-----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, PyjXqgSO56qMhSqzJmyJ5B1v0/nAwScgbT63HObCQoUKA9eruei2MKNtLqxSv6IL xj2eULh5WQtMgWivcOh69w== 0000935799-98-000023.txt : 19980812 0000935799-98-000023.hdr.sgml : 19980812 ACCESSION NUMBER: 0000935799-98-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980810 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: 10-Q SEC ACT: SEC FILE NUMBER: 000-06611 FILM NUMBER: 98680632 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 QUARTERLY REPORT 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 June 30, 1998 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 July 31, 1998 there were 18,339,120 outstanding shares of the registrant's common stock, $1.00 par value each. Consolidated Balance Sheets (In thousands) June 30, 1998 and December 31, 1997 June 30 Dec. 31 (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 3,553 $ 8,235 Accounts receivable 73,257 66,055 Inventories 20,894 19,827 Customer tooling in process 3,844 7,888 Prepaid expenses and other current assets 11,597 12,689 Total Current Assets 113,145 114,694 Property, Plant and Equipment Cost 321,374 313,499 Less Allowance 149,258 139,353 Total Property, Plant and Equipment 172,116 174,146 Intangible Assets - net 52,864 49,951 Other Assets 3,325 2,757 $341,450 $341,548 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Current installment of long-term debt 2,829 $ 3,579 Accounts payable 46,745 45,803 Compensation and amounts withheld 10,995 11,350 Taxes, other than income taxes 2,305 3,072 Other current liabilities 5,902 14,524 Total Current Liabilities 68,776 78,328 Long-term debt, excluding current installment 117,573 118,564 Accrued Retirement Benefits and Other 16,413 14,663 Deferred Income Taxes 12,686 12,121 Shareholders' Equity 126,002 117,872 $341,450 $341,548 See accompanying notes to consolidated financial statements. Consolidated Statements of Operations (Unaudited) (Dollars in thousands, except per share amounts) Periods Ended June 30, 1998 and 1997 Six Months Three Months 1998 1997 1998 1997 Net sales $254,260 $216,148 $128,704 $110,274 Costs and expenses: Cost of products sold 225,781 192,292 113,848 97,234 Administrative and selling 6,462 6,223 3,417 3,191 Amortization 940 - 482 - 233,183 198,515 117,747 100,425 Operating Earnings 21,077 17,633 10,957 9,849 Investment and other income, net (325) 526 (252) 107 Interest expense (4,945) (2,717) (2,502) (1,424) Earnings Before Income Taxes 15,807 15,442 8,203 8,532 Income taxes 5,216 5,637 2,517 3,114 Net Earnings $10,591 $ 9,805 $ 5,686 $ 5,418 Comprehensive Income - net $ 9,273 $ 9,327 $ 4,764 $ 5,081 Basic Earnings Per Share $0.58 $0.54 $0.31 $0.30 Diluted Earnings Per Share $0.58 $0.54 $0.31 $0.30 Cash dividends per share $0.20 $0.20 $0.10 $0.10 Average number of common equivalent shares: Basic 18,297,418 18,116,990 18,415,792 18,133,025 Diluted 18,418,755 18,173,434 18,549,620 18,183,959
See accompanying notes to consolidated financial statements. Consolidated Statements of Cash Flows (Unaudited) (In thousands) Six Months Ended June 30, 1998 and 1997 1998 1997 OPERATING ACTIVITIES Net earnings $10,591 $ 9,805 Depreciation 13,072 10,556 Provision for deferred income taxes 565 598 Amortization of restricted stock 250 163 (Gain) loss on disposition of assets 158 (85) Changes in operating assets and liabilities, net of effects of acquisition of business (11,039) (11,370) Cash Provided By Operating Activities 13,597 9,667 INVESTING ACTIVITIES Acquisition of business, net of cash acquired - (74,388) Capital expenditures (9,291) (17,699) Proceeds from disposal of property and equipment 375 206 Cash Used In Investing Activities (8,916) (91,881) FINANCING ACTIVITIES Cash dividends paid (3,664) (3,626) Notes Payable, net (1,212) Proceeds (repayments) of long-term debt, net (2,751) 58,211 Cash provided by stock transactions, net (745) - Cash Provided From (Used In) Financing Activities (8,372) 54,585 Effect of foreign currency exchange rate changes (991) (353) Increase (Decrease)In Cash and Cash Equivalents (4,682) (27,982) Cash and cash equivalents at beginning of period 8,235 28,902 Cash and Cash Equivalents at End of Period $ 3,553 $ 920 Supplemental Disclosures Cash paid during the year for: Interest $ 4,803 $ 2,590 Income Taxes 5,992 4,207 See accompanying notes to consolidated financial statements. ITEM 2: 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 June 30, 1998 are not necessarily