Sypris Solutions, Inc. Annual Report 2006

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FY2006 Annual Report · Sypris Solutions, Inc.

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planning for the future

2322 06

one step at a time

2006 Annual Report

Revenue
(in millions)

Revenue Per Employee
(USA) (in thousands)

Earnings Per
Diluted Share

3
2
5
$

8
9
4
$

5
2
4
$

3
7
2
$

7
7
2
$

6
0
2
$

8
9
1
$

0
9
1
$

5
8
1
$

7
7
1
$

4
8
.
0
$

6
5
.
0
$

7
4
.
0
$

9
2
.
0
$

)
8
0
.
0
(
$

02 03 04 05 06

Modified Working Capital(*)
(in millions)

Free Cash Flow(*)
(in millions)

Net Debt / Total
Capital Percentage(*)

6
3
1
$

0
0
1
$

3
7
$

2
7
$

2
4
$

6
3
$

5
$

)
3
8
(
$

)
6
(
$

%
3
3

%
3
2

%
4
2

%
5
1

%
1
1

02 03 04 05 06

* Reconciliation of non-GAAP financial measures is available in the financial summary on page 7.

Sypris Solutions is a diversified provider of technology-based outsourced services and
specialty products. We perform a wide range of manufacturing and technical services,
typically under multi-year, sole-source contracts with corporations and government
agencies in the markets for aerospace & defense electronics, truck components &
assemblies, and test & measurement services.

DEAR FELLOW SHARE OWNERS:

The year 2006 certainly was a challenge, with both our
Industrial and Electronics groups negatively impacted by
a variety of issues. Cash flow generation reached record
levels, however, while sales and profitability fell short
of expectations.

Despite the mixed headlines, 2006 provided many bright
spots and improvements and we are optimistic about the
future. Demand for our products and services remains
strong. Individual business units, such as our Tube Turns
division and our Calibration Services division, experienced
considerable success, while our international operations
were expanded at a rapid rate.

We continued to invest in the future through the addition
of new products, market segments and managerial talent.
When confronted with specific issues, the organization
moved aggressively to resolve the problems, learn from
the experiences and improve operational execution,
thereby benefiting our customers as well as the business.

As we look forward, our Industrial Group will utilize
the anticipated down market for commercial vehicle
production in 2007 to reposition its operations for
success throughout future business cycles. We expect
our Aerospace & Defense segment to benefit from the
much anticipated full production of two new classified
programs. And finally, we are pleased to note that our Test
& Measurement segment enters 2007 with a strong backlog
that should position it for continued growth at a rate that

is in excess of the industry average.

FINANCIAL RESULTS

Revenue for the year declined 5.0% to $498 million from
$523 million in 2005. Planned shipments in our Electronics
Group were impacted by a delay in the full production
of two new classified programs, pushing past year end
and resulting in an 18% revenue decline. Revenue from
our Industrial Group increased 1.0% from the prior year
and reflected the combination of a record demand for
commercial vehicles and a large decline in SUV and
light truck production in the face of higher fuel prices
during 2006.

The Company reported a net loss for the year of $1.4
million, or $0.08 per fully diluted share, driven by the
volume decline in our Electronics Group and the significant
operating inefficiencies experienced in our Industrial
Group that were the result of operating in excess of
capacity during most of the year.

The Company also incurred significant expense increases
in the areas of stock options and advisory fees as a result
of the implementation of new accounting rules and the
bankruptcy of a key customer, respectively.

Cash flow generation — the ultimate measure of value —
hit record levels during the year, with free cash flow up
17% to $42 million, demonstrating the results from our
working capital initiatives. Our drive for asset efficiency
resulted in a 27% working capital reduction, with turns
increasing 33% to 6.9 times for the year. The generation of
record free cash flow also benefited from the reduction of
capital investment during 2006 from that of prior years as
the investment cycle came to a conclusion.

OUR INITIATIVES

In last year’s report, we outlined a number of key
initiatives to drive change throughout our business.
And while we are pleased to inform you that much
progress was made during the year, it is important to note
that much work remains and the experience to date has
only deepened our commitment and resolve. Please join
us for a brief review of these efforts.

