<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, 1998
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 June 30, 1998
- --------------------------------------------------------------------------------
Common Stock, $1.00 Par Value 1,949,708
<PAGE> 2
PART I - FINANCIAL INFORMATION PAGE 2
ITEM 1. FINANCIAL STATEMENTS.
THE OILGEAR COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS JUNE 30, 1998 December 31, 1997
===============================================================================================================================
<S> <C> <C>
Current assets:
Cash and cash equivalents $3,653,600 3,010,929
Trade accounts receivable less allowance for doubtful receivables
of $191,270 and $211,372 in 1998 and 1997, respectively 19,457,401 18,677,849
Inventories 29,697,358 26,396,825
Prepaid expenses 446,012 444,099
Other current assets 1,151,688 1,106,497
- -------------------------------------------------------------------------------------------------------------------------------
Total current assets 54,406,059 49,636,199
- -------------------------------------------------------------------------------------------------------------------------------
Property, plant and equipment, at cost
Land 1,063,686 1,072,366
Buildings 11,350,565 11,231,982
Machinery and equipment 48,871,418 46,628,669
Drawings, patterns and patents 3,388,331 3,280,865
- -------------------------------------------------------------------------------------------------------------------------------
64,674,000 62,213,882
Less accumulated depreciation and amortization (32,775,195) (30,834,701)
- -------------------------------------------------------------------------------------------------------------------------------
Net property, plant and equipment 31,898,805 31,379,181
Pension intangible 500,000 500,000
Other assets 6,344,304 7,681,978
- -------------------------------------------------------------------------------------------------------------------------------
$93,149,168 89,197,358
===============================================================================================================================
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY JUNE 30, 1998 December 31, 1997
==================================================================================================================================
<S> <C> <C>
Current liabilities:
Short-term borrowings $1,697 4,078,147
Current installments of long-term debt 2,517,119 1,488,301
Accounts payable 7,312,375 8,166,590
Customer deposits 3,859,025 2,396,477
Accrued compensation 2,314,345 2,546,207
Other accrued expenses and income taxes 3,975,204 3,535,224
- ------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 19,979,765 22,210,946
- ------------------------------------------------------------------------------------------------------------------------------
Long-term debt, less current installments 25,905,103 20,791,956
Unfunded employee retirement plan costs 1,700,000 1,700,000
Unfunded postretirement health care costs 10,970,000 10,970,000
Other noncurrent liabilities 1,263,687 1,194,928
- ------------------------------------------------------------------------------------------------------------------------------
Total liabilities 59,818,555 56,867,830
- ------------------------------------------------------------------------------------------------------------------------------
Minority Interest in consolidated subsidiaries 497,506 501,965
Shareholders' equity:
Common stock, par value $1 per share, authorized 4,000,000 shares;
issued 1,949,708 and 1,927,103 shares in 1998 and 1997, respectively 1,949,708 1,927,103
Capital in excess of par value 9,077,578 8,793,822
Retained earnings 23,813,753 22,999,174
- ------------------------------------------------------------------------------------------------------------------------------
34,841,039 33,720,099
Add(deduct):
Notes receivable from employees for purchase of common stock of the Company (226,848) (182,221)
Other comprehensive income:
Equity adjustments from foreign currency translations (1,061,084) (990,315)
Equity adjustments for pension liability (720,000) (720,000)
- ------------------------------------------------------------------------------------------------------------------------------
(1,781,084) (1,710,315)
- ------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 32,833,107 31,827,563
- ------------------------------------------------------------------------------------------------------------------------------
$93,149,168 89,197,358
==============================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
PAGE 3
THE OILGEAR COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED FOR SIX MONTHS ENDED
JUNE 30 JUNE 30
OPERATIONS 1998 1997 1998 1997
==================================================================================================================================
<S> <C> <C> <C> <C>
Net sales $25,079,020 22,686,156 47,050,058 42,995,102
Cost of sales 17,945,186 15,260,533 33,520,113 29,016,533
- ---------------------------------------------------------------------------------------------------------------------------------
Gross profit 7,133,834 7,425,623 13,529,945 13,978,568
Selling, general and
administrative expenses 5,890,070 6,061,765 11,418,898 11,677,824
- ---------------------------------------------------------------------------------------------------------------------------------
Operating income 1,243,764 1,363,859 2,111,047 2,300,744
