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 REPORTS INCREASED SALES AND EARNINGS FOR 1997
COMPANY INCREASES DIVIDEND TO $0.04 PER SHARE
SARASOTA, FLA, March 5, 1998 - Sun Hydraulics Corporation (NASDAQ: SNHY) today
announced that net sales for the year ended December 31, 1997, were $64.2
million, a 17.6% increase compared to $54.6 million of net sales in 1996. Net
income for the year was $4.7 million, or 7.3% of net sales. Pro forma net
income for the year ended December 31, 1996, was $3.8 million, or 7.0% of
sales, excluding a non-recurring compensation charge of $1.4 million. Basic
and diluted earnings per share for 1997 were $0.75 and $0.73, respectively.
Fourth quarter net sales for the period ended December 31, 1997, were $17.0
million, representing a 27.6% increase compared to net sales of $13.3 million
for the same period in 1996. Net income was $1.3 million, or 7.4% of net sales
for the fourth quarter of 1997, compared to $0.6 million pro forma net income,
or 4.6% of net sales for the fourth quarter of 1996.
The Company's Board of Directors declared a first quarter dividend of $0.04 per
share of its common stock, an increase from $0.035 per share in prior quarters.
The dividend is payable on April 15, 1998, to shareholders of record as of
March 31, 1998.
"We are pleased that our production rates continued to increase in the fourth
quarter, reflecting the successful completion of our 1997 capacity expansion
programs," said Sun Hydraulics President Clyde Nixon. "Both the mobile and
industrial markets showed strength throughout the year and our orders were up
in all major market areas."
"Our sales volume was up significantly for the year, despite our low shipment
rates in the first six months," Nixon said. "Shipments for the last six months
of 1997 were up 27.4% compared to the last half of 1996, and we expect to
accelerate production rates in 1998. Although we successfully increased our
shipments, expediting costs associated with meeting increased market demand,
and start-up costs related to our capacity expansion programs impacted gross
profit for the year."
Sun Hydraulics is a leading designer and manufacturer of high performance
screw-in hydraulic cartridge valves and manifolds for global industrial and
mobile markets.
Certain statements in this release that are not historical facts are
"forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934. Because such statements regarding the intent,
belief or current expectations of the Company, its Directors or its Officers
involve risks and uncertainties, actual results may differ materially from
those expressed in or implied by such forward-looking statements. Risks and
uncertainties include, but are not limited to, changing economic conditions,
changes in capital markets, changes in or the failure to comply with
governmental regulations, and the impact of competitive products and
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pricing. Further information relating to factors that could cause actual
results to differ from those anticipated is included in the Company's filings
with the Securities and Exchange Commission, including 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, effective
January 9, 1997 (SEC File No. 333-14183), and "Business" in the Company's Form
10-K for the year ended December 31, 1996, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Company's
Form 10-Q for the quarter ended September 30, 1997.
SUN HYDRAULICS CORPORATION - DECEMBER 31, 1997
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
Year Ended
December 31,
1997 1996
---- ----
Net sales $ 64,198 $ 54,572
Cost of sales 44,621 37,185
Gross profit 19,577 17,387
Selling, engineering and
administrative expenses 11,275 12,097 (1)
Operating income 8,302 5,290
Interest expense 905 823
Miscellaneous expense 133 267
Income before income taxes 7,264 4,200
Income tax provision 2,554 704
Deferred income tax provision - 2,425
Net Income $ 4,710 $ 1,071
Basic net income
per common share .75 .17 *
Weighted average shares outstanding 6,308 6,300 *
Diluted net income
per common share .73 .16 *
Diluted weighted average
shares outstanding 6,499 6,519 *
Pro forma net income - $ 2,617 (2)
Pro forma basic net income
per common share - .42 *
Pro forma diluted net income
per common share - .40 *
* Shares are based on the weighted number of shares outstanding after the
Company's initial public offering in January 1997.
(1) Selling, engineering and administrative expenses for the year ended
December 31, 1996, reflect a $1.4 million non-recurring, non-cash
compensation expense related to the termination of phantom stock
compensation agreements with certain employees and the issuance of options
to certain Directors.
(2) Pro forma net income for the year ended December 31, 1996, reflects a
provision for income tax as if the Company had always been a "C"
corporation. Pro forma net income, excluding the $1.4 million
compensation expense included in selling, engineering and administrative
expenses, and the
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deferred tax provision of $2.4 million, would have been $3.8 million.
Excluding these one-time charges, basic and diluted earnings per share
would have been $0.60 and $0.58, respectively.
CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
1997 1996
Assets
Current assets:
Cash and cash equivalents $ 1,249 $ 1,038
Accounts receivable, net of allowance for
doubtful accounts of $47 and $62 4,558 3,535
Inventories 6,775 4,451
Other current assets 932 1,132
Total current assets 13,514 10,156
Property, plant and equipment, net 39,789 37,212
Other assets 86 1,048
Total assets $ 53,389 $ 48,416
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 2,847 $ 3,273
Accrued expenses and other liabilities 2,174 1,961
Long-term debt due within one year 1,035 2,340
Notes payable to related parties due within one year 757 655
Dividends payable 221 508
Income taxes payable 1,008 461
Total current liabilities 8,042 9,198
Long-term debt due after one year 6,620 12,314
Notes payable to related parties due after one year 1,152 1,909
Deferred income taxes 2,575 2,578
Other liabilities - 20
Total liabilities 18,389 26,019
Shareholders' equity:
Common stock 6 2,179
Capital in excess of par value 24,163 2,719
Retained earnings 10,732 17,450
Equity adjustment for foreign currency translation 99 49
Total shareholders' equity 35,000 22,397
Total liabilities and shareholders' equity $ 53,389 $ 48,416
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