</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>567,603</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
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 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-21</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;7. Long-Term Debt (Continued) </B></FONT></P>
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;<BR></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="72pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="60pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>As of January&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Guarantor<BR>
Entities </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Non-Guarantor<BR>
Entities </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Eliminations </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Consolidated<BR>
Totals </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>333,191</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>48,737</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>381,928</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property, plant and equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>75,072</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,134</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>79,206</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>35,150</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>33,376</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(15,135</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>53,391</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>443,413</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>86,247</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(15,135</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>514,525</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>113,997</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>22,446</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>136,443</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Intercompany payables (receivables)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(47,474</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>47,474</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term liabilities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>221,268</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,192</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>222,460</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shareholders' equity</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>155,622</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,135</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(15,135</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>155,622</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total liabilities and shareholders' equity</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>443,413</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>86,247</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(15,135</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>514,525</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fo72801_condensed_consolidating_statements_of_operations"> </A>
<A NAME="toc_fo72801_2"> </A>
<BR></FONT><FONT SIZE=2><B>  Condensed Consolidating Statements of Operations    <BR>    </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


</FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="72pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="60pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>For the Fiscal Year Ended January&nbsp;31, 2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Guarantor<BR>
Entities </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Non-Guarantor<BR>
Entities </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Eliminations </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Consolidated<BR>
Totals </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>771,592</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>89,642</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>861,234</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of sales</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>638,761</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>77,206</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>715,967</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross profit</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>132,831</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>12,436</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>145,267</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Selling and administrative expenses</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
90,474</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
13,778</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
104,252</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Impairment of goodwill and indefinite-lived intangible assets</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,316</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>30,171</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>31,487</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity in loss of subsidiaries</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>34,228</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(34,228</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other (income) expense, net</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1,434</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>408</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1,026</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating profit (loss)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>8,247</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(31,921</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>34,228</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>10,554</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense, net</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
16,927</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
2,959</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2><BR>
19,886</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Earnings (loss) before income taxes</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(8,680</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(34,880</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>34,228</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(9,332</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income tax expense (benefit)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,352</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(652</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>700</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(10,032</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(34,228</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>34,228</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(10,032</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;7. Long-Term Debt (Continued)  </B></FONT></P>
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<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="72pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="60pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>For the Fiscal Year Ended January&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Guarantor<BR>
Entities </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Non-Guarantor<BR>
Entities </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Eliminations </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Consolidated<BR>
Totals </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>609,961</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>78,715</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>688,676</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>505,191</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>71,837</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>577,028</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross profit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>104,770</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6,878</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>111,648</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Selling and administrative expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
96,705</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
17,483</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
114,188</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity in loss of subsidiaries</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,953</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(15,953</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other (income) expense, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(2,872</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,926</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>54</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(5,016</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(13,531</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,953</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(2,594</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
17,637</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
2,852</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
20,489</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Loss before income taxes</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(22,653</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(16,383</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,953</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(23,083</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income tax expense (benefit)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,246</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(430</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>816</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(23,899</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(15,953</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,953</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(23,899</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;<BR></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="72pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="60pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>For the Fiscal Year Ended January&nbsp;31, 2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Guarantor<BR>
Entities </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Non-Guarantor<BR>
Entities </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Eliminations </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Consolidated<BR>
Totals </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,080,120</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>137,022</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,217,142</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>885,866</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>116,300</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,002,166</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross profit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>194,254</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>20,722</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>214,976</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Selling and administrative expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
118,844</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
19,297</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
138,141</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity in earnings of subsidiaries</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(759</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>759</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other expense (income), net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,809</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(3,120</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1,311</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating profit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>74,360</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,545</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(759</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>78,146</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
22,021</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
2,910</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
24,931</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Earnings before income taxes</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>52,339</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,635</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(759</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>53,215</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income tax expense</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,783</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>876</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,659</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net earnings</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>50,556</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>759</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(759</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>50,556</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-23</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;7. Long-Term Debt (Continued)  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><A
NAME="fs72801_condensed_consolidating_statements_of_cash_flows"> </A>
<A NAME="toc_fs72801_1"> </A></FONT> <FONT SIZE=2><B>  Condensed Consolidating Statements of Cash Flows    <BR>    </B></FONT></P>
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<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="72pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="60pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>For the Fiscal Year Ended January&nbsp;31, 2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Guarantor<BR>
Entities </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Non-Guarantor<BR>
Entities </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Eliminations </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Consolidated<BR>
Totals </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash provided by (used in):</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(10,032</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(34,228</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>34,228</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(10,032</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity in loss of subsidiaries</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>34,228</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(34,228</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other adjustments</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>28,970</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>37,926</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>66,896</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>53,166</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,698</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>56,864</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Investing activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(14,525</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(399</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(14,924</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Financing activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(36,617</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>467</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(36,150</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Effect of exchange rate on cash</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>57</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>57</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net increase in cash</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,024</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,823</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,847</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash at the beginning of the period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>248</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,073</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,321</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash at the end of the period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,272</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6,896</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,168</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;<BR></FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="72pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="60pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>For the Fiscal Year Ended January&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Guarantor<BR>
Entities </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Non-Guarantor<BR>
Entities </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Eliminations </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Consolidated<BR>
Totals </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash provided by (used in):</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(23,899</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(15,953</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,953</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(23,899</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity in loss of subsidiaries</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>15,953</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(15,953</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other adjustments</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>64,661</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>25,559</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>90,220</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>56,715</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,606</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>66,321</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Investing activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1,301</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(1,639</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(2,940</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Financing activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(55,192</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(8,541</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(63,733</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Effect of exchange rate on cash</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,667</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,667</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net increase in cash</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>222</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,093</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,315</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash at the beginning of the period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>26</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,980</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,006</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash at the end of the period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>248</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,073</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,321</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
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<P style="font-family:times;"><FONT SIZE=2><A
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;7. Long-Term Debt (Continued) </B></FONT></P>
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<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>For the Fiscal Year Ended January&nbsp;31, 2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Guarantor<BR>
Entities </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Non-Guarantor<BR>
Entities </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Eliminations </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Consolidated<BR>
Totals </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
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<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net cash provided by (used in):</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net earnings</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>50,556</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>759</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(759</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>50,556</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Equity in earnings of subsidiaries</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(759</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>759</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other adjustments</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>34,180</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(26,266</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,914</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>83,977</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(25,507</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>58,470</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Investing activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(27,971</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>195</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(27,776</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Financing activities</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(61,937</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>19,573</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(42,364</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Effect of exchange rate on cash</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,294</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,294</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net decrease in cash</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(5,931</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,445</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(10,376</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash at the beginning of the period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,957</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>6,425</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>12,382</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash at the end of the period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>26</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,980</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,006</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;8. Significant Balance Sheet Accounts  </B></FONT></P>


<P style="font-family:times;"><FONT SIZE=2><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allowance for Doubtful Accounts:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Activity in the allowance for doubtful accounts was as follows: </FONT></P>
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<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Fiscal Year Ended January&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Allowance for doubtful accounts at beginning of period</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4,919</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,599</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,140</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Additions to reserves</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>684</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,482</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,281</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Writeoffs against allowance for doubtful accounts</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(3,085</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1,327</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1,189</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Collections of previously reserved items</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>189</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>165</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>367</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Allowance for doubtful accounts at end of period</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,707</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4,919</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,599</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Summarized below are the components of inventories: </FONT></P>
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<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>As of January&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Inventory purchased under distributor agreements</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>107,872</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>104,542</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Raw materials and spare parts</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>79,231</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>93,017</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Work in process</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>97,501</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>34,481</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Finished goods</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,305</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>16,273</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total inventories, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>285,909</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>248,313</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-25</FONT></P>

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</FONT> <FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;8. Significant Balance Sheet Accounts (Continued)  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Raw materials and spare parts include OEM equipment and components used in the manufacturing segment. Finished goods includes manufactured equipment that is essentially complete at
January&nbsp;31, 2010. The inventory balances above are net of inventory valuation allowances of $30.4&nbsp;million and $20.4&nbsp;million at January&nbsp;31, 2011 and January&nbsp;31, 2010,
respectively. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contracts in Process:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Recoverable costs and accrued profits not yet billed relate to long-term equipment contracts. Amounts included in
the financial
statements which relate to recoverable costs and accrued profits not yet billed on contracts in process are classified as current assets. Billings on uncompleted contracts in excess of incurred costs
are classified as current liabilities. Progress billings on contracts are made in accordance with the terms and conditions of the contracts, which often differ from the revenue recognition process. A
summary of the status of uncompleted contracts is as follows: </FONT></P>
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<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="56pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>As of January&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Costs incurred on uncompleted contracts</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>91,768</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>109,788</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accrued profits</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>22,744</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>33,800</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>114,512</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>143,588</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Less billings to date</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(39,863</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(105,661</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>74,649</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>37,927</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Recoverable costs and accrued profits not yet billed (CIEB)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>78,934</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>38,042</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Billings in excess of incurred costs and accrued profits (BIEC)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(4,285</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(115</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>74,649</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>37,927</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property, Plant and Equipment:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Components of property, plant and equipment, net, were as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=5 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>As of January&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Machinery and equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>29,852</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>27,892</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Buildings and leasehold improvements</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>27,918</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>27,299</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Rental equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>67,067</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>60,655</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Computer hardware and software</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,701</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,459</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accumulated depreciation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(62,220</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(48,546</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net depreciable assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>67,318</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>71,759</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Construction in progress</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>696</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>384</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Land</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,063</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>7,063</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property, plant and equipment, net</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>75,077</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>79,206</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation
expense was $15.5&nbsp;million, $16.1&nbsp;million and $15.7&nbsp;million in Fiscal 2010, 2009 and 2008, respectively. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-26</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;8. Significant Balance Sheet Accounts (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rental
equipment includes generator sets, air compressors, rail car movers and material handling equipment that is leased to customers under operating lease arrangements with terms
ranging from one month up to three years. Rental equipment is depreciated over its estimated useful life, and is occasionally transferred into finished goods inventory for resale to customers. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intangible Assets and Goodwill:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Amounts allocated to intangible assets are amortized on a straight-line basis over their estimated
useful
lives. Intangible assets include the following: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:57%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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 </FONT></P>

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<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="81pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="56pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="54pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>As of January&nbsp;31, 2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Estimated<BR>
Useful Life </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Gross<BR>
Carrying<BR>
Value </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Accumulated<BR>
Amortization </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Impairment </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Currency<BR>
Translation </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Net </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Non-current amortizable intangible assets:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Engineering drawings</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>2.5 - 10 Years</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6,346</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(5,211</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>189</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,324</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distribution contracts</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>27 Years</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,384</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(624</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,760</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Customer relationships</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>6 - 11 Years</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7,409</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(3,097</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>635</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>4,947</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Patents</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>4 Years</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>209</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(209</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Non-compete covenant</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>5 Years</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,420</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(1,182</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>105</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>343</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>18,768</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(10,323</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>929</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9,374</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Indefinite-lived intangible assets:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Trademarks</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9,150</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2,834</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>374</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6,690</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>27,918</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(10,323</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2,834</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,303</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>16,064</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;<BR></FONT></P>
 <DIV style="padding:0pt;position:relative;width:57%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"140%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="140%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="10pt" style="font-family:times;"></TD>
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="81pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="61pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="56pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="54pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=14 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>As of January&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Estimated<BR>
Useful Life </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Gross<BR>
Carrying<BR>
Value </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Accumulated<BR>
Amortization </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Impairment </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Currency<BR>
Translation </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Net </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Non-current amortizable intangible assets:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Engineering drawings</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>2.5 - 10 Years</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>6,346</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(4,947</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>189</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,588</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Distribution contracts</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>27 Years</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>3,384</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(499</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>2,885</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Customer relationships</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>6 - 11 Years</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>7,409</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(2,318</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>380</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>5,471</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Patents</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>4 Years</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>209</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(176</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>33</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Non-compete covenant</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>5 Years</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>1,420</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(871</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>78</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>627</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>18,768</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(8,811</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>647</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>10,604</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Indefinite-lived intangible assets:</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:times;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Trademarks</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9,150</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>191</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>9,341</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=2 style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>27,918</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>(8,811</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>838</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:times;"><FONT SIZE=2>19,945</FONT></TD>
<TD style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=2 VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-27</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;8. Significant Balance Sheet Accounts (Continued) </B></FONT></P>
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization
expense was $1.5&nbsp;million, $2.3&nbsp;million and $3.2&nbsp;million in Fiscal 2010, 2009 and 2008, respectively. Amortization expense for the next 5&nbsp;years is
expected to be as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="39pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fiscal 2011</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,398</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fiscal 2012</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,135</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fiscal 2013</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,007</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fiscal 2014</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,001</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fiscal 2015</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,001</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,542</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table presents goodwill, which resulted from the Crown Acquisition, as of the dates indicated, as well as changes in the account during the period shown. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Amount </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Carrying amount as of January&nbsp;31, 2010</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>26,671</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Currency translation</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,982</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Impairment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(28,653</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Carrying amount as of January&nbsp;31, 2011</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&#151;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Warranty Costs:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;A summary of activity for accrued warranty costs, recorded in other current liabilities on the consolidated balance
sheet, for the
periods ended January&nbsp;31, 2011, 2010 and 2009 was as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


</FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="44pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=8 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Fiscal Year Ended January&nbsp;31, </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>Dollars in thousands</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accrued warranty costs at beginning of period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,398</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,990</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,982</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Payments for warranty obligations</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(4,245</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(6,174</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(6,222</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Warranty accrual</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>8,957</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,582</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,230</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accrued warranty costs at end of period</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,110</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,398</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,990</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
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 <P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current liabilities:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Included in other current liabilities are $12.2&nbsp;million and $15.6&nbsp;million of accrued job costs as
of
January&nbsp;31, 2011 and January&nbsp;31, 2010, respectively. No other item comprised more than 5% of total current liabilities as of January&nbsp;31, 2010 or January&nbsp;31, 2009. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-28</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><A
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;9. Equity  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company has 100,005,000 common units issued and outstanding, which consist of both Common Units and Common B Units. Additionally, the Company has Common A Units, none of which are
issued or outstanding. These three classes of Units have the same economic rights. The voting and transfer rights of the three classes differ in that the Common Units are entitled to one vote per
Common Unit and upon transfer shall remain designated as Common Units. The Common A Units are entitled to ten votes per Common A Unit and upon transfer will be designated as Common Units. The Common B
Units are entitled to ten votes per Common B Unit and upon transfer may be designated by the transferor as Common B Units, Common A Units or Common Units. As of January&nbsp;31, 2011 and 2010, the
number of Common Units and Common B Units issued and outstanding was 48,255,000 and 51,750,000. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stewart&nbsp;&amp;
Stevenson&nbsp;LLC is a limited liability company, therefore, U.S. federal and certain state taxes are paid by the holders of our common units. As a limited liability
company, the common interest holders' liability is limited to the capital invested in the Company. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share-Based Compensation:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;On September&nbsp;5, 2007, our board of directors adopted the 2007 Incentive Compensation Plan ("Incentive
Plan"). The
Incentive Plan received the required approval of a majority of our unit holders and became effective on September&nbsp;27, 2007. In connection with the adoption and approval of the Incentive Plan,
the compensation committee of the board, which has the responsibility to administer the Incentive Plan, made certain grants of restricted shares to our non-executive directors and certain
members of our senior executive management. The grants to our four non-executive directors totaled 240,000 restricted shares vesting in five (5)&nbsp;48,000 share tranches, with each
such tranche vesting upon board service for a complete fiscal year. In addition, approximately 112,000 of the restricted shares granted to three former directors were earned as part of their service
to us with the balance of their grants being forfeited. The executive grants total 60,000 restricted shares vesting in five (5)&nbsp;12,000 share tranches, with each tranche vesting upon employment
for a complete fiscal year. In addition, approximately 20,000 of the restricted shares granted to a former executive were earned before his resignation from the company with the balance being
forfeited. The executive grants are subject to the achievement of net pre-tax income growth in the relevant fiscal year that exceeds the median net pre-tax income
growth of a peer group of companies consisting of Schlumberger,&nbsp;Ltd., National Oilwell Varco,&nbsp;Inc., Weatherford International&nbsp;Ltd. and Cameron International Corp. and are subject
to acceleration in the case of an executive's death or disability. This performance condition was met for Fiscal 2010 and 12,000 shares vested; however, this performance condition was not met for
Fiscal 2009 or Fiscal 2008 and those tranches were forfeited. All grants are subject to (i)&nbsp;the completion of an initial public equity offering and (ii)&nbsp;accelerated vesting upon a
change-in-control of the company. No expense has been recognized for these grants because the contingent condition has not occurred and as of January&nbsp;31, 2011, diluted
earnings per share excluded the approximately 408,000 contingent unvested restricted shares. A total of 396,000 restricted shares will vest upon completion of an initial public equity offering, and we
will record a non-cash compensation expense in connection therewith in an amount equal to the grant-date fair value of such vested shares, estimated to be approximately
$5.0&nbsp;million. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-29</FONT></P>

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HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;10. Employee Retirement Savings Plan  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We sponsor an employee retirement savings plan which qualifies under Section&nbsp;401(k) of the Internal Revenue Code. The savings plan is designed to provide eligible employees with
an opportunity to make regular contributions into a long-term investment and savings program. Substantially all U.S. employees are eligible to participate in the savings plan beginning on
the first full pay period after employment. During Fiscal 2010 and Fiscal 2009, we matched employee contributions at the rate of 35% up to 6% of eligible earnings. During Fiscal 2008, we matched
employee contributions at the rate of 50% up to 6% of eligible earnings. We incurred expenses of $1.5&nbsp;million, $1.4&nbsp;million and $3.5&nbsp;million for Fiscal 2010, 2009 and 2008,
respectively. During Fiscal 2011, we will match employee contributions at the rate of 35% up to 6% of eligible earnings. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;11. Recent Accounting Pronouncements  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenue recognition for arrangements with multiple deliverables:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;In October 2009, the Financial Accounting Standards Board issued an
update to
existing guidance on revenue recognition for arrangements with multiple deliverables. This update will allow companies to allocate consideration received for qualified separate deliverables using
estimated selling price for both delivered and undelivered items when vendor-specific objective evidence or third-party evidence is unavailable. Additional disclosures discussing the nature of
multiple element arrangements, the types of deliverables under the arrangements, the general timing of their delivery, and significant factors and estimates used to determine estimated selling prices
are required. We will adopt this update for new revenue arrangements entered into beginning, or materially modified on or after, February&nbsp;1, 2011. We do not expect the provisions of this update
to have a material impact on our consolidated financial statements. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;12. Leases  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating Lease Commitments:</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;We lease certain facilities and equipment from third parties under operating lease arrangements of varying
terms. Under
the terms of these operating lease arrangements, we are generally obligated to make monthly rental payments to the lessors, and include no further obligations at the end of the lease terms. If we
elect to cancel or terminate a lease prior to the end of its term, we are typically obligated to make all remaining lease payments. In certain cases, however, we are allowed to sublet the assets to
another party. Total rent expense was $9.6&nbsp;million, $10.2&nbsp;million and $10.4&nbsp;million in Fiscal 2010, 2009 and 2008, respectively. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Future
minimum lease payments under operating leases as of January&nbsp;31, 2011 are as follows: </FONT></P>
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<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="45pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
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<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fiscal 2011</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,470</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fiscal 2012</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>4,653</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fiscal 2013</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,860</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fiscal 2014</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,753</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Fiscal 2015 and thereafter</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>1,129</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>19,865</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
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</FONT> <FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;13. Related Party Transactions  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;James W. Crystal, a member of our board of directors, is also the Chairman and Chief Executive Officer of Frank Crystal&nbsp;&amp; Company,&nbsp;Inc., an insurance brokerage firm. In
Fiscal 2010, 2009 and 2008, we purchased insurance coverage through Frank Crystal&nbsp;&amp; Company,&nbsp;Inc., generating commissions to Frank Crystal and Company,&nbsp;Inc. of $477,799, $358,426
and $360,662, respectively. The purchase of this coverage was negotiated on an arm's length basis and we believe that the premium was within the range of market prices for similar types of insurance
coverage. We currently anticipate that we will continue to procure insurance from Frank Crystal&nbsp;&amp; Company,&nbsp;Inc. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Backlog
as of January&nbsp;31, 2011 includes $37.5&nbsp;million of related party transactions reflecting an order in Fiscal 2009 from an affiliate. Revenue recognition from this
transaction will be deferred until title to the product passes to a third party and all other revenue recognition criteria have been met. A deposit in the amount of $31.2&nbsp;million is recorded as
a customer deposit in our consolidated balance sheet. Included in inventories, net is $29.5&nbsp;million in costs related to this contract, and no amounts have been recorded in the consolidated
statements of operations through January&nbsp;31, 2011. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company's current practice with respect to related party transactions is as follows: (i)&nbsp;transactions with a value not exceeding $10,000 are subject to approval by our
Chairman (other than transactions in which our Chairman may be a party), (ii)&nbsp;transactions in which our Chairman may be a party or transactions with a value in excess of $10,000 but not
exceeding $100,000 are subject to approval by our Executive Committee (excluding, as appropriate, the participation of a member of the Executive Committee who may be a party to such transactions) and
(iii)&nbsp;all other transactions are subject to approval of our board of directors (excluding, as appropriate, the participation of a member of the board of directors who may be a party to such
transaction). </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;14. Litigation and Contingencies  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In July 2009, we settled an arbitration action brought against one of our suppliers and us. Fiscal 2009 results of operations, after insurance proceeds and receipt of certain inventory,
were negatively impacted by approximately $3.5&nbsp;million, which is recorded in selling and administrative expenses. The settlement resolved the arbitration action and resulted in dismissal and
release of all claims alleged. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
Fiscal 2009, the State of Texas began conducting a sales and use tax audit for Fiscal 2006, 2007 and 2008. Recently, the audit period has been expanded to include Fiscal 2009. In
the second quarter of Fiscal 2009, we completed a preliminary analysis and recorded our then best estimate of probable loss as a charge to selling and administrative expenses and other current
liabilities in our consolidated financial statements. As the audit process and periods have evolved, we have continued to evaluate this analysis and have recorded adjustments to the accrual reflecting
our best estimate of probable loss. The
audit remains in process and, accordingly, our ultimate loss could be greater, or less, than the amounts we have recorded. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are also a defendant in a number of lawsuits relating to matters normally incident to our business. No individual case, or group of cases presenting substantially similar issues of
law or fact, is expected to have a material effect on the manner in which we conduct our business or on our consolidated results of operations, financial position or liquidity. We maintain certain
insurance policies that provide coverage for product liability and personal injury cases. These insurance policies are subject to a self-insured retention for which we are responsible, which is
generally $500,000 for newer cases and $1.0&nbsp;million for cases initiated before Fiscal 2009. We have established reserves that we believe to be adequate based on current evaluations and our
experience in these types of claim situations. Nevertheless, an unexpected outcome or adverse development in any such case could have a material adverse impact on our consolidated results of
operations in the period in which it occurs. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-31</FONT></P>

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<P style="font-family:times;"><FONT SIZE=2><A
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<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;15. Concentrations  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal distribution agreements, which account for a significant portion of total purchases, are generally non-exclusive agreements and are subject to early termination
by either party for a variety of causes. No assurance can be given that such distribution agreements will be renewed beyond their expiration dates. Any interruption in the supply of materials from the
original manufacturers, or a termination of a distributor agreement, could have a material adverse effect on the results of operations. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
market our products and services throughout the world and are not dependent upon any single geographic region outside the United States. Substantially all of our
long-lived assets are located in the United States. Our sales to countries outside the United States, including sales to U.S. customers for export, totaled $166.7&nbsp;million,
$205.6&nbsp;million and $430.5&nbsp;million in Fiscal 2010, 2009 and 2008, respectively. We are not dependent on any single customer and in Fiscal 2010, no single customer accounted for more than
5.4% of our total revenues. Our top 10 customers generated approximately 30.7% of our total revenues during Fiscal 2010. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;16. Quarterly Financial Information&#151;Unaudited  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Fiscal year ended January&nbsp;31, 2011  </B></FONT></P>
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<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Quarter ended </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>May&nbsp;1, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>July&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>October&nbsp;30, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>January&nbsp;31, 2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Total<BR>
Year </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>161,936</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>206,132</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>228,502</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>264,664</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>861,234</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross profit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>25,679</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>37,045</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>42,719</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>39,824</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>145,267</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net (loss) earnings</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
(4,699</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
7,393</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
9,927</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
(22,653</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
(10,032</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net (loss) earnings per unit:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.05</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.07</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.10</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.23</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.10</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.05</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.07</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.10</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.23</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.10</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>Net
loss for the quarter ended January 31, 2011 includes the impact of the $31.5 million goodwill and indefinite-lived intangible assets impairment charge for Crown. </FONT></P>


<P style="font-family:times;"><FONT SIZE=2><B> Fiscal year ended January&nbsp;31, 2010  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:57%;margin-left:10%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"140%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="140%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="58pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="69pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="79pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="79pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="51pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=11 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Quarter ended </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TH ALIGN="LEFT" style="font-family:times;"><FONT SIZE=1><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>May&nbsp;2, 2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>August&nbsp;1, 2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>October&nbsp;31, 2009 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>January&nbsp;31, 2010 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>Total<BR>
Year </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>190,128</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>173,205</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>167,263</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>158,080</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>688,676</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross profit</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>38,896</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>25,956</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>23,672</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>23,124</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>111,648</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net earnings (loss)</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
3,710</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
(9,748</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
(8,188</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
(9,673</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
(23,899</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net earnings (loss) per unit:</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.04</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.10</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.08</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.10</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.24</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>0.04</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.10</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.08</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.10</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(0.24</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>Selling
and general administrative expenses for the quarter ended August&nbsp;1, 2009 included $3.4&nbsp;million for a probable sales tax liability. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-32</FONT></P>

<HR NOSHADE>
<P style='font-family:times;page-break-before:always'></p>
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<P style="font-family:times;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B><BR>
STEWART&nbsp;&amp; STEVENSON&nbsp;LLC AND SUBSIDIARIES </B></FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2><B> NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><B> Note&nbsp;17. Subsequent Event (unaudited)  </B></FONT></P>

<P style="font-family:times;"><FONT SIZE=2><I> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;EMDSI acquisition.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;23, 2011, we acquired 100% of the stock of EMDSI-Hunt Power,&nbsp;L.L.C. ("EMDSI") in an all cash
transaction from ITOCHU Corporation of Japan for total consideration of approximately $25.7&nbsp;million, subject to final closing adjustments. The acquisition was funded from available cash and
through borrowings under our revolving credit facility. EMDSI, which is based in Harvey, Louisiana, specializes in the marketing and distribution of medium speed diesel engines for marine propulsion,
drilling and power generation applications and is a provider of aftermarket parts and service. </FONT></P>

<P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date. The assets acquired and liabilities assumed remain subject to
final closing adjustments, and our ongoing evaluation thereof, which could impact the amount of net tangible assets acquired and, thus, increase or decrease the total consideration transferred. We are
in the process of obtaining third-party valuations for the inventories, property, plant and equipment, intangible assets and goodwill acquired. Accordingly, the amounts below, which are reflective as
of the acquisition date, remain subject to change. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="73pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:80pt;"><FONT SIZE=1><B>(Dollars in thousands)

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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;border-bottom:solid #000000 1.0pt;"><FONT SIZE=1><B>As of<BR>
March&nbsp;23, 2011 </B></FONT></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>2,345</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts receivable</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>5,009</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Inventories</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>9,494</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property, plant and equipment</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>3,206</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other assets</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>178</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total identifiable tangible assets acquired</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>20,232</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total liabilities (current) assumed</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
6,922</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net identifiable tangible assets acquired</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>13,310</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Intangible assets and goodwill</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2><BR>
12,437</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net assets acquired</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>25,747</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;border-bottom:double #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:times;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
summary results of operations information for EMDSI for the twelve months ended December&nbsp;31, 2010 are as follows: </FONT></P>
 <DIV style="padding:0pt;position:relative;width:60%;margin-left:20%;">
<p style="font-family:times;"><font size=1></FONT><FONT SIZE=2>


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<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:times;"></TD>
<TD WIDTH="50pt" style="font-family:times;"></TD>
<TD WIDTH="12pt" style="font-family:times;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR VALIGN="BOTTOM">
<TH NOWRAP  ALIGN="LEFT" style="font-family:times;"><DIV style="border-bottom:solid #000000 1.0pt;margin-bottom:0pt;width:80pt;"><FONT SIZE=1><B>(Dollars in thousands)

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 </B></FONT></DIV></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT><BR></TH>
<TH style="font-family:times;"><FONT SIZE=1>&nbsp;</FONT></TH>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>24,963</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(20,375</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:times;"><p style="font-family:times;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Adjusted net loss</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>(3,935</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:times;"><FONT SIZE=2>)</FONT></TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P style="font-family:times;"><FONT SIZE=2>Adjusted
net loss, a non-GAAP financial measure, reflects the exclusion of a $16.4 million goodwill and intangible assets impairment recorded by EMDSI in its 2010 results of operations. </FONT></P>

<P ALIGN="CENTER" style="font-family:times;"><FONT SIZE=2>F-33</FONT></P>

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<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B> <A NAME="Unaudited_cond_fin_stmts"></A>Unaudited pro forma condensed combined<BR>
financial statements  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>On March&nbsp;23, 2011, we acquired 100% of the stock of EMDSI-Hunt Power, L.L.C. ("EMDSI") in an all cash transaction
from ITOCHU Corporation of Japan for total consideration of approximately $25.7&nbsp;million, subject to final closing adjustments. The acquisition was funded from available cash and through
borrowings under our revolving credit facility. The merger will be accounted for using the acquisition method of accounting. Under the acquisition method of accounting, Stewart&nbsp;&amp;
Stevenson&nbsp;LLC will record all assets acquired and liabilities assumed at their respective acquisition-date fair values. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=3><B> Basis of pro forma presentation  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following unaudited pro forma condensed combined financial statements and related notes combines the historical consolidated
balance sheet and results of operations of Stewart&nbsp;&amp; Stevenson&nbsp;LLC and of EMDSI. The pro forma balance sheet gives effect to the acquisition as if it had occurred on January&nbsp;31,
2011. The pro forma statements of operations for the fiscal year ended January&nbsp;31, 2011 gives effect to the acquisition as if it had occurred on February&nbsp;1, 2010. The pro forma statement
of operations for fiscal year ended January&nbsp;31, 2011 was prepared by combining the Stewart&nbsp;&amp; Stevenson historical consolidated statement of operations for the fiscal year ended
January&nbsp;31, 2011 and EMDSI's historical consolidated statement of operations for the fiscal year ended December&nbsp;31, 2010. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
unaudited pro forma condensed combined financial statements reflect the acquisition consideration transferred. Under FASB ASC Topic 805, acquisition-related transaction costs
(i.e.&nbsp;advisory, legal, valuation and other professional fees) are not included as a component of consideration transferred but are accounted for as expenses in the periods in which the costs
are incurred. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>As
of the date of this prospectus, Stewart&nbsp;&amp; Stevenson&nbsp;LLC has not completed the valuation analysis and calculations in sufficient detail necessary to arrive at the required estimates of
the fair market value of the EMDSI assets to be acquired and liabilities to be assumed and the related allocations to such items, including goodwill. Accordingly, assets and liabilities are presented
at their respective carrying amounts and should be treated as preliminary values. In addition, Stewart&nbsp;&amp; Stevenson&nbsp;LLC has not identified the adjustments, if any, necessary to conform
the EMDSI financial records to Stewart&nbsp;&amp; Stevenson accounting policies. As a result, actual results will differ from this unaudited pro forma condensed combined financial information once
Stewart&nbsp;&amp; Stevenson&nbsp;LLC has completed the detailed valuation analysis and calculations necessary to finalize the required purchase price allocations, and identified any necessary
conforming accounting policy changes for EMDSI. Accordingly, the final allocations of consideration and their effects on the results of operations, may differ materially from the estimated allocations
and unaudited pro forma combined amounts included herein. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
unaudited pro forma condensed combined financial statements are provided for illustrative purposes only and are not intended to represent or be indicative of the consolidated results of operations
or financial position of Stewart&nbsp;&amp; Stevenson&nbsp;LLC that would have been recorded had the acquisition been completed as of the dates presented, and should not be taken as representative of
future results of operations or financial position of the combined company. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-34</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
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<BR>

<P style="font-family:arial;"><FONT SIZE=2>The
unaudited pro forma condensed combined financial statements do not reflect the impacts of any potential operational efficiencies, cost savings or economies of scale that Stewart&nbsp;&amp;
Stevenson&nbsp;LLC may achieve with respect to the combined operations of Stewart&nbsp;&amp; Stevenson and EMDSI. Additionally, the pro forma statements of operations do not include any
non-recurring charges or credits and the related tax effects which result directly from the transaction. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
unaudited pro forma condensed combined financial statements should be read in conjunction with the historical consolidated financial statements and accompanying notes contained in the
Stewart&nbsp;&amp; Stevenson&nbsp;LLC Annual Report on Form&nbsp;10-K. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-35</FONT></P>

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<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B> <A NAME="Unaudited_cond_bal_sheet"></A>Stewart&nbsp;&amp; Stevenson&nbsp;LLC and subsidiaries  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B> Unaudited pro forma condensed combined balance sheet  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:73%;margin-left:10%;">
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<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="82pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="74pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="70pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="58pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(Dollars in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Stewart&nbsp;&amp;<BR>
Stevenson LLC<BR>
historical</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>EMDSI, L.L.C.<BR>
historical</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Pro forma<BR>
adjustments</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Pro forma<BR>
combined</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Assets</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current assets:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cash and cash equivalents</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>9,168</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Restricted cash</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,000</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts receivable, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>85,236</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Recoverable costs and accrued profits not yet billed</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>78,934</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Inventories, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>285,909</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other current assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,186</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total current assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>471,433</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Property, plant and equipment, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>75,077</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Goodwill and intangibles, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>16,064</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Deferred financing costs and other assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,029</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>567,603</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-top:12pt;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2><B>Liabilities and shareholders' equity</B></FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current liabilities:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Bank notes payable</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>7,401</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Current portion of long-term debt</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>40</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounts payable</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>81,198</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accrued payrolls and incentives</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>15,913</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Billings in excess of incurred costs</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>4,285</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Customer deposits</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>80,346</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other current liabilities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>43,979</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total current liabilities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>233,162</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Long-term debt, net of current portion</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>185,181</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other long-term liabilities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>226</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total liabilities</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>418,569</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Commitments and contingencies</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Shareholders' equity:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Common units, 100,005,000 units issued and outstanding</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>74,113</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accumulated other comprehensive income</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>5,092</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Retained earnings</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>69,829</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total shareholders' equity</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>149,034</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total liabilities and shareholders' equity</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>567,603</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
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<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B> <A NAME="Unaudited_cond_stmt_of_ops"></A>Stewart&nbsp;&amp; Stevenson&nbsp;LLC and subsidiaries  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B> Unaudited pro forma condensed combined<BR>
statement of operations  </B></FONT></P>
 <DIV style="padding:0pt;position:relative;width:73%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<TD WIDTH="10pt" style="font-family:arial;"></TD>
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="82pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
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<TD WIDTH="72pt" style="font-family:arial;"></TD>
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<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="58pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=3 ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>(Dollars and units in thousands)</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Stewart&nbsp;&amp;<BR>
Stevenson LLC<BR>
historical</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>EMDSI, L.L.C.<BR>
historical</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Pro forma<BR>
adjustments</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH COLSPAN=2 ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><B>Pro form<BR>
combined</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Sales</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>861,234</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Cost of sales</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>715,967</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Gross profit</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>145,267</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Selling and administrative expenses</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>104,252</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Impairment of goodwill and indefinite-lived intangible assets</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>31,487</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Other (income) expense, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(1,026</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Operating profit (loss)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10,554</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Interest expense, net</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>19,886</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>(Loss) earnings before income taxes</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(9,332</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Income tax expense</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>700</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net (loss) earnings</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(10,032</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma income tax expense (benefit) (unaudited)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>8,227</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma net earnings (loss) available for common unit holders (unaudited)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(18,259</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=3 VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=11 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Weighted average units outstanding:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100,005</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>100,005</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD COLSPAN=3 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Net (loss) earnings per common unit</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Basic</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(0.10</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Diluted</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(0.10</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma tax effect&#151;basic (unaudited)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(0.18</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="BOTTOM">
<TD style="font-family:arial;"><FONT SIZE=0>&nbsp;</FONT></TD>
<TD COLSPAN=2 style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Pro forma tax effect&#151;diluted (unaudited)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>(0.18</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>)</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=15 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>F-37</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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 </FONT> <FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=5><B><I>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares  </I></B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=5><B>
<IMG SRC="g609451.jpg" ALT="GRAPHIC" WIDTH="234" HEIGHT="157">
  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=5><B>Stewart&nbsp;&amp; Stevenson&nbsp;Inc.  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=5><B><I>Common stock  </I></B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B>Preliminary Prospectus  </B></FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=4><B>J.P. Morgan  </B></FONT></P>

<P style="font-family:arial;"><FONT
SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;,
2011 </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that
contained in this prospectus. We and the selling stockholders are offering to sell, and seeking offers to buy, shares of Common Stock only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of shares of Common
Stock.</B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>No action is being taken in any jurisdiction outside the United States to permit a public offering of the shares of Common Stock or possession or distribution of this
prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions
as to this offering and the distribution of this prospectus applicable to that jurisdiction.</B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><B>Until 25&nbsp;days after the date of this prospectus, all dealers that buy, sell or trade in our shares of Common Stock, whether or not participating in this offering, may be
required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or
subscriptions</B></FONT><FONT SIZE=2>. </FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
NAME="page_ja72801_1_1"> </A>


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 </FONT></P>

<!-- TOC_END -->

<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="ja72801_part_ii_information_not_required_in_prospectus"> </A>
<A NAME="toc_ja72801_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Part&nbsp;II<BR>  Information not required in prospectus  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><A
NAME="ja72801_item_13._other_expense__ja701991"> </A>
<A NAME="toc_ja72801_2"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;Other expenses of issuance and distribution.    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The following table shows the costs and expenses, other than underwriting discounts and commissions, to be incurred in connection with the offering
described in this registration statement, all of which will be paid by the registrant. All amounts
are estimates, other than the SEC registration fee, the FINRA filing fee and the New York Stock Exchange listing fee. </FONT></P>
 <DIV style="padding:0pt;position:relative;width:80%;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


<!-- COMMAND=ADD_TABLEWIDTH,"100%" -->


 </FONT></P>

<!-- User-specified TAGGED TABLE -->
<DIV ALIGN="CENTER"><TABLE width="100%"  BORDER=0 CELLSPACING=0 CELLPADDING=0>
<TR><!-- TABLE COLUMN WIDTHS SET -->
<TD WIDTH="" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<TD WIDTH="7pt" ALIGN="RIGHT" style="font-family:arial;"></TD>
<TD WIDTH="50pt" style="font-family:arial;"></TD>
<TD WIDTH="12pt" style="font-family:arial;"></TD>
<!-- TABLE COLUMN WIDTHS END --></TR>

<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>SEC registration fee</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>29,025</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(1)</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>FINRA filing fee</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>25,500</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>(1)</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>New York Stock Exchange listing fee</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Accounting fees and expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Legal fees and expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Printing and engraving expenses</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR BGCOLOR="#CCEEFF" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Miscellaneous</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
<TD COLSPAN=2 ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
<TR BGCOLOR="White" VALIGN="TOP">
<TD VALIGN="BOTTOM" style="font-family:arial;"><p style="font-family:arial;margin-left:10pt;text-indent:-10pt;"><FONT SIZE=2> </FONT><FONT SIZE=2>Total</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT"  VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>$</FONT></TD>
<TD ALIGN="RIGHT" VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 VALIGN="BOTTOM" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
<TD VALIGN="BOTTOM" style="font-family:arial;">&nbsp;</TD>
</TR>
</TABLE></DIV>
<!-- end of user-specified TAGGED TABLE -->
 </DIV>
<DIV style="padding:0pt;position:relative;text-align:left;margin-left:10%;">
<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">
(1)&nbsp;&nbsp;&nbsp;Reflects amounts previously paid. </FONT></P>

<P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;">*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
be completed by amendment </FONT></P>
 </DIV>
 <P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><A
NAME="ja72801_item_14._indemnification_of_directors_and_officers."> </A>
<A NAME="toc_ja72801_3"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;14.&nbsp;&nbsp;&nbsp;Indemnification of directors and officers.    <BR>    </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Section&nbsp;145 of the Delaware General Corporation Law, or DGCL, permits indemnification of officers, directors, and other corporate agents under
certain circumstances and subject to certain limitations. The registrant's certificate of incorporation and the registrant's bylaws will provide that the registrant shall indemnify its directors and
officers, and may indemnify its employees and agents, to the full extent permitted by the DGCL, including circumstances in which indemnification is otherwise discretionary under Delaware law. In
addition, the registrant will enter into separate indemnification agreements under Delaware law with its directors and executive officers which will require the registrant, among other things, to
indemnify them against certain liabilities which may arise by reason of their status or service (other than liabilities determined to arise from acts or omissions not in good faith or not reasonably
believed to be in the best interests of the registrant). </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>These
indemnification provisions and the indemnification agreements to be entered into between the registrant and its executive officers and directors may be sufficiently broad to permit
indemnification of the registrant's executive officers and directors for liabilities, including reimbursement of expenses incurred, arising under the Securities Act. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
underwriting agreement to be filed as Exhibit&nbsp;1.1 to this Registration Statement will provide for indemnification by the underwriters of the registrant and its executive officers and
directors for certain liabilities, including liabilities arising under the Securities Act, or otherwise. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>The
registrant maintains standard policies of insurance that provide coverage (1)&nbsp;to its directors and officers against loss rising from claims made by reason of breach of duty or other
wrongful act and (2)&nbsp;to the registrant with respect to indemnification payments that it may make to such directors and officers. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>II-1</FONT></P>

<HR NOSHADE>
<P style='font-family:arial;page-break-before:always'></p>
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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>

<BR>

<P style="font-family:arial;"><FONT SIZE=2><A
NAME="ja72801_item_15._recent_sales_of_unregistered_securities."> </A>
<A NAME="toc_ja72801_4"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;15.&nbsp;&nbsp;&nbsp;&nbsp;Recent sales of unregistered securities.    <BR>    </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>None.  </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2><A
NAME="ja72801_item_16._exhibits_and_financial_statement_schedules."> </A>
<A NAME="toc_ja72801_5"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;16.&nbsp;&nbsp;&nbsp;&nbsp;Exhibits and financial statement schedules.    <BR>    </B></FONT></P>

<DL compact>
<DT style='font-family:arial;margin-bottom:-11pt;'><FONT SIZE=2>(a)</FONT></DT><DD style="font-family:arial;"><FONT SIZE=2>Exhibits
</FONT></DD></DL>
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<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT SIZE=2>


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<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Number</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Description</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>1.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>*</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Underwriting Agreement</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>3.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>*</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Form of Certificate of Incorporation of Stewart&nbsp;&amp; Stevenson&nbsp;Inc.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>3.2</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>*</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Form of Bylaws of Stewart&nbsp;&amp; Stevenson&nbsp;Inc.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>3.2</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>*</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Form of Plan of Conversion</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>3.4</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Stewart&nbsp;&amp; Stevenson&nbsp;LLC's Certificate of Formation (Filed as Exhibit&nbsp;3.1 to the Registrant's Registration Statement on Form&nbsp;S-4 filed on February&nbsp;2, 2007 (File No.&nbsp;333-140441) and
incorporated herein by reference.)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>3.5</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Stewart&nbsp;&amp; Stevenson&nbsp;LLC's Operating Agreement (Filed as Exhibit&nbsp;3.7 to the Registrant's Registration Statement on Form&nbsp;S-4 filed on February&nbsp;2, 2007 (File No.&nbsp;333-140441) and
incorporated herein by reference.)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>4.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>*</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Form of specimen Common Stock certificate</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>4.2</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Indenture dated as of July&nbsp;6, 2006, among Stewart&nbsp;&amp; Stevenson&nbsp;LLC, Stewart&nbsp;&amp; Stevenson Corp., the Subsidiary Guarantors (as defined therein) and Wells Fargo Bank, National Association
(Filed as Exhibit&nbsp;10.1 to Amendment No.&nbsp;1 to the Registrant's Registration Statement on Form&nbsp;S-1 (Reg. No.&nbsp;333-138952), filed on January&nbsp;31, 2007, and incorporated herein by reference.)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>4.3</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>First Supplemental Indenture, dated as of March&nbsp;10, 2010, among Stewart&nbsp;&amp; Stevenson&nbsp;LLC, Stewart&nbsp;&amp; Stevenson Manufacturing Technologies&nbsp;LLC and Wells Fargo Bank, National Association,
to Indenture dated as of July&nbsp;6, 2006 (Filed as Exhibit&nbsp;10.1 to the Registrant's Quarterly Report on Form&nbsp;10-Q for the fiscal quarter ended May&nbsp;1, 2010 filed on June&nbsp;6, 2010 (File No.&nbsp;001-33836) and incorporated herein
by reference.)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>4.4</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Second Supplemental Indenture, dated as of March&nbsp;23, 2011, among Stewart&nbsp;&amp; Stevenson&nbsp;LLC, EMDSI-Hunt Power,&nbsp;L.L.C. and Wells Fargo Bank, National Association, to Indenture dated July&nbsp;6,
2006 (filed as Exhibit&nbsp;10.1(b) to the Registrant's Annual Report on Form&nbsp;10-K for the fiscal year ended January&nbsp;31, 2011 filed on May&nbsp;2, 2011 (File No.&nbsp;001-33836) and incorporated herein by reference.)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>5.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>*</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Opinion of Jones Day</FONT></TD>
</TR>
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 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>II-2</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>
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<TD COLSPAN=4 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Number</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Description</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Second Amended and Restated Credit Agreement dated as of February&nbsp;13, 2007 by and among Stewart&nbsp;&amp; Stevenson&nbsp;LLC, Stewart&nbsp;&amp; Stevenson Distributor Holdings&nbsp;LLC, Stewart&nbsp;&amp; Stevenson
Power Products&nbsp;LLC, Stewart&nbsp;&amp; Stevenson Petroleum Services&nbsp;LLC, Stewart&nbsp;&amp; Stevenson Funding Corp., S&amp;S Agent&nbsp;LLC, the Canadian Borrowers party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A. as
Administrative Agent and as U.S. Collateral Agent, JPMorgan Chase Bank, NA, Toronto Branch as Canadian Administrative Agent and as Canadian Collateral Agent and JPMorgan Chase Bank, N.A., as Export-Related Lender (Filed as Exhibit&nbsp;10.1 to
Amendment No.&nbsp;1 to the Registrant's Registration Statement of Form&nbsp;S-4, filed on February&nbsp;28, 2007 (File No.&nbsp;333-140441), and incorporated herein by reference.)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>10.2</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Asset Purchase Agreement, dated as of October&nbsp;24, 2005, by and among Stewart&nbsp;&amp; Stevenson Services,&nbsp;Inc., IPSC&nbsp;Co.&nbsp;Inc., Stewart&nbsp;&amp; Stevenson Holdings,&nbsp;Inc., Stewart&nbsp;&amp;
Stevenson De Las Americas,&nbsp;Inc., Stewart&nbsp;&amp; Stevenson International,&nbsp;Inc., Stewart&nbsp;&amp; Stevenson Power,&nbsp;Inc., S&amp;S Trust and Hushang Ansary (Filed as Exhibit&nbsp;10.3 to Amendment No.&nbsp;1 to the Registrant
Registration Statement on Form&nbsp;S-1 (Reg. No.&nbsp;333-138952), filed on January&nbsp;31, 2007, and incorporated herein by reference.)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>10.3</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Asset Purchase Agreement, dated as of September&nbsp;27, 2005, by and among Stewart&nbsp;&amp; Stevenson Services,&nbsp;Inc., Stewart&nbsp;&amp; Stevenson Petroleum Services,&nbsp;Inc., Stewart&nbsp;&amp; Stevenson
International,&nbsp;Inc., Sierra Detroit Diesel Allison,&nbsp;Inc., S&amp;S Trust and Hushang Ansary (Filed as Exhibit&nbsp;10.4 to Amendment No.&nbsp;1 to the Registrant's Registration Statement on Form&nbsp;S-1 (Reg. No.&nbsp;333-138952), filed on
January&nbsp;31, 2007, and incorporated herein by reference.)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>10.4</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Asset Purchase Agreement dated February&nbsp;25, 2007 by and among Stewart&nbsp;&amp; Stevenson&nbsp;LLC, Crown Energy Technologies&nbsp;Inc., Crown Energy Technologies,&nbsp;Inc., Crown Energy Technologies
(Oklahoma)&nbsp;Inc., Crown Energy Technologies (Odessa)&nbsp;Inc., Crown Energy Technologies (Victoria)&nbsp;Inc., Crown Energy Technologies (Casper)&nbsp;Inc., Crown Energy Technologies (Bakersfield),&nbsp;Inc., Rance E. Fisher, and Todd E. Fisher
(Filed as Exhibit&nbsp;10.4 to Amendment No.&nbsp;1 to the Registrant's Registration Statement on Form&nbsp;S-4, filed on February&nbsp;28, 2007 (File No.&nbsp;333-140441), and incorporated herein by reference.)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>10.5</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Stewart&nbsp;&amp; Stevenson 2007 Incentive Compensation Plan (Filed as Exhibit&nbsp;10.4 to Amendment No.&nbsp;3 to the Registrant's Registration Statement on Form&nbsp;S-1 (Reg. No.&nbsp;333-138952), filed on
September&nbsp;28, 2007, and incorporated herein by reference.)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>10.6</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>*</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Form of Registration Rights Agreement by and among Stewart&nbsp;&amp; Stevenson&nbsp;LLC, Parman Capital Group&nbsp;LLC, EC Investments&nbsp;B.V., Frank Carlucci and Nina Ansary</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>10.7</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>*</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Form of Indemnification Agreement between Stewart&nbsp;&amp; Stevenson&nbsp;Inc. and each of its officers and directors</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>10.8</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>*</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Form of Tax Matters Agreement by and between Stewart&nbsp;&amp; Stevenson&nbsp;Inc. and the parties identified therein</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>10.9</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Employment Agreement, dated as of November&nbsp;6, 2007, between Stewart&nbsp;&amp; Stevenson&nbsp;LLC and Hushang Ansary (Filed as Exhibit&nbsp;10.1 to the Registrant's Current Report on Form&nbsp;8-K filed, on
November&nbsp;13, 2007, and incorporated herein by reference.)</FONT></TD>
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 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>II-3</FONT></P>