Interest expense (534,494) (435,565) (996,250) (795,218)
Other non-operating income and (expense) 137,048 (35,469) 272,197 6,037
- ---------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 846,318 892,824 1,386,994 1,511,564
Income taxes 180,000 233,363 305,000 367,256
- ---------------------------------------------------------------------------------------------------------------------------------
Net earnings before minority interest 666,318 659,461 1,081,994 1,144,307
Net earnings (loss) from minority interest (18,757) 32,231 (4,801) 40,702
- ---------------------------------------------------------------------------------------------------------------------------------
Net earnings $685,075 627,230 1,086,795 1,103,605
=================================================================================================================================
Basic earnings per share of common stock 0.35 0.33 0.56 0.58
=================================================================================================================================
Diluted earnings per share of common stock 0.35 0.33 0.56 0.58
=================================================================================================================================
Dividend Per Share $0.07 0.07 0.07 0.13
=================================================================================================================================
Basic weighted average outstanding shares 1,944,409 1,888,718 1,937,319 1,884,926
=================================================================================================================================
Diluted weighted average outstanding shares 1,960,917 1,900,011 1,952,050 1,897,260
=================================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
THE OILGEAR COMPANY AND SUBSIDIARIES PAGE 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR SIX MONTHS ENDED
JUNE 30 JUNE 30
1998 1997
================================================================================================================================
Cash flows from operating activities:
<S> <C> <C>
Net earnings $1,086,795 1,103,605
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation 1,912,733 1,805,956
Common stock issued in connection with:
Compensation element of sales to employees
and employee savings plan 76,795 91,508
Minority interest in consolidated subsidiary (4,801) 40,702
Change in assets and liabilities:
Trade accounts receivable (826,961) (1,935,442)
Inventories (3,311,621) (1,149,798)
Prepaid expenses (5,480) 57,482
Accounts payable (844,878) 1,625,269
Customer deposits 1,489,658 361,153
Accrued compensation (226,114) 132,331
Other, net 802,914 (635,214)
- -------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 149,040 1,497,553
- -------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Capital expenditures (2,452,268) (2,758,617)
Investment in subsidiaries (250,591) (81,000)
- -------------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (2,702,859) (2,839,617)
- -------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net borrowings (repayments) under line-of-credit agreement (4,074,905) 119,848
Repayment of long-term debt (464,904) (1,261,606)
Proceeds from issuance of long-term debt 6,626,062 3,214,441
Cash restricted for capital expenditures 1,256,919 0
Dividends paid (272,218) (251,974)
Purchase of treasury stock 0 (47,975)
Proceeds from sale of treasury stock 0 48,909
Proceeds from sale of common stock 150,197 28,044
Payments received on notes receivable from employees 34,742 38,783
- -------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 3,255,893 1,888,471
- -------------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash (59,403) (545,639)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 642,671 768
Cash and cash equivalents:
At beginning of period 3,010,929 2,367,684
- -------------------------------------------------------------------------------------------------------------------------------
At end of period $3,653,600 2,368,452
===============================================================================================================================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
================================================
Interest $904,132 656,873
================================================
Income taxes $74,944 270,189
- --------------------------------------------------------------------------------================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
PAGE 5
THE OILGEAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
INVENTORIES
Inventories at June 30, 1998 and December 31, 1997 consist of the following:
<TABLE>
<CAPTION>
6-30-98 12-31-97
==========================================================================================
<S> <C> <C>
Raw Materials $ 3,041,115 $ 1,740,946
Work in process 23,542,735 21,924,987
Finished goods 5,073,508 4,960,892
==========================================================================================
31,657,358 28,626,825
==========================================================================================
LIFO reserve (1,960,000) (2,230,000)
==========================================================================================
Total $29,697,358 $26,396,825
==========================================================================================
</TABLE>
Inventories stated on the LIFO basis are valued at $18,024,612 at June 30, 1998.
