<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, 1997
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 March 31, 1997
Common Stock, $1.00 Par Value 1,258,721
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
THE OILGEAR COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS MARCH 31, 1997 DECEMBER 31, 1996
============================================================================================================
<S> <C> <C>
Current assets:
Cash and cash equivalents $3,026,478 2,367,684
Trade accounts receivable less allowance for doubtful receivables
of $213,660 and $218,154 in 1997 and 1996, respectively 15,820,593 14,894,195
Inventories 26,275,928 26,229,868
Prepaid expenses 291,089 528,854
Other current assets 643,497 537,795
- ------------------------------------------------------------------------------------------------------------
Total current assets 46,057,585 44,558,396
- -------------------------------------------------------------===============================================
Property, plant and equipment, at cost
Land 1,215,694 1,283,679
Buildings 10,028,677 10,213,472
Machinery and equipment 43,353,909 42,512,215
Drawings, patterns and patents 2,647,149 2,585,379
- ------------------------------------------------------------------------------------------------------------
57,245,429 56,594,745
Less accumulated depreciation and amortization (28,289,289) (27,740,588)
- ------------------------------------------------------------------------------------------------------------
Net property, plant and equipment 28,956,140 28,854,157
Pension intangible 600,000 600,000
Other assets 3,915,993 3,826,274
- ------------------------------------------------------------------------------------------------------------
$79,529,718 77,838,827
- -------------------------------------------------------------===============================================
LIABILITIES AND SHAREHOLDERS' EQUITY MARCH 31, 1997 DECEMBER 31, 1996
============================================================================================================
Current liabilities:
Short-term borrowings $113,797 113,414
Current installments of long-term debt 2,148,095 2,182,838
Accounts payable 5,623,189 5,728,452
Customer deposits 3,093,797 1,992,367
Accrued compensation 2,595,895 2,724,274
Other accrued expenses and income taxes 2,556,421 3,154,282
- ------------------------------------------------------------------------------------------------------------
Total current liabilities 16,131,194 15,895,627
- -------------------------------------------------------------===============================================
Deferred income taxes 68,054 74,300
Long-term debt, less current installments 17,798,685 16,154,961
Unfunded employee retirement plan costs 5,600,000 5,600,000
Unfunded postretirement health care costs 11,109,000 11,109,000
Other non-current liabilities 1,369,015 1,339,800
- ------------------------------------------------------------------------------------------------------------
Total liabilities 52,075,948 50,173,688
- ------------------------------------------------------------------------------------------------------------
Minority Interest 424,730 348,002
- ------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Common stock par value $1 per share, authorized 4,000,000 shares;
issued 1,258,721 and 1,248,859 shares in 1997 and 1996, respective 1,258,721 1,248,859
Capital in excess of par value 9,184,141 9,090,627
Retained earnings 21,178,868 20,828,365
- ------------------------------------------------------------------------------------------------------------
31,621,730 31,167,851
Add(deduct):
Notes receivable from employees for purchase
of common stock of the Company (250,028) (220,781)
Equity adjustments for foreign currency translation (262,662) 450,067
Equity adjustments for pension liability (4,080,000) (4,080,000)
- ------------------------------------------------------------------------------------------------------------
Total shareholders' equity 27,029,040 27,317,137
- ------------------------------------------------------------------------------------------------------------
$79,529,718 77,838,827
============================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
THE OILGEAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED
MARCH 31
Operations 1997 1996
===================================================================================================================
<S> <C> <C>
Net Sales $20,308,945 21,523,314
Cost of Products Sold 13,481,721 14,496,215
- -------------------------------------------------------------------------------------------------------------------
Gross Profit 6,827,225 7,027,099
Selling, General and
Administrative Expenses 5,890,340 5,966,667
-----------------------------------------------
Operating Income 936,885 1,060,433
Interest Expense (359,653) (386,954)
Other Income and Expense 41,507 (27,252)
- -------------------------------------------------------------------------------------------------------------------
Earnings before income taxes 618,739 646,226
Income taxes 133,894 152,000
- ------------------------------------------------------------------------------------------------------------------
Net earnings before minority interest 484,845 494,227
Net earnings from minority interest 8,470
- -------------------------------------------------------------------------------------------------------------------
Net earnings $476,375 494,227
- -------------------------------------------------==================================================================
Net Income Per Share 0.38 0.42
- -------------------------------------------------==================================================================
Dividend Per Share $0.10 0.10
- ------------------------------------------------===================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
THE OILGEAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED
MARCH 31 MARCH 31
1997 1996
<S> <C> <C>
====================================================================================================================
Cash flows from operating activities:
Net earnings $476,375 494,226
Depreciation 843,859 824,655
Common stock issued in connection with:
Compensation element of sales to employees
and employee savings plan 43,878 33,716
Minority interest in consolidated subsidiary 8,470 0
Change in assets and liabilities:
Trade accounts receivable (1,322,069) (1,918,566)
Inventories (399,927) (326,639)
Prepaid expenses 211,943 205,279
Accounts payable 42,967 (1,052,917)
Customer deposits 1,145,697 653,541
Accrued compensation and pension expense (48,914) 297,201
Unfunded employee benefit costs 0 0
