<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to _________________
Commission file number__________0-822_________
THE OILGEAR COMPANY
(Exact name of registrant as specified in its charter)
Wisconsin 39-0514580
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2300 South 51st Street, Milwaukee, Wisconsin 53219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (414) 327-1700
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
YES ___X___ NO_____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at June 30, 1995
----------------------------- ----------------------------
Common Stock, $1.00 Par Value 1,170,907
<PAGE> 2
PART I - FINANCIAL INFORMATION PAGE 2
ITEM 1. FINANCIAL STATEMENTS.
THE OILGEAR COMPANY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS JUNE 30, 1995 DECEMBER 31, 1994
------------- -----------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $2,293,118 2,830,474
Trade accounts receivable less allowance for doubtful receivables
of $289,013 and $275,893 in 1995 and 1994, respectively 16,334,659 14,966,715
Inventories 24,633,547 22,296,710
Prepaid expenses 425,536 309,740
Other current assets 714,621 645,266
----------- -----------
Total current assets 44,401,481 41,048,905
----------- -----------
Property, plant and equipment, at cost
Land 1,311,332 1,217,743
Buildings 10,602,216 9,393,778
Machinery and equipment 34,415,105 33,128,068
Drawings, patterns and patents 2,128,585 1,981,992
----------- -----------
48,457,239 45,721,581
Less accumulated depreciation and amortization (22,776,526) (21,019,373)
Net property, plant and equipment 25,680,713 24,702,208
Pension intangible 800,000 800,000
Other assets 3,285,798 3,327,909
----------- -----------
$74,167,992 69,879,022
=========== ===========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY JUNE 30, 1995 DECEMBER 31, 1994
------------- -----------------
<S> <C> <C>
Current liabilities:
Short-term borrowings $2,019,651 2,172,055
Current installments of long-term debt 3,119,884 3,038,515
Accounts payable 5,672,585 6,529,990
Customer deposits 3,031,238 1,022,109
Accrued compensation 2,474,900 2,270,593
Other accrued expenses and income taxes 2,327,039 2,302,716
----------- -----------
Total current liabilities 18,645,297 17,335,978
----------- -----------
Deferred income taxes 36,239 0
Long-term debt, less current installments 14,376,078 13,192,844
Unfunded employee retirement plan costs 6,900,000 6,900,000
Unfunded postretirement health care costs 11,378,000 11,180,000
Other non-current liabilities 805,013 727,757
----------- -----------
Total liabilities 52,140,627 49,336,579
----------- -----------
Shareholders' equity:
Common stock par value $1 per share, authorized 4,000,000 shares;
issued 1170907 and 1137938 shares in 1995 and 1994, respective 1,170,907 1,137,938
Capital in excess of par value 8,200,022 7,803,727
Retained earnings 17,678,582 17,072,882
----------- -----------
27,049,511 26,014,547
Add(deduct):
Notes receivable from employees for purchase
of common stock of the Company (185,315) (168,044)
Equity adjustments for foreign currency translation 343,169 (124,060)
Equity adjustments for pension liability (5,180,000) (5,180,000)
----------- -----------
Total shareholders' equity 22,027,365 20,542,443
----------- -----------
$74,167,992 69,879,022
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
THE OILGEAR COMPANY PAGE 3
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
OPERATIONS 1995 1994 1995 1994
----- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $19,274,473 16,309,616 $37,034,504 32,149,362
Cost of sales 12,904,087 11,252,196 24,824,828 21,456,660
----------- ----------- ----------- -----------
Gross profit 6,370,386 5,057,420 12,209,677 10,692,702
Selling, general and
administrative expenses 5,291,887 4,415,146 10,449,992 9,634,205
----------- ----------- ----------- -----------
Operating income 1,078,499 642,274 1,759,685 1,058,497
Interest expense (445,621) (358,626) (810,221) (669,795)
Other income and expense 172,418 121,026 284,395 171,408
----------- ----------- ----------- -----------
Income before income taxes 805,296 404,674 1,233,859 560,110
Income taxes 237,873 48,674 314,548 50,645
----------- ----------- ----------- -----------
Net income $567,423 356,000 $919,311 509,465
=========== =========== =========== ===========
=========== =========== =========== ===========
Net income per share $0.49 0.32 $0.80 0.47
=========== =========== =========== ===========
Dividend per share $0.10 0.05 $0.20 0.10
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
THE OILGEAR COMPANY PAGE 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1995 JUNE 30, 1994
<S> <C> <C>
