SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) Annual Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 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 (I.R.S. Employer
incorporation or organization) Identification No.)
47603 Halyard Drive, Plymouth, Michigan 48170
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (734) 207-6200
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $ 1.00 par value
(Title of Class)
Common Stock Purchase Rights
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all
annual, quarterly and other reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or such shorter period that the registrant has
been required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of the registrant's voting stock held by
non-affiliates of the registrant as of February 20, 1998, computed
by reference to the last sale price for such stock on that date as
reported on the NASDAQ National Market System, was $226,395,000.
At February 20, 1998, there were outstanding 18,173,582 shares of
the registrant's common stock, $1.00 par value each.
Portions of the Proxy Statement for 1998 Annual Meeting of
Shareholders have been incorporated by reference in this Annual
Report on Form 10-K (Part III).
PAGE
<PAGE>
PART I
Item 1. BUSINESS
Introduction
Simpson Industries, Inc. (the "Company") was organized under
Michigan law in 1945. The Company's executive offices are located
in Plymouth, Michigan, and the fifteen plants at which its
manufacturing operations are conducted are located in Michigan,
Ohio, Indiana, North Carolina, Ontario (Canada), Federal District
of Mexico (Mexico), Halifax (United Kingdom), Lyon (France),
Barcelona (Spain), Seoul (Korea) and Sao Paulo (Brazil). The
Company also has an interest in a joint venture in Pune (India).
Reference in this report to the Company includes Simpson
Industries, Inc., and its predecessors, divisions and subsidiaries,
unless otherwise indicated by the context.
General
On December 8, 1997, by action of the Board of Directors, the
Company became subject to the provisions of Chapter 7A of the
Michigan Business Corporation Act. Chapter 7A provides, with
certain exceptions, that business combinations between a Michigan
corporation and an "interested shareholder" generally require the
approval of 90% of the votes of each class of stock entitled to be
cast by the shareholders of the corporation, and not less than 2/3
of the votes of each class of stock entitled to be cast by the
shareholders of the corporation other than voting shares owned by
such interested shareholder. An "interested shareholder" is a
person directly or indirectly owning 10% or more of the
corporation's outstanding voting power, or an affiliate of the
corporation who at any time within two years prior to the date in
question directly or indirectly owned 10% or more of such voting
power.
Principal Products and Markets
The Company manufactures vibration control and other products for
automobile, light-truck and diesel engines, air conditioning
compressor components, wheel-end and suspension components and
assemblies, oil pumps, water pumps and other modular engine
assemblies and transmission and driveline components which are
machined from castings and forgings. These products are produced
principally for original equipment manufacturers of automobiles,
light trucks, diesel engines and heavy duty equipment in North
America and Europe.
The Company's operations are organized into four management groups
- --- Noise, Vibration and Harshness Group, Transmission & Chassis
Group, Heavy Duty Group and Europe/Asia Group. The Company
maintains product design and process development staffs which work
with customers' engineers, principally in the design, testing and
development of new products, as well as in the on-going refinement
of existing products. The Company also conducts its own research
and development activities which are separate from the product
development activities conducted in cooperation with its customers.
The Company expended $3,668,000 in 1997, $2,944,000 in 1996 and
$2,309,000 in 1995 for its research and development.
Competition in the sale of all of the Company's products is
primarily based on engineering, product design, process capability,
quality, cost, delivery and responsiveness. The Company believes
that its performance record in these respects places it in a strong
competitive position. The Company believes that, in the
manufacture of its products, it competes with numerous supplier
companies, some of which are larger and have greater financial
resources than the Company. In addition, many of the Company's
larger customers are capable of performing their own machining
work.
The Company's customers to which sales exceeded 10% of total net
sales include General Motors Corporation, Ford Motor Company and
Chrysler Corporation. Substantially all of the Company's sales are
based on competitive proposals on requests from customers. Sales
of all products to General Motors Corporation, Ford Motor Company
and Chrysler Corporation during the years ended December 31, 1997,
1996 and 1995 accounted for 60.1%, 63.5%, and 65.1%, respectively,
of the Company's total sales during those periods. In recent
years, sales to other significant customers, in particular
Consolidated Diesel Corporation, Caterpillar Incorporated, Peugeot
and Renault have grown in importance as the Company has broadened
its customer base and more narrowly focused its product direction.
However, the loss of all or a substantial portion of sales to major
customers could have a detrimental effect on the Company's
business. The Company believes that such a loss is unlikely
because the Company's products, which generally have a life of five
to ten years, require a substantial initial investment in
engineering, equipment and tooling. Moreover, sales to automotive
customers consist of a large number of different products as well
as different types of the same products, which are sold to separate
divisions and operating groups within each customer's organization.
These customer operating units generally act independently when
making their purchasing decisions.
Because the Company principally ships to its customers' scheduled
needs, information concerning its backlog is not meaningful to an
understanding of its business. Purchase orders for machined
products that do not necessarily represent firm contracts are
generally received from larger customers. Customers issue
short-term releases against the purchase orders from time to time
during the year and these releases are firm orders that typically
remain open for acceptance by the Company for a period of 30 days
or less.
The basic raw materials for the Company's products include aluminum
and ferrous castings, steel forgings, steel bar stock and rubber,
all of which are available from a large number of sources. The
Company has been purchasing such materials from several sources.
The Company holds various patents and, from time to time, in the
ordinary course of its business, files patent applications.
However, the Company does not consider any individual patent or
patent application to be material to the operation of its business.
The Company's operations, in common with those of manufacturers
generally, are subject to numerous federal, state and local laws
and regulations pertaining to the discharge of materials into the
environment or otherwise relating to the protection of the
environment. Compliance with such laws and regulations has not had
and is not anticipated to have a material effect on the capital
expenditures, earnings or competitive position of the Company.
At December 31, 1997, the Company employed 2,355 people on an
active basis.
Since most of the Company's machined products are for engines,
transmissions and drive trains, they are generally not affected by
style changes and their production and delivery continue at a
relatively uniform rate. However, the Company's operations are
affected by the cyclical nature of the United States and European
automobile, light-truck and heavy-duty vehicle markets.
The Company's operations are conducted within one business segment
and sales attributable to customers outside the United States from
U.S. operations were $63,400,000 in 1997, $57,800,000 in 1996 and
$56,200,000 in 1995.
Item 2. PROPERTIES
The Company's facilities are principally involved in the
manufacture of the Company's products and are owned by the Company
and its subsidiaries free of encumbrances, with the exception of
the facilities located in Korea and Brazil, which are leased by the
Company. All of these properties, as well as the related machinery
and equipment are considered to be well-maintained, suitable and
adequate for their intended purpose. The following table sets
forth the location and approximate size of the Company's
facilities.
PROPERTIES IN ACTIVE USE
Approximate Approximate
Location Land Area Floor Space
Gladwin, Michigan........... 5.0 Acres 71,000 Square Feet
Litchfield, Michigan........ 22.8 230,000
Plymouth, Michigan.......... 5.5 68,000
Middleville, Michigan....... 3.5 82,500
Fremont, Indiana............ 13.7 99,000
Bluffton, Indiana........... 12.5 170,000
Edon, Ohio.................. 15.2 134,000
Troy, Ohio.................. 12.2 100,000
Greenville, North Carolina.. 12.6 113,000
Thamesville, Ontario........ 6.0 59,000
Lyon, France................ 3.8 83,000
Halifax, England............ 1.7 54,000
Barcelona, Spain............ 2.2 39,000
Iztapalapa, Mexico.......... 2.8 86,000
Seoul, Korea ............... n/a 23,000
Sao Paulo, Brazil .......... n/a 73,000
TOTAL IN ACTIVE USE 119.5 1,484,500
Item 3. LEGAL PROCEEDINGS
No material legal proceeding is pending to which the Company or any
of its subsidiaries is a party, or of which any of their property
is subject.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted by the Company to a vote of security
holders through the solicitation of proxies or otherwise, during
the fourth quarter of 1997.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
STOCK PRICE AND DIVIDEND INFORMATION
The Company's common stock is traded on the Nasdaq National Market
under the symbol SMPS.
Stock prices are quoted in the automated quotation system operated
by the National Association of Securities Dealers Automated
Quotation System. The quarterly range of bid prices per share, as
reported by Nasdaq, and the dividends paid thereon during the years
ended December 31, 1997 and 1996 are shown in the accompanying
table. Such prices may represent interdealer prices, without
retail mark-up, mark-down or commission and may not necessarily
represent actual transactions.
At December 31, 1997 there were 4,352 individual shareholders of
record of Simpson common stock. Other Simpson common shares
outstanding were held in bank, money management, company and
brokerage house "nominee" accounts for an estimated 5,500
additional shareholders as beneficial owners.
Bid Price Per Share Dividend
Quarter Ended High Low Paid Per
Share
March 31, 1996 10 1/8 8 3/8 .10
June 30, 1996 10 1/4 8 5/8 .10
September 30, 1996 10 1/2 8 1/2 .10
December 31, 1996 11 1/8 9 1/2 .10
March 31, 1997 11 1/8 9 1/2 .10
June 30, 1997 11 1/4 9 1/8 .10
September 30, 1997 12 3/4 10 1/8 .10
December 31, 1997 12 1/4 10 7/8 .10
PAGE
<PAGE>
Item 6. SELECTED FINANCIAL DATA
Five Year Summary
(Dollar amounts in millions, except per share and per employee)
<TABLE>
<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993
Operating Data
Net sales $ 451.5 $ 408.0 $ 395.1 $ 356.6 $ 262.5
Cost of products sold 406.5 365.3 354.4 319.6 234.2
Gross profit 45.0 42.7 40.7 37.0 28.3
as a % of sales 10.0% 10.5% 10.3% 10.4% 10.8%
Operating earnings
before
provisions for
plant closings $ 30.9 $ 29.6 $ 28.8 $ 26.8 $ 19.4
as a % of sales 6.8% 7.3% 7.3% 7.5% 7.4%
Net earnings $ 10.1(1) $ 17.6(2) $ 15.3 $ 14.4 $ 6.4(3)
as a % of sales 2.2% 4.3% 3.9% 4.0% 2.5%
Net earnings per
share (diluted) $ 0.55 $ 0.97 $ 0.85 $ 0.80 $ 0.36
Dividend per share 0.40 0.40 0.40 0.38 0.37
Weighted average
shares (millions) 18.1 18.1 18.0 18.1 18.0
At Year End
Working capital $ 36.4 $ 45.0 $ 40.3 $ 31.7 $ 34.5
Total assets 341.5 249.0 232.5 207.0 186.8
Long-term debt 118.6 58.6 62.3 50.4 39.0
Shareholders' equity 117.9 116.0 105.1 98.0 91.5
Book value per share 6.50 6.42 5.84 5.47 5.12
%Debt/equity 101% 51% 59% 51% 43%
%Debt/total capital 51 35 38 35 31
Additional Statistics
New program launches 13 6 10 23 20
Content per N.A.
light vehicle $ 22 $ 22 $ 22 $ 20 $ 16
EBITDA (4) 54.3(5) 50.1 47.7 43.1 33.6
Depreciation and
amortization expense 23.4 20.5 18.9 16.3 14.2
Capital investment 29.0 26.3 31.5 38.2 37.5
% return on average
equity 8.6% 15.9% 15.1% 15.2% 7.0%
Sales per employee $ 197,687 $ 190,654 $ 186,706 $ 182,240 $163,034
Operating earnings
per employee 13,537(5) 13,832 13,594 13,704 12,041
Number of employees,
year end 2,355 2,115 2,050 2,135 1,768
Stock Activity
Price Range 9 1/8 - 8 3/8 - 8 - 7 7/8 - 10 1/2 -
12 3/4 11 1/8 12 1/8 15 21/32 14 21/32
Price at year end 11 3/4 10 57/64 9 9 1/4 14 3/32
</TABLE>
(1) Includes $5.7 million for provision for net plant closing
costs.
(2) Includes $1.1 million for federal tax credits.
(3) Includes $3 million net charge for accounting changes.
(4) EBITDA includes operating income plus depreciation and
amortization.
(5) Before provision for plant closings of $8.8 million.
<PAGE>
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
Overview
Simpson Industries acquired the Vibration Attenuation Business of
Holset Engineering Company, Ltd. from Cummins Engine Company, in
June of 1997, for an aggregate purchase price, net of cash
acquired, of $75,393,000. The acquisition of the Vibration
Attenuation (VA) Business was accounted for as a purchase, and
the results of the VA business have been included in the
accompanying consolidated statements of the Company since the
date of acquisition.
This acquisition offers the Company the best potential to build
on our North American leadership position in Noise, Vibration and
Harshness products. It will add European-, Asian-, and South
American-based capabilities and expand our customer base and
technological processes. This acquisition also extends our
product line to include viscous dampers for larger diesel
engines, increasing our available product offerings to our North
American customers and provides a manufacturing infrastructure
for all our products.
The acquisition of VA provided 67.6% of the revenue growth in
1997 over 1996.
Results of Operations
The following table summarizes the Company's results of
operations as a percentage of net sales for the years 1995
through 1997 ending December 31.
1997 1996 1995
Net sales 100.0% 100.0% 100.0%
Cost of products sold 90.0 89.5 89.7
Administrative and selling 2.9 3.2 3.0
Amortization .2 -- --
Plant closing costs 1.9 -- --
Operating income 5.0 7.3 7.3
Investment and other
income, net (.1) (.3) (.3)
Interest expense 1.7 1.3 1.4
Earnings before income taxes 3.4 6.3 6.2
Income taxes 1.2 2.0 2.3
Net earnings 2.2% 4.3% 3.9%
1997 Compared to 1996
The Company's net sales reached a new record level in 1997 at
$451,518,000, 11% over the previous record of $407,999,000 set in
1996. The increase in sales was due largely to revenues from the
Company's recent acquisition along with internal growth stemming
from new program launches. North American light vehicle
production was up 3% from 1996 fueled by growth in the light
truck segments. The Company continued to see strong shipments in
its mid-range and heavy-duty diesel engine products to CDC,
Detroit Diesel and Mack Truck.
During 1997 the Company announced the consolidation of its
Jackson and Gladwin, Michigan plants with other North American
operations and recorded a provision for plant closing costs of
$8,769,000 against earnings. These closures are anticipated to
provide annualized savings of approximately $5,500,000 a year
before taxes beginning in 1998. Cost of products sold as a
percent of sales for 1997 was 90.0% as compared to 89.5%. This
increase was due to higher start-up costs with thirteen new
programs launched in 1997 versus six in 1996 and additional
equipment moving and consolidation expenses not allowed to be
included with the aforementioned provision for plant closing
costs. Administrative and selling expenses decreased as a
percentage of sales from 3.2% in 1996 to 2.9% in 1997 due to
better control over expenses and leverage from increased sales
volume. Lastly, the Company incurred expenses for amortization of
goodwill and intangibles from the acquisition over the last half
of the year. Operating earnings, excluding the provision for the
plant closings, reached $30,919,000 in 1997, $1,346,000 or 4.6%
higher than 1996.
Investment and other income was $524,000 in 1997, down $901,000
from 1996, primarily due to lower average invested cash balances.
Interest expense increased $2,097,000 as a result of additional
debt incurred to fund the VA acquisition.
Income tax expense for 1997 reflects an effective rate of 33.8%
compared to 31.3% for 1996. 1996 benefited from federal tax
credits totaling $1,100,000 relating to prior years.
1996 Compared to 1995
Net sales for 1996, at $407,999,000 were 3% above the
$395,069,000 level of 1995. The major reason for the sales
increase from 1995 was the volume on several significant new
products in addition to an increase in production for medium-duty
engines. This was offset by automobile production being down at
the Big Three by 6% from 1995, primarily due to the work
stoppages at GM in the first and fourth calendar quarters.
Operating earnings increased 2.8% from $28,764,000 to $29,573,000
for 1996. The operating margin, at 7.3% remained comparable to
1995 as our Mexican operation was profitable all year and we
experienced improvements in certain key operations. This was
offset by the effect of the work stoppages and lower passenger
car and heavy-duty diesel engine production levels at customers.
Investment and other income was $1,425,000 in 1996, up $278,000
from 1995, due to higher average invested balances and interest
on tax refunds. Interest expense decreased $160,000 from 1995 as
a result of lower average debt balances.
Income tax expense for 1996 represented an effective rate of
31.3% compared to 37.3% for 1995, which was lower due to the
recognition of federal tax credits totaling $1,100,000 relating
to prior years.
Liquidity and Capital Resources
The Company's capital requirements relate primarily to capital
expenditures, debt service and the cost of acquisitions.
Historically, the Company's primary sources of financing have
been cash from operations, borrowings under its revolving line of
credit and the issuance of long-term debt and equity.
Net cash generated from operations was $30,115,000 in 1997
compared to $50,794,000 in 1996 and $35,781,000 in 1995. The cash
flows were primarily provided from earnings and depreciation
expense and in 1997 decreased because of increased working
capital needs.
At December 31, 1997, working capital was $36,366,000, compared
to $45,038,000 at December 31, 1996. The decrease in working
capital was primarily attributable to lower cash balances which
were utilized to fund the acquisition.
During 1997 the Company invested $28,977,000 in capital equipment
and plant expansions compared to $26,296,000 in 1996. Capital
expenditures for 1998 are expected to approximate $28 million and
will principally support new business and infrastructure
enhancements both domestically and internationally.
The Company has paid uninterrupted cash dividends each year since
becoming publicly-owned in 1972. Dividends paid in 1997 were
$7,252,000 compared to $7,229,000 in 1996 and $7,192,000 in 1995.
The dividend rate for all three years was $ .40 per share.
In June 1997, the Company entered into revolving credit
agreements to allow for borrowings of up to $100 million which in
August 1997 were permanently reduced to $50 million. At December
31, 1997, borrowings outstanding under the agreements were $15
million at an interest rate of 6.4%. The borrowings are
classified as long-term based on management's intent and ability
to maintain this level of borrowing for a period in excess of one
year. The Company has letters of credit committed of $1,052,000
under these facilities. At December 31, 1997 the Company has $34
million of the $50 million revolving credit facilities available.
In August 1997, the Company issued and sold $35 million of its
7.03% unsecured Senior Notes, Series A and $15 million of its
6.96% unsecured Senior Notes, Series B. Notes of both series are
due August 1, 2012. Prepayment of $1,500,000 of higher-cost debt
was made in 1997.
The Company maintains unsecured short-term credit lines with
banks under which it may borrow $12,597,000, of which $500,000
was committed as letters of credit at December 31, 1997. The
Company had no short-term borrowings at December 31, 1997.
The Company believes its liquidity, capital resources and cash
flows from operations are sufficient to fund planned capital
expenditures, working capital requirements and debt service in
the absence of additional significant acquisitions.
The Company intends to fund future acquisitions with cash,
securities or a combination of cash and securities. To the extent
the Company uses cash for all or part of any such acquisitions,
it expects to raise such cash primarily from cash generated from
operations, borrowings under the revolving credit agreements or,
if feasible and attractive, issuance of long-term debt or
additional Common Stock.
Impact of Inflation
The Company does not expect that it will be significantly
affected by inflation in 1998.
Impact of FASB Statements
The Company has not yet adopted Statement of Financial Accounting
Standard No. 130 "Reporting Comprehensive Income" or Statement of
Financial Accounting Standard No. 131 "Disclosures About Segments
of an Enterprise and Related Information", which become effective
in 1998. As both statements are disclosure requirements neither
statement will have a material effect upon future financial
statements.
