<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 March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-822
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THE OILGEAR COMPANY
(Exact name of registrant as specified in its charter)
Wisconsin 39-514580
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2300 South 51st Street, Milwaukee, Wisconsin 53219
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (414) 327-1700
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NOT APPLICABLE
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(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
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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 March 31, 1996
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Common Stock, $1.00 Par Value 1,197,114
<PAGE> 2
PART I - FINANCIAL INFORMATION PAGE 2
ITEM 1. FINANCIAL STATEMENTS.
THE OILGEAR COMPANY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
Caption>
ASSETS MARCH 31, 1996 DECEMBER 31, 1995
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<S> <C> <C>
Current assets:
Cash and cash equivalents $2,590,015 2,779,186
Trade accounts receivable less allowance for doubtful receivables
of $312,765 and $313,885 in 1996 and 1995, respectively 18,210,325 16,383,534
Inventories 26,851,123 26,595,579
Prepaid expenses 207,481 414,029
Other current assets 439,413 409,726
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Total current assets 48,298,357 46,582,054
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Property, plant and equipment, at cost
Land 1,264,056 1,281,471
Buildings 9,798,553 10,773,276
Machinery and equipment 38,883,057 36,964,751
Drawings, patterns and patents 2,346,340 2,302,638
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52,292,006 51,322,136
Less accumulated depreciation and amortization (24,977,594) (24,214,130)
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Property, plant and equipment 27,314,412 27,108,006
Pension intangible 700,000 700,000
Other assets 3,615,599 3,512,102
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$79,928,368 77,902,162
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LIABILITIES AND SHAREHOLDERS' EQUITY MARCH 31, 1996 DECEMBER 31, 1995
===================================================================================================================================
Current liabilities:
Short-term borrowings $ 1,600,000 500,000
Current installments of long-term debt 3,030,819 3,324,359
Accounts payable 6,855,118 7,922,093
Customer deposits 3,353,890 2,704,924
Accrued compensation 2,841,318 2,555,159
Other accrued expenses and income taxes 3,166,115 2,742,026
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Total current liabilities 20,847,260 19,748,561
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Deferred income taxes 85,815 87,498
Long-term debt, less current installments 16,558,932 16,074,896
Unfunded employee retirement plan costs 7,100,000 7,100,000
Unfunded postretirement health care costs 11,180,000 11,180,000
Other non-current liabilities 961,583 939,580
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Total liabilities 56,733,590 55,130,535
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Shareholders' equity:
Common stock par value $1 per share, authorized 4,000,000 shares;
issued 1197114 and 1178255 shares in 1996 and 1995, respectively 1,197,114 1,178,255
Capital in excess of par value 8,565,866 8,296,362
Retained earnings 19,049,394 18,675,513
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28,812,374 28,150,130
Add (deduct):
Notes receivable from employees for purchase
of common stock of the Company (280,143) (147,410)
Equity adjustments for foreign currency translation 142,547 248,907
Equity adjustments for pension liability (5,480,000) (5,480,000)
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Total shareholders' equity 23,194,778 22,771,627
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$79,928,368 77,902,162
====================================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
PAGE 3
THE OILGEAR COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
March 31.
OPERATIONS 1996 1995
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<S> <C> <C>
Net sales $21,523,314 17,760,031
Cost of sales 14,496,215 11,920,740
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Gross profit 7,027,099 5,839,291
Selling, general and
administrative expenses 5,966,667 5,158,105
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Operating income 1,060,432 681,186
Interest expense (386,954) (364,600)
Other income and expense (27,252) 111,977
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Income before income taxes 646,226 428,563
Income taxes 152,000 76,675
Net income $494,226 351,888
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Net income per share $0.42 0.31
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Dividend per share $0.10 0.10
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</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
PAGE 4
THE OILGEAR COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31. MARCH 31.