If the first-in, first-out (FIFO) method of inventory valuation had been used
for such inventories, the inventories would have been stated approximately
$1,960,000 higher.
EARNINGS PER SHARE
Earnings per share is based upon weighted average outstanding shares.
RECLASSIFICATIONS
Certain 1997 engineering expenses have been reclassified from operating
expenses to cost of sales in the consolidated statements of earnings to conform
with the 1998 presentation. The amounts reclassified for the three month period
and the six month period ended June 30, 1997 were approximately $298,000 and
$565,000, respectively.
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, 1997 Annual Report, a copy of which
is available upon request. These notes should be read in conjunction with the
notes in the 1997 Annual Report.
OTHER COMPREHENSIVE INCOME
Effective January 1, 1998 the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 130, Reporting Comprehensive Income. SFAS No. 130 requires
the reporting of comprehensive income in addition to net income from operations.
Comprehensive income is a more inclusive financial reporting methodology that
includes disclosure of certain financial information that historically has not
been recognized in the calculation of net income.
Comprehensive income (loss) and the components of other comprehensive income
(loss) for the three month period and six month period ended June 30, 1998 and
1997 are as follows:
<TABLE>
<CAPTION>
Three months Six months
1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net earnings $685,075 659,461 1,086,795 1,103,605
Other comprehensive income (loss) -
foreign currency translation (162,709) (142,213) (70,769) (854,942)
- ----------------------------------------------------------------------------------------------------------------------
Comprehensive income 522,366 517,248 1,016,026 248,663
</TABLE>
<PAGE> 6
PAGE 6
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
An increase in orders backlog, from $24 million at December 31, 1997 to $31.3
million at June 30, 1998, caused inventories to increase from their balances at
December 31, 1997. Working capital increased by $7.0 million. Most of the
increase came from the refinancing of $4.0 million in short-term loans and an
additional $2.0 million into a five year term loan. This $6.0 million term loan
requires repayment of principal in 60 equal monthly installments plus interest
at 7.5% per year.
The Company's management believes the Company has adequate means for meeting
future capital needs.
RESULTS OF OPERATIONS
Second quarter orders for 1998 are up 10% from the second quarter of 1997 and
for the first half of 1998 orders are up 5% from the first half of 1997. The
backlog of orders has increased to approximately $31.3 million at the end of the
second quarter from approximately $24.0 million at the end of 1997.
Net sales increased in the second quarter and the first half of 1998 by 10.5%
and 9.4%, respectively. Gross profit and operating income decreased in the
second quarter and the first half of 1998 because of an adverse product mix and
higher production costs at the Fremont, Nebraska facility. A large part of the
growth in Net sales was accounted for by products that have smaller gross
margins.
Interest expense has increased because interest bearing debt increased.
Year 2000 Computer Software and Hardware Issues.
Like many other companies, the Company is continuing its efforts to
resolve the potential impact of the Year 2000 on its ability to operate critical
systems and to accurately process information that may be date sensitive. The
Company's Year 2000 program includes a process to assess the readiness of key
suppliers and customers. Such assessment is ongoing. At present, the cost of
changing existing systems has been immaterial.
