-----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, DefaKquhG6fuWdRo8iwvgJ4kJ1rTt/xXg4H0cl1YH3j9L0b3BpDNj8yorMiV0xkH xNCh/42edGp25ylvHMoU9Q== 0000920371-99-000038.txt : 19990812 0000920371-99-000038.hdr.sgml : 19990812 ACCESSION NUMBER: 0000920371-99-000038 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990811 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: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13429 FILM NUMBER: 99683665 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: June 30, 1999 ------------- 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) Delaware 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): (925)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 June 30, 1999: 11,910,173 ---------- PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31, ---------------------------- (Unaudited) 1999 1998 1998 ------------ ------------ ------------ ASSETS Current assets Cash and cash equivalents $ 37,215,287 $ 20,624,535 $ 37,402,450 Trade accounts receivable, net 52,597,778 41,884,459 34,089,122 Inventories 65,046,804 55,150,127 56,340,053 Deferred income taxes 4,119,507 4,048,369 3,749,599 Other current assets 2,635,866 1,243,017 1,282,814 ------------ ------------ ------------ Total current assets 161,615,242 122,950,507 132,864,038 Net property, plant and equipment 58,712,214 51,059,397 54,964,704 Investments 503,346 537,582 524,964 Other noncurrent assets 3,161,456 3,067,138 3,246,045 ------------ ------------ ------------ Total assets $223,992,258 $177,614,624 $191,599,751 ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Notes Payable and current portion of long-term debt $ 499,154 $ 330,010 $ 330,704 Trade accounts payable 16,211,194 11,622,431 11,761,237 Accrued liabilities 6,328,264 5,255,517 5,591,292 Income taxes payable - 2,951,963 1,465,384 Accrued profit sharing trust contributions 5,095,397 4,545,941 3,173,362 Accrued cash profit sharing and commissions 5,709,060 4,660,965 4,019,806 Accrued workers' compensation 579,272 779,272 879,272 ------------ ------------ ------------ Total current liabilities 34,422,341 30,146,099 27,221,057 Long-term debt, net of current portion 2,429,526 2,727,799 2,565,182 Deferred income taxes and long-term liabilities 367,194 678,034 531,149 ------------ ------------ ------------ Total liabilities 37,219,061 33,551,932 30,317,388 ------------ ------------ ------------ Commitments and contingencies (Notes 5 and 6) Shareholders' equity Common stock 41,885,081 33,519,125 33,723,845 Retained earnings 145,711,367 110,882,928 127,990,208 Accumulated other comprehensive income (823,251) (339,361) (431,690) ------------ ------------ ------------ Total shareholders' equity 186,773,197 144,062,692 161,282,363 ------------ ------------ ------------ Total liabilities and shareholders' equity $223,992,258 $177,614,624 $191,599,751 ============ ============ ============
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 Six Months Ended June 30, June 30, ---------------------------- ---------------------------- 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Net sales $ 83,752,743 $ 70,786,469 $158,414,333 $130,041,019 Cost of sales 49,088,742 41,708,697 95,301,719 79,089,853 ------------ ------------ ------------ ------------ Gross profit 34,664,001 29,077,772 63,112,614 50,951,166 ------------ ------------ ------------ ------------ Operating expenses: Selling 8,041,724 6,129,472 15,939,530 11,754,247 General and administrative 9,878,575 8,916,134 17,917,336 15,780,630 Compensation related to stock plans 121,135 45,000 204,135 102,000 ------------ ------------ ------------ ------------ 18,041,434 15,090,606 34,061,001 27,636,877 ------------ ------------ ------------ ------------ Income from operations 16,622,567 13,987,166 29,051,613 23,314,289 Interest income, net 255,190 114,302 603,546 320,954 ------------ ------------ ------------ ------------ Income before income taxes 16,877,757 14,101,468 29,655,159 23,635,243 Provision for income taxes 6,805,000 5,728,000 11,934,000 9,601,000 ------------ ------------ ------------ ------------ Net income $ 10,072,757 $ 8,373,468 $ 17,721,159 $ 14,034,243 ============ ============ ============ ============ Net income per common share Basic $ 0.86 $ 0.72 $ 1.52 $ 1.22 Diluted $ 0.82 $ 0.69 $ 1.46 $ 1.16 Number of shares outstanding Basic 11,779,256 11,561,786 11,680,581 11,546,329 Diluted 12,225,229 12,081,026 12,165,456 12,059,737
Simpson Manufacturing Co., Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, ---------------------------- ---------------------------- 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Net income $ 10,072,757 $ 8,373,468 $ 17,721,159 $ 14,034,243 Other comprehensive income, net of tax: Foreign currency translation adjustments (111,940) (147,402) (391,561) (63,636) ------------ ------------ ------------ ------------ Comprehensive income $ 9,960,817 $ 8,226,066 $ 17,329,598 $ 13,970,607 ============ ============ ============ ============
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 June 30, ---------------------------- 1999 1998 ------------ ------------ Cash flows from operating activities Net income $ 17,721,159 $ 14,034,243 ------------ ------------ Adjustments to reconcile net income to net cash provided by operating activities: Gain (loss) on sale of capital equipment (53,246) 6,000 Depreciation and amortization 5,163,600 4,418,512 Deferred income taxes and long-term liabilities (533,863) (657,319) Noncash compensation related to stock plans 119,800 169,894 Changes in operating assets and liabilities, net of effects of acquisitions: Trade accounts receivable (18,779,983) (17,302,209) Inventories (8,834,387) (167,602) Trade accounts payable 4,449,957 2,809,235 Income taxes payable 3,119,596 3,452,536 Accrued profit sharing trust contributions 1,922,035 1,659,066 Accrued cash profit sharing and commissions 1,689,254 1,566,131 Other current assets (1,353,052) 480,569 Accrued liabilities 736,973 (251,386) Accrued workers' compensation (300,000) 120,000 Other noncurrent assets (137,421) (194,665) ------------ ------------ Total adjustments (12,790,737) (3,891,238) ------------ ------------ Net cash provided by operating activities 4,930,422 10,143,005 ------------ ------------ Cash flows from investing activities Capital expenditures (8,857,824) (12,465,806) Proceeds from sale of equipment 250,989 29,348 ------------ ------------ Net cash used in investing activities (8,606,835) (12,436,458) ------------ ------------ Cash flows from financing activities Issuance of debt 204,624 3,029,372 Repayment of debt (171,830) (1,168) Issuance of Company's common stock 3,456,456 471,095 ------------ ------------ Net cash provided by financing activities 3,489,250 3,499,299 ------------ ------------ Net increase (decrease) in cash and cash equivalents (187,163) 1,205,846 Cash and cash equivalents at beginning of period 37,402,450 19,418,689 ------------ ------------ Cash and cash equivalents at end of period $ 37,215,287 $ 20,624,535 ============ ============
