<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 3, 2000
SAUER-DANFOSS INC.
(Exact name of registrant as specified in its charter)
DELAWARE 333-48299 36-3482074
(State or other jurisdiction File Number (I.R.S. Employer
of incorporation) Identification No.)
2800 EAST 13TH STREET
AMES, IOWA 50010
(Address of principal executive offices)
Registrant's telephone number, including area code: (515) 239-6000
SAUER INC.
Former Name if Changed Since Last Report
Copy to:
James W. Kapp, Jr.
Spencer Fane Britt & Browne LLP
1000 Walnut, Suite 1400
Kansas City, MO 64106
(816) 292-8141
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OR ASSETS.
On May 3, 2000, pursuant to the terms of a Stock Exchange Agreement
dated January 22, 2000 (the "Stock Exchange Agreement"), by and among the
Registrant, Danfoss Murmann Holding A/S (the "Holding Company"), Danfoss A/S,
and K. Murmann Verwaltungs GmbH, the Registrant acquired all of the
outstanding common stock of Danfoss Fluid Power A/S and Danfoss Fluid Power
Inc. (the "Danfoss Fluid Power Companies") from the Holding Company in
exchange for 16,149,812 shares (the "Shares") of the Registrant's common
stock (the "Transaction"). Immediately following the consummation of the
Transaction and termination of the Limited Partnership Agreement (defined
below), the Holding Company owned or had the power to vote 26,512,312 shares
of the Registrant's common stock (representing approximately 58.5% of the
Registrant's outstanding shares).
The consideration given in connection with the Transaction was
determined by arms-length negotiations between the parties. The primary
parties involved in the negotiations were the Registrant, on the one hand,
and Danfoss A/S, on the other. The Danfoss Fluid Power Companies were
subsidiaries of Danfoss A/S before being transferred to the Holding Company,
a Danish company formed to effect the Transaction and owned and controlled in
equal shares by Danfoss A/S and entities and persons under the control of
Klaus H. Murmann, the Chairman of the Registrant. Prior to the execution of
the Stock Exchange Agreement, there was no material relationship between
Danfoss A/S and the Registrant or any of its affiliates, directors, or
officers or any associates of any such directors or officers.
In connection with the Transaction, the Registrant terminated the
Amended and Restated Limited Partnership Agreement dated April 14, 1998, by
and among the Registrant, Sauer-Sundstrand GmbH, Sauer GmbH, Klaus H. Murmann
& Co. KG, and Sauer GmbH & Co. Hydraulik KG (the "Limited Partnership
Agreement"). On termination of the Limited Partnership Agreement, the
Registrant was required to issue 2,250,000 shares of the Registrant's common
stock (calculated pursuant to the termination provisions of the Limited
Partnership Agreement) in exchange for the interests of the limited partners
and to pay $6,250,000 in cash in respect of certain taxes payable by the
limited partners related to such exchange.
The Danfoss Fluid Power Companies are worldwide leaders in the
design and manufacture of orbital motors, hydrostatic steering units,
proportional load-sensing valves, gear pumps, and electro-hydraulics for use
by original equipment manufacturers of off-highway mobile equipment (the
"Fluid Power Business"). The assets owned by the Danfoss Fluid Power
Companies will continue to be used in the Fluid Power Business under the
Registrant's ownership.
ITEM 5. OTHER EVENTS.
The Registrant issued one press release on April 27, 2000 and two on
May 3, 2000, copies of which are attached hereto as Exhibits 99.1, 99.2, and
99.3 and incorporated herein by reference.
-2-
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements.
In accordance with Item 7(a)(4) of Form 8-K, the financial statements
required by this Item 7(a) shall be filed by amendment to this Form 8-K no later
than 60 days after the date that this Form 8-K is required to be filed.
(b) Pro Forma Financial Information.
In accordance with Item 7(b)(2) of Form 8-K, the pro forma financial
statements required by this Item 7(b) shall be filed by amendment to this Form
8-K no later than 60 days after the date that this Form 8-K is required to be
filed.