indicative of the results to be expected for the year ending December 31, 1998. Note 2. Stahl International, Inc. Acquisition On April 1, 1998, the Company purchased Stahl International, Inc. ("Stahl") for $3.7 million. Stahl, located in Memphis, Tennessee, manufactures torsional vibration dampers and flywheels for all types of diesel engines. The acquisition was accounted for as a purchase transaction. The purchase cost of $3.7 million has been allocated to assets and liabilities acquired based upon their estimated fair values at the acquisition date. The excess of purchase price over assets acquired (Goodwill) of $2.9 million is being amortized over 40 years. Note 3. Lines of Credit As discussed in Simpson's 1997 Annual Report on Form 10-K, the Company maintains credit lines that allow for borrowings of up to $25 million under a five-year agreement and up to $25 million under a 364-day agreement. At June 30, 1998 there were no borrowings outstanding under the 364-day agreement and there was $15 million outstanding under the five-year agreement. In June of 1998 the 364-day line of credit was renewed. In addition, the restrictive covenants for both the 364-day and the five-year agreements were renegotiated during June 1998. The 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 reached a record high in the second quarter of 1998, increasing 16.7% or $18,430,000 from the second quarter of 1997. Year-to-date sales increased 17.6% or $38,112,000 from the first half of 1997. The increased sales for both periods are primarily attributable to the inclusion of the VA Business acquisition in the third quarter of 1997. In addition, the General Motors strike reduced sales in both periods by approximately $3,500,000. The strike effect was offset by increased sales to heavy-duty customers. Cost of products sold as a percent of sales for the second quarter of 1998 compared to the second quarter of 1997 increased marginally to 88.5% from 88.2%. Cost of products sold as a percent of sales for the first six months of 1998 compared to the first half of 1997 decreased marginally to 88.8% from 89.0%. Administrative and selling costs remained at a relatively constant level for the second quarter, decreasing slightly from 2.9% of sales in the 1997 second quarter to 2.7% of sales in the 1998 second quarter. The decrease from 2.9% for the six months ending June 30, 1997 to 2.5% for the six months ending June 30, 1998 is partially due to the timing of expenses and partially due to increased efficiencies due to volume leveraging. Interest expense for the six- and three-month periods ending June 30, 1998 increased over the same periods in 1997 due to the additional debt used to fund the Holset VA acquisition which occurred in June of 1997. As discussed in Simpson's 1997 Annual Report on Form 10-K, the Company maintains credit lines that allow for borrowings of up to $25 million under a five-year agreement and up to $25 million under a 364-day agreement. At June 30, 1998 there were no borrowings outstanding under the 364-day agreement and there was $15 million outstanding under the five-year agreement. In June of 1998 the 364-day line of credit was renewed. In addition, the restrictive covenants for both the 364-day and the five-year agreements were renegotiated during June 1998. The 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. Cash flow from operations was $13.6 million for the first half of 1998 up from $9.7 million in 1997. Net cash used in investing activities was $8.9 million and $91.9 million for the six months ending June 30, 1997 and 1996, respectively. The primary reason for the decrease in investing activities was the Holset VA acquisition that occurred during the second quarter of 1997. The Company's investment in production capacity for new automotive, light truck and diesel engine programs also decreased from $17.7 million in 1997 to $9.3 million in 1998. The decrease was primarily due to the new program launches occurring in 1997. Net cash used in investing activities and dividends paid during the six months ended June 30, 1998, exceeded cash flows from operations and net proceeds from borrowings, discussed above, resulting in a reduction of $4.7 million in cash and cash equivalents. 