10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q/A

(Amendment No. 1)

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

For the quarterly period ended March 31, 2012

OR

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

For the transition period from                to             

Commission File Number 1-14097

SAUER-DANFOSS INC.

(Exact name of registrant as specified in its charter)

Delaware	36-3482074
(State or other jurisdiction of	(IRS Employer
incorporation or organization)	Identification No.)

2800 East 13th Street, Ames, Iowa	50010
(Address of principal executive offices)	(Zip Code)

(515) 239-6000

(Registrant's telephone number, including Area Code)

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  £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x  No  £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer £	Accelerated filer  x
Non-accelerated filer £	Smaller reporting company £
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes £ No x

As of June 6, 2012, 48,454,417 shares of Sauer-Danfoss Inc. common stock, $.01 par value, were outstanding.

Explanatory Note

Sauer-Danfoss Inc. (the "Company") is filing this Amendment No. 1 (this "Form 10-Q/A") to its Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, filed with the Securities and Exchange Commission on May 3, 2012 (the "Form 10-Q") for the sole purpose of furnishing the Interactive Data File that was inadvertently omitted from Exhibit 101 when the Form 10-Q was filed due to a transmission error associated with the EDGAR filing software used by the Company. Except to update the number of shares outstanding as of the latest practicable date on the cover page, no other changes to the Form 10-Q have been made in this Form 10-Q/A.

This Form 10-Q/A speaks as of the original date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the Form 10-Q, except with respect to the number of shares outstanding set forth on the cover page. This Form 10-Q/A consists solely of the preceding cover page, this Explanatory Note, Part II--Other Information, the signature page, and the exhibits identified in Part II.

PART II. OTHER INFORMATION

Item 6. Exhibits.

Exhibit No.	Description of Document
31.1	Certification by the Chief Executive Officer Pursuant to Rule 13a-14(a).*
31.2	Certification by the Chief Financial Officer Pursuant to Rule 13a-14(a).*
32.1	Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.*
32.2	Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.*
101.INS	XBRL Instance Document.**
101.SCH	XBRL Taxonomy Extension Schema Document.**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.**
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.**
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.**

________________________________________

* Previously filed as exhibits to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2012, filed on May 3, 2012.

** Furnished herewith.

Attached as Exhibit 101 to this report are the following formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Operations for the three months ended March 31, 2012 and 2011, (ii) Consolidated Statements of Comprehensive Income for the three months ended March 31, 2012 and 2011, (iii) Consolidated Balance Sheets at March 31, 2012 and December 31, 2011, (iv) Consolidated Statements of Cash Flows for the three months endedMarch 31, 2012 and 2011 and (v) Notes to Consolidated Financial Statements for the three months endedMarch 31, 2012.

In accordance with Rule 406T of Regulation S-T, the XBRL-related information in Exhibit 101 shall be deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act, shall be deemed not filed for purposes of Section 18 of the Exchange Act or Section 34(b) of the Investment Company Act, and otherwise is not subject to liability under these Sections.

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 and Chief Accounting Officer, Secretary
Date:	June 7, 2012

3

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Basic and Diluted Per Share

3 Months Ended

Mar. 31, 2012

Basic and Diluted Per Share Data [Abstract]

Basic and Diluted Per Share Data [Text Block]

Basic and Diluted Per Share Data —

Basic net income per common share is based on the weighted average number of shares of common stock outstanding for the period less restricted stock shares issued in connection with the Company's long-term incentive plans and subject to risk of forfeiture. Diluted net income per common share assumes that outstanding common shares were increased by shares issuable upon (i) vesting of restricted stock shares, and (ii) granting of shares deferred under the long-term incentive plan. Restricted stock and shares under the long-term incentive plans have an exercise price of zero.

