SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ended September 30, 1997 Commission File Number 0-6611
SIMPSON INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Michigan 38-1225111
(State or other jurisdiction of IRS Employer Identification No.)
incorporation or organization)
47603 Halyard Drive, Plymouth, Michigan 48170-2429
(Address of principal executive offices) (Zip Code)
(313)207-6200
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
At October 31, 1997 there were 18,131,212 outstanding shares of the
registrant's common stock, $1.00 par value each.
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The registrant hereby amends Item I - Financial Statements of its
Quarterly Report on Form 10-Q for the quarter ended September 30, 1997,
to correct a typographical error contained in the Consolidated Statements
of Cash Flows in the line item "Proceeds (repayments) of long-term
debt, net."
Consolidated Balance Sheets (Unaudited)
(In thousands)
September 30, 1997 and December 31, 1996
Sept. 30 Dec. 31
ASSETS
Current Assets
Cash and cash equivalents $ 2,787 $ 28,902
Accounts receivable 68,302 41,032
Inventories 19,690 14,034
Customer tooling in process 6,274 4,002
Prepaid expenses and other current
assets 6,362 6,256
Total Current Assets 103,415 94,226
Property, Plant and Equipment
Cost 312,786 278,229
Less Allowance 140,307 126,152
Total Property, Plant and Equipment 172,479 152,077
Unallocated Purchase Cost 38,843 -
Other Assets 15,315 2,653
$330,052 $248,956
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable $ 479 -
Current installment of long-term
debt 3,579 $ 3,579
Accounts payable 34,684 28,455
Compensation and amounts withheld 9,906 10,203
Taxes, other than income taxes 2,238 2,597
Other accrued expenses 12,805 4,354
Total Current Liabilities 63,691 49,188
Long-term debt, excluding current
installment 121,209 58,643
Accrued Retirement Benefits 15,058 14,015
Deferred Income Taxes 13,848 11,118
Shareholders' Equity 116,246 115,992
$330,052 $248,956
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Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share amounts)
Periods Ended September 30, 1997 and 1996
Nine Months Three Months
1997 1996 1997 1996
Net sales $328,475 $309,698 $112,327 $ 98,228
Costs and expenses:
Cost of products sold 295,614 276,130 103,322 89,309
Administrative and selling 9,538 9,358 3,315 3,159
Provision for plant closing 8,769 - 8,769 -
313,921 285,488 115,406 92,468
Operating Earnings 14,554 24,210 (3,079) 5,760
Investment and other income, net 732 851 206 692
Interest expense (5,094) (4,045) (2,377) (1,321)
Earnings Before Income Taxes 10,192 21,016 (5,250) 5,131
Income taxes 3,724 7,645 (1,913) 1,688
Net Earnings $ 6,468 $13,371 $(3,337) $ 3,443
Net Earnings Per Share $0.36 $0.74 $(0.18) $0.19
Cash dividends per share $0.30 $0.30 $0.10 $0.10
Average number of common
equivalent shares 18,172,233 18,103,242 18,189,835 18,117,073
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Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Nine Months Ended September 30, 1997 and 1996
1997 1996
OPERATING ACTIVITIES
Net earnings $ 6,468 $13,371
Depreciation and amortization 17,032 15,343
Provision for deferred income taxes 2,185 689
Other 165 471
Changes in operating assets and liabilities,
net of effects of acquisition of business (10,585) (376)
Cash Provided By Operating Activities 15,265 29,498
INVESTING ACTIVITIES
Acquisition of business, net of cash acquired (75,407) -
Capital expenditures (22,373) (15,141)
Proceeds from disposal of property
and equipment 321 97
Cash Used In Investing Activities (97,459) (15,044)
FINANCING ACTIVITIES
Cash dividends paid (5,439) (5,424)
Proceeds (repayments) of long-term debt, net 62,555 (1,933)
Cash provided by stock transactions, net - 243
Cash Provided From (Used In) Financing
Activities 57,116 (7,114)
Effect of foreign currency exchange
rate changes (1,037) 143
Increase (Decrease)In Cash and
Cash Equivalents (26,115) 7,483
Cash and cash equivalents at beginning
of period 28,902 13,490
Cash and Cash Equivalents at End of Period $ 2,787 $20,973
Supplemental Disclosures
Cash paid during the year for:
Interest $ 4,207 $ 4,045
Income Taxes 4,662 4,381
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Note 1. Significant Accounting Principles
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial reporting. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The results of operations for the period
ended September 30, 1997 are not necessarily indicative of the results to be
expected for the year ending December 31, 1997.
