-----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, IC1By9sEmyBS3wggSBtnCI9LEMoyFeYmWRzbGyTazoyHInN63hRSBwhQld9jdvNS HFzpL5h4spF+/vA6UAc8yg== /in/edgar/work/20000811/0000950124-00-004902/0000950124-00-004902.txt : 20000921 0000950124-00-004902.hdr.sgml : 20000921 ACCESSION NUMBER: 0000950124-00-004902 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIMPSON INDUSTRIES INC CENTRAL INDEX KEY: 0000090588 STANDARD INDUSTRIAL CLASSIFICATION: [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: 694209 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 e10-q.txt FORM 10-Q 1 ITEM 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 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, 2000 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) (313)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, 2000 there were 17,874,374 outstanding shares of the registrant's common stock, $1.00 par value each. 2 ITEM 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Condensed Consolidated Balance Sheets (In thousands) June 30, 2000 and December 31, 1999
June 30 (Unaudited) Dec. 31 ----------- ------- ASSETS Current Assets Cash and cash equivalents $ 4,439 $ 7,362 Accounts receivable 92,147 84,124 Inventories 18,357 19,448 Customer tooling in process 11,127 6,404 Prepaid expenses and other current assets 12,767 11,960 -------- -------- Total Current Assets 138,837 129,298 Property, Plant and Equipment Cost 377,927 362,259 Less Accumulated Depreciation 189,627 179,346 -------- -------- Net Property, Plant and Equipment 188,300 182,913 Intangible Assets - net 43,908 46,847 Other Assets 2,121 2,398 -------- -------- $373,166 $361,456 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Current installment of long-term debt $ 5,079 $ 6,079 Notes payable 16,879 10,908 Accounts payable 58,691 62,654 Compensation and amounts withheld 11,661 12,614 Taxes, other than income taxes 3,289 3,797 Other current liabilities 11,554 10,261 -------- -------- Total Current Liabilities 107,153 106,313 Long-term debt, excluding current installment 102,898 98,955 Accrued Retirement Benefits and Other 16,124 16,098 Deferred Income Taxes 10,320 7,058 Minority Interest in Joint Venture 462 - Shareholders' Equity 136,209 133,032 -------- -------- $373,166 $361,456 ======== ========
See accompanying notes to condensed consolidated financial statements. 3 ITEM 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Condensed Consolidated Statements of Operations (Unaudited) (Dollars in thousands, except per share amounts) Periods Ended June 30, 2000 and 1999
Three Months Six Months 2000 1999 2000 1999 -------- -------- -------- -------- Net sales $138,572 $139,399 $283,137 $272,501 Costs and expenses: Cost of products sold 122,629 123,237 251,205 242,000 Administrative and selling 3,518 2,748 6,790 5,524 Amortization 487 504 1,053 1,025 -------- -------- -------- -------- 126,634 126,489 259,048 248,549 -------- -------- -------- -------- Operating Earnings 11,938 12,910 24,089 23,952 Investment and other income, net 96 (13) (341) (109) Interest expense (2,269) (2,184) (4,526) (4,316) -------- -------- -------- -------- Earnings Before Income Taxes 9,765 10,713 19,222 19,527 Income taxes 3,418 3,750 6,728 6,835 -------- -------- -------- -------- Net Earnings $ 6,347 $ 6,963 $ 12,494 $ 12,692 ======== ======== ======== ======== Comprehensive Income - net $ 3,856 $ 5,687 $ 9,224 $ 7,305 ======== ======== ======== ======== Basic Earnings Per Share $0.36 $0.39 $0.70 $0.70 Diluted Earnings Per Share $0.36 $0.38 $0.70 $0.70 Cash dividends per share $0.10 $0.10 $0.20 $0.20 Average number of common equivalent shares: Basic 17,874,374 18,065,871 17,890,228 18,105,252 Diluted 17,874,510 18,098,138 17,907,727 18,129,674
See accompanying notes to condensed consolidated financial statements. 4 ITEM 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) Six Months Ended June 30, 2000 and 1999
2000 1999 ------- ------- OPERATING ACTIVITIES Net earnings $12,494 $12,692 Depreciation and amortization 14,134 13,790 Provision for deferred income taxes 3,262 442 Amortization of restricted stock 237 284 (Loss) Gain on disposition of assets (20) 57 Changes in operating assets and liabilities (16,926) 488 -------- -------- Cash Provided By Operating Activities 13,181 27,753 INVESTING ACTIVITIES Capital expenditures (17,965) (19,775) Proceeds from disposal of property and equipment 25 112 -------- -------- Cash Used In Investing Activities (17,940) (19,663) FINANCING ACTIVITIES Cash dividends paid (3,576) (3,621) Notes Payable, net 5,971 1,300 Proceeds (repayments) of long-term debt, net 2,711 (8,539) Cash used in stock transactions, net (949) (1,389) -------- -------- Cash Provided By (Used In) Financing Activities 4,157 (12,249) Effect of foreign currency exchange rate changes (2,321) 1,738 -------- -------- Decrease In Cash and Cash Equivalents (2,923) (2,421) Cash and cash equivalents at beginning of period 7,362 6,145 -------- -------- Cash and Cash Equivalents at End of Period $ 4,439 $ 3,724 ======== ======== Supplemental Disclosures Cash paid during the period for: Interest $ 4,542 $ 3,459 Income Taxes 5,995 6,827