"Safe Harbor" Provisions
This annual report contains forward-looking statements within the
meaning of the Private Securities Litigation Act of 1995.
Investors are cautioned that any forward-looking statements,
including statements regarding the intent, belief, or current
expectations of the Company or its management are not guarantees
of future performance and involve risks and uncertainties, and
that actual results may differ materially from those in
forward-looking statements as a result of various factors
including, but not limited to, (i) general economic conditions in
the markets in which the Company operates, (ii) fluctuation in
demand for the Company's product, and (iii) other actions taken
by the Company. The Company does not intend to update these
forward-looking statements.
PAGE
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Statements Of Operations
(In thousands, except per share amounts)
Year Ended December 31
1997 1996 1995
Net sales $451,518 $407,999 $395,069
Costs and expenses:
Cost of products sold 406,513 365,253 354,436
Administrative and selling 13,152 13,173 11,869
Amortization of intangible
assets 934 -- --
Provision for plant closings 8,769 -- --
429,368 378,426 366,305
Operating Earnings 22,150 29,573 28,764
Investment and other
income, net 524 1,425 1,147
Interest expense (7,451) (5,354) (5,514)
Earnings Before Income Taxes 15,223 25,644 24,397
Income taxes 5,144 8,037 9,095
Net Earnings $ 10,079 $ 17,607 $ 15,302
Basic Earnings Per Share $ .56 $ .97 $ .85
Diluted Earnings Per Share $ .55 $ .97 $ .85
See accompanying notes to consolidated financial statements.
Consolidated Statements Of Cash Flows
(In thousands) Year Ended December 31
1997 1996 1995
OPERATING ACTIVITIES
Net earnings $ 10,079 $ 17,607 $ 15,302
Adjustments to reconcile
net earnings to cash
provided by operating
activities:
Depreciation and
amortization 23,427 20,497 18,921
Provision for plant
closings 6,424 -- --
Provision for deferred
income taxes (828) (102) 1,234
Amortization of restricted
stock 356 363 330
Loss (gain) on disposition
of assets 249 217 (113)
Changes in operating
assets and liabilities:
Accounts receivable (12,118) 6,186 985
Inventories (2,466) (1,153) (1,660)
Other assets (6,381) (655) (4,052)
Accounts payable and
accrued expenses 11,373 7,834 4,834
Cash Provided by
Operating Activities 30,115 50,794 35,781
INVESTING ACTIVITIES
Acquisition of business,
net of cash acquired (75,293) -- --
Sale of marketable securities -- -- 2,491
Capital expenditures (28,977) (26,296) (31,510)
Proceeds from disposal of
property and equipment 2,105 171 1,069
Cash Used in Investing
Activities (102,165) (26,125) (27,950)
FINANCING ACTIVITIES
Cash dividends paid (7,252) (7,229) (7,192)
Principal repayments of
long-term debt (55,079) (2,078) (12,250)
Proceeds from long-term
borrowings 115,000 -- 24,050
Cash provided by stock
transactions, net -- 243 42
Cash (Used in) Provided
by Financing Activities 52,669 (9,064) 4,650
Effect of foreign currency
exchange rate changes (1,286) (193) (1,312)
Increase (Decrease) In
Cash and Cash Equivalents(20,667) 15,412 11,169
Cash and cash equivalents
at beginning of year 28,902 13,490 2,321
Cash and Cash Equivalents
at End of Year $ 8,235 $ 28,902 $ 13,490
Supplemental Disclosures:
Cash paid during the
year for:
Interest $ 5,625 $ 5,354 $ 5,514
Income Taxes 8,538 7,995 7,650
See accompanying notes to consolidated financial statements.
Consolidated Balance Sheets
(In thousands, except share and per share amounts)
December 31
1997 1996
ASSETS
Current Assets
Cash and cash equivalents $ 8,235 $ 28,902
Accounts receivable 66,055 41,032
Inventories 19,827 14,034
Customer tooling in process 7,888 4,002
Prepaid expenses and other
current assets 12,689 6,256
Total Current Assets 114,694 94,226
Property, Plant and Equipment,
at cost
Land 4,867 3,116
Buildings and improvements 55,536 49,058
Machinery and equipment 253,096 226,055
313,499 278,229
Less accumulated depreciation 139,353 126,152
Net Property, Plant and
Equipment 174,146 152,077
Intangible Assets - net 49,951 --
Other Assets 2,757 2,653
$341,548 $ 248,956
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current installments of
long-term debt $ 3,579 $ 3,579
Accounts payable 45,803 28,455
Compensation and amounts
withheld 11,350 10,203
Taxes, other than income taxes 3,072 2,597
Other current liabilities 14,524 4,354
Total Current Liabilities 78,328 49,188
Long-Term Debt, excluding
current installments 118,564 58,643
Accrued Retirement Benefits
and Other 14,663 14,015
Deferred Income Taxes 12,121 11,118
Shareholders' Equity
Common stock,
par value $1 per share:
Authorized - 55,000,000 shares
Outstanding - 18,129,202 shares
(1996 - 18,080,002 shares) 18,129 18,080
Additional paid-in capital 24,792 24,366
Retained earnings 82,101 79,274
Unamortized value of
restricted stock (2,147) (2,028)
Cumulative foreign currency
translation adjustments (4,978) (3,692)
Excess pension cost (25) (8)
Total Shareholders' Equity 117,872 115,992
$341,548 $248,956
See accompanying notes to consolidated financial statements.
<PAGE>
<PAGE>
<TABLE>
Consolidated Statements Of Shareholders' Equity
(In thousands, except share and per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Cumulative
Unamortized Foreign
Additional Value Of Currency Excess
Common Paid-In Retained Restricted Translation Pension
Stock Capital Earnings Stock Adjustments Cost Total
Balance at January 1, 1995 $17,929 $23,201 $60,786 $(1,690) $(2,187) $ -- $ 98,039
Net earnings for 1995 15,302 15,302
Cash dividends - $.40 per share (7,192) (7,192)
Exercise of stock options, net 7 35 42
Restricted stock awards, net 45 410 (455) ---
Amortization of restricted stock 330 330
Translation adjustment
for the year (1,312) (1,312)
Excess pension cost adjustment (132) (132)
Balance at December 31, 1995 7,981 23,646 68,896 (1,815) (3,499) (132) 105,077
Net earnings for 1996 17,607 17,607
Cash dividends - $.40 per share (7,229) (7,229)
Exercise of stock options, net 35 208 243
Restricted stock awards, net 64 512 (576) ---
Amortization of restricted stock 363 363
Translation adjustment
for the year (193) (193)
Excess pension cost adjustment 124 124
Balance at December 31, 1996 18,080 24,366 79,274 (2,028) (3,692) (8) 115,992
Net earnings for 1997 10,079 10,079
Cash dividends - $.40 per share (7,252) (7,252)
Restricted stock awards, net 49 426 (475) ---
Amortization of restricted stock 356 356
Translation adjustment
for the year (1,286) (1,286)
Excess pension cost adjustment (17) (17)
Balance at December 31, 1997 $18,129 $24,792 $82,101 $(2,147) $(4,978) $(25) $117,872
See accompanying notes to consolidated financial statements.
</TABLE>
PAGE
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A -- Significant Accounting Policies
Description of the Business: The Company is a supplier of
precision-machined powertrain and chassis products to the global
automotive and heavy-duty diesel engine markets, supplying in
excess of 700 different components and assemblies to original
equipment manufacturers located principally in North America and
Europe.
Principles of Consolidation: The consolidated financial
statements include the accounts of the Company and all
subsidiaries after elimination of intercompany accounts and
transactions.
Foreign Currency Translation: Translation adjustments from
foreign subsidiaries are reflected in the financial statements as
a separate component of shareholders' equity. Foreign currency
gains and losses resulting from transactions are included in
determining net earnings.
Cash Equivalents: Cash equivalents include all liquid investments
purchased with a maturity of three months or less.
Financial Instruments: Financial instruments consist primarily of
cash and cash equivalents, accounts receivable, accounts payable
and long-term debt. At December 31, 1997, the fair value of
these financial instruments approximates the carrying amount with
the exception of long-term debt as discussed in Note F.
Inventories: Inventories are stated at the lower of cost or
market. Costs are determined by the last-in, first-out (LIFO)
method for domestic inventories and by the first-in, first-out
(FIFO) method for foreign inventories.
Depreciation: Depreciation is computed using the straight-line
method at annual rates which are sufficient to amortize the cost
over the estimated useful lives.
Amortization: Cost in excess of fair-market value of net assets
acquired (goodwill), arising from the acquisition of the
Vibration Attenuation division (see Note B), is amortized on a
straight-line basis over 40 years. Specific intangibles
including a supply, a non-compete and various license agreements
and various patents are amortized on a straight-line basis over
the estimated periods benefited with periods ranging from 2.5 to
40 years. The carrying value of intangible assets is to be
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable. An impairment would be recognized when the
expected undiscounted future operating cash flow derived from
such intangible assets is less than their carrying value. The
Company believes that no impairment exists at December 31, 1997.
Customer Tooling: Costs incurred for customer-owned tooling in
excess of amounts billed to date are recorded as customer tooling
in process. Costs for customer-owned tooling which will be
recovered as parts are shipped are included with other assets.
Income Taxes: Deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred
tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the
enactment date. No deferred income taxes have been provided for
the income tax liability of approximately $350,000 which would be
incurred on repatriation of the permanently reinvested portion of
unremitted earnings of the foreign subsidiaries.
Net Earnings Per Share: Effective December 31, 1997, the Company
adopted SFAS No. 128 "Earnings Per Share." Basic earnings per
share are computed based upon the weighted average shares of
common stock outstanding during the year. Diluted earnings per
share are calculated to give effect to common stock equivalents
(stock options) outstanding during the year. All prior periods
have been restated.
Stock Based Compensation: Effective January 1, 1996, the Company
adopted SFAS No. 123 "Accounting for Stock-Based Compensation".
The Company adopted this standard by making the required
disclosures only. The adoption of this standard did not have an
effect on the Company's financial position or results of
operations.
Use Of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make reasonable estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the date of
the financial statements and the reported net earnings for the
period. Ultimate resolution of uncertainties could cause actual
results to differ from these estimates.
Note B -- Holset VA Acquisition
On June 27, 1997, the Company, through a wholly owned subsidiary,
purchased the Vibration Attenuation division of Holset
Engineering Company Limited ("VA Business") from Cummins Engine
Company. The aggregate purchase cost for the acquisition of the
VA Business was $76.4 million. Funds for the VA Business
acquisition, net of cash received, were provided by cash and
borrowings of $60 million.
The VA Business has operations in the United Kingdom, France,
Spain, Mexico, Korea, Brazil and the United States. The VA
Business is also a minority partner in a joint venture in India.
The VA Business 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 and
accordingly, the results of the VA Business' operations are
included in the consolidated financial statements since the date
of acquisition. The purchase cost of $76.4 million has been
allocated to assets acquired and liabilities assumed based upon
their estimated fair values at the acquisition date. The excess
of the purchase price over net assets acquired (goodwill)
approximated $38.7 million and is being amortized over 40 years.
The following pro forma unaudited financial data is presented to
illustrate the estimated effects of (i) the VA Business
acquisition and (ii) the completion of the new credit agreements
(Note F) as if the transactions had occurred as of January 1 of
each year presented (in thousands, except per share data).
(Unaudited) (Unaudited)
Three Months Ended Twelve Months Ended
Dec 31 Dec 31 Dec 31 Dec 31
1997 1996 1997 1996
Net sales $123,043 $114,653 $487,505 $472,798
Net income 3,611 4,799 8,496 18,330
Net earnings per share:
Basic $ .20 $ .27 $ .47 $ 1.01
Diluted $ .20 $ .26 $ .47 $ 1.01
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 at the beginning of the periods
presented, and is not intended to be a projection of future
results or trends.
Note C -- Provision for Plant Closings
In the third quarter of 1997, in connection with management's
efforts to reduce costs and improve operating efficiencies, the
Company recorded a provision for plant closings of approximately
$8.8 million. The principal actions in the plant closing plan
involve the closure of two manufacturing facilities. This plan is
expected to result in the elimination of approximately 300
positions. Approximately 200 of these terminations had occurred
as of December 31, 1997. The shut-down of one facility was
completed during 1997 and the shut-down of the remaining facility
is expected to be completed during the second quarter of 1998.
The major components of the plant closing charge are as follows:
(In thousands)
Severance and related costs $4,965
Write-down of property, plant and equipment 2,191
Other 1,613
Total Provision for Plant Closings $8,769
These charges were recorded in the appropriate period in
accordance with the requirements of Emerging Issues Task Force
Pronouncement 94-3. At December 31, 1997, approximately $5.7
million of accruals are available for remaining costs.
Note D -- Inventories
The components of inventories are summarized as follows:
(In thousands) 1997 1996
Finished and in-process products $11,294 $ 9,881
Raw materials 8,533 4,153
$19,827 $14,034
The LIFO inventories comprise approximately 84% and 94% of total
inventories at December 31, 1997 and 1996, respectively.
The replacement cost of inventories exceeded the balance sheet
carrying amounts by approximately $5,900,000 and $5,600,000 at
December 31, 1997 and 1996, respectively.
Note E -- Intangible Assets
At December 31, 1997 intangible assets consisted of the
following:
Goodwill $38,728
Supply, non-compete, and license
agreements and various patents 12,200
50,928
Less accumulated amortization 977
Net Intangible Assets 49,951
Note F -- Debt
Long-term debt at December 31 consisted of the following
obligations:
(In thousands) 1997 1996
8.8% Note payable due 1999 $ 2,250 $ 3,750
9.98% Note payable due 2005 12,000 15,000
6.75% Bank term note due 2008 20,000 20,000
8.45% Bank term note due 2005 20,000 20,000
8.82% Bank term note due 2003 2,893 3,472
7.03% Series A Notes 35,000 ---
6.96% Series B Notes 15,000 ---
Revolving Credit Agreement 15,000 ---
122,143 62,222
Less current installments 3,579 3,579
Long-term debt, excluding
current installments $118,564 $58,643
As of December 31, 1997, the estimated fair value of long-term
debt, discounted at current interest rates, was $131,000,000.
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. 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. At
December 31, 1997, the outstanding borrowings under these
agreements are at an interest rate of approximately 6.4% and
there was $1,052,000 committed as letters of credit.
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 Revolving Credit Agreements.
Under the terms of its loan agreements, the Company is subject to
restrictions concerning additional borrowings and maintenance of
minimum net worth. At December 31, 1997, under the most
restrictive covenant retained earnings of approximately
$18,358,000 were unrestricted. The Company was in compliance
with all such covenants at December 31, 1997.
The Company also has uncommitted short-term credit lines with
banks under which it may borrow up to $12,597,000, of which
$500,000 was committed as letters of credit at December 31,1997.
The contract amount of the letters of credit approximate their
fair value. The lines do not have termination dates, but are
reviewed periodically. No compensating balances are required by
any of the loan agreements.
Principal maturities of long-term debt during the four years
following 1998 are as follows: 1999 - $4,829,000; 2000 -
$6,079,000; 2001 - $8,079,000; and 2002 - $24,442,000.
Note G -- Income Taxes
The components of earnings before income taxes were as follows:
(In thousands) 1997 1996 1995
Domestic $ 9,963 $23,047 $21,772
Foreign 5,260 2,597 2,625
$15,223 $25,644 $24,397
The provisions for income tax expense were as follows:
(In thousands) 1997 1996 1995
Current:
Federal $4,976 $ 6,730 $ 6,439
Foreign 691 822 1,109
State 305 587 313
5,972 8,139 7,861
Deferred:
Federal (1,647) 66 1,078
Foreign 947 (330) 73
State (128) 162 83
(828) (102) 1,234
$5,144 $ 8,037 $ 9,095
A reconciliation of income tax expense to the amount computed by
applying the statutory federal income tax rate to earnings before
income taxes follows:
(In thousands) 1997 1996 1995
Income taxes at federal
statutory rate $5,235 $ 8,975 $ 8,539
State income tax, net of
federal benefit 116 487 257
Foreign operating loss 84 (310) 196
Federal tax credits (100) (1,100) --
Differences between domestic and
effective foreign tax rates (254) (107) 67
Other, net 63 92 36
$5,144 $ 8,037 $ 9,095
The tax effects of temporary differences that give rise to
significant deferred tax assets and liabilities at December 31
are as follows:
1997 1996
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
(In thousands) Assets Liabilities Assets Liabilities
Plant and
equipment $ -- $17,133 $ -- $15,880
Accrued
retirement benefits 5,398 -- 4,412 --
Other accrued expenses 4,028 -- 2,948 --
Foreign net operating
loss carryforward 468 -- 390 --
Federal tax credits 1,066 -- 1,066 --
Other items 530 929 391 804
11,490 18,062 9,207 16,684
Valuation allowance (468) -- (390) --
$11,022 $18,062 $ 8,817 $16,684
As of December 31,1997, the Company has unrecognized foreign net
operating loss carryforwards of approximately $1,400,000 that
begin expiring in 2003.
Deferred income tax assets of $5,081,000 and $3,251,000 are
included in other current assets at December 31, 1997, and 1996,
respectively.
Note H -- Pension Plans
The Company has non-contributory defined benefit pension plans
covering substantially all employees, subject to eligibility
requirements. Benefits are based upon a percentage of
compensation or monthly rates times years of service. Plan
assets are held by a trustee and invested in marketable debt and
equity securities and short-term investments. Benefits for
certain employees are provided through multi-employer defined
benefit plans. The Company also has an unfunded supplemental
executive retirement plan for senior management with benefits
based on compensation and years of service. Contributions to
pension plans are sufficient to provide for both current service
costs and amortization of past service costs over a reasonable
period.
Net pension expense for 1997, 1996 and 1995 included the
following components:
1997 1996 1995
Assumptions used were:
Discount rate 8% 7.75% 8.5%
Rate of increase in
compensation levels 5% 5% 5%
Expected annual long-term
rate of return on assets 10% 9% 9%
(In thousands) 1997 1996 1995
Benefits earned during
the year $2,210 $ 2,114 $1,548
Interest cost on projected
benefit obligation 2,613 2,307 2,142
Actual return on assets (2,174) (3,046) (2,591)
Net amortization and deferral 62 1,391 804
Multi-employer plans 510 544 574
$3,221 $ 3,310 $2,477
The following table sets forth the plan's funded status at
September 30:
1997 1996
Assumptions used were the
same as above, except:
Discount rate 7.5% 8%
Rate of increase in
compensation levels 4.5%
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Plans in Which Plans in Which
Assets Accum. Assets Accum.
