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<SEC-DOCUMENT>0000950131-01-500702.txt : 20010417
<SEC-HEADER>0000950131-01-500702.hdr.sgml : 20010417
ACCESSION NUMBER:		0000950131-01-500702
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20010228
FILED AS OF DATE:		20010416

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ACTUANT CORP
		CENTRAL INDEX KEY:			0000006955
		STANDARD INDUSTRIAL CLASSIFICATION:	MISC INDUSTRIAL & COMMERCIAL MACHINERY & EQUIPMENT [3590]
		IRS NUMBER:				390168610
		STATE OF INCORPORATION:			WI
		FISCAL YEAR END:			0831

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		
		SEC FILE NUMBER:	001-11288
		FILM NUMBER:		1602983

	BUSINESS ADDRESS:	
		STREET 1:		6101 N. BAKER RD.
		CITY:			MILWAUKEE
		STATE:			WI
		ZIP:			53209
		BUSINESS PHONE:		4143524160

	MAIL ADDRESS:	
		STREET 1:		6101 N BAKER RD.
		CITY:			MILWAUKEE
		STATE:			WI
		ZIP:			53209

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	APPLIED POWER INC
		DATE OF NAME CHANGE:	19920703

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	APPLIED POWER INDUSTRIES INC
		DATE OF NAME CHANGE:	19730123
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>d10q.txt
<DESCRIPTION>FORM 10-Q
<TEXT>

<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q

     (Mark One)
     [X]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

               For the quarterly period ended February 28, 2001

                                      OR

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


                          Commission File No. 1-11288


                              ACTUANT CORPORATION
            (Exact name of registrant as specified in its charter)


                  Wisconsin                               39-0168610
         (State of incorporation)                 (I.R.S. Employer Id. No.)


                             6100 NORTH BAKER ROAD
                          MILWAUKEE, WISCONSIN 53209
          Mailing address: P. O. Box 325, Milwaukee, Wisconsin 53201
                   (Address of principal executive offices)

                                (414) 352-4160
             (Registrant's telephone number, including area code)

                              APPLIED POWER INC.
  (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  ____
                           -------


The number of shares outstanding of the registrant's Class A Common Stock as of
March 30, 2001 was 7,942,521.

                                       1
<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                          Page No.
                                                                                          -------
<S>                                                                                       <C>
Part I - Financial Information
- ------------------------------
   Item 1 - Financial Statements (Unaudited)
   Actuant Corporation-
        Condensed Consolidated Statements of Earnings..........................................3
        Condensed Consolidated Balance Sheets..................................................4
        Condensed Consolidated Statements of Cash Flows........................................5
        Notes to Condensed Consolidated Financial Statements...................................6
   Item 2 - Management's Discussion and Analysis of Financial Condition
                 and Results of Operations....................................................15
   Item 3 - Quantitative and Qualitative Disclosures About Market Risk........................20


Part II - Other Information
- ---------------------------
   Item 1 - Legal Proceedings.................................................................21
   Item 2 - Changes in Securities..............................................................*
   Item 3 - Defaults Upon Senior Securities....................................................*
   Item 4 - Submission of Matters to a Vote of Security Holders...............................21
   Item 5 - Other Information..................................................................*
   Item 6 - Exhibits and Reports on Form 8-K..................................................22
</TABLE>
________________
*No response to this item is included herein for the reason that it is
inapplicable or the answer to such item is negative.

Risk Factors That May Affect Future Results
- -------------------------------------------
This quarterly report on Form 10-Q contains certain statements, which are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 that involve risks and uncertainties. The terms
"anticipate," "believe," "estimate," "expect," "objective," "plan," "project"
and similar expressions are intended to identify forward-looking statements.
Such forward-looking statements are subject to inherent risks and uncertainties
that may cause actual results or events to differ materially from those
contemplated by such forward-looking statements. In addition to the assumptions
and other factors referred to specifically in connection with such statements,
factors that may cause actual results or events to differ materially from those
contemplated by such forward-looking statements include, without limitation,
general economic conditions and market conditions in the recreational vehicle,
trucking, automotive, industrial production, and construction industries in
North America, Europe and, to a lesser extent, Asia, market acceptance of
existing and new products, successful integration of acquisitions, competitive
pricing, foreign currency risk, interest rate risk, the Company's ability to
access capital markets, the high debt leverage of the Company which results in
less financial flexibility in terms of debt covenants and debt availability, and
other factors that may be referred to or noted in the Company's reports filed
with the Securities and Exchange Commission from time to time.

                                       2
<PAGE>

PART I  - FINANCIAL INFORMATION

Item 1 - Financial Statements (unaudited)
- -----------------------------------------

                              ACTUANT CORPORATION

                 CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

               (Dollars in thousands, except per share amounts)

                                  (Unaudited)

<TABLE>
<CAPTION>
                                                               Three Months Ended                Six Months Ended
                                                        ------------------------------   ------------------------------
                                                         February 28,     February 29,    February 28,     February 29,
                                                            2001              2000           2001              2000
                                                        ------------     -------------   -------------   --------------
<S>                                                     <C>              <C>             <C>             <C>
Net Sales............................................   $    113,335     $   184,087     $   230,855     $    357,128
Cost of Products Sold................................         72,359         118,396         148,049          229,319
                                                        ------------     -----------     -----------     ------------
     Gross Profit....................................         40,976          65,691          82,806          127,809

Engineering, Selling and Administrative Expenses.....         21,698          34,930          43,268           68,568
Amortization of Intangible Assets....................          1,369           1,977           2,868            3,956
Contract Termination Recovery........................              -               -               -           (1,446)
Corporate Reorganization Expenses....................              -           3,487               -            3,487
                                                        ------------     -----------     -----------     ------------
     Operating Earnings..............................         17,909          25,297          36,670           53,244

Other Expense(Income):
      Net Financing Costs............................         12,529           7,692          25,500           18,142
      Other, net.....................................            165            (242)         (1,297)            (652)
                                                        ------------     -----------     -----------     ------------
Earnings from Continuing Operations before Income Tax          5,215          17,847          12,467           35,754
 Expense
Income Tax Expense...................................          2,116           5,953           5,084           12,869
                                                        ------------     -----------     -----------     ------------
Earnings from Continuing Operations..................          3,099          11,894           7,383           22,885

Discontinued Operations, net of  Income Taxes........              -           8,648               -           21,339
                                                        ------------     -----------     -----------     ------------

Net Earnings.........................................   $      3,099     $    20,542     $     7,383     $     44,224
                                                        ============     ===========     ===========     ============

Basic Earnings Per Share:
  Continuing Operations..............................   $       0.39     $      1.52     $      0.93     $       2.93

  Discontinued Operations............................              -            1.11               -             2.73
                                                        ------------     -----------     -----------     ------------
  Total..............................................   $       0.39     $      2.63     $      0.93     $       5.67
                                                        ============     ===========     ===========     ============

Diluted Earnings Per Share:
  Continuing Operations..............................   $       0.37     $      1.47     $      0.89     $       2.84
  Discontinued Operations............................              -            1.07               -             2.64
                                                        ------------     -----------     -----------     ------------
  Total..............................................   $       0.37     $      2.54     $      0.89     $       5.48
                                                        ============     ===========     ===========     ============

Weighted Average Common Shares Outstanding:
  Basic..............................................          7,934           7,810           7,931            7,805
  Diluted............................................          8,289           8,075           8,322            8,069
</TABLE>

     See accompanying Notes to Condensed Consolidated Financial Statements

                                       3
<PAGE>

                              ACTUANT CORPORATION
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                 (Dollars in thousands, except share amounts)

<TABLE>
<CAPTION>
                                                                                    February 28,          August 31,
                                                                                        2001                 2000
                                                                                   ----------------     ---------------
                                                                                     (Unaudited)
                                              ASSETS
                                              ------
<S>                                                                               <C>                   <C>
Current Assets:
         Cash and cash equivalents..............................................   $          254       $       9,896
         Accounts receivable, net...............................................           87,276              83,553
         Inventories, net.......................................................           62,458              67,599
         Receivable from APW Ltd................................................                -              32,894
         Prepaid expenses.......................................................            6,239               5,230
         Deferred income taxes..................................................            4,514               4,542
                                                                                   --------------       -------------
                 Total Current Assets...........................................          160,741             203,714

Property, Plant and Equipment, net..............................................           47,045              49,168
Goodwill, net...................................................................          114,705             116,348
Other Intangibles, net..........................................................           19,919              21,040
Other Long-term Assets..........................................................           28,323              26,711
                                                                                   --------------       -------------

Total Assets....................................................................   $      370,733       $     416,981
                                                                                   ==============       =============


                               LIABILITIES AND SHAREHOLDERS' EQUITY
                               ------------------------------------

Current Liabilities:
         Short-term borrowings..................................................   $          802        $      1,259
         Trade accounts payable.................................................           38,877              43,455
         Accrued compensation and benefits......................................           13,339              16,365
         Income taxes payable...................................................           15,018              39,852
         Other current liabilities..............................................           26,697              25,312
                                                                                   --------------       -------------
                 Total Current Liabilities......................................           94,733             126,243

Long-term Debt..................................................................          412,110             431,215
Deferred Income Taxes...........................................................            4,338               4,486
Other Long-term Liabilities.....................................................           16,670              17,992

Shareholders' Equity:
         Class A common stock, $0.20 par value, authorized 16,000,000 shares,
            issued and outstanding 7,942,521 and 7,922,910 shares, respectively             1,589               7,923
         Additional paid-in capital.............................................         (625,376)           (632,050)
         Accumulated other comprehensive income.................................          (18,877)            (16,991)
         Retained earnings......................................................          485,546             478,163
                                                                                   --------------       -------------
Total Shareholders' Deficit.....................................................         (157,118)           (162,955)
                                                                                   --------------       -------------

Total Liabilities and Shareholders' Equity......................................   $      370,733       $     416,981
                                                                                   ==============       =============
</TABLE>

