UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 October 1, 2000
OR
( ) TRANSITION REPORT PRUSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to_______________
Commission File Number 333-48299
SAUER-DANFOSS INC.
------------------
(Exact name of registrant as specified in its charter)
Delaware
--------
(State or other jurisdiction of
incorporation or organization)
36-3482074
----------
(IRS Employer
Identification No.)
2800 East 13th Street, Ames, Iowa
---------------------------------
(Address of principal executive office)
50010-8600
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(Zip Code)
Registrant's telephone number, including area code (515) 239-6000
--------------
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
------ ------
As of November 15, 2000, 45,311,618 shares of Sauer-Danfoss Inc. common stock,
$.01 par value, were outstanding.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-------------
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Statements of Income:
Thirteen Weeks and Thirty-Nine Weeks Ended October 1, 2000 and October 3, 1999 3
Consolidated Balance Sheets:
As of October 1, 2000 and December 31, 1999 4
Consolidated Statement of Stockholders' Equity:
As of October 1, 2000 and December 31, 1999 5
Consolidated Statements of Cash Flows:
Thirty Nine Weeks Ended October 1, 2000 and October 3, 1999 6
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market Risks 14
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 18
</TABLE>
<PAGE>
SAUER-DANFOSS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-Nine Weeks Ended
------------------------------------ ------------------------------------
October 1, October 3, October 1, October 3,
2000 1999 2000 1999
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
NET SALES $197,366 $115,068 $586,617 $416,129
---------------- ---------------- ---------------- ----------------
COSTS AND EXPENSES:
Cost of sales 147,103 87,659 433,160 312,196
Selling, general and administrative 27,676 13,501 70,754 42,634
Research and development 8,105 5,621 22,882 17,149
Restructuring charges 6,559 - 8,977 -
---------------- ---------------- ---------------- ----------------
Total costs and expenses 189,443 106,781 535,773 371,979
---------------- ---------------- ---------------- ----------------
Operating income 7,923 8,287 50,844 44,150
---------------- ---------------- ---------------- ----------------
NONOPERATING INCOME (EXPENSES):
Interest expense, net (2,882) (1,634) (7,882) (6,402)
Other, net 3,934 37 2,636 (103)
---------------- ---------------- ---------------- ----------------
Nonoperating expenses, net 1,052 (1,597) (5,246) (6,505)
---------------- ---------------- ---------------- ----------------
INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST 8,975 6,690 45,598 37,645
PROVISION FOR INCOME TAXES (3,408) (2,137) (15,105) (11,449)
---------------- ---------------- ---------------- ----------------
INCOME BEFORE MINORITY INTEREST 5,567 4,553 30,493 26,196
MINORITY INTEREST IN INCOME OF
CONSOLIDATED COMPANIES (236) (919) (6,867) (6,701)
---------------- ---------------- ---------------- ----------------
Net income $5,331 $ 3,634 $ 23,626 $ 19,495
================ ================ ================ ================
Basic and diluted net income per
common share $ 0.12 $ 0.14 $ 0.64 $ 0.72
================ ================ ================ ================
Dividends declared per common share $ 0.07 $ 0.07 $ 0.21 $ 0.21
================ ================ ================ ================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
SAUER-DANFOSS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
(Unaudited)
October 1, December 31,
ASSETS 2000 1999
------------------ --------------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 24,778 $ 5,061
Accounts receivable, less allowances 132,949 73,305
Inventories 130,415 73,977
Other current assets 9,166 9,242
------------------ --------------------
Total current assets 297,308 161,585
------------------ --------------------
------------------ --------------------
PROPERTY, PLANT AND EQUIPMENT, NET 400,016 269,485
------------------ --------------------
OTHER ASSETS:
Goodwill and other intangible assets, net 75,054 2,663
Deferred income taxes 6,765 4,273
Other 4,210 4,509
------------------ --------------------
Total other assets 86,029 11,445
------------------ --------------------
$783,353 $442,515
================== ====================
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
Accrued salaries and wages 18,303 8,901
Accrued warranty 10,696 7,640
Other accrued liabilities 34,589 13,744
------------------ --------------------
Total current liabilities 166,922 90,270
------------------ --------------------
------------------ --------------------
LONG-TERM DEBT 177,782 110,934
------------------ --------------------
OTHER LIABILITIES:
Long-term pension liability 28,493 31,342
Postretirement benefits other than pensions 14,909 14,361
Deferred income taxes 26,157 5,448
Other 6,257 5,647
------------------ --------------------
Total other liabilities 75,816 56,798
------------------ --------------------
MINORITY INTEREST IN NET ASSETS OF CONSOLIDATED COMPANIES 27,904 33,761
------------------ --------------------
STOCKHOLDERS' EQUITY:
Common stock, par value $.01 per share, authorized 75,000,000 shares in 2000
and 45,000,000 in 1999; issued 46,483,362 in 2000 and 28,084,550 in 1999;
outstanding 45,311,618 in 2000 and 27,399,050 in 1999 465 281
Additional paid-in capital 303,304 120,053
Retained earnings 57,221 41,863
Accumulated other comprehensive loss (17,992) (7,038)
Unamortized restricted stock compensation (60) (1,707)
Common stock in treasury (at cost),
1,171,744 shares in 2000 and 675,000 shares in 1999 (8,009) (2,700)
------------------ ------------------
Total stockholders' equity 334,929 150,752
------------------ ------------------
$783,353 $442,515
================== ==================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
SAUER-DANFOSS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
NUMBER OF
SHARES COMMON PAID-IN RETAINED
OUTSTANDING STOCK CAPITAL EARNINGS
------------------------------------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1999:
Beginning balance 27,397,050 $ 281 $120,092 $31,416
Comprehensive income:
Net income - - - 18,120
Pension adjustment - - - -
Translation adjustment - - - -
Total comprehensive income - - - -
Restricted stock grant 12,500 - 126 -
Restricted
stock compensation - - - -
Forfeitures of restricted stock (10,500) (165) -
Cash dividends,
($.28 per share) - - - (7,673)
-----------------------------------------------
Ending balance 27,399,050 281 120,053 41,863
PERIOD ENDED OCTOBER 1, 2000:
Comprehensive income:
Net income - - - 23,626
Translation adjustment - - - -
Total comprehensive income - - - -
Treasury shares issued for
acquisition 103,256 - 768 -
Shares issued for acquisition 16,149,812 161 180,070 -
Repurchase of common stock (600,000) - - -
Shares issued to minority interest partner 2,250,000 23 19,665 -
Common control - deemed
dividend (17,337)
Restricted stock grant 9,500 - 85 -
Restricted
stock compensation - - - -
Cash dividends,
($.21 per share) - - - (8,268)
-----------------------------------------------
Ending balance 45,311,618 465 303,304 57,221
===============================================
<CAPTION>
See accompanying notes to consolidated financial statements.
