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 RELEASES SECOND QUARTER RESULTS
SARASOTA, FLA, August 11, 1999 - Sun Hydraulics Corporation (NASDAQ: SNHY)
today announced net sales were $15.9 million for the quarter ended July 3,
1999, representing a 9.5% decrease compared to second quarter 1998 net sales of
$17.6 million. The Company incurred a net loss of $0.2 million for the second
quarter of 1999, compared to net income of $1.2 million in the same quarter of
1998. Basic and diluted net losses per share for the second quarter of 1999
were ($0.03), compared to basic and diluted net income per share of $0.19 and
$0.18, respectively, in the second quarter of 1998.
"The second quarter loss was mainly a result of missed shipments and
productivity issues related to the implementation of our new Y2K compliant
operating system," said Clyde Nixon, Sun Hydraulics President. "As we stated in
our July 29th press release, we experienced many small difficulties during the
implementation, but shipments have recently returned to pre-implementation
levels. We believe that once fully implemented, the new system will provide
significant long-term benefits.
Sun Hydraulics Corporation, with manufacturing and distribution facilities in
Sarasota and Manatee County, Florida, Coventry, England, Erkelenz, Germany and
Incheon, 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; (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, "Business" and "Management's Discussion and Analysis of Financial
Condition" in the Company's Form 10-K for the year ended December 31, 1998 and
"Management's Discussion and Analysis of Financial Condition" in the Company's
Form 10-Q for the quarter ended April 3, 1999. 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.
SUN HYDRAULICS CORPORATION - JULY 3, 1999
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
Three Months Ended
July 3, June 30,
1999 1998
----------- ------------------
(unaudited) (unaudited)
Net sales $ 15,921 $ 17,584
Cost of sales 12,982 12,599
Gross profit 2,939 4,985
Selling, engineering and
administrative expenses 3,068 3,033
Operating income (loss) (129) 1,952
Interest expense 176 231
Miscellaneous expense (income) 13 (45)
Income (loss) before income taxes (318) 1,766
Income tax provision (benefit) (125) 586
Net income (loss) before equity loss in joint venture (193) 1,180
Equity loss in joint venture 23 --
Net income (loss) $ (216) $ 1,180
Basic net income (loss)
per common share $ (0.03) $ 0.19
Basic weighted average
shares outstanding 6,383 6,339
Diluted net income (loss)
per common share $ (0.03) $ 0.18
Diluted weighted average
shares outstanding 6,537 6,553
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SUN HYDRAULICS CORPORATION - JULY 3, 1999
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
Six Months Ended
July 3, June 30,
1999 1998
----------- ----------------
(unaudited) (unaudited)
Net sales $34,386 $ 36,717
Cost of sales 26,927 25,946
Gross profit 7,459 10,771
Selling, engineering and
administrative expenses 6,160 6,047
Operating income 1,299 4,724
Interest expense 429 491
Miscellaneous expense (income) 76 (2)
Income before income taxes 794 4,235
Income tax provision 230 1,415
Net income before equity loss in joint venture 564 2,820
Equity loss in joint venture 57 --
Net income $ 507 $ 2,820
Basic net income
per common share $ 0.08 $ 0.45
Basic weighted average
shares outstanding 6,375 6,332
Diluted net income
per common share $ 0.08 $ 0.43
Diluted weighted average
shares outstanding 6,528 6,524
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CONSOLIDATED BALANCE SHEETS
(in thousands)
July 3, December 31,
1999 1998
----------- -------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 844 $ 1,592
Accounts receivable, net of allowance for
doubtful accounts of $262 and $169 5,977 5,342
Inventories 7,367 8,125
Other current assets 915 891
Total current assets 15,103 15,950
Property, plant and equipment, net 44,528 44,003
Investment in joint venture 189 246
Other assets 926 820
Total assets $60,746 $61,019
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 2,007 $ 2,877
Accrued expenses and other liabilities 1,670 2,065
Long-term debt due within one year 5,191 4,302
Notes payable to related parties due within one year 502 578
Dividends payable 255 254
Income taxes payable 349 245
Total current liabilities 9,974 10,321
Long-term debt due after one year 6,850 6,461
Notes payable to related parties due after one year 148 566
Deferred income taxes 3,624 3,656
Total liabilities 20,596 21,004
Shareholders' equity:
Preferred stock -- --
Common stock 6 6
Capital in excess of par value 24,473 24,386
Retained earnings 15,359 15,363
Equity adjustment for foreign currency translation 312 260
Total shareholders' equity 40,150 40,015
Total liabilities and shareholders' equity $60,746 $61,019
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