UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly period ended: June 30, 1999
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----- -----
Commission file number: 0-23804
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Simpson Manufacturing Co., Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-3196943
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4637 Chabot Drive, Suite 200, Pleasanton, CA 94588
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(Address of principal executive offices)
(Registrant's telephone number, including area code): (925)460-9912
------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
The number of shares of the Registrant's Common Stock outstanding as of
June 30, 1999: 11,910,173
----------
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
----------------------------
(Unaudited)
1999 1998 1998
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 37,215,287 $ 20,624,535 $ 37,402,450
Trade accounts receivable, net 52,597,778 41,884,459 34,089,122
Inventories 65,046,804 55,150,127 56,340,053
Deferred income taxes 4,119,507 4,048,369 3,749,599
Other current assets 2,635,866 1,243,017 1,282,814
------------ ------------ ------------
Total current assets 161,615,242 122,950,507 132,864,038
Net property, plant and equipment 58,712,214 51,059,397 54,964,704
Investments 503,346 537,582 524,964
Other noncurrent assets 3,161,456 3,067,138 3,246,045
------------ ------------ ------------
Total assets $223,992,258 $177,614,624 $191,599,751
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes Payable and current
portion of long-term debt $ 499,154 $ 330,010 $ 330,704
Trade accounts payable 16,211,194 11,622,431 11,761,237
Accrued liabilities 6,328,264 5,255,517 5,591,292
Income taxes payable - 2,951,963 1,465,384
Accrued profit sharing trust
contributions 5,095,397 4,545,941 3,173,362
Accrued cash profit sharing
and commissions 5,709,060 4,660,965 4,019,806
Accrued workers' compensation 579,272 779,272 879,272
------------ ------------ ------------
Total current liabilities 34,422,341 30,146,099 27,221,057
Long-term debt, net of current portion 2,429,526 2,727,799 2,565,182
Deferred income taxes and
long-term liabilities 367,194 678,034 531,149
------------ ------------ ------------
Total liabilities 37,219,061 33,551,932 30,317,388
------------ ------------ ------------
Commitments and contingencies (Notes 5 and 6)
Shareholders' equity
Common stock 41,885,081 33,519,125 33,723,845
Retained earnings 145,711,367 110,882,928 127,990,208
Accumulated other comprehensive income (823,251) (339,361) (431,690)
------------ ------------ ------------
Total shareholders' equity 186,773,197 144,062,692 161,282,363
------------ ------------ ------------
Total liabilities and
shareholders' equity $223,992,258 $177,614,624 $191,599,751
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE>
Simpson Manufacturing Co., Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 83,752,743 $ 70,786,469 $158,414,333 $130,041,019
Cost of sales 49,088,742 41,708,697 95,301,719 79,089,853
------------ ------------ ------------ ------------
Gross profit 34,664,001 29,077,772 63,112,614 50,951,166
------------ ------------ ------------ ------------
Operating expenses:
Selling 8,041,724 6,129,472 15,939,530 11,754,247
General and administrative 9,878,575 8,916,134 17,917,336 15,780,630
Compensation related to stock plans 121,135 45,000 204,135 102,000
------------ ------------ ------------ ------------
18,041,434 15,090,606 34,061,001 27,636,877
------------ ------------ ------------ ------------
Income from operations 16,622,567 13,987,166 29,051,613 23,314,289
Interest income, net 255,190 114,302 603,546 320,954
------------ ------------ ------------ ------------
Income before income taxes 16,877,757 14,101,468 29,655,159 23,635,243
Provision for income taxes 6,805,000 5,728,000 11,934,000 9,601,000
------------ ------------ ------------ ------------
Net income $ 10,072,757 $ 8,373,468 $ 17,721,159 $ 14,034,243
============ ============ ============ ============
Net income per common share
Basic $ 0.86 $ 0.72 $ 1.52 $ 1.22
Diluted $ 0.82 $ 0.69 $ 1.46 $ 1.16
Number of shares outstanding
Basic 11,779,256 11,561,786 11,680,581 11,546,329
Diluted 12,225,229 12,081,026 12,165,456 12,059,737
</TABLE>
Simpson Manufacturing Co., Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net income $ 10,072,757 $ 8,373,468 $ 17,721,159 $ 14,034,243
Other comprehensive income, net of tax:
Foreign currency translation
adjustments (111,940) (147,402) (391,561) (63,636)
------------ ------------ ------------ ------------
Comprehensive income $ 9,960,817 $ 8,226,066 $ 17,329,598 $ 13,970,607
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE>
Simpson Manufacturing Co., Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 17,721,159 $ 14,034,243
------------ ------------
Adjustments to reconcile net income
to net cash
provided by operating activities:
Gain (loss) on sale of capital equipment (53,246) 6,000
Depreciation and amortization 5,163,600 4,418,512
Deferred income taxes and
long-term liabilities (533,863) (657,319)
Noncash compensation related to stock plans 119,800 169,894
Changes in operating assets and liabilities,
net of effects of acquisitions:
Trade accounts receivable (18,779,983) (17,302,209)
Inventories (8,834,387) (167,602)
Trade accounts payable 4,449,957 2,809,235
Income taxes payable 3,119,596 3,452,536
Accrued profit sharing trust contributions 1,922,035 1,659,066
Accrued cash profit sharing and commissions 1,689,254 1,566,131
Other current assets (1,353,052) 480,569
Accrued liabilities 736,973 (251,386)
Accrued workers' compensation (300,000) 120,000
Other noncurrent assets (137,421) (194,665)
------------ ------------
Total adjustments (12,790,737) (3,891,238)
------------ ------------
Net cash provided by operating activities 4,930,422 10,143,005
------------ ------------
Cash flows from investing activities
Capital expenditures (8,857,824) (12,465,806)
Proceeds from sale of equipment 250,989 29,348
------------ ------------
Net cash used in investing activities (8,606,835) (12,436,458)
------------ ------------
Cash flows from financing activities
Issuance of debt 204,624 3,029,372
Repayment of debt (171,830) (1,168)
Issuance of Company's common stock 3,456,456 471,095
------------ ------------
Net cash provided by financing activities 3,489,250 3,499,299
------------ ------------
Net increase (decrease) in cash and
cash equivalents (187,163) 1,205,846
Cash and cash equivalents at beginning of period 37,402,450 19,418,689
------------ ------------
Cash and cash equivalents at end of period $ 37,215,287 $ 20,624,535
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE>
Simpson Manufacturing Co., Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
1. Basis of Presentation
Interim Period Reporting
The accompanying unaudited interim condensed consolidated financial
statements have been prepared pursuant to the rules and regulations for
reporting on Form 10-Q. Accordingly, certain information and footnotes
required by generally accepted accounting principles have been condensed
or omitted. These interim statements should be read in conjunction with
the consolidated financial statements and the notes thereto included in
Simpson Manufacturing Co., Inc.'s (the "Company's") 1998 Annual Report on
Form 10-K (the "1998 Annual Report").
