-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IkmOagHQhS39gJPd/iHUhtk3DXm3LbF/cjG4YjetFv2cEgm8PqTgOgHul6yJyBad 8SZHojAINJ2k+zyGWPuqVg== 0001157523-06-010358.txt : 20061026 0001157523-06-010358.hdr.sgml : 20061026 20061026065524 ACCESSION NUMBER: 0001157523-06-010358 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20061025 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061026 DATE AS OF CHANGE: 20061026 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYPRIS SOLUTIONS INC CENTRAL INDEX KEY: 0000864240 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 611321992 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-24020 FILM NUMBER: 061164196 BUSINESS ADDRESS: STREET 1: 101 BULLITT LN STREET 2: STE 450 CITY: LOUISVILLE STATE: KY ZIP: 40222 BUSINESS PHONE: 5023292000 MAIL ADDRESS: STREET 1: 101 BULLITT LN STREET 2: STE 450 CITY: LOUISVILLE STATE: KY ZIP: 40222 FORMER COMPANY: FORMER CONFORMED NAME: GROUP TECHNOLOGIES CORP DATE OF NAME CHANGE: 19940314 8-K 1 a5259029.txt SYPRIS SOLUTIONS 8K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): October 26, 2006 ---------------------- Sypris Solutions, Inc. (Exact name of registrant as specified in its charter) Delaware 0-24020 61-1321992 (State or Other Jurisdiction (Commission (I.R.S. Employer of Incorporation) File Number) Identification No.) 101 Bullitt Lane, Suite 450 Louisville, Kentucky 40222 (Address of Principal (Zip Code) Executive Offices) Registrant's telephone number, including area code: (502) 329-2000 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Section 2 - Financial Information Item 2.02 Results of Operations and Financial Condition. On October 26, 2006, Sypris Solutions, Inc. (the "Company") announced its financial results for the third quarter ended September 30, 2006. The full text of the press release is set forth in Exhibit 99 hereto. The information in this Form 8-K and the attached Exhibit is being furnished pursuant to Item 2.02 "Results of Operations and Financial Condition" and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. Section 7 - Regulation FD Item 7.01 Regulation FD Disclosure. On October 26, 2006, Sypris Solutions, Inc. (the "Company") announced its financial results for the third quarter ended September 30, 2006. The full text of the press release is set forth in Exhibit 99 hereto. The information in this Form 8-K and the attached Exhibit is being furnished pursuant to Item 7.01 "Regulation FD Disclosure" and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. Section 9 - Financial Statements and Exhibits Item 9.01 Financial Statements and Exhibits. (d) Exhibits. Exhibit Number Description of Exhibit 99 Press release issued October 26, 2006. 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 hereunto duly authorized. Dated: October 26, 2006 Sypris Solutions, Inc. By: /s/ T. Scott Hatton --------------------------------- T. Scott Hatton Vice President and Chief Financial Officer INDEX TO EXHIBITS Exhibit Number Description - ------------ ----------- 99 Registrant's press release dated October 26, 2006. EX-99 2 a5259029ex99.txt EXHIBIT 99 Exhibit 99 Sypris Reports Third Quarter Results Cash Flow Remains Strong LOUISVILLE, Ky.--(BUSINESS WIRE)--Oct. 26, 2006--Sypris Solutions, Inc. (Nasdaq/NM: SYPR) today reported revenue of $126.0 million for the third quarter compared to $140.8 million for the prior year period. The Company reported a net loss of $0.8 million, or $0.04 per diluted share for the third quarter compared to earnings of $3.0 million, or $0.16 per diluted share for the prior year period. Free cash flow for the third quarter reached $10.7 million. For the nine months ended September 30, 2006, the Company reported revenue of $388.2 million compared to $390.7 million for the prior year period and a net loss of $0.4 million, or $0.02 per diluted share compared to net income of $5.6 million, or $0.30 per diluted share for the same period in 2005. The net loss in the first nine months of 2006 included the impact of adopting SFAS No. 123R, Share-Based Payment, which approximated $0.4 million, net of taxes, or $0.02 per diluted share. Free cash flow for the first nine months of 2006 was $35.3 million. "Our Industrial Group experienced a 39% reduction in orders for component shipments to the Ford Motor Company during the third quarter, the result of which had a material impact on the Company's revenue and margins for the period," said Jeffrey T. Gill, President and Chief Executive Officer. "Unfortunately, the rightsizing of our workforces in each of the plants impacted by the change required much of the quarter to complete, further compressing the group's short-term