(c) Exhibits.
The exhibits to this report are listed in the Exhibit Index set forth
elsewhere herein.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
SAUER-DANFOSS INC.
/s/ Kenneth D. McCuskey
Kenneth D. McCuskey, Vice President-Finance
and Treasurer
Dated: May 16, 2000
-3-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
2.1 The Stock Exchange Agreement dated January 22, 2000,
by and among the Registrant, Danfoss A/S, the Holding
Company, and K. Murmann Verwaltungsgesellschaft mbH
is attached as Annex A to the Registrant's Proxy
Statement filed on March 28, 2000, and is incorporated
herein by reference.
99.1 Press Release dated April 27, 2000
99.2 Press Release dated May 3, 2000
99.3 Press Release dated May 3, 2000
</TABLE>
-4-
<PAGE>
SAUER INC.
- ------------------------------------------------------------------------
PRESS RELEASE
FOR IMMEDIATE RELEASE
APRIL 27, 2000
SAUER INC. ANNOUNCES RECORD FIRST QUARTER 2000 SALES AND EARNINGS
AMES, IOWA, USA, APRIL 27, 2000--SAUER INC. (NYSE: SHS), today announced
record first quarter 2000 net income of $8.2 million, slightly higher than
first quarter 1999 net income of $8.1 million. First quarter net income per
share matched last year's record earnings of $0.30 per share. Net sales for
the quarter were also a record at $163.5 million, up 6.8 percent from 1999
net sales of $153.1 million.
"We are very pleased to report these improved results. As we enter 2000, we
are excited to see gains in most of our markets. In particular, we are happy
to see solid gains in our agricultural and turf-care markets," commented
Klaus H. Murmann, Chairman and Chief Executive Officer.
First quarter 2000 sales for the turf care market were up 13.6 percent,
construction was up 9.8 percent, agriculture was up 5.3 percent, specialty
vehicle was up 1.2 percent, and distribution and after-market was up 8.5
percent. Road building was down 6.0 percent compared with first quarter 1999.
Total backlog at the end of the first quarter 2000 was $251.2 million, an
increase of 6.8 percent from last year's level of $235.2 million. Orders
received for the first quarter were $162.3 million, an increase of 28.3
percent over the same period last year.
SEGMENT RESULTS
North American first quarter 2000 net sales were $119.0 million, an increase
of 9.5 percent from 1999 net sales of $108.7 million. Net earnings for North
America for the first quarter 2000 were $7.1 million, down 8.7% from last
year's $7.8 million, reflecting primarily investments made in our new
Lawrence, Kansas, facility. Total backlog at the end of the first quarter
2000 was $177.6 million, up 14.5 percent from last year's level of $155.1
million. Orders received for the first quarter were $112.6 million, an
increase of 49.7 percent over the same period last year.
European first quarter 2000 net sales were $64.2 million, up 2.7 percent from
1999 net sales of $62.6 million, and up 9.1% excluding the impact of currency
fluctuations. Net income for Europe for the first quarter 2000 was $2.2
million, compared with $1.1 million for 1999. Total backlog at the end of the
quarter was $70.8 million, down 7.9 percent from last year's level of $76.9
million, but 3.9% higher excluding the impact of currency. Orders received
for the first quarter were $48.0 million, level with last year, but 12.6%
higher excluding the impact of currency.
East Asian first quarter 2000 net sales were $4.3 million, an increase of 2.3
percent over 1999.
<PAGE>
REVIEW OF QUARTERLY RESULTS AND OUTLOOK
Klaus H. Murmann, Chairman and Chief Executive Officer, commented, "I am
pleased with the increased orders and backlog, as well as the improved
performance in our European operations. Also encouraging are our increased
sales from new customer programs. As we continue to look to 2000, we are
cautiously optimistic for a better year. The agricultural market continues to
show signs of improvement. Our sales in Europe appear to be growing somewhat,
and North American sales continue to remain strong. As we've previously
commented, on a stand-alone basis, Sauer would expect profits of about $0.90
per share for 2000, up from $0.68 in 1999. Taking into account the
amortizaton of goodwill and restructuring cost of the merger, we would expect
earnings to be in the range of $0.68 to $0.70 per share.
