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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
September 30, 2000 Commission file number 0-21835
SUN HYDRAULICS CORPORATION
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(Exact Name of Registration as Specified in its Charter)
FLORIDA 59-2754337
------------------------------- ------------------
(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 6,384,948 shares of common stock, par value $.001,
outstanding as of October 30, 2000.
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Sun Hydraulics Corporation
INDEX
For the second quarter ended September 30, 2000
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2000 (unaudited)
and January 1, 2000 3
Consolidated Statements of Operations for the
Three Months Ended September 30, 2000 (unaudited) and October 2, 1999 (unaudited) 4
Consolidated Statements of Operations for the
Nine Months Ended September 30, 2000 (unaudited) and October 2, 1999 (unaudited) 5
Consolidated Statement of Changes in Shareholders' Equity and
Comprehensive Income for the Nine Months Ended September 30, 2000
(unaudited) and the Year Ended January 1, 2000 6
Consolidated Statements of Cash Flows
for the Nine Months Ended September 30, 2000 (unaudited) and October 2, 1999 (unaudited) 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
Forward Looking Information 15
PART II. OTHER INFORMATION 16
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 17
</TABLE>
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PART I: FINANCIAL INFORMATION
Item 1.
SUN HYDRAULICS CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, JANUARY 1,
2000 2000
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,150 $ 1,122
Accounts receivable, net of allowance for
doubtful accounts of $156 and $196 7,113 6,260
Inventories 8,873 8,131
Taxes receivable -- 455
Other current assets 426 591
------- -------
Total current assets 18,562 16,559
Property, plant and equipment, net 45,546 46,529
Other assets 1,041 986
------- -------
Total assets $65,149 $64,074
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,005 $ 2,712
Accrued expenses and other liabilities 2,289 1,464
Long-term debt due within one year 1,795 3,033
Notes payable to related parties due within one year 135 378
Dividends payable 255 255
Taxes payable 148 --
------- -------
Total current liabilities 6,627 7,842
Long-term debt due after one year 10,372 10,830
Notes payable to related parties due after one year 66 101
Deferred income taxes 4,101 4,125
Other noncurrent liabilities 490 --
------- -------
Total liabilities 21,656 22,898
------- -------
Commitments and contingencies
Shareholders' equity:
Preferred stock -- --
Common stock 6 6
Capital in excess of par value 24,486 24,486
Retained earnings 18,661 16,173
Accumulated other comprehensive income 340 511
------- -------
Total shareholders' equity 43,493 41,176
------- -------
Total liabilities and shareholders' equity $65,149 $64,074
======= =======
</TABLE>
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these financial statements.
3
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SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30, OCTOBER 2,
2000 1999
------------- ----------
(UNAUDITED)
<S> <C> <C>
NET SALES $19,973 $17,664
Cost of sales 14,465 13,174
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GROSS PROFIT 5,508 4,490
Selling, engineering and
administrative expenses 3,621 3,157
------- -------
OPERATING INCOME (LOSS) 1,887 1,333
Interest expense 293 264
Miscellaneous expense (income) 44 178
------- -------
INCOME (LOSS) BEFORE INCOME TAXES 1,550 891
Income tax provision 528 303
------- -------
NET INCOME (LOSS) $ 1,022 $ 588
======= =======
BASIC NET INCOME PER COMMON SHARE $ 0.16 $ 0.09
WEIGHTED AVERAGE SHARES OUTSTANDING 6,385 6,384
DILUTED NET INCOME PER COMMON SHARE $ 0.16 $ 0.09
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING 6,540 6,536
</TABLE>
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these financial statements.