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 working capital requirements. The Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 133 "Accounting for Derivative Instruments and Hedging Activities which becomes effective for fiscal quarters of fiscal years beginning after June 15, 1999. The Company expects to adopt this Standard during 1999, but does not believe that it will have a material impact upon future financial statements. 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 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. The Company will be required to modify or replace substantially all of the computer systems that it uses to prepare for the year 2000. The Company has completed an assessment of the costs of making its computer systems Year 2000 compliant and has determined that such costs will not be material. The Company expects to complete the required changes by January 1, 1999. 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 10.24 Amendment to Credit Agreement, dated June 16, 1998, among Simpson Industries Inc. and certain other Borrowers, certain Commercial Lending Institutions, ABN AMRO Bank N.V. and Comerica Bank 10.25 Amendment to Credit Agreement, dated June 16, 1998, among Simpson Industries Inc. and certain other Borrowers, certain Commercial Lending Institutions, ABN AMRO Bank N.V. and Comerica Bank 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 June 30, 1998. 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 August 10, 1998 By: /S/VINOD M. KHILNANI Vinod M. Khilnani Vice President and Chief Financial Officer INDEX TO EXHIBITS Exhibit No. Description 10.24 Amendment to Credit Agreement, dated June 16, 1998, among Simpson Industries Inc. and certain other Borrowers, certain Commercial Lending Institutions, ABN AMRO Bank N.V. and Comerica Bank 10.25 Amendment to Credit Agreement, dated June 16, 1998, among Simpson Industries Inc. and certain other Borrowers, certain Commercial Lending Institutions, ABN AMRO Bank N.V. and Comerica Bank 11 Computation of Earnings Per Share 27 Financial Data Schedule EX-10.24 2 FIRST AMENDMENT TO CREDIT AGREEMENT (FIVE YEAR) AND SWING NOTE THIS FIRST AMENDMENT TO CREDIT AGREEMENT (Five Year), dated as of June 16, 1998 (this "Amendment"), amends the Credit Agreement (Five Year), dated as of June 17, 1997 (the "Credit Agreement"), among SIMPSON INDUSTRIES, INC., a Michigan corporation ("Simpson"), certain subsidiaries of Simpson (together with Simpson, the "Borrowers"), the various financial institutions parties thereto (collectively, the "Lenders") and ABN AMRO BANK N.V, as agent (the "Agent") for the Lenders. Terms defined in the Credit Agreement are, unless otherwise defined herein or the context otherwise requires, used herein as defined therein. WHEREAS, the parties hereto have entered into the Credit Agreement, which provides for the Lenders to extend certain credit facilities to the Borrowers from time to time; and WHEREAS, the parties hereto desire to amend the Credit Agreement in certain respects as hereinafter set forth; NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows: SECTION 1. AMENDMENTS. Effective as of June 16, 1998, the Credit Agreement and the Swing Note shall be amended in accordance with Sections 1.1 through 1.9 below. SECTION 1.1. Agreement is hereby amended to state in its entirety as follows: "SECTION 2.7. Swing Line Commitment. From time to time on any Business Day occurring prior to the Commitment Termination Date, the Swing Lender agrees to make loans to Simpson (each such loan, a "Swing Loan") in an aggregate principal amount when added to the "Swing Loans" under the Companion Agreement not to exceed $15,000,000. All Swing Loans shall be in Dollars. On the terms and subject to the conditions hereof, Simpson may from time to time borrow, prepay and reborrow Swing Loans." SECTION 1.2. Liens. Section 8.2.2 of the Credit Agreement is hereby amended to state in its entirety as follows: "SECTION 8.2.2. Liens. Simpson will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any asset, whether now owned or hereafter acquired, except: (a) Liens existing on the date of this Agreement and identified on Item 8.2.6(a)(iii) ("Ongoing Indebtedness") of the Disclosure Schedule, securing Indebtedness outstanding on the date of this Agreement described in said Item; (b) Liens for taxes, assessments or other governmental charges or levies not at the time delinquent or thereafter payable without penalty or being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books; (c) Liens of carriers, warehousemen, mechanics, materialmen and landlords incurred in the ordinary course of business