<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
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<CAPTION>
<S> <C>
/X/ Preliminary Proxy Statement / / Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
</TABLE>
SIMPSON INDUSTRIES, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
MMI INVESTMENTS II-A, L.P.; MCM MANAGEMENT, LLC;
MILLBROOK CAPITAL MANAGEMENT, INC.; JOHN S. DYSON;
CLAY B. LIFFLANDER; ALAN L. RIVERA; ROBERT B. KAY AND JEROME LANDE
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<PAGE>
PRELIMINARY COPY
SUBJECT TO COMPLETION--JANUARY 20, 2000
2000 ANNUAL MEETING OF SHAREHOLDERS
OF
SIMPSON INDUSTRIES, INC.
---------------
PRELIMINARY PROXY STATEMENT
OF
MMI INVESTMENTS II-A, L.P.
--------------------
This Preliminary Proxy Statement (this "Proxy Statement") is being
furnished in connection with the solicitation of proxies by MMI Investments
II-A, L.P. ("MMI Investments" or "we") for use at the 2000 Annual Meeting of
Shareholders of Simpson Industries, Inc., a Michigan corporation ("Simpson" or
the "Company"), and at any adjournments or postponements thereof (the "2000
Annual Meeting"). We intend to solicit proxies in support of (i) the election of
three individuals, John S. Dyson, Clay B. Lifflander and Alan Rivera, nominated
by MMI Investments (out of a total of seven to be elected at the 2000 Annual
Meeting), to serve on the Board of Directors of Simpson (the "Board") and (ii) a
resolution requesting that the Board seek the sale of Simpson to a third party
through a competitive auction process to be conducted by a recognized investment
banking firm (the "Shareholder Value Proposal").
As of the date of this Proxy Statement, Simpson has not announced the
date, time or place of the 2000 Annual Meeting or fixed the date for the
determination of shareholders of record entitled to vote at the 2000 Annual
Meeting. The By-laws of Simpson state that its Annual Meeting of Shareholders
will be held in the fourth month of Simpson's fiscal year, April, on a date
specified by the Board.
MMI Investments intends to furnish this Proxy Statement to shareholders
of Simpson with whom MMI Investments communicates directly in person or by
telephone and will furnish this Proxy Statement, upon request, to any other
Simpson shareholder, without charge. This Proxy Statement is first being
furnished to Simpson shareholders on or about __________________, 2000.
MMI Investments is the beneficial owner of 807,100 shares of common
stock, $1.00 par value per share (the "Common Stock"), of Simpson, which shares
represent approximately 4.5% of Simpson's outstanding Common Stock. Additional
"participants" in the solicitation of proxies contemplated by this Proxy
Statement, as defined in the proxy rules promulgated by the Securities and
Exchange Commission ("SEC"), are MCM Management, LLC; Millbrook Capital
Management, Inc.; John S. Dyson; Clay B. Lifflander; Alan L. Rivera, Robert B.
Kay and Jerome Lande. Except for the shares owned by MMI Investments, which the
additional participants may be deemed to beneficially own under SEC rules, none
of the additional participants owns any Common Stock of Simpson. Additional
information concerning MMI Investments and the other participants in this
solicitation is set forth under the heading "Information Concerning MMI
Investments and Other Participants in the Solicitation."
*****************
<PAGE>
INTRODUCTION
At the 2000 Annual Meeting, seven Directors of Simpson are expected to
be elected. MMI Investments intends to nominate for election to the Board, and
to solicit your proxy in support of the election of, John S. Dyson, Clay B.
Lifflander and Alan L. Rivera (the "MMI Nominees"). We also intend to present,
for consideration by Simpson's shareholders at the 2000 Annual Meeting, the
Shareholder Value Proposal.
We are making our Shareholder Value Proposal because of our concerns
over what we regard as the three principal issues presently confronting Simpson.
Our determination to nominate, and solicit proxies for the election of, the MMI
Nominees has arisen out of our concern over the lack of an adequate response
from Simpson's management to our concerns and the Shareholder Value Proposal.
The three principal issues that we see confronting Simpson are:
SIMPSON'S STOCK HAS CHRONICALLY UNDER-PERFORMED. During the longest
bull market of the century, Simpson has delivered NEGATIVE returns on
shareholders' investments. The market price of Simpson's Common Stock on
December 31, 1999 closed at $11.25, a 28.2% decline from its peak within the
last six years, $15.67 in early 1994. During the same period, the S&P 500
increased more than 213%. Had Simpson matched the mere price appreciation of the
S&P 500 over that same period, Simpson's shares would be worth over $49 per
share today. See the discussion of the performance of Simpson's stock versus the
S&P 500 Index and other market indices and the accompanying performance charts
in the section captioned "Reasons For Our Proposals--Simpson's Inadequate Return
to Shareholders."
SIMPSON'S FUTURE PROSPECTS ARE LACKLUSTER. We believe that Simpson,
like many smaller companies in its industry, lacks the broad product and process
technologies, manufacturing capacity and financial resources to support the
significant investment needed to compete effectively given the rapidly changing
and highly-competitive marketplace for vehicle parts suppliers. In addition,
smaller producers in the auto parts industry are increasingly squeezed by their
customers, the automobile manufacturers, who bring severe pressure to bear on
pricing and margins. We believe the industry will increasingly come to be
dominated by larger companies that have the necessary resources to meet the
ever-changing demands of automobile manufacturers. See "Reasons For Our
Proposals--Changes in the Global Marketplace."
SIMPSON HAS FAILED TO GROW THROUGH STRATEGIC ACQUISITIONS. Given the
aforementioned obstacles facing smaller suppliers in the automotive parts
industry, we believe a company like Simpson cannot hope to thrive purely on
internal growth. Further, we believe that the acquisitions made by Simpson in
recent years have been too few, too small and too infrequent, and that Simpson
is not likely to develop a realistic growth strategy based on acquisitions any
time soon, due to the conservatism of Simpson's management, the absence of a
significant track record as an acquirer, and its lack of an acquisition currency
in the form of an attractive stock or significant cash access through leverage.
See "Reasons For Our Proposals--Simpson's Lack of a Growth Strategy."
WE BELIEVE THAT SIMPSON HAS NOT ARTICULATED A DETAILED, SPECIFIC AND
COMPREHENSIVE PLAN THAT WILL ADDRESS THESE ISSUES. BASED ON THIS, WE HAVE COME
TO THE CONCLUSION THAT NO SUCH PLAN EXISTS. IN THE ABSENCE OF SUCH A PLAN, WE
BELIEVE THAT THE BEST COURSE OF ACTION IS FOR THE BOARD TO SEEK THE SALE OF
SIMPSON TO A THIRD PARTY.
Since mid-September 1999, we have been attempting to arrange a meeting
with senior management of Simpson in an effort to understand management's
business strategy and their views concerning the creation of shareholder value
in light of Simpson's undervalued market capitalization and consolidating nature
of the automotive parts industry. After initially agreeing to meet with us,
Simpson management has since engaged in a pattern of stall and delay tactics,
canceling and rescheduling our
<PAGE>
meeting on two different occasions, and then finally outright refusing to
meet with us. Our efforts to engage the Board and management in a dialogue
concerning how best to create value for Simpson shareholders are chronicled
under "Reasons For Our Proposals--Background."
Based on the lack of substantive communications from Simpson
management and the evasive tactics employed by them to avoid discussing with
us their business strategy, we believe current management either (i) is more
interested in entrenching themselves at the expense of other shareholders or
(ii) does not fully appreciate the reasons that the Board should consider the
sale of Simpson now. As a consequence, we have become convinced that even if
the Shareholder Value Proposal were adopted by Simpson's shareholders, there
is a material risk that it will not be given appropriate consideration by the
Board and management, absent the presence of persons on the Board open to it
and other means of enhancing shareholder value. We have concluded that, in
order to ensure that the Board and management of Simpson consider the
Shareholder Value Proposal and all other available options regarding the
creation of value for Simpson shareholders, the active participation in the
management of Simpson by persons, like the MMI Nominees, specifically
committed to such goals is necessary to protect the interests of all Simpson
shareholders. Accordingly, we believe it is in the best interests of all
Simpson shareholders to support the election of the MMI Nominees to the Board
and the approval of the Shareholder Value Proposal.
We selected Messrs. Dyson, Lifflander and Rivera because of their
qualifications and ability to represent your interests. Each of the MMI
Nominees has consented to serve as a director of Simpson if elected. EACH OF
THE MMI NOMINEES HAS FURTHER INDICATED THAT, IF ELECTED TO THE BOARD, HE WILL
WAIVE AND FOREGO THE RECEIPT OF ANY COMPENSATION PAYABLE BY SIMPSON TO HIM AS
A RESULT OF HIS SERVING AS A MEMBER OF THE BOARD. APPRECIATION IN THE PRICE
OF THE SIMPSON COMMON STOCK WILL SERVE AS THE MMI NOMINEES' COMPENSATION. ALL
MMI NOMINEES ARE COMMITTED TO MAXIMIZING SIMPSON SHAREHOLDER VALUE THROUGH
THE SOLICITATION OF OFFERS, BY AN INDEPENDENT INVESTMENT BANK, FOR THE SALE
OF SIMPSON, AT AN ATTRACTIVE PRICE.
*****************
We intend to communicate directly with shareholders of Simpson
concerning the MMI Nominees and the Shareholder Value Proposal and Simpson's
response thereto, through meetings in person and/or by telephone. All Simpson
shareholders are encouraged to make their views known to Simpson's management
and the Board. In addition to soliciting proxies for the 2000 Annual Meeting
in support for the MMI Nominees and our Shareholder Value Proposal, we
reserve the right to solicit proxies with respect to other proposals
concerning Simpson, INCLUDING A PROPOSAL TO ELECT ONE OR MORE ADDITIONAL
PERSONS NOMINATED BY MMI INVESTMENTS TO THE BOARD AND A PROPOSAL TO REQUEST
REDEMPTION OF SIMPSON'S "POISON PILL" SHAREHOLDER RIGHTS PLAN, WHICH WE
BELIEVE DISCOURAGES POTENTIAL ACQUIRORS OF THE COMPANY AND IS NOT IN THE BEST
INTERESTS OF SIMPSON SHAREHOLDERS.
NO PROXY CARD FOR USE AT THE 2000 ANNUAL MEETING IS INCLUDED WITH
THIS PROXY STATEMENT AND WE ARE NOT NOW SOLICITING A PROXY; A PROXY CARD MAY
BE PROVIDED BY MMI INVESTMENTS AFTER SIMPSON NOTIFIES SHAREHOLDERS OF THE
RECORD DATE AND MATTERS TO BE VOTED UPON AT THE 2000 ANNUAL MEETING OR AT AN
EARLIER DATE IF MMI INVESTMENTS DEEMS IT APPROPRIATE. ANY PROXY CARD
DISTRIBUTED BY MMI INVESTMENTS WILL BE ACCOMPANIED OR PRECEDED BY A REVISED
PROXY STATEMENT SETTING FORTH THE DATE, TIME AND LOCATION OF THE 2000 ANNUAL
MEETING AS ANNOUNCED BY SIMPSON.
If you wish to communicate with us concerning Simpson and the
matters discussed in this Proxy Statement, executives of MCM Management, LLC
("MCM Management"), the general partner of MMI Investments, can be reached at
(212) 586-4333. For information regarding our ownership of Common Stock, see
Schedule I attached to this Proxy Statement.
<PAGE>
IMPORTANT: MMI INVESTMENTS IS NOT CURRENTLY ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY.
REASONS FOR OUR PROPOSALS
BACKGROUND
MMI Investments is a private investment firm with investments in
publicly traded securities which we believe are substantially undervalued. The
portfolio of MMI Investments includes significant investments in approximately
30 public companies at any given time. You will find more information about us
and our affiliated companies under "Information Concerning MMI Investments and
Other Participants in the Solicitation." We have acquired shares of Common Stock
of Simpson over time because we believed that the trading prices for the Common
Stock have not adequately reflected the intrinsic value of Simpson's underlying
operations and assets. We continue to believe that is the case. However, as we
have learned more about Simpson and its business strategy, we have become
increasingly pessimistic concerning Simpson's ability to realize this potential
value as an independent company under current management.
In May 1999, we began to acquire shares of Simpson's Common Stock
because of what we consider to be the large discount to its true value at which
the Common Stock was trading. We based this conclusion on our experience with
other companies in this industry and the multiples of EBITDA (i.e., earnings
before interest, taxes, depreciation and amortization) at which other companies
in the industry had changed hands in recent merger and acquisition transactions.
According to the December 1, 1999 issue of THE DAILY DEAL, ".. most acquisition
targets in the auto parts industry have gone for seven to nine times Ebitda."
While we believe Simpson represents a very attractive acquisition target,
Simpson would, even if valued at the low end of this range, have a value of more
than $19 per share. There can be no assurance, however, that the shares of
Common Stock would be valued at such levels by any potential acquiror of
Simpson. In addition, none of MMI Investments, the other participants in MMI
Investment's solicitation or any other person on behalf of MMI Investments has
conducted a formal valuation analysis of Simpson. Prior to May 1999, MMI
Investments had not owned any shares of Simpson Common Stock.
