<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, 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
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(Exact name of registrant as specified in its charter)
WISCONSIN 39-0514580
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(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 September 30, 1996
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Common Stock, $1.00 Par Value 1,215,265
<PAGE> 2
PART I - FINANCIAL INFORMATION PAGE 2
Item 1. FINANCIAL STATEMENTS.
THE OILGEAR COMPANY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS SEPTEMBER 30, 1996 DECEMBER 31, 1995
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<S> <C> <C>
Current assets:
Cash and cash equivalents $747,756 2,779,186
Trade accounts receivable less allowance for doubtful receivables
of $335,624 and $313,885 in 1996 and 1995, respectively 20,238,578 16,383,534
Inventories 25,636,430 26,595,579
Prepaid expenses 259,469 414,029
Other current assets 504,085 409,726
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Total current assets 47,386,318 46,582,054
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Property, plant and equipment, at cost
Land 1,243,813 1,281,471
Buildings 10,967,635 10,773,276
Machinery and equipment 39,614,762 36,964,751
Drawings, patterns and patents 2,464,409 2,302,638
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54,290,619 51,322,136
Less accumulated depreciation and amortization (26,703,768) (24,214,130)
- -----------------------------------------------------------------------------------------------------------------------------
Net property, plant and equipment 27,586,851 27,108,006
Pension intangible 700,000 700,000
Other assets 3,609,598 3,512,102
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$79,282,767 77,902,162
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<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY SEPTEMBER 30, 1996 DECEMBER 31, 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Short-term borrowings $0 500,000
Current installments of long-term debt 3,006,835 3,324,359
Accounts payable 6,205,331 7,922,093
Customer deposits 3,070,471 2,704,924
Accrued compensation 2,694,248 2,555,159
Other accrued expenses and income taxes 3,825,514 2,742,026
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Total current liabilities 18,802,399 19,748,561
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Deferred income taxes 76,941 87,498
Long-term debt, less current installments 16,486,901 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 1,031,444 939,580
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Total liabilities 54,677,685 55,130,535
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Shareholders' equity:
Common stock par value $1 per share, authorized 4,000,000 shares;
issued 1,215,265 and 1,178,255 shares in 1996 and 1995, respectively 1,215,265 1,178,255
Capital in excess of par value 8,814,747 8,296,362
Retained earnings 20,100,681 18,675,513
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30,130,693 28,150,130
Add(deduct):
Notes receivable from employees for purchase
of common stock of the Company (240,096) (147,410)
Equity adjustments for foreign currency translation 194,485 248,907
Equity adjustments for pension liability (5,480,000) (5,480,000)
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Total shareholders' equity 24,605,082 22,771,627
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$79,282,767 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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
OPERATIONS 1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Net sales $22,160,979 21,499,167 $67,260,350 58,533,671
Cost of sales 14,499,210 14,664,490 44,615,494 39,489,317
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Gross profit 7,661,769 6,834,677 22,644,856 19,044,354
Selling, general and
administrative expenses 6,277,657 5,606,554 18,688,153 16,056,546
-------------------------------------------------------------------------------------------
Operating income 1,384,112 1,228,123 3,956,703 2,987,808
Interest expense (441,995) (443,461) (1,280,387) (1,253,682)
Other income and expense 13,435 48,746 (33,816) 333,141
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Income before income taxes 955,552 833,409 2,642,499 2,067,268
Income taxes 313,999 215,452 834,000 530,000
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Net income $ 641,553 617,957 $ 1,808,499 1,537,268
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Net income per share $ 0.53 0.53 $ 1.51 1.33
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Dividend per share $ 0.10 0.10 $ 0.30 0.30
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</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,
1996 1995
<S> <C> <C>
- -------------------------------------------------------------
Cash flows from operating activities:
Net earnings $1,808,499 1,537,268
Depreciation 2,538,200 2,162,371
Common stock issued in connection with:
Compensation element of sales to employees
and employee savings plan 124,779 85,281
Change in assets and liabilities:
Trade accounts receivable (3,936,802) (2,861,725)
Inventories 914,748 (1,969,563)
Prepaid expenses 157,996 109,100
Accounts payable (1,671,772) (1,196,405)
Customer deposits 372,718 1,937,816
Accrued compensation and pension expense 155,972 (268,387)
Unfunded employee benefit costs 0 297,000
Other, net 999,737 373,974
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Net cash provided (used) by operating activities 1,464,076 206,731
