<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997 Commission file number 0-21835
SUN HYDRAULICS CORPORATION
(Exact Name of Registration as Specified in its Charter)
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FLORIDA 59-2754337
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1500 WEST UNIVERSITY PARKWAY
SARASOTA, FLORIDA 34243
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(Address of Principal Executive Offices) (Zip Code)
941/362-1200
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(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 [ ]
The Registrant had 6,300,002 shares of common stock, par value $.001,
outstanding as of May 14, 1997.
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Sun Hydraulics Corporation
INDEX
For the first quarter ended March 31, 1997
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1997 3
and December 31, 1996
Consolidated Statements of Income for the
Three Months Ended March 31, 1997 and 1996 4
Consolidated Statement of Changes in Shareholders' Equity for the
Three Months Ended March 31, 1997 5
Consolidated Statement of Cash Flows
for the Three Months Ended March 31, 1997 and 1996 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Forward Looking Information 12
PART II. OTHER INFORMATION 14
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K -
</TABLE>
2
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Part I: Financial Information
Item 1.
<TABLE>
<CAPTION>
Sun Hydraulics Corporation
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
MARCH 31, DECEMBER 31,
1997 1996
(UNAUDITED)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,557 $ 1,038
Accounts receivable, net of allowance for
doubtful accounts of $59 and $62 4,903 3,535
Inventories 4,735 4,451
Other current assets 788 1,132
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Total current assets 12,983 10,156
Property, plant and equipment, net 38,473 37,212
Other assets 14 1,048
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Total assets $ 51,470 $48,416
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,296 $ 3,273
Accrued expenses and other liabilities 1,856 1,961
Long-term debt due within one year 597 2,340
Notes payable to related parties due within one year 679 655
Accrued distributions/dividends 1,398 508
Income taxes payable, net 1,515 461
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Total current liabilities 8,341 9,198
Long-term debt due after one year 7,107 12,314
Notes payable to related parties due after one year 1,730 1,909
Deferred income taxes 2,578 2,578
Other liabilities 6 20
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Total liabilities 19,762 26,019
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Shareholders' equity:
Common stock 6 2,179
Capital in excess of par value 24,092 2,719
Retained earnings 7,624 17,450
Equity adjustment for foreign currency translation (14) 49
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Total shareholders' equity 31,708 22,397
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Total Liabilities and Shareholders' Equity $ 51,470 $48,416
======== =======
</TABLE>
3
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Sun Hydraulics Corporation
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
(UNAUDITED)
1997 1996
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<S> <C> <C>
NET SALES $14,599 $13,806
Cost of sales 10,202 9,491
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GROSS PROFIT 4,397 4,315
Selling, engineering and
administrative expenses 2,717 2,665
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OPERATING INCOME 1,680 1,650
Interest expense 152 205
Miscellaneous (income) expense (58) 53
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INCOME BEFORE INCOME TAXES 1,586 1,392
Income tax provision 568 289
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NET INCOME $ 1,018 $ 1,103
======= =======
PRO FORMA INCOME DATA (NOTE 3):
INCOME BEFORE INCOME TAXES $ 1,586 $ 1,392
Pro Forma Income tax provision 568 554
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PRO FORMA NET INCOME $ 1,018 $ 838
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PRO FORMA NET INCOME PER SHARE $ .16 $ .13
======= =======
PRO FORMA AVERAGE SHARES OUTSTANDING 6,519 6,509
======= =======
</TABLE>
4
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Sun Hydraulics Corporation
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
EQUITY
ADJUSTMENT
CAPITAL IN FOR FOREIGN
COMMON EXCESS OF RETAINED CURRENCY
STOCK PAR VALUE EARNINGS TRANSLATION TOTAL
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ 2,179 $ 2,719 $ 17,450 $ 49 $ 22,397
Net proceeds from stock offering 6 19,246 19,252
Distributions to shareholders (10,623) (10,623)
Merger with Sun Holdings (Note 2) (2,175) 2,123 (52)
Shares retired in stock offering (4) 4 -
Net income 1,018 1,018
Dividends declared (221) (221)
Adjustment for foreign
currency translation (63) (63)
------- ------- -------- ---- --------
Balance, March 31, 1997 $ 6 $24,092 $ 7,624 $(14) $ 31,708
======= ======= ======== ==== ========
</TABLE>
5
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Sun Hydraulics Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,018 $ 838
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Depreciation 990 806
(Increase) decrease in:
Accounts receivable (1,368) (830)
Inventories (284) (144)
Income tax receivable, net 344
Other current assets 1,034 (1,123)
Other assets - (220)
Increase (decrease) in:
Accounts payable (977) (800)
Accrued expenses and other liabilities (105) 34
Income taxes payable, net 1,054 486
Other liabilities (14) (9)