ACCUMULATED UNAMORTIZED
OTHER RESTRICTED COMMON
COMPREHENSIVE STOCK STOCK
INCOME COMPENSATION IN TREASURY TOTAL
-----------------------------------------------
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1999:
Beginning balance $ 1,813 $(1,998) $(2,700) $148,904
Comprehensive income:
Net income - - - -
Pension adjustment (150) - - -
Translation adjustment (8,701) - - -
Total comprehensive income - - - 9,269
Restricted stock grant - (126) - 0
Restricted
stock compensation - 252 - 252
Forfeitures of restricted stock 165 0
Cash dividends,
($.28 per share) - - - (7,673)
-----------------------------------------------
Ending balance (7,038) (1,707) (2,700) 150,752
PERIOD ENDED OCTOBER 1, 2000:
Comprehensive income:
Net income - - - -
Translation adjustment (10,954) - - -
Total comprehensive income - - - 12,672
Treasury shares issued for
acquisition - - 413 1,181
Shares issued for acquisition - - - 180,231
Repurchase of common stock - - (5,722) (5,722)
Shares issued to minority
interest partner - - - 19,688
Common control - deemed
dividend (17,337)
Restricted stock grant - (85) - -
Restricted
stock compensation - 1,732 - 1,732
Cash dividends,
($.21 per share) - - - (8,268)
-----------------------------------------------
Ending balance $ (17,992) $ (60) $(8,009) $334,929
==============================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
SAUER-DANFOSS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Thirty-Nine Weeks Ended
---------------------------------------------
October 1, October 3,
2000 1999
------------------ ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $23,626 $19,495
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 37,544 27,405
Minority interest in income of
consolidated companies 6,867 6,701
Changes in working capital excluding
effects of acquisitions:
Accounts receivable, net 9,114 (5,771)
Inventories (9,822) 10,559
Accounts payable (16,710) (1,619)
Accrued liabilities 15,710 10,285
Other 3,380 3,550
------------------ ------------------
Net cash provided by operating activities 69,709 70,605
------------------ ------------------
CASH FLOWS FROM INVESTING ACTIVITIES :
Purchases of property, plant and equipment (44,323) (45,834)
Proceeds from sales of property, plant and equipment 444 358
Payments for acquisitions, net of cash acquired 5,126
-
------------------ ------------------
Net cash used in investing activities (38,753) (45,476)
------------------ ------------------
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)
Cash dividends (8,268) (5,754)
Repurchase of common stock (5,722)
-
Distributions to minority interest partners (7,608) (6,049)
------------------ ------------------
Net cash used in financing activities (7,886) (26,343)
------------------ ------------------
EFFECT OF EXCHANGE RATE CHANGES (3,353) (1,745)
------------------ ------------------
CASH AND CASH EQUIVALENTS:
Net increase (decrease) during the period 19,717 (2,959)
Beginning balance 5,061 8,891
------------------ ------------------
Ending balance $24,778 $5,932
================== ==================
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $3,086 $4,452
Income taxes paid $9,021 $8,040
<PAGE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of Danfoss Fluid Power Companies:
Common stock issued $180,232
Long-term debt assumed 81,180
Other liabilities assumed 66,648
------------------
$328,060
Allocated to:
Cash acquired $ 12,563
Inventory 46,686
Other current assets 81,066
Property, plant and equipment 119,970
Goodwill and other intangibles 67,775
------------------
$328,060
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
SAUER-DANFOSS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
1) BASIS OF PRESENTATION AND USE OF ESTIMATES -
The consolidated financial statements of Sauer-Danfoss Inc. and
subsidiaries (the "Company") included herein have been prepared by the
Company without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and disclosures
normally included in the financial statements, prepared in accordance with
accounting principles generally accepted in the United States, have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading. The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States, requires management to make estimates and assumptions that affect
the reported amounts of assets, liabilities, revenues and expenses. Actual
results could differ from those estimates. In the opinion of management,
the statements reflect all adjustments, which are of a normal recurring
nature, necessary to present fairly the Company's financial position as of
October 1, 2000 and December 31, 1999, and results of operations for the
thirteen weeks and thirty-nine weeks ended October 1, 2000 and October 3,
1999, and cash flows for the thirty-nine weeks ended October 1, 2000 and
October 3, 1999. These consolidated financial statements and notes are to
be read in conjunction with the consolidated financial statements and notes
thereto included in the Company's latest annual report on Form 10-K as
filed with the Securities and Exchange Commission on March 30, 2000.
2) BUSINESS COMBINATIONS -
On January 24, 2000, the Company paid $3,600 and issued 103,256 shares of
its common stock to aquire all of the assets of Custom Design Electronics
of Sweden AB ("CDE") and its subsidiary NOB Electronik AB, which
manufactures and sells electronic control panels and related software.