See accompanying notes to condensed consolidated financial statements. 5 ITEM 1: 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, 2000 are not necessarily indicative of the results to be expected for the year ending December 31, 2000. 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 June 30, 2000, there were no borrowings outstanding under the 364-day agreement, and $13.4 million outstanding under the five-year agreement. At June 30, 2000, $10 million of 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. In June of 2000, the 364-day agreement was renewed. 6 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net sales for the second quarter of 2000 were $138.6 million, a small decrease of $0.8 million, or 0.6%, compared to the record $139.4 million in the second quarter of 1999. Year-to-date sales increased 3.9%, or $10.6 million from the first half of 1999. Demand in North America from our automotive customers continued to be strong. Sales to the "Big Three" (GM, Ford and DaimlerChrysler) grew 5% this quarter versus the second quarter of 1999. Sales to our heavy-duty and mid-range diesel customers decreased 17% following a general decline in these markets. European sales were up 13% versus the second quarter of 1999, despite a stronger U.S. dollar. Sales in local currencies are running 20% better than 1999 levels. Cost of products sold as a percent of sales increased slightly from 88.4% in the second quarter of 1999 to 88.5% this quarter. Cost of products sold as a percentage of sales for the first six months of 2000 compared to the first half of 1999 decreased from 88.8% to 88.7%. During the first six months of 2000, the Company added staff to support new programs. As a result, administrative and selling expenses increased from $2.7 million, or 2.0% of sales, in the second quarter of 1999 to $3.5 million, or 2.5% of sales, in the second quarter of 2000; administrative and selling expenses for the first six months of 2000 increased from $5.5 million, or 2.0% of sales, in 1999 to $6.8 million, or 2.4% of sales. Interest expense increased from $4.3 million, or 1.6% of sales, in the first six months of 1999 to $4.5 million, or 1.6% of sales in the first six months of 2000. Second quarter interest expense increased from $2.2 million in 1999, or 1.6% of sales, to $2.3 million in 2000, or 1.6% of sales. Operating earnings for the first six months remained almost constant with $24.1 million in 2000 compared to $24.0 million in 1999. Second quarter operating earnings decreased 7.5%, from $12.9 million in 1999 to $11.9 million in 2000. As a result, net earnings were down 8.8%, from $7.0 million in the second quarter of 1999 to $6.3 million in the second quarter of 2000; net earnings decreased 1.6% for the first six months of 2000, from $12.7 million to $12.5 million. Cash flow from operations was $13.2 million for the first six months of 2000, a decrease of $14.6 million from the first six months of 1999. This is the result of an increase in customer tooling to support new programs and higher receivable balances due to increasing sales volumes. In addition, cash flow for the first six months of 1999 was impacted favorably by a change in supplier payment terms. Net cash used in investing activities totaled $17.9 million for the six months ended June 30, 2000, down $1.8 million from the $19.7 million used in the first half of 2000. These expenditures represent the Company's investment in production capacity for new automotive, light truck and diesel engine programs. 7 ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Cash flow from financing activities increased $16.4 million, from ($12.2) million through June 1999 to $4.2 million through June 2000. To offset the cash used in operations as explained earlier, the Company increased its total borrowings with $8.7 million during the first six months of 2000 compared to a reduction of $7.2 million in the first six months of 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 June 30, 2000, there were no borrowings outstanding under the 364-day agreement, and $13.4 million outstanding under the five-year agreement. At June 30, 2000, $10 million of 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. In June of 2000, the 364-day agreement was renewed. Derivative Instruments and Hedging Activities: SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", was issued in June 1998. It establishes accounting and reporting standards for derivative instruments and hedging activities. As issued SFAS No. 133 is effective for all fiscal quarters of all fiscal years beginning after June 15, 1999. In 1999 the Financial Accounting Standards Board deferred the effective date of SFAS No. 133 with FASB Statement No. 137, Accounting for Derivative Instruments and Hedging Activities - - Deferral of the Effective Date of FASB Statement No. 133. SFAS No. 137 is effective for all fiscal quarters of all fiscal years beginning after June 15, 2000. Any future effects will be incorporated into the current year's financial statements. 8 ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK For the period ended June 30, 2000, the Company did not experience any material change in market risk exposures affecting the quantitative and qualitative disclosures as presented in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. 