<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 September 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 September 30, 1995
- --------------------------------------------------------------------------------
Common Stock, $1.00 Par Value 1,173,562
<PAGE> 2
PART I - FINANCIAL INFORMATION PAGE 2
Item 1. Financial Statements.
THE OILGEAR COMPANY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS SEPTEMBER 30, 1995 DECEMBER 31, 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $1,756,915 2,830,474
Trade accounts receivable less allowance for doubtful receivables
of $398,346 and $275,893 in 1995 and 1994, respectively 18,103,227 14,966,715
Inventories 24,462,115 22,296,710
Prepaid expenses 209,533 309,740
Other current assets 555,722 645,266
- ----------------------------------------------------------------------------------------------------
Total current assets 45,087,512 41,048,905
- ----------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost
Land 1,290,656 1,217,743
Buildings 10,657,825 9,393,778
Machinery and equipment 34,980,973 33,128,068
Drawings, patterns and patents 2,199,211 1,981,992
- ----------------------------------------------------------------------------------------------------
49,128,664 45,721,581
Less accumulated depreciation and amortization (23,345,900) (21,019,373)
- ----------------------------------------------------------------------------------------------------
Net property, plant and equipment 25,782,764 24,702,208
Pension intangible 800,000 800,000
Other assets 3,271,987 3,327,909
- ----------------------------------------------------------------------------------------------------
$74,942,262 69,879,022
====================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY SEPTEMBER 30, 1995 DECEMBER 31, 1994
- ----------------------------------------------------------------------------------------------------
Current liabilities:
Short-term borrowings $2,922,031 2,172,055
Current installments of long-term debt 3,080,726 3,038,515
Accounts payable 5,419,951 6,529,990
Customer deposits 3,004,354 1,022,109
Accrued compensation 2,068,743 2,270,593
Other accrued expenses and income taxes 2,760,092 2,302,716
- ----------------------------------------------------------------------------------------------------
Total current liabilities 19,255,898 17,335,978
- ----------------------------------------------------------------------------------------------------
Deferred income taxes 35,603 0
Long-term debt, less current installments 14,185,542 13,192,844
Unfunded employee retirement plan costs 6,900,000 6,900,000
Unfunded postretirement health care costs 11,477,000 11,180,000
Other non-current liabilities 801,243 727,757
- ----------------------------------------------------------------------------------------------------
Total liabilities 52,655,285 49,336,579
- ----------------------------------------------------------------------------------------------------
Shareholders' equity:
Common stock par value $1 per share, authorized 4,000,000 shares;
issued 1,173,562 and 1,137,938 shares in 1995 and 1994,
respectively 1,173,562 1,137,938
Capital in excess of par value 8,226,573 7,803,727
Retained earnings 18,149,978 17,072,882
- ----------------------------------------------------------------------------------------------------
27,550,113 26,014,547
Add(deduct):
Notes receivable from employees for purchase
of common stock of the Company (167,842) (168,044)
Equity adjustments for foreign currency translation 84,706 (124,060)
Equity adjustments for pension liability (5,180,000) (5,180,000)
- ----------------------------------------------------------------------------------------------------
Total shareholders' equity 22,286,977 20,542,443
- ----------------------------------------------------------------------------------------------------
$74,942,262 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 NINE MONTHS ENDED
September 30, September 30,
OPERATIONS 1995 1994 1995 1994
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $21,499,167 17,963,673 $58,533,671 50,113,035
Cost of sales 14,664,490 11,825,360 39,489,318 33,282,020
- ------------------------------------------------------------------------------------------------------------------
Gross profit 6,834,677 6,138,313 19,044,354 16,831,015
Selling, general and
administrative expenses 5,606,554 5,306,730 16,056,546 14,940,935
- ------------------------------------------------------------------------------------------------------------------
Operating income 1,228,123 831,583 2,987,808 1,890,080
Interest expense (443,461) (332,641) (1,253,682) (1,002,436)
Other income and expense 48,746 164,415 333,141 335,823
- ------------------------------------------------------------------------------------------------------------------
Income before income taxes 833,409 663,357 2,067,268 1,223,467
Income taxes 215,452 1,355 530,000 52,000
- ------------------------------------------------------------------------------------------------------------------
Net income $617,957 662,002 $1,537,268 1,171,467
==================================================================================================================
Net income per share $0.53 0.60 $1.33 1.07
==================================================================================================================
Dividend per share $0.10 0.05 $0.30 0.15
==================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
THE OILGEAR COMPANY PAGE 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
---------------------------------
September 30, September 30,
1995 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $1,537,268 475,330
Depreciation 2,162,371 1,825,610
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 85,281 132,792
Change in assets and liabilities:
Trade accounts receivable (2,861,725) (444,058)
Inventories (1,969,563) (3,674,203)