The reconciliation of basic net income per common share to diluted net income per common share is shown in the following table for the three-month periods ended March 31, 2012 and 2011:

	March 31, 2012					March 31, 2011
	Net Income		Shares	EPS		Net Income		Shares	EPS
Basic net income	$	64,794	48,407,694	$	1.34	$	70,554	48,396,557	$	1.46
Effect of dilutive securities:
Restricted stock	—		16,418	—		—		9,171	—
Performance units	—		56,624	—		—		72,520	—
Diluted net income	$	64,794	48,480,736	$	1.34	$	70,554	48,478,248	$	1.46

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Significant Accounting Policies

3 Months Ended

Mar. 31, 2012

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies [Text Block]

Summary of Significant Accounting Policies —

Basis of Presentation and Principles of Consolidation —

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, and represent the consolidation of all companies in which the Company has a controlling financial ownership interest or a majority of the interest in earnings or losses. Certain information and disclosures normally included in comprehensive financial statements, prepared in accordance with U.S. generally accepted accounting principles (GAAP), 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. In the opinion of management, the financial statements reflect all adjustments necessary to present fairly the Company's consolidated financial position, results of operations and cash flows for the periods presented. It is suggested that these interim financial statements 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 1, 2012.

Use of Estimates —

In preparing the consolidated financial statements in conformity with U.S. generally accepted accounting principles, management must make decisions that impact the reported amounts of assets, liabilities, revenues, expenses, and the related disclosures, including disclosures of contingent assets and liabilities. Such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base accounting estimates. Estimates are used in determining, among other items, inventory valuation, warranty reserves, allowance for doubtful accounts, valuation allowances on deferred tax assets, pension and postretirement accruals, employee incentive accruals, useful lives for intangible assets, and future cash flows associated with impairment testing for goodwill and other long-lived assets. These estimates and assumptions are based on management's best estimates and judgments. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors that management believes to be reasonable under the circumstances, including the current economic environment, adjusting such estimates and assumptions when facts and circumstances dictate. A number of these factors include, among others, the economic conditions, restricted credit markets, foreign currency, and higher commodity costs, all of which impact such estimates and assumptions. As future events and their effects cannot be determined with precision, actual amounts could differ significantly from those estimated at the time the consolidated financial statements are prepared. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.

Recently Adopted Accounting Principles —

In May 2011 the Financial Accounting Standards Board (FASB) issued new accounting guidance that amends some fair value measurement principles and disclosure requirements. The new guidance states that the concepts of highest and best use and valuation premise are only relevant when measuring the fair value of nonfinancial assets and prohibits the grouping of financial instruments for purposes of determining their fair values when the unit of account is specified in other guidance. The Company adopted this guidance as of January 1, 2012 with no impact on the consolidated financial statements.

In June 2011 the FASB amended requirements for the presentation of other comprehensive income (OCI), requiring all nonowner changes in stockholders' equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The Company adopted this guidance in the first quarter of 2012. Upon adoption, certain prior period amounts have been reclassified to conform to the current period financial statement presentation. These reclassifications have no impact on previously reported financial position, results of operations or cash flows.

In September 2011 the FASB issued amendments to the guidance on testing goodwill for impairment. The new guidance provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines that this is the case, it is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized for that reporting unit (if any). If an entity determines that the fair value of a reporting unit is greater than its carrying amount, the two-step goodwill impairment test is not required. Annual impairment tests are performed by the Company in the fourth quarter of each year. The adoption of this updated authoritative guidance is not expected to have an impact on the consolidated financial statements.

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Consolidated Statements of Operations (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Net sales	$ 573,993	$ 564,742
Cost of sales	383,763	375,483
Gross profit	190,230	189,259
Selling, general and administrative	60,045	54,256
Research and development	16,296	14,095
Other	(12)	310
Total operating expenses	76,353	68,041
Income from operations	113,877	121,218
Nonoperating income (expense):
Interest expense, net	(4,371)	(6,101)
Other, net	432	(4,499)
Nonoperating expenses, net	(3,939)	(10,600)
Income before income taxes	109,938	110,618
Income tax expense	(31,939)	(26,083)
Net income	77,999	84,535
Net income attributable to noncontrolling interest, net of tax	(13,205)	(13,981)
Net income attributable to Sauer-Danfoss Inc.	$ 64,794	$ 70,554
Net income per common share, basic and diluted	$ 1.34	$ 1.46
Weighted average basic shares outstanding	48,407,694	48,396,557
Weighted average diluted shares outstanding	48,480,736	48,478,248

