OILGEAR CO - 10-Q Quarterly Report

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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 September 30, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to
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Commission file number 000-00822
------------------------------------------------------

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
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(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 September 30, 2002
- --------------------------------------------------------------------------------
Common Stock, $1.00 Par Value 1,955,398

PAGE 2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

THE OILGEAR COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

See accompanying notes to consolidated financial statements.

PAGE 3

THE OILGEAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)

See accompanying notes to consolidated financial statements.

PAGE 4

THE OILGEAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

THE OILGEAR COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)

See accompanying notes to consolidated financial statements.

PAGE 5

THE OILGEAR COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Basis of Presentation

These interim financial statements reflect all adjustments which are, in the
opinion of management, necessary for a fair statement of the results for the
interim period in accordance with accounting principles generally accepted in
the United States of America. All such adjustments are of a normal recurring
nature. Management assumes the reader will have access to the December 31, 2001
Annual Report on Form 10-K, a copy of which is available upon request. These
notes should be read in conjunction with the Consolidated Financial Statements
and the related notes in the 2001 Annual Report.

Business Description and Operations

The Company manages its operations in three reportable segments based upon
geographic area. Domestic includes the United States and Canada, European
includes Europe and International includes Asia, Latin America, Australia and
Africa.

The individual subsidiaries of the Company operate predominantly in the fluid
power industry. The Company provides advanced technology in the design and
production of unique fluid power components. Products include piston pumps,
motors, valves, controls, manifolds, electrohydraulic components, cylinders,
reservoirs, skids and meters. Industries that use these products are primary
metals, machine tool, automobile, aerospace, petroleum, construction equipment,
chemical, plastic, glass, lumber, rubber and food.

Segment information is as follows:

PAGE 6

Inventories

Inventories at September 30, 2002 and December 31, 2001 consist of the
following:

Inventories stated on the last-in, first-out (LIFO) basis are valued at
$14,008,000 and $17,637,000 at September 30, 2002 and December 31, 2001,
respectively.

Loss per share

The following table sets forth the computation of basic and diluted loss per
common share:

Options to purchase 88,453 shares of common stock with a weighted average
exercise price of $9.29 per share were outstanding at September 30, 2002.
Options to purchase 97,624 shares of common stock with a weighted average
exercise price of $9.71 per share were outstanding at September 30, 2001.

Options to purchase 88,453 and 49,624 shares of common stock were not included
in the computations of diluted earnings per share for the quarterly and nine
month periods ended September 30, 2002 and 2001, respectively, because the
options' exercise prices were greater than the average market price of common
stock during the periods then ended. Due to the net losses of the Company, the
options would be anti-dilutive and would not be included in the diluted loss per
share calculation set forth above.

PAGE 7

Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FINANCIAL CONDITION

The Company has reached a summary agreement for a new loan agreement with its
principal bank, M&I Marshall and Ilsley Bank ("M&I"). The Company and M&I intend
the summary agreement to be binding; however, it does not contain all of the
terms to be associated with the lending relationship. The Company and M&I intend
to enter into a more fulsome and customary agreement in the fourth quarter of
2002 that will supersede the summary agreement but include its terms. Under the
agreement, the long-term revolving loan agreement for $15,500,000 is replaced
with a $10,000,000 term loan with a 2 year maturity and 5 year amortization
schedule. Principal and interest payments are made monthly and an additional
quarterly principal payment is required in the amount of fifty percent of the
quarterly excess cash flow. Excess cash flow is defined as consolidated net
income plus accrued interest expense, depreciation and amortization and less
unfinanced capital expenditures, principal payments on long term debt and
capital lease payments. Loan amortization is scheduled as follows: Year 1 at
$500,000, Year 2 at $1,500,000, Year 3 at $2,500,000, and Years 4 and 5 at
$2,750,000 per year. Also, under the agreement, the existing $6,000,000 line of
credit is replaced by a maximum $12,000,000 line of credit, with the actual
amount available calculated from domestic trade accounts receivable and domestic
inventory monthly balances. The new line of credit matures on April 30, 2003
with annual renewals. The unused amount of the line of credit ($2,500,000 at
September 30, 2002) has a fee of .00375% per year.