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SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, OCTOBER 2,
2000 1999
------------- ----------
(UNAUDITED)
<S> <C> <C>
NET SALES $61,938 $52,050
Cost of sales 45,127 40,100
------- -------
GROSS PROFIT 16,811 11,950
Selling, engineering and
administrative expenses 10,831 9,317
------- -------
OPERATING INCOME 5,980 2,633
Interest expense 896 693
Miscellaneous (income) expense 184 312
------- -------
INCOME BEFORE INCOME TAXES 4,900 1,628
Income tax provision 1,645 532
------- -------
NET INCOME $ 3,255 $ 1,096
======= =======
BASIC NET INCOME PER COMMON SHARE $ 0.51 $ 0.17
WEIGHTED AVERAGE SHARES OUTSTANDING 6,385 6,378
DILUTED NET INCOME PER COMMON SHARE $ 0.50 $ 0.17
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING 6,539 6,531
</TABLE>
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these financial statements.
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SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACCUMULATED
CAPITAL IN OTHER
COMMON EXCESS OF RETAINED COMPREHENSIVE
SHARES STOCK PAR VALUE EARNINGS INCOME TOTAL
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 2000 6,385 $ 6 $ 24,486 $ 16,173 $ 511 $ 41,176
Dividends declared (767) (767)
Comprehensive income:
Net income 3,255 3,255
Foreign currency translation adjustments (171) (171)
--------
Comprehensive income 3,084
----- ------- ------------ ---------- -------- --------
Balance, September 30, 2000 (unaudited) 6,385 $ 6 $ 24,486 $ 18,661 $ 340 $ 43,493
===== ======= ============ ========== ======== ========
</TABLE>
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these financial statements.
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SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, OCTOBER 2,
2000 1999
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(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,255 $ 1,096
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 4,192 3,705
(Gain)/Loss on disposal of assets 276 139
Compensation expense-stock issued 13
Provision for deferred income taxes (24) (3)
(Increase) decrease in:
Accounts receivable (813) (1,238)
Allowance for doubtful accounts (40) (170)
Inventories (742) 888
Income tax receivable, net 320 --
Other current assets 165 139
Other assets 3 (8)
Increase (decrease) in:
Accounts payable (707) (550)
Accrued expenses and other liabilities 825 (432)
Income taxes payable, net 283 (270)
Other liabilities 490 --
------- --------
Net cash provided by operating activities 7,483 3,309
------- --------
Cash flows from investing activities:
Investment in acquisition and joint venture (100) --
Capital expenditures (3,545) (5,517)
Proceeds from dispositions of equipment 102 56
------- --------
Net cash used in investing activities (3,543) (5,461)
------- --------
Cash flows from financing activities:
Proceeds from debt 2,999 10,357
Repayment of debt (4,695) (7,697)
Repayment of notes payable to related parties (278) (568)
Proceeds from exercise of stock options -- 75
Dividends to shareholders (767) (764)
------- --------
Net cash provided by (used in) financing activities (2,741) 1,403
------- --------
Effect of exchange rate changes on cash and
cash equivalents (171) 244
------- --------
Net increase (decrease) in cash and cash equivalents 1,028 (505)
Cash and cash equivalents, beginning of period 1,122 1,592
------- --------
Cash and cash equivalents, end of period $ 2,150 $ 1,087
======= ========
Supplemental disclosure of cash flow information:
Cash paid for:
Interest (including amounts capitalized) $ 896 $ 777
======= ========
Income taxes $ 1,065 $ 805
======= ========
Non-cash tax effect of non-qualified stock options $ -- $ 12
======= ========
Stock issued to employees $ -- $ 13
======= ========
</TABLE>
The accompanying Notes to the Consolidated Financial Statements
are an integral part of these financial statements.
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SUN HYDRAULICS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(in thousands except per share data)
1. INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited interim consolidated 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 (including normal recurring adjustments) and
should be read in conjunction with the consolidated financial statements and
related notes contained in the Annual Report on Form 10-K for the fiscal year
ended January 1, 2000, filed by Sun Hydraulics Corporation (the "Company") with
the Securities and Exchange Commission on March 8, 2000.