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Consolidated Statements of Stockholders' Equity (USD $) In Thousands, except Share data, unless otherwise specified	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings (Accumulated Deficit) [Member]	Accumulated Other Comprehensive Income [Member]	Noncontrolling Interest [Member]
Stockholders' Equity, Beginning Balance at Dec. 31, 2011	$ 577,826	$ 484	$ 335,337	$ 144,424	$ 7,173	$ 90,408
Shares, Outstanding, Beginning Balance at Dec. 31, 2011		48,432,860
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	77,999			64,794		13,205
Other Comprehensive Income (Loss), Net of Tax	16,368				18,843	(2,475)
Performance Units Vested		5,057
Minimum Tax Withholding Settlement	(114)		(114)
Compensation	64		64
Noncontrolling Interest Distribution	(2,974)					(2,974)
Dividends, Common Stock, Cash	(16,953)			(16,953)
Stockholders' Equity, Ending Balance at Mar. 31, 2012	$ 652,216	$ 484	$ 335,287	$ 192,265	$ 26,016	$ 98,164
Shares, Outstanding, Ending Balance at Mar. 31, 2012		48,437,917

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Cash Flows from Operating Activities:
Net income	$ 77,999	$ 84,535
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	20,677	22,472
Change in deferred income taxes	3,956	10,283
Other	76	(310)
Changes in operating assets and liabilities
Accounts receivable, net	(93,225)	(72,991)
Inventories	22,638	(5,236)
Other current assets	(7,816)	(6,057)
Accounts payable	15,274	19,205
Accrued liabilities	13,201	3,400
Other	(506)	(1,976)
Net cash provided by operating activities	52,274	53,325
Cash Flows from Investing Activities:
Purchases of property, plant and equipment	(5,334)	(5,518)
Proceeds from sales of property, plant and equipment	49	274
Advances to related persons	(28,995)	(2,328)
Net cash used in investing activities	(34,280)	(7,572)
Cash Flows from Financing Activities:
Net repayments on notes payable and bank overdrafts	0	(10,487)
Net repayments on revolving credit facility	0	(40,026)
Repayments of long-term debt	(103)	(112)
Distributions to noncontrolling interest	(2,974)	(3,524)
Net cash used in financing activities	(3,077)	(54,149)
Effect of Exchange Rate Changes on Cash	2,050	3,304
Cash and Cash Equivalents:
Net increase during the period	16,967	(5,092)
Beginning balance	72,560	44,039
Ending balance	89,527	38,947
Supplemental Cash Flow Disclosures:
Interest paid	4,578	5,644
Income taxes paid	$ 9,380	$ 8,174

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Net income	$ 77,999	$ 84,535
Foreign currency translation adjustments	14,160	22,123
Pension and postretirement plan adjustments	477	(51)
Unrealized gains on hedging activities	1,731	1,453
Other comprehensive income	16,368	23,525
Comprehensive income	94,367	108,060
Comprehensive income attributable to noncontrolling interest	(10,730)	(14,198)
Comprehensive income attributable to Sauer-Danfoss Inc.	$ 83,637	$ 93,862

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Segment and Geographic Information

3 Months Ended

Mar. 31, 2012

Segment and Geographic Information [Abstract]

Segment and Geographic Information [Text Block]

Segment and Geographic Information —

The Company's reportable segments are organized around its various product lines of Propel, Work Function, Controls and Stand-Alone Businesses. Propel products include hydrostatic transmissions and related products that transmit the power from the engine to the wheel to propel a vehicle. Work Function products include steering motors and motors that transmit power for the work functions of the vehicle. Controls products include electrohydraulic controls, microprocessors, and valves that control and direct the power of a vehicle. Stand-Alone Businesses, an aggregation of two operating segments, includes open circuit gear pumps and motors, cartridge valves and hydraulic integrated circuits, directional control valves, inverters, and light duty hydrostatic transmissions that transmit, control and direct the power of a vehicle and are marketed under their own names and operate as stand-alone businesses. Costs in Global Services relate to internal global service departments and include costs such as consulting for special projects, tax and accounting fees paid to outside third parties, certain insurance premiums, and amortization of intangible assets from certain business combinations.

