OLGR Oilgear

The Oilgear Company (NASDAQ/NMS: OLGR) today reported increased sales and earnings for the third quarter ended September 30, 2006. For the third quarter of 2006, Oilgear reported net sales of $28,438,000, an 11.5% increase from sales of $25,516,000 for the same period in 2005. The company reported net earnings of $859,000 or $0.42 per diluted share for the third quarter of 2006, compared to net earnings of $470,000 or $0.23 per diluted share for the third quarter of 2005. Net sales for the first three quarters of 2006 were $81,849,000, a 6.2% increase from sales of $77,039,000 for the same period in 2005. Net earnings for the first three quarters of 2006 were $7,176,000 or $3.51 per diluted share, compared to net earnings of $1,695,000 or $0.84 per diluted share for the same period in 2005. Net earnings in 2006 included a gain of $5.1 million or $2.49 per diluted share in the second quarter on the sale of the company�s Leeds, England, property, net of expenses, an inventory write-off and taxes. Orders for the third quarter of 2006 were $29.6 million, a 39.2% increase from orders of $21.3 million for the same period in 2005. Orders for the first three quarters of 2006 were $92.3 million, an 18.6% increase from orders of $77.8 million for the same period in 2005. The backlog at September 30, 2006 was $37.3 million, a 38.7% increase from the beginning of the year. �Conditions in our industry remain strong, with double-digit growth in both orders and shipments of hydraulic equipment, however the consensus forecast is for slower growth in 2007. We are experiencing strong demand for engineered systems, components and after-market products. All of our plants are operating at full capacity,� said David A. Zuege, president and chief executive officer. �We remain very enthused about our acquisition by Lincoln Acquisition Corp., which is majority-owned by Mason Wells Buyout Fund II. Through this merger, we will shed the burdens of being a small public company and will have access to the resources we need to capitalize on the opportunities in our industry. On November 6, 2006, we mailed to shareholders a notice of special meeting and proxy to approve this merger. The Board of Directors strongly urges all shareholders to vote in favor of the merger. Every vote is important. Not voting has the same effect as voting no,� said Zuege. The special meeting of Oilgear shareholders to vote on the proposed merger will be held on December 14, 2006. Under the terms of the merger agreement, each outstanding share of Oilgear�s common stock will be converted into the right to receive $15.25 in cash. A leader in the fluid power industry, The Oilgear Company provides advanced technology in the design and production of unique fluid power components and electronic controls. The company serves customers in the primary metals, machine tool, automobile, petroleum, construction equipment, chemical, plastic, glass, lumber, rubber and food industries. Its products are sold as individual components or integrated into high performance applications. Where You Can Find Additional Information In connection with the proposed merger, The Oilgear Company has filed with the Securities and Exchange Commission (the �SEC�), and has furnished to its shareholders, a proxy statement. SHAREHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT BECAUSE IT CONTAINS IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Shareholders may obtain a free-of-charge copy of the proxy statement and other relevant documents filed with the SEC from the SEC�s website at www.sec.gov. Shareholders may also obtain a free-of-charge copy of the proxy statement and other relevant documents by directing a request by mail or telephone to The Oilgear Company, 2300 South 51st Street, Milwaukee, Wisconsin 53219-2340, attention: Corporate Secretary, telephone 414-327-1700. This announcement is neither a solicitation of proxy, an offer to purchase nor a solicitation of an offer to sell shares of The Oilgear Company. The Oilgear Company and certain of its directors, executive officers and other members of management and employees may, under the rules of the SEC, be deemed to be �participants� in the solicitation of proxies from shareholders of The Oilgear Company in favor of the proposed merger. Information regarding the persons who may be considered �participants� in the solicitation of proxies is set forth in The Oilgear Company�s proxy statement. Information regarding certain of these persons and their beneficial ownership of The Oilgear Company common stock is also set forth in the proxy statement. Certain matters discussed in this press release are �forward-looking statements� intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as the Company �believes,� �anticipates,� �expects� or words of similar import. Similarly, statements that describe the Company�s future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated. In addition to the assumptions and