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Net cash provided by (used in) operating activities 1,692 (962)
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Cash flows from investing activities:
Capital expenditures (2,253) (2,625)
Proceeds from dispositions of equipment 2 --
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Net cash used in investing activities (2,251) (2,625)
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Cash flows from financing activities:
Proceeds from long-term debt 1,610 3,370
Repayment of long-term debt (8,560) (517)
Repayment of notes payable to related parties (155) (141)
Proceeds from exercise of stock options - 3
Net proceeds from stock offering 19,252 -
Capital paid for Sun Holdings merger (Note 2) (52) -
Distributions to shareholders (9,954) (643)
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Net cash provided by financing activities 2,141 2,072
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Effect of exchange rate changes on cash (63) (147)
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Net increase (decrease) in cash and cash equivalents 1,519 (1,662)
Cash and cash equivalents, beginning of period 1,038 2,434
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Cash and cash equivalents, end of period $ 2,557 $ 772
======= =======
Supplemental disclosure of cash flow information:
Cash paid (received) during the quarter for:
Interest (including amounts capitalized) $ 400 $ 226
Income taxes $ (291) $ 67
</TABLE>
6
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SUN HYDRAULICS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS EXCEPT PER SHARE DATA)
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited interim financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
for reporting on Form 10-Q. Accordingly, certain information and footnotes
required by generally accepted accounting principles for complete financial
statements are not included herein. The financial statements are prepared on a
consistent basis with and should be read in conjunction with the combined
financial statements and related notes contained in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1996 filed with the
Securities and Exchange Commission on March 31, 1997.
2. INITIAL PUBLIC OFFERING
The financial statements of Sun Hydraulics Corporation (the "Company")
consist of the financial position and results of operations of Sun Hydraulics
Corporation ("Sun Hydraulics") and Sun Hydraulik Holdings Limited ("Sun
Holdings"). In January 1997, Sun Hydraulics effected a 9 for 1 stock split and
issued 374,811 shares of common stock and made a nominal cash payment in
exchange for all of the issued and outstanding stock of Sun Holdings.
Accordingly, financial statements for 1997 are on a consolidated basis, and
financial statements for 1996 are on a combined basis.
The Company has 20,000,000 authorized shares of common stock, par value
$0.001, with 4,000,002 shares outstanding. The Company also has 2,000,000
authorized shares of preferred stock, par value $0.001, with no shares
outstanding.
The Company filed a Registration Statement on Form S-1 with the
Securities and Exchange Commission effective January 9, 1997 and issued
2,300,000 shares of Common Stock in an initial public offering ("IPO"), with
an initial offering price of $9.50. The IPO net proceeds of $19.3 million, the
exchange of shares with Sun Holdings, and the distribution of previously taxed S
Corporation retained earnings are reflected in the Statement of Changes in
Shareholders' Equity.
The $19.3 million of net proceeds from the offering were used as follows: a
payment of $9.5 million of the S Corporation distribution, representing 90% of
the total distribution of $10.6 million, $7.7 million paid to extinguish debt,
and $2.1 was retained as working capital.
3. PRO FORMA NET INCOME AND EARNINGS PER SHARE
Pro forma net income reflects a provision for income taxes as if Sun
Hydraulics had been a C Corporation for all periods presented.
The computation of pro forma earnings per share is based on the pro forma
weighted average number of common shares outstanding, during the period plus
vested common stock equivalents, if dilutive, consisting of certain shares
subject to stock options, after giving effect to the initial public offering
(See Note 2). The assumed exercise of dilutive stock options less the number of
treasury shares assumed to be purchased from the proceeds were calculated using
the average market price during the quarter ended March 31, 1997.
7
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During the first quarter of 1997, Statement on Financial Accounting
Standards NO. 128 ("SFAS 128"), "Earnings per Share", was issued. SFAS 128 will
be effective for the year ending December 31, 1997 and will require a
restatement of previously reported earnings per share. Under SFAS 128, "basic"
earnings per share will replace the reporting of "primary" earnings per share.
Basic earnings per share is calculated by dividing the income available to
common stockholders by the weighted average number of common shares outstanding
for the period, without consideration for common stock equivalents. "Diluted"
earnings per share will replace "fully diluted" earnings per share
under SFAS 128. The calculation of diluted earnings per share is similar to
that of fully diluted earnings per share under existing accounting
pronouncements. Basic and diluted earnings per share is not expected to be
significantly different from primary and fully diluted earnings per share,
respectively, as calculated by the Company.