9 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 10.10 Amendment to Letter Agreement with Roy E. Parrot, dated June 23, 2000 10.25 Third Amendment to Credit Agreement (364 Day), dated June 14, 2000, among Simpson Industries, Inc., certain other Borrowers, certain Commercial Lending Institutions, ABN AMRO Bank N.V., and Comerica Bank 10.27 Amendment to Letter Agreement with Vinod M. Khilnani, dated June 23, 2000 10.29 Amendment to Letter Agreement with George A. Thomas, dated June 23, 2000 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, 2000. 10 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, 2000 /s/Vinod M. Khilnani Vinod M. Khilnani Vice President and Chief Financial Officer 11 Exhibit Index ------------- Exhibit No. Description 10.10 Amendment to Letter Agreement with Roy E. Parrot, dated June 23, 2000 10.25 Third Amendment to Credit Agreement (364 Day), dated June 14, 2000, among Simpson Industries, Inc., certain other Borrowers, certain Commercial Lending Institutions, ABN AMRO Bank N.V., and Comerica Bank 10.27 Amendment to Letter Agreement with Vinod M. Khilnani, dated June 23, 2000 10.29 Amendment to Letter Agreement with George A. Thomas, dated June 23, 2000 11 Computation of Earnings Per Share 27 Financial Data Schedule EX-10.10 2 ex10-10.txt AMENDMENT TO LETTER AGREEMENT - ROY E. PARROT 1 Exhibit 10.10 - Amendment to Letter Agreement with Roy E. Parrot JUNE 23, 2000 Roy E. Parrott Simpson Industries, Inc. 47603 Halyard Drive Plymouth, MI 48170-2429 Re: Change in Control Agreement Modification Dear Mr. Parrott: As you are aware, the Board of Directors of Simpson Industries, Inc. (the "Company") previously determined that you should be protected in the event of a Change in Control of the Company, and you received a letter from me dated September 12, 1989 setting forth the terms of compensation that you would receive if your employment is terminated pursuant to a Change in Control (the "Agreement"). Recently, the Board of Directors reviewed the terms of the Company's Change in Control provisions, which have been in effect for a long period of time, and concluded that the individual agreements should be updated to reflect the current economic environment. For purposes of this letter, "Change in Control" has the same definition as set forth in Section 3 of your Agreement. This letter is intended to constitute an amendment to your Agreement and describes certain changes in the benefits that will be provided to you if your employment is terminated pursuant to a Change in Control. Unless specifically addressed in this letter, the terms in your Agreement will remain unchanged. 1. Subsection (iii)(B) of Section 5 - Compensation upon Termination or During Disability is amended and restated in its entirety to read as follows: (iii) (B) You shall be entitled to receive as severance pay (a) a lump sum payment to be made within 30 days of your Date of Termination in an amount equal to 36 months of your base monthly compensation, as in effect on the Date of Termination, plus the average of the actual short-term incentive bonus payments made to you during the two years prior to the Date of Termination, divided by 12 and multiplied by 36, reduced by applicable income and employment tax withholding requirements; (b) full benefits for up to 36 months under each employee welfare benefit plan in which you were entitled to participate immediately prior to the Date of Termination, with the health and dental continuation coverage to run concurrently with your COBRA rights; (c) vesting credit for up to 36 months under the Company's Supplemental Executive Retirement Plan; and (d) 100% vesting in all outstanding stock options that were granted to you prior to the Change in Control under any of the Company's stock plans. 2 2. Subsection (iv) of Section 5 - Compensation upon Termination or During Disability is amended and restated in its entirety to read as follows: (iv) Notwithstanding the foregoing, no benefits shall be provided under subsection (iii) to the extent that they would (a) disqualify an employee benefit plan under the Internal Revenue Code of 1986, as amended (the "Code"); (b) cause an employee benefit plan to violate the Employee Retirement Income Security Act of 1974, as amended ("ERISA"); or (c) be denied by the insurance carrier that provides such coverage to the Company. Health and dental benefits shall cease upon eligibility through another employer's plan. 3. Subsection (v) shall be added to Section 5 - Compensation upon Termination or During Disability to read as follows: (v) Payments under this Agreement, when aggregated with any other "golden parachute" amounts (defined under Section 280G of the Code as compensation that becomes payable or accelerated due to a Change in Control) payable under this Agreement or any other plans, agreements or policies of the Company, shall not be subject to the golden parachute caps under Sections 280G and 4999 of the Code. To the extent that the amount of aggregate parachute payments provided to you by the Company or the Company's employee benefits plans equals or exceeds the golden parachute cap set forth in Code Sections 280G and 4999, the Company shall pay you the additional compensation as is necessary (after taking into account all Federal, state and local income taxes payable by you as a result of the receipt of such compensation) to place you in the same after-tax position as you would have been in had no such excise tax (or any interest or penalties thereon) been paid or incurred. The Company shall pay such additional compensation at the time when the Company withholds such excise tax from any payments to you. The calculation of the tax gross-up shall be approved by the independent certified public accounting firm that was used by the Company immediately prior to the Change in Control. 