margins. Inventory corrections by other customers also impacted Industrial Group revenue to a lesser degree during the quarter." Gill continued, "The lower than expected revenue and margins for the quarter were also driven by our Electronics Group, which generated lower sales primarily due to a reduction in the initial rate of production for the launch of a new classified program. The short-term change in schedules was necessitated to incorporate several new important design modifications earlier in the product's life cycle. We now expect to reach full rates of production early in 2007." "Despite these headwinds, the Company continued to generate significant free cash flow. As a result, the Company's balance sheet remains a source of strength, with net debt representing less than 14% of total capital. As we go forward, we will continue to evaluate opportunities to use this strength to improve margins and increase the Company's market share." The Industrial Group Revenue for our Industrial Group was $93.0 million in the third quarter compared to $94.5 million for the prior year period. Gross profit for the quarter decreased to $5.2 million from $7.3 million for the same period in 2005, as a result of higher material losses and labor inefficiency from shifting volumes during the quarter. "The near-term outlook for the production of light trucks and sport utility vehicles remains uncertain at best," said Gill. "We have reduced headcount at each of our plants that have been impacted by the announced changes in production outlook, but our sense is that this market will remain challenging for some time to come. We will continue to aggressively pursue initiatives that will enable the Company to succeed in this increasingly difficult environment." The Electronics Group Revenue for our Electronics Group was $32.9 million in the third quarter compared to $46.3 million for the prior year period. Gross profit for the quarter was $5.1 million compared to $8.3 million for the same period in 2005. The declines in revenue and gross profit reflect a decline in product shipments under certain classified programs with the U.S. Government. Revenue for the Aerospace & Defense segment was $21.1 million compared to $33.9 million for the prior year period, as prior year programs ended and new programs were rescheduled to early 2007. Revenue from the Test & Measurement segment was $11.8 million compared to $12.4 million for the prior year period. Despite strong growth in calibration services, softness in our test services market more than offset calibration gains. Gross profit for the Aerospace & Defense segment was $2.6 million, as compared to $5.4 million for the prior year period reflecting the lower volumes, while gross profit for the Test & Measurement segment was $2.5 million compared to $2.9 million for the same period in 2005, due to the decline in testing services. "Net orders for our Electronics Group approximated $37.7 million for the quarter, while backlog grew 5% sequentially from second quarter to $96.3 million," said Gill. "Despite the short-term delay in the launch of two new classified programs, the outlook remains strong for our A&D segment in 2007 when an additional key classified program is scheduled to resume shipment. As a result, we expect our Electronics Group to resume its top line growth during the coming year." Outlook Gill added, "Looking forward, we believe the balance of 2006 will remain challenging for Sypris as our Industrial Group faces continued softness on lower demand for light-duty trucks and sport utility vehicles, and management continues to absorb the impact of a major customer in bankruptcy. Additionally, our Electronics Group is forecasting lower revenue and earnings for fourth quarter to reflect the rescheduling of production for the new classified programs." Gill added, "Consequently, we are lowering our prior guidance from July 27, 2006 with expected revenue during the fourth quarter of 2006 in the range of $115 to $125 million with a loss for the fourth quarter forecasted to be in the range of $0.9 million to $1.8 million, or $0.05 to $0.10 per diluted share. For the full year 2006, the revenue outlook is expected to be in the range of $503.0 to $513.0 million, while a net loss is now forecast to be in the range of $1.3 million to $2.2 million, or $0.07 to $0.12 per diluted share. We continue to expect free cash flow to remain strong for 2006 and to be at the upper end of our prior guidance of $30.0 to $40.0 million for the year. And consistent with our past practice, we will issue a press release and host a conference call on Thursday, January 11, 2007 to discuss the Company's