4. INVENTORIES
The components of inventory are summarized as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
(unaudited)
<S> <C> <C>
Raw materials $ 156 $ 147
Work in process 3,187 2,758
Finished goods 1,392 1,546
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$4,735 $4,451
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</TABLE>
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5. LONG-TERM DEBT
The components of long-term debt are summarized as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
(UNAUDITED)
<S> <C> <C>
Lines of credit agreements, interest payable
at lender's prime rate 8.25% at March 31, 1997
and December 31, 1996) $ 266 $ 1,512
Secured equipment loan, interest only payable
monthly at 8.25% in 1996 - 2,874
8.25% mortgage note payable secured by real
property due in monthly principal and
interest installments of $20 - 2,355
Notes payable secured by equipment, payable
in monthly principal and interest installments
with interest rates
varying from 4.90% to 5.60% with maturity dates
from March 1996 to June 1998 26 46
Construction lines of credit at 8.25% and
6.47% to be converted to mortgage notes
payable at 8.25% and 6.47% with maturities of
15 years and 12 years, respectively. 7,412 7,867
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7,704 14,654
Less amounts due within one year (597) (2,340)
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$7,107 $12,314
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</TABLE>
In February 1997, the Company negotiated a one year, unsecured revolving
credit facility. The agreement provides for a maximum availability of $10,000,
payable on demand at the lender's prime rate of interest.
9
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company is a leading designer and manufacturer of high-performance,
screw-in hydraulic cartridge valves and manifolds which control force, speed
and motion as integral components in fluid power systems. In recent years, the
Company's sales have been comprised of approximately 75% screw-in cartridge
valves and approximately 25% manifolds, and the Company expects that
relationship to remain relatively constant. The Company sells its products
globally through independent distributors and approximately one-third of its
net sales are outside the United States.
In January 1997, the Company completed an initial public offering of
2,300,000 shares of common stock at $9.50 per share. The net proceeds of the
offering were $19.3 million. After the offering, total shares of common stock
outstanding were 6,300,002.
The Company maintains facilities in the United States, the United Kingdom
and Germany. The United States plants, both located in Sarasota, Florida,
manufacture screw-in cartridge valves and manifolds, and supply the United
Kingdom plant with finished products and some cartridge valve components for
final assembly and test. The United Kingdom operation also manufactures
manifolds and supplies a portion to the United States plant. Both the United
States and United Kingdom operations supply finished product to the German
facility. In March 1997, operations commenced in the new production facilities
in Florida and Germany. The German facility currently serves as a technical
support and distribution center with some research and development activities.
Plans are underway for the design and eventual production of large cartridge
valves in the German facility. In the United States, manifold production was
transferred to the new facility creating additional space for cartridge valve
production in the original plant.
First quarter orders remained strong, but the rate of sales did not keep
pace due to capacity constraints at the Company's original plant in Sarasota,
Florida, which resulted in an extension of production lead times. The increase
in net sales in the second quarter is projected to be less than anticipated, as
it is taking longer than planned to transition the manifold operation as a
separate division and to reconfigure the cartridge valve production lines. The
capacity expansion is projected to begin to benefit production output in the
second quarter.
COMPARISON OF QUARTERS ENDED MARCH 31, 1997 AND 1996
Net sales increased 5.7%, or $0.8 million, to $14.6 million in the three
month period ended March 31, 1997, compared to $13.8 million in the three month
period ended March 31, 1996. Domestic net sales increased 4.0%, or $0.4 million
to $9.4 million in the three month period ended March 31, 1997. The increase
was due primarily to increased demand in the mobile equipment sector of the
United States fluid power industry. International net sales
10
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increased 9.1%, or $0.4 million to $5.2 million for the three month period
ended March 31, 1997. European net sales were flat at $3.4 million. Net sales
in Canada, Mexico and South America increased 23.8% to $0.7 with sales to Japan
and the Pacific Rim increasing 39.0% to $1.1 million.
Gross profit increased 1.9% or $0.1 million to $4.4 million in the
three month period ended March 31, 1997, compared to $4.3 million in the
three month period ended March 31, 1996. This increase was related primarily to
the increase in net sales. Gross profit as a percentage of net sales decreased
to 30.1% in the three month period ended March 31, 1997 from 31.3% for the
three month period ended March 31, 1996. The decrease in the percentage of
gross profit to net sales was due primarily to increased manufacturing overhead
costs related to the opening of the new facilities in the United States and
Germany.
Selling, engineering and administrative expenses increased 2.0% or $0.1
million to $2.7 million in the three month period ended March 31, 1997,
compared to $2.6 million in the three month period ended March 31, 1996.