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<TD COLSPAN=4 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 2.25pt;">&nbsp;</TD>
</TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN=2 ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><B>Number</B></FONT><BR></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="LEFT" style="font-family:arial;"><FONT SIZE=2><B>Description</B></FONT><BR></TH>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;">&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>10.10</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Employment Agreement, dated as of February&nbsp;2, 2011, between Stewart&nbsp;&amp; Stevenson&nbsp;LLC and Stephen Fulgham (Filed as Exhibit&nbsp;10.8 to the Registrant's Annual Report on Form&nbsp;10-K for the fiscal
year ended January&nbsp;31, 2011 filed on May&nbsp;2, 2011 (File No.&nbsp;001-33836) and incorporated herein by reference.)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2>21.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>Subsidiaries of the Registrant (Filed as Exhibit&nbsp;21.1 to the Registrant's Annual Report on Form&nbsp;10-K for the fiscal year ended January&nbsp;31, 2011 filed on May&nbsp;2, 2011 (File No.&nbsp;001-33836) and
incorporated herein by reference.)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>23.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Consent of Ernst&nbsp;&amp; Young&nbsp;LLP.</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>23.2</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>*</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Consent of Jones Day (included in Exhibit&nbsp;5.1).</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><BR><FONT SIZE=2>24.1</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>Powers of Attorney (see signature page)</FONT></TD>
</TR>
<TR style="font-size:1.5pt;" VALIGN="TOP">
<TD COLSPAN=4 ALIGN="RIGHT" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><BR>&nbsp;</TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD ALIGN="RIGHT" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
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<p style="font-family:arial;"><font  style="font-size:8pt;line-height:9pt;"></FONT><FONT  style="font-size:8pt;line-height:9pt;">
*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To be filed by amendment. </FONT></P>
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 <P style="font-family:arial;"><FONT  style="font-size:8pt;line-height:9pt;"><A
NAME="ja72801_item_17._undertakings."> </A>
<A NAME="toc_ja72801_6"> </A></FONT> <FONT SIZE=2><B>  Item&nbsp;17.&nbsp;&nbsp;&nbsp;Undertakings.    <BR>    </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>(a)&nbsp;&nbsp;&nbsp;The
undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered
in such names as required by the underwriters to permit prompt delivery to each purchaser. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(b)&nbsp;&nbsp;&nbsp;Insofar
as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of
1933, as amended, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such issue. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>(c)&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned registrant hereby undertakes that: </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
purposes of determining any liability under the Securities Act of 1933, as amended, the information omitted from the form of prospectus filed as part of this registration statement
in reliance upon Rule&nbsp;430A and contained in a form of prospectus filed by the registrant pursuant to Rule&nbsp;424(b)(1) or (4)&nbsp;or 497(h) under the Securities Act of 1933, as amended,
shall be deemed to be part of this registration statement as of the time it was declared effective. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the purpose of determining any liability under the Securities Act of 1933, as amended, each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>II-4</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2>
<A HREF="#bg72801a_main_toc">Table of Contents</A> </FONT></P>

<P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><A
NAME="jc72801_signatures"> </A>
<A NAME="toc_jc72801_1"> </A>
<BR></FONT><FONT SIZE=4><B>  Signatures  <BR>  </B></FONT></P>


<P style="font-family:arial;"><FONT SIZE=2>Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the city of Houston, State of Texas, on May&nbsp;2, 2011. </FONT></P>
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<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD COLSPAN=3 style="font-family:arial;"><FONT SIZE=2> Stewart&nbsp;&amp; Stevenson&nbsp;LLC</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD style="font-family:arial;"><BR><FONT SIZE=2>  By:</FONT></TD>
<TD style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="BOTTOM" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;HUSHANG ANSARY<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Name:&nbsp;&nbsp;Hushang Ansary<BR>
Title:&nbsp;&nbsp;&nbsp;&nbsp;Chairman of the Board of Directors</FONT></TD>
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NAME="jc72801_power_of_attorney"> </A>
<A NAME="toc_jc72801_2"> </A>
<BR></FONT><FONT SIZE=4><B>  Power of attorney  <BR>  </B></FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>We, the undersigned directors and officers of Stewart&nbsp;&amp; Stevenson&nbsp;LLC (the "Company"), hereby severally constitute and
appoint Hushang Ansary and John B. Simmons, and each of them individually, with full powers of substitution and resubstitution, our true and lawful attorneys, with full powers to them and each of them
to sign for us, in our names and in the capacities indicated below, any and all amendments to the Registration Statement on Form&nbsp;S-1 filed with the Securities and Exchange
Commission (including post-effective amendments), and any registration statement filed pursuant to Rule&nbsp;462(b) under the Securities Act of 1933 in connection with the registration
under the Securities Act of 1933 of equity securities of the Company, and to file or cause to be filed the same, with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as each of them might or could do in person, and hereby ratifying and confirming all that said attorneys, and each of them, or their
substitute or substitutes, shall do or cause to be done by virtue of this Power of Attorney. </FONT></P>

<P style="font-family:arial;"><FONT SIZE=2>Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities on May&nbsp;2, 2011. </FONT></P>
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<TR VALIGN="BOTTOM">
<TH ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Signature </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Title </B></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>/s/&nbsp;HUSHANG ANSARY<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Hushang Ansary</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>Chairman</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;FRANK C. CARLUCCI<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Frank C. Carlucci</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Vice Chairman and Director</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;ROBERT L. HARGRAVE<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Robert L. Hargrave</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Vice Chairman and Director</FONT></TD>
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 <P ALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>II-5</FONT></P>

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<P style="font-family:arial;"><FONT SIZE=2><A
HREF="#bg72801a_main_toc">Table of Contents</A></FONT></P>
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<TH ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Signature </B></FONT></TH>
<TH style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TH>
<TH ALIGN="CENTER" style="font-family:arial;border-bottom:solid #000000 1.0pt;"><FONT SIZE=2><B>Title </B></FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>
&nbsp;</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>/s/&nbsp;STEVE FULGHAM<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Steve Fulgham</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2>Chief Executive Officer and Director<BR>
(Principal Executive Officer)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;JOHN B. SIMMONS<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> John B. Simmons</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Chief Financial Officer and Director<BR>
(Principal Financial Officer)</FONT></TD>
</TR>
<TR VALIGN="TOP">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;ANDREW M. CANNON<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Andrew M. Cannon</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Chief Accounting Officer<BR>
(Principal Accounting Officer)</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;NINA ANSARY<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Nina Ansary</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;JAMES W. CRYSTAL<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> James W. Crystal</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;MUNAWAR H. HIDAYATALLAH<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Munawar H. Hidayatallah</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;JOHN D. MACOMBER<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> John D. Macomber</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Director</FONT></TD>
</TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;ANTHONY G. PETRELLO<BR>


<HR NOSHADE SIZE="1.0pt" WIDTH="100%" COLOR="#000000">

</FONT> <FONT SIZE=2> Anthony G. Petrello</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Director</FONT></TD>
</TR>
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<TD ALIGN="CENTER" VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>/s/&nbsp;J. ROBINSON WEST<BR>