Operational Excellence

Driving excellence in everything we do has always been
important at Sypris. Our Operational Excellence initiative
continues that legacy by putting into action tools and
techniques to improve key operating performance metrics,
such as efficiency and material yield.

The LEAN, Continuous Improvement, Six Sigma, and Total
Productive Maintenance techniques we are deploying are
focused on eliminating all sources of waste, reducing costs
and improving delivery and quality — unlocking the margin
potential and increasing the effective capacity of our value
streams. Setup times, equipment downtime, material
handling, material yields, product defects, late deliveries
and safety incidents are all being targeted throughout our
operations as we move beyond isolated pilots to a wider
deployment across the business.

During 2006, we created a comprehensive plan and
initiated a three-year restructuring program in our
Industrial Group that will transition the current
manufacturing footprint to a Center of Excellence
model, with component manufacturing standardized and
manufacturing flows reconfigured to reduce manufacturing
and logistics costs. This effort follows the lead of our
major customers and is expected to benefit both Sypris
and its customers.

Organizational Effectiveness

Regardless of the strength of our processes and systems,
our people are the key ingredient to our future success.
During 2006, we continued to increase the organizational
strength of the Company by top grading personnel and
selectively investing in leadership talent, with key roles
filled during the year with proven managerial expertise
from companies such as General Electric, ArvinMeritor,
Benteler Automotive, Lockheed Martin and British
Aerospace, among others.

Sypris Solutions 2006 Annual Report

In 2006, we continued to improve our internal
organizational communication through the expanded use
of our SYPR.InSide web portal and through the launch of
the Sypris Dashboard, which provides managerial personnel
with real time access to critical operational and financial
performance metrics. These efforts help to ensure that
the execution and achievement of commitments remain
critical components of the Sypris culture.

Investing for Growth

We continued to invest in the Company’s product and
service offerings and the processes by which they are
delivered. In our Electronics Group, we have invested in
new secured communication programs over the past few
years that are scheduled to begin full production during
2007. One of these new classified programs represents
the next generation of an existing, highly successful
product family, while the other program will introduce a
completely new product and functionality. Both programs
are expected to be important contributors to the group’s
financial results for years to come.

Our data systems business developed new partnerships
during the year to expand its platform into the
intelligence receiver market, which we believe will
provide the opportunity for this business unit to double
in size over the next three years.

Our Electronics Group invested to accommodate the
unique requirements and certifications of space-related
manufacturing contracts, the result of which led to
key contract wins during the year. If successful, these
programs could increase our Space-related electronic
manufacturing business four-fold within the next
few years.

Our calibration business posted another solid year of
growth during 2006, with revenue increasing 6.5% from
2005. Our success in North America is prompting customers
to request our services globally and we are responding
with partnerships and investments that will provide
geographic growth, increased content and new platforms
for expansion beyond our current customer base.

Redefining our Portfolio

These investments in and resulting growth of our
Electronics Group will also serve to increase the group’s
impact on the financial results of Sypris and reduce the
cyclical influence of the commercial vehicle industry on
the Company’s consolidated financial results.

The further reshaping of our portfolio will be implemented
upon the completion of our customer and product line
profitability analysis that underlies our commitment to
redefine the Industrial Group portfolio. These efforts will
continue to be centered on increasing our higher value-
added, more profitable business, as we prepare for the

return of the commercial vehicle market in 2008. When
combined with a strong energy market to support the
continued growth of our high-pressure closure business,
we expect these portfolio redefinition efforts to yield
significant margin improvements in the future.

Maximizing Cash Flow

The generation of substantial free cash flow continued
during 2006 with the Company delivering $53 million in
operating cash flow and $42 million in free cash flow
during the year. Over the last two years, operating cash
flow has exceeded $125 million, working capital turns
are up 123%, and net debt is down to a recent low of
11% of total capital. These efforts require painstaking
execution and diligence, but free cash flow provides the
funds necessary to reinvest in new products, processes,
technologies, services and facilities to support future
growth and margin expansion.