1996 1995
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<S> <C> <C>
Cash flows from operating activities:
Net earnings $494,226 351,888
Depreciation 824,655 692,949
Common stock issued in connection with:
Compensation element of sales to employees
and employee savings plan 33,716 72,757
Change in assets and liabilities:
Trade accounts receivable (1,918,566) (604,765)
Inventories (326,639) (442,016)
Prepaid expenses 205,279 (60,373)
Accounts payable (1,052,917) (1,354,249)
Customer deposits 653,541 772,926
Accrued compensation and pension expense 297,201 148,961
Unfunded employee benefit costs 0 99,000
Other, net 405,652 70,948
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Net cash provided (used) by operating activities (383,852) (251,975)
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Cash flows from investing activities:
Additions to property, plant and equipment (1,087,569) (799,395)
Reductions (additions) to other assets (106,149) 80,337
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Net cash used by investing activities (1,193,718) (719,058)
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Cash flows from financing activities:
Net borrowings (repayments) under line-of-credit agreement 1,121,498 5,536
Repayment of long-term debt (590,841) (233,024)
Proceeds from issuance of long-term debt 800,000 244,778
Other non-current liabilities 21,841 37,498
Dividends paid (120,345) (115,330)
Proceeds from sale of common stock 99,062 75,376
Payments received on notes receivable from employees 22,851 23,036
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Net cash provided (used) by financing activities 1,354,066 37,870
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Effect of exchange rate changes on cash 34,333 47,294
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Net increase (decrease) in cash and cash equivalents (189,171) (885,868)
Cash and cash equivalents:
At beginning of year 2,779,186 2,830,474
At end of period $2,590,015 1,944,606
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Supplemental disclosures of cash flow information:
Cash paid during the year for:
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Interest $411,968 206,586
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Income taxes $93,315 24,603
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</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
PAGE 5
THE OILGEAR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INVENTORIES
Inventories at March 31, 1996 and December 31, 1995 consist of the following:
<TABLE>
<CAPTION>
3-31-96 12-31-95
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<S> <C> <C>
Raw Materials $1,525,178 $1,440,263
Work in process $25,087,190 $24,921,466
Finished goods $3,386,755 $3,381,850
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$29,999,123 $29,743,579
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LIFO reserve $3,148,000 $3,148,000
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Total $26,851,123 $26,595,579
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</TABLE>
Inventories stated on the LIFO basis are valued at $17,652,671 at March 31,
1996. If the first-in, first-out (FIFO) method of inventory valuation had been
used for such inventories, the inventories would have been stated approximately
$3,148,000 higher.
EARNINGS PER SHARE
Earnings per share is based upon weighted average outstanding shares.
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, 1995 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
ITEM 2. PAGE 6
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,
1995 and management believes the Company has adequate means for meeting future
capital needs.
RESULTS OF OPERATIONS
Net sales for the first quarter were $21.5 million, up 21% from the $17.8
million reported for the first quarter of 1995. While orders fell slightly from
the record $27.5 million in the first quarter of 1995 to $26 million for the
same period in 1996, this quarter's orders still represent the second highest
quarter in the Company's history. The backlog of orders at March 31, 1996 was
$26.1 million, up 19% from the $21.9 million reported at December 31, 1995.
The net sales from the European companies was approximately $6.6 million, up
50% from the first quarter of 1995. Orders booked in the first quarter were
greater than net sales in the first quarter for both the European companies and
the domestic companies. This caused the backlog to increase by approximately
26% for the European companies and approximately 16% for the domestic
companies.
The Company's first quarter performance was ahead of our internal projections,
but the Company's management remain cautious as a result of the general
slowdown reported by the fluid power industry.
Inflation and increased selling expenses caused operating expenses for the
first quarter of 1996 to increase by 16% when compared to the first quarter of
1995. The increase in net sales resulted in a 56% increase in the operating
income for the first quarter of 1996 compared to the same period in 1995.
Exchange losses on European transactions during the first quarter of 1996
compared with exchange gains during the first quarter of 1995 was the principal
reason for the change in the Other Income and Expenses.
Increased foreign earnings before income taxes and the effect of the
Alternative Minimum Tax on the United States earnings 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.
05-13-96 THE OILGEAR COMPANY
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Registrant
/S/ DAVID A. ZUEGE
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David A. Zuege,
President and CEO
/S/ THOMAS J. PRICE
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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 March 31, 1996
Exhibit
Number
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27 The Oilgear Company Financial Data Schedule for the three
months ended March 31, 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS OF THE OILGEAR COMPANY FOR THE THREE MONTHS ENDED
MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,590,015
<SECURITIES> 0
<RECEIVABLES> 18,523,090
<ALLOWANCES> 312,765
<INVENTORY> 26,851,123
<CURRENT-ASSETS> 48,298,357
<PP&E> 52,292,006
<DEPRECIATION> 24,977,594
<TOTAL-ASSETS> 79,928,368
<CURRENT-LIABILITIES> 20,847,260
<BONDS> 19,589,751
0
0
<COMMON> 9,762,980
<OTHER-SE> 13,431,798
<TOTAL-LIABILITY-AND-EQUITY> 79,928,368
<SALES> 21,523,314
<TOTAL-REVENUES> 21,523,314
<CGS> 14,496,215
<TOTAL-COSTS> 14,496,215
<OTHER-EXPENSES> 5,966,667
<LOSS-PROVISION> 76,188
<INTEREST-EXPENSE> 386,954
<INCOME-PRETAX> 646,226
<INCOME-TAX> 152,000
<INCOME-CONTINUING> 494,226
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 494,226
<EPS-PRIMARY> 0.42
<EPS-DILUTED> 0.42
</TABLE>
