=============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ended March 31, 2000 Commission File Number 0-6611
SIMPSON INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Michigan 38-1225111
(State or other jurisdiction of IRS Employer Identification No.)
incorporation or organization)
47603 Halyard Drive, Plymouth, Michigan 48170-2429
(Address of principal executive offices) (Zip Code)
(734)207-6200
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes _X_ No___
At April 30, 2000 there were 17,874,374 outstanding shares of the
registrant's common stock, $1.00 par value each.
=============================================================================
Consolidated Balance Sheets
(In thousands)
March 31, 2000 and December 31, 1999
March 31 Dec. 31
(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents $ 7,358 $ 7,362
Accounts receivable 96,120 84,124
Inventories 18,611 19,448
Customer tooling in process 9,307 6,404
Prepaid expenses and other current assets 12,251 11,960
Total Current Assets 143,647 129,298
Property, Plant and Equipment
Cost 368,667 362,259
Less accumulated depreciation 184,132 179,346
Total Property, Plant and Equipment 184,535 182,913
Intangible Assets - net 45,525 46,847
Other Assets 3,253 2,398
$376,960 $361,456
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current installment of
long-term debt $ 4,079 $ 6,079
Notes Payable 19,549 10,908
Accounts payable 61,917 62,654
Compensation and amounts withheld 9,323 12,614
Taxes, other than income taxes 4,398 3,797
Other current liabilities 12,011 10,261
Total Current Liabilities 111,277 106,313
Long-term debt, excluding current installment 103,811 98,955
Accrued Retirement Benefits and Other 16,452 16,098
Deferred Income Taxes 9,952 7,058
Shareholders' Equity 135,468 133,032
$376,960 $361,456
See accompanying notes to consolidated financial statements.
Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share amounts)
Periods Ended March 31, 2000 and 1999
Three Months
2000 1999
Net sales $ 144,565 $ 133,102
Costs and expenses:
Cost of products sold 128,576 118,763
Administrative and selling 3,272 2,776
Amortization of intangible assets 566 521
132,414 122,060
Operating Earnings 12,151 11,042
Investment and other income, net (437) (96)
Interest expense (2,257) (2,132)
Earnings Before Income Taxes 9,457 8,814
Income taxes 3,310 3,085
Net Earnings 6,147 5,729
Comprehensive Income - net $ 5,368 $ 1,618
Basic Earnings Per Share $ 0.34 $ 0.32
Diluted Earnings Per Share $ 0.34 $ 0.32
Cash dividends per share $ 0.10 $ 0.10
Average number of common equivalent shares:
Basic 17,906,083 18,144,632
Diluted 17,940,944 18,161,211
See accompanying notes to consolidated financial statements.
Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Three Months Ended March 31, 2000 and 1999
2000 1999
OPERATING ACTIVITIES
Net earnings $ 6,147 $ 5,729
Depreciation and amortization 6,976 6,879
Provision for deferred income taxes 2,894 101
Other 170 199
Changes in operating assets and liabilities (16,531) (7,708)
Cash (Used In) Provided By Operating Activities (344) 5,200
INVESTING ACTIVITIES
Capital expenditures (8,665) (5,035)
Proceeds from disposal of property and equipment 10 53
Cash Used In Investing Activities (8,655) (4,982)
FINANCING ACTIVITIES
Cash dividends paid (1,788) (1,815)
Notes payable - net 8,641 --
Proceeds of long-term debt, net 2,856 1,355
Cash Used in stock transactions (921) (728)
Cash Provided from (Used In)Financing Activities 8,788 (1,188)
Effect of foreign currency exchange rate changes 207 264
Decrease In Cash and Cash Equivalents (4) (706)
Cash and cash equivalents at beginning of period 7,362 6,145
Cash and Cash Equivalents at End of Period $ 7,358 $ 5,439
Supplemental Disclosures
Cash paid during the
year for:
Interest $ 4,295 $ 2,789
Income Taxes 1,306 1,505
See accompanying notes to consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Significant Accounting Principles
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial reporting. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The consolidated financial statements should
be read in conjunction with the consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10K for the year
ended December 31, 1999. The results of operations for the three months ended
March 31, 2000 are not necessarily indicative of the results to be expected
for the year ending December 31, 2000.
Note 2. Lines of Credit
As discussed in Simpson's 1999 Annual Report on Form 10-K, the Company
maintains credit lines that allow for borrowings of up to $25 million under a
five-year agreement and up to $50 million under a 364-day agreement. At March
31, 2000, there were no borrowings outstanding under the 364-day agreement,
and $13.5 million outstanding under the five-year agreement. At March 31,
2000, $10 million of the borrowings under the five-year agreement 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.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Net sales for the first quarter of 2000 increased 8.6%, or $11.5 million,
over the first quarter of 1999. Continued strength in North American and
European markets in both the light vehicle and medium- and heavy duty
markets, were the key factors accounting for the sales growth.
Cost of products sold as a percent of sales decreased slightly, from 89.2% in
the first quarter of 1999 to 88.9% in the first quarter of 2000 reflecting a
slight decrease in direct production costs. Administrative and selling costs
increased from 2.1% of sales for the first quarter of 1999 to 2.3% of sales
for the first quarter of 2000. The increase can be attributed to new program
development and launch costs. As a result, operating earnings increased
10.0%, from $11.0 million for the three months ended March 31, 1999 to $12.1
million for the three months ended March 31, 2000. Net earnings rose 7.3%,
from $5.7 million to $6.1 million over the same period. Interest and other
expense increased slightly from 1.7% of sales in the first quarter of 1999 to
1.9% of sales in the first quarter of 2000, primarily due to higher debt
levels.