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</FONT> <FONT SIZE=2> J. Robinson West</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><FONT SIZE=2><BR>&nbsp;</FONT></TD>
<TD VALIGN="CENTER" style="font-family:arial;"><BR><FONT SIZE=2>Director</FONT></TD>
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Table of Contents
As filed with the Securities and Exchange Commission on May 3, 2011
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Stewart & Stevenson LLC
(to be converted under Delaware law to a corporation and renamed Stewart & Stevenson Inc.)
(Exact name
of registrant as specified in its charter)
Delaware
(State of Incorporation)
3533
(Primary Standard Industrial
Classification Code Number)
20-3974034
(I.R.S. Employer
Identification No.)
1000 Louisiana St.
Suite 5900
Houston, TX 77002
(713) 751-2700
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
John B. Simmons
Chief Financial Officer
1000 Louisiana St.
Suite 5900
Houston, TX 77002
(713) 751-2700
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
William F. Henze, Esq.
J. Eric Maki, Esq.
Jones Day
222 East 41st Street
New York, NY 10017
(212) 326-3939
Stephan J. Feder, Esq.
John C. Ericson, Esq.
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
(212) 455-2000
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following
box.
o
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering.
o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same offering.
o
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement for the same offering.
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
ý
(Do not check if a
smaller reporting company)
Smaller reporting company
o
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities
to be Registered
Proposed Maximum
Aggregate Offering
Amount(1)(2)
Amount of
Registration Fee
Common Stock, par value $0.01 per share
$250,000,000
$29,025(3)
(1)
Includes
shares subject to underwriters' over-allotment option.
(2)
Estimated
solely for the purpose of calculating the registration fee in accordance with Rule 457(o) promulgated under the Securities Act
of 1933.
(3)
A
registration fee of a totaling $38,780 was previously paid in connection with Registration Statement No. 333-138952 consisting of
$32,100 paid on November 24, 2006 and $6,680 paid on October 30, 2007 and pursuant to Rule 457(p) is being applied to offset the registration fee payable hereunder.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further
amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said section 8(a), may determine.
Subject to completion, dated May 3, 2011
The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy
these securities in any jurisdiction where the offer or sale is not permitted.
Preliminary prospectus
shares
Stewart & Stevenson Inc.
Common Stock
This is an initial public offering of shares of our Common Stock. We are offering                  shares of our Common Stock, and the selling
stockholders
identified in this prospectus are selling an additional                  shares of Common Stock. We will not receive any of the proceeds from the sale of shares
by the selling stockholders. We
currently conduct our operations as Stewart & Stevenson LLC. Prior to the consummation of this offering, we will convert under Delaware law to a corporation and change our name to
Stewart & Stevenson Inc.
Prior
to the offering, there has been no public market for our Common Stock. It is currently estimated that the initial public offering price per share of our Common Stock will be between
$             and $             . We intend to apply to have our Common Stock approved for listing on the New York Stock
Exchange under the symbol "             ."
Investing in our Common Stock involves risks. See "Risk factors" beginning on page 13.
Per share
Total
Initial public offering price
$
$
Underwriting discounts and commissions
$
$
Proceeds to us, before expenses
$
$
Proceeds to selling stockholders, before expenses
$
$
We and the selling stockholders have granted the underwriters an option for a period of 30 days to purchase up to an aggregate
of                           
additional shares of Common Stock. We will not receive any of the proceeds from the sale of additional shares of Common Stock by the selling stockholders.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The
underwriters expect to deliver the shares of Common Stock to purchasers on                           , 2011.
J.P. Morgan
, 2011
Table of contents
Page
Prospectus summary
1
Risk factors
13
Special note regarding forward-looking statements
28
Market and industry data
30
Use of proceeds
31
Dividend policy
32
Capitalization
33
Dilution
34
Selected historical consolidated financial data
36
Management's discussion and analysis of financial condition and results of
operations
38
Business
59
Management
77
Compensation discussion and analysis
81
Principal and selling stockholders
87
Certain relationships and transactions
89
Description of capital stock
90
Shares eligible for future sale
96
Description of indebtedness
98
U.S. federal income tax considerations applicable to non-U.S. holders
102
Certain ERISA considerations
107
Underwriting (Conflicts of interest)
108
Legal matters
114
Experts
114
Where you can find more information
114
Index to financial statements
F-1
You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell, and seeking offers to buy, shares of our Common Stock only in jurisdictions where offers and sales are permitted. The information contained in
this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our Common Stock.
Table of Contents
Prospectus summary
This summary highlights selected information contained elsewhere in this prospectus. This summary is not
complete and does not contain all of the information that you should consider before investing in our Common Stock. You should read this prospectus in its entirety before making an investment
decision. Unless otherwise indicated or the context otherwise requires, the terms "we," "our" and "us" refer to Stewart & Stevenson Inc. and its subsidiaries. Our fiscal year begins on
February 1 of the year stated and ends on January 31 of the following year. For example, "Fiscal 2010" commenced on February 1, 2010 and ended on January 31, 2011. We
report results on the fiscal quarter method, with each quarter comprising approximately 13 weeks. For example, the third quarter of Fiscal 2010 commenced on August 1, 2010 and ended on
October 30, 2010.
Our company
We are a leading designer, manufacturer and provider of specialized equipment and aftermarket parts and service for the oil and gas
industry and other industries that we have served for over 100 years.
In
the North American region, the oil and gas industry is currently experiencing a significant transformation in the development of unconventional reserves as a result of innovative hydraulic
fracturing technology. As a leading provider of critical equipment used to extract unconventional oil and gas reserves that would otherwise be uneconomical to develop, we believe that we are in a
prime position to benefit from the rapid growth in the development of unconventional oil and gas resources, particularly in North America.
Our
wide range of products covers hydraulic fracturing, well stimulation, workover, intervention and drilling operations. These products include pumping, acidizing, coil tubing, cementing and nitrogen
units, drilling rigs, workover rigs, power generation systems and electrical support and distribution systems, as well as engines, transmissions and material handling equipment. We have a substantial
installed base of products, which provides us with significant opportunities for recurring, higher-margin aftermarket parts and service revenues from customers in the oil and gas, power generation and
various other industries. In addition, we provide rental equipment to our customers, including generator sets, air compressors, rail car movers and material handling equipment.
With
more than a century of continuous service across diverse industries, we have an established track record of providing a high-quality, technologically advanced series of products using
state-of-the-art components, processes and techniques. We have long-standing relationships with six globally recognized original equipment suppliers, or
OEMs—Detroit Diesel, MTU Friedrichshafen, Electro-Motive Diesel, Hyster, Allison Transmission and Deutz—with which we have conducted business for more than 40 years on
average.
Demand
for our products has been driven primarily by capital spending in the oil and gas industry, which accounted for an estimated 76% and 82% of our equipment revenues and an estimated 72% and 78%
of our total revenues in Fiscal 2009 and Fiscal 2010, respectively. Our extensive and diverse customer base includes many of the world's leading oilfield service companies, as well as customers in the
power generation, marine, mining, construction, commercial vehicle and material handling industries.
As
of January 31, 2011, our equipment order backlog was $375.0 million, compared to $203.2 million as of January 31, 2010. In the fiscal year ended January 31, 2011,
we generated
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revenues
of $861.2 million, operating profit of $10.6 million and EBITDA of $59.1 million, compared with revenues of $688.7 million, operating loss of $2.6 million
and EBITDA of $15.8 million in the fiscal year ended January 31, 2010. For a definition of EBITDA and a reconciliation of EBITDA to net earnings (loss) available for common unit holders,
see "—Summary historical consolidated financial data."
Our business
We manage our business through the following two segments:
Manufacturing (representing 40% of revenues for Fiscal 2010).
We design, manufacture and market equipment for U.S. and international oilfield service providers and
drilling and workover contractors, as well as national oil companies that require integrated and customized product solutions. We manufacture equipment specifically for hydraulic fracturing, well
stimulation, well workover, intervention and drilling operations. Our manufactured products include integrated solutions, which incorporate a variety of components into a single system, for a wide
range of oilfield services and support applications. Our manufacturing segment benefits from our long-standing relationships with our globally recognized OEMs. We have five main
manufacturing facilities across North America, comprising more than 600,000 square feet of space, that are strategically located to effectively service our customers' needs.
Distribution (representing 60% of revenues for Fiscal 2010).
We provide stand-alone products and aftermarket parts and service for products manufactured by us, our
six key OEMs and other manufacturers. In addition, we provide rental equipment including generator sets, air compressors, rail car movers and material handling equipment to our customers. Our
aftermarket parts and service operations, which provide us with a recurring, higher-margin source of revenue, serve customers engaged in the oil and gas, power generation, marine, mining,
construction, commercial vehicle and material handling industries, as well as other industries. Throughout the period of our relationship with our key OEMs, we have been the
factory-authorized provider of their stand-alone products in specified territories, which include major oil and gas producing regions in the United States. Our arrangements with our six key OEMs
generated approximately 57% of our aftermarket parts and service revenues in the fiscal year ended January 31, 2011. Our extensive distribution network is strategically positioned throughout
major oil and gas producing regions, enabling us to effectively support our customers. We provide in-house servicing in close proximity to our customers' operational locations as well as
on-site servicing. As of January 31, 2011, we employed over 650 trained and certified technicians utilizing approximately 575 service bays in the United States, Canada and abroad. Additionally,
we provide aftermarket parts through our extensive network of approximately 185 authorized dealers.
Industry overview
We believe that we are well positioned to capitalize on favorable industry conditions in the markets we serve, particularly the oil
and gas industry, as well as the other industries in which our customers operate.
Increasing capital spending in the oil and gas industry.
Growing worldwide demand for energy has resulted in significantly increased capital expenditures by oil
and natural gas producers. According to Spears & Associates, Inc., annual global drilling and completion expenditures (excluding Russia, China and Central Asia) have increased from
$64 billion in 2000 to $231 billion in 2010, representing a compound annual growth rate of 14%. Although these
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capital
expenditures decreased by 28% from 2008 to 2009, they are projected to increase at a compound annual growth rate of 9% from 2010 to 2016, reaching $378 billion.
Recovery in global drilling activity.
As a result of the economic downturn of 2009, there was a dramatic reduction in global drilling activity. However, according
to Baker Hughes, Inc., the global rig count has recovered 63% from its low of 1,983 in May 2009 to 3,227 in December 2010, reflecting, among other things, the recent improvement in the global
economy and the increased development of unconventional oil and gas resources. The global rig count of 3,434 in March 2011 is near its highest point in approximately 25 years.
Increasing U.S. onshore horizontal drilling activity.
Advances in drilling and completion technologies, including horizontal drilling and hydraulic fracturing,
have made the development of many unconventional resources, such as oil and natural gas shale formations, economically attractive. This has led to a dramatic increase in the development of
oil- and natural gas-producing shale formations, or "plays," in the United States. According to Baker Hughes, Inc., the North American horizontal rig count has risen
from 335 in January 2007 to 947 in December 2010. Suppliers of products and services to the hydraulic fracturing industry currently are benefiting from drilling and completion trends that require more
fracturing stages per well due to the increased horizontal length of the wells.
Increasing drilling in oil- and liquids-rich formations.
While the majority of U.S. drilling rigs currently are drilling in natural gas
formations, there is increasing activity in oil- and natural gas liquids-rich formations, such as the Eagle Ford, Bakken and Niobrara Shales, as well as various resources in
Oklahoma, including the Granite Wash. Although the oil and gas industry is cyclical and oil prices historically have been volatile, we believe that many of the oil- and
liquids-rich plays are economically attractive at oil prices substantially below the current price of oil.
International interest in shale plays.
There is growing international interest in the development of unconventional oil and natural gas shale plays. This has
resulted in a number of joint ventures between major U.S. and large international exploration and production, or E&P, companies related to shale plays in the United States. We believe that these joint
ventures, which typically require international oil companies to commit cash up front and fund significant future capital expenditures, will generate additional demand for drilling and completion
activity in the coming years. In addition, we believe that such joint ventures will continue to stimulate development of other oil and gas shale reservoirs outside the United States.
Fracturing fleet attrition should positively impact demand.
Existing hydraulic fracturing fleets are currently experiencing significantly higher levels of demand
as the result of a significant increase in the number of fracturing stages per horizontal well and increased pump pressure rates associated with the fracturing stages, which are designed to maximize
shale oil and gas production. This higher level of operation associated with shale oil and gas activity is expected to accelerate the replacement cycle of equipment.
Our strengths
We believe that our operations benefit from a number of competitive strengths, including the following:
Strong brand recognition.
We believe that the "Stewart & Stevenson" brand has long been recognized in the oil and gas industry, as well as in other
industries we serve, and identified
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with
high-quality products, innovative solutions and dependable service. We believe that this brand recognition represents a significant competitive advantage domestically and
internationally.
Experienced provider of integrated solutions.
Our product lines include integrated, site-ready solutions, which incorporate a variety of components
into a single system for a wide range of oilfield services and support applications. We believe that our engineered product offerings are highly distinguished in their technical specifications and are
further enhanced by our aftermarket service and support. Our highly trained and experienced mechanical, electrical, electronic, industrial and software engineers and support personnel have core
competencies in product applications and support systems, sophisticated hydraulics and controls, large welded structures, low- to high-voltage electrical power generation and
switchgear, engine-driven machine design, specialty vehicle design and electrical instrumentation, controls and software-driven control packages. We strongly believe in a partnership approach in the
pursuit of our customer objectives, in which our highly qualified engineering and development teams commit to ensure that our products are tailored to meet specific customer requirements.
Established, diversified customer base.
We have strong, long-standing relationships with many of our top customers. We maintain a broad and diverse
customer base, including leading oil and gas service companies, drilling contractors, integrated oil companies and national oil companies, as well as customers in the power generation, marine, mining,
construction, commercial vehicles and material handling industries. In the fiscal year ended January 31, 2011, no single customer accounted for more than 6% of our total revenues, and our top
10 customers, which include domestic and international businesses, collectively represented approximately 31% of our total revenues.
Extensive aftermarket business.
Our extensive network of facilities at over 50 strategic locations provides our customers with high-quality parts and
service throughout the lifecycle of our products. Our extensive aftermarket parts and service sales, which are generally less sensitive to economic cycles, provide a source of recurring revenue and
typically generate higher margins than our equipment sales. This business is supported by an experienced sales force of over 200 personnel and over 650 trained and certified technicians.
Our depth of experience in the industries we serve and our significant, long-standing customer relationships are key components to our success. Combined with superior products, this
knowledge enables us to serve our customers and fully address our markets.
Robust training program.
We are dedicated to training for our employees, dealers and customers utilizing our multiple training facilities, our staff of
full-time trainers and an internet-based learning management system. We maintain over 200 instructor-led and internet-based courses. We provide our domestic and
international customers with onsite training, technical documentation and quality control support. In 2010, we provided training to more than 500 employees and over 700 customers. Our
training efforts ensure that our customers benefit from highly trained and experienced support for the products we offer, and we believe that they provide us a competitive advantage within our
industry.
Highly experienced management team.
We have a highly qualified senior management team with extensive global experience in the industries we serve. Our board of
directors includes individuals with extensive global experience in the energy industry and diversified areas of manufacturing, marketing, finance, international trade and international economic
cooperation, who are prominently regarded for their distinguished accomplishments in the United States and abroad as well as their significant business experience. We believe that our
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board
of directors provides us with an uncommon strategic resource and competitive advantage.
Our strategy
We believe that the implementation of the following strategic initiatives by our management team, under the leadership of our board
of directors, will enable our company to take advantage of significant demand for our well-known product lines across the global marketplace.
Leverage the Stewart & Stevenson brand name.
We believe that our brand name enjoys significant domestic and international recognition, particularly in the
oil and gas industry, and reflects our reputation for quality products, innovative solutions and dependable service. We intend to continue to prominently feature our brand name in our sales and
marketing efforts for our core value-added equipment sales and aftermarket parts and service businesses and believe that technological innovations continue to enhance our brand. We believe that the
strength of our brand helps us to cross-sell and diversify our product lines and expand our domestic and international operations.
Grow our position as a market leader.
We believe that our ability to customize our products to the specific needs of our customers, combined with our comprehensive
aftermarket capabilities and broad geographic reach, position us to satisfy the growing requirements of participants in the oil and gas industry and other industries. We believe that the benefits of
our cost effectiveness programs, combined with our continuing service to industries outside of the oil and gas industry, all of which stand to be beneficiaries in the expected global economic
recovery, will serve as key components to support our ability to grow.
Improve productivity and competitiveness.
We are fully committed to the continued enhancement of our productivity through process improvements and the expansion of
our manufacturing and engineering capabilities. We continue to streamline our operations through an assembly flow line, lean manufacturing techniques, standardization, outsourcing and supply chain
enhancements, while also focusing on opportunities to customize equipment to respond to the specific needs of our customers. We believe that our continued focus on these efforts enhances our
competitive position.
Selectively pursue growth opportunities.
We intend to continue to selectively seek strategic growth opportunities domestically and internationally (particularly in
Brazil, China and the United Arab Emirates), and organically as well as through acquisitions, joint ventures, geographic expansion and the development of additional manufacturing capability. We pursue
a targeted and disciplined acquisition strategy, focused on enhancing our earnings and cash flows, diversifying our supply chain, adding complementary product offerings, improving efficiency and
growing our customer base.
Continue to develop a highly effective workforce.
We have a highly trained and experienced workforce. We are dedicated to providing extensive training, education
and career development programs, as well as attractive incentive compensation plans for the benefit of our employees. We are committed to continuing to attract and retain high-quality and
experienced personnel.
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Risks related to our business and an investment in our common stock
The risks and uncertainties described under "Risk factors" include, among others, the following factors that could have material
adverse effects on our business, financial condition and operating results and the price of our Common Stock:
•
Periodic economic and industry downturns may adversely impact our operating results;
•
We face competition in each of our businesses;
•
Our international equipment sales and aftermarket parts and service operations are subject to risks associated with the
political, economic and other uncertainties inherent in foreign operations;
•
If our arrangements with our suppliers, including our key OEMs, were to be adversely affected, our equipment sales and
aftermarket parts and service business may suffer;
•
We generally quote our customers a fixed price for the equipment that we sell, which exposes us to the risk of cost
overruns;
•
Increased regulation, including regulation of current fracturing techniques, could reduce demand for our well stimulation
equipment; and
•
Our principal stockholder could exercise control of our affairs through his beneficial ownership of all of our
Class B Common Stock.
See
"Risk factors" for a discussion of the foregoing factors, as well as other factors that should be carefully considered prior to an investment in our Common Stock.
Our history
Stewart & Stevenson LLC was formed in November 2005 for the purpose of acquiring from Stewart & Stevenson
Services, Inc., or SSSI, and its affiliates on January 23, 2006, substantially all of their equipment, aftermarket parts and service and rental businesses that primarily served the oil
and gas industry, which we refer to collectively as the
"SSSI Acquisition." Except as otherwise expressly noted, when we refer to financial and other information about us on a historical basis prior to that date, such information reflects the operations we
acquired from SSSI prior to the acquisition.
On
February 26, 2007, we acquired substantially all of the operating assets and assumed certain liabilities of Crown Energy Technologies, Inc. and certain of its affiliates, or Crown,
which we refer to as the "Crown Acquisition." Crown, which was headquartered in Calgary, Alberta, had multiple U.S. operations. Crown manufactured drilling, well servicing and workover rigs,
stimulation equipment and provided related parts and services.
The corporate conversion
We are currently operating as a Delaware limited liability company and, prior to the consummation of this offering, we will convert
under Section 265 of the Delaware General Corporation Law into a corporation and change our name from Stewart & Stevenson LLC to Stewart & Stevenson Inc. We refer to
this event as the "Corporate Conversion." Stewart & Stevenson Inc. will for all purposes of Delaware law, and we believe for all purposes of federal securities law, be deemed to be the
same entity as Stewart & Stevenson LLC, and all of the rights, privileges and powers of Stewart & Stevenson LLC, as well as all of its assets and liabilities and other
obligations, will become those of Stewart & Stevenson Inc.
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The
Corporate Conversion will not result in any revaluations or other changes under generally accepted accounting principles, or GAAP. However, as a taxable entity, Stewart and Stevenson Inc.
will accrue and be subject to federal and state income tax obligations on a going forward basis. As of the date of the Corporate Conversion, we will establish deferred taxes representing the
difference between the tax and book basis of our assets and liabilities. Such net tax liability created is currently estimated to be approximately $2.7 million at January 31, 2011 and
will result in a corresponding adjustment to decrease net earnings from continuing operations. In connection with the Corporate Conversion, we will enter into a tax matters agreement pursuant to which
we will indemnify various persons against any tax-related liability as a result of the Corporate Conversion.
Our
common units outstanding will, in the case of our largest stockholder, Parman Capital Group LLC, which is controlled by Mr. Ansary, the chairman of our board of directors, convert based on
a one-to-one conversion ratio into Class B Common Stock, representing 51.75% of our outstanding shares of total common stock
(
i.e.
, our Common Stock and Class B Common Stock together) without giving effect to this offering, and in respect of all other holders of common
units will convert based on a one-to-one conversion ratio into Common Stock, representing 48.25% of our outstanding shares of total common stock, in each case without giving
effect to this offering.
Subsequent event
On March 23, 2011, we acquired 100% of the stock of EMDSI-Hunt Power, L.L.C. ("EMDSI") in an all cash
transaction from ITOCHU Corporation of Japan for total consideration of approximately $25.7 million, subject to final closing adjustments. The acquisition was funded from available cash and
through borrowings under our revolving credit facility. EMDSI, which is based in Harvey, Louisiana, specializes in the marketing and distribution of medium speed diesel engines for marine propulsion,
drilling and power generation applications and is a provider of aftermarket parts and service.
Additional information
Our principal executive offices are located at 1000 Louisiana St., Suite 5900, Houston, TX, 77002, and our telephone number is
(713) 751-2700. We also have a website located at
www.stewartandstevenson.com
. The information that appears on or is linked to from
our website is not a part of this prospectus.
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The offering
Shares of Common Stock offered by us
shares
Shares of Common Stock offered by the selling stockholders
shares
Shares of common stock to be outstanding after this offering
shares of Common Stock
shares of Class B Common Stock
References in this prospectus to "common stock" mean our Common Stock and Class B Common Stock together.
Option to purchase additional shares
We and the selling stockholders have granted the underwriters an option for a period of 30 days to purchase up to an aggregate
of             additional shares of Common Stock.
Use of proceeds
We estimate that the net proceeds to us of this offering, after deducting estimated underwriting discounts and offering expenses, will be approximately
$              million. We intend to use the net proceeds to repay amounts outstanding under our revolving credit facility and for general corporate purposes. We will not receive
any of the proceeds from the sale of Common Stock by the selling stockholders, including proceeds from the sale of additional shares of Common Stock by the selling stockholders, if any, upon exercise of the underwriters' option to purchase additional
shares. See "Use of proceeds."
Dividend policy
We historically have not paid dividends on our common equity, other than periodic distributions to fund tax payments of our unit holders as a result of our status as a limited liability company, and
there are limitations on our ability to pay such dividends in the future. See "Dividend policy."
New York Stock Exchange symbol
"             "
Risk factors
Please read the section entitled "Risk factors" beginning on page 13 for a discussion of some of the factors you should carefully consider before deciding to invest in our Common
Stock.
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Conflicts of interest
We intend to use at least 5% of the net proceeds of this offering to repay indebtedness owed by us to an affiliate of J.P. Morgan Securities LLC, an underwriter in this offering, that is the
administrative agent and a lender under our revolving credit facility. See "Use of proceeds." Accordingly, this offering will be made in compliance with the applicable provisions of Rule 5121 of the Financial Industry Regulatory Authority,
 Inc. This rule requires that a "qualified independent underwriter" meeting certain standards participate in the preparation of the registration statement and prospectus and exercise the usual standards of due diligence with respect
thereto.                           has agreed to act as a "qualified independent underwriter" within the meaning of
Rule 5121 in connection with this offering. See "Underwriting (Conflicts of interest)" for a more detailed discussion of potential conflicts of interest.
The number of shares of our Common Stock and Class B Common Stock outstanding after this offering will reflect the conversion of our currently outstanding limited
liability company units into Common Stock and Class B Common Stock prior to the consummation of this offering in connection with the Corporate Conversion and:
•
assumes no exercise of the underwriters' option to purchase up to an aggregate
of                           additional shares of
Common Stock from us and the selling stockholders consisting of             shares to be issued by us
and             shares to be sold on a pro rata basis by the selling stockholders;
•
assumes an initial public offering price of $             per share, the midpoint of the offering range set forth
on
the cover of this prospectus; and
•
does not reflect a total of 396,000 restricted shares of Common Stock issued to certain of our officers and directors that
will vest upon consummation of this offering.
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Summary historical consolidated financial data
The following table sets forth our summary historical consolidated financial data as of and for each of the years ended
January 31, 2009, 2010 and 2011. The summary historical consolidated financial data as of January 31, 2010 and 2011 and for the years ended January 31, 2009, 2010 and 2011 were
derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary consolidated financial data as of January 31, 2009 were derived from our audited
consolidated financial statements not included in this prospectus.
You
should read the following information in conjunction with "Capitalization" and "Management's discussion and analysis of financial condition and results of operations" and our consolidated
financial statements and related notes included elsewhere in this prospectus.
Year ended January 31,
(dollars and units in thousands)
2009
2010
2011
Statement of operations data:
Sales
$
1,217,142
$
688,676
$
861,234
Cost of sales
1,002,166
577,028
715,967
Gross profit
214,976
111,648
145,267
Selling and administrative expenses
138,141
114,188
104,252
Impairment of goodwill and indefinite-lived intangible assets
—
—
31,487
Other (income) expense, net(1)
(1,311
)
54
(1,026
)
Operating profit (loss)
78,146
(2,594
)
10,554
Interest expense, net
24,931
20,489
19,886
Earnings (loss) before income taxes
53,215
(23,083
)
(9,332
)
Income tax expense(2)
2,659
816
700
Net earnings (loss) available for common unit holders
$
50,556
$
(23,899
)
$
(10,032
)
Pro forma tax expense (benefit)(3)
$
17,272
$
(3,581
)
$
8,227
Pro forma net earnings (loss) available for common unit holders(3)
$
33,284
$
(20,318
)
$
(18,259
)
Net earnings (loss) available for common unit holders per common unit:
Basic
$
0.51
$
(0.24
)
$
(0.10
)
Diluted
$
0.51
$
(0.24
)
$
(0.10
)
Pro forma tax effect—basic
$
0.33
$
(0.20
)
$
(0.18
)
Pro forma tax effect—diluted
$
0.33
$
(0.20
)
$
(0.18
)
Weighted average units outstanding:
Basic
100,005
100,005
100,005
Diluted
100,005
100,005
100,005
Balance sheet data (end of period):
Working capital(4)
$
313,574
$
245,485
$
238,271
Cash and cash equivalents
2,006
3,321
9,168
Property, plant and equipment, net
93,170
79,206
75,077
Total assets
653,962
514,525
567,603
Total debt
285,370
228,113
192,622
Total shareholders' equity
179,944
155,622
149,034
Cash flow data:
Net cash provided by (used in) continuing operations:
Operating activities
$
58,470
$
66,321
$
56,864
Investing activities
(27,776
)
(2,940
)
(14,924
)
Financing activities
(42,364
)
(63,733
)
(36,150
)
Other continuing operations financial data:
Depreciation and amortization
$
18,869
$
18,402
$
17,053
Capital expenditures
5,469
2,536
(2,211
)
Additions to rental equipment
22,333
777
(10,747
)
EBITDA(5)
97,015
15,808
59,094
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(1)   See discussion of this impairment in "Critical accounting policies—Goodwill and indefinite-lived intangible assets."
(2)   Since
January 23, 2006, we have conducted our operations as Stewart & Stevenson LLC, a limited liability company, and, as a result, U.S. federal and certain state
income taxes have been paid by the holders of our equity interests. Therefore, no U.S. federal income tax expense is recorded in our statement of operations for the period from January 23, 2006
to January 31, 2011. The amounts shown reflect income tax expense associated with foreign jurisdictions and certain state taxes. As of the date of the Corporate Conversion, we will record
deferred taxes representing the difference between the tax and book basis of our assets and liabilities. Such net tax liability created is currently estimated to be approximately $2.7 million
at January 31, 2011 and will result in a corresponding adjustment to decrease net earnings from continuing operations. In connection with the Corporate Conversion, we expect to distribute cash
to our unit holders consistent with our prior practices to cover tax liabilities that will accrue to them through the date of the conversion.
(3)   Represents
the estimated tax effect of our results of operations. We have conducted our operations as Stewart & Stevenson LLC, a limited liability company, with
substantially all earnings taxed at the stockholder level. In connection with the Corporate Conversion, we will be subject to Subchapter C of the Internal Revenue Code of 1986, as amended, and
as a result will become taxable as a corporation and subject to U.S. federal and state income taxes. The tax rate used for pro forma purposes is the U.S. federal income tax rate of 35%, adjusted for
state taxes, federal tax credits earned and other items applied to the pre-tax book income subject to U.S. federal income taxation for the corresponding periods shown.
(4)   Working
capital is total current assets minus total current liabilities.
(5)   EBITDA
means earnings before interest, taxes, depreciation and amortization and impairment of goodwill and indefinite-lived intangible assets and is a non-GAAP financial
measure. We use EBITDA because we believe that such a measurement is a widely accepted financial indicator used by investors and analysts to analyze and compare companies on the basis of operating
performance and that this measurement may be used by some investors and others to make informed investment decisions. You should not consider it in isolation from or as a substitute for net income or
cash flow measures prepared in accordance with GAAP or as a measure of profitability or liquidity. EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a
substitute for analysis of our results as reported under U.S. GAAP. Some of the limitations are:
•
EBITDA does not reflect our cash expenditures, or future requirements for capital
expenditures or contractual commitments;
•
EBITDA does not reflect changes in, or cash requirements for, our working capital
needs;
•
EBITDA does not reflect the significant interest expense, or the cash requirements
necessary to service interest or principal payments, on our debt; and
•
although depreciation, amortization and impairment of goodwill and
indefinite-lived intangible assests are non-cash charges, certain of these assets are being depreciated and amortized and will have to be replaced in the future, and EBITDA does not
reflect any cash requirements for such replacements.
EBITDA
calculations by one company may not be comparable to EBITDA calculations made by
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another
company. The following table provides a reconciliation of net earnings (loss) (a GAAP financial measure) to EBITDA (a non-GAAP financial measure):
Year ended January 31,
(dollars in thousands)
2009
2010
2011
Net earnings (loss) available for common unit holders
$
50,556
$
(23,899
)
$
(10,032
)
Add:
Interest expense, net
24,931
20,489
19,886
Income tax expense (benefit)
2,659
816
700
Depreciation and amortization
18,869
18,402
17,053
Impairment of goodwill and indefinite-lived intangible assets
—
—
31,487
EBITDA (unaudited)
$
97,015
$
15,808
$
59,094
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Risk factors
An investment in our Common Stock involves a significant degree of risk. Prior to making an investment
decision, you should carefully consider, along with other information set forth in this prospectus, the following risk factors. The following risks and uncertainties could materially adversely affect
our business, financial condition or operating results. In this event, the trading price of our Common Stock could decline, and you could lose part or all of your investment.
Risks related to our business
Periodic economic and industry downturns may adversely impact our operating results.
Our equipment sales and, to a lesser extent, our aftermarket parts and service sales depend primarily on the level of activity in the oil and gas
industry. The oil and gas industry traditionally has been volatile, is highly sensitive to supply and demand cycles and is influenced by a combination of long-term and cyclical trends
including:
•
oil and gas prices and industry perceptions of future price levels;
•
the cost of exploring for, producing and delivering oil and gas; and
•
the ability of oil and gas companies to generate capital for investment purposes.
Our
customers in the oil and gas industry historically have tended to delay capital equipment projects, including maintenance and upgrades, during industry downturns. Accordingly, the recent slowdown
in the U.S. and worldwide economic activities that followed the global financial crisis resulted in delays in capital equipment projects, impacting the activities of the industries we serve and
resulting in significantly lower new orders. Difficulty in accessing credit markets diminished product demand, adversely affected activities in manufacturing and put downward pressure on selling
prices. In the United States, producers generally react to
declining oil and gas prices by reducing expenditures. This has in the past, and may in the future, adversely affect our business.
There
can be no assurance that oil and gas prices will remain at current levels or will not decrease significantly. We are unable to predict future oil and gas prices or the level of oil and gas
industry activity. A prolonged low level of activity in the oil and gas industry would adversely affect the demand for our products and services and our business, financial condition and results of
operations.
We face competition in each of our businesses.
We encounter competition in all areas of our business. The principal factors on which we compete include performance, quality, customer service,
timely delivery of products, product lead times, global reach and presence, brand reputation, breadth of product line, quality of aftermarket service and support and price. In addition, our customers
increasingly demand more technologically advanced and integrated products, and we must continue to develop our expertise and technical capabilities in order to manufacture and market these products
and associated services successfully. To remain competitive, we must invest continuously in the education of our workforce, manufacturing capabilities and efficiencies, marketing, client service and
support, distribution networks and research and development.
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We
experience our greatest levels of competition in equipment sales, in terms of both engineered equipment and stand-alone products. We compete with a number of large, well-known OEMs,
manufacturers and distributors that, in some cases, have greater financial and human resources, as well as a broader geographical presence, than we do.
With
respect to aftermarket parts and service sales, we compete with regional and local non-OEM parts and service providers, our customers' in-house service providers,
non-OEM and remanufactured parts and service providers and, for certain product offerings, other factory-authorized providers.
Our
rental operations compete against large, well-recognized companies. Maintaining a rental fleet requires significant investment from year-to-year. If our access
to capital is substantially limited due to contractual restrictions or otherwise, or if capital becomes more costly, we may not be able to make the investments necessary to remain competitive.
Our international equipment sales and aftermarket parts and service operations are subject to risks associated with the political, economic and other uncertainties inherent
in foreign operations.
We have significant equipment sales to customers outside the United States and also maintain aftermarket parts and service operations outside the
United States. For Fiscal 2010 and Fiscal 2009, we derived approximately 19% and 30%, respectively, of our revenues from sales of products and services to customers outside the United States,
including sales to U.S. customers for export. We intend to expand our international sales and operations, thereby increasing our exposure to risks associated with operating outside of the United
States.
Our
international sales, manufacturing and aftermarket parts and service activities are subject to risks associated with the political, economic and other uncertainties inherent in foreign operations,
which include, but are not limited to:
•
the effect of exchange rates on purchasing decisions and power of our foreign customers;
•
changes in exchange rates which could result in increases or decreases in our costs and earnings;
•
foreign exchange risks resulting from changes in foreign exchange rates, which could increase or decrease our costs and
earnings, and the implementation of exchange controls;
•
limitations on our ability to reinvest earnings from operations in one country to fund the capital needs of our operations
in another country; and
•
government regulation and the imposition of, or unexpected adverse changes in, foreign laws or regulatory requirements,
including those pertaining to import duties and quotas, taxes, trade and employment restrictions.
Some
of the markets in which we operate are politically unstable and are subject to civil and communal unrest. Riots, strikes, the outbreak of war or terrorist attacks in locations where we have
operations or conduct business, could also adversely affect our business.
Also,
we operate in some countries in which the risk of bribery is recognized. We have clear policies addressing our prohibition against illegal payments and have a comprehensive training and
certification of compliance program. However, a risk remains despite our efforts. In such
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circumstances,
we could also face fines, sanctions and other penalties from authorities in the relevant jurisdictions, including prohibition of our participating in or curtailment of business
operations in those jurisdictions.
The
occurrence of any of the foregoing factors may have a material adverse effect on our business, financial condition and results of operations. For example, to the extent we make significant
investments in foreign facilities or otherwise expand our overseas presence, the risk that our assets and our income could be adversely affected by fluctuations in the value of local currencies will
increase.
In
addition, many of our customers and the end-users of our equipment operate in international jurisdictions and therefore are subject to the foregoing risks, as well as other risks
associated with international operations. The occurrence of any of these factors may have a material adverse impact on the business and operations of our customers and end-users, which in
turn may have a material adverse effect on us.
If our arrangements with our suppliers, including our key OEMs, were to be adversely affected, our equipment sales and aftermarket parts and service businesses may suffer.
We currently depend on a limited number of suppliers for certain important components for our products, which include diesel engines, transmissions,
fluid pumps and material handling equipment. Our purchases from some of these suppliers are not made pursuant to long-term contracts, and our arrangements with these suppliers may be
terminated, in the case of certain arrangements, upon certain notifications and, otherwise, upon the occurrence of certain events, many of which may be beyond our control. The loss of any of these
suppliers could have a material adverse effect on our business, financial condition and results of operations.
In
addition, a significant portion of the stand-alone equipment that we sell is manufactured by, and, in the case of our engineered equipment, incorporates components provided by, our six key
OEMs:
•
Detroit Diesel Corporation;
•
MTU Friedrichshafen;
•
Allison Transmission, Inc.;
•
Electro-Motive Diesel, Inc.;
•
Hyster Company; and
•
Deutz Corporation.
Approximately
44% and 37% of our cost of goods sold was attributable to stand-alone products purchased from these OEMs in Fiscal 2010 and Fiscal 2009, respectively. In addition, a material
portion of our revenues was attributable to (1) sales of equipment manufactured by us, including components manufactured by these suppliers and (2) servicing and supplying parts for
certain products provided by these OEMs, including parts and products that are components of the equipment we manufacture.
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Our
OEM supplier arrangements, pursuant to which we distribute stand-alone products manufactured by these OEMs, which are currently effective for varying periods of time and are not exclusive, are
subject to risks that include:
•
the nonrenewal or termination, or material change in the terms, of such supplier contracts;
•
the acquisition of one or more of our six key OEMs by one of our competitors or another entity that could adversely
affect our relationship;
•
the inability of our suppliers to provide us with sufficient quantities of equipment and parts to meet the demands of our
customers; and
•
the appointment by our suppliers of additional providers in designated territories in which we are currently the only
provider.
The
occurrence of any of these could have a material adverse effect on our business, financial condition and results of operations. See "Business—Suppliers and raw materials."
We generally quote our customers a fixed price for the equipment that we sell, which exposes us to the risk of cost overruns if we do not accurately estimate the costs
associated with the product.
Most of our engineered equipment sales contracts are "fixed-price" contracts where the original price may be set at an early stage of the process.
The terms of these contracts require us to guarantee the price of products and services that we provide and to assume the risk that the costs to provide such products and services will be greater than
anticipated. The profitability of these contracts is therefore dependent on the ability to reasonably predict the costs associated with performing the contracts. These costs may be affected by a
variety of factors, some of which are beyond our control. Our failure to accurately estimate the resources required for a project or our failure to complete our contractual obligations in a manner
consistent with the project plan upon which our fixed-price contract was based could adversely affect our profitability and could have a material adverse effect on our business, financial condition
and results of operations.
Amounts included in our backlog may not result in actual revenue or translate into profits.
Our backlog may not be realized as revenue or, if realized, may not result in profits. As of January 31, 2011, our equipment order backlog was
$375.0 million. Reductions in backlog due to cancellation by a customer or for other reasons could significantly reduce the revenue and profit we actually receive from contracts included in
backlog. If our backlog fails to materialize, we could experience a reduction in revenue and a decline in profitability, which would result in a deterioration of our financial condition, profitability
and liquidity.
Increased regulation of current fracturing techniques could reduce demand for our well stimulation equipment.
Fracturing is a process that results in the creation of fractures in geological formations in order to stimulate production from oil and gas wells.
Fracturing seeks to increase the rate and ultimate recovery of oil and natural gas. Concerns have been raised over possible environmental damages related to fluids used in the fracturing process. The
FRAC (Fracturing Responsibility and Awareness of Chemicals) Act was introduced in the U.S. Congress in June 2010 seeks to amend the Safe Drinking Water Act so that hydraulic fracturing would be
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regulated
on a federal level. A number of state and provincial regulatory authorities are also considering more stringent regulation of fracturing.
Increased
regulation of hydraulic fracturing would likely delay or halt some projects, including unconventional oil and gas projects. Expanded regulations would likely introduce a period of
uncertainty as companies determine how to proceed. This could result in a reduction of demand for our products and services and could have a material adverse effect on our business, financial
condition and results of operations.
Our and our customers' operations are subject to a variety of environmental, health and safety laws and regulations that may increase our costs, limit the demand for our
products and services or restrict our operations.
Our operations and the operations of our customers are subject to federal, state, local and foreign laws and regulations relating to the protection
of the environment and of human health and safety, including laws and regulations governing the investigation and clean up of contaminated properties, as well as air emissions, water discharges, waste
management and disposal. Such laws and regulations have, and are expected to continue to, become more stringent over time, requiring modifications to our products and operations. These laws and
regulations affect the products and services that we design, market and sell, as well as the facilities where we manufacture and service our products. In addition, environmental laws and regulations
could limit our customers' activities in the oil and gas sector and subsequently the demand for our products.
Environmental
laws and regulations may provide for "strict liability" for damages to the environment or natural resources or threats to public health and safety, rendering a party liable without
regard to negligence of or fault on the part of such party. Sanctions for noncompliance may include revocation of permits, temporary or permanent shutdown of certain operations, corrective action
orders, administrative or civil penalties, and criminal prosecution. Some environmental laws and regulations provide for joint and several strict liability for the investigation or remediation of
spills and releases of hazardous substances, rendering a party potentially responsible for more than its proportionate share of, or responsible for the entire, liability. In addition, we may become
subject to claims alleging personal injury or property damage as a result of alleged exposure to hazardous substances, as well as damage to natural resources. Pursuant to certain environmental laws
and regulations, we may become subject to liability (including with respect to off-site disposal matters or formerly owned or operated facilities) for the conduct of or conditions caused
by others, or for our own acts that were in compliance with all applicable laws and regulations at the time such acts were performed. Any of these laws and regulations could result in claims, fines,
expenditures or other requirements that could have a material adverse effect on our business.
We
invest financial and managerial resources to comply with environmental laws and regulations and will continue to do so in the future. We cannot determine the future cost of compliance or the impact
of environmental regulation on our future operations. In the future, we and our OEMs may not be able to produce adequate supplies of equipment that are compliant with increasing emission or
other environmental standards to meet existing demand, which would have an adverse effect on us. The modification of, or changes in the interpretation or enforcement of, existing laws or regulations,
or the adoption of new laws or
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regulations
imposing more stringent environmental restrictions, could have a material adverse effect on our business, financial condition and results of operations.
Our
businesses are subject to a variety of other regulatory restrictions, such as those governing workplace safety and health. The failure to comply with these rules may result in civil penalties and
criminal prosecution. Further, laws and regulations in this and other areas are complex and change frequently. Changes in laws or regulations, or in their enforcement or interpretation, could subject
us to material costs. We cannot determine the extent to which our future operations and earnings may be so affected.
We
also expect that scientific examination of and political attention to issues surrounding the existence and extent of climate change will continue. A variety of regulatory developments,
both domestic and international, have been introduced that are focused on restricting or managing the emission of carbon dioxide, methane and other greenhouse gases. These developments and further
legislation that may be enacted, or the development or changes within international accords could adversely affect the demand for or suitability of our products and services.
Our projects are subject to numerous hazards and, our record and reputation for safety is important to our business. If we do not maintain an adequate safety record, we may
be ineligible to bid on certain projects, could be terminated from existing projects and our reputation could be harmed.
Our employees and customers are exposed to numerous hazards during the conduct of our business, including electrical contacts and flashes, fires,
natural gas explosions, mechanical failures and transportation accidents. These hazards can cause personal injury and loss of life, severe damage to or destruction of property and equipment and other
consequential damages, and may result in suspension of operations, civil damage claims and criminal fines and penalties that could have a material adverse effect on our business and results of
operations.
Our
safety record is important. If serious accidents or fatalities occur or our safety record deteriorates, our reputation or prospects for obtaining future business could be negatively affected.
The occurrence of an event not fully covered by insurance could have a material adverse effect on our business, financial condition and results of operations.
Our insurance does not provide coverage for all risks, and it may not be adequate to cover all claims that may arise. The occurrence of an event not
fully covered by insurance could have a material adverse effect on our business, financial condition and results of operations. Moreover, particular types of insurance coverage may not be available to
us in the future, we may retain additional risk through higher insurance deductibles or we may be unable to continue to obtain our desired level of insurance coverage at commercially reasonable rates.
Because
many of our products and the products that we distribute are complex and utilize many components, processes and techniques, undetected errors and design flaws may occur. Product defects result
in higher product service, warranty and replacement costs and may cause damage to our customer relationships and industry reputation, all of which may negatively impact our results of operations.
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The
industries that we serve are subject to inherent risks, including equipment defects, malfunctions, failures and natural disasters. These risks may expose our customers to liability for personal
injury, wrongful death, property damage, pollution and other environmental damage. We also may become involved in litigation related to such matters. Any litigation arising from a catastrophic
occurrence involving our equipment or services could result in large claims for damages. Any increase in the frequency or severity of such incidents, or the general level of compensation awards with
respect to such incidents, could affect our ability to obtain projects from our customers or acquire adequate insurance coverage at commercially reasonable rates. In addition to seeking compensation
from us, customers who suffer losses as a result of the occurrence of such events may also reduce or terminate their business with us, which may further harm our results of operations.
We are susceptible to adverse weather conditions affecting the Gulf Coast.
Certain areas in and near the Gulf Coast experience hurricanes and other extreme weather conditions on a relatively frequent basis. Our headquarters,
manufacturing and aftermarket parts and service facilities in Houston are susceptible to significant damage, and our New Orleans and other Gulf Coast facilities are subject to significant damage or
total loss by these storms. Damage caused by high winds and floodwater could potentially cause us to curtail operations at these facilities for a significant period of time until damage can be
assessed and repaired. Moreover, even if we do not experience direct damage from any of these storms, we may experience disruptions of our operations because customers may curtail their activities due
to damage to their facilities in and near the Gulf of Mexico.
Due
to the losses as a consequence of the hurricanes that may affect the Gulf Coast in the future, we may not be able to obtain future insurance coverage comparable to our current
coverage, putting us at a greater risk of loss due to severe weather conditions. Future hurricanes in the region may increase costs and deductibles, limit maximum aggregate recoveries under available
policies or decrease the availability of insurance. Any significant uninsured losses could have a material adverse effect on our business, financial condition and results of operations.
We may continue to expand through acquisitions of other businesses, which may divert our management's attention, result in dilution to our stockholders and consume resources
that are necessary to sustain our business. We may not be able to successfully integrate acquired businesses with our business, and we may not realize the anticipated benefits of such acquisitions.
Acquiring complementary businesses from third parties is an important part of our growth strategy. Our acquisition strategy depends on the
availability of suitable acquisition candidates at reasonable prices. This strategy also depends on our ability to resolve challenges associated with integrating acquired businesses into our existing
business. These challenges include:
•
integration of product lines, sales forces, customer lists and manufacturing facilities;
•
development of management expertise outside of our existing business;
•
diversion of management time and resources;
•
harm to our existing business relationships;
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•
potential loss of key employees of the acquired business; and
•
possible divestitures, inventory write-offs and other charges.
We
cannot be certain that we will find suitable acquisition candidates or that we will be able to meet these challenges successfully.
An
acquisition could absorb substantial cash resources, require us to incur or assume debt obligations, or issue additional common or preferred equity. Restrictions in the agreements governing our
indebtedness may prohibit us from obtaining additional financing, and, if we are not able to obtain financing, we may not be able to consummate acquisitions. If we issue common equity securities or
other securities convertible into common equity securities in connection with an acquisition, we may dilute your interest as a holder of our Common Stock. If we issue preferred equity, the rights of
holders of that preferred equity may be senior to your rights as a holder of our Common Stock.
Negotiating
these transactions can be time-consuming, difficult and expensive, and our ability to close these transactions may often be subject to approvals, including from regulatory
authorities, that are beyond our control. Consequently, we can make no assurances that these transactions, once undertaken and announced, will close.
In
addition, following an acquisition, we may have higher expenses and therefore may not achieve the results that we anticipated at the time of the acquisition, especially if we are not able to
maintain or increase the revenues of the combined business. Acquired entities also may be highly leveraged, dilutive to our earnings per share or have unknown liabilities.
We may not be able to attract and retain qualified employees.
There is significant demand in our industry for skilled technicians and other qualified employees, including specialty servicing and material
handling technicians, direct manufacturing labor and engineers. This demand is more pronounced in certain locations in which we operate where the demand for skilled workers is high. The delivery of
our products and services requires personnel with specialized skills. A significant increase in the wages paid by competing employers could result in a reduction of our skilled labor force, increases
in the wage rates that we must pay or both. If either of these events were to occur, our capacity and profitability could be diminished and our growth potential could be impaired.
Failure to maintain key licenses could have a material impact on our operations.
The part of our business that consists of the sale, distribution, installation and warranty repair of large engines and transmissions used in
commercial vehicle applications in Texas requires certain Texas state motor vehicle licenses that are subject to annual renewal. While these licenses historically have been renewed on a regular basis,
there can be no assurance that any particular license will be renewed in the future. The termination of, or failure to renew, licenses could have a material adverse effect on our financial position,
results of operations and cash flows.
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We may be unable to adequately protect or enforce our intellectual property rights or the value thereof, including our rights to use the "Stewart & Stevenson"
trademark, which could have a material adverse effect on our business.
The protection of our patents, trademarks, service marks, copyrights, trade secrets, domain names and other intellectual property rights, including
know-how, confidential or proprietary technical and business information, is important to our businesses. In particular, our rights to the "Stewart & Stevenson" trademark and logo
are important to our sales and marketing efforts.
To
protect our intellectual property, including our know-how and other proprietary information, we rely on a combination of copyright, patent, trademark, domain name, trade secret and
unfair competition laws, along with confidentiality procedures, contractual provisions and other similar measures. While we have registrations for some of our trademarks in certain countries,
including the United States, protection for intellectual property rights is territorial, and may not be available or enforceable in every country in which our intellectual property and technology is
used. Accordingly, we cannot ensure our ability to use, on an exclusive basis or otherwise, without risk, our intellectual property, including the "Stewart & Stevenson" trademark and logo,
particularly in countries where we, or our licensors, do not have trademark registrations, patents for our technology or copyright protection. The risks relating to our intellectual property include,
among others, potentially being sued for infringement or other violations, paying related damage awards or other fees and costs or having to redesign or cease use of our intellectual property in a
country where a third party has previously established rights in such intellectual property.
With
respect to intellectual property for which we or our licensors currently have protection, there is also the risk that:
•
the patents, copyrights, trademarks, domain names, intellectual property licenses and other intellectual property held by,
used and/or licensed to us, may be challenged, rejected or determined to be invalid; or
•
the confidentiality procedures that we have in place for maintaining trade secrets and other proprietary information may
not be properly followed, which may result in the loss of such rights.
Policing
and enforcing our intellectual property rights, protecting our trade secrets and other know-how, and determining the validity and scope of our intellectual property and related
rights is important, but requires significant resources, particularly if litigation is necessary. Potential litigation could divert our management's time, attention and resources, delay our product
shipments or require us to enter into royalty or license agreements, which may not be available under commercially reasonable terms, if at all. Moreover, the value of our intellectual property rights
may be impaired without infringement occurring.
Our level of indebtedness could negatively affect our financial condition, adversely affect our ability to raise additional capital and harm our ability to react to changes
to our business.
At January 31, 2011, we had approximately $192.6 million of indebtedness, consisting of $35.2 million outstanding under our
asset-based revolving credit facility, $150.0 million of outstanding senior notes and $7.4 million of other notes payable. While we intend to use a portion of the proceeds of this
offering to repay amounts outstanding under our revolving
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credit
facility, we may make additional borrowings at any time under our revolving credit facility, which provides for maximum borrowings of $250.0 million (expandable, subject to certain
