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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: March 1, 2000
Sauer Inc.
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(Exact name of Registrant as specified in its charter)
Delaware 333-48299 36-3482074
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
2800 East 13th Street, Ames, Iowa 50010
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(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (515) 239-6000
Exhibit Index on Page 3
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2
Item 5. Other Events.
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This Current Report on Form 8-K is being filed for the purpose of
disclosing one press release filed as Exhibit 99.4 hereto and which is herein
incorporated by reference in its entirety.
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EXHIBIT INDEX
<S> <C>
Exhibit
No. Description
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99.4 Press Release, dated February 22, 2000
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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 hereunto duly authorized.
SAUER INC.
Date: March 1, 2000
By: /s/ Kenneth D. McCuskey
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Name: Kenneth D. McCuskey
Title: Secretary
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FOR IMMEDIATE RELEASE
FEBRUARY 22, 2000
SAUER INC. ANNOUNCES FOURTH QUARTER SALES AND EARNINGS
AMES, IOWA, USA, FEBRUARY 22, 2000--SAUER INC. (NYSE: SHS), today announced a
fourth quarter 1999 net loss of $1.4 million, or $0.05 per share, compared with
net income for the fourth quarter 1998 of $3.2 million, or $0.11 per share. Net
sales for the quarter were $118.3 million, down 7.0 percent from 1998 net sales
of $127.2 million. These results are in line with the Company's earnings
forecast issued on December 15, 1999.
Fourth quarter 1999 sales for the specialty vehicle market were up 10.1 percent
and construction was up 1.1 percent. Road building, turf care and agricultural
market sales were down 14.6 percent, 10.1 percent and 8.1 percent compared to
fourth quarter 1998, respectively.
Total backlog at the end of the fourth quarter 1999 was $252.4 million, down 3.6
percent from last year's level of $261.7 million. Orders received for the fourth
quarter were $142.8 million, an increase of 9.6 percent over the same period
last year.
TWELVE MONTH REVIEW
Net income for full year 1999 was $18.1 million, or $0.67 per share, compared
with $26.3 million, or $1.01 per share for 1998. Net sales for 1999 were $534.4
million, down 5.3 percent from 1998 net sales of $564.5 million. Orders received
for full year 1999 were $524.8 million, a decrease of 4.3 percent over the same
period last year. Cash flow from operations increased 23% to $77.8 million from
levels in 1998.
SEGMENT RESULTS
North American fourth quarter 1999 net sales were $84.0 million, a decrease of
4.1 percent from 1998 net sales of $87.6 million. Net earnings for North America
for the fourth quarter 1999 was a loss of $1.1 million compared with income of
$4.0 million for 1998. Net sales for the twelve months 1999 for North America
were $377.9 million, or 3.8% below 1998 net sales of $392.9 million, with net
income for 1999 of $17.0 million compared to $25.3 million for 1998. Total
backlog at the end of the fourth quarter 1999 was $172.4 million, down 3.1
percent from last year's level of $178.0 million. Orders received for the fourth
quarter were $97.5 million, an increase of 13.5 percent over the same period
last year.
European fourth quarter 1999 net sales were $48.0 million, or 9.3 percent below
1998 net sales of $52.9 million. Net earnings for Europe for the fourth quarter
1999 was a loss of $0.4 million compared with a loss of $0.6 million for 1998.
Net sales for the twelve months 1999 for Europe were $218.0 million, or 9.2%
below 1998 net sales of $240.0 million, with net income for 1999 of $2.5 million
compared with $5.7 million for 1998. Total backlog at the end of the fourth
quarter 1999 was $77.8 million, down 5.8 percent from last year's level of $82.6
million. Orders received for the fourth quarter were $43.7 million, level with
the same period last year.
East Asian fourth quarter 1999 net sales were $3.1 million, a decrease of 27.0
percent over 1998.
REVIEW OF QUARTERLY RESULTS AND OUTLOOK
Klaus H. Murmann, Chairman and Chief Executive Officer, commented, "Over half of
the $0.16 drop in earnings per share compared to fourth quarter 1998 is
accounted for by the decline in sales. Our road building, turf care and
agricultural markets were all down in the fourth quarter, as they were in the
third quarter. In addition, as previously
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reported, we were hit by setting up a reserve for a patent claim and from
costs relating to our transaction with Danfoss Fluid Power A/S.
"I am particularly pleased with our cash flow for 1999, with cash flow from
operations of $77.8 million being 23 percent above last year, despite our drop
in earnings. This was primarily driven by our good performance in reducing
inventories. Our announced acquisition of NOB in Sweden is also a highlight for
the quarter. This acquisition helps build our electronics and electrohydraulics
expertise in Europe in this important product area.
"As we look to 2000 we are optimistic that our turf care and agricultural
markets will show some improvement. The lower year over year decline in backlogs
for the fourth quarter compared to previous quarters and the increase in
incoming orders for the quarter are both encouraging signs.
"The recently announced merger with Danfoss Fluid Power is proceeding on
schedule. We already have many activities under way to ensure that we can
quickly realize the benefits upon closing of the transaction," concluded
Murmann.