On May 3, 2000, the Company issued 16,149,812 shares of common stock in
exchange for all of the outstanding shares of Danfoss Fluid Power
Companies, which designs and manufactures orbital motors, hydrostatic
steering units, proportional load-sensing valves, gear pumps and
electrohydraulics for use by OEMs of off-highway mobile equipment. The
transaction has been accounted for under the purchase method of accounting
for business combinations in accordance with Accounting Principles Board
Opinion No. 16, "Business Combinations". A preliminary purchase price
allocation has been performed based on independent appraisals resulting in
goodwill of $67,775 being recorded. Since the independent appraisals are
not yet complete, the final purchase price allocations may result in
changes to the amount of recorded assets and goodwill. Accordingly, the
accompanying consolidated statements of income and cash flows include the
effects of the Danfoss Fluid Power Companies since May 3, 2000.
3) RECLASSIFICATION -
Certain previously reported amounts have been reclassified to conform to
the current period presentation.
4) COMPREHENSIVE INCOME (LOSS) -
Total comprehensive income (loss), consisting of net income adjusted for
the effects of foreign currency translation, is as follows:
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
-------------------- -----------------------
October 1, October 3, October 1, October 3,
2000 1999 2000 1999
------------------ ---------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net income $5,331 $3,634 $23,626 $19,495
Translation adjustment (11,331) 4,061 (10,954) (7,574)
------------------ ---------------- ----------------- -----------------
Comprehensive income (loss) ($6,000) $7,695 $12,672 $11,921
================== ================ ================= =================
</TABLE>
5) BASIC AND DILUTED PER SHARE DATA -
Basic net income per common share data has been computed by dividing net
income by the weighted average number of shares of common stock outstanding
for the period less those restricted stock shares issued in connection with
the Company's long-term incentive plan and subject to risk of forfeiture.
The dilutive effect of the restricted stock shares is calculated using the
treasury stock method, which applies the unamortized compensation expense
to repurchase shares of common stock. The reconciliation of basic net
income per common share to diluted net income per common share is shown in
the following table for the thirteen week and thirty-nine week periods
ending October 1, 2000, and October 3, 1999:
<PAGE>
<TABLE>
<CAPTION>
OCTOBER 1, 2000 OCTOBER 3, 1999
--------------- ---------------
NET INCOME SHARES EPS NET INCOME SHARES EPS
---------- ------ --- ---------- ------ ---
<S> <C> <C> <C> <C> <C> <C>
THIRTEEN WEEKS:
Basic net income $5,331 45,303,618 $.12 $3,634 27,226,050 $.14
Effect of dilutive
securities:
Restricted stock - 1,556 - - 32,011 -
------------------ --------------------- --------- ------------------ ---------------------- --------
Diluted net income $5,331 45,305,174 $.12 $3,634 27,258,061 $.14
================== ===================== ========= ================== ====================== ========
THIRTY-NINE WEEKS:
Basic net income $23,626 37,201,618 $.64 $19,495 27,225,428 $.72
Effect of dilutive
securities:
Restricted stock - 1,450 - - 10,701 -
------------------ --------------------- --------- ------------------ ---------------------- --------
Diluted net income $23,626 37,203,068 $.64 $19,495 27,236,129 $.72
================== ===================== ========= ================== ====================== ========
</TABLE>
6) SEGMENT AND GEOGRAPHIC INFORMATION -
The Company's two reportable segments are defined by geographic region due
to the difference in economic characteristics in which these segments
operate. The activities of each reportable segment consist of the design,
manufacture and sale of hydraulic systems and other related components.
The following table presents the significant items by segment for the
results of operations for each of the thirteen and thirty-nine week periods
ending October 1, 2000 and October 3, 1999, and balance sheet data as of
October 1, 2000 and December 31, 1999, respectively:
<TABLE>
<CAPTION>
THIRTEEN WEEKS
ENDED: NORTH ALL
------ ---------
OCTOBER 1, 2000 AMERICA EUROPE OTHER ELIMINATIONS TOTAL
---------------- --------- -------- ------- ------------ -----
Trade sales $ 103,837 $ 91,368 $ 2,161 $ - $ 197,366
Intersegment sales 11,213 17,629 525 (29,367) (1) -
Net income (loss) 694 5,693 (1,056) - (2) 5,331
OCTOBER 3, 1999
---------------
Trade sales $73,258 $ 40,459 $1,351 $ - $ 115,068
Intersegment sales 7,947 6,638 128 (14,713) (1) -
Net income 3,680 47 382 (475) (2) 3,634
<CAPTION>
THIRTY-NINE WEEKS
ENDED: NORTH ALL
------ ---------
OCTOBER 1, 2000 AMERICA EUROPE OTHER ELIMINATIONS TOTAL
---------------- --------- -------- ------- ------------ ------
<S> <C> <C> <C> <C> <C>
Trade sales $ 344,851 $ 237,180 $ 4,586 $ - $ 586,617
Intersegment sales 34,197 43,064 1,405 (78,666) (1) -
Net income (loss) 14,390 11,694 (972) (1,486) (2) 23,626
Total assets 341,609 415,615 400,704 (374,575) (3) 783,353
OCTOBER 3, 1999
---------------
Trade sales $265,741 $ 145,840 $ 4,548 $ - $416,129
Intersegment sales 28,169 24,105 258 (52,532) (1) -
Net income 18,076 2,831 1,130 (2,542) (2) 19,495
Total assets 237,713 209,439 193,720 (189,900) (3) 450,972
</TABLE>
<PAGE>
Reconciliations:
(1) Elimination of intersegment sales.
(2) Net income eliminations - minority interest in German Operating Company.