conditions and commitments, to $325.0 million). Borrowings under our revolving credit facility accrue interest at a floating rate and, accordingly, an increase in interest rates would result in
a corresponding increase in our debt servicing requirements. Subject to restrictions in our revolving credit facility and the indenture governing our senior notes, we may also incur additional
indebtedness.
Our
level of indebtedness could have important consequences to you, including the following:
•
our use of a substantial portion of our cash flow from operations to pay interest on our indebtedness will reduce the
funds available to us for operations and other purposes;
•
our ability to obtain additional debt or equity financing for working capital, capital expenditures, product development,
debt service requirements, acquisitions or general corporate purposes may be impaired;
•
our level of indebtedness could place us at a competitive disadvantage compared to our competitors that may have
proportionately less debt;
•
our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate may be
limited; and
•
our level of indebtedness makes us more vulnerable to economic downturns and adverse developments in our business.
Our revolving credit facility and the indenture governing our senior notes impose significant operating and financial restrictions on us, which may prevent us from pursuing
our business strategies or favorable business opportunities.
Our revolving credit facility and the indenture governing our senior notes impose significant operating and financial restrictions on us. These
restrictions limit or prohibit, among other things, our ability to:
•
incur or assume indebtedness, or provide guarantees in respect of obligations of other persons;
•
purchase, redeem or repay subordinated indebtedness prior to stated maturities;
•
pay dividends on or redeem or repurchase our stock or make other distributions;
•
issue redeemable stock and preferred stock;
•
make loans, investments or acquisitions;
•
incur liens;
•
engage in sale/leaseback transactions;
•
restrict dividends, distributions, loans or other payments or asset transfers from our subsidiaries;
•
sell or otherwise dispose of assets, including capital stock of our subsidiaries;
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•
enter into certain transactions with affiliates;
•
consolidate or merge with or into, or sell substantially all of our assets to, another person;
•
enter into new lines of business; and
•
otherwise conduct necessary corporate activities.
The
revolving credit facility and the indenture governing the senior notes contain financial and operating covenants with which we must comply during the term of the agreements. These covenants
include the maintenance of certain financial ratios, restrictions related to the incurrence of certain indebtedness and investments, and a prohibition on the creation of certain liens. The financial
covenant for the revolving credit facility requires that we maintain a fixed charge coverage ratio, as defined in the credit agreement, of at least 1.1 to 1.0 at such time that our available borrowing
capacity under the revolving credit facility is $30.0 million or less. The financial covenant for the senior notes, which is applicable were we to incur additional indebtedness (subject to
various exceptions set forth in the underlying indenture), requires that, after giving effect to the incurrence of such additional indebtedness, we have a fixed charge coverage ratio, as described in
the indenture, of at least 2.5 to 1.0.
A
breach of any of these covenants could result in a default under our revolving credit facility or our senior notes. If any such default occurs, the lenders under our revolving credit facility and
the holders of our senior notes may declare all outstanding amounts, together with accrued interest and other amounts payable thereunder, to be immediately due and payable. The lenders under our
revolving credit facility also have the right in these circumstances to terminate any commitments they have to provide further funds. In addition, following an event of default under our revolving
credit facility, the lenders under the revolving credit facility will have the right to proceed against the collateral granted to them to secure the amounts payable thereunder, and which force us into
bankruptcy or liquidation. A default on certain other indebtedness could give rise to cross-default or cross-acceleration rights under our revolving credit facility or our senior notes.
Through his beneficial ownership of all of our Class B Common Stock, Mr. Ansary could exercise control of our affairs, and his interests may not be fully
aligned with the holders of our Common Stock.
Upon consummation of this offering, we will have two classes of common stock, Common Stock and Class B Common Stock. The holders of Common
Stock generally will have rights identical to holders of Class B Common Stock, except that holders of Common Stock will be entitled to one vote per share, whereas holders of Class B
Common Stock will be entitled to ten votes per share. Holders of both classes of common stock generally will vote together as a single class on all matters presented to stockholders for their vote or
approval, except as otherwise required by Delaware law.
Upon
consummation of this offering, all issued and outstanding shares of Class B Common Stock will be owned beneficially by Mr. Hushang Ansary, the chairman of our board of directors and
our largest stockholder, and, through his beneficial ownership of all of our outstanding Class B Common Stock and of Common Stock, he will control approximately         % of total
combined voting power of our outstanding common stock. As such, Mr. Ansary will continue to be able to control our policies and operations, including regarding management and key
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strategic
decisions. While the Class B Common Stock will automatically convert into Common Stock if transferred to a third party or upon the death of Mr. Ansary, the Class B
Common Stock will not convert into Common Stock if transferred to Mr. Ansary, entities controlled by Mr. Ansary or to us. Because of the voting rights attendant to the Class B Common
Stock, Mr. Ansary could transfer a substantial portion of his beneficial equity interest and continue to exercise control over our affairs, and his interests may not be fully aligned with those
of the holders of our Common Stock. In addition, the voting power of Mr. Ansary through his ownership of our Class B Common Stock makes his support necessary for any potential mergers,
takeovers or other change of control transactions.
Risks related to this offering, the securities markets and ownership of our Common Stock
We may invest or spend our net proceeds from this offering in ways that may not yield an acceptable return to you.
Although we plan to use a portion of our net proceeds from this offering to repay amounts outstanding under our revolving credit facility, we expect
to use the remainder of the net proceeds for general corporate purposes. You will have no advance opportunity to evaluate our decisions and may not agree with the manner in which we spend such
proceeds. We may not be successful investing the proceeds from this offering in either our operations or external investments.
Shares of common stock eligible for future sale may cause the market price of our Common Stock to drop significantly, even if our business is doing well.
After this offering, we will have             shares of common stock outstanding consisting
of             shares of Common Stock and
             shares of Class B Common Stock. Of these shares, the             shares of Common Stock we and the
selling stockholders are selling in this offering, or             
shares of Common Stock if the underwriters exercise their option to purchase additional shares in full, will be freely tradable without restriction under the Securities Act of 1933, as amended (the
"Securities Act"), except for any shares of common stock purchased by one of our "affiliates" as defined in Rule 144 under the Securities Act. All of the common stock outstanding other than the
shares of Common Stock sold in this offering (a total of             shares, or             shares if the underwriters
exercise their option to purchase additional shares in full), will be
"restricted securities" within the meaning of Rule 144 under the Securities Act and subject to lock-up arrangements.
In
connection with this offering, we and our executive officers and directors and the holders of all of our outstanding common stock and common stock equivalents have agreed that, during the period
beginning from the date of this prospectus and continuing to and including the date 180 days after the date of this prospectus, neither we nor any of them will, directly or indirectly, offer,
sell, offer to sell, contract to sell or otherwise dispose of any shares of our common stock or securities convertible into or exchangeable or exercisable for any common stock without the prior
written consent of J.P. Morgan Securities LLC, on behalf of the underwriters, except in limited circumstances. See "Underwriting (Conflicts of interest)" for a description of these
lock-up arrangements. Upon the expiration of these lock-up agreements,             shares of common stock,
or             shares of common stock if the underwriters
exercise their option to purchase additional shares in full, will be eligible for sale in the public market
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under
Rule 144 of the Securities Act, subject to volume limitations and other restrictions contained in Rule 144.
After
this offering, the holders of             shares of common stock, or             shares of common stock if the
underwriters exercise their option to purchase additional shares in full,
will have rights, subject to some limited conditions, to demand, in the case of Parman Capital Group LLC and EC Investments B.V., that we file registration statements on their behalf
and, in the case of Parman Capital Group LLC, EC Investments B.V. and certain other holders, to include their shares of common stock in registration statements that we file on our behalf
or on behalf of other stockholders. By exercising their registration rights and selling a large number of shares of common stock, these holders could cause the price of our Common Stock to decline.
Furthermore, if we file a registration statement to offer additional shares of our Common Stock and have to include shares of common stock held by those holders, it could impair our ability to
raise needed capital by depressing the price at which we could sell our Common Stock. See "Shares eligible for future sale—Registration rights."
Also,
in the future, we may issue our securities in connection with investments and acquisitions. Common Stock issued in connection with an investment or acquisition could constitute a material
portion of our then outstanding common stock.
An active market for our Common Stock may not develop, and the initial public offering price of our Common Stock may not be indicative of the market price of our Common
Stock after this offering.
Prior to this offering, there has been no public market for our Common Stock. An active market for our Common Stock may not develop or be sustained
after this offering. If an active market for our Common Stock does not development, the price or our Common Stock may not be maintained or could decrease. The initial public offering price of our
Common Stock will be determined by negotiations among us, the selling stockholders and the representatives of the underwriter, based on numerous factors that we discuss in the "Underwriting (Conflicts
of interest)" section of this prospectus. This price may not be indicative of the market price at which our Common Stock will trade after this offering.
We may not pay regular dividends on our Common Stock, so you may not receive funds without selling your Common Stock.
We historically have not paid dividends on our common equity, other than periodic distributions to fund tax payments of our unit holders as a result
of our status as a limited liability company. Subject to Delaware law, our board of directors will determine the payment of future dividends on our Common Stock, if any, and the amount of any
dividends in light of any applicable contractual restrictions limiting our ability to pay dividends, our earnings and cash flows, our capital requirements, our financial condition and other factors
our board of directors deems relevant. The terms of our revolving credit facility and the indenture governing our senior notes restrict our ability to pay dividends or other distributions on our
equity securities. In addition, the payment of dividends is subject to approval of the holders of a majority of the combined voting power of Common Stock and Class B Common Stock, voting
together as a single class. Accordingly, you may have to sell some or all of your Common Stock in order to generate cash from your investment. You may not receive a gain on your investment when you
sell our Common Stock, and may lose all or the entire amount of your investment.
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The price of our Common Stock may be volatile.
The market price of our Common Stock could be subject to significant fluctuations after this offering and may decline below the initial public
offering price. You may not be able to resell your shares at or above the initial public offering price. Among the factors, many of which are beyond our control, that could affect our stock price
are:
•
industry developments, such as the price of oil, levels of capital expenditures by oil and natural gas producers,
increased regulation and global rig count;
•
our operating and financial performance and prospects;
•
quarterly variations in the rate of growth of our financial indicators, such as earnings per share, net income and
revenues;
•
changes in revenue or earnings estimates;
•
publication of research reports by analysts;
•
speculation in the press or investment community;
•
strategic actions by us or our competitors, such as acquisitions or restructurings;
•
sales of our Common Stock by us or our stockholders;
•
actions by institutional investors;
•
general market conditions; and
•
U.S. and international economic, legal and regulatory factors unrelated to our performance.
The
stock markets in general have experienced extreme volatility that has at times been unrelated to the operating performance of particular companies, and companies experiencing extremely volatile
stock price have been the subject of securities class actions. These broad market fluctuations may adversely affect the trading price of our Common Stock, and any legal actions against us could have
an adverse affect on our financial condition.
As a publicly traded company, we will become subject to additional regulation and incur additional administrative costs relating to compliance with U.S. securities laws and
New York Stock Exchange requirements.
We prepare and file annual, quarterly and current reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As a publicly
traded company, we will be required to comply with additional rules and regulations promulgated by the Securities and Exchange Commission (the "SEC"), including additional requirements mandated by the
Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and the rules and regulations of the New York Stock Exchange. For example, we will be required to include in our annual reports on
Form 10-K an attestation report from our auditors as to our management's assessment of our internal control over financial reporting. Compliance with these rules and regulations
will result in an ongoing increase in our legal, audit and financial compliance costs and could result in the diversion of management attention from operations and strategic opportunities and will
make legal, accounting and administrative activities more time consuming and costly. As a result of this offering, we expect to incur higher general and administrative expenses relating to companies
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with
publicly traded equity securities, including, among other things, increased costs to maintain insurance for directors and officers.
If we fail to maintain an effective system of internal controls, we may not be able to report our financial results accurately or prevent fraud.
We produce our financial statements in accordance with the requirements of U.S. GAAP; however, while we have performed our own analysis as to
the effectiveness of our internal control over financial reporting, our independent registered public accounting firm has not attested to the effectiveness of our internal control over financial
reporting pursuant to Section 404 of the Sarbanes-Oxley Act ("Section 404"). Effective internal controls are necessary for us to provide reliable financial reports and to prevent fraud
and to operate successfully as a publicly traded company. Our efforts to maintain an effective system of internal controls may not be successful, and we may be unable to maintain adequate internal
controls over our financial processes and reporting in the future, including compliance with the obligations under Section 404. Any failure to maintain effective internal controls, difficulties
encountered in their implementation or other effective improvement of our internal controls could impact our operating results or cause us to fail to meet our reporting
obligations. Given the difficulties inherent in the design and operation of internal controls over financial reporting, in the future, we or our independent registered public accounting firm may not
be able to conclude that our internal control over financial reporting are effective. Ineffective internal controls may subject us to regulatory scrutiny and a loss of confidence in our reported
financial information, which could have an adverse effect on our business and a negative effect on the trading price of our Common Stock.
Provisions in our charter documents or Delaware law, as well as Mr. Ansary's beneficial ownership of all of our outstanding Class B Common Stock, may inhibit a
takeover, which could adversely affect the value of our Common Stock.
Our certificate of incorporation and bylaws and Delaware corporate law will contain provisions that could delay or prevent a change of control or
changes in our management that a stockholder might consider favorable. These provisions will apply even if the offer may be considered beneficial by some of our stockholders. See "Description of
capital stock" for a description of these provisions.
In
addition, upon consummation of this offering, Mr. Ansary, through his beneficial ownership of all of our outstanding Class B Common Stock and of Common Stock, will control
approximately         % of the total combined voting power of our outstanding common stock, which will give him the ability to prevent a potential takeover of our company. If a change of control
or change in management is delayed or prevented, the market price of our Common Stock could decline.
Purchasers in this offering will experience immediate and substantial dilution in net tangible book value per share.
If you purchase shares of our Common Stock in this offering, you will experience immediate and substantial dilution of $             per share
based on an assumed offering price of $             per share, the midpoint of the estimated price range shown on the cover page of this prospectus, because the price that you pay will
be
substantially greater than the net tangible book value per share of the shares you acquire. This dilution is due in large part to the fact that our earlier investors paid substantially less than the
initial public offering price when they purchased their shares. If the underwriters exercise their option to purchase additional shares, there will be further dilution to new investors. See "Dilution"
for more information.
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Special note regarding forward-looking statements
This prospectus includes statements that are, or may deemed to be, "forward-looking statements." These forward-looking statements can
be identified by the use of forward-looking terminology, including the terms "believes," "estimates," "anticipates," "expects," "intends," "plans," "may," "will" or "should" or, in each case, their
negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts and are not limited to the outlook for our future business
and financial performance. They appear in a number of places throughout this prospectus and include statements regarding our intentions, beliefs or current expectations concerning, among other things,
our results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which we operate.
By
their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and some of which are
beyond our control. We believe that these risks and uncertainties include:
•
periodic economic and industry downturns affecting the oil and gas industry;
•
competitive pressures in the industries that we serve;
•
factors affecting our international sales and operations;
•
the potential loss of a key OEM supplier;
•
our failure to accurately estimate costs associated with products produced under fixed-price contracts;
•
our ability to translate backlog into revenue and profit;
•
the effect of regulation of hydraulic fracturing on the demand for our products;
•
the impact of governmental laws and regulations, including environmental laws and regulations;
•
the hazards to which our employees and customers are exposed during the conduct of our business;
•
the occurrence of events not covered by insurance;
•
our susceptibility to adverse weather conditions affecting the Gulf Coast;
•
unforeseen difficulties relating to acquisitions;
•
our ability to attract and retain qualified employees;
•
our failure to maintain key licenses;
•
our ability to protect our intellectual property;
•
our level of indebtedness and restrictions on our activities imposed by our debt instruments;
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•
our principal stockholder could exercise control of our affairs through his beneficial ownership of all of our
Class B Common Stock; and
•
the other factors described under "Risk factors."
These
factors should not be construed as exhaustive and should be read with the other cautionary statements in this prospectus.
We
caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry
in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this prospectus. In addition, even if our results of operations, financial
condition, liquidity and growth, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this prospectus, those results or developments may
not be indicative of results or developments in subsequent periods.
Any
forward-looking statements which we make in this prospectus speak only as of the dates of such statements, and, except as required under the federal securities laws and the rules and regulations
of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements after we distribute this prospectus, whether as a result of new information, future events or
otherwise. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be
viewed as historical data.
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Market and industry data
This prospectus includes market share and industry data and forecasts that we obtained from industry publications and surveys and
internal company sources. As noted in this prospectus, Baker Hughes, Inc. and Spears & Associates, Inc. were the primary sources for third-party industry data and forecasts.
Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. While we have no reason to believe that
this information is not accurate or unreliable, we have not independently verified any of the data from third-party sources, nor have we ascertained the underlying economic assumptions relied upon
therein. Statements as to our market position are based on market data currently available to us. While we are not aware of any misstatements regarding the industry data presented herein, estimates
included in such data involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading "Risk factors" in this prospectus.
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Use of proceeds
We estimate that the net proceeds from this offering with respect to the shares of Common Stock to be sold by us will be
$              million, after deducting underwriting discounts and commissions and estimated expenses payable by us in connection with this offering and assuming a public offering
price of
$             per share (the midpoint of the price range
set forth on the cover of this prospectus). We will not receive any of the proceeds from the sale of shares by the selling stockholders.
We
intend to use the net proceeds to repay amounts outstanding under our revolving credit facility and for general corporate purposes.
An
affiliate of J.P. Morgan Securities LLC, an underwriter in this offering, is the administrative agent and a lender under our revolving credit facility and will, accordingly, receive
portions of the proceeds used to repay borrowings thereunder. See "Underwriting (Conflicts of interest)." The revolving credit facility is an asset-based facility that matures on February 13,
2012, provides for borrowings of up to $250.0 million and accrues interest at LIBOR plus a margin ranging from 1.25% to 2.0% per annum, based on our leverage ratio. As of January 31,
2011, approximately $35.2 million of borrowings were outstanding under the revolving credit facility and bore interest at a weighted average interest rate of LIBOR plus 1.5%, or 2.02%.
A
$1.00 increase (decrease) in the assumed initial public offering price of $             per share would increase (decrease) the net proceeds to us from this offering by
$              million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated
underwriting
discounts and commissions and estimated offering expenses payable by us.
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Dividend policy
We historically have not paid dividends on our common equity, other than periodic distributions to fund tax payments of our unit
holders as a result of our status as a limited liability company. Our future decisions concerning the payment of dividends on our Common Stock will depend upon our results of operations, financial
condition, contractual obligations, business prospects and capital expenditure plans, as well as any other factors that our board of directors may consider relevant. Our ability to pay dividends is
subject
to covenants contained in our revolving credit facility and the indenture governing our senior notes.
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Capitalization
The table below shows our cash and cash equivalents and capitalization as of January 31, 2011. The table also shows such
capitalization as adjusted to give effect to (1) the Corporate Conversion and (2) this offering, assuming a public offering price of $             per share, and our receipt
and
application of the estimated net proceeds of this offering and does not give effect to (a) the tax impact estimated to be approximately $        million for deferred taxes from
our conversion from a limited liability company to a corporation in connection with the Corporate Conversion or (b) the distribution to our unit holders to fund tax payments of such unit
holders as a result of our status as a limited liability company prior to the Corporate Conversion.
You
should read the table in conjunction with the information set forth under "Use of proceeds," "Selected historical consolidated financial data" and "Management's discussion and
analysis of financial condition and results of operations" and our consolidated financial statements and related notes included elsewhere in this prospectus.
As of January 31, 2011
(dollars in thousands)
Actual
As adjusted(1)
Cash and cash equivalents
$
9,168
$
Current debt:
Current portion of long-term debt
40
Notes payable
7,401
Total current debt
7,441
Long-term debt:
Revolving credit facility(2)
35,181
Senior notes
150,000
Total long-term debt
185,181
Total debt
192,622
Shareholders' equity:
Common units, 100,005,000 units issued and outstanding
74,113
—
(3)
Preferred stock, 100,000,000 shares authorized, 0 issued and outstanding
—
Common Stock, $0.01 par value; 600,000,000 shares authorized,
                    shares issued and outstanding as adjusted
—
Class B Common Stock, $0.01 par value; 300,000,000 shares authorized,
                    shares issued and outstanding as adjusted
—
Additional paid-in capital
—
Accumulated other comprehensive income
5,092
Retained earnings
69,829
Total shareholders' equity
149,034
Total capitalization
$
341,656
$
(1)   A $1.00 increase (decrease) in the assumed initial public offering price per share would increase (decrease) each of as adjusted cash and cash equivalents, total shareholders' equity
and total capitalization by $              million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after
deducting
underwriting discounts and estimated offering expenses payable by us.
(2)   Our
revolving credit facility provides for up to $250.0 million of borrowings. As of January 31, 2011, we had approximately $35.2 million drawn under our
revolving credit facility. We expect to repay all amounts outstanding under our revolving credit facility with a portion of the proceeds of this offering.
(3)   Reflects
the conversion of our common units based on a one-to-one conversion ratio into common stock in connection with the Corporate Conversion.
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Dilution
If you invest in our Common Stock in this offering, your ownership interest will be diluted to the extent of the difference between
the initial public offering price per share and the as adjusted net tangible book value per share of our common stock upon the completion of this offering and the Corporate Conversion. Dilution
results from the fact that the per share offering price of our Common Stock in this offering will be substantially in excess of the book value per share attributable to the shares of our common stock
to be held by our existing stockholders following the Corporate Conversion. Net tangible book value per share represents our total tangible assets less total liabilities divided by the total number of
shares of our common stock outstanding (excluding shares of Common Stock to be issued in connection with this offering), after giving effect to the Corporate Conversion. After giving effect to the
Corporate Conversion, our net tangible book value as of January 31, 2011 was approximately $              million, or approximately
$             per share.
After
giving effect to the sale of the shares of Common Stock at an assumed initial public offering price of $             per share (the midpoint of the price range set forth on the cover of
this
prospectus) and after deducting underwriting discounts and commissions and estimated expenses payable by us in connection with this offering, our as adjusted net tangible book value as of
January 31, 2011 would have been approximately $              million, or $             per share of Common
Stock. This represents an immediate increase in net tangible book value
of $             per share to our existing stockholders and an immediate dilution of $             per share to new
investors purchasing shares of Common Stock in this offering at the assumed
initial offering price. The following table illustrates this dilution on a per share basis:
Assumed initial public offering price per share
$
Net tangible book value per share as of January 31, 2011
$
Increase per share attributable to new investors
$
Net tangible book value per share after this offering
$
Dilution in as adjusted net tangible book value per share to new investors
$
A $1.00 increase (decrease) in the assumed initial public offering price per share of Common Stock would increase (decrease) our as adjusted net tangible book value by
$              million, our as adjusted net tangible book value per share by $             per share and the
dilution in as adjusted net tangible book value to new investors in this
offering by $             per share, assuming the number of shares of Common Stock offered by us, as set forth on the cover page of this prospectus, remains the same.
The
following table summarizes on an as adjusted basis as of January 31, 2011, giving effect to the Corporate Conversion and this offering, the number of shares of our Common Stock purchased
from us, the effective cash contribution paid to us, and the average price per share paid to us by our existing stockholders and to be paid by new investors purchasing shares of our Common Stock from
us in this offering. The table is based on an assumed initial public
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offering
price of $             per share before deduction of underwriting discounts and commissions and estimated expenses payable by us in connection with this offering:
Shares purchased
Total consideration
Average
price per
share
Number(1)
Percent
Amount
Percent
Existing stockholders
%
$
%
$
New investors
Total
100.0%
$
100.0%
$
(1)   Reflects shares owned by the selling stockholders that will be purchased by new investors as a result of this offering.
The
above discussion and tables assume no exercise of the underwriters' option to purchase up to an aggregate of             additional shares of Common Stock from us and the selling
stockholders
consisting of             shares issued by us and             shares to be sold on a pro rata basis by the selling
stockholders.
If
the underwriters exercise their option to purchase additional shares in full:
•
the percentage of our shares of common stock held by our existing stockholders will decrease to approximately
       % of the total outstanding amount of our shares of common stock after the Corporate Conversion and this offering;
•
the Common Stock held by new investors will represent approximately         % of the total outstanding amount of our
shares of common stock after the Corporate Conversion and this offering; and
•
there will be an immediate dilution of $             per share of Common Stock to new investors.
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Selected historical consolidated financial data
The following table sets forth our selected historical consolidated financial data as of and for each of the years ended
January 31, 2007, 2008, 2009, 2010 and 2011. The selected historical consolidated financial data as of January 31, 2010 and 2011 and for the years ended January 31, 2009, 2010 and
2011 were derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected historical consolidated financial data as of January 31, 2009, 2008 and
2007 and the years ended January 31, 2008 and 2007 were derived from our audited consolidated financial statements that are not included in this prospectus. The selected historical consolidated
financial data for the year ended January 31, 2008 includes the results of Crown from the date of its acquisition on February 26, 2007.
You
should read the following information in conjunction with "Capitalization" and "Management's discussion and analysis of financial condition and results of operations" and our consolidated
financial statements and related notes included elsewhere in this prospectus.
Year ended January 31,
(dollars and units in thousands)
2007
2008(5)
2009
2010
2011
Statement of operations data:
Sales
$
942,148
$
1,335,427
$
1,217,142
$
688,676
$
861,234
Cost of sales
774,060
1,070,396
1,002,166
577,028
715,967
Gross profit
168,088
265,031
214,976
111,648
145,267
Selling and administrative expenses
108,005
139,947
138,141
114,188
104,252
Impairment of goodwill and indefinite-lived intangible assets(1)
—
—
—
—
31,487
Other (income) expense, net
(1,900
)
(989
)
(1,311
)
54
(1,026
)
Operating profit (loss)
61,983
126,073
78,146
(2,594
)
10,554
Interest expense, net
19,756
29,058
24,931
20,489
19,886
Earnings (loss) before income taxes
42,227
97,015
53,215
(23,083
)
(9,332
)
Income tax expense(2)
742
5,192
2,659
816
700
Net earnings (loss)
41,485
91,823
50,556
(23,899
)
(10,032
)
Net earnings (loss)
41,485
91,823
50,556
(23,899
)
(10,032
)
Preferred dividends
(4,017
)
—
—
—
—
Net earnings (loss) available for common unit holders
$
37,468
$
91,823
$
50,556
$
(23,899
)
$
(10,032
)
Pro forma tax expense (benefit)(3)
$
14,318
$
31,628
$
17,272
$
(3,581
)
$
8,227
Pro forma net earnings (loss) available for common unit holders(3)
$
23,150
$
60,195
$
33,284
$
(20,318
)
$
(18,259
)
Net earnings (loss) per unit:
Basic
$
0.51
$
0.92
$
0.51
$
(0.24
)
$
(0.10
)
Diluted
$
0.41
$
0.92
$
0.51
$
(0.24
)
$
(0.10
)
Net earnings (loss) available for common unit holders per common unit:
Basic
$
0.46
$
0.92
$
0.51
$
(0.24
)
$
(0.10
)
Diluted
$
0.41
$
0.92
$
0.51
$
(0.24
)
$
(0.10
)
Pro forma tax effect—basic
$
0.29
$
0.60
$
0.33
$
(0.20
)
$
(0.18
)
Pro forma tax effect—diluted
$
0.27
$
0.60
$
0.33
$
(0.20
)
$
(0.18
)
Weighted average units outstanding:
Basic
80,745
100,005
100,005
100,005
100,005
Diluted
100,005
100,005
100,005
100,005
100,005
Balance sheet data (end of period):
Working capital(4)
$
214,718
$
318,072
$
313,574
$
245,485
$
238,271
Cash and cash equivalents
5,852
12,382
2,006
3,321
9,168
Property, plant and equipment, net
61,303
82,606
93,170
79,206
75,077
Total assets
456,801
673,621
653,962
514,525
567,603
Total debt
204,474
294,592
285,370
228,113
192,622
Total shareholders' equity
94,872
174,941
179,944
155,622
149,034
(1)   See discussion of this impairment in "Critical accounting policies—Goodwill and indefinite-lived intangible assets."
(2)   Since
January 23, 2006, we have conducted our operations as Stewart & Stevenson LLC, a limited liability company, and, as a result, U.S. federal and certain state
income taxes have been paid by the
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holders of our equity interests. Therefore, no U.S. federal income tax expense is recorded in our statement of operations for the period from January 23, 2006 to January 31, 2011. The
amounts shown reflect income tax expense associated with foreign jurisdictions and certain state taxes. As of the date of the Corporate Conversion, we will record deferred taxes representing the
difference between the tax and book basis of our assets and liabilities. Such net tax liability created is currently estimated to be approximately $2.7 million at January 31, 2011 and
will result in a corresponding adjustment to decrease net earnings from continuing operations. In connection with the Corporate Conversion, we expect to distribute cash to our unit holders consistent
with our prior practices to cover tax liabilities that will accrue to them through the date of the conversion.
(3)   Represents
the estimated tax effect of our results of operations. We have conducted our operations as Stewart & Stevenson LLC, a limited liability company, with
substantially all earnings taxed at the stockholder level. In connection with the Corporate Conversion, we will be subject to Subchapter C of the Internal Revenue Code, and as a result will
become taxable as a corporation and subject to U.S. federal and state income taxes. The tax rate used for pro forma purposes is the U.S. federal income tax rate of 35%, adjusted for state taxes,
federal tax credits earned and other items applied to the pre-tax book income subject to U.S. federal income taxation for the corresponding periods shown.
(4)   Working
capital is total current assets minus total current liabilities.
(5)   Our
results of operations for the year ended January 31, 2008 include the results of operations of Crown from February 26, 2007, the date we consummated the Crown
Acquisition.
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Management's discussion and analysis of
financial condition and results of operations
The following discussion should be read in conjunction with "Selected historical consolidated financial data"
and our consolidated financial statements and related notes thereto included elsewhere in this prospectus. The following information contains forward-looking statements, which are subject to risks and
uncertainties. Should one or more of these risks or uncertainties materialize, our actual results may differ from those expressed or implied by the forward-looking statements. See "Special note
regarding forward-looking statements."
Overview
We are a leading designer, manufacturer and provider of specialized equipment and aftermarket parts and service for the oil and gas
industry and other industries that we have served for over 100 years.
Our
wide range of products covers hydraulic fracturing, well stimulation, workover, intervention and drilling operations. These products include well stimulation equipment; pumping, acidizing, coiled
tubing, cementing and nitrogen units; drilling rigs and workover rigs; power generation systems; and electrical support and distribution systems, as well as engines, transmissions, prime movers and
material handling equipment. We have a substantial installed base of products, which provides us with significant opportunities for recurring, higher-margin aftermarket parts and service revenues from
customers in the oil and gas, power generation and various other industries. In addition, we provide rental equipment to our customers, including generator sets, air compressors, rail car movers and
material handling equipment. See "Business—Products and services" for further information on our product lines and related descriptions.
In
Fiscal 2010, we generated revenues of $861.2 million, operating profit of $10.6 million and EBITDA of $59.1 million, compared with revenues of $688.7 million, operating
loss of $2.6 million and EBITDA of $15.8 million in Fiscal 2009. For a definition of EBITDA and a reconciliation of EBITDA to net earnings (loss) available for common unit holders, see
"Prospectus summary—Summary historical consolidated financial data."
Business drivers and measures
Revenue factors
Oil and gas industry capital expenditures.
Sales of our equipment are significantly driven by the capital spending programs of our customers. Growing worldwide
demand for energy has resulted in significantly increased capital expenditures by oil and gas producers in recent years. We believe that we are well positioned for the rapid growth in the development
of unconventional oil and gas resources, particularly in North America, which require utilization of technologically advanced well stimulation equipment of the nature that we provide. Although
commodity price fluctuations may impact the level of oil and gas exploration activity in the long term, we believe the capital spending programs of our customers at this time continue to be strong. A
decrease in the capital spending programs of our customers would adversely impact our equipment sales and, to a lesser extent, our aftermarket parts and service and
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rental
sales. Approximately 78% and 72% of our revenues in Fiscal 2010 and Fiscal 2009, respectively, came from customers in the oil and gas industry.
Non-oil and gas industries.
We believe that many of the non-oil and gas industries we serve, particularly the commercial vehicle and
material handling industries, provide us with opportunities to continue to grow our business.
Aftermarket parts and service demand.
In addition, we provide aftermarket parts and service and rent equipment to customers in the oil and gas, power generation,
marine, mining, construction, commercial vehicle and material handling industries. These sales generated approximately 35% and 40% of our revenues during Fiscal 2010 and Fiscal 2009, respectively. We
provide aftermarket parts and service for equipment manufactured by approximately 100 manufacturers, including products manufactured by us and our key OEMs, and our aftermarket business
provides us with a recurring revenue stream. Our rental revenue includes generators, compressors and material handling equipment.
Backlog.
Among the metrics we track to monitor demand in our business is equipment order backlog. We define backlog as unfilled equipment orders that consist of
written purchase orders or signed contracts accompanied, if required by our credit policies, by credit support (typically down payments or letters of credit). As of January 31, 2011, our
equipment order
backlog was $375.0 million, compared to $203.2 million as of January 31, 2010. For more information about our backlog, see "Business—Backlog."
Backlog
of $375.0 million as of January 31, 2011 includes $37.5 million of related party transactions reflecting an order in Fiscal 2009 from an affiliate. Revenue recognition
from this transaction will be deferred until title to the product passes to a third party and all other revenue recognition criteria have been met. A deposit in the amount of $31.2 million is
recorded as a customer deposit in our consolidated balance sheet. Included in inventories, net is $29.5 million in costs related to this contract, and no amounts have been recorded in the
consolidated statements of operations through January 31, 2011.
Seasonality.
Our revenues are not significantly affected by seasonality.
Operational factors
Ensuring timely supply of components.
While we believe that the opportunities to grow our business are significant, there are also challenges and uncertainties we
face in executing our business plans. In the current environment of strong demand for products and services of the type we provide, our ability to procure certain components on a timely basis to meet
the delivery needs of our customers is a concern. A substantial portion of the products we sell includes components provided by our six key OEMs and on occasion we need to rely upon alternative
sources of supply for those components because of the current levels of high demand for the components we require. Our ability to satisfy the delivery requirements of a customer on a timely basis is
critical to our success. For more information, see "Business—Suppliers and raw materials."
Labor market constraints.
Although we have the benefit of a highly trained and experienced workforce, we believe that attracting and retaining high quality and
experienced personnel is a significant challenge in the current competitive environment, particularly in oil- and gas-related
activities. Accordingly, we place particular emphasis on career development programs that seek to improve the retention of employees, including senior and middle management.
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Table of Contents
Presentation of historical financial information
Our fiscal year begins on February 1 of the stated year and ends on January 31 of the following year. For example,
Fiscal 2010 began on February 1, 2010 and ended on January 31, 2011. We report results on the fiscal quarter method, with each quarter comprising approximately 13 weeks.
Historical operation as an LLC
For the period from January 23, 2006 to immediately prior to the consummation of this offering, we have conducted our operations though
Stewart & Stevenson LLC, a limited liability company, and, as a result, U.S. federal and certain state income taxes were paid by the holders of our equity interests. Therefore, no U.S.
federal income tax expense is recorded in our statement of operations for the years ended January 31, 2007, 2008, 2009, 2010 and 2011. The amounts shown under "income taxes" in our audited
consolidated financial statements reflect taxes paid to foreign jurisdictions and certain state taxes. As of the date of the Corporate Conversion, we will record deferred taxes representing the
difference between the tax and book basis of our assets and liabilities. Such net tax liability created is currently estimated to be approximately $2.7 million at January 31, 2011 and
will result in a corresponding adjustment to decrease net earnings from continuing operations. In connection with the Corporate Conversion, we expect to distribute cash to our unit holders consistent
with our prior practices to cover tax liabilities that will accrue to them through the date of the conversion.
Segment presentation
We recently revised our segment presentation to present the following reportable segments:
•
Manufacturing
, which includes the design, manufacture and marketing of
equipment for oilfield service providers, drilling and workover contractors, U.S. and international oilfield service companies, and national oil companies. We provide parts and service to customers
primarily in the oil and gas industry.
•
Distribution
, which includes the distribution of stand-alone products and
the provision of aftermarket parts and service for products manufactured by us, our key OEMs and other manufacturers, as well as the renting of equipment, including generator sets, rail car movers and
material handling equipment.
•
Corporate and shared services
, which includes administrative overhead
normally not associated with specific activities within our operating segments.
For
more information on our segments, see "—Segment data."
In
our prior reports filed with the SEC, we presented four segments: equipment, aftermarket parts and service, rental and corporate. The audited consolidated financial statements included elsewhere in
this prospectus have been recast to reflect our new segment presentation.
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Critical accounting policies
Use of estimates and assumptions
The preparation of financial statements in conformance with accounting principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of sales and expense during the reporting period. We evaluate our estimates on an ongoing basis, based on historical experience and various other assumptions that we believe to be reasonable
under the circumstances. Actual results may differ from these estimates.
Revenue recognition
Revenue from equipment and parts sales is recognized when the product is shipped, collection is reasonably assured, risks of ownership have been
transferred to and accepted by the customer and contract terms are met. Cash discounts or other incentives to customers are recorded as a reduction of revenue. Revenue from service agreements is
recognized as earned when services have been rendered. Revenue from rental agreements is recognized on a straight-line basis over the rental period. We report revenue net of any
revenue-based taxes assessed by governmental authorities.
With
respect to long-term equipment contracts, revenue is recognized using the percentage-of-completion method. The majority of our contracts are fixed-price contracts, and
measurement of progress toward completion is based on direct labor hours incurred. For long-term equipment contracts to build land-based drilling, work over and service rigs, measurement of progress
toward completion is based on the cost-to-cost method. Changes in estimates for revenues, costs to complete and profit margins are recognized in the period in which they are reasonably determinable.
Any anticipated losses on uncompleted contracts are recognized whenever evidence indicates that the estimated total cost of a contract exceeds its estimated total revenue. With respect to
cost-plus-fixed-fee contracts, we recognize the fee ratably as the actual costs are incurred, based upon the total fee amounts expected to be realized upon
completion of the contracts. Bid and proposal costs are expensed as incurred.
Recoverable
costs and accrued profits not yet billed ("Unbilled Revenue") represent the cumulative revenue recognized less the cumulative billings to the customer. Any billed revenue that has not been
collected is reported as accounts receivable. The timing of when we bill our customers is generally based upon advance billing terms or contingent upon completion of certain phases of the work, as
stipulated in the contract. Billings in excess of incurred costs represent progress billings in excess of Unbilled Revenue.
We
frequently sell equipment together with "start-up" services, which typically involve adding fuel to the engine, starting the equipment for the first time and observing it to ensure that
it is operating properly. In cases where start-up services are required on an equipment sale, the estimated start-up costs are accrued when revenue from the equipment sale is
recognized.
Accounts receivable
Accounts receivable are recorded when billed and represent claims against third parties that will be settled in cash. The carrying value of our
accounts receivable, net of the allowance for doubtful accounts, represents the estimated net realizable value. We maintain an allowance for
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doubtful
accounts for estimated losses related to credit extended to our customers. We base such estimates on our current accounts receivable aging and historical collections and settlements
experience, existing economic conditions and any specific customer collection issues
we have identified. Uncollectible accounts receivable are written off when we determine that the balance cannot be collected.
Inventories
Inventories are stated at the lower of cost or market, with cost primarily determined on a first-in, first-out ("FIFO") basis
and market determined on the basis of estimated realizable values. We purchase a considerable amount of our inventory for resale from independent manufacturers pursuant to distribution agreements.
Cost represents invoice or production cost for new items and original cost less allowance for condition for used equipment inventory. Production cost includes material, labor and manufacturing
overhead. When circumstances dictate, we write inventory down to its estimated realizable value based upon assumptions about future demand, technological innovations, market conditions, plans for
disposal and the physical condition of products. Shipping and handling costs are expensed as incurred in cost of sales. Shipping and handling costs billed to customers are recorded as sales.
Goodwill and indefinite-lived intangible assets
We perform an impairment test for goodwill and indefinite-lived intangible assets annually during the fourth quarter, or earlier if indicators of
potential impairment exist. Our goodwill impairment test involves a comparison of the fair value of each of our reporting units with their carrying value. Our impairment test for indefinite-lived
intangible assets involves the comparison of the fair value of the intangible asset and its carrying value. The fair value is determined using discounted cash flows ("income approach") and other
market-related valuation models, including earnings multiples ("public company market approach") and comparable asset market values ("transaction approach"). Certain estimates and judgments are
required in the application of these fair value models. The income approach consists of estimating the future cash flows that are directly associated with each of our reporting units. There are
significant inherent uncertainties and management judgment involved in estimating the fair value of each reporting unit, including historical experience and future expectations such as budgets and
industry projections. We believe we have made reasonable estimates and assumptions to estimate the fair value of our reporting units.
We
performed the first step for our annual impairment test, which compares the fair value of our reporting units to their carrying values, during the Fiscal 2010 fourth quarter and the result of this
test indicated that a probable impairment existed for our Crown reporting unit. The
Fiscal 2010 results of operations for the Crown reporting unit did not achieve our expectations. In particular, the anticipated rebound for and growth in rig and well stimulation equipment sales and
backlog growth for the Crown reporting unit have not reached pre-2009 levels. These assumptions had been factored into our budgets and forecasts and specific sales were anticipated to
occur during Fiscal 2010, including the fourth quarter, coupled with growth in backlog for these products. Because oil prices have risen, it was anticipated that capital spending for land-based
drilling, work over and service rigs would return and be reflected in backlog and equipment ordering trends. As a result of this prolonged downturn, our cash flow projections for Crown have been
substantially revised downward.
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The
Crown reporting unit had goodwill of $28.7 million and indefinite-lived intangible assets (trademarks) of $4.1 million subject to this annual impairment test. In determining the fair
value in the step one test, the material assumptions used for the income approach included a weighted average cost of capital of 21.4% and a long-term growth rate of 4.1%. Based on our
future cash flow projections for the Crown reporting unit, the result of the income approach indicated the carrying amount of the Crown reporting unit exceeded its estimated fair value. In addition,
these cash flow projections did not result in meaningful market-related comparisons under the public company market and transaction approaches. Therefore, under the second step of the impairment test,
we allocated the estimated fair value indicated by the income approach to the identifiable tangible and intangible assets and liabilities based on their respective values. This allocation indicated a
partial impairment for the indefinite-lived intangible assets and no residual value for goodwill.
The
below table details the impact of this impairment charge, which resulted in an overall decrease to goodwill and intangibles, net in our consolidated balance sheets of $31.5 million as
follows:
Indefinite-Lived
Intangible Assets
Goodwill
Crown reporting unit before impairment test
$
4,084
$
28,653
Impairment charges
(2,834
)
(28,653
)
Crown reporting unit after impairment test
$
1,250
$
—
We recorded a $31.5 million impairment charge in our consolidated results of operations for Fiscal 2010.
Long-lived assets
Long-lived assets, which include property, plant and equipment and acquired definite-lived intangibles assets, comprise a significant
amount of our total assets. We carry our property, plant and equipment at cost less accumulated depreciation. Maintenance and repairs are expensed as incurred and expenditures for renewals,
replacements and improvements are capitalized. We depreciate our property, plant and equipment on a straight-line basis over their estimated useful lives. Definite-lived intangibles are
amortized on a straight-line basis over their estimated useful lives.
In
accounting for long-lived assets, we must make estimates about the expected useful lives of the assets and the potential for impairment based on the fair value of the assets and the
cash flows they are expected to generate. The value of the long-lived assets is then amortized over their expected useful lives. A change in the estimated useful lives
of our long-lived assets would have an impact on our results of operations. We estimate the useful lives of our long-lived asset groups as follows:
Buildings
10-25 years
Leasehold improvements
Lesser of lease term or asset life
Rental equipment
2-8 years
Machinery and equipment
4-7 years
Computer hardware and software
3-4 years
Intangible assets
4 months-27 years
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In
estimating the useful lives of our property, plant and equipment, we rely primarily on our actual experience with the same or similar assets. The useful lives of our definite-lived intangible
assets are determined by the years over which we expect the assets to generate a benefit based on legal, contractual or regulatory terms.
We
assess the valuation of components of our property, plant and equipment and definite-lived intangible assets whenever events or circumstances dictate that the carrying value might not be
recoverable. We base our evaluation on indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external
market conditions or factors that may be present. If such factors indicate that the carrying amount of an asset or asset group may not be recoverable, we determine whether impairment has occurred by
analyzing an estimate of undiscounted future cash flows at the lowest level for which identifiable cash flows exist. If our estimate of undiscounted future cash flows during the estimated useful life
of the asset is less than the carrying value of the asset, we recognize a loss for the difference between the carrying value of the asset and its estimated fair value, measured by the present value of
estimated future cash flows or other means, as appropriate under the circumstances.
Warranty costs
Generally, the only warranty provided to our customers for products we sell that were originally manufactured by others, including our key OEMs, is
the warranty provided by those original manufacturers. We warrant products manufactured, and services provided, by us for periods of three to 18 months. Based on historical experience and
contract terms, we accrue the estimated cost of our product and service warranties at the time of sale or, in some cases, when specific warranty exposures are identified and quantifiable. Accrued
warranty costs are adjusted periodically to reflect actual experience. Certain warranty and other related claims involve matters of dispute that ultimately are resolved by negotiation, arbitration or
litigation. Occasionally, a material warranty issue can arise that is beyond our historical experience. We accrue for any such warranty issues as they become known and estimable.
Customer deposits
We sometimes collect advance customer deposits to secure customers' obligations to pay the purchase price of ordered equipment. For
long-term construction contracts, these customer deposits are recorded as current liabilities until construction begins. During construction, the deposit liability is reclassified into
billings in excess of incurred costs and, ultimately, recognized into revenue under the percentage-of-completion method. For all other sales, these deposits are recorded as
current liabilities until revenue is recognized.
Insurance
We maintain a variety of insurance for our operations that we believe to be customary and reasonable. We are self-insured up to certain
levels in the form of deductibles and retentions for general liability, vehicle liability, group medical and workers' compensation claims. Other than normal business and contractual risks that are not
insurable, our risks are commonly insured against and the effect of a loss occurrence is not expected to be significant. We accrue for estimated self-insurance costs and uninsured
exposures based on estimated development of claims filed and an estimate of claims incurred but not reported as of each balance sheet date. We regularly review estimates of reported and unreported
claims and provide for losses accordingly.
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Comparison of results of operations—Fiscal 2010 and Fiscal 2009
Sales
In Fiscal 2010, our sales were $861.2 million, an increase of $172.6 million, or 25.1%, compared to the same period of Fiscal 2009
sales of $688.7 million. The increase in sales impacted both segments and was attributable primarily to an overall increase in equipment sales in the manufacturing segment to customers in the
oil and gas industry for our well stimulation equipment. Parts and service sales increased in both segments and higher transmission sales for oilfield equipment were primarily responsible for the
increase in equipment sales for the distribution segment.
A
breakdown of sales for the periods is as follows:
For the year ended
January 31,
Change
(dollars in thousands)
2011
2010
$
%
Manufacturing segment
Equipment
$
321,008
$
230,796
$
90,212
39.1%
Parts and Service
21,386
15,558
5,828
37.5%
Total manufacturing sales
$
342,394
$
246,354
$
96,040
39.0%
Distribution segment
Equipment
$
216,251
$
164,846
$
51,405
31.2%
Parts and Service
279,341
258,082
21,259
8.2%
Rentals
23,248
19,394
3,854
19.9%
Total distribution sales
$
518,840
$
442,322
$
76,518
17.3%
Total sales
$
861,234
$
688,676
$
172,558
25.1%
Operating profit (loss)
Manufacturing(1)
$
11,277
$
15,875
$
(4,598
)
(29.0)%
Distribution
37,481
23,640
13,841
58.5%
Corporate and shared services
(38,204
)
(42,109
)
3,905
(9.3)%
Total operating profit
$
10,554
$
(2,594
)
$
13,148
Operating profit percentage
Manufacturing(1)
3.3%
6.4%
Distribution
7.2%
5.3%
Consolidated
1.2%
(0.4)%
(1)   The Fiscal 2010 operating profit for the manufacturing segment includes the impact of the $31.5 million goodwill and indefinite-lived intangible assets impairment charge for
Crown.
Manufacturing
sales increased by 39.0%, or $96.0 million, during Fiscal 2010 compared to Fiscal 2009, of which $90.2 million of this increase was related to equipment sales and
$5.8 million was related to an increase in parts and service sales. The increase in equipment sales was primarily attributable to higher sales volumes for well stimulation equipment, which was
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partially
offset by lower sales volumes in power generation (associated with deepwater drilling rig build cycles) and rigs as follows:
For the year ended January 31,
Change
(dollars in thousands)
2011
2010
$
%
Manufacturing equipments sales
Well stimulation
$
275,271
$
60,016
$
215,255
358.7
%
Power generation
17,889
116,749
(98,860
)
(84.7
)%
Rigs
14,673
42,215
(27,542
)
(65.2
)%
Seismic products
6,192
2,220
3,972
178.9
%
Electric products
5,382
6,931
(1,549
)
(22.3
)%
Other
1,601
2,665
(1,064
)
(39.9
)%
Total equipment sales
$
321,008
$
230,796
$
90,212
39.1
%
Distribution
sales increased by $76.5 million to $518.8 million in Fiscal 2010 compared to $442.3 million in Fiscal 2009. The increase in distribution sales was due to increased
equipment sales of $51.4 million, parts and service of $21.3 million and rentals of $3.8 million. The increase in transmissions is due to higher sales volumes for oilfield
equipment. Equipment sales increased due to the following changes in our distribution products:
For the year ended January 31,
Change
(dollars in thousands)
2011
2010
$
%
Distribution equipment sales
Power generation
$
48,427
$
48,348
$
79
0.2
%
Engines
28,845
32,631
(3,786
)
(11.6
)%
Transmissions
47,661
17,769
29,892
168.2
%
Prime movers
34,488
26,962
7,526
27.9
%
Material handling
31,099
24,609
6,490
26.4
%
Rail car movers
11,638
8,390
3,248
38.7
%
Other
14,093
6,137
7,956
129.6
%
Total equipment sales
$
216,251
$
164,846
$
51,405
31.2
%
Gross profit
Our gross profit was $145.3 million for Fiscal 2010 compared to $111.6 million for Fiscal 2009, reflecting an increase in gross profit
margin from 16.2% to 16.9%. Our gross profit margin increased by 0.7 points due to higher sales volumes and product mix. The manufacturing segment gross profit margin increased from 15.4% to 17.0%, an
increase of 1.6 points. The distribution segment gross profit margin remained flat at 16.8%.
Selling and administrative expenses
Selling and administrative expenses decreased by $9.9 million to $104.3 million for Fiscal 2010, primarily as a result of the following
items, which impacted Fiscal 2009: (1) an accrual for a probable sales tax liability ($3.4 million); (2) the settlement and defense of a claim ($3.5 million); and (3) the
closure of a facility ($0.9 million). Further decreases in overall selling and administrative expenses in Fiscal 2010, including lower professional and legal fees, bad
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debt
expense and depreciation, partially offset by higher compensation expense. As a result, selling and administrative expenses as a percentage of sales decreased to 12.1% in Fiscal 2010 from 16.6%
for Fiscal 2009.
Other (income) expense, net
Other income increased by $1.1 million to $1.0 million for Fiscal 2010, mainly as the result of gains associated with foreign currency
derivative instruments in Fiscal 2010, lower foreign currency transaction losses associated with our foreign subsidiaries in Fiscal 2010 as compared to Fiscal 2009. Our foreign subsidiaries in Canada,
Colombia and Venezuela generated 4.0%, 3.9% and 0.3%, respectively, of our sales for Fiscal 2010.
Operating profit
Our operating profit increased to $10.6 million, or 1.2% of sales, during Fiscal 2010 from an operating loss of $2.6 million, or 0.4%
of sales, volumes, gross profit margins in Fiscal 2009, primarily as the result of higher sales and lower selling and administrative expenses; however, operating profit margin was significantly
reduced by the impact of the goodwill and indefinite-lived intangible assets impairment charge of $31.5 million. See discussion of this impairment in "Critical accounting
policies—Goodwill and indefinite-lived intangible assets."
Interest expense, net
Interest expense, net for Fiscal 2010 decreased by $0.6 million compared to Fiscal 2009, primarily as a result of lower outstanding borrowings
and interest rates for our revolving credit facility during Fiscal 2010, partially offset by higher interest income during Fiscal 2009.
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Table of Contents
Comparison of the results of operations—Fiscal 2009 and Fiscal 2008
Sales
For Fiscal 2009, our sales were $688.7 million, a decrease of $528.5 million, or 43.4%, compared to Fiscal 2008 sales of
$1,217.1 million. The decrease in sales impacted both segments and resulted from low customer confidence due to the weak U.S. and global economies, tight credit markets and unstable gas and oil
prices.
A
breakdown of sales for these periods is as follows:
Year ended January 31,
Change
(dollars in thousands)
2010
2009
$
%
Manufacturing segment
Equipment
$
230,796
$
485,165
$
(254,369
)
(52.4)%
Parts and service
15,558
34,890
(19,332
)
(55.4)%
Total manufacturing sales
$
246,354
$
520,055
$
(273,701
)
(52.6)%
Distribution segment
Equipment
$
164,846
$
307,754
$
(142,908
)
(46.4)%
Parts and service
258,082
347,898
(89,816
)
(25.8)%
Rentals
19,394
41,435
(22,041
)
(53.2)%
Total distribution sales
$
442,322
$
697,087
$
(254,765
)
(36.5)%
Total sales
$
688,676
$
1,217,142
$
(528,466
)
(43.4)%
Operating profit (loss)
Manufacturing
$
15,875
$
50,110
$
(34,235
)
(68.3)%
Distribution
23,640