2. BUSINESS
Sun Hydraulics Corporation and its wholly owned subsidiaries (the
"Company") design, manufacture, and sell screw-in cartridge valves and manifolds
used in hydraulic systems. The Company has facilities in the United States, the
United Kingdom, Germany, and Korea. Sun Hydraulics Corporation ("Sun
Hydraulics"), with its main offices located in Sarasota, Florida, designs,
manufactures and sells primarily through independent distributors. Sun Hydraulik
Holdings Limited ("Sun Holdings"), a wholly owned subsidiary of Sun Hydraulics,
was formed to provide a holding company vehicle for the European market
operations; its wholly owned subsidiaries are Sun Hydraulics Limited (a British
corporation, "Sun Ltd.") and Sun Hydraulik GmbH (a German corporation, "Sun
GmbH"). Sun Ltd. operates a manufacturing and distribution facility located in
Coventry, England, and Sun GmbH, located in Erkelenz, Germany, designs,
manufactures and markets the Company's products in German-speaking European
markets. Sun Hydraulics Korea Corporation ("Sun Korea"), a wholly owned
subsidiary of Sun Hydraulics, located in Inchon, Korea, operates a manufacturing
and distribution facility.
3. LONG-TERM DEBT (in thousands)
On July 23, 2000, the Company replaced its $5,000 unsecured, revolving
credit facility with a two year, unsecured, revolving credit facility of $7,500
and converted the outstanding balance of $5,677 on its $7,500 secured, revolving
credit facility to a four year, secured, term loan. The $7,500 credit facility
has an interest rate equal to the bank lender's prime rate less 1% or LIBOR plus
1.9% for predetermined periods of time, at the Company's option. The term loan
has an interest rate equal to the bank lender's prime rate less 1%. At September
30, 2000, the interest rate for both facilities was 7.99%. At September 30,
2000, the balances outstanding on the unsecured and secured facilities were $0
and $5,476, respectively. Both credit facilities are subject to certain debt
covenants.
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In April 2000, the Company obtained a loan in Korea for approximately
$107, secured by equipment. The loan has a variable interest rate of between 3%
and 5%; the current rate on the loan is 4%. Terms are monthly interest payments
only through April 2003, and monthly principal and interest payments from May
2003 through April 2006.
On September 8, 2000, the Company obtained a loan in Korea for
approximately $90, secured by equipment. The loan has a fixed interest rate of
10.2%. Monthly payments of interest and principle begin in November 2000, with
the final payment due in September 2001.
4. COMPREHENSIVE INCOME
In addition to net income, comprehensive income includes certain
amounts recorded directly in equity. The components of comprehensive income, net
of related income tax effects, for the third quarter and year-to-date periods,
were as follows (in thousands):
<TABLE>
<CAPTION>
Three Months ended Nine Months Ended
September 30, October 2, September 30, October 2,
2000 1999 2000 1999
------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Net Income $1,022 $588 $3,255 $1,096
Foreign currency translation
adjustments (net of taxes) 44 192 (171) 244
------ ---- ------ ------
Comprehensive income $1,066 $780 $3,084 $1,340
====== ==== ====== ======
</TABLE>
5. SEGMENT REPORTING
The Company has adopted Statement of Accounting Standards No. 131,
"Disclosures about Segments of Enterprise and Related Information" ("SFAS 131").
This approach designates the internal organization that is used by management
for making operational decisions and addressing performance as the source of
determining the Company's reportable segments. Management bases its financial
decisions by the geographical location of its operations.
The individual subsidiaries comprising the Company operate
predominantly in a single industry as manufacturers and distributors of
hydraulic components. The subsidiaries are multinational with operations in the
United States, the United Kingdom, Germany, and Korea. In computing operating
profit for the foreign subsidiaries, no allocations of general corporate
expenses have been made.
Identifiable assets of the foreign subsidiaries are those assets
related to the operation of those companies. United States assets consist of all
other operating assets of the Company.