Selling, engineering and administrative expense as a percentage of sales
decreased to 18.6% in the three month period ended March 31, 1997 compared to
19.3% in the three month period ended March 31, 1996, due to normal cost
increases on a stable expense base, spread over a higher sales volume.
Interest expense decreased for the three month period ended March 31,1997
due to the repayment of debt from the proceeds of the Company's initial public
offering. Miscellaneous income in the three month period ended March 31, 1997,
included interest income earned on the temporary investment of the
proceeds of the Company's initial public offering.
The provision for income taxes in the three month period ended March 31,
1997 resulted in an effective tax rate of 35.8% compared to 39.8% in the
three month period ended March 31, 1996. The decrease in rate is due primarily
to the change in mix of pretax income among the Company's three operating units
in the United States, the United Kingdom and Germany.
LIQUIDITY AND CAPITAL RESOURCES
In January 1997, the Company received $20.3 million of proceeds from its
initial public offering of common stock. Net proceeds after expenses were
approximately $19.3 million. Concurrent with the initial public offering, $9.5
million of the S Corporation distribution was paid out representing 90% of the
total distribution of approximately $10.6 million. Also in January, the capital
equipment loan balance of $2.9 million and the mortgage balance of $2.4 million
on the original United States facility were paid in full. In March $1.0 million
was paid to reduce the mortgage on the new plant in the United States to a
balance of $5.2 million. In February and March, $1.4 million was paid to reduce
the revolving line of credit in the United States to a zero balance.
Cash generated from operations in the three month period ended March 31,
1997, was $1.7 million. Working capital increased from $0.9 million at December
31, 1996 to $4.6 million at March 31, 1997. Accounts receivable increased $1.4
million due to the seasonally lower shipments during December 1996 and higher
shipments in March 1997. Accounts payable decreased $0.9
11
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million at March 31, 1997 from December 31,1996 due to cash management in
anticipation of the initial public offering proceeds received in January 1997.
In February 1997, the Company obtained a $10.0 million unsecured revolving
credit facility with a term of one year and an interest rate equal to the bank
lender's prime rate. This replaced a $1.7 million line of credit, which had
been secured by all inventory and accounts receivable.
Capital expenditures in the three month period ended March 31, 1997 were
$2.3 million. This was comprised of $1.1 million related to the construction of
the new facilities in the United States and Germany and $1.2 million for new
machinery and equipment.
The Company believes that cash generated from operations and its borrowing
availability under the $10 million revolving line of credit will be sufficient
to satisfy the Company's operating expenses and capital expenditures for the
foreseeable future.
The Company declared a dividend of $.035 per share to shareholders of
record on March 31, 1997, with payment made on April 15, 1997.
SEASONALITY AND INFLATION
The Company experiences reduced activity during the fourth quarter of the
year, largely as a result of fewer working days due to holiday shutdowns.
The Company does not believe that inflation had a material effect on its
operations for the periods ended March 31, 1997 and March 31, 1996. There can
be no assurance, however, that the Company's business will not be affected by
inflation in the future.
FORWARD-LOOKING INFORMATION
Certain oral statements made by management from time to time and certain
statements contained herein that are not historical facts are "forward-looking
statements" within the meaning of Section 21E of the Securities Exchange Act of
1934 and because such statements involve risks and uncertainties, actual
results may differ materially from those expressed or implied by such
forward-looking statements. Forward-looking statements, including those in
Management's Discussion and Analysis of Financial Condition and Results of
Operations are statements regarding the intent, belief or current expectations,
estimates or projections of the Company, its Directors or its Officers about
the Company and the industry in which it operates, and assumptions made by
management, and include among other items, (i) the Company's strategies
regarding growth, including its intention to develop new products; (ii) the
Company's financing plans; (iii) trends affecting the Company's financial
condition or results of operations; (iv) the Company's ability to continue to
control costs and to meet its liquidity and other financing needs; (v) the
declaration and payment of dividends; and (vi) the Company's ability to respond
to changes in customer demand domestically and internationally, including as a
result of standardization. Although the Company believes that its expectations
are based on reasonable assumptions, it can give no assurance that the
anticipated results will occur.