Exceed Benefits Exceed Benefits
Accum. Exceed Accum. Exceed
Benefits Assets Benefits Assets
Actuarial present value of:
Vested benefit obligation $22,033 $ 3,773 $ 6,849 $ 15,561
Accumulated benefit obligation $25,061 $ 4,475 $ 7,640 $ 16,821
Projected benefit obligation $32,431 $ 6,040 $ 10,360 $ 22,146
Plan assets at fair value 26,237 2,692 9,181 14,468
Deficiency of assets under
projected benefit obligation (6,194) (3,348) (1,179) (7,678)
Unrecognized net loss 3,612 451 235 3,180
Unrecognized net asset (824) 501 (309) (46)
Unrecognized prior service cost 846 351 527 482
Additional minimum liability -- (232) -- (290)
Accrued pension liability included
in the balance sheets $ (2,560) $(2,277) $ (726) $ (4,352)
</TABLE>
The Company has recorded an additional minimum liability at
December 31, 1997 and 1996, representing the excess of the
unfunded accumulated benefit obligations over the fair value of
plan assets and accrued pension liabilities. The additional
liability has been offset by intangible assets to the extent of
previously unrecognized prior service cost. Certain employees
participate in Company-sponsored 401(k) savings plans. Under the
plans, the Company contributes a defined amount to individual
employee accounts based on the respective employee's
contribution. Contributions approximated $1,330,000, $1,490,000
and $1,340,000 in 1997, 1996 and 1995, respectively.
Note I -- Retiree Medical Benefits
The Company provides medical benefits to certain retired
employees, their covered dependents, and beneficiaries.
Generally, employees who have attained age 55 and who have
rendered 10 years of service are eligible for these benefits.
Certain medical plans are contributory and other medical plans
are noncontributory.
The retiree medical benefit cost for 1997, 1996 and 1995
consisted of the following:
1997 1996 1995
Assumed discount rate 8% 7.75% 8.5%
(In thousands)
Benefits earned during the year $ 598 $ 612 $ 464
Interest cost on accumulated
retiree medical benefits 759 693 770
Net amortization 3 5 12
$1,360 $ 1,310 $ 1,246
The Company's retiree medical benefits are not funded. The
following table presents the actuarial present value of the
obligation at September 30 reconciled with amounts recognized in
the balance sheet:
1997 1996
Assumed discount rate 7.5% 8%
(In thousands)
Accumulated retiree
medical benefits obligation:
Retirees $ 3,699 $ 2,924
Fully-eligible, active
plan participants 1,134 1,390
Other active employees 5,744 5,387
10,577 9,701
Unrecognized net gain (loss) (344) 612
Unamortized prior service cost (60) (69)
$10,173 $10,244
Other actuarial assumptions used for the Company's retiree health
care plans include:
<PAGE>
(Dollars in thousands) 1997 1996 1995
Medical cost trend rate (a) 7.5% 8% 11%
Effect of a 1% point increase
in the medical cost trend rate
on the accumulated retiree
medical benefit obligation $1,946 $ 1,574 1,761
Effect of a 1% point increase in
the medical cost trend rate on
the aggregate of the service
and interest cost $ 336 $ 270 $ 245
(a) Beginning in 1996, the medical cost trend rate was assumed
to be 8% and to decrease .5% per year to 5.5% in 2001 and
remaining at that level thereafter. In 1995, the medical
cost trend rate was set at 11% and assumed to decrease 1%
per year to 6% in 2000 and remaining at that level
thereafter.
During 1997, the Company reduced its obligation for retiree
medical benefits by $770,000 related to the closing of two
plants.
Note J -- Long-Term Incentive Plans
The Company has long-term incentive plans under which employees
or directors may be granted stock options or other long-term
incentives. The 1984 Plan, which allowed for options to be
granted for up to 1,687,500 common shares, was terminated in
1993. Options and restricted shares previously granted under the
1984 Plan remain outstanding for up to 10 years. Stock
appreciation rights (SARs), which provide that optionees may
receive cash in lieu of shares, were also granted in conjunction
with stock option grants.
In 1993, the Company adopted the 1993 Executive Long-Term
Incentive Plan for employees. The 1993 Plan permits the grant of
stock options, restricted stock, stock appreciation rights,
performance shares and performance units. The authorized share
pool for making grants under the 1993 Plan is 1,350,000 common
shares. Also in 1993, the Company adopted the 1993 Non-Employee
Director Stock Option Plan. Under this plan, nonqualified stock
options may be granted to non-employee directors for up to
150,000 common shares.
Options granted have varying exercise dates within five years
after grant date and generally expire after ten years. At
December 31, 1997 there were 1,361,940 of common stock reserved
for issuance under the plans of which 830,550 are available for
future grants.
The Company applies APB Opinion No. 25 in accounting for its
stock compensation plans. Accordingly, no compensation cost has
been recognized for the stock options granted in 1997 or 1996.
Had compensation cost for these options been determined on the
basis of fair value pursuant to SFAS No. 123, The Company's pro
forma net income and earnings per share would have been as
indicated below:
1997 1996
Net income As reported $10,079 $17,607
Pro forma $ 9,874 $17,413
Basic Earnings
per share As reported $ .56 $ .97
Pro forma $ .54 $ .96
Diluted earnings
per share As reported $ .55 $ .97
Pro forma $ .54 $ .96
The fair value of each option grant is estimated on the date of
grant using the Black Scholes option-pricing model with the
following weighted average assumptions used for grants in 1997
and 1996, respectively: dividend yield of 3.8% for both years;
expected volatility of 37% and 40%; risk-free interest rates of
6.5% and 6.1%; and an expected life of 7.0 and 6.8 years.
Incentive plan activity is summarized as follows:
Stock Option Plans
Weighted
Option Average Restricted
Shares Exercise Price Shares
1996:
Outstanding
January 1, 1996 392,645 $ 9.27 185,591
Granted/awarded 107,240 9.24 74,980
Exercised (37,050) 5.61 --
Restrictions lapsed -- -- (34,726)
Canceled/forfeited (20,720) 12.11 (11,502)
Outstanding 442,115 9.44 214,343
Exercisable 226,143 --
Weighted-average
fair value of options
granted during
the year $ 9.25
1997:
Granted/awarded 100,760 $9.76 64,020
Exercised (1,485) 6.67 --
Restrictions lapsed -- -- (33,039)
Canceled/forfeited (10,000) 9.94 (14,986)
Outstanding 531,390 9.50 230,338
Exercisable 287,774 --
Weighted-average
fair value of options
granted during
the year $ 9.76
Note K -- Shareholder Rights Plan
In 1997, the Company adopted a new Shareholder Rights Plan with
substantially the same terms as the prior shareholder rights plan
which expired in 1997. The Plan is designed to discourage partial
or two-tier tender offers which could result in unequal treatment
of shareholders. Under the Plan, the right to purchase one share
of common stock was distributed for each outstanding share of the
Company's common stock. The Plan provides that the Rights become
exercisable if a person or group acquires, in a transaction not
approved by the Board of Directors, 20% or more of the Company's
common stock or commences a tender or exchange offer which would
result in a person or group acquiring 20% or more of the
Company's common stock. In addition, the Plan permits the Board
of Directors to declare a person or group owning 10% or more of
the Company's common stock an "Adverse Person," under certain
circumstances, which also causes the Rights to become
exercisable.
When exercisable, each Right entitles shareholders to purchase
one share of the Company's common stock at a specified exercise
price. The Company will be entitled to redeem the Rights at
$.005 per Right until a person or group has been declared an
"Adverse Person" or the close of business on the tenth business
day after a public announcement that a 20% position has been
acquired. If a 20% position is acquired, a person or group is
declared an "Adverse Person," the Company is acquired or certain
other events occur after the Rights become exercisable, each
Right will entitle its holder to purchase, for the exercise
price, a number of the Company's or acquiring company's common
shares having a market value of twice the exercise price. Rights
were issued in 1997 to shareholders and will be attached to each
share issued thereafter until the Rights become exercisable,
expire or are redeemed. Rights expire May 9, 2007, unless
extended by the Board of Directors.
Note L -- Earnings Per Share
In thousands, except per share amounts
1997 1996 1995
Net earnings applicable to
common stock and common
stock equivalents $10,079 $17,607 $15,302
Basic Earnings per Share
Weighted average shares
outstanding 18,123 18,067 17,971
Earnings Per Share $ .56 $ .97 $ .85
Diluted Earnings per Share
Weighted average shares
outstanding 18,123 18,067 17,971
Net effect of dilutive
stock options 79 48 70
18,202 18,115 18,041
Earnings Per Share $ .55 $ .97 $ .85
Options to purchase 43,020, 75,480 and 52,740 shares of common
stock were outstanding during 1997 through 1995 respectively, at
prices ranging from $11.00 to $14.67. These shares were not
included in the computation of diluted EPS because the options'
exercise price was greater than the average market price of the
common shares.
Note M -- Geographic Areas and Major Customers
The Company operated entirely in North America prior to 1997.
With the acquisition of the Holset VA business during 1997, the
Company expanded its operations to Europe. The Company's
geographic data for the year ended December 31, 1997 is as
follows:
(In thousands)
Revenue:
North America $425,466
Europe 30,401
Eliminations (4,349)
Total $451,518
Operating income
North America $ 20,705
Europe 1,445
Eliminations
Total $ 22,150
Identifiable Assets
North America $256,300
Europe 87,335
Eliminations (2,087)
Total $341,548
Sales between geographic areas are accounted for at prices that
provide a profit and are in accordance with the rules and
regulations of the respective governing authorities.
The Company's operations are conducted within one business
segment. Export sales to customers from the United States were
$63,409,000.
Net sales to major customers were:
(In thousands) 1997 1996 1995
General Motors Corporation $126,500 $108,800 $109,200
Ford Motor Company 88,500 86,700 92,900
Chrysler Corporation 56,500 63,400 55,000
Consolidated Diesel Company
and its parent companies,
Cummins Engine Company
Inc. and Case Corporation 47,000 38,800 36,500
Caterpillar Inc. 36,100 35,900 25,900
Aggregate receivables for these customers at December 31, 1997
and 1996 approximate the same percent of total receivables as
aggregate sales to these customers bear to total sales.
Note N -- Commitments and Contingencies
The Company has been identified as a potentially responsible
party under federal environmental regulations to share in the
cost of cleanups at two waste disposal sites along with many
other companies. While management believes the Company's
responsibility in these matters is minimal, it has established
reserves which it believes are adequate to cover potential
liabilities.
<PAGE>
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders
Simpson Industries, Inc.
We have audited the accompanying consolidated balance sheets of
Simpson Industries, Inc. and subsidiaries as of December 31, 1997
and 1996, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1997. These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Simpson Industries, Inc. and subsidiaries at December
31, 1997 and 1996, and the results of their operations and their
cash flows for each of the years in the three-year period ended
December 31, 1997 in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Detroit, Michigan
January 27, 1998
<PAGE>
<PAGE>
Summary of Quarterly Results of Operations
(In thousands, except per share amounts)
Quarter Ended
Mar.31 Jun.30 Sep.30 Dec.31
1997
Net sales $105,874 $110,274 $112,327 $123,043
Gross profit 10,816 13,040 9,472 11,677
Net earnings 4,387 5,418 (3,337) 3,611
Net earnings per share
Basic .24 .30 (.18) .20
Diluted .24 .30 (.18) .20
1996
Net sales $101,421 $110,049 $ 98,228 $ 98,301
Gross profit 10,383 14,266 8,919 9,178
Net earnings 3,957 5,971 3,443 4,236
Net earnings per share
Basic .22 .33 .19 .23
Diluted .22 .33 .19 .23
Net earnings for the quarter ended September 30, 1997 were
decreased by $5,700 ($.31 per share for both basic and diluted)
for the provision for plant closing.
Net earnings for the quarter ended December 31, 1996 were
increased by $1,100 ($.06 per share for both basic and
diluted) from federal tax credits.
<PAGE>
<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
NONE
<PAGE>
<PAGE>
PART III
The information called for by the items within this part is
included in the Company's Proxy Statement for the 1998 Annual
Meeting of Shareholder's, and is incorporated herein by
reference, as follows:
Pages in 1998
Proxy Statement
Item 10. Directors and Executive Officers
of the Company 1-3,13
(includes information set forth in the
1998 Proxy Statement under "Further Information
- Compliance with Section 16(a) of the
Exchange Act")
Item 11. Executive Compensation 5-11
Item 12. Security Ownership of Certain
Beneficial Owners and Management 12
Item 13. Certain Relationships and Related
Transactions N/A
<PAGE>
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) (1) The Consolidated financial statements of the Company
and its subsidiaries, included in Item 8 herein by reference:
Consolidated Balance Sheets - December 31, 1997 and 1996
Consolidated Statements of Shareholders' Equity - years
ended December 31, 1997, 1996 and 1995
Consolidated Statements of Operations - years ended
December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows - years ended
December 31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements -
December 31, 1997
(2) All financial statement schedules for which provision is
made in the applicable accounting regulations of the Securities
and Exchange Commission are not required under the related
instructions.
(3) Exhibits. The following exhibits designated with a "+"
symbol represent the Company's management contracts or
compensatory plans or arrangements for executive officers:
3.1 * Restated Articles of Incorporation, as amended
3.2 * Bylaws, as amended
4.2 Rights Agreement, dated as of February 28, 1997,
between Simpson Industries, Inc. and Harris
Trust and Savings Bank, as Rights Agent
(previously filed as Exhibit 4.2 to the Company's
Current Report on Form 8-K, dated April 22, 1997
and incorporated herein by reference)
10.3 Note Agreement with Aetna Life Insurance Company,
dated June 12, 1986 (previously filed as
Exhibit 10.3 to the Company's Current Report on
Form 8-K, dated June 12, 1986 and
incorporated herein by reference)
Amendment to Note Agreement with Aetna Life
Insurance Company, dated November 17, 1994
(previously filed as Exhibit 10.3 to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, and
incorporated herein by reference)
Amendment No. 2 to Note Agreement with Aetna Life
Insurance Company, dated as of June 17, 1997
(previously filed as Exhibit 10.3 to the Company's
Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997 and incorporated herein by
reference)
10.4 + 1984 Stock Option Plan, as amended (previously
filed as Exhibit 10.4 to the Company's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1988 and incorporated
herein by reference)
10.8 + Supplemental Executive Retirement Plan (previously
filed as Exhibit 10.8 to the Company's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1988, and incorporated
herein by reference)
10.10+ Letter Agreement, dated September 12, 1989, with
Roy E. Parrott (previously filed as Exhibit 10.10
to the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1989 and
incorporated herein by reference)
+ Amendment to Letter Agreement with Roy E. Parrott,
dated March 15, 1994 (previously filed as Exhibit
10.10 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994, and
incorporated herein by reference)
10.11 Note Agreement with Massachusetts Mutual Life
Insurance Company, dated August 15, 1991
(previously filed as Exhibit 10.11 to the
Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1991 and
incorporated herein by reference)
Amendment No. 1 to Note Agreement with
Massachusetts Mutual Life Insurance Company,
dated as of June 17, 1997 (previously filed as
Exhibit 10.11 to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1997
and incorporated herein by reference)
10.13+ Simpson Industries, Inc. 1993 Executive Long-Term
Incentive Plan (previously filed as Exhibit
10.13 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992, and
incorporated herein by reference)
10.14+ Simpson Industries, Inc. 1993 Non-Employee
Director Stock Option Plan (previously filed as
Exhibit 10.14 to the Company's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1992, and incorporated herein by
reference)
10.15 Term Loan Agreement with Comerica Bank, dated as
of December 17, 1993 (previously filed as Exhibit
10.15 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993 and
incorporated herein by reference)
Amendment to Term Loan Agreement with Comerica
Bank, dated as of November 1, 1994 (previously
filed as Exhibit 10.15 to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1994, and incorporated herein by
reference)
Amendment No. 2 to Term Loan Agreement with
Comerica Bank, dated as of June 17, 1997
(previously filed as Exhibit 10.15 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997 and incorporated herein by reference)
10.19+ Letter Agreement, dated December 16, 1994, with
James A. Hug (previously filed as Exhibit 10.19 to
the Company's Annual Report on Form 10-K for the
Fiscal year ended December 31, 1994, and
incorporated herein by reference)
10.20 Term Note Agreement with Comerica Bank, dated as of
January 25, 1995 (previously filed as Exhibit 10.20
to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, and
incorporated herein by reference)
Amendment No. 2 to Term Loan Agreement with
Comerica Bank, dated as of June 17, 1997
(previously filed as Exhibit 10.20 to the
Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997 and
incorporated herein by reference)
10.21 Term Note Agreement with Comerica Bank, dated as of
February 7, 1995 (previously filed as
Exhibit 10.21 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31,
1994, and incorporated herein by reference)
Amendment No. 2 to Term Loan Agreement with
Comerica Bank, dated as of June 17, 1997
(previously filed as Exhibit 10.21 to the
Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1997 and
incorporated herein by reference)
10.23+ Letter Agreement, dated March 1, 1996, with James
B.Painter (previously filed as Exhibit 10.23
to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, and
incorporated herein by reference)
10.24 Credit Agreement, dated June 17, 1997, among
Simpson Industries and certain other Borrowers,
certain Commercial Lending Institutions,
ABN AMRO Bank N.V. and Comerica Bank
(previously filed as Exhibit 10.24
to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1997 and incorporated
herein by reference)
* Amendment to Credit Agreement, dated August 22,
1997 among Simpson Industries, Inc. and certain
other Borrowers, certain Commercial Lending
Institutions, ABN AMRO Bank N.V. and Comerica Bank
10.25 Credit Agreement, dated June 17, 1997, among
Simpson Industries and certain other Borrowers,
certain Commercial Lending Institutions, ABN AMRO
Bank N.V. and Comerica Bank (previously filed as
Exhibit 10.25 to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997 and
incorporated herein by reference)
* Amendment to Credit Agreement, dated August 22, 1997
among Simpson Industries, Inc. and certain other
Borrowers, certain Commercial Lending Institutions,
ABN AMRO Bank N.V. and Comerica Bank
10.26 Note Agreement, dated August 1, 1997 with
Northwestern Mutual Life Insurance Company,
Chubb Life Insurance Company of America, Chubb
Colonial Life Insurance Company, Allstate Life
Insurance Company and United of Omaha Life Insurance
Company (previously filed as Exhibit 10.26 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997 and incorporated
herein by reference)
10.27+* Letter Agreement, dated September 1, 1997, with
Vinod M. Khilnani
11 * Statement regarding Computation of per share
earnings
21 * Subsidiaries of registrant
23 * Consent of independent public accountants
27.1 * Financial Data Schedule
* Filed with this report
(b) No reports on Form 8-K were filed during the last quarter of
the Company's fiscal year ended December 31, 1997.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 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.
By: /s/ Roy E. Parrott
Roy E. Parrott,
Chairman and Chief Executive
Officer
Date: February 21, 1998
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities indicated on
February 21, 1998.
