-----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, NTufNu9Td9D4FZRbQap44pEtJcI7a7Y1wa022JeqFxB2pLFmDYzZRXXbIX16s3xx mTrkWCcxxhGo3xl3XbMxfw== 0000920371-97-000015.txt : 19970520 0000920371-97-000015.hdr.sgml : 19970520 ACCESSION NUMBER: 0000920371-97-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIMPSON MANUFACTURING CO INC /CA/ CENTRAL INDEX KEY: 0000920371 STANDARD INDUSTRIAL CLASSIFICATION: CUTLERY, HANDTOOLS & GENERAL HARDWARE [3420] IRS NUMBER: 943196943 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-23804 FILM NUMBER: 97607771 BUSINESS ADDRESS: STREET 1: 4637 CHABOT DR STREET 2: STE 200 CITY: PLEASANTON STATE: CA ZIP: 94588 BUSINESS PHONE: 5106099912 MAIL ADDRESS: STREET 1: 4637 CHABOT DR STREET 2: STE 200 CITY: PLEASANTON STATE: CA ZIP: 94588 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period ended: March 31, 1997 -------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to -------- -------- Commission file number: 0-23804 ------- Simpson Manufacturing Co., Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) California 94-3196943 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4637 Chabot Drive, Suite 200, Pleasanton, CA 94588 -------------------------------------------------- (Address of principal executive offices) (Registrant's telephone number, including area code): (510)460-9912 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- The number of shares of the Registrant's Common Stock outstanding as of March 31, 1997: 11,456,716 ---------- PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS.
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS March 31, December 31, ---------------------------- (Unaudited) 1997 1996 1996 ------------ ------------ ------------ ASSETS Current assets Cash and cash equivalents $ 3,812,205 $ 6,191,487 $ 19,815,297 Short-term investments - - 3,896,428 Trade accounts receivable, net 31,334,018 26,280,550 20,930,490 Inventories 53,716,313 34,335,990 42,247,777 Deferred income taxes 3,192,455 2,357,455 2,919,455 Other current assets 1,528,651 1,361,923 956,565 ------------ ------------ ------------ Total current assets 93,583,642 70,527,405 90,766,012 Net property, plant and equipment 35,335,825 26,233,565 28,687,635 Investments 507,127 1,329,715 1,382,578 Other noncurrent assets 3,141,989 1,824,959 1,684,548 ------------ ------------ ------------ Total assets $132,568,583 $ 99,915,644 $122,520,773 ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Notes Payable $ 280,895 $ - $ - Trade accounts payable 10,919,997 5,869,968 10,063,828 Accrued liabilities 3,525,075 3,112,278 4,137,648 Income taxes payable 3,381,161 951,393 341,626 Accrued profit sharing trust contributions 3,142,402 2,626,226 2,446,001 Accrued cash profit sharing and commissions 2,346,768 1,307,125 2,292,057 Accrued workers' compensation 809,272 842,125 809,272 ------------ ------------ ------------ Total current liabilities 24,405,570 14,709,115 20,090,432 Deferred income taxes and long-term liabilities 1,152,981 133,783 133,333 ------------ ------------ ------------ Total liabilities 25,558,551 14,842,898 20,223,765 ------------ ------------ ------------ Commitments and contingencies (Notes 5 and 6) Shareholders' equity Common stock 31,298,619 30,789,607 31,233,648 Retained earnings 75,620,180 54,404,772 70,862,906 Cumulative translation adjustment 91,233 (121,633) 200,454 ------------ ------------ ------------ Total shareholders' equity 107,010,032 85,072,746 102,297,008 ------------ ------------ ------------ Total liabilities and shareholders' equity $132,568,583 $ 99,915,644 $122,520,773 ============ ============ ============
The accompanying notes are an integral part of these condensed consolidated financial statements.