"We are also pleased to report that the integration of the Swedish company
NOB, which we acquired in January, is progressing well. We look forward to
the gains in electronics and electrohydraulics in Europe that this
acquisition brings us," commented Murmann.
DANFOSS MERGER
"Our merger with Danfoss Fluid Power, a worldwide leader in the design and
production of technically sophisticated mobile hydraulics, is scheduled to
close on May 3. Our customers and employees are looking forward to us
operating as one integrated worldwide company. Our global management team has
been working for over six months to bring together both companies. Sauer and
Danfoss sales and marketing teams have completed cross training, and we are
ready to move forward as Sauer-Danfoss Inc. The announced closing and moving
of our Newtown valve plant to Danfoss' Easley, South Carolina, location is on
schedule, and we are proceeding with our plans to rationalize our overlapping
European sales companies."
Sauer is a worldwide leader in the design, manufacture and sale of engineered
hydraulic systems and components for use primarily in applications of
off-highway mobile equipment. Sauer has manufacturing and engineering
capabilities in Europe, the United States and China, and has headquarters in
both Neumunster, Germany and Ames, Iowa. Sauer's common stock is listed on
the New York Stock Exchange under the symbol SHS and on the Frankfurt
Exchange under the symbol SAR.
THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
IN THE FORWARD-LOOKING STATEMENTS. THE COMPANY'S REPORTS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION PROVIDE A MORE DETAILED DESCRIPTION OF
THESE RISKS AND UNCERTAINTIES.
FOR FURTHER INFORMATION PLEASE CONTACT:
KENNETH D. MCCUSKEY
Treasurer and Secretary
Sauer Inc.
Ames, Iowa, USA
(515) 239-6364
<PAGE>
CONDENSED CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Thirteen Weeks Ended
Unaudited APRIL 2, April 4,
(Dollars in thousands except share and per share data) 2000 1999
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
NET SALES $ 163,479 $ 153,097
Cost of sales 120,573 114,082
- ---------------------------------------------------------------------------------------------------
Gross profit 42,906 39,015
Selling 6,394 6,620
Research and development 7,199 6,102
Administrative 10,719 8,064
- ---------------------------------------------------------------------------------------------------
Total operating expenses 24,312 20,786
- ---------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS 18,594 18,229
Nonoperating income (expenses):
Interest expense, net (2,156) (2,487)
Royalty income 179 175
Minority interest (2,917) (3,094)
Other, net (200) (117)
- ---------------------------------------------------------------------------------------------------
Income before income taxes 13,500 12,706
Income taxes (5,333) (4,642)
- ---------------------------------------------------------------------------------------------------
NET INCOME $ 8,167 $ 8,064
======================================================================================================
NET INCOME PER SHARE:
Basic and diluted net income per common share $ 0.30 $ 0.30
======================================================================================================
Basic weighted average shares outstanding 27,304,370 27,225,000
Diluted weighted average shares outstanding 27,306,341 27,225,000
Cash dividends per common share $ 0.07 $ 0.07
- ---------------------------------------------------------------------------------------------------
</TABLE>
BUSINESS SEGMENT INFORMATION BY GEOGRAPHIC AREA
<TABLE>
<CAPTION>
Thirteen Weeks Ended
Unaudited APRIL 2, April 4,
(Dollars in thousands) 2000 1999
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
NET SALES, including intersegment sales
North America $ 119,019 $108,691
Europe 64,227 62,562
Other 1,501 1,337
Intersegment sales (21,268) (19,493)
- ---------------------------------------------------------------------------------------------------
TOTAL $ 163,479 $153,097
======================================================================================================
NET INCOME
North America $ 7,121 $ 7,799
Europe 2,198 1,065
Other (1,152) (800)
- ---------------------------------------------------------------------------------------------------
TOTAL $ 8,167 $ 8,064
======================================================================================================
</TABLE>
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
Thirteen Weeks Ended
Unaudited APRIL 2, April 4,