Signature Title
/s/ Roy E. Parrott Chairman and Chief Executive
Roy E. Parrott Officer and Director
(principal executive officer)
/s/ Vinod M. Khilnani Vice President, Chief Financial
Vinod M. Khilnani Officer and Treasurer
(principal financial officer)
(principal accounting officer)
/s/ Michael E. Batten Director
Michael E. Batten
/s/ Susan F. Haka Director
Susan F. Haka
/s/ George R. Kempton Director
George R. Kempton
/s/ Walter J. Kirchberger Director
Walter J. Kirchberger
/s/ Robert W. Navarre Director
Robert W. Navarre
/s/ Ronald L. Roudebush Director
Ronald L. Roudebush
/s/ F. Lee Weaver Director
F. Lee Weaver
/s/ Frank K. Zinn Director and Secretary
Frank K. Zinn
<PAGE>
<PAGE>
INDEX TO EXHIBITS
3.1 * Restated Articles of Incorporation, as amended
3.2 * Bylaws, as amended
4.2 Rights Agreement, dated as of February 28, 1997,
between Simpson Industries, Inc. and Harris
Trust and Savings Bank, as Rights Agent
(previously filed as Exhibit 4.2 to the Company's
Current Report on Form 8-K, dated April 22, 1997
and incorporated herein by reference)
10.3 Note Agreement with Aetna Life Insurance Company,
dated June 12, 1986 (previously filed as
Exhibit 10.3 to the Company's Current Report on
Form 8-K, dated June 12, 1986 and
incorporated herein by reference)
Amendment to Note Agreement with Aetna Life
Insurance Company, dated November 17, 1994
(previously filed as Exhibit 10.3 to the
Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, and
incorporated herein by reference)
Amendment No. 2 to Note Agreement with Aetna Life
Insurance Company, dated as of June 17, 1997
(previously filed as Exhibit 10.3 to the Company's
Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997 and incorporated herein by
reference)
10.4 + 1984 Stock Option Plan, as amended (previously
filed as Exhibit 10.4 to the Company's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1988 and incorporated
herein by reference)
10.8 + Supplemental Executive Retirement Plan (previously
filed as Exhibit 10.8 to the Company's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1988, and incorporated
herein by reference)
10.10+ Letter Agreement, dated September 12, 1989, with
Roy E. Parrott (previously filed as Exhibit 10.10
to the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1989 and
incorporated herein by reference)
+ Amendment to Letter Agreement with Roy E. Parrott,
dated March 15, 1994 (previously filed as Exhibit
10.10 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994, and
incorporated herein by reference)
10.11 Note Agreement with Massachusetts Mutual Life
Insurance Company, dated August 15, 1991
(previously filed as Exhibit 10.11 to the
Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1991 and
incorporated herein by reference)
Amendment No. 1 to Note Agreement with
Massachusetts Mutual Life Insurance Company,
dated as of June 17, 1997 (previously filed as
Exhibit 10.11 to the Company's Quarterly Report
on Form 10-Q for the quarter ended June 30, 1997
and incorporated herein by reference)
10.13+ Simpson Industries, Inc. 1993 Executive Long-Term
Incentive Plan (previously filed as Exhibit
10.13 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992, and
incorporated herein by reference)
10.14+ Simpson Industries, Inc. 1993 Non-Employee
Director Stock Option Plan (previously filed as
Exhibit 10.14 to the Company's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1992, and incorporated herein by
reference)
10.15 Term Loan Agreement with Comerica Bank, dated as
of December 17, 1993 (previously filed as Exhibit
10.15 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993 and
incorporated herein by reference)
Amendment to Term Loan Agreement with Comerica
Bank, dated as of November 1, 1994 (previously
filed as Exhibit 10.15 to the Company's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1994, and incorporated herein by
reference)
Amendment No. 2 to Term Loan Agreement with
Comerica Bank, dated as of June 17, 1997
(previously filed as Exhibit 10.15 to the Company's
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997 and incorporated herein by reference)
10.19+ Letter Agreement, dated December 16, 1994, with
James A. Hug (previously filed as Exhibit 10.19 to
the Company's Annual Report on Form 10-K for the
Fiscal year ended December 31, 1994, and
incorporated herein by reference)
10.20 Term Note Agreement with Comerica Bank, dated as of
January 25, 1995 (previously filed as Exhibit 10.20
to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994, and
incorporated herein by reference)
Amendment No. 2 to Term Loan Agreement with
Comerica Bank, dated as of June 17, 1997
(previously filed as Exhibit 10.20 to the
Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997 and
incorporated herein by reference)
10.21 Term Note Agreement with Comerica Bank, dated as of
February 7, 1995 (previously filed as
Exhibit 10.21 to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31,
1994, and incorporated herein by reference)
Amendment No. 2 to Term Loan Agreement with
Comerica Bank, dated as of June 17, 1997
(previously filed as Exhibit 10.21 to the Company's
Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997 and incorporated herein by
reference)
10.23+ Letter Agreement, dated March 1, 1996, with James
B. Painter (previously filed as Exhibit Exhibit
10.23 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996, and
incorporated herein by reference)
10.24 Credit Agreement, dated June 17, 1997, among
Simpson Industries and certain other Borrowers,
certain Commercial Lending Institutions, ABN AMRO
Bank N.V. and Comerica Bank (previously filed as
Exhibit 10.24 to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997 and
incorporated herein by reference)
* Amendment to Credit Agreement, dated August 22,
1997 among Simpson Industries, Inc. and certain
other Borrowers, certain Commercial Lending
Institutions, ABN AMRO Bank N.V. and Comerica Bank
10.25 Credit Agreement, dated June 17, 1997, among
Simpson Industries and certain other Borrowers,
certain Commercial Lending Institutions, ABN AMRO
Bank N.V. and Comerica Bank (previously filed as
Exhibit 10.25 to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997 and
incorporated herein by reference)
* Amendment to Credit Agreement, dated August 22, 1997
among Simpson Industries, Inc. and certain other
Borrowers, certain Commercial Lending Institutions,
ABN AMRO Bank N.V. and Comerica Bank
10.26 Note Agreement, dated August 1, 1997 with
Northwestern Mutual Life Insurance Company,
Chubb Life Insurance Company of America, Chubb
Colonial Life Insurance Company, Allstate Life
Insurance Company and United of Omaha Life Insurance
Company (previously filed as Exhibit 10.26 to the
Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997 and incorporated
herein by reference)
10.27+* Letter Agreement, dated September 1, 1997, with
Vinod M. Khilnani
11 * Statement regarding Computation of per share
earnings
21 * Subsidiaries of registrant
23 * Consent of independent public accountants
27.1 * Financial Data Schedule
* Filed with this report
RESTATED ARTICLES OF INCORPORATION
of
SIMPSON INDUSTRIES, INC. (a Michigan Corporation)
1. These Restated Articles of Incorporation are executed
pursuant to the provisions of Sections 641 - 651, Act 284, Public
Acts of 1972.
2. The present name of the corporation is Simpson
Industries, Inc.
3. All of the former names of the corporation are as
follows: Simpson Company, Simpson Manufacturing Company.
4. The date of filing the original articles of
incorporation was July 9, 1945.
5. The following Restated Articles of Incorporation
supersede the original Articles of Incorporation as amended and
shall be the Articles of Incorporation of the corporation:
ARTICLE I
The name of this corporation is Simpson Industries, Inc.
ARTICLE II
The purpose or purposes for which the corporation is
organized is to engage in any activity within the purposes for
which corporations may be organized under the Business
Corporation Act of Michigan.
ARTICLE III
The location of the corporation is 917 Anderson Road,
Litchfield, Hillsdale County, Michigan 49252.
The address of the registered office in Michigan is 917
Anderson Road, Litchfield, Hillsdale County, Michigan 49252.
The current resident agent of the corporation is Robert W.
Navarre.
ARTICLE IV
The total authorized capital stock is 8,500,000 shares of
common stock with a par value of $1.00 per share. Holders of
common stock shall have equal voting rights and other rights and
shall be entitled to one vote per share. No holder of capital
stock of the corporation shall be entitled as such as a matter of
right to subscribe for, or to purchase, any part of a new or
additional issue of stock or any other reacquired shares of stock
of any class whatsoever or of any securities convertible into
stock of any class whatsoever, whether now or hereafter
authorized and whether issued for cash or other consideration.
ARTICLE V
The term of this corporation is perpetual.
ARTICLE VI
Whenever a compromise or arrangement or any plan of
reorganization of this corporation is proposed between this
corporation and its creditors or any class of them and/or between
this corporation and its shareholders or any class of them, any
court of equity jurisdiction within the state of Michigan may, on
the application of this corporation or of any creditor or any
shareholder thereof, or on the application of any receiver or
receivers appointed for this corporation, order a meeting of the
creditors or class of creditors, and/or of the shareholders or
class of shareholders, as the case may be, to be affected by the
proposed compromise or arrangement or reorganization, to be
summoned in such manner as said court directs. If a majority in
number, representing three-fourths in value of the creditors or
class of creditors, and/or of the shareholders or class of
shareholders, as the case may be, to be affected by the proposed
compromise or arrangement or reorganization, agrees to any
compromise or arrangement or to any reorganization of this
corporation as a consequence of such compromise or arrangement,
said compromise or arrangement and said reorganization shall, if
sanctioned by the court to which the said application has been
made, be binding on all the creditors or class of creditors,
and/or on all the shareholders or class shareholders, as the case
may be, and also on this corporation.
ARTICLE VII
The Board of Directors may from time to time adopt, alter,
amend supplement or repeal the By-Laws of the Corporation,
provided that any By-Laws adopted, altered, amended, supplemented
or repealed by the Board may be thereafter repealed, altered,
amended supplemented, or readopted by the shareholders of the
Corporation, and provided further that Section 2, 4, 5 and 6 of
Article IV and Article XI of the By-Laws shall not be altered,
amended supplemented or repealed, and no provisions shall be
adopted, except by affirmative vote of the holders of at least 66
2/3% of the outstanding shares of common stock of the Corporation
entitled to vote generally in the election of directors. This
Article VII shall not be altered, amended, supplemented or
repealed except by affirmative vote of the holders of at least 66
2/3% of the outstanding shares of common stock of the Corporation
entitled to vote generally in the election of directors.
ARTICLE VIII
(A) Except as set forth in paragraph (B) of this
Article, the affirmative vote or consent of the holders of not
less than two-thirds (66 2/3%) of the outstanding shares of stock
of this Corporation entitled to vote for election of directors,
voting for purposes of this Article as one class, shall be
required:
(1) to adopt any agreement for, or to
approve, the merger or consolidation of the
Corporation or any subsidiary (as hereinafter
defined) with or into any other person (as
hereinafter defined),
(2) to authorize any sale, lease,
transfer, exchange, mortgage, pledge or other
disposition to any other person of all or
substantially all of the assets of the
Corporation or any subsidiary, or
(3) to authorize the issuance or
transfer by the Corporation or any subsidiary
of any voting securities or the Corporation
or any subsidiary in exchange or payment for
the securities or assets of any other person,
if such authorization is otherwise required
by law or by any agreement between the
Corporation and any national securities
exchange or by any other agreement to which
the Corporation or any subsidiary is a party,
if, in any such case, as of the record date
for the determination of shareholders
entitled to notice thereof and to vote
thereon or consent thereto, such other person
is, or at any time within the preceding
twelve months has been, the beneficial owner
(as hereinafter defined) of 5 percent of more
of the outstanding shares of stock of the
Corporation entitled to vote in elections of
directors. If such other person is not, and
has not been, a 5 percent beneficial owner,
the provisions of this paragraph (A) shall
not apply, and the provisions of Michigan law
shall apply.
(B) The provisions of paragraph (A) of this Article
shall not apply, and the provisions of Michigan law shall apply,
to (1) any transaction described therein if the Board of
Directors by resolution shall have approved a memorandum of
understanding with such other person setting forth the principal
terms of such transaction and such transaction is substantially
consistent therewith, provided that a majority of those members
of the Board of Directors, voting in favor of such resolution
were duly elected and acting members of the Board of Directors
prior to the time such other person became the beneficial owner
of 5 percent or more of the outstanding shares of stock of the
Corporation entitled to vote for election of directors; or (2)
any transaction described therein if such other person is a
corporation of which a majority of the outstanding shares of all
classes of stock entitled to vote in elections of directors is
owned of record or beneficially by the Corporation or its
subsidiaries.
(C) The affirmative vote or consent of the holders of
not less than two-thirds (66 2/3%) of the outstanding shares of
stock of the Corporation entitled to vote for election of
directors, voting for purposes of this Article as one class,
shall be required for the adoption of any plan for the
dissolution of the Corporation if the Board of Directors shall
not have, by resolution, recommended to the shareholders the
adoption of such plan for dissolution of the corporation. If the
Board of Directors shall have so recommended to the shareholders
such plan for dissolution of the Corporation, the provisions of
Michigan law shall apply.
(D) For purposes of this Article,
(1) any specified person shall be
deemed to be the beneficial owner' of shares
of stock of the Corporation (a) which such
specified person or any of its affiliates or
associates (as such terms are hereinafter
defined) owns, directly or indirectly,
whether of record or not, (b) which such
specified person or any of its affiliates or
associates has the right to acquire pursuant
to any agreement, or upon exercise of
conversion rights, warrants or options, or
otherwise, or (c) which are beneficially
owned, directly or indirectly (including
shares deemed owned through application of
clauses (a) and (b) above), by any other
person with which such specified person or
any of its affiliates or associates has any
agreement, arrangement, or understanding for
the purpose of acquiring, holding, voting or
disposing of stock of the Corporation;
(2) a subsidiary' is any corporation
more than 49 percent of the voting securities
of which are owned, directly or indirectly,,
by the Corporation;
(3) a person' is any individual,
corporation, partnership, joint venture, or
other entity;
(4) an affiliate' of a specified
person is any person that directly, or
indirectly through one or more
intermediaries, controls, or is controlled
by, or is under common control with, the
specified person, and
(5) an associate' of a specified
person is (a) any person of which such
specified person is an officer or partner or
is, directly, or indirectly, the beneficial
owner of 10 percent or more of any class of
equity securities, (b) any trust or other
estate in which such specified person has a
substantial beneficial interest or as to
which such specified person serves as trustee
or in a similar capacity, (c) any relative or
spouse of such specified person, or any
relative of such spouse, who has the same
home as such specified person or who is a
director or officer of such specified person
or any corporation which controls or is
controlled by such specified person of (d)
any other member or partner in a partnership,
limited partnership, syndicate or other group
of which the specified person is a member or
partner and which is acting together for the
purpose of acquiring, holding or disposing of
any interest in the Corporation or any of its
subsidiaries.
(E) For purposes of determining whether a person owns
beneficially 5 percent or more of the outstanding shares of stock
of the Corporation entitled to vote in elections of directors,
the outstanding shares of stock of the Corporation shall include
shares deemed owned through application of clauses (a), (b) or
(c) of paragraph (D)(1) above but shall not include any other
shares which may be issuable, pursuant to any agreement or upon
exercise of conversion rights, warrants or options, or otherwise.
(F) The Board of Directors shall have the power and
duty to determine, for purposes of this Article, on the basis of
information known to such Board,
(1) whether any person referred to in
paragraph (A) of this Article own
beneficially 5 percent or more of the
outstanding shares of stock of the
Corporation entitled to vote in elections of
directors; and
(2) whether a proposed transaction is
substantially consistent with any memorandum
of understanding of the character referred to
in paragraph (B) of this Article.
Any such determination shall be conclusive and binding for all
purposes of this Article.
(G) This Article VIII shall not be altered, amended,
supplemented or repealed, and no provision of these Articles of
Incorporation inconsistent herewith shall be adopted, except by
the affirmative vote of the holders of at least two-thirds (66
2/3%) of the outstanding shares of stock of this Corporation
entitled to vote generally in the election of directors,
considered for this purpose as one class.
1. These Restated Articles of Incorporation were duly
adopted by the Board of Directors on the seventh day of February,
1981, in accordance with the provisions of Section 642, Act 284,
Public Acts of 1972.
2. These Restated Articles of Incorporation only restate
and integrate and do not further amend the provisions of the
Articles of Incorporation as heretofore amended and there is no
material discrepancy between those provisions and the provisions
of these Restated Articles.
Signed this 3 day of March, 1981.
SIMPSON INDUSTRIES, INC.
By: /S/ Robert W. Navarre
Robert W. Navarre, President
PAGE
<PAGE>
CERTIFICATE OF MERGER
Filed by
SIMPSON INDUSTRIES, INC.
Pursuant to Section 712 of the Michigan Business Corporation
Act, Simpson Industries, Inc. executes the following Certificate
of Merger.
1. The name of the corporation is Simpson Industries,
Inc., a Michigan corporation (the "Company"). The location of
the Company's registered office is 917 Anderson Road, Litchfield,
Michigan 49252.
2. The following Plan of Merger was adopted by the Board
of Directors of the Company in accordance with Section 711(1),
Act 284, P.A. 1972, on June 1, 1982:
Simpson Industries, Inc., a Michigan corporation
(the "Company"), owning all of the issued and
outstanding shares of Teer, Wickwire & Company and
Marben Corporation, both Michigan corporations (the
"Subsidiaries"), hereby adopts this Plan of Merger to
merge the Subsidiaries into the Company pursuant to
Section 711(1), Act 284, P.A. 1972, on the following
terms and conditions:
(a) The Company has authorized capital stock
consisting of 8,500,000 shares of common stock,
par value $1.00 per share, of which 3,418,924
shares are issued and outstanding and will be
issued and outstanding on the effective date of
the merger; pursuant to Section 711(1), Act 284,
P.A. 1972, such shares are not entitled to vote on
the merger.
(b) Teer, Wickwire & Company has authorized
capital stock consisting of 50,000 shares of
common stock, par value $1.00 per share, of which
100 shares are issued and outstanding on the
effective date of the merger; Marben Corporation
has authorized capital stock consisting of 25,000
shares of common stock, par value $10.00 per
share, of which 16,200 shares are issued and
outstanding and will be issued and outstanding on
the effective date of the merger; pursuant to
Section 711(1), Act 284, P.A. 1972, such shares
are not entitled to vote on the merger.
(c) On the effective date of the merger, the
Subsidiaries shall be merged into the Company.
The Company shall be the surviving corporation
with its corporate existence unaffected and
unimpaired by the merger. The separate existence
and corporate organization of the Subsidiaries
shall cease upon the effective date of the merger.
(d) On the effective date of the merger,
each share of the capital stock of the Company
issued and outstanding shall continue as an
identical share of the Company, as the surviving
corporation.
(e) On the effective date of the merger,
each share of the capital stock of the
Subsidiaries issued and outstanding shall be
cancelled and shall cease to exist without any
action on the part of the holder thereof.
(f) If at any time the Company shall
determine that additional conveyances, documents,
or other action are necessary to carry out the
provisions of the Plan of Merger, the officers and
directors of the Subsidiaries as of the effective
date of this merger shall execute such conveyances
or documents or take such action.
(g) The effective date of the merger shall
be June 30, 1982.
Signed this 21st day of June, 1982.
SIMPSON INDUSTRIES, INC.
By: /S/ R.W. Navarre
R.W. Navarre, President
PAGE
<PAGE>
CERTIFICATE OF MERGER
Filed by
SIMPSON INDUSTRIES, INC.
Pursuant to Section 712 of the Michigan Business Corporation
Act, Simpson Industries, Inc. executes the following Certificate
of Merger.
1. The name of the corporation is Simpson Industries,
Inc., a Michigan corporation (the "Company"). The location of
the Company's registered office is 917 Anderson Road, Litchfield,
Michigan 49252.
2. The following Plan of Merger was adopted by the Board
of Directors of the Company in accordance with Section 711(1),
Act 284, P.A. 1972, on June 21, 1982:
Simpson Industries, Inc., a Michigan corporation
(the "Company"), owning all of the issued and
outstanding shares of Lee Stamping and Machine, Inc., a
Michigan corporation (the "Subsidiary"), hereby adopts
this Plan of Merger to merge the Subsidiary into the
Company pursuant to Section 711(1), Act 284, P.A. 1972,
on the following terms and conditions:
(a) The Company has authorized capital
stock consisting of 8,500,000 shares of
common stock, par value $1.00 per share, of
which 4,118,924 shares are issued and
outstanding and will be issued and
outstanding on the effective date of the
merger; pursuant to Section 711(1), Act 284,
P.A. 1972, such shares are not entitled to
vote on the merger.