Non-operating income (expense) consists of the following:
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED FOR SIX MONTHS ENDED
6-30-98 6-30-97 6-30-98 6-30-97
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income 40,184 34,573 $95,903 91,370
Foreign currency exchange gain (loss) 1,984 (88,441) 52,978 (124,127)
Miscellaneous, net 94,880 18,399 123,316 38,794
===========================================================================================================
137,048 (35,469) 272,197 6,037
===========================================================================================================
</TABLE>
<PAGE> 7
PAGE 7
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
<PAGE> 8
PAGE 8
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the annual meeting of shareholders on April 21, 1998 management's
nominees named below were elected as directors of the class whose term expires
in 2001, by the indicated votes cast for and withheld with respect to each
nominee. Of the 1,934,918 shares of Common Stock which were entitled to vote at
the meeting, 1,594,995 shares were represented in person or by proxy and
1,576,309 shares (99% of the shares represented) 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>
Dale C. Boyke 1,576,729 18,266 2001
Frank L. Schmit 1,576,749 18,246 2001
Michael C. Sipek 1,576,309 18,686 2001
</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 1999 or 2000, is contained in the registrant's Proxy Statement
dated March 27, 1998 with respect to the 1998 annual meeting of shareholders.
Item 5. OTHER INFORMATION
DEADLINES FOR SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-5(e) under the Securities Exchange Act of 1934, as
amended effective June 29, 1998:
(1) The deadline for submitting shareholder proposals to be considered for
inclusion in the Company's proxy statement and form of proxy for the Company's
1999 annual meeting of shareholders pursuant to Rule 14a-8 is November 27, 1998.
(2) The date after which notice of a shareholder proposal submitted outside
the processes of Rule 14a-8 is considered untimely is February 10, 1999.
<PAGE> 9
PAGE 9
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> 10
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.
8-13-98 THE OILGEAR COMPANY
- -------------------------------------------------------------------------------
REGISTRANT
/S/ DAVID A. ZUEGE
- -------------------------------------------------------------------------------
PRESIDENT AND CEO
/S/ THOMAS J. PRICE
- -------------------------------------------------------------------------------
VP-FINANCE AND CORPORATE
SECRETARY
<PAGE> 11
PAGE 11
THE OILGEAR COMPANY
COMMISSION FILE NUMBER 0-822
EXHIBIT INDEX
Quarterly Report on Form 10-Q
For the Quarter Ended June 30, 1998
Exhibit
Number
- -------
4 Loan Agreement by and between M&I Marshall & Ilsley Bank
and the Oilgear Company dated as of September 28, 1990
as amended as of April 28, 1998.
27(a) The Oilgear Company Financial Data Schedule for the six
months ended June 30, 1998.
27(b) The Oilgear Company Restated Financial Data Schedule for
the six months ended June 30, 1997.
<PAGE> 1
EXHIBIT 4
AMENDMENT NO. 5 TO LOAN AGREEMENT
This is Amendment No. 5 to an Amended and Restated Loan Agreement dated
as of June 17, 1996, subsequently amended (the "Loan Agreement"), between The
Oilgear Company ("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 expressly acknowledged, it is hereby agreed
that:
ARTICLE I - DEFINITIONS
When used herein, the following terms shall have the meanings
specified:
1. Amendment. "Amendment" shall mean this Amendment No. 5 to Loan
Agreement.
2. Loan Agreement. "Loan Agreement" shall mean the Loan Agreement between
M&I and the Company, dated as of September 28, 1990, as Amended and
Restated on June 17, 1996, and subsequently amended, together with the
Exhibits attached thereto.
3. Other Terms. The other capitalized terms used in this Amendment shall
have the definitions specified in the Loan Agreement.
ARTICLE II - AMENDMENTS
The Loan Agreement is deemed amended as of the date hereof as follows:
4. Article I - Definitions. "Commitment Termination Date." The definition
of "Commitment Termination Date" contained in Article I of the Loan
Agreement is hereby amended in its entirety to read as follows:
Commitment Termination Date. "Commitment Termination Date" shall mean
the earlier of (a) April 30, 2001 or (b) the date on which the
Commitment is terminated pursuant to Section 2.13, 2.18 or 7.1 of this
Loan Agreement.
