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[SAUER DANFOSS LOGO]
FOR IMMEDIATE RELEASE
NOVEMBER 7, 2000
SAUER-DANFOSS INC. REPORTS SOLID INCREASES IN THIRD QUARTER SALES
AND EARNINGS
AMES, IOWA, USA, NOVEMBER 7, 2000--SAUER-DANFOSS INC. (NYSE: SHS), today
announced its financial results for the third quarter and nine months ended
October 1, 2000. The financial statements for both the 2000 third quarter and
nine months include the operations of Danfoss Fluid Power A/S, which was
acquired on May 3, 2000, in a transaction using the purchase method of
accounting.
Net income for the third quarter 2000, excluding one-time merger-related costs
and gains, totaled $8.1 million, or $0.18 per share, compared with net income
for the third quarter 1999 of $3.6 million, or $0.14 per share. The third
quarter 2000 amounts do not reflect $0.06 per share of one-time merger-related
costs and gains. Reported net income for the third quarter 2000 was $5.3
million, or $0.12 per share. Danfoss Fluid Power contributed $0.03 per share to
earnings.
Net sales for the quarter were $197.4 million, up 71.5 percent from 1999 net
sales of $115.1 million. On a comparable basis, excluding the operations of
Danfoss Fluid Power, net sales were up 14.0 percent in local currency, and at
$124.2 million, up 7.9 percent as reported in U.S. dollars.
Klaus H. Murmann, Chairman, commented, "We had an outstanding quarter, with
sales up 14 percent on a comparable basis, and earnings per share up 28 percent,
excluding merger-related costs. I am particularly pleased with the strong
performance of Danfoss Fluid Power, which added $0.03 per share to earnings in
our first full quarter of operating as a combined company." Murmann continued,
"We have recorded the strong sales and earnings in spite of lower sales in
construction and road building."
On a comparable basis, excluding Danfoss Fluid Power, third quarter 2000 sales
for the turf care market were up 26.4 percent, agricultural market sales were up
14.0 percent, the specialty vehicle market was up 7.0 percent, and distribution
and aftermarket was up 1.0 percent. Construction market sales were down 7.4
percent and road building sales were down by 13.1 percent.
On a comparable basis, total backlog at the end of the third quarter 2000 was up
15.3 percent in local currency, and at $246.3 million, up 8.2 percent from last
year's level of $227.6 million, as reported in U.S. dollars. Orders received for
the third quarter were up 4.0 percent over the same period last year in local
currency, but in U.S. dollars down by 2.5 percent at $128.0 million.
NINE MONTH REVIEW
Net income for the first nine months of 2000, excluding one-time merger-related
costs and gains, totaled $30.7 million, or $0.83 per share, compared with net
income for the first nine months of 1999 of $19.5 million, or $0.72 per share.
The nine months 2000 amounts do not reflect $0.19 per share of one-time
merger-related costs and gains. Reported net income for the first nine months of
2000 was $23.6 million, or $0.64 per share. Danfoss Fluid Power contributed
$0.01 per share to earnings.
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Net sales for the first nine months of 2000 were $586.6 million, up 41.0 percent
from 1999 net sales of $416.1 million. On a comparable basis, net sales were up
13.3 percent in local currency, and at $455.8 million, up 9.5 percent from 1999
as reported in U.S. dollars. Orders received for the first nine months of 2000,
on a comparable basis, were up 24.3 percent in local currency, and at $449.8
million, up 17.7 percent over the same period last year as reported in U.S.
dollars.
SEGMENT RESULTS
North American third quarter 2000 net sales were $103.8 million, an increase of
41.6 percent from 1999 net sales of $73.3 million, or an increase of 9.7 percent
on a comparable basis. Net income for North America for the third quarter 2000
was $0.7 million compared with $3.7 million for 1999. On a comparable basis,
2000 net income was $3.4 million. Total backlog at the end of the third quarter
2000, on a comparable basis, was $170.6 million, up 13.0 percent from last
year's level of $151.0 million. Orders received for the third quarter were $82.7
million, a decrease of 3.4 percent over the same period last year.