4. Section 10 - Arbitration is amended and restated in its entirety to read as follows: 10. Arbitration. Any dispute or controversy arising under or in connection with this Agreement (except as set forth in Section 11 below), shall be settled exclusively by arbitration in Oakland County, Michigan in accordance with the American Arbitration Association's National Rules for the Resolution of Employment Disputes. The arbitrator shall not have jurisdiction or authority to change, add to or subtract from any of the provisions of this Agreement. The parties to this Agreement hereby acknowledge that with arbitration as the exclusive remedy with respect to any grievance hereunder (except as set forth in Section 11 3 below), neither party has the right to resort to any Federal, state or local court or administrative agency concerning breaches of this Agreement (except as set forth in Section 11 below), and that the decision of the arbitrator shall be a complete defense to any suit, action or proceeding instituted in any Federal, state or local court or before any administrative agency with respect to any dispute which is arbitrable as set forth herein. The decision of the arbitrator shall be final and enforceable in any court of competent jurisdiction. 5. Section 11 - Covenant Not to Compete shall be added to the Agreement to read as follows: 11. Covenant Not to Compete. (i) During the term of your employment with the Company and for a period of 36 months after your termination of employment with the Company for any reason, or for such shorter period as the Company may agree in writing, you shall not directly or indirectly engage in any activity, whether on your own behalf or as an employee, consultant or independent contractor of any other person or entity which competes with the Company within North America for the development, production or sale of any product, material or process to be sold, produced or used by the Company during the course of your employment with the Company, including any product, material or process which may be under development by the Company during the course of your employment with the Company and of which you have, or hereafter may gain, knowledge. (ii) You agree that the covenant not to compete set forth above shall not impose undue hardship on you and is reasonable in both geographic scope and duration in view of: (a) the Company's legitimate interest in protecting proprietary information, the disclosure of which to the Company's competitors would substantially and unfairly impair the Company's ability to compete in the marketplace or substantially and unfairly benefit the Company's competitors; (b) the specialized training and experience that continues to be provided to you by the Company in the course of your employment with the Company; (c) the fact that the services rendered by you on behalf of the Company are specialized, unique and extraordinary; (d) the fact that the Company directly competes within North America in the sale, production and development of products, materials and 4 processes; and (e) the good and valuable consideration provided to you by the Company. (iii) During the term of your employment with the Company and for a period of 36 months after your termination of employment with the Company for any reason, you shall not employ, hire, solicit, induce, or attempt to employ, hire, solicit, or induce for employment, directly or indirectly any employee(s) of the Company to leave his or her employment and become an employee, consultant or representative of any other entity, including but not limited to you or your new employer, if any. (iv) The covenant not to compete set forth herein is of a special, unique, extraordinary and intellectual character, which gives the Company a peculiar value, the loss of which cannot be reasonably or adequately compensated for in damages in an action at law. A breach by you of the covenant not to compete shall cause the Company great and irreparable injury and damage. Therefore, the Company will be entitled to injunctive relief, specific performance and other equitable relief to prevent your breach of the covenant not to compete. This subsection shall not, however, be construed to constitute a waiver of any of the rights which the Company may have for damages or otherwise. (v) This covenant not to compete inures to the benefit of the Company and any successors and assigns of the Company. To confirm your acceptance of the terms of this letter as a valid modification to your Agreement, kindly sign and return to the Company the enclosed copy of this letter. Sincerely, SIMPSON INDUSTRIES, INC. By: --------------------------------------- F. Lee Weaver, Chair, Compensation Committee Agreed to this 23rd day of June, 2000 - ------------------------------- Roy E. Parrott EX-10.25 3 ex10-25.txt THIRD AMENDMENT TO CREDIT AGREEMENT 1 Exhibit 10.25 - Third Amendment to Credit Agreement THIRD AMENDMENT TO CREDIT AGREEMENT (364 DAY) THIS THIRD AMENDMENT TO CREDIT AGREEMENT (364 Day), dated as of June 14, 2000 (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; WHEREAS, the parties amended the Credit Agreement (the "First Amendment") in certain respects on June 16, 1998, and again on June 15, 1999 (the "Second Amendment"); and WHEREAS, the parties hereto desire to amend the Credit Agreement again 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: 1. SECTION AMENDMENT. Effective as of June 14, 2000, Section 1.1 of the Credit Agreement is hereby amended by the deletion of the date "June 14, 2000" in the definition of "Stated Maturity Date" (amended to read as such by the Second Amendment) and the substitution therefor of the date "June 13, 2001." 