     See accompanying Notes to Condensed Consolidated Financial Statements

                                       4
<PAGE>

                              ACTUANT CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (Dollars in thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                               Six Months            Six Months
                                                                                  Ended                 Ended
                                                                               February 28,          February 29,
                                                                                   2001                  2000
                                                                             -----------------    ------------------
<S>                                                                          <C>                  <C>
Operating Activities
- --------------------
Net earnings from continuing operations....................................    $       7,383        $        22,885
Adjustments to reconcile net earnings to net cash
      provided by operating activities:
           Depreciation and amortization...................................            8,050                 12,381
           Other non-cash items............................................             (786)                     -
           Changes in operating assets and liabilities, excluding
               the effects of business acquisitions:
                    Accounts receivable....................................           (3,458)               (27,838)
                    Inventories............................................            5,129                 (1,745)
                    Prepaid expenses and other assets......................             (558)                   341
                    Trade accounts payable.................................           (4,232)                 2,542
                    Other accrued liabilities..............................           (3,241)                (2,899)
                    Receivable from APW Ltd................................           30,894                      -
                    Income taxes payable...................................          (24,726)                     -
                                                                               -------------        ---------------
     Cash provided by continuing operations................................           14,455                  5,667
     Cash provided by discontinued operations..............................                -                 19,751
                                                                               -------------        ---------------
     Net cash provided by operating activities.............................           14,455                 25,418


Investing Activities
- --------------------
Proceeds from the sale of property, plant and equipment....................                -                    703
Additions to property, plant and equipment.................................           (3,578)                (5,744)
Product line dispositions and other........................................              238                  2,987
Net investing activities of discontinued operations........................                -                (28,615)
                                                                               -------------        ---------------
     Net cash used in investing activities.................................           (3,340)               (30,669)


Financing Activities
- --------------------
Net (repayments) borrowings of debt........................................          (20,895)               376,573
Additions to receivables financing facility................................                -                  1,420
Dividends paid on common stock.............................................                -                 (1,171)
Proceeds from stock option exercises.......................................              340                  1,604
Net financing activities of discontinued operations........................                -               (386,228)
                                                                               -------------        ---------------
     Net cash used in financing activities.................................          (20,555)                (7,802)

Effect of exchange rate changes on cash....................................             (202)                  (186)
                                                                               -------------        ---------------

Net decrease in cash and cash equivalents..................................           (9,642)               (13,239)

Effect of change in cash of discontinued operations........................                -                 14,752

Cash and cash equivalents - beginning of period............................            9,896                  7,256
                                                                               -------------        ---------------

Cash and cash equivalents - end of period..................................    $         254        $         8,769
                                                                               =============        ===============
</TABLE>

     See accompanying Notes to Condensed Consolidated Financial Statements

                                       5
<PAGE>

                               ACTUANT CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Basis of Presentation
- -------------------------
On January 9, 2001 Applied Power Inc. shareholders approved the change of the
name of the Company to Actuant Corporation. The accompanying unaudited condensed
consolidated financial statements of Actuant Corporation ("Applied Power,"
"Actuant," or the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial reporting and with the
instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. The condensed
consolidated balance sheet data as of August 31, 2000 was derived from audited
financial statements, but does not include all disclosures required by generally
accepted accounting principles. For additional information, refer to the
consolidated financial statements and related footnotes in the Company's fiscal
2000 Annual Report on Form 10-K.

In the opinion of management, all adjustments considered necessary for a fair
presentation of financial results have been made. Such adjustments consist of
only those of a normal recurring nature. Operating results for the six months
ended February 28, 2001 are not necessarily indicative of the results that may
be expected for the entire fiscal year ending August 31, 2001.

On January 9, 2001, our shareholders approved a reverse stock split whereby
every five shares of common stock were converted into one share of common stock.
In addition, our shareholders approved a reduction in our authorized class A
common shares from 80 million to 16 million with a similar reduction for other
capital stock. Where appropriate, these changes are reflected in these financial
statements for all periods presented.

(2) Distribution and Discontinued Operations
- --------------------------------------------
On January 27, 2000, Applied Power's board of directors authorized various
actions to enable Applied Power to distribute its Electronics segment ("APW
Ltd.") to its shareholders (the "Distribution"). In the Distribution, Applied
Power shareholders received, in the form of a special dividend, one share of APW
Ltd. common stock for each Applied Power common share. As a result, APW Ltd.
became a separately traded, publicly held company. The Distribution was approved
by the board of directors on July 7, 2000 and shares of APW Ltd. were
distributed to Applied Power shareholders of record at July 21, 2000, effective
July 31, 2000.

Accordingly, the Condensed Consolidated Statement of Earnings and the Condensed
Consolidated Statement of Cash Flows for the six months ended February 29, 2000
have been reclassified to reflect the Company's former Electronics segment as a
discontinued operation. Thus, the revenues, costs and expenses, and cash flows
of the former Electronics segment have been excluded from the respective
captions in the accompanying condensed consolidated financial statements. The
net operating results of the former Electronics segment have been reported, net
of applicable taxes, as "Discontinued Operations, net of Income Taxes." The net
operating results of the discontinued operations include financing costs related
to the debt allocated to the Electronics segment.

(3) Divestitures and Product Line Dispositions
- ----------------------------------------------
During fiscal 2000, the Company divested several of its businesses and
discontinued certain product lines, which significantly impacts the
comparability of financial information presented. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations" for further
discussion.

(4) Inventories, net
- --------------------
The nature of the Company's products is such that they generally have a very
short production cycle. Consequently, the amount of work-in-process at any point
in time is minimal. In addition, many parts or components are ultimately either
sold individually or assembled with other parts making a distinction between raw
materials and finished goods impractical to determine. Several other locations
maintain and manage their inventories using a job cost system where the
distinction of categories of inventory by state of completion is also not
available.

As a result of these factors, it is neither practical nor cost effective to
segregate the amounts of raw materials, work-in-process or finished goods
inventories at the respective balance sheet dates, as segregation would only be
possible as the result of physical inventories which are taken at dates
different from the balance sheet dates.

                                       6
<PAGE>

(5) Earnings Per Share
- ----------------------

The reconciliations between basic and diluted earnings per share are as follows
(in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                   Three Months Ended                 Six Months Ended
                                                             --------------------------------  -------------------------------
                                                              February 28,    February 29,      February 28,    February 29,
                                                                  2001            2000             2001             2000
                                                             --------------- ----------------  --------------  ---------------
<S>                                                          <C>             <C>               <C>             <C>
Numerator:
    Earnings from continuing operations..................    $    3,099        $   11,894      $                $     22,885
    Earnings from discontinued operations................             -             8,648              -              21,339
                                                             ----------        ----------      ---------        ------------
    Net earnings.........................................    $    3,099        $   20,542      $   7,383        $     44,224
                                                             ==========        ==========      =========        ============

Denominator:
    Weighted average common shares outstanding for
      basic earnings per share...........................         7,934             7,810          7,931               7,805
    Net effect of dilutive stock options based on the
      treasury stock method using average market price...           355               265            391                 264
                                                             ----------        ----------      ---------        ------------
    Weighted average common and equivalent
      shares outstanding for diluted earnings per share..         8,289             8,075          8,322               8,069
                                                             ==========        ==========      =========        ============

Basic Earnings Per Share:
    Earnings from continuing operations..................    $     0.39        $     1.52      $    0.93        $       2.93
    Earnings from discontinued operations................             -              1.11              -                2.73
                                                             ----------        ----------      ---------        ------------
    Basic earnings per share.............................    $     0.39        $     2.63      $    0.93        $       5.67
                                                             ==========        ==========      =========        ============

Diluted Earnings Per Share:
    Earnings from continuing operations..................    $     0.37        $     1.47      $    0.89        $       2.84
    Earnings from discontinued operations................             -              1.07              -                2.64
                                                             ----------        ----------      ---------        ------------
    Diluted earnings per share...........................    $     0.37        $     2.54      $    0.89        $       5.48
                                                             ==========        ==========      =========        ============
</TABLE>

(6) Comprehensive Income
- ------------------------

The components of comprehensive income are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                  Three Months Ended                 Six Months Ended
                                                         ---------------------------------  --------------------------------
                                                          February 28,     February 29,      February 28,    February 29,
                                                              2001             2000             2001             2000
                                                         ---------------  ----------------  --------------  ----------------
<S>                                                      <C>              <C>                <C>            <C>
    Net earnings.......................................  $       3,099    $       20,542    $      7,383    $     44,224
    Foreign currency translation adjustments...........           (370)           (4,778)         (1,886)         (2,595)
                                                         -------------    --------------    ------------    ------------
    Comprehensive income...............................   $      2,729    $       15,764    $      5,497    $     41,629
                                                         =============    ==============    ============    ============
</TABLE>

                                       7
<PAGE>

(7) Fire Loss
- -------------
In February 2001, one of the Company's facilities in Oldenzaal, The Netherlands
was damaged by fire. The fire damaged a portion of the leased building, as well
as certain inventory and property, plant and equipment contained therein.
Additionally, the fire impacted the shipment of product produced on the truck
cab-tilt production line that is housed in the damaged facility. The Company is
party to an insurance contract that is expected to cover the damaged inventory
and equipment as well as the business interruption resulting from the fire. The
costs incurred through February 28, 2001 and the net book value of lost assets
total $0.7 million. This amount has been recorded as a receivable in the
Condensed Consolidated Balance Sheet, as the amounts are expected to be
recovered from our insurance carrier. Future insurance recoveries under our
replacement value policy are probable, and will be recorded net of additional
costs associated with the fire, once the amounts to be recovered are estimable.

(8) Segment Information
- -----------------------
The Company is organized and managed along the lines of its two business
segments: Tools & Supplies and Engineered Solutions. Tools & Supplies products
include high-force hydraulic tools, electrical tools and consumables, which are
sold to a variety of markets including general industrial, construction,
production automation, retail do-it-yourself ("DIY"), retail marine and retail
automotive aftermarket. Engineered Solutions works with customers to provide
customized solutions in the recreational vehicle ("RV"), truck, automotive,
medical, and other markets. Products include RV slide-out and leveling systems,
hydraulic cab-tilt systems for heavy-duty trucks, electro-hydraulic automotive
convertible top actuation systems and extruded and molded silicone products for
the medical market. "General corporate and other" as indicated below primarily
includes general corporate expenses, financing costs on third party debt and
foreign currency exchange adjustments.

The following table summarizes continuing operations financial information by
reportable segment (in thousands).