THE FUTURE

We continue to see a future for Sypris that is bright.
As previously announced, we expect 2007 to be challenging
as we take advantage of the cyclical downturn in the
commercial vehicle market by investing to restructure our
Industrial Group in preparation for the market rebound in
2008 and beyond. We will also continue to invest in our
Electronics Group to support double-digit organic growth
and a further rebalancing of the overall Sypris portfolio.
Collectively, we are confident that these initiatives
represent strategies that will transform our business model
and guide us to improved operational and financial results.

THANK YOU

As always, we close with notes of thanks. We appreciate
the dedication and commitment of our fellow employees,
many of whom are also share owners. We count on their
passion for excellence in all that they do to help Sypris
grow and to achieve ever higher levels of success.

We also want to thank our customers and investors, who
place their trust in Sypris and count on us to deliver. We
sincerely appreciate your confidence and encourage you
to contact us. We welcome your comments and would be
pleased to answer your questions.

Sincerely,

Jeffrey T. Gill
President & CEO

Robert E. Gill
Chairman of the Board

Sypris Solutions 2006 Annual Report

We invite you to walk through a
few of the steps we are taking to
pave the way for future growth.

1.
operational
excellence

2.
organizational
effectiveness

We are migrating to a commodity-management supply chain organization
We are migrating to a commodity-management supply chain organization
structure that will be managed at the corporate level. Under this initiative,
structure that will be managed at the corporate level. Under this initiative,
we will be consolidating and where practical, standardizing the speciﬁ cations
we will be consolidating and where practical, standardizing the speciﬁ cations
of our buy to generate savings. We are also implementing a functional approach
of our buy to generate savings. We are also implementing a functional approach
to our Information Systems to reduce the cost-to-serve for this important
to our Information Systems to reduce the cost-to-serve for this important
component of our infrastructure.
component of our infrastructure.

3.
investing
for growth

A number of initiatives are under way to drive Sypris toward operational
excellence. We are developing an integrated sales forecasting, production
planning and inventory-management process throughout our organization.
We are deploying LEAN, Continuous Improvement and Total Productive
Maintenance to enhance efﬁ ciency, cost reduction, quality and delivery
performance. As part of a longer-term strategic initiative, our Industrial
Group is launching a multi-year restructuring to transition to a Center of
Excellence model.

We are continuing to invest in growth initiatives for our business, particularly
for the Electronics Group. During 2007, we will be launching full production of
two new secure communications products and will continue to invest in research
and development activities to meet our customers’ needs. We are pursuing new
opportunities to gain entry into the intelligence receiver market and to grow our
volume in the Space market through turnkey solutions designed in cooperation
with our customers. We are looking to expand into international markets to
maintain the growth momentum of our calibration business.

4.
redefining
our portfolio

We expect to achieve double-digit growth in our Electronics Group in 2007 and further expect
to sustain that level of growth in subsequent years. Our customer requirements are projected
to increase and we are making the investments in research and development as well as market
presence to meet these needs.

Our Industrial Group is facing challenges arising from a temporary market decline in 2007 and
we will use the coming year as an opportunity to rationalize our business by investing in our
higher value-added business areas.

5.
maximizing
cash flow

We have been successful in improving cash ﬂ ow by changing our culture with respect to cash
management, including the implementation of “quick response” mechanisms utilizing real-time
operational dashboard data to improve cash management. We are broadening these actions to
new areas of the cash-conversion cycle, including the implementation of business-to-business
e-commerce solutions for efﬁ ciency and cash management. Our goal is to achieve and sustain
working capital turns of eight to ten times.