5. Article I - Definitions. "Pound Sterling Commitment Termination Date."
The definition of "Pound Sterling Commitment Termination Date"
contained in Article I of the Loan Agreement is hereby amended in its
entirety to read as follows:
"Pound Sterling Commitment Termination Date." "Pound Sterling
Commitment Termination Date" shall mean the earlier of (a) April 30,
2001 or (b) the date on which the Commitment is terminated pursuant to
Section 2.13, 2.18 or 7.1 of this Loan Agreement.
<PAGE> 2
6. Article I- Definitions. "Second Term Loan." This section of the Loan
Agreement is deleted in its entirety.
7. Article I- Definitions. "Second Term Note." This section of the Loan
Agreement is deleted in its entirety.
8. Article I- Definitions. "Term Loan." This section of the Loan Agreement
is hereby restated in its entirety as follows:
Term Loan. "Term Loan" shall mean the term loan made by M&I to the
Company on April ___, 1998 pursuant to Section 2.2 of this Loan
Agreement.
9. Article I - Definitions. "Term Note." This section of the Loan
Agreement is hereby restated in its entirety as follows:
Term Note. "Term Note" shall mean the business note dated April 28,
1998, from the Company to M&I evidencing the Term Loan in the original
principal amount of Six Million and 00/100 Dollars ($6,000,000.00),
together with all extensions, renewals, amendments, modifications and
refinancings thereof.
10. 2.2 Term Loan. This section of the Loan Agreement is hereby restated
in its entirety as follows:
2.2 Term Loan. On April 28, 1998, M&I shall make the Term Loan to the
Company in the original principal amount of $6,000,000.00, which Term
Loan shall be evidenced by the Term Note. The Term Loan shall mature
on April 28, 2003 and shall bear interest as set forth in the Term
Note.
11. 2.3 Second Term Loan (a), (b) and (c). These sections of the Loan
Agreement are deleted in their entirety.
12. Revolving Business Note. Section 2.4 of Amendment No. 4 to Loan
Agreement dated October 7, 1997, is deleted in its entirety upon
closing and funding of the Term Loan, at which time all loans which are
outstanding evidenced by the Revolving Business Note dated October 7,
1997, in the original principal amount of $4,000,000 shall be evidenced
by the Term Note.
13. 2.8 Payments. Subsection (d). This section of the Loan Agreement is
deleted in its entirety.
14. 6.6 Consolidated Debt to Worth Ratio. This section of the Loan
Agreement is restated in its entirety as follows:
<PAGE> 3
6.6 Consolidated Debt to Worth Ratio. Maintain at all times a
Consolidated Debt to Worth Ratio of not more than 2.35:1.00.
15. 6.7 Consolidated Tangible Net Worth. This section of the Loan Agreement
is restated in its entirety as follows:
6.7 Consolidated Tangible Net Worth. Maintain at all times a
Consolidated Tangible Net Worth of at least $25,000,000.00 at
January 1, 1998 through December 30, 1998 which Consolidated Tangible
Net Worth requirement shall increase annually on December 31 of each
year, commencing December 31, 1998 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.
ARTICLE III - REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to M&I that:
16. 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 Default or Event of Default under the Loan Agreement has
occurred and is continuing as of the date of this Amendment.
17. Authorization; Enforceability. The making, execution and delivery of
this Amendment and the Term Note, and performance of and compliance
with the terms of the Loan Agreement as amended, have been duly
authorized by all necessary corporate action by the Company. This
Amendment and the Term Note are the valid and binding obligations of
the Company, enforceable against the Company in accordance with their
terms.
18. Absence of Conflicting Obligations. The making, execution and delivery
of this Amendment, and performance and compliance with the terms of the
Loan Agreement as amended, do not violate any presently existing
provision of law or the Articles 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
19. Continuance of Loan Agreement, the Notes and the Security Agreement.
Except as specifically amended by this Amendment, the Loan Agreement, the Notes
and the Security Agreement shall remain in full force and effect.
