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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. __3______)
Filed by the Registrant /_/
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/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
SIMPSON INDUSTRIES, INC.
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(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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(Name of Person(s) Filing Proxy Statement if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
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filing fee is calculated and state how it was determined)
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PRELIMINARY COPY--SUBJECT TO COMPLETION--MARCH 8, 2000
2000 ANNUAL MEETING OF SHAREHOLDERS OF
SIMPSON INDUSTRIES, INC.
APRIL 18, 2000
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PROXY STATEMENT OF
MMI INVESTMENTS II-A, L.P.
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This Proxy Statement (this "Proxy Statement") and BLUE proxy card are
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"). Simpson has provided notice that the 2000 Annual
Meeting will be held on April 18, 2000, and that the record date (the "Record
Date") for determining shareholders entitled to notice of and to vote at the
2000 Annual Meeting will be March 3, 2000.
At the 2000 Annual Meeting, the Company's shareholders will be asked
to (i) elect seven individuals to the Board of Directors of Simpson (the
"Board"), (ii) consider a resolution submitted by MMI Investments 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"), and (iii) consider other business properly
brought before the 2000 Annual Meeting.
MMI Investments has nominated three individuals to be elected to the
Board, John S. Dyson, Clay B. Lifflander, and Alan Rivera (the "MMI Nominees").
We are soliciting proxies for (i) the election of the MMI Nominees to the Board
and (ii) the approval of the Shareholder Value Proposal .
This Proxy Statement is first being furnished to Simpson shareholders
on or about March 10, 2000.
MMI Investments is the beneficial owner of 850,000 shares of common
stock, $1.00 par value per share (the "Common Stock"), of Simpson, which shares
represent approximately 4.7% 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."
THE ENCLOSED BLUE PROXY CARD MAY BE EXECUTED BY HOLDERS OF RECORD AS OF
THE RECORD DATE. YOU ARE URGED TO SIGN AND DATE THE ENCLOSED BLUE PROXY CARD AND
RETURN IT IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE 2000
ANNUAL MEETING. YOUR LAST DATED PROXY IS THE ONLY ONE THAT COUNTS, SO RETURN THE
BLUE PROXY CARD EVEN IF YOU DELIVERED A PRIOR PROXY. WE URGE YOU NOT TO RETURN
ANY PROXY CARD SENT TO YOU BY THE COMPANY.
*****************
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INTRODUCTION
WHAT ARE WE PROPOSING?
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
is soliciting your proxy in support of the election of, John S. Dyson, Clay B.
Lifflander and Alan L. Rivera. We also intend to present for consideration at
the 2000 Annual Meeting, and are soliciting your proxy in favor of, the
Shareholder Value Proposal, which requests 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.
WHY ARE WE MAKING THESE PROPOSALS?
Our Shareholder Value Proposal is intended to permit Simpson's
shareholders to express clearly and unequivocally to the Board their views
concerning a sale of Simpson to a third party at an attractive price. Due to
Simpson's poor stock price performance, the conditions in its rapidly evolving
industry and Simpson's failure to develop and execute a substantial acquisition
program to respond to such conditions, we have come to the conclusion that the
sale of Simpson now is the best available alternative available to create value
for Simpson shareholders. We explain the reasons behind this conclusion in great
detail in this Proxy Statement. We encourage you to consider them carefully.
Our determination to nominate, and solicit proxies for the election
of, the MMI Nominees has arisen out of our concern over the response from
Simpson's management to our attempt to bring the Shareholder Value Proposal
before Simpson's shareholders. As we describe more fully later in this Proxy
Statement (see "Reasons for Our Proposals - Background"), our attempt to
engage Simpson's management in a dialogue concerning the Shareholder Value
Proposal and our reasons for proposing it was initially met by what we
believe to be a deliberate effort on the part of Simpson management to avoid
meeting with us. When management finally agreed to present to us their
strategic plan for the Company's future, we found nothing in that plan that
allayed our concerns about the creation of shareholder value. In particular,
we found nothing in that presentation which suggested that the potential sale
of Simpson as a means to create shareholder value had been systematically
considered. Thus, we have become convinced that only through the presence of
the MMI Nominees on Simpson's Board will the strategic alternative of having
an independent investment bank solicit offers for the sale of Simpson at an
attractive price be given full and fair consideration by the Board. If our
Shareholder Value Proposal is approved by shareholders and the MMI Nominees
are elected to the Board, the MMI Nominees, as persons whose sole interest in
Simpson is to increase the value of the 4.7% of Simpson's outstanding shares
that they beneficially own, will work diligently to ensure that the strategic
alternative of selling the Company now does not fall victim to any
self-interest or lack of vision by Simpson management.
WHAT ARE THE REASONS YOU SHOULD SUPPORT OUR PROPOSALS?
The three principal issues that we see confronting Simpson today 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
February 29, 2000 closed at $10.06, a 35.8% 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 191%. Had Simpson matched the mere price appreciation of the
S&P 500 over that same period, Simpson's shares would be worth over $45 per
share today. See the discussion of the performance of
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Simpson's stock versus the S&P 500 Index , other market indices and an industry
peer group, and the accompanying performance chart, 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 small 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
consolidating 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- increasing 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 and that an acquisition program is a necessary key to a
successful growth strategy. We believe that the acquisitions made by Simpson in
recent years have been too few, too small and too infrequent. Further, we
believe 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, OR
EVEN THE REALISTIC HOPE FOR ONE, WE BELIEVE THAT THE BEST COURSE OF ACTION IS
FOR THE BOARD TO SEEK THE SALE OF SIMPSON TO A THIRD PARTY.