Important factors that could cause the actual results to differ materially
from those in the forward-looking statements include, among other items, (i)
the economic cyclicality of the capital goods industry in general and the
hydraulic valve and manifold industry in particular, which directly affect
customer orders, lead times and sales volume; (ii) conditions in the capital
markets, including the interest rate environment and the availability of
capital; (iii) changes in the competitive marketplace that could affect the
Company's revenue and/or cost bases, such as increased competition, lack of
qualified engineering, marketing, management or other personnel, and increased
labor and raw materials costs; (iv) changes in technology or customer
requirements, such as standardization of the cavity into which screw-in
cartridge valves must fit, which could render the Company's products or
technologies noncompetitive or obsolete; (v) new product introductions, product
sales mix and the geographic mix of sales nationally and internationally; and
(vi) changes relating to the Company's international sales, including changes
in regulatory requirements or tariffs, trade or currency restrictions,
fluctuations in exchange rates, and tax and collection issues. Further
information relating to factors that could cause actual results to differ from
those anticipated is included but not limited to information under the headings
"Risk Factors" in the
12
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Form S-1 Registration Statement and Prospectus for the Company's initial public
offering, and "Business" in the Company's Form 10-K for the year ended December
31, 1996. The Company disclaims any intention or obligation to update or revise
forward-looking statements, whether as a result of new information, future
events or otherwise.
13
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PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
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<S> <C>
3.1* Amended and Restated Articles of Incorporation of the Company (previously filed as
Exhibit 3.1 in the Pre-Effective Amendment No. 4 to the Company's Registration Statement on
Form S-1 filed on December 19, 1996 (File No. 333-14183)).
3.2* Amended and Restated Bylaws of the Company (previously filed as Exhibit 3.2 in the Pre-
Effective Amendment No. 4 to the Company's Registration Statement on Form S-1 filed on
December 19, 1996 (File No. 333-14183)).
4.1* Revolving Credit Agreement, dated March 9, 1992, between Sun Hydraulics Corporation and
Northern Trust Bank of Florida/Sarasota, N.A. (previously filed as Exhibit 4.1 in the
Company's Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-
14183)).
4.2* Modification Agreement, dated March 25, 1993, amending Revolving Credit Agreement dated
March 9, 1992, between Sun Hydraulics Corporation and Northern Trust Bank of Florida, N.A.
(previously filed as Exhibit 4.2 in the Company's Registration Statement on Form S-1 filed
on October 15, 1996 (File No. 333-14183)).
</TABLE>
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<TABLE>
<S> <C>
4.3* Second Modification to Revolving Credit Agreement, dated May __, 1995, between Sun
Hydraulics Corporation and Northern Trust Bank of Florida, N.A. (previously filed as
Exhibit 4.3 in the Company's Registration Statement on Form S-1 filed on October 15, 1996
(File No. 333-14183)).
4.4* Revolving Line of Credit Renewal Note, dated May __, 1995, in the amount of $1,700,000.00
given by Sun Hydraulics Corporation to Northern Trust Bank of Florida, N.A. (previously
filed as Exhibit 4.4 in the Company's Registration Statement on Form S-1 filed on
October 15, 1996 (File No. 333-14183)).
4.5* Mortgage and Security Agreement, dated January 9, 1992, between Suninco, Inc., Sun
Hydraulics Corporation, and Northern Trust Bank of Florida, N.A. (previously filed as
Exhibit 4.5 in the Company's Registration Statement on Form S-1 filed on October 15, 1996
(File No. 333-14183)).
4.6* Loan Agreement, dated March 29, 1996, between Suninco, Inc., Sun Hydraulics Corporation,
and Northern Trust Bank of Florida, N.A. (previously filed as Exhibit 4.6 in the Company's
Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-14183)).
4.7* Security Agreement, dated March 29, 1996, between Suninco, Inc., Sun Hydraulics
Corporation, and Northern Trust Bank of Florida, N.A. (previously filed as Exhibit 4.7 in
the Company's Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-
14183)).
4.8* Modification and Additional Advance Agreement, dated March 29, 1996, between Suninco, Inc.
and Northern Trust Bank of Florida, N.A. (previously filed as Exhibit 4.8 in the Company's
Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-14183)).
4.9* Consolidated Note, dated March 29, 1996, in the amount of $2,475,000.00, given by Suninco,
Inc. to Northern Trust Bank of Florida, N.A. (previously filed as Exhibit 4.9 in the
Company's Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-
14183)).
4.10* Loan Agreement, dated May 20, 1996, between Sun Hydraulics Corporation and Northern Trust
Bank of Florida, N.A. (previously filed as Exhibit 4.10 in the Company's Registration
Statement on Form S-1 filed on October 15, 1996 (File No. 333-14183)).
</TABLE>
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<TABLE>
<S> <C>
4.11* Security Agreement, dated May 20, 1996, between Sun Hydraulics Corporation and Northern
Trust Bank of Florida, N.A. (previously filed as Exhibit 4.11 in the Company's Registration
Statement on Form S-1 filed on October 15, 1996 (File No. 333-14183)).
4.12* Consolidated Note, dated May 20, 1996, in the amount of $3,063,157.00, given by Sun
Hydraulics Corporation to Northern Trust Bank of Florida, N.A. (previously filed as
Exhibit 4.12 in the Company's Registration Statement on Form S-1 filed on October 15, 1996
(File No. 333-14183)).