We have continued to invest in Simpson's Common Stock and as a result
are now among the Company's largest shareholders, owning 807,100 shares or
approximately 4.5% of the outstanding Common Stock. In mid-September 1999, we
contacted Simpson's Chief Executive Officer, Roy Parrott, and requested a
meeting for later that month or the beginning of October 1999 in an effort to
understand Simpson's business strategy. We initiated this meeting in order to
discuss management's strategic business plan and views concerning the creation
of shareholder value in light of Simpson's severely undervalued market
capitalization and the consolidating nature of the automotive parts industry.
Such a meeting is a common practice for us with companies in which we have made
investments and in our experience is generally welcomed by a company's
management as an opportunity to present its strategic plan to one of the
company's significant owners. Rather than the cooperation and responsiveness we
had hoped that Simpson management would demonstrate, we received a request that
we wait approximately six weeks for this meeting. While puzzled by management's
refusal to yield us one hour of time until early November, we were eager to
afford management the opportunity to relate its strategic plan for the creation
of shareholder value and agreed to wait and meet with Mr. Parrott on November 2,
1999. One week before we were to meet with management at the Company's offices
in Plymouth, Michigan, we received a letter from Mr. Parrott canceling the
meeting of November 2nd. Among the reasons given for this cancellation was that:
"[t]he other information we [management] have assembled indicates that [MMI
Investments] has a history of submitting shareholder proposals for inclusion in
companies' proxy materials." Further, our interest in meeting to discuss the
future of the Company was
<PAGE>
dismissed as follows: "If your interest in the meeting is to garner text for
the statement supporting a shareholder proposal, as appears to have been the
case in other instances, we likewise have no interest in meeting with you."
We were dismayed at management's unwillingness to allay our concerns
about Simpson's languishing stock price by meeting with us to demonstrate a
reasonable plan for increasing shareholder value. We responded to Simpson the
following day, October 27, 1999, in a letter explaining that we manage
investments in a number of public companies and meet with management of many of
these companies regularly without participating in their proxy process. We
further stated that a meeting with Simpson management would provide great
insight into the operation and strategic plan of the Company and management's
capabilities. (Please see Appendix A for copies of all written correspondence
between MMI Investments and the Simpson management.) The Company replied with a
letter reiterating the cancellation of our November 2nd appointment and
suggesting a meeting instead in December. We interpreted that suggestion as an
attempt to delay our consideration of possible next steps, including the
submission of a shareholder proposal, until after the November 12, 1999 deadline
for submission of shareholder proposals for inclusion in Simpson's proxy
material for the 2000 Annual Meeting. We concluded that management's repeated
efforts to avoid a discussion of the creation of shareholder value meant that it
might in fact have no plan on that important matter. Therefore, we decided that
our active participation in Simpson's annual meeting was necessary for the
creation of value for all Simpson shareholders. On November 2, 1999, we
submitted a shareholder proposal urging the sale of the Company. Accompanying
the proposal was a letter accepting Mr. Parrott's proposed meeting in December.
Simpson's management refused to include our Shareholder Value Proposal
in its proxy materials. While Simpson was not, under the rules of the SEC,
required to include our Shareholder Value Proposal in management's proxy
materials, it was certainly permitted to include it and we were hopeful that
Simpson would choose to include the proposal in the spirit of allowing
shareholders a voice on matters vital to their company's future. To this end, we
even stated our willingness to pay the extra printing and mailing costs
associated with the inclusion of the brief additional materials in Simpson's
proxy statement. In spite of this, management denied our request. Furthermore,
Mr. Parrott officially retracted his offer of a meeting in December and stated
that he "[does] not believe that a meeting would be constructive or worthwhile
for either party." WE BELIEVE MR. PARROTT IS WRONG; A MEETING WITH AN OWNER OF
807,100 SHARES (OR 4.5%) OF THE COMMON STOCK OF THE COMPANY FOR WHICH HE WORKS
IS, WE BELIEVE, WELL WORTH HIS TIME, PARTICULARLY IF MR. PARROTT HAS A PLAN TO
ARTICULATE.
In response to these events and in order to allow us to communicate
more freely with fellow Simpson shareholders, we filed on December 1, 1999 a
preliminary proxy statement with the SEC relating to our Shareholder Value
Proposal. On December 8, 1999, we sent a letter to Mr. Parrott asking his views
on the question of what he would do in the event the Company's shareholders
approved our Shareholder Value Proposal. We asked him to let us know whether, in
the event of the passage of our proposal, he would do the following:
(i) as Chairman of the Board, promptly call a meeting of the Board
to consider the implementation of the Shareholder Value
Proposal; and
(ii) as a director, vote in favor of a resolution to implement the
Shareholder Value Proposal.
We sent a copy of this letter to each of Simpson's other directors, indicating
that we were equally interested in their response, as a director of Simpson, to
the questions posed in our letter to Mr. Parrott. A response was requested by
December 15, 1999. The ONLY RESPONSE we have received is a letter
<PAGE>
from Mr. Parrott acknowledging receipt of the letter and stating that copies
of it have been sent to the Board.
On December 27, 1999, we submitted a request to the Company seeking to
inspect certain of its records, including the Company's shareholder list and
information concerning contemplated, proposed or considered extraordinary
corporate transactions involving the Company, such as acquisitions, mergers, and
sales of assets, and requests received by the Company from any of its customers
or prospective customers requesting that the Company develop, or assist such
customers in the development of, additional products or services or requesting
reduced prices from the Company. Because of the Company's lack of communication
with us, we hoped that a review of such records would help us evaluate the
effect of the decisions and actions of the Board and management in the recent
past on the Company's stock price and operations, and the response of management
to the changes in the Company's industry. We believe that, under applicable
Michigan law, we are entitled to inspect such records. In response to this
request, we received a letter from the Company's outside attorneys on January 4,
2000 denying our request to inspect all of the records we had requested except
for the shareholder list.
So that you can judge for yourself the tone and nuance of our
communications with management and determine whether our reaction is
appropriate, we have attached copies of all correspondence between Simpson and
MMI Investments.
Based on what we believe to be management's evasive tactics and
apparent inability or unwillingness to meet what we consider to be one of the
most basic responsibilities of the management of a public company, namely
articulating to shareholders a detailed, specific and comprehensive business
strategy, we are extremely concerned about Simpson's direction. We are
especially disappointed by management's refusal to meet with a shareholder whose
stock ownership is nearly twice that of the combined ten members of the Board
and the five highest paid executives (excluding unexercised employee or director
stock options). These Simpson insiders, in spite of their more than 150 years of
combined service with the Company, own less than 3% of its stock. Given the
commonly accepted principle that significant stock ownership by a company's
management more fully aligns their interest with those of the company's other
shareholders (see, for instance, the Report of the Compensation Committee of the
Board contained in Simpson's March 1999 Proxy Statement which states that "[its]
policies are also designed to promote Company stock ownership among the
executive group to align their long-term interests with those of the
shareholders and to encourage enhancement of shareholder value"), we believe the
level of stock ownership by Simpson's management contributes to a lack of
commitment to the creation of value for the true owners of the Company. See
Schedule I and Schedule II for MMI Investment's and management's stock
ownership.
REASONS TO SUPPORT THE MMI NOMINEES AND THE SHAREHOLDER VALUE PROPOSAL
Please consider the following:
SIMPSON'S INADEQUATE RETURN TO SHAREHOLDERS. During the longest bull
market of the century, Simpson has for long periods delivered NEGATIVE returns
on shareholders' investments. The market price of the Common Stock on December
31, 1999 closed at $11.25, a 28.2% decline from its peak within the last six
years, $15.67 in early 1994. During the same period, the S&P 500 increased more
than 213%. HAD SIMPSON MATCHED THE MERE PRICE APPRECIATION OF THE S&P 500 OVER
THAT SAME PERIOD, SIMPSON'S SHARES WOULD BE WORTH OVER $49 PER SHARE TODAY. Do
not be fooled by the Company and its management when they proclaim the Company
is headed in the right direction as evidenced by a 16% increase in Simpson's
share price during 1999. Remember, this is primarily the same management group
that was responsible for the driving the share price from $15.67 in early 1994
to approximately $9.50 at the end of 1998. Despite management's professed
success in 1999, that fact is
<PAGE>
that the Common Stock is still trading at levels that are wholly
inadequate. In addition, we note that management is not quick to point out
that more than 6% of 1999's 16% gain occurred after we initially filed our
preliminary proxy statement related to our Shareholder Value Proposal on
December 1, 1999.
The following graph, which compares the percentage change in the
cumulative total returns of the Common Stock of Simpson, the Standard &
Poor's 500 Index and the Standard & Poor's Manufacturing (diversified
industries) Index ("S&P MAND") for the period beginning on December 31, 1993
through December 31, 1999, illustrates the point. Consider Simpson's poor
stock price performance for yourself.
STOCK PERFORMANCE* SINCE DECEMBER 1993
Cumulative Total Return Based on Initial Investment of $100
on December 31, 1993,
Assuming Reinvestment of Any Dividends
[Chart]
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12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
<S> <C> <C> <C> <C> <C> <C> <C>
Simpson $ 100 $ 68 $ 69 $ 87 $ 97 $ 83 $ 100
S&P 500 100 101 139 170 227 291 352
S&P MAND 100 103 145 194 266 326 365
</TABLE>
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* The S&P 500 Index is a broadly diversified index that is based on the
stock prices of 500 different companies, broken down as of December 31,
1999 into 376 industrial companies, 41 utilities, 11 transportation
companies, and 71 financial institutions. It is a capitalization
weighted index which means changes in the price of a particular stock
will influence the index in proportion to the total market value of the
outstanding stock of that particular company. As of December 31, 1999,
the weighted average market value of the S&P 500 Index was
approximately $143 billion while the median market value of stocks
represented in that index was approximately $8.0 billion. The average
price/earnings ratio of companies included in the S&P 500 Index as of
January 19, 2000 was 32.12. The S&P MAND is an index that is based on
the stock prices of 11 manufacturing companies that is designed to
measure the performance of the manufacturing (diversified industries)
sector of the S&P 500 Index. It is also a capitalization weighted
index.
<PAGE>
The average price/earnings ratio of companies included in the
S&P MAND as of January 19, 2000 was 21.01. As of January 19, 2000,
Simpson's market capitalization was approximately $203 million and its
price/earnings ratio was 9.87.
An investment in Simpson does not fare much better when compared with
indices more specific to Simpson's market position. In fact, the following
performance graph based upon Simpson's own 1999 Proxy Statement shows that an
investment in Simpson DECLINED in value 17.3% (from December 31, 1993 through
December 31, 1998), while the Russell 2000 INCREASED 75.17% and an Industry
Index (defined below) INCREASED 52.04% over the same period.
The following graph compares the cumulative, five-year shareholder
return, on an indexed basis, of the Company's Common Stock with the Russell 2000
Index and an industry index of publicly-traded companies operating primarily in
Standard Industrial Classification 371 ("Industry Index"). Simpson stated in its
Proxy Statement that it selected the Industry Index because the companies
included therein are engaged in the manufacturing of motor vehicles and related
parts, accessories and equipment, and pay dividends.
Comparison of Five Year Cumulative Total Return*
Among Simpson Industries, Inc.,
Russell 2000 Index,** and Industry Index
[CHART]
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12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Simpson $ 100.00 $ 67.82 $ 68.73 $ 86.59 $ 96.90 $ 82.70
Russell 2000 100.00 98.18 126.10 146.90 179.75 175.17
Industry Index 100.00 91.15 108.44 131.07 149.63 152.04
</TABLE>
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* Assumes that the value of an investment in the Company's Common Stock
and each index was $100 on December 31, 1993 and that all dividends
were reinvested.
** The Russell 2000 Index measures the performance of the 2,000 smallest
companies in the Russell 3000 Index, which represent approximately 11%
of the total market capitalization of the 3,000 largest US companies
based on TOTAL MARKET CAPITALIZATION. As of June 30, 1999, the average
market capitalization of such companies was approximately $526.4
million. As of January 19, 2000, the average price/earnings ratio of
such companies was 67.79. As of January 19, 2000, Simpson's market
capitalization was approximately $203 million and its price/earnings
ratio was 9.87.
<PAGE>
Should shareholders of Simpson continue to be patient with these
below-market returns? We believe not. Management may counsel patience, citing
the weak market for small cap value stocks and the automotive parts supplier
industry generally. In our view, these issues are insignificant and only mask
the real issue affecting the value of Simpson and the returns to its
shareholders, namely the fundamental changes affecting the vehicle parts
industry globally that are increasingly beyond the capacity of a small,
independent company like Simpson to address or remedy. WE URGE YOU NOT TO BE
FOOLED -- THE FUTURE OF YOUR INVESTMENT MAY DEPEND UPON IT.