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") 1998 Annual Report on Form 10-K (the "1998 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. Certain prior year amounts have been reclassified to conform to the 1999 presentation with no effect on net income as previously reported. Net Income Per Common Share Basic 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 diluted per-share calculations for all periods when the effect of their inclusion is dilutive. The following is a reconciliation of basic earnings per share ("EPS") to diluted EPS:
Three Months Ended Three Months Ended June 30, 1998 June 30, 1997 ---------------------------------- ---------------------------------- Per Per Income Shares Share Income Shares Share ------------ ------------ ------ ------------ ------------ ------ Basic EPS Income available to common shareholders $ 10,072,757 11,779,256 $ 0.86 $ 8,373,468 11,561,786 $ 0.72 Effect of Dilutive Securities Stock options - 445,973 (0.04) - 519,240 (0.03) ------------ ------------ ------ ------------ ------------ ------ Diluted EPS Income available to common shareholders $ 10,072,757 12,225,229 $ 0.82 $ 8,373,468 12,081,026 $ 0.69 ============ ============ ====== ============ ============ ====== Six Months Ended Six Months Ended June 30, 1998 June 30, 1997 ---------------------------------- ---------------------------------- Per Per Income Shares Share Income Shares Share ------------ ------------ ------ ------------ ------------ ------ Basic EPS Income available to common shareholders $ 17,721,159 11,680,581 $ 1.52 $ 14,034,243 11,546,329 $ 1.22 Effect of Dilutive Securities Stock options - 484,875 (0.06) - 513,408 (0.06) ------------ ------------ ------ ------------ ------------ ------ Diluted EPS Income available to common shareholders $ 17,721,159 12,165,456 $ 1.46 $ 14,034,243 12,059,737 $ 1.16 ============ ============ ====== ============ ============ ======
2. Trade Accounts Receivable Trade accounts receivable consist of the following:
June 30, December 31, ---------------------------- 1999 1998 1998 ------------ ------------ ------------ Trade accounts receivable $ 54,677,589 $ 43,707,675 $ 35,550,836 Allowance for doubtful accounts (1,341,765) (1,247,263) (1,173,656) Allowance for sales discounts (738,046) (575,953) (288,058) ------------ ------------ ------------ $ 52,597,778 $ 41,884,459 $ 34,089,122 ============ ============ ============
3. Inventories The components of inventories consist of the following:
June 30, December 31, ---------------------------- 1999 1998 1998 ------------ ------------ ------------ Raw materials $ 19,632,599 $ 17,486,981 $ 18,904,545 In-process products 6,646,652 5,357,076 5,255,755 Finished products 38,767,553 32,306,070 32,179,753 ------------ ------------ ------------ $ 65,046,804 $ 55,150,127 $ 56,340,053 ============ ============ ============
Approximately 91% 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 LIFO and are subject to adjustment based upon final year-end inventory amounts. At June 30, 1999 and 1998, and December 31, 1998, the replacement value of LIFO inventories exceeded LIFO cost by approximately $79,000, $566,000 and $359,000, respectively. 4. Net Property, Plant and Equipment Net property, plant and equipment consists of the following:
June 30, December 31, ---------------------------- (Unaudited) 1999 1998 1998 ------------ ------------ ------------ Land $ 4,216,519 $ 3,366,519 $ 3,891,519 Buildings and site improvements 26,721,362 17,158,155 25,743,968 Leasehold improvements 3,666,600 3,364,468 3,463,063 Machinery and equipment 68,494,297 58,769,568 67,052,907 ------------ ------------ ------------ 103,098,778 82,658,710 100,151,457 Less accumulated depreciation and amortization (53,788,748) (46,182,977) (49,498,717) ------------ ------------ ------------ 49,310,030 36,475,733 50,652,740 Capital projects in progress 9,402,184 14,583,664 4,311,964 ------------ ------------ ------------ $ 58,712,214 $ 51,059,397 $ 54,964,704 ============ ============ ============
5. Debt Outstanding debt at June 30, 1999 and 1998, and December 31, 1998, and the available credit at June 30, 1999, consisted of the following:
Debt Outstanding Available -------------------------------------------- Credit at at June 30, at June 30, ---------------------------- December 31, 1999 1999 1998 1998 ------------ ------------ ------------ ------------ Revolving line of credit, interest at bank's reference rate (at June 30, 1999, the bank's reference rate was 7.75%), expires June 2000 $ 12,476,351 $ - $ - $ - Revolving term commitment, interest at bank's prime rate (at June 30, 1999, the bank's prime rate was 7.75%), expires June 2000 8,616,628 - - - Revolving line of credit, interest rate at the bank's base rate of interest plus 2%, expires July 2000 393,763 - - - Revolving line of credit, interest rate at the weighted average Euro interbank rate of interest plus 1%, expires March 2000 - 157,403 - - Standby letter of credit facilities 1,907,022 - - - Term loan, interest at LIBOR plus 1.375% (at June 30, 1999, the LIBOR plus 1.375% was 6.4413%), expires May 2008 - 2,700,000 3,000,000 2,850,000 Other notes payable and long-term debt - 71,277 57,809 45,886 ------------ ------------ ------------ ------------ 23,393,764 2,928,680 3,057,809 2,895,886 Less current portion - (499,154) (330,010) (330,704) ------------ ------------ ------------ ------------ $ 23,393,764 $ 2,429,526 $ 2,727,799 $ 2,565,182 ============ ============ ============ Standby letters of credit issued and outstanding (1,907,022) ------------ $ 21,486,742 ============
