<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
------ Exchange Act of 1934. For the quarterly period ended March 28, 1999.
or
------ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the transition period from
_________________ to ________________.
Commission file number: 0-24020
SYPRIS SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 61-1321992
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
455 South Fourth Street
Louisville, Kentucky 40202
(Address of principal executive offices, including zip code)
(502) 585-5544
(Registrant's telephone number, including area code)
--------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
As of April 16, 1999 the Registrant had 9,459,584 shares of Common Stock
outstanding.
<PAGE>
INDEX
<TABLE>
<CAPTION>
<S> <C> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Operations for the Three
Months Ended March 28, 1999 and March 29, 1998 .............2
Consolidated Balance Sheets at March 28, 1999 and
December 31, 1998 ..........................................3
Consolidated Statements of Cash Flows for the Three
Months Ended March 28, 1999 and March 29, 1998 .............4
Notes to Consolidated Financial Statements ..................5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ........................8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K ...........................12
Signatures ...................................................................13
</TABLE>
1
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
Sypris Solutions, Inc.
Consolidated Statements of Operations
(in thousands, except for per share data)
<TABLE>
<CAPTION>
Three Months Ended
---------------------
March 28, March 29,
1999 1998
--------- ---------
(Unaudited)
<S> <C> <C>
Net revenue......................................... $44,898 $55,490
Cost of sales....................................... 35,178 44,578
------- -------
Gross profit...................................... 9,720 10,912
Selling, general and administrative expense......... 5,442 7,160
Research and development............................ 1,603 1,506
Amortization of intangible assets................... 243 153
------- -------
Operating income.................................. 2,432 2,093
Interest expense, net............................... 298 460
Other income, net................................... (105) (127)
------- -------
Income before income taxes.......................... 2,239 1,760
Income tax expense.................................. 706 699
------- -------
Net income.......................................... $ 1,533 $ 1,061
======= =======
Net income per common share:
Basic............................................. $ 0.16 $ 0.11
Diluted........................................... $ 0.16 $ 0.11
Shares used in computing per common share amounts:
Basic............................................. 9,452 9,424
Diluted........................................... 9,763 9,826
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE>
Sypris Solutions, Inc.
Consolidated Balance Sheets
(in thousands, except for share data)
<TABLE>
<CAPTION>
March 28, December 31,
1999 1998
--------- ------------
(Unaudited)
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents........................... $ 10,743 $ 12,387
Accounts receivable, net............................ 25,737 26,283
Inventory, net...................................... 41,950 38,465
Other current assets................................ 1,452 1,724
-------- --------
Total current assets............................... 79,882 78,859
Property, plant and equipment, net................... 28,059 27,535
Intangible assets, net............................... 11,822 12,075
Other assets......................................... 2,655 2,650
-------- --------
$122,418 $121,119
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable.................................... $ 13,435 $ 13,004
Accrued liabilities................................. 21,952 23,651
Current portion of long-term debt................... 11,658 10,083
-------- --------
Total current liabilities.......................... 47,045 46,738
Long-term debt....................................... 18,500 18,500
Other liabilities.................................... 5,957 6,522
-------- --------
Total liabilities.................................. 71,502 71,760
Shareholders' equity:
Preferred stock, no par value, 1,000,000 shares
authorized; no shares issued....................... -- --
Common stock, non-voting, par value $.01 per share,
10,000,000 shares authorized; no shares issued..... -- --
Common stock, par value $.01 per share, 20,000,000
shares authorized; 9,457,584 and 9,450,593 shares
issued and outstanding in 1999 and 1998,
respectively..... ................................. 95 95
Additional paid-in capital.......................... 23,262 23,238
Retained earnings................................... 28,853 27,320
Accumulated other comprehensive income.............. (1,294) (1,294)
-------- --------
Total shareholders' equity......................... 50,916 49,359
-------- --------
$122,418 $121,119
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
Sypris Solutions, Inc.