Interest rates are determined using LIBOR plus a basis point margin. The basis
point margin is determined by the funded debt to EBITDA ratio and ranges from
125 basis points if the ratio is less than 1.5 to 400 basis points if the ratio
is 4.0 or greater. These loans are secured by substantially all the Company's
U.S. assets.

The new loan agreement contains various covenants that adjust over the term of
the agreement. At September 30, 2002, the covenants were as follows: minimum
consolidated tangible net worth (defined as consolidated tangible assets minus
consolidated liabilities minus adjustments from foreign currency translation,
minus net value of certain intangibles and adjustments from minimum pension
liability) is equal or greater than $27,000,000, increasing annually by 60% of
net income and 75% of other increases in equity; capital expenditures measured
annually are limited to net income plus depreciation; funded debt (generally
interest bearing debt) to EBITDA ratio of not greater than 9.75:1.00;
consolidated debt (total liabilities on the balance sheet) to net worth
(adjusted consolidated tangible net worth) ratio is not greater than 2.0:1.0;
and consolidated debt service coverage ratio using a rolling four quarter basis
(defined as (a) EBITDA over (b) principal payments, interest expense, dividends,
repurchase of capital stock of the Company) is 0.60:1.00. As of September 30,
2002, the Company was in compliance with all of these revised covenants.

The lower net sales volume and an effort to improve asset utilization have
contributed to the lower "trade accounts receivables" balance (reduced by
approximately $1,996,000 with the effect of currency changes and by
approximately $2,627,000 without the effect of currency changes) and "inventory"
balance (reduced by approximately $1,027,000 with the effect of currency changes
and by approximately $1,696,000 without the effect of currency changes) at
September 30, 2002 compared to December 31, 2001. A net decrease in 2002 of
"billings in excess of costs and estimated earnings on uncompleted contracts"
and a net increase in "costs and estimated earnings in excess of billings on
uncompleted contracts" in 2002 (which together approximate $3,912,000 with the
effect of currency changes and approximate $3,795,000 without the effect of
currency changes) primarily came from contracts for projects in the European
segment.

During the first nine months of 2002 cash was provided by operations in the
amount of approximately $666,000 compared to a use of cash of approximately
$3,088,000 for the same period in 2001. The decrease in trade receivables and
inventory in the first nine months of 2002 compared to an increase for the same
period in 2001 was the primary reason for the change.

The total interest bearing debt decreased by approximately $900,000 during 2002
but the new bank agreement increases the part of total debt that is
considered a current liability. The sum of "short term borrowings" and "current
installments of long-term debt" increased by approximately $4,200,000 and
"long-term debt" decreased by $5,100,000. This was the predominant influence on
the decrease in working capital of approximately $5,000,000.

"Depreciation and amortization" decreased slightly to approximately $2,739,000
from approximately $2,882,000 after the effect of the currency changes for the
nine-month periods ended September 30, 2002 and 2001, respectively. "Additions
to property, plant and equipment" decreased to approximately $982,000 from
approximately $1,280,000 after the effect of the currency changes for the
nine-month periods ended September 30, 2002 and 2001, respectively.

The Company's consulting actuaries are working to complete their 2002 valuation
of the Company's defined benefit pension plan obligation. While the valuation is
incomplete and a reasonable estimate is not yet available, it is anticipated
that due to decreased discount rates and the impact of losses on plan investment
assets, the unfunded employee retirement plan cost will materially increase and
a material minimum pension liability adjustment to equity will be required. The
adjustment is not a cash item and will be excluded from the Company's debt
covenant measurements described above.

The previously announced closing of the Longview facility is progressing and
should be completed near the end of the year. The real estate has been put up
for sale with a real estate broker and most of the personal property will be
sold when the plant is closed. All of the product lines produced in the Longview
facility either have been or are in the process of being transferred to the
Company's Milwaukee facility.

The Company believes its cash on hand, cash flows from operations and available
borrowings under the new short-term and long-term bank credit facilities under
the summary agreement discussed above will continue to be
sufficient to meet its operating needs.