other factors referenced specifically in connection with such statements, the following could impact the business and financial prospects of the Company: factors affecting the economy generally, including the financial and business conditions of the Company�s customers, the demand for customers� products and services that utilize the Company�s products, and national and international events; factors affecting the Company�s financial performance or condition, including restrictions or conditions imposed by current or prospective lenders, tax legislation, and changes in accounting principles; factors affecting percentage of completion contracts, including the accuracy of estimates and assumptions regarding the timing and levels of costs to complete those contracts; factors affecting the Company�s international operations, including fluctuations in currencies, changes in laws and political or financial insecurity of foreign governments; factors affecting the Company�s ability to hire and retain competent employees, including unionization of non-union employees and strikes or work stoppages; any further decrease in stock price as a result of market conditions; changes in the law or standards applicable to the Company, including environmental laws and accounting pronouncements; availability of raw materials; unanticipated technological developments that result in competitive disadvantages and may impair existing assets; the uncertainty that the proposed merger with Lincoln will close, the possible disruptions to the Company�s business because of the pending merger with Lincoln, and if the merger does not close, the substantial costs which have been and will be incurred in connection with the merger, including possible expense reimbursements and termination fees to Lincoln; and factors set forth in the Company�s periodic reports filed with the SEC in accordance with the Securities Exchange Act. Shareholders, potential investors and other readers are urged to consider these factors and those set forth in the Company's filings with the SEC carefully in evaluating the forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. The Oilgear Company Consolidated Condensed Operating Statement (Unaudited) � Three Months Ended September 30, Nine Months Ended September 30, 2006� 2005� 2006� 2005� Net sales $ 28,438,000� $ 25,516,000� $ 81,849,000� $ 77,039,000� Cost of sales 20,513,000� 18,468,000� 60,632,000� 56,047,000� Gross profit 7,925,000� 7,048,000� 21,217,000� 20,992,000� Selling, general and administrativeexpenses 6,176,000� 5,671,000� 17,543,000� 16,881,000� Expenses related to Leeds, UK move -� -� 979,000� -� Gain on sale of Leeds, UK facility -� -� 7,216,000� -� Operating income $ 1,748,000� $ 1,377,000� $ 9,912,000� $ 4,111,000� Interest expense 580,000� 646,000� 1,846,000� 1,859,000� Other non-operating income (loss), net 45,000� (51,000) 119,000� 81,000� Earnings before income taxes 1,213,000� 679,000� 8,185,000� 2,333,000� Income tax expense 258,000� 170,000� 877,000� 513,000� Net earnings before minority interest 955,000� 509,000� 7,308,000� 1,820,000� Minority interest 96,000� 39,000� 132,000� 125,000� Net earnings $ 859,000� $ 470,000� $ 7,176,000� $ 1,695,000� � Basic earnings per share of common stock $ 0.42� $ 0.23� $ 3.55� $ 0.85� Diluted earnings per share of common stock $ 0.42� $ 0.23� $ 3.51� $ 0.84� � Basic weighted average outstanding shares 2,039,000� 2,001,000� 2,023,000� 1,994,000� Diluted weighted average outstanding shares 2,062,000� 2,038,000� 2,044,000� 2,028,000� The Oilgear Company Consolidated Condensed Balance Sheet (Unaudited) � � September 30, 2006 December 31, 2005 ASSETS � Current Assets Cash and cash equivalents $ 5,417,000� $ 4,370,000� Accounts receivable 19,478,000� 18,849,000� Inventories 26,125,000� 25,365,000� Other current assets 6,718,000� 3,785,000� Total current assets $57,738,000� $ 52,369,000� Net property plant and equipment 16,043,000� 15,881,000� Other assets 2,368,000� 2,893,000� $ 76,149,000� $ 71,143,000� � LIABILITIES AND SHAREHOLDERS� EQUITY � Current Liabilities Current debt $ 11,774,000� $ 16,612,000� Accounts payable 11,457,000� 9,215,000� Other current liabilities 9,507,000� 9,820,000� Total current liabilities $ 32,738,000� $ 35,647,000� Long-term debt 7,193,000� 7,724,000� Unfunded employee benefit costs 19,042,000� 18,764,000� Other non-current liabilities 817,000� 850,000� Total liabilities $ 59,790,000� $ 62,985,000� Minority interest in consolidated subsidiary 1,171,000� 1,091,000� Shareholders� equity 15,188,000� 7,067,000� $ 76,149,000� $ 71,143,000� The Oilgear Company (NASDAQ/NMS: OLGR) today reported increased sales and earnings for the third quarter ended September 30, 2006. For the third quarter of 2006, Oilgear reported net sales of $28,438,000, an 11.5% increase from sales of $25,516,000 for the same period in 2005. The company reported net earnings of $859,000 or $0.42 per diluted share for the third quarter of 2006, compared to