-----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, ULaCDZHJr1aWWNs14/dDfRgwhPEbG4ZGv5zeRh6FzL+eUlHAUSBWbjdJ7RkO/Cng Bmpx61CN+qB84QijtFeuUw== 0000935799-97-000019.txt : 19970918 0000935799-97-000019.hdr.sgml : 19970918 ACCESSION NUMBER: 0000935799-97-000019 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970627 ITEM INFORMATION: FILED AS OF DATE: 19970912 SROS: NASD 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: 8-K/A SEC ACT: SEC FILE NUMBER: 000-06611 FILM NUMBER: 97679671 BUSINESS ADDRESS: STREET 1: 47603 HALYARD DR CITY: PLYMOUTH STATE: MI ZIP: 48170 BUSINESS PHONE: 3135406200 MAIL ADDRESS: STREET 1: 47603 HALYARD DR CITY: PLYMOUTH STATE: MI ZIP: 48170 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K/A AMENDMENT TO APPLICATION OR REPORT Filed pursuant to Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 SIMPSON INDUSTRIES, INC. (Exact name of registrant as specified in its charter) MICHIGAN 0-6611 38-1225111 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 47603 Halyard Drive, Plymouth, Michigan 48170 (Address of Principal executive offices) (Zip Code) Registrant's telephone number, including area code (313) 207-6200 (Former name or former address, if changed since last report) PAGE AMENDMENT NO. 1 The undersigned Registrant hereby amends the following items, financial statements, exhibits or other portions of its Current Report on Form 8-K dated June 27, 1997 as set forth in the pages attached hereto: Item 7. Financial Statements and Exhibits. (a) Financial Statements of Business Acquired (b) Pro Forma Financial Information PAGE SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to be signed on its behalf by the undersigned hereunto duly authorized. SIMPSON INDUSTRIES, INC. By: /S/ VINOD M. KHILNANI Vinod M. Khilnani Chief Financial Officer Dated: September 9, 1997 PAGE Item 7. Financial Statements and Exhibits. (a) Financial Statements of Business Acquired Filed with this Report are the following audited financial statements of Cummins Engine Company, Inc. Vibration Attenuation Business: (1) Audited Combined Balance Sheet as of December 31, 1996; and (2) Audited Combined Statements of Earnings, Retained Earnings and Cash Flows for the year ended December 31, 1996. (b) Pro Forma Financial Information (1) A pro forma combined condensed balance sheet is not filed with this Report because the entire transaction is already fully reflected in the Registrant's June 30, 1997 Consolidated Balance Sheet, which was filed as part of the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. Filed with this Report is the following unaudited pro forma financial statements of the Registrant: (2) Pro Forma Consolidated Condensed Statement of Income for the year ended December 31, 1996; (3) Pro Forma Consolidated Condensed Statement of Income for the six months ended June 30, 1997. CUMMINS ENGINE COMPANY, INC. VIBRATION ATTENUATION BUSINESS Combined Financial Statements For the Year Ended December 31, 1996 (With Independent Auditors' Report Thereon) PAGE CUMMINS ENGINE COMPANY, INC. VIBRATION ATTENUATION BUSINESS Table of Contents Page(s) Independent Auditors' Report 1 Combined Balance Sheet 2 Combined Statement of Earnings 3 Combined Statement of Retained Earnings 4 Combined Statement of Cash Flows 5 Notes to Combined Financial Statements 6-11 INDEPENDENT AUDITORS' REPORT The Board of Directors and Stockholders Simpson Industries, Inc.: We have audited the accompanying combined balance sheet of Cummins Engine Company, Inc. Vibration Attenuation Business as of December 31, 1996, and the related combined statements of earnings, retained earnings, and cash flows for the year then ended. These combined financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these combined financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Cummins Engine Company, Inc. Vibration Attenuation Business as of December 31, 1996, and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP Detroit, Michigan September 3, 1997 PAGE CUMMINS ENGINE COMPANY, INC. VIBRATION ATTENUATION BUSINESS Combined Balance Sheet December 31, 1996 (in thousands) ASSETS Current assets: Cash and cash equivalents $ 1,120 Receivables: Trade receivables, net of allowance for doubtful accounts of $89 18,338 Intercompany receivables - Cummins (note 2) 4,777 Total receivables 23,115 Inventory (note 3) 4,102 Prepaid expenses and other current assets 18 Total current assets 28,355 Property, plant, and equipment, net (note 4) 17,798 Other assets 328 $ 46,481 LIABILITIES AND STOCKHOLDER'S EQUITY Current liabilities: Accounts payable - trade $ 12,106 Intercompany payables - Cummins (note 2) 1,212 Accrued liabilities (note 5) 3,230 Total current liabilities 16,548 Intercompany long-term debt (note 7) 755 Total liabilities 17,303 Stockholder's equity: Share capital 6,260 Retained earnings 19,527 Cumulative