Cash flows from operating activities:
Net earnings $919,311 509,465
Depreciation 1,451,566 1,389,231
Common stock issued in connection with:
Funding of expense for the Employee Retirement Plan 0 218,001
Compensation element of sales to employees
and employee savings plan 85,827 128,756
Change in assets and liabilities:
Trade accounts receivable (932,085) (2,150,466)
Inventories (1,921,184) (2,677,131)
Prepaid expenses (100,498) (628,034)
Accounts payable (1,003,960) 377,596
Customer deposits 1,948,701 984,123
Accrued compensation and pension expense 113,839 564,914
Unfunded employee benefit costs 198,000 0
Other, net (231,864) 841,658
----------- -----------
Net cash provided (used) by operating activities 527,653 (441,887)
----------- -----------
Cash flows from investing activities:
Additions to property, plant and equipment (2,079,829) (831,639)
Reductions (additions) to other assets 91,684 44,565
----------- -----------
Net cash used by investing activities (1,988,145) (787,074)
----------- -----------
Cash flows from financing activities:
Net borrowings (repayments) under line-of-credit agreement (319,058) 1,398,400
Repayment of long-term debt (603,561) (706,222)
Proceeds from issuance of long-term debt 1,709,721 0
Other non-current liabilities 41,658 63,516
Dividends paid (232,421) (108,972)
Purchase of treasury stock (225,856) 0
Proceeds from sale of treasury stock 144,665 0
Proceeds from sale of common stock 277,188 265,194
Payments received on notes receivable from employees 48,979 21,909
----------- -----------
Net cash provided (used) by financing activities 841,314 933,825
----------- -----------
Effect of exchange rate changes on cash 81,822 (193,134)
----------- -----------
Net increase (decrease) in cash and cash equivalents (537,356) (488,270)
Cash and cash equivalents:
At beginning of year 2,830,474 1,746,673
----------- -----------
At end of period $2,293,118 1,258,403
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $760,355 588,961
=========== ===========
Income taxes $342,218 106,862
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
PAGE 5
THE OILGEAR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INVENTORIES
Inventories stated on the LIFO basis are valued at $14,981,795 at June 30,
1995. If the first-in, first-out (FIFO) method of inventory valuation had been
used for such inventories the inventories would have been stated approximately
$4,184,000 higher. As a result of the application of the LIFO cost method, the
inventories cannot be segregated as to raw materials, work in process and
finished goods.
EARNINGS PER SHARE
Earnings per share is based upon weighted average outstanding shares.
RECLASSIFICATIONS
Prepaid pension costs of $2,362,810 which were included in "Other current
assets" in the December 31, 1994 balance sheet have been reclassified to "Other
assets" to conform to the June 30, 1995 presentation.
OTHER INFORMATION
The financial statements reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the interim
period. All such adjustments are of a normal recurring nature. Management
assumes the reader will have access to the December 31, 1994 Annual Report, a
copy of which is available upon request. These notes should be read in
conjunction with the notes in the Annual Report.
<PAGE> 6
PAGE 6
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Company amended its Loan Agreement with the M&I Marshall and Ilsley Bank on
April 30, 1995. The Loan Agreement was amended to increase the borrowing limits
on the Revolving Credit Loan from $9 million to $11 million and to extend the
Bank's commitment termination date from June 30, 1996 to June 30, 1997.
The Company's financial position has not materially changed from December 31,
1994 and management believes the Company has adequate means for meeting future
capital needs.
RESULTS OF OPERATIONS
Net sales for the second quarter were $19.3 million, up 18.2% from the
$16.3 million reported for the second quarter of 1994. Six months sales of
$37.0 million were up 15.2% from the $32.1 million for the same period a year
ago. The backlog of orders at June 30, 1995 reached $25.8 million, up 73.2%
from the $14.9 million reported at Decemeber 31, 1994 which was the result of
increased orders during the first six months of 1995. Six month orders were
$48.8 million compared to $36.0 in the first six months of 1994, an increase of
35.5%. Second quarter orders of $21.3 million exceeded shipments by $2 million
and were 19% ahead of the second quarter of 1994. Orders were down from the
record level of the first quarter and the Company has begun to see a slight
slowdown in domestic orders that is in line with industry forecasts.