<TABLE>
<CAPTION>
                                                  Three Months Ended                    Six Months Ended
                                           ---------------------------------  --------------------------------------
                                            February 28,      February 29,      February 28,         February 29,
                                                2001              2000              2001                 2000
                                           ----------------  ---------------  ------------------   -----------------
<S>                                        <C>               <C>              <C>                  <C>
Net Sales:
Tools & Supplies.........................      $  68,911         $ 79,516          $  138,684           $ 150,575
Engineered Solutions.....................         44,424          104,571              92,171             206,553
                                           ----------------  ---------------  ------------------   -----------------
Total....................................      $ 113,335        $ 184,087          $  230,855           $ 357,128
                                           ----------------  ---------------  ------------------   -----------------

Earnings Before Income Tax Expense:
Tools & Supplies.........................      $  11,940        $  15,370           $  23,435           $  26,272
Engineered Solutions.....................          7,310           17,114              15,724              37,620
General corporate and other..............        (14,035)         (14,637)            (26,692)            (28,138)
                                           ----------------  ---------------  ------------------   -----------------
Total....................................       $  5,215        $  17,847           $  12,467           $  35,754
                                           ----------------  ---------------  ------------------   -----------------
</TABLE>

Results for the six months ended February 29, 2000 for the Engineered Solutions
segment include a $1.4 million recovery related to the resolution of a contract
termination originally recorded in fiscal 1999. In addition, results for the
three and six months ended February 29, 2000 include corporate reorganization
expenses of $3.5 million included in "General corporate and other." These
corporate reorganization expenses relate to costs incurred as a result of the
Distribution.

(9) Subsequent Events
- ---------------------
On March 1, 2001, the Company acquired substantially all of the net operating
assets of Dewald Manufacturing ("Dewald") for approximately $12.8 million.
Dewald is engaged in the design and manufacture of leveling and slide out
systems for the North American recreational vehicle market. Dewald operates a
manufacturing facility near South Bend, Indiana, and employs approximately 130
employees. Its annual revenues are approximately $20 million.

On March 21, 2001, the Company announced that it is in preliminary discussion
with a number of parties regarding the possible sale of its Mox-Med business.
Mox-Med provides molded and extruded silicone products for the medical and
housewares industries, and has annual net sales of approximately $20 million.

                                       8
<PAGE>

(10) Guarantor Condensed Financial Statements
- ---------------------------------------------
In connection with the Distribution, Actuant issued 13% Senior Subordinated
Notes due 2009. All of our material domestic wholly-owned subsidiaries (the
"Guarantors") fully and unconditionally guarantee the 13% notes on a joint and
several basis. We believe separate financial statements and other disclosures
concerning each of the Guarantors would not provide additional information that
is material to investors. Therefore, the Guarantors are combined in the
presentation below. There are no significant restrictions on the ability of the
Guarantors to make distributions to Actuant. The following tables present the
results of operations, financial position and cash flows of Actuant Corporation
and its subsidiaries, the Guarantors and non-guarantor entities, and the
eliminations necessary to arrive at the information for the Company on a
condensed consolidated basis.

                                       9
<PAGE>

                CONDENSED CONSOLIDATING STATEMENTS OF EARNINGS
                            (Dollars in thousands)

<TABLE>
<CAPTION>
                                                               Six Months Ended February 28, 2001
                                            --------------------------------------------------------------------------
                                               Actuant                         Non
                                             Corporation    Guarantors     Guarantors    Eliminations   Consolidated
                                            -------------- -------------- -------------- -------------- --------------
<S>                                         <C>            <C>            <C>            <C>            <C>
Net sales.................................  $     38,642   $   112,902    $    79,311              --   $   230,855
Cost of products sold.....................        23,434        73,417         51,198              --       148,049
                                            ------------   -----------    -----------    ------------   -----------
     Gross profit.........................        15,208        39,485         28,113              --        82,806
Operating expenses........................        11,224        19,199         12,845                        43,268
Amortization of intangible assets.........             5         2,731            132              --         2,868
                                            ------------   -----------    -----------    ------------   -----------
       Operating earnings.................         3,979        17,555         15,136              --        36,670
Other expense (income):
        Intercompany activity, net........        (2,288)        1,218          1,070              --            --
        Net financing costs...............        25,031            --            469              --        25,500
        Other, net........................           182            14         (1,493)             --        (1,297)
                                            ------------   -----------    -----------    ------------   -----------
Earnings (Loss) before income tax
(benefit) expense ........................       (18,946)       16,323         15,090              --        12,467
Income tax (benefit) expense..............        (6,986)        6,249          5,821              --         5,084
                                            ------------   -----------    -----------    ------------   -----------
Net (loss) earnings.......................  $    (11,960)  $    10,074    $     9,269              --   $     7,383
                                            ============   ===========    ===========    ============   ===========

<CAPTION>
                                                                    Six Months Ended February 29, 2000
                                                ---------------------------------------------------------------------------
                                                   Actuant                         Non
                                                 Corporation    Guarantors     Guarantors    Eliminations    Consolidated
                                                -------------- -------------- -------------- -------------- --------------
<S>                                             <C>            <C>            <C>            <C>            <C>
Net sales....................................   $     41,367   $   103,698    $   212,063    $         --   $    357,128
Cost of products sold........................         24,449        68,243        136,627              --        229,319
                                                ------------   -----------    -----------    ------------   ------------
     Gross profit............................         16,918        35,455         75,436              --        127,809
Operating expenses...........................         17,292        14,969         38,348                         70,609
Amortization of intangible assets............              5         2,045          1,906              --          3,956
                                                ------------   -----------    -----------    ------------   ------------
       Operating earnings....................           (379)       18,441         35,182              --         53,244
Other expense (income):
        Intercompany activity, net...........           (155)        6,177          3,614          (9,636)            --
        Net financing costs..................         13,962         3,361            819              --         18,142
        Other, net...........................           (513)          139           (278)             --           (652)
                                                ------------   -----------    -----------    ------------   -------------
Earnings (Loss) from continuing operations
before income tax (benefit) expense..........        (13,673)        8,764         31,027           9,636         35,754
Income tax (benefit) expense.................         (5,927)        5,959          9,746           3,091         12,869
                                                ------------   -----------    -----------    ------------   ------------
Earnings (Loss) from continuing operations...         (7,746)        2,805         21,281           6,545         22,885
Earnings from discontinued operations........             --            --         21,339              --         21,339
                                                ------------   -----------    -----------    ------------   ------------
Net (loss) earnings..........................   $     (7,746)  $     2,805    $    42,620    $      6,545   $     44,224
                                                ============   ===========    ===========    ============   ============
</TABLE>

                                       10
<PAGE>

                     CONDENSED CONSOLIDATING BALANCE SHEET
                            (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                               February 28, 2001
                                                  ----------------------------------------------------------------------------
                                                       Actuant                         Non
                                                     Corporation    Guarantors     Guarantors    Eliminations   Consolidated
                                                    -------------- -------------- -------------- -------------- --------------
<S>                                                 <C>            <C>            <C>            <C>            <C>
                  ASSETS
Current assets
      Cash and cash equivalents...................  $       853    $      (150)   $      (449)            --    $       254
      Accounts receivable, net....................       11,808         39,674         35,794             --         87,276
      Inventories, net............................       10,942         40,097         11,419             --         62,458
      Prepaid expenses............................        1,164            740          4,335             --          6,239
      Deferred income taxes.......................        3,165              7          1,342             --          4,514
                                                    -----------    -----------    -----------    -----------    -----------
            Total current assets..................       27,932         80,368         52,441             --        160,741
Property, plant and equipment, net................        4,717         33,074          9,254             --         47,045
Goodwill, net.....................................           --        109,607          5,098             --        114,705
Other intangibles, net............................           14         19,820             85             --         19,919
Other long-term assets............................       27,652            166            505             --         28,323
                                                    -----------    -----------    -----------    -----------    -----------

Total assets......................................  $    60,315    $   243,035    $    67,383             --    $   370,733
                                                    ===========    ===========    ===========    ===========    ===========

          LIABILITIES AND EQUITY

Current liabilities
      Short-term borrowings.......................  $        --    $        --    $       802             --    $       802
      Trade accounts payable......................        6,440         18,700         13,737             --         38,877
      Accrued compensation and benefits...........        4,346          3,826          5,167             --         13,339
      Income taxes payable........................        5,707          5,941          3,370             --         15,018
      Other current liabilities...................       13,156          6,316          7,225             --         26,697
                                                    -----------    -----------    -----------    -----------    -----------
             Total current liabilities............       29,649         34,783         30,301             --         94,733
Long-term debt....................................      397,723            540         13,847             --        412,110
Deferred income taxes.............................        2,969           (860)         2,229             --          4,338
Other long-term liabilities.......................       16,611           (262)           321             --         16,670
Intercompany balances, net........................      747,497        (24,765)      (722,732)            --             --
Total shareholders' (deficit) equity..............   (1,134,134)       233,599        743,417             --       (157,118)
                                                    -----------    -----------    -----------    -----------    -----------
Total liabilities and shareholders' equity........  $    60,315    $   243,035    $    67,383             --    $   370,733
                                                    ===========    ===========    ===========    ===========    ===========
</TABLE>

                                       11
<PAGE>

                     CONDENSED CONSOLIDATING BALANCE SHEET
                            (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                              August 31, 2000
                                                  --------------------------------------------------------------------------
                                                     Actuant                         Non
                                                   Corporation    Guarantors     Guarantors    Eliminations   Consolidated
                                                  -------------- -------------- -------------- -------------- --------------
<S>                                               <C>            <C>            <C>            <C>            <C>
                  ASSETS
Current assets
      Cash and cash equivalents..............     $     5,076    $       721    $     4,099             --    $     9,896
      Accounts receivable, net...............          13,837         36,870         32,846             --         83,553
      Inventories, net.......................          10,528         45,317         11,754             --         67,599
      Receivable from APW Ltd................          32,894             --             --             --         32,894
      Prepaid expenses.......................             699            567          3,964             --          5,230
      Deferred income taxes..................           3,965              6            571             --          4,542
                                                  -----------    -----------    -----------    -----------    -----------
            Total current assets.............          66,999         83,481         53,234             --        203,714
Property, plant and equipment, net...........           5,010         35,473          8,685             --         49,168
Goodwill, net................................              --        111,246          5,102             --        116,348
Other intangibles, net.......................              19         20,911            110             --         21,040
Other long-term assets.......................          26,098            133            480             --         26,711
                                                  -----------    -----------    -----------    -----------    -----------

Total assets.................................     $    98,126    $   251,244         67,611             --    $   416,981
                                                  ===========    ===========    ===========    ===========    ===========

