<PAGE> 1
Exhibit 99.1
FOR RELEASE: Immediately
Contact:
Richard K. Arter Investor Relations 941-362-1200
Richard J. Dobbyn Chief Financial Officer 941-362-1200
SUN HYDRAULICS CORPORATION NET INCOME INCREASES 61% OVER 1ST QUARTER
SARASOTA, FLA, August 7, 2000 - Sun Hydraulics Corporation (NASDAQ: SNHY) today
announced net sales for the quarter ended July 1, 2000 were a record $21.9
million, representing an increase of 37.5% compared to second quarter 1999 and
9.0% compared to the first quarter of 2000. Second quarter 2000 net income rose
to $1.4 million, an increase of 60.7% compared to the first quarter of 2000.
Basic and diluted earnings per share for the second quarter of 2000 were $0.22
and $0.21, respectively.
"We continued to improve our operational performance in the second quarter,"
said Allen Carlson, Sun Hydraulics new president. "Both production and factory
productivity are increasing and we finished the quarter with an exceptionally
strong shipping month. The improvements in revenue and income over the past four
quarters are attributable to strong customer demand and the concentrated efforts
of our worldwide distributors, our suppliers and our employees.
"The exceptionally strong demand we saw in the first half of the year has not
continued," Carlson said. "We started to see orders soften at the end of the
second quarter, and at the current incoming order rate, we expect third quarter
shipments to be lower than the second quarter.
"Our focus continues to be on sustaining revenue and earnings growth over a
long-term perspective. We have the capacity and product development programs in
place to continue to profitably grow our business for the foreseeable future and
will continue to develop and introduce new products and ensure that capacity is
sufficient to allow us to increase production when required," Carlson concluded.
Sun Hydraulics Corporation, with manufacturing and distribution facilities in
Sarasota and Manatee County, Florida, Coventry, England, Erkelenz, Germany and
Inchon, Korea, is a leading designer and manufacturer of high performance
screw-in hydraulic cartridge valves and manifolds for worldwide 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; 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.
<PAGE> 2
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 heading "Business" and
particularly under the subheading, "Business Risk Factors" in the Company's Form
10-K for the year ended January 1, 2000 and "Management's Discussion and
Analysis of Financial Condition and Results of Operation" in the Company's Form
10Q for the quarter ended July 1, 2000. 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.
-2-
<PAGE> 3
SUN HYDRAULICS CORPORATION - JULY 1, 2000
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended
July 1, July 3,
2000 1999
------- -------
(unaudited) (unaudited)
<S> <C> <C>
Net sales $21,896 $ 15,921
Cost of sales 15,698 12,982
Gross profit 6,198 2,939
Selling, engineering and
administrative expenses 3,544 3,068
Operating income (loss) 2,654 (129)
Interest expense 313 176
Miscellaneous expense (income) 193 36
Income (loss) before income taxes 2,148 (341)
Income tax provision (benefit) 771 (125)
Net income (loss) $ 1,377 $ (216)
Basic net income (loss)
per common share $ 0.22 $ (0.03)
Basic weighted average
shares outstanding 6,385 6,383
Diluted net income (loss)
per common share $ 0.21 $ (0.03)
Diluted weighted average
shares outstanding 6,590 6,537
</TABLE>
-3-
<PAGE> 4
SUN HYDRAULICS CORPORATION - JULY 1, 2000
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
<TABLE>
<CAPTION>
Six Months Ended
July 1, July 3,
2000 1999
------- -------
(unaudited) (unaudited)
<S> <C> <C>
Net sales $41,966 $34,386
Cost of sales 30,664 26,927
Gross profit 11,302 7,459
Selling, engineering and
administrative expenses 7,210 6,160
Operating income 4,092 1,299
Interest expense 603 429
Miscellaneous expense (income) 140 133
Income before income taxes 3,349 737
Income tax provision 1,116 230
Net income $ 2,233 $ 507
Basic net income
per common share $ 0.35 $ 0.08
Basic weighted average
shares outstanding 6,385 6,375
Diluted net income
per common share $ 0.34 $ 0.08
Diluted weighted average
shares outstanding 6,582 6,528
</TABLE>
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
July 1, January 1,
2000 2000
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 1,517 $ 1,122
Accounts receivable, net of allowance for
doubtful accounts of $156 and $196 8,196 6,260
Inventories 8,318 8,131
Taxes Receivable 127 455
Other current assets 597 591
Total current assets 18,755 16,559
Property, plant and equipment, net 46,585 46,529
Other assets 1,075 986
Total assets $66,415 $64,074
</TABLE>
-4-
<PAGE> 5
<TABLE>
<S> <C> <C>
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 2,617 $ 2,712
Accrued expenses and other liabilities 2,466 1,464
Long-term debt due within one year 2,117 3,033
Notes payable to related parties due within one year 219 378
Dividends payable 255 255
Income taxes payable 721 --
Total current liabilities 8,395 7,842
Long-term debt due after one year 10,953 10,830
Notes payable to related parties due after one year 78 101
Deferred income taxes 4,110 4,125
Other n/c liabilities 195 --
Total liabilities 23,731 22,898
Shareholders' equity:
Preferred stock -- --
Common stock 6 6
Capital in excess of par value 24,486 24,486
Retained earnings 17,896 16,173
Equity adjustment for foreign currency translation 296 511
Total shareholders' equity 42,684 41,176
Total liabilities and shareholders' equity $66,415 $64,074
</TABLE>
-5-