(Dollars in thousands) 2000 1999
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 9,169 $ 5,061
Accounts receivable, net 100,449 73,305
Inventories 76,710 73,977
Other current assets 11,175 9,242
- ------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 197,503 161,585
Property, plant and equipment, net 265,038 269,485
Other assets 15,444 11,445
- ------------------------------------------------------------------------------------------------------
TOTAL ASSETS $477,985 $442,515
======================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and bank overdrafts $ 30,704 $ 19,312
Long-term debt due within one year 1,565 1,609
Accounts payable 40,731 39,064
Other accrued liabilities 45,107 30,285
- -------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 118,107 90,270
Long-term debt 111,081 110,934
Long-term pension liability 32,671 31,342
Deferred income taxes 5,881 5,448
Other liabilities 17,854 20,008
Minority interest in net assets of consolidated companies 36,651 33,761
Stockholders' equity 155,740 150,752
- -------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $477,985 $442,515
======================================================================================================
</TABLE>
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Thirteen Weeks Ended
Unaudited APRIL 2, April 4,
(Dollars in thousands) 2000 1999
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,167 $ 8,064
Depreciation and amortization 9,884 9,595
Minority interest in income of consolidated companies 2,917 3,094
Net change in receivables, inventories, and payables (29,976) (19,823)
Other, net 13,676 9,165
- -------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,668 10,095
- -------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for acquisitions, net of cash acquired (3,645) -
Purchases of property, plant and equipment (7,771) (15,415)
- -------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (11,416) (15,415)
- -------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on notes payable and bank overdrafts 12,205 1,123
Net borrowings of long-term debt 1,618 5,561
Cash dividends (1,925) (1,918)
Distribution to minority interest partners (28) (1,394)
- -------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 11,870 3,372
- -------------------------------------------------------------------------------------------------------
Effect of exchange rate changes (1,014) (135)
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 4,108 (2,083)
Cash and cash equivalents at beginning of year 5,061 8,891
- -------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,169 $ 6,808
======================================================================================================
</TABLE>
<PAGE>
- -------------------------------------------------------------------------
PRESS RELEASE
FOR IMMEDIATE RELEASE
MAY 3, 2000
SAUER INC. COMPLETES MERGER WITH DANFOSS FLUID POWER
AMES, IOWA, USA, MAY 3, 2000--SAUER INC. (NYSE: SHS) announced today the
completion of its previously announced merger with Danfoss Fluid Power A/S,
after receiving overwhelming shareholder approval at a special meeting of
Sauer shareholders held this morning in Ames, Iowa. Sauer will be renamed
Sauer-Danfoss Inc. The merger creates the world's largest focused mobile
hydraulics company.
Under the terms of the merger, all Danfoss Fluid Power A/S stock will be
exchanged for 16.2 million shares of Sauer common stock, with a value of
approximately $179 million. As a result of the merger, the company will have
approximately 46 million shares outstanding, on a fully diluted basis.
"We are excited to complete this merger and begin operating as Sauer-Danfoss
Inc.," commented Klaus H. Murmann, Chairman. "We look forward to the
opportunities this strategic combination will bring to our customers and the
combined organization. By combining our industry knowledge and design
capabilities, we can provide a truly integrated package of solutions to both
the leading global OEMs and regional vehicle manufacturers in our shared
end-markets. We will continue to provide the excellent customer service for
which both companies are well known. In addition, the synergies we expect to
experience by joining forces will enable us to compete more effectively in
our global marketplace, improve our purchasing and operating efficiencies,
and enhance our future profitability."
Common stock in Sauer-Danfoss Inc. will continue to be traded on the New York
Stock Exchange under the symbol SHS and on the Frankfort Stock Exchange under
the symbol SAR.