In mid-September 1999, we began attempts 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 the consolidating nature of
the automotive parts industry. After initially agreeing to meet with us, Simpson
management engaged in a pattern of stall and delay tactics, canceling and
rescheduling our meeting on two different occasions, and then outright refusing
to meet with us. Faced with the mounting complaints of other major shareholders
concerning management's unwillingness to meet with us, Simpson's Chairman, Roy
Parrott, and Chief Financial Officer, Vinod Khilnani, finally did meet with us
on February 10, 2000, nearly five full months after our initial request for a
meeting. In this meeting, Chairman Parrott outlined a strategic vision for
Simpson that confirmed our fears about his lack of a plan for the growth of
Simpson that would reliably create shareholder value. Our efforts to engage the
Board and management in a dialogue concerning how best to create value for
Simpson shareholders and our meeting with Chairman Parrott are chronicled under
"Reasons For Our Proposals--Background."
Because MMI Investments believes that Simpson management does not fully
appreciate the reasons that the Board should consider the sale of Simpson now,
we are 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
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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. 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. 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.
HOW CAN YOU MAKE YOUR VIEWS KNOWN?
We encourage you to make your views on these important matters known to
Simpson's senior management and its board of directors. THE BEST WAY TO
ACCOMPLISH THIS IS BY EXECUTING YOUR BLUE PROXY CARD TO VOTE "FOR" THE MMI
NOMINEES AND "FOR" THE SHAREHOLDER VALUE PROPOSAL . You are urged not to sign
any proxy card sent to you by Simpson.
You may also voice your support of our Shareholder Value Proposal and
the MMI Nominees by either writing, calling or faxing Simpson's Chairman and
Chief Executive Officer, 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.
THEY ARE YOUR EMPLOYEES. LET THEM KNOW THAT YOU WANT THEM TO TAKE ACTION NOW TO
ENHANCE THE VALUE OF YOUR INVESTMENT IN SIMPSON.
YOUR VOTE IS IMPORTANT SO PLEASE SIGN, DATE AND MAIL YOUR BLUE PROXY
CARD AT YOUR EARLIEST CONVENIENCE.
If you wish to communicate with us concerning Simpson and the matters
discussed in this Proxy Statement, executives of Millbrook Capital Management,
Inc., the manager of MMI Investments, can be reached at (212) 586-4333.
WHO CAN VOTE AT THE 2000 ANNUAL MEETING?
Simpson has given notice that the Record Date for the 2000 Annual
Meeting is March 3, 2000. Shareholders of the Company as of the Record Date are
entitled to one vote for each share of Common Stock of the Company held on the
Record Date. According to the Company's preliminary proxy statement for the 2000
Annual Meeting that was filed with the SEC on March 3, 2000, 17,907,194 shares
of Common Stock were issued and outstanding on the Record Date.
HOW DO YOU VOTE BY PROXY?
To elect the MMI Nominees to the Board and approve the Shareholder
Value Proposal, promptly sign, date and mail the enclosed BLUE proxy card in the
enclosed postage-paid envelope. Whether you plan to attend the 2000 Annual
Meeting or not, we encourage you to complete and return the enclosed BLUE proxy
card.
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Properly executed proxies will be voted in accordance with the
directions indicated thereon. If you sign the BLUE proxy card but do not make
any specific choices, your proxy will vote your shares as follows:
- "FOR" the election of the MMI Nominees, John S. Dyson, Clay B.
Lifflander and Alan L. Rivera, to the Board, as well as for the
election of all of the persons nominated by the Company for the Board,
except George R. Kempton, George A. Thomas and F. Lee Weaver.
- "FOR" the Shareholder Value Proposal.
If any other matter is presented at the 2000 Annual Meeting, the
persons named on the enclosed BLUE proxy card will vote in accordance with their
best judgment concerning such matter. At the time this Proxy Statement was first
furnished to shareholders, we knew of no matters that would be acted upon at the
2000 Annual meeting, other than those discussed in this Proxy Statement.
If any of your shares are held in the name of a brokerage firm, bank,
bank nominee or other institution on the Record Date, only that institution can
vote your shares and only upon its receipt of your specific instructions.
Accordingly, please contact the person responsible for your account at such
institution and instruct that person to execute and return the BLUE proxy card
on your behalf. You should also sign, date and mail the voting instruction form
that your broker or banker sends you. Please do this for each account you
maintain to ensure that all of your shares are voted.
Remember that your vote is important regardless of the number of shares
you own. Please act today by signing, dating and mailing your BLUE proxy card.
Remember, do not sign any proxy card sent to you by Simpson, not even as a vote
of protest. A later-dated Simpson proxy card will revoke a previously executed
BLUE proxy card.
WHO CAN YOU CALL IF YOU HAVE QUESTIONS?
If you have any questions concerning this Proxy Statement or need help
voting your shares, please call Jerome Lande at (212) 586-4333 or MMI's proxy
solicitor:
D.F. KING & CO., INC.
77 WATER STREET
NEW YORK, NY 10005
CALL TOLL FREE:
1-888-242-8149
*************
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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." Based on Simpson's approximately $67 million
of EBITDA in fiscal 1999, Simpson would, even if valued at the low end of
this range, have a value of approximately $20 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 850,000 shares or
approximately 4.7% of the outstanding Common Stock. In mid-September 1999, we
contacted Chairman 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 Chairman 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 Chairman Parrott canceling our 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
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."