2. SECTION 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. 2.1. SECTION 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: 2 (a) Amendment. This Amendment, duly executed by Simpson, the Agent and the 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. 2.2. SECTION 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. 3. SECTION 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: 3.1. SECTION 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. 3 3.2. SECTION 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. 3.3. SECTION Validity, etc. This Amendment constitutes the legal, valid and binding obligation of Simpson enforceable in accordance with its terms. 4. SECTION MISCELLANEOUS. 4.1. SECTION 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. 4.2. SECTION 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. 4.3. SECTION 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. 4.4. SECTION Headings. The various headings of this Amendment are inserted for convenience only and shall not affect the 4 meaning or interpretation of this Amendment or any provisions hereof. 4.5. SECTION 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. 4.6. SECTION Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. 4.7. SECTION 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. 5 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., individually and as Agent By --------------------------------------------- Title: ----------------------------------------- By --------------------------------------------- Title: ----------------------------------------- COMERICA BANK, individually and as Documentation Agent By --------------------------------------------- Title: ----------------------------------------- HARRIS TRUST AND SAVINGS BANK as a Lender, By --------------------------------------------- Title: ----------------------------------------- THE BANK OF NEW YORK as a Lender, By --------------------------------------------- Title: ----------------------------------------- EX-10.27 4 ex10-27.txt AMENDMENT TO LETTER AGREEMENT - VINOD M. KHILNANI 1 Exhibit 10.27 - Amendment to Letter Agreement with Vinod M. Khilnani JUNE 23, 2000 Vinod M. Khilnani Simpson Industries, Inc. 47603 Halyard Drive Plymouth, MI 48170-2429 Re: Change in Control Agreement Modification Dear Vinod: As you are aware, the Board of Directors of Simpson Industries, Inc. (the "Company") previously determined that you should be protected in the event of a Change in Control of the Company, and you received a letter from me dated September 1, 1997 setting forth the terms of compensation that you would receive if your employment is terminated pursuant to a Change in Control (the "Agreement"). Recently, the Board of Directors reviewed the terms of the Company's Change in Control provisions, which have been in effect for a long period of time, and concluded that the individual agreements should be updated to reflect the current economic environment. For purposes of this letter, "Change in Control" has the same definition as set forth in Section 3 of your Agreement. This letter is intended to constitute an amendment to your Agreement and describes certain changes in the benefits that will be provided to you if your employment is terminated pursuant to a Change in Control. Unless specifically addressed in this letter, the terms in your Agreement will remain unchanged. 3. Subsection (iii)(B) of Section 5 - Compensation upon Termination or During Disability is amended and restated in its entirety to read as follows: (iii) (B) You shall be entitled to receive as severance pay (a) a lump sum payment to be made within 30 days of your Date of Termination in an amount equal to 30 months of your base monthly compensation, as in effect on the Date of Termination, plus the average of the actual short-term incentive bonus payments made to you during the two years prior to the Date of Termination, divided by 12 and multiplied by 30, reduced by applicable income and employment tax withholding requirements; (b) full benefits for up to 30 months under each employee welfare benefit plan in which you were entitled to participate immediately prior to the Date of Termination, with the health and dental continuation coverage to run concurrently with your COBRA rights; (c) vesting credit up to a maximum of 30 months under the Company's Supplemental Executive Retirement Plan; and (d) 100% vesting in all 2 outstanding stock options that were granted to you prior to the Change in Control under any of the Company's stock plans. 