4.13* Loan Agreement, dated June 14, 1996, between Sun Hydraulics Corporation, Suninco Inc., and
Northern Trust Bank of Florida, N.A. (previously filed as Exhibit 4.13 in the Company's
Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-14183)).
4.14* Mortgage, dated June 14, 1996, between Sun Hydraulics Corporation, Suninco Inc., and
Northern Trust Bank of Florida, N.A. (previously filed as Exhibit 4.14 in the Company's
Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-14183)).
4.15* Security Agreement, dated June 14, 1996, between Sun Hydraulics Corporation and Northern
Trust Bank of Florida, N.A. (previously filed as Exhibit 4.15 in the Company's Registration
Statement on Form S-1 filed on October 15, 1996 (File No. 333-14183)).
4.16* Promissory Note, dated June 14, 1996, in the amount of $6,187,000.00, given by Sun
Hydraulics Corporation and Suninco, Inc. to Northern Trust Bank of Florida, N.A.
(previously filed as Exhibit 4.16 in the Company's Registration Statement on Form S-1 filed
on October 15, 1996 (File No. 333-14183)).
4.17* Revolving Loan Facility letter agreement, dated July 30, 1996, in the amount of L.800,000,
between Sun Hydraulics Ltd. and Lloyds Bank Plc. (previously filed as Exhibit 4.17 in the
Company's Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-
14183)).
4.18* Overdraft and Other Facilities letter agreement, dated June 7, 1996, in an amount not to
exceed L.250,000, between Sun Hydraulics Ltd. and Lloyds Bank Plc. (previously filed as
Exhibit 4.18 in the Company's Registration Statement on Form S-1 filed on October 15, 1996
(File No. 333-14183)).
</TABLE>
16
<PAGE> 17
<TABLE>
<S> <C>
4.19* Mortgage, dated April 11, 1996, between Sun Hydraulik GmbH and Dresdner Bank (previously
filed as Exhibit 4.19 in the Company's Registration Statement on Form S-1 filed on
October 15, 1996 (File No. 333-14183)).
4.20* Amendment to Recommended Offer by Sun Hydraulics Corporation to acquire the whole of the
issued share capital of Sun Hydraulik Holdings Limited, dated December 17, 1996 (previously
filed as Exhibit 2.1 in the Pre-Effective Amendment No. 4 to the Company's Registration
Statement on Form S-1 filed on December 19, 1996 (File No. 333-14183)).
4.21* Master Note, dated February 3, 1997, in the amount of $10,000,000.00, made by the Company
to evidence a line of credit granted to the Company by Northern Trust Bank of Florida, N.A.
(previously filed as Exhibit 4.21 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1996).
10.1* Form of Distributor Agreement (Domestic) (previously filed as Exhibit 10.1 in the Company's
Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-14183)).
10.2* Form of Distributor Agreement (International) (previously filed as Exhibit 10.2 in the
Company's Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-
14183)).
10.3*+ 1996 Sun Hydraulics Corporation Stock Option Plan (previously filed as Exhibit 10.3 in the
Pre-Effective Amendment No. 4 to the Company's Registration Statement on Form S-1 filed on
December 19, 1996 (File No. 333-14183)).
10.4*+ Form of Indemnification Agreement (previously filed as Exhibit 10.4 in the Pre-Effective
Amendment No. 4 to the Company's Registration Statement on Form S-1 filed on December 19,
1996 (File No. 333-14183)).
11.1 Statement regarding Computation of Earnings Per Share.
27.1 Financial Data Schedule for quarter ended March 31, 1997. (For SEC purposes only)
</TABLE>
- ---------------------------
* Previously filed.
+ Executive management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K.
None.
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, in the City of
Sarasota, State of Florida on May 15, 1997.
SUN HYDRAULICS CORPORATION
By: /s/ Richard J. Dobbyn
-----------------------------
Richard J. Dobbyn
Chief Financial Officer (Principal
Financial and Accounting Officer)
18
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------ -------------------
<S> <C>
3.1* Amended and Restated Articles of Incorporation of the Company (previously filed as
Exhibit 3.1 in the Pre-Effective Amendment No. 4 to the Company's Registration Statement on
Form S-1 filed on December 19, 1996 (File No. 333-14183)).
3.2* Amended and Restated Bylaws of the Company (previously filed as Exhibit 3.2 in the Pre-
Effective Amendment No. 4 to the Company's Registration Statement on Form S-1 filed on
December 19, 1996 (File No. 333-14183)).