(b) Lee Stamping and Machine, Inc. has
authorized capital stock consisting of 1,000
shares of common stock, par value $100.00 per
share of which 135 shares are issued and
outstanding and will be issued and
outstanding on the effective date of the
merger; pursuant to Section 711(1), Act 284,
P.A. 1972, such shares are not entitled to
vote on the merger.
(c) On the effective date of the
merger, the Subsidiary shall be merged into
the Company. The Company shall be the
surviving corporation with its corporate
existence unaffected and unimpaired by the
merger. The separate existence and corporate
organization of the Subsidiary shall cease
upon the effective date of the merger.
(d) On the effective date of the merger,
each share of the capital stock of the Company
issued and outstanding shall continue as an
identical share of the Company, as the surviving
corporation.
(e) On the effective date of the
merger, each share of the capital stock of
the Subsidiary issued and outstanding shall
be cancelled and shall cease to exist without
any action on the part of the holder thereof.
(f) If at any time the Company shall
determine that additional conveyances, documents,
or other action are necessary to carry out the
provisions of the Plan of Merger, the officers and
directors of the Subsidiary as of the effective
date of this merger shall execute such conveyances
or documents or take such action.
(g) The effective date of the merger shall
be June 30, 1982.
Signed this 29th day of June, 1982.
SIMPSON INDUSTRIES, INC.
By: /S/ K E Berman
Kenneth E. Berman
Its: Vice President
PAGE
<PAGE>
CERTIFICATE OF ASSUMED NAME
Pursuant to the provisions of Section 217, Act 284, Public
Acts of 1972, as amended, the undersigned corporation executes
the following Certificate:
1. The true name of the corporation is Simpson Industries,
Inc.
2. The location of the registered office in Michigan is:
917 Anderson Road, Litchfield, Michigan 49252
3. The assumed name under which the business is to be
transacted is: Marben Corporation
Signed this 29th day of June, 1982
By: /S/ K E Berman
Kenneth E. Berman, Vice President - Finance
PAGE
<PAGE>
CERTIFICATE OF CHANGE OF REGISTERED OFFICE
AND/OR CHANGE OF RESIDENT AGENT
1. The name of the corporation is Simpson Industries, Inc.
2. The address of its registered office as currently on file
with the Corporation and Securities Bureau is 917 Anderson Road,
Litchfield, Michigan 49252
3. The address of the registered office is changed to 615
Griswold, Suite 1414, Detroit, Michigan 48226.
4. The name of the resident agent as currently on file with the
Corporation and Securities Bureau is Robert W. Navarre.
5. The name of the successor resident agent is The Corporation
Company
6. The corporation further states that the address of its
registered office and the address of the business office of its
resident agent, as changed, are identical.
7. The changes designated above were authorized by resolution
duly adopted by its board of directors or trustees.
Signed this 7th day of October, 1982
By: /S/ Frank K. Zinn
Frank K. Zinn, Assistant Secretary
<PAGE>
<PAGE>
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
1. The present name of the corporation is: Simpson Industries,
Inc.
2. The corporation identification number (CID) assigned by the
Bureau is 034-302
3. The location of its registered office is: 615 Griswold,
(Suite 1414), Detroit, Michigan 48226
4. Article IV of the Articles of Incorporation is hereby
amended to read as follows:
The total authorized capital stock is 17,000,000 shares of
common stock, par value $1.00 per share. Holders of common stock
shall have equal voting rights and other rights and shall be
entitled to one vote per share. No holder of capital stock of
the corporation shall be entitled as such as a matter of right to
subscribe for, or to purchase, any part of a new or additional
issue of stock or any other reacquired shares of stock of any
class whatsoever or of any securities convertible into stock of
any class whatsoever, whether now or hereafter authorized and
whether issued for cash or other consideration.
5(b) The foregoing amendment to the Articles of Incorporation was
duly adopted on the 11th day of November, 1986. The amendment
was duly adopted in accordance with Section 611(2) of the Act by
the vote of the shareholders if a profit corporation, or by the
vote of the shareholders or members if a nonprofit corporation,
or by the vote of the directors if a nonprofit corporation
organized on a non stock directorship basis. The necessary votes
were cast in favor of the amendment.
Signed this 11th day of November, 1986
By: /S/ R W Navarre
Robert W. Navarre, President
PAGE
<PAGE>
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
1. The present name of the corporation is: Simpson Industries,
Inc.
2. The corporation identification number (CID) assigned by the
Bureau is 034-302
3. The location of its registered office is: 615 Griswold,
(Suite 1414), Detroit, Michigan 48226
4. Article IV of the Articles of Incorporation is hereby
amended to read as follows:
The total authorized capital stock is 35,000,000 shares of
common stock, par value $1.00 per share. Holders of common stock
shall have equal voting rights and other rights and shall be
entitled to one vote per share. No holder of capital stock of
the corporation shall be entitled as such as a matter of right to
subscribe for, or to purchase, any part of a new or additional
issue of stock or any other reacquired shares of stock of any
class whatsoever or of any securities convertible into stock of
any class whatsoever, whether now or hereafter authorized and
whether issued for cash or other consideration.
The Articles of Incorporation are hereby further amended by
adding a new Article IX as set forth on the attached Exhibit A
5(b) The foregoing amendment to the Articles of Incorporation was
duly adopted on the 23rd day of May, 1988. The amendment was
duly adopted in accordance with Section 611(2) of the Act by the
vote of the shareholders if a profit corporation, or by the vote
of the shareholders or members if a nonprofit corporation, or by
the vote of the directors if a nonprofit corporation organized on
a nonstock directorship basis. The necessary votes were cast in
favor of the amendment.
Signed this 8th day of July, 1988
By: /S/ R W Navarre
Robert W. Navarre, President
PAGE
<PAGE>
EXHIBIT A
ARTICLE IX
(a) No director of the Corporation shall be personally
liable to the Corporation or its shareholders for monetary
damages for breach of fiduciary duty as a director, provided that
the foregoing shall not eliminate or limit the liability of a
director for any of the following: (i) breach of the director's
duty of loyalty to the Corporation or its shareholders; (ii) acts
or omissions not in good faith or that involve intentional
misconduct or knowing violation of law; (iii) a violation of
Section 551(1) of the Michigan Business Corporation Act; (iv) a
transaction from which the director derived an improper personal
benefit; or (v) an act or omission occurring before the date on
which this Article IX became effective. If the Michigan Business
Corporation Act hereafter is amended to authorize the further
elimination or limitation of the liability of directors, then the
liability of a director of the corporation, in addition to the
limitation on personal liability contained herein, shall be
limited to the fullest extent permitted by the amended Michigan
Business Corporation Act. No amendment or repeal of this Article
IX shall apply to or have any effect on the liability or alleged
liability of any director of the corporation for or with respect
to any acts or omissions of such director occurring prior to such
amendment or repeal.
(b)(1) Each individual who was or is made a party to or is
involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that such individual, or an
individual of whom such individual is the legal representative,
(i) is or was a director or officer of the Corporation, or (ii)
is or was serving (at such time as such individual is or was a
director or officer of the Corporation) at the request of the
Corporation as a director, officer, partner, trustee,
administrator, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans (hereinafter an
"indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, partner,
trustee, administrator, employee or agent or in any other
capacity while serving as a director, officer, partner, trustee,
administrator, employee or agent, shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by
the Michigan Business Corporation Act, as the same exists or may
hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees,
judgments, fines and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such indemnitee in connection
therewith and such indemnification shall continue as to an
indemnitee who has ceased to be a director or officer, and shall
inure to the benefit of such indemnitee's heirs, executors and
administrators; provided, however, that except as provided in
paragraph (b)(2) hereof with respect to proceedings to enforce
rights to indemnification, the Corporation shall indemnify any
such indemnitee seeking indemnification in connection with a
proceeding (or part thereof) initiated by such indemnitee only if
such proceeding (or part thereof) was authorized by the Board of
Directors of the Corporation. The right to indemnification
conferred in this Section shall be a contract right and shall
include the right to paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final
disposition (hereinafter "advances"); provided, however, that,
the payment of such expenses incurred by an indemnitee in advance
of the final disposition of a proceeding, shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of
such indemnitee, to repay all advances if it shall ultimately be
determined by final judicial decision that such indemnitee is not
entitled to be indemnified under this Section or otherwise. The
Corporation may, by action of its Board of Directors or by action
of any person to whom the Board of Directors has delegated such
authority, provide indemnification to other employees and agents
of the Corporation with the same scope and effect as the
foregoing indemnification.
(b)(2) If a claim under paragraph (b)(1) of this Section is
not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the
indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If
successful in whole or in part in any such suit or in a suit
brought by the Corporation to recover advances, the indemnitee
shall be entitled to be paid also the expense of prosecuting or
defending such claim. In any action brought by the indemnitee to
enforce a right hereunder (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding
in advance of its final disposition where the required
undertaking has been tendered to the Corporation) it shall be a
defense that, and in any action brought by the Corporation to
recover advances the Corporation shall be entitled to recover
such advances if, the indemnitee has not met the applicable
standard of conduct set forth int eh Michigan Business
Corporation Act. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or
its shareholders) to have made a determination prior to the
commencement of such action that indemnification of the
indemnitee is proper in the circumstances because the indemnitee
has met the applicable standard of conduct set forth in the
Michigan Business Corporation Act, nor an actual determination by
the Corporation (including its Board of Directors, independent
legal counsel, or its shareholders) that the indemnitee has not
met such applicable standard of conduct, shall be a defense to an
action brought by the indemnitee or create a presumption that the
indemnitee has not met the applicable standard of conduct. In
any action brought by the indemnitee to enforce a right hereunder
or by the Corporation to recover payments by the Corporation of
advances, the burden of proof shall be on the Corporation.
(b)(3) The right to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article shall not be
exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Articles of
Incorporation, Bylaw, agreement, vote of shareholders or
disinterested directors or otherwise.
(b)(4) The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or
agent of the Corporation or another corporation, partnership,
joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Corporation would have the
power to indemnify such person against such expense, liability or
loss under the Michigan Business Corporation Act.
PAGE
<PAGE>
CERTIFICATE AND PLAN OF MERGER
OF
SIMPSON INDUSTRIES (North Carolina), INC.
INTO
SIMPSON INDUSTRIES, INC.
Pursuant to the provisions of Act 284, Public Acts of 1972,
as amended, Simpson Industries, Inc., a Michigan corporation (the
"Parent"), and Simpson Industries (North Carolina), Inc., a North
Carolina corporation (the "Subsidiary"), execute the following
Certificate:
1. Name of Constituent Corporations. The name of each
constituent corporation and its corporation identification number
("CID") are Simpson Industries, Inc., CID 034-302, and Simpson
Industries (North Carolina), Inc., a North Carolina corporation,
which has no CID.
2. Surviving Corporation. The name of the surviving
corporation and its corporation identification number are Simpson
Industries, Inc., CID 034-302.
3. Stock of Constituent Corporations. As to each
constituent corporation, the designation and number of
outstanding shares of each class or series and the voting rights
thereof are as follows:
Designation and Class or
Number of Out- Class or Series
standing Shares Series Entitled
in Each Class Entitled to Vote
Name of Corporation or Series to Vote As a Class
Simpson Industries,
Inc. Common Stock, Common Common
9,736,001 shares
outstanding
Simpson Industries
(North Carolina),
Inc. Common Stock, Common Common
$1.00 par value
25,000 shares
outstanding
The number of shares is not subject to change prior to the
effective date of the merger.
4. Manner and Basis of Conversion of Stock. The terms and
conditions of the merger, including the manner and basis of
converting the shares of each constituent corporaiton into shares
of the surviving corporation or other consideration, are as
follows:
(a) On the effective date of the merger, all shares of the
outstanding stock of the Subsidiary shall be virtue of the
merger by cancelled and retired and all rights in respect
thereof shall cease.
(b) Each outstanding share of Parent Common Stock shall
remain one share of Common Stock of the surviving
corporation, which shall be validly issued and outstanding,
fully paid and nonassessable, and shall not be liable to any
further call, nor shall the holder thereof be liable for any
further payments with respect thereto.
5. Articles of Incorporation. No amendment to the
Articles of Incorporation of the surviving corporation shall be
effected by the merger.
6. Succession. On the effective date of the merger, the
Subsidiary shall merge into a single corporation, which shall be
the Parent, as the surviving corporation, and the separate
existence of the Subsidiary shall cease. The Parent shall
succeed to all of the properties, rights and other assets of the
Subsidiary and shall be subject to all the liabilities of the
Subsidiary, without further action by any corporation, in
accordance with the Michigan Business Corporation Act.
7. Execution of Documents. The board of directors and
officers of the Parent and the Subsidiary are authorized and
directed to do all things necessary to carry out this Plan of
Merger.
8. Adoption of Plan of Merger Under North Carolina Law.
The merger is permitted by the laws of the State of North
Carolina, the jurisdiction under which the Subsidiary is formed,
and this Certificate and Plan of Merger was adopted and approved
by the Subsidiary pursuant to and in accordance with the laws of
that jurisdiction.
9. Parent's Ownership of Subsidiary. The Parent owns all
of the outstanding shares of common stock of the Subsidiary as
listed in Paragraph 3 of this Certificate and Plan of Merger.
10. Effective Date. This Plan of Merger shall be effective
as of December 31, 1991.
11. Governing Law. This Plan of Merger shall be governed
by Michigan law.
Dated: December 17, 1991 SIMPSON INDUSTRIES, INC.
By: /S/ R W Navarre
Title: Chairman of the Board
SIMPSON INDUSTRIES (North
Carolina), Inc.
By: /S/ R W Navarre
Title: Chairman of the Board
PAGE
<PAGE>
CT SYSTEM
May 5, 1993
Thomas Pierson, Deputy Director
Michigan Department of Commerce
Corporation & Security Bureau
6546 Mercantile Way
Lansing, Michigan 48909
Re: CHANGE OF REGISTERED OFFICE ADDRESS
Dear Mr. Pierson:
This letter is to certify that The Corporation Company has
changed its address from: 615 Griswold Street, Detroit, Michigan
48226 to: 30600 Telegraph Road, Bingham Farms, Michigan 48025.
We will notify all active corporations for which The Corporation
Company is the resident agent of this change of address.
Enclosed is our check for $52,000.00 to cover the filing fee for
the 10,294 active profit and non-profit corporations for which
your records indicate The Corporation Company is agent. This
payment will include the fee for providing us with an
alphabetical listing of the names of all the corporations for
which the registered office has been changed. Also included in
this payment is the fee for a clean-up list which we will request
within 30 days of the filing.
Please confirm in writing the date that this change was
effectuated on your records.
Thank you in advance for your cooperation.
Very truly yours,
/S/ Kenneth J. Uva
Kenneth J. Uva
Vice President
Sworn before me this 5th day of May, 1993.
/S/ Theresa Alfrin
PAGE
<PAGE>
CERTIFICATE AND PLAN OF MERGER
OF
AUTOMATED PRODUCTION SERVICES, INC.
INTO
SIMPSON INDUSTRIES, INC.
Pursuant to the provisions of Act 284, Public Acts of 1972,
as amended, Simpson Industries, Inc., a Michigan corporation (the
"Parent"), and Automated Production Services, Inc., a Delaware
corporation (the "Subsidiary"), execute the following
Certificate:
1. Name of Constituent Corporations. The name of each
constituent corporation and its corporate identification number
("CID") are Simpson Industries, Inc., CID 034-302, and Automated
Production Services, Inc., a Delaware corporation, which has no
CID.
2. Surviving Corporation. The name of the surviving
corporation and its corporation identification number are Simpson
Industries, Inc., CID 034-302.
3. Stock of Constituent Corporations. As to each
constituent corporation, the designation and number of
outstanding shares of each class or series and the voting rights
thereof are as follows:
Designation and Class or
Number of Out- Class or Series
standing Shares Series Entitled
in Each Class Entitled to Vote
Name of Corporation or Series to Vote As a Class
Simpson Industries,
Inc. Common Stock, Common Common
11,914,674 Shares
outstanding
Automated Production
Services, Inc. Common Stock, Common Common
$1.00 par value
500 Shares
outstanding
The number of shares is not subject to change prior to the
effective date of the merger.
4. Manner and Basis of Conversion of Stock. The terms and
conditions of the merger, including the manner and basis of
converting the shares of each constituent corporation into shares
of the surviving corporation or other consideration, are as
follows:
(a) On the effective date of the merger, all shares of the
outstanding stock of the Subsidiary shall be virtue of the
merger by cancelled and retired and all rights in respect
thereof shall cease.
(b) Each outstanding share of Parent Common Stock shall
remain one share of Common Stock of the surviving
corporation, which shall be validly issued and outstanding,
fully paid and nonassessable, and shall not be liable to any
further call, nor shall the holder thereof be liable for any
further payments with respect thereto.
5. Articles of Incorporation. No amendment to the
Articles of Incorporation of the surviving corporation shall be
effected by the merger.
6. Succession. On the effective date of the merger, the
Subsidiary shall merge into a single corporation, which shall be
the Parent, as the surviving corporation, and the separate
existence of the Subsidiary shall cease. The Parent shall
succeed to all of the properties, rights and other assets of the
Subsidiary and shall be subject to all the liabilities of the
Subsidiary, without further action by any corporation, in
accordance with the Michigan Business Corporation Act.
7. Execution of Documents. The board of directors and
officers of the Parent and the Subsidiary are authorized and
directed to do all things necessary to carry out this Plan of
Merger.
8. Adoption of Plan of Merger Under Delaware Law. The
merger is permitted by the laws of the State of Delaware, the
jurisdiction under which the Subsidiary is formed, and this
Certificate and Plan of Merger was adopted and approved by the
Subsidiary pursuant to and in accordance with the laws of that
jurisdiction.
9. Parent's Ownership of Subsidiary. The Parent owns all
of the outstanding shares of common stock of the Subsidiary as
listed in Paragraph 3 of this Certificate and Plan of Merger.
10. Effective Date. This Plan of Merger shall be effective
as of December 31, 1993.
11. Governing Law. This Plan of Merger shall be governed
by Michigan law.
Dated: December 20, 1993 SIMPSON INDUSTRIES, INC.
By: /S/ Roy E. Parrott
Title: President
AUTOMATED PRODUCTION
SERVICES, INC.
By: /S/ Roy E. Parrott
Title: President
PAGE
<PAGE>
CERTIFICATE OF RENEWAL OF ASSUMED NAME
1. The corporate name, resident agent, and mailing address of
its registered office are:
Simpson Industries, Inc.
The Corporation Company
30600 Telegraph Road
Bingham Farms, MI 48025
Identification Number: 034302
2. The assumed name under which business is transacted is:
Gladwin Machine Products Co.
3. The registration of the assumed name is extended for a
period expiring on December 31 of the fifth full calendar year
following the year in which this renewal is filed, unless sooner
terminated.
Signed this 8th day of October, 1996
By: /S/ James E. Garpow
James E. Garpow, Treasurer
PAGE
<PAGE>
CERTIFICATE OF RENEWAL OF ASSUMED NAME
1. The corporate name, resident agent, and mailing address of
its registered office are:
Simpson Industries, Inc.