(3) Total assets eliminations:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Investment in subsidiaries $(300,465) $(145,106)
Intersegment receivables (73,877) (43,350)
Intersegment profit in inventory and other (233) (1,444)
---- ------
Total assets eliminations $(374,575) $(189,900)
========= =========
</TABLE>
A summary of the Company's net sales by product line is presented below:
<TABLE>
<CAPTION>
Net Sales
--------------------------------------------------------------------
Thirteen Weeks Ended Thirty-Nine Weeks Ended
-------------------------------- -----------------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Hydrostatic transmissions $123,084 $90,420 $411,518 $337,190
Open circuit gear pumps and motors and piston pumps 40,199 16,153 97,259 50,973
Electrohydraulics and others 34,083 8,495 77,840 27,966
------ ----- ------ ------
Total $197,366 $115,068 $586,617 $416,129
======== ======== ======== ========
</TABLE>
A summary of the Company's net sales and long-lived assets by geographic area is
presented below:
<TABLE>
<CAPTION>
NET SALES (1) Long-Lived Assets
------------
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED ASSETS (2)
-------------------- ----------------------- ----------
2000 1999 2000 1999 2000 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
United States $99,545 $65,873 $334,078 $243,643 $202,771 $153,921
Germany 19,264 8,521 50,810 34,910 46,988 45,460
United Kingdom 11,792 6,901 31,374 22,411 22,128 24,896
Denmark (3) 48 - 80 - 67,249 -
Slovakia (3) 27 368 290 770 30,577 36,092
Other countries 66,690 33,405 169,985 114,395 109,567 16,288
------ ------ ------- ------- ------- ------
Total $197,366 $115,068 $586,617 $416,129 $479,280 $276,657
======== ======== ======== ======== ======== ========
</TABLE>
(1) Net sales are attributed to countries based on location of customer.
(2) Long-lived assets include property, plant and equipment net of accumulated
depreciation, intangible assets net of accumulated amortization and certain
other long-term assets.
(3) Majority of this country's sales are shipped outside of the home country
where the product is produced.
No single customer accounted for 10% or more of total consolidated sales in
any period presented.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OF SAUER-DANFOSS INC. AND SUBSIDIARIES (THE "COMPANY")
SAFE HARBOR STATEMENT - THE INFORMATION DISCUSSED BELOW IN MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CONTAINS "FORWARD-LOOKING STATEMENTS," STATEMENTS REGARDING MATTERS THAT ARE NOT
HISTORICAL FACTS, BUT RATHER ARE SUBJECT TO RISKS AND UNCERTAINTIES. THESE
STATEMENTS ARE BASED ON CURRENT FINANCIAL AND ECONOMIC CONDITIONS AND RELY
HEAVILY ON THE COMPANY'S INTERPRETATIONS OF WHAT IT CONSIDERS KEY ECONOMIC
ASSUMPTIONS. ACTUAL FUTURE RESULTS MAY DIFFER MATERIALLY DEPENDING ON A VARIETY
OF FACTORS. THESE FACTORS, SOME OF WHICH ARE IDENTIFIED IN THE DISCUSSION
ACCOMPANYING SUCH FORWARD-LOOKING STATEMENTS, INCLUDE, BUT ARE NOT LIMITED TO,
GENERAL ECONOMIC CONDITIONS, FOREIGN CURRENCY MOVEMENTS, PRICING AND PRODUCT
INITIATIVES AND OTHER ACTIONS TAKEN BY COMPETITORS, ABILITY OF SUPPLIERS TO
PROVIDE MATERIALS AS NEEDED, LABOR RELATIONS, THE COMPANY'S EXECUTION OF
INTERNAL PERFORMANCE PLANS, AND OTHER CHANGES TO BUSINESS CONDITIONS.
RESULTS OF OPERATIONS
THIRTEEN WEEKS ENDED OCTOBER 1, 2000 COMPARED TO THIRTEEN WEEKS ENDED OCTOBER 3,
1999
On May 3, 2000 the Company completed the acquisition of Danfoss Fluid Power
("DFP") by issuing 16,149,812 shares of common stock in exchange for all of the
shares of DFP and changed its name from Sauer Inc. to Sauer-Danfoss Inc. The
acquisition has been accounted for by the purchase method of accounting, and
accordingly, the consolidated statements of income and consolidated statements
of cash flows include the operations and cash flow of DFP beginning May 3, 2000.
NET SALES - The Company reported sales for third quarter 2000 of $197.4
million, an increase of $82.3 million, or 71.5% from third quarter 1999 net
sales of $115.1 million. On a comparable basis, Sauer-only net sales
increased by 7.9% or $9.1 million and increased by 14.0% excluding the
impact of currency fluctuations, (i.e. net sales measured in U.S. dollars
would have been greater had currency exchange/translation rates remained
at the same levels as the rates that prevailed in the corresponding period
in 1999). Net sales increased in all markets the Company serves except for
road-building and construction, which declined 9.8% and 3.9%, respectively,
from third quarter 1999. Turf care increased 31.2%, agriculture increased
18.3%, and specialty increased 11.1% from comparable amounts in third
quarter 1999. North American net sales for third quarter 2000 of $103.8
million increased by $30.5 million, or 41.6% from third quarter 1999 net
sales of $73.3 million, or an increase of 9.7% on a comparable basis.
European net sales for third quarter 2000 of $91.4 million increased by
$50.9 million, or 125.7% from third quarter 1999 net sales of $40.5
million. On a comparable basis, European net sales increased by 19.6% or
2.7% excluding the impact of currency fluctuations. East Asia net sales for
third quarter 2000 increased by $0.8 million from third quarter 1999.