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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 the referenced 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 our Shareholder Value Proposal. 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,
Chairman 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 INFORMED CHAIRMAN PARROTT THAT A MEETING WITH
ONE OF THE COMPANY'S LARGEST SHAREHOLDERS WOULD BE, WE BELIEVE, WELL WORTH HIS
TIME, PARTICULARLY IF CHAIRMAN PARROTT HAD 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 Chairman Parrott asking 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:
- as Chairman of the Board, promptly call a meeting of the Board to
consider the implementation of the Shareholder Value Proposal; and
- 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 Chairman Parrott. A response was requested
by December 15, 1999. The ONLY RESPONSE we received was a letter from Chairman
Parrott acknowledging receipt of the letter and stating that copies of it have
been sent to the Board.
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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 the correspondence between Simpson and
MMI Investments discussed above.
On December 27, 1999, we submitted a request to the Company seeking
to inspect certain records that we believe we are entitled to inspect as
shareholders of Simpson under applicable Michigan law, 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 proposals 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.
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 on the basis
that "the Company does not believe that MMI has stated a proper purpose
under, or is otherwise entitled, to inspect any of the other information
requested." To date, we have received from Simpson a registered shareholder
list but have been denied access to information that we believe Simpson
possesses concerning the beneficial owners of its stock (i.e. shareholders
who hold their stock through banks, brokers and other financial
institutions), as well as the other records we requested. We believe that,
under applicable Michigan law, we are entitled to inspect such records,
although there can be no assurance a Michigan court would agree. Michigan
law states that any shareholder of record has the right to inspect for any
proper purpose the corporation's stock ledger, a list of its shareholders,
and its other books and records, subject to certain notice requirements and
to the records sought being directly connected to the purpose. A "proper
purpose" means a purpose reasonably related to such person's interest as a
shareholder. Our purpose for requesting a beneficial owners list was to
facilitate our contacting other shareholders in order to present and discuss
our proposals. Our purpose for asking for the other records was to enable us
to assess management decision making by Simpson, including in response to
changes in Simpson's industry, and the extent to which such decisions have
impacted the value of Simpson's shares. Copies of the correspondence between
us and our representatives and representatives of Simpson are available to
anyone who receives this Proxy Statement, upon request. We believe that these
requests were reasonably related to our interest, as a shareholder, in
promoting the proposals described in this Proxy Statement.
We believe that the refusal of the Company to provide us a
beneficial owners list, a list that would allow us to communicate with all
shareholders of the Company on the same basis that the Company is able to
communicate with them, is another tactic of the Company to prevent a fair and
democratic proxy contest. Ask yourself, why is Chairman Parrott afraid to
compete with MMI Investments on a level playing field?
Faced with mounting complaints from other major shareholders concerning
Chairman Parrott's refusal to meet with us, Chairman Parrott finally agreed to
meet with us. On February 10, 2000, we met with Chairman Parrott and Vinod
Khilnani, Simpson's Chief Financial Officer. After listening to Chairman
Parrott's views regarding management's strategic vision and the creation of
shareholder value, we now think we have a good idea why he wanted to avoid a
meeting with us.
In our meeting, Chairman Parrott outlined his strategic plan for
Simpson, the financial results to be expected from that plan during the next
five years, and the Company's merger and acquisition strategy. While Chairman
Parrott's presentation in person was principally similar to the earlier public
filing with the SEC of his presentation materials, this meeting was useful in
its corroboration of our understanding of Chairman Parrott's strategic plan.
Here is a summary of his presentation and our comments thereon:
SIMPSON'S STRATEGIC PLAN: Chairman Parrott's long-term vision for
Simpson is not as a producer of large sub-assemblies, but rather as a
producer of components and small modules which would be supplied to a
middle layer of sub-assembly manufacturers as well as car
manufacturers. It is our belief that the further auto parts
manufacturers are from their end customers, the auto manufacturers, the
greater the margin dilution they are likely to suffer as a result.
Furthermore, we believe that auto parts suppliers that resign
themselves to the manufacture of components and small modules rather
than large and complex sub-assemblies run a severe risk of alienating a
customer base that is increasingly looking to shrink their individual
component purchasing, their in-house assemblage, and the number of
their suppliers.
SIMPSON'S EXPECTED FINANCIAL RESULTS: Chairman Parrott's strategic plan
projects revenue growth from new business and M&A activity to a total
of $1 billion for Simpson in 2005. Chairman Parrott also projects
improvement in Simpson's
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operating margins to 9% in 2002. While we believe that these examples
of revenue growth and margin improvement may be attainable by Chairman
Parrott, they are not, in our view, adequate for a public company in
Simpson's position. We believe a $1 billion dollar auto parts
manufacturer is barely large enough to survive IN TODAY'S MARKETPLACE.
It is our belief that Chairman Parrott's plan does not address the
primary cause of Simpson's poor valuation: its relative size and lack
of a real growth strategy. Since we have no reason to believe that the
investment community will change its view of companies of Simpson's
relative size and growth expectations, we believe that Chairman
Parrott's strategic plan will result in a share valuation on a
price-to-earnings basis in the future similar to the one with which
Simpson currently suffers. For example, when one calculates the
proportional increase in Simpson's net income margin from Chairman
Parrott's goal of 9% operating margin improvement, applies the benefit
of this margin to the 2005 revenue projection of $1 billion, uses the
price-to-earnings valuation at which Simpson currently trades
(approximately 8.9 times as of March 3, 2000), and calculates the value
of Simpson stock in today's dollars using a 15% discount rate, the
result from the Simpson financial plan is a stock price that has a
present value of APPROXIMATELY $11.60. WE BELIEVE THAT A FINANCIAL PLAN
THAT PROJECTS SUCH MODEST GROWTH IN MARKET VALUE IN FIVE YEARS IS NOT
ACCEPTABLE.