for sums not overdue or being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books; (d) Liens incurred in the ordinary course of business other than in connection with borrowed money; (e) judgment Liens in existence less than 15 days after the entry thereof or with respect to which execution has been stayed or the payment of which is covered in full (subject to a customary deductible) by insurance maintained with responsible insurance companies; (f) Liens in connection with Capitalized Lease Liabilities in amounts permitted hereunder; (g) Liens on newly acquired assets of, and stock of, special purpose entities; and (h) Liens on assets securing Indebtedness incurred in connection with the securitization of receivables in an amount when added to Indebtedness secured by other Liens (other than Liens permitted under Sections 8.2.2(b) and (c)) permitted under this Section 8.2.2 and Indebtedness of Subsidiaries of Simpson shall not exceed 10% of the sum of the total Indebtedness of Simpson and its Subsidiaries and the Net Worth of Simpson and its Subsidiaries." SECTION 1.3. Investments. Section 8.2.5 of the Credit Agreement is hereby deleted and intentionally left blank. SECTION 1.4. Indebtedness. Section 8.2.6 of the Credit Agreement is hereby amended to state in its entirety as follows: "Section 8.2.6. Indebtedness. () The Borrowers will not, and will not permit any of their Subsidiaries to, create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness at any time outstanding in excess of 3.5 times EBITDA (as of the most recent Fiscal Quarter end.) (a) Simpson shall not permit any Indebtedness of any of its Subsidiaries to exist except: (i) Indebtedness to Simpson or another Subsidiary; and (ii) Indebtedness in an amount which, when added to the amount of Indebtedness of Simpson subject to Liens (other than Liens described in Sections 8.2.2(b) and (c)), shall not exceed 10% of the sum of the total Indebtedness of Simpson and its Subsidiaries and the Net Worth of Simpson and its Subsidiaries." SECTION 1.5. Subordinated Debt. Section 8.2.7 of the Credit Agreement is hereby amended to state in its entirety as follows: "SECTION 8.2.7. Subordinated Debt. The Borrower will not incur, or permit to exist, any Subordinated Debt with respect to which principal payments are required to be made prior to the Stated Maturity Date and will not make any prepayments on any Subordinated Debt." SECTION 1.6. Capital Expenditures. Section 8.2.8 of the Credit Agreement is hereby deleted and intentionally left blank. SECTION 1.7. Sale/Leaseback. Section 8.2.10 of the Credit Agreement is hereby amended to state in its entirety as follows: "SECTION 8.2.10. Sale/Leaseback. The Borrowers will not, and will not permit any of their Subsidiaries to, sell or otherwise transfer any assets with the intent to lease such assets as lessee other than the transfer of Simpson's corporate headquarters and technical center at 47603 Halyard Drive, Plymouth, Michigan 48170." SECTION 1.8. Asset Dispositions. Section 8.2.12 of the Credit Agreement is hereby amended to state in its entirety as follows: "SECTION 8.2.12 Asset Dispositions, etc. The Borrowers will not, and will not permit any of their Subsidiaries to, sell, transfer, lease, contribute or otherwise convey, or grant options, warrants or other rights with respect to, all or any substantial part of their assets (including accounts receivable and capital stock of Subsidiaries) to any Person, unless (a) such sale, transfer, lease, contribution or conveyance is in the ordinary course of its business; or (b) the net book value of such assets, together with the net book value of all other assets sold, transferred, leased, contributed or conveyed otherwise than in the ordinary course of business by the Borrowers or any of their Subsidiaries pursuant to this clause in any Fiscal Year, does not exceed 10% of the consolidated total assets of Simpson and its Subsidiaries in addition to any transfer in connection with a sale and leaseback permitted pursuant to Section 8.2.10." SECTION 1.9. Swing Note. The Swing Note is hereby amended to delete the numbers "$10,000,000" and "Ten Million Dollars" wherever they appear and substitute therefor the numbers "$15,000,00" and "Fifteen Million Dollars", respectively. SECTION 2. CONDITIONS PRECEDENT. This Amendment shall become effective when each of the conditions precedent set forth in this Section 2 shall have been satisfied, and