European third quarter 2000 net sales were $91.4 million, or 125.7 percent above
1999 net sales of $40.5 million. On a comparable basis, net sales were up 19.6
percent in local currency, and up 2.7 percent as reported in U.S. dollars. Net
income for Europe for the third quarter 2000 was $5.7 million compared with $0.1
million for 1999. On a comparable basis, 2000 net income was $0.6 million. Total
backlog at the end of the third quarter 2000, on a comparable basis, was up 20.9
percent in local currency, and at $74.5 million, down 0.5 percent from last
year's level of $74.9 million, as reported in U.S. dollars. Orders received for
the third quarter were up 17.6 percent in local currency on the same period last
year, but down 3.3 percent to $43.8, as reported in U.S. dollars.
East Asia third quarter 2000 net sales were $7.5 million, an increase of 56.2
percent over 1999 sales of $4.8 million, but a decrease of 4.2 percent on a
comparable basis.
"While the segment results reflect a slowing in North America, we continue to
see strength in our European operations," stated Murmann. "In Europe, the strong
results were led by the record sales and earnings in our Danish and German
operations. We are beginning to see the synergies and market share gains we
expected with our merger with Danfoss Fluid Power."
UPDATE ON DANFOSS FLUID POWER INTEGRATION
Murmann reported, "The Company's restructuring plans are proceeding well. In the
third quarter, a number of product lines were moved from the Racine, Wisconsin,
plant to the West Branch, Iowa, plant. We are on track to complete the move by
year-end and continue to expect annual pre-tax savings of $2.5 million. We are
also restructuring our European sale offices and are also scheduled to finish by
year-end. The merger with Danfoss Fluid Power has given us opportunities to
rationalize any overlap between our businesses, and we continue to focus on
improving the operating efficiency of the Company."
GROWTH STRATEGY
Mr. Murmann continued, "As the global leader in mobile hydraulics, we are
well-positioned to achieve strong growth over the long-term through our focused
growth strategy. The strength of our combined companies enables us to
effectively market more components and complete systems to our existing
customers, while at the same time target new market opportunities through
continued global expansion and selective, value-added acquisitions."
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FOURTH QUARTER OUTLOOK
Mr. Murmann commented, "Our strong results for the first nine months are
somewhat tempered by the declines we are seeing in the construction and road
building markets, especially in North America. We now see the full year 2000 net
income, before amortization and restructuring costs, coming in between $0.95 to
$1.00 per share. This compares to our earlier projections of $0.90 per share. We
are estimating amortization and restructuring costs to be approximately $0.31
per share compared to our earlier projection of $0.20 to $0.22 per share. We are
now forecasting full year 2000 reported earnings of $0.64 to $0.69. The higher
one-time costs are being primarily driven by our decision to close and move the
Racine plant. This move, as stated before, will result in additional pre-tax
savings of $2.5 million. The total annual pre-tax sales and cost synergies from
our merger with Danfoss Fluid Power are now forecasted to reach $19.0 - $23.0
million by 2004."
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 6,500 employees
worldwide and sales of about $950 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.
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:
SAUER-DANFOSS INC. - INVESTOR RELATIONS
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KENNETH D. MCCUSKEY Sauer-Danfoss Inc. Phone: (515) 239-6364
Vice President - Finance 2800 East 13th Street Fax: (515) 239-6443
Ames, Iowa, USA 50010 [email protected]
JOHN N. LANGRICK Sauer-Danfoss Inc. Phone: +49-4321-871-190
Director of Finance - Europe Krokamp 35 Fax: +49-4321-871-121
D-24539 Neumunster [email protected]
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Internet: http://www.sauer-danfoss.com
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CONDENSED CONSOLIDATED STATEMENT OF INCOME
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<CAPTION>
13 Weeks Ended 39 Weeks Ended
Unaudited OCTOBER 1, October 3, OCTOBER 1, October 3,
(Dollars in thousands except share and per share data) 2000 1999 2000 1999
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<S> <C> <C> <C> <C>
NET SALES $ 197,366 $ 115,068 $ 586,617 $ 416,129
Cost of sales 147,103 87,659 433,160 312,196
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Gross profit 50,263 27,409 153,457 103,933
Selling 11,971 5,880 28,923 18,808
Research and development 8,105 5,621 22,882 17,149
Administrative 15,705 7,621 41,831 23,826
