Sypris Solutions
Annual Report 2007

Plain-text annual report

2007 Annual Report Position Strategic Repositioning for a Changing World In the dynamic business environment we live in today, it is more vital than ever that we possess a clear vision for Sypris. Understanding our destination allows us to not only implement changes that will position us to be more competitive and grow successfully, but it also provides a sense of purpose and focus in a changing world. The key to successfully navigating these changes is to recognize change that requires a nimble response in order to maintain the course while not overreacting to other sources of change that only serve to distract and threaten to alter that course. We are positioning Sypris to be stronger and more effective. The rebalancing of our portfolio between the Industrial Group and the Electronics Group is a critical part of our focus. These efforts will reduce reliance on a single market or industry by growing our Electronics Group where we experience higher margin opportunity within a higher growth market. The results are already evident as can be seen in the charts to the right. With our commitment to increase R&D funding and expand market opportunities in our calibration and data recorder/receiver markets, we expect by 2010 to achieve a balanced portfolio. We are also charting a course for revenue diversification through globalization of our Industrial Group. We are focusing on commercial truck and trailer market demand beyond North American borders and on other market sectors such as Off-Highway. These efforts will provide important customer and market diversification that will further serve to reduce cyclicality. 2006 Revenue Percentage Industrial Group 73% Electronics Group 27% 2007 Revenue Percentage Industrial Group 64% Electronics Group 36% 2010 Revenue Percentage (Forecasted) Industrial Group 50% Electronics Group 50% Additionally, important efforts are underway to reshape who we do business with and how we meet our customers’ needs. For example, utilizing commercial best practices and understanding our core and non-core product lines assist us in defining business relationships. Whether through generation of more business or rationalization of present arrangements, these efforts will provide opportunities to improve profitability. There’s no discounting the importance of revenue generation, but equally important is the delivery of those revenues to create the greatest return. We’re focusing on understanding how best to provide that service at the lowest cost- to-serve while meeting our customers’ needs. In 2007, our Industrial Group initiated Phase I of a 4-Phase Restructuring Plan to transform that business into a Center of Excellence model that not only lowers the cost-to-serve but also aligns with our customers’ strategic interests, creating synergies for everyone. Regardless of which repositioning effort we are pursuing – whether we are diversifying our customer base or improving our ability to service those customers – we are committed to a single objective – to create sustainable and profitable growth. 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. Improving Processes “ We have strengthened our balance sheet to provide us the flexibility and resources necessary for profitable growth. ” Maximizing Resources T. Scott Hatton, Vice President and CFO, Sypris Solutions Measuring Results “ Expanding our presence into global markets will enhance our ability to provide consistent year-over-year growth and maximize asset utilization. ” Sergio L. M. de Carvalho, President, Sypris Technologies Opportunity i n f o r m i d a t e i a o n s n o i t u c e x e Identifying Tools for Long-Term Success In that same dynamic world that requires repositioning, change can represent opportunity. Having the appropriate tools to realize that opportunity is vital to long-term success. The Sypris toolkit includes six areas of concentration: • Investing in Technology • Developing Talent • Leveraging Sales & Marketing • Standardizing Production Systems • Managing Working Capital • Measuring Performance Our ability to understand where our market trends are moving, and which trends are commercially viable, is critical in determining what technology, either in R&D or equipment, will be relevant. We are capturing this information in technology roadmaps that provide a strategic filter and timeline that will yield future growth. Equally important are investments in our organization. We recognize the importance of upgrading the skills of our workforce, along with the requirement to invest in new talent. Our recently upgraded performance management system allows the integration of talent development activities with focused goals and objectives to ensure we not only recruit top talent but continue to enhance their capabilities to be more effective going forward. With the right products and right people, we leverage our sales and marketing tools to create new business opportunity. The commercial function has