net earnings of $470,000 or $0.23 per diluted share for the third quarter of 2005. Net sales for the first three quarters of 2006 were $81,849,000, a 6.2% increase from sales of $77,039,000 for the same period in 2005. Net earnings for the first three quarters of 2006 were $7,176,000 or $3.51 per diluted share, compared to net earnings of $1,695,000 or $0.84 per diluted share for the same period in 2005. Net earnings in 2006 included a gain of $5.1 million or $2.49 per diluted share in the second quarter on the sale of the company's Leeds, England, property, net of expenses, an inventory write-off and taxes. Orders for the third quarter of 2006 were $29.6 million, a 39.2% increase from orders of $21.3 million for the same period in 2005. Orders for the first three quarters of 2006 were $92.3 million, an 18.6% increase from orders of $77.8 million for the same period in 2005. The backlog at September 30, 2006 was $37.3 million, a 38.7% increase from the beginning of the year. "Conditions in our industry remain strong, with double-digit growth in both orders and shipments of hydraulic equipment, however the consensus forecast is for slower growth in 2007. We are experiencing strong demand for engineered systems, components and after-market products. All of our plants are operating at full capacity," said David A. Zuege, president and chief executive officer. "We remain very enthused about our acquisition by Lincoln Acquisition Corp., which is majority-owned by Mason Wells Buyout Fund II. Through this merger, we will shed the burdens of being a small public company and will have access to the resources we need to capitalize on the opportunities in our industry. On November 6, 2006, we mailed to shareholders a notice of special meeting and proxy to approve this merger. The Board of Directors strongly urges all shareholders to vote in favor of the merger. Every vote is important. Not voting has the same effect as voting no," said Zuege. The special meeting of Oilgear shareholders to vote on the proposed merger will be held on December 14, 2006. Under the terms of the merger agreement, each outstanding share of Oilgear's common stock will be converted into the right to receive $15.25 in cash. A leader in the fluid power industry, The Oilgear Company provides advanced technology in the design and production of unique fluid power components and electronic controls. The company serves customers in the primary metals, machine tool, automobile, petroleum, construction equipment, chemical, plastic, glass, lumber, rubber and food industries. Its products are sold as individual components or integrated into high performance applications. Where You Can Find Additional Information In connection with the proposed merger, The Oilgear Company has filed with the Securities and Exchange Commission (the "SEC"), and has furnished to its shareholders, a proxy statement. SHAREHOLDERS ARE ADVISED TO READ THE PROXY STATEMENT BECAUSE IT CONTAINS IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Shareholders may obtain a free-of-charge copy of the proxy statement and other relevant documents filed with the SEC from the SEC's website at www.sec.gov. Shareholders may also obtain a free-of-charge copy of the proxy statement and other relevant documents by directing a request by mail or telephone to The Oilgear Company, 2300 South 51st Street, Milwaukee, Wisconsin 53219-2340, attention: Corporate Secretary, telephone 414-327-1700. This announcement is neither a solicitation of proxy, an offer to purchase nor a solicitation of an offer to sell shares of The Oilgear Company. The Oilgear Company and certain of its directors, executive officers and other members of management and employees may, under the rules of the SEC, be deemed to be "participants" in the solicitation of proxies from shareholders of The Oilgear Company in favor of the proposed merger. Information regarding the persons who may be considered "participants" in the solicitation of proxies is set forth in The Oilgear Company's proxy statement. Information regarding certain of these persons and their beneficial ownership of The Oilgear Company common stock is also set forth in the proxy statement. Certain matters discussed in this press release are "forward-looking statements" intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified as such because the context of the statement will include words such as the Company "believes," "anticipates," "expects" or words of similar import. Similarly, statements that describe the Company's future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated. In addition to the assumptions and other factors referenced specifically in connection with such statements, the following could impact the business and financial prospects of the Company: factors affecting the economy generally, including the financial and business conditions of the Company's customers, the demand for customers' products and services that utilize the Company's