66,456
(42,816
)
(64.4)%
Corporate and shared services
(42,109)
(38,420)
(3,689
)
9.6%
Total operating profit (loss)
$
(2,594)
$
78,146
$
(80,740
)
(103.3)%
Operating profit percentage
Manufacturing
6.4%
9.6%
Distribution
5.3%
9.5%
Consolidated
(0.4)%
6.4%
Manufacturing sales decreased by 52.6%, or $273.7 million, during Fiscal 2009 compared to Fiscal 2008. The decrease in sales was attributable to lower
equipment sales of $254.4 million and net decreases in parts and service of $19.3 million. Equipment sales decreased for all
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products,
except power generation equipment (due to higher demand associated with deepwater drilling rig build cycles) and other equipment, as indicated in the following chart:
Year ended January 31,
Change
(dollars in thousands)
2010
2009
$
%
Manufacturing equipment sales
Well stimulation
$
60,016
$
255,343
$
(195,327
)
(76.5)%
Rigs
42,215
121,145
(78,930
)
(65.2)%
Power generation
116,749
58,141
58,608
100.8%
Seismic products
2,220
36,776
(34,556
)
(94.0)%
Electric products
6,931
12,131
(5,200
)
(42.9)%
Other
2,665
1,629
1,036
63.6%
Total equipment sales
$
230,796
$
485,165
$
(254,369
)
(52.4)%
Distribution sales fell by 36.5%, or $254.8 million, to $442.3 million during Fiscal 2009 from $697.1 million in Fiscal 2008. Equipment
sales fell by $142.9 million, parts and service sales fell by $89.8 million, and rental sales fell by $22.1 million. Rental sales during Fiscal 2008 included revenues of
approximately $11.2 million related to Hurricanes Gustav and Ike, which were not repeated during Fiscal 2009. Sales of equipment by product decreased as follows:
Year ended January 31,
Change
(dollars in thousands)
2010
2009
$
%
Distribution equipment sales
Power generation
$
48,348
$
58,358
$
(10,010
)
(17.2)%
Engines
32,631
65,344
(32,713
)
(50.1)%
Transmissions
17,769
49,757
(31,988
)
(64.3)%
Prime movers
26,962
52,658
(25,696
)
(48.8)%
Material handling
24,609
52,468
(27,859
)
(53.1)%
Rail car movers
8,390
20,230
(11,840
)
(58.5)%
Other
6,137
8,939
(2,802
)
(31.3)%
Total equipment sales
$
164,846
$
307,754
$
(142,908
)
(46.4)%
Gross profit
Our gross profit was $111.6 million for Fiscal 2009, a decrease of $103.4 million, compared to $215.0 million in Fiscal 2008,
reflecting a decline in gross profit margin from 17.7% to 16.2%, due to lower sales volumes, product mix and pricing pressures. The manufacturing segment gross profit margin increased slightly from
14.6% to 15.4%, primarily driven by changes in product mix. The distribution segment gross profit margin decreased from 20.1% to 16.8%, as a result of changes in product mix, pricing pressures and
increases in indirect costs such as inventory reserves.
Selling and administrative expenses
Selling and administrative expenses decreased by $23.9 million to $114.2 million in Fiscal 2009 compared to $138.1 million in
Fiscal 2008. Selling and administrative expenses as a percentage of sales increased to 16.6% from 11.3% for Fiscal 2009, primarily as a result of the impact of
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lower
sales volumes and our fixed costs. The decrease of $23.9 million during Fiscal 2009 was partially offset by approximately $3.4 million related to an accrual for a probable sales
tax liability and $3.5 million related to the settlement and defense of a claim. Fiscal 2008 included legal and professional expenses of approximately $2.6 million associated with the
pursuit of strategic alternatives, $1.6 million related to Sarbanes-Oxley 404 internal controls implementation costs, and $3.2 million of non-cash amortization of other
intangible assets.
Other expense (income), net
Other expense was $0.1 million in Fiscal 2009, a decrease of $1.4 million compared to other income of $1.3 million in Fiscal
2008, mainly as the result of foreign currency transaction losses associated with our Canadian subsidiary, partially offset by realized gains associated with our foreign currency derivative
instruments in place at that time.
Operating (loss) profit
Our operating loss was $2.6 million, or 0.4% of sales, in Fiscal 2009, compared to operating profit of $78.1 million, or 6.4% of sales,
in Fiscal 2008, primarily as the result of lower sales and gross profit margins.
Interest expense, net
Net interest expense was $20.5 million in Fiscal 2009, a decrease of $4.4 million compared to net interest expense of
$24.9 million in Fiscal 2008. The decrease in interest expense was primarily a result of lower outstanding balances and lower interest rates for our revolving credit facility and an increase in
interest income as compared to Fiscal 2008.
Segment data
In our prior reports filed with the SEC, we presented four segments: equipment, aftermarket parts and service, rental and corporate.
We have revised our segments to the following three segments: manufacturing, distribution and corporate and shared services. The audited consolidated financial statements included elsewhere in this
prospectus have been presented on this basis.
Through
our two operating segments, we design, manufacture and market a wide range of equipment and provide aftermarket parts and service to a broad range of customers. We also provide rental
equipment through our distribution segment. These products and services are consistent with our activities in prior periods and were reported in prior periods as three distinct operating segments. We
now report these same product categories within our two operating segments, which reflect our internal management structure.
This
operational and management structure was clarified and defined in the fourth quarter of Fiscal 2010 as the result of senior management's assessment and recommendations made to the board of
directors. This operational and management realignment was approved by our board and is reflected in the segments we now report. We believe that the two operating segment presentation continues to
report the products and services we provide, while also providing a view of how we manage our business and a better platform from which to explain the key activities within, and drivers for, our
business.
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Our
reportable segments are as follows:
Manufacturing
We design, manufacture and market equipment for U.S. and international oilfield service providers and drilling and workover contractors, as well as
national oil companies that require integrated and customized product solutions. We manufacture equipment specifically for hydraulic fracturing, well stimulation, well workover, intervention and
drilling operations. Our manufactured products include integrated solutions, which incorporate a variety of components into a single system, for a wide range of oilfield services and support
applications. In addition, we provide parts and service to customers primarily in the oil and gas industry.
Distribution
We provide stand-alone products and aftermarket parts and service for products manufactured by us, our six key OEMs and other manufacturers.
In addition, we provide rental equipment including generator sets, air compressors, rail car movers and material handling equipment to our customers. Our aftermarket parts and service operations,
which provide us with a recurring, higher-margin source of revenue, serve customers engaged in the oil and gas, power generation, marine, mining, construction, commercial vehicle and material handling
industries, as well as other industries.
Corporate and shared services
Our corporate and shared services segment includes administrative overhead normally not associated with specific activities within the operating
segments. These expenses include legal, finance and accounting, internal audit, human resources, information technology, marketing, supply chain and similar corporate office costs.
Intra-segment
revenues and costs are eliminated, and operating profit (loss) represents earnings (loss) before interest and income taxes.
Segment results comparison—Fiscal 2010 and Fiscal 2009
Manufacturing
Operating profit generated by our manufacturing segment decreased to $11.3 million, or 3.3% of sales, for Fiscal 2010, from
$15.9 million, or 6.4% of sales for Fiscal 2009. The $4.6 million decrease in operating profit was attributable to a goodwill and indefinite-lived intangible asset impairment charge of
$31.5 million. This impairment charge was offset by increases of $14.8 million in sales volume, $5.5 million in increases due to a higher average profit margin, a
$3.8 million decrease in selling and administrative expenses and a $2.8 million decrease in other expense. The decrease in selling and administrative expenses primarily related to lower
depreciation, rent and facility-related costs and lower bad debt expense. The decrease in other expense was the result of foreign currency transaction losses attributable to our Canadian subsidiary in
Fiscal 2009 that were lower in Fiscal 2010.
Our
manufacturing backlog as of January 31, 2011 was $273.6 million, as compared to $158.6 million on January 31, 2010, an increase of 72.5%. Backlog of
$273.6 million as of January 31, 2011 includes a $37.5 million related party transaction, reflecting an order in Fiscal 2009 from an affiliate. Revenue recognition from this
transaction will be deferred until title to the product passes to a third party and all other revenue recognition criteria have been met. Cash payments received pursuant to this transaction are
recorded as customer deposits in the
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consolidated
balance sheet and amounted to $31.2 million as of January 31, 2011. Included in inventories, net is $29.5 million of costs related to this transaction, and no amounts
have been recorded in the consolidated statement of operations for this transaction to date.
Distribution
Operating profit generated by the distribution segment increased to $37.5 million in Fiscal 2010 from $23.6 million in Fiscal 2009,
representing an increase in operating profit percentage from 5.3% to 7.2%. The $13.9 million increase in operating profit was attributable to increases of $12.9 million in sales volume
and decreases of $1.7 million in selling and administrative expenses, partially offset by a $0.2 million decrease in average gross profit margin and an increase of $0.5 million in
other expense.
Our
distribution backlog as of January 31, 2011 was $101.4 million, as compared to $44.7 million on January 31, 2010, an increase of 126.8%.
Corporate and shared services
Corporate and shared services expenses decreased to $38.2 million in Fiscal 2010 compared to $42.1 million in Fiscal 2009, primarily as
a result of the following items that impacted Fiscal 2009: an accrual for a probable sales tax liability ($3.4 million) and the settlement and defense of a claim ($3.5 million). These
decreases were offset by an increase in bonuses ($2.8 million). As a result of these decreases, and due to higher sales volumes, corporate and shared services expenses decreased from 6.1% to
4.4% as a percentage of sales.
Segment results comparison—Fiscal 2009 and Fiscal 2008
Manufacturing
Operating profit generated by the manufacturing segment decreased to $15.9 million in Fiscal 2009 from $50.1 million in Fiscal 2008, a
decrease in operating profit margin from 9.6% to 6.4%, primarily due to higher costs and lower sales volumes. The $34.2 million decrease in operating profit was attributable to a decrease of
$39.9 million in sales volume and an increase in other expense of $7.3 million, partially offset by $10.9 million decrease in selling and administrative expenses and an increase
of $2.1 million in our average profit margin. The increase in other expense resulted from foreign currency transaction gains in Fiscal 2008 for our Canadian subsidiary, while foreign currency
transaction losses occurred in Fiscal 2009. Selling and administrative expenses decreased as a result of lower salaries and wages, including the impact of headcount reductions, depreciation,
facilities costs and other items.
Our
manufacturing backlog as of January 31, 2010 was $158.6 million compared to $223.7 million as of January 31, 2009, a decrease of 31.7%. We experienced significant
declines in demand in fiscal 2009 for our well stimulation and drilling rig products as a result of lower oil and gas prices, the tight credit markets and the weak U.S. and global economies. Backlog
of $158.6 million as of January 31, 2010 includes a $37.5 million related party transaction reflecting an order in Fiscal 2009 from an affiliate. Revenue recognition from this
transaction will be deferred until title to the product passes to a third party and all other revenue recognition criteria have been met. A deposit in the amount of $9.4 million is recorded as
a customer deposit in our consolidated balance sheet. Included in inventories, net is $5.8 million in costs related to this contract, and no amounts have been recorded in the consolidated
statements of operations through January 31, 2010.
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Distribution
Operating profit generated by the distribution segment decreased to $23.6 million in Fiscal 2009 from $66.4 million in Fiscal 2008,
while operating profit margin decreased from 9.5% to 5.3%. The $42.8 million decrease in operating profit was attributable to decreases of $51.2 million in sales volume and
$14.6 million in our average profit margin. Decreases in selling and administrative expenses of $21.7 million and $1.3 million in other expense partially offset the overall
decrease in operating profit. Selling and administrative expenses decreased due to lower salaries and wages, including the impact of headcount reductions, depreciation, rent and facility costs, among
other items. The decrease in other expense is primarily attributable to foreign currency transaction losses occurring in our Venezuelan subsidiary in Fiscal 2008 that did not occur in Fiscal 2009.
Our
distribution backlog as of January 31, 2010 was $44.7 million, as compared to $64.2 million on January 31, 2009, a decrease of 30.4%.
Corporate and shared services
Corporate and shared services expenses increased to $42.1 million in Fiscal 2009 compared to $38.4 million in Fiscal 2008 and increased
as a percentage of sales from 3.2% to 6.1% as a result of lower sales volumes. Corporate and shared services expenses in Fiscal 2009 included $3.4 million of charges related to the accrual for
a probable sales tax liability, $3.5 million in defense and settlement of a claim, an increase of $2.7 million in facility related expenses and an increase of $1.0 million in
warranty expense.
Liquidity and capital resources
Our principal source of liquidity is cash generated by operations. We also have a $250.0 million asset-based revolving credit
facility, which we draw upon when necessary to satisfy our working capital needs and generally pay down with available cash. Our liquidity needs are primarily driven by changes in working capital
associated with execution of large manufacturing projects. While many of our contracts include advance customer deposits and progress billings, some international contracts provide for substantial
portions of funding under confirmed letters of credit upon delivery of the products.
We
have funded, and expect to continue to fund, operations through cash flows generated by operating activities and borrowings under our revolving credit facility. We also expect that ongoing
requirements for debt service and capital expenditures will be funded from these sources.
Our
future liquidity requirements will be for working capital, capital expenditures, debt service and general corporate purposes. Our borrowing capacity under the revolving credit facility is impacted
by, among other factors, the amount of working capital and qualifying assets therein. Based on our current level of operations, we believe that cash flow from operations and available cash, together
with available borrowings under our revolving credit facility, will be adequate to meet our short-term and long-term liquidity needs. However, our ability to meet our working
capital and debt service requirements is subject to future economic conditions and to financial, business and other factors, many of which are beyond our control. If we are not able to meet such
requirements, we may be required to seek additional sources of capital.
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Cash flows
Year ended January 31,
(dollars in thousands)
2011
2010
2009
Net cash provided by operating activities
$
56,864
$
66,321
$
58,470
Net cash used in investing activities
(14,924
)
(2,940
)
(27,776
)
Net cash used in financing activities
(36,150
)
(63,733
)
(42,364
)
As of January 31, 2011, our cash and cash equivalent balance was $9.2 million. The level of cash and cash equivalents is impacted by the timing of
cash receipts, disbursements and borrowings and payments under our revolving credit facility.
Fiscal 2010 compared to Fiscal 2009
Operating cash flow for Fiscal 2010 decreased by $9.5 million compared to Fiscal 2009. Fiscal 2009 reflects the conversion of working capital
to cash given the completion of large jobs and the overall decrease in business activity. Fiscal 2010 reflects the overall increase in business activity and resultant build-up for
long-term contracts and inventory. These increases were funded in large part by customer deposits, thus offsetting the cash outlays.
Cash
flow used in investing activities increased by $12.0 million for Fiscal 2010 compared to Fiscal 2009. This increase is due to the substantial curtailment of capital expenditures during
Fiscal 2009 as a result of the overall economic and business conditions due to the global recession, tight credit markets and volatile gas and oil prices. Given the increase in our business activity,
capital spending increased in Fiscal 2010, particularly for our rental business.
Cash
flow used in financing activities decreased by $27.6 million for Fiscal 2010 compared to Fiscal 2009 and primarily relates to lower payments in Fiscal 2010 under our revolving credit
facility. This overall decrease in payments under our revolving credit facility results from the use of cash flow for investing activities and lower overall cash flow from operations in Fiscal 2010,
whereas cash flow was used to pay down our revolving credit facility in Fiscal 2009.
Fiscal 2009 compared to Fiscal 2008
Operating cash flow increased by $7.9 million in Fiscal 2009 as compared Fiscal 2008, despite a net loss of $23.9 million. This
increase stems from working capital being converted to cash flow as large projects were completed and paid and a lack of further build-up of inventory due to the slow-down in
business activity.
Cash
flow used in investing activities decreased by $24.9 million in Fiscal 2009 as compared to Fiscal 2008. This decrease was due to the substantial curtailment of capital expenditures during
Fiscal 2009 as a result of overall economic and business conditions due to the global recession, tight credit markets and unstable gas and oil prices.
Cash
flow used in financing activities increased by $21.4 million in Fiscal 2009 as compared to Fiscal 2008. This increase was attributable to increased payments under our revolving credit
facility of $49.0 million as a result of increased available cash flow from operations and lower investments of cash outflows. This increase was partially offset by a $28.0 million
decrease in distributions to shareholders for tax obligations, which was attributable to the overall net loss for Fiscal 2009.
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Financing sources
We have an asset-based revolving credit facility in the amount of $250.0 million with a $25.0 million sub-facility to be
used by our Canadian subsidiary. The $250.0 million revolving credit facility, which matures in February 2012, is secured by substantially all accounts receivable, inventory and property, plant
and equipment and provides for borrowings at LIBOR, plus a margin ranging from 1.25% to 2.00% per annum, based on our leverage ratios, as specified in the credit agreement. Based on the outstanding
borrowings, letters of credit issued and the terms of the asset-based revolving credit facility, our available borrowing capacity was approximately $124.3 million at January 31, 2011.
While we expect to be able to refinance or renew our revolving credit facility, there are no guarantees we will be able to do so, at all or on substantially similar terms and conditions.
In
June 2006, we issued $150.0 million in principal amount of 10% Senior Notes due 2014. The senior notes are unsecured and are guaranteed on an unsecured basis by our domestic restricted
subsidiaries. The senior notes mature on July 15, 2014, and interest is payable semi-annually on January 15 and July 15.
Borrowings
under our revolving credit facility and our senior notes were as follows as of the dates indicated:
(dollars in thousands)
As of
January 31,
2011
As of
January 31,
2010
Revolving credit facility
$
35,181
$
70,870
Unsecured senior notes
150,000
150,000
Total
$
185,181
$
220,870
The revolving credit facility and the senior notes contain financial and operating covenants with which we must comply during the terms of the agreements. These
covenants include the maintenance of certain financial ratios, restrictions related to the incurrence of certain indebtedness and investments, and prohibition of the creation of certain liens. We were
in compliance with all covenants as of January 31, 2011. The financial covenant for the revolving credit facility requires that we maintain a fixed charge coverage ratio, as defined in the
agreement, of at least 1.1 to 1.0; however, this covenant does not take effect until our available borrowing capacity is $30.0 million or less. The covenants in the senior notes indenture
require that, if were we to incur additional indebtedness, pay dividends or make certain other restricted payments (in each case, subject to various exceptions set forth in the indenture), after
giving effect to the incurrence of such additional indebtedness, we have a fixed charge coverage ratio, as described in the indenture, of at least 2.5 to 1.0.
See
"Description of indebtedness" for more details about our revolving credit facility and senior notes.
Capital expenditures
Our estimated capital expenditures for Fiscal 2011 are not anticipated to exceed $30.0 million, and up to $19.0 million of this amount
is available for rental equipment additions.
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Contractual obligations and commitments
The following table summarizes the scheduled maturities under our revolving credit facility and our senior notes and our expected payments for other
significant contractual obligations as of January 31, 2011:
(dollars in thousands)
Fiscal
2011
Fiscal
2012
Fiscal
2013
Fiscal
2014
Fiscal
2015
Thereafter
Total
Senior notes
$
—
$
—
$
—
$
150,000
$
—
$
—
$
150,000
Revolving credit facility
—
35,181
—
—
—
—
35,181
Notes payable(1)
7,441
—
—
—
—
—
7,441
Interest on senior debt(1)
16,516
15,063
15,000
7,500
—
—
54,079
Operating leases:
Equipment
1,267
590
482
66
17
—
2,422
Property
5,958
2,897
1,848
1,323
896
192
13,114
Vehicles
2,245
1,166
530
364
24
—
4,329
Total operating leases
$
9,470
$
4,653
$
2,860
$
1,753
$
937
$
192
$
19,865
Total
$
33,427
$
54,897
$
17,860
$
159,253
$
937
$
192
$
266,566
(1)
Interest
in respect of our revolving credit facility and notes payable is calculated assuming the outstanding balance and the current average borrowing rate
at January 31, 2011 remain unchanged over the terms of the agreements.
Off-balance sheet arrangements
We did not have material off-balance sheet arrangements as of January 31, 2011. We lease certain facilities and equipment from
third parties under operating lease arrangements. For more information about these leases, see Note 13 to our audited consolidated financial statements included elsewhere in this prospectus.
Effects of inflation
We do not believe that inflation has had a material adverse effect on our financial condition or results of operations in recent
years. However, to the extent that the cost of components and other supplies that we purchase rise and we are unable to pass those price increases on to our customers, our financial condition and
results of operations would be adversely affected. In instances in which we enter into contracts, such as for the manufacture of certain equipment that requires lead time between the placing of the
order and delivery, the majority of those contracts are at a fixed price. Any increase in component and other supply costs over the term of these contracts would reduce our profit margin on those
products.
Quantitative and qualitative disclosures about market risk
We are exposed to certain market risks as part of our ongoing business operations, including risks from changes in interest rates and
commodity prices, which could impact our financial condition, results of operations and cash flows. We plan to manage our exposure to these and other market risks through regular operating and
financing activities and on a limited basis, the use of derivative financial instruments. We intend to use such derivative financial instruments as risk management tools and not for speculative
investment purposes.
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Foreign exchange risk
Our international subsidiaries in Colombia and Venezuela transact most of their business in their respective local currencies, while our Canadian
subsidiary
conducts its business in both Canadian and U.S. dollars. Revenues generated by our Canadian, Colombian and Venezuelan subsidiaries comprised 4.0%, 3.9% and 0.3%, respectively, of our total revenue
during Fiscal 2010. Our results of operations were not significantly impacted by changes in currency exchange rates.
During
the second quarter of Fiscal 2010, we entered into four short-term foreign currency exchange rate contracts to manage our exposure to fluctuations in foreign currency for certain
purchase orders that were denominated in Euros. As of October 30, 2010, all of these contracts were closed and we have recognized a $0.8 million realized gain, which was recorded in
other (income) expense, net within our consolidated statement of operations. We did not apply hedge accounting for these derivative instruments. We entered into a short-term foreign
currency exchange rate derivative instrument in January 2009 to manage our exposure to fluctuations in foreign currency exchange rates for certain contracts of our Canadian subsidiary that were not
denominated in its functional currency. This derivative was settled in the second quarter of Fiscal 2009 and resulted in a realized gain of $1.4 million, which was recorded in other (income)
expense, net within our consolidated statement of operations.
A
10% depreciation of the Canadian dollar with respect to the U.S. dollar would have caused our Canadian subsidiary's assets and sales as of and for the year ended January 31, 2011 to decrease
in U.S. dollar terms by approximately $5.5 million and $4.3 million, respectively. A 10% depreciation of the Colombian peso with respect to the U.S. dollar would have caused our
Colombian subsidiary's assets and sales as of and for the year ended January 31, 2011 to decrease in U.S. dollar terms by approximately $2.0 million and $3.1 million,
respectively.
On
January 10, 2010, the Venezuelan government devalued its currency from 2.15 Bolivars per U.S. dollar to 4.30 Bolivars per U.S. dollar (the "official rate"), and the Venezuelan economy has
since been designated as hyperinflationary. We historically have utilized the official rate for our Venezuelan operations. Beginning February 1, 2010, we utilized the U.S. dollar as the
functional currency for our Venezuelan subsidiary and remeasured its financial statements into U.S. dollars at the official rate. Accordingly, using hyperinflationary accounting, we recognized the
related losses or gains from such remeasurement of its balance sheet in the consolidated statements of its operations. During Fiscal 2010, the official rate for Venezuela did not fluctuate
significantly. As a result, the effect of remeasuring our Venezuelan subsidiary was insignificant.
At
January 31, 2011, we evaluated the rate at which we remeasure our Venezuelan subsidiary and concluded that based on the continued slow-down of its economy and resultant
constraints presently impacting the banking environment and associated limitations therein, that the SITME rate of 5.30 Bolivars per U.S. dollar was a more appropriate remeasurement rate. The result
of this change in remeasurement rate did not have a material impact to our financial statements. The total assets for our Venezuela subsidiary are approximately $4.0 million.
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Interest rate risk
We use variable-rate debt to finance certain of our operations and capital expenditures. Assuming the entire $250.0 million
revolving credit facility were drawn, each quarter point change in interest rates would result in a $0.6 million change in annual interest expense.
Recent accounting pronouncements
Revenue recognition for arrangements with multiple deliverables
In October 2009, the Financial Accounting Standards Board issued an update to existing guidance on revenue recognition for arrangements with multiple
deliverables. This update will allow companies to allocate consideration received for qualified separate deliverables using estimated selling price for both delivered and undelivered items when
vendor-specific objective evidence or third-party evidence is unavailable. Additional disclosures discussing the nature of multiple element arrangements, the types of deliverables under the
arrangements, the general timing of their delivery, and significant factors and estimates used to determine estimated selling prices are required. We will adopt this update for new revenue
arrangements entered into beginning, or materially modified on or after, February 1, 2011. We do not expect the provisions of this update to have a material impact on our consolidated financial
statements.
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Business
Our company
We are a leading designer, manufacturer and provider of specialized equipment and aftermarket parts and service for the oil and gas
industry and other industries that we have served for over 100 years.
Our
wide range of products covers hydraulic fracturing, well stimulation, workover, intervention and drilling operations. These products include pumping, acidizing, coil tubing, cementing and nitrogen
units, drilling rigs, workover rigs, power generation systems and electrical support and distribution systems, as well as engines, transmissions and material handling equipment. We have a substantial
installed base of products, which provides us with significant opportunities for recurring, higher-margin aftermarket parts and service revenues from customers in the oil and gas, power generation and
various other industries. In addition, we provide rental equipment to our customers, including generator sets, air compressors, rail car movers and material handling equipment.
With
more than a century of continuous service across diverse industries, we have an established track record of providing a high-quality, technologically advanced series of products using
state-of-the-art components, processes and techniques. We have long-standing relationships with six globally recognized original equipment suppliers, or
OEMs—Detroit Diesel, MTU Friedrichshafen, Electro-Motive Diesel, Hyster, Allison Transmission and Deutz—with which we have conducted business for more than 40 years on
average.
Demand
for our products has been driven primarily by capital spending in the oil and gas industry, which accounted for an estimated 82% and 76% of our equipment revenues and an estimated 78% and 72%
of our total revenues in Fiscal 2010 and Fiscal 2009, respectively. Our extensive and diverse customer base includes many of the world's leading oilfield service companies, as well as customers in the
power generation, marine, mining, construction, commercial vehicle and material handling industries.
Our business
We manage our business through the following two principal segments:
Manufacturing (representing 43%, 36% and 40% of revenues for the fiscal years ended January 31, 2009, 2010 and 2011, respectively).
We design, manufacture
and market equipment for U.S. and international oilfield service providers and drilling and workover contractors, as well as national oil companies that require integrated and customized product
solutions. We manufacture equipment specifically for hydraulic fracturing, well stimulation, well workover, intervention and drilling operations. Our manufactured products include integrated
solutions,
which incorporate a variety of components into a single system, for a wide range of oilfield services and support applications. Our manufactured products provide integrated solutions, which can
incorporate a variety of components into a single system, for a wide range of oilfield services and support applications. Our manufacturing segment benefits from our long-standing
relationships with globally recognized OEMs. We have five main manufacturing facilities across North America, comprising more than 600,000 square feet of space that are strategically located to
effectively service our customers' needs.
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Distribution (representing 57%, 64% and 60% of revenues for the fiscal years ended January 31, 2009, 2010 and 2011, respectively).
We provide stand-alone
products and aftermarket parts and service for products manufactured by us, our six key OEMs and other manufacturers. In addition, we provide rental equipment including generator sets, air
compressors, rail car movers and material handling equipment to our customers. Our aftermarket parts and service operations, which provide us with a recurring, higher-margin source of revenue, serve
customers engaged in the oil and gas, power generation, marine, mining, construction, commercial vehicle and material handling industries, as well as other industries. Throughout the period of our
relationship with our key OEMs, we have been the factory-authorized provider of their stand-alone products in specified territories, which include major oil and gas producing regions in the United
States. Our arrangements with our six key OEMs generated approximately 57%, 56% and 55% of our aftermarket parts and service revenues in Fiscal 2010, Fiscal 2009 and Fiscal 2008, respectively. Our
extensive distribution network is strategically positioned throughout major oil and gas producing regions, enabling us to effectively support our customers. We provide in-house servicing
in close proximity to our customers' operational locations as well as on-site servicing. As of January 31, 2011, we employed over 650 trained and certified service technicians utilizing
approximately 575 service bays in the United States, Canada and abroad. Additionally, we provide aftermarket parts through our extensive network of approximately 185 authorized dealers.
Our strengths
We believe that our operations benefit from a number of competitive strengths, including the following:
Strong brand recognition.
We believe that the "Stewart & Stevenson" brand has long been recognized in the oil and gas industry, as well as in other
industries we serve, and identified with high-quality products, innovative solutions and dependable service. We believe that this brand recognition represents a significant competitive
advantage domestically and internationally.
Experienced provider of integrated solutions.
Our product lines include integrated, site-ready solutions, which incorporate a variety of components
into a single system for a wide range of oilfield services and support applications. We believe that our engineered product offerings are highly distinguished in their technical specifications and are
further enhanced by our aftermarket service and support. Our highly trained and experienced mechanical, electrical, electronic, industrial and software engineers and support personnel have core
competencies in product applications and support systems, sophisticated hydraulics and controls, large welded structures, low- to high-voltage electrical power generation and
switchgear, engine-driven machine design, specialty vehicle design and electrical instrumentation, controls and software-driven control packages. We strongly believe in a partnership approach in the
pursuit of our customer objectives, in which our highly qualified engineering and development teams commit to ensure that our products are tailored to meet specific customer requirements.
Established, diversified customer base.
We have strong, long-standing relationships with many of our top customers. We maintain a broad and diverse
customer base, including leading oil and gas service companies, drilling contractors, integrated oil companies and national oil companies, as well as customers in the power generation, marine, mining,
construction, commercial vehicles and material handling industries. As of January 31, 2011, no single
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customer
accounted for more than 6% of our total revenues, and our top 10 customers, which include domestic and international businesses, collectively represented approximately 31% of our total
revenues.
Extensive aftermarket business.
Our extensive network of facilities, at over 50 strategic locations provides our customers with high-quality parts and
service throughout the lifecycle of our products. Our extensive aftermarket parts and service sales, which is generally less sensitive to economic cycles, provide a source of recurring revenue and
typically generate higher margins than our equipment sales. This business is supported by an experienced sales force of over 200 personnel and over 650 trained and certified technicians. Our depth of
experience in the industries we serve and our significant, long-standing customer relationships are key components to our success. Combined with superior products, this knowledge enables
us to serve our customers and fully address our markets.
Robust training program.
We are dedicated to training for our employees, dealers and customers utilizing our multiple training facilities, our staff of
full-time trainers and an internet-based learning management system. We maintain over 200 instructor-led and internet-based courses. We provide our domestic and international
customers with onsite training, technical documentation and quality control support. In 2010, we provided training to more than 500 employees and over 700 customers. Our training efforts ensure that
our customers benefit from highly trained and experienced support for the products we offer, and we believe that they provide us a competitive advantage within our industry.
Highly experienced management team.
We have a highly qualified senior management team with extensive global experience in the industries we serve. Our board of
directors includes individuals with extensive global experience in the energy industry and diversified areas of manufacturing, marketing, finance, international trade and international economic
cooperation who are prominently regarded for their distinguished accomplishments in the United States and abroad as well as their significant business experience. We believe that our board of
directors provides us with an uncommon strategic resource and competitive advantage.
Our strategy
We believe that the implementation of the following strategic initiatives by our management team, under the leadership of our board
of directors, will enable our company to take advantage of significant demand for our well-known product lines across the global marketplace.
Leverage the Stewart & Stevenson brand name.
We believe that our brand name enjoys significant domestic and international recognition, particularly in the
oil and gas industry, and reflects our reputation for quality products, innovative solutions and dependable service. We intend to continue to prominently feature our brand name in our sales and
marketing efforts for our core value-added equipment sales and aftermarket parts and service businesses and to pursue technological innovations. We believe that the strength of our brand helps us to
cross-sell and diversify our product lines and expand our domestic and international operations.
Grow our position as a market leader.
We believe that our ability to customize our products to the specific needs of our customers, combined with our comprehensive
aftermarket capabilities and broad geographic reach, positions us to satisfy the growing requirements of
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participants
in the oil and gas industry and other industries. We believe that the benefits of our cost effectiveness programs, combined with our continuing service to industries outside of the oil
and gas industry, all of which stand to be beneficiaries in the expected global economic recovery, will serve as key components to support our ability to grow.
Improve productivity and competitiveness.
We are fully committed to the continued enhancement of our productivity through process improvements and the expansion of
our manufacturing and engineering capabilities. We continue to streamline our operations through an assembly flow line, lean manufacturing techniques, standardization, outsourcing and supply chain
enhancements, while also focusing on opportunities to customize equipment to respond to the specific needs of our customers. We believe that our continued focus on these efforts enhances our
competitive position.
Selectively pursue growth opportunities.
We intend to continue to selectively seek strategic growth opportunities domestically and internationally (particularly in
Brazil, China and the United Arab Emirates), and organically as well as through acquisitions, joint ventures, geographic expansion and the development of additional manufacturing capability. We pursue
a targeted and disciplined acquisition strategy, focused on enhancing our earnings and cash
flows, diversifying our supply chain, adding complementary product offerings, improving efficiency and growing our customer base.
Continue to develop a highly effective workforce.
We have a highly trained and experienced workforce. We are dedicated to providing extensive training, education
and career development programs, as well as attractive incentive compensation plans for the benefit of our employees. We are committed to continuing to attract and retain high-quality and
experienced personnel.
Industry overview
We believe that we are well positioned to capitalize on favorable industry conditions in the markets we serve, particularly the oil
and gas industry, as well as the other industries in which our customers operate.
Increasing capital spending in the oil and gas industry.
Growing worldwide demand for energy has resulted in significantly increased capital expenditures by oil
and natural gas producers. According to Spears & Associates, Inc., annual global drilling and completion expenditures (excluding Russia, China and Central Asia) have increased from
$64 billion in 2000 to $231 billion in 2010, representing a compound annual growth rate of 14%. Although these capital expenditures decreased by 28% from 2008 to 2009, they are projected
to increase at a compound annual growth rate of 9% from 2010 to 2016, reaching $378 billion.
Recovery in global drilling activity.
As a result of the economic downturn of 2009, there was a dramatic reduction in global drilling activity. However, according
to Baker Hughes, Inc., the global rig count has recovered 63% from its low of 1,983 in May 2009 to 3,227 in December 2010, reflecting, among other things, the recent improvement in the global
economy and the increased development of unconventional oil and gas resources. The global rig count of 3,434 in March 2011 is near its highest point in approximately 25 years.
Increasing U.S. onshore horizontal drilling activity.
Advances in drilling and completion technologies, including horizontal drilling and hydraulic fracturing,
have made the
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development
of many unconventional resources, such as oil and natural gas shale formations, economically attractive. This has led to a dramatic increase in the development of oil- and
natural gas-producing shale formations, or "plays," in the United States. According to Baker Hughes, Inc., the North American horizontal rig count has risen from 335 in January 2007
to 947 in December 2010. Suppliers of products and services to the hydraulic fracturing industry currently benefit from drilling and completion trends that require more fracturing stages per well due
to the increased horizontal length of the wells.
Increasing drilling in oil- and liquids-rich formations.
While the majority of U.S. drilling rigs currently are drilling in natural gas
formations, there is increasing activity in oil- and natural gas liquids-rich formations, such as the Eagle Ford, Bakken and Niobrara Shales, as well as various resources in
Oklahoma, including the Granite Wash. Although the oil and gas industry is cyclical and oil prices historically have been volatile, we believe that many of the oil- and
liquids-rich plays are economically attractive at oil prices substantially below the current price of oil.
International interest in shale plays.
There is growing international interest in the development of unconventional oil and natural gas shale plays. This has
resulted in a number of joint ventures between major U.S. and large international exploration and production, or E&P, companies related to shale plays in the United States. We believe that these joint
ventures, which typically require international oil companies to commit cash up front and fund significant future capital expenditures, will generate additional demand for drilling and completion
activity in the coming years. In addition, we believe that such joint ventures will continue to stimulate development of other oil and gas shale reservoirs outside the United States.
Fracturing fleet attrition should positively impact demand.
Existing hydraulic fracturing fleets are currently experiencing significantly higher levels of demand
as the result of a significant increase in the number of fracturing stages per horizontal well and increased pump pressure
rates associated with the fracturing stages, which are designed to maximize shale oil and gas production. This higher level of operation associated with shale oil and gas activity is expected to
accelerate the replacement cycle of equipment.
Our history
Stewart & Stevenson LLC was formed in November 2005 for the purpose of acquiring from Stewart & Stevenson
Services, Inc., or SSSI, and its affiliates on January 23, 2006, substantially all of their equipment, aftermarket parts and service and rental businesses that primarily served the oil
and gas industry, which we refer to collectively as the "SSSI Acquisition." Except as otherwise expressly noted, when we refer to financial and other information about us on a historical basis prior
to that date, such information reflects the operations we acquired from SSSI prior to the acquisition.
On
February 26, 2007, we acquired substantially all of the operating assets and assumed certain liabilities of Crown Energy Technologies, Inc. and certain of its affiliates, which we
refer to as "Crown." Crown, which was headquartered in Calgary, Alberta, had multiple U.S. operations. Crown manufactured drilling, well servicing and workover rigs, stimulation equipment and provided
related parts and services. As a result of the Crown Acquisition, we increased our manufacturing capabilities and broadened the markets we serve. The Crown Acquisition
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allowed
us to better serve the growing Canadian oil and gas market and to expand more rapidly into global markets.
Products and services
Through our two operating segments, we design, manufacture, and market a wide-range of equipment, provide aftermarket
parts and service, and provide rental equipment to a broad range of customers.
Equipment
We design, manufacture and market equipment for well stimulation, drilling and well servicing rigs, coiled tubing, cementing, nitrogen pumping, power
generation and electrical systems. We record sales of these products in our manufacturing segment. We distribute stand-alone products manufactured by us. We record sales of these products in our
distribution segment.
A
substantial portion of the products we sell in both the manufacturing and distribution segments includes components provided by our six key OEMs. Our relationships with these OEMs generally enable
us to sell their products globally as components of our engineered equipment and in specified territories as stand-alone products. We have been the factory-authorized provider of stand-alone products
of our six key OEMs in these territories, which principally cover major oil and gas producing regions in the United States, for an average of approximately 40 years. For Fiscal 2010,
approximately 76.1% and 23.9% of our equipment sales revenues were derived from engineered products and stand-alone products, respectively. Approximately 40.4% of our product costs for Fiscal 2010
represented equipment supplied to us by these OEMs, which we use in combination with our design, engineering, and manufacturing expertise to deliver a value-added, integrated solution to our
customers.
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The
following table lists the equipment we provide:
Product line
Percentage of
total equipment
revenues in
Fiscal 2010
Product description
Segment
Well stimulation
49.1%
Equipment that includes fracturing pumps, blenders, hydration, chemical additive systems and control systems and software used to enhance oil and gas production.
Manufacturing
Power generation
12.3%
Standby emergency back-up, fire suppression and prime power in a variety of configurations and capacities, using natural gas and
diesel engines.
Manufacturing and Distribution
Transmissions
8.9%
Automatic transmissions and related products.
Distribution
Prime movers
6.4%
Engineered packages, mating internal combustion engines to a transmission or torque converter to power specific customer
applications.
Distribution
Material handling
5.8%
Fork lift trucks and ancillary equipment.
Distribution
Engines
5.4%
Internal combustion diesel and natural gas engines.
Distribution
Rigs
2.7%
Equipment used in drilling, workover and well servicing, and exploration and enhancement of oil and gas production.
Manufacturing
Rail car movers
2.2%
Engine-driven equipment used in rail car switching operations.
Distribution
Coiled tubing
1.8%
Well workover, stimulation and drilling equipment used on land and offshore applications.
Manufacturing
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Product line
Percentage of
total equipment
revenues in
Fiscal 2010
Product description
Segment
Other
5.4%
Various equipment utilized in the oil and gas services industry, such as cementing, nitrogen pumping, fluid pumping and contract manufacturing of
seismic and electric equipment.
Manufacturing and Distribution
Aftermarket parts and service
We provide aftermarket parts and service to customers in the oil and gas industry, as well as customers in the power generation, marine, mining,
construction, commercial vehicle and material handling industries. Our aftermarket parts and service business supports equipment manufactured by approximately 100 manufacturers, and in certain
cases, including for our product offerings from our six key OEMs, we have been the factory-authorized parts and service provider for specified territories, principally in major oil and gas producing
regions in the United States. Approximately 35% of our total revenues for Fiscal 2010 were from aftermarket parts and service operations. For Fiscal 2010, approximately 57% of the aftermarket parts
and service revenues pertained to products sourced from our six key OEMs. Both our manufacturing and distribution segments generate revenues from aftermarket parts and service.
We
believe there are a number of factors which affect a customer's choice of its supplier of aftermarket parts and service, including the customer's preference to use factory-authorized parts and
service, price, parts availability, level and number of experienced technicians, proximity to the customer's location and flexibility to service products in the field. As of
January 31, 2011, we employed over 650 highly trained service technicians, utilizing approximately 575 service bays in the United States, Canada and abroad. We also have significant
capabilities to service customers at their sites, due to our large number of technicians and our close proximity to the customer. Additionally, we maintain a substantial investment in parts inventory
managed by our experienced parts personnel, and we provide aftermarket parts through our extensive network of approximately 185 authorized dealers.
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The following map represents our manufacturing facilities and service locations, as well as the states in which we have an OEM supply agreement.
Rental
Our rental products primarily consist of generator sets, air compressors, rail car movers and material handling equipment that are offered to a wide
range of end markets and are principally rented on a short-term basis as a
complementary solution to equipment sales. Our rental fleet consists of over 1,300 units as of January 31, 2011, and we are able to complement our equipment offering by providing our
customers the flexibility of renting versus purchasing certain equipment. Revenues for Fiscal 2010 represented approximately 2.7% of our total revenues, and our rental products generate our highest
margins and provide us with a strong return on our investment. We record these revenues within our distribution segment.
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The
following table lists our rental products:
Product line
Percentage of
total rental
revenues in
Fiscal 2010
Product description
Generators
41.8%
Engines/generators ranging from 25 to 2,000 kilowatts.
Material handling equipment
36.0%
Fork lift trucks, rail car movers and ancillary equipment.
Air compressors
22.2%
Air compressors ranging from 375 to 1,600 cubic feet per minute.
Our
utilization rate for Fiscal 2010 and Fiscal 2009 was approximately 49% and 44%, respectively, of our available rental fleet, and we generally recover our costs to acquire rental equipment over a
three-year period. The average useful life of our rental equipment is approximately five years, and our practice is to sell a unit out of the rental fleet upon reaching its useful life. We
closely monitor our utilization rate before making capital investments used to replenish or grow the rental fleet.
Customers and markets
We maintain a broad and diverse customer base, including leading oil and gas service companies, drilling contractors, integrated oil
companies and national oil companies, as well as customers in the power generation, marine, mining, construction, commercial vehicles and material handling industries. We are not dependent on any
single customer, and during Fiscal 2010, our ten largest customers accounted for approximately 31% of our total sales and no single customer accounted for more than 6% of our total sales. The demand
of our customers for the products we provide has not historically been characterized by seasonality.
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The
following table lists the markets and types of customers we serve:
Market
Percentage of
total revenues
in Fiscal 2010
Types of customers
Oil and gas services
81.5%
Well stimulation providers, drilling contractors, well servicing companies, integrated oil companies and national oil companies.
Material handling
4.3%
Warehouse/distribution companies, manufacturing companies, chemical companies and various other companies that utilize fork lifts
and rail car spotters.
Power generation
3.5%
Commercial facilities that need back-up power generation capabilities.
Commercial vehicles
2.5%
Freight transportation companies, emergency services, transit authorities and recreational vehicle users. Primarily aftermarket
parts and service.
Construction
1.0%
Commercial building and home construction companies, and highway construction companies.
Mining
0.2%
Companies involved in the extraction of raw materials through various mining methods.
Government
0.2%
Federal agencies (
e.g.
, the U.S. Department of Defense), state agencies
(
e.g.
, departments of transportation) and local agencies (
e.g.
, departments of public works).
Marine
0.1%
Offshore work boat providers, tug boat operators and recreational boat users.
Other
6.7%
Primarily authorized dealers and distributors of our products in various markets, including the primary markets we serve and
various other industries.
We
believe that our wide range of high-quality standard products, demonstrated by our ISO 9001:2000 certifications, and our partnership-based approach generate high levels of
customer satisfaction and result in repeat business.
We
sell a significant portion of our equipment and parts and service to our customers pursuant to purchase orders subject to our standard terms and conditions, which generally provide for
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payment
within 30 days. Historically, cancellations are infrequent, but customers generally have the right to cancel an order until it is filled.
For
larger equipment, particularly for customers in the oil and gas industry, we often enter into fixed-price contracts, and the measurement of progress toward completion is based on direct labor
hours incurred. Many of these contracts require downpayments from the customer or, for international customers, credit support. Some of our contracts are
cost-plus-fixed-fee contracts, which provide for reimbursement of specified costs plus a fixed fee.
For
Fiscal 2010 and Fiscal 2009, we derived approximately 19% and 30%, respectively, of our revenues from sales of products and services to customers outside the United States, including sales to U.S.
customers for export.
Manufacturing and engineering design
Our manufacturing processes generally consist of fabrication, machining, assembly and testing. Many of our products are designed,
manufactured and produced to clients' specifications, often for long-life and harsh environment applications. To facilitate quality and productivity, we are continuing to implement a
variety of manufacturing strategies, including inventory management, flow line manufacturing and integrated supply chain management. As a result of these manufacturing strategies, we have increased
our capacity throughput, reduced our production costs and lowered manufacturing cycle times for our products. In addition, we have been successful in outsourcing the fabrication of subassemblies and
components of our products, such as trailers, whenever costs are significantly lower and quality is comparable to our own manufacturing. Our manufacturing operations are principally conducted in 10
locations throughout the United States and Canada. See "—Facilities."
We
strive to manufacture the highest quality products and are committed to improving the quality and efficiency of our products and processes. We are certified in compliance with ISO 9001:2000.
Although
we manufacture some of the components included in our products, the principal raw materials required for the manufacture of our products are purchased from our six key OEMs, and we believe
that available sources of supply generally will be sufficient for our needs for the foreseeable future.
Sales and marketing
We primarily sell and market our products directly to our customers through our sales and service centers in the United States and
abroad with a direct sales force of approximately 200 employees. We also utilize a network of approximately 185 authorized dealers and approximately 16 independent overseas sales
representatives to market and distribute our products. Our equipment product lines are generally sold directly to the end users, and in certain international markets we may use authorized sales
representatives to help facilitate the marketing of our products. Our aftermarket parts and service and rental product lines are also provided to our customers on a direct basis. We also utilize a
network of authorized dealers to market and distribute parts. During Fiscal 2010, 97% of our total sales resulted from direct sales to the customer, while 3% was derived from sales to our dealer
network.
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Our
authorized dealers and our independent overseas sales representatives are independent contractors and are not our employees. Our authorized dealers buy our products and resell to their end
customers. Our independent overseas sales representatives assist in arranging for sales to international customers and generally do not take resale risk with respect to our products but receive
commissions based on completed sales. We provide training to our authorized dealers and independent overseas sales representatives.
Backlog
Our unfilled equipment orders that we include in equipment order backlog consist of written purchase orders and signed contracts
accompanied, if required by our credit policies, by credit support (typically downpayments or letters of credit), determined in accordance with our credit policies. Historically, cancellations are
infrequent; however, these unfilled orders are generally subject to cancellation. Purchase options are not included in equipment order backlog until exercised.
Our
unfilled equipment order backlog has increased since the third quarter of Fiscal 2009 and, as of January 31, 2011, was $375.0 million. We expect to recognize most of this backlog in
Fiscal 2011.
Backlog
of $375.0 million as of January 31, 2011 includes a $37.5 million related party transaction, reflecting an order in Fiscal 2009 from an affiliate. Revenue recognition from
this transaction will be deferred until title to the product passes to a third party and all other revenue recognition criteria have been met. A deposit in the amount of $31.2 million is
recorded as a customer deposit in our consolidated balance sheet. Included in inventories, net is $29.5 million in costs related to this contract, and no amounts have been recorded in the
consolidated statements of operations for this transaction to date.
Our
equipment order backlog over the past 11 quarters has been as follows at period end (dollars in millions):
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Competition
We operate in highly fragmented and very competitive markets, and, as a result, we compete against numerous businesses. Some of our
competitors have achieved substantially more market penetration with respect to certain products, such as coiled tubing and generators, and some of our competitors are larger and have greater
financial and other resources.
Major
competitors for well stimulation equipment include Enerflow Industries Inc., United Engines Manufacturing (a subsidiary of United Holdings LLC), Dragon Products (a division of Modern Group Inc.)
and National Oilwell Varco, Inc. For our well servicing, drilling and coiled tubing products, our major competitor is National Oilwell Varco, Inc. In our rail car mover product line, we compete
against Trackmobile, Inc. and Central Manufacturing Inc., and we compete with Cummins Inc. and Caterpillar, Inc. and their distributors for generators and other types of engine-driven products. ZF
Industries Inc. and Twin Disc Incorporated are our primary competitors for transmissions. We believe that our customers base their decisions to purchase equipment based on price, lead time and
delivery, quality, and aftermarket parts and service capabilities.
For
aftermarket parts sales, we compete with distributors of factory-authorized OEM parts, with providers of non-OEM parts and remanufactured parts, and other distributors of OEM parts.
For aftermarket service sales, the market is highly fragmented and characterized by numerous small, independent providers. We believe there are a number of factors that affect our customers' decisions
when choosing their supplier of aftermarket parts and service, including the customer's preference to use factory-authorized OEM parts and service. Customers also consider price, parts availability,
level and number of experienced technicians, proximity to the customer's location and flexibility to service products in the field.
Our
rental business focuses on generators, material handling equipment and air compressors and we compete with much larger companies, including United Rentals Inc., NationsRent
Companies Inc., Hertz Equipment Rental Corporation and Aggreko plc. We believe our customers base their decisions to rent equipment based on price, availability and aftermarket parts,
support and service.
We
believe that the significant capital required to obtain and operate manufacturing facilities, acquire and maintain adequate inventory levels, and hire and maintain a highly skilled labor force,
along with our long-standing relationships with our six key OEMs, is a disincentive for new market entrants.
Suppliers and raw materials
In Fiscal 2010, approximately 77% of our cost of goods sold consisted of raw materials and component parts, with the other 23% being
labor and overhead. Approximately 44% of the raw materials and component parts in cost of goods sold were obtained from our six key OEMs pursuant to long-standing relationships, and 56%
were obtained from a variety of other suppliers.
Our
supply agreements with our six key OEMs are non-exclusive and typically short-term and have been renewed on an ongoing basis, but no assurances can be given that they will be renewed
beyond their expiration dates. We have been the factory-authorized provider of our product offerings from these OEMs in the territories below for many years, and our
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relationships
with these OEMs average approximately 40 years. The following table lists our key OEMs, the products they provide, the designated geographic territories that we serve and the
expiration date of our current supply agreements:
OEM
Supplier
since
Products
Designated geographic territories
Expiration
date
Detroit Diesel Corporation
1938
Parts for high-speed diesel engines
Texas, Colorado, New Mexico, Wyoming, Western Nebraska, South Louisiana, Coastal Mississippi, Coastal Alabama and Colombia
2017
MTU Friedrichshafen
1938
Heavy duty high-speed diesel and natural gas engines
Texas, Colorado, New Mexico, Wyoming, Western Nebraska, South Louisiana, Coastal Mississippi, Coastal Alabama and
Colombia
2011(1) (Colombia 2012)
Electro-Motive Diesel, Inc.
1956
Heavy duty medium-speed diesel engines
Texas, Colorado, New Mexico, Oklahoma, Arkansas, Louisiana, Tennessee, Mississippi, Alabama, Mexico, Central America and parts of
South America
2013
Hyster Company
1959
Material handling equipment
Texas and New Mexico
No expiration date
Allison Transmission, Inc.
1973
Automatic transmissions, power shift transmissions and torque converters
Texas, Colorado, New Mexico, Wyoming, Western Nebraska, South Louisiana, Coastal Mississippi, Coastal Alabama, parts of Utah and
Arizona and Colombia
2013
Deutz Corporation
1996
Diesel and natural gas engines
Colorado, Eastern Wyoming, Arizona, New Mexico, Texas, Oklahoma, Kansas, Arkansas, Louisiana, Mississippi, Western Tennessee,
Venezuela and Colombia
No expiration date
(1)   We continue to operate under our prior agreement and are in the process of renewing this agreement.
Our six key OEMs supply us with diesel engines, transmissions, material handling equipment and natural gas engines, as well as the aftermarket parts used to
support those components. We also purchase large fluid pumps, generators and hydraulic and electrical components, among many other items, from an extensive supplier base.
We
generally have been able to recover component price increases by raising the prices of our goods and services. We expect to continue the practice of raising our prices to offset these increases,
but we can give no assurance that we will be able to do so. Our ability to raise our prices depends on market conditions and prices for similar products in the market. In addition, for larger
equipment, particularly for customers in the oil and gas industry, we often enter into
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fixed-price
contracts, which are typically performed within one year. Our ability to raise prices on fixed-price contracts is limited.
Facilities
In addition to our leased headquarters in the central business district of Houston, Texas, we also maintain over 2.5 million
square feet of manufacturing, service and sales facilities throughout the central United States, Canada, Colombia and Venezuela, as well as sales offices in Beijing and Moscow. We have a total of
57 facilities, of which 48 are located in the United States and Canada (17 are owned and 31 are leased), and the remaining nine, all of which are leased, are located abroad.
Our
facilities are located close to major onshore and offshore petroleum producing regions in the United States and in a number of the world's energy producing nations. A summary of our major
locations is shown below:
Location
Leased / owned
Segment
Dallas, TX
Owned
Distribution
Houston, TX (East)
Owned
Distribution
Houston, TX (Northwest)
Owned
Manufacturing
Odessa, TX
Owned
Distribution
Denver, CO
Owned
Distribution
San Antonio, TX
Owned
Distribution
New Orleans, LA
Owned/Leased
Distribution
Farmington, NM
Owned
Distribution
Corpus Christi, TX
Owned
Distribution
Odessa, TX
Leased
Manufacturing
Edmond, OK
Leased
Manufacturing
Victoria, TX
Leased
Manufacturing
Calgary, Canada
Leased
Manufacturing
For
the fiscal year ended January 31, 2011, our international assets represented approximately 11% of our total assets.
Employees
As of January 31, 2011, we had approximately 2,300 employees, of whom approximately 2,000 were employed in the United
States and Canada and approximately 300 were employed abroad. Of the approximately 2,000 U.S. and Canadian employees, we have approximately 70 engineers, 575 service technicians, 170 sales and