increased utilization of pricing tools and strategic filters to determine where we bring the most value to our customers. With revised standard procedures for bid and proposal activities and enhanced market coverage for both the Electronics Group and Industrial Group, we are aligning ourselves to grow faster and at a more profitable rate. With all business, we look to our Sypris Production System to execute the requirements. By implementing LEAN and Six Sigma process improvements and focusing on standard operating procedures that are integrated and automated in critical areas such as scheduling and commodity management, we increase customer satisfaction. The incremental benefit to Sypris is a faster order-to-remittance process, improved profitability and reduced working capital requirements. Timely reporting of comprehensive performance metrics through our real-time Sypris Dashboard provides the reinforcement necessary to confirm our performance is in line with expectations. Being able to react quickly to mitigate the unexpected or to communicate progress to a larger employee population is both instantaneous and cost effective. Utilizing real-time metrics for immediate feedback helps us to understand the effectiveness of our other tools as well, and provides an important opportunity to constantly incorporate new improvements for a changing world. Investing in Technology (R&D as % of Revenue) Managing Working Capital (Days Sales Outstanding) 3-4% 66 2.7% 2.4% 2.3% 52 48 40-45 2005 2006 2007 2010F 2005 2006 2007 2010F informationexecutionideas“ The Tube Turns Division is focusing its efforts on profitable growth through innovative solutions. We are utilizing our history and experience with cutting- edge technology to create reliable engineered products that will surpass our customers’ expectations. ” Leveraging Experience Brett Keener, Plant Manager, Sypris Technologies Focusing Efforts Increasing Knowledge “Leveraging our technical experience is the foundation for Sypris Test & Measurement’s success. In this competitive environment, we increase our value to our customers by investing in innovative solutions and continuous improvement while building on the knowledge and talent of our people. ” Kathy Smith Boyd, President, Sypris Test & Measurement DeaR FeLLO w sHaRe OwneRs: The year 2007 was expected to be a challenge and proved to be just that, with our Industrial Group confronting the effects of a 44% reduction in the production of heavy-duty commercial vehicles. The impact of this significant event was offset somewhat by the successful implementation of improved customer pricing, the advantageous settlement with and execution of a new contract with Dana Corporation, double-digit growth from our Electronics Group and strict cost containment throughout. The many areas of progress were notable and important from the standpoint of understanding the future outlook for the Company. Our Aerospace & Defense segment registered a 19% increase in shipments and posted a 31% growth in orders during 2007, driven primarily by the introduction of a new classified secure communication product for use by the Department of Defense. Our Test & Measurement segment generated 15% top-line growth through the continued expansion of its calibration services operation, while our Aerospace & Defense segment successfully expanded its range of product offerings into the Intelligence Receiver market. As a result, revenue from our Electronics Group increased to 36% of consolidated sales, up from 27% for the prior year. Our Industrial Group continued to benefit from strong product sales to customers in the energy markets and initiated plans to expand its reach globally by increasing its investment in organizational support structure. Our supply chain organization made important progress toward its goal of generating $15 million in annualized savings by the end of 2009, while our program to rebalance production and increase output in our Industrial Group from low-cost countries progressed on schedule with a targeted 2010 completion date. 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 them, learned from the experience and improved its operating execution, thereby benefiting both our customers and the business. In summary, significant progress was made during the downturn, laying the groundwork for a recovery during the second half of 2008 as increasing shipments from our Electronics Group combine with an expected recovery in demand for the production of commercial vehicles. The wind down of program- launch support costs, improved product mix and double- digit increases in volume are expected to drive an important expansion in margins in our Electronics Group, thereby leading to an increasingly positive outlook for this important segment of our business. FinanCiaL ResULts Revenue for the year declined 12.4% to $436 million from $498 million in 2006, but would have fallen further had it not been for the positive year-over-year performance of our Electronics Group. Shipments in