The following table sets forth the Company's Sauer-only net sales by market for
comparable purposes, in dollars (000's) and as a percentage of total Sauer-only
net sales, for the thirteen weeks ended October 1, 2000 and October 3, 1999:
<TABLE>
<CAPTION>
October 1, 2000 % of Total October 3, 1999 % of Total
----------------------- ---------------- ----------------------- ----------------
<S> <C> <C> <C> <C>
Agriculture $ 20,877 16.8 $17,855 20.1
Construction 19,409 15.6 20,018 13.2
Turf Care 22,046 17.8 16,678 17.1
Road-building 13,331 10.7 14,737 13.3
Specialty 12,152 9.8 10,913 7.6
Distribution and aftermarket 36,396 29.3 34,868 28.8
----------------------- ---------------- ----------------------- ----------------
Total $124,211 100.0 $115,068 100.0
======================= ================ ======================= ================
</TABLE>
COST OF SALES - Cost of sales for third quarter 2000 of $147.1 million was 74.5%
of net sales, compared to 76.2% of net sales for third quarter 1999. The lower
cost of sales percentage in relation to sales reflects the higher absorption
rates experienced due to the higher sales levels offset partially by the $0.7
million flow through of the fair market value write-up of DFP inventory
associated with products sold during the quarter. The Company does not
anticipate any additional impact on operations of inventory flow-through for the
DFP inventory in the fourth quarter of 2000. Cost of sales as a percentage of
net sales for the former DFP companies were comparable to those of Sauer for the
third quarter.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - Selling, general and
administrative expenses for third quarter 2000 of $27.7 million increased by
$14.2 million, or 105.2% from third quarter 1999 expenses of $13.5 million.
$11.1 million of this increase is due to the inclusion of three months of DFP
results. The majority of the remaining $3.1 million increase is due to
merger-related integration costs.
<PAGE>
RESEARCH AND DEVELOPMENT EXPENSES - Research and development expenses for third
quarter 2000 of $8.1 million increased $2.5 million or 44.7% from third quarter
1999 expenses of $5.6 million. The inclusion of DFP for three months accounts
for $1.4 million of this increase. The remaining increase relates to significant
development activities for new programs including material for prototypes and
increased headcount to support these programs.
RESTRUCTURING CHARGES - During the third quarter of 2000, the Company recorded
$1.6 million of restructuring charges related to the closing of its Newtown,
Pennsylvania, facility, the operations of which were relocated to Easley, South
Carolina. This charge related to severance costs, relocation of people and
equipment and an accrual to cover building maintenance and services for the
remainder of the lease term. The Company does not anticipate any further
significant charges related to the Newtown closing. The Company also recorded an
additional $5.0 million of restructuring charges related primarily to asset
write-offs in preparation of moving the Racine, Wisconsin, operations to its
West Branch, Iowa, and Ames, Iowa, facilities. The Company anticipates an
additional $2.0 to $2.5 million of restructuring charges in the fourth quarter
related to its restructuring of the European sales offices.
NONOPERATING EXPENSES, NET - Net nonoperating income for third quarter 2000 of
$1.1 million increased by $2.7 million from third quarter 1999 net expenses of
$1.6 million. Net interest expense for third quarter 2000 of $2.9 million
increased by $1.3 million from third quarter 1999 net expense of $1.6 million.
The increase in net interest expense relates to the increased debt related to
the DFP acquisition. Other income, net, for third quarter 2000 increased by $3.9
million from third quarter 1999 due primarily to currency exchange gains related
to a loan denominated in Danish Kroner between Denmark and the former DFP
operations in North America. This loan was repaid in September using proceeds
from the recently expanded credit lines in North America, thereby eliminating
the future potential of these currency gains or losses.
PROVISION FOR INCOME TAXES - Provision for income taxes for third quarter 2000
of $3.4 million increased by $1.3 million from third quarter 1999 provision for
income taxes of $2.1 million. The increase comes from the increase in income
before income taxes of $2.3 million as well as an increase in the effective tax
rate for third quarter 2000 of 39.0% from the third quarter 1999 rate of 37.0%.
NET INCOME - Net income for third quarter 2000 of $5.3 million increased by $1.7
million, or 47.2% from third quarter 1999 net income of $3.6 million. The
increase in net income was driven by the increased sales volumes and the effects
of the three months of DFP results, offset partially by the one-time charges and
merger-related costs discussed above. North American third quarter 2000 net
income of $0.7 million decreased by $3.0M, or 81% from third quarter 1999 net
income of $3.7 million. European third quarter 2000 net income of $5.7 million
increased by $5.6 million from third quarter 1999 net income of $0.1 million.
The increase in European net income results from the improved economic
conditions currently being experienced in Europe as well as the three months of
DFP results.
THIRTY-NINE WEEKS ENDED OCTOBER 1, 2000 COMPARED TO THIRTY-NINE WEEKS ENDED
OCTOBER 3, 1999
NET SALES - Net sales for the first nine months of 2000 of $586.6 million
increased by $170.5 million, or 41.0% from the first nine months of 1999 net
sales of $416.1 million. On a comparable basis, Sauer-only net sales of $455.8
million increased by $39.7 million or 9.5% from the first nine months of 1999.
Sauer-only net sales increased 13.3% from the first nine months of 1999
excluding the impact of currency fluctuations. North American net sales for the
first nine months of 2000 of $344.9 million increased by $79.2 million, or 29.8%
from the first nine months of 1999 net sales of $265.7 million. On a comparable
basis, Sauer-only net sales in North America increased $37.8 million or 14.3%
from the first nine months of 1999. This increase was driven by the increases in
agriculture, turf care and specialty markets offset partially by the decline in
the road-building and construction markets as mentioned above. European net
sales for the first nine months of 2000 of $237.2 million increased by $91.4
million, or 62.7% from the first nine months of 1999 net sales of $145.8
million. Sauer-only European net sales increased by $2.0 million or 1.4% from
the first nine months of 1999. Net sales, Sauer-only, for East Asia for the
first nine months of 2000 were level with the first nine months of 1999.