translation adjustment 3,391 Total stockholder's equity 29,178 Commitments and contingencies (notes 9 and 10) $ 6,481 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS CUMMINS ENGINE COMPANY, INC. VIBRATION ATTENUATION BUSINESS Combined Statement of Earnings Year ended December 31, 1996 (in thousands) Net sales $ 64,799 Cost of sales 45,911 Gross profit 18,888 Administrative and selling expenses 10,094 Operating income 8,794 Other income (expense): Interest expense, net (223) Other income 192 Income before income taxes 8,763 Income taxes (note 6) 3,341 Net income $ 5,422 CUMMINS ENGINE COMPANY, INC. VIBRATION ATTENUATION BUSINESS Combined Statement of Retained Earnings Year ended December 31, 1996 (In thousands) Balance at January 1, 1996 $ 20,257 Net income 5,422 Dividends paid (6,152) Balance at December 31, 1996 $ 19,527 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS CUMMINS ENGINE COMPANY, INC. VIBRATION ATTENUATION BUSINESS Combined Statement of Cash Flows Year ended December 31, 1996 (in thousands) Cash flows from operating activities: Net income $ 5,422 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,028 Changes in assets and liabilities: Increase in accounts receivable (3,089) Increase in inventories (418) Increase in accounts payable and accrued expenses 4,481 Other, net 1,491 Net cash provided by operating activities 10,915 Cash flows from investing activities: Purchase of property, plant, and equipment (3,455) Net cash used in investing activities (3,455) Cash flows from financing activities: Net repayment on borrowings (1,064) Dividend payments (6,152) Net cash used in financing activities (7,216) Effect of exchange rate changes on cash 16 Net increase in cash and cash equivalents 260 Cash and cash equivalents - beginning of the year 860 Cash and cash equivalents - end of the year $ 1,120 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS CUMMINS ENGINE COMPANY, INC. VIBRATION ATTENUATION BUSINESS Notes to Combined Financial Statements December 31, 1996 (All amounts in thousands) (1) Nature of Business The Vibration Attenuation Business (Company) of Cummins Engine Company, Inc. (Cummins), was acquired by Simpson Industries, Inc., on June 27, 1997. The acquisition was effected by acquiring the common stock of Cummins' subsidiaries in certain countries and by acquiring net assets in certain other countries. Cummins will continue to be a customer of the Company after the sale. The Company supplies rubber dampers for light- and medium-duty engines and viscous dampers for heavy-duty diesel engine customers. Manufacturing operations are located in England, France, Spain, Mexico, Brazil, and Korea. The Company is also a minority partner in a joint venture in India. (2) Summary of Significant Accounting Principles Principles of Combination The combined financial statements of the Vibration Attenuation Business have been extracted from the accounts of Cummins and its subsidiary companies. The combined statements include the accounts of the entire Vibration Attenuation Business. Hodek, an affiliated company in India in which Cummins does not have a controlling interest, is accounted for as an investment at its historical cost. All significant intercompany balances and transactions have been eliminated in the combination. Related Party Transactions with Cummins The Company has normal transactions with other Cummins business units outside the Vibration Attenuation Business. Intercompany receivables and payables arise through these normal business transactions, which will continue under Simpson's ownership. Included in net sales is $6,374 of intercompany sales to Cummins business units. In April 1997, the French subsidiary paid a dividend of approximately $4.2 million to its direct parent, a subsidiary of Cummins. CUMMINS ENGINE COMPANY, INC. VIBRATION ATTENUATION BUSINESS Notes to Combined Financial Statements, Continued (2) Summary of Significant Accounting Principles, Continued Revenue Recognition The Company recognizes revenues on the sale of its products, net of estimated costs of returns, allowances, and sales incentives, when the products are shipped to customers. Product Coverage Programs Estimated costs of commitments for product coverage programs are charged to earnings at the time the Company sells its products. Foreign Currency The Company uses the local currency as the functional currency for its manufacturing operations outside the United States, except those in Brazil and Mexico, for which it uses the U.S. dollar. At operations which use the local currency as the functional currency, results are translated into U.S. dollars using the average exchange rates for the year. Assets and liabilities are translated into U.S. dollars using year-end exchange rates, with the exception of certain nonmonetary assets such as share capital and