As of June 30, 1999, the Company had three outstanding standby letters of credit. Two of these letters of credit, in the aggregate amount of $1,166,748, are used to support the Company's self-insured workers' compensation insurance requirements. The third, in the amount of $740,274, is used to guarantee performance on the Company's leased facility in the UK. Other notes payable represent debt associated with foreign businesses. 6. Commitments and Contingencies Note 9 to the consolidated financial statements in the Company's 1998 Annual Report provides information concerning commitments and contingencies. From time to time, the Company is involved in various legal proceedings and other matters arising in the normal course of business. 7. Segment Information The Company is organized into two primary segments. The segments are defined by types of products manufactured, marketed and distributed to the Company's customers. The two product segments are connector products and venting products. These segments are differentiated in several ways, including the types of materials used, the production process, the distribution channels used and the applications in which the products are used. Transactions between the two segments were immaterial for each of the periods presented. The following table illustrates certain measurements used by management to assess the performance of the segments described above as of or for the three and six months ended:
Three Months Ended Six Months Ended June 30, June 30, ---------------------------- ---------------------------- 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Net Sales Connector products $ 68,544,000 $ 58,285,000 $ 128,382,000 $105,697,000 Venting products 15,209,000 12,501,000 30,032,000 24,344,000 ------------ ------------ ------------ ------------ Total $ 83,753,000 $ 70,786,000 $158,414,000 $130,041,000 ============ ============ ============ ============ Income from Operations Connector products $ 14,465,000 $ 12,740,000 $ 24,741,000 $ 20,971,000 Venting products 2,302,000 1,369,000 4,434,000 2,743,000 All other (144,000) (122,000) (123,000) (400,000) ------------ ------------ ------------ ------------ Total $ 16,623,000 $ 13,987,000 $ 29,052,000 $ 23,314,000 ============ ============ ============ ============ Total Assets Connector products $134,806,000 $113,930,000 Venting products 46,479,000 40,219,000 All other 42,707,000 23,466,000 ------------ ------------ Total $223,992,000 $177,615,000 ============ ============
Cash collected by the Company's subsidiaries is routinely transferred into the Company's cash management accounts and, therefore, has been included in the total assets of the segment entitled "All other." Cash and cash equivalent balances in this segment were approximately $36,387,000 and $19,089,000 as of June 30, 1999 and 1998, respectively. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Certain matters discussed below are forward-looking statements that involve risks and uncertainties, certain of which are discussed in this report and in other reports filed by the Company with the Securities and Exchange Commission. Actual results might differ materially from results suggested by any forward-looking statements in this report. The following is a discussion and analysis of the consolidated financial condition and results of operations for the Company for the three months ended June 30, 1999 and 1998. 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 June 30, 1999, Compared with the Three Months Ended June 30, 1998 Sales increased 18.3% in the second quarter of 1999 as compared to the second quarter of 1998. The increase reflected sales growth throughout the United States, particularly in California. Sales in most of the Company's international markets continued to grow. Simpson Strong-Tie's second quarter sales increased 17.6% over the same quarter last year, while Simpson Dura-Vent's sales increased 21.7%. Homecenters were the fastest growing connector sales channel. The sales increase was broad based across all of Simpson Strong-Tie's major product lines. Anchoring Systems products had the highest growth rate in sales and the Company's new Strong-Wall product line also contributed to the increased sales. Sales of most of Simpson Dura-Vent's major product lines increased compared to the second quarter of 1998, led by above average growth rates for its Direct- Vent and chimney product lines. Income from operations increased 18.8% from $13,987,166 in the second quarter of 1998 to $16,622,567 in the second quarter of 1999 as a result of higher sales and gross margins and lower general and administrative costs as a percentage of sales. Gross margins increased from 41.1% in the second quarter of 1998 to 41.4% in the second quarter of 1999 primarily due to better absorption of fixed overhead costs as a result of the increased production. Selling expenses increased 31.2% from $6,129,472 in the second quarter of 1998 to $8,041,724 in the second quarter of 1999. The increase was primarily due to higher promotional expenses as well as higher costs related to an increase in the number of sales and marketing personnel. General and administrative expenses increased 10.8% from $8,916,134 in the second quarter of 1998 to $9,878,575 in the second quarter of 1999 primarily due to increased cash profit sharing resulting from higher operating income. The effective tax rate was 40.3% in the second quarter of 1999, a slight decrease from the second quarter of 1998. Results of Operations for the Six Months Ended June 30, 1999, Compared with the Six Months Ended June 30, 1998 Sales increased 21.8% in the first half of 1999 as compared to the first half of 1998. The increase reflected sales growth throughout the United States, particularly in California and in the southeastern portion of the country. Sales in most of the Company's international markets continued to grow. Simpson Strong-Tie's sales through June 30, 1999, increased 21.5% over the same period in the prior year, while Simpson Dura-Vent's sales increased 23.4%. Homecenters were the fastest growing connector sales channel. The sales increase was broad based across all of Simpson Strong- Tie's major product lines. Anchoring Systems products had the highest growth rate in sales. Sales of all of Simpson Dura-Vent's major product lines increased in the first half of 1999 compared to the same period in 1998, led by above average growth rates for its Direct-Vent and chimney product lines. Income from operations increased 24.6% from $23,314,289 in the first half of 1998 to $29,051,613 in the first half of 1999 as a result of higher sales and gross margins and lower general and administrative costs as a percentage of