notice thereof shall have been given by the Agent to Simpson and the Lenders. SECTION 2.1. Receipt of Documents. The Agent shall have received all of the following documents duly executed, dated the date hereof or such other date as shall be acceptable to the Agent, and in form and substance satisfactory to the Agent: (a) Amendment. This Amendment, duly executed by Simpson, the Agent and the Required Lenders. (b) Secretary's Certificate. A certificate of the secretary or an assistant secretary of Simpson, as to (i) resolutions of the Board of Directors of Simpson then in full force and effect authorizing the execution, delivery and performance of this Amendment and each other document described herein, and (ii) the incumbency and signatures of those officers of Simpson authorized to act with respect to this Amendment and each other document described herein. SECTION 2.2. Compliance with Warranties, No Default, etc. Both before and after giving effect to the effectiveness of this Amendment, the following statements by Simpson shall be true and correct (and Simpson, by its execution of this Amendment, hereby represents and warrants to the Agent and each Lender that such statements are true and correct as at such times): (a) the representations and warranties set forth in Article VII of the Credit Agreement shall be true and correct with the same effect as if then made (unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date); and (b) no Default shall have then occurred and be continuing. SECTION 3. REPRESENTATIONS AND WARRANTIES. To induce the Lenders and the Agent to enter into this Amendment, Simpson hereby represents and warrants to the Agent and each Lender as follows: SECTION 3.1. Due Authorization, Non-Contravention, etc. The execution, delivery and performance by Simpson of this Amendment are within Simpson's corporate powers, have been duly authorized by all necessary corporate action, and do not (a) contravene Simpson's Organic Documents; (b) contravene any contractual restriction, law or governmental regulation or court decree or order binding on or affecting Simpson; or (c) result in, or require the creation or imposition of, any Lien on any of Simpson's properties. SECTION 3.2. Government Approval, Regulation, etc. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other Person is required for the due execution, delivery or performance by Simpson of this Amendment. SECTION 3.3. Validity, etc. This Amendment constitutes the legal, valid and binding obligation of Simpson enforceable in accordance with its terms. SECTION 4. MISCELLANEOUS. SECTION 4.1. Continuing Effectiveness, etc. This Amendment shall be deemed to be an amendment to the Credit Agreement, and the Credit Agreement, as amended hereby, shall remain in full force and effect and is hereby ratified, approved and confirmed in each and every respect. After the effectiveness of this Amendment in accordance with its terms, all references to the Credit Agreement in the Loan Documents or in any other document, instrument, agreement or writing shall be deemed to refer to the Credit Agreement as amended hereby. SECTION 4.2. Payment of Costs and Expenses. Simpson agrees to pay on demand all expenses of the Agent (including the fees and out-of-pocket expenses of counsel to the Agent) in connection with the negotiation, preparation, execution and delivery of this Amendment. SECTION 4.3. Severability. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Amendment or affecting the validity or enforceability of such provision in any other jurisdiction. SECTION 4.4. Headings. The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or any provisions hereof. SECTION 4.5. Execution in Counterparts. This Amendment may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. SECTION 4.6. Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. SECTION 4.7. Successors and Assigns. This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the day and year first above written. SIMPSON INDUSTRIES, INC. By______________________________ Title:__________________________ ABN AMRO BANK N.V., Chicago Branch, individually and as Agent By______________________________ Title:__________________________ By______________________________ Title:__________________________ COMERICA BANK, individually and as Documentation Agent By______________________________ Title:__________________________ HARRIS TRUST AND SAVINGS BANK By______________________________ Title:__________________________ THE BANK OF NEW YORK By______________________________ Title:__________________________ EX-10.25 3 FIRST AMENDMENT TO CREDIT AGREEMENT (364 DAY) AND SWING NOTE THIS FIRST AMENDMENT TO CREDIT AGREEMENT (364 Day), dated as of June 16, 1998 (this "Amendment"), amends the Credit Agreement (364 Day), dated as of June 17, 1997 (the "Credit Agreement"), among SIMPSON INDUSTRIES, INC., a Michigan corporation ("Simpson"), certain subsidiaries of Simpson (together with Simpson, the "Borrowers"), the various financial institutions parties thereto (collectively, the "Lenders") and ABN AMRO BANK N.V, as agent (the "Agent") for the Lenders. Terms defined in the Credit Agreement are, unless otherwise defined herein or the context otherwise requires, used herein as defined therein. WHEREAS, the parties hereto have entered into the Credit Agreement, which provides for the Lenders to extend certain credit facilities to the Borrowers from time to time; and WHEREAS, the parties hereto desire to amend the Credit Agreement in certain respects as hereinafter set forth; NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows: SECTION 1. AMENDMENTS. Effective as of June 16, 1998, the Credit Agreement and the Swing Note shall be amended in accordance with Sections 1.1 through 1.10 below. SECTION a. Stated Maturity Date. The definition of "Stated Maturity Date" in Section 1.1 of the Credit Agreement is hereby amended by the deletion of the date "June 16, 1998" and the substitution therefor of the date "June 15, 1999." SECTION b. Swing Line. Section 2.7 of the Credit Agreement is hereby amended to state in its entirety as follows: "SECTION 2.7. Swing Line Commitment. From time to time on any Business Day occurring prior to the Commitment Termination Date, the Swing Lender agrees to make loans to Simpson (each such loan, a "Swing Loan") in an aggregate principal amount when added to the "Swing Loans" under the Companion Agreement not to exceed $15,000,000. All Swing Loans shall be in Dollars. On the terms and subject to the conditions hereof, Simpson may from time to time borrow, prepay and reborrow Swing Loans." SECTION c. Liens. Section 8.2.2 of the Credit Agreement is hereby amended to state in its entirety as follows: "SECTION 8.2.2. Liens. Simpson will not, and will not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any asset, whether now owned or hereafter acquired, except: i. Liens existing on the date of this Agreement and identified on Item 8.2.6(a)(iii) ("Ongoing Indebtedness") of the Disclosure Schedule, securing Indebtedness outstanding on the date of this Agreement described in said Item; ii. Liens for taxes, assessments or other governmental charges or levies not at the time delinquent or thereafter payable without penalty or being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books; iii. Liens of carriers, warehousemen, mechanics, materialmen and landlords incurred in the ordinary course of business for sums not overdue or being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books; iv. Liens incurred in the ordinary course of business other than in connection with borrowed money; v. judgment Liens in existence less than 15 days after the entry thereof or with respect to which execution has been stayed or the payment of which is covered in full (subject to a customary deductible) by insurance maintained with responsible insurance companies; vi. Liens in connection with Capitalized Lease Liabilities in amounts permitted hereunder; vii. Liens on newly acquired assets of, and stock of, special purpose entities; and viii. Liens on assets securing Indebtedness incurred in connection with the securitization of receivables in an amount when added to Indebtedness secured by other Liens (other than Liens permitted under Sections 8.2.2(b) and (c)) permitted under this Section 8.2.2 and Indebtedness of Subsidiaries of Simpson shall not exceed 10% of the sum of the total Indebtedness of Simpson and its Subsidiaries and the Net Worth of Simpson and its Subsidiaries." SECTION d. Investments. Section 8.2.5 of the Credit Agreement is hereby deleted and intentionally left blank. SECTION e. Indebtedness. Section 8.2.6 of the Credit Agreement is hereby amended to state in its entirety as follows: "Section 8.2.6. Indebtedness. i. The Borrowers will not, and will not permit any of their Subsidiaries to, create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness at any time outstanding in excess of 3.5 times EBITDA (as of the most recent Fiscal Quarter end.) ii. Simpson shall not permit any Indebtedness of any of its Subsidiaries to exist except: 1) Indebtedness to Simpson or another Subsidiary; and 2) Indebtedness in an amount which, when added to the amount of Indebtedness of Simpson subject to Liens (other than Liens described in Sections 8.2.2(b) and (c)), shall not exceed 10% of the sum of the total Indebtedness of Simpson and its Subsidiaries and the Net Worth of Simpson and its Subsidiaries." SECTION f. Subordinated Debt. Section 8.2.7 of the Credit Agreement is hereby amended to state in its entirety as follows: "SECTION 8.2.7. Subordinated Debt. The Borrower will not incur, or permit to exist, any Subordinated Debt with respect to which principal payments are required to be made prior to the Stated Maturity Date and will not make any prepayments on any Subordinated Debt." SECTION g. Capital Expenditures. Section 8.2.8 of the Credit Agreement is hereby deleted and intentionally left blank. SECTION h. Sale/Leaseback. Section 8.2.10 of the Credit Agreement is hereby amended to state in its entirety as follows: "SECTION 8.2.10. Sale/Leaseback. The Borrowers will not, and will not permit any of their Subsidiaries to, sell or otherwise transfer any assets with the intent to lease such assets as lessee other than the transfer of Simpson's corporate headquarters and technical center at 47603 Halyard Drive, Plymouth, Michigan 48170." SECTION i. Asset Dispositions. Section 8.2.12 of the Credit Agreement is hereby amended to state in its entirety as follows: "SECTION 8.2.12 Asset Dispositions, etc. The Borrowers will not, and will not permit any of their Subsidiaries to, sell, transfer, lease, contribute or otherwise convey, or grant options, warrants or other rights with respect to, all or any substantial part of their assets (including accounts receivable and capital stock of Subsidiaries) to any Person, unless i. such sale, transfer, lease, contribution or conveyance is in the ordinary course of its business; or ii. the net book value of such assets, together with the net book value of all other assets sold, transferred, leased, contributed or conveyed otherwise than in the ordinary course of business by the Borrowers or any of their Subsidiaries pursuant to this clause in any Fiscal Year, does not exceed 10% of the consolidated total assets of Simpson and its Subsidiaries in addition to any transfer in connection with a sale and leaseback permitted pursuant to Section 8.2.10." SECTION j. Swing Note. The Swing Note is hereby amended to delete the numbers "$10,000,000" and "Ten Million Dollars" wherever they appear the substitute therefor the numbers "$15,000,00" and "Fifteen Million Dollars", respectively. SECTION 2. CONDITIONS PRECEDENT. This Amendment shall become effective when each of the conditions precedent set forth in this Section 2 shall have been satisfied, and notice thereof shall have been given by the Agent to Simpson and the Lenders. SECTION a. Receipt of Documents. The Agent shall have received all of the following documents duly executed, dated the date hereof or such other date as shall be acceptable to the Agent, and in form and substance satisfactory to the Agent: i. Amendment. This Amendment, duly executed by Simpson, the Agent and the Required Lenders. ii. Secretary's Certificate. A certificate of the secretary or an assistant secretary of Simpson, as to (i) resolutions of the Board of Directors of Simpson then in full force and effect authorizing the execution, delivery and performance of this Amendment and each other document described herein, and (ii) the incumbency and signatures of those officers of Simpson authorized to act with respect to this Amendment and each other document described herein. SECTION b. Compliance with Warranties, No Default, etc. Both before and after giving effect to the effectiveness of this Amendment, the following statements by Simpson shall be true and correct (and Simpson, by its execution of this Amendment, hereby represents and warrants to the Agent and each Lender that such statements are true and correct as at such times): i. the representations and warranties set forth in Article VII of the Credit Agreement shall be true and correct with the same effect as if then made (unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date); and ii. no Default shall have then occurred and be