          LIABILITIES AND EQUITY
Current liabilities
      Short-term borrowings..................     $        --    $        --    $     1,259             --    $     1,259
      Trade accounts payable.................           6,602         25,210         11,643             --         43,455
      Accrued compensation and benefits......           7,405          4,164          4,796             --         16,365
      Income taxes payable...................         (23,518)        30,660         32,710             --         39,852
      Other current liabilities..............           7,671          8,534          9,107             --         25,312
                                                  -----------    -----------    -----------    -----------    -----------
             Total current liabilities.......          (1,840)        68,568         59,515             --        126,243
Long-term debt...............................         430,675            540             --             --        431,215
Deferred income taxes........................           5,769           (741)          (542)            --          4,486
Other long-term liabilities..................          17,818           (462)           636             --         17,992
Intercompany balances, net...................         687,060        (51,241)      (635,819)            --             --
Total shareholders' (deficit) equity.........      (1,041,356)       234,580        643,821             --       (162,955)
                                                  -----------    -----------    -----------    -----------     ----------
Total liabilities and shareholders' equity...     $    98,126    $   251,244         67,611             --      $ 416,981
                                                  ===========    ===========    ===========    ===========    ===========
</TABLE>

                                       12
<PAGE>

                 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                        Six Months Ended February 28, 2001
                                                     --------------------------------------------------------------------------
                                                       Actuant
                                                     Corporation    Guarantors   Non Guarantors    Eliminations     Consolidated
                                                     -----------    ----------   --------------    ------------     ------------
<S>                                                  <C>            <C>           <C>              <C>              <C>
Operating activities
   Net earnings(loss) ............................   $   (11,960)   $  10,074      $     9,269               --     $     7,383
   Adjustments to reconcile net earnings(loss) to
   cash provided by operating activities:
      Depreciation and amortization...............         1,000        5,689            1,361               --           8,050
      Other non-cash items........................          (786)          --               --               --            (786)
      Changes in operating assets and                     59,507      (31,756)         (27,943)              --            (192)
        liabilities, net..........................   -----------    ---------      -----------     ------------     -----------
Cash provided by (used in) operating activities ..        47,761      (15,993)         (17,313)              --          14,455

Investing activities
      Additions to property, plant and equipment..          (538)      (1,380)          (1,660)              --          (3,578)
      Product line dispositions and other.........            --          238               --               --             238
                                                     -----------    ---------      -----------     ------------     -----------
Cash used in investing activities.................          (538)      (1,142)          (1,660)                          (3,340)

Financing activities
      Net (repayments)borrowings of debt..........       (31,729)          --           10,834               --         (20,895)
      Stock option exercises and other............           340           --               --               --             340
      Intercompany (receivables) payables.........       (20,057)      16,264            3,793               --              --
                                                     -----------    ---------      -----------     ------------     -----------
Cash (used in) provided by financing activities...       (51,446)      16,264           14,627               --         (20,555)

Effect of exchange rate changes on cash...........            --           --             (202)              --            (202)
                                                     -----------    ---------      -----------     ------------     -----------

Net decrease  in cash and cash equivalents........        (4,223)        (871)          (4,548)              --          (9,642)
Cash and cash equivalents--beginning of period.....        5,076          721            4,099                            9,896
                                                     -----------    ---------      -----------     ------------     -----------
Cash and cash equivalents--end of period...........  $       853    $    (150)     $      (449)              --     $       254
                                                     ===========    =========      ===========     ============     ===========
</TABLE>

                                       13
<PAGE>

                 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                                                           Six Months Ended February 29, 2000
                                                       --------------------------------------------------------------------------
                                                          Actuant                        Non
                                                        Corporation    Guarantors     Guarantors      Eliminations   Consolidated
                                                       ------------    ----------     ----------      ------------   ------------
<S>                                                    <C>             <C>            <C>             <C>            <C>
Operating activities
   Net earnings(loss) from continuing operations..     $    (7,746)    $   2,805      $  21,281       $     6,545    $    22,885
   Adjustments to reconcile net earnings(loss)
    from continuing operations to cash provided
    by (used in) operating activities of
    continuing operations:
      Depreciation and amortization...............           1,351         4,262          6,768                --         12,381
      Changes in operating assets and
        liabilities, net..........................           6,250        (2,244)       (27,060)           (6,545)       (29,599)
                                                       -----------     ---------      ---------       -----------    -----------
Cash provided by (used in) operating activities
of continuing operations..........................            (145)        4,823            989                --          5,667
Discontinued operations...........................              --            --         19,751                --         19,751
                                                       -----------     ---------      ---------       -----------    -----------
Total cash provided by (used in) operating
  activities......................................            (145)        4,823         20,740                --         25,418

Investing activities
      Proceeds from the sale of property, plant
        and equipment.............................               4           129            570                --            703
      Additions to property, plant and equipment..            (445)       (2,971)        (2,328)               --         (5,744)
      Product line dispositions and other.........              --            --          2,987                --          2,987
      Discontinued operations.....................              --            --        (28,615)               --        (28,615)
                                                       -----------     ---------      ---------       -----------    -----------
Cash used in investing activities.................            (441)       (2,842)       (27,386)                         (30,669)

Financing activities
      Net repayments of debt......................         376,573            --             --                --        376,573
      Additions to (decreases in) receivables
        financing facility........................            (269)        2,375           (686)               --          1,420
      Dividends paid on common stock..............          (1,171)           --             --                --         (1,171)
      Stock option exercises and other............           1,604            --             --                --          1,604
      Intercompany (receivables) payables.........        (376,402)       (4,740)       381,142                --             --
      Discontinued operations.....................              --            --       (386,228)               --       (386,228)
                                                       -----------     ---------      ---------       -----------    -----------
Cash (used in) provided by financing activities...             335        (2,365)        (5,772)               --         (7,802)

Effect of exchange rate changes on cash...........              --            --           (186)               --           (186)
                                                       -----------     ---------      ---------       -----------    -----------
Net (decrease) increase in cash and cash
  equivalents.....................................            (251)         (384)       (12,604)               --        (13,239)
Effect of change in cash of discontinued
  operations......................................              --            --         14,752                --         14,752
Cash and cash equivalents--beginning of period....            (721)         (209)         8,186                            7,256
                                                       -----------     ---------      ---------       -----------    -----------
Cash and cash equivalents--end of period..........     $      (972)    $    (593)     $  10,334       $        --    $     8,769
                                                       ===========     =========      =========       ===========    ===========
</TABLE>

                                       14
<PAGE>

Item 2 - Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations
- -------------

On January 9, 2001 Applied Power Inc. changed its name to Actuant Corporation.
Throughout this "Management's Discussion and Analysis of Financial Condition and
Results of Operations" when we refer to "Actuant", "Applied Power", or the
"Company", we mean Actuant Corporation and its subsidiaries. Also on January 9,
2001, our shareholders approved a reverse stock split whereby every five shares
of common stock were converted into one share of common stock. Where
appropriate, this change is reflected in this Form 10-Q for all periods
presented.


The Distribution
- ----------------
On January 27, 2000, Applied Power's board of directors authorized various
actions to enable Applied Power to distribute its Electronics segment ("APW
Ltd.") to its shareholders (the "Distribution"). In the Distribution, Applied
Power shareholders received, in the form of a special dividend, one share of APW
Ltd. common stock for each Applied Power common share. As a result, APW Ltd.
became a separately traded, publicly held company. The Distribution was approved
by the board of directors on July 7, 2000 and shares of APW Ltd. were
distributed to Applied Power shareholders of record at July 21, 2000, effective
July 31, 2000. Applied Power now trades separately on The New York Stock
Exchange ("NYSE") under the ticker symbol "ATU." APW Ltd. trades on the NYSE
under the ticker symbol "APW."

As a result of the Distribution, the Company's Electronics segment is presented
as "discontinued operations" in the accompanying financial statements.


Results of Operations
- ---------------------
During fiscal year 2000, we divested several businesses and discontinued certain
product lines that were no longer considered  integral to our business strategy,
collectively referred to as the "non-continuing businesses". The following table
summarizes the significant divestitures that were completed:

                                                                 Approximate
Divestitures                   Segment          Date        Annual Sales (1)
- ------------                   -------          ----        ----------------
                                                               (in millions)
Norelem             Tools & Supplies         August 2000             $     8
Barry Controls      Engineered Solutions       June 2000                 120
Air Cargo           Engineered Solutions        May 2000                  22
Samuel Groves       Engineered Solutions    October 1999                   9
________
(1)    At the time of the transactions.

The comparability of operating results from period to period is impacted by the
non-continuing businesses. The tables included in "Results of Continuing
Operations" below show the effect, by segment, of the non-continuing businesses
on reported results.

Results from Continuing Operations
- ----------------------------------
Earnings from continuing operations were $3.1 million, or $0.37 per diluted
share, and $11.9 million, or $1.47 per diluted share, for the second quarter of
fiscal 2001 and 2000, respectively. Earnings from continuing operations for the
six months ended February 28, 2001 were $7.4 million, or $0.89 per diluted
share, compared to $22.9 million, or $2.84 per diluted share, for the prior year
period. Our first half and second quarter results in the prior year included the
operating results of Norelem, Barry Controls, and Air Cargo, which we divested
in the second half of fiscal 2000. Furthermore, our current capital structure is
different than that which existed during the comparable periods in the prior
year since we entered into new credit agreements and issued new subordinated
debt in conjunction with the Distribution. As a result, certain adjustments must
be made to make the results in the Condensed Consolidated Statements of Earnings
comparable. Our fiscal 2000 results, reflecting the removal of the divested
businesses and the impact of our new capital structure, were $6.6 million, or
$0.81 per diluted share, and $12.0 million, or $1.49 per diluted share, for the
quarter and six months ended February 29, 2000, respectively. Our operating
results in the current fiscal year are lower than prior year results due to the
impact of currency rates on translated results and slowing economic conditions,
most notably in the North American recreational vehicle market. The remainder of
this section is a discussion of comparative operating results for the second
quarter and six-month periods.

                                       15
<PAGE>

<TABLE>
<CAPTION>
Net Sales by Segment
(in thousands)

                                              Three Months Ended                     Six Months Ended
                                         ---------------------------            -------------------------
                                         February 28,   February 29,            February 28,  February 29,
                                            2001           2000        Change       2001         2000         Change
                                         ------------   ------------  --------- ------------  ------------   --------
<S>                                      <C>            <C>           <C>       <C>           <C>            <C>
Tools & Supplies ......................   $ 68,911         $ 79,516    (13.3)%   $138,684     $150,575        (7.9)%
Less: non-continuing /(1)/ ............          -            3,559                     -        7,955
                                          --------         --------              --------     --------
 Adjusted Tools & Supplies ............   $ 68,911         $ 75,957     (9.3)%   $138,684     $142,620        (2.8)%
                                          ========         ========              ========     ========

Engineered Solutions ..................   $ 44,424         $104,571    (57.5)%   $ 92,171     $206,553       (55.4)%
Less: non-continuing /(2)/ ............          -           47,322                     -       88,543
                                          --------         --------              --------     --------
 Adjusted Engineered Solutions.........     44,424           57,249    (22.4)%   $ 92,171     $118,010       (21.9)%
                                          ========         ========              ========     ========

Total net sales .......................   $113,335         $184,087    (38.4)%   $230,855     $357,128       (35.4)%
Less: Non-continuing /(1)(2)/ .........          -           50,881                     -       96,498
                                          --------         --------              --------     --------
Adjusted net sales ....................   $113,335         $133,206    (14.9)%   $230,855     $260,630       (11.4)%
                                          ========         ========              ========     ========
</TABLE>
________
(1)  "Non-continuing" represents the divested Tools & Supplies businesses, which
     include Norelem, Enerpac's automotive line of business and Gardner Bender's
     TAM product line.
(2)  "Non-continuing" represents the divested Engineered Solutions businesses,
     which include Barry Controls, Air Cargo, Samuel Groves and Magnets.