SIMPSON'S MERGER & ACQUISITION STRATEGY: Chairman Parrott's M&A
strategy is geared to achieving strategic, synergistic, and accretive
acquisitions at a cautious pace. In addition, Chairman Parrott believes
that Simpson can sustain sufficient additional leverage to pursue such
an efficient and accretive acquisition program. We are skeptical,
however, of Chairman Parrott's acquisition program. As we explain
elsewhere in this Proxy Statement (See "--Simpson Has Left Itself with
No Currency for Acquisitions" on page 15), based on current conditions
in the public debt markets and Simpson's limited leverage capacity due
to the size of its EBITDA stream and the likelihood that it will in the
future have to use some significant portion of that EBITDA to make
capital expenditures required to respond to a changing marketplace, it
is our belief that the acquisitions available to Simpson would be too
small to make a significant difference in Simpson's overall market
position. Simpson appears to recognize this issue. In our meeting,
Chairman Parrott stated, as he did in Simpson's fourth quarter earnings
conference call, that Simpson's acquisition prospects are limited to a
small number of companies with under $100 million of revenue. Further,
Chairman Parrott's goal of $1 billion in revenue by 2005 includes
revenue growth derived from his acquisition program. We believe
Chairman Parrott's goal of $500 million in total revenue growth from
both intrinsic and external (acquired) growth in the next five years is
a lethargic goal, especially for a company in Simpson's position.
For these reasons, we believe that Chairman Parrott's strategic plan
demonstrates no realistic prospects for a meaningful acquisition program, no
recognition of Simpson's need rapidly to grow and achieve economies of scale in
order to remain viable in the auto parts industry, and a financial plan from
both intrinsic and external growth that projects, under current multiples, a
stock price in five years that will have experienced, at best, modest growth. In
other words, we believe that Chairman Parrott would not meet with us because he
could not present a strategic plan that demonstrates credible value creation for
shareholders. As such, we are even more concerned that Simpson management, and
Chairman Parrott in particular, does not fully appreciate, and therefore will
not properly consider, the significant value creation that may result from an
orchestrated and accountable sale process.
9
<PAGE>
As evidence of our concerns, we ask you to consider the combined stock
ownership level of the ten members of the Board and the five highest paid
executives of Simpson (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. See Schedule I
and Schedule II for MMI Investment's and management's stock ownership,
respectively. 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 1999 Annual Meeting
Proxy Statement (reiterated in the preliminary proxy statement it filed on March
3, 2000 for the 2000 Annual Meeting) 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. As a result, we ask you to consider
whether management may be more interested in retaining their present positions
and compensation packages than in maximizing the value to them (AND YOU) as
shareholders. Please consider that, if elected to the Board, the MMI Nominees
will be:
- The members of the Board with the greatest beneficial ownership
of Common Stock;
- The only significant shareholders on the Board who are not
drawing a salary from the Company in excess of a quarter of a
million dollars annually; and
- The only members of the Board who will not receive directors'
fees or a salary from the Company.
We believe that, if elected, the MMI Nominees will be the only Board
members whose interests are solely aligned with those of our fellow
shareholders.
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 February
29, 2000 closed at $10.06, a 35.8% 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 191%. HAD SIMPSON MATCHED THE MERE PRICE APPRECIATION OF THE S&P 500 OVER
THAT SAME PERIOD, SIMPSON'S SHARES WOULD BE WORTH OVER $45 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. Since the end of 1999, the Common Stock has lost
approximately 66% of 1999's gain (as of February 29, 2000). In addition,
remember that this is primarily the same management group that was responsible
for driving the share
10
<PAGE>
price from $15.67 in early 1994 to approximately $9.50 at the end of 1998.
Despite management's professed success in 1999, the fact is that the Common
Stock is still trading at levels that are wholly inadequate. We also note that
management is not quick to point out that more than 6% of 1999's 16% gain (or
approximately 38% of 1999's gain) occurred after we 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 , the Standard & Poor's Manufacturing (diversified industries) Index
("S&P MAND"), the Russell 2000 Index and an industry peer group selected by the
Company for use in its proxy statement illustrates the point. The percentage
change in cumulative total return has been calculated for the period beginning
on December 31, 1993 through February 29, 2000. 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
[GRAPH]
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 2/29/00
-------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Simpson ........ $100 $ 68 $ 69 $ 87 $ 97 $ 83 $ 89
----
S&P 500 ........ 100 101 139 170 227 291 328
----
S&P MAND ....... 100 103 145 194 266 326 326
----
Russell 2000 ... 100 98 126 147 180 175 243
- ---------------- ---- ---- ---- ---- ---- ---- ----
Peer Group Index 100 83 89 113 141 140 105
- ---------------- ---- ---- ---- ---- ---- ---- ----
</TABLE>
- ------------
* 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 February
29, 2000 into 378 industrial companies, 40 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 February 29, 2000, the weighted average market value of the S&P 500
Index was approximately $134 billion while the median market value of
stocks represented in that index was
11
<PAGE>
approximately $7.9 billion. The average price/earnings ratio of
companies included in the S&P 500 Index as of February 29, 2000 was
31.08. 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. The
average price/earnings ratio of companies included in the S&P MAND
as of February 29, 2000 was 21.54. The Russell 2000 Index measures
the performance of the 2,000 smallest companies in the Russell 3000
Index, which represent approximately 8% 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 February 29, 2000, the average price/earnings ratio of such
companies was 63.88. As of February 29, 2000, Simpson's market
capitalization was approximately $181.2 million and its
price/earnings ratio was 8.83.