FINANCIAL SUMMARY

(In thousands, except per share data)

2006(1)

2005

2004(2)(3)

2003(3)

2002

Years ended December 31,

Consolidated Statement of Operations Data:
Net revenue
Gross profit
Operating (loss) income
Net (loss) income
(Loss) earnings per common share:
Basic
Diluted
Cash dividends per common share

$ 497,664
41,090
(135)
(1,362)

$ 522,766
51,338
12,222
$ 5,321

$ 425,402
53,439
13,898
8,299

$ 276,605
45,945
14,874
8,091

$ 273,477
49,541
18,976
11,453

$
$
$

$
(0.08)
$
(0.08)
0.12 $

0.30
0.29
0.12

$
$
$

0.48
0.47
0.12

$
$
$

0.57
0.56
0.12

$
$
$

0.87
0.84
0.06

(In thousands)

2006(1)

2005

2004(2)(3)

2003(3)

2002

December 31,

Consolidated Balance Sheet Data:
Cash and cash equivalents
Working capital
Total assets
Long-term debt, net of current portion
Total stockholders’ equity

$ 32,400
100,717
379,033
55,000
209,886

$ 12,060
111,765
417,624
80,000
213,734

$ 14,060
143,123
431,178
110,000
208,939

$ 12,019
81,456
264,435
53,000
145,392

12,403
78,600
224,612
30,000
137,690

(1) Effective January 1, 2006, we adopted Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment” under

the modiﬁ ed prospective method. We also adopted SFAS No. 158, “Employers’ Accounting for Deﬁ ned Beneﬁ t Pension and Other
Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R).” See Note 1 of our consolidated ﬁ nancial
statements.

(2) On May 3, 2004 and June 30, 2004, respectively, we completed the acquisition of the net assets of ArvinMeritor’s Kenton, Ohio facility
and Dana’s Toluca, Mexico facility and their results of operations and related purchased assets are included from those dates forward.

(3) On December 31, 2003, we completed the acquisition of the net assets of Dana’s Morganton, North Carolina facility and its results of

operations and related purchased assets are included from that date forward.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands)

2006(1)

2005

2004(2)(3)

2003(3)

2002

December 31,

Modified working capital:
Working capital
Less: Cash & cash equivalents
Less: Restricted cash
Plus: Current portion of long term debt

Modified working capital

Net debt to total capital percentage:
Net debt:

Long-term debt
Current portion of long-term debt
less: Cash and cash equivalents
less: Restricted cash

Net debt

Capital:

Total stockholders’ equity
Net debt
Total capital

Net debt to total capital %

$ 100,717
32,400
1,002
5,000
$ 72,315

$ 111,765
12,060
-
-
$ 99,705

$ 143,123
14,060
-
7,000
$ 136,063

$ 81,456
12,019
-
3,200
$ 72,637

$ 55,000
5,000
32,400
1,002
26,598

$ 80,000
-
12,060
-
67,940

$ 110,000
7,000
14,060
-
102,940

$ 53,000
3,200
12,019
-
44,181

78,600
12,403
-
7,000
73,197

30,000
7,000
12,403
-
24,597

209,886
26,598
$ 236,484
11.2%

213,734
67,940
$ 281,674
24.1%

208,939
102,940
$ 311,879
33.0%

145,392
44,181
$ 189,573
23.3%

137,690
24,597
$ 162,287
15.2%

(In thousands)

2006(1)

2005

2004(2)(3)

2003(3)

2002

Years ended December 31,

Free Cash Flow:
Net cash provided by (used in)

operating activities
Less: Capital expenditures

Free cash flow

$ 52,806
10,326
$ 42,480

$ 72,588
36,264
$ 36,324

$ (27,410)
55,900
$ (83,310)

$ 27,275
22,521
4,754

13,601
19,747
(6,146)

Sypris At A Glance

Market-Focused Businesses

Business Summary

Applications and Uses

Select Customers

Truck Components
and Assemblies

Manufacturing Services

Automated forging, machining, induction
hardening, cold extrusion, heat-treating,
testing and fabrication of products,
production tooling and prototypes.

Axle shafts, steer axles, trailer axle beams, carriers,
full-float tubes, ring gears, pinions, knuckles, input
shafts, helical gears, housings and other drive train
components for use in light, medium and heavy-duty
trucks, pickup trucks and automobiles.

ArvinMeritor, Axle Alliance, Dana, DaimlerChrysler
and Ford Motor Co.

Products

High-pressure closures, transition joints
and insulated joints.

Pipeline and chemical systems in the energy and
chemical industries.