Other, net (719,592) 321,343
- --------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities 282,686 (468,160)
- --------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Additions to property, plant and equipment (965,619) (1,087,569)
Reductions (additions) to other assets (81,000) 0
- --------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (1,046,620) (1,087,569)
- --------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net borrowings (repayments) under line-of-credit agreement 220 1,121,498
Repayment of long-term debt (616,308) (590,841)
Proceeds from issuance of long-term debt 2,331,680 800,000
Dividends paid (125,872) (120,345)
Proceeds from sale of common stock 9,963 99,060
Payments received on notes receivable from employees 20,288 22,851
- --------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities 1,619,971 1,332,224
- --------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (197,244) 34,335
- --------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 658,794 (189,170)
Cash and cash equivalents:
At beginning of year 2,367,684 2,779,186
- --------------------------------------------------------------------------------------------------------------------
At end of period $3,026,478 2,590,015
- ---------------------------------------------------------===========================================================
Supplemental disclosures of cash flow information:
Cash paid during the year for:
====================================
Interest $254,154 411,968
====================================
Income taxes $59,756 93,315
- -------------------------------------------------------=============================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
THE OILGEAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INVENTORIES
Inventories at March 31, 1997 and December 31, 1996 consist of the following:
<TABLE>
<S> <C> <C>
3-31-97 12-31-96
------- --------
Raw Materials $ 1,441,974 $ 1,497,513
Work in process $22,697,428 $23,212,707
Finished goods $ 4,740,526 $ 4,431,648
- ----------------------------------------------------------------------------------------
$28,879,928 $29,141,868
- ----------------------------------------------------------------------------------------
LIFO reserve $ 2,604,000 $ 2,912,000
- ----------------------------------------------------------------------------------------
Total $26,275,928 $26,229,868
- ----------------------------------------------------------------------------------------
</TABLE>
Inventories stated on the LIFO basis are valued at $17,453,006 at March 31,
1997. If the first-in, first-out (FIFO) method of inventory valuation had been
used for such inventories, the inventories would have been stated approximately
$2,604,000 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, 1996 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.
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,
1996 and management believes the Company has adequate means for meeting future
capital needs.
RESULTS OF OPERATIONS
Record first quarter orders totaling $28.5 million were up approximately 10%
from the $26.0 million in orders reported for the first quarter of 1996 and
caused customer deposits to increase by approximately $1.1 million as compared
to December 31, 1996. The backlog of orders at the close of the quarter totaled
$26.2 million, up approximately 46% from the $18.0 million at the beginning of
1997.
A slow down in orders during the fourth quarter of 1996 caused net sales for
the first quarter of 1997 to decrease by approximately 6% from the net sales
reported for the first quarter of 1996. The Company's net sales for the first
quarter of 1997 decreased in both the domestic and European operations.
Operating expenses in the first quarter of 1997 decreased slightly from the
first quarter of 1996.
Lower interest rates on the Company's long term borrowings resulted in lower
interest expense during the first quarter of 1997 as compared to the first
quarter of 1996.
A decrease in the amount of exchange losses and an increase in interest income
were the principal reasons for the change in other income.
The slight decrease of 3.6% in net earnings was the result of the decrease in
net sales in the first quarter of 1997.
<PAGE> 7
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
<PAGE> 8
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
(c) On February 28, 1997, the Company sold an aggregate of 4,450
unregistered shares of its Common Stock ("Shares") pursuant to the Company's
Key Employee Stock Purchase Plan, as amended and restated September 6, 1990
(the "Plan"). The Shares were sold to certain officers and other key employees
in an exempt offering pursuant to Section 4(2) of the Securities Act of 1933,
as amended. The purchase price paid for each Share was $14.50, the market bid
price on the date of purchase. In payment thereof, each purchaser delivered
two promissory notes to the Company bearing annual interest at a rate of 5%.
One of the notes, for one-half of the aggregate purchase price, is payable in
three equal annual installments due on the 2nd, 3rd and 4th February 28th after
the date of purchase. The other note, for the other half of the aggregate
purchase price, is payable in three equal annual installments, each of which
will be forgiven if none of the Shares has been resold and the purchaser is
still in the employ of the Company on the due dates, which are the 4th, 5th and
6th February 28th after the date of purchase.
<PAGE> 9
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> 10
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.
5-13-97 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> 11
THE OILGEAR COMPANY
(COMMISSION FILE NUMBER 0-822)
EXHIBIT INDEX
Quarterly Report on Form 10-Q
For the Quarter Ended March 31, 1997
Exhibit
Number
27 The Oilgear Company Financial Data Schedule for the three
months ended March 31, 1997.
<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 MARCH 31,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 3,026,478
<SECURITIES> 0
<RECEIVABLES> 16,034,253
<ALLOWANCES> 213,660
<INVENTORY> 26,275,928
<CURRENT-ASSETS> 46,057,585
<PP&E> 57,245,429
<DEPRECIATION> 28,289,289
<TOTAL-ASSETS> 79,529,718
<CURRENT-LIABILITIES> 16,131,194
<BONDS> 19,946,780
0
0
<COMMON> 10,442,863
<OTHER-SE> 16,586,178
<TOTAL-LIABILITY-AND-EQUITY> 79,529,718
<SALES> 20,308,945
<TOTAL-REVENUES> 20,308,945
<CGS> 13,481,721
<TOTAL-COSTS> 13,481,721
<OTHER-EXPENSES> 5,890,340
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 359,652
<INCOME-PRETAX> 618,739
<INCOME-TAX> 133,894
<INCOME-CONTINUING> 476,375
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 476,375
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
</TABLE>