products, and national and international events; factors affecting the Company's financial performance or condition, including restrictions or conditions imposed by current or prospective lenders, tax legislation, and changes in accounting principles; factors affecting percentage of completion contracts, including the accuracy of estimates and assumptions regarding the timing and levels of costs to complete those contracts; factors affecting the Company's international operations, including fluctuations in currencies, changes in laws and political or financial insecurity of foreign governments; factors affecting the Company's ability to hire and retain competent employees, including unionization of non-union employees and strikes or work stoppages; any further decrease in stock price as a result of market conditions; changes in the law or standards applicable to the Company, including environmental laws and accounting pronouncements; availability of raw materials; unanticipated technological developments that result in competitive disadvantages and may impair existing assets; the uncertainty that the proposed merger with Lincoln will close, the possible disruptions to the Company's business because of the pending merger with Lincoln, and if the merger does not close, the substantial costs which have been and will be incurred in connection with the merger, including possible expense reimbursements and termination fees to Lincoln; and factors set forth in the Company's periodic reports filed with the SEC in accordance with the Securities Exchange Act. Shareholders, potential investors and other readers are urged to consider these factors and those set forth in the Company's filings with the SEC carefully in evaluating the forward-looking statements. The forward-looking statements made herein are only made as of the date of this press release and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances. -0- *T The Oilgear Company Consolidated Condensed Operating Statement (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 ------------ ------------ ------------ ------------ Net sales $28,438,000 $25,516,000 $81,849,000 $77,039,000 Cost of sales 20,513,000 18,468,000 60,632,000 56,047,000 ------------ ------------ ------------ ------------ Gross profit 7,925,000 7,048,000 21,217,000 20,992,000 Selling, general and administrative expenses 6,176,000 5,671,000 17,543,000 16,881,000 Expenses related to Leeds, UK move - - 979,000 - Gain on sale of Leeds, UK facility - - 7,216,000 - ------------ ------------ ------------ ------------ Operating income $1,748,000 $1,377,000 $9,912,000 $4,111,000 ------------ ------------ ------------ ------------ Interest expense 580,000 646,000 1,846,000 1,859,000 Other non-operating income (loss), net 45,000 (51,000) 119,000 81,000 ------------ ------------ ------------ ------------ Earnings before income taxes 1,213,000 679,000 8,185,000 2,333,000 Income tax expense 258,000 170,000 877,000 513,000 ------------ ------------ ------------ ------------ Net earnings before minority interest 955,000 509,000 7,308,000 1,820,000 Minority interest 96,000 39,000 132,000 125,000 ------------ ------------ ------------ ------------ Net earnings $859,000 $470,000 $7,176,000 $1,695,000 ============ ============ ============ ============ Basic earnings per share of common stock $0.42 $0.23 $3.55 $0.85 ============ ============ ============ ============ Diluted earnings per share of common stock $0.42 $0.23 $3.51 $0.84 ============ ============ ============ ============ Basic weighted average outstanding shares 2,039,000 2,001,000 2,023,000 1,994,000 Diluted weighted average outstanding shares 2,062,000 2,038,000 2,044,000 2,028,000 *T -0- *T The Oilgear Company Consolidated Condensed Balance Sheet (Unaudited) September 30, December 31, 2006 2005 ------------- ------------- ASSETS Current Assets Cash and cash equivalents $5,417,000 $4,370,000 Accounts receivable 19,478,000 18,849,000 Inventories 26,125,000 25,365,000 Other current assets 6,718,000 3,785,000 ------------- ------------- Total current assets $57,738,000 $52,369,000 ------------- ------------- Net property plant and equipment 16,043,000 15,881,000 Other assets 2,368,000 2,893,000 ------------- ------------- $76,149,000 $71,143,000 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Current debt $11,774,000 $16,612,000 Accounts payable 11,457,000 9,215,000 Other current liabilities 9,507,000 9,820,000 ------------- ------------- Total current liabilities $32,738,000 $35,647,000 ------------- ------------- Long-term debt 7,193,000 7,724,000 Unfunded employee benefit costs 19,042,000 18,764,000 Other non-current liabilities 817,000 850,000 ------------- ------------- Total liabilities $59,790,000 $62,985,000 ------------- ------------- Minority interest in consolidated subsidiary 1,171,000 1,091,000 Shareholders' equity 15,188,000 7,067,000 ------------- ------------- $76,149,000 $71,143,000 ============= ============= *T