ITEM 1. BUSINESS.
The primary business of The Oilgear Company ("Oilgear" or the "Registrant"; together with its subsidiaries, the "Company") and its subsidiaries is the manufacture and distribution of systems and value engineered components for a broad range of industrial machinery and industrial processes. Oilgear was incorporated under the laws of Wisconsin in 1921.
Principal Products, Markets and Methods of Distribution
The Company's products primarily involve the flow, pressure, condition, control and measurement of liquids, which the Company refers to as Fluid Power. The Company provides advanced technology in the design and production of Fluid Power components, systems and electronic controls. Its product line includes hydraulic pumps, high pressure intensifier pumps, valves, controls, cylinders, motors, and fluid meters. The Company manufactures both radial and axial piston type hydraulic pumps in sizes delivering from approximately 4 gallons per minute to approximately 230 gallons per minute at pressures ranging up to 15,000 pounds per square inch. The intensifier pumps are reciprocating pumps operating at pressures up to 120,000 pounds per square inch. The valves manufactured are pressure control, directional control, servo valves and prefill valves for pressures up to 15,000 pounds per square inch. The Company's pumps and valves are controlled through the actions of manual, hydraulic, pneumatic, electric, and electrohydraulic controls or control systems. The cylinders manufactured are heavy duty special purpose cylinders operating at up to 3,500 pounds per square inch. The Company's bent axis and axial piston motors are produced in sizes ranging from .85 cubic inch per revolution to 44 cubic inch per revolution.
The Company offers an engineering and manufacturing team capable of providing advanced technology in the design and production of unique fluid power components, systems and electronic controls. The Company's global involvement focuses its expertise on markets in which customers demand top quality, prompt delivery, high performance and responsive aftermarket support. Its piston pumps, motors, valves, controls, manifolds, electronic systems and components, cylinders, reservoirs, skids, meters and other products are utilized in many industries such as the primary metals, machine tool, automobile, petroleum, construction equipment, chemical, plastic, glass, lumber, rubber and food industries. The Company strives to serve those markets requiring high technology and expertise where reliability, top performance and longer service life are needed. The products are sold as individual components or integrated into high performance systems. A portion of the Company's business comes from responsive, high quality aftermarket sales and flexible rebuilding services which include exchange, factory rebuild and field repair service, along with customer education.
The Company's products are sold in the United States and Canada directly through 8 district sales offices and by a network of approximately 60 distributors. Sales offices are located in Milwaukee, Wisconsin; Novi, Michigan; Cleveland, Ohio; Dallas and Longview, Texas; Laguna Hills, California; Lynnwood, Washington; Atlanta, Georgia; Kansas City, Missouri; St. George, Utah; and Doylestown, Pennsylvania. The Company's international sales are generated directly by employees located in Milwaukee, Wisconsin; Bedford and Leeds, England; Paris and Lyons, France; Hernani, Spain; Hattersheim-Eddersheim, Germany; Montirone, Italy; Taren Point, Australia; Belgaum, India; Song Nam City, South Korea; and Mexico City, Mexico; and by a worldwide network of approximately 20 distributors. An Oilgear licensee, Oilgear Japan, is responsible for sales of all equipment sold in Japan. The Company is also part of a joint venture company in India, Oilgear Towler Polyhydron Pvt. Ltd., which distributes products manufactured in the United States, as well as repairs and manufactures designated Oilgear products for the Indian market.
Competition
The Company is a supplier of components for the capital goods industry. Vigorous competition exists in this industry. The Company's products compete worldwide against the products of a number of domestic and foreign firms presently engaged in the industry, most of which are of greater overall size and resources than the Company. The principal methods of competition include price, product performance, product availability, service, and warranty.
Customers
No material part of the Company's business is dependent upon a single customer or a very few customers.
Backlog
The Company's backlog of orders believed to be firm as of December 31, 1995 was approximately $21,900,000, an increase of approximately $7,000,000 from the backlog of orders as of December 31, 1994, which was approximately $14,900,000. The Company expects that substantially all such orders will be filled in 1996. The Company's backlog is significant to its operations but is not seasonal in any significant respect. Backlog is generally dependent upon economic cycles affecting capital spending in the industries that utilize the Company's products.