opening retained earnings, which are translated into U.S. dollars using historical exchange rates. The resulting translation adjustments are recorded as a separate component of shareholders' investment. At the Company's operations in Brazil and Mexico, cash and certain other monetary assets and liabilities (such as receivables and payables) and revenues and expenses are translated into U.S. dollars using current exchange rates. Inventories and nonmonetary assets, such as fixed assets, are translated into U.S. dollars using historical exchange rates. The resulting translation adjustments and gains and losses from foreign currency transactions are reflected in net earnings. Research and Development Expenditures for research and development of new products, as well as engineering expenditures during early production and ongoing efforts to improve existing products, are charged to earnings as incurred, net of contract reimbursements. CUMMINS ENGINE COMPANY, INC. VIBRATION ATTENUATION BUSINESS Notes to Combined Financial Statements, Continued (2) Summary of Significant Accounting Principles, Continued Cash Equivalents Cash equivalents are investments that are readily convertible to known amounts of cash and have original maturities of three months or less. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Tax provisions for the separate countries are prepared on a stand-alone basis. Inventories Inventories are stated at the lower of cost or market. Cost is determined using standard costs calculated to reflect all appropriate material and production expenses, together with attributable overheads. Standard costs approximate costs determined on the first in, first out basis. Property, Plant, and Equipment and Depreciation Depreciation is computed using the straight-line method for financial reporting purposes. The estimated service lives to compute depreciation range from 20 to 40 years for building and 3 to 20 years for machinery, equipment, and fixtures. Where appropriate, the Company uses accelerated depreciation methods for tax purposes. Maintenance and repair costs are charged to earnings as incurred. CUMMINS ENGINE COMPANY, INC. VIBRATION ATTENUATION BUSINESS Notes to Combined Financial Statements, Continued (2) Summary of Significant Accounting Principles, Continued Financial Instruments The Company values financial instruments as required by Statement of Financial Accounting Standards No. 107, Disclosures About Fair Value of Financial Instruments. The carrying amounts of cash, receivables, and accounts payable approximate fair value due to the short maturity periods of these instruments. The Company's debt bears interest at rates which fluctuate with market rates, and therefore, the carrying amount approximates fair value. Use of Estimates Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. Retirement Plans All UK employees are eligible to join the Cummins UK pension and life assurance scheme. It is a 40-year defined benefits scheme, and members are contracted out of the State Earnings Related Scheme. There is no Company pension scheme for employees in France and Spain. Employees are expected to make their own pension investments or they rely on the state pension. Both the employees and the employer pay contributions to the General Social Security Fund. U.S. employees are eligible to join the Cummins pension scheme. (3) Inventories Inventories are comprised of: Finished products $2,372 Work in process and raw materials 1,730 $4,102 CUMMINS ENGINE COMPANY, INC. VIBRATION ATTENUATION BUSINESS Notes to Combined Financial Statements, Continued (4) Property, Plant, and Equipment Property, plant, and equipment are comprised of: Land and buildings $ 4,800 Machinery, equipment, and fixtures 30,910 Construction in process 1,715 37,425 Less accumulated depreciation (19,627) $ 17,798 (5) Accrued Liabilities Accrued liabilities are comprised of: Employee compensation and fringe benefits accruals $ 1,273 Other 1,957 $ 3,230 (6) Income Taxes The business of the Company in France, Spain, and Korea is conducted within stand-alone Cummins' subsidiaries. The business of the Company in England, Mexico, Brazil, and the United States is conducted within other Cummins subsidiaries which also include non-vibration attenuation business. The effective tax rate of 38.1 percent is higher than the U.S. statutory tax rate of 34 percent because a higher proportion of income before income taxes was earned in countries with higher statutory corporate income tax rates. Deferred income taxes of the business are not significant. (7) Intercompany Debt The Company has a loan from Cummins. No maturity date is stipulated in the loan agreement and the interest rate is 8.5%. CUMMINS ENGINE COMPANY, INC. VIBRATION ATTENUATION BUSINESS Notes to Combined Financial Statements, Continued (8) Line of Credit Facility The