Exhibit 99.1

FOR RELEASE: Immediately

         
Contact:        
Richard K. Arter
Richard J. Dobbyn		   Investor Relations
Chief Financial Officer 		  941-362-1200
941-362-1200

Sun Hydraulics Corporation Reports
Fourth Quarter and 2001 Year End Results
Declares dividend of $0.04 for 1st Quarter of 2002

SARASOTA, FLA, March 6, 2002 – Sun Hydraulics Corporation (NASDAQ: SNHY) today announced that net sales for the year ended December 29, 2001, were $65.0 million, a decrease of 18.8% compared to net sales of $80.0 million for the year ended December 30, 2000. Net income for 2001 was $1.0 million, or 1.5% of net sales, compared to $3.9 million, or 4.9% of net sales for 2000. Basic and diluted earnings per share for the year ended December 29, 2001, were $0.15 and $0.14 respectively, compared to $0.61 and $0.60 for the year ended December 30, 2000.

Fourth Quarter on Forecast

Net sales for the fourth quarter ended December 29, 2001, were $13.4 million, a decrease of 23.4% compared to net sales of $17.5 million for the fourth quarter of 2000. Net loss for the quarter ended December 29, 2001, was $0.7 million, compared to net income of $0.7 for the fourth quarter of 2000. Net loss for the fourth quarter of 2001 included a pretax charge of $0.3 million for slow moving inventory. Basic and diluted net loss per share for the fourth quarter were $0.10.

Strong Cash Flow

Cash generated from operations for 2001 was $7.3 million. Capital expenditures for the year were $4.0 million, debt decreased $1.4 million, and $1.0 million was paid to shareholders in dividends. Cash on hand at December 29, 2001, was $3.6 million, an increase of $0.9 million for the year.

Commenting on the results for the year, Allen Carlson, Sun’s president, said, “Sun’s diversified customer base and global presence kept us strong in an extremely difficult year. We were able to keep all the workforce intact, continue investments in productivity improvements and strengthen our marketing efforts.”

Outlook Brightens

Orders to date for the first quarter of 2002 were at a rate 30% higher than the fourth quarter of 2001 and 12% higher than the third quarter of 2001. “The Company estimates that sales for the first quarter of 2002 will be approximately 12% higher than the previous quarter and net income will approach breakeven,” said Carlson. “We believe that order rates will continue to improve and estimated sales for the year will be in the $70 million range, which should produce net income per share of approximately $0.40,” Carlson concluded.

 

 

Dividend

Sun Hydraulics Corporation declared a $0.04 per share quarterly dividend on its common stock on February 23, 2002. The dividend is payable on April 15, 2002, to shareholders of record as of March 31, 2002.

Other Highlights

Sun launched a new website which disseminates product information quickly and is widely available to help stimulate global demand and pull product through the distribution channel. The time from the engineering release of products to their appearance in the marketplace has been drastically reduced. Sun will continue to invest in this technology as one of the best ways to keep its broad product offering available to provide control solutions for customers around the world.

Sun Hydraulics Corporation is a leading designer and manufacturer of high performance screw-in hydraulic cartridge valves and manifolds for worldwide industrial and mobile markets. For more information about Sun, please visit our website at www.sunhydraulics.com.

Sun Hydraulics Corporation will broadcast its 4th quarter and 2001 year end financial results conference call with analysts live over the Internet at 2:30 P.M. E.S.T., today, March 6, 2002. To listen, go to http://investor.sunhydraulics.com/medialist.cfm.

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

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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 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Form 10-Q for the quarter ended September, 29, 2001, and under the heading “Business” and particularly under the subheading, “Business Risk Factors” in the Company’s Form 10-K for the year ended December 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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SUN HYDRAULICS CORPORATION – DECEMBER 29, 2001
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(in thousands except per share data)

                                 
    Three Months Ended   Twelve Months Ended
   
 
    December 29,   December 30,   December 29,   December 30,
    2001   2000   2001   2000
   
 
 
 
Net sales
   $ 13,361     $ 17,537     $ 64,983     $ 79,967  
Cost of sales
     11,552       12,816       50,358       58,502  
Gross profit
     1,809       4,721       14,625       21,465  
Selling, engineering and administrative expenses
     2,758       3,344       12,565       14,109  
Operating income (loss)
     (949 )     1,377       2,060       7,356  
Interest expense
     203       218       878       1,114  
Miscellaneous expense
     (56 )     138       (130 )     323  
Income (loss) before income taxes
     (1,096 )     1,021       1,312       5,919  
Income tax provision
     (434 )     354       362       1,998  
Net income (loss)
   $ (662 )   $ 667     $ 950     $ 3,921  
Basic net income (loss) per common share
     (0.10 )     0.10       0.15       0.61  
Basic weighted average shares outstanding
     6,421       6,385       6,421       6,385  
Diluted net income (loss) per common share
     (0.10 )     0.10       0.14       0.60  
Diluted weighted average shares outstanding
     6,421       6,570       6,554       6,574  

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CONSOLIDATED BALANCE SHEETS
(in thousands)

                     
        December 29,   December 30,
        2001   2000
       
 
Assets
                
Current assets:
                
 
Cash and cash equivalents
   $ 3,611     $ 2,698  
 
Accounts receivable, net of allowance for doubtful accounts of $195 and $163
     4,755       6,112  
 
Inventories
     7,238       9,033  
 
Taxes Receivable
     668       —  
 
Other current assets
     985       536  
   
Total current assets
     17,257       18,379  
Property, plant and equipment, net
     43,555       44,984  
Other assets
     938       1,011  
Total assets
   $ 61,750     $ 64,374  
Liabilities and Shareholders’ Equity
                
Current liabilities:
                
 
Accounts payable
   $ 1,323     $ 1,787  
 
Accrued expenses and other liabilities
     1,494       1,585  
 
Long-term debt due after one year
     1,405       1,779  
 
Dividends payable
     257       255  
 
Income taxes payable
     —       315  
   
Total current liabilities
     4,479       5,721  
Long-term debt due after one year
     9,258       10,233  
Deferred income taxes
     3,848       4,106  
Deferred royalties
     427       478  
   
Total liabilities
     18,012       20,538  
Shareholders’ equity:
                
 
Common stock
     6       6  
 
Capital in excess of par value
     24,502       24,486  
 
Retained earnings
     19,001       19,073  
 
Accumulated comprehensive income
     229       271  
   
Total shareholders’ equity
     43,738       43,836  
Total liabilities and shareholders’ equity
   $ 61,750     $ 64,374  

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