Sauer-Danfoss Inc. is a worldwide leader in the design, manufacture and sale
of engineered hydraulic systems and components for use primarily in
applications of off-highway mobile equipment. Sauer-Danfoss, with
approximately 6,200 employees worldwide and sales of about $840 million, has
manufacturing and engineering capabilities in Europe, the United States and
China, and principal business centers in Ames, Iowa, Neumunster, Germany, and
Nordborg, Denmark. More details online at www.sauer-danfoss.com.
FOR FURTHER INFORMATION PLEASE CONTACT:
KENNETH D. MCCUSKEY
Vice President - Finance
Sauer-Danfoss Inc.
Ames, Iowa, USA
(515) 239-6364
<PAGE>
- ----------------------------------------------------------------------------
PRESS RELEASE
FOR IMMEDIATE RELEASE
MAY 3, 2000
SAUER-DANFOSS INC. NAMES GLOBAL SENIOR MANAGEMENT TEAM
AMES, IOWA, USA, MAY 3, 2000--SAUER-DANFOSS INC. (NYSE: SHS) today announced
the members of its global senior management team, which will lead the company
following the close of the merger between Sauer Inc. and Danfoss Fluid Power
A/S. The senior management team is comprised of executives from both
companies.
Klaus H. Murmann, formerly Chairman and Chief Executive Officer of Sauer
Inc., will serve as Chairman of Sauer-Danfoss Inc. Jorgen Clausen, Chief
Executive Officer of Danfoss A/S, will serve as Vice Chairman.
Leading the company in the Executive Office will be David L. Pfeifle, of
Sauer Inc., who has been named President and Chief Executive Officer. Niels
Erik Hansen, formerly of Danfoss Fluid Power, will serve as Executive Vice
President and Chief Operating Officer.
The structure of the Global Management Team for Sauer-Danfoss Inc. has also
been announced, and is comprised of the following individuals:
- - David J. Anderson, of Sauer Inc., has been named Vice President-Sales and
Marketing, Americas and East Asia.
- - Hans J. Cornett, of Danfoss Fluid Power, has been named Vice
President-Sales and Marketing, Europe.
- - Per Have, of Danfoss Fluid Power, has been named Vice
President-Information Technology.
- - Richard Jarboe, of Danfoss Fluid Power, has been named Vice
President-Open Circuit.
- - Thomas Kittel, of Sauer Inc., has been named Vice President-Hydrostatics,
Europe.
- - Henrik Krabsen, of Danfoss Fluid Power, has been named Vice
President-Valves.
- - Finn Lyhne, of Danfoss Fluid Power, has been named Vice President-Motors
and Steering.
- - Kenneth D. McCuskey, of Sauer Inc., has been named Vice
President-Finance.
- - Albert Zahalka, of Sauer Inc., has been named Vice
President-Electrohydraulics.
The Global Management Team will be rounded out with the addition of a Vice
President-Hydrostatics, US, who is yet to be named.
<PAGE>
"The senior management team blends together the best talents of both Sauer
Inc. and Danfoss Fluid Power," commented Klaus H. Murmann, Chairman of
Sauer-Danfoss Inc. "We are extremely fortunate that we were able to draw from
such a talented pool of existing management. They have the necessary
management skills, product and market knowledge, customer relationships, and
global perspectives to successfully lead Sauer-Danfoss Inc. as the world's
largest focused mobile hydraulics company."
Sauer-Danfoss Inc. is a worldwide leader in the design, manufacture and sale
of engineered hydraulic systems and components for use primarily in
applications of off-highway mobile equipment. Sauer-Danfoss, with
approximately 6,200 employees worldwide and sales of about $840 million, has
manufacturing and engineering capabilities in Europe, the United States and
China, and principal business centers in Ames, Iowa, Neumunster, Germany, and
Nordborg, Denmark. More details online at www.sauer-danfoss.com.
FOR FURTHER INFORMATION PLEASE CONTACT:
KENNETH D. MCCUSKEY
Vice President - Finance
Sauer-Danfoss Inc.
Ames, Iowa, USA
(515) 239-6364