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
----------------------
March 28, March 29,
1999 1998
--------- ---------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income................................................................................... $ 1,533 $ 1,061
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization.............................................................. 1,811 1,746
Other noncash (credits) charges............................................................ (125) 92
Changes in operating assets and liabilities:
Accounts receivable....................................................................... 710 (1,611)
Inventory................................................................................. (3,698) 3,678
Other current and noncurrent assets....................................................... (284) 159
Accounts payable.......................................................................... 431 (924)
Accrued and other liabilities............................................................. (1,394) (452)
------- -------
Net cash (used in) provided by operating activities...................................... (1,016) 3,749
Cash flows from investing activities:
Capital expenditures......................................................................... (1,893) (383)
Other........................................................................................ (334) (513)
------- -------
Net cash used in investing activities.................................................... (2,227) (896)
Cash flows from financing activities:
Net borrowings (repayments) under revolving credit agreements................................ 1,593 (445)
Principal payments on long-term debt......................................................... (18) (74)
Proceeds from issuance of common stock....................................................... 24 24
------- -------
Net cash provided by (used in) financing activities...................................... 1,599 (495)
------- -------
Net (decrease) increase in cash and cash equivalents.......................................... (1,644) 2,358
Cash and cash equivalents at beginning of period.............................................. 12,387 9,836
------- -------
Cash and cash equivalents at end of period.................................................... $10,743 $12,194
======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
Sypris Solutions, Inc.
Notes to Consolidated Financial Statements
(1) Organization
Sypris Solutions, Inc. ("Sypris" or the "Company") is a Delaware
corporation which was organized in 1997 and began business on March 30, 1998
with the completion of the merger of Group Financial Partners, Inc. ("GFP") and
two of its subsidiaries, Bell Technologies, Inc. ("Bell") and Tube Turns
Technologies, Inc. ("Tube Turns"), with and into Group Technologies Corporation
("GroupTech"), a Nasdaq-traded company in which GFP owned an approximate 80%
interest. Effective immediately thereafter, GroupTech was merged with and into
Sypris, a subsidiary created to accomplish the reincorporation in Delaware. As a
result of these and other transactions (collectively referred to herein as the
"Reorganization"), Sypris became the holding company for Bell, GroupTech, Tube
Turns and Metrum-Datatape, Inc. ("Metrum-Datatape"), a wholly-owned subsidiary
of GFP prior to the Reorganization, and succeeded to the listing of GroupTech on
the Nasdaq Stock Market under the new symbol SYPR. In connection with the
Reorganization, a one-for-four reverse stock split was effected for shareholders
of record as of March 30, 1998. All references in the unaudited consolidated
financial statements to number of shares and per share amounts of the Company's
common stock have been retroactively restated to reflect the decreased number of
shares outstanding.
Sypris is a diversified provider of specialized industrial products and
technical services. The Company's products range from integrated data
acquisition, storage and retrieval systems, magnetic instruments and current
sensors to high pressure closures and other industrial products. The Company's
technical services include a variety of specialized engineering, manufacturing,
testing, calibration and encryption capabilities.
(2) Basis of Presentation
The accompanying unaudited consolidated financial statements include the
accounts of Sypris and its subsidiaries and have been prepared by the Company in
accordance with the rules and regulations of the Securities and Exchange
Commission (the "Commission"). All significant intercompany transactions and
accounts have been eliminated. These unaudited consolidated financial statements
reflect, in the opinion of management, all material adjustments (which include
only normal recurring adjustments) necessary to fairly state the results of
operations, financial position and cash flows for the periods presented, and the
disclosures herein are adequate to make the information presented not
misleading. Preparing financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities, revenue
and expenses. Actual results for the three months ended March 28, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999. These unaudited consolidated financial statements should be
read in conjunction with the consolidated financial statements, and notes
thereto, for the year ended December 31, 1998 as presented in the Company's
annual report on Form 10-K.
The historical financial statements presented in this report for the period
ended March 29, 1998 are the consolidated financial statements of GFP, since GFP
is deemed to be the acquirer from an accounting point of view as a result of the
Reorganization. Certain amounts in the Company's 1998 consolidated financial
statements have been reclassified to conform with the 1999 presentation.
5
<PAGE>
(3) Net Income per Common Share
For the three months ended March 29, 1998, shares used in computing basic
and diluted net income per common share include the outstanding shares of Sypris
common stock as of the date of the Reorganization and the dilution associated
with common stock options issued prior to the Reorganization.