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, ---------------------------- 1997 1996 ------------ ------------ Net sales $ 51,927,222 $ 43,457,448 Cost of sales 32,608,564 28,355,992 ------------ ------------ Gross profit 19,318,658 15,101,456 Operating expenses: Selling 5,208,264 4,510,033 General and administrative 6,226,376 5,128,446 ------------ ------------ 11,434,640 9,638,479 ------------ ------------ Income from operations 7,884,018 5,462,977 Interest income, net 160,256 53,527 ------------ ------------ Income before income taxes 8,044,274 5,516,504 Provision for income taxes 3,287,000 2,254,000 ------------ ------------ Net income $ 4,757,274 $ 3,262,504 ============ ============ Net income per common share $ 0.40 $ 0.28 ============ ============ Weighted average shares outstanding 11,881,875 11,621,429 ============ ============
The accompanying notes are an integral part of these condensed consolidated financial statements.
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, ---------------------------- 1997 1996 ------------ ------------ Cash flows from operating activities Net income $ 4,757,274 $ 3,262,504 ------------ ------------ Adjustments to reconcile net income to net cash provided by operating activities: Gain on sale of capital equipment (5,000) (20,397) Depreciation and amortization 1,875,006 1,445,241 Deferred income taxes and long-term liabilities (273,000) 350,000 Equity in (income) losses of affiliates (58,000) 16,000 Changes in operating assets and liabilities, net of effects of acquisitions: Trade accounts receivable (9,086,908) (5,609,415) Inventories (5,397,833) 135,260 Other current assets (525,526) (127,310) Other noncurrent assets 257,531 (27,450) Trade accounts payable (264,230) (1,566,792) Accrued liabilities (1,477,517) (274,249) Accrued profit sharing trust contributions 696,401 626,487 Accrued cash profit sharing and commissions 54,711 17,981 Income taxes payable 3,081,975 1,703,227 ------------ ------------ Total adjustments (11,122,390) (3,331,417) ------------ ------------ Net cash used in operating activities (6,365,116) (68,913) ------------ ------------ Cash flows from investing activities Capital expenditures (4,758,625) (1,067,445) Proceeds from sale of equipment 5,000 29,840 Proceeds from sale of short-term investments 3,995,333 - Acquisitions, net of cash acquired and equity interest already owned (9,183,110) (11,637) ------------ ------------ Net cash used in investing activities (9,941,402) (1,049,242) ------------ ------------ Cash flows from financing activities Issuance of debt 280,895 - Repayment of debt - (20,037) Issuance of Company's common stock 22,531 373,891 ------------ ------------ Net cash provided by financing activities 303,426 353,854 ------------ ------------ Net decrease in cash and cash equivalents (16,003,092) (764,301) Cash and cash equivalents at beginning of period 19,815,297 6,955,788 ------------ ------------ Cash and cash equivalents at end of period $ 3,812,205 $ 6,191,487 ============ ============
The accompanying notes are an integral part of these condensed consolidated financial statements. SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation Interim Period Reporting The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and footnotes required by generally accepted accounting principles have been condensed or omitted. These interim statements should be read in conjunction with the consolidated financial statements and the notes thereto included in Simpson Manufacturing Co., Inc.'s (the "Company's") 1996 Annual Report on Form 10-K (the "1996 Annual Report"). The unaudited quarterly condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements, and in the opinion of management, contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial information set forth therein, in accordance with generally accepted accounting principles. The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles. The Company's quarterly results may be subject to fluctuations. As a result, the Company believes the results of operations for the interim periods are not necessarily indicative of the results to be expected for any future period. Net Income Per Common Share Net income per common share is computed based upon the weighted average number of common shares outstanding. Common equivalent shares, using the treasury stock method, are included in the per-share calculations for all periods since the effect of their inclusion is dilutive. The number of shares used in computing primary and fully diluted net income per common share did not differ materially for the three months ended March 31, 1997 and 1996. Newly Issued Accounting Standards In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share" and No. 129, "Disclosure of Information about Capital Structure." SFAS No. 128 establishes standards for computing and presenting earnings per share ("EPS"), replacing the presentation of primary EPS with a presentation of basic EPS. SFAS No. 129 consolidates the existing disclosure requirements regarding an entity's capital structure. SFAS No. 128 and 129 are effective for financial statements issued for periods ending after December 15, 1997, and accordingly, management has not determined the impact on the Company's financial statements for the quarter ended March 31, 1997. 2. Trade Accounts Receivable Trade accounts receivable consist of the following:
