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, 2000
-------------
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
-------
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
------------------------------------------------------
(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, 2000: 12,057,456
----------
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30,
----------------------------
(Unaudited) December 31,
2000 1999 1999
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 52,719,098 $ 37,215,287 $ 54,509,610
Trade accounts receivable, net 57,796,725 52,597,778 42,420,223
Inventories 78,996,134 65,046,804 72,751,245
Deferred income taxes 5,106,942 4,119,507 4,745,534
Other current assets 2,590,724 2,635,866 1,323,215
------------ ------------ ------------
Total current assets 197,209,623 161,615,242 175,749,827
Property, plant and equipment, net 60,525,647 58,712,214 61,143,524
Investments 376,032 503,346 374,455
Other noncurrent assets 11,614,646 3,161,456 9,986,187
------------ ------------ ------------
Total assets $269,725,948 $223,992,258 $247,253,993
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable and current
portion of long-term debt $ 479,854 $ 499,154 $ 349,541
Trade accounts payable 14,167,384 16,211,194 12,780,621
Accrued liabilities 7,790,093 6,328,264 7,819,155
Income taxes payable 2,484,249 - 3,362,254
Accrued profit sharing trust
contributions 2,109,614 5,095,397 3,504,286
Accrued cash profit sharing and
commissions 6,301,610 5,709,060 4,531,861
Accrued workers' compensation 1,395,764 579,272 1,345,764
------------ ------------ ------------
Total current liabilities 34,728,568 34,422,341 33,693,482
Long-term debt, net of current portion 2,238,300 2,429,526 2,414,562
Deferred income taxes and long-term
liabilities 388,465 367,194 556,783
------------ ------------ ------------
Total liabilities 37,355,333 37,219,061 36,664,827
------------ ------------ ------------
Minority interest in consolidated
subsidiaries 1,309,163 - -
Commitments and contingencies (Notes 5 and 6)
Stockholders' equity
Common stock 45,801,157 41,885,081 44,716,488
Retained earnings 187,057,546 145,711,367 166,457,600
Accumulated other comprehensive income (1,797,251) (823,251) (584,922)
------------ ------------ ------------
Total stockholders' equity 231,061,452 186,773,197 210,589,166
------------ ------------ ------------
Total liabilities and
stockholders' equity $269,725,948 $223,992,258 $247,253,993
============ ============ ============
</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,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 97,825,539 $ 83,752,743 $182,441,078 $158,414,333
Cost of sales 58,657,998 49,088,742 109,458,160 95,301,719
------------ ------------ ------------ ------------
Gross profit 39,167,541 34,664,001 72,982,918 63,112,614
------------ ------------ ------------ ------------
Operating expenses:
Selling 9,728,488 8,041,724 18,281,610 15,939,530
General and administrative 11,647,056 9,999,710 22,295,382 18,121,471
------------ ------------ ------------ ------------
21,375,544 18,041,434 40,576,992 34,061,001
------------ ------------ ------------ ------------
Income from operations 17,791,997 16,622,567 32,405,926 29,051,613
Interest income, net 623,308 255,190 1,267,183 603,546
Income before income taxes 18,415,305 16,877,757 33,673,109 29,655,159
Provision for income taxes 7,586,000 6,805,000 13,764,000 11,934,000
Minority interest (494,877) - (690,837) -
------------ ------------ ------------ ------------
Net income $ 11,324,182 $ 10,072,757 $ 20,599,946 $ 17,721,159
============ ============ ============ ============
Net income per common share
Basic $ 0.94 $ 0.86 $ 1.71 $ 1.52
Diluted $ 0.92 $ 0.82 $ 1.67 $ 1.46
Number of shares outstanding
Basic 12,042,289 11,779,256 12,031,367 11,680,581
Diluted 12,318,850 12,225,229 12,300,179 12,165,456
</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,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net income $ 11,324,182 $ 10,072,757 $ 20,599,946 $ 17,721,159
Other comprehensive income, net of tax:
Foreign currency translation
adjustments (911,676) (111,940) (1,212,329) (391,561)
------------ ------------ ------------ ------------
Comprehensive income $ 10,412,506 $ 9,960,817 $ 19,387,617 $ 17,329,598
============ ============ ============ ============
</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,
----------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 20,599,946 $ 17,721,159
------------ ------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of capital equipment (23,305) (53,246)
Depreciation and amortization 6,540,727 5,163,600
Minority interest (690,837) -