Chevron, ExxonMobil and Shell Oil.

Aerospace and Defense
Electronics

Manufacturing Services

Engineering Services

Products

Test and
Measurement Services

Calibration and Repair

Testing

Products

Integrated design and engineering
services, component selection, sourcing
and procurement, automated assembly,
design and implementation of product
testing, systems assembly, and repair and
warranty services.

Software design services for data and
communications security products and
contract design services, network security
vulnerability assessment, design and
certification.

Network encryption and secure key
loading devices, communication
intelligence receivers, real-time
networkcentric analog and digital data
acquisition and storage systems.

Calibration, repair and certification
of electrical, electronic, physical and
dimensional test equipment. Installation,
execution and turn-key management of
customer “Permanent On-Site” Calibration
Programs.

Testing of digital, linear, discrete, passive
and hybrid components, RF device testing,
EMI testing, environmental testing, dynamics
testing, NEMA Traffic Systems testing and
transportation testing on packaging, products,
systems and subassemblies.

Hall generators, current sensors, autoprobes
and gaussmeters.

Electronic assemblies and subsystems for use in
military cockpit control and display systems, missile
guidance systems, commercial avionics, satellite
communications systems, ruggedized hand-held
computers, and secure communications networks
and products.

Boeing, Eaton, General Dynamics, Honeywell,
L3, Lockheed Martin, U.S. Department of Defense,
Northrop Grumman, Raytheon, U.S. Army and ViaSat.

Secured transmission of voice and data for
intelligence and surveillance applications.

General Services Administration, U.S. Department
of Defense and U.S. Army.

Network and communications security, collection and
storage of data for aerospace applications, weapons
test and evaluation, and acquisition of signal data
from targets of interest for the intelligence
gathering community.

General Dynamics, Government of Israel,
Johnson Space Center, Lockheed Martin, NASA,
U.S. Department of Defense, Northrop Grumman,
Raytheon, Titan Corporation, TRW, U.S. Air Force,
U.S. Army and U.S. Navy.

Telecommunications systems, air traffic control
systems, electronic component manufacturing,
automotive, process control, weather radar systems,
aerospace and defense, medical device manufacturing
and power generation and distribution.

Military, aerospace, satellite and launch
systems, missile systems, avionics, medical,
telecommunications semiconductor manufacturing,
automotive and transportation.

Current measurement applications in mass transit
systems, elevators, automotive diagnostic systems
and laboratory diagnostic systems. Magnetic
measurement of components used in military,
aerospace and medical applications, and for
research and development and quality control.

AT&T, Bombardier, Bose, Delphi Automotive, Eaton,
FAA, General Dynamics, Hamilton Sundstrand,
Honeywell, ITT, Kodak, Lucent Technologies,
Motorola, National Weather Service, Nokia, Siemens,
Square D, Texas Instruments, Tyco Electronics,
TRW Automotive and Underwriters Laboratories

Arrow Electronics, Avnet, BAE Systems, Boeing,
Bose, Eldec, General Dynamics, GE Infrastructure
Security, Goodrich, Hamilton Sundstrand, Harris,
Honeywell, iRobot, Jabil Circuit, JPL, L-3, Lockheed
Martin, Merrimac Industries, NASA, Northrop
Grumman, Raytheon, Reckitt Benckiser, Sawtek,
Suntron and Teledyne

Electro-Motive Diesel, Hamilton Sundstrand,
Ithaco, Lockheed Martin, Science and Engineering
Services and Toyo

Sypris Solutions 2006 Annual Report

EXECUTIVE OFFICERS

BOARD OF DIRECTORS

T. SCOTT HATTON
Vice President and CFO

JOHN R. MCGEENEY
General Counsel
and Secretary

RICHARD L. DAVIS
Senior Vice President

ANTHONY C. ALLEN
Vice President, Treasurer
and Assistant Secretary

ROBERT E. GILL (1†) (5)
Chairman of the Board

SIDNEY R. PETERSEN (1) (3†)
Retired Chairman & CEO
Getty Oil, Inc.