March 31, December 31, ---------------------------- 1997 1996 1996 ------------ ------------ ------------ Trade accounts receivable $ 33,020,437 $ 27,522,716 $ 22,242,827 Allowance for doubtful accounts (1,386,684) (1,039,728) (1,108,950) Allowance for sales discounts (299,735) (202,438) (203,387) ------------ ------------ ------------ $ 31,334,018 $ 26,280,550 $ 20,930,490 ============ ============ ============
3. Inventories The components of inventories consist of the following:
March 31, December 31, ---------------------------- 1997 1996 1996 ------------ ------------ ------------ Raw materials $ 17,577,343 $ 12,043,223 $ 15,107,660 In-process products 4,431,115 3,716,719 3,763,634 Finished products 31,707,855 18,576,048 23,376,483 ------------ ------------ ------------ $ 53,716,313 $ 34,335,990 $ 42,247,777 ============ ============ ============
Approximately 90% of the Company's inventories are valued using the LIFO (last-in, first-out) method. Because inventory determination under the LIFO method is only made at the end of each year based on the inventory levels and costs at that time, interim LIFO determinations must necessarily be based on management's estimates of expected year-end inventory levels and costs. Since future estimates of inventory levels and costs are subject to change, interim financial results reflect the Company's most recent estimate of the effect of inflation and are subject to final year-end LIFO inventory amounts. At March 31, 1997 and 1996, and December 31, 1996, the replacement value of LIFO inventories exceeded LIFO cost by approximately $1,186,000, $3,793,000 and $1,186,000, respectively. 4. Net Property, Plant and Equipment Net property, plant and equipment consists of the following:
March 31, December 31, ---------------------------- 1997 1996 1996 ------------ ------------ ------------ Land $ 2,440,682 $ 2,065,682 $ 2,065,682 Buildings and site improvements 12,584,599 10,382,039 10,379,901 Leasehold improvements 2,953,492 2,859,053 2,869,612 Machinery and equipment 49,633,900 40,806,558 46,311,624 ------------ ------------ ------------ 67,612,673 56,113,332 61,626,819 Less accumulated depreciation and amortization (37,646,354) (31,546,682) (35,916,354) ------------ ------------ ------------ 29,966,319 24,566,650 25,710,465 Capital projects in progress 5,369,506 1,666,915 2,977,170 ------------ ------------ ------------ $ 35,335,825 $ 26,233,565 $ 28,687,635 ============ ============ ============
5. Debt The outstanding debt at March 31, 1997 and 1996, and the available credit at March 31, 1997, consisted of the following:
Available Debt Outstanding Credit at at March 31, March 31, ---------------------------- 1997 1997 1996 ------------ ------------ ------------ Revolving line of credit, interest at bank's reference rate (at March 31, 1997, the bank's reference rate was 8.50%), expires June 1997 $ 12,931,753 $ - $ - Revolving line of credit, interest at bank's prime rate (at March 31, 1997, the bank's prime rate was 8.50%), expires June 1997 4,783,715 - - Revolving term commitment, interest at bank's prime rate (at March 31, 1997, the bank's prime rate was 8.50%), expires June 1997 4,000,000 - - Revolving lines of credit, interest rate at the bank's base rate of interest plus 2%, expires June 1997 410,875 - - Standby letter of credit facilities 1,284,533 - - Other notes payable - 280,895 - ------------ ------------ ------------ Total credit facilities $ 23,410,876 $ 280,895 $ - ============ ============ Standby letters of credit issued and outstanding (1,284,533) ------------ Total credit available $ 22,126,343 ============
The Company has three outstanding standby letters of credit. Two of these letters of credit, in the aggregate amount of $832,570, are used to support the Company's self-insured workers' compensation insurance requirements while the other, in the amount of $451,963, is used to support the working capital needs of its European operations. Other notes payable represent debt associated with foreign businesses acquired during the quarter. 6. Commitments and Contingencies Note 10 to the consolidated financial statements in the Company's 1996 Annual Report provides information concerning commitments and contingencies relating to pending or possible claims, legal actions and proceedings against the Company and its subsidiaries. Management believes that the final resolution of these matters, individually or in the aggregate, is not expected to have a material adverse effect on the financial position of the Company. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following is a discussion and analysis of the consolidated financial condition and results of operations for the Company for the three months ended March 31, 1997 and 1996. The following should be read in conjunction with the interim Condensed Consolidated Financial Statements and related Notes appearing elsewhere herein. Results of Operations for the Three Months Ended March 31, 1997, Compared with the Three Months Ended March 31, 1996 Net sales increased 19.5% from the first quarter of 1996 to the first quarter of 1997. The increase reflected growth throughout the United States, with above average increases in the Northeast and in California. Simpson Strong-Tie's first quarter sales increased 23.3% over the same quarter last year while Simpson Dura-Vent's sales increased 7.4%. Homecenters and contractor distributors were the fastest growing connector sales channels, while dealer distributor sales increased but at a slower rate than overall sales during the quarter. The growth rate of Simpson Strong-Tie's engineered wood, seismic and epoxy product sales remained strong, while Simpson Dura-Vent sales of Direct-Vent products, sold both to OEMs and through distributors, continued to experience strong growth. Income from operations increased 44.3% from $5,462,977 in the first quarter of 1996 to $7,884,018 in the first quarter of 1997. This increase was primarily due to higher gross margins that resulted from lower labor and overhead costs as a percentage of sales, despite an increase in depreciation charges which resulted principally from equipment purchased during 1996. Selling, general and administrative expenses increased from $9,638,479 in the first quarter of 1996 to $11,434,640 in the first quarter of 1997, but decreased slightly as a percentage of sales. The increase in selling, general and administrative expenses was primarily due to increased cash profit sharing, as a result of higher operating profit. The effective tax rate remained constant at 40.9% in the first quarter of 1997. On March 11, 1997, a subsidiary of the Company completed the purchase of three Canadian companies and a related U.S. company, known as the Isometric Group, which manufacture and distribute a line of mechanical anchors and other related products. The acquisition price was approximately $7.3 million in cash plus an earnout based on future sales increases. Also on March 11, 1997, another of the Company's subsidiaries completed the purchase, for approximately $1.7 million in cash, of the remaining 66% of the equity of Patrick Bellion, S.A. ("Bellion"), a French manufacturer of connector products. Bellion is now a wholly-owned subsidiary of the Company. These two acquisitions extend the Company's products and distribution in North America and continental Europe. Liquidity and Sources of Capital As of March 31, 1997, working capital was $69.2 million as compared to $55.8 million at March 31, 1996, and $70.7 million at December 31, 1996. The principal components of the decrease in working capital from December 31, 1996, were cash and cash equivalents and short-term investments which, in the aggregate, decreased a total of $19.9 million, a large portion of which was used to purchase the Isometric Group, Bellion and capital equipment. In addition, income taxes payable increased approximately $3.0 million. These decreases were offset by increases in the Company's trade accounts receivable and inventory balances totaling nearly $21.9 million as a result of the two acquisitions, higher sales levels and seasonal buying programs. Without giving effect to the two acquisitions, which are included in investing activities, the decrease in working capital was partially offset by net income and noncash expenses, such as depreciation and amortization, totaling approximately $6.6 million, and resulted in a net use of cash of $6.4 million. As of March 31, 1997, the Company had unused credit facilities available of approximately $22.1 million. The Company used $9.9 million in its investing activities, primarily to complete the two acquisitions and to purchase capital equipment. The Company made $4.8 million in capital equipment purchases in the first quarter of 1997 to expand its capacity. The Company plans to continue this expansion in 1997. Partially offsetting these expenditures, the Company sold its short-term investments, which matured in March, for approximately $4.0 million. The Company believes that cash generated by operations and borrowings available under its existing credit agreements will be sufficient for the Company's working capital needs and planned capital expenditures through the remainder 1997. Depending on the Company's future growth, it may become necessary to secure additional sources of financing. PART II -- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. The Company is involved in various legal proceedings and other matters arising in the normal course of business. In the opinion of management, none of such matters when ultimately resolved will have a material adverse effect on the Company's financial position or results of operations. ITEM 2. CHANGES IN SECURITIES. None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits. EXHIBIT NO DESCRIPTION ------- -------------------------------------------------------- 11 Statements re computation of earnings per share 27 Financial Date Schedule, which is submitted electronically to the Securities and Exchange Commission for information only and not filed.