Deferred income taxes and long-term liabilities (519,752) (533,863)
Equity in income of affiliates (23,195) -
Noncash compensation related to stock plans 196,875 119,800
Changes in operating assets and liabilities, net of
effects of acquisitions:
Trade accounts receivable (15,666,996) (18,779,983)
Inventories (6,574,584) (8,834,387)
Trade accounts payable 1,545,104 4,449,957
Income taxes payable (459,313) 3,119,596
Accrued profit sharing trust contributions (1,390,046) 1,922,035
Accrued cash profit sharing and commissions 1,769,901 1,689,254
Other current assets (1,405,366) (1,353,052)
Accrued liabilities 2,938 736,973
Accrued workers' compensation 50,000 (300,000)
Other noncurrent assets (703,981) (137,421)
------------ ------------
Total adjustments (17,351,830) (12,790,737)
------------ ------------
Net cash provided by operating activities 3,248,116 4,930,422
Cash flows from investing activities
Capital expenditures (5,470,975) (8,857,824)
Asset acquisitions, net of cash acquired (74,186) -
Proceeds from sale of equipment 66,081 250,989
------------ ------------
Net cash used in investing activities (5,479,080) (8,606,835)
------------ ------------
Cash flows from financing activities
Issuance of debt 149,054 204,624
Repayment of debt (180,558) (171,830)
Issuance of common stock 471,956 3,456,456
------------ ------------
Net cash provided by financing activities 440,452 3,489,250
------------ ------------
Net decrease in cash and cash equivalents (1,790,512) (187,163)
Cash and cash equivalents at beginning of period 54,509,610 37,402,450
------------ ------------
Cash and cash equivalents at end of period $ 52,719,098 $ 37,215,287
============ ============
</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")
1999 Annual Report on Form 10-K (the "1999 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.
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, 2000 June 30, 1999
---------------------------------- ----------------------------------
Per Per
Income Shares Share Income Shares Share
------------ ------------ ------ ------------ ------------ ------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Income available to
common stockholders $ 11,324,182 12,042,289 $ 0.94 $ 10,072,757 11,779,256 $ 0.86
Effect of Dilutive Securities
Stock options - 276,561 (0.02) - 445,973 (0.04)
------------ ------------ ------ ------------ ------------ ------
Diluted EPS
Income available to
common stockholders $ 11,324,182 12,318,850 $ 0.92 $ 10,072,757 12,225,229 $ 0.82
============ ============ ====== ============ ============ ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
June 30, 2000 June 30, 1999
---------------------------------- ----------------------------------
Per Per
Income Shares Share Income Shares Share
------------ ------------ ------ ------------ ------------ ------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Income available to
common stockholders $ 20,599,946 12,031,367 $ 1.71 $ 17,721,159 11,680,581 $ 1.52
Effect of Dilutive Securities
Stock options - 268,812 (0.04) - 484,875 (0.06)
------------ ------------ ------ ------------ ------------ ------
Diluted EPS
Income available to
common stockholders $ 20,599,946 12,300,179 $ 1.67 $ 17,721,159 12,165,456 $ 1.46
============ ============ ====== ============ ============ ======
</TABLE>
2. Trade Accounts Receivable
Trade accounts receivable consist of the following:
<TABLE>
<CAPTION>
At June 30,
---------------------------- At
(Unaudited) December 31,
2000 1999 1999
------------ ------------ ------------
<S> <C> <C> <C>
Trade accounts receivable $ 59,580,474 $ 54,677,589 $ 43,952,137
Allowance for doubtful accounts (1,054,367) (1,341,765) (1,203,147)
Allowance for sales discounts (729,382) (738,046) (328,767)
------------ ------------ ------------
$ 57,796,725 $ 52,597,778 $ 42,420,223
============ ============ ============
</TABLE>
3. Inventories
The components of inventories consist of the following:
<TABLE>
<CAPTION>
At June 30,
---------------------------- At
(Unaudited) December 31,
2000 1999 1999
------------ ------------ ------------
<S> <C> <C> <C>
Raw materials $ 23,715,241 $ 19,632,599 $ 22,816,584
In-process products 8,487,815 6,646,652 7,593,038
Finished products 46,793,078 38,767,553 42,341,623
------------ ------------ ------------
$ 78,996,134 $ 65,046,804 $ 72,751,245
============ ============ ============
</TABLE>
Approximately 88% 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, 2000, and December 31, 1999, LIFO cost exceeded the
replacement value of LIFO inventories by approximately $1,308,000 and
$1,503,000, respectively. At June 30, 1999, the replacement value of
LIFO inventories exceeded LIFO cost by approximately $79,000.