Adjusted net sales declined $19.9 million, or 14.9%, in the second quarter and
$29.8 million, or 11.4%, for the six months ended February 28, 2001, compared to
the prior year periods.  The $29.8 million decline in revenue from the first
half of the fiscal 2000 resulted from a $14 million reduction in RV market
sales, negative currency impact of $9 million due to the impact of foreign
currency rate changes on translated results, and overall weaker economic
conditions.  Excluding foreign currency rate changes and the impact of our lower
sales to North American RV manufacturers, sales declined 7.7% and 3.1% in the
three and six-month periods ended February 28, 2001, respectively, compared to
the prior year.

Tools & Supplies
Adjusted net sales for the Tools & Supplies segment declined from the comparable
prior year periods by $7.0 million and $3.9 million for the three and six-month
periods ended February 28, 2001, respectively. Excluding the effect of foreign
currency rate changes, which caused $1.1 million of the quarter over quarter
decline, Tools & Supplies sales decreased 8% compared to the fiscal 2000 second
quarter.  This decline was driven primarily from Gardner Bender's 16% decrease,
offset by an increase of 2% in Enerpac sales.  Approximately $4.0 million, or
half, of the sales decline in Gardner Bender was caused by the implementation of
a new computer system in the first quarter of fiscal 2000, which resulted in
shipments being delayed from the fiscal 2000 first quarter into the second
quarter. Additionally, Gardner Bender sales to OEM customers and the automotive
aftermarket were lower, reflecting the softening U.S. economy.

The net sales decline experienced during the six-months ended February 28, 2001
primarily resulted from the effects of the strengthening US dollar, which
comprised $3.4 million of the $3.9 million decrease.

Engineered Solutions
Adjusted net sales for the Engineered Solutions segment decreased from the prior
year periods by $12.8 million, or 22.4%, for the quarter and $25.8 million, or
21.9%, for the first half of fiscal 2001.  Approximately $8.6 million of the
fiscal second quarter decline is attributable to lower sales into the RV market,
while $1.4 million was due to the impact of foreign currency rate changes.  The
North American RV market started slowing in the third quarter of fiscal 2000,
with the slowing continuing into the current quarter.  Our Power Gear unit's
sales into this market were 50% lower in the second quarter of this year than
the record shipments made in the second quarter of the prior year.  Excluding
foreign currency rate changes and the impact of our lower sales to RV
manufacturers, our Engineered Solutions second quarter sales declined $2.8
million, primarily reflecting the impact of the slowing economy in North
America.

The $25.8 million adjusted net sales decline experienced during the six months
ended February 28, 2001 primarily resulted from a $14.1 million reduction in
sales to the RV market and $5.5 million from foreign currency rate

                                       16
<PAGE>

changes. The remainder of the decline resulted from slower economic conditions.


<TABLE>
<CAPTION>
Gross Profit Margins By Segment                           Three Months Ended                       Six Months Ended
                                              -----------------------------------   -----------------------------------------
                                                 February 28,       February 29,       February 28,         February 29,
                                                     2001               2000               2001                2000
                                              -----------------   ---------------   -----------------    --------------------
<S>                                           <C>                 <C>               <C>                  <C>
Tools & Supplies............................        41.6%                40.7%            41.0%               40.1%
Adjusted Tools & Supplies...................        41.6%                40.7%            41.0%               40.3%

Engineered Solutions........................        27.7%                31.9%            28.2%               32.6%
Adjusted Engineered Solutions...............        27.7%                29.6%            28.2%               29.7%

Total gross profit margin...................        36.2%                35.7%            35.9%               35.8%
Total adjusted gross profit margin..........        36.2%                35.9%            35.9%               35.5%
</TABLE>


Second quarter and year-to-date adjusted gross profit margins improved compared
to the prior fiscal year periods, driven by strong Tools & Supplies performance
offset by weaker Engineered Solutions performance.

Tools & Supplies
Adjusted gross profit margins in our Tools & Supplies segment improved in the
quarter, and year-to-date, as compared to the prior fiscal year periods.  The
improvement results from the elimination of lower margin SKUs within the Tools &
Supplies product portfolio, and cost reductions generated from direct labor
improvements, Asian sourcing of components and finished goods, as well as lower
fixed costs resulting from closing the NECON manufacturing plant.

Engineered Solutions
Engineered Solutions adjusted gross profit margins decreased in the quarter and
year-to-date as compared to the prior fiscal year periods.  The significant
sales reductions to the RV industry negatively impacted margins as we
experienced lower production volumes over which we could spread the fixed
manufacturing costs of our RV plants.  We are reducing employment costs at these
plants to minimize the impact of the sales slowdown.

                                       17
<PAGE>

<TABLE>
<CAPTION>
Engineering, Selling, and Administrative by Segment
(in thousands)

                                        Three Months Ended                              Six Months Ended
                                  ---------------------------------             --------------------------------
                                    February 28,      February 29,               February 28,      February 29,
                                       2001              2000          Change        2001              2000         Change
                                  ---------------   ---------------   --------  --------------    --------------  ---------
<S>                               <C>               <C>               <C>       <C>               <C>             <C>
Tools & Supplies .............      $ 15,915          $ 16,061          (0.9)%    $ 31,720           $ 32,319       (1.9)%
Less: non-continuing /(1)/ ...             -               933                           -              2,050
                                    --------          --------                    --------           --------
 Adjusted Tools & Supplies ...      $ 15,915          $ 15,128           5.2 %    $ 31,720           $ 30,269        4.8 %
                                    ========          ========                    ========           ========

Engineered Solutions .........      $  4,441          $ 15,170         (70.7)%    $  9,058           $ 27,642      (67.2)%
Less: non-continuing /(2)/ ...             -             9,876                           -             18,053
                                    --------          --------                    --------           --------
 Adjusted Engineered Solutions      $  4,441          $  5,294         (16.1)%    $  9,058           $  9,589       (5.5)%
                                    ========          ========                    ========           ========

General Corporate ............      $  1,342             3,699         (63.7)%    $  2,490           $  8,607      (71.1)%
                                    ========          ========                    ========           ========

Total ESA ....................      $ 21,698          $ 34,930         (37.9)%    $ 43,268           $ 68,568      (36.9)%
Less: Non-continuing .........             -            10,809                           -             21,549
                                    --------          --------                    --------           --------
Adjusted ESA .................      $ 21,698          $ 24,121         (10.0)%    $ 43,268           $ 47,019       (8.0)%
                                    ========          ========                    ========           ========
</TABLE>

________
(1)  "Non-continuing" represents the divested Tools & Supplies businesses, which
     include Norelem, Enerpac's automotive line of business and Gardner Bender's
     TAM product line.
(2)  "Non-continuing" represents the divested Engineered Solutions businesses,
     which include Barry Controls, Air Cargo, Samuel Groves and Magnets.

Total engineering, selling and administrative ("ESA") expenses decreased $3.7
million, from $47.0 million to $43.3 million for the six months ended February
29, 2000 and February 28, 2001, respectively.  Fiscal 2001 second quarter
adjusted ESA expenses were 10% percent lower than those reported in the second
quarter of fiscal 2000, resulting from lower corporate expenses.  In the prior
year periods, corporate expenses included costs related to both the former
Industrial and Electronics business segments of Applied Power.  None of these
expenses have been allocated to the discontinued operation's financial results.
Management believes general corporate expenses will approximate $5.0 million for
fiscal year 2001.

Tools & Supplies
Tools & Supplies adjusted ESA expenses increased over the prior period amounts
by 5.2% and 4.8% for the quarter and six months ended February 28, 2001,
respectively.  This increase in adjusted Tools & Supplies ESA expenses is
primarily caused by increased sales, marketing, and information technology
("IT") expenses in Enerpac and increased engineering and IT expenses at Gardner
Bender.

Engineered Solutions
Compared to the prior year periods, Engineered Solutions adjusted ESA expenses
decreased by 16.1% for the fiscal 2001 second quarter and 5.5% for the six
months ended February 28, 2001.  These reductions resulted from lower expenses
attributable to the sales decline, as well as cost reduction program benefits.


Amortization Expense
Amortization expense was lower in the current year periods compared to the prior
year primarily due to the non-continuing businesses.

Contract Termination Recovery
During the first quarter of fiscal 2000, the Company recovered approximately
$1.4 million of a contract termination charge originally expensed in fiscal 1999
by the Engineered Solutions segment.

Other Expense(Income)
Net financing costs for the three and six-month periods ended February 28, 2001
increased $4.8 million and $7.4 million, respectively, compared to the prior
fiscal year periods.  The increased costs are the result of the realignment of
debt in the Distribution.  The current credit facilities have higher interest
rates than that which had been previously

                                       18
<PAGE>

incurred by the Company. Current borrowings consist of those under a senior
secured credit agreement (the "Senior Credit Agreement") and new Senior
Subordinated Notes, which carry a 13% interest rate.

Other, net is primarily comprised of foreign currency gains and losses.

Liquidity and Capital Resources
- -------------------------------

Cash and cash equivalents totaled $0.3 million at February 28, 2001 and $9.9
million at August 31, 2000. In order to minimize net financing costs, the
Company intentionally maintains low cash balances by using available cash to
reduce borrowings.

Net cash generated by operating activities of continuing operations totaled
$14.5 million and $5.7 million for the six-month periods ended February 28, 2001
and February 29, 2000, respectively. Discontinued operations generated $19.8
million of cash from operating activities in the six months ended February 29,
2000. Net cash used in investing and financing activities for the six months
ended February 28, 2001 totaled $3.3 million and $20.6 million, respectively.
Cash used for investing activities primarily consisted of capital expenditures.
Cash used for financing activities primarily consisted of debt repayments.