Company maintains a line of credit facility in Spain in the amount of 50 million pesetas at current interest rates. The line was unused at December 31, 1996. (9) Operating Leases The Vibration Attenuation Business leases certain manufacturing equipment, office furniture and fixtures, and motor vehicles. Most of these leases require fixed rental payments, expire over the next five years and can be renewed or replaced with similar leases. Rental expense under these leases approximated $233 in 1996. Future minimum payments for leases with original terms of more than one year are $233 in 1997, $127 in 1998, $58 in 1999, $23 in 2000, and $3 in 2001. (10) Contingencies The Company is subject to various claims and legal proceedings arising out of the normal course of business, none of which, in the opinion of management, is expected to have a material effect on the Company's financial position or results of operations. PAGE SIMPSON INDUSTRIES, INC. PRO FORMA FINANCIAL INFORMATION Unaudited Pro Forma Combined Statement of Income and Notes Set forth below are the respective historical statements of income of Simpson Industries, Inc. ("Simpson") and the Cummins Engine Company, Inc. Vibration Attenuation Business ("Holset VA") and the pro forma combined statements of income for the year ended December 31, 1996, as if the transaction had been completed as of January 1, 1996. The presentation reflects the purchase of all assets and the assumption of certain liabilities of Holset VA. This pro forma combined statement of income should be read in conjunction with the historical financial statements of Simpson and Holset VA and the pro forma combined statement of income for the six months ended June 30, 1997, included with this Amendment. This pro forma combined statement of income is not necessarily indicative of future earnings or earnings that would have been reported for the period indicated had the transaction been completed at January 1, 1996. Pro Forma Combined Condensed Statement of Income (Unaudited) Year Ended December 31, 1996 (In thousands, except per share amounts) Historical Pro Forma Simpson Holset VA Adjustments Combined Net sales $407,999 $ 64,799 $ 472,798 Cost and expenses Cost of products sold 365,253 45,911 2,269* 413,433 Administrative and selling 13,173 10,094 23,267 378,426 56,005 2,269 436,700 Operating Earnings 29,573 8,794 (2,269) 36,098 Investment and other income, net 1,425 192 1,617 Interest expense (5,354) (223) (5,250)** (10,827) Earnings Before Income Taxes 25,644 8,763 (7,519) 26,888 Income taxes 8,037 3,341 (2,820)*** 8,558 Net Earnings $17,607 $5,422 $(4,699) $18,330 Net Earnings Per Share $ 0.97 $1.01 Average number of common equivalent shares 18,108,439 18,108,439 * To reflect the incremental depreciation on the write-up of fixed assets and amortization expense on the unallocated purchase cost. ** To reflect interest expense on the debt issued to finance the purchase of Holset VA. *** To reflect the income taxes on the pro forma adjustment at a rate of 37.5%. PAGE SIMPSON INDUSTRIES, INC. PRO FORMA FINANCIAL INFORMATION Unaudited Pro Forma Combined Statement of Income Set forth below are the respective historical statements of income of Simpson Industries, Inc. ("Simpson") and the Cummins Engine Company, Inc. Vibration Attenuation Business ("Holset VA") and the pro forma combined statement of income for the six months ended June 30, 1997, as if the transaction had been completed as of January 1, 1997. The presentation reflects the purchase of all assets and the assumption of certain liabilities of Holset VA. This pro forma combined statement of income should be read in conjunction with the historical financial statements of Simpson and Holset VA and the pro forma combined statement of income for the year ended December 31, 1996, included with this Amendment. This pro forma combined statement of income is not necessarily indicative of future earnings or earnings that would have been reported for the period indicated had the transaction been completed at January 1, 1997. PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME (UNAUDITED) Six Months Ended June 30, 1997 (In thousands, except per share amounts) Historical Pro Forma Simpson Holset VA Adjustments Combined Net sales $ 216,148 $ 35,763 $ 251,911 Cost and expenses Cost of products sold 192,292 26,597 995 219,884 Administrative and selling 6,223 5,024 11,247 198,515 31,621 995 231,131 Operating Earnings 17,633 4,142 (995) 20,780 Investment and other income, net 526 201 727 Interest expense (2,717) (59) (2,625) (5,401) Earnings Before Income Taxes 15,442 4,284 (3,620) 16,106 Income taxes 5,637 1,793 (1,552) 5,878 Net Earnings $ 9,805 $ 2,491 $ (2,068) $ 10,228 Net Earnings Per Share $ 0.54 $ 0.56 Average number of common equivalent shares 18,163,432 18,163,432 -----END PRIVACY-ENHANCED MESSAGE-----