Dear Fellow Stockholders:

In our letter last year, we discussed the importance of market leadership and the vital role played by highly qualified, motivated employees in the future development of Sypris. We believe these two leadership elements are essential to any business that expects to generate consistently outstanding results.

We are pleased to build upon last year's strong foundation with a report of our progress during 2002. The financial results were very positive and clearly reflected a continued improvement in the Company's performance.

The numbers only tell part of the story, however, so we thought you might like to hear directly from several of our major customers, six of whom have been featured inside this annual report. Nothing speaks like performance, especially when expressed by others.

FINANCIAL RESULTS
The year 2002 was a record-setting year for Sypris Solutions. The Company reported significant gains in terms of virtually all important financial measures and began to realize the benefits derived from a number of key operating initiatives.

Revenue for 2002 increased for the third consecutive year, rising 7% to $273 million from $255 million in 2001. The increase was driven by an 84% increase in revenue from our Industrial Group, which benefited from a new manufacturing services contract with Visteon, as well as a full year of production under a long-term contract signed with Dana during 2001.

Operating income increased 45% to a record $19 million, while net income rose 80% to exceed $11 million for the year. Margins continued to expand, driven largely by a 90% increase in gross profit for our Industrial Group. Revenue per employee increased 15% to a record $177,000, reflecting a continuing and successful effort throughout the Company to improve productivity.

Earnings per share increased 33% to $0.84 from $0.63 in 2001, including the effect of a 36% increase in the number of shares outstanding. Net book value increased 95% to $137 million, or $10.03 per share, as a result of strong earnings and the successful sale of $56 million of common stock to the public in March 2002.

Cash flow from operations increased 61% to a record $14 million. This increase was achieved even after we invested $6 million in two of our defined benefit pension plans during the fourth quarter, ensuring that they were 100% funded and the future of our employees' retirement was on solid ground.

The growing financial strength and positive earnings trend of Sypris led the Board of Directors to declare the Company's first quarterly dividend of $0.03 per share during 2002. We are optimistic that the future performance of the Company will enable the Board to continue providing stockholders with a current rate of return on their investment.

Our strong report card for 2002 could have been better, however, as cost overruns on new programs and revenue shortfalls on others prevented us from reaching our targeted expectations. We will continue to address these and other issues with the appropriate sense of urgency so as to further enhance the Company's financial performance.

INVESTMENTS
We continued to invest in the future of the Company, with capital expenditures approximating $20 million during 2002, or over 7% of revenue.

During the past five years, we have invested over $100 million in new technology and automation to support the needs of our customers. We believe that these investments are essential to our ability to provide our customers with manufacturing and technical services that are cost-competitive on a global scale.

Of particular note, we also invested in the implementation of a Six Sigma program in our Electronics Group during the year. The results in terms of improved quality, customer service and reduced costs were outstanding. We are now committed to expanding the Six Sigma program throughout Sypris and plan to train all of our employees in these powerful techniques within the next few years.

CONTRACT AWARDS
During 2002, we secured new multi-year supply agreements with the National Security Agency, Visteon, BAE Systems, Honeywell and the Federal Aviation Administration, bringing the total estimated value of new contract awards to $302 million for the year.

The Visteon contract is particularly noteworthy. Under the supply agreement, which began in early 2002, Sypris is providing axle shafts for Ford's F-150, F-250, F-350 and Ranger-series pickup trucks; the Ford Expedition; the Lincoln Navigator and the Ford Mustang GT. The agreement runs through 2006 and has a projected value of $150 million over the term of the contract.

Long-term, sole-source contracts serve as the foundation of our strategic partnerships with a growing number of large corporations and government agencies, with new contract awards reaching an estimated $676 million over the past 24 months. We expect these supply agreements to make a meaningful contribution to the growth and stability of Sypris for years to come.

THE FUTURE
As we look ahead:

Aerospace & Defense Electronics
The market for aerospace and defense electronics is expected to benefit from the Government's renewed and sustained focus on our Country's national defense.

We have long-term contracts with many of the leading aerospace and defense contractors, including BAE Systems, Boeing, Honeywell, Lockheed Martin, Northrop Grumman and Raytheon. We also have a long-term relationship with the National Security Agency to design and build secure communications equipment and develop encryption software.

These strategic partnerships enable us to invest the resources necessary to deliver the high-level of technical services demanded by these important customers, a factor that we believe sets us apart from our competition. Consequently, we believe that Sypris, with over 35 years of experience in aerospace and defense electronics, is uniquely positioned to play an increasingly larger role for our customers as they prepare to meet the expected increase in demand for their own products and services.

Truck Components & Assemblies
According to recent industry publications, the production of medium and heavy-duty trucks is forecast to approximate 2002 levels in 2003, then increase by an estimated 15% per year through 2006 as fleet owners replace aging vehicles.

Sypris is the principal supplier of manufacturing services for the production of medium and heavy-duty truck axle shafts in North America. We will continue investing to expand our relationships with and provide additional value for our strategic customers in this market. As industry forecasts indicate, our opportunities are significant.

Test & Measurement Services
The market for test and measurement services has been hit hard by the difficult economy and remains highly fragmented, with a wide variety of often thinly-capitalized businesses vying to service the local needs of large national corporations.

Due to the need to control costs and ensure quality and reliability, these corporations are increasingly looking for strong national providers to handle all of their service requirements. We will use our financial strength during the coming years to accelerate the growth of our national capability to meet the needs of these large and demanding customers.

Our Vision
Our vision is focused and clear. Sypris is an outsourcing specialist that is dedicated to using its resources to service long-term, strategic partnerships with industry-leading corporations and government agencies.

We will continue to invest in markets where we can sustain a competitive advantage. We believe that our ongoing initiatives to increase market share, while maintaining a balanced business mix, will serve Sypris and its stockholders well for many years to come.

OUR CUSTOMERS SPEAK OUT
Exceeding customer expectations is critical to the success of any company in today's harsh economic business climate. The statements of six of our key customers in this annual report reflect the devoted efforts of our employees to do whatever is necessary to contribute to the success of our customers. We hope you find their perspectives to be of value and interest.

THANK YOU
We want to thank our employees, many of whom are fellow stockholders, for their hard work over this past year. The many achievements of 2002 would not have been possible without their commitment, energy and hard work. We also want to thank our customers for the opportunity to serve them. We are dedicated to providing each of these business partners with the right solutions to improve their competitiveness. We sincerely appreciate your investment in Sypris Solutions and encourage you to contact us. We welcome your comments and would be pleased to answer your questions.