Gross profit as a percentage of sales for the second quarter increased
by 6.6% compared to the second quarter of 1994. The higher level of sales and a
mix of more profitable products in sales in the second quarter of 1995 were the
reasons for the increase.
The increases in the interest rates from the first six months of 1994 to the
first six months of 1995 have caused the interest expense to increase by
approximately 21% for the six month period.
<PAGE> 7
PAGE 7
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the annual meeting of shareholders on April 18, 1995 management's
nominees named below were elected as directors, three of the class whose
term expires in 1998 and one for the balance of a term expiring in 1997, by the
indicated votes cast for and withheld with respect to each nominee. Of the
1,006,170 shares of Common Stock which were represented at the meeting,
976,841 shares (97%) were voted for the election of all of management's
nominees. There were no abstentions or broker non-votes with respect to the
election of directors.
<TABLE>
<CAPTION>
Name of Nominee For Withheld Term-expiring
<S> <C> <C> <C>
Carl L. Gosewehr 976,841 29,329 1998
Edward Neuwirth 979,667 26,503 1998
Frank L. Schmit 991,893 14,277 1998
Randolph W. Carson 992,479 13,691 1997
</TABLE>
Further information concerning this matter, including the name of
each other director whose term of office as a director continued after
the meeting, to expire in 1996 or 1997, is contained in the
registrant's Proxy Statement dated March 20, 1995 with respect to the
1995 annual meeting of shareholders.
<PAGE> 8
PAGE 8
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
See Exhibit Index following the last page of this Form 10-Q
which Exhibit Index is incorporated herein by reference.
(b) Reports on Form 8-K:
A current report on Form 8-K was filed by the Company on May 2,
1995 for the purpose of updating the description of the Company's
common stock under the Securities Exchange Act of 1934.
<PAGE> 9
PAGE 9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
8-11-95 THE OILGEAR COMPANY
-----------------------------
REGISTRANT
/S/ OTTO F. KLIEVE
-----------------------------
OTTO F. KLIEVE,
PRESIDENT
/S/ THOMAS J. PRICE
-----------------------------
THOMAS J. PRICE
VP-FINANCE AND CORPORATE
SECRETARY
<PAGE> 10
PAGE 10
THE OILGEAR COMPANY
EXHIBIT INDEX
Quarterly Report on Form 10-Q
For the Quarter Ended June 30, 1995
Exhibit
Number
4.3(a) Amendment No. 1 to Second Amendatory Loan Agreement dated
April 30, 1995
27 The Oilgear Company Financial Data Schedule for the three
months ended June 30, 1995.
<PAGE> 1
EXHIBIT 4.3(a)
(6/30/95 10-Q)
AMENDMENT NO. 1 TO SECOND AMENDATORY LOAN AGREEMENT
THIS AMENDMENT NO. 1 TO SECOND AMENDATORY LOAN AGREEMENT is made as
of the 30th day of April, 1995 by and between THE OILGEAR COMPANY (the
"Company") and M&I MARSHALL & ILSLEY BANK ("M&I").
IN CONSIDERATION of the mutual covenants, conditions and agreements
set forth herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, it is hereby agreed that:
ARTICLE I
DEFINITIONS
When used herein, the following terms shall have the meanings
specified:
1.1 Amendment. "Amendment" shall mean this Amendment No. 1 to
Second Amendatory Loan Agreement.
1.2 Loan Agreement. "Loan Agreement" shall mean the Loan Agreement
by and between M&I and the Company, dated as of September 28, 1990, as
amended and restated by a Second Amendatory Loan Agreement dated as of July
15, 1994.
1.3 Other Terms. The other capitalized terms used in this
Amendment shall have the definitions assigned in the Loan Agreement.