The Corporation Company
30600 Telegraph Road
Bingham Farms, MI 48025
Identification Number: 034302
2. The assumed name under which business is transacted is:
Middleville Manufacturing Co.
3. The registration of the assumed name is extended for a
period expiring on December 31 of the fifth full calendar year
following the year in which this renewal is filed, unless sooner
terminated.
Signed this 8th day of October, 1996
By: /S/ James E. Garpow
James E. Garpow, Treasurer
PAGE
<PAGE>
CERTIFICATE OF RENEWAL OF ASSUMED NAME
1. The corporate name, resident agent, and mailing address of
its registered office are:
Simpson Industries, Inc.
The Corporation Company
30600 Telegraph Road
Bingham Farms, MI 48025
Identification Number: 034302
2. The assumed name under which business is transacted is:
Simpson Manufacturing Co.
3. The registration of the assumed name is extended for a
period expiring on December 31 of the fifth full calendar year
following the year in which this renewal is filed, unless sooner
terminated.
Signed this 8th day of October, 1996
By: /S/ James E. Garpow
James E. Garpow, Treasurer
PAGE
<PAGE>
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
1. The present name of the corporation is: Simpson Industries,
Inc.
2. The identification number assigned by the Bureau is: 034-302.
3. The location of the registered office is:
30600 Telegraph Road, Bingham Farms, Michigan 48025
4. Article III of the Articles of Incorporation is hereby
amended to read as follows:
The total authorized capital is 55,000,000 shares
of common stock, par value $1.00 per share. Holders of
the common stock shall have equal voting rights and
other rights and shall be entitled to one vote per
share. No holder of capital stock of the corporation
shall be entitled as such as a matter of right to
subscribe for, or to purchase, any part of a new or
additional issue of stock or any other reacquired
shares of stock of any class whatsoever or of any
securities convertible into stock of any class
whatsoever, whether now or hereafter authorized and
whether issued for cash or other consideration.
5. Not applicable.
6. The foregoing amendment to the Articles of Incorporation was
duly adopted on the 22nd day of April, 1997, by the shareholders
if a profit corporation, or by the shareholders or members if a
nonprofit corporation at a meeting. The necessary votes were
cast in favor of the amendment.
Signed this 5th day of May, 1997
By: /S/ Roy E. Parrott
President and Chief Executive Officer
7. Not applicable.
PAGE
<PAGE>
CERTIFICATE OF RENEWAL OF ASSUMED NAME
1. The corporate name, resident agent, and mailing address of
its registered office are:
Simpson Industries, Inc.
The Corporation Company
30600 Telegraph Road
Bingham Farms, MI 48025
Identification Number: 034302
2. The assumed name under which business is transacted is:
Marben Corporation
3. The registration of the assumed name is extended for a
period expiring on December 31 of the fifth full calendar year
following the year in which this renewal is filed, unless sooner
terminated.
Signed this 4th day of December, 1997
By: /S/ James E. Garpow
James E. Garpow, Assistant Treasurer and
Assistant Secretary
PAGE
<PAGE>
CERTIFICATE OF CORRECTION
Pursuant to the provisions of Act 284, Public Acts of 1972
(profit corporations), Act 162, Public Acts of 1982 (nonprofit
corporations), or Act 23, Public Acts of 1993 (limited liability
companies), the undersigned corporation or limited liability
company executes the following Certificate:
1. The name of the corporation or limited liability company is:
Simpson Industries, Inc.
2. The identification number assigned by the Bureau is: 034-302
3. The corporation or limited liability company is formed under
the laws of the State of Michigan.
4. That Restated Articles of Incorporation were filed by the
Bureau on April 1, 1981 and that said document requires
correction.
5. Describe the inaccuracy or defect contained in the above
named document:
A phrase was inadvertently omitted from the second line
on page 3 which should read, after the word
"provisions"; "of the Bylaws or of these Articles of
Incorporation inconsistent with such Bylaw provisions .
. ."
6. The document is corrected as follows:
ARTICLE VII
The Board of Directors may from time to time
adopt, alter, amend, supplement or repeal the By-Laws
of the Corporation, provided that any By-Laws adopted,
altered, amended, supplemented or repealed by the Board
may be thereafter repealed, altered, amended,
supplemented, or readopted by the shareholders of the
Corporation, and provided further that Sections 2, 4, 5
and 6 of the Article IV and Article XI of the By-Laws
shall not be altered, amended, supplemented or
repealed, and no provisions of the By-Laws or of these
Articles of Incorporation inconsistent with such By-Law
provisions shall be adopted, except by affirmative vote
of the holders of at least 66 2/3% of the outstanding
shares of common stock of the Corporation entitled to
vote generally in the election of directors. This
Article VII shall not be altered, amended, supplemented
or repealed except by affirmative vote of the holders
of at least 66 2/3% of the outstanding shares of common
stock of the Corporation entitled to vote generally in
the election of directors.
Signed this 28 day of January, 1998
By: /S/ R. E. Parrott
Roy E. Parrott, President
As amended 12/8/97
BYLAWS
OF
SIMPSON INDUSTRIES, INC.
ARTICLE I
OFFICES
1.01 Principal Office. The principal office of the
corporation shall be at such place within the State of Michigan
as the Board of Directors shall determine from time to time.
1.02 Other Offices. The corporation also may have offices at
such other places as the Board of Directors from time to time
determines or the business of the corporation requires.
ARTICLE II
SEAL
2.01 Seal. The corporation may have a seal in such form as
the Board of Directors may from time to time determine. The seal
may be used by causing it or a facsimile to be impressed,
affixed, reproduced or otherwise.
ARTICLE III
SHAREHOLDERS AND MEETINGS OF SHAREHOLDERS
3.01 Place of Meetings. All meetings of shareholders shall
be held at the principal office of the corporation or at such
other place as shall be determined by the Board of Directors and
stated in the notice of meeting.
3.02 Annual Meeting. The annual meeting of shareholders of
the corporation shall be held on such business day during the
fourth month after the end of the fiscal year as the Board of
Directors may fix. Directors shall be elected at each Annual
Meeting and such other business transacted as may properly come
before the meeting in accordance with these Bylaws. The Board of
Directors acting by resolution may postpone and reschedule any
previously scheduled annual meeting of shareholders. Any annual
meeting of shareholders may be adjourned by the Chairman of the
meeting or pursuant to a resolution of the Board of Directors.
3.03 Special Meetings. Special meetings of the shareholders
may be called by the Chairman of the Board, or by the President,
or pursuant to resolution of the Board of Directors. Business
transacted at a special meeting of shareholders shall be confined
to the purpose or purposes of the meeting as stated in the notice
of the meeting. The Board of Directors acting by resolution may
postpone and reschedule any previously scheduled special meeting
of shareholders. Any special meeting of shareholders may be
adjourned by the Chairman of the meeting or pursuant to
resolution of the Board of Directors.
3.04 Notice of Meetings. Except as otherwise provided by
statute, written notice of the time, place and purposes of a
meeting of shareholders shall be given not less than 10 nor more
than 60 days before the date of the meeting to each shareholder
of record entitled to vote at the meeting, either personally or
by mailing such notice to his last address as it appears on the
books of the corporation. No notice need be given of an adjourned
meeting of the shareholders provided the time and place to which
such meeting is adjourned are announced at the meeting at which
the adjournment is taken and at the adjourned meeting only such
business is transacted as might have been transacted at the
original meeting. However, if after the adjournment a new record
date is fixed for the adjourned meeting a notice of the adjourned
meeting shall be given to each shareholder of record on the new
record date entitled to notice as provided in this Bylaw.
3.05 Record Dates. The Board of Directors, the Chairman of
the Board (if such office is filled) or the President may fix in
advance a date as the record date for the purpose of determining
shareholders entitled to notice of and to vote at a meeting of
shareholders or an adjournment thereof, or to express consent or
to dissent from a proposal without a meeting, or for the purpose
of determining shareholders entitled to receive payment of a
dividend or allotment of a right, or for the purpose of any other
action. The date fixed shall not be more than 60 nor less than 10
days before the date of the meeting, nor more than 60 days before
any other action. In such case only such shareholders as shall be
shareholders of record on the date so fixed shall be entitled to
notice of and to vote at such meeting or adjournment thereof, or
to express consent or to dissent from such proposal, or to
receive payment of such dividend or to receive such allotment of
rights, or to participate in any other action, as the case may
be, notwithstanding any transfer of any stock on the books of the
corporation, or otherwise, after any such record date. Nothing in
this Bylaw shall affect the rights of a shareholder and his
transferee or transferor as between themselves.
3.06 List of Shareholders. The Secretary of the corporation
or the agent of the corporation having charge of the stock
transfer records for shares of the corporation shall make and
certify a complete list of the shareholders entitled to vote at a
shareholders' meeting or any adjournment thereof. The list shall
be arranged alphabetically within each class and series, with the
address of, and the number of shares held by, each shareholder;
be produced at the time and place of the meeting; be subject to
inspection by any shareholder during the whole time of the
meeting; and be prima facie evidence as to who are the
shareholders entitled to examine the list or vote at the meeting.
3.07 Quorum. Unless a greater or lesser quorum is required
in the Articles of Incorporation or by the laws of the State of
Michigan, the shareholders present at a meeting in person or by
proxy who, as of the record date for such meeting, were holders
of a majority of the outstanding shares of the corporation
entitled to vote at the meeting shall constitute a quorum at the
meeting. Whether or not a quorum is present, a meeting of
shareholders may be adjourned by a vote of the shares present in
person or by proxy. When the holders of a class or series of
shares are entitled to vote separately on an item of business,
this Bylaw applies in determining the presence of a quorum of
such class or series for transaction of such item of business.
3.08 Proxies. A shareholder entitled to vote at a meeting of
shareholders or to express consent or dissent without a meeting
may authorize other persons to act for the shareholder by proxy.
A proxy shall be signed by the shareholder or the shareholder's
authorized agent or representative and shall not be valid after
the expiration of three years from its date unless otherwise
provided in the proxy. A proxy is revocable at the pleasure of
the shareholder executing it except as otherwise provided by the
laws of the State of Michigan.
3.09 Inspectors of Election. The Board of Directors, or the
chairman presiding at any shareholders' meeting, may appoint one
or more inspectors. If appointed, the inspectors shall determine
the number of shares outstanding and the voting power of each,
the shares represented at the meeting, the existence of a quorum
and the validity and effect of proxies, and shall receive votes,
ballots or consents, hear and determine challenges or consents,
determine the result, and do such acts as are proper to conduct
the election or vote with fairness to all shareholders. On
request of the person presiding at the meeting, the inspectors
shall make and execute a written report to the person presiding
at the meeting of any of the facts found by them and matters
determined by them. The report shall be prima facie evidence of
the facts stated and of the vote as certified by the inspectors.
3.10 Voting. Each outstanding share is entitled to one vote
on each matter submitted to a vote, unless otherwise provided in
the Articles of Incorporation. Votes shall be cast in writing,
signed by the shareholder or shareholder's proxy. When an action,
other than the election of directors, is to be taken by a vote of
the shareholders, it shall be authorized by a majority of the
votes cast by the holders of shares entitled to vote thereon,
unless a greater vote is required by the Articles of
Incorporation or by the laws of the State of Michigan. Except as
otherwise provided by the Articles of Incorporation, directors
shall be elected by a plurality of the votes cast at any
election.
3.11 Meetings of Shareholders.
(A) Annual Meetings of Shareholders. (1) Nominations of
persons for election to the Board of Directors of the corporation
and the proposal of business to be considered by the shareholders
may be made at an annual meeting of shareholders (a) pursuant to
the corporation's notice of meeting, (b) by or at the direction
of the Board of Directors or (c) by any shareholder of the
corporation who was a shareholder of record at the time of giving
of notice provided for in this Bylaw, who is entitled to vote at
the meeting and who complied with the notice procedures set forth
in this Bylaw.
(2) For nominations or other business to be properly
brought before an annual meeting by a shareholder pursuant to
clause (c) of paragraph (A)( 1) of this Bylaw, the shareholder
must have given timely notice thereof in writing to the Secretary
of the corporation. To be timely, a shareholder's notice shall be
delivered to the Secretary at the principal executive offices of
the corporation not less than 60 days nor more than 90 days prior
to the first anniversary of the preceding year's annual meeting;
provided, however, that in the event that the date of the annual
meeting is advanced by more than 30 days or delayed by more than
60 days from such anniversary date, notice by the shareholder to
be timely must be so delivered not earlier than the 90th day
prior to such annual meeting and not later than the close of
business on the later of the 60th day prior to such annual
meeting or the 10th day following the day on which public
announcement of the date of such meeting is first made. Such
shareholder's notice shall set forth (a) as to each person whom
the shareholder proposes to nominate for election or reelection
as a director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election
of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (including such person's written
consent to being named in the proxy statement as a nominee and to
serving as a director if elected); (b) as to any other business
that the shareholder proposes to bring before the meeting, a
brief description of the business desired to be brought before
the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such
shareholder and the beneficial owner, if any, on whose behalf the
proposal is made; (c) as to the shareholder giving the notice and
beneficial owner, if any, on whose behalf the nomination or
proposal is made (i) the name and address of such shareholder, as
they appear on the corporation's books, and of such beneficial
owner and (ii) the class and number of shares of the corporation
which are owned beneficially and of record by such shareholder
and such beneficial owner.
(3) Notwithstanding anything in the second sentence of
paragraph (A)(2) of this Bylaw to the contrary, in the event that
the number of directors to be elected to the Board of Directors
of the corporation is increased and there is no public
announcement naming all of the nominees for director or
specifying the size of the increased Board of Directors made by
the corporation at least 70 days prior to the first anniversary
of the preceding year's annual meeting, a shareholder's notice
required by this Bylaw shall also be considered timely, but only
with respect to nominees for any new positions created by such
increase, if it shall be delivered to the Secretary at the
principal executive offices of the corporation not later than the
close of business on the 10th day following the day on which such
public announcement is first made by the corporation.
(B) Special Meetings of Shareholders. Only such business
shall be conducted at a special meeting of shareholders as shall
have been brought before the meeting pursuant to the
corporation's notice of meeting. Nominations of persons for
election to the Board of Directors may be made at a special
meeting of shareholders at which directors are to be elected
pursuant to the corporation's notice of meeting (a) by or at the
direction of the Board of Directors or (b) by any shareholder of
the corporation who is a shareholder of record at the time of
giving of notice provided hereunder, who shall be entitled to
vote at the meeting and who complies with the notice procedures
set forth in this Bylaw. Nominations by shareholders of persons
for election to the Board of Directors may be made at such a
special meeting of shareholders if the shareholder's notice
required by paragraph (A)(2) of this Bylaw shall be delivered to
the Secretary at the principal executive offices of the
corporation not earlier than the 90th day prior to such special
meeting and not later than the close of business on the later of
the 60th day prior to such special meeting or the 10th day
following the day on which public announcement is first made of
the date of the special meeting and of the nominees proposed by
the Board of Directors to be elected at such meeting.
(C) General. (1) Only such persons who are nominated in
accordance with the procedures set forth in this Bylaw shall be
eligible to serve as directors and only such business shall be
conducted at a meeting of shareholders as shall have been brought
before the meeting in accordance with the procedures set forth in
this Bylaw. The Chairman of the meeting shall have the power and
duty to determine whether a nomination or any business proposed
to be brought before the meeting was made in accordance with the
procedures set forth in this Bylaw and, if any proposed
nomination or business is not in compliance with this Bylaw, to
declare that such defective proposal shall be disregarded.
(2) For purposes of this Bylaw, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News
Service, Associated Press or comparable national news service or
in a document publicly filed by the corporation with the
Securities and Exchange Commission pursuant to Sections 13, 14 or
15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Bylaw,
a shareholder shall also comply with all applicable requirements
of the Exchange Act and the rules and regulations thereunder with
respect to the matters set forth in this Bylaw. Nothing in this
Bylaw shall be deemed to affect any rights of shareholders to
request inclusion of proposals in the corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act.
ARTICLE IV
DIRECTORS
4.01 (Section 1) Management of the Corporation. The
business and affairs of the corporation shall be managed by the
Board of Directors. The directors need not be residents of
Michigan.
4.02 (Section 2) Number and Classification. The number of
directors constituting the entire Board of Directors shall not be
less than three nor more than twelve, the exact number of
directors to be fixed from time to time only by vote of a
majority of the entire Board. No decrease in the number of
directors shall shorten the term of any incumbent director.
Directors need not be shareholders of the Corporation
4.03 (Section 3) [Reserved].
4.04 (Section 4) Term of Office. The directors shall be
divided into three classes as nearly equal in number as possible,
with the term of office of one class expiring each year. At the
annual meeting of shareholders held in 1977, directors of the
first class shall be elected to hold office for a term expiring
at the next annual meeting of shareholders; directors of the
second class shall be elected to hold office for a term expiring
at the second succeeding meeting of shareholders; and directors
of the third class shall be elected to hold office for a term
expiring at the third succeeding meeting of shareholders, or, in
each case, when their respective successors are elected and have
qualified or upon their earlier death, resignation or removal.
At each annual election held after classification and the initial
election of directors according to classes, the directors chosen
to succeed those whose terms then expire shall be elected for a
term expiring at the third succeeding annual meeting of
shareholders, or when their respective successors are elected and
have qualified, or upon their earlier death, resignation or
removal. If the number of directors is changed, any increase or
decrease in directors shall be apportioned among the classes so
as to maintain all classes as nearly equal in number as possible
and any individual director elected to any class shall hold
office for a term which shall coincide with the term of such
class.
4.05 (Section 5) Vacancies. Newly created directorships
resulting from an increase in the number of directors and
vacancies occurring in the Board for any reason may be filled by
vote of a majority of the directors then in office, although less
than a quorum, or by a sole remaining director, at any meeting of
the Board. A director elected to fill a vacancy shall be elected
to hold office until the expiration of the term of the class to
which he has been elected and until his successor shall be duly
elected or qualified or until his earlier death, resignation or
removal.
4.06 (Section 6) Removal of Directors. Any or all of the
directors may be removed from office at any time, but only for
cause, by vote of a majority the shareholders entitled to vote
generally in the election of directors or by vote of a majority
of the entire Board of Directors, excluding the member whose
removal is being voted upon.
4.07 (Section 7) Annual Meeting. The Board of Directors
shall meet each year immediately after the annual meeting of the
shareholders, or within three (3) days of such time excluding
Sundays and legal holidays if such later time is deemed
advisable, at the place where such meeting of the shareholders
has been held or such other place as the Board may determine, for
the purpose of election of officers and consideration of such
business that may properly be brought before the meeting;
provided, that if less than a majority of the directors appear
for an annual meeting of the Board of Directors the holding of
such annual meeting shall not be required and the matters which
might have been taken up therein may be taken up at any later
special or annual meeting, or by consent resolution.
4.08 (Section 8) Regular and Special Meetings. Regular
meetings of the Board of Directors may be held at such times and
places as the majority of the directors may from time to time
determine at a prior meeting or as shall be directed or approved
by the vote or written consent of all the directors. Special
meetings of the Board may be called by the Chairman of the Board
(if such office is filled) or the President and shall be called
by the President or Secretary upon the written request of any two
directors.