Take another look at the performance graph on the previous page. A $100
investment in Simpson's Common Stock made on December 31, 1993 has been worth
less than that amount on each of the measurement dates in the graph. Should
shareholders of Simpson continue to be patient with these 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 million
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, based on recently available industry
data, the Company's gross margin is below industry averages (10.1% for fiscal
year 1999 vs. 21.0% for the industry). 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
12
<PAGE>
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. Auto industry analysts have suggested 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.
- 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. In addition,
new purchasing technologies in the auto parts industry such as the internet auto
parts exchange announced by General Motors, Ford and DaimlerChrysler in late
February 2000 may further squeeze margins. The auto makers intend to flow as
much as $240 billion of their annual spending on parts through such exchange
once it is fully operational To quote the February 28, 2000 edition of THE WALL
STREET JOURNAL:
But for smaller suppliers and others not ready to embrace the
wired world, the creation of the equivalent of Home Depot for
auto suppliers may not be such a wonderful thing. "These
online auctions are really going to squeeze the margins of
some suppliers who can't afford to be squeezed," said Rod
Lache, auto analyst for Deutsche Banc Alex. Brown.
Simply put, the automobile industry consolidation does not bode well
for companies like Simpson. DaimlerChrysler's purchasing cost savings were
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
13
<PAGE>
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. 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 what we view as sufficient 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 have not in the recent past demonstrated the capabilities or
business strategy necessary to gain market share, improve operating efficiency
or broaden product lines through an acquisition program. By failing to do so, 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."
Look at Simpson's recent history in the acquisition arena. 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
14
<PAGE>
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.
Chairman Parrott has, of course, publicly suggested that Simpson now intends to
pursue a more vigorous acquisition program involving strategic, synergistic, and
accretive acquisitions at a cautious pace. We doubt his plan will succeed 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 EBITDA (defined for
this purpose as Simpson's earnings before interest, taxes,
depreciation and amortization) that Simpson generates limits the
amount of additional debt that 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 $67
million of EBITDA for the twelve months ended December 31, 1999,
its current debt of approximately $113 million, and an assumed
interest rate of 11.27% 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 February 25, 2000 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 an EBITDA/Interest coverage ratio of 3.45
(which is the average of the EBITDA/Interest coverage ratios of
the companies used by Simpson as its peer group in Simpson's
recent filing with the SEC), is no greater than approximately $89
million. Even this number may overstate Simpson's borrowing
capacity. Simpson's $67 million of reported EBITDA does not
reflect the use by Simpson of a significant portion of its cash
flow to fund capital expenditures necessary for Simpson to
compete for, among other things, capital intensive projects to
produce auto subassemblies and modules. For example, in fiscal
1999 alone, Simpson incurred approximately $42 million in capital
expenditures. Simpson cannot realistically expect to use its
equity to make acquisitions either. Due to Simpson's poor stock
price performance, it could not finance a transaction through the
issuance of more equity without substantially diluting current
ownership and further hurting its operating results.
15
<PAGE>
- 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.
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 SIGN, DATE AND RETURN THE BLUE
PROXY CARD AND VOTE FOR THE MMI NOMINEES FOR ELECTION TO THE BOARD AND TO
SUPPORT OUR SHAREHOLDER VALUE PROPOSAL.
16
<PAGE>
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 Simpson's preliminary proxy statement for
the 2000 Annual Meeting which was filed with the SEC on March 3, 2000, 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 has provided written
notice to the Secretary of the Company of its intent to nominate the MMI
Nominees 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. ("Millbrook") and its predecessors since inception in 1981. He is
RR 1 also a director of Millbrook. From 1994 to 1996, Mr. Dyson served
Box 167D as Deputy Mayor for Finance and Economic Development for the City
Wing Road of New York and currently serves as Chairman of the Mayor's Council
Millbrook, New York 12545 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. Mr. Dyson also serves as Chairman of the Board
and a director of Key Components, Inc., a diversified manufacturing
corporation ("Key Components"), Key Components Finance Corp.
("KCFC") and Key Components, LLC ("KC LLC").
AGE: 57.
Clay B. Lifflander............................. Mr. Lifflander was appointed President and a director of Millbrook
c/o Millbrook Capital Management, Inc. in October 1995. From 1994 to 1995, he served as President of the
RR 1 New York City Economic Development Corporation. During this
Box 167D period, Mr. Lifflander also served as Chairman of the New York City
Wing Road Industrial Development
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Name and Business Address Principal Occupation and Business Experience During Last Five
- ------------------------- Years; Current Directorships; Age
---------------------------------
<S> <C>
Millbrook, New York 12545 Agency. Previously, Mr. Lifflander was 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 and a director of
Key Components and as a director of KCFC and KC LLC. AGE: 37.