The following table sets forth the Company's Sauer-only net sales by market for
comparable purposes, in dollars (000's) and as a percentage of total Sauer-only
net sales, for the thirty-nine weeks ended October 1, 2000, and October 3, 1999:
<TABLE>
<CAPTION>
October 1, % of Total October 3, % of
2000 1999 Total
----------------- ----------- --------------- ----------
<S> <C> <C> <C> <C>
Agriculture $72,482 15.9 $66,713 16.0
Construction 71,524 15.7 67,354 16.2
Turf Care 106,402 23.3 83,313 20.0
Road-building 51,896 11.4 55,975 13.5
Specialty 39,211 8.6 35,673 8.6
Distribution and aftermarket 114,321 25.1 107,100 25.7
----------------- ----------- --------------- ----------
Total $455,836 100.0 $416,129 100.0
================= =========== =============== ==========
</TABLE>
<PAGE>
COST OF SALES - Cost of sales for the first nine months of 2000 of $433.2
million was 73.9% of net sales, compared to 75.0% of net sales for the first
nine months of 1999. As mentioned above, this improvement in cost absorption
relates to the higher sales volumes offset partially by the year-to-date
inventory impact of $2.1 million related to the DFP inventory. In addition, the
Company is experiencing production efficiencies from the previous high levels of
capital expenditures.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - Selling, general and
administrative expenses for the first nine months of 2000 of $70.8 million
increased by $28.2 million, or 66.2% from the first nine months of 1999 expenses
of $42.6 million. The increase reflects $19.1 million from five months of DFP
results as mentioned above in addition to the other merger-related costs being
incurred to integrate the former DFP companies with the former Sauer
organization.
RESEARCH AND DEVELOPMENT EXPENSES - Research and development expenses for the
first nine months of 2000 of $22.9 million increased by $5.8 million, or 33.9%
from the first nine months of 1999 expenses of $17.1 million. On-going product
development activity in the agriculture, construction and specialty markets is
driving a significant amount of increased cost in this area for proto-type
development, as well as including five months of DFP results accounting for $2.2
million of this increase. In addition, the Company continues to add engineers to
support these product development programs.
RESTRUCTURING CHARGES - Year to date restructuring charges are $9.0 million. As
stated above, $6.6 million of these charges were recorded in the third quarter
with the other $2.4 million being recorded in the second quarter. The Company
anticipates an additional $2.0 to $2.5 million to be recorded during the fourth
quarter.
NONOPERATING EXPENSES, NET - Net nonoperating expenses for the first nine months
of 2000 of $5.2 million decreased by $1.3 million from the first nine months of
1999 net expenses of $6.5 million. Net interest expense for the first nine
months of 2000 of $7.9 million increased by $1.5 million from the first nine
months of 1999 net expense of $6.4 million, reflecting higher overall borrowings
associated with the DFP acquisition. Other income, net, for the first nine
months of 2000 increased by $2.7 million from the first nine months of 1999
relating primarily to currency exchange gains as mentioned above along with an
increase in royalty income from the Company's Japanese licensee.
PROVISION FOR INCOME TAXES - Provision for income taxes for the first nine
months of 2000 of $15.1 million increased by $3.7 million from the first nine
months of 1999 provision for income taxes of $11.4 million. The increase comes
primarily from the increase in income before income taxes of $7.8 million
coupled with an increase in the effective tax rate for the first nine months of
2000 of 39.0% from the first nine months of 1999 rate of 37.0%.
NET INCOME - Net income for the first nine months of 2000 of $23.6 million
increased by $4.1 million, or 21.0% from the first nine months of 1999 net
income of $19.5 million. North American net income for the first nine months of
2000 of $14.4 million decreased by $3.7 million, or 20.5% from the first nine
months of 1999 net income of $18.1 million. North American net income was
unfavorably impacted primarily by the restructuring charges related to the
closing of the Newtown, Pennsylvania, facility and the Racine, Wisconsin,
facility as mentioned above as well as other merger integration costs. European
net income for the first nine months of 2000 of $11.7 million increased by $8.9
million, or 318%, from the first nine months of 1999 net income of $2.8 million,
aided by five months of DFP net income totaling $8.8 million.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity have been from internally generated
funds and from borrowings under its credit facilities.
Net cash provided by operating activities for the first nine months of 2000 of
$69.7 million decreased by $.9 million from the first nine months of 1999 of
$70.6 million. The decrease in operating cash flow resulted primarily from
higher overall inventory levels due to the record sales levels in addition to a
significant reduction in accounts payable.
Net borrowings under short and long term credit facilities for the first nine
months of 2000 were $13.7 million compared to the first nine months of 1999 net
repayments of $14.5 million. Net borrowings have increased from 1999 to support
the higher overall level of sales activity and the DFP acquisition.
The cash provided by operating activities of $69.7 million have funded 2000
capital expenditures of $44.3 million, dividends of $8.3 million, distributions
to minority interest partners of $7.6 million and common stock repurchases of
$5.7 million.
<PAGE>
Capital expenditures for the first nine months of 2000 of $44.3 million
decreased by $1.5 million from the first nine months of 1999 capital
expenditures of $45.8 million. On a comparable basis, Sauer-only capital
expenditures are down $14.3 million from 1999 levels. The decrease is in line
with the Company's expectations. The higher level of capital expenditures in
prior years is now in place to support the Company's future growth plans.
Additional capital expenditures will be made after considering current economic
conditions, the pace of on-going product development, and the need for
production efficiencies. The Company plans to continue to fund its capital
expenditures from internally generated funds and increased borrowings under its
credit facilities. These sources of funds are expected to be sufficient to
support the planned capital expenditures and the Company's working capital
requirements into 2001.
OTHER MATTERS
ACQUISITIONS - The Company previously announced that it has entered into a
memorandum of understanding to purchase Compact Controls, Inc., a manufacturer
of cartridge valves and manifolds based in Portland, Oregon. Details of the
purchase agreement are in the process of being finalized and the Company now
expects to complete this transaction in the first quarter of 2001. The
transaction will be accounted for under the purchase method of accounting for
business combinations. With sales of approximately $33 million and approximately
275 employees, Compact Controls is expected to further expand the Company's
systems capabilities.
The Company is currently in the process of completing the acquisition of nine
Danfoss Fluid Power sales companies as outlined in the Company's proxy statement
dated March 28, 2000. The Company anticipates completing the transaction in the
first quarter of 2001 by issuing approximately 2,000,000 to 3,000,000 shares of
its common stock in exchange for all of the assets used by these sales companies
to distribute product in their respective geographic locations.