JOHN F. BRINKLEY (2) (4)
Retired General Manager
North American Automotive
Operations Export Sales
Ford Motor Company

JEFFREY T. GILL (1) (5)
President & CEO

JOHN M. KRAMER
Group Vice President,
Sypris Solutions, and
President, Sypris
Technologies

ROBERT B. SANDERS
Group Vice President and
President, Sypris Electronics

KATHY SMITH BOYD
Vice President, Sypris
Solutions, and President,
Sypris Test & Measurement

G. DARRELL ROBERTSON
Vice President, Sypris
Solutions, and President,
Sypris Data Systems

WILLIAM G. FERKO (3) (4†)
Vice President & CFO
Genlyte Group, Inc.

R. SCOTT GILL (1)
Managing Member
Astor & Longwood, LLC

WILLIAM L. HEALEY (2) (4)
Private Investor & Consultant

ROBERT SROKA (2†) (3)
Managing Director
Corporate Solutions Group

Sypris Solutions 2006 Annual Report

(1) Member of Executive Committee

(2) Member of Compensation Committee

(3) Member of Audit and Finance Committee

(4) Member of Nominating and
Governance Committee

(5) Executive Officer

† Committee Chairman

COMPANY LOCATIONS

INVESTOR INFORMATION

ALABAMA
Sypris Data Systems
3322 S. Memorial Parkway
Suite 505
Huntsville, AL 35801
Phone: (256) 881-2231

ARIZONA
Sypris Test & Measurement
2320 West Peoria Avenue
Building D-133
Phoenix, AZ 85029
Phone: (602) 395-5900

CALIFORNIA
Sypris Data Systems
Subsidiary Headquarters
160 E. Via Verde
San Dimas, CA 91773
Phone: (909) 962-9400

Sypris Test & Measurement
16340 Roscoe Boulevard
Suite 100
Van Nuys, CA 91406
Phone: (818) 830-9111

Sypris Test & Measurement
615 N. Mary Avenue
Sunnyvale, CA 94085
Phone: (408) 720-0006

COLORADO
Sypris Data Systems
7307 S. Revere Parkway
Centennial, CO 80112
Phone: (303) 773-4700

Sypris Test & Measurement
8020 Southpark Circle
Suite 300
Littleton, CO 80120
Phone: (303) 798-2243

FLORIDA
Sypris Test & Measurement
Subsidiary Headquarters
6120 Hanging Moss Road
Orlando, FL 32807
Phone: (407) 678-6900

Sypris Electronics
Subsidiary Headquarters
10901 North McKinley Drive
Tampa, FL 33612
Phone: (813) 972-6000

Sypris Data Systems
2460 N. Courtney Parkway
Suite 107
Merritt Island, FL 32953
Phone: (321) 449-9243

GEORGIA
Sypris Test & Measurement
1000 Cobb Place Boulevard
Building 200, Suite 240
Kennesaw, GA 30144
Phone: (770) 795-8092

ILLINOIS
Sypris Test & Measurement
2055 Army Trail Road
Suite 108
Addison, IL 60101
Phone: (630) 620-5800

KENTUCKY
Sypris Solutions
Corporate Headquarters
101 Bullitt Lane
Suite 450
Louisville, KY 40222
Phone: (502) 329-2000

Sypris Technologies
Subsidiary Headquarters
101 Bullitt Lane
Suite 205
Louisville, KY 40222
Phone: (502) 420-1222

Sypris Technologies
2820 West Broadway
Louisville, KY 40211
Phone: (502) 774-6011

Sypris Technologies
Tube Turns Division
2612 Howard Street
Louisville, KY 40211
Phone: (502) 774-6011

MARYLAND
Sypris Data Systems
9020 Junction Drive
Suite 3
Annapolis Junction, MD 20701
Phone: (301) 470-0110

Sypris Electronics
9020 Junction Drive
Suite 3
Annapolis Junction, MD 20701
Phone: (301) 490-4397

MASSACHUSETTS
Sypris Test & Measurement
53 Second Avenue
Burlington, MA 01803
Phone: (781) 272-9050