CHANGES IN THE GLOBAL MARKETPLACE. The automobile and vehicle parts
industries have undergone dramatic transformations in the 1990s. Both industries
have experienced mass consolidation which, in our opinion, has thus far
increased and will continue to exacerbate the pricing pressures being
experienced by small companies like Simpson. We are not alone in this view. A
November 11, 1999 article in THE WALL STREET JOURNAL entitled "As Auto-Parts
Markers fight for Profits, `Correction' is Taking Place in Industry" reports: "A
consulting group's analysis of the financial statements of publicly traded
automotive-components makers underscores the pressures of the industry's
restructuring" and that "the industry has high fixed costs, rising research and
development outlays, demands from auto makers to assume warranty costs and to
deliver annual price reductions, and high investment requirements." The
consulting group's analysis referred to in that article indicated that:
[T]he number of suppliers with revenue between $500 and $1 billion
substantially decreased between 1997 and 1998. Regardless of their
performance, companies in and around this category are under increasing
pressure to grow. . . . Clearly, this is not a time for complacency.
We believe Simpson's results of operation have already been impacted by
these pricing pressures. For instance, the Company's gross margin is below
industry averages (10.4% vs. 20.2% for the industry over the twelve months
ending October 1999). We believe that pricing pressure is particularly evident
in a lag in gross margin due to the lack of purchasing power and the high
capital cost of automation that plague smaller producers. Simpson is not alone;
we believe the entire vehicle parts supplier industry will face severe
challenges in the near future. However, we believe that Simpson is not
positioned to face these challenges. Consider the following:
Since the fourth quarter of 1998, the automobile industry has seen the
merger of Daimler Benz and Chrysler, Ford's acquisition of Volvo and the
investment by Renault in Nissan. One common theme present in all of these
transactions has been the expectation that the larger combined companies will
benefit immediately from cost savings. The single largest component of this cost
savings is expected to be savings on purchasing from vehicle parts suppliers. We
believe, as do other analysts, that larger companies such as these will be
successful in leveraging their purchasing power by demanding and receiving price
concessions from their suppliers as a result of the following factors:
- By comparing price sheets from the vast supply base of a
combined purchasing department, manufacturers will be able to
identify easily where pricing discrepancies exists.
- Suppliers will be unable to resist these cost reduction
requests. In most cases, automobile manufacturers have plenty
of alternate sources for parts. As long as someone is willing
to provide products at a lower price, manufacturers will be
successful in gaining price concessions.
<PAGE>
- Requesting price concessions from suppliers also protects the
manufacturers from any internal struggles. Cost savings
through layoffs and/or plant closures create additional costs
up-front and can produce negative goodwill throughout the
workforce. Going after suppliers generates rapid cost
reductions with no negative impact on the new entity.
In our opinion, suppliers like Simpson have had and will continue to
have no choice but to grant the requested price concessions. In an industry with
high capital costs, suppliers tend to fight for increased market share even if
additional market share comes at the expense of gross margins. Therefore, if a
company like Simpson is unwilling to make price concessions, somebody else will,
leaving the company to spread high capital costs over fewer sales.
Simply put, the automobile industry consolidation does not bode well
for companies like Simpson. DaimlerChrysler's purchasing cost savings are
estimated to be $533 million in 1999 alone. For Renault/Nissan, the purchasing
cost savings are expected to be $491 million for calendar year 2000. On an
overall basis, it has been estimated that the calendar year 2000 cost savings
that the three recently consolidated manufacturers (DaimlerChrysler,
Renault/Nissan and Ford/Volvo) are looking for is $1.5 billion from direct
purchasing reductions. These reductions, if not offset by cost reductions or
other savings at the supplier level, could reduce overall estimated supplier
industry margins by 5.4%. And this projection merely reflects the effect on the
parts industry of the cost savings projected by the three consolidated
automobile manufacturers. In order to remain competitive with those three
manufacturers, we believe that other automobile manufacturers will be forced to
seek price reductions from their suppliers, thereby further exacerbating already
existing pricing pressures.
But the story of independent, small vehicle parts makers like Simpson
is, we believe, not merely a tale of greater pricing pressures but also of lost
opportunities. For instance, manufacturers in the automotive industry are
increasingly looking for suppliers capable of developing and testing larger and
more complex modules and subassemblies. These modules and assemblies consist of
"bundles" of automotive components, all preassembled prior to delivery to the
automotive manufacturer. Modules and subassemblies can range from relatively
simple auto components, like a dashboard, to complex systems like seat and door
systems, complete driver/passenger compartment systems, and fully assembled
"rolling chassis." For instance, the prototype Mercedes "Smart" car, assembled
in France, is assembled from only six modules. This trend presents a unique
opportunity for suppliers with a broad range of product and process technologies
and expertise in logistics and project management. As a reward for those
suppliers capable of taking responsibility for more complex subassemblies,
manufacturers are developing closer long-term supply relationships. In addition,
suppliers demonstrating the core competencies to handle added product
development and testing are also being offered the opportunity of extra volume.
In order to meet the added demands of manufacturers, suppliers are
required to undertake heavy investment to acquire and develop expanded system
capabilities, raising the costs and risks of participation in order to take
advantage of the available opportunities. In our opinion, despite Simpson's
professed interest in participating in this trend, as evidenced by its
statements in its 1998 Annual Report to Shareholders, Simpson, unfortunately, is
not in a position to take advantage of such opportunities. We believe that
Simpson lacks the broad product and process technologies, manufacturing capacity
and financial strength either to develop complex subassemblies itself or to
acquire a company of a sufficient size and with sufficient capabilities. As a
result, we believe Simpson and companies like it may be excluded from the
opportunities arising from the changing relationship between manufacturers and
suppliers.
These trends have had a dramatic effect on the vehicle parts industry.
In 1990 there were more than 3,000 tier-one companies in business. Six years
later, the number was down to 1,500 and some estimates indicate that the number
will further decrease to approximately 350 by the end of year 2000.
<PAGE>
This shows that suppliers seeking to compete more efficiently in a
changing marketplace are seeking strategic combinations and acquisitions to
help accomplish their goals.
Without a viable strategy to address the challenges facing smaller
suppliers in the automotive parts industry, Simpson will, we believe, continue
to be confronted with fierce competition from companies with far superior cost
structures that can effectively compete in an environment of intense cost
pressures, lower margin businesses and significant capital requirements. Our
fear is that Simpson, as an independent company with its current position in the
industry and no real prospects for growth, is not equipped to handle that
competition. THE END RESULT, WE BELIEVE, WILL BE THE DETERIORATION OF SIMPSON'S
CORE BUSINESSES AT THE EXPENSE OF ITS SHAREHOLDERS.
SIMPSON'S LACK OF A GROWTH STRATEGY. In the face of these challenges,
management has not, in our opinion, offered a viable strategy to increase
Simpson's market share through external growth. While operating personnel have
managed to produce some internal growth, in our view, Simpson corporate
management clearly has not demonstrated the capabilities or business strategy
necessary to gain market share, improve operating efficiency or broaden product
lines through an acquisition program. In so doing, we believe Simpson corporate
management has essentially stifled the growth of the Company's value in the
public marketplace since, as one major firm investment analyst that covers the
automotive parts industry has reported, "companies in which internal growth is
supplemented by acquisitions have historically been better investments than
those focused on internal growth alone."
It appears to us that Simpson is unwilling or unable to pursue
strategic acquisitions in response to these challenges. The Company has not
completed a significant acquisition since it acquired Cummins Engine Vibration
Attenuation business (the "Cummins Acquisition") in June of 1997 at an aggregate
purchase price of approximately $76 million. The Company's only other
acquisition since then, the acquisition of Stahl International, Inc. in April
1998 for $3.7 million, was, in our view, an insignificant transaction. We
believe that the Cummins Acquisition itself demonstrates a lack of Simpson
corporate management's ability to execute an effective acquisition program. The
Cummins Engine Vibration Attenuation business experienced margin deterioration
in the 18 months prior to the acquisition, causing the purchase multiple to
actually TREND UPWARDS on a trailing basis, from 8.7 times 1996 earnings before
interest and taxes ("EBIT") to 9.2 times annualized EBIT for the first six
months of 1997. Based on this margin deterioration and the fact that the final
purchase price reflected an increased purchase multiple, MMI Investments
believes Simpson overpaid for this business. Overpaying for a small business
headed in the wrong direction is, in our opinion, a poor way to pursue an
acquisition program.
We believe that Simpson's lack of strategic acquisitions over the past
two years has weakened Simpson's competitive position and significantly hindered
its ability to achieve economies of scale, thereby impairing value for
shareholders. Since the Cummins Acquisition, which was itself an unusual
activity for the Company, Simpson has not demonstrated an interest, let alone
the ability, to improve its position as a market leader through acquisitions.
Why is that? We believe it is for three reasons:
- SIMPSON HAS NO ACQUISITION OR GROWTH TRACK RECORd which would
identify it in any way to the market as a legitimate potential
acquiror.
- SIMPSON HAS LEFT ITSELF WITH NO CURRENCY FOR ACQUISITIONS. Due
to the already apparent strain on its margins and the effect
of such strain on Simpson's operating results generally,
Simpson would almost certainly have significant difficulty
sustaining the leverage burden of large debt-financed
acquisitions. In a recent filing with the SEC, Simpson stated
that its Debt-to-EBITDA ratio and its EBITDA/Interest coverage
ratio are both better than many companies in Simpson's
industry. We believe that this is largely irrelevant. The
point is that the amount of free cash flow that Simpson
generates limits the amount of additional debt that
<PAGE>
Simpson can support, and any such additional debt will not
permit Simpson to greatly expand its business through cash
acquisitions. By way of illustration, MMI Investments believes
that based on Simpson's approximately $34 million of free cash
flow (defined for this purpose as Simpson's earnings before
interest, taxes, depreciation and amortization MINUS Simpson's
capital expenditures) for the twelve months ended September
30, 1999, its current debt of approximately $115 million, and
an assumed interest rate of 10.85% for debt securities issued
in the high yield market in connection with a highly leveraged
acquisition transaction (which is approximately the average
yield-to-maturity reported by Bear Stearns & Co., Inc. in its
High Yield Index Report dated December 10, 1999 (the "Bear
Stearns Report") for high yield bonds issued by companies
included in its Automobile Manufacturing - Related Index),
Simpson's long-term borrowing availability for such a
transaction, based on a free cash flow-to-interest expense
ratio of 1.58x (which is the average of the free cash
flow-to-interest expense coverage ratios of the companies
covered in the Bear Stearns Report), is no greater than
approximately $110 million. Furthermore, due to its poor stock
price performance, Simpson could not finance a transaction
through the issuance of more equity without substantially
diluting current ownership and further hurting its operating
results.
- SIMPSON HAS, WE BELIEVE, A HISTORY OF COMPLACENT MANAGEMENt,
avoiding leverage and significant structural changes in the
business. In our opinion, such a management approach has led,
and will continue to lead, to the stagnation or, worse yet,
the decline of Simpson's market value, given the demands of
the changing global marketplace. A strategic acquisition to
improve Simpson's position requires a degree of ambition that
we believe this Board has failed to demonstrate and is
unlikely to assume.
THERE IS A SOLUTION. We believe the best course of action is for the
Board to seek the sale of the Company to a third party thereby maximizing value
for all Simpson shareholders. Through such a sale, a strategic acquiror could
benefit from Simpson's product and process technologies in taking advantage of
the opportunities, and in meeting the challenges, presented by industry trends.
While we do not believe that Simpson is properly equipped to compete as an
independent company, we believe that Simpson's operations are extremely
attractive to strategic acquirors, and that the price an acquiror will pay for
those operations will far exceed Simpson's value in the marketplace during the
foreseeable future. Furthermore, we believe that several factors are aligned to
make this the ideal time to pursue a sale of the Company.
- SIMPSON'S RECENT INTERNAL TOP-LINE GROWTH demonstrates the
strength of the sales force and operating personnel that are
actually running the Company on a day-to-day basis, as
compared to what we view as the weakness of the Board and top
officers who are determining the Company's strategic
direction. This operational performance ought to be
capitalized upon.
- THE CURRENT HIGH-WATER-MARK OF AUTO INDUSTRY SALES are not
generally projected to continue at this fever pitch. That
means automotive supplier earnings may be at their peak. In
view of that, and given the fact that transaction values are
often based on multiples of earnings, auto parts manufacturers
that sell now are likely to achieve more favorable transaction
values than if they sell later.
- THE CURRENT DISLOCATION IN THE MARKET VALUES OF AUTO PARTS
MANUFACTURERs has, in our opinion, made the sector ripe for
another wave of consolidation. As such, by sitting still now
Simpson runs the risk of being even more isolated and
consequently, under even more price-pressure as more of its
peer group is consolidated into larger competitors.
<PAGE>
THE CONSOLIDATION IN THE SUPPLIER INDUSTRY WILL NOT LAST FOREVER. NOW
IS THE TIME FOR THE BOARD TO ACT, BEFORE IT IS TOO LATE. Simpson shareholders
have suffered with negative returns for too long. In our view, the best way for
shareholders to obtain the full value of their shareholdings is for the Board to
retain a recognized investment banking firm and to charge such firm with the
responsibility of objectively determining the value of Simpson's businesses and
then conducting a competitive auction process.