ARTICLE II
AMENDMENTS
The Loan Agreement is amended as follows:
2.1 Section 1.2 - Commitment. Section 1.2 of the Loan Agreement is
amended in its entirety to read as follows:
1.2 Commitment. "Commitment" shall mean the
commitment of M&I to make Revolving Credit Loans to the
Company under the Loan Agreement up to the maximum
principal amount of Eleven Million and 00/100 Dollars
($11,000,000.00) through the Commitment Termination Date,
or such lesser amount resulting from a termination or
reduction of the Commitment pursuant to the Loan Agreement.
2.2 Section 1.3 - Commitment Termination Date. Section 1.3 of
the Loan Agreement is amended in its entirety to read as follows:
<PAGE> 2
1.3 Commitment Termination Date. "Commitment
Termination Date" shall mean the earlier of (a) June 30, 1997 or
(b) the date on which the Commitment is terminated pursuant to
Section 5.4 or 11.1 of this Agreement.
2.3 Section 2.10(a) - Line of Credit Loans. Section 2.10(a) of the
Loan Agreement is amended by deleting the date "April 30, 1995" contained in
the second line of Section 2.10(a) and substituting therefor the date "April
30, 1996".
2.4 Section 3.1(d) - Notes. Section 3.1(d) of the Loan Agreement is
amended in its entirety to read as follows:
(d) Each Line of Credit Loan shall be evidenced by a
Line of Credit Note and shall mature on the earlier to occur of:
(i) April 30, 1996; or (ii) receipt by the Company of payment in
full of the accounts receivable owing on the project financed by
the proceeds of such Line of Credit Loan.
2.5 Section 5.1 - Making of Payments. Section 5.1 of the Loan
Agreement is amended by deleting the third sentence thereof and inserting in
its place the following:
The Company shall make mandatory payments of principal on the
Revolving Credit Note so that the principal amount outstanding
under the Revolving Credit Note never exceeds the amount of the
Commitment, as such Commitment Amount may be reduced pursuant to
Section 5.4 hereof.
2.6 Section 10.7 - Consolidated Tangible Net Worth. Section 10.7 of
the Loan Agreement is amended in its entirety to read as follows:
10.7 Consolidated Tangible Net Worth. Maintain at
all times a Consolidated Tangible Net Worth of at least
$16,000,000.00 at January 1, 1995 through December 30, 1995 which
Consolidated Tangible Net Worth requirement shall increase
annually on December 31 of each year, commencing December 31,
1995 by (a) an amount equal to 60% of the consolidated net
income, as shown on the audited financial statements of the
Company and its Subsidiaries for the fiscal year ending on such
December 31 (but not less than zero) plus (b) an amount equal to
75% of any other increase in equity for such fiscal year.
2
<PAGE> 3
2.7 Revolving Credit Note. The Company shall execute and deliver
to M&I a Revolving Credit Note in the original principal amount of
$11,000,000.00, dated July 31, 1992, as amended and restated on July 15,
1994 and April 30, 1995, and otherwise in form and substance satisfactory to
M&I. This Revolving Credit Note shall evidence the Revolving Credit Loans
and shall constitute the Revolving Credit Note issued pursuant to the Loan
Agreement and shall be in substitution for the Revolving Credit Note dated
July 31, 1992, as amended and restated on July 15, 1994, issued by the
Company payable to the order of M&I.
2.8 Line of Credit Note Form. Exhibit 9 to the Loan Agreement,
which is the form of Line of Credit Note, is amended in its entirety as set
forth in Schedule 1 hereto. Any Line of Credit Notes issued after the date
hereof shall be in substantially the form of Schedule 1 hereto. This
Section 2.8 shall not amend any Line of Credit Notes issued prior to the
date of this Amendment.