Alan L. Rivera................................. Mr. Rivera joined Millbrook in September 1996 as its Chief
c/o Millbrook Capital Management, Inc. Financial Officer and General Counsel. He is responsible for
RR 1 Millbrook's financial management and legal affairs. Prior to
Box 167D joining Millbrook, Mr. Rivera served as Executive Vice President of
Wing Road Finance and Administration and General Counsel of the New York City
Millbrook, New York 12545 Economic Development 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. Mr. Rivera also serves on the board of directors of Key
Components, KCFC and KC LLC. AGE 37.
</TABLE>
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, any members of their immediate
family or any of their other associates have been a party to any transaction or
other relationship with the Company or any of its affiliates (other than as a
shareholder). 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.
18
<PAGE>
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 BLUE proxy card you will be voting for the MMI
Nominees and four of the Company's seven nominees proposed to serve as
directors, unless you appropriately mark your card otherwise. 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 the
Company's nominees, other than George R. Kempton, George A. Thomas and F. Lee
Weaver. In addition, shareholders returning the BLUE proxy card have the
opportunity to withhold authority with respect to any other Company nominee
by writing the name of that nominee on the BLUE proxy card. There can be no
assurance that the Company's nominees will serve if elected with any of the
MMI 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 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. PLEASE SIGN AND DATE THE BLUE PROXY CARD AND
RETURN IT IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE 2000
ANNUAL MEETING.
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.
19
<PAGE>
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 BELIEVES THAT IT IS IN YOUR BEST INTEREST TO APPROVE
THE SHAREHOLDER VALUE PROPOSAL AT THE 2000 ANNUAL MEETING. PLEASE SIGN AND DATE
THE BLUE PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU
PLAN TO ATTEND THE 2000 ANNUAL MEETING.
20
<PAGE>
VOTING PROCEDURES
For the proxy solicited hereby to be voted, the enclosed BLUE proxy
card must be signed, dated, and returned to MMI Investments c/o D.F. King & Co.,
Inc. ("D.F. King"), in the enclosed envelope in time to be voted at the 2000
Annual Meeting. If you wish to vote for the MMI Nominees and the Shareholder
Value Proposal, you must submit the enclosed BLUE proxy card and must NOT submit
the Company's proxy card. If you have already returned the Company's proxy card,
you have the right to revoke it as to all matters covered thereby and may do so
by subsequently signing, dating, and mailing the enclosed BLUE proxy card. ONLY
YOUR LATEST DATED PROXY WILL COUNT AT THE 2000 ANNUAL MEETING. Execution of a
BLUE proxy card will not affect your right to attend the 2000 Annual Meeting and
to vote in person. Any proxy may be revoked as to all matters covered thereby at
any time prior to the time a vote is taken by (i) filing with the Secretary of
the Company a later dated written revocation or a duly executed proxy; (ii)
submitting a duly executed proxy bearing a later date to MMI Investments; or
(iii) attending and voting at the 2000 Annual Meeting in person. Attendance at
the 2000 Annual Meeting will not in an of itself constitute a revocation.
Shares of Common Stock represented by a valid, unrevoked BLUE proxy
card will be voted as specified. You may vote for the MMI Nominees and the
Shareholder Value Proposal or withhold authority to vote on such proposals by
marking the proper box on the BLUE proxy card. Shares represented by a BLUE
proxy card where no specification has been made will be voted for the MMI
Nominees and the Shareholder Value Proposal.
Except as set forth in this Proxy Statement, MMI Investments is not
aware of any other matter to be considered at the 2000 Annual Meeting. If any
other matter is presented at the 2000 Annual Meeting, the persons named on the
enclosed BLUE proxy card will vote in accordance with their best judgment
concerning such matter.
If any of your shares are held in the name of a brokerage firm, bank,
bank nominee or other institution on the Record Date, only that institution can
vote your shares and only upon its receipt of your specific instructions.
Accordingly, please contact the person responsible for your account at such
institution and instruct that person to execute and return the BLUE proxy card
on your behalf. You should also sign, date and mail the voting instruction form
(or BLUE proxy card) that your broker or banker sends you. Please do this for
each account you maintain to ensure that all of your shares are voted.
Only holders of record as of the close of business on the Record Date
will be entitled to vote at the 2000 Annual Meeting. If you were 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.
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.
Simpson's proxy statement for the 2000 Annual Meeting is required to provide
information about the number of shares of Common Stock outstanding and entitled
to vote as of the Record Date, and reference is made thereto for such
information. 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
21
<PAGE>
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.
If you have questions, or need further assistance, please call Jerome
Lande of Millbrook at (212) 586-4333 or our proxy solicitor, D.F. King at (888)
242-8149.
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 customary clerical and mailing expenses incurred by them in
forwarding these materials to their customers.
We have retained D.F. King for solicitation and advisory services in
connection with the solicitation of proxies at an estimated fee of $75,000,
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
seventy five 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 $400,000. Total costs incurred to the date of
this Proxy Statement by us have been approximately $165,000.
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
22
<PAGE>
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.
MMI Investments anticipates that Simpson's definitive proxy statement
for the 2000 Annual Meeting will contain information concerning, among other
things, (i) the background of Simpson's nominees for the Board, (ii) the
compensation paid and payable to the Simpson's directors and executive officers,
(iii) the committees of Simpson's Board and their responsibilities; and (iv) the
meetings of Simpson's Board and all committees thereof. MMI Investments assumes
no responsibility for the accuracy or completeness of such information.