4.1* Revolving Credit Agreement, dated March 9, 1992, between Sun Hydraulics Corporation and
Northern Trust Bank of Florida/Sarasota, N.A. (previously filed as Exhibit 4.1 in the
Company's Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-
14183)).
4.2* Modification Agreement, dated March 25, 1993, amending Revolving Credit Agreement dated
March 9, 1992, between Sun Hydraulics Corporation and Northern Trust Bank of Florida, N.A.
(previously filed as Exhibit 4.2 in the Company's Registration Statement on Form S-1 filed
on October 15, 1996 (File No. 333-14183)).
</TABLE>
<PAGE> 20
<TABLE>
<S> <C>
4.3* Second Modification to Revolving Credit Agreement, dated May __, 1995, between Sun
Hydraulics Corporation and Northern Trust Bank of Florida, N.A. (previously filed as
Exhibit 4.3 in the Company's Registration Statement on Form S-1 filed on October 15, 1996
(File No. 333-14183)).
4.4* Revolving Line of Credit Renewal Note, dated May __, 1995, in the amount of $1,700,000.00
given by Sun Hydraulics Corporation to Northern Trust Bank of Florida, N.A. (previously
filed as Exhibit 4.4 in the Company's Registration Statement on Form S-1 filed on
October 15, 1996 (File No. 333-14183)).
4.5* Mortgage and Security Agreement, dated January 9, 1992, between Suninco, Inc., Sun
Hydraulics Corporation, and Northern Trust Bank of Florida, N.A. (previously filed as
Exhibit 4.5 in the Company's Registration Statement on Form S-1 filed on October 15, 1996
(File No. 333-14183)).
4.6* Loan Agreement, dated March 29, 1996, between Suninco, Inc., Sun Hydraulics Corporation,
and Northern Trust Bank of Florida, N.A. (previously filed as Exhibit 4.6 in the Company's
Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-14183)).
4.7* Security Agreement, dated March 29, 1996, between Suninco, Inc., Sun Hydraulics
Corporation, and Northern Trust Bank of Florida, N.A. (previously filed as Exhibit 4.7 in
the Company's Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-
14183)).
4.8* Modification and Additional Advance Agreement, dated March 29, 1996, between Suninco, Inc.
and Northern Trust Bank of Florida, N.A. (previously filed as Exhibit 4.8 in the Company's
Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-14183)).
4.9* Consolidated Note, dated March 29, 1996, in the amount of $2,475,000.00, given by Suninco,
Inc. to Northern Trust Bank of Florida, N.A. (previously filed as Exhibit 4.9 in the
Company's Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-
14183)).
4.10* Loan Agreement, dated May 20, 1996, between Sun Hydraulics Corporation and Northern Trust
Bank of Florida, N.A. (previously filed as Exhibit 4.10 in the Company's Registration
Statement on Form S-1 filed on October 15, 1996 (File No. 333-14183)).
</TABLE>
<PAGE> 21
<TABLE>
<S> <C>
4.11* Security Agreement, dated May 20, 1996, between Sun Hydraulics Corporation and Northern
Trust Bank of Florida, N.A. (previously filed as Exhibit 4.11 in the Company's Registration
Statement on Form S-1 filed on October 15, 1996 (File No. 333-14183)).
4.12* Consolidated Note, dated May 20, 1996, in the amount of $3,063,157.00, given by Sun
Hydraulics Corporation to Northern Trust Bank of Florida, N.A. (previously filed as
Exhibit 4.12 in the Company's Registration Statement on Form S-1 filed on October 15, 1996
(File No. 333-14183)).
4.13* Loan Agreement, dated June 14, 1996, between Sun Hydraulics Corporation, Suninco Inc., and
Northern Trust Bank of Florida, N.A. (previously filed as Exhibit 4.13 in the Company's
Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-14183)).
4.14* Mortgage, dated June 14, 1996, between Sun Hydraulics Corporation, Suninco Inc., and
Northern Trust Bank of Florida, N.A. (previously filed as Exhibit 4.14 in the Company's
Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-14183)).
4.15* Security Agreement, dated June 14, 1996, between Sun Hydraulics Corporation and Northern
Trust Bank of Florida, N.A. (previously filed as Exhibit 4.15 in the Company's Registration
Statement on Form S-1 filed on October 15, 1996 (File No. 333-14183)).
4.16* Promissory Note, dated June 14, 1996, in the amount of $6,187,000.00, given by Sun
Hydraulics Corporation and Suninco, Inc. to Northern Trust Bank of Florida, N.A.
(previously filed as Exhibit 4.16 in the Company's Registration Statement on Form S-1 filed
on October 15, 1996 (File No. 333-14183)).