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
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME
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Thirteen Weeks Ended Fiscal Year Ended
Unaudited DECEMBER 31, December 31, DECEMBER 31, December 31,
(Dollars in thousands except share and per share data) 1999 1998 1999 1998
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<S> <C> <C> <C> <C>
NET SALES $ 118,253 $ 127,246 $ 534,382 $ 564,524
Cost of sales 96,254 99,626 408,450 428,311
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Gross profit 21,999 27,620 125,932 136,213
Selling 5,919 6,013 24,727 24,942
Research and development 6,162 5,555 23,311 22,089
Administrative 9,829 8,031 33,655 29,571
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Total operating expenses 21,910 19,599 81,693 76,602
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INCOME FROM OPERATIONS 89 8,021 44,239 59,611
Nonoperating income (expenses):
Interest expense, net (2,164) (2,302) (8,566) (8,814)
Royalty income 429 382 976 986
Minority interest 175 (1,396) (6,526) (9,494)
Other, net (414) (117) (1,064) (576)
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Income (loss) before income taxes (1,885) 4,588 29,059 41,713
Income taxes 510 (1,390) (10,939) (15,379)
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NET INCOME (LOSS) $ (1,375) $ 3,198 $ 18,120 $ 26,334
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NET INCOME (LOSS) PER SHARE:
Basic and diluted net income (loss) per common share $ (0.05) $ 0.11 $ 0.67 $ 1.01
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Basic weighted average shares outstanding 27,223,820 27,225,000 27,225,036 26,148,288
Diluted weighted average shares outstanding 27,252,798 27,225,000 27,240,193 26,150,302
Cash dividends per common share $ 0.07 $ 0.07 $ 0.28 $ 0.29
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BUSINESS SEGMENT INFORMATION BY GEOGRAPHIC AREA
Thirteen Weeks Ended Fiscal Year Ended
Unaudited DECEMBER 31, December 31, DECEMBER 31, December 31,
(Dollars in thousands) 1999 1998 1999 1998
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NET SALES, including intersegment sales
North America $ 83,978 $ 87,553 $ 377,888 $ 392,896
Europe 48,016 52,844 217,961 239,987
Other 1,310 982 6,116 2,577
Intersegment sales (15,051) (14,133) (67,583) (70,936)
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TOTAL $ 118,253 $ 127,246 $ 534,382 $ 564,524
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NET INCOME (LOSS)
North America $ (1,055) $ 3,977 $ 17,021 $ 25,346
Europe (368) (554) 2,463 5,688
Other 48 (225) (1,364) (4,700)
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TOTAL $ (1,375) $ 3,198 $ 18,120 $ 26,334
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CONDENSED CONSOLIDATED BALANCE SHEETS
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Unaudited DECEMBER 31, December 31,
(Dollars in thousands) 1999 1998
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ASSETS
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CURRENT ASSETS:
Cash and cash equivalents $ 5,061 $ 8,891
Accounts receivable, net 73,305 73,661
Inventories 73,977 89,195
Other current assets 9,242 9,984
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TOTAL CURRENT ASSETS 161,585 181,731
Property, plant and equipment, net 269,485 262,527
Other assets 11,445 15,513
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TOTAL ASSETS $ 442,515 $ 459,771
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Notes payable and bank overdrafts $ 19,312 $ 41,767
Long-term debt due within one year 1,609 2,398
Accounts payable 39,064 38,271
Other accrued liabilities 30,285 29,168
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TOTAL CURRENT LIABILITIES 90,270 111,604
Long-term debt 110,934 106,862
Long-term pension liability 31,342 33,044
Deferred income taxes 5,448 4,746
Other liabilities 20,008 19,027
Minority interest in net assets of consolidated companies 33,761 35,584
Stockholders' equity 150,752 148,904
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 442,515 $ 459,771
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Fiscal Year Ended
Unaudited DECEMBER 31, December 31,
(Dollars in thousands) 1999 1998
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 18,120 $ 26,334
Depreciation and amortization 35,538 30,635
Minority interest in income of consolidated companies 6,526 9,494
Net change in receivables, inventories, and payables 7,729 (678)
Other, net 9,873 (2,250)
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NET CASH PROVIDED BY OPERATING ACTIVITIES 77,786 63,535
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (57,149) (98,582)
Purchase of minority interest - (693)
Proceeds from sales of property, plant and equipment 370 325
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NET CASH USED IN INVESTING ACTIVITIES (56,779) (98,950)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments on notes payable and bank overdrafts (18,395) (11,363)
Net borrowings on long-term debt 9,867 13,916
Net proceeds from initial public offering - 48,100
Cash dividends (7,673) (7,691)
Distribution to minority interest partners (6,739) (7,885)
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NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (22,940) 35,077
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Effect of exchange rate changes (1,897) 1,866
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Net increase (decrease) in cash and cash equivalents (3,830) 1,528
Cash and cash equivalents at beginning of year 8,891 7,363
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $5,061 $8,891
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