4. Subsection (iv) of Section 5 - Compensation upon Termination or During Disability is amended and restated in its entirety to read as follows: (iv) Notwithstanding the foregoing, no benefits shall be provided under subsection (iii) to the extent (a) that the aggregate present value of any "parachute payments" provided to you under this Agreement (determined under Section 280G of the Internal Revenue Code of 1986, as amended [the "Code"]), when aggregated with parachute payments to you under all other Company plans, programs or agreements, exceeds 2.99 times your "base amount," as defined under Code Section 280G and the regulations thereunder, in which case, the amounts payable under this Agreement, when aggregated with your other parachute payments, shall be reduced until the present value of your aggregate parachute payments does not exceed 2.99 times the base amount; (b) they would disqualify an employee benefit plan under the Code; (c) they would cause an employee benefit plan to violate the Employee Retirement Income Security Act of 1974, as amended ("ERISA"); or (d) they would be denied by the insurance carrier that provides such coverage to the Company. Health and dental benefits shall cease upon eligibility through another employer's plan. 3. Section 10 - Arbitration is amended and restated in its entirety to read as follows: 10. Arbitration. Any dispute or controversy arising under or in connection with this Agreement (except as set forth in Section 11 below), shall be settled exclusively by arbitration in Oakland County, Michigan in accordance with the American Arbitration Association's National Rules for the Resolution of Employment Disputes. The arbitrator shall not have jurisdiction or authority to change, add to or subtract from any of the provisions of this Agreement. The parties to this Agreement hereby acknowledge that with arbitration as the exclusive remedy with respect to any grievance hereunder (except as set forth in Section 11 below), neither party has the right to resort to any Federal, state or local court or administrative agency concerning breaches of this Agreement (except as set forth in Section 11 below), and that the decision of the arbitrator shall be a complete defense to any suit, action or proceeding instituted in any Federal, state or local court or before any administrative agency with respect to any dispute which is arbitrable as set forth herein. The decision of the arbitrator shall be final and enforceable in any court of competent jurisdiction. 4. Section 11 - Covenant Not to Compete shall be added to the Agreement to read as follows: 3 11. Covenant Not to Compete. (vi) During the term of your employment with the Company and for a period of 30 months after your termination of employment with the Company for any reason, or for such shorter period as the Company may agree in writing, you shall not directly or indirectly engage in any activity, whether on your own behalf or as an employee, consultant or independent contractor of any other person or entity which competes with the Company within North America for the development, production or sale of any product, material or process to be sold, produced or used by the Company during the course of your employment with the Company, including any product, material or process which may be under development by the Company during the course of your employment with the Company and of which you have, or hereafter may gain, knowledge. (vii) You agree that the covenant not to compete set forth above shall not impose undue hardship on you and is reasonable in both geographic scope and duration in view of: (a) the Company's legitimate interest in protecting proprietary information, the disclosure of which to the Company's competitors would substantially and unfairly impair the Company's ability to compete in the marketplace or substantially and unfairly benefit the Company's competitors; (b) the specialized training and experience that continues to be provided to you by the Company in the course of your employment with the Company; (c) the fact that the services rendered by you on behalf of the Company are specialized, unique and extraordinary; (d) the fact that the Company directly competes within North America in the sale, production and development of products, materials and processes; and (e) the good and valuable consideration provided to you by the Company. (viii) During the term of your employment with the Company and for a period of 30 months after your termination of employment with the Company for any reason, you shall not employ, hire, solicit, induce, or attempt to employ, hire, solicit, or induce for employment, directly or indirectly any employee(s) of the Company to leave his or her employment and become an employee, consultant or representative of 4 any other entity, including but not limited to you or your new employer, if any. (ix) The covenant not to compete set forth herein is of a special, unique, extraordinary and intellectual character, which gives the Company a peculiar value, the loss of which cannot be reasonably or adequately compensated for in damages in an action at law. A breach by you of the covenant not to compete shall cause the Company great and irreparable injury and damage. Therefore, the Company will be entitled to injunctive relief, specific performance and other equitable relief to prevent your breach of the covenant not to compete. This subsection shall not, however, be construed to constitute a waiver of any of the rights which the Company may have