<TABLE>
<CAPTION>
Debt                                                           February 28, 2001      August 31, 2000
                                                              --------------------   -------------------
<S>                                                           <C>                    <C>
  (in thousands)
Senior secured debt........................................   $           200,049      $        233,300
Senior subordinated notes, net of discount.................               197,527               197,375
Euro term loan.............................................                13,847                     -
Other......................................................                 1,489                 1,799
                                                                ------------------       ---------------
Total Debt.................................................   $           412,912      $        432,474
                                                                ==================       ===============
</TABLE>

During the first quarter of fiscal 2001, a European subsidiary of the Company
completed a bank term loan financing of 15.0 million EURO. Amortization of the
loan begins on January 31, 2003 with semi-annual repayments thereafter and a
final maturity of July 31, 2007. The loan interest rate is based on three month
EURIBOR with a spread of 1.10%. Proceeds from the borrowing were used to prepay
15.0 million EURO of the Euro denominated term borrowings under the Company's
Senior Credit Agreement, which carried a higher rate of interest.

The Company is focused on debt reduction. In the seven months since the
Distribution, debt has been reduced by $37.6 million. During the first six
months of fiscal 2001 debt was reduced $19.6 million. The Company expects total
debt reduction (excluding proceeds or repayments from business divestitures or
acquisitions) of $35.0 million in fiscal 2001. The Company plans to use all cash
provided from operations to fund capital expenditures and debt reduction. In
addition to cash from operations, the Company is exploring alternative sources
of financing, which could reduce total financing costs. For example, we are in
the process of implementing an accounts receivable securitization program from
which we hope to generate at least $25 million of proceeds at lower financing
costs. No dividend payments were made in fiscal 2001, nor do we expect to pay
dividends in the near future, so that cash flow from operations can be used to
reduce debt. At February 28, 2001, the Company had approximately $41.5 million
of availability under its credit facilities, and was in compliance with all
covenants under its debt agreements. The Company believes that availability
under its credit facilities, plus funds generated from operations, will be
adequate to meet operating, debt service and capital expenditure requirements
for the foreseeable future.

New Accounting Pronouncements
- -----------------------------
In December 1999, the Securities and Exchange Commission ("SEC") released Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." This bulletin summarizes certain views of the SEC staff on applying
generally accepted accounting principles to revenue recognition in financial
statements. The SEC staff expressed its view that revenue is realized or
realizable and earned when all of the following criteria are met: persuasive
evidence of an arrangement exists; delivery has occurred or services have been
rendered; the seller's price to the buyer is fixed or determinable; and
collectability is reasonably assured. The Company believes that the adoption of
SAB 101 will not have a material effect on its financial statements.

Effective September 1, 2000, the Company adopted Statement of Financial
Accounting Standard ("SFAS") No. 133, "Accounting for Derivative Instruments and
Hedging Activities". This statement requires all derivative instruments

                                       19
<PAGE>

to be recorded in the balance sheet at fair value. The initial adoption of this
statement did not have a material effect on the Company's earnings or financial
position.

Recent Events
- -------------
In February 2001, one of the Company's facilities in Oldenzaal, The Netherlands
was damaged by fire. The fire damaged a portion of the leased building, as well
as certain inventory and property, plant and equipment contained therein.
Additionally, the fire impacted the shipment of product produced on the truck
cab-tilt production line that is housed in the damaged facility. The Company is
party to an insurance contract that is expected to cover the damaged inventory
and equipment as well as the business interruption resulting from the fire. The
costs incurred through February 28, 2001 and the net book value of lost assets
total $0.7 million. This amount has been recorded as a receivable in the
Condensed Consolidated Balance Sheet, as the amounts are expected to be
recovered from our insurance carrier. Future insurance recoveries under our
replacement value policy are probable, and will be recorded net of additional
costs associated with the fire, once the amounts to be recovered are estimable.

On March 1, 2001, the Company acquired substantially all of the net operating
assets of Dewald Manufacturing ("Dewald") for approximately $12.8 million.
Dewald is engaged in the design and manufacture of leveling and slide out
systems for the North American recreational vehicle market. Dewald operates a
manufacturing facility near South Bend, Indiana, and employs approximately 130
employees. Its annual revenues are approximately $20 million.

On March 21, 2001, the Company announced that it is in preliminary discussion
with a number of parties regarding the possible sale of its Mox-Med business.
Mox-Med provides molded and extruded silicone products for the medical and
housewares industries, and has annual net sales of approximately $20 million.


Item 3 - Quantitative and Qualitative Disclosures About Market Risk
- -------------------------------------------------------------------

The Company is exposed to market risk from changes in foreign exchange and
interest rates and, to a lesser extent, commodities. To reduce such risks, the
Company selectively uses financial instruments. All hedging transactions are
authorized and executed pursuant to clearly defined policies and procedures,
which strictly prohibit the use of financial instruments for trading purposes.

A discussion of the Company's accounting policies for derivative financial
instruments is included in the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 2000 within Note A - "Summary of Significant
Accounting Policies" in Notes to Consolidated Financial Statements.

Currency Risk - The Company has significant international operations. In most
- -------------
instances, the Company's products are produced at manufacturing facilities
located near the customer. As a result, significant volumes of finished goods
are manufactured in countries for sale into those markets. For goods purchased
from other Company affiliates, the Company denominates the transaction in the
functional currency of the producing operation.

The Company has adopted the following guidelines to manage its foreign exchange
exposures:

(i)   increase the predictability of costs associated with goods whose purchase
      price is not denominated in the functional currency of the buyer;

(ii)  minimize the cost of hedging through the use of naturally offsetting
      positions (borrowing in local currency), netting, pooling; and

(iii) where possible, sell product in the functional currency of the producing
      operation.

The Company's identifiable foreign exchange exposures result primarily from the
anticipated purchase of product from affiliates and third-party suppliers along
with the repayment of intercompany loans with foreign subsidiaries denominated
in foreign currencies. The Company periodically identifies areas where we do not
have naturally occurring offsetting positions and then purchases hedging
instruments to protect against anticipated exposures. There are no such hedging
instruments in place at February 28, 2001 or through the date of this filing.
The Company's financial position is not materially sensitive to fluctuations in
exchange rates as any gains or losses on foreign currency exposures are
generally offset by gains and losses on underlying payables, receivables and net
investments in foreign subsidiaries.

Interest Rate Risk - Given our leverage, we are exposed to interest rate risk
- ------------------
from changes in interest rates. We have periodically utilized interest rate swap
agreements historically to manage overall financing costs and interest

                                       20
<PAGE>

rate risk. We had no such agreements in place at February 28, 2001 or through
the date of this filing. Our Senior Credit Agreement stipulates that the lower
of 50% of our total debt or $200.0 million be fixed interest rate obligations.
We are in compliance with this requirement.


PART II -  OTHER INFORMATION
Item 1 - Legal Proceedings
- --------------------------

In connection with the disposition of Barry Wright Corporation in June 2000,
Actuant indemnified the buyer for certain matters. The buyer made an
indemnification claim for damages of approximately $6 million involving a
specific contract. Actuant is investigating the claim and investigating the
purchaser's compliance with the purchase agreement, but believes that it has
viable defenses to the claim. The Company intends to vigorously defend the
claim. Based on the information presently available, management believes the
claim will not have a material impact on its financial position or results of
operations.

Item 4 - Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------

The Annual Meeting of Shareholders was held on January 9, 2001 to elect a board
of seven directors and to vote on a number of proposals. Each director nominee
was elected. The number of votes for each nominee is set forth below:

<TABLE>
<CAPTION>
                                     Share Votes For       Share Votes Withheld
                                -----------------------  ------------------------
<S>                             <C>                      <C>
H. Richard Crowther                    35,073,306              413,687
Richard A. Kashow                      35,076,677              410,316
Richard G. Sim                         35,037,148              449,845
Gustav H.P. Boel                       35,053,218              433,775
Bruce S. Chelberg                      35,066,742              420,251
William P. Sovey                       35,063,901              423,092
Robert C. Arzbaecher                   35,072,315              414,678
</TABLE>


In addition, the following proposals were voted on at the January 9, 2001 annual
meeting:

(a)   Proposal to approve the Actuant Corporation 2001 Stock Plan.

      FOR                AGAINST                      ABSTAIN
      20,252,025         8,787,896                    113,335

(b)   Proposal to approve the Actuant Corporation 2001 Outside Directors' Stock
      Option Plan.

      FOR                AGAINST                      ABSTAIN
      24,514,377         4,382,099                    256,780

(c)   Proposal to approve the Articles of Amendment to change the name of the
      Company.

      FOR                AGAINST                      ABSTAIN
      35,119,127         162,485                      205,381

(d)   Proposal to approve the Articles of Amendment to effect a five-for-one
      reverse split.

      FOR                AGAINST                      ABSTAIN
      34,052,083         1,194,260                    240,650

                                       21
<PAGE>

(e)   Proposal to approve the Articles of Amendment to reduce the number of
      shares of common stock .

      FOR                AGAINST                      ABSTAIN
      34,691,648         521,433                      273,912

(f)   Proposal to approve a shareholder's proposal concerning shareholder rights
      plan.

      FOR                AGAINST                      ABSTAIN
      14,444,291         14,215,231                   493,734

(g)   The following verbal proposals presented at the annual meeting of
      shareholders were voted 0 shares FOR each proposal and 35,486,993 shares
      AGAINST each proposal:

      1.   That shareholders should have the opportunity to vote on auditors at
           the 2001 and subsequent annual meetings.

      2.   That the Board be required to have at least 9 directors.


      3.   That the 2001 and subsequent proxy statements list all the outside
           directorships, including non-profit organizations, held by each
           director.


      4.   That confidential voting be allowed at the 2001 and subsequent annual
           meetings.

      5.   That the annual meeting start between the hours of 10:00 a.m. and
           3:00 p.m. and not at 8:00 a.m.


Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------

(a)  See Index to Exhibits on page 24, which is incorporated herein by
     reference.

                                       22
<PAGE>

                                    SIGNATURE


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.