The unaudited quarterly condensed consolidated financial statements have
been prepared on the same basis as the audited annual consolidated
financial statements, and in the opinion of management, contain all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the financial information set forth therein, in accordance
with generally accepted accounting principles. The year-end condensed
consolidated balance sheet data was derived from audited financial
statements, but does not include all disclosures required by generally
accepted accounting principles. The Company's quarterly results may be
subject to fluctuations. As a result, the Company believes the results of
operations for the interim periods are not necessarily indicative of the
results to be expected for any future period.
Certain prior year amounts have been reclassified to conform to the 1999
presentation with no effect on net income as previously reported.
Net Income Per Common Share
Basic net income per common share is computed based upon the weighted
average number of common shares outstanding. Common equivalent shares,
using the treasury stock method, are included in the diluted per-share
calculations for all periods when the effect of their inclusion is
dilutive.
The following is a reconciliation of basic earnings per share ("EPS") to
diluted EPS:
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
June 30, 1998 June 30, 1997
---------------------------------- ----------------------------------
Per Per
Income Shares Share Income Shares Share
------------ ------------ ------ ------------ ------------ ------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Income available to
common shareholders $ 10,072,757 11,779,256 $ 0.86 $ 8,373,468 11,561,786 $ 0.72
Effect of Dilutive Securities
Stock options - 445,973 (0.04) - 519,240 (0.03)
------------ ------------ ------ ------------ ------------ ------
Diluted EPS
Income available to
common shareholders $ 10,072,757 12,225,229 $ 0.82 $ 8,373,468 12,081,026 $ 0.69
============ ============ ====== ============ ============ ======
<PAGE>
Six Months Ended Six Months Ended
June 30, 1998 June 30, 1997
---------------------------------- ----------------------------------
Per Per
Income Shares Share Income Shares Share
------------ ------------ ------ ------------ ------------ ------
Basic EPS
Income available to
common shareholders $ 17,721,159 11,680,581 $ 1.52 $ 14,034,243 11,546,329 $ 1.22
Effect of Dilutive Securities
Stock options - 484,875 (0.06) - 513,408 (0.06)
------------ ------------ ------ ------------ ------------ ------
Diluted EPS
Income available to
common shareholders $ 17,721,159 12,165,456 $ 1.46 $ 14,034,243 12,059,737 $ 1.16
============ ============ ====== ============ ============ ======
</TABLE>
2. Trade Accounts Receivable
Trade accounts receivable consist of the following:
<TABLE>
<CAPTION>
June 30, December 31,
----------------------------
1999 1998 1998
------------ ------------ ------------
<S> <C> <C> <C>
Trade accounts receivable $ 54,677,589 $ 43,707,675 $ 35,550,836
Allowance for doubtful accounts (1,341,765) (1,247,263) (1,173,656)
Allowance for sales discounts (738,046) (575,953) (288,058)
------------ ------------ ------------
$ 52,597,778 $ 41,884,459 $ 34,089,122
============ ============ ============
</TABLE>
3. Inventories
The components of inventories consist of the following:
<TABLE>
<CAPTION>
June 30, December 31,
----------------------------
1999 1998 1998
------------ ------------ ------------
<S> <C> <C> <C>
Raw materials $ 19,632,599 $ 17,486,981 $ 18,904,545
In-process products 6,646,652 5,357,076 5,255,755
Finished products 38,767,553 32,306,070 32,179,753
------------ ------------ ------------
$ 65,046,804 $ 55,150,127 $ 56,340,053
============ ============ ============
</TABLE>
Approximately 91% of the Company's inventories are valued using the LIFO
(last-in, first-out) method. Because inventory determination under the
LIFO method is only made at the end of each year based on the inventory
levels and costs at that time, interim LIFO determinations must
necessarily be based on management's estimates of expected year-end
inventory levels and costs. Since future estimates of inventory levels and
costs are subject to change, interim financial results reflect the
Company's most recent estimate of the effect of LIFO and are subject to
adjustment based upon final year-end inventory amounts. At June 30, 1999
and 1998, and December 31, 1998, the replacement value of LIFO inventories
exceeded LIFO cost by approximately $79,000, $566,000 and $359,000,
respectively.
<PAGE>
4. Net Property, Plant and Equipment
Net property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
June 30, December 31,
----------------------------
(Unaudited)
1999 1998 1998
------------ ------------ ------------
<S> <C> <C> <C>
Land $ 4,216,519 $ 3,366,519 $ 3,891,519
Buildings and site improvements 26,721,362 17,158,155 25,743,968
Leasehold improvements 3,666,600 3,364,468 3,463,063
Machinery and equipment 68,494,297 58,769,568 67,052,907
------------ ------------ ------------
103,098,778 82,658,710 100,151,457
Less accumulated depreciation
and amortization (53,788,748) (46,182,977) (49,498,717)
------------ ------------ ------------
49,310,030 36,475,733 50,652,740
Capital projects in progress 9,402,184 14,583,664 4,311,964
------------ ------------ ------------
$ 58,712,214 $ 51,059,397 $ 54,964,704
============ ============ ============
</TABLE>
5. Debt
Outstanding debt at June 30, 1999 and 1998, and December 31, 1998, and the
available credit at June 30, 1999, consisted of the following:
<TABLE>
<CAPTION>
Debt Outstanding
Available --------------------------------------------
Credit at at June 30, at
June 30, ---------------------------- December 31,
1999 1999 1998 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revolving line of credit, interest
at bank's reference rate (at June
30, 1999, the bank's reference rate
was 7.75%), expires June 2000 $ 12,476,351 $ - $ - $ -
Revolving term commitment, interest at
bank's prime rate (at June 30, 1999,
the bank's prime rate was 7.75%),
expires June 2000 8,616,628 - - -
Revolving line of credit, interest rate
at the bank's base rate of interest
plus 2%, expires July 2000 393,763 - - -
Revolving line of credit, interest rate
at the weighted average Euro interbank
rate of interest plus 1%, expires
March 2000 - 157,403 - -
Standby letter of credit facilities 1,907,022 - - -
Term loan, interest at LIBOR plus 1.375%
(at June 30, 1999, the LIBOR plus
1.375% was 6.4413%), expires May 2008 - 2,700,000 3,000,000 2,850,000
Other notes payable and long-term debt - 71,277 57,809 45,886
------------ ------------ ------------ ------------
23,393,764 2,928,680 3,057,809 2,895,886
Less current portion - (499,154) (330,010) (330,704)
------------ ------------ ------------ ------------
$ 23,393,764 $ 2,429,526 $ 2,727,799 $ 2,565,182
============ ============ ============
Standby letters of credit issued
and outstanding (1,907,022)
------------
$ 21,486,742
============
</TABLE>
<PAGE>
As of June 30, 1999, the Company had three outstanding standby letters of
credit. Two of these letters of credit, in the aggregate amount of
$1,166,748, are used to support the Company's self-insured workers'
compensation insurance requirements. The third, in the amount of $740,274,
is used to guarantee performance on the Company's leased facility in the
UK. Other notes payable represent debt associated with foreign businesses.