The following table presents the significant items by operating segment for the results of operations for the three-month periods ended March 31, 2012 and 2011:

	Propel		Work Function		Controls		Stand-Alone		Global Services			Total
March 31, 2012
Net sales	$	256,326	$	92,233	$	84,568	$	140,866	$	—		$	573,993
Segment income (loss)	55,276		17,877		23,308		28,095		(10,247		)	114,309
Interest expense, net												(4,371		)
Income before income taxes												109,938
Depreciation and amortization	7,862		5,067		3,143		3,988		617			20,677
Capital expenditures	1,345		954		826		1,747		462			5,334
March 31, 2011
Net sales	$	250,230	$	99,706	$	79,339	$	135,467	$	—		$	564,742
Segment income (loss)	65,120		17,330		22,750		25,918		(14,399		)	116,719
Interest expense, net												(6,101		)
Income before income taxes												110,618
Depreciation and amortization	8,437		5,442		3,492		4,532		569			22,472
Capital expenditures	3,275		544		473		994		232			5,518

A summary of the Company's net sales and long-lived assets by geographic area is presented below:

	Net Sales (1)				Long-Lived Assets (2)
	Three Months Ended March 31,				March 31,
	2012		2011		2012		2011
United States	$	253,778	$	220,280	$	101,357	$	106,198
China	38,285		73,097		19,168		11,810
Germany	49,167		51,473		51,814		58,245
Italy	25,728		29,605		9,721		12,122
Denmark (3)	5,742		6,519		93,005		110,398
Other countries	201,293		183,768		146,985		177,604
Total	$	573,993	$	564,742	$	422,050	$	476,377

________________________________________

(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, goodwill, intangible assets net of accumulated amortization, and certain other long-lived assets.

(3) Majority of this country's sales are shipped outside of the home country where the product is produced.

One customer accounted for ten percent of total consolidated net sales in the three months ended March 31, 2012 and 2011, respectively.

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Document and Entity Information Document	3 Months Ended
	Mar. 31, 2012	May 02, 2012
Entity Information [Line Items]
Entity Registrant Name	Sauer Danfoss Inc
Entity Central Index Key	0000865754
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q1
Amendment Flag	true
Amendment Description	Filing of XBRL data inadvertently omitted due to technical difficulties.
Entity Common Stock, Shares Outstanding		48,451,417

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Consolidated Balance Sheets Parenthetical (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Allowance for doubtful accounts	$ 4,605	$ 4,361
Accumulated depreciation	$ 808,562	$ 779,449
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	4,500,000	4,500,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	48,437,917

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Fair Value and Derivative Financial Instruments

3 Months Ended

Mar. 31, 2012

Fair Value and Derivative Financial Instruments [Abstract]

Fair Value and Eerivative Financial Instruments [Text Block]

Fair Value and Derivative Financial Instruments —

The Company holds certain assets and liabilities that are required to be measured at fair value on a recurring basis. These include the Company's derivative instruments related to foreign currency forward contracts, as well as foreign exchange swaps. The Company uses derivative financial instruments to manage risk and not for trading or other speculative purposes.

Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is the Company's policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements. The fair values of the Company's derivatives are determined based on inputs that are readily available in public markets or can be derived from information available in publicly quoted markets. Therefore, the Company has categorized these contracts as Level 2 in the fair value hierarchy.

The following table presents the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis:

	Balance Sheet Classification	March 31, 2012		December 31, 2011
Assets:
Foreign exchange swaps (not designated as hedging instruments)	Other current assets	$	—	$	494
Liabilities:
Forward contracts (designated as hedging instruments)	Other accrued liabilities	$	1,541	$	3,809
Foreign exchange swaps (not designated as hedging instruments)	Other accrued liabilities	81		—
Forward contracts (designated as hedging instruments)	Other liabilities	—		129
		$	1,622	$	3,938

The Company enters into forward contracts to hedge the value of the U.S. dollar or euro cash flow at locations that do not have the U.S. dollar or euro as their functional currency but conduct certain transactions in U.S. dollars or euros. The objective of all outstanding forward contracts is to hedge forecasted transactions in U.S. dollars or euros through the cash settlement date. The Company enters into forward contracts with maturity dates of up to eighteen months after the contract date. All forward contracts are designated as and qualify for hedge accounting treatment.

