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SUN ELECTRIC CORPORATION ANNOUNCES SECOND QUARTER RESULTS

 SUN ELECTRIC CORPORATION ANNOUNCES SECOND QUARTER RESULTS
 CRYSTAL LAKE, Ill., Aug. 4 /PRNewswire/ -- Sun Electric Corp. (NYSE: SE) announced today the following financial results for the second calendar quarter and the six months ended June 30, 1992:
 (Dollars in thousands except per share amounts)
 Three Months Ended Six Months Ended
 June 30 June 30
 1992 1991 1992 1991
 Sales $51,228 53,816 105,574 107,893
 Operating loss (1,456) (231) (805) (2,793)
 Net loss (3,624) (2,725) (5,467) (7,587)
 Net loss per
 common share (.38) (.29) (.57) (.80)
 Gerald A. Kien, chairman, president and chief executive officer stated, "The operating results of the company's North American operations during the second quarter of this year continued to reflect soft demand for automotive diagnostic and test equipment. Equipment sales to customers in the United States for the second quarter were $3.1 million lower than in the second quarter of 1991. However, as of June 30, 1992, the company's United States operations had an equipment order backlog of $8.9 million (compared to $2.4 million at June 30, 1991) resulting, in large part, from a greater than anticipated demand for automotive refrigerant recycling and recovery equipment, which accounted for $5.4 million of the backlog. The high mix of lower margin refrigerant recycling and recovery equipment sales during the second quarter caused the company to experience a lower gross margin rate than in the second quarter of 1991. The company anticipates filling most of these backlogged orders during the third quarter of 1992.
 "During the second quarter of 1992, the company's international division reported sales of $27.9 million, which were $1.2 million below the 1991 second quarter level, due primarily to lower sales in Germany.
 "During the second quarter, the company acquired 100 percent ownership interest in Vehicle Test Technology Inc. (VTTI), a Washington corporation in which it previously held a 50 percent interest. VTTI has been the operator of the vehicle emissions testing program in the state of Washington since 1982 and was recently awarded the state's contract to design and operate its new vehicle emissions testing program scheduled to begin June 1, 1993. This contract, which is for an initial term of 6 1/2 years, expands the geographic areas served by the current program, upgrades testing equipment and inspection procedures, and is expected to generate gross revenues of approximately $50.0 million over the term of the contract. VTTI contributed $1.5 million in revenues in the second quarter of this year."
 Sun Electric Corp. designs, manufactures, markets and services automotive diagnostic, test and service equipment and information and management systems for the motor vehicle service industry in more than 100 countries. The company also designs and operates centralized vehicle emissions inspections stations.
 SUN ELECTRIC CORPORATION
 CONSOLIDATED CONDENSED BALANCE SHEET
 (In thousands)
 June 30, December 31
 1992 1991
 Cash & equivalents $ 5,733 5,058
 Receivables, net 47,594 52,014
 Inventories 81,854 72,850
 Total current assets 135,181 129,922
 Investments and advances
 unconsolidated affiliate (A) -- 1,154
 Prepaid expenses
 and other assets 15,892 8,318
 Fixed assets, net 28,383 24,180
 Total assets 179,456 163,574
 Notes payable, (A) (B) 22,196 11,849
 Accounts payable 21,221 16,658
 Accrued expenses 32,278 29,902
 Income taxes 9,284 7,495
 Total current liabilities 84,979 65,904
 Long-term debt 7,664 7,192
 Other non-current
 liabilities 2,523 1,937
 Shareholders' equity 84,290 88,541
 Total liabilities
 and equity 179,456 163,574
 NOTE: Reference should be made to the 1991 Annual Report to shareholders for a description of the company's accounting policies and other financial disclosures.
 SUN ELECTRIC CORPORATION
 CONSOLIDATED STATEMENT OF OPERATIONS
 (In thousands except per share data)
 Three Months Ended Six Months Ended
 June 30 June 30
 1992 1991 1992 1991
 Net sales $ 51,228 53,816 105,574 107,893
 Cost of sales 31,109 31,193 63,303 64,539
 Gross income 20,119 22,623 42,271 43,354
 Selling, general and
 administrative expenses 21,575 22,854 43,076 46,147
 Income (loss) from
 operations (1,456) (231) (805) (2,793)
 Other (income) expense:
 Interest (income)
 expense, net 658 406 1,142 1,098
 Foreign currency losses 107 103 385 527
 Net earnings of
 unconsolidated affiliate (A) -- (290) (239) (580)
 Other (income) expense,
 net (C) (235) 50 (359) 123
 Total 530 269 929 1,168
 Earnings (loss) before
 provision for
 income taxes (1,986) (500) (1,734) (3,961)
 Provision for income taxes 1,638 2,225 3,733 3,626
 Net earnings (loss) (3,624) (2,725) (5,467) (7,587)
 Earnings (Loss)
 per common share:
 Net earnings (loss) $ (.38) $ (.29) (.57) (.80)
 Shares used to calculate
 earnings (loss) per
 common share 9,579 9,463 9,538 9,460
 NOTE: Reference should be made to the 1991 Annual Report to Shareholders for a description of the company's accounting policies and other financial disclosures.
 SUN ELECTRIC CORPORATION
 NOTES TO FINANCIAL STATEMENTS
 (Dollar Amounts in Thousands)
 NOTE A: On April 10, 1992, the company purchased the remaining outstanding fifty percent equity interest in Vehicle Test Technology Inc. (VTTI), the company's unconsolidated affiliate, from a third party. The purchase price was funded with a $7,000 90-day bank bridge loan provided by one of the company's existing European banks; the loan was subsequently extended for an additional 90 day period. The company intends to refinance this loan by its due date of Oct. 8, 1992, which will require the expansion of its present European credit facilities or the obtaining of financing from another source.
 NOTE B: On June 30, 1992 the company signed an agreement with its United States commercial bank amending certain provisions of the parties' existing $10,000 agreement and extending the agreement's term through Sept. 30, 1992.
 On July 24, 1992, the company signed an agreement with a commercial lender providing up to $4,000 in additional borrowing capacity for the company's United States operations through July 24, 1993. The company and the lender are continuing to negotiate a longer term credit facility in an amount sufficient to retire all outstanding borrowings currently provided by the company's commercial bank and to fund the longer term operating and working capital requirements of the company's United States operations. The company expects to complete this financing during the third quarter.
 NOTE C: Included in other expenses, net for the six months ended June 30, 1991, are $300 of expenses for legal and investment banking fees related to the investigation of a potential acquisition by the company.
 -0- 8/4/92
 /CONTACT: Martin M. Ellen of Sun Electric, 815-459-7700/
 (SE) CO: Sun Electric Corp. ST: Illinois IN: UTI SU: ERN


TM -- NY080 -- 6891 08/04/92 21:14 EDT
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