marketing employees and 1,200 aftermarket, manufacturing and administrative employees. We consider our current labor relations to be good and do not have any employees in the United States and Canada
that are represented by labor unions. See "Risk factors—Risks related to our business—We may not be able to attract and retain qualified employees."
Trademarks and patents
We rely on a combination of patent, trademark, copyright, unfair competition and trade secret laws in the United States and other
jurisdictions, as well as employee and third-party
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non-disclosure
agreements, license arrangements and domain name registrations, as well as unpatented proprietary know-how and other trade secrets, to protect our products,
components, processes and applications. With the exception of the "Stewart &
Stevenson" trademark and logo, we do not believe any single patent, copyright, trademark or trade name is material to our business as a whole. Any issued patents that cover our proprietary technology
and any of our other intellectual property rights may not provide us with adequate protection or be commercially beneficial to us and, if applied for, may not be issued. The issuance of a patent is
not conclusive as to its validity or its enforceability. Competitors may also be able to design around our patents. If we are unable to protect our patented technologies, our competitors could
commercialize technologies or products which are substantially similar to ours.
With
respect to proprietary know-how and other proprietary information, we rely on trade secret laws in the United States and other jurisdictions and confidentiality agreements. Monitoring
the unauthorized use of our technology is difficult, and the steps we have taken may not prevent unauthorized use of our technology. The disclosure or misappropriation of our intellectual property
could harm our ability to protect our rights and our competitive position.
Environmental, health and safety matters and other regulatory matters
We are subject to a variety of federal, state, local, foreign and provincial environmental laws and regulations, including those
governing the discharge of pollutants into the air or water, the management and disposal of hazardous substances and wastes and the responsibility to investigate and remediate contaminated sites that
are or were owned, leased, operated or used by us or our predecessors. Many of our operations require environmental permits and controls to prevent and limit air and water pollution. These permits
contain terms and conditions that impose limitations on our manufacturing activities, production levels and associated activities and periodically may be subject to modification, renewal and
revocation by issuing authorities. Fines and penalties may be imposed for non-compliance with applicable environmental laws and regulations and the failure to have or to comply with the
terms and conditions of required permits. We believe that we are currently in compliance in all material respects with the terms and conditions of our permits. We are also subject to the federal
Occupational Safety and Health Act and similar state and foreign laws, which impose requirements and standards of conduct on our operations for the health and safety of our workers. We periodically
review our procedures and policies for compliance with environmental and health and safety requirements. We believe that our operations are generally in compliance with applicable environmental and
health and safety regulatory requirements or that any non-compliance will not result in a material liability or cost to achieve compliance. Historically, the costs of achieving and
maintaining compliance with environmental and health and safety requirements have not been material.
Certain
environmental laws in the United States, such as the federal Superfund law and similar state laws, impose liability for investigating and remediating contaminated sites on "responsible
parties." These parties include, for example: current owners and operators of the site; parties who owned or operated the site at the time hazardous substances were released or spilled at the site;
parties who generated wastes and arranged to send them to the site for disposal; and parties who transported wastes to the site. Liability under such laws is strict, meaning, for example, that current
owners or operators can be liable even if all releases of
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hazardous
substances occurred before they owned or operated the site, regardless of the lawfulness of the original disposal activities. Liability under such laws is also joint and several, meaning
that a responsible party might be held liable for more than its fair share of investigation or cleanup costs. As a practical matter, however, when more than one responsible party is involved at a
site, the costs of investigation and remediation are often allocated among the viable responsible parties on some form of equitable basis. In connection with each of the SSSI Acquisition and the Crown
Acquisition, the previous owner retained environmental liabilities relating to pre-closing conditions or occurrences, subject to certain dollar limitations and caps. However, for the
reasons set forth above, there could be contamination at some of our current or formerly owned or operated facilities for which we could be liable under applicable environmental laws.
In
addition to the environmental health and safety measures described above, the part of our business that consists of the sale, distribution, installation and warranty repair of large engines and
transmissions used in commercial vehicle applications in Texas requires certain Texas state motor vehicle licenses, which are subject to annual renewal.
Legal matters
We are also a defendant in a number of lawsuits relating to matters normally incident to our business. No individual case, or group
of cases presenting substantially similar issues of law or fact, is expected to have a material effect on the manner in which we conduct our business or on our consolidated results of operations,
financial position or liquidity. We maintain certain insurance policies that provide coverage for product liability and personal injury cases. These insurance policies are subject to a
self-insured retention for which we are responsible, which is generally $500,000 for newer cases and $1 million for cases initiated before Fiscal 2009. We have established reserves
that we believe to be adequate based on current evaluations and our experience in these types of claim situations. Nevertheless, an unexpected outcome or adverse development in any such case could
have a
material adverse impact on our consolidated results of operations in the period in which it occurs.
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Management
Executive officers and directors
The following table sets forth information with respect to our directors and executive officers as of April 30, 2011.
Name
Age
Position(s)
Hushang Ansary
83
Chairman of the Board of Directors
Frank Carlucci
80
Vice Chairman and Director
Robert L. Hargrave
70
Vice Chairman and Director
Steve Fulgham
50
Chief Executive Officer and Director
John B. Simmons
58
Chief Financial Officer and Director
Andrew M. Cannon
37
Chief Accounting Officer
Jack L. Pieper
40
Vice President—Operational Finance
David C. Sulkis
54
General Counsel
Kenneth W. Simmons
55
Vice President—Domestic Sales and Aftermarket
Charles T. Hatcher
62
Vice President—Human Resources
David E. Christensen
56
Senior Vice President—Manufacturing and Engineering
Nina Ansary
44
Director
James Crystal
73
Director
Munawar H. Hidayatallah
66
Director
John Macomber
83
Director
Anthony G. Petrello
56
Director
J. Robinson West
64
Director
Hushang Ansary
(Chairman).    Mr. Ansary is a Houston oil industry entrepreneur and philanthropist. He has been our Chairman of the Board since January 2006.
He has served as Chairman of the Board of Parman Capital Group LLC since December 2005 and is our principal stockholder. From March 1995 to June 2000, Mr. Ansary was Chairman and Chief
Executive Officer of IRI International Corporation (IRI), a New York Stock Exchange oilfield equipment company. From June 2000 to March 2005, Mr. Ansary served on the board of directors of
National Oilwell, Inc. Mr. Ansary is a former Economic and Finance Minister of Iran, Iranian Ambassador to the United States and Chairman and Chief Executive Officer of National Iranian
Oil Company.
Frank C. Carlucci
(Vice Chairman and Director).    Mr. Carlucci has been a member of our board of directors since January 2006 and the Vice Chairman of
our board of directors since March 2006. From 1993 to January 2003, Mr. Carlucci was Chairman, and from 2003 to 2005, Chairman Emeritus, of The Carlyle Group, a private equity firm. From
June 2000 to November 2005, he was a member of the board of directors of IRI. Mr. Carlucci served as National Security Advisor to the U.S. President and the U.S. Secretary of Defense in the
Reagan Administration. Mr. Carlucci is a Trustee of the RAND Corporation.
Robert L. Hargrave
(Vice Chairman and Director).    Mr. Hargrave has been our Vice Chairman since February 2011. Prior to that, he was our Chief Executive
Officer from January 2007 to January 2011. From 1999 to 2007, he was a private entrepreneur. He served as President and
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Chief
Executive Officer of Stewart & Stevenson Services, Inc. from 1997 to 1999 and its Chief Financial Officer from 1983 to 1997. Mr. Hargrave served as Vice Chairman and Chief
Financial Officer at IRI from 1999 to 2000.
Steve Fulgham
(Chief Executive Officer and Director).    Mr. Fulgham has been our Chief Executive Officer and Director since February 2011. He was most
recently with Schlumberger, where he served for 27 years in several capacities, most recently as President—Schlumberger North America Land. His other management positions covered
locations in Africa, Asia and Europe. He holds a B.S. in Petroleum Engineering and is a member of several oil and gas associations.
John B. Simmons
(Chief Financial Officer and Director).    Mr. Simmons has been our Chief Financial Officer and Director since September 2010. From
February 2007 to August 2010, Mr. Simmons was a private entrepreneur. From January 2006 to January 2007, Mr. Simmons was our Vice Chairman and Chief Executive
Officer.
Andrew M. Cannon
(Chief Accounting Officer).    Mr. Cannon has been our Chief Accounting Officer since January 2009. Mr. Cannon is a Certified Public
Accountant, most recently with Ernst & Young LLP from November 2002 through December 2008, and has worked primarily with the oilfield services, energy and related supporting industries.
Jack L. Pieper
(Vice President—Operational Finance).    Mr. Pieper has been our Vice President—Operational Finance since January 2009.
Prior to that, he was our Corporate Controller and has served in several roles in his 15 year tenure with Stewart & Stevenson. He is a Certified Public Accountant.
David C. Sulkis
(General Counsel).    Mr. Sulkis has been our General Counsel since January 2007. From 2002 to 2007, Mr. Sulkis practiced law at Baker
Botts L.L.P.
Kenneth W. Simmons
(Vice President, Domestic Sales and Aftermarket).    Mr. Simmons has been our Vice President of Domestic Sales and Aftermarket since
November 2006. From January 2006 to October 2006, he served as Vice President of North Region Distribution and Rental Operations. From January 2005 to January 2006, Mr. Simmons was Vice
President of North Region Distribution Rental Operations and from August 2003 to December 2004, Regional Operations Manager at Stewart & Stevenson & Stevenson Services, Inc.
Mr. Simmons was Chief Operating Officer of USA Compression from March 2001 to March 2003.
Charles T. Hatcher
(Vice President—Human Resources).    Mr. Hatcher has been our Vice President—Human Resources since May 2006.
Mr. Hatcher was Vice President of
Human Resources for the Power Products Division of Stewart & Stevenson Services, Inc. from September 2003 to May 2006. From January 2000 to June 2003, Mr. Hatcher was employed by
GE Oil & Gas Pipeline Inspection & Integrity Services, North America, a pipeline inspection company, as its Director of Human Resources.
David E. Christensen
(Senior Vice President—Manufacturing and Engineering).    Mr. Christensen has been our Senior Vice
President—Manufacturing and Engineering since May 2008. Prior to that, he was our Vice President of Engineering, from May 2006 to April 2008. From June 2001 to April 2006, he served as the
General Manager of the Utility Equipment Division of Stewart & Stevenson Services, Inc. Mr. Christensen has been employed with Stewart & Stevenson for 29 years.
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Nina Ansary
(Director).    Ms. Ansary has been a member of our board of directors since January 2006. Since April 1997, she has served as President of The
Ansary Foundation, an organization dedicated to philanthropic activities. She is also a member of the board of trustees of the Pacific Region of the Boys and Girls Clubs of America. Ms. Ansary
is the daughter of Mr. Ansary, our Chairman of the Board of Directors.
James W. Crystal
(Director).    Mr. Crystal has been a member of our board of directors since March 2006. For more than the past five years, Mr. Crystal
has been Chairman and Chief Executive Officer of Frank Crystal & Company, an insurance brokerage firm. He is Vice Chairman and Trustee of Mount Sinai Medical Center, Inc., a medical
service provider. He is a director of Global Indemnity plc. Mr. Crystal was a director of Blockbuster Inc. from February 2008 until May 2010.
Munawar H. Hidayatallah
(Director).    Mr. Hidayatallah has been a member of our board of directors since March 2011. Mr. Hidayatallah served as
Chairman and Chief Executive Officer of Allis Chalmers Energy Inc. from 2001 to 2011. He was Chief Financial Officer of IRI from 1994 to
1999 and served as a director of that company prior to its merger with National Oilwell Varco, Inc. in 2000. Mr. Hidayatallah is a member of the Institute of Chartered Accountants.
John D. Macomber
(Director).    Mr. Macomber has been a member of our board of directors since January 2006. He has been a Principal of JDM Investment Group, a
private investment firm, since 1992. From June 2000 to November 2005, he was a member of the board of directors of IRI. He was Chairman and Chief Executive Officer of Celanese Corporation from 1973 to
1986 and a Senior Partner at McKinsey & Company from 1954 to 1973. Mr. Macomber is Vice Chairman of The Atlantic Council. He has been a Director of Lehman Brothers Holdings Inc.,
which filed for bankruptcy in 2008. He was Chairman and President of the Export-Import Bank of the U.S. from 1989 to 1992.
Anthony G. Petrello
(Director).    Mr. Petrello has been a member of our board of directors since March 2011. Mr. Petrello has been President and Chief
Operating Officer of Nabors Industries Ltd. since 1992, a director of that company since 1991 and its Deputy Chairman since 2003.
J. Robinson West
(Director).    Mr. West has been a member of our board of directors since March 2011. Mr. West has been Chairman and Chief Executive
Officer of PFC Energy, Inc., an international energy consulting firm, since 1985. He is a director of Key Energy, Inc. and Chairman of Magellan Petroleum Corporation. Mr. West is
Chairman of the U.S. Institute of Peace and served as Assistant Secretary of the Interior in the Reagan Administration. He is a member of the National Petroleum Council and the Council on Foreign
Relations.
Director independence
Our board of directors has determined that each of Messrs. Carlucci, Crystal, Hidayatallah, Macomber, Petrello and West is an
"independent" director within the meaning of the applicable rules of the SEC and the New York Stock Exchange.
Board committees
The standing committees of our board of directors are the executive committee, the audit committee, the compensation committee and,
upon consummation of this offering, the nominating and governance committee. These committees are described below.
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Executive committee
Our executive committee consists of Mr. Ansary, as Chairman, Ms. Ansary and Messrs. Carlucci, Macomber and Petrello. Except as
limited by Delaware law, the executive committee will exercise the authority of our board of directors when the full board of directors is not in session.
Audit committee
Our audit committee consists of Mr. Hidayatallah, as Chairman, and Messrs. Carlucci and Crystal. Mr. Hidayatallah and
Mr. Crystal serve as audit committee financial experts. This committee is concerned primarily with the accuracy and effectiveness of the audits of our financial statements by our internal audit
staff and by our independent auditors. Its duties include:
•
selecting independent auditors;
•
reviewing the scope of the audit to be conducted by them, as well as the results of their audit;
•
approving non-audit services provided to us by our independent auditor;
•
reviewing the organization and scope of our internal system of audit, financial and disclosure controls;
•
appraising our financial reporting activities, including our annual report, and the accounting standards and principles
followed; and
•
conducting other reviews relating to compliance by our employees with our policies and applicable laws.
Compensation committee
Our compensation committee consists of Mr. Macomber, as Chairman, and Messrs. Carlucci and Hidayatallah. Our compensation committee
reviews and recommends policy relating to compensation and benefits of our directors and executive officers, including evaluating executive officer performance, reviewing and approving executive
officer compensation, reviewing director compensation, making recommendations to the board with respect to the approval, adoption and amendment of incentive compensation plans, administering
equity-based incentive compensation and other plans and reviewing executive officer employment agreements and severance arrangements.
Nominating and governance committee
Upon consummation of this offering, our nominating and governance committee will consist of Mr. Petrello, as Chairman, and
Messrs. Crystal and West. The nominating and governance committee's responsibilities are expected to include, among other things (1) responsibility for establishing our corporate
governance guidelines, (2) overseeing the board of director's operations and effectiveness and (3) identifying, screening and recommending qualified candidates to serve on the board of
directors.
Compensation committee interlocks and insider participation
None of our executive officers has served as a member of a compensation committee (or if no committee performs that function, the
board of directors) of any other entity that has an executive officer serving as a member of our compensation committee.
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Compensation discussion and analysis
Compensation philosophy and objectives
The primary objectives of our compensation policies with respect to executive compensation are to attract and retain the best
possible executives to lead us and to properly motivate these executives to perform at the highest levels of which they are capable. Compensation levels established for our executives are designed to
promote loyalty and long-term commitment to us and the achievement of our goals, to motivate the
best possible performance and to award achievement of budgetary goals to the extent such responsibility is within the executive's job description.
Role of compensation committee
Our compensation committee is responsible for reviewing, and modifying when appropriate, the overall goals and objectives of our executive
compensation programs, as well as our levels of compensation. In addition, our compensation committee is responsible for evaluating the performance and approving the compensation level of each of our
executive officers, taking into account the Chairman's recommendations, who does not participate in the Incentive Plan. Our compensation committee did not engage the services of an independent
compensation advisor in connection with compensation decisions made in Fiscal 2010.
Compensation components
Our executive compensation program consists of the following elements:
Base salary
The primary component of compensation of our executives is base salary. We believe that the base salary element is required in order to provide our
executive officers with a stable income stream that is commensurate with their responsibilities and the competitive market conditions. The base salary levels of our executives with respect to Fiscal
2010 were established based upon: (1) the individual's particular background and circumstances, including experience and skills, (2) our knowledge of competitive factors within the
industry in which we operate, (3) the job responsibilities of the individual, (4) our expectations as to the performance and contribution of the individual and our judgment as to the
individual's potential future value to us and (v) existing base salary levels. In establishing the current base salary levels, we did not engage in any particular benchmarking activities or
engage any outside compensation advisors. Base salaries remained unchanged from the end of Fiscal 2008 through Fiscal 2010, although an across the board pay cut, ranging from 5% to 20%, was
implemented in March 2009 as a response to the economic downturn in the global economy. In August 2010, due to improved economic conditions affecting our industry, our compensation committee
restored the base salaries of all of our employees, including our named executive officers, to previous levels, except for Mr. Ansary and Mr. Hargrave, who voluntarily continued their
salary reductions. In addition, effective January, 2011, Mr. Ansary voluntarily reduced his salary a further $0.5 million on an annual basis, in order to offset increases in the costs of
certain health insurance benefits for all employees.
We
expect that in future years, base salary levels will be established based upon these factors as well as additional factors including prior year's performance, the individual's length of
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service
to us and other elements. Mr. Ansary plays a major role creating our organic and acquisitive growth opportunities, expanding our international presence and the achieving of our global
strategic objectives. Mr. Ansary's base salary for Fiscal 2010, before giving effect to the reduction effected in Fiscal 2009 and voluntarily continued in Fiscal 2010 and to the further
voluntary reduction in Fiscal 2010, was established in light of his unique role in our company. Pursuant to the terms of our revolving credit facility, Mr. Ansary's total compensation for any
fiscal year commencing in Fiscal 2007 may not exceed $5 million, provided that after consummation of an initial public equity offering, any change in Mr. Ansary's total compensation will
be subject only to the approval of our board of directors. On November 6, 2007, we entered into an employment agreement with Mr. Ansary pursuant to which Mr. Ansary's annual base
salary will continue, subject to voluntary reductions, to be not less than $2.0 million.
Bonus
In the face of the global financial turmoil and economic downturn, we have discontinued our previously reported bonus practice of awarding our
executives discretionary cash bonuses. Accordingly, no cash bonuses or discretionary cash bonuses were awarded to the named executive officers for Fiscal 2009 or Fiscal 2008. We resumed cash and
discretionary cash bonuses in Fiscal 2010.
With
respect to executive bonuses for Fiscal 2011 and future years, absent extraordinary circumstances, it will be our practice to provide our executives discretionary cash bonuses and equity awards
in years when our Board-approved EBITDA target is achieved. Any such cash bonuses and equity awards are expected to be comparable to the median of those generally awarded by a peer group of companies,
currently consisting of Schlumberger, Ltd., National
Oilwell Varco, Inc., Weatherford International Ltd. and Baker Hughes Incorporated, to their executives for achievement of performance measures.
Equity awards
On September 5, 2007, our board of directors adopted the 2007 Incentive Compensation Plan ("Incentive Plan"). The Incentive Plan received the
required approval of a majority of our unit holders and became effective on September 27, 2007. In connection with the adoption and approval of the Incentive Plan, the compensation committee of
the board, which has the responsibility to administer the Incentive Plan, made certain grants of restricted shares to our non-executive directors and certain members of our senior
executive management. The grants to our four non-executive directors totaled 240,000 restricted shares vesting in five (5) 48,000 share tranches, with each such tranche vesting upon
board service for a complete fiscal year. In addition, approximately 112,000 of the restricted shares granted to three former directors were earned as part of their service to us with the balance of
their grants being forfeited. The executive grants total 60,000 restricted shares vesting in five (5) 12,000 share tranches, with each tranche vesting upon employment for a complete fiscal
year. In addition, approximately 20,000 of the restricted shares granted to a former executive were earned before his resignation from the Company with the balance being forfeited. The executive
grants are subject to the achievement of net pre-tax income growth in the relevant fiscal year that exceeds the median net pre-tax income growth of a peer group of companies
consisting of Schlumberger, Ltd., National Oilwell Varco, Inc., Weatherford International Ltd., and Cameron International Corp. and are subject to acceleration in the case of an
executive's death or
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disability.
This performance condition was met for Fiscal 2010 and 12,000 shares vested; however, this performance condition was not met for Fiscal 2009 or Fiscal 2008 and those tranches were
forfeited. All grants are subject to (i) the completion of an initial public equity offering and (ii) accelerated vesting upon a change-in-control of the company.
No expense has been recognized for these grants because the contingent condition has not occurred and as of January 31, 2011, diluted earnings per share excluded the approximately 408,000
contingent unvested restricted shares. A total of 396,000 restricted shares will vest upon completion of an initial public equity offering, and we will record a non-cash compensation
expense in connection therewith in an amount equal to the grant-date fair value of such vested shares, estimated to be approximately $5.0 million.
401(k) plan
We maintain a retirement savings plan, or a 401(k) Plan, for the benefit of all eligible employees. Currently, employees may elect to defer their
compensation up to the statutorily prescribed limit. During Fiscal 2010, we matched 35% of employee contributions to the 401(k) Plan, capped at 6% of the employee's salary. An employee's interests in
his or her deferrals are 100% vested when contributed. The 401(k) Plan is intended to qualify under Sections 401(a) and 501(a) of the Internal Revenue Code. As such, contributions to the 401(k)
Plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) Plan, and all contributions are deductible by us when made. We provide this benefit to our
executive officers because it is a benefit we provide to all of our eligible employees and it is provided to our executive officers on the same basis as all other eligible employees.
Executive Officer Benefits
We provided our executive officers with the following benefits: (1) payment of life insurance premiums, (2) payment of medical
insurance premiums, (3) payment of accidental death and dismemberment insurance premiums and (4) payment of long term disability insurance premiums in previous years and for a portion of
Fiscal 2010, but have discontinued this practice due to recent regulatory changes. We pay for the parking expenses of our executive officers at our headquarters.
2007 Incentive Compensation Plan
The purpose of the Incentive Plan is to attract, reward and retain qualified personnel, and to provide incentives for our directors, officers and
employees to set forth maximum efforts for the success of our business. Our Incentive Plan permits the granting of awards in the form of options to purchase common stock or units, stock appreciation
rights, restricted shares of common stock or units, restricted stock units, performance shares, performance units and senior executive plan bonuses (which may be in shares of common stock or units
and/or cash).
Subject
to certain adjustments that may be required from time to time to prevent dilution or enlargement of the rights of participants in the Incentive Plan, a maximum of 5,000,000 shares (which may
be in the form of units prior to our conversion to a corporation) are available for grants of all equity awards under the Incentive Plan. The shares of common stock or units to be issued under the
Incentive Plan consist of authorized but unissued shares of our common stock or units. If any shares are subject to an award that expires or are forfeited, then such shares will, to the extent of any
forfeiture or termination, again be available for making awards under the Incentive Plan. To the extent any awards granted are subject to the
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achievement
of a performance goal in respect of a fiscal year or other period, upon the occurrence of a change of control during the period, the performance goal shall be deemed satisfied.
The
performance goals applicable to any award under the Incentive Plan in respect of any participant who is or is likely to become a "covered employee" within the meaning of Section 162(m) of
the Internal Revenue Code will be based on specified levels of, growth in, or performance relative to peer company or peer company group performance in one or more of the following categories
(excluding extraordinary or non-recurring items unless otherwise specified): (1) profitability measures; (2) revenue, sales and same store sales measures; (3) business
unit performance; (4) leverage measures; (5) stockholder return; (6) expense management; (7) asset and liability measures; (8) individual performance;
(9) supply chain efficiency; (10) customer satisfaction; (11) productivity measures; (12) cash flow measures; (13) return measures; and (14) product
development and/or performance.
Awards
under the Incentive Plan are subject to the following limitations: (1) the maximum number of shares of common stock or units that (a) may be subject to stock options or
appreciation rights granted to a participant during any calendar year is 400,000 shares plus an additional 100,000 shares in respect of a participant who has not previously been employed by us and
(b) may be subject to performance shares, restricted shares or restricted stock units granted to a participant during any calendar year is 200,000 shares plus an additional 50,000 shares in
respect of a participant who has not previously been employed by us and (2) the maximum aggregate cash value of payments to any participant for any performance period pursuant to an award of
performance units and the payment of a senior executive plan bonus to any participant in respect of any fiscal year may not in either case exceed 2% of EBITDA (excluding the effects of discontinued
operations or extraordinary or non-recurring items).
Our
compensation committee administers the Incentive Plan. The compensation committee has the ability to: select individuals to receive awards; select the types of awards to be granted; determine the
terms and conditions of the awards, including the number of shares, the
purchase price or exercise price of the awards, if any, and restrictions and performance goals, if any, relating to any award; establish the time when the awards and/or restrictions become
exercisable, vest or lapse; and make all other determinations deemed necessary or advisable for the administration of the plan.
While
our board of directors may terminate or amend the Incentive Plan at any time, no amendment may adversely impair the rights of grantees with respect to outstanding awards. In addition, an
amendment will be contingent on approval of our stockholders to the extent required by law. Unless terminated earlier, the Incentive Plan will terminate on the tenth anniversary of the date on which
it was approved by our stockholders, after which no further awards may be made under the Incentive Plan, but will continue to govern unexpired awards.
Employment Agreements
We have a written employment agreement with Mr. Ansary. In addition, we entered into an employment agreement with Mr. Fulgham in
connection with his hiring in February 2011. None of our other executive officers are party to written or unwritten employment agreements or severance or change in control arrangements with us. For a
description of the material terms of the employment agreement with Mr. Ansary, see "Compensation Components—Base Salary."
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Summary compensation table
The following table sets forth the compensation of our most highly compensated executive officers, which include our chief executive
officer, for Fiscal 2010, 2009 and 2008. We refer to these individuals as our named executive officers.
Name and principal position
Fiscal
Year
Salary
Cash
Bonus
Equity
awards
All other
compensation(1)
Total
Hushang Ansary
2010
$
2,008,894
$
—
$
—
$
45,009
$
2,053,903
Chairman of the Board of
2009
2,082,572
—
—
40,525
2,123,097
Directors and of the
2008
2,500,000
—
—
42,431
2,542,431
Executive Committee
Robert L. Hargrave (2)
2010
508,125
500,000
—
36,570
1,044,695
Vice Chairman
2009
518,726
—
—
32,212
550,938
2008
600,000
—
—
33,425
633,425
John B Simmons (3)
2010
183,569
250,000
—
15,196
448,765
Chief Financial Officer
David E. Christensen
2010
190,914
157,381
—
25,629
373,924
Senior Vice President—
Manufacturing and
Engineering
Kenneth W. Simmons
2010
190,914
105,381
—
20,726
317,021
Vice President—Domestic
2009
185,072
—
—
15,728
200,800
Sales & Aftermarket
2008
200,000
—
—
16,828
216,828
(1)   Consists of executive officer benefits listed above and 401(k) matching contributions.
(2)   Mr. Hargrave
was our Chief Executive Officer through January 2011.
(3)   Mr. Simmons
became our Chief Financial Officer effective September 14, 2010.
Grants of Plan-Based Awards
We did not grant any incentive awards or equity awards to our named executive officers in Fiscal 2010.
Outstanding Equity Awards at Fiscal Year-End
Mr. Hargrave holds 36,000 restricted shares, of which 12,000 are subject to forfeiture if certain performance goals are not
achieved in Fiscal 2011. See "Compensation components—Equity Awards" for a discussion. All restricted shares held by Mr. Hargrave, if not previously forfeited, will vest upon
(1) the completion of an initial public equity offering or (2) a change-in-control of the Company.
Option Exercises and Stock Vested
Our named executive officers did not exercise any options and did not have any stock awards vest during Fiscal 2010.
Potential Payments upon Termination or Change-in-Control
We have not entered into any agreement with any of our named executive officers that would provide for severance payments upon a
termination of employment or payments made in connection with a change in control.
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Mr. Hargrave
holds 36,000 restricted shares, of which 12,000 are subject to forfeiture if certain performance goals are not achieved in Fiscal 2011. See "Compensation
components—Equity Awards" in for a discussion. All restricted shares held by
Mr. Hargrave, if not previously forfeited, will vest upon (1) the completion of an initial public equity offering or (2) a change-in-control of us.
Director compensation
Directors who are also full-time officers or employees of our company receive no additional compensation for serving as
directors. All other directors receive an annual retainer of $60,000. For a discussion of equity awards made to our non-executive directors in anticipation of our initial public offering,
see Equity Awards above. Each non-employee director also receives an annual fee of $10,000 for serving as the chair of a standing committee, with the exception of the chair of the audit
committee, who receives an annual fee of $15,000. In addition, each director who otherwise serves on a committee receives an annual fee of $5,000. The following table sets forth compensation earned by
our non-employee directors in Fiscal 2010.
Name of director
Fees earned
or
paid in cash
Total
Nina Ansary
$
65,000
$
65,000
Frank C. Carlucci
70,000
70,000
James W. Crystal
75,000
75,000
John D. Macomber
70,000
70,000
Stephen Solarz(1)
65,000
65,000
(1)   Mr. Solarz passed away in November 2010.
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Principal and selling stockholders
The following table sets forth certain information as of April 30, 2011 regarding the beneficial ownership of our outstanding
common equity, by:
•
each person or entity known by us to beneficially own more than 5% of our outstanding common stock;
•
each of our directors and named executive officers; and
•
all of our directors and executive officers as a group.
Beneficial
ownership of shares is determined under rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power. In computing the number
of shares beneficially owned by a person and the percentage ownership of that person, shares of Common Stock subject to options held by that person that are currently exercisable or exercisable within
60 days of April 30, 2011 are deemed outstanding. These shares, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Except as
indicated in the footnotes to this table and as provided pursuant to applicable community property laws, the stockholders named in the table have sole voting and investment power with respect to the
shares set forth opposite each stockholder's name. This table assumes no exercise of the underwriters' option to purchase up to an aggregate
of                      additional shares of Common Stock from
us and the selling stockholders consisting of                      shares issued by us
and                      shares to be sold on a pro rata basis by the selling stockholders. Unless otherwise indicated, the
address for each of the persons listed below is: c/o Stewart & Stevenson LLC, 1000 Louisiana St., Suite 5900, Houston, Texas 77002.
Number of units
beneficially
owned prior to this offering(1)
Number of shares
beneficially
owned after this offering(1)
Name and address of beneficial owner
Number of
units
Percentage
Shares
offered
Number of
shares
Percentage
Parman Capital Group LLC(2)
51,750,000
51.75%
%
EC Investments B.V.(3)(4)
40,005,000
40.00%
%
Hushang Ansary(2)(4)(5)
91,755,000
91.75%
%
Steve Fulgham
—
—
—
%
Robert L. Hargrave(8)
—
—
—
%
John B. Simmons
—
—
—
%
David E. Christensen
—
—
—
%
Kenneth W. Simmons
—
—
—
%
Nina Ansary(4)(6)(8)
4,300,000
4.30%
%
Frank C. Carlucci(4)(7)(8)
3,950,000
3.95%
%
James W. Crystal(4)(8)
—
—
—
%
Munawar H. Hidayatallah
—
—
—
%
John D. Macomber(4)(8)
—
—
—
%
Anthony G. Petrello
—
—
—
%
J. Robinson West
—
—
—
%
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Number of units
beneficially
owned prior to this offering(1)
Number of shares
beneficially
owned after this offering(1)
Name and address of beneficial owner
Number of
units
Percentage
Shares
offered
Number of
shares
Percentage
All directors and executive officers as a group (16 persons)
100,005,000
100.00%
%
(1)   Immediately prior to consummation of this offering, we will convert to a corporation and units will convert on a one-to-one basis into shares. Upon
consummation of this offering, Parman Capital Group LLC will hold all outstanding shares of Class B Common Stock and all other investors will hold shares of Common Stock. Excludes
12,000,000 units which Parman Capital Group LLC has the right to reacquire from EC Investments B.V. until April 2011.
(2)   Mr. Ansary
and his wife are the sole members of Parman Capital Group LLC. Mr. Ansary has sole voting and dispositive power with respect to the units held by
Parman Capital Group LLC.
(3)   Includes
12,000,000 units that Parman Capital Group LLC has the right to reacquire, 1,700,000 units that Ms. Ansary has the right to reacquire and 1,300,000 units that
the Frank C. Carlucci III Revocable Trust has the right to reacquire from EC Investments B.V. until April 2011.
(4)   EC Investments B.V.
is a wholly owned subsidiary of Ennia Caribe Holding N.V., which is in turn a wholly-owned subsidiary of Parman International B.V., a private
investment company in which Mr. Ansary owns a controlling equity interest and Mr. Carlucci and Ms. Ansary each own a minority equity interest. Mr. Ansary is Chairman of the
Supervisory Board of Ennia Caribe Holding N.V. Messrs. Carlucci, Crystal and Macomber and Ms. Ansary are also members of the Supervisory Board of Ennia Caribe Holding N.V.
Each of Messrs. Carlucci, Crystal and Macomber and Ms. Ansary disclaim beneficial ownership of such units.
(5)   Reflects
beneficial ownership of units held by Parman Capital Group LLC and EC Investments B.V.
(6)   Excludes
1,700,000 units which Ms. Ansary has the right to reacquire from EC Investments B.V. until April 2011.
(7)   Reflects
units held by Frank C. Carlucci III Revocable Trust. Excludes 1,300,000 units which the Frank C. Carlucci III Revocable Trust has the right to reacquire from
EC Investments B.V. until April 2011.
(8)   Number
of shares beneficially owned after this offering does not include an aggregate of 396,000 shares of Common Stock granted to various officers and directors under the Incentive
Plan which will vest upon the completion of this offering. See "Compensation discussion and analysis—2007 Incentive Compensation Plan."
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Certain relationships and transactions
James W. Crystal, a member of our board of directors, is also the Chairman and Chief Executive Officer of Frank Crystal &
Company, Inc., an insurance brokerage firm. In Fiscal 2010, 2009 and 2008, we purchased insurance coverage through Frank Crystal & Company, Inc., generating commissions to Frank
Crystal & Company, Inc. of $477,799, $358,426 and $360,662, respectively. The purchase of this coverage was negotiated on an arms' length basis, and we believe that the premium was within the
range of market prices for similar types of insurance coverage. We currently anticipate that we will continue to procure insurance from Frank Crystal & Company, Inc.
Backlog
of $375.0 million as of January 31, 2011 includes a $37.5 million related party transaction, reflecting an order in Fiscal 2009 from EC Investments B.V., an entity
indirectly controlled by a private investment company in which Mr. Ansary holds a controlling equity interest and in which Mr. Carlucci and Ms. Ansary, each of whom is a member of
our board of directors, each hold minority interests. Revenue recognition from this transaction will be deferred until title to the product passes to a third party and all other revenue recognition
criteria have been met. A deposit in the amount of $31.2 million is recorded as a customer deposit in our consolidated balance sheet. Included in inventories, net is $29.5 million in
costs related to this contract, and no amounts had been recorded in the consolidated statements of operations for this transaction as of January 31, 2011.
Our
current practice with respect to related party transactions is as follows: (1) transactions with a value not exceeding $10,000 are subject to approval by our Chairman (other than
transactions in which our Chairman may be a party); (2) transactions in which our Chairman may be a party or transactions with a value in excess of $10,000 but not exceeding $100,000 are
subject to approval by our Executive Committee (excluding, as appropriate, the participation of a member of the Executive Committee who may be a party to such transactions); and (3) all other
transactions are subject to approval of our board of directors (excluding, as appropriate, the participation of a member of board of directors who may be a party to such transactions).
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Description of capital stock
This description is a summary only, assumes that the Corporate Conversion has occurred and is subject to our certificate of
incorporation and bylaws as they will be adopted upon the Corporate Conversion, which we will file as exhibits to the registration statement of which this prospectus is a part.
Our
authorized capital stock consists of 600 million shares of Common Stock, $0.01 par value, 300 million shares of Class B Common Stock, $0.01 par value, and 100 million
shares of preferred stock, $0.01 par value. The following summary of certain provisions relating to the Common Stock, Class B Common Stock and preferred stock does not purport to be complete
and is subject to, and qualified in its entirety by, the provisions of applicable Delaware law and the provisions of our certificate of incorporation and our bylaws.
Common Stock and Class B Common Stock
General.
The holders of Common Stock and Class B Common Stock have identical rights except with respect to voting, conversion and transfer.
Voting rights.
Holders of our Common Stock are entitled to one vote per share on all matters to be voted on by stockholders, while holders of Class B Common
Stock are entitled to ten votes per share. Generally, except as may be provided by law, all matters to be voted on by stockholders must be approved by a majority of the votes entitled to be cast by
all holders of Common Stock and Class B Common Stock present in person or represented by proxy, voting together as a single class, subject to any voting rights granted to holders of any
preferred stock. However, amendments to our certificate of incorporation that would alter or change the powers, preferences or special rights of the Common Stock or Class B Common Stock so as
to affect them adversely also must be approved by a majority of the votes entitled to be cast by the holders of the Common Stock or Class B Common Stock (as the case may be), voting as a
separate class.
Dividends.
Subject to the rights of holders of our preferred stock, holders of our Common Stock and Class B Common Stock are entitled to such dividends as
our board of directors may declare out of funds legally available therefor. Holders of our Common Stock and Class B Common Stock will share equally on a per share basis in any dividend declared
by the board of directors, subject to any preferential rights of any outstanding preferred stock. Dividends consisting of shares of Common Stock and Class B Common Stock may be paid only as
follows: (1) shares of Common Stock may be paid only to holders of Common Stock, and shares of Class B Common Stock may be paid only to holders of Class B Common Stock; and
(2) the number of shares so paid will be equal on a per share basis with respect to each outstanding share of Common Stock and Class B Common Stock.
We
may not reclassify, subdivide or combine shares of either class of common stock without at the same time proportionally reclassifying, subdividing or combining shares of the other class.
Other provisions.
The holders of our Common Stock and Class B Common Stock will share equally on a per share basis, upon liquidation or dissolution of all
of the assets available for distribution to holders of common stock. The holders of our Common Stock and Class B Common Stock have no preemptive or other subscription rights, and there are no
redemption
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or
sinking fund provisions with respect to these shares. Additional shares of Class B Common Stock may only be issued to Mr. Ansary and entities controlled by Mr. Ansary.
Merger or consolidation.
In the event of a merger or consolidation, the holders of Common Stock and Class B Common Stock generally will be entitled to
receive the same per share consideration, if any.
Conversion/transfer of Class B Common Stock.
Our Class B Common Stock will be convertible into Common Stock on a
share-for-share basis at the option of the holder at any time, or automatically upon transfer to a person or entity which is not a permitted transferee or upon the death of
Mr. Ansary. In general, permitted transferees will include us, Mr. Ansary and entities controlled by Mr. Ansary.
Preferred stock
Our board of directors will have the authority, with the approval of a majority of the combined voting power of our Common Stock and
Class B Common Stock, voting together as a single class, to issue shares of preferred stock from time to time in one or more series and to fix the number of shares and terms of each such
series. The board may (subject to such stockholder approval) determine the designation and other terms of each series, including, among others:
•
dividend rates;
•
whether dividends will be cumulative or non-cumulative;
•
redemption rights;
•
liquidation rights;
•
sinking fund provisions;
•
conversion or exchange rights; and
•
voting rights.
The
issuance of preferred stock, while providing us with flexibility in connection with possible acquisitions and other corporate purposes, could reduce the relative voting power of holders of our
Common Stock and Class B Common Stock. It could also affect the likelihood that holders of our Common Stock and Class B Common Stock will receive dividend payments and payments upon
liquidation.
The
issuance of shares of capital stock could be used to discourage an attempt to obtain control of our company. For example, if, in the exercise of its fiduciary obligations, our board of directors
determined that a takeover proposal was not in the best interest of our stockholders, our board of directors could authorize the issuance of preferred stock, subject to approval of the holders of a
majority of the voting power of our Common Stock and Class B Common Stock, voting together as a single class. The shares could be issued in one or more
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transactions
that might prevent or make the completion of the change of control transaction more difficult or costly by:
•
diluting the voting or other rights of the proposed acquiror or insurgent stockholder group;
•
creating a substantial voting block in institutional or other hands that might undertake to support the position of the
incumbent board; or
•
effecting an acquisition that might complicate or preclude the takeover.
In
this regard, our certificate of incorporation will grant our board of directors broad power to establish the rights and preferences of the authorized and unissued preferred stock. Our board of
directors, subject to approval of the holders of a majority of the voting power of our Common Stock and Class B Common Stock, voting together as a single class, could establish one or more
series of preferred stock that entitle holders to:
•
vote separately as a class on any proposed merger or consolidation;
•
cast a proportionately larger vote than our common stock on any transaction or for all purposes;
•
elect directors having terms of office or voting rights greater than those of other directors;
•
convert preferred stock into a greater number of common stock or other securities;
•
demand redemption at a specified price under prescribed circumstances related to a change of control of our company;
or
•
exercise other rights designed to impede a takeover.
Certificate of incorporation and bylaws
Election and removal of directors
The exact number of directors will be fixed from time to time by an affirmative vote (or written consent) of a majority of the combined voting power
of our outstanding Common Stock and Class B Common Stock, voting together as a single class. Directors may be removed with or without cause by an affirmative vote of a majority of the combined
voting power of our outstanding Common Stock and Class B Common Stock, voting together as a single class. Any vacancy occurring on the board of directors and any newly
created directorship may be filled only by vote of a majority of the combined voting power of our outstanding Common Stock and Class B Common Stock, voting together as a single class.
Stockholder meetings
Our certificate of incorporation and our bylaws will provide that special meetings of our stockholders may be called (1) by the Chairman,
(2) at the request of a majority of the directors, by our Secretary, or (3) by a majority of the combined voting power Common Stock and Class B Common Stock, voting together as a
single class.
Stockholder action by written consent
Our certificate of incorporation and our bylaws will provide that holders of our Common Stock and Class B Common Stock will be able to act by
written consent without a meeting.
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Amendment of certificate of incorporation
Our certificate of incorporation generally may be amended only by the affirmative vote of holders of at least a majority of the combined voting power
of our Common Stock and Class B Common Stock, voting together as a single class; provided, however, that the holders of our Common Stock and Class B Common Stock will each be entitled to
vote separately as a class with respect to amendments to our certificate of incorporation that change the powers, preferences or special rights of their respective class so as to affect them
adversely.
Amendment of bylaws
Our bylaws generally may be altered, amended or repealed by our board of directors, provided that certain bylaws relating to stockholder meetings and
the election and removal of our directors may not be amended or repealed without the affirmative vote (or written consent) of holders of a majority of the combined voting power of our Common Stock and
Class B Common Stock, voting together as a single class.
Limitation of liability of directors and officers
We intend to complete our Corporate Conversion prior to the completion of this offering. Section 145 of the Delaware General
Corporation Law, or DGCL, authorizes a court to award, or a corporation's board of directors to grant, indemnity to directors and officers in terms sufficiently broad to permit such indemnification
under certain circumstances for liabilities, including reimbursement for expenses incurred, arising under the Securities Act.
As
permitted by the DGCL, we anticipate that our Delaware certificate of incorporation, which will be effective upon the closing of this offering, will include a provision that permits the elimination
of personal liability of our directors for monetary damages for breach of fiduciary duty as a director, to the fullest extent permitted by the DGCL as it now exists or as it may be amended. The DGCL
permits limitations of liability for a director's breach of fiduciary duty other than liability:
•
for any breach of the director's duty of loyalty to us or our stockholders;
•
for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of the law;
•
for unlawful payments of dividends or unlawful stock repurchases or redemptions, as provided under Section 174 of
the DGCL; or
•
for any transaction from which the director derived an improper personal benefit.
Such
limitation of liability may not apply to liabilities arising under the federal securities laws and does not affect the availability of equitable remedies such as injunctive relief or rescission.
In addition and as permitted under the DGCL, our certificate of incorporation will also permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability
arising out of his or her actions in such capacity, regardless of whether indemnification would be permitted under the DGCL. We intend to obtain liability insurance for our directors and officers.
Upon
completion of this offering, our certificate of incorporation and bylaws will provide that we shall indemnify our officers and directors and anyone serving at the request of the
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Company
as an officer, director, employee or agent of another entity, and may indemnify our employees and agents, to the fullest extent permitted by the DGCL. Section 145 of the DGCL also
empowers us to enter into indemnification agreements with our officers, directors, employees and agents. Prior to the completion of this offering, we expect to enter into indemnification agreements
with our directors and executive officers to give such directors and executive officers additional contractual assurances regarding our indemnification obligations set forth in our certificate of
incorporation and bylaws and to provide additional procedural protections, which contractual rights may, in some cases, be broader than the specific indemnification provisions contained in the DGCL.
The indemnification agreements may require us, among other things, to indemnify such directors and executive officers against liabilities that may arise by reason of their status or service as
directors or executive officers and to advance expenses they incur as a result of any proceeding against them as to which they could be indemnified.
At
present, there is no pending litigation or proceeding involving any of our directors, executive officers, other employees or agents for which indemnification is sought, and we are not aware of any
threatened litigation or proceeding that may result in a claim for such indemnification.
Anti-takeover effects of some provisions
Some provisions of our certificate of incorporation and bylaws could make the following more difficult:
•
acquisition of control of us by means of a proxy contest or otherwise, or
•
removal of our incumbent officers and directors.
These
provisions, as well as our ability to issue preferred stock, are designed to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage
persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection give us the potential ability to negotiate with the
proponent of an unfriendly or unsolicited proposal to acquire or restructure us, and that the benefits of this increased protection outweigh the disadvantages of discouraging those proposals, because
negotiation of those proposals could result in an improvement of their terms.
Delaware business combination statute
We will elect to be subject to Section 203 of the DGCL, which regulates corporate acquisitions. Section 203 prevents an
"interested stockholder," which is defined generally as a person owning 15% or more of a corporation's voting stock, or any affiliate or associate of that person, from engaging in a broad range of
"business combinations" with the corporation for three years after becoming an interested stockholder unless:
•
the board of directors of the corporation had previously approved either the business combination or the transaction that
resulted in the stockholder's becoming an interested stockholder;
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•
upon completion of the transaction that resulted in the stockholder becoming an interested stockholder, that person owned
at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, other than statutorily excluded shares; or
•
following the transaction in which that person became an interested stockholder, the business combination is approved by
the board of directors of the corporation and holders of at least two-thirds of the outstanding voting stock not owned by the interested stockholder.
Generally,
a "business combination" includes a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. Under Section 203, the
restrictions described above also do not apply to specific business combinations proposed by an interested stockholder following the announcement or notification of designated extraordinary
transactions involving the corporation and a person who had not been an interested stockholder during the previous three years or who became an interested stockholder with the approval of a majority
of the corporation's directors, if such extraordinary transaction is approved or not opposed by a majority of the directors who were directors prior to any person becoming an interested stockholder
during the previous three years or were recommended for election or elected to succeed such directors by a majority of such directors.
Section 203
may make it more difficult for a person who would be an interested stockholder to effect various business combinations with us for a three-year period after such person
became an interested stockholder. Section 203 also may have the effect of preventing changes in our management and could make it more difficult to accomplish transactions which our stockholders
may otherwise deem to be in their best interests.
Listing of Common Stock
We intend to apply to list our Common Stock on the New York Stock Exchange under the symbol "                  ."
Transfer agent and registrar
The transfer agent and registrar for our Common Stock is Continental Stock Transfer & Trust Company.
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Shares eligible for future sale
Until the consummation of this offering, there will be no market for our Common Stock. We can make no predictions as to the effect,
if any, that sales of shares of Common Stock or the availability of shares of Common Stock for sale will have on the market price shares of our Common Stock prevailing from time to time. Nevertheless,
sales of significant amounts of our Common Stock in the public market, or the perception that such sales may occur, could adversely affect prevailing market prices.
If
permitted under our current and future agreements, including agreements governing our debt, we may issue shares of Common Stock from time to time as consideration for acquisitions, investments or
other transactions. In the event any such acquisition, investment or other transaction is significant, the number of shares that we may issue may be significant, which may have an adverse effect on
the market price of our Common Stock. In addition, we
may also grant registration rights covering those shares of Common Stock issued in connection with any such acquisition, investment or other transaction.
Sale of restricted shares
After giving effect to this offering, we will have             shares of common stock outstanding, consisting
of             
shares of Common Stock and             shares of Class B Common Stock. Of these shares of common stock,
the             shares of Common Stock being sold in this offering, plus any
shares issued upon exercise of the underwriters' option to purchase additional shares, will be freely tradeable without restriction under the Securities Act, except for any such shares that may be
held or acquired by an "affiliate" of ours, as that term is defined in Rule 144 promulgated under the Securities Act, which shares will be subject to the volume limitations and other
restrictions of Rule 144 described below. The remaining             shares of common stock, consisting
of             shares of Common Stock and             shares of Class B
Common Stock held by our existing stockholders upon completion of this offering, other than those subject to the underwriters' option to purchase additional shares to the extent it is exercised, will
be "restricted securities" as that phrase is defined in Rule 144, and may not be resold, in the absence of registration under the Securities Act, except pursuant to an exemption from such
registration, including among others, the exemption provided by Rule 144 under the Securities Act, which rule is summarized below. All of these restricted securities will be subject to the
lock-up agreements described below.
Beginning
180 days after the date of this prospectus, subject to certain exceptions, shares of Common Stock that are subject to lock-up agreements will be eligible for sale pursuant
to the holding period requirements and, in the case of our affiliates, the volume limitations, imposed by Rule 144. See "Underwriting (Conflicts of interest)."
Rule 144
In general, under Rule 144, as currently in effect, once we have been subject to public company reporting requirements for at
least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the three months preceding a sale and who has beneficially
owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those shares without complying with the
manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If
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such
a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person is entitled to
sell those shares under Rule 144 without complying with any of the other requirements of Rule 144.
In
general, under Rule 144, as currently in effect, once we have been subject to public company reporting requirements for at least 90 days, our affiliates or persons selling shares on
behalf of our affiliates who have beneficially owned the shares proposed to be sold for at least six months are entitled to sell upon expiration of the lock-up agreements described below,
within any three-month period, a number of shares that does not exceed the greater of:
•
1% of the number of shares of Common Stock then outstanding, which will equal approximately             shares
immediately after this offering; or
•
the average weekly trading volume of the Common Stock during the four calendar weeks preceding the filing of a notice on
Form 144 with respect to that sale.
Sales
under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the
availability of current public information about us.
Lock-up agreements
Notwithstanding the foregoing, we, our executive officers, directors and certain existing stockholders have agreed not to offer,
sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares of our Common Stock or securities convertible into or exchangeable or exercisable for shares of our Common
Stock for a period of 180 days after the date of this prospectus subject to certain exceptions, without the prior written consent of J.P. Morgan Securities LLC, on behalf of the
underwriters. This lock-up period may be extended in certain circumstances. See "Underwriting (Conflicts of interest)."
Registration rights
Upon consummation of this offering, we will become party to a registration rights agreement with certain holders of our common stock.
The agreement will provide that Parman Capital Group LLC and EC Investments B.V., which upon consummation of this offering will own in the aggregate approximately         % of our
outstanding Common Stock, may require us to register under the Securities Act all or any portion of their shares, a so-called "demand request." The demand registration rights are subject
to certain limitations, including that we are not obligated to effect:
•
more than three demand registrations in total or more than one demand registration in any twelve-month period;
•
a demand registration within 180 days after the effective date of the registration statement of which this
prospectus is a part; and
•
a demand registration unless the demand request is for a number of shares with a market value equal to at least
$25 million.
In
addition, Parman Capital Group LLC, EC Investments B.V. and two of our directors, Mr. Frank Carlucci and Ms. Nina Ansary, will have so-called "piggyback"
registration rights, which means that they may include their respective shares in any future registration of our Common Stock, whether or not that registration relates to a primary offering by us or a
secondary offering by or on behalf of any of our stockholders. The demand and piggyback registration rights will be subject to standard market cut-back exceptions.
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Description of indebtedness
Revolving credit facility
Our revolver credit facility is a $250.0 million (expandable to $325.0 million) senior asset-based facility, subject to
availability, which includes a $25.0 million (expandable to $35.0 million) sub-limit for a Canadian revolving credit sub-facility (which is only available to
Canadian borrowers), a $30.0 million sub-limit for letters of credit, a $25.0 million sub-limit for an export-related sub-facility and a
$30.0 million sub-limit for swingline loans.
The
revolving credit facility also provides for a $15.0 million sub-limit for protective advances, which are loans that are unilaterally made by the administrative agent that it
deems are necessary or desirable for reasons in its discretion (based upon its determination made in good faith and in the exercise of reasonable business judgment), including to preserve or protect
the collateral and to enhance the likelihood of repayment of all of the loans. In addition, the administrative agent may in its sole discretion make overadvance loans at the borrowers' request in an
amount not to exceed $15.0 million. Overadvance loans may be made at the administrative agent's sole discretion in excess of the amount that is available under the revolving credit facility.
The Canadian revolving credit sub-facility similarly provides for a $2.5 million sub-limit for Canadian protective advances and a $2.5 million limit on Canadian
overadvance loans. Borrowings by us pursuant to protective advances and overadvances are treated no differently than any other loans under the revolving credit facility in determining the remaining
amount of credit available under the facility.
Our
availability and the revolving credit facility is based on a formula that calculates the domestic borrowing base and the Canadian borrowing base, which are based on a percentage of the value of
accounts receivable and inventory plus a fixed asset component, if applicable, of the domestic borrowers and their domestic subsidiaries and the Canadian borrowers and their Canadian subsidiaries,
respectively, subject to customary eligibility requirements and net of customary reserves. All borrowings are subject to the satisfaction of customary conditions, including delivery of a borrowing
notice, the accuracy of representations and warranties in all material respects and the absence of defaults.
Interest.
Borrowings under the revolving credit facility (other than borrowings in Canadian dollars under the Canadian revolving credit sub-facility)