Goodwill, arising from the acquisition of the Vibration Attenuation division
(see below), is amortized on a straight-line basis over 40 years. Specific
intangibles are amortized on a straight-line basis over the estimated periods
benefited with periods ranging from 5 to 20 years. For further information
regarding the Company's accounting policies, refer to the Consolidated
Financial Statements and related notes included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1996.
Note 2. Holset VA Acquisition
On June 27, the Company through a wholly owned subsidiary purchased the
Vibration Attenuation division of Holset Engineering Company Limited ("Holset
VA") from Cummins Engine Company. The aggregate purchase cost for the
acquisition of the Holset VA Business was $76.6 million. Funds for the Holset
VA Business acquisition, net of cash received, were provided by cash and
borrowings of $60 million under the Credit Agreements as described in Note 4.
The Holset VA Business has operations in the United Kingdom, France, Spain,
Mexico, Korea, Brazil, and the United States. The Holset VA Business is also
a minority partner in a joint venture in India. Holset VA manufactures rubber
and viscous dampers and supplies three main markets including heavy truck,
light truck and automotive and industrial.
The acquisition was accounted for as a purchase transaction. The purchase
cost of $76.6 million has been allocated to assets acquired and liabilities
assumed based upon their preliminary estimated fair values at the acquisition
date. The excess of the purchase price over the estimated values for assets
and liabilities has been reflected as unallocated purchase cost which is being
amortized over 40 years. The final allocation of the purchase costs to assets
and liabilities will depend on the final results of appraisals that are not
yet complete. Therefore, the final allocation will probably differ from the
estimated allocation, possibly by substantial amounts. The preliminary
allocation at June 27, 1997 of the $76.6 million purchase cost is summarized
as follows:
(In thousands)
Current assets $17,748
Property, plant and equipment 15,806
Unallocated purchase cost,
principally goodwill 38,843
Intangible assets 12,728
Other noncurrent assets 841
Current liabilities (9,346)
Total purchase cost $76,620
NOTE 3. Pro Forma Information
The following pro forma unaudited financial data is presented to illustrate
the estimated effects of (i) the Holset VA acquisition and (ii) the completion
of the new credit agreements (Note 4) as if the transactions had occurred as
of January 1 of each year presented (in thousands, except per share data).
________________________________________________________________________
Three Months Ended Nine Months Ended
Sept 30 Sept 30 Sept 30 Sept 30
1997 1996 1997 1996
Net sales 125,605 111,345 377,516 358,145
Net income (4,150) (2,866) 6,078 13,531
Net income per share $(.23) $.16 $0.33 $0.75
________________________________________________________________________
The pro forma information above does not purport to be indicative of the
results that actually would have been achieved if the transactions had
occurred prior to the years presented, and is not intended to be a projection
of future results or trends.
Note 4. Debt
On August 1, 1997 the Company issued and sold $35 million of its 7.03% Senior
Notes, Series A and $15 million of its 6.96% Senior Notes, Series B. Notes of
both series are due August 1, 2012. The proceeds of the Notes were used to
pay down and permanently reduce the 364-Day and five-year Credit Agreements
discussed below.
In June 1997, the Company entered into revolving credit agreements to allow
for borrowings of up to $50 million under a five-year agreement and up to $50
million under a 364-day agreement. In August 1997 these agreements were
permanently reduced to $25 million each. At September 30, 1997, borrowings
outstanding under the 364-day agreement were $17.5 million at interest rates
ranging from 6.32 % to 8.5%. There were no borrowings outstanding under the
five-year agreement. The 364-day agreement is classified as long-term based
on management's intent to maintain this level of borrowing for a period in
excess of one year and the Company's ability to transfer the borrowings to its
five-year line.
Borrowings under the credit agreements bear interest, at the election of the
Company, at a floating rate of interest equal to (a) the higher of ABN AMRO's
prime lending rate and the federal funds rate plus .5% or (b) the Eurodollar
rate plus the applicable borrowing margin.
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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, thereunto duly authorized.
SIMPSON INDUSTRIES, INC.
Registrant
/S/ VINOD M. KHILNANI
November 21, 1997 Vinod M. Khilnani
Chief Financial Officer