Segment information is as follows:
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<TABLE>
<CAPTION>
United United
States Korea Kingdom Germany Elimination Consolidated
<S> <C> <C> <C> <C> <C> <C>
THREE MONTHS
ENDED SEPTEMBER 30, 2000
Sales to unaffiliated
customers $ 13,614 $ 1,488 $ 3,305 $ 1,566 $ -- $ 19,973
Intercompany sales 2,959 -- 471 8 (3,438) --
Operating profit 1,156 112 568 96 (45) 1,887
Depreciation and
amortization 1,068 44 222 70 -- 1,404
Capital expenditures 619 24 116 (395) -- 364
THREE MONTHS
ENDED OCTOBER 2, 1999
Sales to unaffiliated
customers $ 12,700 $ 1,052 $ 2,653 $ 1,259 $ -- $ 17,664
Intercompany sales 2,108 -- 546 11 (2,665) --
Operating profit 917 14 339 70 (7) 1,333
Depreciation expense 946 37 205 77 - 1,265
Capital expenditures 1,816 8 534 24 - 2,382
NINE MONTHS
ENDED SEPTEMBER 30, 2000
Sales to unaffiliated
customers $ 43,032 $ 4,343 $ 9,905 $ 4,658 $ -- $ 61,938
Intercompany sales 8,885 -- 1,429 23 (10,337) --
Operating profit 4,090 277 1,418 275 (80) 5,980
Identifiable assets 49,709 3,363 8,862 5,654 (2,439) 65,149
Depreciation and
amortization 3,214 117 660 201 -- 4,192
Capital expenditures 2,558 430 713 (156) -- 3,545
NINE MONTHS
ENDED OCTOBER 2, 1999
Sales to unaffiliated
customers $ 36,933 $ 2,926 $ 8,240 $ 3,951 $ -- $ 52,050
Intercompany sales 5,945 -- 1,627 25 (7,597) --
Operating profit 1,226 51 1,007 253 96 2,633
Identifiable assets 47,126 2,753 8,689 6,299 (2,348) 62,519
Depreciation expense 2,806 56 609 234 -- 3,705
Capital expenditures 4,007 54 1,090 366 -- 5,517
</TABLE>
Operating profit is total sales and other operating income less
operating expenses. In computing segment operating profit, interest expense and
net miscellaneous income (expense) have not been deducted (added).
Included in U.S. sales to unaffiliated customers were export sales,
principally to Canada and Asia, of $5,150 and $4,102 during the nine months
ended September 30, 2000, and October 2, 1999, respectively.
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Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Sun Hydraulics Corporation 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.
The Company sells its products globally, primarily though independent
distributors. Approximately 66% of product sales are used by the mobile market,
characterized by applications where the equipment is not fixed in place, the
operating environment is often unpredictable, and duty cycles are generally
moderate to low. The remaining 34% of sales are used by industrial markets,
which are characterized by equipment that is fixed in place, typically in a
controlled environment, with higher pressures and duty cycles. The Company sells
to both markets with a single product line. In 1999, the Company generated
approximately 37% of its net sales outside of the United States.
Consolidated orders for the three months ended September 30, 2000,
increased $1.0 million, or 5.9%, to $17.6 million compared to the three months
ended October 2, 1999. However, domestic orders decreased $0.8 million, or 7.5%,
over that same time frame. Compared to the previous quarter, orders for the
three months ended September 30, 2000, decreased $2.7 million, or 13.4%.
Domestic orders decreased 20.2% over the same time frame, accounting for $2.5
million of the $2.7 million decrease. Management believes that the order
decrease is reflective of a general slowdown in manufacturing activity in the
United States. The United States National Fluid Power Association (NFPA)
reported a 1.5% decrease in total hydraulic orders for the three months ended
September 30, 2000 compared to the same three months of 1999.
For the nine months ended September 30, 2000, consolidated orders
increased $10.0 million, or 20.3%, to $59.5 million, compared to the nine months
ended October 2, 1999. In the first nine months of 2000, domestic orders
increased 15.1% compared to the same time period in 1999. For the nine months
ended September 30, 2000, NFPA reported a 6.5% increase in total hydraulic
orders compared to the same period in 1999.