2.9 Miscellaneous Amendments. The Loan Agreement, the Revolving
Credit Note, the Line of Credit Notes, and all other documents, instruments
and materials executed and delivered heretofore or hereafter pursuant to the
Loan Agreement are deemed hereby to be amended so that any reference therein
to the Loan Agreement, the Line of Credit Notes, or Revolving Credit Note
shall be a reference to such documents as amended by or pursuant to this
Amendment. Any references in the Security Agreement to the Revolving Credit
Note, including, without limitation, the Revolving Credit Note referenced in
the definition of "Notes" contained in the Security Agreement shall refer to
the Revolving Credit Note in the original principal amount of $11,000,000.00
dated July 31, 1992, as amended and restated on July 15, 1994, and on April
30, 1995, and evidencing the Revolving Credit Loans made pursuant to the
Loan Agreement, as such Revolving Credit Note may be amended, modified,
extended or renewed from time to time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to M&I that:
3.1 Loan Agreement. All of the representations and warranties made
by the Company in the Loan Agreement are true and correct on the date of
this Amendment. No Event of Default under the Loan Agreement has occurred
and is continuing as of the date of this Amendment. No event has occurred
which with the lapse of time or giving of notice or both would constitute an
Event of Default under the Loan Agreement as of the date of this Amendment.
3.2 Authorization; Enforceability. The making, execution and
delivery of this Amendment, the Line of Credit Notes and the Revolving
Credit Note, and performance of and compliance with the
3
<PAGE> 4
terms of the Loan Agreement as amended and the Line of Credit Notes and the
Revolving Credit Note, have been duly authorized by all necessary corporate
action by the Company. This Amendment, the Line of Credit Notes and the
Revolving Credit Note are the valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms.
3.3 Absence of Conflicting Obligations. The making, execution and
delivery of this Amendment and the Line of Credit Notes and the Revolving
Credit Note, and performance of and compliance with the terms of the Loan
Agreement as amended, the Line of Credit Notes and the Revolving Credit Note,
do not violate any presently existing provision of law or the articles or
certificate of incorporation or bylaws of the Company or any agreement to which
the Company is a party or by which it is bound.
ARTICLE IV
MISCELLANEOUS
4.1 Continuance of Loan Agreement. Except as specifically amended by
this Amendment, the Loan Agreement shall remain in full force and effect.
4.2 Survival. All agreements, representations and warranties made in
this Amendment or in any documents delivered pursuant to this Amendment shall
survive the execution of this Amendment and the delivery of any such document.
4.3 Governing Law. This Amendment, the Line of Credit Notes and the
Revolving Credit Note shall be governed by the laws of the State of Wisconsin.
4.4 Counterparts; Headings. This Amendment may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same agreement. Article and Section
headings in this Amendment are inserted for convenience of reference only and
shall not constitute a part hereof.
4.5 Severability. Any provision of this Amendment which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Amendment or affecting the
validity or enforceability of such provision in any other jurisdiction.
4.6 Effectiveness. This Amendment shall be effective as of April 30,
1995 upon receipt by M&I of the following documents:
(a) this Amendment executed by the Company;
(b) the Revolving Credit Note required by this Amendment,
executed by the Company;
4
<PAGE> 5
(c) the Amendment to Certain Line of Credit Notes
("Notes Amendment") executed by the Company;
(d) a certificate of the secretary or an assistant
secretary of the Company dated the date hereof as to: (i) the incumbency
and signature of the officers of the Company who have signed or will sign
this Amendment, the Notes Amendment and the Revolving Credit Note to be
delivered pursuant to this Amendment; and (ii) the adoption and continuing
effect of resolutions of the Board of Directors of the Company authorizing
the execution and delivery of this Amendment, the Notes Amendment and the
Revolving Credit Note; and
(e) such additional supporting documents and materials as
M&I may reasonably request.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1
to Second Amendatory Loan Agreement as of the day and year first written above.
THE OILGEAR COMPANY
By:/s/ THOMAS J. PRICE
Name: Thomas J. Price
Title: Vice President of
Finance/Secretary
M&I MARSHALL & ILSLEY BANK
By:/s/ BRAD D. CHAPIN
Name: Brad D. Chapin
Title: Vice President
Attest:
/s/ MARK A. HOGAN
Name: Mark A. Hogan
Title: Vice President
6
<PAGE> 7
SCHEDULE 1
EXHIBIT 9
THE OILGEAR COMPANY
LINE OF CREDIT NOTE
Contract No. ____________
$____________ Milwaukee, Wisconsin
Date:_______________
FOR VALUE RECEIVED, THE OILGEAR COMPANY, a Wisconsin corporation
(the "Company"), hereby promises to pay to the order of M&I
MARSHALL & ILSLEY BANK, a Wisconsin banking corporation ("M&I"), the
principal sum of _________________________________ DOLLARS
($______________), or such lesser amount of principal which remains
outstanding under this Note, together with any unpaid accrued interest, on
the Maturity Date. "Maturity Date" shall mean the earlier to occur of:
(i) April 30, 1996; or
(ii) receipt by the Company of payment in full of the accounts
receivable owing on the Contract referenced above.