4.09 (Section 9) Notices. No notice shall be required for
annual or regular meetings of the Board or for adjourned
meetings, whether regular or special. Three days' written notice,
or 24-hour telephonic notice, shall be given for special meetings
of the Board, and such notice shall state or recite the time,
place and purpose or purposes of the meeting.
4.10 (Section 10) Quorum. A majority of the Board of
Directors then in office, or of the members of a committee
thereof, constitutes a quorum for the transaction of business.
The vote of a majority of the directors present at any meeting at
which there is a quorum shall be the acts of the Board or of the
committee, except as a larger vote may be required by the laws of
the State of Michigan. A member of the Board or of a committee
designated by the Board may participate in a meeting by means of
conference telephone or similar communications equipment by means
of which all persons participating in the meeting can communicate
with each other. Participation in a meeting in this manner
constitutes presence in person at the meeting.
4.11 (Section 11) Executive and Other Committees. The Board
of Directors may, by resolution passed by a majority of the whole
Board, appoint three or more members of the Board as an executive
committee to exercise all powers and authorities of the Board in
management of the business and affairs of the corporation, except
that the committee shall not have power or authority to:
(a) Amend the Articles of Incorporation;
(b) Adopt an agreement of merger or plan of share exchange;
(c) Recommend to shareholders the sale, lease or exchange
of all or substantially all of the corporation's property and
assets;
(d) Recommend to shareholders a dissolution of the
corporation or revocation of a dissolution;
(e) Amend these Bylaws;
(f) Fill vacancies in the Board; or
(g) Unless expressly authorized by the Board, declare a
dividend or authorize the issuance of stock.
The Board of Directors from time to time may, by like
resolution, appoint such other committees of one or more
directors to have such authority as shall be specified by the
Board in the resolution making such appointments. The Board of
Directors may designate one or more directors as alternate
members of any committee who may replace an absent or
disqualified member at any meeting thereof.
4.12 (Section 12) Dissents. A director who is present at a
meeting of the Board of Directors, or a committee thereof of
which the director is a member, at which action on a corporate
matter is taken is presumed to have concurred in that action
unless the director's dissent is entered in the minutes of the
meeting or unless the director files a written dissent to the
action with the person acting as secretary of the meeting before
the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the corporation promptly
after the adjournment of the meeting. Such right to dissent does
not apply to a director who voted in favor of such action. A
director who is absent from a meeting of the Board, or a
committee thereof of which he is a member, at which any such
action is taken is presumed to have concurred in the action
unless he files his written dissent with the Secretary of the
corporation within a reasonable time after he has knowledge of
the action.
4.13 (Section 13) Compensation. The Board of Directors, by
affirmative vote of a majority of directors in office and
irrespective of any personal interest of any of them, may
establish reasonable compensation of directors for services to
the corporation as directors or officers.
ARTICLE V
CAPITAL STOCK
5.01 Issuance of Shares. The shares of capital stock of the
corporation shall be issued in such amounts, at such times, for
such consideration and on such terms and conditions as the Board
shall deem advisable, subject to the provisions of the Articles
of Incorporation of the corporation and the further provisions of
these Bylaws, and subject also to any requirements or
restrictions imposed by the laws of the State of Michigan.
5.02 Certificates for Shares. The shares of the corporation
shall be represented by certificates signed by the Chairman of
the Board, President or a Vice President and also may be signed
by the Treasurer, Assistant Treasurer, Secretary or Assistant
Secretary of the corporation, and may be sealed with the seal of
the corporation or a facsimile thereof. The signatures of the
officers may be facsimiles if the certificate is countersigned by
a transfer agent or registered by a registrar other than the
corporation itself or its employee. In case an officer who has
signed or whose facsimile signature has been placed upon a
certificate ceases to be such officer before the certificate is
issued, it may be issued by the corporation with the same effect
as if he were such officer at the date of issuance. A
certificate representing shares shall state upon its face that
the corporation is formed under the laws of the State of
Michigan; the name of the person to whom it is issued; the number
and class of shares, and the designation of the series, if any,
which the certificate represents; the par value of each share
represented by the certificate, or a statement that the shares
are without par value; and such other provisions as may be
required by the laws of the State of Michigan.
5.03 Transfer of Shares. The shares of the capital stock
of the corporation are transferable only on the books of the
corporation upon surrender of the certificate therefor, properly
endorsed for transfer, and the presentation of such evidences of
ownership and validity of the assignment as the corporation may
require.
5.04 Registered Shareholders. The corporation shall be
entitled to treat the person in whose name any share of stock is
registered as the owner thereof for purposes of dividends and
other distributions in the course of business, or in the course
of recapitalization, merger, plan of share exchange,
reorganization, sale of assets, liquidation or otherwise and for
the purpose of votes, approvals and consents by shareholders, and
for the purpose of notices to shareholders, and for all other
purposes whatever, and shall not be bound to recognize any
equitable or other claim to or interest in such shares on the
part of any other person, whether or not the corporation shall
have notice thereof, save as expressly required by the laws of
the State of Michigan.
5.05 Lost or Destroyed Certificates. Upon the
presentation to the corporation of a proper affidavit attesting
the loss, destruction or mutilation of any certificate or
certificates for shares of stock of the corporation, the Board of
Directors shall direct the issuance of a new certificate or
certificates to replace the certificates so alleged to be lost,
destroyed or mutilated. The Board of Directors may require as a
condition precedent to the issuance of new certificates any or
all of the following:
(a) Presentation of additional evidence or proof
of the loss, destruction or mutilation claimed;
(b) Advertisement of loss in such manner as the
Board of Directors may direct or approve;
(c) A bond or agreement of indemnity, in such form
and amount and with such sureties, or without sureties,
as the Board of Directors may direct or approve;
(d) The order or approval of a court or judge.
ARTICLE VI
NOTICES, WAIVERS OF NOTICE AND MANNER OF ACTING
6.01 Notices. All notices of meetings required to be
given to shareholders, directors or any committee of directors
may be given by mail, telecopy, telegram, radiogram or cablegram
to any shareholder, director or committee member at his last
address as it appears on the books of the corporation. Such
notice shall be deemed to be given at the time when the same
shall be mailed or otherwise dispatched. Telephonic notice may be
given for special meetings of the Board as provided in Section
4.09.
6.02 Waiver of Notice. Notice of the time, place and
purpose of any meeting of shareholders, directors or committee of
directors may be waived by telecopy, telegram, radiogram,
cablegram or other writing, either before or after the meeting,
or in such other manner as may be permitted by the laws of the
State of Michigan. Attendance of a person at any meeting of
shareholders, in person or by proxy, or at any meeting of
directors or of a committee of directors, constitutes a waiver of
notice of the meeting except as follows:
(a) In the case of a shareholder, unless the
shareholder at the beginning of the meeting objects to holding
the meeting or transacting business at the meeting, or unless
with respect to consideration of a particular matter at the
meeting that is not within the purpose or purposes described in
the meeting notice, the shareholder objects to considering the
matter when it is presented.
(b) In the case of a director, unless he or she at the
beginning of the meeting, or upon his or her arrival, objects to
the meeting or the transacting of business at the meeting and
does not thereafter vote for or assent to any action taken at the
meeting.
6.03 Action Without a Meeting. Any action required or
permitted at any meeting of shareholders or directors or
committee of directors may be taken without a meeting, without
prior notice and without a vote, if all of the shareholders or
directors or committee members entitled to vote thereon consent
thereto in writing before or after the action is taken.
ARTICLE VII
OFFICERS
7.01 Number. The Board of Directors shall elect or
appoint a Chairman of the Board, a President, a Secretary and a
Treasurer and such Vice Presidents, Assistant Secretaries and/or
Assistant Treasurers as the Board of Directors may from time to
time determine. The Chairman of the Board and the President shall
be members of the Board of Directors. Any two or more of the
above offices, except those of President and Vice President, may
be held by the same person, but no officer shall execute,
acknowledge or verify an instrument in more than one capacity if
the instrument is required by law, the Articles of Incorporation
or these Bylaws to be executed, acknowledged, or verified by one
or more officers.
7.02 Term of Office, Resignation and Removal. An officer
shall hold office for the term for which he is elected or
appointed and until his successor is elected or appointed and
qualified, or until his resignation or removal. An officer may
resign by written notice to the corporation. The resignation is
effective upon its receipt by the corporation or at a subsequent
time specified in the notice of resignation. An officer may be
removed by the Board with or without cause. The removal of an
officer shall be without prejudice to his contract rights, if
any. The election or appointment of an officer does not of itself
create contract rights.
7.03 Vacancies. The Board of Directors may fill any
vacancies in any office occurring for whatever reason.
7.04 Authority. All officers, employees and agents of
the corporation shall have such authority and perform such duties
in the conduct and management of the business and affairs of the
corporation as may be designated by the Board of Directors and
these Bylaws.
ARTICLE VIII
DUTIES OF OFFICERS
8.01 Chairman of the Board. The Chairman of the Board
shall preside at all meetings of the Board of Directors and shall
perform such other duties as may be prescribed from time to time
by the Board of Directors or by the Bylaws. The Chairman may
also be the Chief Executive Officer of the corporation if so
designated by the Board of Directors.
8.02 President. The President shall be the Chief
Executive Officer of the corporation unless otherwise designated
by the Board of Directors. The Chief Executive Officer shall see
that all orders and resolutions of the Board are carried into
effect and shall have the general powers of supervision and
management over the business and affairs of the corporation
customarily vested in the Chief Executive Officer. The President
shall perform such other duties as may be prescribed from time to
time by the Board of Directors and shall also assume the duties
of the Chairman in the absence or disability of the Chairman of
the Board.
8.03 Vice Presidents. The Vice Presidents shall have
such powers and perform such duties as may be assigned to them by
the Chairman of the Board, the President or the Board of
Directors. In the absence or disability of the President, the
Vice President designated by the Board shall perform his duties
and exercise his powers and shall perform such other duties as
the Board of Directors may from time to time prescribe.
8.04 Secretary. The Secretary shall attend all meetings
of the Board of Directors and of shareholders and shall record
all votes and minutes of all proceedings in a book to be kept for
that purpose. He shall give or cause to be given notice of all
meetings of the shareholders and of the Board of Directors. He
shall keep in safe custody the seal of the corporation and, when
authorized by the Board, affix the same to any instrument
requiring it, and when so affixed it shall be attested by his
signature, or by the signature of the Treasurer or an Assistant
Secretary. The Secretary may delegate any of his duties, powers
and authorities to one or more Assistant Secretaries, unless such
delegation is disapproved by the Board.
8.05 Treasurer. The Treasurer shall have the custody of
the corporate funds and securities; shall keep full and accurate
accounts of receipts and disbursements in books of the
corporation; and shall deposit all moneys and other valuable
effects in the name and to the credit of the corporation in such
depositories as may be designated by the Board of Directors. He
shall render to the Chief Executive Officer and directors,
whenever they may require it, an account of his transactions as
Treasurer and of the financial condition of the corporation. The
Treasurer may delegate any of his duties, powers and authorities
to one or more Assistant Treasurers, unless such delegation is
disapproved by the Board of Directors.
8.06 Assistant Secretaries and Treasurers. The Assistant
Secretaries, in order of their seniority, shall perform the
duties and exercise the powers and authorities of the Secretary
in case of the Secretary's absence or disability. The Assistant
Treasurers, in the order of their seniority, shall perform the
duties and exercise the powers and authorities of the Treasurer
in case of the Treasurer's absence or disability. The Assistant
Secretaries and Assistant Treasurers shall also perform such
duties as may be delegated to them by the Secretary and
Treasurer, respectively, and also such duties as the Board of
Directors may prescribe.
ARTICLE IX
SPECIAL CORPORATE ACTS
9.01 Orders for Payment of Money. All checks, drafts,
notes, bonds, bills of exchange and orders for payment of money
of the corporation shall be signed by such officer or officers or
such other person or persons as the Board of Directors may from
time to time designate.
9.02 Contracts and Conveyances. The Board of Directors
of the corporation may in any instance designate the officer and
or agent who shall have authority to execute any contract,
conveyance, mortgage, proxy or other instrument on behalf of the
corporation, or may ratify or confirm any execution. When the
execution of any instrument has been authorized without
specification of the executing officers or agents, the Chairman
of the Board, the President or any Vice President, and the
Secretary or Assistant Secretary or Treasurer or
AssistantTreasurer, may execute the same in the name and on
behalf of this corporation and may affix the corporate seal
thereto.
ARTICLE X
BOOKS AND RECORDS
10.01 Maintenance of Books and Records. The proper
officers and agents of the corporation shall keep and maintain
such books, records and accounts of the corporation's business
and affairs, minutes of the proceedings of its shareholders,
Board and committees, if any, and such stock ledgers and lists of
shareholders, as the Board of Directors shall deem advisable, and
as shall be required by the laws of the State of Michigan and
other states or jurisdictions empowered to impose such
requirements. Books, records and minutes may be kept within or
without the State of Michigan in a place which the Board shall
determine.
10.02 Reliance on Books and Records. In discharging his
duties, a director or an officer of the corporation, when acting
in good faith, may rely upon information, opinions, reports, or
statements, including financial statements and other financial
data, if prepared or presented by any of the following:
(a) One or more directors, officers, or employees of
the corporation, or of a business organization under joint
control or common control, whom the director or officer
reasonably believes to be reliable and competent in the matters
presented;
(b) Legal counsel, public accountants, engineers, or
other persons as to matters the director or officer reasonably
believes are within the person's professional or expert
competence; or
(c) A committee of the board of which he or she is not
a member if the director or officer reasonably believes the
committee merits confidence. A director or officer is not
entitled to rely on the information set forth above if he or she
has knowledge concerning the matter in question that makes
reliance otherwise permitted unwarranted.
ARTICLE XI
AMENDMENTS
11.01 Amendments. Except as provided in the
Articles of Incorporation of the corporation, these By-Laws may
be altered, amended, supplemented or repealed by vote of a
majority of the vote of a majority of the votes cast by
shareholders entitled to vote for the election of directors, or
by the Board of Directors, provided that the Board shall not
alter, amend, supplement or repeal any By-Laws fixing or
affecting their qualifications, classifications or term of
office. Any By-Laws adopted, altered, amended, supplemented or
repealed by the Board of Directors may be thereafter altered,
amended, supplemented, repealed or readopted by the shareholders.
ARTICLE XII
INDEMNIFICATION
12.01 Non-Derivative Actions. Subject to all of the
other provisions of this Article, the corporation shall indemnify
any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative and whether formal or informal (other than an
action by or in the right of the corporation) by reason of the
fact that the person is or was a director or officer of the
corporation, or is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee,
or agent of another foreign or domestic corporation, partnership,
joint venture, trust or other enterprise, whether for profit or
not, against expenses (including actual and reasonable attorneys'
fees), judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with
such action, suit or proceeding if the person acted in good faith
and in a manner the person reasonably believed to be in or not
opposed to the best interests of the corporation or its
shareholders, and with respect to any criminal action or
proceeding, if the person had no reasonable cause to believe his
or her conduct was unlawful. The termination of any action, suit
or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good
faith and in a manner which the person reasonably believed to be
in or not opposed to the best interests of the corporation or its
shareholders, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
12.02 Derivative Actions. Subject to all of the
provisions of this Article, the corporation shall indemnify any
person who was or is a party to or is threatened to be made a
party to any threatened, pending or completed action or suit by
or in the right of the corporation to procure a judgment in its
favor by reason of the fact that the person is or was a director
or officer of the corporation, or is or was serving at the
request of the corporation as a director, officer, partner,
trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust or other
enterprise, whether for profit or not, against expenses
(including attorneys' fees) and amounts paid in settlement
actually and reasonably incurred by the person in connection with
such action or suit if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to
the best interests of the corporation or its shareholders.
However, indemnification shall not be made for any claim, issue
or matter in which such person has been found liable to the
corporation unless and only to the extent that the court in which
such action or suit was brought has determined upon application
that, despite the adjudication of liability but in view of all
circumstances of the case, such person is fairly and reasonably
entitled to indemnification for the reasonable expenses incurred.
12.03 Expenses of Successful Defense. To the extent
that a person has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Section
12.01 or 12.02 of these Bylaws, or in defense of any claim, issue
or matter in the action, suit or proceeding, the person shall be
indemnified against actual and reasonable expenses (including
attorneys' fees) incurred by such person in connection with the
action, suit or proceeding and any action, suit or proceeding
brought to enforce the mandatory indemnification provided by this
Article XII.
12.04 Definition. For the purposes of Sections
12.01 and 12.02, "other enterprises" shall include employee
benefit plans; "fines" shall include any excise taxes assessed on
a person with respect to an employee benefit plan; and "serving
at the request of the corporation" shall include any service as a
director, officer, employee, or agent of the corporation which
imposes duties on, or involves services by, the director or
officer with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good
faith and in a manner the person reasonably believed to be in the
interest of the participants and beneficiaries of an employee
benefit plan shall be considered to have acted in a manner "not
opposed to the best interests of the corporation or its
shareholders" as referred to in Sections 12.01 and 12.02.
12.05 Contract Right; Limitation on Indemnity. The
right to indemnification conferred in this Article XII shall be a
contract right, shall apply to services of a director or officer
as an employee or agent of the corporation as well as in such
person's capacity as a director or officer, from the date he
became or becomes such director or officer, and any repeal or
modification of this section shall not adversely affect any right
or protection existing at the time of such repeal or
modification. Except as provided in Section 12.03 of these
Bylaws, the corporation shall have no obligations under this
Article XII to indemnify any person in connection with any
proceeding, or part thereof, initiated by such person without
authorization by the Board of Directors.
12.06 Determination That Indemnification is Proper.
Any indemnification under Section 12.01 or 12.02 of these Bylaws
(unless ordered by a court) shall be made by the corporation only
as authorized in the specific case upon a determination that
indemnification of the person is proper in the circumstances
because the person has met the applicable standard of conduct set
forth in Section 12.01 or 12.02, whichever is applicable, and
upon an evaluation of the reasonableness of expenses and amount
paid in settlement. Such determination and evaluation shall be
made in any of the following ways:
(a) By a majority vote of a quorum of the Board
consisting of directors who are not parties or threatened to be
made parties to such action, suit or proceeding;
(b) If the quorum described in clause (a) above is not
obtainable, then by a majority vote of a committee of directors
duly designated by the Board of Directors and consisting solely
of two or more directors who are not at the time parties or
threatened to be made parties to the action, suit or proceeding;
(c) By independent legal counsel in a written opinion
which counsel shall be selected in one of the following ways: (i)
by the board or its committee in the manner prescribed in
subparagraph (a) or (b); or (ii) if a quorum of the board cannot
be obtained under subparagraph (a) and a committee cannot be
designated under subparagraph (b), by the board; or
(d) By the shareholders, but shares held by directors
or officers who are parties or threatened to be made parties to
the action, suit or proceeding may not be voted.
12.07 Proportionate Indemnity. If a person is
entitled to indemnification under Section 12.01 or 12.02 of these
Bylaws for a portion of expenses, including attorneys' fees,
judgments, penalties, fines, and amounts paid in settlement, but
not for the total amount thereof, the corporation shall indemnify
the person for the portion of the expenses, judgments, penalties,
fines, or amounts paid in settlement for which the person is
entitled to be indemnified.