Net sales for the three months ended September 30, 2000, decreased $1.9
million, or 8.8%, compared to the previous quarter. While management does not
believe that the aforementioned manufacturing slowdown is either severe or long
term, fourth quarter net sales are estimated to be 15% less than the third
quarter.
COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 2000 AND OCTOBER 2, 1999
Net sales increased $2.3 million, or 13.1%, to $20.0 million for the
quarter ended September 30, 2000, compared to the quarter ended October 2, 1999.
Net sales in the United States operations increased $0.9 million, or 7.2%,
despite a decrease in orders of $0.8, or 6.4%. This
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7.2% sales increase was primarily due to increased production output. Net sales
in the United Kingdom, German and Korean operations increased $1.4 million, or
28.0%, on strong demand.
Gross profit increased $1.0 million, or 22.7%, to $5.5 million for the
quarter ended September 30, 2000, compared to the quarter ended October 2, 1999.
Gross profit as a percentage of net sales increased to 27.6% compared to 25.4%
for the third quarter of 1999. This increase was due to overall higher net sales
and reduced prime manufacturing costs as a percentage of net sales in the United
States operations, offset by a $0.3 million, or 10.2%, increase in total company
manufacturing overhead.
Selling, engineering and administrative expenses increased 14.7%, or
$0.5 million, to $3.6 million in the quarter ended September 30, 2000, compared
to $3.2 million in the quarter ended October 2, 1999. This increase was due
primarily to increased spending levels for product catalogues, support and
enhancements to new software systems, consulting fees and an additional charge
for warranty expense.
Interest expense was $0.3 million for the quarter ended September 30,
2000, compared to $0.3 million for the quarter ended October 2, 1999. This
reflects a higher average interest rate on lower debt.
Other expenses decreased to less than $0.1 million for the quarter
ended September 30, 2000, compared to $0.2 last year and consisted primarily of
foreign currency exchange losses offset by interest income.
The provision for income taxes for the quarter ended September 30,
2000, was 34.0% of pretax income, compared to 34.0% for the quarter ended
October 2, 1999.
Net income for the three months ended September 30, 2000, was $1.0
million, compared to $0.6 million for the three months ended October 2, 1999.
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2000 AND OCTOBER 2, 1999
Net sales increased $9.9 million, or 19.0%, to $62.0 million for the
nine months ended September 30, 2000, compared to the nine months ended October
2, 1999. This increase was due to an increase in demand across all business
segments and improved manufacturing productivity in the United States
operations. Also, net sales in the nine months ended October 2, 1999, were
adversely affected by reduced production output in the United States operations
related to problems with a new manufacturing system implementation.
Gross profit increased $4.9 million, or 40.7%, to $16.8 million for the
nine months ended September 30, 2000, compared to the nine months ended October
2, 1999. Gross profit as a percentage of net sales increased to 27.1%, compared
to 23.0% for the first nine months of 1999. This percentage increase was due to
substantially higher total net sales in 2000 and an unusually low gross profit
percentage in the nine months ended October 2, 1999, related to problems
implementing a new manufacturing system in the United States operations. Also,
in the nine months ended September 30, 2000, prime manufacturing costs in the
United States operations
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were lower as a percentage of net sales than the nine months ended October 2,
1999, primarily due to reduced costs of purchased parts and improved
productivity in the current year. Manufacturing overhead expenses in the United
States increased $0.9 million, or 9.4%, in the nine months ended September 30,
2000, compared to the same period last year. Depreciation expense accounted for
$0.5 million of the $0.9 million increase.
Selling, engineering and administrative expenses increased 16.2%, or
$1.5 million, to $10.8 million in the nine months ended September 30, 2000,
compared to $9.3 million in the nine months ended October 2, 1999. Major
contributors to this increase were higher spending levels for product catalogues
and for support and enhancements to new software systems installed last year.
Interest expense was $0.9 million for the nine months ended September
30, 2000, compared to $0.7 million for the nine months ended October 2, 1999.
