Sun Hydraulics 2007 Sales Rise 18% to $167 Million, Net Income up 36%, Board Declares First Quarter Dividend of $0.09


SARASOTA, FL--(Marketwire - March 4, 2008) - Sun Hydraulics Corporation (NASDAQ: SNHY) reported financial results for the year and fourth quarter 2007 as follows:

(Dollars in millions except net income per share)

                      December 29,  December 30,
                          2007          2006      Increase

      Twelve Months Ended
Net Sales                  $167.4        $142.3         18%
Net Income                  $22.1         $16.2         36%
Net Income per share:
   Basic                    $1.35         $0.99         35%
   Diluted                  $1.34         $0.99         35%

      Three Months Ended
Net Sales                   $41.3         $35.0         18%
Net Income                   $5.1          $3.8         34%
Net Income per share:
   Basic                    $0.31         $0.23         35%
   Diluted                  $0.31         $0.23         35%

Note:  The Company announced a 50% stock dividend to shareholders of
record on June 30, 2007, payable on July 15, 2007.  All earnings per share
and weighted average share information reflect the 50% stock dividend.

"The strong fourth quarter capped off another great year," reported Allen Carlson, Sun's President and CEO. "Last year's momentum has continued into this year's first quarter and we are forecasting another quarter of double digit growth."

"Our foreign sales expanded briskly in 2007," Carlson continued. "Approximately 80% of Sun's growth last year was generated in Europe and Asia/Pacific, and that strong international demand is continuing in the first quarter."

"Equally exciting is the fact that domestic demand was strong in the first two months of the year, with order activity up 11% compared to the first two months of 2007. After moderate 5% domestic growth in 2007 and despite the negative economic commentary we all hear, this is welcome news."

"Sun's new electrically actuated products introduced in Europe last year will receive their formal North American introduction at the International Fluid Power Exposition next week in Las Vegas," Carlson added. "These products will feature WhiteOak's on-board electronics. These are truly unique products in the marketplace and are well suited for use by many exhibitors. We expect an equally favorable market reaction to that which we experienced in Europe when the products were launched in April 2007."

Outlook

2008 first quarter sales are estimated to be in the range of $47 million, a 15% increase over last year. First quarter earnings per share are estimated to be between $0.41 and $0.43 per share, compared to $0.35 per share last year.

Dividend

On March 1, 2008, Sun Hydraulics' Board of Directors declared a $0.09 per share dividend on its common stock. The dividend is payable on April 15, 2008, to shareholders of record as of March 31, 2008. Sun Hydraulics advises all shareholders to familiarize themselves with rules regarding dividends, payment dates and ex-dividend dates. See the following website for more information http://www.sec.gov/answers/dividen.htm

Open House and Webcast

Sun Hydraulics Corporation will broadcast its 2007 financial results conference call live over the Internet at 4:00 P.M. E.T. tomorrow, March 5, 2008. The conference call will be in conjunction with an Investor Open House to be held at the Company's facility at 701 Tallevast Road, Sarasota, Florida, starting at 3:30 P.M. To listen to the webcast, go to http://investor.sunhydraulics.com/medialist.cfm. A copy of this earnings release is posted on the Investor Relations page of our website under "Press Releases."

Webcast Q&A

Questions may be submitted to the Company via email after reviewing this earnings release, by going to the Sun Hydraulics website, www.sunhydraulics.com, and clicking on Investor Relations on the top menu. Scroll down to the bottom of the page and click on contact email: investor@sunhydraulics.com, which will open an email window to type in your message. Sun management will then answer these and other questions during the Company's webcast. If an individual wishes to ask questions directly during the webcast, the conference call may be accessed by dialing 1-877-407-8033.

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.