Cash flow from operations decreased $5.5 million, from $5.2 million for the
first three months of 1999 to $(0.3) million for the first three months of
2000. Net cash used in investing activities totaled $8.7 million as of March
31, 2000, up $3.7 million from the $5.0 million used as of March 31, 1999.
These expenditures represent the Company's investment in production capacity
for new automotive, light truck and diesel engine programs.
Cash flow before financing activities decreased $9.2 million, from $0.2
million as of March 31, 1999 to $(9.0) million as of March 31, 2000. The
Company believes that cash flows from operations and available credit
facilities will be sufficient to meet its debt service requirements,
projected capital expenditures and dividends, and working capital
requirements.
The Company maintains credit lines that allow for borrowings of up to $25
million under a five-year agreement and up to $50 million under a 364-day
agreement. Since December 31, 1999, up to $13.8 million has been borrowed
under the five-year agreement. At March 31, 2000, $13.5 million in borrowings
were outstanding under the five-year agreement. At March 31, 2000, $10
million of the borrowings under the five-year agreement 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.
This report contains forward-looking statements within the meaning of the
Securities Exchange Act of 1934. These statements, including those relating
to future outlook and operating performance, new programs expected to be
launched, and other statements regarding the belief or current expectations
of the Company, involve risks and uncertainties. Accordingly, actual results
may differ materially as a result of various factors including, but not
limited to, general economic conditions in the markets in which the Company
operates, fluctuation in demand for the Company's products, the activities of
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (continued)
competitors, and various other factors outside of the Company's control.
The Company does not intend to update these forward-looking statements.
Derivative Instruments and Hedging Activities: SFAS No.133, "Accounting for
Derivative Instruments and Hedging Activities", was issued in June 1998. It
establishes accounting and reporting standards for derivative instruments and
hedging activities. As issued SFAS No.133 is effective for all fiscal
quarters of all fiscal years beginning after June 15, 1999. In 1999 the Board
deferred the effective date of SFAS No. 133 with FASB Statement No.137,
Accounting for Derivative Instruments and Hedging Activities - Deferral of
the Effective Date of FASB Statement No. 133. SFAS No.137 is effective for
all fiscal quarters of all fiscal years beginning after June 15, 2000. Any
future effects will be incorporated into the current year's financial
statements.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For the period ended March 31, 2000, the Company did not experience any
material change in market risk exposures affecting the quantitative and
qualitative disclosures as presented in the Company's Annual Report on Form
10-K for the year ended December 31, 1999.
Part II. Other Information
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of Simpson Industries, Inc.
was held on April 18, 2000 in Greenville, NC. The following
matters were submitted to a vote of security holders.
1(a) The following persons were elected to the Board of Directors
until the 2001 annual meeting:
Votes In
Nominee Favor Withheld
------- -------- --------
Susan P. Haka 13,809,316 215,560
George R. Kempton 8,518,821 232,403
Walter J. Kirchberger 13,837,716 192,105
Roy E. Parrott 13,835,140 191,558
Ronald L. Roudebush 13,838,263 191,558
George A. Thomas 8,558,540 195,939
F. Lee Weaver 8,563,228 194,229
1(b) The following persons were previously elected to the Board
of Directors and serve until the 2001 annual meeting:
Michael E. Batten
Robert W. Navarre
Frank K. Zinn
2 Proposal to approve the Shareholder Value Proposal
submitted by MMI Investments II-A, L.P. were as follows:
Votes In Favor 6,622,712
Votes Against 7,556,459
Votes Withheld/Abstentions 609,478
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed as part of this report.
Exhibit No. Description
11 Computation of Earnings Per Share
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended March 31, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SIMPSON INDUSTRIES, INC.
Registrant
May 12, 2000 /s/ Vinod M. Khilnani
Vinod M. Khilnani
Vice President and Chief Financial Officer
Exhibit (11) - Computation of Earnings Per Share
Three Months Ended
March 31
2000 1999
Basic:
Average shares outstanding 17,906,083 18,144,632
========== ==========
Net earnings applicable to common stock and
common stock equivalents $6,147,000 $5,729,000
========= =========
Basic earnings per share $.34 $.32
=== ===
Diluted:
Average shares outstanding 17,906,083 18,144,632
Net effect of dilutive stock options based on
treasury stock method using the average
market price 34,861 16,579
---------- ----------
Average number of common shares and common
equivalent shares 17,940,944 18,161,211
========== ==========
Net earnings applicable to common stock and
common stock equivalents $6,147,000 $5,729,000
========= ==========
Diluted earnings per share $.34 $.32
=== ===
<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 MARCH 31,
2000, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<PERIOD-TYPE> 3-MOS
<CASH> 7,358
<SECURITIES> 0
<RECEIVABLES> 96,120
<ALLOWANCES> 0
<INVENTORY> 18,611
<CURRENT-ASSETS> 143,647
<PP&E> 368,667
<DEPRECIATION> 184,132
<TOTAL-ASSETS> 376,960
<CURRENT-LIABILITIES> 111,277
<BONDS> 103,811
<COMMON> 17,843
0
0
<OTHER-SE> 117,625
<TOTAL-LIABILITY-AND-EQUITY> 376,960
<SALES> 144,565
<TOTAL-REVENUES> 144,565
<CGS> 128,576
<TOTAL-COSTS> 132,414
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,257
<INCOME-PRETAX> 9,457
<INCOME-TAX> 3,310
<INCOME-CONTINUING> 6,147
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,147
<EPS-BASIC> 0.34
<EPS-DILUTED> 0.34
</TABLE>