This increase was due to increased interest rates on both lines of credit in the
United States, which vary in relation to the United States prime rate.
The provision for income taxes for the nine months ended September 30,
2000, was 33.6% of pretax income, compared to 31.0% of pretax income for the
nine months ended October 2, 1999. The change in rate was primarily due to the
mix in pretax income in the operating business segments.
Net income for the nine months ended September 30, 2000, was $3.3
million compared to $1.1 million for the nine months ended October 2, 1999.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's primary source of capital has been cash
generated from operations, although fluctuations in working capital requirements
have been met through borrowings under revolving lines of credit. The Company's
principal uses of cash have been to pay operating expenses, make capital
expenditures, pay dividends to shareholders, and service debt.
Cash flow from operations for the nine months ended September 30, 2000,
increased $4.2 million to $7.5 million compared to $3.3 million for the nine
months ended October 2, 1999. This increase was due to higher net income and
depreciation. Capital expenditures, consisting primarily of purchases of
machinery and equipment, were $3.5 million for the nine months ended September
30, 2000, compared to $5.5 million for the nine months ended October 2, 1999.
The Company has three revolving lines of credit: one in the United
States, one in England, and one in Germany. None of these arrangements contain
pre-payment penalties. For an analysis of Company debt, see Note 4 to the
Consolidated Financial Statements.
The Company has notes payable to five former shareholders that bear
interest at a weighted rate of 15% and have terms expiring in one to four years.
These notes were issued by the Company in 1989 and 1990, in connection with the
repurchase of shares of common stock from former shareholders and do not allow
for prepayment by the Company. At September 30, 2000, $0.2 million was
outstanding under these notes.
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The Company believes that cash generated from operations and its
borrowing availability under its revolving lines of credit will be sufficient to
satisfy the Company's operating expenses and capital expenditures for the
foreseeable future.
The Company declared a quarterly dividend of $0.04 per share to
shareholders of record on September 30, 2000, which was paid on October 15,
2000.
SEASONALITY AND INFLATION
The Company generally has experienced 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 September 30, 2000, and October
2, 1999. There can be no assurance, however, that the Company's business will
not be affected by inflation in the future.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company is exposed to market risk from changes in interest rates on
borrowed funds, which could affect its results of operations and financial
condition. At September 30, 2000, the Company had approximately $5.6 million in
variable-rate debt outstanding and, as such, the market risk is immaterial based
upon a 10% increase or decrease in interest rates. The Company manages this risk
by selecting debt financing at its U.S. bank lender's prime rate less 1%, or the
LIBOR rate plus 1.9%, whichever is the most advantageous.
EURO
In January 2000 the German Operation adopted the Euro as its primary
currency. The Company presently believes that, with remediation measures, any
material risks associated with the Euro Conversion can be mitigated.
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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 "Business", including
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 Conditions and Results of Operations" in this Form 10-Q for the
quarter ended September 30, 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.
15
<PAGE> 16
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:
16
<PAGE> 17
EXHIBIT EXHIBIT DESCRIPTION
NUMBER -------------------
-------
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) and incorporated
herein by reference).
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) and incorporated herein by
reference).
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) and incorporated herein by
reference).
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) and incorporated herein by reference).
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) and incorporated herein by reference).
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) and incorporated herein by reference).
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) and incorporated herein by reference).
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) and incorporated herein by reference).
17
<PAGE> 18
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) and incorporated herein by reference).
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) and incorporated herein
by reference).
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) and incorporated herein by reference).
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) and incorporated herein by reference).
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) and incorporated herein by reference).
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) and
incorporated herein by reference).
4.17 Revolving Loan Facility letter agreement, dated July 30, 1996,
in the amount of (pound)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) and incorporated herein by
reference).
4.18 Overdraft and Other Facilities letter agreement, dated June 7,
1996, in an amount not to exceed (pound)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) and
incorporated herein by reference).
18
<PAGE> 19
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) and incorporated herein by
reference).