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Cash flows from investing activities:
Additions to property, plant and equipment (3,052,726) (3,000,539)
Reductions (additions) to other assets (101,566) 86,033
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Net cash used by investing activities (3,154,291) (2,914,506)
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Cash flows from financing activities:
Net borrowings (repayments) under line-of-credit agreement (500,000) 668,910
Repayment of long-term debt (1,253,406) (1,015,672)
Proceeds from issuance of long-term debt 1,400,000 1,943,053
Other non-current liabilities 116,074 60,441
Dividends paid (364,015) (349,777)
Proceeds from sale of common stock 283,095 226,628
Payments received on notes receivable from employees 35,518 36,368
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Net cash provided (used) by financing activities (282,733) 1,569,951
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Effect of exchange rate changes on cash (58,482) 64,265
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Net increase (decrease) in cash and cash equivalents (2,031,430) (1,073,559)
Cash and cash equivalents:
At beginning of year 2,779,186 2,830,474
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At end of period $747,756 1,756,915
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Supplemental disclosures of cash flow information:
Cash paid during the year for:
--------------------------------------
Interest $1,219,430 1,140,586
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Income taxes $429,196 464,036
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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 September 30, 1996 and December 31, 1995 consist of the
following:
<TABLE>
<CAPTION>
9-30-96 12-31-95
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<S> <C> <C>
Raw Materials $ 1,377,955 $ 1,440,263
Work in process $23,273,777 $24,921,466
Finished goods $ 3,620,698 $ 3,381,850
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$28,272,430 $29,743,579
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LIFO reserve $ 2,636,000 $ 3,148,000
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Total $25,636,430 $26,595,579
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</TABLE>
Inventories stated on the LIFO basis are valued at $17,102,687 at September 30,
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
$2,636,000 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
PAGE 6
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
FINANCIAL CONDITION
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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 third quarter was $22.2 million, up 3% from the $21.5 million
reported for the third quarter of 1995. Net sales for the first nine months of
1996 was $67.3 million, up 15% from the $58.5 million reported for the same
period in 1995. The Company's Net sales (shipments) for the first nine months
increased in both the domestic and European operations.
The increase in net sales caused the 1996 gross profit in the third quarter and
the first nine months to increase over the gross profits reported in 1995 by
12% and 19%, respectively.
Increased development and selling expenses along with inflation caused operating
expenses for the third quarter and the first nine months of 1996 to increase
compared to the operating expenses reported in the same periods of 1995 by 12%
and 16%, respectively.
The increase in net sales was the largest contributing factor in the increases
in operating income, by 13% and 32%, respectively, for the third quarter and
the first nine months of 1996 compared to the same periods of 1995.
Exchange losses on European transactions during the first nine months of 1996
compared with exchange gains during the same period 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 using the
Alternative Minimum Tax in 1995 and not in 1996 on United States earnings
increased income taxes.
Orders for the third quarter totaled $21,028,000, down slightly from the
$22,090,000 in orders reported for the third quarter of 1995, but well above
the $17,500,000 million level in the third quarters of 1993 and 1994. The
backlog of orders at the close of the quarter totaled $21,032,000, down
slightly from $22,145,000 at the beginning of 1996.
<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.
11-13-96 THE OILGEAR COMPANY
--------------------------
REGISTRANT
/S/ DAVID A. ZUEGE
--------------------------
DAVID A. ZUEGE,
PRESIDENT AND CEO
/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, 1996
Exhibit
Number
- --------
27 The Oilgear Company Financial Data Schedule for the
nine months ended September 30, 1996.
<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, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 747,756
<SECURITIES> 0
<RECEIVABLES> 20,574,202
<ALLOWANCES> 335,624
<INVENTORY> 25,636,430
<CURRENT-ASSETS> 47,386,318
<PP&E> 54,290,619
<DEPRECIATION> 26,703,768
<TOTAL-ASSETS> 79,282,767
<CURRENT-LIABILITIES> 18,802,399
<BONDS> 19,493,736
0
0
<COMMON> 10,030,012
<OTHER-SE> 14,575,070
<TOTAL-LIABILITY-AND-EQUITY> 79,282,767
<SALES> 67,260,350
<TOTAL-REVENUES> 67,260,350
<CGS> 44,615,494
<TOTAL-COSTS> 44,615,494
<OTHER-EXPENSES> 18,688,153
<LOSS-PROVISION> 76,188
<INTEREST-EXPENSE> 1,280,387
<INCOME-PRETAX> 2,642,499
<INCOME-TAX> 834,000
<INCOME-CONTINUING> 1,808,499
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,808,499
<EPS-PRIMARY> 1.51
<EPS-DILUTED> 1.51
</TABLE>