sales. Gross margins increased from 39.2% in the first half of 1998 to 39.8% in the first half of 1999 primarily due to better absorption of fixed overhead costs as a result of the increased production. Selling expenses increased 35.6% from $11,754,247 in the first half of 1998 to $15,939,530 in the first half of 1999. The increase was primarily due to higher promotional expenses as well as higher costs related to an increase in the number of sales and marketing personnel. General and administrative expenses increased 13.5% from $15,780,630 in the first half of 1998 to $17,917,336 in the first half of 1999 primarily due to increased cash profit sharing resulting from higher operating income. The effective tax rate was 40.2% in the first half of 1999, a slight decrease from the first half of 1998. Liquidity and Sources of Capital As of June 30, 1999, working capital was $127.2 million as compared to $92.8 million at June 30, 1998, and $105.6 million at December 31, 1998. The principal components of the increase in working capital from December 31, 1998, were increases in the Company's trade accounts receivable and inventories totaling approximately $27.2 million, primarily due to higher sales levels. In addition, a reduction in income taxes payable resulting from the exercise of stock options by employees of the Company, most of which occurred in the second quarter, increased working capital by approximately $4.6 million. Partially offsetting these increases were increases in trade accounts payable, accrued profit sharing trust contributions and accrued cash profit sharing. These accounts increased an aggregate of approximately $8.1 million. The balance of the change in working capital was due to the fluctuation of various other asset and liability accounts. The working capital change and changes in noncurrent assets and liabilities combined with net income and noncash expenses, primarily depreciation and amortization, totaling approximately $23.0 million, resulted in net cash provided by operating activities of approximately $4.9 million. As of June 30, 1999, the Company had unused credit facilities available of approximately $21.5 million. The Company used approximately $8.6 million in its investing activities, primarily to purchase the capital equipment and property needed to expand its capacity. The Company plans to continue this expansion throughout the remainder of the year and into 2000. Financing activities provided the Company with approximately $3.5 million in cash. Substantially all of this cash was generated by the issuance of stock upon the exercise of stock options by current employees and a director of the Company. 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 of 1999 and into 2000. Depending on the Company's future growth, it may become necessary to secure additional sources of financing. Year 2000 Problem The year 2000 problem is primarily the result of computer programs and computer controlled equipment using two digits rather than four to define the applicable year. Such software may recognize a date using "00" as the year 1900 rather than the year 2000. This could potentially result in system failures or miscalculations leading to disruptions in the Company's activities or those of its significant customers, suppliers and banks. The Company does not produce or sell any computer components, software or electronic parts in its normal business environment and, therefore, does not believe that it has any material risk of product liability or obsolescence resulting from the year 2000 problem. In 1998, the Company established a Year 2000 Committee (the "Committee") to evaluate the extent, if any, of its year 2000 and associated problems, to make any required changes and to establish contingency plans. The Company's computer systems are PC based with few interfaces to other internal systems. These systems use a date handling routine that the Company believes to be year 2000 compliant. The Company has completed tests of its internal software which demonstrated no significant risk from the year 2000 problem. The Company is also focusing on major customers, suppliers and equipment used in its operations to assess compliance. The Committee will continue to evaluate these areas of exposure and, where possible, will develop contingency plans and alternative sources to avoid interruptions in the Company's business. Nevertheless, the Company cannot give any assurance that there will not be a material adverse effect on the Company if third parties with whom the Company conducts business do not adequately address the year 2000 problem and, therefore, are unable to conduct operations without interruption. Costs related to the year 2000 problem are funded through operating cash flows. The Committee estimates that the costs of addressing the year 2000 problem are expected to be less than $100,000, most of which has been spent. The Company presently expects that the total cost of achieving year 2000 compliant systems will not be material to its financial condition, liquidity or results of operations. Time and cost estimates are based on currently available information. Developments that could affect estimates include, but are not limited to, the availability and cost of trained personnel, the ability to locate and correct all relevant computer code and systems, and the degree of remediation success of the Company's customers, suppliers and banks in finding and resolving their year 2000 problems. PART II -- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. From time to time, the Company is involved in various legal proceedings and other matters arising in the normal course of business. ITEM 2. CHANGES IN SECURITIES. None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Annual Meeting of Shareholders ("Annual Meeting") was held on May 20, 1999. The following seven nominees were elected as director by the votes indicated:
Total Votes Total Votes Withheld For Each From Each Term Name Director Director Expires* - ------------------------ ------------ ------------ ------------ Earl F. Cheit 10,077,303 5,210 2002 Thomas J Fitzmyers 10,077,003 5,510 2002 Stephen B. Lamson 10,077,003 5,510 2001 Peter N. Louras 10,077,303 5,210 2001 Sunne Wright McPeak 10,077,303 5,210 2000 Barclay Simpson 10,077,303 5,210 2000 Barry Lawson Williams 10,077,003 5,510 2002 ______________ * The term expires on the date of the Annual Meeting in the year indicated.