The Company had foreign currency forward contracts outstanding in notional amounts as follows:

	March 31, 2012	December 31, 2011
U.S. dollar	40,950	50,550
Euro	5,850	8,250

Changes in the fair value of forward contracts designated as hedging instruments are recognized as a component of net income or accumulated other comprehensive income depending on whether the transaction related to the hedged risk has occurred and whether the contract qualifies as highly effective. Changes in fair values of derivatives that are accounted for as cash flow hedges are recorded in accumulated other comprehensive income. The amount of loss, net of tax, recorded as a component of accumulated other comprehensive income related to forward contracts was $990 and $2,721 at March 31, 2012 and December 31, 2011, respectively. At March 31, 2012 the Company expects to reclassify $990 of loss, net of tax, on forward contracts from accumulated other comprehensive income to net income during the next twelve months due to the actual fulfillment of forecasted transactions.

The following table summarizes the amount of gain (loss) reclassified from accumulated other comprehensive income into net income for the three months endedMarch 31, 2012 and 2011:

	Three Months Ended March 31,
Statement of Operations Classification	2012			2011
Net Sales	$	(507	)	$	(158	)
Other, net	167			211
	$	(340	)	$	53

Any portion of the hedge that is deemed ineffective due to the absolute value of the cumulative change in the derivative being greater than the cumulative change in the hedged item is recorded immediately in other, net on the consolidated statements of operations. There was no significant hedge ineffectiveness in the three months endedMarch 31, 2012 or 2011.

The Company uses foreign exchange swaps to hedge intercompany financing activities between group companies with different functional currencies. The Company does not designate these foreign exchange swaps as hedging instruments. Accordingly, the gain or loss associated with changes in the fair value of these contracts is immediately recorded in other, net on the consolidated statements of operations.

The following table summarizes the amount of loss related to foreign exchange swaps recognized in the statements of operations for the three months endedMarch 31, 2012 and 2011:

	Three Months Ended March 31,
Statement of Operations Classification	2012			2011
Other, net	$	(581	)	$	(313	)

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Inventories

3 Months Ended

Mar. 31, 2012

Inventories [Abstract]

Inventories [Text Block]

Inventories —

The composition of inventories is as follows:

	March 31, 2012			December 31, 2011
Raw materials	$	96,868		$	101,069
Work in progress	49,979			50,455
Finished goods and parts	73,470			87,846
LIFO allowance	(22,138		)	(21,660		)
Total	$	198,179		$	217,710

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Pension and Postretirement Benefits Other than Pensions

3 Months Ended

Mar. 31, 2012

Pension and Postretirement Benefits Other Than Pensions [Abstract]

Pension and Postretirement Benefits Other Than Pensions [Text Block]

Pension and Postretirement Benefits Other than Pensions —

Pension Benefits

The Company has defined benefit plans covering a significant number of its employees. The benefits under these plans are based primarily on years of service and compensation levels. Pension expense for the three months endedMarch 31, 2012 and 2011 for the defined benefit plans consists of the following components:

	Three Months Ended March 31,
	2012			2011
Service cost	$	1,198		$	1,010
Interest cost	4,330			3,255
Expected return on plan assets	(4,356		)	(3,164		)
Amortization of prior service cost	(74		)	(67		)
Amortization of net loss	1,525			1,055
Net periodic pension expense	$	2,623		$	2,089

Postretirement Benefits

The Company provides health benefits for certain retired employees and certain dependents when the employee becomes eligible for these benefits by satisfying plan provisions that include certain age and service requirements.

The components of the postretirement benefit expense of the Company-sponsored plans for the three months endedMarch 31, 2012 and 2011 are as follows:

	Three Months Ended March 31,
	2012			2011
Service cost	$	50		$	50
Interest cost	350			650
Amortization of prior service cost	(375		)	(32		)
Amortization of net loss	525			482
Postretirement benefit expense	$	550		$	1,150

During the third quarter of 2011, the Company amended its U.S. retiree health care plans to change the method by which postretirement health care is provided for certain eligible Medicare age retirees and / or spouses. Beginning January 1, 2012, the Company provides its eligible Medicare age retirees and / or spouses postretirement health care in the form of a defined contribution benefit, together with access to a third party health care exchange designed specifically for Medicare age participants. Postretirement health care was previously provided to this group through the Company's standard group health plan. The plan amendment reduced the accumulated postretirement benefit obligation by approximately $19,500 which is being recognized as part of net periodic postretirement benefit cost over the average life expectancy of retired eligible employees.