RESULTS OF OPERATIONS PAGE 8

Orders increased by 46.6% in the third quarter of 2002 and increased by 8.7% in
the first nine months when compared to the same periods in 2001. Backlog of
orders at September 30, 2002 increased by 50.9% to approximately $30,860,000
from December 31, 2001. The significant increase in orders in the third quarter
was primarily the result of receiving a contract for approximately $11,000,000
for the hydraulic, electric and electronic controls on a forging press being
built in France to produce sophisticated forgings for the European aerospace
industry and other markets. Orders from the Domestic segment decreased by 16.4%
and the International segment decreased by 27.0% in the first nine months of
2002 when compared to the same period in 2001. The European segment orders for
the first nine months of 2002 increased by 77.9% from the same period of 2001.
Orders for large custom engineered hydraulic and electronic products has been
the hardest hit by the global economic slowdown in capital equipment spending in
all segments. Although, the activity for quotations on projects to supply custom
engineered hydraulic equipment has increased in the third quarter of 2002, the
orders for these types of products continues to be depressed.

The extended softness in the fluid power market in the United States caused net
sales in the Domestic segment to decrease by 20.6% in the third quarter and
13.4% for the first nine months of 2002 when compared to the same periods in
2001. An increase in orders from the defense industry was the primary reason the
European segment net sales increased in the third quarter of 2002 by
approximately 13.7% and increased by approximately 7.9% for the first nine
months of 2002 when compared to the same periods in 2001. A softness in the
forging and capital goods markets in the International segment decreased sales
in the third quarter of 2002 by 11.7% and in the first nine months of 2002 by
24.3% when compared to the same periods in 2001. Consolidated net sales
decreased in the third quarter of 2002 by 10.4% and in the first nine months of
2002 by 9.5% when compared to the same periods in 2001.

Our reduced employment level and other cost improvements resulted in a decrease
in operating expenses in the third quarter and the first nine months of 2002
compared to the same period in 2001.

The decrease in net sales and lower margins due to lower utilization of our
production facilities were the primary reasons for the change in operating
results in the Domestic segment. Operating results in the Domestic segment
changed from an operating income of approximately $110,000 in the third quarter
of 2001 to an operating loss of approximately $359,000 in the third quarter of
2002 and operating income of approximately $1,405,000 in the first nine months
of 2001 to an operating loss of approximately $175,000 in the first nine months
of 2002. The increase in net sales, contracts with higher margins and lower
expenses due to a reduced employment level at the Leeds, England factory were
the primary reasons for the change in operating results in the European segment.
Operating results in the European segment changed from an operating loss of
approximately $511,000 in the third quarter of 2001 to operating income of
approximately $125,000 in the third quarter of 2002 and operating income of
approximately $63,000 in the first nine months of 2001 compared to an operating
income of approximately $297,000 in the first nine months of 2002.

The lack of construction contracts, a decrease in net sales, lower margins and
cost overruns on jobs in new markets were the primary reasons for the change in
operating results in the International segment. Operating results in the
International segment changed from operating income of approximately $241,000 in
the third quarter of 2001 to an operating loss of approximately $409,000 in the
third quarter of 2002 and operating income of approximately $994,000 in the
first nine months of 2001 to an operating loss of approximately $58,000 in the
first nine months of 2002.

Interest expense has decreased approximately $76,000 in the third quarter of
2002 and decreased by approximately $268,000 in the first nine months of 2002
compared to the same periods in 2001 primarily from the decline in interest
rates.

The primary reason for the decrease in net loss per share in the third quarter
of 2002 (net loss of $.66) compared to a net loss of $.94 in the third quarter
of 2001 was approximately $717,000 of special charges in the third quarter
of 2001. The primary reason for the net loss of $1.25 in the first nine months
of 2002 compared to a net loss per share of $.77 in the first nine months of
2001 was the decrease in net sales resulting in a lower utilization of
production facilities, increased price competition brought on by the long
downturn in the industry and a less profitable mix of business.