                                       ACTUANT CORPORATION
                                       (Registrant)



Date:  April 13, 2001                  By: /s/ Andrew G. Lampereur
                                          ------------------------
                                       Andrew G. Lampereur
                                       Chief Financial Officer

                                       (Principal Financial and
                                       Accounting Officer and duly
                                       authorized to sign on behalf of
                                       the registrant)

                                       23
<PAGE>

                               ACTUANT CORPORATION
                               (the "Registrant")
                          (Commission File No. 1-11288)

                          QUARTERLY REPORT ON FORM 10-Q
                     FOR THE QUARTER ENDED FEBRUARY 28, 2001
                                INDEX TO EXHIBITS
<TABLE>
<CAPTION>
                                                                       Incorporated Herein                 Filed
  Exhibit                      Description                               By Reference To                 Herewith
- ------------   --------------------------------------------  -----------------------------------------  ------------
<S>            <C>                                           <C>                                        <C>
    4.7        Amendment to Articles of Incorporation                                                        X
               effecting the name change

    4.8        Amendment to Articles of Incorporation                                                        X
               effecting the reverse stock split

    4.9        Amended and restated Articles of                                                              X
               Incorporation

   10.23       Actuant Corporation 2001 Stock Plan           Exhibit B to the Registrant's Proxy
                                                             Statement, dated December 1, 2000 for
                                                             the 2001 Annual Meeting of Shareholders

   10.24       Actuant Corporation 2001 Outside              Exhibit C to the Registrant's Proxy
               Directors' Stock Option Plan                  Statement, dated December 1, 2000 for
                                                             the 2001 Annual Meeting of Shareholders
</TABLE>

                                       24
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.7
<SEQUENCE>2
<FILENAME>dex47.txt
<DESCRIPTION>ARTICLES OF AMENDMENT STOCK (APPLIED POWER)
<TEXT>

<PAGE>

Sec. 180.1006           State of Wisconsin
Wis. Stats.   Department of Financial Institutions


             ARTICLES OF AMENDMENT - STOCK, FOR-PROFIT CORPORATION


A.   The present corporate name (prior to any change effected by this amendment)
     is:

    APPLIED POWER INC.
    -------------------

Text of Amendment (Refer to the existing articles of incorporation and the
instructions on the reverse of this form.  Determine those items to be changed
and set forth the number identifying the paragraph in the articles of
incorporation being changed and how the amended paragraph is to read.)

RESOLVED, THAT the articles of incorporation be amended as follows:

ARTICLE I IS HEREBY AMENDED TO READ IN ITS ENTIRETY AS FOLLOWS:

                                   ARTICLE I
                                      Name

The name of the corporation is Actuant Corporation.

B.   Amendment(s) adopted on   JANUARY 9, 2001
                               ---------------

(Indicate the method of adoption by checking (X) the appropriate choice below.)

     (    )  In accordance with sec. 180.1002, Wis. Stats. (By the Board of
     Directors)
OR
     ( X  )  In accordance with sec. 180.1003, Wis. Stats. (By the Board of
     Directors and Shareholders)
OR
     (    )  In accordance with sec. 180.1005, Wis. Stats. (By Incorporators or
     Board of Directors, before issuance of shares)

C.   Executed on   JANUARY 9, 2001             /s/ Robert C. Arzbaecher
                   ---------------            --------------------------------
                                                        (Signature)
Title:  (  X  ) President  (    ) Secretary
or other officer title ____________________        Robert C. Arzbaecher
                                                   ---------------------------
                                                        (Printed Name)

This document was drafted by     WALTER J. SKIPPER
                                 -----------------
                    (Name the individual who drafted the document)
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.8
<SEQUENCE>3
<FILENAME>dex48.txt
<DESCRIPTION>ARTICLES OF AMENDMENT-STOCK (ACTUANT)
<TEXT>

<PAGE>

Sec. 180.1006                  State of Wisconsin
Wis. Stats.           Department of Financial Institutions


             ARTICLES OF AMENDMENT - STOCK, FOR-PROFIT CORPORATION


A.   The present corporate name (prior to any change effected by this amendment)
     is:

   ACTUANT CORPORATION
   -------------------

Text of Amendment (Refer to the existing articles of incorporation and the
instructions on the reverse of this form.  Determine those items to be changed
and set forth the number identifying the paragraph in the articles of
incorporation being changed and how the amended paragraph is to read.)

RESOLVED, THAT the articles of incorporation be amended as follows:

SECTION 3.1 IS HEREBY AMENDED TO READ IN ITS ENTIRETY AS SET FORTH ON EXHIBIT A
ATTACHED HERETO.

THE EFFECTIVE TIME OF THESE ARTICLES OF AMENDMENT SHALL BE AT 8:00 A.M. CENTRAL
TIME ON JANUARY 25, 2001.

B.   Amendment(s) adopted on   JANUARY 9, 2001
                               ---------------

(Indicate the method of adoption by checking (X) the appropriate choice below.)

     (       )  In accordance with sec. 180.1002, Wis. Stats. (By the Board of
     Directors)
OR
     (   X   )  In accordance with sec. 180.1003, Wis. Stats. (By the Board of
     Directors and Shareholders)
OR
     (       )  In accordance with sec. 180.1005, Wis. Stats. (By Incorporators
     or Board of Directors, before issuance of shares)

C.   Executed on   JANUARY 9, 2001             /s/ Robert C. Arzbaecher
                   ------------------------    ---------------------------------
                                                       (Signature)
Title:  (  X  ) President  (    ) Secretary
or other officer title                             Robert C. Arzbaecher
                      ---------------------    ---------------------------------
                                                       (Printed Name)

This document was drafted by     WALTER J. SKIPPER
                                 -----------------
                    (Name the individual who drafted the document)
<PAGE>

                                  EXHIBIT A TO
                            ARTICLES OF AMENDMENT OF
                              ACTUANT CORPORATION

     "3.1 Number of Shares and Classes.  The aggregate number of shares which
the Corporation shall have authority to issue is as follows:

          (a)  Class A Common Stock.  16,000,000 shares of Class A Common Stock,
     having a par value of $.20 per share.
          (b)  Class B Common Stock.  1,500,000 shares of Class B Common Stock,
     having a par value of $.20 per share.
          (c)  Cumulative Preferred Stock.  160,000 shares of Cumulative
     Preferred Stock, having a par value of $1.00 per share."

     Upon the amendment of this Section 3.1, every five (5) issued and
outstanding shares of Class A Common Stock, $.20 par value per share (the "Old
Common Stock") shall automatically and without action on the part of the
shareholders, be converted into and reconstituted as one (1) share of Class A
Common Stock, $.20 par value per share (the "New Common Stock"), subject to the
treatment of the fractional share interests as described below and every five
shares of Class B Common Stock and Cumulative Preferred Stock authorized shall
automatically and without action on the part of the shareholders, be converted
into and reconstituted as one (1) share of Class B Common Stock or Cumulative
Preferred Stock, respectively.  Each holder of a certificate or certificates
that, immediately prior to this Amendment becoming effective pursuant to the
Wisconsin Business Corporation Law, represented outstanding shares of the Old
Common Stock (the "Old Certificates") shall be entitled to receive a certificate
or certificates for the number of shares of New Common Stock they own by
presenting their Old Certificates to the Corporation's transfer agent for
cancellation and exchange.  No scrip or fractional certificates shall be issued.
The Corporation shall aggregate and sell any fractional interests of a
shareholder and remit the proceeds from such sale to shareholders that would
otherwise receive fractional shares.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.9
<SEQUENCE>4
<FILENAME>dex49.txt
<DESCRIPTION>ARTICLES OF RESTATEMENT
<TEXT>

<PAGE>

                              ACTUANT CORPORATION

                            ARTICLES OF RESTATEMENT


     The undersigned officer of Actuant Corporation (the "Corporation"), a
Wisconsin corporation, hereby certifies that:

     1.   The Board of Directors of the Corporation has adopted the
          Restated Articles of Incorporation (the "Restated Articles") in
          the form attached hereto as Exhibit A in accordance with Wis.
                                      ---------
          Stat. (S) 180.1007.

     2.   The Restated Articles do not contain an amendment to the articles of
          incorporation of the Corporation requiring shareholder approval.

     3.   The Restated Articles supersede the original articles of
          incorporation, any restated articles of incorporation previously
          adopted and all amendments to the original and any restated articles
          of incorporation of the Corporation.

     Executed this 30th day of January, 2001.



                                        /s/ Robert C. Arzbaecher
                                    ------------------------------------------
                                    Robert C. Arzbaecher, President and
                                    Chief Executive Officer



This document was drafted by:

Walter J. Skipper
Quarles & Brady LLP
411 East Wisconsin Avenue
Milwaukee, WI 53202-4497
<PAGE>

                                                                       Exhibit A
                                                                       ---------


                       RESTATED ARTICLES OF INCORPORATION
                                       OF
                              ACTUANT CORPORATION


     These Restated Articles of Incorporation supersede and take the place of
the heretofore existing Restated Articles of Incorporation and any amendments
thereto.

                                   ARTICLE I.

                                      Name

     The name of the Corporation is Actuant Corporation.

                                  ARTICLE II.

                                    Purposes

     The purposes for which this Corporation is organized are to engage in any
lawful activity within the purposes for which corporations may be organized
under the Wisconsin Business Corporation Law.

                                  ARTICLE III.

                                 Capital Stock

     3.1  Number of Shares and Classes.  The aggregate number of shares which
the Corporation shall have authority to issue is as follows:

          (a) Class A Common Stock.  16,000,000 shares of Class A Common Stock,
     having a par value of $.20 per share.

          (b) Class B Common Stock.  1,500,000 shares of Class B Common Stock,
     having a par value of $.20 per share.

          (c) Cumulative Preferred Stock.  160,000 shares of Cumulative
     Preferred Stock, having a par value of $1.00 per share.

     3.2  Relative Rights of Class A and Class B Common Stock.  The relative
rights and preferences of shares of Class A Common Stock and Class B Common
Stock are as follows:

          (a) Voting.  On all matters other than the election of the Board of
     Directors, the holders of Class A Common Stock and Class B Common Stock (no
     class voting as a separate class unless otherwise required by the Wisconsin
     Business Corporation Law) shall possess full and equal voting power of one
     vote per share.  On the election of the Board of Directors,

                                      A-1
<PAGE>

     and except as otherwise provided below, the holders of the Class A Common
     Stock, together with the holders of Cumulative Preferred Stock of all
     series having voting power (no class voting as a separate class) shall
     elect a maximum minority of the number of directors to be elected and the
     holders of the Class B Common Stock shall elect a minimum majority of the
     number of directors to be elected. Although the maximum minority of the
     number of directors to be elected by the holders of the Class A Common
     Stock, together with the holders of the Cumulative Preferred Stock having
     voting power, shall at no time be less than one, the determination of the
     maximum minority of the number of directors shall at all times be made
     without regard to fractions, the holders of Class B Common Stock to elect a
     minimum majority of one if an odd number directors are to be elected or two
     if an even number of directors are to be elected. In the event that there
     are no shares of Class B Common Stock outstanding, the holders of Class A
     Common Stock, together with the holders of Cumulative Preferred Stock of
     all series having voting power (no class voting as a separate class), shall
     elect all of the directors to be elected. A director, once elected and duly
     qualified, may be removed only by the requisite affirmative vote of the
     holders of that class of stock by which such director was elected.