our Electronics Group increased 17.8%, driven by strong double-digit growth in our Aerospace & Defense and Test & Measurement segments. Revenue from our Industrial Group decreased 23.4% from the prior year, and reflected the cyclical reduction in demand for commercial vehicles and trailers following the institution of new emissions standards at the beginning of 2007. The decline was offset somewhat by improved 8 sypris solutions 2007 Annual Report pricing and additional revenue that resulted during the year from the settlement agreement with Dana. The Company reported a net loss for the year of $2.1 million, or $0.12 per share, driven by the volume decline in our Industrial Group and lower profitability in our Electronics Group despite the double-digit increase in its shipments for the year. The reduced level of profitability for the Electronics Group was impacted by increased support costs for the launch of a new classified program, an unfavorable mix of product sales and the delay in the award of a new government program into the first quarter of 2008. These issues are expected to be reversed during 2008, resulting in a return to historical margins during the year. The Company also incurred significant legal and professional fees associated with the negotiation and settlement of the new Dana agreement during Dana’s bankruptcy case, which served to place an additional drag on the Company’s earnings during 2007. Net cash used in operating activities was $10.5 million in 2007, which reflected the one-time normalization of credit terms under the agreement with Dana, the investment in inventory to support new product programs for our Aerospace & Defense segment and a delay in the timing of receipts owed by several government agencies. Capital expenditures for the year decreased slightly to $10.2 million compared to $10.3 million for the prior year. Despite the challenging year, the Company’s balance sheet remained a source of strength. The investments initiated during 2007 will help to position Sypris to benefit from the expected recovery in the commercial vehicle market and support increased research and development costs for new classified government programs. Dana settLeMent The successful negotiation of a settlement agreement with Dana, which included the execution of a new long-term, sole- source supply agreement through the year 2014, was clearly one of the more important accomplishments of 2007. Dana, which had filed for bankruptcy protection in March 2006, emerged from Chapter 11 on January 31, 2008. The settlement agreement was comprehensive and is expected to have a positive impact on both companies for years to come. Among other things, the companies agreed to exchange and rebalance production between plants to reduce costs for both parties, while Sypris agreed to release Dana from committed but undelivered program volumes. The new, long-term, sole-source supply agreement with Dana provided Sypris with a general unsecured claim in the amount of $89.9 million. This claim was converted into 3.1 million shares of Dana common stock upon Dana’s successful exit from bankruptcy on January 31, 2008. The Company expects to receive additional distributions in the future, including approximately $6 million of cash in March of 2008 and additional shares of equity on a quarterly basis as disputed claims in the bankruptcy are resolved. The benefits of the settlement agreement resulting from the successful reorganization of Dana are many, but perhaps none more important than the elimination of extensive organizational and financial support that was required as we worked with Dana and its suppliers during this very challenging period. We want to thank those individuals, both within and outside of our organization, who worked on our behalf for their unwavering support, dedication and tireless efforts, without which this very positive outcome would not have been possible. key initiatives As reported in prior years, we have dedicated financial and organizational resources to support several key initiatives that are expected to help transform Sypris into a stronger, increasingly successful company. Please join us for a brief review of these efforts. investing in Our electronics Group We continue to invest in the Company’s product and service offerings, and the processes by which they are delivered. In our Aerospace & Defense segment, we have invested in new secure communication programs over the past few years that will begin full production during 2008. 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 our financial results going forward. In our Test & Measurement segment, our calibration business posted another solid year of growth during 2007, with revenue increasing 15% from 2006. 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. As a result of these investments, we expect our Electronics Group to deliver strong double-digit growth in 2008, and to position the Group to continue this trend well into the future. improving Mix These investments in and the 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. During 2007, revenue from the Electronics Group increased to 36% of consolidated revenue from 27% during the prior year. Our objective is to increase this contribution further to 50% or more during the coming years. 