By electing the MMI Nominees to the Board, shareholders of Simpson will
be electing three directors that are committed to maximizing Simpson shareholder
value through the solicitation of offers, by an independent investment bank, for
the sale of Simpson, at an attractive price.
IF YOU SHARE OUR VIEWS, WE URGE YOU TO VOTE FOR THE MMI NOMINEES FOR
ELECTION TO THE BOARD AND TO SUPPORT OUR SHAREHOLDER VALUE PROPOSAL. VOICE YOUR
SUPPORT OF OUR SHAREHOLDER VALUE PROPOSAL BY EITHER WRITING, CALLING OR FAXING
SIMPSON'S CHAIRMAN AND CEO, ROY E. PARROTT, AND THE OTHER MEMBERS OF SIMPSON'S
BOARD. SIMPSON'S ADDRESS IS 47603 HALYARD DRIVE, PLYMOUTH, MICHIGAN 48170-2429,
ITS TELEPHONE NUMBER IS (734) 207-6200 AND ITS FAX NUMBER IS (734) 207-6500. LET
THEM KNOW THAT YOU WANT THEM TO TAKE ACTION TO ENHANCE THE VALUE OF YOUR
INVESTMENT IN SIMPSON. WE ARE NOT SOLICITING PROXIES AT THIS TIME. PLEASE DO NOT
SEND A PROXY AT THIS TIME.
OUR PROPOSAL FOR ELECTION OF DIRECTORS
GENERAL
The Board presently consists of 10 directors. At Simpson's 1999 Annual
Meeting, the shareholders approved an amendment to Simpson's Bylaws to eliminate
the classification of the Board and to provide for the annual election of
directors. According to publicly available information, it is expected that at
the 2000 Annual Meeting, seven nominees will be elected to the Board, to hold
office until the 2001 Annual Meeting and until their successors have been
elected and qualified or until their earlier death, resignation or removal. In
accordance with Simpson's Bylaws, MMI Investments intends to provide written
notice to the Secretary of the Company of its nomination of the MMI Nominees for
election to the Board. The Bylaws require nominations to be made no sooner than
January 21 and no later than February 20, 2000, subject to change in the event
the annual meeting date is accelerated or delayed from its timing of last year
by more than 30 days. Notice will be provided by MMI Investments pursuant to
Section 3.11 of Article III of the Company's Bylaws, which sets forth certain
requirements for shareholders intending to nominate candidates for election to
the Board.
THE MMI NOMINEES
MMI Investments proposes that the Simpson shareholders elect the MMI
Nominees to the Board at the 2000 Annual Meeting. The three MMI Nominees are
listed below and have furnished the following information concerning their
principal occupations or employment and certain other matters.
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE DURING LAST FIVE
YEARS; CURRENT DIRECTORSHIPS; AGE
<S> <C>
John S. Dyson.................................. Mr. Dyson has been chairman of Millbrook Capital Management, Inc.
c/o Millbrook Capital Management, Inc. ("MCM") and its predecessors since inception in 1981. He is also a
RR1 director of MCM. From 1994 to 1996, Mr. Dyson served as Deputy
Box 167D Mayor for Finance and
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE DURING LAST FIVE
YEARS; CURRENT DIRECTORSHIPS; AGE
<S> <C>
Wing Road Economic Development for the City of New York
Millbrook, New York 12545 and currently serves as Chairman of the Mayor's Council of Economic
Advisors. Mr. Dyson was Vice-Chairman of Dyson-Kissner-Moran
Corporation where he worked from 1970 to 1975. In 1974, Mr. Dyson
was appointed Commissioner of the New York State Department of
Agriculture. From 1975 to 1979, Mr. Dyson served as Commissioner
of the New York State Department of Commerce. From 1979 to 1985,
Mr. Dyson was Chairman of the New York State Power Authority. Mr.
Dyson earned his Bachelors Degree from Cornell University and his
Masters Degree from Princeton University. He serves as a Trustee
of Cornell University, Morgan Library and Middlesex School. He
also serves as Chairman of the Board and a director of Key
Components, Inc., a diversified manufacturing corporation ("Key
Components"). AGE: 56.
Clay B. Lifflander............................. Mr. Lifflander was appointed President and a director of MCM in
c/o Millbrook Capital Management, Inc. October 1995. From 1994 to 1995, he served as President of the New
RR1 York City Economic Development Corporation. During this period,
Box 167D Mr. Lifflander also served as Chairman of the New York City
Wing Road Industrial Development Agency. Previously, Mr. Lifflander was
Millbrook, New York 12545 Managing Director in the Mergers and Acquisitions Group at Smith
Barney Inc., where he worked from 1984 to 1994. Mr. Lifflander
earned his Bachelors Degree and MBA from Cornell University. He
currently serves on the boards of the United Nations Development
Corporation, the Hudson River Museum and Key Components. Mr.
Lifflander also serves as Chief Executive Officer of Key
Components. AGE: 37.
Alan L. Rivera................................. Mr. Rivera joined MCM in September 1996 as its Chief Financial
c/o Millbrook Capital Management, Inc. Officer and General Counsel. He is responsible for MCM's financial
RR1 management and legal affairs. Prior to joining MCM, Mr. Rivera
Box 167D served as Executive Vice President of Finance and Administration
Wing Road and General Counsel of the New York City Economic Development
Millbrook, New York 12545 Corporation. Previously, Mr. Rivera worked from 1987 to 1990 as a
Public Finance Attorney with Mudge, Rose, Guthrie, Alexander and
Ferdon and from 1990 to 1994 as a Corporate Finance Attorney with
Townley & Updike. Mr. Rivera earned his Bachelors Degree in
Business Administration from Boston University and his Juris Doctor
from Georgetown University. He serves on the board of directors of
the New York City Industrial Development Agency, the New York
Health and Hospitals Corporation, Cancer Care, Inc. and Key
Components. AGE 37.
</TABLE>
<PAGE>
Each of the MMI Nominees has consented to serve as a director of
Simpson if elected. EACH OF THE MMI NOMINEES HAS FURTHER INDICATED THAT, IF
ELECTED TO THE BOARD, HE WILL WAIVE AND FOREGO THE RECEIPT OF ANY COMPENSATION
PAYABLE BY SIMPSON TO HIM AS A RESULT OF HIS SERVING AS A MEMBER OF THE BOARD.
APPRECIATION IN THE PRICE OF THE SIMPSON COMMON STOCK WILL SERVE AS THE MMI
NOMINEES' COMPENSATION. Although MMI Investments has no reason to believe that
any of the MMI Nominees will be unable to serve as directors, if any one or more
of the MMI Nominees shall not be available for election, the persons to be
appointed as proxies agree to vote for the election of such other nominees as
may be proposed by MMI Investments. You are urged to carefully consider the MMI
Nominees' qualifications and abilities to represent your interests. During the
past three years, none of the MMI Nominees or any members of their immediate
family have been a party to any transaction or other relationship with the
Company or any of its affiliates. In addition, none of such persons have been
indebted to the Company during that time.
REASONS FOR THE NOMINATION OF THE MMI NOMINEES
ALL MMI NOMINEES ARE COMMITTED TO MAXIMIZING SIMPSON SHAREHOLDER VALUE
THROUGH THE SOLICITATION OF OFFERS, BY AN INDEPENDENT INVESTMENT BANK, FOR THE
SALE OF SIMPSON, AT AN ATTRACTIVE PRICE.
As discussed more fully elsewhere in this Proxy Statement, we have come
to believe that even if the Shareholder Value Proposal were adopted by Simpson's
shareholders, there is a material risk that it will not be given appropriate
consideration by the Board and management, absent the presence of persons on the
Board open to it and other means of enhancing shareholder value. Despite our
repeated inquiries as to what action, if any, management and the Board would
take in the event of the passage of our Shareholder Value Proposal, we have
received no response. We have concluded that, in order to ensure that the Board
and management of Simpson consider the Shareholder Value Proposal and all other
available options regarding the creation of value for Simpson shareholders, the
active participation in the management of Simpson by persons, like the MMI
Nominees, specifically committed to such goals is necessary to protect the
interests of all Simpson shareholders. Further , the MMI Nominees, through their
backgrounds in business, government, and investment banking, will bring a
substantial and relevant body of business experience to the Board. Accordingly,
we believe it is in the best interests of all Simpson shareholders to support
the election of the MMI Nominees to the Board.
* * *
When you return the MMI Investments proxy card you will be voting for
the MMI Nominees and four of the Company's seven nominees proposed to serve as
directors. Since MMI Investments has only nominated three individuals for the
seven available Board seats, if the MMI Nominees are elected, four of the
nominees proposed by the Company who receive the highest number of votes will
also be elected. MMI Investments intends to use the proxy solicited hereby to
vote for four of the Company's nominees who will be identified in a revised
proxy statement once the Company announces its complete slate of nominees.
Election of nominees as directors of Simpson requires the affirmative
vote of a plurality of the votes cast on the matter at the Annual Meeting,
assuming a quorum is present or otherwise represented at the Annual Meeting.
"Plurality" means that the nominees who receive the largest number of votes cast
will be elected as directors. Consequently, only shares of Common Stock that are
voted in favor of a particular nominee will be counted toward such nominee's
attaining a plurality of votes. Shares present at the meeting that are not voted
for a particular nominee (including broker non-votes) and shares present by
proxy where the shareholder properly withheld authority to vote for such nominee
will not be counted
<PAGE>
toward such nominee's attainment of a plurality. Your vote is important
regardless of the number of shares you own.
MMI INVESTMENTS BELIEVES THAT IT IS IN YOUR BEST INTEREST TO ELECT THE
MMI NOMINEES AT THE 2000 ANNUAL MEETING, AND STRONGLY RECOMMENDS A VOTE FOR THE
ELECTION OF THE MMI NOMINEES.
MMI INVESTMENTS IS NOT CURRENTLY ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY AT THIS TIME.
OUR SHAREHOLDER VALUE PROPOSAL
We intend to present the following proposal at the 2000 Annual Meeting:
RESOLVED, that the shareholders of Simpson Industries, Inc.
(the "Company") request that the Board of Directors seek the sale of
the Company to a third party through a competitive auction process to
be conducted by a recognized investment banking firm.
Consistent with state law and the proxy rules, this proposal is merely
a recommendation to the Board and its passage cannot compel action. However, a
substantial shareholder vote in favor should, in our opinion, be regarded as a
persuasive instruction to the Board to conduct an auction of the Company.
MMI INVESTMENTS IS NOT CURRENTLY ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY AT THIS TIME. WE DO ENCOURAGE YOU, HOWEVER, TO
MAKE YOUR VIEWS ON THIS IMPORTANT MATTER KNOWN TO SIMPSON'S SENIOR MANAGEMENT
AND ITS BOARD OF DIRECTORS. VOICE YOUR SUPPORT OF OUR SHAREHOLDER VALUE PROPOSAL
BY EITHER WRITING, CALLING OR FAXING SIMPSON'S CHAIRMAN AND CEO, ROY E. PARROTT,
AND THE OTHER MEMBERS OF SIMPSON'S BOARD. SIMPSON'S ADDRESS IS 47603 HALYARD
DRIVE, PLYMOUTH, MICHIGAN 48170-2429, ITS TELEPHONE NUMBER IS (734) 207-6200 AND
ITS FAX NUMBER IS (734) 207-6500. LET THEM KNOW THAT YOU WANT THEM TO TAKE
ACTION TO ENHANCE THE VALUE OF YOUR INVESTMENT IN SIMPSON.
<PAGE>
VOTING PROCEDURES
The shares of Common Stock are the only shares of capital stock of
Simpson entitled to notice of, and to vote at, the 2000 Annual Meeting. Every
holder of shares of Common Stock is entitled to one (1) vote for each Common
Share held. In accordance with Simpson's By-laws, at the 2000 Annual Meeting,
the holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall be required for the purpose of a quorum. For the Shareholder
Value Proposal to be adopted at the 2000 Annual Meeting if a quorum is
present, it will be necessary that the Shareholder Value Proposal receive
more votes favoring the Shareholder Value Proposal than votes are cast
opposing the Shareholder Value Proposal. For the election of directors,
nominees receiving a plurality of the votes cast at the 2000 Annual Meeting
in person or by proxy will be elected as directors. "Plurality" means that
the nominees who receive the largest number of votes cast will be elected as
directors. Shares not voted will have no effect on the election of directors.
Abstentions and broker non-votes are not votes cast and, therefore,
will not be counted in determining voting results and will have no effect on
the Shareholder Value Proposal or the election of directors, although
abstentions and broker non-votes will be counted in the determination of a
quorum. Inspectors of election that are appointed by the Board or, if no such
appointment is made, by the presiding officer of Simpson at the 2000 Annual
Meeting, will tabulate the votes cast.