SHAREHOLDER PROPOSALS FOR THE SIMPSON 2001 ANNUAL MEETING
Simpson's preliminary proxy statement relating to the 2000 Annual
Meeting that was filed with the SEC on March 3, 2000 indicates that any
shareholder proposal to be considered for inclusion in the proxy statement to be
distributed by Simpson in connection with its 2001 Annual Meeting of
Shareholders must be received by Simpson not later than November 17, 2000.
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 Management"), 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 Management. 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 Millbrook 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
23
<PAGE>
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 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.
Except as set forth in this Proxy Statement (including the Schedules
hereto), none of MMI Investments or any other participant in this solicitation
or any of their respective associates: (i) directly or indirectly beneficially
owns any shares of Common Stock or any other securities of the Company or any of
its subsidiaries; (ii) has had any relationship with the Company in any capacity
other than as a shareholder, or is or has been a party to any transaction, or
series of similar transactions, since the beginning of Company's last fiscal
year with respect to any shares of the Company; (iii) knows of any transactions
since the beginning of Company's last fiscal year, currently proposed
transactions, or series of similar transactions, to which the Company or any of
its subsidiaries was or is to be a party, in which the amount involved exceeds
$60,000 and in which
24
<PAGE>
any of them or their respective affiliates had, or will have, a direct or
indirect material interest; (iv) has any interest in the matters to be voted
on at the 2000 Annual Meeting, other than an interest, if any, as a
shareholder of the Company; or (v) has been indebted to the Company or any of
its subsidiaries.
In addition, other than as set forth in this Proxy Statement (including
the Schedules hereto), there are no contracts, arrangements or understandings
entered into by MMI Investments or any other participant in this solicitation or
any of their respective associates within the past year with any person with
respect to any of the Company's securities, including, but not limited to, joint
ventures, loan or option arrangements, puts or calls, guarantees against loss or
guarantees of profit, division of losses or profits, or the giving or
withholding of proxies. In addition, none of MMI Investments or any other
participant in this solicitation or any of their respective associates has been
engaged in contacts, negotiations or transactions with the Company or its
affiliates concerning a merger, consolidation, acquisition, tender offer or
other acquisition of securities, or a sale or other transfer of a material
amount of assets; or has had any other transaction (other than this proxy
solicitation and matters incidental thereto) with the Company or any of its
executive officers, directors or affiliates that would require disclosure under
the rules and regulations of the SEC.
Except as set forth in this Proxy Statement (including the Schedules
hereto), none of MMI Investments or any other participant in this solicitation
or any of their respective associates, has entered into any agreement or
understanding with any person with respect to (i) any future employment by the
Company or its affiliates or (ii) any future transactions to which the Company
or any of its affiliates will or may be a party.
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
25
<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 SIMPSON INDUSTRIES, INC.
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>
<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
2/10/00 11,000 10.55
2/11/00 19,900 10.56
2/14/00 5,000 10.38
2/15/00 1,300 10.00
2/16/00 5,700 10.31
--------
850,000
</TABLE>
Based on 17,907,194 shares of Common Stock outstanding as of March 3,
2000 (as reported in Simpson's preliminary proxy statement for the 2000 Annual
Meeting that was filed with the SEC on March 3, 2000), the 850,000 shares of
Common Stock owned by MMI Investments represents 4.7% of the outstanding Common
Stock.
By virtue of being the general partner of MMI Investments, MCM
Management may be deemed to be the beneficial owner of the 850,000 shares (or
approximately 4.7%) 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.
In connection with the above-referenced transactions, MMI Investments
used (i) available cash and (ii) the proceeds of approximately $7.7 million
principal amount of margin loans to make these purchases. These margin loans
were obtained from one broker under customary terms and conditions. The entire
principal amount of such margin loans remains outstanding as of the date of this
Proxy Statement.
<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 February 1, 2000, by the directors and
executive officers of Simpson Industries, Inc., as reported in Simpson's
preliminary proxy statement for the 2000 Annual Meeting that was filed with the
SEC on March 3, 2000, 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. .................................. 1,257,625 shares (2) 6.98%
1299 Ocean Avenue
Santa Monica, CA 90401
President and Fellows of Harvard College ......................... 1,020,536 shares (3) 5.66%
c/o Harvard Management Company, Inc.
600 Atlantic Avenue
Boston, MA 02210
Roy E. Parrott ................................................... 203,156 1.11
Walter J. Kirchberger ............................................ 90,432 0.50
F. Lee Weaver .................................................... 82,420(4) 0.45
James A. Hug ..................................................... 82,037 0.45
George G. Gilbert ................................................ 76,855 0.42
Frank K. Zinn .................................................... 59,061(5) 0.32
Robert W. Navarre ................................................ 28,562 0.16
George R. Kempton ................................................ 30,813(6) 0.17
Vinod M. Khilnani ................................................ 36,037 0.20
James B. Painter ................................................. 28,769 0.16
George A. Thomas ................................................. 29,898(7) 0.16
Ronald L. Roudebush .............................................. 19,000 0.10
Susan F. Haka .................................................... 7,020 0.04
Michael E. Batten................................................. 7,000 0.04-
All present directors and executive officers...................... 781,060 shares 4.29%
</TABLE>
- -------
(1) Includes shares beneficially held for certain executive officers and
directors under the Simpson Industries, Inc. Savings Plan and also
includes 320,546 shares of Common Stock certain executive officers and
directors may acquire within the next 60 days pursuant to the exercise of
stock options under the Company's long-term incentive plans.