6. Commitments and Contingencies
Note 9 to the consolidated financial statements in the Company's 1998
Annual Report provides information concerning commitments and
contingencies. From time to time, the Company is involved in various legal
proceedings and other matters arising in the normal course of business.
7. Segment Information
The Company is organized into two primary segments. The segments are
defined by types of products manufactured, marketed and distributed to the
Company's customers. The two product segments are connector products and
venting products. These segments are differentiated in several ways,
including the types of materials used, the production process, the
distribution channels used and the applications in which the products are
used. Transactions between the two segments were immaterial for each of
the periods presented.
The following table illustrates certain measurements used by management to
assess the performance of the segments described above as of or for the
three and six months ended:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Sales
Connector products $ 68,544,000 $ 58,285,000 $ 128,382,000 $105,697,000
Venting products 15,209,000 12,501,000 30,032,000 24,344,000
------------ ------------ ------------ ------------
Total $ 83,753,000 $ 70,786,000 $158,414,000 $130,041,000
============ ============ ============ ============
Income from Operations
Connector products $ 14,465,000 $ 12,740,000 $ 24,741,000 $ 20,971,000
Venting products 2,302,000 1,369,000 4,434,000 2,743,000
All other (144,000) (122,000) (123,000) (400,000)
------------ ------------ ------------ ------------
Total $ 16,623,000 $ 13,987,000 $ 29,052,000 $ 23,314,000
============ ============ ============ ============
Total Assets
Connector products $134,806,000 $113,930,000
Venting products 46,479,000 40,219,000
All other 42,707,000 23,466,000
------------ ------------
Total $223,992,000 $177,615,000
============ ============
</TABLE>
Cash collected by the Company's subsidiaries is routinely transferred into
the Company's cash management accounts and, therefore, has been included
in the total assets of the segment entitled "All other." Cash and cash
equivalent balances in this segment were approximately $36,387,000 and
$19,089,000 as of June 30, 1999 and 1998, respectively.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Certain matters discussed below are forward-looking statements that
involve risks and uncertainties, certain of which are discussed in this
report and in other reports filed by the Company with the Securities and
Exchange Commission. Actual results might differ materially from results
suggested by any forward-looking statements in this report.
The following is a discussion and analysis of the consolidated financial
condition and results of operations for the Company for the three months
ended June 30, 1999 and 1998. The following should be read in conjunction
with the interim Condensed Consolidated Financial Statements and related
Notes appearing elsewhere herein.
Results of Operations for the Three Months Ended June 30, 1999,
Compared with the Three Months Ended June 30, 1998
Sales increased 18.3% in the second quarter of 1999 as compared to the
second quarter of 1998. The increase reflected sales growth throughout the
United States, particularly in California. Sales in most of the Company's
international markets continued to grow. Simpson Strong-Tie's second
quarter sales increased 17.6% over the same quarter last year, while
Simpson Dura-Vent's sales increased 21.7%. Homecenters were the fastest
growing connector sales channel. The sales increase was broad based across
all of Simpson Strong-Tie's major product lines. Anchoring Systems
products had the highest growth rate in sales and the Company's new
Strong-Wall product line also contributed to the increased sales. Sales of
most of Simpson Dura-Vent's major product lines increased compared to the
second quarter of 1998, led by above average growth rates for its Direct-
Vent and chimney product lines.
Income from operations increased 18.8% from $13,987,166 in the second
quarter of 1998 to $16,622,567 in the second quarter of 1999 as a result
of higher sales and gross margins and lower general and administrative
costs as a percentage of sales. Gross margins increased from 41.1% in the
second quarter of 1998 to 41.4% in the second quarter of 1999 primarily
due to better absorption of fixed overhead costs as a result of the
increased production. Selling expenses increased 31.2% from $6,129,472 in
the second quarter of 1998 to $8,041,724 in the second quarter of 1999.
The increase was primarily due to higher promotional expenses as well as
higher costs related to an increase in the number of sales and marketing
personnel. General and administrative expenses increased 10.8% from
$8,916,134 in the second quarter of 1998 to $9,878,575 in the second
quarter of 1999 primarily due to increased cash profit sharing resulting
from higher operating income. The effective tax rate was 40.3% in the
second quarter of 1999, a slight decrease from the second quarter of 1998.
Results of Operations for the Six Months Ended June 30, 1999,
Compared with the Six Months Ended June 30, 1998
Sales increased 21.8% in the first half of 1999 as compared to the first
half of 1998. The increase reflected sales growth throughout the United
States, particularly in California and in the southeastern portion of the
country. Sales in most of the Company's international markets continued to
grow. Simpson Strong-Tie's sales through June 30, 1999, increased 21.5%
over the same period in the prior year, while Simpson Dura-Vent's sales
increased 23.4%. Homecenters were the fastest growing connector sales
channel. The sales increase was broad based across all of Simpson Strong-
Tie's major product lines. Anchoring Systems products had the highest
growth rate in sales. Sales of all of Simpson Dura-Vent's major product
lines increased in the first half of 1999 compared to the same period in
1998, led by above average growth rates for its Direct-Vent and chimney
product lines.
Income from operations increased 24.6% from $23,314,289 in the first half
of 1998 to $29,051,613 in the first half of 1999 as a result of higher
sales and gross margins and lower general and administrative costs as a
percentage of sales. Gross margins increased from 39.2% in the first half
of 1998 to 39.8% in the first half of 1999 primarily due to better
absorption of fixed overhead costs as a result of the increased
production. Selling expenses increased 35.6% from $11,754,247 in the first
half of 1998 to $15,939,530 in the first half of 1999. The increase was
primarily due to higher promotional expenses as well as higher costs
related to an increase in the number of sales and marketing personnel.
General and administrative expenses increased 13.5% from $15,780,630 in
the first half of 1998 to $17,917,336 in the first half of 1999 primarily
due to increased cash profit sharing resulting from higher operating
income. The effective tax rate was 40.2% in the first half of 1999, a
slight decrease from the first half of 1998.
<PAGE>
Liquidity and Sources of Capital
As of June 30, 1999, working capital was $127.2 million as compared to
$92.8 million at June 30, 1998, and $105.6 million at December 31, 1998.
The principal components of the increase in working capital from December
31, 1998, were increases in the Company's trade accounts receivable and
inventories totaling approximately $27.2 million, primarily due to higher
sales levels. In addition, a reduction in income taxes payable resulting
from the exercise of stock options by employees of the Company, most of
which occurred in the second quarter, increased working capital by
approximately $4.6 million. Partially offsetting these increases were
increases in trade accounts payable, accrued profit sharing trust
contributions and accrued cash profit sharing. These accounts increased an
aggregate of approximately $8.1 million. The balance of the change in
working capital was due to the fluctuation of various other asset and
liability accounts. The working capital change and changes in noncurrent
assets and liabilities combined with net income and noncash expenses,
primarily depreciation and amortization, totaling approximately $23.0
million, resulted in net cash provided by operating activities of
approximately $4.9 million. As of June 30, 1999, the Company had unused
credit facilities available of approximately $21.5 million.