          (b) Stock Dividends.  Stock dividends on Class A Common Stock shall be
     paid only in Class A Common Stock and stock dividends on Class B Common
     Stock shall be paid only in Class B Common Stock.

          (c) Conversion of Class B Common Stock:

               (i) Optional Conversion.  Any holder of shares of Class B Common
          Stock may convert any or all such shares into shares of Class A Common
          Stock on a share-for-share basis, at any time or from time to time, by
          surrender to the Corporation of the certificate(s) representing such
          shares of Class B Common Stock to be converted by the holder and by
          giving written notice to the Corporation of the holder's election to
          convert in the form prescribed by the Corporation.  The Corporation
          shall, as soon as practicable after receipt of such written notice and
          the proper surrender to the Corporation of the certificate(s)
          representing the shares of Class B Common Stock to be so converted,
          issue and deliver to, or in accordance with the instructions of, the
          holder certificates for the number of shares of Class A Common Stock
          to which the holder shall be entitled and for the number, if any, of
          shares of Class B Common Stock represented by the certificate(s)
          surrendered which are not being so converted.  Such conversion shall
          be deemed to have been effective immediately prior to the close of
          business on the date on which the Corporation shall have received both
          such written notice and the properly surrendered certificate(s) for
          shares of Class B Common Stock to be converted (the "Conversion
          Date"), and at such time the rights of the holder as to the converted
          shares shall cease and the person or persons entitled to receive the
          shares of Class A Common Stock issuable upon the conversion shall be
          deemed to be, and shall be treated for all purposes as, the record
          holder or holders of such Class A Common Stock on the Conversion Date.

                                      A-2
<PAGE>

               (ii) Automatic Conversion.  When the number of outstanding shares
          of Class B Common Stock is reduced to less than 500,000 (which number
          shall be appropriately adjusted to reflect capital adjustments
          resulting from a stock split, stock dividend, reverse stock split,
          recapitalization, reorganization, merger, consolidation, combination
          or exchange of shares, and the like), all of the then outstanding
          shares of Class B Common Stock shall be deemed without further action
          on the part of any person (including, without limitation, the
          Corporation and its shareholders) to be immediately and automatically
          converted into shares of Class A Common Stock on a share-for-share
          basis, and stock certificates formerly representing outstanding shares
          of Class B Common Stock shall thereupon and thereafter be deemed to
          represent a like number of shares of Class A Common Stock possessing
          all the rights and privileges incident thereto.

               (d)  Other.  Except as set forth in subsections (a), (b) and (c),
          each share of Class A Common Stock and Class B Common Stock shall be
          equal in every respect and entitled to the same rights and privileges,
          and shall be treated in the same manner with respect to any stock
          splits or stock dividends; such shares are collectively referred to
          herein as "Common Stock ".

     3.3  Directors' Authority to Establish Series of Cumulative Preferred
Stock.  The Board of Directors is authorized to divide the Cumulative Preferred
Stock into series and to fix and determine the relative rights and preferences
of each series.  Each series shall be so designated by the Board of Directors as
to distinguish the shares thereof from the shares of all other series.  All
shares of Cumulative Preferred Stock shall be identical except as to the
following relative rights and preferences, as to which the Board of Directors
may establish variations between different series not inconsistent with the
provisions of these Articles:

          (a)  The rate of dividend;

          (b)  The price at and the terms and conditions on which shares may be
     redeemed;

          (c)  The amount payable upon shares in the event of voluntary or
     involuntary liquidation;

          (d)  Sinking fund provisions for the redemption or purchase of shares;

          (e)  The terms and conditions on which shares may be converted into
     Common Stock, if the shares of any series are issued with the privilege of
     conversion;

          (f)  Voting rights, if any, subject to the provisions of Section 3.2
     hereof.

     3.4  Dividends and Distributions.  The holders of Cumulative Preferred
Stock of all series shall be entitled to receive dividends at such rates upon
such conditions and at such times as shall be stated in the resolution or
resolutions of the Board of Directors providing for the issuance thereof. All
dividends on Cumulative Preferred Stock shall be without priority as between
series, shall be

                                      A-3
<PAGE>

paid out of net earnings or any surplus properly applicable to the payment of
dividends, and shall be paid or set apart before any dividends or other
distributions shall be paid or set apart for Common Stock; provided, however,
that dividends may be declared and paid on Common Stock in Common Stock prior to
dividends on the Cumulative Preferred Stock being paid or set apart. Any
dividends paid upon the Cumulative Preferred Stock in an amount less than full
cumulative dividends accrued and in arrears upon all Cumulative Preferred Stock
outstanding shall, if more than one series be outstanding, be distributed among
the different series in proportion to the aggregate amounts which would be
distributable to the Cumulative Preferred Stock of each series if full
cumulative dividends were declared and paid thereon. The dividends on the
Cumulative Preferred Stock shall be cumulative, so that if at any time the full
amount of dividends accrued and in arrears on the Cumulative Preferred Stock
shall not be paid, the deficiency shall be payable before any dividends or other
distributions shall be paid or set apart on Common Stock (other than a
distribution payable in shares of Common Stock), and before any sums shall be
paid or set apart for the redemption of less than all of the Cumulative
Preferred Stock then outstanding. Dividends on Cumulative Preferred Stock shall
accrue from date of issue. Whenever all dividends accrued and in arrears on
Cumulative Preferred Stock shall have been declared and shall have been paid or
set apart, the Board of Directors may declare dividends on Common Stock out of
the remaining net profits of the Corporation, or out of surplus applicable to
the payment of such dividends.

     3.5  Liquidation Rights.  In the event of the voluntary liquidation or
winding up of the Corporation, the holders of Cumulative Preferred Stock shall
be entitled to receive out of the assets of the Corporation in full the fixed
voluntary liquidation amount thereof, plus accrued dividends thereon, all as
provided in the resolution or resolutions providing for the issuance thereof,
before any amount shall be paid to the holders of Common Stock.  In the event of
the involuntary liquidation of the Corporation, the holders of the Cumulative
Preferred Stock shall be entitled to receive out of the assets of the
Corporation in full the fixed involuntary liquidation amount thereof, plus
accrued dividends thereon, all as provided in the resolution or resolutions
providing for the issuance thereof, before any amount shall be paid to the
holders of Common Stock.  If, upon the voluntary or involuntary liquidation or
winding up of the Corporation, the assets of the Corporation shall be
insufficient to pay the holders of all of the Cumulative Preferred Stock the
entire amounts to which they may be entitled, the assets of the Corporation
shall, if more than one series be outstanding, be distributed among the
different series in proportion to the aggregate amounts which would be
distributable to the Cumulative Preferred Stock of each series if sufficient
assets were available.  The holders of Cumulative Preferred Stock shall not
otherwise be entitled to participate in any distribution of assets of the
Corporation, which shall be divided or distributed among the holders of Common
Stock.  No consolidation or merger of the Corporation with or into another
corporation or corporations and no sale by the Corporation of all or
substantially all of its assets shall be deemed a liquidation or winding up of
the Corporation.

     3.6  Voting Rights of Cumulative Preferred Stock.  The holders of
Cumulative Preferred Stock shall have only such voting rights as shall be stated
in the resolution or resolutions of the Board of Directors providing for the
issuance thereof, except to the extent that such limitation may be inconsistent
with the provisions of the Wisconsin Business Corporation Law.

                                      A-4
<PAGE>

     3.7  Repurchase, etc. of Shares.  The Corporation, acting through its Board
of Directors, shall have the right to purchase, take, receive, or otherwise
dispose of its own shares, to the fullest extent provided by law at the time of
any such transaction.

                                  ARTICLE IV.

                               Pre-emptive Rights

     No holder of any stock of the Corporation shall have any pre-emptive or
other subscription rights nor be entitled, as of right, to purchase or subscribe
for any part of the unissued stock of this Corporation or any additional stock
issued by reason of any increase of authorized capital stock of this Corporation
or other securities whether or not convertible into stock of the Corporation.

                                   ARTICLE V.

                                     Voting

     The affirmative vote of two-thirds of all shares entitled to vote thereon
(and/or of each class which shall be entitled to vote thereon as a class) shall
be required in order to constitute shareholder approval or adoption of any of
the following:

          (a) Merger or consolidation of the Corporation.

          (b) Liquidation of the Corporation.

          (c) Sale, lease, exchange or other disposition of all or substantially
     all assets of the Corporation.

          (d) Amendment of the Articles of Incorporation or the By-laws.

          (e) Removal of any director of the Corporation.

                                  ARTICLE VI.

                          Registered Office and Agent

     The address of the registered office of the Corporation is c/o Quarles &
Brady LLP, 411 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, and the name
of the registered agent at such office is Anthony W. Asmuth III.

                                      A-5
<PAGE>

                                  ARTICLE VII.

                                   Directors

     The number of directors constituting the Board of Directors shall be such
number, not less than three (3), as shall be fixed from time to time by the By-
laws of the Corporation, subject to the provisions of this Article VII.  The By-
laws may provide for the division of the Board of Directors into two or three
classes of directors and for the terms and manner of election thereof not
inconsistent with the applicable provisions of the Wisconsin Business
Corporation Law.  In the event of such classification and provided that shares
of Class B Common Stock are then outstanding, each class of directors so created
shall contain as nearly as possible an equal number of directors elected by the
holders of Class A Common Stock and Cumulative Preferred Stock having voting
power, as a group, and shall also contain as nearly as possible an equal number
of directors elected by the holders of Class B Common Stock.  In the event there
should be two classes of directors specified by the By-laws, then from the next
succeeding annual meeting of shareholders and for so long as there are two
classes of directors the total number of directors shall not be less than five
(5).  In the event there should be three classes of directors specified by the
By-laws, then from the next succeeding annual meeting of shareholders and for so
long as there are three classes of directors the total number of directors shall
not be less than seven (7).  Each director shall serve for the term for which
such director was elected, regardless of any subsequent change in the By-laws
relating to the length of directors' terms.

                                 ARTICLE VIII.

                                   Amendments

     These Articles may be amended in the manner authorized by law at the time
of amendment, provided that the provisions of Article V hereof have been
satisfied.

                                 *  *  *  *  *

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</TEXT>
</DOCUMENT>
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