-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SMFI8r/s0qveeL8qGmy7sX2QqPKf3BhjorR0z+ILx18f63HoqgKz1WQ+BFtYjEBz crWYCdEmiKoEkPIaukHw5Q== 0000889697-99-000170.txt : 19991111 0000889697-99-000170.hdr.sgml : 19991111 ACCESSION NUMBER: 0000889697-99-000170 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991110 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIMPSON INDUSTRIES INC CENTRAL INDEX KEY: 0000090588 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLE PARTS & ACCESSORIES [3714] IRS NUMBER: 381225111 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-06611 FILM NUMBER: 99745210 BUSINESS ADDRESS: STREET 1: 47603 HALYARD DR CITY: PLYMOUTH STATE: MI ZIP: 48170 BUSINESS PHONE: 3132076200 MAIL ADDRESS: STREET 1: 47603 HALYARD DR CITY: PLYMOUTH STATE: MI ZIP: 48170 10-Q 1 ============================================================================= SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended September 30, 1999 Commission File Number 0-6611 SIMPSON INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Michigan 38-1225111 (State or other jurisdiction of IRS Employer Identification No.) incorporation or organization) 47603 Halyard Drive, Plymouth, Michigan 48170-2429 (Address of principal executive offices) (Zip Code) (734)207-6200 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes __ X __ No _______ At October 31, 1999 there were 18,008,728 outstanding shares of the registrant's common stock, $1.00 par value each. ============================================================================= Consolidated Balance Sheets (In thousands) September 30, 1999 and December 31, 1999 Sept. 30 (Unaudited) Dec. 31 ----------- ------- ASSETS Current Assets Cash and cash equivalents $ 5,717 $ 6,145 Accounts receivable 81,978 72,785 Inventories 17,617 22,866 Customer tooling in process 6,271 1,749 Prepaid expenses and other current assets 11,358 10,994 -------- -------- Total Current Assets 122,941 114,539 Property, Plant and Equipment Cost 352,785 328,609 Less Allowance 175,105 158,724 Total Property, Plant and Equipment 177,680 169,885 Intangible Assets - net 48,423 52,192 Other Assets 3,016 3,938 -------- -------- $352,060 $340,554 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Current installment of long-term debt $ 4,079 $ 4,829 Notes payable 10,400 -- Accounts payable 50,307 52,039 Compensation and amounts withheld 10,838 11,694 Taxes, other than income taxes 3,105 2,483 Other current liabilities 8,372 11,298 -------- -------- Total Current Liabilities 87,101 82,343 Long-term debt, excluding current installment 106,100 105,534 Accrued Retirement Benefits and Other 16,901 17,312 Deferred Income Taxes 11,550 10,797 Shareholders' Equity 130,408 124,568 -------- -------- $352,060 $340,554 ======== ======== See accompanying notes to consolidated financial statements.
Consolidated Statements of Operations (Unaudited) (Dollars in thousands, except per share amounts) Periods Ended September 30, 1999 and 1998 Three Months Nine Months ---------------------------- ---------------------------- 1999 1998 1999 1998 ---- ---- ---- ---- Net sales $ 124,220 $ 110,016 $ 396,721 $ 364,276 Costs and expenses: Cost of products sold 114,382 103,732 356,382 329,513 Administrative and selling 3,201 2,924 8,725 9,386 Amortization 508 524 1,533 1,464 ------------ ------------ ------------ ------------ 118,091 107,180 366,640 340,363 ------------ ------------ ------------ ------------ Operating Earnings 6,129 2,836 30,081 23,913 Investment and other income, net 177 904 68 579 Interest expense (2,178) (2,353) (6,494) (7,298) ------------ ------------ ------------ ------------ Earnings Before Income Taxes 4,128 1,387 23,655 17,194 Income taxes 1,278 458 8,113 5,674 ------------ ------------ ------------ ------------ Net Earnings $ 2,850 $ 929 $ 15,542 $ 11,520 ============ ============ ============ ============ Comprehensive Income - net $ 3,836 $ 1,368 $ 11,141 $ 10,641 ============ ============ ============ ============ Basic Earnings Per Share $ 0.16 $ 0.05 $ 0.86 $ 0.63 Diluted Earnings Per Share $ 0.16 $ 0.05 $ 0.86 $ 0.63 Cash dividends per share $ 0.10 $ 0.10 $ 0.30 $ 0.30 Average number of common equivalent shares: Basic 18,033,679 18,318,644 18,081,394 18,304,493 Diluted 18,098,532 18,395,029 18,119,294 18,410,846 See accompanying notes to consolidated financial statements.