b. Reports on Form 8-K Report on Form 8-K dated January 7, 1997, reporting under Item 5 the purchase by Simpson Strong-Tie International, Inc. of the assets of the Builders Products Division of MiTek Industries Ltd. ("MiTek") and the signing of a separate supply agreement with MiTek. Report on Form 8-K dated March 21, 1997, reporting under Item 5 the purchase by Simpson Strong-Tie Canada, Limited of the Isometric Group and the purchase by Simpson Strong-Tie France, Limited of Patrick Bellion, S.A. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Simpson Manufacturing Co., Inc. ----------------------------------- (Registrant) DATE: May 14, 1997 By: /s/ Stephen B. Lamson ----------------- ----------------------- Stephen B. Lamson Chief Financial Officer EX-11 2 COMPUTATION RE EARNINGS PER SHARE
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER COMMON SHARE (UNAUDITED) EXHIBIT 11 -------------- Primary Earnings per Share Three Months Ended March 31, ---------------------------- 1997 1996 ------------ ------------ Weighted average number of common shares outstanding 11,454,126 11,390,002 Shares issuable pursuant to employee stock option plans, less shares assumed repurchased at the average fair value during the period 422,998 228,992 Shares issuable pursuant to the independent director stock option plan, less shares assumed repurchased at the average fair value during the period 4,751 2,435 ------------ ------------ Number of shares for computation of primary net income per share 11,881,875 11,621,429 ============ ============ Net income $ 4,757,274 $ 3,262,504 ============ ============ Primary net income per share $ 0.40 $ 0.28 ============ ============
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER COMMON SHARE (UNAUDITED) EXHIBIT 11 -------------- Fully Diluted Earnings per Share Three Months Ended March 31, ---------------------------- 1997 1996 ------------ ------------ Weighted average number of common shares outstanding 11,454,126 11,390,002 Shares issuable pursuant to employee stock option plans, less shares assumed repurchased at the end of period fair value 436,624 276,020 Shares issuable pursuant to the independent director stock option plan, less shares assumed repurchased at the end of period fair value 4,863 2,921 ------------ ------------ Number of shares for computation of fully diluted net income per share 11,895,613 11,668,943 ============ ============ Net income $ 4,757,274 $ 3,262,504 ============ ============ Fully diluted net income per share $ 0.40 $ 0.28 ============ ============
EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Condensed Consolidated Balance Sheet at March 31, 1997, (Unaudited) and the Condensed Consolidated Statement of Operations for the three months ended March 31, 1997, (Unaudited) and is qualified in its entirety by reference to such financial statements. 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 3,812,205 0 33,020,437 1,686,419 53,716,313 93,583,642 72,982,179 37,646,354 132,568,583 24,405,570 0 0 0 31,298,619 75,711,413 107,010,032 51,927,222 51,927,222 32,608,564 32,608,564 11,434,640 0 0 8,044,274 3,287,000 4,757,274 0 0 0 4,757,274 0.40 0.40 Interest income for the three months ended March 31, 1997, was $160,256.
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