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 the rationalization of less desirable business, while increasing our higher value-added, more profitable business, as we prepare for the return of the commercial vehicle market in late 2008 with a better mix of business. When combined with a strong energy market to support the continued growth of our high-pressure closure product sales, we expect these portfolio redefinition efforts to yield significant margin improvements in the future. Rebalancing Production The Dana settlement coincided nicely with our plans to rebalance production in our Industrial Group between plants based upon a Centers of Excellence approach, the result of which is expected to lead to increased efficiencies and improved operational results. As part of this plan, an increasing amount of production is expected to be shifted to low-cost countries in order to position production closer to our customers’ plants and to reduce our overall cost. We expect output from low-cost countries to increase substantially over the next several years. During 2008, our Industrial Group will initiate plans to establish operations during the coming years in India, China and Eastern Europe, with the primary objective to establish a foothold in these fast-growing markets. We plan to partner with established leaders in these markets to balance risk and preserve capital. Once completed, these investments will have the added benefit of further diversifying the Company’s customer base and reducing its dependency on the North American commercial vehicle market. tHe FUtURe As we look to the future, we expect 2008 to be a year of marked improvement, with continued double-digit growth in our Electronics Group and the commencement of a recovery in our Industrial Group. As a result, we expect the increased volume, improved mix of secure communications product sales and continued advances in productivity to drive margins and earnings as the Company moves out of 2008 and into 2009. Our managerial efforts will continue to focus on the realignment of production in our Industrial Group and the laying of the groundwork for additional growth in our Electronics Group in 2009 and beyond. When completed, we believe the results will be reflected in increased profits, a more attractive balance between industrial and electronics shipments, and reduced customer, market and industry risk. tHank yOU As always, we close with a note 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 evolve into an increasingly successful company. We also want to thank our customers and investors, both of whom place their trust in Sypris and count on us to meet our commitments for quality, delivery and performance. We sincerely appreciate your confidence and encourage you to contact us. We welcome your comments and would be pleased to answer your questions. We believe that Sypris has a very bright future and hope you feel that way as well. Sincerely, Jeffrey T. Gill President & CEO Robert E. Gill Chairman of the Board sypris solutions 2007 Annual Report 9 Revenue (in millions) Revenue Per employee (USA) (in thousands) earnings Per Diluted share 3 2 5 $ 8 9 4 $ 6 3 4 $ 5 2 4 $ 3 1 2 $ 6 0 2 $ 8 9 1 $ 5 8 1 $ 0 9 1 $ 7 7 2 $ . 6 5 0 $ 7 4 0 $ . 9 2 0 $ . ) 8 0 0 ( $ . ) 2 1 0 ( $ . 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 Modified working Capital(*) (in millions) Free Cash Flow(*) (in millions) net Debt / total Capital Percentage(*) * * 2 4 1 $ 6 3 1 $ 0 0 1 $ 3 7 $ 2 7 $ 2 4 $ 6 3 $ % 3 3 % 3 2 % 4 2 % 9 1 % 1 1 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 5 $ ) 3 8 ( $ ) 1 2 ( $ * Reconciliation of non-GAAP financial measures is available in the financial summary on page 11. ** Includes $54 million associated with the Dana settlement. FinanCiaL sUMMaR y (In thousands, except per share data) 2007 2006(1) 2005 2004(2)(3) 2003(3) 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 $ 435,915 39,796 (823) (2,139) $ $ 497,664 41,090 (135) (1,362) $ $ 522,766 51,338 12,222 5,321 $ $ 425,402 53,439 13,898 8,299 $ $ $ $ (0.12) (0.12) 0.12 $ $ $ (0.08) (0.08) 0.12 $ $ $ 0.30 0.29 0.12 $ $ $ 0.48 0.47 0.12 $ $ $ $ $ 276,605 45,945 14,874 8,091 0.57 0.56 0.12 (In thousands) 2007 2006(1) 2005 2004(2)(3) 2003(3) December 31, Consolidated Balance Sheet Data: Cash and cash equivalents Working capital Total assets Long-term debt, net of current portion Total stockholders’ equity $ 14,622 152,441 422,060 60,000 207,479 $ 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 (1) Effective January 1, 2006, we adopted Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment” under the modified prospective method. We also adopted SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R).” See Note 1 of our consolidated