Consolidated Statements of Cash Flows (Unaudited) (In thousands) Nine Months Ended September 30, 1999 and 1998 1999 1998 ---- ---- OPERATING ACTIVITIES Net earnings $ 15,542 $ 11,520 Depreciation and amortization 20,800 19,237 Provision for deferred income taxes 753 924 Other 540 544 Changes in operating assets and liabilities (13,876) (14,334) -------- -------- Cash Provided By Operating Activities 23,759 17,891 INVESTING ACTIVITIES Capital expenditures (29,604) (14,894) Proceeds from disposal of property and equipment 789 391 -------- -------- Cash Used In Investing Activities (28,815) (14,503) FINANCING ACTIVITIES Cash dividends paid (5,425) (5,494) Notes Payable, net 10,400 2,488 Proceeds (repayments) of long-term debt, net (184) (1,389) Cash used in stock transactions, net (1,485) (1,724) -------- -------- Cash Provided From (Used In) Financing Activities 3,306 (6,119) Effect of foreign currency exchange rate changes 1,322 (661) -------- -------- Decrease In Cash and Cash Equivalents (428) (3,392) Cash and cash equivalents at beginning of period 6,145 8,235 -------- -------- Cash and Cash Equivalents at End of Period $ 5,717 $ 4,843 ======== ======== Supplemental Disclosures Cash paid during the year for: Interest $ 6,208 $ 7,628 Income Taxes 7,744 7,440 See accompanying notes to consolidated financial statements. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1. Significant Accounting Principles The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the period ended September 30, 1999 are not necessarily indicative of the results to be expected for the year ending December 31, 1999. Note 2. Lines of Credit The Company maintains credit lines that allow for borrowings of up to $25 million under a five-year agreement and up to $50 million under a 364-day agreement. At September 30, 1999, there was $10 million outstanding under the five-year agreement and no borrowings outstanding under the 364-day agreement. Borrowings under the five-year agreement are classified as long-term based on management's intent and ability to maintain this level of borrowing for a period in excess of one year. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net sales for the third quarter of 1999 were a record $124.2 million, an increase of 12.9%, or $14.2 million, over the third quarter of 1998. Year-to-date sales increased 8.9%, or $32.4 million from 1998. Demand in North America from our automotive customers continued to be strong. Sales to the "Big Three" (GM, Ford and Daimler/Chrysler) grew 21% this quarter versus the third quarter of 1998. Sales to our heavy-duty and mid-range diesel customers decreased 1%. European sales were also up, although third quarter 1999 U.S. dollar translated sales remained relatively flat with the third quarter 1998 due to a stronger U.S. dollar. Cost of products sold as a percent of sales decreased from 94.3% in the third quarter of 1998 to 92.1% this quarter. Cost of products sold as a percentage of sales for the first nine months of 1999 compared to the first nine months of 1998 decreased from 90.5% to 89.8%. Administrative and selling expenses as a percent of sales decreased from 2.7% in the third quarter of 1998 to 2.6% this quarter; administrative and selling expenses for the first nine months of 1999 decreased from $9.4 million, or 2.6% of sales, in 1998 to $8.7 million, or 2.2% of sales. Our overall cost structure has benefited from the restructuring initiatives we took in 1997 and 1998. Third quarter interest expense decreased from $2.4 million in 1998, or 2.1% of sales, to $2.2 million in 1999, or 1.8% of sales. Interest expense decreased from $7.3 million, or 2.0% of sales, for the nine months ended September 30, 1998 to $6.5 million, or 1.6% of sales for the nine months ended September 30, 1999. The decrease was primarily due to lower levels of outstanding debt. Third quarter operating earnings increased $3.3 million, from $2.8 million in 1998 to $6.1 million in 1999, mainly due to the GM strike in the third quarter of 1998. Year to date operating earnings grew from $23.9 million in 1998 to $30.1 million in 1999, an increase of 25.8%. In addition, net earnings rose $1.9 million, from $0.9 million in the third quarter of 1998 to $2.8 million in the third quarter of 1999; year-to-date net earnings rose 34.9%, from $11.5 million to $15.5 million. Cash flow from operations was $23.8 million for the first nine months of 1999, an increase of $5.9 million over the first nine months of 1998. Net cash used in investing activities totaled $28.8 million for the nine months ended September 30, 1999, up $14.3 million from the $14.5 million used in the nine months