financial outlook for 2007." Sypris Solutions is a diversified provider of technology-based outsourced services and specialty products. The Company performs a wide range of manufacturing and technical services, typically under multi-year, sole-source contracts with major corporations and government agencies in the markets for aerospace and defense electronics, truck components and assemblies, and test and measurement services. For more information about Sypris Solutions, visit its Web site at www.sypris.com. Each "forward-looking statement" herein is subject to serious risks and should not be relied upon, as detailed in our most recent Form 10-K and Form 10-Q and subsequent SEC filings. Briefly, we currently believe that such risks also include: cost and availability of raw materials such as steel, components, freight, natural gas or utilities; cost and inefficiencies associated with increasing our manufacturing capacity and launching new programs; stability and predictability of our costs and margins or our customers' forecasts, financial conditions, late payments, low-margin product mix, market shares, changing product requirements or scheduling demands; costs associated with breakdowns or repairs of machinery and equipment; growth beyond our productive capacity, cyclical or other downturns, adverse impacts of new technologies or other competitive pressures which erode our margins; cost, efficiency and yield of our operations including capital investments, working capital, scrap rates, cycle times, injuries, self-insured risks, wages, freight, production schedules, overtime costs, or expediting costs; failure to make strategic acquisitions or to integrate and improve results of acquired businesses or to identify and adequately insure environmental or other risks in due diligence; inventory valuation risks due to obsolescence, shrinkage, theft, price, overstocking or underbilling; changes in government funded or other customer programs; reliance on major customers or suppliers, especially in the automotive sector where bankruptcies (such as Dana Corporation's recent filing) could result in the rejection or modification of our contracts; revised contract prices or estimates of major contract costs; dependence on, recruitment or retention of management or other key employees; union negotiations; pension valuation, health care or other benefit costs; labor relations; strikes; risks of foreign operations; currency exchange rates; costs and supply of debt, equity capital, or insurance due to poor operating or financial results, new business risks, credit ratings, debt covenant violations, contract claims, insurance conditions or regulatory developments; impairments or write-offs of goodwill or fixed assets; changes in licenses, security clearances, or other legal rights to operate, manage our work force or import and export as needed; weaknesses in internal controls; costs of compliance with auditing, regulatory or contractual obligations; regulatory actions or sanctions; disputes or litigation, involving customer, supplier, creditor, stockholder, product liability or environmental claims; war, terrorism or political uncertainty; unanticipated or uninsured disasters, losses or business risks; inaccurate data about markets, customers or business conditions; or unknown risks and uncertainties. SYPRIS SOLUTIONS, INC. Financial Highlights (In thousands, except per share amounts) Three Months Ended September 30, ------------------- 2006 2005 --------- --------- (Unaudited) Revenue $125,955 $140,811 Net (loss) income $(802) $3,001 (Loss) earnings per common share: Basic $(0.04) $0.17 Diluted $(0.04) $0.16 Weighted average shares outstanding: Basic 18,094 18,036 Diluted 18,094 18,423 Nine Months Ended September 30, ------------------- 2006 2005 --------- --------- (Unaudited) Revenue $388,185 $390,654 Net (loss) income $(389) $5,572 (Loss) earnings per common share: Basic $(0.02) $0.31 Diluted $(0.02) $0.30 Weighted average shares outstanding: Basic 18,071 18,009 Diluted 18,071 18,328 Sypris Solutions, Inc. Consolidated Income Statements (in thousands, except for per share data) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ------------------- 2006 2005 2006 2005 ------------------ --------- --------- (Unaudited) (Unaudited) Net revenue: Industrial Group $93,021 $94,504 $283,974 $272,867 Aerospace & Defense 21,166 33,866 69,094 81,957 Test & Measurement 11,768 12,441 35,117 35,830 --------- -------- --------- --------- Electronics Group 32,934 46,307 104,211 117,787 --------- -------- --------- --------- Total net revenue 125,955 140,811 388,185 390,654 Cost of sales: Industrial Group 87,871 87,161 