There were no adjustments required to be made to net income for purposes of
computing basic and diluted net income per common share. A reconciliation of the
average number of common shares outstanding used in the calculation of basic and
diluted net income per common share is as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
-----------------------
March 28, March 29,
1999 1998
--------- ---------
(Unaudited)
<S> <C> <C>
Shares used to compute basic net income per common share........................................... 9,452 9,424
Dilutive effect of stock options................................................................... 311 402
------- -------
Shares used to compute diluted net income per common share......................................... 9,763 9,826
======= =======
</TABLE>
(4) Inventory
Inventory consists of the following (in thousands):
<TABLE>
<CAPTION>
March 28, December 31,
1999 1998
----------- ------------
(Unaudited)
<S> <C> <C>
Raw materials...................................................................................... $14,148 $15,697
Work-in-process.................................................................................... 14,597 12,447
Finished Goods..................................................................................... 1,206 2,478
Costs relating to long-term contracts and programs, net of amounts attributed to revenue
recognized to date................................................................................ 19,244 16,700
Progress payments related to long-term contracts and programs...................................... (2,596) (4,224)
LIFO reserve....................................................................................... (609) (609)
Reserve for excess and obsolete inventory.......................................................... (4,040) (4,024)
------- -------
$41,950 $38,465
======= =======
</TABLE>
6
<PAGE>
(5) Segment Data
The Company's operations are conducted in two reportable business segments:
the Electronics Group and the Industrial Group. There was no intersegment net
revenue recognized for all periods presented. The following table presents
financial information for the reportable segments of the Company for the three
months ended March 28, 1999 and March 29, 1998 (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
--------------------------
March 28, March 29,
1999 1998
---------- ---------
(Unaudited)
<S> <C> <C>
Net revenue from unaffiliated customers:
Electronics Group......................... $35,521 $46,886
Industrial Group.......................... 9,377 8,604
------- -------
$44,898 $55,490
======= =======
Gross profit:
Electronics Group......................... $ 7,883 $ 9,473
Industrial Group.......................... 1,837 1,439
------- -------
$ 9,720 $10,912
======= =======
Operating income:
Electronics Group......................... $ 1,816 $ 2,042
Industrial Group.......................... 1,334 992
General, corporate and other.............. (718) (941)
------- -------
$ 2,432 $ 2,093
======= =======
</TABLE>
(6) Commitments and Contingencies
Tube Turns is a co-defendant in two separate lawsuits filed in 1993 and
1994, one pending in federal court and one pending in state district court in
Louisiana, arising out of an explosion in a coker plant owned by Exxon
Corporation located in Baton Rouge, Louisiana. The suits are being defended for
Tube Turns by its insurance carrier, and the Company intends to vigorously
defend its case. The Company believes that a settlement or related judgment
would not result in a material loss to Tube Turns or the Company.
More specifically, according to the complaints, Tube Turns is the alleged
manufacturer of a carbon steel pipe elbow which failed, causing the explosion
which destroyed the coker plant and caused unspecified damages to surrounding
property owners. One of the actions was brought by Exxon and claims damages for
destruction of the plant, which Exxon estimates exceed one hundred million
dollars. In this action, Tube Turns is a co-defendant with the fabricator who
built the pipe line in which the elbow was incorporated and with the general
contractor for the plant. The second action is a class action suit filed on
behalf of the residents living around the plant and claims damages in an amount
as yet undetermined. Exxon is a co-defendant with Tube Turns, the contractor and
the fabricator in this action. In both actions, Tube Turns maintains that the
carbon steel pipe elbow at issue was appropriately marked as carbon steel and
was improperly installed, without the knowledge of Tube Turns, by the fabricator
and general contractor in a part of the plant requiring a chromium steel elbow.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
The following table sets forth certain financial data, expressed as a
percentage of net revenue, from the Company's Consolidated Statements of
Operations for the three months ended March 28, 1999 and March 29, 1998.
<TABLE>
<CAPTION>
Three Months Ended
-------------------
March 28, March 29,
1999 1998
--------- ---------
<S> <C> <C>
Net revenue.................................. 100.0% 100.0%
Cost of sales................................ 78.4 80.3
----- -----
Gross profit................................. 21.6 19.7
Selling, general and administrative expense.. 12.1 12.9
Research and development..................... 3.6 2.7
Amortization of intangible assets............ 0.5 0.3
----- -----
Operating income............................. 5.4% 3.8%
===== =====
Net income................................... 3.4% 1.9%
===== =====
</TABLE>
For reporting purposes, the operations of Bell, GroupTech and Metrum-
Datatape are included in the Electronics Group, and Tube Turns' operations are
included in the Industrial Group. Segment discussion is included in the
following discussion and analysis of the Company's consolidated results of
operations.