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) and incorporated herein by
reference).
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 and incorporated herein by reference).
4.22 Renewal Master Note, dated February 3, 1998, 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 4.22 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998 and incorporated herein by reference).
4.23 Modification Agreement, dated March 1, 1998, between the
Company and Northern Trust Bank of Florida, N.A. (previously
filed as Exhibit 4.23 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1998 and incorporated
herein by reference).
4.24 Renewal Master Note, dated as of February 3, 1998, in the
amount of $4,965,524.51, between the Company and Northern Trust
Bank of Florida, N.A. (previously filed as Exhibit 4.24 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998 and incorporated herein by reference).
4.25 Renewal Master Note, dated of February 3, 1999, in the amount
of $4,965,524.51, between the Company and Northern Trust Bank
of Florida, N.A. (previously filed as Exhibit 4.25 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
April 3, 1999 and incorporated herein by reference).
4.26 Renewal Master Note, dated July 23, 1999, in the amount of
$5,000,000.00 between the Company and Northern Trust Bank of
Florida, N.A. (previously filed as Exhibit 4.26 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
July 3, 1999 and incorporated herein by reference).
19
<PAGE> 20
4.27 Loan Agreement, dated July 23, 1999, in the amount of
$7,500,000.00, between the Company and Northern Trust Bank of
Florida, N.A. (previously filed as Exhibit 4.27 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
July 3, 1999 and incorporated herein by reference).
4.28 Security Agreement, dated July 23, 1999, between the Company
and Northern Trust Bank of Florida, N.A. (previously filed as
Exhibit 4.28 to the Company's Quarterly Report on Form 10-Q for
the quarter ended July 3, 1999 and incorporated herein by
reference).
4.29 Promissory Note, dated July 23, 1999, in the amount of
$7,500,000.00, between the Company and Northern Trust Bank of
Florida, N.A. (previously filed as Exhibit 4.29 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
July 3, 1999 and incorporated herein by reference).
4.30 Loan Agreement, dated July 23, 2000, by and among Northern
Trust Bank of Florida, N.A. as Lender, Sun Hydraulics
Corporation as Borrower, and Sun Hydraulik Holdings Limited,
Sun Hydraulics Limited and Sun Hydraulik GmbH as Guarantors.
4.31 First Amendment to Security Agreement, dated July 23, 2000, by
and among between Northern Trust Bank of Florida, N.A. and Sun
Hydraulics Corporation.
4.32 Master Note, dated July 23, 2000, in the amount of
$7,500,000.00, made by Sun Hydraulics Corporation in favor of
Northern Trust Bank of Florida, N.A.
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) and
incorporated herein by reference).
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) and
incorporated herein by reference).
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) and incorporated herein
by reference).
10.4+ Amendment No. 1 to 1996 Stock Option Plan (previously filed as
Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1997 and incorporated herein by
reference).
20
<PAGE> 21
10.5+ 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) and incorporated herein by reference).
10.6+ Sun Hydraulics Corporation Employee Stock Award Program
(previously filed as Exhibit 4 to the Company's registration
statement on Form S-8 filed on July 20, 1999, and incorporated
herein by reference.
27.1 Financial Data Schedule for period ended September 30, 2000
(for SEC purposes only).
+ Executive management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K.
Report on Form 8-K (dated August 7, 2000) filed August 14,
2000, announcing second quarter financial results.
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 November 7, 2000.
SUN HYDRAULICS CORPORATION
By: /s/ Richard J. Dobbyn
----------------------------------
Richard J. Dobbyn
Chief Financial Officer (Principal
Financial and Accounting Officer)
21
<PAGE> 22
EXHIBIT INDEX
EXHIBIT EXHIBIT DESCRIPTION
NUMBER -------------------
------
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) and incorporated
herein by reference).
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) and incorporated herein by
reference).
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) and incorporated herein by
reference).
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) and incorporated herein by reference).
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) and incorporated herein by reference).
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) and incorporated herein by reference).