Only holders of record as of the close of business on the record
date (to be set by Simpson) will be entitled to vote. If you are a
shareholder of record on the record date, you will retain your voting rights
for the 2000 Annual Meeting even if you sell such shares after the record
date. Accordingly, it is important that you vote the shares you own on the
record date or grant a proxy to vote such shares, even if you sell such
shares after the record date.
If any of your shares of Common Stock are held in the name of a
brokerage firm or bank, only it can vote such shares and only upon receipt of
your specific instructions. Accordingly, please contact the person
responsible for your account concerning the voting of your shares.
You will not be eligible to vote at the 2000 Annual Meeting for the
MMI Nominees or the Shareholder Value Proposal unless you have provided a
proxy or are present in person. If you sign and return a proxy and change
your mind, you can always revoke the proxy by sending new written
instructions, with a later date, or by attending the meeting and voting in
person. Shares represented by a validly signed proxy returned to MMI
Investments where no specification has been made with respect to the election
of directors or the Shareholder Value Proposal will be voted for the MMI
Nominees and for the Shareholder Value Proposal.
IMPORTANT: MMI INVESTMENTS IS NOT CURRENTLY ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
SOLICITATION OF PROXIES
In connection with our solicitation of proxies for use at the 2000
Annual Meeting, such proxies may be solicited by mail, courier service,
advertisement, telephone, telecopier or other electronic means, and in
person. Solicitations may be made by our partners, managers, officers and
other employees, none of whom will receive additional compensation for such
solicitations. We may request banks, brokerage firms, and other custodians,
nominees, and fiduciaries to forward all of the solicitation materials to the
beneficial owners of the shares they hold of record. We will reimburse these
record holders for
<PAGE>
customary clerical and mailing expenses incurred by them in forwarding these
materials to their customers.
We have retained D.F. King & Co., Inc. ("D.F. King") for
solicitation and advisory services in connection with the solicitation of
proxies at an estimated fee of $[ ], together with reimbursement for its
reasonable out-of-pocket expenses. We have also agreed to indemnify D.F. King
against certain liabilities and expenses, including liabilities and expenses
under the federal securities laws. D.F. King has informed us that it would
employ up to approximately [ ] persons to solicit proxies for use at the
2000 Annual Meeting.
We will pay all expenses associated with any solicitation of proxies
by us in connection with the 2000 Annual Meeting. We do not intend to seek
reimbursement for such expenses from Simpson or any other party or parties.
We estimate that the costs incidental to our solicitation of proxies,
including expenditures for advertising, printing, postage, legal and related
expenses would be approximately $[ ]. Total costs incurred to the date
of this Proxy Statement by us have been approximately $[ ].
CERTAIN INFORMATION ABOUT SIMPSON
Simpson is a Michigan corporation with its principal executive
office located at 47603 Halyard Drive, Plymouth Michigan 48170-2429. The
telephone number of Simpson is (734) 207-6200.
Simpson is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements, and other information
with the SEC. Reports, registration statements, proxy statements, and other
information filed by Simpson with the SEC can be inspected and copied at the
public reference facilities maintained by the SEC at Judiciary Plaza, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the SEC's
Regional Offices, Judiciary Plaza, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and Room 1024, 7 World Trade Center, New York, New
York 10048. Copies of such material can be obtained from the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Documents filed electronically by Simpson are also
available at the SEC's Web site (http://www.sec.gov).
Schedule II sets forth certain information obtained from documents
filed with the SEC with respect to Simpson concerning the ownership of shares
of Common Stock by directors and executive officers of Simpson and by other
persons who own more than five percent of the outstanding shares of Common
Stock.
<PAGE>
SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
Simpson's Notice of Annual Meeting and Proxy Statement relating to
its 1999 Annual Meeting of Shareholders indicates that any shareholder
proposal to be considered for inclusion in the proxy statement to be
distributed by Simpson in connection with the 2000 Annual Meeting must have
been received by Simpson not later than November 12, 1999.
INFORMATION CONCERNING MMI INVESTMENTS AND
OTHER PARTICIPANTS IN THE SOLICITATION
Information concerning MMI Investments, MCM Management, LLC,
Millbrook Capital Management, Inc., John S. Dyson, Clay B. Lifflander, Alan
L. Rivera, Robert B. Kay and Jerome Lande, who are "participants" in the
solicitation contemplated by this Proxy Statement, as defined in the proxy
rules promulgated by the SEC under the Exchange Act, is set forth below and
on Schedule I hereto.
MMI Investments is a Delaware limited partnership formed for the
purpose of investing in publicly traded securities that we believe are
substantially undervalued. MCM Management, LLC ("MCM"), a Delaware limited
liability company, is our general partner and its principal business is
managing investments in publicly traded securities and in private companies.
Millbrook Capital Management, Inc., a New York corporation ("Millbrook") and
the manager of MMI Investments, provides management services to MMI
Investments. Millbrook is also the manager of MMI Investments, L.L.C. ("MMI
LLC"), a Delaware limited liability company that invests in publicly traded
securities. All of the participants who are individuals (except Mr. Lande)
are limited partners of MMI Investments and members of MCM. All of the
participants who are individuals are currently employed by Millbrook in
various capacities. Each such person's employment by Millbrook represents
such person's principal occupation or employment. The principal business
address of each participant is RR1, Box 167D, Wing Road, Millbrook, New York
12545.
If you wish to communicate with MMI Investments concerning Simpson
and the matters discussed in this Proxy Statement, executives of MCM
Management can be reached at 212.586.4333. Set forth in Schedule I hereto is
certain information relating to (i) the beneficial ownership of securities of
Simpson by MMI Investments and the other participants in the solicitation
contemplated by this Proxy Statement and (ii) certain transactions in such
securities by such persons.
The following persons may communicate with shareholders of Simpson
in the manner contemplated by this Proxy Statement on behalf of MMI
Investments: John S. Dyson, Clay B. Lifflander, Alan Rivera and Jerome Lande.
MMI LLC has conducted two previous proxy solicitations in an attempt
to increase shareholder value. In 1997, MMI LLC conducted a proxy contest
seeking to have three of its nominees elected to the Board of Directors of
The Eastern Company ("Eastern"), a manufacturer of locks and other specialty
industrial hardware. MMI LLC's nominees were publicly committed to enhancing
value for shareholders of Eastern through the solicitation of offers by an
independent investment bank for the sale of Eastern at an attractive price,
or in the absence of such an offer, the implementation of other strategies
aimed at enhancing shareholders' returns. MMI LLC began such contest after
the rejection by Eastern of a cash merger proposal made by Millbrook on
behalf of one of Millbrook's portfolio investment companies, which proposal
represented a 29% premium over Eastern's average closing stock price for the
thirty trading days preceding such proposal. At Eastern's 1997 Annual
Meeting, Eastern's incumbent directors were reelected. However, within one
month of such Annual Meeting, the Board of Directors of Eastern replaced
Eastern's Chief Executive Officer with an individual whose views concerning
Eastern's business
<PAGE>
strategy were in our opinion largely consistent with those of MMI LLC. MMI
LLC acquired its Eastern shares between February and September 1996 for an
average price of $12.24 per share. It sold its shares in April 1998 for an
average price of $25.88 per share.
On October 30, 1998, MMI LLC submitted a shareholder proposal
similar to the Shareholder Value Proposal to Excel Industries, Inc.
("Excel"), a manufacturer of window, door and seating systems, RV appliances,
and complex injection-molded parts for automotive, bus, heavy truck and
recreational vehicle manufacturers. On November 18, 1998, Excel issued a
press release announcing that it had engaged Morgan Stanley Dean Witter & Co.
as its financial advisor to consider strategic alternatives to benefit Excel
and enhance shareholder value. MMI LLC filed on November 30, 1998 a proxy
statement with the Securities and Exchange Commission in support of its
shareholder proposal and in order to allow it to more freely communicate with
Excel's other shareholders concerning Excel's process of considering
strategic alternatives. Representatives of MMI LLC thereafter began
discussions with Excel's management and investment bankers, industry analysts
and other Excel shareholders, to attempt to ensure all strategic alternatives
available to Excel be fully considered by it, including the sale of Excel.
This effort culminated in the announcement on January 19, 1999 that Excel had
agreed to be acquired by Dura Automotive Systems Inc. at $25.50 per share, a
significant premium over Excel's prior trading prices. This acquisition
closed in March 1999. MMI LLC acquired its Excel shares between June 1997 and
October 1998 at an average price of $14.11 per share.
There can be no assurance as to what the result of the current
Shareholder Value Proposal for Simpson will be.
None of MMI Investments, the other participants in the solicitation
contemplated by this Proxy Statement or their associates have any arrangement
or understanding with any person with respect to future employment by the
Company or its affiliates or with respect to any future transactions to which
the Company or its affiliates may be a party. In addition, during the past
three years, none of the MMI Nominees or any members of their immediate
family have been a party to any transaction or other relationship with the
Company or any of its affiliates. In addition, none of such persons have been
indebted to the Company during that time.
ADDITIONAL INFORMATION
MMI Investments assumes no responsibility for the accuracy or
completeness of any information contained herein which is based on, or
incorporated by reference to, filings of Simpson with the SEC.
Questions, or requests for additional copies of this Proxy
Statement, should be directed to:
D.F. KING & CO., INC.
77 WATER STREET
NEW YORK, NY 10005
CALL TOLL FREE:
1-888-242-8149
<PAGE>
SCHEDULE I
COMMON SHARES BENEFICIALLY OWNED BY MMI INVESTMENTS II-A, L.P. AND
MCM MANAGEMENT, LLC AND OTHER PERSONS
SCHEDULE OF
PURCHASES OF COMMON STOCK OF THE SIMPSON COMPANY
BY MMI INVESTMENTS II-A, L.P.
<TABLE>
<CAPTION>
DATE NO. OF SHARES PRICE PER SHARE
- ---- ------------- ---------------
<S> <C> <C>
5/18/99 1,000 9.75
6/22/99 1,000 10.03
7/29/99 1,000 12.06
7/30/99 10,000 11.94
8/3/99 6,600 11.92
8/4/99 10,000 11.94
8/5/99 7,600 11.92
8/6/99 5,000 11.81
8/9/99 5,000 11.69
8/10/99 18,000 11.77
8/11/99 1,000 11.94
8/12/99 10,000 11.88
8/13/99 10,000 11.81
8/16/99 5,000 11.65
8/17/99 11,000 11.75
8/18/99 12,000 11.82
8/19/99 105,000 11.95
8/20/99 5,000 12.25
8/23/99 2,000 12.25
8/24/99 3,000 12.25
8/25/99 3,500 12.41
8/26/99 11,000 12.42
8/27/99 8,500 12.39
8/30/99 32,000 12.44
8/31/99 21,000 12.44
9/1/99 20,000 12.44
9/9/99 1,500 12.06
9/13/99 75,000 12.13
9/17/99 5,000 11.94
9/20/99 63,000 12.00
9/20/99 5,000 11.94
9/21/99 1,000 11.50
9/22/99 3,000 11.25
9/23/99 16,600 11.25
9/24/99 5,000 11.88
10/4/99 10,000 11.63
10/6/99 5,200 11.19
10/7/99 6,000 11.31
10/13/99 3,600 10.90
10/14/99 10,000 10.88
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
DATE NO. OF SHARES PRICE PER SHARE
- ---- ------------- ---------------
<S> <C> <C>
10/15/99 40,300 11.05
10/18/99 35,000 10.93
10/21/99 5,000 10.19
10/22/99 17,400 10.45
10/25/99 7,500 9.81
10/26/99 29,300 10.15
10/28/99 3,300 10.25
10/29/99 12,000 10.46
11/1/99 11,300 10.36
11/2/99 3,800 10.59
12/10/99 9,000 11.54
12/14/99 19,300 11.70
12/15/99 15,000 11.71
12/16/99 2,600 11.71
12/17/99 17,500 11.75
12/20/99 25,000 11.75
12/22/99 11,600 11.69
12/29/99 7,100 10.50
--------
807,100
</TABLE>
Based on 18,008,728 shares of Common Stock outstanding as of October
31, 1999 (as reported in Simpson's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999), the 807,100 shares of Common Stock owned
by MMI Investments represents 4.5% of the outstanding Common Stock. MMI
Investments owns all 807,100 shares directly and owns 1,000 of such shares of
record.
By virtue of being the general partner of MMI Investments, MCM
Management may be deemed to be the beneficial owner of the 807,100 shares (or
approximately 4.5%) of Common Stock of Simpson owned by MMI Investments.
Except for the shares of Common Stock owned by MMI Investments, none of MCM
Management, Millbrook, John S. Dyson, Clay B. Lifflander, Alan L. Rivera,
Robert B. Kay or Jerome Lande beneficially own any Common Stock of Simpson.
Except as set forth in this Proxy Statement, to the knowledge of MMI
Investments, none of MMI Investments or any other participant is, or was
within the past year, a party to any contract, arrangement or understanding
with any other person with respect to any securities of Simpson.