The Company used approximately $8.6 million in its investing activities,
primarily to purchase the capital equipment and property needed to expand
its capacity. The Company plans to continue this expansion throughout the
remainder of the year and into 2000.
Financing activities provided the Company with approximately $3.5 million
in cash. Substantially all of this cash was generated by the issuance of
stock upon the exercise of stock options by current employees and a
director of the Company.
The Company believes that cash generated by operations and borrowings
available under its existing credit agreements, will be sufficient for the
Company's working capital needs and planned capital expenditures through
the remainder of 1999 and into 2000. Depending on the Company's future
growth, it may become necessary to secure additional sources of financing.
Year 2000 Problem
The year 2000 problem is primarily the result of computer programs and
computer controlled equipment using two digits rather than four to define
the applicable year. Such software may recognize a date using "00" as the
year 1900 rather than the year 2000. This could potentially result in
system failures or miscalculations leading to disruptions in the Company's
activities or those of its significant customers, suppliers and banks.
The Company does not produce or sell any computer components, software or
electronic parts in its normal business environment and, therefore, does
not believe that it has any material risk of product liability or
obsolescence resulting from the year 2000 problem.
In 1998, the Company established a Year 2000 Committee (the "Committee")
to evaluate the extent, if any, of its year 2000 and associated problems,
to make any required changes and to establish contingency plans. The
Company's computer systems are PC based with few interfaces to other
internal systems. These systems use a date handling routine that the
Company believes to be year 2000 compliant. The Company has completed
tests of its internal software which demonstrated no significant risk from
the year 2000 problem.
The Company is also focusing on major customers, suppliers and equipment
used in its operations to assess compliance. The Committee will continue
to evaluate these areas of exposure and, where possible, will develop
contingency plans and alternative sources to avoid interruptions in the
Company's business. Nevertheless, the Company cannot give any assurance
that there will not be a material adverse effect on the Company if third
parties with whom the Company conducts business do not adequately address
the year 2000 problem and, therefore, are unable to conduct operations
without interruption.
Costs related to the year 2000 problem are funded through operating cash
flows. The Committee estimates that the costs of addressing the year 2000
problem are expected to be less than $100,000, most of which has been
spent. The Company presently expects that the total cost of achieving year
2000 compliant systems will not be material to its financial condition,
liquidity or results of operations.
<PAGE>
Time and cost estimates are based on currently available information.
Developments that could affect estimates include, but are not limited to,
the availability and cost of trained personnel, the ability to locate and
correct all relevant computer code and systems, and the degree of
remediation success of the Company's customers, suppliers and banks in
finding and resolving their year 2000 problems.
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, the Company is involved in various legal proceedings
and other matters arising in the normal course of business.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Annual Meeting of Shareholders ("Annual Meeting") was held on May 20,
1999. The following seven nominees were elected as director by the votes
indicated:
<TABLE>
<CAPTION>
Total Votes
Total Votes Withheld
For Each From Each Term
Name Director Director Expires*
- ------------------------ ------------ ------------ ------------
<C> <C> <C> <C>
Earl F. Cheit 10,077,303 5,210 2002
Thomas J Fitzmyers 10,077,003 5,510 2002
Stephen B. Lamson 10,077,003 5,510 2001
Peter N. Louras 10,077,303 5,210 2001
Sunne Wright McPeak 10,077,303 5,210 2000
Barclay Simpson 10,077,303 5,210 2000
Barry Lawson Williams 10,077,003 5,510 2002
______________
* The term expires on the date of the Annual Meeting in the year
indicated.
</TABLE>
The following proposal was also adopted at the Annual Meeting by the vote
indicated:
<TABLE>
<CAPTION>
Broker
Proposal For Against Abstain Non-Vote
- ------------------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
To ratify the appointment of
PriceWaterhouseCoopers LLP
as independent auditors of
the Company for 1999 10,076,517 1,810 4,186 -
To reincorporate under Delaware
law with new charter provisions 7,730,838 1,159,109 19,789 1,172,777
A. Reincorporate under Delaware law 7,767,583 1,125,904 16,249 1,172,777
B. Classified Board of Directors 6,776,007 2,102,939 30,790 1,172,777
C. No shareholder action by written consent 6,333,937 1,741,509 834,290 1,172,777
</TABLE>
<PAGE>
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
<TABLE>
<CAPTION>
a. Exhibits.
EXHIBIT
NO DESCRIPTION
------- ------------------------------------------------------
<S> <C>
10.1 Credit Agreement, dated July 16, 1999, between
Barclays Bank PLC and Simpson Strong-Tie International,
Inc.
10.2 Indemnification Agreements, dated May 21, 1999,
between Simpson Manufacturing Co., Inc. and each of
its directors.
11 Statements re computation of earnings per share
27 Financial Data Schedule, which is submitted
electronically to the Securities and Exchange
Commission for information only and not filed.
b. Reports on Form 8-K
Report on Form 8-K dated May 20, 1999, reporting
under Item 5 that the Company had changed its state
of incorporation from California to Delaware.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Simpson Manufacturing Co., Inc.
-------------------------------
(Registrant)
DATE: AUGUST 11, 1999 By: /s/Stephen B. Lamson
------------------ -------------------------------
Stephen B. Lamson
Chief Financial Officer
EXHIBIT 10.1
------------
PRIVATE & CONFIDENTIAL
The Directors 5531
Simpson Strong-Tie International Inc.
Winchester Road
Cardinal Point Our Ref: SCB/hbh
Tamworth
Staffordshire 16th July 1999
Dear Sirs
SIMPSON STRONG-TIE INTERNATIONAL INC
We are writing to confirm that we have agreed facilities for the above
company as described below. The facilities are repayable upon demand at
any time, but subject to this overriding condition, the limits have been
marked forward for review by 16th July 2000.
FACILITIES
OVERDRAFT GBP250,000 (two hundred and fifty
thousand pounds).
RENTAL GUARANTEE TO ROYAL LONDON GBP442,000 (four hundred and forty
two thousand pounds).
HM CUSTOMS & EXCISE GUARANTEE GBP10,000 (2 x GBP5,000)
COMPANY BARCLAYCARD GBP15,000 (fifteen thousand
pounds).
BARCLAYS VEHICLE MANAGEMENT GBP60,000 (sixty thousand pounds).
SERVICES
PURPOSE To assist with the working
capital requirements of the
Company.
INTEREST/COMMISSION/FEES Interest will be charged at a
rate of 2% above Barclays Bank's
Base Rate current from time to
time.
<PAGE>
Barclays Bank PLC
Simpson Strong-Tie International Inc.
16th July 1999
No amounts may be drawn in excess
of the agreed facility but if
exceptionally the Bank pays
amounts which are not agreed in
advance and which create an
excess position, then a borrowing
margin of 15% will apply to the
unauthorised amounts calculated
daily.
Interest will be charged
quarterly in arrears in March,
June, September and December, or
at such other intervals as the
Bank may notify to you.
Base Rate is currently 5% and
variations in Base Rate are
published in the press.