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 "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, 2007, 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, 2006. 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
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)

                                                   Three Months Ended
                                                 December 29, December 30,
                                                      2007         2006

Net sales                                         $    41,289  $    34,967

Cost of sales                                          27,943       23,916
                                                  -----------  -----------

Gross profit                                           13,346       11,051

Selling, engineering and administrative expenses        5,282        4,814
                                                  -----------  -----------

Operating income                                        8,064        6,237

Interest (income)/expense, net                           (129)          77
Foreign currency transaction (gain) loss, net             (44)         124
Miscellaneous (income) expense, net                        39         (217)
                                                  -----------  -----------

Income before income taxes                              8,198        6,253

Income tax provision                                    3,071        2,440
                                                  -----------  -----------

Net income                                        $     5,127  $     3,813
                                                  ===========  ===========


Basic net income per common share (1)             $      0.31  $      0.23

Weighted average basic shares outstanding (1)          16,485       16,255

Diluted net income per common share (1)           $      0.31  $      0.23

Weighted average diluted shares outstanding (1)        16,530       16,341

Dividends declared per share (1)                  $     0.090  $     0.067

(1) The Company announced a 50% stock dividend to shareholders of record on
June 30, 2007, payable on July 15, 2007. All per share and weighted average
share information reflect the 50% stock dividend.



SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share data)

                                                    Twelve Months Ended
                                                  December 29, December 30,
                                                      2007         2006

Net sales                                         $   167,374  $   142,282

Cost of sales                                         112,524       98,350
                                                  -----------  -----------

Gross profit                                           54,850       43,932

Selling, engineering and administrative expenses       21,215       18,881
                                                  -----------  -----------

Operating income                                       33,635       25,051

Interest (income)/expense, net                           (411)         126
Foreign currency transaction (gain) loss, net             (42)         187
Miscellaneous income, net                                (283)        (165)
                                                  -----------  -----------

Income before income taxes                             34,371       24,903

Income tax provision                                   12,240        8,680
                                                  -----------  -----------

Net income                                        $    22,131  $    16,223
                                                  ===========  ===========


Basic net income per common share (1)             $      1.35  $      0.99

Weighted average basic shares outstanding (1)          16,437       16,317

Diluted net income per common share (1)           $      1.34  $      0.99

Weighted average diluted shares outstanding (1)        16,498       16,408

Dividends declared per share (1)                  $     0.337  $     0.267

(1) The Company announced a 50% stock dividend to shareholders of record on
June 30, 2007, payable on July 15, 2007. All per share and weighted average
share information reflect the 50% stock dividend.



SUN HYDRAULICS CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)

                                                  December 29, December 30,
                                                      2007         2006
Assets
Current assets:
  Cash and cash equivalents                       $     19,191 $      9,379
  Restricted cash                                          146          118
  Accounts receivable, net of allowance for
   doubtful accounts of $215 and $140                   17,029       13,917
  Inventories                                           11,421       10,386
  Deferred income taxes                                    301          219
  Other current assets                                   1,210          986
                                                  ------------ ------------
      Total current assets                              49,298       35,005

Property, plant and equipment, net                      56,999       50,355
Other assets                                             4,483        1,825
                                                  ------------ ------------

Total assets                                      $    110,780 $     87,185
                                                  ============ ============

Liabilities and Shareholders' Equity
Current liabilities:
  Accounts payable                                $      5,668 $      4,812
  Accrued expenses and other liabilities                 4,857        4,059
  Long-term debt due within one year                       417          426
  Dividends payable                                      1,484        1,085
  Income taxes payable                                     674          608
                                                  ------------ ------------
      Total current liabilities                         13,100       10,990

Long-term debt due after one year                          284          646
Deferred income taxes                                    5,108        4,451
Other liabilities                                          406          298
                                                  ------------ ------------

      Total liabilities                                 18,898       16,385

Shareholders' equity:
  Common stock                                              16           16
  Capital in excess of par value                        34,390       30,962
  Retained earnings                                     51,844       35,279
  Accumulated other comprehensive income                 5,632        4,543
                                                  ------------ ------------
      Total shareholders' equity                        91,882       70,800
                                                  ------------ ------------

Total liabilities and shareholders’ equity        $    110,780 $     87,185
                                                  ============ ============



SUN HYDRAULICS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)