Net revenue for the first quarter of 1999 was $44.9 million, a decrease of
$10.6 million, or 19.1%, from $55.5 million for the first quarter of 1998. For
the first quarter of 1999, the Electronics Group experienced a decrease in net
revenue of $11.4 million, while the Industrial Group experienced an increase of
$0.8 million, compared to the year-earlier period. The $11.4 million decrease in
the Electronics Group's net revenue for the first quarter of 1999 was primarily
attributable to reduced volume on manufacturing services contracts. Although
backlog for the Electronics Group, at the beginning of 1999 was up 24.1% to
$95.2 million from the beginning of 1998, the shipment schedules on certain
contracts awarded in the fourth quarter of 1998 are not expected to begin until
the second half of 1999. Product sales for the comparable year-to-year periods
also decreased due to reduced customer demand in the domestic and international
markets. The $0.8 million increase in the Industrial Group's net revenue for the
first quarter of 1999 resulted primarily from an increase in shipments to a
customer based upon their continued commitment to use the Company as its sole
source for truck axles in its North American market. The positive momentum from
the truck axle shipments was partially offset by soft demand for certain
products in Asia and South America, as well as with customers in the oil and gas
industry.
Gross profit for the first quarter of 1999 was $9.7 million, a decrease of
$1.2 million, or 11.0%, compared to $10.9 million for the first quarter of 1998.
The Electronics Group's gross profit for the first quarter of 1999 was $7.9
million, a decrease of $1.6 million, or 16.8%, compared to $9.5 million for the
first quarter of 1998. The $1.6 million decrease in the Electronics Group's
gross profit is primarily attributable to the reduced level of net revenue
described above. The Electronics Group's gross profit percentage increased to
22.2% in the first quarter of 1999 from 20.2% for the comparable period in 1998.
The margin improvement primarily reflects a more favorable revenue mix, as
product sales and technical services accounted for a greater percentage of the
Electronics Group's net revenue in the first quarter of 1999 as compared to
1998. The Industrial Group's gross profit for the first quarter of 1999 was $1.8
million, an increase of $0.4 million, or 27.7%, compared to $1.4 million for the
first quarter of 1998. Cost reductions on certain programs and management
control over manufacturing overhead spending resulted in an improvement in gross
profit percentage to 19.6% in the first quarter of 1999 from 16.7% for the
comparable period in 1998.
Selling, general and administrative expense for the first quarter of 1999
was $5.4 million, a decrease of $1.8 million, or 24.0%, compared to $7.2 million
for the first quarter of 1998. The decrease is primarily comprised of various
expense reductions in the Electronics Group which totaled $1.6 million. Expense
reductions related to the
8
<PAGE>
decrease in net revenue and gross profit include selling, incentive and travel
expense. Workforce reductions and the consolidation of certain functional
activities during 1998 further contributed to the expense reductions. The first
quarter of 1998 also included professional fees and other costs associated with
the Reorganization which were nonrecurring.
Research and development expense for the first quarter of 1999 was $1.6
million, an increase of $0.1 million, or 6.4%, compared to $1.5 million for the
first quarter of 1998. This increase was generated by the Electronics Group, and
reflects management's continued support and investment in the data acquisition,
storage and analysis product lines.
Amortization of intangible assets for the first quarter of 1999 was
$243,000, an increase of $90,000, or 58.8% compared to $153,000 for the first
quarter of 1998. This increase resulted from the amortization of goodwill
recorded in connection with the Reorganization.
Interest expense for the first quarter of 1999 was $0.3 million, a decrease
of $0.2 million, or 35.2%, from $0.5 million for the first three months of 1998.
This decrease is primarily due to a reduction in the weighted average debt
outstanding coupled with a reduction in the Company's overall costs of
borrowing. The reduction in the weighted average debt outstanding resulted
primarily from the utilization of cash flow from operations in the second half
of 1998 to reduce outstanding borrowings. The overall cost of borrowing was
reduced as a result of the decline in the interest rates at which the Company
borrows under its consolidated credit facility.