Commission will be charged in
line with the Bank tariff current
from time to time, a copy of
which is in your possession. The
tariff is usually reviewed
annually in May.
Commission in respect of the
Rental Guarantee will be charged
at a rate of 0.45% per annum.
The commission and management
time charge will be debited
quarterly in arrears in March,
June, September and December.
A renewal fee of GBP500 has been
debited to the account.
SECURITY The facility will be
secured/guaranteed by :-
Standby Letter of Credit in the
sum of GBP442,000 from the Union
Bank re the Rental Guarantee to
Royal London.
A Guarantee from Simpson
Manufacturing Inc in respect of
the remaining facilities.
<PAGE>
Barclays Bank PLC
Simpson Strong-Tie International Inc.
16th July 1999
and any other security which is
now held or hereinafter may be
held by the Bank, all of which
security is to be available as
cover for all liabilities of the
Borrower whether actual or
contingent to the Bank at any
time.
CONDITION PRECEDENT The facility is conditional upon
the Standby Letter of Credit
being renewed at its expiry date.
INFORMATION The Borrower will provide the
Bank with copies of its audited,
trading and consolidated profit
and loss account and balance
sheet as soon as they are
available, and not later than 180
days from the end of each
accounting reference period.
Yours faithfully
/s/S C Brettell
- ---------------------------------
S C BRETTELL
CORPORATE MANAGER
EXHIBIT 10.2
------------
INDEMNIFICATION AGREEMENT
This Indemnification Agreement is made this May 21, 1999, by
and between Simpson Manufacturing Co., Inc., a Delaware corporation
("Company"), and _______________________________________ ("Indemnitee"),
with reference to the following facts:
Competent and experienced persons may be reluctant to serve
corporations as directors or officers or in other capacities unless they
are provided with adequate protection through liability insurance or
adequate indemnification against inordinate risks of claims and actions
against them arising out of their service to the corporation. The
current unavailability, inadequacy and cost of insurance and
uncertainties relating to indemnification have increased the difficulty
of attracting and retaining such persons.
The Board of Directors of the Company has determined that it is in
the interests of the Company's shareholders to attract and retain such
persons and that the Company should act to assure such persons of
appropriate and lawful protection in the future. Section 145 of the
Delaware Corporation Law and the Certificate of Incorporation and Bylaws of
the Company empower the Company to indemnify its officers, directors,
employees and agents by agreement and to indemnify persons who serve, at the
request of the Company, as directors, officers, employees or agents of other
corporations or enterprises, and section 145 expressly provides that the
indemnification provided therein is not exclusive.
The Company believes that it is reasonable, prudent and necessary
for the Company contractually to obligate itself to indemnify such persons
to the fullest extent permitted by applicable law, so that they will serve
or continue to serve the Company free from undue concern that they will not
be so indemnified. Indemnitee is willing to serve or continue to serve and
to take on additional service for or on behalf of the Company on the
condition that Indemnitee be so indemnified.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and conditions herein, the Company and Indemnitee hereby agree as
follows:
1. Definitions. For purposes of this Agreement:
(a) "Board" means the Board of Directors of the Company
(excluding any direct or indirect subsidiary or parent of the Company).
(b) "Change of Control" means a change in control of the
Company occurring after the Effective Date of a nature that would be
required to be reported in response to Item 1 of Form 8-K (or in response
to any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934, as amended (the "Act"), whether or
not the Company is then subject to such reporting requirement; provided
that, without limiting the foregoing, a Change of Control shall be deemed
to have occurred if after the Effective Date (i) any "person" (as that
term is used in sections 13(d) and 14(d) of the Act) becomes the
"beneficial owner" (as that term is defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Company representing thirty
percent or more of the combined voting power of the Company's then
outstanding securities without the prior approval of at least two-thirds
of the members of the Board in office immediately prior to such person
attaining such percentage; (ii) the Company is a party to a merger,
consolidation, sale of assets or other reorganization, or a proxy
contest, as a consequence of which members of the Board in office
immediately prior to such transaction or event constitute less than a
majority of the Board thereafter; or (iii) during any period of twenty-
four calendar months, individuals who at the beginning of such period
constituted the Board (including for this purpose any new director whose
election or nomination for election by the Company's shareholders is
approved by a vote of at least two-thirds of the directors then still in
office who shall have been directors at the beginning of such period)
cease for any reason to constitute at least a majority of the Board.
(c) Unless the context indicates otherwise, the term
"Company" as used in this Agreement shall be deemed to include any direct
or indirect subsidiary or parent of the Company.
(d) "Corporate Status" describes the status of a person who
is or was a director, officer, employee, agent or fiduciary of the
Company or of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise which such person is or was
serving at the request of the Company.
(e) "Disinterested Director" means a member of the Board who
is not and was not a party to the Proceeding in respect of which
indemnification is sought by Indemnitee.
(f) "Effective Date" means the date in the first paragraph of
this Agreement.
(g) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees,
travel expenses, duplicating costs, printing and binding costs, telephone
charges, postage, delivery service fees, and all other disbursements or
expenses incurred in prosecuting, defending, preparing to prosecute or
defend, investigating, or being or preparing to be a witness in a
Proceeding.
(h) "Independent Counsel" means a law firm, or a member of a
law firm, that is experienced in matters of corporation law and neither
presently is, nor in the five years preceding commencement of a Proceeding
giving rise to a claim for indemnification hereunder shall have been,
retained to represent: (i) the Company or Indemnitee in any matter material
to either such party, or (ii) any other party to such Proceeding.
Notwithstanding the foregoing, the term "Independent Counsel" shall not
include any person who, under the applicable standards of professional
conduct then prevailing, would have a conflict of interest in representing
either the Company or Indemnitee in an action to determine Indemnitee's
rights under this Agreement.
(i) "Proceeding" includes any action, suit, arbitration,
alternative dispute resolution mechanism, investigation, administrative
hearing or any other proceeding whether civil, criminal, administrative or
investigative, whether or not initiated prior to the Effective Date, except
a proceeding initiated by Indemnitee pursuant to section 11 of this
Agreement to enforce Indemnitee's rights under this Agreement.
2. Agreement to Serve. Indemnitee confirms that Indemnitee has
agreed, in reliance on the covenants and agreements in this Agreement, to
serve as a director, officer, employee, agent or fiduciary of the Company or
at the request of the Company, as a director, officer, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise. Indemnitee may at any time and
for any reason resign from such position (subject to any other contractual
obligation or any obligation imposed by operation of law). The Company
shall have no obligation under this Agreement to continue Indemnitee in any
position with the Company.
3. Indemnification -- General. The Company shall indemnify and
defend, and advance Expenses to, Indemnitee as provided below in this
Agreement and to the fullest extent permitted by applicable law in effect on
the Effective Date hereof and to such greater extent as applicable law may
thereafter from time to time permit.
