Sun Hydraulics First Quarter Earnings Increase 31%, Sales Increase 20%; Board of Directors Declares Shared Distribution Dividend

Market Wire, May, 2008

Sun Hydraulics Corporation (NASDAQ: SNHY) reported financial results for the first quarter 2008 as follows:

(Dollars in millions except net income per share)

                                      March 29,    March 31,
                                         2008         2007       Increase
    Three Months Ended
Net Sales                            $       49.0 $       40.9          20%
Net Income                           $        7.7 $        5.8          33%
Net Income per share:
   Basic                             $       0.46 $       0.35          31%
   Diluted                           $       0.46 $       0.35          31%


Note: March 31, 2007 earnings per share and weighted average share
information reflects a 50% stock dividend effective at the close of
business on July 15, 2007.

"Strong orders and sales continued throughout the first quarter," said Allen Carlson, Sun's CEO and president. "All geographic areas were active with first quarter sales to North America increasing 11%, Europe 20% and Asia/Pacific 41%. This is now the 20th consecutive quarter of double-digit sales growth and 18th consecutive quarter of double-digit earnings growth. Dating back to 1972, Sun is proud to have sustained a compound annual growth rate of 23%. As we move forward, we will continue to focus on customer service and bringing new products to market."

Continuing, Carlson talked about the positive reaction to Sun products at the recently concluded International Fluid Power Exposition in Las Vegas. "As we had expected, all of our new products were well received by our customers. There was a high level of interest, especially in electrically actuated cartridges and integrated packages."

Commenting on the important role Sun employees play, Dr. Ferdi Megerlin, Sun's Chairman of the Board, said, "Sun's employees are fundamental to our success. Historically, employees have been rewarded via employer contributions to a 401(k) plan and an Employee Stock Ownership Plan (ESOP). Most recently, at the end of 2007, Sun contributed $1.5 million to the ESOP in the form of newly issued shares of Sun stock."

Introducing the new shared distribution dividend, Dr. Megerlin explained, "Sun's Board of Directors acknowledged that, to maintain the Company's momentum, it is important for its employees to continue to perform at the highest level and that it is desirable for Sun employees and Sun shareholders to share further in the benefits resulting from Sun's ongoing growth and profitability. Therefore, the Board has elected to make an additional $0.75 million contribution to the Employee Stock Ownership Plan (ESOP) and concurrently pay a discretionary cash dividend of $0.09 per share to shareholders. Combined, the shared distribution is the equivalent of $2.25 million."

"In the future, the Board of Directors may consider a shared distribution on an annual basis, taking into account Sun's financial performance, strategic opportunities, debt position, known future cash requirements and current and future liabilities," Dr. Megerlin continued. "Additionally, management will continue to explore methods that would allow non-U.S. employees to participate in the shared distributions. A decision in this regard is expected by year end."

Commenting on the shared distribution, Allen Carlson said, "This action is consistent with Sun's culture of rewarding and sharing with those who participate in and contribute to our success. We are proud to implement this ground-breaking method of uniting together employees and shareholders in pursuit of Sun's on-going success."

The special $0.09 per share dividend is payable on May 30, 2008, to shareholders of record as of May 15, 2008. The $0.75 million contribution to the ESOP, to be made on May 30, 2008; had an impact of approximately $0.03/share on first quarter earnings, which was partially offset by proceeds for an insurance claim equal to approximately $0.01/per share.

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 .

Outlook

2008 second quarter sales are estimated to be approximately $51 million, an 18% increase over last year. Second quarter earnings per share are estimated to be between $0.50 and $0.52 per share, compared to $0.36 per share last year.

Webcast

Sun Hydraulics Corporation will broadcast its 2008 first quarter financial results conference call live over the Internet at 2:30 P.M. E.T. tomorrow, May 7, 2008. To listen to the webcast, go to http://investor.sunhydraulics.com/medialist.cfm .

Webcast Q&A

If an individual wishes to ask questions directly during the webcast, the conference call may be accessed by dialing 1-877-407-8033. Questions also may be submitted to the Company via email 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. A copy of this earnings release is posted on the Investor Relations page of our website under "Press Releases."