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): July 13, 2006 (July 12, 2006)
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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
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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 July 12, 2006, Sypris Solutions, Inc. (the "Company")
reported that it is lowering its financial outlook for the
second quarter. The Company now expects to report a loss for the
second quarter in the range of $0.02 to $0.04 per diluted share
compared to prior guidance for earnings of $0.10 to $0.12 per
diluted share. Revenue for the second quarter is expected to be
in the range of $132 to $133 million, which is consistent with
prior guidance of $130 to $135 million. Free cash flow is
expected to be in excess of $20 million, significantly exceeding
prior guidance. 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 July 12, 2006, Sypris Solutions, Inc. (the "Company")
reported that it is lowering its financial outlook for the
second quarter. The Company now expects to report a loss for the
second quarter in the range of $0.02 to $0.04 per diluted share
compared to prior guidance for earnings of $0.10 to $0.12 per
diluted share. Revenue for the second quarter is expected to be
in the range of $132 to $133 million, which is consistent with
prior guidance of $130 to $135 million. Free cash flow is
expected to be in excess of $20 million, significantly exceeding
prior guidance. 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
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99 Press release issued July 12, 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: July 13, 2006 Sypris Solutions, Inc.
By: /s/ T. Scott Hatton
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T. Scott Hatton
Vice President and Chief
Financial Officer
INDEX TO EXHIBITS
Exhibit
Number Description
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99 Registrant's press release dated July 12, 2006.
Exhibit 99
Sypris Lowers Earnings Outlook; Cash Flow Remains Strong
LOUISVILLE, Ky.--(BUSINESS WIRE)--July 12, 2006--Sypris Solutions,
Inc. (Nasdaq/NM:SYPR) today reported that it is lowering its financial
outlook for the second quarter. The Company now expects to report a
loss for the second quarter in the range of $0.02 to $0.04 per diluted
share compared to prior guidance for earnings of $0.10 to $0.12 per
diluted share. Revenue for the second quarter is expected to be in the
range of $132 to $133 million, which is consistent with prior guidance
of $130 to $135 million. Free cash flow is expected to be in excess of
$20 million, significantly exceeding prior guidance.
"The second quarter proved to be a very difficult period for the
Company," said Jeffrey T. Gill, president and chief executive officer.
"Our Industrial Group experienced unplanned equipment downtime that
resulted in significant overtime, labor inefficiencies and increased
material consumption during a period in which record demand required
the business to be at full operational capacity. All systems have
since been returned to service, but the cost of doing so under these
conditions had a material impact on margins."
"In addition to the headwinds experienced by our Industrial Group,
our Electronics Group was impacted by a delay in shipments under
certain classified programs with the U.S. Government. Unfortunately,
these delays are expected to continue through the balance of this year
as the various agencies work to complete the required certification
processes. Once certified, we expect demand to be robust, with
preliminary customer feedback indicating that initial estimates of
demand are likely to be exceeded."
"The results for the quarter and the year continue to reflect the
strain and expense of working with a major customer that has filed for
court protection under bankruptcy law. While we have been fortunate
and have successfully collected a substantial amount of our
pre-petition accounts receivable, we continue to experience program
launch delays, pricing disputes and excessive external costs that are
impacting both the top and bottom line. The silver lining remains the
Company's strong free cash flow, which has exceeded $60 million over
the past four quarters."
Gill continued, "Looking forward, we believe that it is prudent to
establish a more conservative outlook for the remainder of 2006. Until
we demonstrate that our Industrial Group can operate for sustained
periods at capacity, our forecast for operating margins will remain at
current levels. The delay in the certification of the classified
programs in our Electronics Group is expected to shift as much as $20
million of shipments from 2006 into 2007, the result of which is
forecast to impact revenue and earnings during the second half of
2006."
"As a result, we expect revenue during the second half of 2006 to
be in the range of $275 to $285 million, reflecting the $20 million
program delay into 2007, while earnings are forecast to be in the
range of $0.10 to $0.15 per share during the second half compared to
prior guidance of $0.30 to $0.38 per share. For the full year 2006,
the revenue outlook has been revised to a range of $537 to $548
million, while earnings are now forecast to be in the range of $0.11
to $0.18 per diluted share compared to prior guidance of $0.45 to
$0.55. Despite the reduction in earnings, we fully expect free cash
flow to remain strong for 2006 and consistent with the lower end of
our prior guidance, which was $30 to $40 million for the year."
A conference call is scheduled for Thursday, July 13, 2006, at
9:00 a.m. Eastern Time to discuss the content of this release. The
call can be accessed live via the Internet. Visit www.sypris.com or
www.fulldisclosure.com for the link to the call or to listen to a
replay of the call, which will be available for 30 days.
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 for users of test
and measurement equipment. 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, expediting costs or scrap rates; 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.
CONTACT: Sypris Solutions, Inc.
T. Scott Hatton, 502-329-2000