<PAGE>
4. Net Property, Plant and Equipment
Net property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
At June 30,
---------------------------- At
(Unaudited) December 31,
2000 1999 1999
------------ ------------ ------------
<S> <C> <C> <C>
Land $ 4,455,289 $ 4,216,519 $ 4,316,015
Buildings and site improvements 27,617,579 26,721,362 26,724,935
Leasehold improvements 3,928,022 3,666,600 3,942,613
Machinery and equipment 83,207,212 68,494,297 81,147,265
------------ ------------ ------------
119,208,102 103,098,778 116,130,828
Less accumulated depreciation
and amortization (64,364,589) (53,788,748) (58,949,908)
------------ ------------ ------------
54,843,513 49,310,030 57,180,920
Capital projects in progress 5,682,134 9,402,184 3,962,604
------------ ------------ ------------
$ 60,525,647 $ 58,712,214 $ 61,143,524
============ ============ ============
</TABLE>
5. Debt
Outstanding debt at June 30, 2000 and 1999, and December 31, 1999, and
the available credit at June 30, 2000, consisted of the following:
<TABLE>
<CAPTION>
Debt Outstanding
Available --------------------------------------------
Credit at at June 30, at
June 30, ---------------------------- December 31,
2000 2000 1999 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revolving line of credit, interest
at bank's reference rate (at June
30, 2000, the bank's reference rate
was 9.50%), expires November 2000 $ 12,231,203 $ - $ - $ -
Revolving term commitment, interest
at bank's prime rate (at June 30,
2000, the bank's prime rate less
0.50% was 9.00%), expires June 2002 8,344,838 - - -
Revolving line of credit, interest
rate at the bank's base rate of
interest plus 2%, expires July 2001 379,593 - - -
Term loan, fixed interest rate
of 5.3%, expires September 2006 - 143,766 157,403 164,562
Standby letter of credit facilities 2,423,959 - - -
Term loan, interest at LIBOR plus
1.375% (at June 30, 2000, LIBOR plus
1.375% was 8.0200%), expires May 2008 - 2,400,000 2,700,000 2,550,000
Other notes payable and long-term debt - 174,388 71,277 49,541
------------ ------------ ------------ ------------
23,379,593 2,718,154 2,928,680 2,764,103
Less current portion - (479,854) (499,154) (349,541)
------------ ------------ ------------ ------------
23,379,593 $ 2,238,300 $ 2,429,526 $ 2,414,562
============ ============ ============
Standby letters of credit issued
and outstanding (2,423,959)
------------
$ 20,955,634
============
</TABLE>
<PAGE>
As of June 30, 2000, the Company had three outstanding standby letters
of credit. Two of these letters of credit, in the aggregate amount of
$1,710,324, are used to support the Company's self-insured workers'
compensation insurance requirements. The third, in the amount of
$713,635, is used to guarantee performance on the Company's leased
facility in the United Kingdom. Other notes payable represent debt
associated with foreign businesses.