4. Third Party Actions. Indemnitee shall be entitled to the
rights of indemnification provided in this section 4 if, by reason of
Indemnitee's Corporate Status, Indemnitee is, or is threatened to be made, a
party to any threatened, pending or completed Proceeding, other than a
Proceeding by or in the right of the Company. Pursuant to this section 4,
the Company shall indemnify and defend Indemnitee against Expenses,
judgments, penalties, fines and amounts paid in settlement actually and
reasonably incurred by Indemnitee or on Indemnitee's behalf in connection
with such Proceeding or any claim, issue or matter therein, if Indemnitee
acted in good faith and in a manner Indemnitee believed to be in or not
opposed to the best interests of the Company, and, with respect to any
criminal Proceeding, had no reasonable cause to believe Indemnitee's conduct
was unlawful.
5. Derivative Actions. Indemnitee shall be entitled to the rights
of indemnification provided in this section 5 if, by reason of Indemnitee's
Corporate Status, Indemnitee is, or is threatened to be made, a party to any
threatened, pending or completed Proceeding brought by or in the right of
the Company to procure a judgment in its favor. Pursuant to this section 5,
the Company shall indemnify and defend Indemnitee against Expenses actually
and reasonably incurred by Indemnitee or on Indemnitee's behalf in
connection with such Proceeding if Indemnitee acted in good faith and in a
manner Indemnitee believed to be in or not opposed to the best interests of
the Company. Notwithstanding the foregoing, no indemnification against such
Expenses shall be made in respect of any claim, issue or matter in such
Proceeding as to which Indemnitee shall have been adjudged to be liable to
the Company if applicable law prohibits such indemnification; provided that,
if applicable law so permits, indemnification against Expenses shall
nevertheless be made by the Company in such event if and only to the extent
that the Court of Chancery of the State of Delaware, or the court in which
such Proceeding shall have been brought or is pending, shall determine.
6. Indemnification for Expenses of Indemnitee. Notwithstanding
any provision of this Agreement to the contrary, to the extent that
Indemnitee is, by reason of Indemnitee's Corporate Status, a party to and is
successful, on the merits or otherwise, in any Proceeding, Indemnitee shall
be indemnified against all Expenses incurred by Indemnitee or on
Indemnitee's behalf in connection therewith. If Indemnitee is not wholly
successful in such Proceeding but is successful, on the merits or otherwise,
as to one or more but less than all claims, issues or matters in such
Proceeding, the Company shall indemnify Indemnitee against all Expenses
incurred by Indemnitee or on Indemnitee's behalf in connection with each
successfully resolved claim, issue or matter. For purposes of this section
6 and without limitation, the termination of any claim, issue or matter in
such a Proceeding by dismissal, with or without prejudice, shall be deemed
to be a successful result as to such claim, issue or matter.
7. Indemnification for Expenses of a Witness. Notwithstanding any
other provision of this Agreement to the contrary, to the extent that
Indemnitee is, by reason of Indemnitee's Corporate Status, a witness in any
Proceeding, Indemnitee shall be indemnified against all Expenses actually
and reasonable incurred by Indemnitee or on Indemnitee's behalf in
connection therewith.
8. Advancement of Expenses. The Company shall advance all
reasonable Expenses incurred by or on behalf of Indemnitee in connection
with any Proceeding within twenty days after the receipt by the Company of a
statement or statements from Indemnitee requesting such advance or advances
from time to time, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably evidence the
Expenses incurred by Indemnitee and shall include or be preceded or
accompanied by an undertaking by or on behalf of Indemnitee to repay any
Expenses advanced if it shall ultimately be determined that Indemnitee is
not entitled to be indemnified against such Expenses.
9. Indemnification Procedure.
(a) To obtain indemnification under this Agreement, Indemnitee
shall submit to the Chief Financial Officer of the Company (or to such other
officer as may be designated by the Board) a written request, including such
documentation and information as is reasonably available to Indemnitee and
is reasonably necessary to determine whether and to what extent Indemnitee
is entitled to indemnification. Such officer of the Company shall, promptly
on receipt of such a request for indemnification, advise the Board in
writing that Indemnitee has requested indemnification.
(b) On written request by Indemnitee for indemnification
pursuant to section 9(a), a determination, if required by applicable law,
with respect to Indemnitee's entitlement thereto shall be made in the
specific case: (i) if a Change of Control shall have occurred, by
Independent Counsel (unless Indemnitee shall request that such determination
be made by the Board or the shareholders, in which case by the person or
persons or in the manner provided in clause (ii) or (iii) of this section
9(b)) in a written opinion to the Board, a copy of which shall be delivered
to Indemnitee; (ii) if a Change of Control shall not have occurred, (A) by
the Board by a majority vote of a quorum consisting of Disinterested
Directors or (B) if a quorum of the Board consisting of Disinterested
Directors is not obtainable or, even if obtainable, such quorum of
Disinterested Directors so directs, by Independent Counsel in a written
opinion to the Board, a copy of which shall be delivered to Indemnitee or
(C) if directed by the Board, by the shareholders of the Company; or (iii)
as provided in section 10(b) of this Agreement. If it is so determined that
Indemnitee is entitled to indemnification, payment to or on behalf of
Indemnitee shall be made within ten days after such determination.
Indemnitee shall cooperate with the person, persons or entity making such
determination with respect to Indemnitee's entitlement to indemnification,
including providing to such person, persons or entity on reasonable advance
request any documentation or information that is not privileged or otherwise
protected from disclosure and that is reasonably available to Indemnitee and
reasonably necessary to such determination. Any Expenses incurred by
Indemnitee in so cooperating with the person, persons, or entity making such
determination shall be borne by the Company (irrespective of the
determination as to Indemnitee's entitlement to indemnification) and the
Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom.
(c) If the determination of entitlement to indemnification is
to be made by Independent Counsel pursuant to section 9(b), the Independent
Counsel shall be selected as provided in this section 9(c). If a Change of
Control shall not have occurred, the Independent Counsel shall be selected
by the Board, and the Company shall give written notice to Indemnitee
advising Indemnitee of the identity of the Independent Counsel so selected.
If a Change of Control shall have occurred, the Independent Counsel shall be
selected by Indemnitee (unless Indemnitee shall request that such selection
be made by the Board, in which event the preceding sentence shall apply),
and Indemnitee shall give written notice to the Company advising it of the
identity of the Independent Counsel so selected. In either event,
Indemnitee or the Company, as the case may be, may, within seven days after
such written notice of selection shall have been given, deliver to the
Company or to Indemnitee, as the case may be, a written objection to such
selection. Such objection may be asserted only on the ground that the
Independent Counsel so selected does not meet the requirements of
"Independent Counsel" as defined in section 1, and the objection shall set
forth with particularity the factual basis of such assertion. If such
written objection is made, the Independent Counsel so selected may not serve
as Independent Counsel, unless and until a court shall have determined that
such objection is without merit. If, within twenty days after submission by
Indemnitee of a written request for indemnification pursuant to section
9(a), no Independent Counsel shall have been selected and not objected to,
either the Company or Indemnitee may petition the Court of Chancery of the
State of Delaware for resolution of any objection which shall have been made
by the Company or Indemnitee to the other's selection of Independent Counsel
and or for the appointment as Independent Counsel of a person selected by
the Court or by such other person as the Court shall designate, and the
person with respect to whom an objection is so resolved or the person so
appointed shall act as Independent Counsel under section 9(b). The Company
shall pay any and all reasonable fees and expenses of Independent Counsel
incurred by such Independent Counsel in connection with acting pursuant to
section 9(b), and the Company shall pay all reasonable fees and Expenses
incident to the procedures of this section 9(c), regardless of the manner in
which such Independent Counsel is selected or appointed. On the due
commencement of any judicial proceeding or arbitration pursuant to section
11(a)(iii), Independent Counsel shall be discharged and relieved of any
further responsibility in such capacity (subject to the applicable standards
of professional conduct then prevailing).