OUTLOOK - Although the Company has experienced strong results for the first nine
months of 2000, there are signs, particularly in the North American
road-building and construction markets, of weakening. The Company has seen
orders for these two market segments decline from the prior year's levels as
equipment manufacturers begin to correct their high inventory levels built up
earlier in the year. The European market continues to be strong, helping to
offset some of the weakening in the North American market. The Company is
optimistic that its targets for the total year in terms of earnings will be met
and possibly exceeded. The restructuring plans related to the DFP acquisition
are progressing as planned and are anticipated to be very well along towards
completion by the end of 2000.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See the Company's most recent annual report filed on Form 10-K (Item 7A). There
has been no material change in this information.
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to the security holders for vote during the quarter
ended October 1, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
Exhibit
NO. DESCRIPTION OF DOCUMENT
3.1 The Amended and Restated Certificate of Incorporation of the Company
dated May 3, 2000, is attached as Exhibit 3.1 to the Company's Form
10-Q filed on August 16, 2000, and is incorporated herein by
reference.
3.2 The Amended and Restated Bylaws of the Company dated May 3, 2000, is
attached as Exhibit 3.2 to the Company's Form 10-Q filed on August
16, 2000, and is incorporated herein by reference.
4 The form of Certificate of the Company's Common Stock, $.01 Par Value,
is attached as Exhibit 4 to the Company's Form 10-Q filed on
August 16, 2000, and is incorporated herein by reference.
10.1(a) The Termination Agreement and Release dated May 3, 2000 relating to
the termination of a Silent Partnership Agreement is attached as
Exhibit 10.1(a) to the Company's Form 10-Q filed on August 16,
2000, and is incorporated herein by reference.
10.1(b) The Registration Rights Agreement is attached as Exhibit 10.1(b) to
Amendment No. 1 to the Company's Form S-1 Registration Statement filed
on April 23, 1998, and is incorporated herein by reference.
10.1(c) The form of Indemnification Agreement entered into between the Company
and each of its directors and certain officers is attached as Exhibit
10.1(c) to Amendment No. 1 to the Company's Form S-1 Registration
Statement filed on April 23, 1998, and is incorporated herein by
reference.
10.1(d) The Lease Agreement for the Company's Dubnica, Slovakia facility is
attached as Exhibit 10.1(f) to Amendment No. 1 to the Company's Form
S-1 Registration Statement filed on April 23, 1998, and is
incorporated herein by reference.
10.1(e) The Lease Agreement for the Company's Swindon, England facility is
attached as Exhibit 10.1(g) to Amendment No. 1 to the Company's Form
S-1 Registration Statement filed on April 23, 1998, and is
incorporated herein by reference.
10.1(f) The Lease Agreement for the Company's Minneapolis, Minnesota facility
is attached as Exhibit 10.1(h) to Amendment No. 1 to the Company's
Form S-1 Registration Statement filed on April 23, 1998, and is
incorporated herein by reference.
<PAGE>
10.1(g) The Lease Agreement for the Company's Newtown, Pennsylvania facility
is attached as Exhibit 10.1(i) to Amendment No. 1 to the Company's
Form S-1 Registration Statement filed on April 23, 1998, and is
incorporated herein by reference.
10.1(h) The Lease Agreement for the Company's Shanghai/Pudong, China facility
is attached as Exhibit 10.1(j) to Amendment No. 1 to the Company's
Form S-1 Registration Statement filed on April 23, 1998, and is
incorporated herein by reference.
10.1(i) The Employment Contract with Klaus Murmann is attached as Exhibit
10.1(k) to Amendment No. 1 to the Company's Form S-1 Registration
Statement filed on April 23, 1998, and is incorporated herein by
reference.
10.1(j) The Agreement and Amendment to Employment Agreement, effective May 3,
2000, relating to the Employment Contract referred to in 10.1(i) above
with Klaus Murmann is attached as Exhibit 10.1(j) to the Company's
Form 10-Q filed on August 16, 2000, and is incorporated herein by
reference.
10.1(k) The Employment Contract with David L. Pfeifle is attached as Exhibit
10.1(x) to the Company's Form 10-Q filed on May 18, 2000 and is
incorporated herein by reference.
10.1(l) The Executive Employment Agreement with Neils Erik Hansen dated May 3,
2000 is attached as Exhibit 10.1(l) to the Company's Form 10-Q filed
on August 16, 2000, and is incorporated herein by reference.
10.1(m) The Employment Contract with Thomas Kittel is attached as Exhibit
10.1(m) to Amendment No. 1 to the Company's Form S-1 Registration
Statement filed on April 23, 1998, and is incorporated herein by
reference.
10.1(n) The Sauer Inc. Management Incentive Plan is attached as Exhibit
10.1(r) to Amendment No. 1 to the Company's Form S-1 Registration
Statement filed on April 23, 1998, and is incorporated herein by
reference.
10.1(o) The Sauer-Sundstrand Employees' Retirement Plan is attached as Exhibit
10.1(s) to Amendment No. 1 to the Company's Form S-1 Registration
Statement filed on April 23, 1998, and is incorporated herein by
reference.
10.1(p) The Sauer-Sundstrand Company Supplemental Retirement Benefit Plan for
Certain Key Executives is attached as Exhibit 10.1(t) to Amendment No.
1 to the Company's Form S-1 Registration Statement filed on April 23,
1998, and is incorporated herein by reference.
10.1(q) The Sauer-Sundstrand Company Supplemental Retirement Benefit Plan for
Certain Key Executives Previously Employed by the Sundstrand
Corporation is attached as Exhibit 10.1(u) to Amendment No. 1 to the
Company's Form S-1 Registration Statement filed on April 23, 1998, and
is incorporated herein by reference.