In connection with the above-referenced transactions, MMI
Investments used (i) available cash and (ii) the proceeds of approximately
$6.1 million principal amount of margin loans to make these purchases. These
margin loans were obtained from one broker under customary terms and
conditions. Approximately $[ ] principal amount of such margin loans
remain outstanding as of the date of this Proxy Statement.
I-2
<PAGE>
SCHEDULE II
BENEFICIAL OWNERSHIP OF SIMPSON COMMON SHARES
The following information is derived from publicly available
information on file with the SEC, and sets forth (i) the number of shares of
Common Stock beneficially owned, as of March 1, 1999, by the directors and
executive officers of Simpson Industries, Inc., as reported in Simpson's 1999
Proxy Statement, and (ii) the number of shares of Common Stock beneficially
owned by persons known to MMI Investments to beneficially own 5% or more of
the outstanding shares of Common Stock:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
------------------------ ------------------ --------
<S> <C> <C>
Dimensional Fund Advisors, Inc.................................... 1,188,625 shares (2) 6.5%
1299 Ocean Avenue
Santa Monica, CA 90401
Roy E. Parrott ................................................... 194,037 1.1
Walter J. Kirchberger ............................................ 90,432 0.5
F. Lee Weaver .................................................... 84,420(3) 0.5
James A. Hug ..................................................... 71,438 0.4
George G. Gilbert ................................................ 66,146 0.4
Frank K. Zinn .................................................... 59,061(4) 0.3
Robert W. Navarre ................................................ 31,562 0.2
George R. Kempton ................................................ 30,813(5) 0.2
Vinod M. Khilnani ................................................ 24,669 0.1
James B. Painter ................................................. 22,707 0.1
George A. Thomas ................................................. 19,898(6) 0.1
Ronald L. Roudebush .............................................. 19,000 0.1
Jeoffrey A. Burris ............................................... 17,361 0.1
Susan F. Haka .................................................... 7,020 --.--
Michael E. Batten................................................. 7,000 --.--
All present directors and executive
officers........................................................ 743,564 shares 4.0%
</TABLE>
(1) Includes shares beneficially held for certain executive officers and
directors under the Simpson Industries, Inc. Savings Plan and also
includes 296,924 shares of Common Stock certain executive officers and
directors may acquire within 60 days after March 1, 1999 pursuant to the
exercise of stock options under the Company's long-term incentive plans.
(2) Sole voting power - 1,188,625 shares (6.5%); sole investment power -
1,188,625 shares (6.5%); as reported in the Schedule 13G, dated February
11, 1999, received by the Company from Dimensional Fund Advisors, Inc.
("Dimensional"). Dimensional, a registered investment advisor, is deemed
to have beneficial ownership of 1,188,625 shares of the Company's common
stock as of December 31, 1998, all of which shares are held by certain
registered investment companies or certain other investment vehicles.
Dimensional serves as investment advisor or manager to all such investment
companies and investment vehicles. Dimensional disclaims beneficial
ownership of all such shares.
II-1
<PAGE>
(3) Includes 55,917 shares owned by Prudence B. Weaver, Mr. Weaver's wife,
for her own benefit.
(4) Includes 43,311 shares owned jointly by Mr. Zinn and Ruth A. Zinn, his
wife.
(5) Includes 20,463 shares owned jointly by Mr. Kempton and Joyce H. Kempton,
his wife.
(6) Includes 9,898 shares owned jointly by Mr. Thomas and Carolyn C. Thomas,
his wife.
- ------------------------
Although MMI Investments does not have any information that would
indicate that any information contained in this Schedule II, which has been
taken from documents on file with the SEC, is inaccurate or incomplete, MMI
Investments assumes no responsibility for the accuracy or completeness of
such information.
II-2
<PAGE>
APPENDIX A
<PAGE>
[MCM LOGO]
MILLBROOK CAPITAL MANAGEMENT INC.
September 28, 1999
Mr. Roy E. Parrott
Chairman and Chief Executive Officer
Simpson Industries Inc.
47603 Halyard Drive
Plymouth, MI 48170
Dear Mr. Parrott:
It was a pleasure speaking with you last Friday, the 24th of
September. As you are aware, it is our wish, as a significant shareholder of
Simpson Industries Inc. (the "Company"), to meet with you in order to discuss
management's strategic plan for the growth of the Company and the realization
of greater shareholder value.
We are sorry to hear that your schedule precludes meeting before
November. However, we are delighted to accept your invitation to meet during
the first week of November at your offices in Plymouth. We propose to meet
Tuesday, November 2nd at 11 AM. Attending on behalf of MCM Management LLC
("MCM"), the manager of MMI Investments II-A, L.P. and holder of 500,300
shares of the Company in "street name," will be MCM's President, Clay
Lifflander, and myself.
We greatly look forward to this opportunity to introduce ourselves
and to hear management's perspectives on the growth and improvement of the
Company's performance. We understand the strain placed on your schedule by
the flood conditions in North Carolina, however if you should find that you
are able to fit us in sooner, please let us know.
By way of further introduction I have included with this letter a
copy of MCM's brochure. I thank you in advance for your time and look forward
to meeting in person.
Sincerely,
/s/ Jerome Lande
Jerome Lande
Enclosure
<PAGE>
Carnegie Hall Tower
152 West 57th Street
New York, NY 10019
(212) 586-4333
Fax: (212) 586-0340
Wing Road
RR 1, Box 167D
Millbrook, NY 12545
(914) 677-8383
Fax: (914) 677-6186
<PAGE>
Simpson Industries, Inc.
47603 Halyard Drive
Plymouth, MI 48170-2429
734/207-6200 Fax: 734/207-6570
October 26, 1999
CONFIDENTIAL
Mr. Jerome Lande
Millbrook Capital Management, Inc.
Carnegie Hall Tower
152 West 57th Street
New York, NY 10019
Dear Mr. Lande,
Thank you for your letter of September 28, 1999 and related introductory
materials. A review of these materials, and additional information we have
assembled concerning MCM, suggests to us that the purpose of your request to
meet with our management may be quite different than we had assumed when we
last spoke. While we have a long-standing policy of openness with our
shareholders - big and small, institutional and individual - we also have a
policy of not meeting with people when their purpose or motivation is
unclear. We find ourselves in that position as it relates to MCM.
The MCM brochure that you sent to us touts the expertise of MCM in private
equity investments and acquisitions. If your are interested in acquiring
Simpson Industries, Inc., we suggest that you present a proposal for
consideration by our Board of Directors. We have no interest in meeting with
you in advance of any such proposal; and we do not believe, after
consultation with our advisors, that such a meeting would be appropriate.
The other information we have assembled indicates that MCM has a history of
submitting shareholder proposals for inclusion in companies' proxy materials.
If your interest in a meeting is to garner text for the statement supporting
a shareholder proposal, as appears to have been the case in other instances,
we likewise have no interest in meeting with you. Rather, if you choose to
submit a proposalit will be considered by us in the ordinary course, pursuant
to applicable proxy regulations.
We regret, therefore, that we must postpone our previously scheduled November
2, 1999 meeting. We will be happy to arrange another date and time once you
have clarified your purposes for requesting a meeting and, in that regard, we
ask that you clarify your position, in writing, as to whether you intend to
submit an acquisition or similar proposal relating to Simpson, and whether
you intend to participate in the proxy process relating to Simpson's 2000
Annual Meeting of Shareholders. To be clear, we are always open to
constructive and well-meaning suggestions concerning the future of Simpson
that are motivated by the best interests of all our shareholders, and we
welcomeMCM's submission of any suggestions it may have. We
<PAGE>
simply require a clear understanding ofMCM's agenda in order to be able to
assess whether a meeting is appropriate.
Very truly yours,
/s/Roy E. Parrott
Roy E. Parrott
Chairman and Chief Executive Officer
REP/jag
<PAGE>
[MCM LOGO]
MILLBROOK CAPITAL MANAGEMENT INC.
October 27, 1999
Mr. Roy E. Parrott
Simpson Industries, Inc.
47603 Halyard Drive
Plymouth, Michigan 48170-2429
Dear Mr. Parrott:
I am in receipt of your letter to Jerome Lande of October 26, 1999
in which you cancel our appointment for November 2nd, 1999. I cannot express
strongly enough our surprise and disappointment at this reaction. Let me
attempt to respond to your various concerns as you outlined them in your
letter.
MCM does not now, nor will we in the foreseeable future, have any
interest whatsoever in acquiring Simpson Industries, Inc. ("Simpson" or the
"Company").
Regarding your concerns about MCM's participation at the 2000 annual
meeting, I am equally confused and concerned. MCM actively manages
investments in over 60 public companies and meets with the management of any
number of these companies regularly without participating in their proxy
process. Clearly any meeting with management is a source of great insight
into the operation and strategic plan of a company and its management
capabilities (as it would be with Simpson). Yet your refusal to meet if such
information were to be used in a shareholder proposal incorrectly presupposes
that a) MCM meetings with management typically lead to a shareholder
proposal, and b) the submission of ANY shareholder proposal is a hostile act
to management. This attitude demonstrates a striking disregard for
shareholder democracy and Simpson's public ownership.
We had assumed that you understand that management has an obligation
to the ownership of its company to articulate its business outlook,
management philosophy and strategic plan for the continued creation of
shareholder value. This is the nature of the management of a public company
and is our motivation for the November 2nd meeting. Your request for a
forfeiture of our rights as shareholders in exchange for such a meeting is
unreasonable and unjustifiable. Your investor relations strategy seems to
suggest that you would only like to meet with those investors who are sure to
agree with management's perspective. We find this troubling indeed.
It is our belief that your letter of October 26th and your refusal
to meet with us may be the result of poor and premature advice of counsel.
You are probably correct if you believe that you are not obligated by law to
attend this meeting. You are incorrect if you believe that you are not
compelled by the nature of your office to attend this meeting.
In closing let me say that we are still eager to have the
opportunity to meet in person and participate in a frank and honest
discussion. We would be pleased to find that you are also interested in such
a discussion about the operations and strategy of Simpson. Please inform
Jerome Lande no later than close of business tomorrow, October 28, 1999
whether or not you are breaking our appointment to meet at 11am, November
2nd,1999 as we have already gone to considerable time and expense to make the
necessary travel arrangements. Please remember that this date was agreed upon
after your request that we defer this meeting from our original requested
date in early October. As such, further postponement on your part is
equivalent to a refusal to meet.
Respectfully,
/s/ Clay Lifflander
Clay Lifflander
<PAGE>
Carnegie Hall Tower
152 West 57th Street
New York, NY 10019
(212) 586-4333
Fax: (212) 586-0340
Wing Road
RR 1, Box 167D
Millbrook, NY 12545
(914) 677-8383
Fax: (914) 677-6186
<PAGE>
Simpson Industries, Inc.
47603 Halyard Drive
Plymouth, MI 48170-2429
734/207-6200 Fax: 734/207-6570
October 29 1999
VIA FACSIMILE
212/586-0340
Mr. Clay Lifflander
Millbrook Capital Management, Inc.
Carnegie Hall Tower
152 West 57th Street
New York, NY 10019
Dear Mr. LiffLander:
I have your letter of October 27, 1999, which clarifies your purpose and
motivation for requesting a meeting. We now understand that you are not
interested in presenting an acquisition proposal, but are principally
interested in us articulating our business outlook, philosophy and strategic
plans; something we do with our shareholders on a regular basis.
We would suggest a meeting when we are next in New York. In fact, we will be
in New York the week of December 6 to meet with analysts and institutional
investors. We are currently firming up our plans and would be available to
meet with you at your offices on either December 6, 7 or 8. Please advise at
your earliest opportunity which of these days is preferable.
Very truly yours,
/s/Roy E. Parrott
Roy E. Parrott
Chairman and Chief Executive Officer
REP/lmc
cc: Jerome Lande
<PAGE>
[MCM LOGO]
MILLBROOK CAPITAL MANAGEMENT INC.
November 2, 1999
VIA FEDERAL EXPRESS AND FACSIMILE
Roy E. Parrott
Chairman and Chief Executive officer
Simpson Industries, Inc.
47603 Halyard Drive
Plymouth, Michigan 48170-2429
Dear Mr. Parrott:
We are very disappointed by your decision to cancel our visit to
Simpson Industries, Inc. (the "Company") to discuss the Company's operations
and strategic plan for the creation of shareholder value. Your pattern of
avoidance now includes two attempts at postponement and one cancellation of
your agreement to meet. Therefore, we can only conclude that you do not have
a plausible plan for the creation of shareholder value.
Accordingly, we are extremely concerned about the shareholders'
interests. Therefore we are submitting the enclosed shareholder proposal for
the creation of greater shareholder value through the sale of the Company.
On behalf of MMI Investments II-A, L.P. ("MMI Investments"), we
hereby notify Simpson Industries, Inc. that MMI Investments intends to
present the enclosed shareholder proposal (the "Proposal") at the Company's
2000 annual meeting of shareholders (the "Annual Meeting").