Income tax expense, on an interim basis, is provided for at the anticipated
effective tax rate for the year.
Liquidity, Capital Resources and Financial Condition
Net cash used by operating activities totaled $1.0 million for the first
quarter of 1999, compared to net cash provided by operating activities of $3.7
million for the comparable period of 1998. During the quarter ended March 28,
1999, the Company's inventory balance increased $3.7 million. Inventory in the
Electronics Group and Industrial Group, increased $2.8 million and $0.9 million,
respectively, during the quarter ended March 28, 1999. These increases were
caused primarily by the acquisition of inventory to satisfy material
requirements for contracts either currently in progress or contracts that are
anticipated to begin in the second quarter of 1999.
Net cash used in investing activities was $2.2 million for the first
quarter of 1999, compared to $0.9 million for the comparable period in 1998.
This change primarily resulted from the increased levels of capital expenditures
in both the Electronics Group and the Industrial Group, which totaled $1.1
million and $0.8 million, respectively. Capital expenditures for the Electronics
Group include information system upgrades and replacements as well as
manufacturing, assembly and test equipment. The Industrial Group's capital
expenditures relate primarily to increasing production capacity in order to
properly meet the expanding needs of its customer base.
Net cash provided by financing activities totaled $1.6 million during the
first quarter of 1999 compared to net cash used in financing activities of $0.5
million during the comparable period of 1998. During the quarter ended March 28,
1999, the Company's net borrowings under its revolving credit facilities
increased approximately $1.6 million in order to fund its operating and
investing needs.
Under the terms of the credit agreement between the Company and its bank,
the Company had total availability for borrowings and letters of credit under
its revolving credit facility of $11.5 million at March 28, 1999. Maximum
borrowings on the revolving credit facility are $30.0 million, subject to a $5.0
million limit for letters of credit.
9
<PAGE>
Impact of Year 2000
Some of the Company's older computer programs were written using two digits
rather than four to define the applicable year. As a result, those computer
programs have time-sensitive software which recognize a date using "00" as the
year 1900 rather than the year 2000. This could cause a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities.
Sypris has implemented a company-wide Year 2000 Project (the "Y2K Project")
to address the Year 2000 issue. The Y2K Project encompasses both information
technology ("IT") and non-IT systems. The Y2K Project is being addressed by
project teams at each of the Company's subsidiaries and by the Company's IT
Committee, which consists of senior members of the IT departments from each
subsidiary.
Beginning in 1998, the Company began a program of reviewing its enterprise
resource planning ("ERP") systems to reduce the number of ERP systems utilized
across its business units and improve overall access to information. During
1998, the Company selected three primary ERP systems and is in the process of
implementing the upgrades or conversions for these new systems. All new ERP
systems are Year 2000 compliant, and the implementations have been completed or
are scheduled for completion at various dates through the third quarter of 1999.
The Company has a contingency plan for the implementation of one ERP system,
which provides for a Year 2000 compliance patch to its current system in the
event an unforeseen problem is encountered during the total system conversion.
The installation of the Year 2000 compliance patch is expected to take place in
the second quarter of 1999.
A detailed assessment of all significant IT systems has been completed. The
project teams are implementing plans to correct problems identified during the
assessment phase of the Y2K Project. The implementation of the new ERP systems
and the related hardware modifications have addressed the majority of the
Company's business systems. The Company has also upgraded or replaced the
majority of its personal computers and standardized its desktop software
applications over the past three years. The Company expects that the testing and
remediation of all IT systems will be complete by the second quarter of 1999.
A detailed assessment of all significant non-IT systems has been completed.
The Company has identified the critical non-IT systems, which includes
microcontroller based systems and other devices with embedded chips used in the
engineering, manufacturing and testing processes and expects to complete the
assessment, testing and remediation on the critical systems by the second
quarter of 1999. Completion of testing and remediation on certain of the lower
priority non-IT systems will continue during the second and third quarters of
1999. The Company is also reviewing telephone, security, HVAC and other facility
related systems and will complete the testing and remediation of these systems
by the second quarter of 1999.