continuing. SECTION 3. REPRESENTATIONS AND WARRANTIES. To induce the Lenders and the Agent to enter into this Amendment, Simpson hereby represents and warrants to the Agent and each Lender as follows: SECTION a. Due Authorization, Non-Contravention, etc. The execution, delivery and performance by Simpson of this Amendment are within Simpson's corporate powers, have been duly authorized by all necessary corporate action, and do not i. contravene Simpson's Organic Documents; ii. contravene any contractual restriction, law or governmental regulation or court decree or order binding on or affecting Simpson; or iii. result in, or require the creation or imposition of, any Lien on any of Simpson's properties. SECTION b. Government Approval, Regulation, etc. No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other Person is required for the due execution, delivery or performance by Simpson of this Amendment. SECTION c. Validity, etc. This Amendment constitutes the legal, valid and binding obligation of Simpson enforceable in accordance with its terms. SECTION 4. MISCELLANEOUS. SECTION a. Continuing Effectiveness, etc. This Amendment shall be deemed to be an amendment to the Credit Agreement, and the Credit Agreement, as amended hereby, shall remain in full force and effect and is hereby ratified, approved and confirmed in each and every respect. After the effectiveness of this Amendment in accordance with its terms, all references to the Credit Agreement in the Loan Documents or in any other document, instrument, agreement or writing shall be deemed to refer to the Credit Agreement as amended hereby. SECTION b. Payment of Costs and Expenses. Simpson agrees to pay on demand all expenses of the Agent (including the fees and out-of-pocket expenses of counsel to the Agent) in connection with the negotiation, preparation, execution and delivery of this Amendment. SECTION c. Severability. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Amendment or affecting the validity or enforceability of such provision in any other jurisdiction. SECTION d. Headings. The various headings of this Amendment are inserted for convenience only and shall not affect the meaning or interpretation of this Amendment or any provisions hereof. SECTION e. Execution in Counterparts. This Amendment may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. SECTION f. Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. SECTION g. Successors and Assigns. This Amendment shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the day and year first above written. SIMPSON INDUSTRIES, INC. By______________________________ Title:__________________________ ABN AMRO BANK N.V., Chicago Branch, individually and as Agent By______________________________ Title:__________________________ By______________________________ Title:__________________________ COMERICA BANK, individually and as Documentation Agent By______________________________ Title:__________________________ HARRIS TRUST AND SAVINGS BANK By______________________________ Title:__________________________ THE BANK OF NEW YORK By______________________________ Title:__________________________ EX-11 4 COMPUTATION OF EARNINGS PER SHARE Six Months Ended Three Months Ended June 30 June 30 1998 1997 1998 1997 Basic: Average shares outstanding 18,297,418 18,116,990 18,415,792 18,133,025 Net earnings applicable to common stock and common stock equivalents $10,591,000 $9,805,000 $5,686,000 $5,418,000 Basic earnings per share $0.58 $0.54 $0.31 $0.30 Diluted: Average shares outstanding 18,297,418 18,116,990 18,415,792 18,133,025 Net effect of dilutive stock options based on treasury stock method using the average market price to common stock and common stock equivalents 121,337 56,444 133,828 50,934 Average number of common shares and common equivalent shares 18,418,755 18,173,434 18,549,620 18,183,959 Net earnings applicable to common stock and common stock equivalents $10,591,000 $9,805,000 $5,686,000 $5,418,000 Diluted earnings per share $0.58 $0.54 $0.31 $0.30
EX-27 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S UNAUDITED FINANCIAL STATEMENTS AS OF AND FOR THE PERIOD ENDING JUNE 30, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 DEC-31-1998 JUN-30-1998 6-MOS 3,553 0 73,257 0 20,894 113,145 321,374 149,258 341,450 68,776 0 0 0 18,356 107,646 341,450 254,260 253,935 225,781 7,402 0 0 4,945 15,807 5,216 10,591 0 0 0 10,591 0.58 0.58
-----END PRIVACY-ENHANCED MESSAGE-----