The Proposal requests that the Board of Directors of the Company
seek the prompt sale of the Company to a third party on terms that will
maximize shareholder value through a competitive auction process to be
conducted by a recognized investment banking firm.
MMI Investments is the beneficial owner of 700,000 shares of the
Company's common stock; 699,000 shares held in "street" name and 1,000 shares
held in "record" name. The General Partner of MMI Investments is MCM
Management, LLC.
MMI Investments, as a significant shareholder of the Company, is
requesting that the Company include the Proposal in the Company's proxy
statement. To that end, the Proposal meets the length and format requirements
of SEC Rule 14a-8. Please let us know promptly how the Company wishes to
proceed with respect to the Proposal.
We are still willing to meet in order to hear management's
perspective on the future operations and strategic plan of the Company.
Please contact us regarding your pre-arranged trip to the East Coast in order
that we may secure an appointment. If management does have an attractive plan
for value creation for all Simpson shareholders, we would reconsider our
position.
<PAGE>
Sincerely,
MMI Investments II-A, L.P.
By: MCM Management, LLC as General Partner
By: /s/ CLAY B. LIFFLANDER
-------------------------------------
Clay B. Lifflander
Member and President
Enclosure
Carnegie Hall Tower
152 West 57th Street
New York, NY 10019
(212) 586-4333
Fax: (212) 586-0340
Wing Road
RR 1, Box 167D
Millbrook, NY 12545
(914) 677-8383
Fax: (914) 677-6186
<PAGE>
SHAREHOLDER RESOLUTION
RESOLVED, that the shareholders of Simpson Industries, Inc. (the
"Company") request that the Board of Directors seek the sale of the Company
to a third party through a competitive auction process to be conducted by a
recognized investment banking firm.
SUPPORTING STATEMENT
We believe that the value that can be achieved for the Company's
shareholders through the sale of the Company is significantly greater than
the value that can be achieved by remaining an independent company under
existing management.
Three reasons dictate the sale of our company:
SHAREHOLDER RETURNS. During the longest bull market of the century,
the Company has for long periods delivered NEGATIVE returns on shareholders'
investments. The market price of the common stock on November 1, 1999 (the
day prior to this proposal's submission) was $10 5/16, a 34.2% decline from
its peak of the last six years. During the same period, the S&P 500 increased
186.1%. Had the Company matched the S&P 500, its shares would be worth over
$44 3/4 today.
COMPANY PERFORMANCE. The Company's performance lags that of its
industry group in several areas. For instance, the Company's gross margin is
below industry averages (10.4% vs. 20.2% for the industry over the last
twelve months.) Furthermore, the Company has not grown its business as fast
as its peer group, producing 8.5% revenue growth for the last twelve months,
versus 17.9% for the industry. Most successful companies in the auto parts
industry have shown that the best way to improve performance is through
aggressive growth and the economies of scale which accompany increased size.
Despite this, the Company has not completed a significant acquisition within
the last two and a half years.
MARKET POSITION. In our opinion, the Company cannot compete
successfully with less than a 1% share of the rapidly consolidating vehicle
parts market. Smaller producers in this industry are increasingly squeezed by
customers, who bring severe pressure to bear on pricing and margins. As a
result, the industry is dominated by larger companies with better performance
and greater financial resources.
We believe that the Company's operations are extremely attractive to
strategic acquirers. Furthermore, we believe that given the Company's recent
history and the multiples currently being paid for similar companies in this
industry, the price an acquirer will pay for these operations will far exceed
the Company's value in the marketplace during the foreseeable future.
Therefore, a competitive auction for the Company presents an opportunity to
maximize shareholder value and protect the future of the Company's businesses.
Consistent with state law and proxy rules, this proposal is a
recommendation to the Board and its passage cannot compel action. However, a
substantial shareholder vote in favor of this proposal should be regarded as
a mandate to the Board to conduct an auction of the Company. A proxy card
returned without voting instructions or marked "abstain" may be counted
against this proposal. Do not let this happen.
SEND A STRONG MESSAGE TO MANAGEMENT AND THE BOARD. PLEASE VOTE "FOR"
THIS RESOLUTION.
<PAGE>
SIMPSON INDUSTRIES, INC.
47603 HALYARD DRIVE
PLYMOUTH, MICHIGAN 48170-2429
(734) 207-6200
November 12, 1999
Mr. Clay B. Lifflander VIA FEDERAL EXPRESS
Millbrook Capital Management Inc.
Carnegie Hall Tower
152 West 57th Street
New York, NY 10019
Dear Mr. Lifflander:
This will acknowledge receipt of the shareholder proposal of MMI
Investments II-A, L.P. and your transmittal letter dated November 2, 1999
requesting that it be included in the Company's proxy statement under SEC
Rule 14a-8.
Based on the information you provided, we have determined that MMI
Investments II-A, L.P. did not become a holder of record until October 1999.
Accordingly, we are unable to verify that you have met the eligibility
requirements for submitting a proposal, including continuously holding
securities for at least one year, as required by the Rule.
If you disagree with our determination, please provide us with the
written evidence required under Rule 14a-8(b) within 14 days from your
receipt of this notification.
Very truly yours,
SIMPSON INDUSTRIES, INC.
/s/ Frank K. Zinn
Frank K. Zinn
Secretary and General Counsel
cc: Mr. Roy E. Parrott
<PAGE>
[MCM LOGO]
MILLBROOK CAPITAL MANAGEMENT INC.
November 15, 1999
Via Federal Express and Facsimile: (734) 207-6570
Mr. Roy E. Parrott
Chairman and Chief Executive Officer
Simpson Industries, Inc.
47603 Halyard Drive
Plymouth, Michigan 481710-2429
Dear Mr. Parrott:
I am in receipt of a letter from Frank K. Zinn requesting
information regarding the ownership by MMI Investments II-A, L.P. ("MMI II")
of shares of common stock of Simpson Industries (the "Company" or "Simpson").
MMI II holds 700,000 shares of Simpson, 699,000 in "street" name and 1,000
shares in "record" name. MMI II has owned at least $2,000 in market value of
the Company's common stock since May of this year. MMI II intends to continue
to hold shares of the Company through the date of the 2000 Annual Meeting of
Shareholders.
Based upon the Company's currently depressed market valuation, the
issues affecting the Company's performance, and the rapid consolidation
occurring in the vehicle parts supplier industry, we believe that the Company
should include MMI II's shareholder proposal in its proxy materials for the
2000 Annual Meeting of Shareholders. It is our opinion that the company is
obligated by the principles and responsibilities of public market ownership
not to stifle shareholder concerns, especially as they relate to the
protection and advancement of the interests of Simpson's owners.
While Rule 14a-8 under the Securities Exchange Act of 1934 does not
REQUIRE the Company to include MMI II's shareholder proposal in its proxy
materials, the Company is certainly permitted to do so. Furthermore, MMI II
is prepared to pay the reasonable additional costs, if any, associated with
printing and distributing the additional text in the Company's proxy
materials. If MMI II's shareholder proposal is not included, it will be a
result of management's decision to REJECT it.
As you will recall, in your letter of October 29, 1999 you had
offered us a meeting during your upcoming trip to New York City in early
December. We accepted your offer in our letter of November 2nd and have kept
our schedules flexible on the days you suggested (December 6th-8th) in
anticipation of our meeting. We are still awaiting your response regarding a
specific time and location for this meeting. We remain eager (as we were for
each of our since-cancelled appointments) to participate in a constructive
dialogue with management regarding the maximization of value for
shareholders. Such a meeting would be essential to us as we decide the extent
of our participation in the proxy process.
Carnegie Hall Tower Wing Road
152 West 57th Street RR 1, Box 167D
New York, NY 10019 Millbrook, NY 12545
(212) 586-4333 (914) 677-8383
Fax: (212) 586-0340 Fax: (914) 677-6186
<PAGE>
Please let us know by close of business this Friday, November 19,
1999, your decisions regarding both the inclusion of MMI II's shareholder
proposal in the Company's proxy materials and our proposed meeting in New
York City in early December. We look forward to your response.
Sincerely,
MMI Investment II-A, L.P.
By: MCM Management, LLC as General Partner
By: /s/ CLAY B. LIFFLANDER
------------------------------------
Clay B. Lifflander
Member and President
cc: Frank K. Zinn, Secretary and General Counsel
Simpson Industries, Inc.
<PAGE>
SIMPSON INDUSTRIES, INC.
Roy E. Parrott, Chairman and Chief Executive Officer
47603 Halyard Drive
Plymouth, Michigan 48170-2429
734/207-6200 Fax: 734/207-6570
November 22, 1999
Mr. Clay B. Lifflander
Millbrook Capital Management, Inc.
Carnegie Hall Tower
152 West 57th Street
New York, NY 10019
Dear Mr. Lifflander:
Thank you for your letter of November 15, 1999 confirming that you have owned
Simpson shares for only a few months. We will make a determination very
shortly as to whether to include your proposal in our proxy materials and
will promptly advise you at that time.
In light of the views and opinions clearly set forth in your shareholder
resolution and supporting statement, I believe we clearly understand your
position and views of the company. Therefore, since you have taken this
position I do not believe that a meeting would be constructive or worthwhile
for either party. You may be assured that our Board of Directors is
continually engaged with management in examining the Company's performance,
philosophy and strategic plans for the best interests of all shareholders.
Very truly yours,
/s/Roy E. Parrott
Roy E. Parrott
<PAGE>
[LETTERHEAD]
December 8, 1999
Via Federal Express and Facsimile: (734) 207-6570
Mr. Roy E. Parrott
Chairman and Chief Executive Officer
Simpson Industries, Inc.
47603 Halyard Drive
Plymouth, Michigan 48170-2429
Dear Mr. Parrott:
As you know, MMI Investments II-A, L.P. ("MMI Investments") has filed a
proxy statement with the Securities and Exchange Commission in support of the
shareholder value proposal that we plan to present at the 2000 Annual Meeting
of Simpson Industries, Inc. (the "Company"), which proposal requests that the
Board of Directors of the Company seek the sale of the Company to a third
party through a competitive auction process to be conducted by a recognized
investment banking firm.
Our shareholder value proposal is, of course, precatory in nature, but
its passage would, in our view, constitute the clearest possible statement of
the wishes of the true owners of the Company concerning this important
matter. However, in refusing to include the shareholder value proposal in
the Company's proxy materials or even to meet with us, a significant
shareholder of the Company, the Company's management has demonstrated what we
believe to be a clear unwillingness to honor basic principles of shareholder
democracy. Given this unfortunate history, the question of what the Board
would do in the event the Company's shareholders approved our shareholder
value proposal has naturally occurred to us.
Accordingly, we have two questions for you regarding your intentions in
the event our shareholder value proposal is approved by the Company's
shareholders. While we recognize that you cannot speak for the rest of the
Company's Board, please let us know, in the event of the passage of our
proposal, whether you will do the following:
1) as Chairman of the Board, promptly call a meeting of the Board
to consider the implementation of the shareholder value proposal;
and if so,
2) as a Director, vote in favor of a resolution to implement the
shareholder value proposal.
We have attempted to pose these questions as succinctly and directly as
possible. As such, feel free to respond simply with a "yes" or "no." The
lack of an unequivocal response will be understood as a negative answer to
both of our inquiries. Please let us know your answer by the close of
business Wednesday, December 15, 1999. As always, please contact me if you
have any questions regarding this. We greatly look forward to your response.
Carnegie Hall Tower Wing Road
152 West 57th Street RR 1, Box 167D
New York, NY 10019 Millbrook, NY 12545
(212) 586-4333 (914) 677-8383
Fax: (212) 586-0340 Fax: (914) 677-6186
<PAGE>
Sincerely,
MMI Investments II-A, L.P.
By: MCM Management, LLC as
General Partner
By: /s/ Clay B. Lifflander
-------------------------------
Clay B. Lifflander
Member and President
cc: The Board of Directors,
Simpson Industries, Inc.
<PAGE>
[LETTERHEAD]
December 8, 1999
Mr. F. Lee Weaver
Weaver, Bennett & Bland, P.A.
196 N. Trade Street
Matthews, NC 28105
Re: Simpson Industries, Inc.
Dear Mr. Weaver:
Enclosed please find a copy of Clay Lifflander's letter to Roy Parrott
dated today, December 8, 1999. The purpose of this letter is to inquire into
Mr. Parrott's intentions in the event of the passage by a majority of the
shareholders of Simpson Industries, Inc. ("Simpson") of the shareholder value
proposal submitted by MMI Investments II-A, L.P. in its proxy statement filed
with the Securities and Exchange Commission.
We are equally interested in your response, as a Director of Simpson, to
the questions that Mr. Lifflander has posed to Mr. Parrott in this letter.
Sincerely,
/s/ Jerome Lande
Jerome Lande
Enclosure Wing Road
Carnegie Hall Tower RR 1, Box 167D
152 West 57th Street Millbrook, NY 12545
New York, NY 10019 (914) 677-8383
(212) 586-4333 Fax: (914) 677-6186
Fax: (212) 586-0340
<PAGE>
SIMPSON INDUSTRIES, INC.