<PAGE> 4
20. Survival. all agreements, representations and warrants 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.
21. Governing Law. This Amendment and the other documents issued pursuant
to this Amendment shall be governed by, and construed and interpreted
in accordance with, the laws of the State of Wisconsin applicable to
contracts made and wholly performed within such state.
22. 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 the Amendment are inserted for
convenience of reference only and shall not constitute a part hereof.
23. 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 in any other
jurisdiction.
In witness whereof, the parties hereto have executed this Amendment
No.5 to Loan Agreement as of this 28th day of April, 1998.
M&I Marshall & Ilsley Bank (SEAL) The Oilgear Company (SEAL)
By:/s/ Kathleen T. Coleman By:/s/Thomas J. Price
--------------------------- --------------------------
Title:Vice President Title:V.P. Finance & Corporate
------------------------
Secretary
------------------------
By:/s/Mark R. Hogan
----------------------------
Title:Senior Vice President
-------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED
FINANCIAL STATEMENTS OF THE OILGEAR COMPANY FOR THE SIX MONTHS ENDED JUNE 30,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 3,653,600
<SECURITIES> 0
<RECEIVABLES> 19,648,671
<ALLOWANCES> 191,270
<INVENTORY> 29,697,358
<CURRENT-ASSETS> 54,406,059
<PP&E> 64,674,000
<DEPRECIATION> 32,775,195
<TOTAL-ASSETS> 93,149,168
<CURRENT-LIABILITIES> 19,979,765
<BONDS> 28,422,222
0
0
<COMMON> 11,027,286
<OTHER-SE> 21,805,821
<TOTAL-LIABILITY-AND-EQUITY> 93,149,168
<SALES> 47,050,058
<TOTAL-REVENUES> 47,050,058
<CGS> 33,520,113
<TOTAL-COSTS> 33,520,113
<OTHER-EXPENSES> 11,418,898
<LOSS-PROVISION> 54,667
<INTEREST-EXPENSE> 996,250
<INCOME-PRETAX> 1,386,994
<INCOME-TAX> 305,000
<INCOME-CONTINUING> 1,086,795
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,086,795
<EPS-PRIMARY> 0.56
<EPS-DILUTED> 0.56
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE RESTATED SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS OF THE OILGEAR COMPANY FOR THE SIX MONTHS ENDED
JUNE 30, 1997, AS RESTATED TO REFLECT THE ADOPTION OF SFAS NO. 128, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,368,452
<SECURITIES> 0
<RECEIVABLES> 16,556,548
<ALLOWANCES> 211,862
<INVENTORY> 27,023,139
<CURRENT-ASSETS> 46,815,911
<PP&E> 59,058,229
<DEPRECIATION> 29,239,214
<TOTAL-ASSETS> 81,159,957
<CURRENT-LIABILITIES> 16,391,975
<BONDS> 20,132,037
0
0
<COMMON> 10,493,611
<OTHER-SE> 16,979,485
<TOTAL-LIABILITY-AND-EQUITY> 81,159,957
<SALES> 42,995,102
<TOTAL-REVENUES> 42,995,102
<CGS> 28,451,153
<TOTAL-COSTS> 28,451,153
<OTHER-EXPENSES> 12,243,205
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 795,217
<INCOME-PRETAX> 1,511,563
<INCOME-TAX> 367,256
<INCOME-CONTINUING> 1,103,605
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,103,605
<EPS-PRIMARY> 0.58<F1>
<EPS-DILUTED> 0.58<F1>
<FN>
<F1>RESTATED FOR THE THREE-FOR-TWO STOCK SPLIT DECLARED ON DECEMBER 10, 1997 AND
PAID ON JANUARY 20, 1998. UNLESS OTHERWISE INDICATED, PRIOR FINANCIAL DATA
SCHEDULES HAVE NOT BEEN RESTATED TO REFLECT THE STOCK SPLIT.
</FN>
</TABLE>