Non-operating income consists of the following:

PAGE 9

NEW ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No.
141, Business Combinations ("SFAS 141") and SFAS No. 142, Goodwill and Other
Intangible Assets ("SFAS 142"). SFAS 141 requires that the purchase method of
accounting be used for all business combinations. SFAS 141 specifies criteria
that intangible assets acquired in a business combination must meet to be
recognized and reported separately from goodwill. SFAS 142 will require that
goodwill and intangible assets with indefinite useful lives no longer be
amortized, but instead tested for impairment at least annually in accordance
with the provisions of SFAS 142. SFAS 142 also requires that intangible assets
with estimable useful lives be amortized over their respective estimated useful
lives to their estimated residual values, and reviewed for impairment in
accordance with SFAS 121 and, after its adoption, SFAS 144.

The Company adopted the provisions of SFAS 141 as of July 1, 2001 and SFAS 142
effective January 1, 2002.

As of December 31, 2001, the Company had unamortized goodwill in the amount of
$145,113, all of which was subject to the transition provisions of SFAS 142. The
impact of the adoption of the Statements did not have a material effect on the
financial statements and no transitional impairment losses were recognized in
2002.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets ("SFAS 144"). This Statement supersedes SFAS 121
yet retains its fundamental provisions for recognition and measurement of the
impairment of long-lived assets to be held and used and for measurement of
long-lived assets to be disposed of by sale. In addition, SFAS 144 requires
companies to separately report discontinued operations and extends that
reporting to a component of an entity that either has been disposed of (by sale,
abandonment, or in a distribution to owners) or is classified as held for sale.
The Company adopted SFAS 144 on January 1, 2002. The adoption of SFAS 144 did
not have a material effect on the financial statements or operations of the
Company.

In July 2002, the FASB issued Statement No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. The Statement requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. Statement 146
replaces EITF Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." The Company is required to apply this
Statement prospectively to exit or disposal activities initiated after December
31, 2002.

SUBSEQUENT EVENTS

The Company has elected to freeze benefits in The Oilgear Salaried Retirement
Plan and the Oilgear Towler Pension Plan, each a defined benefit plan, effective
December 31, 2002.

PAGE 10

CAUTIONARY FACTORS

The discussions in this section and elsewhere contain various forward-looking
statements concerning the Company's prospects that are based on the current
expectations and beliefs of management. Forward-looking statements may also be
made by the Company from time to time in other reports and documents as well as
oral presentations. When used in written documents or oral statements, the words
"anticipate", "believe", "estimate", "expect", "objective", and similar
expressions are intended to identify forward-looking statements. The statements
contained herein and such future statements involve or may involve certain
assumptions, risks and uncertainties, many of which are beyond the Company's
control, that could cause the Company's actual results and performance to differ
materially from what is expected. In addition to the assumptions and other
factors referenced specifically in connection with such statements, the
following factors could impact the business and financial prospects of the
Company:

* Continued weakness in the fluid power industry, particularly a reduction in
orders of custom products with high value-added features.

* Limitations on the Company's ability to further decrease its costs and to
spread its fixed costs over diminishing orders for the Company's products.

* Factors affecting the Company's international operations, including relevant
foreign currency exchange rates, which can affect the cost to produce the
Company's products or the ability to sell the Company's products in foreign
markets, and the value in United States dollars of sales made in foreign
currencies. Other factors include foreign trade, monetary and fiscal policies;
laws, regulations and other activities of foreign governments, agencies and
similar organizations; and risks associated with having major facilities located
in countries which have historically been less stable than the United States in
several respects, including fiscal and political stability.

* Factors affecting the Company's ability to hire and retain competent
employees, including unionization of the Company's non-union employees and
changes in relationships with the Company's unionized employees.

* The risk of strikes or other labor disputes at those locations that are
unionized which could affect the Company's operations.

* Factors affecting the economy generally, including the financial and business
conditions of the Company's customers and the demand for customers' products and
services that utilize Company products and national events including threats of
terrorism.

* Factors affecting the fair market value of the Company's common stock or other
factors that would negatively impact the funding of the Company's employee
benefit plans and cause the Company's stock to cease to be listed on the Nasdaq
National Market.

* Factors affecting the Company's financial performance or condition, including
tax legislation, unanticipated restrictions on the Company's ability to transfer
funds from its subsidiaries and changes in applicable accounting principles or
environmental laws and regulations or the ability of the Company to comply with
or obtain waivers for noncompliance with its bank covenants.

