Oilgear Reports Fourth Quarter and Year-End Results
MILWAUKEE--March 8, 2002--The Oilgear Company today reported results for the fourth quarter and year ended December 31, 2001.Excluding the previously announced restructuring charges of $973,000 or $0.50 per share for closing a facility, early retirement benefits and severance, Oilgear reported a net loss of $731,000 or $0.37 per diluted share for 2001, compared to net earnings of $774,000 or $0.39 per diluted share in 2000. Including the restructuring charges, the net loss was $1,704,000 or $0.88 per share. Net sales for 2001 were $82,619,000, compared to sales of $92,318,000 in the prior year.
For the fourth quarter of 2001, excluding the restructuring charges of $255,000 or $0.13 per share for closing a facility, early retirement benefits and severance, Oilgear reported net earnings of $57,000 or $0.03 per diluted share, compared to a net loss of $363,000 or $0.18 per diluted share for the fourth quarter of 2000. Including the restructuring charges, the loss was $198,000 or $0.10 per share. Net sales for the fourth quarter of 2001 were $19,181,000, compared to sales of $23,039,000 for the comparable prior period.
"2001 was a challenging year for us and I am glad it is over," said David A. Zuege, president and chief executive officer of Oilgear. "Our disappointing results were primarily due to the effects of the depressed state of the world fluid power market and the downturn in the global economy."
Zuege said that during 2001 Oilgear took significant steps to adjust its cost structure to the realities of the marketplace. "Our success in cost cutting is reflected in our fourth quarter results, while still a loss, is an improvement over last year's fourth quarter on a 16.7% reduction in sales. While we are very disappointed in our 2001 results, we feel that we have laid the groundwork for a much more efficient and effective operation as the market and the economy recover," he said.
Zuege indicated that in light of lower sales and earnings during 2001, the company acted aggressively to reduce employment and operating costs. "The special charges, including severance costs related to workforce reductions at our plants in Milwaukee and Leeds, England, closing of an assembly facility in Novi, Michigan, and expenses for early retirement programs, taken during the third and fourth quarters of 2001, reflect several actions aimed at reducing costs. We have reduced our total worldwide workforce by nearly 15% since the beginning of 2001 through a combination of early retirements and layoffs and we have also reduced the hours of remaining employees. The largest reduction was in our U.S. workforce, which is down nearly 22%. In terms of revenues, while our results continue to be down, based on trade association reports, we believe that our shipments are ahead of the industry average and we are not losing market share," said Zuege.
Orders for 2001 totaled $81,877,000, compared to orders of $94,661,000 in 2000. The backlog was $20,445,000 at December 31, 2001, compared to a backlog of $21,187,000 at the end of 2000. "During the first two months of 2002, we began to see some increased order activity, particularly in Europe, which gives us hope that perhaps we have seen the worst of the current manufacturing recession," Zuege said.
In 2001, the weakness in the financial equity markets caused a net investment loss of approximately $2,400,000 in Oilgear's defined benefit pension plans. The reduced long-term interest rates in 2001 increased the present value of the pension benefit obligations by approximately $2,000,000. Under Generally Accepted Accounting Principles, the combination of these events eliminated Oilgear's prepaid pension asset. This reduced "other assets" by approximately $7,500,000 and increased "unfunded employee benefit costs" by approximately $3,000,000, resulting in a decrease in equity of approximately $10,500,000. In commenting on the change in equity, Zuege indicated that if the financial equity markets strengthen and long-term interest rates increase, these numbers could reverse in the future.
A leader in the fluid power industry, The Oilgear Company provides advanced technology in the design and production of unique fluid power components, systems 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 systems.
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 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; factors affecting the economy generally, including an economic slowdown and other conditions that could reduce demand for the Company's products; 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; 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.
News releases and product information from The Oilgear Company are available 24 hours a day on-line at: www.oilgear.com
The Oilgear Company
Consolidated Condensed Operating Statement
(Unaudited)
Three Months Ended December 31,
2001 2000
--------------------------------
Net sales $ 19,181,000 $ 23,039,000
Cost of sales 14,426,000 17,304,000
Special costs 155,000 --
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Gross profit $ 4,600,000 $ 5,735,000
Operating expenses 4,377,000 5,770,000
Special operating expenses 100,000 --
------------- -------------
Operating income (loss) $ 123,000 $ (35,000)
------------- -------------
Interest expense 412,000 448,000
Other income 159,000 124,000
------------- -------------
Loss before income taxes (130,000) (359,000)
Income taxes 71,000 4,000
------------- -------------
Net loss before minority interest (201,000) (363,000)
Minority interest (3,000) 0
------------- -------------
Net earnings (loss) $ (198,000) $ (363,000)
============= =============
Basic earnings (loss) per share of
common stock $ (0.10) $ (0.18)
============= =============
Diluted earnings (loss) per share of
common stock $ (0.10) $ (0.18)
============= =============
Dividends per share $ 0.00 $ 0.07
============= =============
Basic weighted average outstanding
shares 1,943,000 1,981,000
Diluted weighted average outstanding
shares 1,943,000 1,981,000
Twelve Months Ended December 31,
2001 2000
--------------------------------
Net sales $ 82,619,000 $ 92,318,000
Cost of sales 63,112,000 68,575,000
Special costs 647,000 --
------------- -------------
Gross profit $ 18,860,000 $ 23,743,000
Operating expenses 18,468,000 21,065,000
Special operating expenses 326,000 --
------------- -------------
Operating income $ 66,000 $ 2,678,000
------------- -------------
Interest expense 1,666,000 1,580,000
Other income 215,000 198,000
------------- -------------
Earnings (loss) before income taxes (1,385,000) 1,296,000
Income taxes 277,000 416,000
------------- -------------
Net earnings (loss) before minority
interest (1,662,000) 880,000
Minority interest 42,000 106,000
------------- -------------
Net earnings (loss) $ (1,704,000) $ 774,000
============= =============
Basic earnings (loss) per share of
common stock $ (0.88) $ 0.39
============= =============
Diluted earnings (loss) per share of
common stock $ (0.88) $ 0.39
============= =============
Dividends per share $ 0.14 $ 0.28
============= =============
Basic weighted average outstanding
shares 1,947,000 1,981,000
Diluted weighted average outstanding
shares 1,947,000 1,987,000
The Oilgear Company
Consolidated Condensed Balance Sheet
(Unaudited)
December 31, December 31,
2001 2000
------------------------------
ASSETS
Current Assets
Cash and cash equivalents $ 4,997,000 $ 5,102,000
Accounts receivable 17,002,000 18,593,000
Inventories 23,910,000 23,830,000
Other current assets 2,186,000 4,585,000
------------- -------------
Total current assets $ 48,095,000 $ 52,110,000
------------- -------------
Net property plant and equipment 22,701,000 24,836,000
Other assets 1,136,000 7,886,000
------------- -------------
$ 71,932,000 $ 84,832,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current debt $ 7,564,000 $ 3,273,000
Accounts payable 5,377,000 7,727,000
Other current liabilities 8,230,000 8,248,000
------------- -------------
Total current liabilities $ 21,171,000 $ 19,248,000
------------- -------------
Long-term debt 17,130,000 20,058,000
Unfunded employee benefit costs 13,996,000 11,685,000
Other non-current liabilities 1,107,000 1,550,000
------------- -------------
Total liabilities $ 53,404,000 $ 52,541,000
------------- -------------
Minority interest in consolidated
subsidiary 946,000 904,000
Shareholders' equity 17,582,000 31,387,000
------------- -------------
$ 71,932,000 $ 84,832,000
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