The Company has identified and is communicating with customers, suppliers
and other critical service providers to determine if entities with which the
Company transacts business have an effective plan in place to address the Year
2000 issue, and to determine the extent of the Company's vulnerability to the
failure of first parties to remediate their own Year 2000 issue. The Company is
relying on statements from its service and goods suppliers and is not auditing
suppliers' preparation plans. Risks associated with this approach are being
identified and contingency plans will be developed as needed.
As of March 28, 1999, the Company has spent approximately $300,000 on its
Y2K Project. Additional costs to be incurred in 1999 to correct Year 2000
problems are estimated at approximately $500,000. Such costs do not include
normal system upgrades and replacements. The costs incurred by the Company for
the new ERP systems are considered to be normal system upgrades and replacements
and, therefore, are not included in costs for the Y2K Project. The Company does
not expect the costs relating to Year 2000 remediation to have a material effect
on its results of operations or financial condition.
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the Year 2000 problem, resulting in part from the
uncertainty of the Year 2000 readiness of first-party suppliers and customers,
the Company is unable to determine at this time whether the consequences of Year
2000 failures will have a material impact on
10
<PAGE>
the Company's results of operations, liquidity or financial condition. The Y2K
Project is expected to significantly reduce the Company's level of uncertainty
about the Year 2000 problem and, in particular, about the Year 2000 compliance
and readiness of its material first-party suppliers and customers. The Company
believes that, with the implementation of new ERP systems and completion of the
Y2K Project as scheduled, the possibility of significant interruptions of normal
operations should be reduced.
Forward-looking Statements
This Form 10-Q contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Similar forward looking
statements are made periodically in reports to the Securities and Exchange
Commission, press releases, reports and documents and in written and oral
presentations to investors, shareholders, analysts and others, regarding future
results or expected developments. Words such as "anticipates," "believes,"
"estimates," "expects," "is likely," "predicts," and variations of such words
and similar expressions are intended to identify such forward-looking
statements. Although Sypris believes that its expectations are based on
reasonable assumptions, it cannot assure that the expectations contained in such
statements will be achieved. Such statements involve risks and uncertainties
which may cause actual future activities and results of operations to be
materially different from those suggested in this report, including, among
others: the Company's dependence on its current management; the risks and
uncertainties present in the Company's business; business conditions and growth
in the general economy and the electronics and industrial markets served by the
Company; competitive factors and price pressures; availability of third party
component parts at reasonable prices; inventory risks due to shifts in market
demand and/or price erosion of purchased components; changes in product mix;
cost and yield issues associated with the Company's manufacturing facilities; as
well as other factors described elsewhere in this report and in the Company's
other filings with the Securities and Exchange Commission.
11
<PAGE>
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit
Number Description
------- -----------
27 Financial Data Schedule
- ----------------
(b) Reports on Form 8-K:
The Company filed no reports on Form 8-K during the three months ended
March 28, 1999.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYPRIS SOLUTIONS, INC.
(Registrant)
Date: April 27, 1999 By: /s/ David D. Johnson
-------------- --------------------------
(David D. Johnson)
Vice President & Chief
Financial Officer
Date: April 27, 1999 By: /s/ Anthony C. Allen
-------------- --------------------------
(Anthony C. Allen)
Vice President, Controller
& Chief Accounting Officer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ACCOMPANYING FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-28-1999
<CASH> 10,743
<SECURITIES> 0
<RECEIVABLES> 25,737
<ALLOWANCES> 0
<INVENTORY> 41,950
<CURRENT-ASSETS> 79,882
<PP&E> 28,059
<DEPRECIATION> 0
<TOTAL-ASSETS> 122,418
<CURRENT-LIABILITIES> 47,045
<BONDS> 18,500
0
0
<COMMON> 95
<OTHER-SE> 50,821
<TOTAL-LIABILITY-AND-EQUITY> 122,418
<SALES> 44,898
<TOTAL-REVENUES> 44,898
<CGS> 35,178
<TOTAL-COSTS> 35,178
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (164)
<INTEREST-EXPENSE> 298
<INCOME-PRETAX> 2,239
<INCOME-TAX> 706
<INCOME-CONTINUING> 1,533
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,533
<EPS-PRIMARY> 0.16
<EPS-DILUTED> 0.16
</TABLE>