bear interest, at our option, at either the alternate base rate or the adjusted LIBOR Rate, plus the applicable percentage for revolving credit loans, which ranges from 0.00% to 0.25%, in the case of
alternate base rate loans, and from 1.25% to 2.00%, in the case of Eurodollar loans, in each case, depending on our leverage ratio. Swingline loans bear interest at the alternate base rate plus the
applicable percentage for revolving credit loans. Protective advances and overadvances bear interest at the alternate base rate plus the applicable percentage for revolving credit loans plus 2.00%.
Bankers'
acceptances and Canadian prime rate interest options will be available for Canadian dollar borrowings under the Canadian revolving credit sub-facility. Under the bankers'
acceptances option, the Canadian borrowers pay the lenders accepting bankers' acceptances an acceptance fee calculated at the applicable percentage for U.S. dollar Eurodollar loans referred to above.
In addition, the lenders accepting bankers' acceptances are entitled to purchase the bankers' acceptances on a discounted basis at the discount rate. Borrowings under Canadian
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prime
rate interest option bear interest at the Canadian prime rate plus 0.75% plus the applicable percentage for U.S. dollar alternate base rate loans referred to above.
The
revolving credit facility may be borrowed, repaid and reborrowed from time to time until February 2012, subject to satisfaction of certain customary conditions on the date of any such borrowing,
including availability under the borrowing base.
Guarantees and security.
At present, all of our domestic subsidiaries, other than the borrower under our floor plan facility (see "—Floor plan
financing agreement"), are borrowers under our revolving credit facility. Any of our subsequently acquired or organized domestic subsidiaries that do not become borrowers, which we refer to as the
guarantors, are required to guarantee on a senior secured basis the borrowers' obligations under our revolving credit facility. In addition, our obligations, along with the obligations of the other
borrowers under our revolving credit facility, and these guarantees are secured by substantially all the borrowers' and guarantors' assets, including but not limited to:
•
a first-priority pledge of all the capital stock of subsidiaries held by the borrowers or any guarantor which, in the case
of capital stock of any foreign subsidiary pledged to secure a loan to a domestic borrower, is limited to only first-tier foreign subsidiaries and then only 65% of the voting capital stock
of such first-tier foreign subsidiary; and
•
first-priority security interests in substantially all of the borrowers' and the guarantors' tangible and intangible
assets, including accounts receivable, inventory, equipment, general intangibles, investment property, intellectual property, cash and proceeds of such assets.
Covenants.
The revolving credit facility contains a financial covenant requiring us to maintain, except during periods when availability under the revolving credit
facility is at least $30.0 million, a fixed charge coverage ratio of at least 1.1 to 1.0. The revolving credit facility also contains restrictive covenants pertaining to the management and
operation of the borrowers and the guarantors and their subsidiaries. These restrictive covenants include significant limitations on asset sales, indebtedness (excluding the notes), creation of liens,
mergers and acquisitions, fundamental changes, investments and loans, dividends, payment of indebtedness, transactions with affiliates, sale and lease-back transactions, inter-borrower
transactions and amendment of material documents. In addition, incurrence of additional debt, receipt of casualty and condemnation payments and sale of assets would require mandatory repayment of the
loans. The revolving credit facility also contains customary affirmative covenants, including furnishing financial statements, providing notice of material events, maintaining the existence and
conduct of business, paying third party obligations, maintaining properties, complying with laws, using loan proceeds for working capital, general corporate and other specified purposes, maintaining
adequate insurance and the providing of additional collateral by newly formed subsidiaries.
Events of default.
The revolving credit facility provides for customary events of default (relating, in certain cases, to both us and our subsidiaries),
including:
•
failure to make payments when due;
•
breach of covenants;
•
breach of representations and warranties;
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•
default under any agreement relating to material indebtedness (which includes debt for borrowed money and obligations in
respect of hedge transactions) in excess of $10.0 million;
•
bankruptcy and other insolvency events;
•
judgment defaults;
•
defaults under the Employee Retirement Income Security Act of 1974, as amended; and
•
certain change of control events.
Change
of control events include (1) the current controlling holders of common units ceasing to hold a certain threshold percentage (which threshold reduces after the completion of a qualified
public offering) of voting equity interests in Stewart & Stevenson LLC, (2) Stewart & Stevenson LLC ceasing to hold, directly or indirectly, 100% of the other
borrowers or any guarantors, subject to certain exceptions, (3) occupation of a majority of the board of directors by persons who were neither nominated board of directors of Stewart &
Stevenson LLC nor appointed by directors so nominated, (4) the acquisition of direct or indirect control of any loan party by any person or group other than the current controlling
holders of common units or (e) so long as any of the senior notes are outstanding, any "change in control" or other similar term described the indenture.
10% Senior Notes due 2014
In June 2006, we issued $150,000,000 of our 10% Senior Notes due 2014, which we refer to as the senior notes. The senior notes rank
equally in right of payment with all of our existing and future senior indebtedness and rank senior in right of payment to all of our existing and future subordinated indebtedness. These notes are not
secured, and as such, have no underlying assets to secure the payment of principal or interest. The senior notes are guaranteed on a senior unsecured basis by our domestic restricted subsidiaries. The
senior notes mature on July 15, 2014, with interest at a rate of 10% payable semi-annually in arrears on January 15 and July 15.
The
senior notes may be redeemed at any time, in whole or in part, at a redemption price equal to 105.0% of the principal amount of the notes in the first year, declining yearly to par at
July 15, 2012, plus accrued and unpaid interest, if any, to the date of redemption. The indenture does not contain any mandatory prepayment provisions.
Upon
the occurrence of a change of control, each holder of the senior notes will have the right to require us to repurchase that holder's senior notes at a price equal to 101% of their principal
amount, plus accrued and unpaid interest, if any, to the date of purchase. Under the indenture governing the senior notes, a change of control will have occurred following the consummation of this
offering if:
•
any person or group of related persons other than Mr. Ansary and his family members or entities wholly owned or
controlled by Mr. Ansary and his family members, which we refer to as permitted holders, owns over 35% of the total voting power of the voting stock of our company, the permitted holders
beneficially own less of the voting power of the voting stock of our company than such other person or group of related persons and the permitted holders do not have the right or ability by voting
power, contract or otherwise, to elect or designate for election a majority of the board of directors;
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•
a majority of the members of the board of directors are not continuing directors, which the indenture governing the senior
notes defines as being either directors on the issue date of the senior notes or directors nominated for election or elected to the board of directors with the approval of a majority of the continuing
directors who were members of the board of directors at the time of such nomination or election;
•
the disposition other than by way of merger or consolidation of all or substantially all of our assets to any person other
than a permitted holder; or
•
the adoption by our stockholders of a plan or proposal for the liquidation or dissolution of the company.
The
indenture governing the senior notes contains covenants that, among other things, limit our ability, subject to certain qualifications and exceptions, to:
•
incur or guarantee additional indebtedness;
•
sell assets;
•
pay dividends and make other equity distributions;
•
purchase or redeem capital stock;
•
make investments;
•
consolidate or merge with or into other companies; and
•
engage in transactions with affiliates.
The
senior notes contain certain events of default, including failure to pay principal and interest on the notes, failure to comply with covenants, subject to a 60-day grace period in
certain instances, and certain bankruptcy, insolvency or reorganization events with respect to us or the subsidiary guarantors.
Floor plan financing agreement
We have had a floor plan facility with Amegy Bank National Association since 2006 to facilitate the purchase of new and used
inventory for our Freightliner truck dealership that allows our subsidiary, Stewart & Stevenson Truck Holdings LLC, to borrow up to $5.0 million and is secured by
$5.0 million of cash collateral. The floor plan facility has a one-year maturity, and we have renewed it annually since 2006. As of January 31, 2011, $0.7 million in advances were
outstanding under this floor plan facility. Advances under this floor plan facility bear interest at the prime rate.
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U.S. federal income tax considerations
applicable to non-U.S. holders
The following is a summary of the material U.S. federal income tax considerations related to the purchase, ownership and disposition
of our Common Stock by non-U.S. holders (as defined below) of our Common Stock, but does not purport to be a complete analysis of all the potential tax considerations relating thereto.
This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended, or the "Code," the applicable U.S. federal income tax regulations promulgated or proposed under the Code,
which we refer to as the "Treasury Regulations," current administrative rulings and practice and judicial decisions, all as of the date hereof. These authorities are subject to change and differing
interpretations at any time, possibly with retroactive effect, so as to result in U.S. federal income tax consequences different from those set forth below. This summary is applicable only to
non-U.S. holders (as defined below) who hold our Common Stock as a capital asset for U.S. federal income tax purposes. We have not sought any ruling
from the Internal Revenue Service, or the "IRS," with respect to the statements made and the conclusions reached in the following summary, and there can be no assurance that the IRS would not assert,
or that a court would not sustain, a position contrary to such statements and conclusions.
This
summary also does not address any possible applicability of any U.S. federal tax other than the income tax, including but not limited to the U.S. federal estate tax or gift tax, U.S. alternative
minimum tax, or the tax considerations arising under the laws of any non-U.S., state or local jurisdiction. In addition, this discussion does not address tax considerations applicable to
an investor's particular circumstances or to investors that may be subject to special tax rules, including, without limitation:
•
banks, financial institutions, insurance companies, brokers and certain dealers and traders;
•
persons who hold our Common Stock as part of a position in a hedging or constructive sale transaction, "straddle,
"conversion" or other integrated transaction for tax purposes;
•
investors subject to the alternative minimum tax;
•
"controlled foreign corporations" and "passive foreign investment companies";
•
persons who are partnerships or other pass-through entities; and
•
certain former citizens or expatriates of the United States.
THIS SUMMARY OF UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY AND IS NOT LEGAL OR TAX ADVICE. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH
RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATION, AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK ARISING
UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX RULES, THE U.S. ALTERNATIVE MINIMUM TAX RULES, OR UNDER THE LAWS OF ANY STATE, LOCAL, NON- U.S. OR OTHER TAXING JURISDICTION OR UNDER ANY
APPLICABLE TAX TREATY.
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Non-U.S. holder defined
For purposes of this discussion, you are a non-U.S. holder if you are a beneficial holder of our Common Stock and, for
U.S. federal income tax purposes, are neither a "United States person" nor a partnership (or an entity or arrangement treated as a partnership for U.S. federal income tax purposes). A "United States
person" is:
•
an individual citizen or resident of the United States;
•
a corporation or other entity taxable as a corporation for U.S. federal income tax purposes that is created or organized
in or under the laws of the United States, any state thereof or the District of Columbia;
•
an estate whose income is subject to U.S. federal income tax regardless of its source; or
•
a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United
States persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable Treasury Regulations to be treated as a United States
person.
If
a partnership, including any entity or arrangement treated as a partnership for U.S. federal income tax purposes, is a holder of our Common Stock, then the tax treatment of a partner in such
partnership generally will depend upon the status of the partner and the activities of the partnership. Persons who are partners of a partnership holding our Common Stock should consult their own tax
advisors concerning the tax consequences of holding and disposing of our Common Stock.
Distributions
Following this offering, we do not intend to make any distributions on shares of our Common Stock. However, if we do make
distributions on our Common Stock, other than certain pro rata distributions of Common Stock, then those payments would constitute dividends for U.S. federal income tax purposes to the extent payable
from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles, as of the end of the taxable year of the distribution. To the extent those distributions
exceed both our current and our accumulated earnings and profits, such distributions would first constitute a non-taxable return of capital, which would reduce your tax basis in your
shares of our Common Stock, but not below zero, and thereafter would be treated as gain from the sale of stock. See the discussion under "—Gain on the sale or disposition of Common Stock"
below.
Any
dividend on our Common Stock paid to you generally will be subject to U.S. withholding tax at a rate of 30% of the gross amount of the dividend, subject to any exemption or lower rate as may be
specified by an applicable tax treaty, unless the dividends are effectively connected with the conduct by you of a trade or business within the United States. We may withhold 30% of either
(1) the gross amount of the entire distribution, even if the amount of the distribution is greater than the amount constituting a dividend once determined, as described above, or (2) the
amount of the distribution we project will be a dividend, based upon a reasonable estimate of both our current and our accumulated earnings and profits for the taxable year in which the distribution
is made, in each case as provided for in the Treasury Regulations. If it is subsequently determined that the amount of tax withheld exceeds the
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amount
of withholding tax applicable to the portion of the distribution constituting a dividend, then you may obtain a refund of any such excess amounts if you timely file an appropriate claim for
refund with the IRS.
In
order to receive a reduced rate of or an exemption from withholding tax under an income tax treaty, you are required (1) to satisfy certain certification requirements, which may be met by
providing us or our agent with an IRS Form W-8BEN (or other applicable form) certifying, under penalty of perjury, as to your qualification for the reduced rate or exemption and
that you are not a United States person or (2) if you hold our Common Stock through certain non-U.S. intermediaries, to satisfy the relevant certification requirements of the
Treasury Regulations. Special certification and other requirements apply to certain non-U.S. holders that are partnerships or other pass-through entities.
Dividends
received by you that are effectively connected with your conduct of a U.S. trade or business (and, if provided for in an applicable income tax treaty, are attributable to a permanent
establishment or, in the case of an individual, a fixed base maintained by you in the United States) are not subject to withholding tax, provided that you satisfy certain certification requirements,
which may be met by providing us or our agent with an IRS Form W-8ECI properly certifying, under penalty of perjury, such exemption. Such effectively connected dividends, although
not subject to withholding tax, generally are subject to U.S. federal income tax and are taxed at the same graduated rates applicable to United States persons, net of certain deductions and credits.
In addition, if you are a corporate non-U.S. holder receiving effectively connected dividends, your earnings and profits for the taxable year that are effectively connected with your
conduct of a U.S. trade or business may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable tax treaty.
If
you are eligible for a reduced rate of or an exemption from withholding tax pursuant to an income tax treaty, then you may obtain a refund of any excess amounts withheld if you timely file an
appropriate claim for refund with the IRS.
Gain on the sale or disposition of Common Stock
Subject to the discussion regarding backup withholding below, you generally will not be subject to U.S. federal income or withholding
tax on any gain realized upon the sale or other disposition of our Common Stock unless:
•
that gain is effectively connected with your conduct of a U.S. trade or business and, if required by an applicable income
tax treaty, is attributable to a permanent establishment (or, in the case of an individual, a fixed base) maintained by you in the United States;
•
you are a nonresident alien individual who is present in the United States for a period or periods aggregating
183 days or more during the calendar year in which the sale or disposition occurs and certain other conditions are met; or
•
our Common Stock constitutes a U.S. real property interest by reason of our status as a "United States real property
holding corporation" for U.S. federal income tax purposes, which we refer to as a "USRPHC," at any time within the shorter of the five-year period preceding the disposition or your holding
period for our Common Stock.
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If
you are a non-U.S. holder described in the first bullet above, you generally will be required to pay tax on the net gain derived from the sale or disposition under regular graduated
U.S. federal income tax rates, as if you were a United States person, except as otherwise required by an applicable income tax treaty. In addition, corporate non-U.S. holders described in
the first bullet above may be subject to an additional branch profits tax at a 30% rate, subject to any exemption or lower rate as may be specified by an applicable tax treaty.
If
you are an individual non-U.S. holder described in the second bullet above, you will be subject to tax at a gross rate of 30% on the amount by which your capital gains allocable to U.S.
sources, including gain from the sale or other disposition of our Common Stock, exceed capital losses allocable to U.S. sources, except as otherwise provided in an applicable income tax treaty.
We
believe that we are not currently and will not become a USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property interests
relative to the fair market value of our business assets, there can be no assurance that we will not become a USRPHC in the future. Even if we become a USRPHC, however, so long as our Common Stock is
regularly traded on an established securities market, our Common Stock will be treated as a U.S. real property interest only if you actually or constructively hold more than 5% of such regularly
traded Common Stock at any time within the shorter of the five-year period preceding the disposition or your holding period for the Common Stock. If you are a non-U.S. holder
who may own more than 5% of our Common Stock, you are encouraged to consult your tax advisor with respect to the U.S. tax consequences of a disposition of our Common Stock.
Backup withholding and information reporting
We will, where required, report to the IRS and to you the amount of dividends, if any, paid to you on our Common Stock, your name and
address and the amount of tax withheld, if any. Pursuant to tax treaties or other agreements, the IRS may make its reports available to tax authorities in your country of residence.
Payments
of dividends made to you generally will be subject to backup withholding unless you establish an exemption, for example by properly certifying your non-U.S. status on a
Form W-8BEN or another appropriate version of IRS Form W-8. Notwithstanding the foregoing, backup withholding generally will apply if either we or our paying
agent has actual knowledge, or reason to know, that you are a United States person
that is not an exempt recipient or that the conditions of any other exemption are not, in fact, satisfied.
Information
reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale of our Common Stock within the United States or conducted through certain
U.S.-related financial intermediaries, unless you certify under penalty of perjury as to your non-U.S. person status or you otherwise establishes an exemption (and neither we nor the
paying agent has actual knowledge or reason to know that you are a United States person or that the conditions of any other exemptions are not, in fact, satisfied).
Backup
withholding is not an additional tax. Amounts withheld from payments to non-U.S. holders under the backup withholding rules will be allowed as a credit against the holder's U.S.
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federal
income tax liability and may entitle the holder to a refund, provided that the required information is furnished to the IRS in a timely manner.
Recent legislation
The recently enacted Hiring Incentives to Restore Employment Act (the "HIRE Act"), which was signed into law on March 18,
2010, modifies some of the rules described above, including with respect to certification requirements and information reporting, for certain stock held through a "foreign financial institution" or
"non-financial foreign entity." In the event of non-compliance with those revised requirements, a 30% U.S. withholding tax could be imposed on payments of dividends and sale
proceeds in respect of our Common Stock made after December 31, 2012. Congress delegated broad authority to the U.S. Treasury Department to promulgate regulations to implement the new
withholding and reporting regime. It cannot be predicted whether or how any regulations promulgated by the U.S. Treasury Department pursuant to this broad delegation of regulatory authority will
affect holders of our stock. Prospective investors are urged to consult their own tax advisors regarding the HIRE Act and legislative proposals that may be relevant to their investment in our stock.
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Certain ERISA considerations
The following is a summary of certain considerations associated with the purchase of our Common Stock by employee benefit plans that
are subject to Title I of the U.S. Employee Retirement Income Security Act of 1974, as amended ("ERISA"), plans, individual retirement accounts and other arrangements that are subject to
Section 4975 of the Code or provisions under any federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of ERISA or the Code ("Similar
Laws"), and entities whose underlying assets are considered to include "plan assets" of such plans, accounts and arrangements (each, a "Plan").
ERISA
and the Code impose certain duties on persons who are fiduciaries of a Plan subject to Title I of ERISA or Section 4975 of the Code (each, an "ERISA Plan") and prohibit certain
transactions involving the assets of an ERISA Plan and its fiduciaries or other interested parties. Under ERISA and the Code, any person who exercises any discretionary authority or control
over the administration of such an ERISA Plan or the management or disposition of the assets of such an ERISA Plan, or who renders investment advice for a fee or other compensation to such an ERISA
Plan, is generally considered to be a fiduciary of the ERISA Plan.
In
considering an investment in our Common Stock using a portion of the assets of any Plan, a fiduciary should determine whether the investment is in accordance with the documents and instruments
governing the Plan and the applicable provisions of ERISA, the Code or any Similar Law relating to a fiduciary's duties to the Plan including, without limitation, the prudence, diversification,
delegation of control and prohibited transaction provisions of ERISA, the Code and any other applicable Similar Laws.
Representation
Accordingly, by acceptance of the Common Stock, each buyer and subsequent transferee of the Common Stock will be deemed to have
represented and warranted that either (1) no portion of the assets used by such buyer or transferee to acquire and hold the Common Stock constitutes assets of any Plan or (2) the
purchase and holding of the Common Stock by such buyer or transferee will not constitute a non-exempt prohibited transaction under ERISA or the Code or a similar violation of any
applicable Similar Laws.
The
foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in
non-exempt prohibited transactions, it is particularly important that fiduciaries, or other persons considering purchasing the Common Stock on behalf of, or with the assets of, any Plan,
consult with their counsel regarding the matters described herein.
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Underwriting (Conflicts of interest)
We and the selling stockholders are offering the shares of Common Stock described in this prospectus through a number of
underwriters. J.P. Morgan Securities LLC is acting as sole book-running manager of the offering and as the representative of the underwriters. We and the selling stockholders will
enter into an underwriting agreement with the underwriters. Subject to the terms and conditions of the underwriting agreement, we and the selling stockholders will agree to sell to the underwriters,
and each underwriter will severally agree to purchase, at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus, the number of shares
of Common Stock listed next to its name in the following table:
Name
Number of shares
J.P. Morgan Securities LLC
Total
The underwriters are committed to purchase all the shares of Common Stock offered by us and the selling stockholders if they purchase any shares, other than the
shares covered by the option described below unless and until this option is exercised. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of
non-defaulting underwriters may also be increased or the offering may be terminated.
The
underwriters propose to offer the shares of Common Stock directly to the public at the initial public offering price set forth on the cover page of this prospectus and to certain dealers at that
price less a concession not in excess of $             per share. Any such dealers may resell shares to certain other brokers or dealers at a discount of up to
$             per share from the
initial public offering price. After the initial public offering of the shares, the offering price and other selling terms may be changed by the underwriters. Sales of shares made outside of the
United States may be made by affiliates of the underwriters. The representative has advised us and the
selling stockholders that the underwriters do not intend to confirm discretionary sales in excess of 5% of the shares of Common Stock offered in this offering.
The
underwriters have an option to buy up to an aggregate of             additional shares of Common Stock from us and the selling stockholders to cover sales of shares by the underwriters
which
exceed the number of shares specified in the table above. The underwriters have 30 days from the date of this prospectus to exercise this option to purchase additional shares. If any shares are
purchased with this option to purchase additional shares, the underwriters severally will purchase shares in approximately the same proportion as shown in the table above. If any additional shares of
Common Stock are purchased, the underwriters will offer the additional shares on the same terms as those on which the initial shares of Common Stock are being offered.
The
underwriting fee is equal to the public offering price per share of Common Stock less the amount paid by the underwriters to us and the selling stockholders per share of Common Stock. The
following table shows the per share and total underwriting discounts and
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commissions
to be paid to the underwriters assuming both no exercise and full exercise of the underwriters' option to purchase additional shares.
Paid by us
Without option
exercise
With full
option exercise
Per share
$
$
Total
$
$
Paid by the selling stockholders
Without option
exercise
With full
option exercise
Per share
$
$
Total
$
$
We estimate that the total expenses of this offering, including registration, filing and listing, printing fees and legal and accounting expenses, but excluding
the underwriting discounts and commissions, will be approximately $              million.
A
prospectus in electronic format may be made available on the websites maintained by one or more underwriters, or selling group members, if any, participating in the offering. The representative may
agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the representative to
underwriters and selling group members that may make Internet distributions on the same basis as other allocations.
We
have agreed that, subject to certain limited exceptions, we will not (1) pledge, announce the intention to sell, offer, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise dispose of, directly or indirectly, or file with the SEC a registration statement under the
Securities Act relating to, any shares of our Common Stock or securities convertible into or exchangeable or exercisable for any shares of our Common Stock, or publicly disclose the intention to make
any offer, sale, pledge, disposition or filing, or (2) enter into any swap or other arrangement that transfers all or a portion of the economic consequences associated with the ownership of any
shares of Common Stock or any such other securities (regardless of whether any of these transactions are to be settled by the delivery of shares of Common Stock or such other securities, in cash or
otherwise), in each case without the prior written consent of
J.P. Morgan Securities LLC, on behalf of the underwriters, for a period of 180 days after the date of this prospectus.
Our
directors, executive officers and certain of our stockholders, including the selling stockholders, have entered into lock-up agreements with the underwriters prior to the commencement
of this offering pursuant to which we and each of these persons or entities, for a period of 180 days after the date of this prospectus, may not, subject to certain limited exceptions, without
the prior written consent of J.P. Morgan Securities LLC, (1) offer, pledge, announce the intention to sell, sell contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of our Common Stock (including, without limitation,
Common Stock which may be deemed to be beneficially owned by such directors, executive officers and stockholders in accordance with the rules and regulations of the SEC and securities which may be
issued upon exercise of a stock option or
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warrant)
or (2) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise, or (3) make any demand for or exercise any right
with respect to the registration of any shares of Common Stock or any security convertible into or exercisable or exchangeable for our Common Stock.
Notwithstanding
the foregoing, if (1) during the last 17 days of the 180-day restricted period, we issue an earnings release or material news or a material event relating to
our company occurs; or (2) prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning
on the last day of the 180-day period, the restrictions described in the two preceding paragraphs shall continue to apply until the expiration of the 18-day period beginning on
the issuance of the earnings release or the occurrence of the material news or material event.
We
have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act.
We
intend to apply to have our Common Stock approved for listing on the New York Stock Exchange under the symbol "                    ."
In
connection with this offering, the underwriters may engage in stabilizing transactions, which involves making bids for, purchasing and selling shares of Common Stock in the open market for the
purpose of preventing or retarding a decline in the market price of the Common Stock while this offering is in progress. These stabilizing transactions may include making short sales of the Common
Stock, which involves the sale by the underwriters of a greater number of shares of Common Stock than they are required to purchase in this offering, and purchasing shares of Common Stock on the open
market to cover positions created by short sales. Short sales may be "covered" shorts, which are short positions in an amount not greater than the underwriters' option to purchase additional shares
referred to above, or may be "naked" shorts, which are short positions in excess of that amount. The underwriters may close out any covered short position either by exercising their option to purchase
additional shares, in whole or in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things, the price of shares available for
purchase in the open market compared to the price at which the underwriters may purchase shares through the option to purchase additional shares. A naked short position is more likely to be created if
the underwriters are concerned that there may be downward pressure on the price of the Common Stock in the open market that could adversely affect investors who purchase in this offering. To the
extent that the underwriters create a naked short position, they will purchase shares in the open market to cover the position.
The
underwriters have advised us that, pursuant to Regulation M of the Securities Act, they may also engage in other activities that stabilize, maintain or otherwise affect the price of the
Common Stock, including the imposition of penalty bids. This means that if the representative of the underwriters purchases Common Stock in the open market in stabilizing transactions or to cover
short sales, the representative can require the underwriters that sold those shares as part of this offering to repay the underwriting discounts and commissions received by them.
These
activities may have the effect of raising or maintaining the market price of the Common Stock or preventing or retarding a decline in the market price of the Common Stock, and, as a
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result,
the price of the Common Stock may be higher than the price that otherwise might exist in the open market. If the underwriters commence these activities, they may discontinue them at any time.
The underwriters may carry out these transactions on the New York Stock Exchange, in the over-the-counter market or otherwise.
Prior
to this offering, there has been no public market for our Common Stock. The initial public offering price will be determined by negotiations among us, the selling stockholders and the
representative of the underwriters. In determining the initial public offering price, we, the
selling stockholders and the representative of the underwriters expect to consider a number of factors including:
•
the information set forth in this prospectus and otherwise available to the representative;
•
our prospects and the history and prospects for the industry in which we compete;
•
an assessment of our management;
•
our prospects for future earnings;
•
the general condition of the securities markets at the time of this offering;
•
the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and
•
other factors deemed relevant by the underwriters, the selling stockholders and us.
Neither
we nor the selling stockholders nor the underwriters can assure investors that an active trading market will develop for our Common Stock, or that our Common Stock will trade in the public
market at or above the initial public offering price.
European Economic Area
Each underwriter has represented that (1) it has only communicated or caused to be communicated and will only communicate or
cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (UK) ("FSMA") received by
it in connection with the issue or sale of any Common Stock in circumstances in which Section 21(1) of the FSMA does not apply to us and (2) it has complied and will comply with all
applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.
In
relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, which on the date hereof includes the European Union plus Iceland, Norway and
Liechtenstein (each, a "Relevant Member State"), each underwriter has represented and agreed that with effect from and including the date on which the European Union Prospectus Directive (the "EU
Prospectus Directive") is implemented in that Relevant Member State (the "Relevant Implementation Date") it has not made and will not make an offer of Common Stock to the public in that Relevant
Member State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in
another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the EU Prospectus Directive, except that it may, with effect from and
including the
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Relevant
Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:
•
to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or
regulated, whose corporate purpose is solely to invest in securities;
•
to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial
year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or
consolidated accounts;
•
to fewer than 100 natural or legal persons (other than qualified investors as defined in the EU Prospectus Directive)
subject to obtaining the prior consent of the sole book-running manager for such offer; or
•
in any other circumstances which do not require the publication by us of a prospectus pursuant to Article 3 of the
Prospectus Directive.
For
the purposes of this provision, the expression an "offer of shares to the public" in relation to any shares in any Relevant Member State means the communication in any form and by any means of
sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in that Member State
by any measure implementing the EU Prospectus Directive in that Member State and the expression EU Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in
each Relevant Member State.
Notes to prospective investors in Switzerland
This document does not constitute an issue prospectus within the meaning of Art. 652a of the Swiss Code of Obligations. The shares of
Common Stock may not be sold directly or indirectly in or into Switzerland except in a manner which will not result in a public offering within the meaning of the Swiss Code of Obligations. Our Common
Stock will not be listed on the SWX Swiss Exchange and, therefore, the documents relating to our Common Stock, including, but not limited to, this document, do not claim to comply with the disclosure
standards of the listing rules of SWX Swiss Exchange and corresponding prospectus schemes annexed to the listing rules of the SWX Swiss Exchange. This document as well as any other material relating
to our Common Stock is personal and confidential and does not constitute an offer to any other person. This document may only be used in Switzerland by those investors to whom it has been handed out
in connection with the offering described
herein and may neither directly nor indirectly be distributed or made available to other persons without our express consent. It may not be used in connection with any other offer and shall in
particular not be copied and/or distributed to the public in (or from) Switzerland. Neither this document nor any other offering materials relating to the shares of Common Stock may be distributed,
published, or otherwise made available in Switzerland except in a manner which will not constitute a public offer of the shares of Common Stock in Switzerland.
Relationships with underwriters and their affiliates
Certain
of the underwriters and their respective affiliates have provided in the past to us and our affiliates and may provide, from time to time, in the future certain commercial banking, financial
advisory, investment banking and other services for us and such affiliates in the ordinary course of their business, for which they have received or will to receive customary fees and commissions. An
affiliate of J.P. Morgan Securites LLC is the administrative agent and a lender under our revolving credit facility. See "—Conflicts of interest." In addition, from time to
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time,
certain of the underwriters and their affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short
positions in our debt or equity securities or loans, and may do so in the future.
Conflicts of interest
An
affiliate of J.P. Morgan Securities LLC, an underwriter in this offering, acts as administrative agent and a lender under our revolving credit facility and will receive more than 5% of the
net proceeds of this offering in connection with the repayment of amounts under our revolving
credit facility. Accordingly, this offering is being made in compliance with the requirements of Rule 5121 of the Financial Industry Regulatory Authority, Inc. In accordance with this
rule,                           has assumed the responsibilities of acting as a "qualified independent
underwriter." In its role as a qualified independent underwriter,                           has participated in due
diligence and the preparation of the registration statement of which this prospectus is a
part.                           will not receive any additional fees for serving as a qualified independent
underwriter
in connection with this offering. J.P. Morgan Securities LLC will not confirm sales of the shares to any account over which it exercises discretionary authority without the prior written
approval of the customer.
113
Table of Contents
Legal matters
Certain legal matters in connection with the sale of the shares of Common Stock offered hereby will be passed upon for us by Jones
Day, New York, New York. The validity of the shares of Common Stock offered hereby will be passed upon for the underwriters by Simpson Thacher & Bartlett LLP, New York, New York.
Experts
The consolidated financial statements of Stewart & Stevenson LLC and its subsidiaries at January 31, 2011 and
2010, and for each of the three years in the period ended January 31, 2011, appearing in this prospectus and the registration statement have been audited by Ernst & Young LLP,
independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
Where you can find more information
We file periodic and current reports pursuant to the reporting requirements of the Exchange Act. We have filed with the SEC a
registration statement on Form S-1 under the Securities Act that registers the shares of our Common Stock to be sold in this offering. This prospectus, filed as a part of the
registration statement, does not contain all of the information set forth in the registration statement and exhibits and schedules, certain parts of which are omitted in accordance with the rules and
regulations of the SEC. For further information about us and the Common Stock to be sold in this offering, please refer to the registration statement. Statements contained in this prospectus as to the
contents of any agreement or any other document referred to are not necessarily complete and, in each instance, we refer you to the copy of the agreement or other document filed as an exhibit to the
registration statement. Each of these statements is qualified in all respects by this reference.
You
may read and copy the registration statement and the exhibits and schedules to the registration statement at the public reference room maintained by the SEC at 100 F Street, N.E.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information regarding the public reference room. You may also obtain copies of all or part
of the registration statement by mail from the Public Reference Section of the SEC at prescribed rates.
The
SEC also maintains a website that contains reports, proxy and information statements and other information about issuers, including our company, that file electronically with the SEC. The address
of that website is
www.sec.gov
.
114
Table of Contents
Index to financial statements
Stewart & Stevenson LLC and subsidiaries consolidated financial statements year ended January 31, 2011
Report of independent registered public accounting firm
F-2
Consolidated balance sheets as of January 31, 2011 and 2010
F-3
Consolidated statements of operations for the years ended January 31, 2011, 2010 and 2009
F-4
Consolidated statements of shareholders' equity for the years ended January 31, 2011, 2010 and
2009
F-5
Consolidated statements of cash flows for the years ended January 31, 2011, 2010 and 2009
F-6
Notes to consolidated financial statements
F-7
Index to unaudited pro forma condensed combined
financial statements
Page
Unaudited pro forma condensed combined financial statements
F-34
Unaudited pro forma condensed combined balance sheet as of January 31, 2011
F-36
Unaudited pro forma condensed combined statement of operations for the fiscal year ended January 31,
2011
F-37
Notes to unaudited pro forma condensed combined financial statements
F-
F-1
Table of Contents
Report of Independent Registered Public Accounting Firm
The
Board of Directors and Shareholders
Stewart & Stevenson LLC
We
have audited the accompanying consolidated balance sheets of Stewart & Stevenson LLC and subsidiaries as of January 31, 2011 and 2010, and the related
consolidated statements of operations, shareholders' equity and cash flows for each of the three years in the period ended January 31, 2011. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial
reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In
our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Stewart & Stevenson LLC and
subsidiaries at January 31, 2011 and 2010, and the consolidated results of their operations and their cash flows for each of the three years in the period ended January 31, 2011, in
conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
Houston,
Texas
May 2, 2011
F-2
Table of Contents
Stewart & Stevenson LLC and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands)
January 31, 2011
January 31, 2010
Assets
Current assets:
Cash and cash equivalents
$
9,168
$
3,321
Restricted cash
5,000
3,000
Accounts receivable, net
85,236
81,626
Recoverable costs and accrued profits not yet billed
78,934
38,042
Inventories, net
285,909
248,313
Other current assets
7,186
7,626
Total current assets
471,433
381,928
Property, plant and equipment, net
75,077
79,206
Goodwill and intangibles, net
16,064
46,616
Deferred financing costs and other assets
5,029
6,775
Total assets
$
567,603
$
514,525
Liabilities and shareholders' equity
Current liabilities:
Bank notes payable
$
7,401
$
7,122
Current portion of long-term debt
40
65
Accounts payable
81,198
52,994
Accrued payrolls and incentives
15,913
8,714
Billings in excess of incurred costs
4,285
115
Customer deposits
80,346
26,307
Other current liabilities
43,979
41,126
Total current liabilities
233,162
136,443
Long-term debt, net of current portion
185,181
220,926
Other long-term liabilities
226
1,534
Total liabilities
418,569
358,903
Commitments and contingencies
Shareholders' equity:
Common units, 100,005,000 units issued and outstanding
74,113
74,113
Accumulated other comprehensive income
5,092
1,383
Retained earnings
69,829
80,126
Total shareholders' equity
149,034
155,622
Total liabilities and shareholders' equity
$
567,603
$
514,525
See
accompanying Notes to Consolidated Financial Statements
F-3
Table of Contents
Stewart & Stevenson LLC and Subsidiaries
Consolidated Statements of Operations
Fiscal Year Ended
(Dollars and units in thousands)
January 31, 2011
January 31, 2010
January 31, 2009
Sales
$
861,234
$
688,676
$
1,217,142
Cost of sales
715,967
577,028
1,002,166
Gross profit
145,267
111,648
214,976
Selling and administrative expenses
104,252
114,188
138,141
Impairment of goodwill and indefinite-lived intangible assets
31,487
—
—
Other (income) expense, net
(1,026
)
54
(1,311
)
Operating profit (loss)
10,554
(2,594
)
78,146
Interest expense, net
19,886
20,489
24,931
(Loss) earnings before income taxes
(9,332
)
(23,083
)
53,215
Income tax expense
700
816
2,659
Net (loss) earnings
$
(10,032
)
$
(23,899
)
$
50,556
Pro forma tax expense (benefit) (unaudited)
$
8,227
$
(3,581
)
$
17,272
Pro forma net (loss) earnings (unaudited)
$
(18,259
)
$
(20,318
)
$
33,284
Weighted average units outstanding:
Basic
100,005
100,005
100,005
Diluted
100,005
100,005
100,005
Net (loss) earnings per common unit
Basic
$
(0.10
)
$
(0.24
)
$
0.51
Diluted
$
(0.10
)
$
(0.24
)
$
0.51
Pro forma tax effect—basic (unaudited)
$
(0.18
)
$
(0.20
)
$
0.33
Pro forma tax effect—diluted (unaudited)
$
(0.18
)
$
(0.20
)
$
0.33
See
accompanying Notes to Consolidated Financial Statements
F-4
Table of Contents
Stewart & Stevenson LLC and Subsidiaries
Consolidated Statements of Shareholders' Equity
(Dollars in thousands)
Common
Units
Accumulated Other
Comprehensive
Income (Loss)
Retained
Earnings
Total
Balance, January 31, 2008
$
74,113
$
8,233
$
92,595
$
174,941
Net earnings
—
—
50,556
50,556
Other comprehensive loss
—
(11,995
)
—
(11,995
)
Distributions to unit holders for tax obligations
—
—
(33,558
)
(33,558
)
Balance, January 31, 2009
$
74,113
$
(3,762
)
$
109,593
$
179,944
Net loss
—
—
(23,899
)
(23,899
)
Other comprehensive income
—
5,145
—
5,145
Distributions to unit holders for tax obligations
—
—
(5,568
)
(5,568
)
Balance, January 31, 2010
$
74,113
$
1,383
$
80,126
$
155,622
Net loss
—
—
(10,032
)
(10,032
)
Other comprehensive income
—
3,709
—
3,709
Distributions to unit holders for tax obligations
—
—
(265
)
(265
)
Balance January 31, 2011
$
74,113
$
5,092
$
69,829
$
149,034
See
accompanying Notes to Consolidated Financial Statements
F-5
Table of Contents
Stewart & Stevenson LLC and Subsidiaries
Consolidated Statements of Cash Flows
Fiscal Year Ended
(Dollars in thousands)
January 31, 2011
January 31, 2010
January 31, 2009
Operating activities
Net (loss) earnings
$
(10,032
)
$
(23,899
)
$
50,556
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:
Amortization of deferred financing costs
1,668
2,011
1,980
Depreciation and amortization
17,053
18,402
18,869
Impairment of goodwill and indefinite-lived intangible assets
31,487
—
—
Non-cash foreign exchange (gains) losses
(71
)
29
(3,017
)
Change in operating assets and liabilities net of the effect of acquisitions:
Accounts receivable, net
(2,985
)
68,413
7,879
Recoverable costs and accrued profits not yet billed
(40,857
)
19,091
4,182
Inventories, net
(34,108
)
49,464
(7,300
)
Accounts payable
27,695
(35,627
)
(29,045
)
Accrued payrolls and incentives
7,237
(2,381
)
(1,755
)
Billings in excess of incurred costs
4,088
(27,889
)
(3,370
)
Customer deposits
53,840
5,500
5,143
Other current assets and liabilities
2,989
(3,274
)
17,225
Other, net
(1,140
)
(3,519
)
(2,877
)
Net cash provided by operating activities
56,864
66,321
58,470
Investing activities
Capital expenditures
(2,211
)
(2,536
)
(5,469
)
Additions to rental equipment
(10,747
)
(777
)
(22,333
)
Increase in restricted cash
(2,000
)
—
—
Proceeds from sale of property, plant and equipment, net
34
373
26
Net cash used in investing activities
(14,924
)
(2,940
)
(27,776
)
Financing activities
Change in short-term notes payable
(108
)
1,525
1,836
Deferred financing costs
—
(375
)
(375
)
Changes in long-term revolving loans
(35,777
)
(59,315
)
(10,267
)
Distributions to shareholders for tax obligations
(265
)
(5,568
)
(33,558
)
Net cash used in financing activities
(36,150
)
(63,733
)
(42,364
)
Effect of exchange rate on cash
57
1,667
1,294
Increase (decrease) in cash and cash equivalents
5,847
1,315
(10,376
)
Cash and cash equivalents, beginning of fiscal period
3,321
2,006
12,382
Cash and cash equivalents, end of fiscal period
$
9,168
$
3,321
$
2,006
Cash paid for:
Interest
$
18,187
$
19,709
$
22,883
Income taxes
$
2,169
$
1,278
$
4,346
See accompanying Notes to Consolidated Financial Statements
F-6
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Company Overview
Stewart & Stevenson LLC, headquartered in Houston, Texas was formed for the purpose of acquiring from Stewart & Stevenson Services, Inc. ("SSSI") and its
affiliates on January 23, 2006 substantially all of their equipment, aftermarket parts and service and rental businesses that primarily served the oil and gas industry (the "SSSI Acquisition").
Unless otherwise indicated or the context otherwise requires, the terms "Stewart & Stevenson," the "Company," "we," "our" and "us" refer to Stewart & Stevenson LLC and its
subsidiaries.
On
February 26, 2007, we acquired substantially all of the operating assets and assumed certain liabilities of Crown Energy Technologies, Inc. and certain of its affiliates
(collectively, "Crown"), which we refer to as the "Crown Acquisition." Crown, which was headquartered in Calgary, Alberta, had multiple U.S. operations. Crown manufactured drilling, well servicing and
workover rigs, stimulation equipment and provided related parts and services.
We
are a leading designer, manufacturer and provider of specialized equipment and aftermarket parts and service for the oil and gas and other industries. Our wide range of products
covers hydraulic fracturing, well stimulation, workover, intervention and drilling operations. These products include well stimulation equipment, pumping, acidizing, coiled tubing, cementing and
nitrogen units, drilling rigs and workover rigs, power generation systems, and electrical support and distribution systems, as well as engines, transmissions, prime movers and material handling
equipment. We have a substantial installed base of products, which provides us with significant opportunities for recurring, higher-margin aftermarket parts and service revenues from customers in the
oil and gas, power generation and various other industries. In addition, we provide rental equipment to our customers, including generator sets, air compressors, rail car movers and material handling
equipment.
Note 2. Summary of Significant Accounting Policies
Use of Estimates and Assumptions:
The preparation of financial statements in conformity with generally accepted accounting principles
in the United
States ("GAAP") requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenue and expenses during the reporting period. We evaluate our estimates on an ongoing basis, based on historical experience and various other
assumptions that we believe to be reasonable under the circumstances. Actual results may differ from these estimates.
Fiscal Year:
Our fiscal year begins on February 1 of the year stated and ends on January 31 of the following year. For
example, our
"Fiscal 2010" commenced on February 1, 2010 and ended on January 31, 2011. We report results on the fiscal quarter method with each quarter comprising approximately 13 weeks.
Consolidation:
The consolidated financial statements include the accounts of Stewart & Stevenson LLC and all enterprises
in which we
have a controlling interest. All intercompany accounts and transactions have been eliminated. We do not have any variable-interest entities.
Reclassifications:
Certain reclassifications have been made in the prior year consolidated financial statements to conform to the
current period
presentation. In our prior reports filed with the SEC, we presented four segments: equipment, aftermarket parts and service, rental and corporate. We have revised our segments to the following three
segments: manufacturing, distribution and corporate and shared services. The audited consolidated financial statements have been recast to reflect our new segment presentation. See "Note
6—
Segment Data
."
F-7
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2. Summary of Significant Accounting Policies (Continued)
Cash Equivalents:
Interest-bearing deposits, investments in government securities, commercial paper, money market funds and other
highly liquid
investments with original maturities of three months or less are considered cash equivalents.
Accounts Receivable:
Accounts receivable are recorded when billed and represent claims against third parties that will be settled in
cash. The
carrying value of our accounts receivable, net of the allowance for doubtful accounts, represents the estimated net realizable value. We maintain an allowance for doubtful accounts for estimated
losses related to credit extended to our customers. We base such estimates on our current accounts receivable aging and historical collections and settlements experience, existing economic conditions
and any specific customer collection issues we have identified. Uncollectible accounts receivable are written off when we determine that the balance cannot be collected.
Derivative financial instruments:
On occasion, we enter into derivative financial instruments to manage certain exposures to our
operations; however,
this activity has been relatively insignificant to our financial statements. During the second quarter of Fiscal 2010, we entered into four short-term foreign currency exchange rate
contracts to manage our exposure to fluctuations in foreign currency for certain purchase orders that were denominated in Euros. As of October 30, 2010, all of these contracts were closed and the
Company recognized a $0.8 million realized gain, which was recorded in other (income) expense, net within our consolidated statements of operations. A short-term foreign currency
exchange rate derivative instrument was entered in January 2009 to manage our exposure to fluctuations in foreign currency exchange rates for certain contracts of our Canadian subsidiary that were not
denominated in its functional currency. The derivative was settled in the second quarter of Fiscal 2009 and resulted in a gain of $1.4 million, which was recorded in other (income) expense, net
within our consolidated statements of operations.
Inventories:
Inventories are stated at the lower of cost or market, with cost primarily determined on a first-in, first-out
("FIFO") basis and market determined on the basis of estimated realizable values. We purchase a considerable amount of our inventory for resale from independent manufacturers pursuant to distribution
agreements. Cost represents invoice or production cost for new items and original cost less allowance for condition for used equipment inventory. Production cost includes material, labor and
manufacturing overhead. When circumstances dictate, we write inventory down to its estimated realizable value based upon assumptions about future demand, technological innovations, market conditions,
plans for disposal and the physical condition of products. Shipping and handling costs are expensed as incurred in cost of sales. Shipping and handling costs billed to customers are recorded as sales.
Revenue Recognition:
Revenue from equipment and parts sales is recognized when the product is shipped, collection is reasonably assured,
 risks of
ownership have been transferred to and accepted by the customer and contract terms are met. Cash discounts or other incentives to customers are recorded as a reduction of revenue. Revenue from service
agreements is recognized as earned, when services have been rendered. Revenue from rental agreements is recognized on a straight-line basis over the rental period. We report revenue net of
any revenue-based taxes assessed by governmental authorities.
F-8
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2. Summary of Significant Accounting Policies (Continued)
With
respect to long-term equipment contracts, which accounted for approximately 28.7% of total sales in Fiscal 2010, revenue is recognized using the
percentage-of-completion method. The majority of our contracts are fixed-price contracts, and measurement of progress toward completion is based on direct labor hours incurred.
For long-term equipment contracts to build land-based drilling, workover and service rigs, measurement of progress toward completion is based on the cost-to-cost method. Changes in estimates for
revenues, costs to complete and profit margins are recognized in the period in which they are reasonably determinable. Any anticipated losses on uncompleted contracts are recognized whenever evidence
indicates that the estimated total cost of a contract exceeds its estimated total revenue. With respect to cost-plus-fixed-fee contracts, we recognize the fee
ratably as the actual costs are incurred, based upon the total fee amounts expected to be realized upon completion of the contracts. Bid and proposal costs are expensed as incurred.
Recoverable
costs and accrued profits not yet billed ("Unbilled Revenue") represent the cumulative revenue recognized less the cumulative billings to the customer. Any billed revenue
that has not been collected is reported as accounts receivable. The timing of when we bill our customers is generally based upon advance billing terms or contingent upon completion of certain phases
of the work, as stipulated in the contract. Progress billings in accounts receivable at January 31, 2011 and 2010 included contract retentions totaling $3.5 million and
$7.6 million, respectively, which are anticipated to be collected within one year. Billings in excess of incurred costs represent progress billings in excess of Unbilled Revenue.
We
frequently sell equipment together with "start-up" services, which typically involve adding fuel to the engine, starting the equipment for the first time, and observing it
to ensure that it is operating properly. In cases where start-up services are required on an equipment sale, the estimated start-up costs are accrued when revenue from the
equipment sale is recognized. We had approximately $2.6 million and $1.1 million of accrued start-up costs that had not yet been performed as of January 31, 2011 and
January 31, 2010, respectively.
Customer Deposits:
We sometimes collect advance customer deposits to secure customers' obligations to pay the purchase price of ordered
equipment.
For long-term construction contracts, these customer deposits are recorded as current liabilities until construction begins. During construction, the deposit liability is reclassified into
billings in excess of incurred costs and, ultimately, recognized into revenue under the percentage-of-completion method. For all other sales, these deposits are recorded as
current liabilities until revenue is recognized.
Long-Lived Assets:
Long-lived assets, which include property, plant and equipment and acquired definite-lived intangible
assets, comprise a significant amount of our total assets. We carry our property, plant and equipment at cost less accumulated depreciation. Maintenance and repairs are expensed as incurred and
expenditures for renewals, replacements and improvements are capitalized. We depreciate our property, plant and equipment on a straight-line basis
over their estimated useful lives. Definite-lived intangibles are amortized on a straight-line basis over their estimated useful lives.
F-9
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2. Summary of Significant Accounting Policies (Continued)
In
accounting for long-lived assets, we must make estimates about the expected useful lives of the assets and the potential for impairment based on the fair value of the
assets and the cash flows they are expected to generate. The value of the long-lived assets is then amortized over their expected useful lives. A change in the estimated useful lives of
our long-lived assets would have an impact on our results of operations. We estimate the useful lives of our long-lived asset groups as follows:
Buildings
10 - 25 years
Leasehold improvements
Lesser of lease term or asset life
Rental equipment
2 - 8 years
Machinery and equipment
4 - 7 years
Computer hardware and software
3 - 4 years
Intangible assets
4 months - 27 years
In
estimating the useful lives of our property, plant and equipment, we rely primarily on our actual experience with the same or similar assets. The useful lives of our definite-lived
intangible assets are determined by the years over which we expect the assets to generate a benefit based on legal, contractual or regulatory terms.
We
assess the valuation of components of our property, plant and equipment and definite-lived intangible assets whenever events or circumstances dictate that the carrying value might not
be recoverable. We base our evaluation on indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external
market conditions or factors that may be present. If such factors indicate that the carrying amount of an asset or asset group may not be recoverable, we determine whether impairment has occurred by
analyzing an estimate of undiscounted future cash flows at the lowest level for which identifiable cash flows exist. If the estimate of undiscounted future cash flows during the estimated useful life
of the asset is less than the carrying value of the asset, we recognize a loss for the difference between the carrying value of the asset and its estimated fair value, measured by the present value of
estimated future cash flows or third party appraisal, as appropriate under the circumstances.
Goodwill and indefinite-lived intangible assets:
We perform an impairment test for goodwill and indefinite-lived intangible assets
annually during
the fourth quarter, or earlier if indicators of potential impairment exist. Our goodwill impairment test involves a comparison of the fair value of each of our reporting units with their carrying
value. Our impairment test for indefinite-lived intangible assets involves the comparison of the fair value of the intangible asset and its carrying value. The fair value is determined using
discounted cash flows ("income approach") and other market-related valuation
models, including earnings multiples ("public company market approach") and comparable asset market values ("transaction approach"). Certain estimates and judgments are required in the application of
these fair value models. The income approach consists of estimating the future cash flows that are directly associated with each of our reporting units. There are significant inherent uncertainties
and management judgment involved in estimating the fair value of each reporting unit, including historical experience and future expectations such as budgets and industry projections. We believe we
have made reasonable estimates and assumptions to estimate the fair value of our reporting units.
F-10
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2. Summary of Significant Accounting Policies (Continued)
We
performed the first step for our annual impairment test, which compares the fair value of our reporting units to their carrying values, during the Fiscal 2010 fourth quarter and the
result of this test indicated that a probable impairment existed for our Crown reporting unit. The Fiscal 2010 results of operations for the Crown reporting unit did not achieve our expectations. In
particular, the anticipated rebound for and growth in rig and well stimulation equipment sales and backlog growth for the Crown reporting unit have not reached pre-2009 levels. These
assumptions had been factored into our budgets and forecasts and specific sales were anticipated to occur during Fiscal 2010, including the fourth quarter, coupled with growth in backlog for these
products. Because oil prices have risen, it was anticipated that capital spending for land-based drilling, workover and service rigs would return and be reflected in backlog and equipment
ordering trends. As a result of this prolonged downturn, our cash flow projections for Crown have been substantially revised downward.
The
Crown reporting unit had goodwill of $28.7 million and indefinite-lived intangible assets (trademarks) of $4.1 million subject to this annual impairment test. In
determining the fair value in the step one test, the material assumptions used for the income approach included a weighted average cost of capital of 21.4% and a long-term growth rate of
4.1%. Based on our future cash flow projections for the Crown reporting unit, the result of the income approach indicated the carrying amount of the Crown reporting unit exceeded its estimated fair
value. In addition, these cash flow projections did not result in meaningful market-related comparisons under the public company market and transaction approaches. Therefore, under the second step of
the impairment test, we allocated the estimated fair value indicated by the income approach to the identifiable tangible and intangible assets and liabilities based on their respective values. This