Raw Materials
During the year, iron and steel castings, bearings, steel and other raw materials were generally available from a number of sources, and the Company is generally not dependent on any one supplier.
Patents, Licenses, Franchises
The Company has a number of United States and foreign patents. It does not consider its business to be materially dependent upon any patent, patent application or patent license agreement.
Research and Development
The Company's research and development activities are conducted by members of the engineering staff at its Milwaukee and Leeds, England plants, who spend a substantial amount of their time on research and development. During 1995, the Company expended $2,127,000, and during 1994 and 1993, $1,752,000 and $1,653,000, respectively, on the research and development activities of its engineering staff. The emphasis of the Company's product development efforts continues to be the expansion of its line of axial piston pumps and the customizing of products to suit specific customer applications.
Environmental Matters
To date, compliance with federal, state and local provisions which have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, has not had any material effect on the capital expenditures, earnings and competitive position of the Company. The Company does not presently anticipate that compliance with such provisions will have any material effect on its capital expenditures, earnings and competitive position in the future.
Employees
At December 31, 1995, the Company had 932 employees.
Seasonal Aspects of Business
The Company's business is not seasonal to any significant extent.
Industry Segments and Principal Products
The Company is engaged in one industry, the manufacture and distribution of fluid power systems and components for industrial machinery and industrial processes. The Company also provides repair parts and service for most of the products it manufactures. See "Principal Products, Markets and Methods of Distribution" above.
Foreign and Domestic Operations and Export Sales
Incorporated by reference to Note 2 of "Notes To Consolidated Financial Statements" on page 15 of the Registrant's Annual Report to Shareholders for the fiscal year ended December 31, 1995 ("1995 Annual Report").
ITEM 2.

ITEM 2. PROPERTIES.
Oilgear owns a one-story general office and factory building located on 20 acres of land at 2300 South 51st Street in Milwaukee, Wisconsin. This building is constructed of concrete, steel and brick and contains approximately 276,000 square feet of floor space.
Oilgear owns a manufacturing plant in Longview, Texas, constructed of concrete block and steel, which contains approximately 44,000 square feet.
A 99,000 square foot manufacturing facility is located in Fremont, Nebraska. To manage the increased demand for the Company's new products, the Company expanded its Fremont, Nebraska facility in 1995.
The Company's Oilgear Towler GmbH subsidiary owns an approximately 25,000 square foot concrete block and steel manufacturing facility in Hattersheim- Eddersheim, Germany, subject to a mortgage.
The Company's Oilgear Towler Ltd. subsidiary owns a one-story manufacturing plant and two office buildings constructed of concrete, steel and brick totaling approximately 62,000 square feet on six acres of land in Leeds, England, and an additional prefabricated facility being used by the electrical engineering department.
The Company's Oilgear Towler Ltd. subsidiary also owns a small service and sales facility in Bedford, England.
The Company's Oilgear Towler S.A. Spanish subsidiary owns a two-story manufacturing plant and office constructed of concrete and brick totaling approximately 35,000 square feet on approximately one acre of land in Hernani, Spain.
The Company's Oilgear Towler S.A. French subsidiary owns, subject to a mortgage, a 9,000 square foot office building constructed of prefabricated steel materials located on approximately one-half acre of land in Paris, France.
The Company's Oilgear Towler S.r.l. Italian subsidiary owns a two-story prefabricated concrete building on .6 acre of land in Montirone, Italy. The facility is used to repair and assemble customer equipment, as well as house sales and service functions.
These properties are maintained in good condition and are adequate for present operations.
Borrowings under the Company's domestic and foreign loan agreements are collateralized by substantially all domestic property, plant and equipment and by substantially all assets of the applicable foreign subsidiaries, respectively. See Notes 4 and 5 of "Notes To Consolidated Financial Statements" on page 16 in the 1995 Annual Report.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS.
The Company is a defendant in several product liability actions which it believes are adequately covered by insurance, and certain other litigation incidental to its business.
