(

)

Exit and Disposal Activities

November

22,

2016,

the Board of Directors of the Company approved moving forward with the exploration of a range of strategic options for the Broadway Plant, including the divestiture of the plant, the transitional reduction in its operations to accommodate lower volumes, the relocation of production to other Company facilities as needed, and/or the closure of the plant. Accordingly, management explored various exit or disposal options for the Broadway Plant with the input of our salaried and unionized employees, our customers and others within the industry. On

February

21,

2017,

with the benefit of management’s analysis, the Board approved a modified exit or disposal plan with respect to the Broadway Plant, which is now expected to continue certain transitional operations into

2018.

The Company expects to relocate certain assets from the Broadway Plant to other manufacturing facilities as needed to serve its existing and target customer base and to identify underutilized or non-core assets for disposal. Management expects to use proceeds from the sale of any underutilized or non-core assets to fund costs incurred on the transfer of equipment from the Broadway Plant and the transition of the related production. Management will evaluate options for the real estate and any remaining assets in the Broadway Plant following the completion of production at that facility.

2016,

the Company recorded charges of

$645,000,

$0.03

per share, related to the transition of production from the Broadway Plant, which is included in severance, relocation and other costs in the Consolidated Statement of Operations. A summary of the pre-tax charges is as follows (in thousands):

	Total Program		Recognized as of December 31, 2016		Remaining Costs to be Recognized
Severance and benefit-related costs	$	1,265	$	427	$	838
Asset impairments		188		188		0
Equipment relocation costs		2,531		0		2,531
Other		530		30		500
	$	4,514	$	645	$	3,869

Severance and benefit-related costs tied to workforce reductions were recorded in accordance with Accounting Standards Codification (ASC)

420,

Exit or Disposal Cost Obligations

and ASC

712,

Compensation – Nonretirement

Postemployment Benefits

. Under ASC

420,

one

-time termination benefits that are conditioned on employment through a certain transition period are recognized ratably between the date employees are communicated the details of the

one

-time termination benefit and their final date of service. Accordingly, the Company has recorded

$427,000

2016

and expects to record an additional

$838,000

2017.

The Company evaluates its long-lived assets for impairment when events or circumstances indicate that the carrying value

may

not be recoverable in accordance with ASC

360,

Impairment and Disposal of Long-Lived Asset

. The Company’s strategic decision to transition production from the Broadway Plant led to an

$188,000

non-cash impairment charge in

2016.

The charge was based on the excess of carrying value of certain assets not expected to be redeployed over their respective fair value. Fair values for these assets were determined based on discounted cash flow analyses.

A summary of costs and related reserves for the transition of production from the Broadway Plant at

December

31,

2016

is as follows (in thousands):

	Accrued				Cash			Accrued
	Balance at				Payments			Balance at
	Dec. 31,		2016		or Asset			Dec. 31,
	2015		Charge		Write-Offs			2016
Severance and benefit related costs	$	0	$	427	$	0		$	427
Asset impairments		0		188		(188	)		0
Equipment relocation costs		0		0		0			0
Other		0		30		(30	)		0
	$	0	$	645	$	(218	)	$	427

The Company expects to incur additional pre-tax costs of approximately

$3,869,000

within Sypris Technologies, which is expected to be all cash expenditures.

As noted above, management expects to use proceeds from the sale of any underutilized or non-core assets to fund costs incurred on the transfer of equipment from the Broadway Plant and the transition of the related production. The following assets have been segregated and included in assets held for sale in the consolidated balance sheet as of

December

31,

2016

(in thousands):

	December 31,
	2016
Machinery, equipment, furniture and fixtures	$	6,673
Accumulated depreciation		(5,841	)
Property, plant and equipment, net	$	832