268,384 251,586 Aerospace & Defense 18,559 28,498 59,185 70,829 Test & Measurement 9,289 9,546 27,327 27,386 --------- -------- --------- --------- Electronics Group 27,848 38,044 86,512 98,215 --------- -------- --------- --------- Total cost of sales 115,719 125,205 354,896 349,801 Gross profit: Industrial Group 5,150 7,343 15,590 21,281 Aerospace & Defense 2,607 5,368 9,909 11,128 Test & Measurement 2,479 2,895 7,790 8,444 --------- -------- --------- --------- Electronics Group 5,086 8,263 17,699 19,572 --------- -------- --------- --------- Total gross profit 10,236 15,606 33,289 40,853 Selling, general and administrative 10,175 8,492 29,726 26,158 Research and development 427 767 1,132 2,384 Amortization of intangible assets 163 161 480 474 --------- -------- --------- --------- Operating (loss) income (529) 6,186 1,951 11,837 Interest expense, net 820 1,797 3,062 4,566 Other income, net 12 (89) (246) (856) --------- -------- --------- --------- (Loss) income before income taxes (1,361) 4,478 (865) 8,127 Income tax (benefit) expense (559) 1,477 (476) 2,555 --------- -------- --------- --------- Net (loss) income $(802) $3,001 $(389) $5,572 ========= ======== ========= ========= (Loss) earnings per common share: Basic $(0.04) $0.17 $(0.02) $0.31 Diluted $(0.04) $0.16 $(0.02) $0.30 Dividends declared per common share $0.03 $0.03 $0.09 $0.09 Weighted average shares outstanding: Basic 18,094 18,036 18,071 18,009 Diluted 18,094 18,423 18,071 18,328 Sypris Solutions, Inc. Consolidated Balance Sheets (in thousands, except for share data) September 30, December 31, 2006 2005 ------------- ------------ (Unaudited) ASSETS Current assets: Cash and cash equivalents $26,238 $12,060 Accounts receivable, net 76,047 95,432 Inventory, net 77,859 79,724 Other current assets 35,267 26,020 ------------- ------------ Total current assets 215,411 213,236 Property, plant and equipment, net 160,217 176,719 Goodwill 14,277 14,277 Other assets 11,699 13,392 ------------- ------------ Total assets $401,604 $417,624 ============= ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $85,512 $76,567 Accrued liabilities 21,341 24,904 Current portion of long-term debt 5,000 -- ------------- ------------ Total current liabilities 111,853 101,471 Long-term debt 55,000 80,000 Other liabilities 23,018 22,419 ------------- ------------ Total liabilities 189,871 203,890 Stockholders' equity: Preferred stock, par value $0.01 per share, 975,150 shares authorized; no shares issued -- -- Series A preferred stock, par value $0.01 per share, 24,850 shares authorized; no shares issued -- -- Common stock, non-voting, par value $0.01 per share, 10,000,000 shares authorized; no shares issued -- -- Common stock, par value $0.01 per share, 30,000,000 shares authorized; 18,338,334 and 18,165,658 shares issued and outstanding in 2006 and 2005, respectively 183 182 Additional paid-in capital 143,217 142,111 Retained earnings 71,335 73,375 Treasury stock (16) -- Accumulated other comprehensive loss (2,986) (1,934) ------------- ------------ Total stockholders' equity 211,733 213,734 ------------- ------------ Total liabilities and stockholders' equity $401,604 $417,624 ============= ============ Sypris Solutions, Inc. Consolidated Cash Flow Statements (in thousands) Nine Months Ended September 30, ----------------- 2006 2005 -------- -------- (Unaudited) Cash flows from operating activities: Net (loss) income $(389) $5,572 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 21,272 18,698 Other noncash items 1,414 1,714 Changes in operating assets and liabilities: Accounts receivable 18,334 (5,095) Inventory 1,657 (8,006) Other current assets (4,142) (2,108) Accounts payable 9,288 30,809 Accrued liabilities (4,238) 6,542 -------- -------- Net cash provided by operating activities 43,196 48,126 Cash flows from investing activities: Capital expenditures (7,852) (32,805) Proceeds from sale of assets 71 29 Changes in nonoperating assets and liabilities 85 (1,330) -------- -------- Net cash used in investing activities (7,696) (34,106) Cash flows from financing activities: Net change in debt under revolving credit agreements (20,000) (5,000) Cash dividends paid (1,643) (1,619) Proceeds from issuance of common stock 321 1,044 -------- -------- Net cash used in financing activities (21,322) (5,575) -------- -------- Net increase in cash and cash equivalents 14,178 8,445 Cash and cash equivalents at beginning of period 12,060 14,060 -------- -------- Cash and cash equivalents at end of period $26,238 $22,505 ======== ======== CONTACT: Sypris Solutions, Inc. Chief Financial Officer: T. Scott Hatton, 502-329-2000 -----END PRIVACY-ENHANCED MESSAGE-----