financial 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) 2007 2006(1) 2005 2004 (2)(3) 2003(3) 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 % $ 152,441 14,622 883 5,000 $ 141,936 $ 100,717 32,400 1,002 5,000 $ 72,315 $ 111,765 12,060 - - $ 99,705 $ 143,123 14,060 - 7,000 $ 136,063 $ 60,000 5,000 14,622 883 49,495 $ 55,000 5,000 32,400 1,002 26,598 $ 80,000 - 12,060 - 67,940 $ 110,000 7,000 14,060 - 102,940 207,479 49,495 $ 256,974 19.3% 209,886 26,598 $ 236,484 11.2% 213,734 67,940 $ 281,674 24.1% 208,939 102,940 $ 311,879 33.0% Years ended December 31, $ $ $ $ 81,456 12,019 - 3,200 72,637 53,000 3,200 12,019 - 44,181 145,392 44,181 189,573 23.3% (In thousands) 2007 2006(1) 2005 2004 (2)(3) 2003(3) Free Cash Flow: Net cash (used in) provided by operating activities Less: Capital expenditures Free cash flow $ $ (10,504) 10,155 (20,659) $ 52,806 10,326 $ 42,480 $ 72,588 36,264 $ 36,324 $ $ (27,410) 55,900 (83,310) $ $ 27,275 22,521 4,754 10 sypris solutions 2007 Annual Report sypris solutions 2007 Annual Report 11 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. engineered 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 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. 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, Northrop Grumman, Raytheon, U.S. Army, U.S. Department of Defense and ViaSat. Secured transmission of voice and data for intelligence and surveillance applications. U.S. Department of Defense. Products Network encryption and secure key loading devices, communication intelligence receivers, real-time networkcentric analog and digital data acquisition and storage systems. 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, Lockheed Martin, NASA, Northrop Grumman, Raytheon, Titan Corporation, U.S. Air Force, U.S. Army, U.S. Department of Defense and U.S. Navy. Test and Measurement Services Calibration and Repair 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. 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. testing Products 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. Military, aerospace, satellite and launch systems, missile systems, avionics, medical, telecommunications semiconductor manufacturing, automotive and transportation. Hall generators, current sensors, autoprobes and gaussmeters. 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, Draeger, Eaton, FAA, Gambro, Hamilton Sundstrand, Honeywell, ITT, Kodak, Lucent Technologies, Motorola, National Technical Systems, National Weather Service, Nokia, Siemens, Square D, Texas Instruments, Tektronix, Temic Automotive of North America, Tyco Electronics, TRW Automotive and Underwriters Laboratories. Arrow Electronics, Avnet, BAE Systems, Ball Aerospace & Technologies Corp., Boeing, Bose, Celestica, DRS Technologies, Eldec, General Dynamics, Goodrich, Hamilton Sundstrand, Harris, Honeywell, Jabil Circuit, JPL, Killdeer, L-3, Lockheed Martin, Merrimac Industries, NASA, Northrop Grumman, Raytheon, Reckitt Benckiser, Suntron and Teledyne. Carrier Corporation, Electro-Motive Diesel, Hamilton Sundstrand, Ithaco, Lockheed Martin, Science and Engineering Services (U.S. Army), Starsys and Toyo. sypris solutions 2007 Annual Report 13 eXeCUtive OFFiCeRs BO aRD OF DiReC tORs 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 seRGiO L. M. De CaRvaLHO Vice President, Sypris Solutions, and President, Sypris Technologies 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†) CFO, Philips BU Professional Luminaires North America, a manufacturer of lighting fixtures and controls R. sCOtt GiLL (1) Broker Baird & Warner, a residential real estate brokerage firm wiLLiaM L. HeaLey (2) (4) Private Investor & Consultant ROBeRt sROka (2†) (3) Managing Director Corporate Solutions Group, an investment banking firm 14 sypris solutions 2007 Annual Report sypris solutions 2007 Annual Report 15 (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 9840 Owensmouth Avenue Chatsworth, CA 91311 Phone: (818) 717-5060 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 114 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 9515 Gerwig Lane Suite 119 Columbia, MD 21046 Phone: (410) 312-7923 sypris electronics 9020 Junction Drive Suite 3 Annapolis Junction, MD 20701 Phone: (301) 490-4397 MassaCHUsetts 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 Suite 110 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 Industrias quimicas No. 200 Zona Industrial Toluca, Mexico C.P. 50071 Phone: (52) (722) 262-3300 16 sypris solutions 2007 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 22, 2008 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: (888) 606-3971 Fax: (312) 904-7024 inDePenDent ReGisteReD PUBLiC aCCOUntinG FiRM Ernst & Young LLP 400 West Market Street Suite 2400 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 2007 Form 10-K, which accompanies this document, is incorporated herein as an integral part of our 2007 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 

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