Sypris Test & Measurement
7 Sterling Road
North Billerica, MA 01862
Phone: (978) 663-2137

MICHIGAN
Sypris Test & Measurement
24301 Catherine Industrial Road
Suite 116
Novi, MI 48375
Phone: (248) 305-5200

NEW JERSEY
Sypris Test & Measurement
2500 Main Street Extension
Suite 2
Sayreville, NJ 08872
Phone: (732) 721-6116

Sypris Test & Measurement
1133 Route 23 South
Wayne, NJ 07470
Phone: (973) 628-1363

NEW YORK
Sypris Test & Measurement
135 Calkins Road
Suite R
Rochester, NY 14623
Phone: (585) 334-6570

NORTH CAROLINA
Sypris Technologies
105 Wamsutta Mill Road
Morganton, NC 28655
Phone: (828) 433-4600

OHIO
Sypris Technologies
13267 State Route 68 South
Kenton, OH 43326
Phone: (419) 674-4051

Sypris Technologies
1550 Marion Agosta Road
Marion, OH 43302
Phone: (740) 383-2111

Sypris Test & Measurement
950 Keynote Circle
Brooklyn Heights, OH 44131
Phone: (216) 741-7040

Sypris Test & Measurement
3148 Presidential Drive
Fairborn, OH 45324
Phone: (937) 427-3444

TEXAS
Sypris Test & Measurement
254 East Arapaho Road
Suite 101
Richardson, TX 75081
Phone: (972) 231-4443

Sypris Data Systems
8500 Dyer Street
Suite 65
El Paso, TX 79904
Phone: (915) 757-2547

MEXICO
Sypris Technologies
Alberto Einstein No. 401
Zona Industrial
Toluca, Mexico C.P. 50071
Phone: (52) (722) 279-3906

Sypris Solutions 2006 Annual Report

CORPORATE ADDRESS
Sypris Solutions, Inc.
101 Bullitt Lane
Suite 450
Louisville, KY 40222
Phone: (502) 329-2000
Fax: (502) 329-2050

ANNUAL MEETING
The Annual Meeting of Stockholders will be
held on Tuesday, April 24, 2007, at 10:00 a.m.
at 101 Bullitt Lane, Lower Level Seminar
Room, Louisville, Kentucky.

FOR MORE INFORMATION
To learn more about Sypris Solutions, Inc.,
visit our site on the World Wide Web at
www.sypris.com.

INVESTOR MATERIALS
The Sypris web page – www.sypris.com –
is your entry point for a vast array of information
about Sypris, including its products, financial
information, real-time stock quotes, links to each
of its subsidiary operations, corporate governance
information and other useful information.

For investor information, including
additional annual reports, 10-Ks, 10-Qs or
any other financial literature, please contact
Lynn W. Boon, Corporate Services Manager,
101 Bullitt Lane, Suite 450, Louisville, KY 40222.

SYPRIS ON NASDAQ
The common stock of Sypris
trades on the NASDAQ Global
Market under the symbol SYPR.

TRANSFER AGENT
LaSalle Bank N.A.
135 South LaSalle Street
Suite 1946
Chicago, IL 60603
Phone: (800) 246-5761
Fax: (312) 904-7024

INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Ernst & Young LLP
400 West Market Street
Suite 2100
Louisville, KY 40202
Phone: (502) 585-1400
Fax: (502) 584-4221

CORPORATE COUNSEL
Wyatt, Tarrant & Combs, LLP
500 West Jefferson Street
Suite 2800
Louisville, KY 40202
Phone: (502) 589-5235
Fax: (502) 589-0309

Our 2006 Form 10-K, which accompanies this document, is incorporated herein as an integral part of our
2006 Annual Report.

Forward-Looking Statements
This report includes non-historical or “forward-looking” statements concerning future events or conditions.
Important risk factors, which could cause actual results to differ materially from these statements, are set
forth in Item 1A. Risk Factors in the accompanying Form 10-K.

101 Bullitt Lane, Suite 450
Louisville, Kentucky 40222
Phone (502) 329-2000
Fax (502) 329-2050
www.sypris.com