allocation indicated a partial impairment for the indefinite-lived intangible assets and no residual value for goodwill.
The
below table details the impact of this impairment charge, which resulted in an overall decrease to goodwill and intangibles, net in our consolidated balance sheets of
$31.5 million as follows:
Indefinite-Lived
Intangible Assets
Goodwill
Crown reporting unit before impairment test
$
4,084
$
28,653
Impairment charges
(2,834
)
(28,653
)
Crown reporting unit after impairment test
$
1,250
$
—
We
recorded a $31.5 million impairment charge in our consolidated results of operations for Fiscal 2010.
Insurance:
We maintain a variety of insurance for our operations that we believe to be customary and reasonable. We are self-insured up
to certain levels in the form of deductibles and retentions for general liability, vehicle liability, group medical and workers compensation claims. Other than normal business and contractual risks
that are not insurable, our risk is commonly insured and the effect of a loss occurrence is not expected to be significant. We accrue for estimated self-insurance costs and uninsured
exposures based on estimated development of claims filed and an estimate of claims incurred but not reported. We regularly review estimates of reported and unreported claims and provide for losses
accordingly.
F-11
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2. Summary of Significant Accounting Policies (Continued)
Advertising:
Advertising costs are included in selling and administrative expenses and are expensed as incurred. These expenses totaled
$1.7 million, $1.4 million and $2.8 million for Fiscal 2010, 2009 and 2008, respectively.
Research and Development:
Expenditures for research and development activities are charged to expense as incurred and were
$0.6 million,
$1.0 million and $3.3 million in Fiscal 2010, 2009 and 2008, respectively.
Translation of Foreign Currency:
The local currency is the functional currency for our Canadian and Colombian subsidiaries and, as such,
 assets and
liabilities are translated into U.S. dollars at year end exchange rates. Income and expense items are translated at average exchange rates during the year. Translation adjustments resulting from
changes in exchange rates are reported in accumulated other comprehensive income. Gains or losses from foreign currency transactions are recognized in current earnings as a component of other expense
(income), net in our consolidated statements of operations.
On
January 10, 2010, the Venezuelan government devalued its currency from 2.15 Bolivars per U.S. dollar to 4.30 Bolivars per U.S. dollar ("the official rate") and the Venezuelan
economy has since been designated as hyperinflationary. The Company recognized a translation loss of $3.1 million as of January 31, 2010, which was recorded in currency translation
adjustment, a component of accumulated other comprehensive income (loss) in our consolidated balance sheets. We have historically utilized the official rate for our Venezuelan operations. Beginning
February 1, 2010, we utilized the U.S. dollar as the functional currency for our Venezuelan subsidiary and remeasured its financial statements into U.S. dollars at the official rate.
Accordingly, using "hyperinflationary accounting," we recognized the related losses or gains from such remeasurement of its balance sheet in the consolidated statements of its operations. During
Fiscal 2010, the official rate for Venezuela did not fluctuate significantly. As a result, the effect of remeasuring our Venezuelan subsidiary was insignificant.
At
January 31, 2011, we evaluated the rate at which we remeasure our Venezuelan subsidiary and concluded that based on the continued slow-down of its economy and
resultant constraints presently impacting the banking environment and associated limitations therein, that the SITME rate of 5.30 Bolivars per U.S. dollar was a more appropriate remeasurement rate.
The result of this change in remeasurement rate did not have a material impact to our financial statements. The total assets for our Venezuela subsidiary are approximately $4.0 million.
Fair Value of Financial Instruments:
Our financial instruments consist primarily of cash equivalents, trade
receivables, trade payables and debt instruments. The recorded values of cash equivalents, trade receivables and trade payables are considered to be representative of their respective fair values.
Generally, our notes payable and revolving credit facility have interest rates which are tied to current market rates, and thus, their fair value is consistent with their recorded amounts. The
estimated fair value of our senior notes is based on quoted market prices (Level 1). At January 31, 2011, our senior notes with a carrying value of $150.0 million had a fair value
of $153.2 million.
F-12
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 2. Summary of Significant Accounting Policies (Continued)
Warranty Costs:
Generally, the only warranty provided to our customers for products we sell that were originally manufactured by others,
 including
our key OEMs, is the warranty provided by those original manufacturers. We warrant products manufactured, and services provided, by us for periods of three to 18 months. Based on historical
experience and contract terms, we accrue the estimated cost of our product and service warranties at the time of sale or, in some cases, when specific warranty exposures are identified and
quantifiable. Accrued warranty costs are adjusted periodically to reflect actual experience. Certain warranty and other related claims involve matters of dispute that ultimately are resolved by
negotiation, arbitration or litigation. Occasionally, a material warranty issue can arise that is beyond our historical experience. We accrue for any such warranty issues as they become known and
estimable.See Note 8—"
Significant Balance Sheet Accounts.
"
Income Taxes:
As a limited liability company, income is reported for federal and state income tax purposes by our unit holders.
Generally, we make
quarterly distributions to our unit holders to fund their tax obligations. We are responsible, however, for paying taxes such as Texas Margins tax and other foreign income taxes. To provide financial
statement users comparable information as a taxable entity as contemplated in the Corporate Conversion, we have included pro forma estimated federal and certain states' income tax expense for all
periods presented.
Note 3. Income Taxes
Our effective tax rate for Fiscal 2010 was approximately 7.5%, which excludes our tax distributions to the unit holders of our limited liability company. As a limited liability company,
income is reported for federal and state income tax purposes (except for the Texas Margins tax and foreign taxes reported at the entity level) by our unit holders. During Fiscal 2010, we recorded
$1.4 million of Texas Margins tax and $0.7 million of income tax benefit associated with foreign jurisdictions. Generally, we make quarterly distributions to the unit holders to fund
their tax obligations. During Fiscal 2010, 2009 and 2008, we made tax distributions of $0.3 million, $5.6 million and $33.6 million, respectively, to our unit holders.
The
following table lists the pre-tax earnings by geographic area:
Fiscal Year Ended January 31,
(Dollars in thousands)
2011
2010
2009
Net earnings (loss) before income taxes:
U.S.
$
25,570
$
(6,205
)
$
52,970
Foreign
(34,902
)
(16,878
)
245
Total
$
(9,332
)
$
(23,083
)
$
53,215
F-13
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 3. Income Taxes (Continued)
The
provision for income taxes consisted of the following:
Fiscal Year Ended January 31,
(Dollars in thousands)
2011
2010
2009
Current expense (benefit)
U.S.
Federal
$
—
$
—
$
—
State
1,297
1,285
1,684
Total U.S.
1,297
1,285
1,684
Foreign
208
(1,446
)
1,502
Total current (benefit) expense
1,505
(161
)
3,186
Deferred expense (benefit)
U.S.
Federal
—
—
—
State
54
(84
)
(104
)
Total U.S.
54
(84
)
(104
)
Foreign
(859
)
1,061
(423
)
Total deferred expense (benefit)
(805
)
977
(527
)
Income tax expense
$
700
$
816
$
2,659
A
reconciliation between the provision for income taxes and income taxes computed by applying the statutory rate is as follows:
Fiscal Year Ended January 31,
(Dollars in thousands)
2011
2010
2009
Tax (benefit) provision at statutory rate
$
(3,266
)
$
(8,079
)
$
18,625
Add (deduct):
State income tax
1,351
1,201
1,580
Valuation allowance
5,145
3,114
—
Foreign credits
76
(41
)
7
Benefit (tax) on LLC income not subject to taxation at the statutory rate
(2,606
)
4,621
(17,553
)
Income tax expense
$
700
$
816
$
2,659
F-14
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 3. Income Taxes (Continued)
The
tax effects of temporary differences that give rise to the deferred tax assets and liabilities were as follows:
As of January 31,
(Dollars in thousands)
2011
2010
Deferred tax assets:
Net operating loss carryforward
$
2,263
$
1,808
Reserves, allowances and accruals
756
389
Amortizable intangible assets
720
745
Non-amortizable intangible assets
4,184
—
Property and equipment
336
172
8,259
3,114
Valuation allowance
(8,259
)
(3,114
)
Deferred tax liabilities:
Goodwill and non-amortizable intangibles
—
(1,046
)
Net deferred tax assets (liabilities)
$
—
$
(1,046
)
As
of January 31, 2011, the Company had a gross Canadian net operating loss carry forward of $9.1 million which expires in 2031. A full valuation allowance has been
provided for this asset and other deferred tax assets and the valuation allowance increased $5.1 million in Fiscal 2010. We have established valuation allowances for uncertainties in realizing
the benefit of this tax loss carry forward and other deferred tax assets. Changes in estimates of future taxable income or in tax laws may alter this expectation.
Note 4. Net Earnings Per Share
Accounting standards require dual presentation of earnings per share ("EPS"): Basic EPS and Diluted EPS. Basic EPS is computed by dividing net earnings or loss available to common unit
holders by the weighted average number of common units outstanding for the period. For purposes of EPS, one unit is equivalent to one share. Diluted EPS excludes 408,000 contingent dilutive unvested
restricted shares that would be considered common stock equivalents using the treasury stock method because as of
January 31, 2011, the contingent condition had not occurred. See "Note 9—
Equity
" for a discussion of the outstanding
restricted share grants.
F-15
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 4. Net Earnings Per Share (Continued)
The following table sets forth the computation of basic and diluted earnings per common unit:
Fiscal Year Ended January 31,
(Dollars and units in thousands)
2011
2010
2009
Numerator:
Net (loss) earnings
$
(10,032
)
$
(23,899
)
$
50,556
Denominator:
Basic weighted average units outstanding
100,005
100,005
100,005
Effect of dilutive securities
—
—
—
Diluted weighted average units outstanding
100,005
100,005
100,005
Basic (loss) earnings per unit
$
(0.10
)
$
(0.24
)
$
0.51
Diluted (loss) earnings per unit
$
(0.10
)
$
(0.24
)
$
0.51
Note 5. Comprehensive Income
Total comprehensive income was as follows:
Fiscal Year Ended January 31,
(Dollars in thousands)
2011
2010
2009
Net (loss) earnings
$
(10,032
)
$
(23,899
)
$
50,556
Currency translation gain (loss)
3,709
5,145
(11,995
)
Comprehensive (loss) income
$
(6,323
)
$
(18,754
)
$
38,561
Translation
adjustments resulting from changes in exchange rates are reported in other comprehensive income. As of January 31, 2011, 2010 and 2009, the entire accumulated other
comprehensive gain (loss) balance consisted of currency translation adjustments. Foreign currency transaction exchange gains (losses) are recorded in other expense (income), net in the consolidated
statements of operations and were $0.1 million, ($1.7) million and $1.3 million during Fiscal 2010, 2009 and 2008, respectively.
Note 6. Segment Data
In our prior reports filed with the SEC, we presented four segments: equipment, aftermarket parts and service, rental and corporate. We have revised our segments to the following three
segments: manufacturing, distribution and corporate and shared services. The consolidated financial statements have been recast to reflect our new segment presentation.
Through
our two operating segments, we design, manufacture and market a wide range of equipment and provide aftermarket parts and service to a broad range of customers. We also provide
rental equipment through our distribution segment. These products and services are consistent with our activities in prior periods and were reported in prior periods as three distinct operating
segments. We now report these same product categories within our two operating segments, which reflects our internal management structure.
F-16
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 6. Segment Data (Continued)
This
operational and management structure was clarified and defined in the fourth quarter of Fiscal 2010 as the result of senior management's assessment and recommendations made to the
board of directors. This operational and management realignment was approved by our board and is reflected in the segments we now report. We believe that the two operating segment presentation
continues to report the products and services we provide, while also providing a view of how we manage our business and a better platform from which to explain the key activities within, and drivers
for, our business.
The
Crown results are included in our manufacturing segment and are aligned with our internal management structure.
Our
reportable segments are as follows:
Manufacturing
We design, manufacture and market equipment for U.S. and international oilfield service providers and drilling and workover
contractors, as well as national oil companies that require integrated and customized product solutions. We manufacture equipment specifically for hydraulic fracturing, well stimulation, well
workover, intervention and drilling operations. Our manufactured products include integrated solutions, which incorporate a variety of components into a single system, for a wide range of oilfield
services and support applications. In addition, we provide parts and service to customers primarily in the oil and gas industry.
Distribution
We provide stand-alone products and aftermarket parts and service for products manufactured by us, our six key OEMs and other
manufacturers. In addition, we provide rental equipment including generator sets, air compressors, rail car movers and material handling equipment to our customers. Our aftermarket parts and service
operations, which provide us with a recurring, higher-margin source of revenue, serve customers engaged in the oil and gas, power generation, marine, mining, construction, commercial vehicle and
material handling industries, as well as other industries.
Corporate and shared services
Our corporate and shared services segment includes administrative overhead normally not associated with specific activities within the
operating segments. These expenses include legal, finance and accounting, internal audit, human resources, information technology, marketing, supply chain and similar corporate office costs.
F-17
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 6. Segment Data (Continued)
Intra-segment
revenues and costs are eliminated, and operating profit (loss) represents earnings (loss) before interest and income taxes. Operating results by segment were as follows:
Fiscal Year Ended January 31,
(Dollars in thousands)
2011
2010
2009
Sales
Manufacturing
$
342,394
$
246,354
$
520,055
Distribution
518,840
442,322
697,087
Total sales
$
861,234
$
688,676
$
1,217,142
Operating profit (loss)
Manufacturing
$
11,277
$
15,875
$
50,110
Distribution
37,481
23,640
66,456
Corporate and shared services
(38,204
)
(42,109
)
(38,420
)
Total operating profit
$
10,554
$
(2,594
)
$
78,146
Operating profit percentage
Manufacturing
3.3
%
6.4
%
9.6
%
Distribution
7.2
5.3
9.5
Consolidated
1.2
%
(0.4
)%
6.4
%
The
Fiscal 2010 operating profit for the manufacturing segment includes the impact of the $31.5 million goodwill and indefinite-lived intangible assets impairment charge for Crown.
Assets
by segment were as follows:
Fiscal Year Ended January 31,
(Dollars in thousands)
2011
2010
2009
Assets
Manufacturing
$
274,183
$
254,070
$
309,255
Distribution
278,382
248,178
327,935
Corporate and shared services
15,038
12,277
16,772
Total Assets
$
567,603
$
514,525
$
653,962
Capital
expenditures by segment were as follows:
Fiscal Year Ended January 31,
(Dollars in thousands)
2011
2010
2009
Capital Expenditures
Manufacturing
$
238
$
784
$
346
Distribution
12,071
1,998
25,821
Corporate and shared services
649
531
1,635
Total capital expenditures
$
12,958
$
3,313
$
27,802
F-18
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 6. Segment Data (Continued)
Depreciation
and amortization by segment were as follows:
Fiscal Year Ended January 31,
(Dollars in thousands)
2011
2010
2009
Depreciation & amortization
Manufacturing
$
5,672
$
6,388
$
7,218
Distribution
10,729
10,970
10,479
Corporate and shared services
652
1,044
1,172
Total deprecation & amortization
$
17,053
$
18,402
$
18,869
Geographic
Information for the periods presented is shown below:
Fiscal Year Ended January 31
(Dollars in thousands)
2011
2010
2009
Sales
United States
$
694,506
$
483,078
$
786,641
International
166,728
205,598
430,501
Total
$
861,234
$
688,676
$
1,217,142
International
sales reflects sales in and to countries outside the United States, including sales to U.S. customers for export.
As of January 31,
(Dollars in thousands)
2011
2010
Assets
United States
$
506,670
$
431,684
International
60,933
82,841
Total
$
567,603
$
514,525
Note 7. Long-Term Debt
As of
(Dollars in thousands)
January 31, 2011
January 31, 2010
Other debt
$
7,441
$
7,243
Revolving credit facility
35,181
70,870
Unsecured senior notes
150,000
150,000
Total
192,622
228,113
Less: current portion of other debt
(7,441
)
(7,187
)
Long-term debt, net of current portion
$
185,181
$
220,926
F-19
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 7. Long-Term Debt (Continued)
Future
maturities of debt by year at January 31, 2011 are as follows:
(Dollars in thousands)
Fiscal 2011
$
7,441
Fiscal 2012
35,181
Fiscal 2013
—
Fiscal 2014
150,000
Fiscal 2015 and thereafter
—
Total
$
192,622
Other debt:
Other debt includes certain short-term secured loans within our South American operations, a floor plan financing agreement
and other
equipment loans. The restricted cash on our balance sheet relates to collateral securing certain of this debt. The weighted average interest rate for the South American operations debt was 5.7%,
11.1%, and 11.7% in Fiscal 2010, 2009 and 2008, respectively. The interest rate for the floor plan financing agreement was 3.3% in each of Fiscal 2010, 2009 and 2008.
Revolving Credit Facility:
In February 2007, we amended our senior credit facility, increased the revolving credit facility to
$250.0 million
and added a $25.0 million sub-facility to be used by our Canadian operations. The amended $250.0 million revolving credit facility, which matures in February 2012, is an
asset-based revolving credit facility which is secured by substantially all accounts receivable, inventory and property, plant and equipment and provides for borrowings at LIBOR plus a margin ranging
from 1.25% to 2.00% per annum, based on our leverage ratios, as specified in the credit agreement. Borrowings under the facility bear interest at a weighted average interest rate of 2.02%, 2.59% and
2.71% as of January 31, 2011, 2010 and 2009, respectively. A commitment fee of 0.30% to 0.375% per annum is payable on all unused portions of the revolving credit facility based on our
leverage ratios. Interest payments are due monthly, or as LIBOR contracts expire. The revolving credit facility also has a $30.0 million sub-facility which may be used for letters
of credit. The credit agreement limits available borrowings to certain percentages of our assets. As of January 31, 2011, there were $19.5 million of letters of credit outstanding. Based
on the outstanding borrowings, letters of credit issued and the terms of the asset-based revolving credit facility, our available borrowing capacity was approximately $124.3 million and
$68.3 million at January 31, 2011 and 2010, respectively.
Unsecured Senior Notes:
During the second quarter of Fiscal 2006, we issued $150.0 million of senior unsecured notes, bearing
interest at
10.0% per annum and maturing in July 2014.
The
revolving credit facility and the senior notes contain financial and operating covenants with which we must comply during the terms of the agreements. These covenants include the
maintenance of certain financial ratios, restrictions related to the incurrence of certain indebtedness and investments, and prohibition of the creation of certain liens. We were in compliance with
all covenants as of January 31, 2011. The financial covenant for the revolving credit facility requires that we maintain a fixed charge coverage ratio, as defined in the agreement, of at least
1.1 to 1.0; however, this covenant does not take effect until our available borrowing capacity is $30.0 million or less. The financial covenant for the senior notes indenture requires that,
were we to incur additional indebtedness (subject to various exceptions set forth in the indenture), after giving effect to the incurrence of such additional indebtedness, we have a consolidated
coverage ratio, as defined in the indenture, of at least 2.5 to 1.0.
F-20
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 7. Long-Term Debt (Continued)
We incurred $3.3 million of capitalized legal and financing charges associated with establishing the original $250.0 million senior credit facility, which are being
amortized over the five year term of the facility. As a result of the amendment reducing the facility to $125.0 million in June 2006, we recorded a $1.5 million non-cash
charge during the second quarter of Fiscal 2006 as interest expense. We also incurred $5.1 million of capitalized legal and financing charges associated with the issuance of the
$150.0 million senior unsecured notes during the second quarter of Fiscal 2006. These costs are being amortized over the eight year term of the notes. During the first quarter of Fiscal 2007,
we incurred $2.2 million of capitalized legal and financing costs associated with the February 2007 amendment to the senior credit facility. As of January 31, 2011, $3.9 million
of unamortized costs are included in the balance sheet.
Guarantor entities:
The senior notes were co-issued by Stewart & Stevenson, LLC and Stewart & Stevenson Funding
Corp. and are guaranteed by all of our subsidiaries except one domestic subsidiary, one subsidiary in Canada and two subsidiaries in South America. Stewart & Stevenson LLC and all of its
subsidiaries except one domestic subsidiary, one subsidiary in Canada and two subsidiaries in South America are co-borrowers on the $250.0 million revolving credit facility.
The
following condensed consolidating financial statements present separately the financial position, results of operations and cash flows of the co-issuers/guarantors
("Guarantor Entities"), and all non-guarantor subsidiaries of the Company ("Non-Guarantor Entities") based on the equity method of accounting.
Condensed Consolidating Balance Sheets
As of January 31, 2011
(Dollars in thousands)
Guarantor
Entities
Non-Guarantor
Entities
Eliminations
Consolidated
Totals
Current assets
$
414,311
$
57,122
$
—
$
471,433
Property, plant and equipment
72,246
2,831
—
75,077
Other assets
881
4,827
15,385
21,093
Total assets
$
487,438
$
64,780
$
15,385
$
567,603
Current liabilities
$
200,693
$
32,469
$
—
$
233,162
Intercompany payables (receivables)
(47,606
)
47,606
—
—
Long-term liabilities
185,317
90
—
185,407
Shareholders' equity
149,034
(15,385
)
15,385
149,034
Total liabilities and shareholders' equity
$
487,438
$
64,780
$
15,385
$
567,603
F-21
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 7. Long-Term Debt (Continued)
As of January 31, 2010
Guarantor
Entities
Non-Guarantor
Entities
Eliminations
Consolidated
Totals
Current assets
$
333,191
$
48,737
$
—
$
381,928
Property, plant and equipment
75,072
4,134
—
79,206
Other assets
35,150
33,376
(15,135
)
53,391
Total assets
$
443,413
$
86,247
$
(15,135
)
$
514,525
Current liabilities
$
113,997
$
22,446
$
—
$
136,443
Intercompany payables (receivables)
(47,474
)
47,474
—
—
Long-term liabilities
221,268
1,192
—
222,460
Shareholders' equity
155,622
15,135
(15,135
)
155,622
Total liabilities and shareholders' equity
$
443,413
$
86,247
$
(15,135
)
$
514,525
Condensed Consolidating Statements of Operations
For the Fiscal Year Ended January 31, 2011
(Dollars in thousands)
Guarantor
Entities
Non-Guarantor
Entities
Eliminations
Consolidated
Totals
Sales
$
771,592
$
89,642
$
—
$
861,234
Cost of sales
638,761
77,206
—
715,967
Gross profit
132,831
12,436
—
145,267
Selling and administrative expenses
90,474
13,778
—
104,252
Impairment of goodwill and indefinite-lived intangible assets
1,316
30,171
—
31,487
Equity in loss of subsidiaries
34,228
—
(34,228
)
—
Other (income) expense, net
(1,434
)
408
—
(1,026
)
Operating profit (loss)
8,247
(31,921
)
34,228
10,554
Interest expense, net
16,927
2,959
—
19,886
Earnings (loss) before income taxes
(8,680
)
(34,880
)
34,228
(9,332
)
Income tax expense (benefit)
1,352
(652
)
—
700
Net loss
$
(10,032
)
$
(34,228
)
$
34,228
$
(10,032
)
F-22
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 7. Long-Term Debt (Continued)
For the Fiscal Year Ended January 31, 2010
Guarantor
Entities
Non-Guarantor
Entities
Eliminations
Consolidated
Totals
Sales
$
609,961
$
78,715
$
—
$
688,676
Cost of sales
505,191
71,837
—
577,028
Gross profit
104,770
6,878
—
111,648
Selling and administrative expenses
96,705
17,483
—
114,188
Equity in loss of subsidiaries
15,953
—
(15,953
)
—
Other (income) expense, net
(2,872
)
2,926
—
54
Operating loss
(5,016
)
(13,531
)
15,953
(2,594
)
Interest expense, net
17,637
2,852
—
20,489
Loss before income taxes
(22,653
)
(16,383
)
15,953
(23,083
)
Income tax expense (benefit)
1,246
(430
)
—
816
Net loss
$
(23,899
)
$
(15,953
)
$
15,953
$
(23,899
)
For the Fiscal Year Ended January 31, 2009
Guarantor
Entities
Non-Guarantor
Entities
Eliminations
Consolidated
Totals
Sales
$
1,080,120
$
137,022
$
—
$
1,217,142
Cost of sales
885,866
116,300
—
1,002,166
Gross profit
194,254
20,722
—
214,976
Selling and administrative expenses
118,844
19,297
—
138,141
Equity in earnings of subsidiaries
(759
)
—
759
—
Other expense (income), net
1,809
(3,120
)
—
(1,311
)
Operating profit
74,360
4,545
(759
)
78,146
Interest expense, net
22,021
2,910
—
24,931
Earnings before income taxes
52,339
1,635
(759
)
53,215
Income tax expense
1,783
876
—
2,659
Net earnings
$
50,556
$
759
$
(759
)
$
50,556
F-23
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 7. Long-Term Debt (Continued)
Condensed Consolidating Statements of Cash Flows
For the Fiscal Year Ended January 31, 2011
(Dollars in thousands)
Guarantor
Entities
Non-Guarantor
Entities
Eliminations
Consolidated
Totals
Net cash provided by (used in):
Operating activities
Net loss
$
(10,032
)
$
(34,228
)
$
34,228
$
(10,032
)
Equity in loss of subsidiaries
34,228
—
(34,228
)
—
Other adjustments
28,970
37,926
—
66,896
Operating activities
53,166
3,698
—
56,864
Investing activities
(14,525
)
(399
)
—
(14,924
)
Financing activities
(36,617
)
467
—
(36,150
)
Effect of exchange rate on cash
—
57
—
57
Net increase in cash
2,024
3,823
—
5,847
Cash at the beginning of the period
248
3,073
—
3,321
Cash at the end of the period
$
2,272
$
6,896
$
—
$
9,168
For the Fiscal Year Ended January 31, 2010
Guarantor
Entities
Non-Guarantor
Entities
Eliminations
Consolidated
Totals
Net cash provided by (used in):
Operating activities
Net loss
$
(23,899
)
$
(15,953
)
$
15,953
$
(23,899
)
Equity in loss of subsidiaries
15,953
—
(15,953
)
—
Other adjustments
64,661
25,559
—
90,220
Operating activities
56,715
9,606
—
66,321
Investing activities
(1,301
)
(1,639
)
—
(2,940
)
Financing activities
(55,192
)
(8,541
)
—
(63,733
)
Effect of exchange rate on cash
—
1,667
—
1,667
Net increase in cash
222
1,093
—
1,315
Cash at the beginning of the period
26
1,980
—
2,006
Cash at the end of the period
$
248
$
3,073
$
—
$
3,321
F-24
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 7. Long-Term Debt (Continued)
For the Fiscal Year Ended January 31, 2009
Guarantor
Entities
Non-Guarantor
Entities
Eliminations
Consolidated
Totals
Net cash provided by (used in):
Operating activities
Net earnings
$
50,556
$
759
$
(759
)
$
50,556
Equity in earnings of subsidiaries
(759
)
—
759
—
Other adjustments
34,180
(26,266
)
—
7,914
Operating activities
83,977
(25,507
)
—
58,470
Investing activities
(27,971
)
195
—
(27,776
)
Financing activities
(61,937
)
19,573
—
(42,364
)
Effect of exchange rate on cash
—
1,294
—
1,294
Net decrease in cash
(5,931
)
(4,445
)
—
(10,376
)
Cash at the beginning of the period
5,957
6,425
—
12,382
Cash at the end of the period
$
26
$
1,980
$
—
$
2,006
Note 8. Significant Balance Sheet Accounts
Allowance for Doubtful Accounts:
Activity in the allowance for doubtful accounts was as follows:
Fiscal Year Ended January 31,
(Dollars in thousands)
2011
2010
2009
Allowance for doubtful accounts at beginning of period
$
4,919
$
3,599
$
3,140
Additions to reserves
684
2,482
1,281
Writeoffs against allowance for doubtful accounts
(3,085
)
(1,327
)
(1,189
)
Collections of previously reserved items
189
165
367
Allowance for doubtful accounts at end of period
$
2,707
$
4,919
$
3,599
Inventories:
Summarized below are the components of inventories:
As of January 31,
(Dollars in thousands)
2011
2010
Inventory purchased under distributor agreements
$
107,872
$
104,542
Raw materials and spare parts
79,231
93,017
Work in process
97,501
34,481
Finished goods
1,305
16,273
Total inventories, net
$
285,909
$
248,313
F-25
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 8. Significant Balance Sheet Accounts (Continued)
Raw materials and spare parts include OEM equipment and components used in the manufacturing segment. Finished goods includes manufactured equipment that is essentially complete at
January 31, 2010. The inventory balances above are net of inventory valuation allowances of $30.4 million and $20.4 million at January 31, 2011 and January 31, 2010,
respectively.
Contracts in Process:
Recoverable costs and accrued profits not yet billed relate to long-term equipment contracts. Amounts included in
the financial
statements which relate to recoverable costs and accrued profits not yet billed on contracts in process are classified as current assets. Billings on uncompleted contracts in excess of incurred costs
are classified as current liabilities. Progress billings on contracts are made in accordance with the terms and conditions of the contracts, which often differ from the revenue recognition process. A
summary of the status of uncompleted contracts is as follows:
As of January 31,
(Dollars in thousands)
2011
2010
Costs incurred on uncompleted contracts
$
91,768
$
109,788
Accrued profits
22,744
33,800
$
114,512
$
143,588
Less billings to date
(39,863
)
(105,661
)
$
74,649
$
37,927
Recoverable costs and accrued profits not yet billed (CIEB)
$
78,934
$
38,042
Billings in excess of incurred costs and accrued profits (BIEC)
(4,285
)
(115
)
$
74,649
$
37,927
Property, Plant and Equipment:
Components of property, plant and equipment, net, were as follows:
As of January 31,
(Dollars in thousands)
2011
2010
Machinery and equipment
$
29,852
$
27,892
Buildings and leasehold improvements
27,918
27,299
Rental equipment
67,067
60,655
Computer hardware and software
4,701
4,459
Accumulated depreciation
(62,220
)
(48,546
)
Net depreciable assets
$
67,318
$
71,759
Construction in progress
696
384
Land
7,063
7,063
Property, plant and equipment, net
$
75,077
$
79,206
Depreciation
expense was $15.5 million, $16.1 million and $15.7 million in Fiscal 2010, 2009 and 2008, respectively.
F-26
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 8. Significant Balance Sheet Accounts (Continued)
Rental
equipment includes generator sets, air compressors, rail car movers and material handling equipment that is leased to customers under operating lease arrangements with terms
ranging from one month up to three years. Rental equipment is depreciated over its estimated useful life, and is occasionally transferred into finished goods inventory for resale to customers.
Intangible Assets and Goodwill:
Amounts allocated to intangible assets are amortized on a straight-line basis over their estimated
useful
lives. Intangible assets include the following:
As of January 31, 2011
(Dollars in thousands)
Estimated
Useful Life
Gross
Carrying
Value
Accumulated
Amortization
Impairment
Currency
Translation
Net
Non-current amortizable intangible assets:
Engineering drawings
2.5 - 10 Years
$
6,346
$
(5,211
)
$
—
$
189
$
1,324
Distribution contracts
27 Years
3,384
(624
)
—
—
2,760
Customer relationships
6 - 11 Years
7,409
(3,097
)
—
635
4,947
Patents
4 Years
209
(209
)
—
—
—
Non-compete covenant
5 Years
1,420
(1,182
)
—
105
343
Total
$
18,768
$
(10,323
)
$
—
$
929
$
9,374
Indefinite-lived intangible assets:
Trademarks
—
9,150
—
(2,834
)
374
6,690
Total
$
27,918
$
(10,323
)
$
(2,834
)
$
1,303
$
16,064
As of January 31, 2010
(Dollars in thousands)
Estimated
Useful Life
Gross
Carrying
Value
Accumulated
Amortization
Impairment
Currency
Translation
Net
Non-current amortizable intangible assets:
Engineering drawings
2.5 - 10 Years
$
6,346
$
(4,947
)
$
—
$
189
$
1,588
Distribution contracts
27 Years
3,384
(499
)
—
—
2,885
Customer relationships
6 - 11 Years
7,409
(2,318
)
—
380
5,471
Patents
4 Years
209
(176
)
—
—
33
Non-compete covenant
5 Years
1,420
(871
)
—
78
627
Total
$
18,768
$
(8,811
)
$
—
$
647
$
10,604
Indefinite-lived intangible assets:
Trademarks
—
9,150
—
—
191
9,341
Total
$
27,918
$
(8,811
)
$
—
$
838
$
19,945
F-27
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 8. Significant Balance Sheet Accounts (Continued)
Amortization
expense was $1.5 million, $2.3 million and $3.2 million in Fiscal 2010, 2009 and 2008, respectively. Amortization expense for the next 5 years is
expected to be as follows:
(Dollars in thousands)
Fiscal 2011
$
1,398
Fiscal 2012
1,135
Fiscal 2013
1,007
Fiscal 2014
1,001
Fiscal 2015
1,001
Total
$
5,542
The
following table presents goodwill, which resulted from the Crown Acquisition, as of the dates indicated, as well as changes in the account during the period shown.
(Dollars in thousands)
Amount
Carrying amount as of January 31, 2010
$
26,671
Currency translation
1,982
Impairment
(28,653
)
Carrying amount as of January 31, 2011
$
—
Warranty Costs:
A summary of activity for accrued warranty costs, recorded in other current liabilities on the consolidated balance
sheet, for the
periods ended January 31, 2011, 2010 and 2009 was as follows:
Fiscal Year Ended January 31,
Dollars in thousands
2011
2010
2009
Accrued warranty costs at beginning of period
$
4,398
$
4,990
$
5,982
Payments for warranty obligations
(4,245
)
(6,174
)
(6,222
)
Warranty accrual
8,957
5,582
5,230
Accrued warranty costs at end of period
$
9,110
$
4,398
$
4,990
Other current liabilities:
Included in other current liabilities are $12.2 million and $15.6 million of accrued job costs as
of
January 31, 2011 and January 31, 2010, respectively. No other item comprised more than 5% of total current liabilities as of January 31, 2010 or January 31, 2009.
F-28
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 9. Equity
The Company has 100,005,000 common units issued and outstanding, which consist of both Common Units and Common B Units. Additionally, the Company has Common A Units, none of which are
issued or outstanding. These three classes of Units have the same economic rights. The voting and transfer rights of the three classes differ in that the Common Units are entitled to one vote per
Common Unit and upon transfer shall remain designated as Common Units. The Common A Units are entitled to ten votes per Common A Unit and upon transfer will be designated as Common Units. The Common B
Units are entitled to ten votes per Common B Unit and upon transfer may be designated by the transferor as Common B Units, Common A Units or Common Units. As of January 31, 2011 and 2010, the
number of Common Units and Common B Units issued and outstanding was 48,255,000 and 51,750,000.
Stewart &
Stevenson LLC is a limited liability company, therefore, U.S. federal and certain state taxes are paid by the holders of our common units. As a limited liability
company, the common interest holders' liability is limited to the capital invested in the Company.
Share-Based Compensation:
On September 5, 2007, our board of directors adopted the 2007 Incentive Compensation Plan ("Incentive
Plan"). The
Incentive Plan received the required approval of a majority of our unit holders and became effective on September 27, 2007. In connection with the adoption and approval of the Incentive Plan,
the compensation committee of the board, which has the responsibility to administer the Incentive Plan, made certain grants of restricted shares to our non-executive directors and certain
members of our senior executive management. The grants to our four non-executive directors totaled 240,000 restricted shares vesting in five (5) 48,000 share tranches, with each
such tranche vesting upon board service for a complete fiscal year. In addition, approximately 112,000 of the restricted shares granted to three former directors were earned as part of their service
to us with the balance of their grants being forfeited. The executive grants total 60,000 restricted shares vesting in five (5) 12,000 share tranches, with each tranche vesting upon employment
for a complete fiscal year. In addition, approximately 20,000 of the restricted shares granted to a former executive were earned before his resignation from the company with the balance being
forfeited. The executive grants are subject to the achievement of net pre-tax income growth in the relevant fiscal year that exceeds the median net pre-tax income
growth of a peer group of companies consisting of Schlumberger, Ltd., National Oilwell Varco, Inc., Weatherford International Ltd. and Cameron International Corp. and are subject
to acceleration in the case of an executive's death or disability. This performance condition was met for Fiscal 2010 and 12,000 shares vested; however, this performance condition was not met for
Fiscal 2009 or Fiscal 2008 and those tranches were forfeited. All grants are subject to (i) the completion of an initial public equity offering and (ii) accelerated vesting upon a
change-in-control of the company. No expense has been recognized for these grants because the contingent condition has not occurred and as of January 31, 2011, diluted
earnings per share excluded the approximately 408,000 contingent unvested restricted shares. A total of 396,000 restricted shares will vest upon completion of an initial public equity offering, and we
will record a non-cash compensation expense in connection therewith in an amount equal to the grant-date fair value of such vested shares, estimated to be approximately
$5.0 million.
F-29
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 10. Employee Retirement Savings Plan
We sponsor an employee retirement savings plan which qualifies under Section 401(k) of the Internal Revenue Code. The savings plan is designed to provide eligible employees with
an opportunity to make regular contributions into a long-term investment and savings program. Substantially all U.S. employees are eligible to participate in the savings plan beginning on
the first full pay period after employment. During Fiscal 2010 and Fiscal 2009, we matched employee contributions at the rate of 35% up to 6% of eligible earnings. During Fiscal 2008, we matched
employee contributions at the rate of 50% up to 6% of eligible earnings. We incurred expenses of $1.5 million, $1.4 million and $3.5 million for Fiscal 2010, 2009 and 2008,
respectively. During Fiscal 2011, we will match employee contributions at the rate of 35% up to 6% of eligible earnings.
Note 11. Recent Accounting Pronouncements
Revenue recognition for arrangements with multiple deliverables:
In October 2009, the Financial Accounting Standards Board issued an
update to
existing guidance on revenue recognition for arrangements with multiple deliverables. This update will allow companies to allocate consideration received for qualified separate deliverables using
estimated selling price for both delivered and undelivered items when vendor-specific objective evidence or third-party evidence is unavailable. Additional disclosures discussing the nature of
multiple element arrangements, the types of deliverables under the arrangements, the general timing of their delivery, and significant factors and estimates used to determine estimated selling prices
are required. We will adopt this update for new revenue arrangements entered into beginning, or materially modified on or after, February 1, 2011. We do not expect the provisions of this update
to have a material impact on our consolidated financial statements.
Note 12. Leases
Operating Lease Commitments:
We lease certain facilities and equipment from third parties under operating lease arrangements of varying
terms. Under
the terms of these operating lease arrangements, we are generally obligated to make monthly rental payments to the lessors, and include no further obligations at the end of the lease terms. If we
elect to cancel or terminate a lease prior to the end of its term, we are typically obligated to make all remaining lease payments. In certain cases, however, we are allowed to sublet the assets to
another party. Total rent expense was $9.6 million, $10.2 million and $10.4 million in Fiscal 2010, 2009 and 2008, respectively.
Future
minimum lease payments under operating leases as of January 31, 2011 are as follows:
(Dollars in thousands)
Fiscal 2011
$
9,470
Fiscal 2012
4,653
Fiscal 2013
2,860
Fiscal 2014
1,753
Fiscal 2015 and thereafter
1,129
Total
$
19,865
F-30
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 13. Related Party Transactions
James W. Crystal, a member of our board of directors, is also the Chairman and Chief Executive Officer of Frank Crystal & Company, Inc., an insurance brokerage firm. In
Fiscal 2010, 2009 and 2008, we purchased insurance coverage through Frank Crystal & Company, Inc., generating commissions to Frank Crystal and Company, Inc. of $477,799, $358,426
and $360,662, respectively. The purchase of this coverage was negotiated on an arm's length basis and we believe that the premium was within the range of market prices for similar types of insurance
coverage. We currently anticipate that we will continue to procure insurance from Frank Crystal & Company, Inc.
Backlog
as of January 31, 2011 includes $37.5 million of related party transactions reflecting an order in Fiscal 2009 from an affiliate. Revenue recognition from this
transaction will be deferred until title to the product passes to a third party and all other revenue recognition criteria have been met. A deposit in the amount of $31.2 million is recorded as
a customer deposit in our consolidated balance sheet. Included in inventories, net is $29.5 million in costs related to this contract, and no amounts have been recorded in the consolidated
statements of operations through January 31, 2011.
The
Company's current practice with respect to related party transactions is as follows: (i) transactions with a value not exceeding $10,000 are subject to approval by our
Chairman (other than transactions in which our Chairman may be a party), (ii) transactions in which our Chairman may be a party or transactions with a value in excess of $10,000 but not
exceeding $100,000 are subject to approval by our Executive Committee (excluding, as appropriate, the participation of a member of the Executive Committee who may be a party to such transactions) and
(iii) all other transactions are subject to approval of our board of directors (excluding, as appropriate, the participation of a member of the board of directors who may be a party to such
transaction).
Note 14. Litigation and Contingencies
In July 2009, we settled an arbitration action brought against one of our suppliers and us. Fiscal 2009 results of operations, after insurance proceeds and receipt of certain inventory,
were negatively impacted by approximately $3.5 million, which is recorded in selling and administrative expenses. The settlement resolved the arbitration action and resulted in dismissal and
release of all claims alleged.
During
Fiscal 2009, the State of Texas began conducting a sales and use tax audit for Fiscal 2006, 2007 and 2008. Recently, the audit period has been expanded to include Fiscal 2009. In
the second quarter of Fiscal 2009, we completed a preliminary analysis and recorded our then best estimate of probable loss as a charge to selling and administrative expenses and other current
liabilities in our consolidated financial statements. As the audit process and periods have evolved, we have continued to evaluate this analysis and have recorded adjustments to the accrual reflecting
our best estimate of probable loss. The
audit remains in process and, accordingly, our ultimate loss could be greater, or less, than the amounts we have recorded.
We
are also a defendant in a number of lawsuits relating to matters normally incident to our business. No individual case, or group of cases presenting substantially similar issues of
law or fact, is expected to have a material effect on the manner in which we conduct our business or on our consolidated results of operations, financial position or liquidity. We maintain certain
insurance policies that provide coverage for product liability and personal injury cases. These insurance policies are subject to a self-insured retention for which we are responsible, which is
generally $500,000 for newer cases and $1.0 million for cases initiated before Fiscal 2009. We have established reserves that we believe to be adequate based on current evaluations and our
experience in these types of claim situations. Nevertheless, an unexpected outcome or adverse development in any such case could have a material adverse impact on our consolidated results of
operations in the period in which it occurs.
F-31
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 15. Concentrations
Our principal distribution agreements, which account for a significant portion of total purchases, are generally non-exclusive agreements and are subject to early termination
by either party for a variety of causes. No assurance can be given that such distribution agreements will be renewed beyond their expiration dates. Any interruption in the supply of materials from the
original manufacturers, or a termination of a distributor agreement, could have a material adverse effect on the results of operations.
We
market our products and services throughout the world and are not dependent upon any single geographic region outside the United States. Substantially all of our
long-lived assets are located in the United States. Our sales to countries outside the United States, including sales to U.S. customers for export, totaled $166.7 million,
$205.6 million and $430.5 million in Fiscal 2010, 2009 and 2008, respectively. We are not dependent on any single customer and in Fiscal 2010, no single customer accounted for more than
5.4% of our total revenues. Our top 10 customers generated approximately 30.7% of our total revenues during Fiscal 2010.
Note 16. Quarterly Financial Information—Unaudited
Fiscal year ended January 31, 2011
Quarter ended
(Dollars in thousands)
May 1, 2010
July 31, 2010
October 30, 2010
January 31, 2011
Total
Year
Sales
$
161,936
$
206,132
$
228,502
$
264,664
$
861,234
Gross profit
25,679
37,045
42,719
39,824
145,267
Net (loss) earnings
$
(4,699
)
$
7,393
$
9,927
$
(22,653
)
$
(10,032
)
Net (loss) earnings per unit:
Basic
$
(0.05
)
$
0.07
$
0.10
$
(0.23
)
$
(0.10
)
Diluted
$
(0.05
)
$
0.07
$
0.10
$
(0.23
)
$
(0.10
)
Net
loss for the quarter ended January 31, 2011 includes the impact of the $31.5 million goodwill and indefinite-lived intangible assets impairment charge for Crown.
Fiscal year ended January 31, 2010
Quarter ended
(Dollars in thousands)
May 2, 2009
August 1, 2009
October 31, 2009
January 31, 2010
Total
Year
Sales
$
190,128
$
173,205
$
167,263
$
158,080
$
688,676
Gross profit
38,896
25,956
23,672
23,124
111,648
Net earnings (loss)
$
3,710
$
(9,748
)
$
(8,188
)
$
(9,673
)
$
(23,899
)
Net earnings (loss) per unit:
Basic
$
0.04
$
(0.10
)
$
(0.08
)
$
(0.10
)
$
(0.24
)
Diluted
$
0.04
$
(0.10
)
$
(0.08
)
$
(0.10
)
$
(0.24
)
Selling
and general administrative expenses for the quarter ended August 1, 2009 included $3.4 million for a probable sales tax liability.
F-32
Table of Contents
STEWART & STEVENSON LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 17. Subsequent Event (unaudited)
EMDSI acquisition.
On March 23, 2011, we acquired 100% of the stock of EMDSI-Hunt Power, L.L.C. ("EMDSI") in an all cash
transaction from ITOCHU Corporation of Japan for total consideration of approximately $25.7 million, subject to final closing adjustments. The acquisition was funded from available cash and
through borrowings under our revolving credit facility. EMDSI, which is based in Harvey, Louisiana, specializes in the marketing and distribution of medium speed diesel engines for marine propulsion,
drilling and power generation applications and is a provider of aftermarket parts and service.
The
following summarizes the preliminary fair values of the assets acquired and liabilities assumed at the acquisition date. The assets acquired and liabilities assumed remain subject to
final closing adjustments, and our ongoing evaluation thereof, which could impact the amount of net tangible assets acquired and, thus, increase or decrease the total consideration transferred. We are
in the process of obtaining third-party valuations for the inventories, property, plant and equipment, intangible assets and goodwill acquired. Accordingly, the amounts below, which are reflective as
of the acquisition date, remain subject to change.
(Dollars in thousands)
As of
March 23, 2011
Cash
$
2,345
Accounts receivable
5,009
Inventories
9,494
Property, plant and equipment
3,206
Other assets
178
Total identifiable tangible assets acquired
20,232
Total liabilities (current) assumed
6,922
Net identifiable tangible assets acquired
13,310
Intangible assets and goodwill
12,437
Net assets acquired
$
25,747
The
summary results of operations information for EMDSI for the twelve months ended December 31, 2010 are as follows:
(Dollars in thousands)
Sales
$
24,963
Net loss
$
(20,375
)
Adjusted net loss
$
(3,935
)
Adjusted
net loss, a non-GAAP financial measure, reflects the exclusion of a $16.4 million goodwill and intangible assets impairment recorded by EMDSI in its 2010 results of operations.
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Table of Contents
Unaudited pro forma condensed combined
financial statements
On March 23, 2011, we acquired 100% of the stock of EMDSI-Hunt Power, L.L.C. ("EMDSI") in an all cash transaction
from ITOCHU Corporation of Japan for total consideration of approximately $25.7 million, subject to final closing adjustments. The acquisition was funded from available cash and through
borrowings under our revolving credit facility. The merger will be accounted for using the acquisition method of accounting. Under the acquisition method of accounting, Stewart &
Stevenson LLC will record all assets acquired and liabilities assumed at their respective acquisition-date fair values.
Basis of pro forma presentation
The following unaudited pro forma condensed combined financial statements and related notes combines the historical consolidated
balance sheet and results of operations of Stewart & Stevenson LLC and of EMDSI. The pro forma balance sheet gives effect to the acquisition as if it had occurred on January 31,
2011. The pro forma statements of operations for the fiscal year ended January 31, 2011 gives effect to the acquisition as if it had occurred on February 1, 2010. The pro forma statement
of operations for fiscal year ended January 31, 2011 was prepared by combining the Stewart & Stevenson historical consolidated statement of operations for the fiscal year ended
January 31, 2011 and EMDSI's historical consolidated statement of operations for the fiscal year ended December 31, 2010.
The
unaudited pro forma condensed combined financial statements reflect the acquisition consideration transferred. Under FASB ASC Topic 805, acquisition-related transaction costs
(i.e. advisory, legal, valuation and other professional fees) are not included as a component of consideration transferred but are accounted for as expenses in the periods in which the costs
are incurred.
As
of the date of this prospectus, Stewart & Stevenson LLC has not completed the valuation analysis and calculations in sufficient detail necessary to arrive at the required estimates of
the fair market value of the EMDSI assets to be acquired and liabilities to be assumed and the related allocations to such items, including goodwill. Accordingly, assets and liabilities are presented
at their respective carrying amounts and should be treated as preliminary values. In addition, Stewart & Stevenson LLC has not identified the adjustments, if any, necessary to conform
the EMDSI financial records to Stewart & Stevenson accounting policies. As a result, actual results will differ from this unaudited pro forma condensed combined financial information once
Stewart & Stevenson LLC has completed the detailed valuation analysis and calculations necessary to finalize the required purchase price allocations, and identified any necessary
conforming accounting policy changes for EMDSI. Accordingly, the final allocations of consideration and their effects on the results of operations, may differ materially from the estimated allocations
and unaudited pro forma combined amounts included herein.
The
unaudited pro forma condensed combined financial statements are provided for illustrative purposes only and are not intended to represent or be indicative of the consolidated results of operations
or financial position of Stewart & Stevenson LLC that would have been recorded had the acquisition been completed as of the dates presented, and should not be taken as representative of
future results of operations or financial position of the combined company.
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Table of Contents
The
unaudited pro forma condensed combined financial statements do not reflect the impacts of any potential operational efficiencies, cost savings or economies of scale that Stewart &
Stevenson LLC may achieve with respect to the combined operations of Stewart & Stevenson and EMDSI. Additionally, the pro forma statements of operations do not include any
non-recurring charges or credits and the related tax effects which result directly from the transaction.
The
unaudited pro forma condensed combined financial statements should be read in conjunction with the historical consolidated financial statements and accompanying notes contained in the
Stewart & Stevenson LLC Annual Report on Form 10-K.
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Table of Contents
Stewart & Stevenson LLC and subsidiaries
Unaudited pro forma condensed combined balance sheet
(Dollars in thousands)
Stewart &
Stevenson LLC
historical
EMDSI, L.L.C.
historical
Pro forma
adjustments
Pro forma
combined
Assets
Current assets:
Cash and cash equivalents
$
9,168
Restricted cash
5,000
Accounts receivable, net
85,236
Recoverable costs and accrued profits not yet billed
78,934
Inventories, net
285,909
Other current assets
7,186
Total current assets
471,433
Property, plant and equipment, net
75,077
Goodwill and intangibles, net
16,064
Deferred financing costs and other assets
5,029
Total assets
$
567,603
Liabilities and shareholders' equity
Current liabilities:
Bank notes payable
$
7,401
Current portion of long-term debt
40
Accounts payable
81,198
Accrued payrolls and incentives
15,913
Billings in excess of incurred costs
4,285
Customer deposits
80,346
Other current liabilities
43,979
Total current liabilities
233,162
Long-term debt, net of current portion
185,181
Other long-term liabilities
226
Total liabilities
418,569
Commitments and contingencies
Shareholders' equity:
Common units, 100,005,000 units issued and outstanding
74,113
Accumulated other comprehensive income
5,092
Retained earnings
69,829
Total shareholders' equity
149,034
Total liabilities and shareholders' equity
$
567,603
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Stewart & Stevenson LLC and subsidiaries
Unaudited pro forma condensed combined
statement of operations
(Dollars and units in thousands)
Stewart &
Stevenson LLC
historical
EMDSI, L.L.C.
historical
Pro forma
adjustments
Pro form
combined
Sales
$
861,234
Cost of sales
715,967
Gross profit
145,267
Selling and administrative expenses
104,252
Impairment of goodwill and indefinite-lived intangible assets
31,487
Other (income) expense, net
(1,026
)
Operating profit (loss)
10,554
Interest expense, net
19,886
(Loss) earnings before income taxes
(9,332
)
Income tax expense
700
Net (loss) earnings
$
(10,032
)
Pro forma income tax expense (benefit) (unaudited)
$
8,227
Pro forma net earnings (loss) available for common unit holders (unaudited)
$
(18,259
)
Weighted average units outstanding:
Basic
100,005
Diluted
100,005
Net (loss) earnings per common unit
Basic
$
(0.10
)
Diluted
$
(0.10
)
Pro forma tax effect—basic (unaudited)
$
(0.18
)
Pro forma tax effect—diluted (unaudited)
$
(0.18
)
F-37
Table of Contents
shares
Stewart & Stevenson Inc.
Common stock
Preliminary Prospectus
J.P. Morgan
,
2011
You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that
contained in this prospectus. We and the selling stockholders are offering to sell, and seeking offers to buy, shares of Common Stock only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of shares of Common
Stock.
No action is being taken in any jurisdiction outside the United States to permit a public offering of the shares of Common Stock or possession or distribution of this
prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions
as to this offering and the distribution of this prospectus applicable to that jurisdiction.
Until 25 days after the date of this prospectus, all dealers that buy, sell or trade in our shares of Common Stock, whether or not participating in this offering, may be
required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or
subscriptions
.
Table of Contents
Part II
Information not required in prospectus
Item 13.    Other expenses of issuance and distribution.
The following table shows the costs and expenses, other than underwriting discounts and commissions, to be incurred in connection with the offering
described in this registration statement, all of which will be paid by the registrant. All amounts
are estimates, other than the SEC registration fee, the FINRA filing fee and the New York Stock Exchange listing fee.
SEC registration fee
$
29,025
(1)
FINRA filing fee
25,500
(1)
New York Stock Exchange listing fee
*
Accounting fees and expenses
*
Legal fees and expenses
*
Printing and engraving expenses
*
Miscellaneous
*
Total
$
*
(1)   Reflects amounts previously paid.
*      To
be completed by amendment
Item 14.   Indemnification of directors and officers.
Section 145 of the Delaware General Corporation Law, or DGCL, permits indemnification of officers, directors, and other corporate agents under
certain circumstances and subject to certain limitations. The registrant's certificate of incorporation and the registrant's bylaws will provide that the registrant shall indemnify its directors and
officers, and may indemnify its employees and agents, to the full extent permitted by the DGCL, including circumstances in which indemnification is otherwise discretionary under Delaware law. In
addition, the registrant will enter into separate indemnification agreements under Delaware law with its directors and executive officers which will require the registrant, among other things, to
indemnify them against certain liabilities which may arise by reason of their status or service (other than liabilities determined to arise from acts or omissions not in good faith or not reasonably
believed to be in the best interests of the registrant).
These
indemnification provisions and the indemnification agreements to be entered into between the registrant and its executive officers and directors may be sufficiently broad to permit
indemnification of the registrant's executive officers and directors for liabilities, including reimbursement of expenses incurred, arising under the Securities Act.
The
underwriting agreement to be filed as Exhibit 1.1 to this Registration Statement will provide for indemnification by the underwriters of the registrant and its executive officers and
directors for certain liabilities, including liabilities arising under the Securities Act, or otherwise.
The
registrant maintains standard policies of insurance that provide coverage (1) to its directors and officers against loss rising from claims made by reason of breach of duty or other
wrongful act and (2) to the registrant with respect to indemnification payments that it may make to such directors and officers.
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Table of Contents
Item 15.    Recent sales of unregistered securities.
None.
Item 16.    Exhibits and financial statement schedules.
(a)
Exhibits
Number
Description
1.1
*
Underwriting Agreement
3.1
*
Form of Certificate of Incorporation of Stewart & Stevenson Inc.
3.2
*
Form of Bylaws of Stewart & Stevenson Inc.
3.2
*
Form of Plan of Conversion
3.4
Stewart & Stevenson LLC's Certificate of Formation (Filed as Exhibit 3.1 to the Registrant's Registration Statement on Form S-4 filed on February 2, 2007 (File No. 333-140441) and
incorporated herein by reference.)
3.5
Stewart & Stevenson LLC's Operating Agreement (Filed as Exhibit 3.7 to the Registrant's Registration Statement on Form S-4 filed on February 2, 2007 (File No. 333-140441) and
incorporated herein by reference.)
4.1
*
Form of specimen Common Stock certificate
4.2
Indenture dated as of July 6, 2006, among Stewart & Stevenson LLC, Stewart & Stevenson Corp., the Subsidiary Guarantors (as defined therein) and Wells Fargo Bank, National Association
(Filed as Exhibit 10.1 to Amendment No. 1 to the Registrant's Registration Statement on Form S-1 (Reg. No. 333-138952), filed on January 31, 2007, and incorporated herein by reference.)
4.3
First Supplemental Indenture, dated as of March 10, 2010, among Stewart & Stevenson LLC, Stewart & Stevenson Manufacturing Technologies LLC and Wells Fargo Bank, National Association,
to Indenture dated as of July 6, 2006 (Filed as Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended May 1, 2010 filed on June 6, 2010 (File No. 001-33836) and incorporated herein
by reference.)
4.4
Second Supplemental Indenture, dated as of March 23, 2011, among Stewart & Stevenson LLC, EMDSI-Hunt Power, L.L.C. and Wells Fargo Bank, National Association, to Indenture dated July 6,
2006 (filed as Exhibit 10.1(b) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 2011 filed on May 2, 2011 (File No. 001-33836) and incorporated herein by reference.)
5.1
*
Opinion of Jones Day
II-2
Table of Contents
Number
Description
10.1
Second Amended and Restated Credit Agreement dated as of February 13, 2007 by and among Stewart & Stevenson LLC, Stewart & Stevenson Distributor Holdings LLC, Stewart & Stevenson
Power Products LLC, Stewart & Stevenson Petroleum Services LLC, Stewart & Stevenson Funding Corp., S&S Agent LLC, the Canadian Borrowers party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A. as
Administrative Agent and as U.S. Collateral Agent, JPMorgan Chase Bank, NA, Toronto Branch as Canadian Administrative Agent and as Canadian Collateral Agent and JPMorgan Chase Bank, N.A., as Export-Related Lender (Filed as Exhibit 10.1 to
Amendment No. 1 to the Registrant's Registration Statement of Form S-4, filed on February 28, 2007 (File No. 333-140441), and incorporated herein by reference.)
10.2
Asset Purchase Agreement, dated as of October 24, 2005, by and among Stewart & Stevenson Services, Inc., IPSC Co. Inc., Stewart & Stevenson Holdings, Inc., Stewart &
Stevenson De Las Americas, Inc., Stewart & Stevenson International, Inc., Stewart & Stevenson Power, Inc., S&S Trust and Hushang Ansary (Filed as Exhibit 10.3 to Amendment No. 1 to the Registrant
Registration Statement on Form S-1 (Reg. No. 333-138952), filed on January 31, 2007, and incorporated herein by reference.)
10.3
Asset Purchase Agreement, dated as of September 27, 2005, by and among Stewart & Stevenson Services, Inc., Stewart & Stevenson Petroleum Services, Inc., Stewart & Stevenson
International, Inc., Sierra Detroit Diesel Allison, Inc., S&S Trust and Hushang Ansary (Filed as Exhibit 10.4 to Amendment No. 1 to the Registrant's Registration Statement on Form S-1 (Reg. No. 333-138952), filed on
January 31, 2007, and incorporated herein by reference.)
10.4
Asset Purchase Agreement dated February 25, 2007 by and among Stewart & Stevenson LLC, Crown Energy Technologies Inc., Crown Energy Technologies, Inc., Crown Energy Technologies
(Oklahoma) Inc., Crown Energy Technologies (Odessa) Inc., Crown Energy Technologies (Victoria) Inc., Crown Energy Technologies (Casper) Inc., Crown Energy Technologies (Bakersfield), Inc., Rance E. Fisher, and Todd E. Fisher
(Filed as Exhibit 10.4 to Amendment No. 1 to the Registrant's Registration Statement on Form S-4, filed on February 28, 2007 (File No. 333-140441), and incorporated herein by reference.)
10.5
Stewart & Stevenson 2007 Incentive Compensation Plan (Filed as Exhibit 10.4 to Amendment No. 3 to the Registrant's Registration Statement on Form S-1 (Reg. No. 333-138952), filed on
September 28, 2007, and incorporated herein by reference.)
10.6
*
Form of Registration Rights Agreement by and among Stewart & Stevenson LLC, Parman Capital Group LLC, EC Investments B.V., Frank Carlucci and Nina Ansary
10.7
*
Form of Indemnification Agreement between Stewart & Stevenson Inc. and each of its officers and directors
10.8
*
Form of Tax Matters Agreement by and between Stewart & Stevenson Inc. and the parties identified therein
10.9
Employment Agreement, dated as of November 6, 2007, between Stewart & Stevenson LLC and Hushang Ansary (Filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed, on
November 13, 2007, and incorporated herein by reference.)
II-3
Table of Contents
Number
Description
10.10
Employment Agreement, dated as of February 2, 2011, between Stewart & Stevenson LLC and Stephen Fulgham (Filed as Exhibit 10.8 to the Registrant's Annual Report on Form 10-K for the fiscal
year ended January 31, 2011 filed on May 2, 2011 (File No. 001-33836) and incorporated herein by reference.)
21.1
Subsidiaries of the Registrant (Filed as Exhibit 21.1 to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 2011 filed on May 2, 2011 (File No. 001-33836) and
incorporated herein by reference.)
23.1
Consent of Ernst & Young LLP.
23.2
*
Consent of Jones Day (included in Exhibit 5.1).
24.1
Powers of Attorney (see signature page)
*      To be filed by amendment.
Item 17.   Undertakings.
(a)   The
undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered
in such names as required by the underwriters to permit prompt delivery to each purchaser.
(b)   Insofar
as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act of
1933, as amended, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such issue.
(c)    The
undersigned registrant hereby undertakes that:
1.     For
purposes of determining any liability under the Securities Act of 1933, as amended, the information omitted from the form of prospectus filed as part of this registration statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933, as amended,
shall be deemed to be part of this registration statement as of the time it was declared effective.
2.     For
the purpose of determining any liability under the Securities Act of 1933, as amended, each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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Table of Contents
Signatures
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the city of Houston, State of Texas, on May 2, 2011.
Stewart & Stevenson LLC
By:
/s/ HUSHANG ANSARY
Name:  Hushang Ansary
Title:    Chairman of the Board of Directors
Power of attorney
We, the undersigned directors and officers of Stewart & Stevenson LLC (the "Company"), hereby severally constitute and
appoint Hushang Ansary and John B. Simmons, and each of them individually, with full powers of substitution and resubstitution, our true and lawful attorneys, with full powers to them and each of them
to sign for us, in our names and in the capacities indicated below, any and all amendments to the Registration Statement on Form S-1 filed with the Securities and Exchange
Commission (including post-effective amendments), and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933 in connection with the registration
under the Securities Act of 1933 of equity securities of the Company, and to file or cause to be filed the same, with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as each of them might or could do in person, and hereby ratifying and confirming all that said attorneys, and each of them, or their
substitute or substitutes, shall do or cause to be done by virtue of this Power of Attorney.
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities on May 2, 2011.
Signature
Title
/s/ HUSHANG ANSARY
Hushang Ansary
Chairman
/s/ FRANK C. CARLUCCI
Frank C. Carlucci
Vice Chairman and Director
/s/ ROBERT L. HARGRAVE
Robert L. Hargrave
Vice Chairman and Director
II-5
Table of Contents
Signature
Title
/s/ STEVE FULGHAM
Steve Fulgham
Chief Executive Officer and Director
(Principal Executive Officer)
/s/ JOHN B. SIMMONS
John B. Simmons
Chief Financial Officer and Director
(Principal Financial Officer)
/s/ ANDREW M. CANNON
Andrew M. Cannon
Chief Accounting Officer
(Principal Accounting Officer)
/s/ NINA ANSARY
Nina Ansary
Director
/s/ JAMES W. CRYSTAL
James W. Crystal
Director
/s/ MUNAWAR H. HIDAYATALLAH
Munawar H. Hidayatallah
Director
/s/ JOHN D. MACOMBER
John D. Macomber
Director
/s/ ANTHONY G. PETRELLO
Anthony G. Petrello
Director
/s/ J. ROBINSON WEST
J. Robinson West
Director
II-6