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Note 4 - Customer Contract Negotiations
 9 Months Ended
Sep. 28, 2014
Risks and Uncertainties [Abstract]  
Concentration Risk Disclosure [Text Block]

(4)

Customer Contract Negotiations


Our supply agreement with Dana Holding Corporation (“Dana”) expires on December 31, 2014, and our supply agreements with Meritor, Inc. (“Meritor”) expire on December 31, 2014 and May 2, 2015. For the nine months ended September 28, 2014, Dana and Meritor represented approximately 59% and 16% of our net revenue, respectively.


In July 2013, Sypris and Dana signed an amended and restated supply agreement, the binding effect of which is currently in dispute. Dana has repudiated this agreement and purported to exercise its rights under the parties’ prior agreement to begin exploring alternative supply relationships with third parties, including the right to sign new supply agreements, authorize tooling expenditures and engage in certain production part approval processes (“PPAP”) with respect to the goods currently supplied by Sypris. Sypris disputes Dana’s ability to exercise such rights.


The parties have also asserted various damages claims against each other arising out of their prior supply agreement and have sought the assistance of a mediator and an arbitrator in connection with these disputes. Dana initiated an ancillary action in Ohio state court challenging the arbitrability of the existence and enforceability of the amended and restated supply agreement on January 17, 2014. The parties have conducted discovery; an arbitration hearing has been scheduled for January 2015, and a trial in the Ohio court has been scheduled for March 2015. In addition, Dana has notified us that it intends to terminate its supply relationship with us effective December 31, 2014 and to transition over 2,000 active part numbers, which we currently manufacture for Dana, to alternative suppliers at the expiration date of the original supply agreement. While we continue to communicate with Dana on a variety of potential resolutions to this dispute, we believe that it is unlikely that the arbitration or the Ohio state court action will be resolved prior to December 31, 2014. The failure to resolve this dispute with Dana on acceptable terms would have a material adverse effect on our financial condition and financial performance. Even if we prevail on the merits in the arbitration or litigation proceedings, there can be no assurance as to the size or timing of any monetary damages awarded, we may be unable to continue our supply relationship with Dana or we could continue our supply relationship with significantly reduced volumes or prices, any of which could have a material adverse effect on our financial condition and financial performance.


In addition, the failure to enter into an agreement with Meritor on acceptable terms, or the entry into agreements for fewer products or reduced volumes or prices would have a material adverse effect on our financial condition and financial performance.


The Company is exploring alternatives to address the various range of potential outcomes for both the Dana and Meritor supply agreements, including the complete or partial renewal of either or both supply relationships, pursuing new business opportunities with existing and potential customers, identifying alternative uses for the related assets and certain other contingency plans. The Company expects to have plans established and initiated prior to December 31, 2014 to mitigate the impact of the potential loss of a significant amount of business and to support the Company’s operations and provide sufficient liquidity to finance its operations for at least the next 12 months. However, there can be no assurance that our plans to mitigate the loss and to provide sufficient liquidity will be successful.