The following proposal was also adopted at the Annual Meeting by the vote indicated:
Broker Proposal For Against Abstain Non-Vote - ------------------------------------------- ------------ ------------ ------------ ------------ To ratify the appointment of PriceWaterhouseCoopers LLP as independent auditors of the Company for 1999 10,076,517 1,810 4,186 - To reincorporate under Delaware law with new charter provisions 7,730,838 1,159,109 19,789 1,172,777 A. Reincorporate under Delaware law 7,767,583 1,125,904 16,249 1,172,777 B. Classified Board of Directors 6,776,007 2,102,939 30,790 1,172,777 C. No shareholder action by written consent 6,333,937 1,741,509 834,290 1,172,777
ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits. EXHIBIT NO DESCRIPTION ------- ------------------------------------------------------ 10.1 Credit Agreement, dated July 16, 1999, between Barclays Bank PLC and Simpson Strong-Tie International, Inc. 10.2 Indemnification Agreements, dated May 21, 1999, between Simpson Manufacturing Co., Inc. and each of its directors. 11 Statements re computation of earnings per share 27 Financial Data 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 May 20, 1999, reporting under Item 5 that the Company had changed its state of incorporation from California to Delaware.
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: AUGUST 11, 1999 By: /s/Stephen B. Lamson ------------------ ------------------------------- Stephen B. Lamson Chief Financial Officer EX-10 2 CREDIT AGREEMENT EXHIBIT 10.1 ------------ PRIVATE & CONFIDENTIAL The Directors 5531 Simpson Strong-Tie International Inc. Winchester Road Cardinal Point Our Ref: SCB/hbh Tamworth Staffordshire 16th July 1999 Dear Sirs SIMPSON STRONG-TIE INTERNATIONAL INC We are writing to confirm that we have agreed facilities for the above company as described below. The facilities are repayable upon demand at any time, but subject to this overriding condition, the limits have been marked forward for review by 16th July 2000. FACILITIES OVERDRAFT GBP250,000 (two hundred and fifty thousand pounds). RENTAL GUARANTEE TO ROYAL LONDON GBP442,000 (four hundred and forty two thousand pounds). HM CUSTOMS & EXCISE GUARANTEE GBP10,000 (2 x GBP5,000) COMPANY BARCLAYCARD GBP15,000 (fifteen thousand pounds). BARCLAYS VEHICLE MANAGEMENT GBP60,000 (sixty thousand pounds). SERVICES PURPOSE To assist with the working capital requirements of the Company. INTEREST/COMMISSION/FEES Interest will be charged at a rate of 2% above Barclays Bank's Base Rate current from time to time. Barclays Bank PLC Simpson Strong-Tie International Inc. 16th July 1999 No amounts may be drawn in excess of the agreed facility but if exceptionally the Bank pays amounts which are not agreed in advance and which create an excess position, then a borrowing margin of 15% will apply to the unauthorised amounts calculated daily. Interest will be charged quarterly in arrears in March, June, September and December, or at such other intervals as the Bank may notify to you. Base Rate is currently 5% and variations in Base Rate are published in the press. Commission will be charged in line with the Bank tariff current from time to time, a copy of which is in your possession. The tariff is usually reviewed annually in May. Commission in respect of the Rental Guarantee will be charged at a rate of 0.45% per annum. The commission and management time charge will be debited quarterly in arrears in March, June, September and December. A renewal fee of GBP500 has been debited to the account. SECURITY The facility will be secured/guaranteed by :- Standby Letter of Credit in the sum of GBP442,000 from the Union Bank re the Rental Guarantee to Royal London. A Guarantee from Simpson Manufacturing Inc in respect of the remaining facilities. Barclays Bank PLC Simpson Strong-Tie International Inc. 16th July 1999 and any other security which is now held or hereinafter may be held by the Bank, all of which security is to be available as cover for all liabilities of the Borrower whether actual or contingent to the Bank at any time. CONDITION PRECEDENT The facility is conditional upon the Standby Letter of Credit being renewed at its expiry date. INFORMATION The Borrower will provide the Bank with copies of its audited, trading and consolidated profit and loss account and balance sheet as soon as they are available, and not later than 180 days from the end of each accounting reference period. Yours faithfully /s/S C Brettell - --------------------------------- S C BRETTELL CORPORATE MANAGER EX-10 3 INDEMNIFICATION AGREEMENT EXHIBIT 10.2 ------------ INDEMNIFICATION AGREEMENT This Indemnification Agreement is made this May 21, 1999, by and between Simpson Manufacturing Co., Inc., a Delaware corporation ("Company"), and _______________________________________ ("Indemnitee"), with reference to the following facts: Competent and experienced persons may be reluctant to serve corporations as directors or officers or in other capacities unless they are provided with adequate protection through liability insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to the corporation. The current unavailability, inadequacy and cost of insurance and uncertainties relating to indemnification have increased the difficulty of attracting and retaining such persons. The Board of Directors of the Company has determined that it is in the interests of the Company's shareholders to attract and retain such persons and that the Company should act to assure such persons of appropriate and lawful protection in the future. Section 145 of the Delaware Corporation Law and the Certificate of Incorporation and Bylaws of the Company empower the Company to indemnify its officers, directors, employees and agents by agreement and to indemnify persons who serve, at the request of the Company, as directors, officers, employees or agents of other corporations or enterprises, and section 145 expressly provides that the indemnification provided therein is not exclusive. The Company believes that it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify such persons to the fullest extent permitted by applicable law, so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified. Indemnitee is willing to serve or continue to serve and to take on additional service for or on behalf of the Company on the condition that Indemnitee be so indemnified. NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions herein, the Company and Indemnitee hereby agree as follows: 1. Definitions. For purposes of this Agreement: (a) "Board" means the Board of Directors of the Company (excluding any direct or indirect subsidiary or parent of the Company). (b) "Change of Control" means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported in response to Item 1 of Form 8-K (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the "Act"), whether or not the Company is then subject to such reporting requirement; provided that, without limiting the foregoing, a Change of Control shall be deemed to have occurred if after the Effective Date (i) any "person" (as that term is used in sections 13(d) and 14(d) of the