47603 HALYARD DRIVE
PLYMOUTH, MICHIGAN 48170-2429
December 17, 1999
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
Mr. Clay B. Lifflander
Millbrook Capital Management Inc.
Carnegie Hall Tower
152 West 57th Street
New York, NY 10019
Dear Mr. Lifflander:
The Company has determined not to include your proposal in its proxy
materials for the 1999 Annual Meeting of Shareholders. We have so advised
the SEC in accordance with the requirements of Rule 14a-8 and are providing
you with a copy of our letter.
Very truly yours,
SIMPSON INDUSTRIES, INC.
/s/ Frank K. Zinn
Frank K. Zinn
Secretary
<PAGE>
SIMPSON INDUSTRIES, INC.
47603 HALYARD DRIVE
PLYMOUTH, MICHIGAN 48170-2429
December 17, 1999
Securities and Exchange Commission
Office of Chief Counsel
Division of Corporation Finance
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Simpson Industries, Inc.
1999 Annual Meeting of Shareholders
Ladies and Gentlemen:
Simpson Industries, Inc. (the "Company") intends to exclude a
shareholder proposal submitted by MMI Investments II-A, L.P. (the
"Proponent") from the Company's proxy materials for its 1999 Annual Meeting
of Shareholders based on Proponent's failure to meet the eligibility
requirements of Rule 14a-8 under the Securities Exchange Act of 1934.
The Company believes the proposal may be properly excluded because the
Proponent had not been an owner of Simpson securities for a least one year at
the time it submitted its proposal on November 2, 1999. The Company notified
the Proponent of this deficiency by letter dated November 12, 1999 and the
Proponent acknowledged that the Company was not required to include its
proposal in the Company proxy materials by letter dated November 15, 1999.
In accordance with Rule 14a-8 (Question 10), we enclose six copies each
of (i) Proponent's November 2, 1999 letter and attached proposal, (ii) the
Company's reply dated November 12, 1999, (iii) the Proponent's response dated
November 15, 1999, and (iv) this letter.
A copy of this letter is also being provided to the Proponent. Should
the Staff have any questions regarding the Company's intention to exclude the
proposal, please contact the undersigned at (313) 568-6969.
Very truly yours,
SIMPSON INDUSTRIES, INC.
/s/ Frank K. Zinn
Frank K. Zinn
Secretary
cc: Mr. Clay B. Lifflander
<PAGE>
[LETTERHEAD]
December 20, 1999
Mr. Clay Lifflander
Member and President
Millbrook Capital Management, Inc.
Carnegie Hall Tower
152 West 57th Street
New York, NY 10019
Dear Mr. Lifflander:
I am in receipt of your letter dated December 8, 1999. Copies have been sent
to each member of our Board of Directors which, as I have assured you, meets
regularly to consider alternatives to maximize the long-term value of Simpson
Industries for all of our shareholders.
Sincerely yours,
/s/ Roy E. Parrott
Roy E. Parrott
REP/kb
cc: F. Zinn
<PAGE>
[MCM LOGO]
MILLBROOK CAPITAL MANAGEMENT INC.
December 27, 1999
BY UPS NEXT DAY AIR
Simpson Industries, Inc.
47603 Halyard Drive
Plymouth, Michigan 48170-2429
Attention: Mr. Roy E. Parrott, Chairman and Chief Executive Officer
Mr. Frank K. Zinn, Secretary and General Counsel
RE: SHAREHOLDER REQUEST FOR SHAREHOLDER LIST, CORPORATE BOOKS,
RECORDS AND MINUTES
MMI Investments II-A, L.P. ("MMI"), as a shareholder of Simpson
Industries, Inc. (the "Corporation"), requests pursuant to Section 487 of the
Michigan Business Corporation Act (the "MBCA"), that you allow its attorneys,
Bell, Boyd & Lloyd, or such other person or persons as such attorneys may
designate to you in writing, to examine, within five business days of this
request, and to make extracts from, the following:
1. The Corporation's stock ledger and a list of its shareholders,
certified by the Corporation's transfer agent as of date within five
business days of this request, and showing the name and address of each
shareholder and the number of shares registered in the name of such
shareholder as of the date of certification by the transfer agent.
2. Copies of each of the following information or documents to the extent
such information or documents are in the Corporation's possession or
can reasonably be obtained by the Corporation:
(a) any information concerning the number and identity of the
beneficial owners of the Corporation's stock that can be obtained from
the nominees of any central depository for such Common Stock, such as
CEDE & Co. (any such information, a "CEDE List"),
(b) any non-objecting beneficial owner list (a "NOBO List") produced
pursuant to Rule 14b-1 of the Securities and Exchange Commission (the
"SEC") from those brokers and other institutions that hold the
Corporation's common stock on behalf of the beneficial owners thereof,
including the names, addresses and stockholdings of each non-objecting
beneficial owner so listed,
Carnegie Hall Tower Wing Road
152 West 57th Street RR 1, Box 167D
New York, NY 10019 Millbrook, NY 12545
(212) 586-4333 (914) 677-8383
Fax: (212) 586-0340 Fax: (914) 677-6186
<PAGE>
Simpson Industries, Inc.
December 27, 1999
Page 2
(c) any consenting or non-objecting beneficial owner list (a "COBO
List") produced pursuant to SEC Rule 14b-2 from those banks that hold
the Corporation's common stock on behalf of the beneficial owners
thereof, including the names, addresses and stockholdings of each
consenting or non-objecting beneficial owner so listed (a "COBO List"),
(d) any daily transfer list or sheet (a "Daily Transfer List") showing
changes in the Corporation's shareholders from the information set
forth in the aforementioned CEDE Lists, NOBO Lists and COBO Lists.
3. The minutes of all proceedings of the shareholders and directors of the
Corporation from January 1, 1994 through and including the date of this
request.
4. Any books and records of the Corporation during the period from January
1, 1994 to the present concerning either (a) contemplated, proposed, or
considered extraordinary corporate transactions, including, but not
limited to any possible acquisition, merger, exchange, sale of assets,
joint venture, strategic partnership, or consolidation, whether as the
anticipated target or acquiror, or (b) requests received by the Company
from any of its customers or prospective customers requesting that the
Corporation develop, or assist such customers in the development of,
additional products or services or requesting reduced prices from the
Corporation, including any of the following, whether internally or
externally prepared relating thereto:
(a) historical or pro forma financial statements;
(b) reports;
(c) correspondence;
(d) memoranda;
(e) other evidence of discussions;
(f) recommendations made to management;
(g) internal e-mail;
(h) meeting notes; and
(i) proposals, solicitations or engagement letters from financial
advisers, brokers, investment bankers, accounting firms, or
consultants.
To the extent that the Corporation or any of its agents acquires any
CEDE List, NOBO List, COBO List or Daily Transfer List relating to the
Corporation's shareholders during the period commencing on the record date for
the Corporation's 2000 Annual Meeting (the "Annual Meeting") and ending on the
date of the Annual Meeting, this request shall constitute a request
<PAGE>
Simpson Industries, Inc.
December 27, 1999
Page 3
to examine and make copies of such list not later than five business days
after the Corporation obtains such materials.
The purpose of the request set forth in paragraph 1 and 2 above is to
enable MMI to contact other record and/or beneficial owners of the Corporation's
common stock in order to present and discuss the "Shareholder Value Proposal" of
MMI that is set forth in MMI's preliminary proxy statement dated December 1,
1999, relating to the Annual Meeting, and any definitive form thereof or other
amendments thereto (the "MMI Proxy Statement"), and to discuss other matters of
common concern among the Corporation's shareholders, including recent management
decisions concerning the Corporation and their effect on the value of the
Corporation's common stock, and the possible election to the Board of Directors
of the Corporation one or more individuals not currently on such Board.
The purpose of the requests set forth in paragraphs 3 and 4 above is to
enable MMI to assess management decision making by the Corporation during the
preceding six years as evidenced by the corporate books and records so
requested. In this regard, MMI is concerned that management decisions and
policies over the past six years have materially impacted the value of shares in
the Corporation. During that time, the price of the Corporation's stock has
underperformed both the market as a whole and many companies in the
Corporation's industry. Also during that time, material changes have occurred in
the Corporation's industry, including those caused by the consolidation through
acquisition of many companies in that industry and those arising out of the
demand by customers that their suppliers, such as the Corporation, develop and
offer additional or enhanced products and services and/or reduced prices to such
customers. MMI seeks to review these books and records in order to evaluate the
effect of the decisions and actions of the Corporation's Board of Directors and
management on the Corporation's stock price and operations, and the response of
management to the changes in the Corporation's industry. Access to these
corporate books and records is required to protect MMI's interest as a
shareholder and the interests of other shareholders.
In addition, MMI hereby requests that you furnish to us, in accordance
with SEC Rule 14a-7, the following information within five business days of your
receipt of this letter:
1. Notification as to whether you have elected to mail our Proxy Statement
relating to the Annual Meeting or to provide us a list of security
holders as required by SEC Rule 14a-7(a)(1).
2. A statement of the approximate number of record and beneficial holders
of the common stock of the Corporation, separated by type of holder and
class, which are to be solicited of behalf of management in connection
with the Annual Meeting.
3. A statement of the approximate number of beneficial owners that are to
be solicited through banks, brokers or other persons.
4. An estimate of the cost of mailing a proxy statement of approximately
twenty pages and proxy form in a window-type envelope, including an
estimate of the cost of handling
<PAGE>
Simpson Industries, Inc.
December 27, 1999
Page 4
and mailing such material to the bankers, brokers and other persons
in subparagraph 3. above.
If you elect to provide us with a shareholder list pursuant to SEC Rule
14a-7(a)(2)(ii), please furnish us with the following additional information
within five business days of the receipt of this letter:
1. A reasonably current list of the names, addresses and security
positions of the shareholders referred to in subparagraph 2. of the
preceding paragraph.
2. A list of the names and addresses of the banks, brokers and other
persons specified in subparagraph 3. of the preceding paragraph,
including a CEDE List for all of these institutions.
3. The most recent NOBO List and COBO list compiled by the Corporation
pursuant to Rule 14a-13(b), in the Corporation's possession, or which
subsequently comes into the Corporation's possession.
All of the foregoing information should be on magnetic tape or software
diskette of the type that you normally supply to the Corporation's own proxy
solicitor, accompanied by a print-out of the information on such tape or
diskette and any instructions that are necessary to make use of such
information. In addition, all such information should be updated on a daily
basis until the record date for the Annual Meeting.
In connection with our request for information and documents under SEC
Rule 14a-7, the affidavit required under SEC Rule 14a-7(c) is attached hereto.
You are requested to direct to Bell, Boyd & Lloyd, whose address
follows, any response which you wish to make to this request.
MMI Investments II-A, L.P.
By: MCM Management, LLC as General Partner
By: /s/ Clay B. Lifflander
------------------------------
Member and President
BELL, BOYD & LLOYD
70 West Madison Street
Suite 3300
Chicago, IL 60602
(312) 372-1121
Attention: Donald J. Bingle
<PAGE>
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
AFFIDAVIT
CLAY B. LIFFLANDER affirms and states:
1. I am the President and a Member of MCM Management, LLC, which
is the general partner of MMI Investments II-A, L.P., a Delaware limited
partnership ("MMI").
2. MMI is the record and beneficial owner of shares of Common
Stock, $1.00 par value per share ("Common Stock"), of Simpson Industries, Inc.,
a Michigan corporation ("Simpson"). As a holder of Common Stock, MMI intends to
present, for consideration by Simpson's shareholders at Simpson's 2000 Annual
Meeting (the "Annual Meeting"), a resolution requesting that the Board of
Directors of Simpson seek the sale of Simpson to a third party through a
competitive auction process to be conducted by a recognized investment banking
firm (the "Shareholder Value Proposal"). MMI also has reserved the right to
solicit proxies with respect to other proposals concerning Simpson, including a
proposal to elect to the Board of Directors of Simpson one or more individuals
not currently on such Board or to request redemption of Simpson's "poison pill"
shareholder rights plan. The Shareholder Value Proposal and any such other
proposals that MMI determines to present at the Annual Meeting are herein called
the "Proposals."
3. MMI will not use any shareholder list information provide to
it by Simpson pursuant to Rule 14a-7 of the Rules and Regulations of the
Securities and Exchange Commission (the "Information") other than to solicit
holders of Common Stock of Simpson in connection with the 2000 Annual Meeting.
1
<PAGE>
4. MMI will not disclose the Information to any person other than
its officers, employees and agents to extent necessary to effectuate
communication with, and solicitation of, holders of Common Stock of Simpson
relating to the Proposals.
/s/ Clay B. Lifflander
-----------------------------------
Clay B. Lifflander
SUBSCRIBED and SWORN before me
this 27th day of December, 1999.
/s/ Alan L. Rivera
- -----------------------------------
Notary Public
Alan L. Rivera, Notary Public
State of New York 02R15084244
Qualified in New York County
Certified in New York County
Commission Expires Sept. 2, 2002
2