4.17* Revolving Loan Facility letter agreement, dated July 30, 1996, in the amount of L.800,000,
between Sun Hydraulics Ltd. and Lloyds Bank Plc. (previously filed as Exhibit 4.17 in the
Company's Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-
14183)).
4.18* Overdraft and Other Facilities letter agreement, dated June 7, 1996, in an amount not to
exceed L.250,000, between Sun Hydraulics Ltd. and Lloyds Bank Plc. (previously filed as
Exhibit 4.18 in the Company's Registration Statement on Form S-1 filed on October 15, 1996
(File No. 333-14183)).
</TABLE>
<PAGE> 22
<TABLE>
<S> <C>
4.19* Mortgage, dated April 11, 1996, between Sun Hydraulik GmbH and Dresdner Bank (previously
filed as Exhibit 4.19 in the Company's Registration Statement on Form S-1 filed on
October 15, 1996 (File No. 333-14183)).
4.20* Amendment to Recommended Offer by Sun Hydraulics Corporation to acquire the whole of the
issued share capital of Sun Hydraulik Holdings Limited, dated December 17, 1996 (previously
filed as Exhibit 2.1 in the Pre-Effective Amendment No. 4 to the Company's Registration
Statement on Form S-1 filed on December 19, 1996 (File No. 333-14183)).
4.21* Master Note, dated February 3, 1997, in the amount of $10,000,000.00, made by the Company
to evidence a line of credit granted to the Company by Northern Trust Bank of Florida, N.A.
(previously filed as Exhibit 4.21 to the Company's Annual Report on Form 10-K for the year
ended December 31, 1996).
10.1* Form of Distributor Agreement (Domestic) (previously filed as Exhibit 10.1 in the Company's
Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-14183)).
10.2* Form of Distributor Agreement (International) (previously filed as Exhibit 10.2 in the
Company's Registration Statement on Form S-1 filed on October 15, 1996 (File No. 333-
14183)).
10.3*+ 1996 Sun Hydraulics Corporation Stock Option Plan (previously filed as Exhibit 10.3 in the
Pre-Effective Amendment No. 4 to the Company's Registration Statement on Form S-1 filed on
December 19, 1996 (File No. 333-14183)).
10.4*+ Form of Indemnification Agreement (previously filed as Exhibit 10.4 in the Pre-Effective
Amendment No. 4 to the Company's Registration Statement on Form S-1 filed on December 19,
1996 (File No. 333-14183)).
11.1 Statement regarding Computation of Earnings Per Share.
27.1 Financial Data Schedule for quarter ended March 31, 1997. (For SEC purposes only)
</TABLE>
- ---------------------------
* Previously filed.
+ Executive management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K.
None.
<PAGE> 1
Statement regarding Computation of Per Share Earnings EXHIBIT 11.1
Quarter ended March 31
1997 1996
---- ----
[S] [C] [C]
PRIMARY
Net income (Note 3) $1,018 $ 838
====== ======
Weighted average shares outstanding 6,519 6,509
Primary EPS $ .16 $ .13
====== ======
FULLY DILUTED
Net income (Note 3) $1,018 $ 838
Weighted average shares outstanding 6,514 6,488
Primary EPS $ .16 $ .13
====== ======
The treasury stock method was used in the calculation of the average shares
outstanding for EPS. The denominator includes the shares outstanding during
the year plus the number of shares from assumed exercise of all vested
outstanding stock options less the number of treasury shares that would be
repurchased from the proceeds of such exercise. For primary EPS, the average
stock price for the quarter is used; in the calculation for fully diluted EPS,
the quarter end stock price is used. For the periods presented, the number of
shares issued in the initial public offering are also included in the
denominator as though shares had been outstanding since the beginning of each
year, in accordance with Regulation S-X, Article 11.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF THE REGISTRANT AND IS
QUALFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,557
<SECURITIES> 0
<RECEIVABLES> 4,903<F1>
<ALLOWANCES> 0
<INVENTORY> 4,735
<CURRENT-ASSETS> 788
<PP&E> 38,473<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 51,470
<CURRENT-LIABILITIES> 8,341
<BONDS> 0
0
0
<COMMON> 6
<OTHER-SE> 31,702
<TOTAL-LIABILITY-AND-EQUITY> 51,470
<SALES> 14,599
<TOTAL-REVENUES> 14,599
<CGS> 10,202
<TOTAL-COSTS> 10,202
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 152
<INCOME-PRETAX> 1,586
<INCOME-TAX> 568
<INCOME-CONTINUING> 1,018
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,018
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
<FN>
<F1>NET OF ALLOWANCE FOR DOUBTFUL AMOUNTS OF $59.
<F2>NET OF ACCUMULATED DEPRECIATION OF $15,007.
</FN>
</TABLE>