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Related Person Transactions

3 Months Ended

Mar. 31, 2012

Related Person Transactions [Abstract]

Related Party Transactions [Text Block]

Related Person Transactions —

The Company can borrow up to $300,000 under a term loan and revolving credit facility with Danfoss A/S, the Company's majority stockholder. Two term loans of approximately $200,000 ($140,000 and 45,000 euro) were outstanding at March 31, 2012 and December 31, 2011. There were no principal amounts outstanding under the revolving credit facility at March 31, 2012 or December 31, 2011. The Company incurred interest expense of $4,608 and $5,786 for the three months ended March 31, 2012 and 2011, respectively, related to the debt with Danfoss A/S.

In August 2011, the Company entered into an Agreement with Danfoss A/S, the Company's majority stockholder, to loan excess cash to Danfoss A/S at the EURIBOR or LIBOR rate plus 0.25%. The cash deposited with Danfoss A/S was $199,100 and $168,450, at March 31, 2012 and December 31, 2011, respectively. The Company had four deposits of cash with Danfoss A/S at March 31, 2012 with a weighted average interest rate of 0.60% and terms ranging from 6 to 28 days. The Company recorded interest income of $351 during the three months ended March 31, 2012 related to this agreement.

In October 2010, the Company entered into an Agreement with Daikin Industries Ltd., a noncontrolling interest owner in an entity consolidated by the Company, to loan excess cash or borrow funds on a daily basis as needed. The cash deposited with Daikin was $11,793 and $10,277 at March 31, 2012 and December 31, 2011, respectively. Interest is earned based on short term financing rates and was $11 and $2 during the three months ended March 31, 2012 and 2011, respectively, related to this agreement.

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Accrued Warranty Costs

3 Months Ended

Mar. 31, 2012

Accrued Warranty Costs [Abstract]

Accrued Warranty Costs [Text Block]

Accrued Warranty Costs —

The Company warrants its various products over differing periods depending upon the type of product and application. Consequently, the Company records warranty liabilities for the estimated costs that may be incurred under its basic warranty based on past trends of actual warranty claims compared to the actual sales levels to which those claims apply. These liabilities are accrued at the time the sales of the products are recorded.

In addition to its normal warranty liability, the Company, from time to time in the normal course of business, incurs costs to repair or replace defective products with a specific customer or group of customers. The Company refers to these as field recalls and in these instances, the Company records a specific provision for the expected costs it will incur to repair or replace these products utilizing information from customers and internal information regarding the specific cost of materials and labor. Due to the sporadic and infrequent nature of field recalls, and the potential for a range of costs associated with field recalls, the Company cannot accurately estimate these costs at the time the products are sold. Therefore, these costs are recorded at the time information becomes known to the Company. As the field recalls are carried out, the Company relieves the specific liability related to that field recall. These specific field recall liabilities are reviewed on a quarterly basis.

The following table presents the changes in the Company's accrued warranty liability:

	Three Months Ended March 31,
	2012			2011
Balance, beginning of period	$	29,863		$	28,183
Payments	(3,957		)	(4,506		)
Accruals for warranties	2,916			3,742
Currency impact	346			1,018
Balance, end of period	$	29,168		$	28,437

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Other Comprehensive Income

3 Months Ended

Mar. 31, 2012

Other Comprehensive Income (Loss), Net of Tax [Abstract]

Comprehensive Income (Loss) Note [Text Block]

Other Comprehensive Income —

The following table shows the tax and exchange rate effects of amounts allocated to each component of other comprehensive income for the three months ended March 31, 2012 and 2011.