for damages or otherwise. (x) This covenant not to compete inures to the benefit of the Company and any successors and assigns of the Company. To confirm your acceptance of the terms of this letter as a valid modification to your Agreement, kindly sign and return to the Company the enclosed copy of this letter. Sincerely, SIMPSON INDUSTRIES, INC. By: --------------------------------- Roy E. Parrott, CEO and Chairman Agreed to this 23rd day of June, 2000 - ------------------------------- Vinod M. Khilnani EX-10.29 5 ex10-29.txt AMENDMENT TO LETTER AGREEMENT - GEORGE A. THOMAS 1 Exhibit 10.29 - Amendment to Letter Agreement with George A. Thomas JUNE 23, 2000 George A. Thomas Simpson Industries, Inc. 47603 Halyard Drive Plymouth, MI 48170-2429 Re: Change in Control Agreement Modification Dear George: As you are aware, the Board of Directors of Simpson Industries, Inc. (the "Company") previously determined that you should be protected in the event of a Change in Control of the Company, and you received a letter from me dated March 1, 1999 setting forth the terms of compensation that you would receive if your employment is terminated pursuant to a Change in Control (the "Agreement"). Recently, the Board of Directors reviewed the terms of the Company's Change in Control provisions, which have been in effect for a long period of time, and concluded that the individual agreements should be updated to reflect the current economic environment. For purposes of this letter, "Change in Control" has the same definition as set forth in Section 3 of your Agreement. This letter is intended to constitute an amendment to your Agreement and describes certain changes in the benefits that will be provided to you if your employment is terminated pursuant to a Change in Control. Unless specifically addressed in this letter, the terms in your Agreement will remain unchanged. 5. Subsection (iii)(B) of Section 5 - Compensation upon Termination or During Disability is amended and restated in its entirety to read as follows: (iii) (B) You shall be entitled to receive as severance pay (a) a lump sum payment to be made within 30 days of your Date of Termination in an amount equal to 30 months of your base monthly compensation, as in effect on the Date of Termination, plus the average of the actual short-term incentive bonus payments made to you during the two years prior to the Date of Termination, divided by 12 and multiplied by 30, reduced by applicable income and employment tax withholding requirements; (b) full benefits for up to 30 months under each employee welfare benefit plan in which you were entitled to participate immediately prior to the Date of Termination, with the health and dental continuation coverage to run concurrently with your COBRA rights; (c) vesting credit up to a maximum of 30 months under the Company's Supplemental Executive Retirement Plan; and (d) 100% vesting in all 2 outstanding stock options that were granted to you prior to the Change in Control under any of the Company's stock plans. 6. Subsection (iv) of Section 5 - Compensation upon Termination or During Disability is amended and restated in its entirety to read as follows: (iv) Notwithstanding the foregoing, no benefits shall be provided under subsection (iii) to the extent (a) that the aggregate present value of any "parachute payments" provided to you under this Agreement (determined under Section 280G of the Internal Revenue Code of 1986, as amended [the "Code"]), when aggregated with parachute payments to you under all other Company plans, programs or agreements, exceeds 2.99 times your "base amount," as defined under Code Section 280G and the regulations thereunder, in which case, the amounts payable under this Agreement, when aggregated with your other parachute payments, shall be reduced until the present value of your aggregate parachute payments does not exceed 2.99 times the base amount; (b) they would disqualify an employee benefit plan under the Code; (c) they would cause an employee benefit plan to violate the Employee Retirement Income Security Act of 1974, as amended ("ERISA"); or (d) they would be denied by the insurance carrier that provides such coverage to the Company. Health and dental benefits shall cease upon eligibility through another employer's plan. 3. Section 10 - Arbitration is amended and restated in its entirety to read as follows: 10. Arbitration. Any dispute or controversy arising under or in connection with this Agreement (except as set forth in Section 11 below), shall be settled exclusively by arbitration in Oakland County, Michigan in accordance with the American Arbitration Association's National Rules for the Resolution of Employment Disputes. The arbitrator shall not have jurisdiction or authority to change, add to or subtract from any of the provisions of this Agreement. The parties to this Agreement hereby acknowledge that with arbitration as the exclusive remedy with respect to any grievance hereunder (except as set forth in Section 11 below), neither party has the right to resort to any Federal, state or local court or administrative agency concerning breaches of this Agreement (except as set forth in Section 11 below), and that the decision of the arbitrator shall be a complete defense to any suit, action or proceeding instituted in any Federal, state or local court or before any administrative agency with respect to any dispute which is arbitrable as set forth herein. The decision of the arbitrator shall be final and enforceable in any court of competent jurisdiction. 