                                                    Twelve Months Ended
                                                  December 29, December 30,
                                                      2007         2006
Cash flows from operating activities:
Net income                                        $    22,131  $    16,223
Adjustments to reconcile net income to
 net cash provided by operating activities:
Depreciation and amortization                           6,341        5,849
(Gain) loss on disposal of assets                         (74)          12
Stock-based compensation expense                          735          573
Stock options income tax benefit                         (748)        (381)
Allowance for doubtful accounts                            75           30
Provision for slow moving inventory                       251          157
Provision for deferred income taxes                       575          326
(Increase) decrease in:
   Accounts receivable                                 (3,187)      (2,972)
   Inventories                                         (1,286)      (2,673)
   Income taxes receivable                                  -          236
   Other current assets                                  (224)        (122)
   Other assets, net                                     (310)         (29)
Increase (decrease) in:
   Accounts payable                                       856          (10)
   Accrued expenses and other liabilities               2,184        1,385
   Income taxes payable                                   814          989
   Other liabilities                                      108           17
                                                  -----------  -----------
Net cash from operating activities                     28,241       19,610

Cash flows used in investing activities:
Investment in High Country Tek, Inc.                   (2,375)           -
Capital expenditures                                  (12,591)      (9,525)
Proceeds from dispositions of equipment                   192           28
                                                  -----------  -----------
Net cash used in investing activities                 (14,774)      (9,497)

Cash flows used in financing activities:
Proceeds from debt                                          -        7,000
Repayment of debt                                        (371)      (8,312)
Proceeds from exercise of stock options                   287          162
Stock options income tax benefit                          748          381
Proceeds from stock issued                                272          238
Payments for purchase of treasury stock                     -       (2,951)
Dividends to shareholders                              (5,167)      (4,349)
                                                  -----------  -----------
Net cash used in financing activities                  (4,231)      (7,831)

Effect of exchange rate changes on cash and
 cash equivalents                                         604        1,385
                                                  -----------  -----------

Net (decrease) increase in restricted cash                 28         (295)
Net (decrease) increase in cash and cash
 equivalents                                            9,812        3,962
                                                  -----------  -----------

Cash and cash equivalents, beginning of period          9,497        5,830
                                                  -----------  -----------

Cash and cash equivalents, end of period          $    19,337  $     9,497
                                                  ===========  ===========

Supplemental disclosure of cash flow information:
Cash paid:
   Interest                                       $        51  $       312
   Income taxes                                   $    11,900  $     7,510



                    United                  United
                    States   Korea Germany Kingdom Elimination Consolidated

Three Months
Ended December 29, 2007
Sales to
 unaffiliated
 customers         $25,142 $ 4,671 $ 5,434 $ 6,042   $      -     $ 41,289
Intercompany sales   6,629       -      27     478     (7,134)           -
Operating income     5,641     345   1,351     676         51        8,064
Depreciation and
 amortization        1,167      49     153     316          -        1,685
Capital
 expenditures        1,664      20      73   1,386          -        3,143

Three Months
Ended December 30, 2006
Sales to
 unaffiliated
 customers         $21,972 $ 4,121 $ 4,484 $ 4,390   $      -     $ 34,967
Intercompany sales   6,359       -      18     728     (7,105)           -
Operating income     4,520     521     817     436        (57)       6,237
Depreciation and
 amortization        1,044      38     142     252          -        1,476
Capital
 expenditures        1,822      76      33     400          -        2,331

Twelve Months
Ended December 29, 2007
Sales to
 unaffiliated
 customers         $99,516 $20,567 $24,164 $23,127   $      -     $167,374
Intercompany sales  30,344       -     142   2,621    (33,107)           -
Operating income    22,408   2,103   5,955   3,205        (36)      33,635
Depreciation and
 amortization        4,488     178     556   1,119          -        6,341
Capital
 expenditures        9,339     284     125   2,843          -       12,591

Twelve Months
Ended December 30, 2006
Sales to
 unaffiliated
 customers         $89,077 $16,368 $19,128 $17,709   $      -     $142,282
Intercompany sales  25,809       -     106   2,990    (28,905)           -
Operating income    16,608   2,212   4,046   2,330       (145)      25,051
Depreciation and
 amortization        4,206     150     510     983          -        5,849
Capital
 expenditures        8,408     122     238     757          -        9,525