Act) becomes the "beneficial owner" (as that term is defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing thirty percent or more of the combined voting power of the Company's then outstanding securities without the prior approval of at least two-thirds of the members of the Board in office immediately prior to such person attaining such percentage; (ii) the Company is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board in office immediately prior to such transaction or event constitute less than a majority of the Board thereafter; or (iii) during any period of twenty- four calendar months, individuals who at the beginning of such period constituted the Board (including for this purpose any new director whose election or nomination for election by the Company's shareholders is approved by a vote of at least two-thirds of the directors then still in office who shall have been directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board. (c) Unless the context indicates otherwise, the term "Company" as used in this Agreement shall be deemed to include any direct or indirect subsidiary or parent of the Company. (d) "Corporate Status" describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Company. (e) "Disinterested Director" means a member of the Board who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee. (f) "Effective Date" means the date in the first paragraph of this Agreement. (g) "Expenses" shall include all reasonable attorneys' fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses incurred in prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding. (h) "Independent Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the five years preceding commencement of a Proceeding giving rise to a claim for indemnification hereunder shall have been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party, or (ii) any other party to such Proceeding. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement. (i) "Proceeding" includes any action, suit, arbitration, alternative dispute resolution mechanism, investigation, administrative hearing or any other proceeding whether civil, criminal, administrative or investigative, whether or not initiated prior to the Effective Date, except a proceeding initiated by Indemnitee pursuant to section 11 of this Agreement to enforce Indemnitee's rights under this Agreement. 2. Agreement to Serve. Indemnitee confirms that Indemnitee has agreed, in reliance on the covenants and agreements in this Agreement, to serve as a director, officer, employee, agent or fiduciary of the Company or at the request of the Company, as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law). The Company shall have no obligation under this Agreement to continue Indemnitee in any position with the Company. 3. Indemnification -- General. The Company shall indemnify and defend, and advance Expenses to, Indemnitee as provided below in this Agreement and to the fullest extent permitted by applicable law in effect on the Effective Date hereof and to such greater extent as applicable law may thereafter from time to time permit. 4. Third Party Actions. Indemnitee shall be entitled to the rights of indemnification provided in this section 4 if, by reason of Indemnitee's Corporate Status, Indemnitee is, or is threatened to be made, a party to any threatened, pending or completed Proceeding, other than a Proceeding by or in the right of the Company. Pursuant to this section 4, the Company shall indemnify and defend Indemnitee against Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner Indemnitee believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal Proceeding, had no reasonable cause to believe Indemnitee's conduct was unlawful. 5. Derivative Actions. Indemnitee shall be entitled to the rights of indemnification provided in this section 5 if, by reason of Indemnitee's Corporate Status, Indemnitee is, or is threatened to be made, a party to any threatened, pending or completed Proceeding brought by or in the right of the Company to procure a judgment in its favor. Pursuant to this section 5, the Company shall indemnify and defend Indemnitee against Expenses actually and reasonably incurred by Indemnitee or on Indemnitee's behalf in connection with such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee believed to be in or not opposed to the best interests of the Company. Notwithstanding the foregoing, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company if applicable law prohibits such indemnification; provided that, if applicable law so permits, indemnification against Expenses shall nevertheless be made by the Company in such event if and only to the extent that the Court of Chancery of the State of Delaware, or the court in which such Proceeding shall have been brought or is pending, shall determine. 6. Indemnification for Expenses of Indemnitee. Notwithstanding any provision of this Agreement to the contrary, to the extent that Indemnitee is, by reason of Indemnitee's Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, Indemnitee shall be indemnified against all Expenses incurred by Indemnitee or on Indemnitee's behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses incurred by Indemnitee or on Indemnitee's behalf in connection with each successfully resolved claim, issue or matter. For purposes of this section 6 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter. 7. Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement to the contrary, to the extent that Indemnitee is, by reason of Indemnitee's Corporate Status, a witness in any Proceeding, Indemnitee shall be indemnified against all Expenses actually and reasonable incurred by Indemnitee or on Indemnitee's behalf in connection therewith. 8. Advancement of Expenses. The Company shall advance all reasonable Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding within twenty days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that Indemnitee is not entitled to be indemnified against such Expenses. 9. Indemnification Procedure. (a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Chief Financial Officer of the Company (or to such other officer as may be designated by the Board) a written request, including such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. Such officer of the Company shall, promptly on receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification. (b) On written request by Indemnitee for indemnification pursuant to section 9(a), a determination, if required by applicable law, with respect to Indemnitee's entitlement thereto shall be made in the specific case: (i) if a Change of Control shall have occurred, by Independent Counsel (unless Indemnitee shall request that such determination be made by the Board or the shareholders, in which case by the person or persons or in the manner provided in clause (ii) or (iii) of this section 9(b)) in a written opinion to the Board, a copy of which shall be delivered to Indemnitee; (ii) if a Change of Control shall not have occurred, (A) by the Board by a majority vote of a quorum consisting of Disinterested Directors or (B) if a