In October 1992, the United States Environmental Protection Agency ("EPA") contacted the Company for information regarding the possible disposal of waste at the Muskego Sanitary Landfill in Muskego, Wisconsin. The EPA made its request pursuant to the provisions of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") and the Resource Conservation and Recovery Act. The Company duly responded, noting that "ordinary trash" may have been hauled to the Muskego site. In November 1992, the EPA notified the Company that it had been identified as a responsible party for purposes of remedial action at the Muskego Sanitary Landfill. On December 9, 1992, the EPA issued a unilateral administrative order under CERCLA directing 46 respondents to perform remedial action for the first operable unit (source control) and to reimburse the EPA for oversight costs. The Company was not named in the order. In a subsequent unilateral administrative order dated June 6, 1995 (the "1995 Order"), the EPA directed the Company and 55 other respondents to design and implement remedial measures for the second operable unit (groundwater remediation) at the Muskego site. The Company is participating with a group of respondents to address allocation issues. While the cost of remediation under the 1995 Order is not yet known, and while the allocation process is not yet complete, the Company's share is presently expected to be less than $40,000. It is not certain what further action involving the Company, if any, may be brought regarding this matter, nor is it possible at this time to predict the ultimate outcome of any litigation or negotiation that might involve the Company.
Oilgear is a member of a De Minimis Group of small volume waste contributors to the Conservation Chemical Company of Illinois, Inc. facility located in Gary, Indiana (the "CCCI Site"). The CCCI Site is the subject of a clean-up effort commenced by the EPA under CERCLA in 1985. The amount of waste contributed by Oilgear to the CCCI Site has been identified by the EPA as .0046% of the total contributed by the more than 200 waste generators identified by the EPA. The Company has accepted a de minimis settlement offered by the EPA pursuant to which the Company has agreed to pay $1,388.25. The Company expects the settlement to be finalized by mid-1996.
In August 1995, the EPA contacted the Company for information regarding the possible disposal of waste by the Company at the former PCB Treatment, Inc. facilities in Kansas City, Missouri and Kansas, respectively. The EPA made its request pursuant to the provisions of CERCLA. The Company duly responded. The Company has had no further communications from the EPA since its response. It is not certain what further involvement the Company may have in this matter, if any, and, accordingly, it is not possible at this time to predict the exposure, if any, to the Company as a result of this matter.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth quarter of 1995.
EXECUTIVE OFFICERS OF THE REGISTRANT.
The names, ages, offices and positions held, and periods of service in their present offices, of all executive officers of the Registrant are listed below. Except in the case of mid-term vacancies, officers are elected for one-year terms at the Board of Directors meeting following the annual meeting of shareholders each year.
- ------------------ (1) Mr. Zuege was Secretary - Treasurer from 1972 to 1978, Vice President - Finance and Secretary from 1979 to 1993, Senior Vice President and Secretary for a portion of 1993, and Executive Vice President and Chief Operating Officer during the remainder of 1993 through 1995. He has been a member of the Board of Directors since 1982.
(2) Mr. Bahner has been employed with the Company in the engineering department since 1973. He has served as Director of Engineering from 1987 to 1991 and Managing Director of Oilgear's subsidiary, Oilgear Towler Ltd., from 1989 to 1991. He has been a member of the Board of Directors since 1992.
(3) Mr. Price has been employed in various positions with the Company since 1966. He served as Controller of the Company from 1977 to 1986, as Treasurer/Controller from 1987 to 1993, and as Treasurer/Controller and Secretary from 1993 to 1994.
(4) Mr. Bursch has been employed in various positions with the Company's European operations since 1966. He served as Geschaftsfuhrer of Oilgear GmbH (now Oilgear Towler GmbH) before his appointment as Chairman of the Board of Management - Europe in 1991, which office he held until January 1, 1994.
FORWARD-LOOKING INFORMATION
Items 1, 3 and 7 of this Annual Report on Form 10-K and other documents or oral presentations contain or may contain forward-looking statements made by or on behalf of the Registrant which involve risks and uncertainties that could cause the Company's actual results to differ materially from those discussed in such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, the following: world economies, foreign currency conversion rates and world political stability.