6. Commitments and Contingencies
Note 9 to the consolidated financial statements in the Company's 1999
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,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Sales
Connector products $ 83,285,000 $ 68,544,000 $152,798,000 $128,382,000
Venting products 14,541,000 15,209,000 29,643,000 30,032,000
------------ ------------ ------------ ------------
Total $ 97,826,000 $ 83,753,000 $182,441,000 $158,414,000
============ ============ ============ ============
Income from Operations
Connector products $ 16,034,000 $ 14,465,000 $ 28,635,000 $ 24,741,000
Venting products 1,656,000 2,302,000 3,737,000 4,434,000
All other 102,000 (144,000) 34,000 (123,000)
------------ ------------ ------------ ------------
Total $ 17,792,000 $ 16,623,000 $ 32,406,000 $ 29,052,000
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
At June 30,
---------------------------- At
(Unaudited) December 31,
2000 1999 1999
------------ ------------ ------------
<S> <C> <C> <C>
Total Assets
Connector products $161,310,000 $134,806,000 $148,328,000
Venting products 51,750,000 46,479,000 38,828,000
All other 56,666,000 42,707,000 60,098,000
------------ ------------ ------------
Total $269,726,000 $223,992,000 $247,254,000
============ ============ ============
</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
$49,147,000, $36,387,000 and $53,682,000 as of June 30, 2000 and 1999,
and December 31, 1999, 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 and six months ended June 30, 2000 and 1999. 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, 2000,
Compared with the Three Months Ended June 30, 1999
Net sales increased 16.8% in the second quarter of 2000 as compared to
the second quarter of 1999. Most of the sales growth occurred
domestically, particularly in California. International sales also
contributed to the increase, due in large part to the acquisition of
Furfix Products Limited ("Furfix") in the third quarter of 1999.
Simpson Strong-Tie's second quarter sales increased 21.5% over the same
quarter last year, while Simpson Dura-Vent's sales decreased 4.4%.
Contractor distributors and homecenters were the fastest growing
connector sales channel. The sales increase was broad based across most
of Simpson Strong-Tie's major product lines. Strong-Wall and Anchor
Systems product lines had the highest growth rates in sales. Sales of
Simpson Dura-Vent's Direct-Vent product line increased compared to the
second quarter of 1999, while sales of its other product lines
declined. Part of this decline can be attributed to high demand for
wood burning appliances in 1999 resulting in a spike in sales of
chimney products last year.
Income from operations increased 7.0% from $16,622,567 in the second
quarter of 1999 to $17,791,997 in the second quarter of 2000 primarily
as a result of higher sales. However, the increase related to sales was
partially offset by lower gross margins. Gross margins decreased from
41.4% in the second quarter of 1999 to 40.0% in the second quarter of
2000 primarily due to higher product costs. These costs were offset
somewhat by better absorption of fixed overhead costs resulting from
the increased production. Selling expenses increased 21.0% from
$8,041,724 in the second quarter of 1999 to $9,728,488 in the second
quarter of 2000. The increase was primarily due to higher promotional
expenses as well as higher personnel costs, particularly those
associated with the increase in the number of sales and merchandising
personnel. General and administrative expenses increased 16.5% from
$9,999,710 in the second quarter of 1999 to $11,647,056 in the second
quarter of 2000 primarily due to increased cash profit sharing expenses
resulting from higher operating income, and higher personnel and other
administrative overhead costs, including costs associated with the
operation of Keybuilder.com LLC ("Keybuilder.com"), the Company's joint
venture with Keymark Enterprises, Inc., ("Keymark") and those
associated with Furfix. The effective tax rate was 41.2% in the second
quarter of 2000, an increase from 40.3% in the second quarter of 1999.
Results of Operations for the Six Months Ended June 30, 2000,
Compared with the Six Months Ended June 30, 1999
Net sales increased 15.2% in the first half of 2000 as compared to the
first half of 1999. Most of the sales growth occurred domestically,
particularly in California. International sales also contributed to the
increase, due in large part to the acquisition of Furfix in the third
quarter of 1999. Simpson Strong-Tie's first half sales increased 19.0%
over the same period last year, while Simpson Dura-Vent's sales
decreased 1.3%. Contractor distributors were the fastest growing
connector sales channel. The sales increase was broad based across most
of Simpson Strong-Tie's major product lines. Strong-Wall and Anchor
Systems product lines had the highest growth rates in sales. Sales of
Simpson Dura-Vent's Direct-Vent product line increased compared to the
first half of 1999, while sales of its other product lines declined.
Part of this decline can be attributed to high demand for wood burning
appliances in 1999 resulting in a spike in sales of chimney products
last year.