quorum of the Board consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board, a copy of which shall be delivered to Indemnitee or (C) if directed by the Board, by the shareholders of the Company; or (iii) as provided in section 10(b) of this Agreement. If it is so determined that Indemnitee is entitled to indemnification, payment to or on behalf of Indemnitee shall be made within ten days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee's entitlement to indemnification, including providing to such person, persons or entity on reasonable advance request any documentation or information that is not privileged or otherwise protected from disclosure and that is reasonably available to Indemnitee and reasonably necessary to such determination. Any Expenses incurred by Indemnitee in so cooperating with the person, persons, or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee's entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. (c) If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to section 9(b), the Independent Counsel shall be selected as provided in this section 9(c). If a Change of Control shall not have occurred, the Independent Counsel shall be selected by the Board, and the Company shall give written notice to Indemnitee advising Indemnitee of the identity of the Independent Counsel so selected. If a Change of Control shall have occurred, the Independent Counsel shall be selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and Indemnitee shall give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within seven days after such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection. Such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of "Independent Counsel" as defined in section 1, and the objection shall set forth with particularity the factual basis of such assertion. If such written objection is made, the Independent Counsel so selected may not serve as Independent Counsel, unless and until a court shall have determined that such objection is without merit. If, within twenty days after submission by Indemnitee of a written request for indemnification pursuant to section 9(a), no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware for resolution of any objection which shall have been made by the Company or Indemnitee to the other's selection of Independent Counsel and or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate, and the person with respect to whom an objection is so resolved or the person so appointed shall act as Independent Counsel under section 9(b). The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to section 9(b), and the Company shall pay all reasonable fees and Expenses incident to the procedures of this section 9(c), regardless of the manner in which such Independent Counsel is selected or appointed. On the due commencement of any judicial proceeding or arbitration pursuant to section 11(a)(iii), Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing). 10. Presumptions and Effect of Certain Proceedings. (a) If a Change of Control shall have occurred, in making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee shall have submitted a request for indemnification in accordance with section 9(a) of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. (b) If the person, persons or entity empowered or selected under section 9 to determine whether Indemnitee is entitled to indemnification shall not have made a determination within sixty days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided that such sixty-day period may be extended for a reasonable time, not to exceed an additional thirty days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith requires such additional time for the obtaining or evaluating information relating thereto; and provided further that the foregoing provisions of this section 10(b) shall not apply (i) if the determination of entitlement to indemnification is to be made by the shareholders pursuant to section 9(b)and if (A) within fifteen days after receipt by the Company of the request for such determination the Board shall have resolved to submit such determination to the shareholders for their consideration at an annual meeting thereof to be held within seventy-five days after such receipt and such determination is made thereat, or (B) a special meeting of shareholders is called within fifteen days after such receipt for the purpose of making such determination, such meeting is held for such purpose within sixty days after having been so called and such determination is made thereat, or (ii) if the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to section 9(b). (c) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or on a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee's conduct was unlawful. 11. Remedies of Indemnitee. (a) Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of Indemnitee's entitlement to indemnification or advancement of expenses if (i) a determination is made pursuant to section 9 that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to section 8, (iii) the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to section 9(b) and such determination shall not have been made and delivered in a written opinion within ninety days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to section 5 within ten days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within ten days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to section 9 or 10. Indemnitee shall commence such proceeding seeking an adjudication within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this section 11(a). The Company shall not oppose Indemnitee's right to seek any such adjudication. (b) If a determination shall have been made pursuant to section 9 that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this section 11 shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of that adverse determination. If a Change of Control shall have occurred, in any judicial proceeding commenced pursuant to this section 11 the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be. (c) If a determination shall have been made or deemed to have been made pursuant to section 9 or 10 that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this section 11, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law. (d) The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this section 11 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all provisions of this Agreement. (e) If Indemnitee, pursuant to this section 11, seeks a judicial adjudication to enforce Indemnitee's rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company against, any and all expenses (of the types described in the definition of Expenses in section 1) incurred by Indemnitee in such judicial adjudication, but only if Indemnitee prevails therein. If it is determined in such judicial adjudication that Indemnitee is entitled to receive part but not all of the indemnification or advancement of expenses sought, the expenses incurred by Indemnitee in connection with such judicial adjudication shall be appropriately prorated. 