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. 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- SUN HYDRAULICS CORPORATION - JULY 1, 2000 CONSOLIDATED STATEMENTS OF INCOME (in thousands except per share data)
Three Months Ended July 1, July 3, 2000 1999 ------- ------- (unaudited) (unaudited) 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
-3- SUN HYDRAULICS CORPORATION - JULY 1, 2000 CONSOLIDATED STATEMENTS OF INCOME (in thousands except per share data)
Six Months Ended July 1, July 3, 2000 1999 ------- ------- (unaudited) (unaudited) 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
CONSOLIDATED BALANCE SHEETS (in thousands)
July 1, January 1, 2000 2000 (unaudited) 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
-4- 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
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