10. Presumptions and Effect of Certain Proceedings.
(a) If a Change of Control shall have occurred, in making a
determination with respect to entitlement to indemnification hereunder, the
person, persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee
shall have submitted a request for indemnification in accordance with
section 9(a) of this Agreement, and the Company shall have the burden of
proof to overcome that presumption in connection with the making by any
person, persons or entity of any determination contrary to that presumption.
(b) If the person, persons or entity empowered or selected
under section 9 to determine whether Indemnitee is entitled to
indemnification shall not have made a determination within sixty days after
receipt by the Company of the request therefor, the requisite determination
of entitlement to indemnification shall be deemed to have been made and
Indemnitee shall be entitled to such indemnification, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material
fact necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of
such indemnification under applicable law; provided that such sixty-day
period may be extended for a reasonable time, not to exceed an additional
thirty days, if the person, persons or entity making the determination with
respect to entitlement to indemnification in good faith requires such
additional time for the obtaining or evaluating information relating
thereto; and provided further that the foregoing provisions of this section
10(b) shall not apply (i) if the determination of entitlement to
indemnification is to be made by the shareholders pursuant to section
9(b)and if (A) within fifteen days after receipt by the Company of the
request for such determination the Board shall have resolved to submit such
determination to the shareholders for their consideration at an annual
meeting thereof to be held within seventy-five days after such receipt and
such determination is made thereat, or (B) a special meeting of shareholders
is called within fifteen days after such receipt for the purpose of making
such determination, such meeting is held for such purpose within sixty days
after having been so called and such determination is made thereat, or (ii)
if the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to section 9(b).
(c) The termination of any Proceeding or of any claim, issue
or matter therein, by judgment, order, settlement or conviction, or on a
plea of nolo contendere or its equivalent, shall not (except as otherwise
expressly provided in this Agreement) of itself adversely affect the right
of Indemnitee to indemnification or create a presumption that Indemnitee did
not act in good faith and in a manner which Indemnitee believed to be in or
not opposed to the best interests of the Company or, with respect to any
criminal Proceeding, that Indemnitee had reasonable cause to believe that
Indemnitee's conduct was unlawful.
11. Remedies of Indemnitee.
(a) Indemnitee shall be entitled to an adjudication in an
appropriate court of the State of Delaware, or in any other court of
competent jurisdiction, of Indemnitee's entitlement to indemnification or
advancement of expenses if (i) a determination is made pursuant to section 9
that Indemnitee is not entitled to indemnification under this Agreement,
(ii) advancement of Expenses is not timely made pursuant to section 8, (iii)
the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to section 9(b) and such determination shall
not have been made and delivered in a written opinion within ninety days
after receipt by the Company of the request for indemnification, (iv)
payment of indemnification is not made pursuant to section 5 within ten days
after receipt by the Company of a written request therefor, or (v) payment
of indemnification is not made within ten days after a determination has
been made that Indemnitee is entitled to indemnification or such
determination is deemed to have been made pursuant to section 9 or 10.
Indemnitee shall commence such proceeding seeking an adjudication within 180
days following the date on which Indemnitee first has the right to commence
such proceeding pursuant to this section 11(a). The Company shall not
oppose Indemnitee's right to seek any such adjudication.
(b) If a determination shall have been made pursuant to
section 9 that Indemnitee is not entitled to indemnification, any judicial
proceeding commenced pursuant to this section 11 shall be conducted in all
respects as a de novo trial on the merits, and Indemnitee shall not be
prejudiced by reason of that adverse determination. If a Change of Control
shall have occurred, in any judicial proceeding commenced pursuant to this
section 11 the Company shall have the burden of proving that Indemnitee is
not entitled to indemnification or advancement of Expenses, as the case may
be.
(c) If a determination shall have been made or deemed to have
been made pursuant to section 9 or 10 that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in any
judicial proceeding commenced pursuant to this section 11, absent (i) a
misstatement by Indemnitee of a material fact, or an omission of a material
fact necessary to make Indemnitee's statement not materially misleading, in
connection with the request for indemnification, or (ii) a prohibition of
such indemnification under applicable law.
(d) The Company shall be precluded from asserting in any
judicial proceeding commenced pursuant to this section 11 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court that the Company is bound
by all provisions of this Agreement.
(e) If Indemnitee, pursuant to this section 11, seeks a
judicial adjudication to enforce Indemnitee's rights under, or to recover
damages for breach of, this Agreement, Indemnitee shall be entitled to
recover from the Company, and shall be indemnified by the Company against,
any and all expenses (of the types described in the definition of Expenses
in section 1) incurred by Indemnitee in such judicial adjudication, but only
if Indemnitee prevails therein. If it is determined in such judicial
adjudication that Indemnitee is entitled to receive part but not all of the
indemnification or advancement of expenses sought, the expenses incurred by
Indemnitee in connection with such judicial adjudication shall be
appropriately prorated.
12. Non-Exclusivity; Survival of Rights; Insurance; Subrogation.
(a) The rights of indemnification and to receive advancement
of Expenses as provided by this Agreement shall not be deemed exclusive of
any other rights to which Indemnitee may at any time be entitled under
applicable law, the Certificate of Incorporation, the Bylaws, any agreement,
a vote of shareholders or a resolution of directors, or otherwise. No
amendment, alteration or termination of this Agreement or any provision
hereof shall be effective as to Indemnitee with respect to any action taken
or omitted by Indemnitee in Indemnitee's Corporate Status prior to such
amendment, alteration or termination.
(b) To the extent that the Company maintains an insurance
policy or policies providing liability insurance for directors, officers,
employees, agents or fiduciaries of the Company or of any other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
that such person serves at the request of the Company, Indemnitee shall be
covered by such policy or policies in accordance with its or their terms to
the maximum extent of the coverage available for any such director, officer,
employee, agent or fiduciary under such policy or policies.
(c) In the event of any payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
take all action necessary to secure such rights, including execution of such
documents as are necessary to enable the Company to bring suit to enforce
such rights.
(d) The Company shall not be liable under this Agreement to
make any payment of amounts otherwise indemnifiable hereunder if and to the
extent that Indemnitee shall have otherwise received such payment under any
insurance policy, contract, agreement or otherwise.