4. Section 11 - Covenant Not to Compete shall be added to the Agreement to read as follows: 3 11. Covenant Not to Compete. (xi) During the term of your employment with the Company and for a period of 30 months after your termination of employment with the Company for any reason, or for such shorter period as the Company may agree in writing, you shall not directly or indirectly engage in any activity, whether on your own behalf or as an employee, consultant or independent contractor of any other person or entity which competes with the Company within North America for the development, production or sale of any product, material or process to be sold, produced or used by the Company during the course of your employment with the Company, including any product, material or process which may be under development by the Company during the course of your employment with the Company and of which you have, or hereafter may gain, knowledge. (xii) You agree that the covenant not to compete set forth above shall not impose undue hardship on you and is reasonable in both geographic scope and duration in view of: (a) the Company's legitimate interest in protecting proprietary information, the disclosure of which to the Company's competitors would substantially and unfairly impair the Company's ability to compete in the marketplace or substantially and unfairly benefit the Company's competitors; (b) the specialized training and experience that continues to be provided to you by the Company in the course of your employment with the Company; (c) the fact that the services rendered by you on behalf of the Company are specialized, unique and extraordinary; (d) the fact that the Company directly competes within North America in the sale, production and development of products, materials and processes; and (e) the good and valuable consideration provided to you by the Company. (xiii) During the term of your employment with the Company and for a period of 30 months after your termination of employment with the Company for any reason, you shall not employ, hire, solicit, induce, or attempt to employ, hire, solicit, or induce for employment, directly or indirectly any employee(s) of the Company to leave his or her employment and become an employee, consultant or representative of 4 any other entity, including but not limited to you or your new employer, if any. (xiv) The covenant not to compete set forth herein is of a special, unique, extraordinary and intellectual character, which gives the Company a peculiar value, the loss of which cannot be reasonably or adequately compensated for in damages in an action at law. A breach by you of the covenant not to compete shall cause the Company great and irreparable injury and damage. Therefore, the Company will be entitled to injunctive relief, specific performance and other equitable relief to prevent your breach of the covenant not to compete. This subsection shall not, however, be construed to constitute a waiver of any of the rights which the Company may have for damages or otherwise. (xv) This covenant not to compete inures to the benefit of the Company and any successors and assigns of the Company. To confirm your acceptance of the terms of this letter as a valid modification to your Agreement, kindly sign and return to the Company the enclosed copy of this letter. Sincerely, SIMPSON INDUSTRIES, INC. By: ---------------------------------- Roy E. Parrott, CEO and Chairman Agreed to this 23rd day of June, 2000 - ------------------------------- George A. Thomas 5 Exhibit (11) - Computation of Earnings Per Share
Three Months Ended Six Months Ended June 30 June 30 2000 1999 2000 1999 ----------- ----------- ----------- ----------- Basic: Average shares outstanding 17,874,374 18,065,871 17,890,228 18,105,252 =========== =========== =========== =========== Net earnings applicable to common stock and common stock equivalents $ 6,347,000 $ 6,963,000 $12,494,000 $12,692,000 =========== =========== =========== =========== Basic earnings per share $0.36 $0.39 $0.70 $0.70 ===== ===== ===== ===== Diluted: Average shares outstanding 17,874,374 18,065,871 17,890,228 18,105,252 Net effect of dilutive stock options based on treasury stock method using the average market price to common stock and common stock equivalents 136 32,267 17,499 24,422 ----------- ----------- ----------- ----------- Average number of common shares and common equivalent shares 17,874,510 18,098,138 17,907,727 18,129,674 =========== =========== =========== =========== Net earnings applicable to common stock and common stock equivalents $ 6,347,000 $ 6,963,000 $12,494,000 $12,692,000 =========== =========== =========== =========== Diluted earnings per share $0.36 $0.38 $0.70 $0.70 ===== ===== ===== =====
EX-27 6 ex27.txt 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, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 6-MOS DEC-31-2000 JUN-30-2000 4,439 0 92,147 0 18,357 138,837 377,927 189,627 373,166 107,153 102,898 0 0 17,874 118,335 373,166 283,137 283,137 251,205 259,048 0 0 4,526 19,222 6,728 12,494 0 0 0 12,494 0.70 0.70
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