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) and incorporated herein by reference).
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) and incorporated herein by reference).
22
<PAGE> 23
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) and incorporated herein by reference).
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) and incorporated herein
by reference).
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) and incorporated herein by reference).
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) and incorporated herein by reference).
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) and incorporated herein by reference).
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) and
incorporated herein by reference).
4.17 Revolving Loan Facility letter agreement, dated July 30, 1996,
in the amount of (pound)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) and incorporated herein by
reference).
4.18 Overdraft and Other Facilities letter agreement, dated June 7,
1996, in an amount not to exceed (pound)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) and
incorporated herein by reference).
23
<PAGE> 24
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) and incorporated herein by
reference).
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) and incorporated herein by
reference).
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 and incorporated herein by reference).
4.22 Renewal Master Note, dated February 3, 1998, 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 4.22 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998 and incorporated herein by reference).
4.23 Modification Agreement, dated March 1, 1998, between the
Company and Northern Trust Bank of Florida, N.A. (previously
filed as Exhibit 4.23 to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1998 and incorporated
herein by reference).
4.24 Renewal Master Note, dated as of February 3, 1998, in the
amount of $4,965,524.51, between the Company and Northern Trust
Bank of Florida, N.A. (previously filed as Exhibit 4.24 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998 and incorporated herein by reference).
4.25 Renewal Master Note, dated of February 3, 1999, in the amount
of $4,965,524.51, between the Company and Northern Trust Bank
of Florida, N.A. (previously filed as Exhibit 4.25 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
April 3, 1999 and incorporated herein by reference).
4.26 Renewal Master Note, dated July 23, 1999, in the amount of
$5,000,000.00 between the Company and Northern Trust Bank of
Florida, N.A. (previously filed as Exhibit 4.26 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
July 3, 1999 and incorporated herein by reference).
24
<PAGE> 25
4.27 Loan Agreement, dated July 23, 1999, in the amount of
$7,500,000.00, between the Company and Northern Trust Bank of
Florida, N.A. (previously filed as Exhibit 4.27 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
July 3, 1999 and incorporated herein by reference).
4.28 Security Agreement, dated July 23, 1999, between the Company
and Northern Trust Bank of Florida, N.A. (previously filed as
Exhibit 4.28 to the Company's Quarterly Report on Form 10-Q for
the quarter ended July 3, 1999 and incorporated herein by
reference).
4.29 Promissory Note, dated July 23, 1999, in the amount of
$7,500,000.00, between the Company and Northern Trust Bank of
Florida, N.A. (previously filed as Exhibit 4.29 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
July 3, 1999 and incorporated herein by reference).
4.30 Loan Agreement, dated July 23, 2000, by and among Northern
Trust Bank of Florida, N.A. as Lender, Sun Hydraulics
Corporation as Borrower, and Sun Hydraulik Holdings Limited,
Sun Hydraulics Limited and Sun Hydraulik GmbH as Guarantors.
4.31 First Amendment to Security Agreement, dated July 23, 2000, by
and among between Northern Trust Bank of Florida, N.A. and Sun
Hydraulics Corporation.
4.32 Master Note, dated July 23, 2000, in the amount of
$7,500,000.00, made by Sun Hydraulics Corporation in favor of
Northern Trust Bank of Florida, N.A.
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) and
incorporated herein by reference).
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) and
incorporated herein by reference).
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) and incorporated herein
by reference).
10.4+ Amendment No. 1 to 1996 Stock Option Plan (previously filed as
Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1997 and incorporated herein by
reference).
10.5+ 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) and incorporated herein by reference).
25
<PAGE> 26
10.6+ Sun Hydraulics Corporation Employee Stock Award Program
(previously filed as Exhibit 4 to the Company's registration
statement on Form S-8 filed on July 20, 1999, and incorporated
herein by reference).
27.1 Financial Data Schedule for period ended September 30, 2000
(for SEC purposes only).
+ Executive management contract or compensatory plan or arrangement.
26