10.1(r) The Sauer-Sundstrand Employees' Savings & Retirement Plan is attached
as Exhibit 10.1(v) to Amendment No. 1 to the Company's Form S-1
Registration Statement filed on April 23, 1998, and is incorporated
herein by reference.
10.1(s) The Amended and Restated Post-Retirement Care Agreement for Klaus
Murmann, effective May 3, 2000, is attached as Exhibit 10.1(s) to the
Company's Form 10-Q filed on August 16, 2000, and is incorporated
herein by reference.
10.1(t) The European Employees' Pension Plan is attached as Exhibit 10.1(y) to
Amendment No. 1 to the Company's Form S-1 Registration Statement filed
on April 23, 1998, and is incorporated herein by reference.
10.1(u) The Sauer-Danfoss Inc. 1998 Long-Term Incentive Plan is attached as
Exhibit 10.1(p) to Amendment No. 1 to the Company's Form S-1
Registration Statement filed on April 23, 1998 and is incorporated
herein by reference.
10.1(v) The Amendment, effective May 3, 2000 to the Sauer-Danfoss Inc. 1998
Long-Term Incentive Plan referred to in 10.1(u) above is attached as
Exhibit 10.1(v) to the Company's Form 10-Q filed on August 16,
2000, and is incorporated herein by reference.
10.1(w) The Sauer-Danfoss Inc. Non-employee Director Stock Option and
Restricted Stock Plan is attached as Exhibit 10.1(q) to Amendment No.
1 to the Company's Registration Statement filed on April 23, 1998 and
is incorporated herein by reference.
10.1(x) The Amendment, effective May 3, 2000, to the Sauer-Danfoss Inc.
Non-employee Director Stock Option and Restricted Stock Plan referred
to in 10.1(w) above is attached as Exhibit 10.1(x) to the Company's
Form 10-Q filed on August 16, 2000, and is incorporated herein by
reference.
10.1(y) The 1999 Sauer-Danfoss Inc. Bonus Plan is attached as Exhibit 10.1(a)
to the Company's Form 10-Q filed on August 13, 1999 and is
incorporated herein by reference.
10.1(z) The Amendment, effective May 3, 2000, to the 1999 Sauer-Danfoss Inc.
Bonus Plan referred to in 10.1(y) above is attached as Exhibit 10.1(z)
to the Company's Form 10-Q filed on August 16, 2000, and is
incorporated herein by reference.
<PAGE>
10.1(aa) The form of the Sauer-Danfoss Inc. Change in Control Agreement for
U.S. Participants dated May 3, 2000 is attached as Exhibit 10.1(aa) to
the Company's Form 10-Q filed on August 16, 2000, and is
incorporated herein by reference.
10.1(ab) The form of the Sauer-Danfoss Inc. Change in Control Agreement for
European Participants dated May 3, 2000 is attached as Exhibit
10.1(ab) to the Company's Form 10-Q filed on August 16, 2000, and
is incorporated herein by reference.
10.1(ac) The Trademark and Trade Name Agreement dated May 3, 2000 between the
Company and Danfoss A/S is attached as Exhibit 10.1(ac) to the
Company's Form 10-Q filed on August 16, 2000, and is incorporated
herein by reference.
10.1(ad) The Stock Purchase and Transfer Agreement dated January 24, 2000
relating to the acquisition of all of the stock of Custom Design
Electronics of Sweden AB is attached as Exhibit 10.1(w) to the
Company's Form 10-Q filed on May 18, 2000 and is incorporated herein
by reference.
10.1(ae) The Termination Agreement with Tonio P. Barlage dated March 31, 2000
is attached as Exhibit 10.1(y) to the Company's Form 10-Q filed on May
18, 2000 and is incorporated herein by reference.
10.1(af) The Stock Exchange Agreement dated January 22, 2000 by and among the
Registrant, Danfoss A/S, Danfoss Murmann Holding A/S. and K. Murmann
Verwaltungsgesellschaft mbH is attached as Annex A to the Company's
Proxy Statement filed on March 28, 2000 and is incorporated herein by
reference.
10.1(ag) The Stock Purchase Agreement with Tonio P. Barlage and Maria Barlage
dated March 31, 2000 is attached as Exhibit 10.1(aa) to the Company's
Form 10-Q filed on May 18, 2000 and is incorporated herein by
reference.
10.1(ah) The Sauer-Danfoss Employees' Retirement Plan as amended and restated,
effective January 1, 2000 and renamed as of May 3, 2000 is attached
hereto.
27.1 Financial data schedule.
(b) REPORTS ON FORM 8-K
On July 14, 2000 the Company filed a Current Report on Form 8-K/A
for the purpose of amending Item 7 of its Current Report on Form
8-K filed on May 16, 2000. Item 7 was amended to include pro
forma financial information related to the consummation of the
acquisition of Danfoss Fluid Power.
On August 22, 2000 the Company filed a Current Report on Form 8-K
for the purpose of disclosing two press releases. The first press
release dated August 10, 2000 announced that President and CEO,
David L. Pfeifle had undergone coronary artery bypass surgery.
The second press release dated August 14, 2000 announced the
Company's second quarter financial results.
On September 25, 2000 the Company filed a Current Report on Form
8-K for the purpose of disclosing one press release dated
September 21, 2000 announcing the third quarter dividend.
On October 31, 2000 the Company filed a Current Report on Form
8-K for the purpose of disclosing two press releases dated
October 24, 2000 and October 26, 2000. The press release dated
October 24, 2000 announced the appointment of James R. Wilcox as
Vice President and General Manager of the Company's Global
Hydrostatics Business Unit. The second press release dated
October 26, 2000 announced the date and time of the Company's
third quarter conference call to discuss third quarter results.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Sauer-Danfoss Inc.
By /s/ Kenneth D. McCuskey
-------------------------------
Kenneth D. McCuskey, Vice President Finance and
Chief Accounting Officer
Sauer-Danfoss Inc.
November 15, 2000
