(

)

Strategic Actions

The Company completed a number of strategic actions during the past

three

years in response to the nonrenewal of supply agreements with certain Tier I automotive customers primarily due to global pricing constraints, the downturn in the commercial vehicle market beginning in the

fourth

quarter of

2015

and other market and economic factors impacting the Company. Strategic actions taken included: (i) initiation of the Company’s exit from the Broadway Plant (defined below) (see Note

), (ii) the sale of Sypris Electronics’ SioMetrics, Cyber Range, Information Security Solutions and Data Systems product lines (the “CSS business”) in

2016,

(iii) the sale and leaseback of the Company’s facility in Toluca, Mexico in

2016,

(iv) the sale of the Company’s manufacturing facility in Morganton, North Carolina in

2015,

(v) the capacity reallocation of certain oil and gas industry components to Mexico, (vi) the relocation of its Sypris Electronics operation to a new facility beginning in

2017,

and (vii) reductions in employment costs through reduced work schedules, senior management pay reductions and deferral of merit increases and certain benefit payments. Using a portion of the proceeds generated from the asset sales noted above, the Company paid off all of its most senior secured debt consisting of a “Term Loan” and “Revolving Credit Facility” in

August 2016.

During this period, the Company also received the benefit of cash infusions from Gill Family Capital Management, Inc. (“GFCM”) in the form of secured promissory note obligations totaling

$6,500,000

in principal, originally scheduled to mature in

2019.

The GFCM note was amended during

2017

to, among others things, extend the maturity dates so that the note matures in part in

2021,

2023

and

2025

(see Note

The Company has embraced a strategic change in its business by repositioning away from certain of its traditional Tier

customers that represent the primary suppliers to the original equipment manufacturers (“OEMs”) in the commercial vehicle markets, while targeting to replace these customers with longer-term relationships, especially among the OEMs and others who place a higher value on the Company’s innovation, flexibility and core commitment to lean manufacturing principles. Among the customer programs

not

being renewed was a supply agreement with Meritor Inc. (“Meritor”), which expired on

January 1, 2017,

which utilized production at the Company’s Louisville, Kentucky automotive and commercial vehicle manufacturing plant (the “Broadway Plant”). The Company similarly has experienced a reduction in certain portions of its business with Eaton Corporation (“Eaton”). As a result of these decisions, the Company experienced a significant reduction in its commercial vehicle revenues in

2017

(See Note

). Subsequent to the end of the

third

quarter of

2018,

the Company entered into a

three

-year agreement to supply axle shafts to Sistemas Automotrices de Mexico, S.A. de C.V. (“Sisamex”), as well as a number of other product lines for periods of up to

six

years from the commencement of production.