ended September 30, 1998. Strong earnings and working capital management more than offset a significant increase in expenditures for equipment. These expenditures represent the Company's investment in production capacity for new automotive, light truck and diesel engine programs. Cash flow provided from financing activities increased $9.4 million, from a use of $6.1 million through September 1998 to providing $3.3 million through September 1999. The Company believes that cash flows from operations and available credit facilities will be sufficient to meet its debt service requirements, projected capital expenditures and dividends, and working capital requirements. The Company maintains credit lines that allow for borrowings of up to $25 million under a five-year agreement and up to $50 million under a 364-day agreement. At September 30, 1999, there was $10 million outstanding under the five-year agreement and no borrowings outstanding under the 364-day agreement. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Borrowings under the five-year agreement are classified as long-term based on management's intent and ability to maintain this level of borrowing for a period in excess of one year. Many computer systems and software products refer to years in terms of their final two digits only. Such programs may interpret the year 2000 to mean the year 1900 instead. If not corrected, these programs could cause date-related transaction failures. In 1997, we developed a compliance assurance process to address the problem. A project team, headed by the Vice President - Information Technology, has performed a detailed assessment of all internal computer systems, and computing-related equipment in all facilities. Our primary vendors, material suppliers, service suppliers and banks were asked to verify their Year 2000 readiness. Overall, Simpson has implemented new business systems across the corporation and has installed a new midrange and personal computing infrastructure. There is no computing technology imbedded in our manufactured products. Shop floor machine tool controllers have tested successfully. Although we currently believe that our systems are Year 2000 compliant in all material respects, our current systems may contain undetected errors or defects with Year 2000 date functions that may result in material costs. Simpson's Year 2000 program includes: Global business systems: Year 2000 business computing issues have been minimized in North America by the implementation of a new enterprise system. The new system received Year 2000 certification from the Information Technology Association of America (ITAA) and has been implemented at all North American locations. Implemented modules included finance, purchasing, manufacturing, human resources and payroll. Simpson has modified and successfully tested remaining legacy systems. European operations have implemented new systems that have been certified as Year 2000 ready and have tested accordingly. Global engineering systems: Year 2000 engineering computing issues have been minimized by the implementation of a Year 2000 compliant product data management system. Global computer aided engineering (CAE) software and hardware have been remediated and tested and are compliant. Central computing: Simpson installed a new Year 2000 ready AS/400 computer and operating system in December 1998. Other AS/400 software consists of third party packages under provider maintenance. Third party software readiness has been confirmed with suppliers and all software has been upgraded to Year 2000 ready. Each European location has new Year 2000 ready AS/400 hardware and software. End user computing: In North America, Simpson has replaced desktop/laptop computers and software. The new equipment and software configuration have been thoroughly tested. Simpson's end user computing environment consists mostly of Microsoft products, which are Year 2000 ready. In Europe, Year 2000 compliance personal computer testing has been completed and minor exceptions are being remediated. Environmental operations: Year 2000 impact on environmental operations has been determined. HVAC, building security systems, phone systems, fire alarm systems, uninterruptable power supplies (UPS), and building/plant utilities have been remediated, as required. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Manufactured Products: Simpson products have been reviewed for Year 2000 compliance. Manufactured products do not use embedded microprocessor technology nor do they rely on microprocessor technology for operation. Shop floor and Technical Center: In North America, machine tools are stand-alone (vs. integrated in a computing network). Machine tool controllers have been tested and experienced no Year 2000 problems. In Europe and Brazil, PLC vendors have been contacted and report compliance. Simpson suppliers, agents, and service providers: Direct material suppliers were contacted in September 1997 with a follow-up mailing in October 1998. A two-day audit was conducted at five key suppliers. A similar Year 2000 questionnaire was sent to indirect material suppliers in December 1998. Key agents and service providers, including utility companies (gas, electric, and water), banks, telephone and data communications providers, have been contacted. Replies indicate readiness by all key suppliers, agents and service providers. Additionally, our midrange-computing service provider is Year 2000 compliant. Our European locations have pursued a similar direction with key suppliers and service providers, who have indicated they are Year 2000 compliant. Contingency Plans: Simpson will manage Year 2000 business interruptions, if any occur as it would any other business interruptions. Simpson has developed contingency plans relating to Year 2000 and those plans will be continuously reviewed and revised as we learn more about the potential environment. These contingency plans would allow Simpson to operate certain critical functions for a short period of time without the intervention of computers. However, the contingency plans are expected to provide relief for only a short period of time, after which interruptions in the Company's normal business activities could have a material adverse effect on the Company's operations. Furthermore, since the Company's operations are also dependent upon key suppliers and service providers beign Year 2000 compliant on a timely basis, there can be no assurance that our effors will prevent a material adverse impact on the Company's operations should such suppliers and service providers experience significant problems. Certain statements in this report may be "forward-looking statements" under the Securities Exchange Act of 1934. Statements regarding future operating performance, new programs expected to be launched, Year 2000 compliance and other future prospects and developments are based on current expectations and involve certain risks and uncertainties that could cause the actual results and developments to differ materially from the forward-looking statements. Potential risks and uncertainties include such factors as demand for the Company's products, pricing and other actions taken by competitors, and general economic conditions affecting the markets served by the Company. Part II. Other Information ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are filed as part of this report. Exhibit No. Description ----------- ----------- 11 Computation of Earnings Per Share 27 Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed during the quarter ended September 30, 1999. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIMPSON INDUSTRIES, INC. Registrant November 10, 1999 /s/Vinod M. Khilnani Vinod M. Khilnani Vice President and Chief Financial Officer EX-11 2 Exhibit (11) - Computation of Earnings Per Share
Three Months Ended Nine Months Ended September 30 September 30 ------------------------- ------------------------- 1999 1998 1999 1998 ---- ---- ---- ---- Basic: Average shares outstanding 18,033,679 18,318,644 18,081,394 18,304,493 Net earnings applicable to common stock and common stock equivalents $ 2,850,000 $ 929,000 $15,542,000 $11,520,000 Basic earnings per share $ 0.16 $ 0.05 $ 0.86 $ 0.63 Diluted: Average shares outstanding 18,033,679 18,318,644 18,081,394 18,304,493 Net effect of dilutive stock options based on treasury stock method using the average market price to common stock and common stock equivalents 64,853 76,385 37,900 106,353 ----------- ----------- ----------- ----------- Average number of common shares and common equivalent shares 18,098,532 18,395,029 18,119,294 18,410,846 =========== =========== =========== =========== Net earnings applicable to common stock and common stock equivalents $ 2,850,000 $ 929,000 $15,542,000 $11,520,000 Diluted earnings per share $ 0.16 $ 0.05 $ 0.86 $ 0.63
EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S UNAUDITED FINANCIAL STATEMENTS AS OF AND FOR THE PERIOD ENDING SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 DEC-31-1999 SEP-30-1999 9-MOS 5,717 0 81,978 0 17,617 122,941 352,785 175,105 352,060 87,101 0 18,037 0 0 112,371 352,060 396,721 396,789 356,382 10,258 0 0 6,494 23,655 8,113 15,542 0 0 0 15,542 0.86 0.86
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