Restructuring charges 6,559 - 8,977 -
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Total operating expenses 42,340 19,122 102,613 59,783
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INCOME FROM OPERATIONS 7,923 8,287 50,844 44,150
Nonoperating income (expenses):
Interest expense, net (2,882) (1,634) (7,882) (6,402)
Minority interest (236) (919) (6,867) (6,701)
Other, net 3,934 37 2,636 (103)
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Income before income taxes 8,739 5,771 38,731 30,944
Income taxes (3,408) (2,137) (15,105) (11,449)
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NET INCOME $ 5,331 $ 3,634 $ 23,626 $ 19,495
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NET INCOME PER SHARE:
Basic and diluted net income per common share $ 0.12 $ 0.14 $ 0.64 $ 0.72
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Basic weighted average shares outstanding 45,303,618 27,226,050 37,201,618 27,225,428
Diluted weighted average shares outstanding 45,305,174 27,258,061 37,203,068 27,236,129
Cash dividends per common share $ 0.07 $ 0.07 $ 0.21 $ 0.21
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BUSINESS SEGMENT INFORMATION BY GEOGRAPHIC AREA
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<CAPTION>
13 Weeks Ended 39 Weeks Ended
Unaudited OCTOBER 1, October 3, OCTOBER 1, October 3,
(Dollars in thousands) 2000 1999 2000 1999
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<S> <C> <C> <C> <C>
NET SALES
North America $103,837 $ 73,258 $344,851 $265,741
Europe 91,368 40,459 237,180 145,840
Other 2,161 1,351 4,586 4,548
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TOTAL $197,366 $115,068 $586,617 $416,129
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NET INCOME
North America $ 694 $ 3,680 $ 14,390 $ 18,076
Europe 5,693 47 11,694 2,831
Other (1,056) (93) (2,458) (1,412)
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TOTAL $ 5,331 $ 3,634 $ 23,626 $ 19,495
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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
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<CAPTION>
39 Weeks Ended
Unaudited OCTOBER 1, October 3,
(Dollars in thousands) 2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 23,626 $ 19,495
Depreciation and amortization 37,544 27,405
Minority interest in income of consolidated companies 6,867 6,700
Net change in receivables, inventories, and payables (17,418) 3,169
Other, net 19,090 13,836
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NET CASH PROVIDED BY OPERATING ACTIVITIES 69,709 70,605
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (44,323) (45,834)
Payments for acquisitions, net of cash acquired 5,126 -
Proceeds from sales of property, plant and equipment 444 358
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NET CASH USED IN INVESTING ACTIVITIES (38,753) (45,476)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) on notes payable and bank overdrafts 18,230 (5,818)
Net repayments of long-term debt (4,518) (8,722)
Repurchase of common stock (5,722) -
Cash dividends (8,268) (5,754)
Distribution to minority interest partners (7,608) (6,049)
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NET CASH USED IN FINANCING ACTIVITIES (7,886) (26,343)
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Effect of exchange rate changes (3,353) (1,745)
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Net increase (decrease) in cash and cash equivalents 19,717 (2,959)
Cash and cash equivalents at beginning of year 5,061 8,891
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 24,778 $ 5,932
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CONDENSED CONSOLIDATED BALANCE SHEET
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<CAPTION>
Unaudited OCTOBER 1, December 31,
(Dollars in thousands) 2000 1999
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 24,778 $ 5,061
Accounts receivable, net 132,949 73,305
Inventories 130,415 73,977
Other current assets 9,166 9,242
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TOTAL CURRENT ASSETS 297,308 161,585
Property, plant and equipment, net 400,016 269,485
Other assets 86,029 11,445
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TOTAL ASSETS $783,353 $442,515
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and bank overdrafts $ 41,967 $ 19,312
Long-term debt due within one year 1,141 1,609
Accounts payable 60,226 39,064
Other accrued liabilities 63,588 30,285
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TOTAL CURRENT LIABILITIES 166,922 90,270
Long-term debt 177,782 110,934
Long-term pension liability 28,493 31,342
Deferred income taxes 26,157 5,448
Other liabilities 21,166 20,008
Minority interest in net assets of consolidated companies 27,904 33,761
Stockholders' equity 334,929 150,752
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $783,353 $442,515
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