12.08 Expense Advance. The corporation shall pay or
reimburse the reasonable expenses incurred by a person referred
to in Section 12.01 or 12.02 of these bylaws who is a party or
threatened to be made a party to an action, suit, or proceeding
in advance of final disposition of the proceeding if all of the
following apply:
(a) The person furnishes the corporation a written
affirmation of his or her good faith belief that he or she has
met the applicable standard of conduct set forth in Section 12.01
or 12.02;
(b) The person furnishes the corporation a written
undertaking executed personally, or on his or her behalf, to
repay the advance if it is ultimately determined that he or she
did not meet the standard of conduct;
(c) The authorization of payment is made in the manner
specified in Section 12.06; and
(d) A determination is made that the facts then known
to those making the determination would not preclude
indemnification under Section 12.01 or 12.02. The undertaking
shall be an unlimited general obligation of the person on whose
behalf advances are made but need not be secured.
12.09 Non-Exclusivity of Rights. The
indemnification or advancement of expenses provided under this
Article XII is not exclusive of other rights to which a person
seeking indemnification or advancement of expenses may be
entitled under a contractual arrangement with the corporation.
However, the total amount of expenses advanced or indemnified
from all sources combined shall not exceed the amount of actual
expenses incurred by the person seeking indemnification or
advancement of expenses.
12.10 Indemnification of Employees and Agents of
the Corporation. The corporation may, to the extent authorized
from time to time by the Board of Directors, grant rights to
indemnification and to the advancement of expenses to any
employee or agent of the corporation to the fullest extent of the
provisions of this Article XII with respect to the
indemnification and advancement of expenses of directors and
officers of the corporation.
12.11 Former Directors and Officers. The
indemnification provided in this Article XII continues as to a
person who has ceased to be a director or officer and shall inure
to the benefit of the heirs, executors and administrators of such
person.
12.12 Insurance. The corporation may purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director,
officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and
incurred by him in any such capacity or arising out of his status
as such, whether or not the corporation would have power to
indemnify him against such liability under these Bylaws or the
laws of the State of Michigan.
12.13 Changes in Michigan Law. In the event of any
change of the Michigan statutory provisions applicable to the
corporation relating to the subject matter of Article XII of
these Bylaws, then the indemnification to which any person shall
be entitled hereunder shall be determined by such changed
provisions, but only to the extent that any such change permits
the corporation to provide broader indemnification rights than
such provisions permitted the corporation to provide prior to any
such change. Subject to Section 12.15, the Board of Directors is
authorized to amend these Bylaws to conform to any such changed
statutory provisions.
12.14 Enforcement of Rights. Any indemnification or
payment in advance of final disposition under this Article XII
shall be made promptly, and in any event within 30 days, after
written request to the corporation by the person seeking such
indemnification or payment. The rights granted by this Article
XII shall be enforceable by such person in any court of competent
jurisdiction.
12.15 Amendment or Repeal of Article XII. No
amendment or repeal of this Article XII shall apply to or have
any effect on any director or officer of the corporation for or
with respect to any acts or omissions of such director or officer
occurring prior to such amendment or repeal.
August 22, 1997
Ronald R. Richter
Group Vice President
ABN AMRO Bank N.V.
135 South LaSalle Street
Chicago, IL 60674
Dear Ron:
As we have discussed per Section 2.2, reduction of Commitment
Amounts, we are reducing the Commitment Amount of both Five-Year
and 364-Day credit agreements dated June 17, 1997, to $25,000,000
each. This reduction will still leave a total of $50,000,000
between the agreements.
Sincerely,
James E. Garpow
Assistant Treasurer and Assistant Secretary
JEG/llc
cc: V. Khilnani
L. Flom
August 22, 1997
Ronald R. Richter
Group Vice President
ABN AMRO Bank N.V.
135 South LaSalle Street
Chicago, IL 60674
Dear Ron:
As we have discussed per Section 2.2, reduction of Commitment
Amounts, we are reducing the Commitment Amount of both Five-Year
and 364-Day credit agreements dated June 17, 1997, to $25,000,000
each. This reduction will still leave a total of $50,000,000
between the agreements.
Sincerely,
James E. Garpow
Assistant Treasurer and Assistant Secretary
JEG/llc
cc: V. Khilnani
L. Flom
SIMPSON INDUSTRIES, INC.
47603 Halyard Drive
Plymouth, Michigan 48170-2429
September 1, 1997
Mr. Vinod M. Khilnani
Simpson Industries, Inc.
47603 Halyard Drive
Plymouth, Michigan 48170-2429
Dear Vinod:
Simpson Industries, Inc. (the "Company") considers a
dedicated and vital management team to be essential for
protecting and enhancing the best interests of the Company and
its shareholders. In this connection, the Company recognizes
that the possibility of a change in control may exist and that
such possibility, and the uncertainty and questions which it may
raise among management, may result in the departure or
distraction of management personnel to the detriment of the
Company and its shareholders. Accordingly, the Board of
Directors of the Company (the "Board") has determined that
appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of members of the Company's
senior management, including yourself, to their assigned duties
without distraction in the face of the potentially disturbing
circumstances arising from the possibility of change in control
of the Company.
This letter agreement sets forth the severance benefits
which the Company agrees will be provided to you in the event
your employment with the Company is terminated subsequent to a
"Change in Control of the Company" (as defined in Section 3
hereof) under the circumstances described below.
1. Company's Right to Terminate. The Company may
terminate your employment at any time, subject to providing the
benefits hereinafter specified in accordance with the terms
hereof and subject to any other benefits which the Company has
agreed in writing to provide you.
2. Term of Agreement. This Agreement shall commence
on the date hereof and shall continue in effect until
December 31, 1998; provided, however, that commencing on
January 1, 1999 and each January 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year
unless at least 30 days prior to such January 1 date, the Company
shall have given notice that it does not wish to extend this
Agreement; and provided, further, that this Agreement shall
continue in effect beyond the term provided herein if a change in
control of the Company as defined in Section 3 hereof, shall have
occurred during such term.
3. Change in Control. No benefits shall be payable
hereunder unless there shall have been a change in control of the
Company, as set forth below, and your employment by the Company
shall thereafter have been terminated in accordance with Section
4 below. For purposes of this Agreement, a "Change in Control of
the Company" shall mean a Change in Control of a nature that
would be required to be reported in response to the requirements
of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act")
provided that, without limitation, such a Change in Control shall
be deemed to have occurred if (i) any "person" [as such term is
used in Sections 13(d) and 14(d) of the Exchange Act] is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the
Company representing 25 percent or more of the combined voting
power of the Company's then outstanding securities; or
(ii) during any period of two consecutive calendar years,
individuals who at the beginning of such period constitute the
Board cease for any reason to constitute at least a majority
thereof unless the election or the nomination for election by the
Company's shareholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period.
4. Termination Following Change in Control. If any of
the events described in Section 3 hereof constituting a Change in
Control of the Company shall have occurred, you shall be entitled
to the benefits provided in Section 5 hereof upon the subsequent
termination of your employment within two years from the date of
such Change in Control unless such termination is (a) because of
your death, (b) by the Company for Cause or Disability or (c) by
you other than for Good Reason.
(i) Disability. Termination by the Company
of your employment based on "Disability" shall mean
termination because of your absence from your duties
with the Company on a full time basis for 180
consecutive calendar days, as a result of your
incapacity due to physical or mental illness, unless
within 30 days after Notice of Termination (as
hereinafter defined) is given following such absence you
shall have returned to the full time performance of your
duties.
(ii) Cause. Termination by the Company of
your employment for "Cause" shall mean termination upon
(A) the willful and continued failure by you to
substantially perform your duties with the Company
(other than any such failure resulting from your
incapacity due to physical or mental illness), after a
demand for substantial performance is delivered to you
by the Chief Executive Officer of the Company or by the
Chairman of the Board of Directors which specifically
identifies the manner in which such executive believes
that you have not substantially performed your duties,
or (B) the willful engaging by you in misconduct which
is materially injurious to the Company, monetarily or
otherwise. For purposes of this paragraph, no act, or
failure to act, on your part shall be considered
"willful" unless done, or omitted to be done, by you not
in good faith and without reasonable belief that your
action or omission was in the best interest of the
Company. Notwithstanding the foregoing, you shall not
be deemed to have been terminated for Cause unless and
until there shall have been delivered to you a copy of a
Notice of Termination from the Chief Executive Officer
of the Company after reasonable notice to you and an
opportunity for you, together with your counsel, to be
heard before the Chief Executive Officer, finding that
in the good faith option of such executive you were
guilty of conduct set forth above in clauses (A) or (B)
of the first sentence of this paragraph and specifying
the particulars thereof in detail.
(iii) Good Reason. Termination by you of your
employment for "Good Reason" shall mean termination
based on:
(A) the assignment to you of any duties
inconsistent with your position, duties,
responsibilities and status with the Company
immediately prior to a Change in Control, or a
change in your reporting responsibilities, titles
or offices as in effect immediately prior to a
Change in Control, or any removal of you from or
any failure to re-elect you to any of such
positions, except in connection with the
termination of your employment for Cause or
Disability or as a result of your death or by you
other than for Good Reason;
(B) a reduction by the Company in your base
salary as in effect on the date hereof or as the
same may be increased from time to time;
(C) a failure by the Company to continue the
Company's incentive bonus plans as the same may be
modified from time to time but substantially in the
form currently in effect (the "Plans"), or a
failure by the Company to continue you as a
participant in the Plans on at least the present
basis or to pay you the amounts which you would be
entitled to receive based on the Company's
performance in accordance with the Plans;
(D) the Company's requiring you to be based
anywhere other than your present location or the
Company's principal executive offices except for
required travel on the Company's business to an
extent substantially consistent with your present
business travel obligations, or in the event you
consent to any such relocation, the failure by the
Company to pay (or reimburse you for) all
reasonable moving expenses incurred by you or to
indemnify you against any loss realized in the sale
of your principal residence in connection with any
such relocation;
(E) the failure by the Company to continue
in effect any benefit, retirement or compensation
plan, savings and profit sharing plan, stock
ownership plan, stock purchase plan, stock option
plan, life insurance plan, health- and-accident
plan, dental plan or disability plan in which you
are participating at the time of a Change in
Control of the Company (or plans pro- viding you
with no less favorable benefits), the taking of any
action by the Company which would adversely affect
your participation in or materially reduce your
benefits under any of such plans or deprive you of
any material fringe benefit enjoyed by you at the
time of the Change in Control, or the failure by
the Company to provide you with the number of paid
vacation days to which you are then entitled in
accordance with the Company's normal vacation
policy in effect on the date hereof;
(F) the failure by the Company to obtain the
assumption of the agreement to perform this
Agreement by any successor as contemplated in
Section 6 hereof; or
(G) any purported termination of your
employment which is not effected pursuant to a
Notice of Termination satisfying the requirements
of paragraph (iv) below [and, if applicable,
paragraph (ii) above]; and for purposes of this
Agreement, no such purported termination shall be
effective.
(iv) Notice of Termination. Any purported
termination by the Company pursuant to paragraph (i) or
(ii) above or by you pursuant to paragraph (iii) above
shall be communicated by written Notice of Termination
to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision
in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to
provide a basis for termination of your employment under
the provision so indicated.
(v) Date of Termination. "Date of Termination"
shall mean (A) if your employment is terminated for
Disability, 30 days after Notice of Termination is given
(provided that you shall not have returned to the
performance of your duties on a full-time basis during
such 30 day period), (B) if your employment is
terminated pursuant to paragraph (ii) above, the date
specified in the Notice of Termination, and (C) if your
employment is terminated for any other reason, the date
on which a Notice of Termination is given; provided if
within 30 days after any Notice of Termination is given
the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date
on which the dispute is finally determined, either by
mutual written agreement of the parties, by a binding
and final arbitration award or by a final judgment,
order or decree of a court of competent jurisdiction
(the time for appeal therefrom having expired and no
appeal having been perfected).
5. Compensation upon Termination or During Disability.
(i) During any period that you fail to perform
your duties hereunder as a result of incapacity due to
physical or mental illness, you shall continue to
receive your full base salary at the rate then in effect
and any bonus payments under the Plans paid during such
period until this Agreement is terminated pursuant to
paragraph 4(i) hereof. Thereafter, your benefits shall
be determined in accordance with the Company's long-term
disability plan then in effect.
(ii) If your employment shall be terminated for
Cause, the Company shall pay you your full base salary
through the Date of Termination at the rate in effect at
the time Notice of Termination is given and the Company
shall have no further obligation to you under this
Agreement.
(iii) If your employment by the Company shall be
terminated (A) by the Company other than for Cause or
Disability or (B) by you for Good Reason, then you shall
be entitled to the benefits provided below:
(A) the Company shall pay you your full base
salary through the Date of Termination at the rate
in effect at the time Notice of Termination is
given and the amount, if any, with respect to any
year then ended which pursuant to the Plans would
have accrued to you on the basis of the Company's
performance but which has not yet been paid to you;
(B) From the date of Termination through a
period of 24 months following the Change in Control
or until your normal retirement date (whichever
first occurs), you shall be entitled to receive as
severance pay (i) a monthly payment equal to your
monthly salary for the last full month immediately
preceding termination, plus 1/12 of the average of
the short-term incentive bonus payments paid to you
or accrued with respect to each of the two years
preceding termination; (ii) continued treatment as
an "employee" under any stock option, employee
benefit or other compensation arrangement (for the
remaining period); (iii) full benefits under each
employee welfare benefit plan in which you were
entitled to participate immediately prior to date
of termination; (iv) the right to immediately
exercise in full all outstanding stock options;
(v) full credit under the Company's retirement
plans for service through the remaining period.
(C) The Company shall also pay to you all
legal fees and expenses incurred by you as a result
of any controversy over this Agreement, to the
extent you are successful in legal proceedings
against the Company.
(iv) Notwithstanding the foregoing, no payments
shall be provided under subsection (iii) to the extent
that they would (A) constitute an "excess parachute
payment" under Section 280G of the Internal Revenue
Code, (B) disqualify an employee benefit plan or trust
under the Internal Revenue Code, or (C) cause an
employee benefit plan or trust to violate the Employee
Income Retirement Security Act of 1974, as amended.
6. Successors; Binding Agreement.
(i) The Company will require any successor
(whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company, to
expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company
would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any succession
shall be a breach of this Agreement and shall entitle
you to compensation from the Company in the same amount
and on the same terms as you would be en- titled
hereunder if you terminated your employment for Good
Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As
used in this Agreement, "Company" shall mean the Company
as hereinbefore defined and any successor to its
business and/or assets as aforesaid which executes and
delivers the agreement provided for in this paragraph 6
or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law.
(ii) This Agreement shall inure to the benefit
of and be enforceable by your personal or legal
representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If you
should die while any amount would still be payable to
you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there be no
such designee, to your estate.
7. Notice. For the purposes of this Agreement,
notices and all other communications provided for in the
Agreement shall be in writing and shall be deemed to have been
duly given when delivered or mailed by United States registered
mail, returned receipt requested, postage prepaid, addressed to
the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Company shall be
directed to the attention to the Chief Executive Officer of the
Company with a copy to the Secretary of the Company, or to such
other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
8. Miscellaneous. No provisions of this Agreement may
be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing signed by you
and such officer as may be specifically designated by the Board
of Directors of the Company. No waiver by either party hereto at
any time of any breach by the other party hereto of, or
compliance with, any condition of this Agreement to be performed
by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions or representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed
by the laws of the State of Michigan.
9. Validity. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
10. Arbitration. Any dispute or controversy arising
under or in connection with this Agreement shall be settled
exclusively by arbitration in Oakland County, Michigan in
accordance with the rules of the American Arbitration Association
then in effect. Judgment may be entered on the arbitrator's
award in any court having jurisdiction.
To confirm your acceptance, kindly sign and return to
the Company the enclosed copy of this letter which will then
constitute our agreement on this subject.
Sincerely,
SIMPSON INDUSTRIES, INC.
By:_________________________
Roy E. Parrott, President
Agreed to this _____________
day of September _____, 1997
____________________________
Vinod M. Khilnani
Year Ended December 31
1997 1996 1995
Basic
Average shares outstanding 18,123,475 18,066,552 17,971,417
========== ========== ==========
Net earnings applicable to
common stock and common
stock equivalents $10,079,000 $17,607,000 $15,302,000
========== ========== ==========
Earnings per share $.56 $.97 $.85
========== ========== ==========
Diluted
Average shares outstanding 18,123,475 18,066,552 17,971,417
Net effect of dilutive
stock options based on the
treasury stock method
using the average market
price 78,363 48,525 70,059
Average number of common
and common equivalent
shares 18,201,838 18,115,077 18,041,475
========== ========== ==========
Net earnings applicable to
common stock and common
stock equivalents $10,079,000 $17,607,000 15,302,000
========== ========== ==========
Earnings per share $.55 $.97 $.85
========== ========== ==========
State or
Jurisdiction of Percent
Name of Subsidiary Incorporation Owned
R.J.Simpson Manufacturing Company Ontario, Canada 100%
(Canada) Ltd.
Simpson Industries, S.A. de C.V. Federal District 99%
of Mexico
Dampers SAS Lyon, France 100%
Simpson International (U.K.) Ltd. Halifax, England 100%
The Board of Directors and Shareholders
Simpson Industries, Inc.:
We consent to incorporation by reference in the registration
statement (No. 33-39679) on Form S-8 pertaining to the Simpson
Industries, Inc. Savings Plan, to incorporation by reference in
the registration statement (No. 33-39678) on Form S-8 pertaining
to the Simpson Industries, Inc. - Fremont Operation Savings Plan,
to incorporation by reference in the registration statement (No.
2-95425) on Form S-8 pertaining to the Simpson Industries, Inc.
1984 Stock Option Plan, to incorporation by reference in the
registration statement (No. 33-62806) on Form S-8 pertaining to
the 1993 Executive Long-Term Incentive Plan, and to incorporation
by reference in the registration statement (No. 33-62802) 1993
Non-Employee Director Stock Option Plan, of our report dated
January 27, 1998, relating to the consolidated balance sheets of
Simpson Industries, Inc., and subsidiaries as of December 31,
1997, and 1996, and the related consolidated statements of
operations, shareholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1997, which
report appears in the December 31, 1997, annual report on Form
10-K of Simpson Industries, Inc.
/S/ KPMG
Detroit, Michigan
March 24, 1998
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS
AS OF AND FOR THE PERIOD ENDING DECEMBER 31,
1997, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
<MULTIPLIER> 1000
<PERIOD START> JAN-01-1997
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 8,235
<SECURITIES> 0
<RECEIVABLES> 66,055
<ALLOWANCES> 0
<INVENTORY> 19,827
<CURRENT-ASSETS> 114,694
<PP&E> 313,499
<DEPRECIATION> 139,353
<TOTAL-ASSETS> 341,548
<CURRENT-LIABILITIES> 78,328
<BONDS> 0
<COMMON> 18,129
0
0
<OTHER-SE> 99,743
<TOTAL-LIABILITY-AND-EQUITY> 341,548
<SALES> 451,518
<TOTAL-REVENUES> 452,042
<CGS> 406,513
<TOTAL-COSTS> 420,599
<OTHER-EXPENSES> 8,769
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,451
<INCOME-PRETAX> 15,223
<INCOME-TAX> 5,144
<INCOME-CONTINUING> 10,079
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,079
<EPS-PRIMARY> 0.56
<EPS-DILUTED> 0.55
</TABLE>