In addition, the Company shall make principal payments in the amounts
and on the dates set forth below:
<TABLE>
<S> <C>
Installment Date: Amount of Installment:
______________________ $______________________
______________________ $______________________
______________________ $______________________
______________________ $______________________
______________________ $______________________
______________________ $______________________
______________________ $______________________
</TABLE>
Notwithstanding the Maturity Date or the scheduled principal installments
referenced above, upon receipt at any time by the Company of any partial or
full payment with respect to the Contract referenced above, the Company
shall make an immediate prepayment of the principal of this Note in an
amount equal to the amount of any such payment received by the Company.
The unpaid principal shall bear interest from the date hereof until
paid, computed on the basis of a 360-day year, at an annual rate equal to
the rate of interest adopted by M&I from time to time as its base rate for
interest determinations (the "Prime Rate") plus one-quarter percent (1/4%),
and the rate of interest hereunder shall change with each change in such
Prime Rate. Interest accrued on the outstanding principal balance through
the last day of each month shall be payable on the first
<PAGE> 8
(1st) day of the next month, commencing on ___________ 1, 199_ and continuing
thereafter until the principal is paid in full, with all accrued interest paid
with the final payment of principal.
In the event that any amount of the principal of, or
interest on, this Note is not paid on the date when due, the entire principal
amount outstanding shall bear interest from the day following the due date
until all such overdue amounts have been paid in full at the rate per annum
which is equal to the greater of: (a) 2% in excess of the rate applicable to
the unpaid amount immediately before it became due, or (b) 2% in excess of the
Prime Rate.
Payments of both principal and interest are to be made in
lawful money of the United States of America at the offices of M&I Marshall &
Ilsley Bank, Attention: Commercial Loan Department, 770 North Water Street,
Milwaukee, Wisconsin 53202 or at such other place as the holder shall designate
in writing to the maker.
The maker and all endorsers hereby severally waive
presentment for payment, protest and demand, notice of protest, demand and of
dishonor and nonpayment of this Note.
This Note constitutes a Line of Credit Term Note issued
pursuant to a Loan Agreement (the "Loan Agreement") dated as of September 28,
1990 by and between M&I Marshall & Ilsley Bank and The Oilgear Company, as
amended and restated by a Second Amendatory Loan Agreement dated as of July 15,
1994, and an Amendment No. 1 to Second Amendatory Loan Agreement dated as of
April 30, 1995, as may be further amended and restated from time to time, to
which Loan Agreement reference is hereby made for a statement of the terms and
conditions under which the Loan evidenced hereby may be made and a description
of the terms and conditions upon which this Note may be prepaid in whole or in
part. In case an Event of Default, as defined in the Loan Agreement, shall
occur, the entire unpaid principal and accrued interest may be automatically
due and payable or may be declared due and payable as provided in the Loan
Agreement.
2
<PAGE> 9
Additional Provisions:_______________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
THE OILGEAR COMPANY
By:___________________________
Title: Thomas J. Price
Its: Vice President of
Finance/Secretary
3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED
FINANCIAL STATEMENTS OF THE OILGEAR COMPANY FOR THE THREE MONTHS ENDED JUNE 30,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,293,118
<SECURITIES> 0
<RECEIVABLES> 16,623,672
<ALLOWANCES> 289,013
<INVENTORY> 24,633,547
<CURRENT-ASSETS> 44,401,481
<PP&E> 48,457,239
<DEPRECIATION> 22,776,526
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0
0
<OTHER-SE> 12,656,435
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<OTHER-EXPENSES> 10,449,992
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<INTEREST-EXPENSE> 810,221
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<INCOME-TAX> 314,548
<INCOME-CONTINUING> 919,311
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<NET-INCOME> 919,311
<EPS-PRIMARY> 0.80
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</TABLE>