	Change in Period		Tax (Expense) Benefit			Effect of Exchange Rates			Net Change
Three Months Ended March 31, 2012:
Foreign currency translation	$	14,160	$	—		$	—		$	14,160
Pension and postretirement plan adjustment	1,608		(602		)	(529		)	477
Unrealized gains on hedging activities	2,231		(402		)	(98		)	1,731
Other comprehensive income	$	17,999	(1,004		)	$	(627	)	$	16,368
Three Months Ended March 31, 2011
Foreign currency translation	$	22,123	$	—		$	—		$	22,123
Pension and postretirement plan adjustment	1,002		(377		)	(676		)	(51		)
Unrealized gains on hedging activities	1,630		(174		)	(3		)	1,453
Other comprehensive income	$	24,755	$	(551	)	$	(679	)	$	23,525

The changes in accumulated other comprehensive income, excluding non-controlling interest, for the three months ended March 31, 2012 is as follows:

	Foreign Currency Translation		Pension/ Postretirement Plan Adjustment			Hedging Activities			Accumulated Other Comprehensive Income
Balance as of January 1, 2012	$	82,955	$	(73,061	)	$	(2,721	)	$	7,173
Current period other comprehensive income	16,635		477			1,731			18,843
Balance as of March 31, 2012	$	99,590	$	(72,584	)	$	(990	)	$	26,016

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Current Assets:
Cash and cash equivalents	$ 89,527	$ 72,560
Cash deposited with related persons	210,893	178,727
Accounts receivable (net of allowances of $4,605 and $4,361 in 2012 and 2011, respectively)	313,346	215,978
Inventories	198,179	217,710
Other current assets	83,637	75,868
Total current assets	895,582	760,843
Property, Plant and Equipment (net of accumulated depreciation of $808,562 and $779,449 in 2012 and 2011, respectively)	362,250	367,844
Other Assets:
Goodwill	35,251	34,474
Other intangible assets, net	16,522	16,883
Deferred income taxes	89,940	90,512
Other	8,027	7,700
Total other assets	149,740	149,569
Total Assets	1,407,572	1,278,256
Current Liabilities:
Long-term debt due within one year	987	955
Accounts payable	197,216	177,996
Accrued salaries and wages	70,940	67,140
Accrued warranty	29,168	29,863
Other accrued liabilities	90,011	52,237
Total current liabilities	388,322	328,191
Long-Term Debt	201,205	199,502
Other Liabilities:
Long-term pension liability	77,419	79,717
Postretirement benefits other than pensions	31,488	31,488
Deferred income taxes	35,312	35,184
Other	21,610	26,348
Total other liabilities	165,829	172,737
Total liabilities	755,356	700,430
Stockholders' Equity:
Preferred stock, par value $.01 per share, authorized 4,500,000 shares, no shares issued or outstanding	0	0
Common stock, par value $.01 per share, authorized shares 75,000,000 in 2011 and 2010; issued and outstanding 48,432,860 in 2011 and 48,408,259 in 2010	484	484
Additional paid-in capital	335,287	335,337
Accumulated deficit	192,265	144,424
Accumulated other comprehensive income	26,016	7,173
Total Sauer-Danfoss Inc. stockholders' equity	554,052	487,418
Noncontrolling interest	98,164	90,408
Total stockholders' equity	652,216	577,826
Total Liabilities and Stockholders' Equity	$ 1,407,572	$ 1,278,256

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Restructuring

3 Months Ended

Mar. 31, 2012

Restructuring [Abstract]

Restructuring [Text Block]

Restructuring —

In 2011 the Company announced its plans to restructure its European sales organization to establish a distributor organization to serve smaller customers. Costs related to the reorganization are included in the Global Services segment and totaled $239 in the three months ended March 31, 2012, which are included in selling, general and administrative expenses.

The following table summarizes the restructuring charges incurred and the activity in the accrued liability during the three months ended March 31, 2012.

	Employee Termination Costs		Professional Fees			Total
Balance as of December 31, 2011	$	4,180	$	483		$	4,663
Charges to Expense	—		239			239
Payments made	—		(722		)	(722		)
Balance as of March 31, 2012 (1)	$	4,180	$	—		$	4,180
Cumulative charges incurred	$	4,180	$	722		$	4,902

(1) The $4,180 of accrued employee termination costs will be paid through 2013.