Prepaid expenses 109,100 (160,168)
Accounts payable (1,196,405) 364,170
Customer deposits 1,937,816 865,362
Accrued compensation and pension expense (268,387) 395,988
Unfunded employee benefit costs 297,000 0
Other, net 373,974 1,256,945
- ----------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities 206,731 1,255,769
- ----------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (3,000,539) (1,053,077)
Reductions (additions) to other assets 86,033 (67,573)
- ----------------------------------------------------------------------------------------------------
Net cash used by investing activities (2,914,506) (1,120,650)
- ----------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net borrowings (repayments) under line-of-credit agreement 668,910 2,263,340
Repayment of long-term debt (1,015,672) (1,664,615)
Proceeds from issuance of long-term debt 1,943,053 0
Other non-current liabilities 60,441 76,113
Dividends paid (349,777) (108,972)
Purchase of treasury stock (300,808) 0
Proceeds from sale of treasury stock 190,412 0
Proceeds from sale of common stock 337,024 284,427
Payments received on notes receivable from employees 36,368 29,277
- ----------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities 1,569,951 879,570
- ----------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash 64,265 (556,604)
- ----------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (1,073,559) 458,085
Cash and cash equivalents:
- ----------------------------------------------------------------------------------------------------
At beginning of year 2,830,474 1,746,673
At end of period $1,756,915 2,204,758
===================================================================================================
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $1,140,586 1,028,159
Income taxes $464,036 229,847
===================================================================================================
</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 $16,292,730 at September 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 relassified to "Other
assets" to conform to the September 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. The
results of operations for the three months and the nine months ended September
30, 1995 are not necessarily indicative of the results which may be expected
for fiscal 1995. 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'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 third quarter were $21.5 million, up 19.7% from the
$18.0 million reported for the third quarter of 1994. Nine months sales of
$58.5 million were up 16.8% from the $50.1 million for the same period a year
ago. Orders have exceeded shipments in all three quarters of 1995, resulting in
a backlog of orders at September 30, 1995 of $27.6 million, up 85.2% from the
$14.9 million reported at December 31, 1994. It is the highest backlog level
since 1990. Nine month orders were $70.5 million compared to $53.6 million in
the first nine months of 1994, an increase of 31.5%. Third quarter orders were
$21.7 million, up 23% from the third quarter of 1994.
A significant increase in orders came from the Company's European customers.
European orders increased by 57% to approximately $6.9 million in the third
quarter of 1995 and increased by 71% to $23.8 million for the nine months ended
September 30, 1995.
Despite comments supported by the National Fluid Power Association that
industry indicators suggest a slowdown towards the end of the year, domestic
orders increased by 10% to approximately $14.8 million in the third quarter of
1995 compared to the third quarter of 1994 and increased by 18% to $46.7
million for the nine months ended September 30, 1995. However, there can be no
assurance that the Company won't experience the predicted slowdown during the
fourth quarter of 1995 or during the beginning of fiscal 1996.
The increase in net sales resulted in an increase in the operating income for
the third quarter of 1995 and the nine month period of 1995 compared to the
same periods in 1994 by approximately 48% and 58%, respectively.
The increases in the interest rates from the first nine months of 1994 to the
first nine months of 1995 and the increase in the amount of debt have caused
the interest expense to increase by approximately 25% for the nine month
period.
Increased foreign earnings before income taxes and the effect of the
Alternative Minimum Tax on the United States earnings sharply increased income
taxes.
<PAGE> 7
PAGE 7
PART II - OTHER INFORMATION
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:
No reports on Form 8-K have been filed during the quarter for
which this report is filed.
<PAGE> 8
PAGE 8
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.
11-13-95 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> 9
PAGE 9
THE OILGEAR COMPANY
EXHIBIT INDEX
Quarterly Report on Form 10-Q
For the Quarter Ended September 30, 1995
Exhibit
Number
- --------
27 The Oilgear Company Financial Data Schedule for the nine months
ended September 30, 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED
FINANCIAL STATEMENTS OF THE OILGEAR COMPANY FOR THE NINE MONTHS ENDED SEPTEMBER
30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,756,915
<SECURITIES> 0
<RECEIVABLES> 18,501,573
<ALLOWANCES> 398,346
<INVENTORY> 24,462,115
<CURRENT-ASSETS> 45,087,512
<PP&E> 49,128,664
<DEPRECIATION> 23,345,900
<TOTAL-ASSETS> 74,942,262
<CURRENT-LIABILITIES> 19,255,898
<BONDS> 17,266,268
<COMMON> 9,400,135
0
0
<OTHER-SE> 12,886,841
<TOTAL-LIABILITY-AND-EQUITY> 74,942,262
<SALES> 58,533,671
<TOTAL-REVENUES> 58,533,671
<CGS> 39,489,318
<TOTAL-COSTS> 39,489,318
<OTHER-EXPENSES> 16,056,546
<LOSS-PROVISION> 112,500
<INTEREST-EXPENSE> 1,253,682
<INCOME-PRETAX> 2,067,268
<INCOME-TAX> 530,000
<INCOME-CONTINUING> 1,537,268
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,537,268
<EPS-PRIMARY> 1.33
<EPS-DILUTED> 1.33
</TABLE>