PART II
ITEM 5.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Incorporated by reference to "Quarterly Financial Information" and "Equity" on pages 9 and 10, respectively, of the 1995 Annual Report.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA.
Incorporated by reference to "5 Year Summary" on page 11 of the 1995 Annual Report.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Incorporated by reference to "Management's Discussion" on pages 8 through 11 of the 1995 Annual Report.
The second, third and fourth paragraphs under "Legal Proceedings" in Item 3 hereof are also incorporated herein in response to this item.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements and supplementary financial information required by this item are set forth on pages 12 through 20 and page 11, respectively, of the 1995 Annual Report and are incorporated by reference.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Incorporated by reference to "Election of Directors" on pages 2 and 3 of the Registrant's Proxy Statement, dated March 22, 1996, for its Annual Meeting of Shareholders on April 16, 1996 ("1996 Annual Meeting Proxy Statement"), and "Executive Officers of the Registrant" in Part I hereof.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION.
Incorporated by reference to "Executive Compensation" and "Compensation Committee Interlocks and Insider Participation" on pages 6 through 10 and page 13, respectively, of the 1996 Annual Meeting Proxy Statement.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Incorporated by reference to "Security Ownership of Certain Beneficial Owners and Management" on pages 4 and 5 of the 1996 Annual Meeting Proxy Statement.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not applicable. PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Documents filed:
1. and 2. Financial Statements and Financial Statement Schedules. See following "Index to Consolidated Financial Statements and Schedule," which is incorporated herein by reference.
3. Exhibits. See Exhibit Index included as last part of this report, which index is incorporated herein by reference. Each management contract or compensatory plan or arrangement required to be filed as an exhibit to this report is identified in the Exhibit Index by two asterisks preceding its exhibit number.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the last quarter of 1995.
THE OILGEAR COMPANY AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedule - -----------------------------------------------------------------------------
The consolidated financial statements of The Oilgear Company and subsidiaries together with the report thereon of KPMG Peat Marwick LLP dated February 28, 1996, appearing on pages 12 through 20 of the 1995 Annual Report, are incorporated by reference into this Annual Report on Form 10-K. The following additional financial data should be read in conjunction with the consolidated financial statements in the 1995 Annual Report.
ADDITIONAL FINANCIAL DATA
Independent Auditors' Report on Financial Statement Schedule
Submitted:
II - Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable or because the required information is given in the consolidated financial statements and the notes thereto.
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE
The Board of Directors The Oilgear Company:
Under date of February 28, 1996, we reported on the consolidated balance sheets of The Oilgear Company and subsidiaries as of December 31, 1995 and 1994, and the related consolidated statements of operations and shareholders' equity, and cash flows for each of the years in the three-year period ended December 31, 1995, which are incorporated by reference in the Company's annual report on Form 10-K for the year ended December 31, 1995. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related financial statement schedule as listed in the accompanying index. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on this financial statement schedule based on our audits.
In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.
KPMG Peat Marwick LLP
Milwaukee, Wisconsin February 28, 1996
THE OILGEAR COMPANY AND SUBSIDIARIES SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(1) INCLUDES ADJUSTMENTS DUE TO FOREIGN CURRENCY TRANSLATION.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
THE OILGEAR COMPANY (Registrant)
By /s/ THOMAS J. PRICE March 29, 1996 ------------------------------------- Thomas J. Price, Vice President of Finance and Corporate Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Carl L. Gosewehr, Otto F. Klieve and David A. Zuege, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.
______________________
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.*
*Each of these signatures is affixed as of March 29, 1996.
S-1
THE OILGEAR COMPANY (THE "REGISTRANT") (COMMISSION FILE NO. 0-822)
* * * * *
EXHIBIT INDEX
1995 ANNUAL REPORT ON FORM 10-K
____________________
*Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the Registrant agrees to furnish to the Securities and Exchange Commission, upon request, a copy of any unfiled instrument with respect to long-term debt.
**Management contracts and executive compensation plans or arrangements required to be filed as exhibits pursuant to Item 14(c) of Form 10-K.
EI-1
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**Management contracts and executive compensation plans or arrangements required to be filed as exhibits pursuant to Item 14(c) of Form 10-K.
EI-2
EI-3