Sun Hydraulics Corporation Reports 3rd Quarter EPS of $0.16 on Sales of $20 million


SARASOTA, FLA, November 6, 2000 - Sun Hydraulics Corporation (NASDAQ: SNHY) today announced net sales for the quarter ended September 30, 2000 were $20.0 million, representing an increase of 13.0% compared to the third quarter of 1999. For the nine months ended September 30, 2000, net sales increased 19.0%, or $9.9 million, compared to the first nine months of 1999. Net income for the quarter ended September 30, 2000 was $1.0 million, an increase of 74.0% compared to the third quarter of 1999. Both basic and diluted earnings per share for the third quarter of 2000 were $0.16.

"As we stated last quarter, we expected third quarter shipments to be lower than our record second quarter levels," said Allen Carlson, Sun Hydraulics president. "We were very pleased with the $20.0 million in shipments. The weakening in demand that we began to see at the end of the second quarter continued in the third quarter, the majority of it in our North American markets. Our earnings for the quarter were what we expected, given the shipment volumes.

"Looking forward, we continue to see soft markets in the United States, which we attribute to a general slowdown in manufacturing activity," Carlson commented. "However, we have seen our domestic orders pick up slightly in October and expect this will continue. International business is up year over year and continues to hold up as we enter the fourth quarter.

"At the current incoming order rate, we expect fourth quarter shipments will be approximately 15% below third quarter levels and diluted earnings per share are estimated to be approximately $0.08 for the fourth quarter and $0.58 for the year. We do not anticipate the slowdown we have seen in the United States to be either severe or long term and our recently completed capacity expansion makes us well prepared for future growth."

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 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.

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