Income from operations increased 11.5% from $29,051,613 in the first
half of 1999 to $32,405,926 in the first half of 2000 primarily as a
result of higher sales. Gross margins increased slightly from 39.8% in
the first half of 1999 to 40.0% in the first half of 2000 primarily due
to better absorption of fixed overhead costs as a result of the
increased production. However, this was mostly offset by the increased
product costs that occurred in the second quarter. Selling expenses
increased 14.7% from $15,939,530 in the first half of 1999 to
$18,281,610 in the first half of 2000. The increase was primarily due
to higher promotional expenses as well as higher personnel costs,
particularly those associated with the increase in the number of sales
<PAGE>
and merchandising personnel. General and administrative expenses
increased 23.0% from $18,121,471 in the first half of 1999 to
$22,295,382 in the first half of 2000 primarily due to increased cash
profit sharing expenses resulting from higher operating income, and
higher personnel and other administrative overhead costs, including
costs associated with the operation of Keybuilder.com and with Furfix.
The effective tax rate was 40.9% in the first half of 2000, an increase
from 40.2% in the first half of 1999.
In November 1999, the Board of Directors authorized the Company, for a
period of one year, to purchase up to $10 million of the Company's
common stock. To date, no such purchases have been made.
In August 2000, Simpson Strong-Tie acquired the assets of Anchor
Tiedown Systems, Inc ("ATS") for approximately $4.5 million in cash.
ATS manufactures and distributes the MBR product line to anchor multi-
story buildings using a threaded rod hold down system. The MBR system
is complementary and additive to Simpson Strong-Tie's line of seismic
hold down products.
Liquidity and Sources of Capital
As of June 30, 2000, working capital was $162.5 million as compared to
$127.2 million at June 30, 1999, and $142.1 million at December 31,
1999. The principal components of the increase in working capital from
December 31, 1999, were increases in the Company's trade accounts
receivable and inventories totaling approximately $21.6 million,
primarily due to higher sales levels. In addition, accrued profit
sharing trust contributions decreased by approximately $1.4 million,
primarily due to the timing of the payment of the Company's 1999 trust
obligation. Offsetting these increases were increases, aggregating
approximately $3.2 million, in accrued cash profit sharing and trade
accounts payable. 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 $27.1 million, resulted in net
cash provided by operating activities of approximately $3.2 million. As
of June 30, 2000, the Company had unused credit facilities available of
approximately $21.0 million.
The Company used approximately $5.5 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 2001.
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 2000 and into 2001. Depending on the Company's
future growth, it may become necessary to secure additional sources of
financing.
The Company believes that the effect of inflation on the Company has
not been material in recent years, as inflation rates have remained
relatively low.
<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
16, 2000. The following two nominees were elected as directors by the
votes indicated:
<TABLE>
<CAPTION>
Total Votes
Total Votes Withheld
for Each from Each Term
Name Director Director Expires*
------------------------ ------------ ------------ ------------
<C> <C> <C> <C>
Sunne Wright McPeak 10,093,053 195,730 2003
Barclay Simpson 9,304,676 984,107 2003
--------------
* The term expires on the date of the Annual Meeting in the year
indicated.
</TABLE>
The following proposals were 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 increase by 500,000 shares (from
1,500,000 to 2,000,000) the number of
shares of Common Stock reserved for
issuance under the Simpson Manufacturing
Co., Inc. 1994 Stock Option Plan 9,343,806 939,131 5,846 -
To ratify the appointment of
PricewaterhouseCoopers LLP as independent
auditors of the Company for 2000 10,281,048 1,251 6,884 400
</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 Asset Purchase Agreement, dated July 28, 2000, between
Anchor Tiedown Systems, Inc. and James E. Claus,
Arthur B. Richardson, Kenneth T. Boilen and Robert T.
Claus and Janet M. Claus and Simpson Strong-Tie
Company Inc.
10.2 First Amendment to Credit Agreement, dated June 1,
2000, between Simpson Manufacturing Co., Inc. and
Wells Fargo Bank, N.A.
10.3 Second Amendment of the Loan Agreement dated June 1,
1998, dated August 3, 2000, between Union Bank of
California, N.A. and Simpson Manufacturing Co., Inc.
10.4 Second Modification to the Commercial Promissory Note
dated June 1, 1998, dated August 3, 2000, between
Union Bank of California, N.A. and Simpson
Manufacturing Co., Inc.
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.
</TABLE>
b. Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which this
report is filed.
<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, 2000 By: /s/MICHAEL J. HERBERT
------------------ -------------------------------
Michael J. Herbert
Chief Financial Officer