(2) Sole voting power - 1,257,625 shares (6.98%); sole investment power -
1,257,625 shares (6.98%); as reported in the Schedule 13G, dated February
4, 2000, received by the Company from Dimensional Fund Advisors, Inc.
("Dimensional"). Dimensional, a registered investment advisor, is deemed
to have beneficial ownership of 1,257,625 shares of the Company's common
stock as of December 31, 1999, all of which shares are held by certain
registered investment companies or certain other investment vehicles.
Dimensional serves as investment advisor or
<PAGE>
manager to all such investment companies and investment vehicles.
Dimensional disclaims beneficial ownership of all such shares.
(3) Includes 957,436 shares owned by President and Fellows of Harvard College
("President and Fellows") and 45,100 shares owned by Harvard Master Trust
("Trust"). President and Fellows along with Trust comprise a group within
the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, and each may be deemed to beneficially own the shares of the
Company owned by the others. Sole voting power - President and Fellows:
975,436 shares (5.41%); Trust: 45,100 shares (0.25%); sole investment
power - President and Fellows 975,436 shares (5.41%); Trust: 45,100 shares
(0.25%); as reported in the Schedule 13G, dated February 7, 2000, received
by the Company from President and Fellows.
(4) Includes 55,917 shares owned by Prudence B. Weaver, Mr. Weaver's wife, for
her own benefit.
(5) Includes 43,311 shares owned jointly by Mr. Zinn and Ruth A. Zinn, his
wife.
(6) Includes 20,463 shares owned jointly by Mr. Kempton and H. Kempton, his
wife.
(7) 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.
<PAGE>
REVOCABLE REVOCABLE
PROXY PROXY
SIMPSON INDUSTRIES, INC.
ANNUAL MEETING OF STOCKHOLDERS -- APRIL 18, 2000
THIS PROXY IS SOLICITED IN OPPOSITION TO THE BOARD OF DIRECTORS
OF SIMPSON INDUSTRIES, INC. BY MMI INVESTMENTS II-A, L.P. ("MMI")
The undersigned shareholder of Simpson Industries, Inc. (the "Company")
hereby appoints John S. Dyson and Clay B. Lifflander, or either one of them,
each with full power of substitution, to act as proxies for the undersigned, and
to vote all shares of Common Stock, par value $1.00 per share, which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Stockholders of the Company to be held on April 18, 2000 and at any
and all postponements and adjournments thereof, as indicated on the reverse side
hereof.
THIS PROXY IS REVOCABLE AND WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED (1) FOR THE ELECTION OF
EACH OF THE MMI NOMINEES AND FOUR OF THE COMPANY'S NOMINEES AND (2) FOR THE
SHAREHOLDER VALUE PROPOSAL. IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL
MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN THEIR BEST
JUDGMENT. AT THE PRESENT TIME, MMI KNOWS OF NO OTHER BUSINESS TO BE PRESENTED AT
THE ANNUAL MEETING. THIS PROXY REVOKES ALL PRIOR PROXIES GIVEN BY THE
UNDERSIGNED WITH RESPECT TO MATTERS COVERED BY THIS PROXY AND THE VOTING OF
SHARES OF COMMON STOCK OF THE COMPANY AT THE 2000 ANNUAL MEETING.
PLEASE SIGN, DATE, AND MAIL THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
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PROXY (CONTINUED)
THIS PROXY IS SOLICITED IN OPPOSITION TO THE BOARD OF DIRECTORS OF SIMPSON
INDUSTRIES, INC. BY MMI
MMI RECOMMENDS A VOTE "FOR" THE MMI NOMINEES LISTED AND "FOR" THE SHAREHOLDER
VALUE PROPOSAL
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1. ELECTION OF DIRECTORS--NOMINEES OF MMI: For Withhold 2. To approve the Shareholder Value Proposal For Against
John S. Dyson, Clay B. Lifflander and / / / / submitted by MMI Investments II-A, L.P. / / / /
Alan L. Rivera
Instruction: To withhold authority to vote 3. In the discretion of the Proxies appointed
for the election of any individual nominee(s), hereunder, on such other business as may
write the name(s) of such in the following properly come before the meeting.
space:
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MMI Intends to use this Proxy to vote for the
persons nominated by the Company to serve as
Directors, other than the Company nominees
listed below. To withhold authority to vote
for one or more additional Company nominees,
write the name of the nominee(s) below. Refer
to the proxy statement and proxy distributed
by the Company for the names and other
information concerning such nominees.
-------------------------------------------- The undersigned acknowledges receipt of MMI's Proxy
Company Nominee Exception(s) Statement.
MMI is NOT seeking authority to vote for and Dated: ____________________________________, 2000
will not exercise any such authority for
George R. Kempton, George A. Thomas and F. Lee Signature(s) _____________________________________
Weaver. There is no assurance that any of the
Company's nominees will serve as Directors __________________________________________________
if the MMI Nominees are elected to the Board. IMPORTANT: PLEASE SIGN EXACTLY AS YOUR NAME OR
NAMES APPEAR HEREON. IF SIGNING AS AN ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE, GUARDIAN, OR IN
SOME OTHER REPRESENTATIVE CAPACITY, OR AS AN
OFFICER OF A CORPORATION, PLEASE INDICATE YOUR
CAPACITY OR FULL TITLE. IF STOCK IS HELD JOINTLY,
EACH JOINT OWNER SHOULD SIGN.
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YOUR VOTE IS IMPORTANT! PLEASE SIGN, DATE, AND PROMPTLY MAIL YOUR PROXY.