(e) The Company may, to the maximum extent permitted by law,
create a trust fund, grant a security interest or use other means
(including, without limitation, letters of credit, surety bonds and other
similar arrangements) to ensure or secure the payment of such amounts as may
become necessary to effect indemnification provided hereunder.
13. Duration of Agreement. This Agreement shall continue
until and terminate on the later of: (a) ten years after the date that
Indemnitee shall have ceased to serve as a director, officer, employee,
agent or fiduciary of the Company or of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise that
Indemnitee shall have served at the request of the Company; or (b) the final
termination of all pending Proceedings in respect of which Indemnitee is
granted rights of indemnification or advancement of expenses hereunder and
of any proceeding commenced by Indemnitee pursuant to section 11 relating
thereto. This Agreement shall bind the Company and its successors and
assigns and shall inure to the benefit of Indemnitee and Indemnitee's heirs,
executors and administrators.
14. Severability. If any provision or provisions of this
Agreement shall be held to be invalid, illegal or unenforceable for any
reason whatsoever: (a) the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby; and (b) to the maximum extent possible, the provisions of
this Agreement shall be construed to give effect to the intent of the
provision held invalid, illegal or unenforceable.
15. Exceptions to Indemnification Rights. Except for a proceeding
to enforce or determine rights under this Agreement, Indemnitee shall not be
entitled to Indemnification or advancement of Expenses under this Agreement
with respect to any Proceeding, or any claim therein, brought or made by
Indemnitee against the Company.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same
Agreement.
17. Captions. The headings of the sections of this Agreement are
for convenience of reference only and are not part of this Agreement.
18. Amendment and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless in writing and signed by
both parties. No waiver of any provision of this Agreement shall be deemed
or shall constitute a waiver of any other provision (whether or not similar)
nor shall such waiver constitute a continuing waiver.
19. Notice by Indemnitee. Indemnitee agrees to notify the Company
promptly in writing on being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any
Proceeding or matter which may be subject to indemnification or advancement
of Expenses covered hereunder.
20. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have
been duly given and received when personally delivered, when transmitted by
facsimile if transmission is confirmed, one business day after being
deposited for next-day delivery with a nationally recognized overnight
delivery service, or three days after being deposited as first class mail
with the United States Postal Service, all charges or first class postage
prepaid, properly addressed to Indemnitee, at the address set forth below
Indemnitee's signature herein, or to the Company, at its principal place of
business, Attention: Chief Financial Officer, or to such other address as
may have been furnished hereunder by either party to the other.
21. Entire Agreement. This Agreement constitutes the entire
agreement of the parties and supercedes all prior or contemporaneous
negotiations, correspondence, understandings and agreements between the
parties, written or oral, regarding the subject matter hereof; provided that
nothing in this Agreement shall limit any right to indemnification that
Indemnitee may have under the Certificate of Incorporation or the Bylaws of
the Company.
22. Governing Law. This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the State of
Delaware
IN WITNESS WHEREOF, this Agreement has been duly executed by or on
behalf of the parties hereto as of the date in the first paragraph of this
Agreement.
"COMPANY" "INDEMNITEE"
SIMPSON MANUFACTURING CO., INC.
By: /s/Thomas J Fitzmyers By: ** SEE ATTACHED SCHEDULE
---------------------------- ----------------------------
Thomas J Fitzmyers
President
Address: 4637 Chabot Drive, Suite 200 Address: *SEE ATTACHED SCHEDULE
P.O. Box 10789
Pleasanton, CA 94588-0789
Telephone: 925-460-9912 Telephone:
Facsimile: 925-847-9114 Facsimile
** The following schedule includes the names and addresses of each of the
Indemnitees who entered into the Indemnity Agreement with the Simpson
Manufacturing Co., Inc.
<TABLE>
<CAPTION>
INDEMNITEE ADDRESS
- --------------------- ----------------------------------------
<S> <C>
Earl F. Cheit 50 Lenox Road, Kensington, CA 94707
Thomas J Fitzmyers 2651 Finley Road, Pleasanton, CA 94566
Stephen B. Lamson 432 Matthew Court, Pleasanton, CA 94566
Peter N. Louras 4 Greenwood Court, Orinda, CA 94563
Sunne Wright McPeak 3476 Torlano Court, Pleasanton, CA 94566
Barclay Simpson 520 Miner Road, Orinda, CA 94563
Barry Lawson Williams 1737 Alhambra Lane, Oakland, CA 94611
</TABLE>
<TABLE>
<CAPTION>
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(UNAUDITED)
EXHIBIT 11
--------------
Basic Earnings per Share
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Weighted average number of common
shares outstanding 11,779,256 11,561,786 11,680,581 11,546,329
============ ============ ============ ============
Net income $ 10,072,757 $ 8,373,468 17,721,159 14,043,234
============ ============ ============ ============
Basic net income per share $ 0.86 $ 0.72 1.52 1.22
============ ============ ============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(UNAUDITED)
EXHIBIT 11
--------------
DILUTED EARNINGS PER SHARE
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Weighted average number of common
shares outstanding 11,779,256 11,561,786 11,680,581 11,546,329
Shares issuable pursuant to employee
stock option plans, less shares
assumed repurchased at the average
fair value during the period 441,999 514,046 481,144 508,423
Shares issuable pursuant to the
independent director stock option
plan, less shares assumed repurchased
at the average fair value during
the period 3,974 5,194 3,731 4,985
------------ ------------ ------------ ------------
Number of shares for computation of
diluted net income per share 12,225,229 12,081,026 12,165,456 12,059,737
============ ============ ============ ============
Net income $ 10,072,757 $ 8,373,468 17,721,159 14,043,234
============ ============ ============ ============
Diluted net income per share $ 0.82 $ 0.69 $ 1.46 $ 1.16
============ ============ ============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheet at June 30, 1999, (Unaudited)
and the Condensed Consolidated Statement of Operations for the three
months ended June 30, 1999, (Unaudited) and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 37,215,287
<SECURITIES> 0
<RECEIVABLES> 54,677,589
<ALLOWANCES> 2,079,811
<INVENTORY> 65,046,804
<CURRENT-ASSETS> 161,615,242
<PP&E> 112,500,962
<DEPRECIATION> 53,788,748
<TOTAL-ASSETS> 223,992,258
<CURRENT-LIABILITIES> 34,422,341
<BONDS> 2,928,680
0
0
<COMMON> 41,885,081
<OTHER-SE> 144,888,116
<TOTAL-LIABILITY-AND-EQUITY> 223,992,258
<SALES> 83,752,743
<TOTAL-REVENUES> 83,752,743
<CGS> 49,088,742
<TOTAL-COSTS> 49,088,742
<OTHER-EXPENSES> 18,041,434
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0<F1>
<INCOME-PRETAX> 16,877,757
<INCOME-TAX> 6,805,000
<INCOME-CONTINUING> 10,072,757
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,072,757
<EPS-BASIC> 0.86
<EPS-DILUTED> 0.82
<FN>
<F1>Interest income for the six months ended June 30, 1999,
was $603,546.
</FN>
</TABLE>