* The cost and other effects of claims involving the Company's products and
other legal and administrative proceedings, including the expense of
investigating, litigating and settling any claims.

* Factors affecting the Company's ability to produce products on a competitive
basis, including the availability of raw materials at reasonable prices and
financing with acceptable terms.

* Unanticipated technological developments that result in competitive
disadvantages and create the potential for impairment of existing assets.

PAGE 11

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company is exposed to market risk stemming from changes in foreign exchange
rates and interest rates. Changes in these factors could cause fluctuations in
earnings and cash flows. The Company has significant foreign operations, for
which the functional currencies are denominated primarily in the Euro and
British Pound Sterling. As the values of the currencies of the foreign countries
in which the Company has operations increase or decrease relative to the U. S.
dollar, the sales, expenses, profits, assets and liabilities of the Company's
foreign operations, as reported in the Company's Consolidated Financial
Statements, increase or decrease accordingly.

INTEREST RATE RISK

The Company's debt structure and interest rate risk are managed through the use
of fixed and floating rate debt. The Company's primary exposure is to United
States interest rates on the approximately $21,000,000 of floating debt at
September 30, 2002. A 100 basis point movement in interest rates on floating
rate debt outstanding at September 30, 2002 would result in a change in earnings
before income taxes of approximately $210,000 per year.

FOREIGN EXCHANGE RATE RISK

The Company has foreign currency exposures related to intercompany buying and
selling in currencies other than the local currencies in which it operates. At
September 30, 2002, the payables in US dollars from foreign subsidiaries was
approximately $300,000. A 10% change in foreign exchange rates would result in a
change in earnings before income taxes of approximately $30,000 per year.

The Company occasionally uses forward contracts to reduce fluctuations in
foreign currency cash flows related to third party material purchases,
intercompany product shipments and intercompany loans. At September 30, 2002, we
had one forward exchange contract for 500,000 Euros against the British Pound
Sterling at a rate of 1.5945 for delivery in October 2002 compared to the 1.5866
rate at maturity on October 31, 2002 which is a 1,600 British Pound Sterling
gain in the fourth quarter of 2002.

ITEM 4. CONTROLS AND PROCEDURES

As of September 30, 2002, an evaluation was performed under the supervision and
with the participation of

PAGE 12

the Company's management, including the CEO and CFO, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures. Based
on that evaluation, the Company's management, including the CEO and CFO,
concluded that the Company's disclosure controls and procedures were effective.
There have been no significant changes in the Company's internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of their evaluation.

PAGE 13

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:

On August 27, 2002, The Oilgear Company filed a report on Form
8-K dated August 27, 2002, to file as an exhibit the press
release reporting the closing of its Longview, Texas facility.

On October 4, 2002, The Oilgear Company filed a report on Form
8-K dated September 24, 2002 to report receipt of a 90-day notice
from The Nasdaq Stock Market that the Company has not maintained
a minimum market value of publicly held shares of $5,000,000 as
required for continued listing on the National Market.

PAGE 14

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.

November 14, 2002

THE OILGEAR COMPANY
Registrant

/s/ DAVID A. ZUEGE
---------------------------------------------------
David A. Zuege
President and CEO
(Principal Executive Officer)

/s/ THOMAS J. PRICE
---------------------------------------------------
Thomas J. Price
VP-CFO and Secretary
(Principal Financial and Chief Accounting Officer)

CEO/CFO CERTIFICATIONS PURSUANT TO
SECTION 302 OF SARBANES-OXLEY ACT OF 2002
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, David A Zuege, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Oilgear Company;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 14, 2002

/s/ DAVID A. ZUEGE
---------------------------------------------------
David A. Zuege
President and Chief Executive Officer

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Thomas J. Price, certify that:

1. I have reviewed this quarterly report on Form 10-Q of The Oilgear Company;

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 14, 2002

/s/ THOMAS J. PRICE
---------------------------------------------------
Thomas J. Price
Vice President-Chief Financial Officer

THE OILGEAR COMPANY
COMMISSION FILE NUMBER 000-00822
EXHIBIT INDEX

Quarterly Report on Form 10-Q
For the Quarter Ended September 30, 2002