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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest
Event Reported): October 14, 1998
SUN HYDRAULICS CORPORATION
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(Exact name of registrant as specified in its charter)
Florida 0-21835 59-2754337
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1500 West University Parkway
Sarasota, Florida 34232
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 941-362-1200
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ITEM 5. OTHER EVENTS.
PRESS RELEASE
On October 14, 1998, the Company issued the press release attached
hereto as Exhibit 99.1 announcing that it expects operating income for the third
quarter of 1998 to fall below analysts' expectations.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
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<CAPTION>
Exhibit
Number Exhibit Description
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<S> <C>
99.1 Press Release of the Registrant dated October 14, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned thereunto duly authorized.
SUN HYDRAULICS CORPORATION
By: /s/ Richard J. Dobbyn
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Richard J. Dobbyn
Chief Financial Officer (Principal
Financial and Accounting Officer)
Dated: October 19, 1998
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EXHIBIT INDEX
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<CAPTION>
Exhibit
Number Exhibit Description
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<S> <C>
99.1 Press Release of the Registrant dated October 14, 1998.
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Exhibit 99.1
[SUN HYDRAULICS CORPORATION LETTERHEAD]
FOR RELEASE: Immediately
Contact:
Richard K. Arter Investor Relations 941-362-1200
Richard J. Dobbyn Chief Financial Officer 941-362-1200
SUN HYDRAULICS CORPORATION EXPECTS THIRD AND FOURTH QUARTER OPERATING INCOME
TO BE BELOW ANALYSTS' EXPECTATIONS
SARASOTA, FLA, October 14, 1998 - Sun Hydraulics Corporation (NASDAQ: SNHY)
today announced that it expects operating income for the third quarter of 1998
to fall below analysts' expectations. Third quarter net income, excluding $1.1
million ($0.17 per fully diluted share) from a business interruption insurance
claim, is expected to be approximately $0.14 per fully diluted share. Fourth
quarter 1998 net income is expected to be less than third quarter net income net
of the gain from the insurance claim.
"Although we produced and shipped approximately the same unit volume of
cartridges as last quarter, productivity declined and material cost as a percent
of sales continued to increase," said Sun Hydraulics President Clyde Nixon. "We
reduced the amount of our past due orders, but total cartridge production did
not increase as expected. We anticipate that productivity will improve in the
fourth quarter and we have also identified areas where we can better control
cartridge material costs, but the benefits will take time to materialize. Third
quarter 1998 consolidated orders were only down 3.0% compared to the second
quarter of 1998 and 4.0% compared to the third quarter of 1997."
"Manifold shipments were down approximately 12% compared to the second quarter
of 1998," Nixon continued. "Since reducing manifold lead times at the end of the
first quarter, we have seen a significant drop in orders. We believe this
reflects in part distributors and customers adjusting their inventories in
response to the improved availability of product. Manifold earnings contribution
was less than expected due to the lower volume of shipments."
"Historically, we experience lower shipping volumes in the fourth quarter due to
the holiday reduction of working days. This, plus the material costs and mix
changes, indicate that our year-end earnings will fall short of analysts'
current expectations."
"Sun Hydraulics continues to be confident with its strategic position. The
recent acquisition of our Korean distributor gives us a distribution and
manufacturing base in Asia similar to our successful operations in the United
Kingdom and Germany. We are adding critical cartridge capacity in the fourth
quarter of 1998 and the first quarter of 1999 and continue to be excited about
the future growth potential our new products and new markets provide," Nixon
concluded.
Sun Hydraulics expects third quarter financial results to be released on or
about November 13, 1998.
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Sun Hydraulics is a leading designer and manufacturer of high performance
screw-in hydraulic cartridge valves and manifolds for global industrial and
mobile markets.
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; (vi) the Company's Year 2000 readiness
plans and costs; and (vii) 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; (vi) the Company's ability timely
to become Year 2000 ready, including the Company's ability to identify all
critical systems that will be impacted by the Year 2000, the Company's ability,
in a cost-efficient manner, to correct, upgrade or replace such systems, and the
Year 2000 readiness of third parties with which the Company has material
relationships; and (vii) 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 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, 1997, and "Management's
Discussion and Analysis" in the Company's Form 10-Q for the quarter ended June
30, 1998. 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.
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