12. Non-Exclusivity; Survival of Rights; Insurance; Subrogation. (a) The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Certificate of Incorporation, the Bylaws, any agreement, a vote of shareholders or a resolution of directors, or otherwise. No amendment, alteration or termination of this Agreement or any provision hereof shall be effective as to Indemnitee with respect to any action taken or omitted by Indemnitee in Indemnitee's Corporate Status prior to such amendment, alteration or termination. (b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, officers, employees, agents or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person serves at the request of the Company, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, officer, employee, agent or fiduciary under such policy or policies. (c) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights. (d) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee shall have otherwise received such payment under any insurance policy, contract, agreement or otherwise. (e) The Company may, to the maximum extent permitted by law, create a trust fund, grant a security interest or use other means (including, without limitation, letters of credit, surety bonds and other similar arrangements) to ensure or secure the payment of such amounts as may become necessary to effect indemnification provided hereunder. 13. Duration of Agreement. This Agreement shall continue until and terminate on the later of: (a) ten years after the date that Indemnitee shall have ceased to serve as a director, officer, employee, agent or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that Indemnitee shall have served at the request of the Company; or (b) the final termination of all pending Proceedings in respect of which Indemnitee is granted rights of indemnification or advancement of expenses hereunder and of any proceeding commenced by Indemnitee pursuant to section 11 relating thereto. This Agreement shall bind the Company and its successors and assigns and shall inure to the benefit of Indemnitee and Indemnitee's heirs, executors and administrators. 14. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby; and (b) to the maximum extent possible, the provisions of this Agreement shall be construed to give effect to the intent of the provision held invalid, illegal or unenforceable. 15. Exceptions to Indemnification Rights. Except for a proceeding to enforce or determine rights under this Agreement, Indemnitee shall not be entitled to Indemnification or advancement of Expenses under this Agreement with respect to any Proceeding, or any claim therein, brought or made by Indemnitee against the Company. 16. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. 17. Captions. The headings of the sections of this Agreement are for convenience of reference only and are not part of this Agreement. 18. Amendment and Waiver. No supplement, modification or amendment of this Agreement shall be binding unless in writing and signed by both parties. No waiver of any provision of this Agreement shall be deemed or shall constitute a waiver of any other provision (whether or not similar) nor shall such waiver constitute a continuing waiver. 19. Notice by Indemnitee. Indemnitee agrees to notify the Company promptly in writing on being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder. 20. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and received when personally delivered, when transmitted by facsimile if transmission is confirmed, one business day after being deposited for next-day delivery with a nationally recognized overnight delivery service, or three days after being deposited as first class mail with the United States Postal Service, all charges or first class postage prepaid, properly addressed to Indemnitee, at the address set forth below Indemnitee's signature herein, or to the Company, at its principal place of business, Attention: Chief Financial Officer, or to such other address as may have been furnished hereunder by either party to the other. 21. Entire Agreement. This Agreement constitutes the entire agreement of the parties and supercedes all prior or contemporaneous negotiations, correspondence, understandings and agreements between the parties, written or oral, regarding the subject matter hereof; provided that nothing in this Agreement shall limit any right to indemnification that Indemnitee may have under the Certificate of Incorporation or the Bylaws of the Company. 22. Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Delaware IN WITNESS WHEREOF, this Agreement has been duly executed by or on behalf of the parties hereto as of the date in the first paragraph of this Agreement. "COMPANY" "INDEMNITEE" SIMPSON MANUFACTURING CO., INC. By: /s/Thomas J Fitzmyers By: ** SEE ATTACHED SCHEDULE ---------------------------- ---------------------------- Thomas J Fitzmyers President Address: 4637 Chabot Drive, Suite 200 Address: *SEE ATTACHED SCHEDULE P.O. Box 10789 Pleasanton, CA 94588-0789 Telephone: 925-460-9912 Telephone: Facsimile: 925-847-9114 Facsimile ** The following schedule includes the names and addresses of each of the Indemnitees who entered into the Indemnity Agreement with the Simpson Manufacturing Co., Inc.
INDEMNITEE ADDRESS - --------------------- ---------------------------------------- Earl F. Cheit 50 Lenox Road, Kensington, CA 94707 Thomas J Fitzmyers 2651 Finley Road, Pleasanton, CA 94566 Stephen B. Lamson 432 Matthew Court, Pleasanton, CA 94566 Peter N. Louras 4 Greenwood Court, Orinda, CA 94563 Sunne Wright McPeak 3476 Torlano Court, Pleasanton, CA 94566 Barclay Simpson 520 Miner Road, Orinda, CA 94563 Barry Lawson Williams 1737 Alhambra Lane, Oakland, CA 94611
EX-11 4 COMPUTATION RE EARNINGS PER SHARE
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER COMMON SHARE (UNAUDITED) EXHIBIT 11 -------------- Basic Earnings per Share Three Months Ended Six Months Ended June 30, June 30, ---------------------------- ---------------------------- 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Weighted average number of common shares outstanding 11,779,256 11,561,786 11,680,581 11,546,329 ============ ============ ============ ============ Net income $ 10,072,757 $ 8,373,468 17,721,159 14,043,234 ============ ============ ============ ============ Basic net income per share $ 0.86 $ 0.72 1.52 1.22 ============ ============ ============ ============
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES COMPUTATION OF EARNINGS PER COMMON SHARE (UNAUDITED) EXHIBIT 11 -------------- DILUTED EARNINGS PER SHARE Three Months Ended Six Months Ended June 30, June 30, ---------------------------- ---------------------------- 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Weighted average number of common shares outstanding 11,779,256 11,561,786 11,680,581 11,546,329 Shares issuable pursuant to employee stock option plans, less shares assumed repurchased at the average fair value during the period 441,999 514,046 481,144 508,423 Shares issuable pursuant to the independent director stock option plan, less shares assumed repurchased at the average fair value during the period 3,974 5,194 3,731 4,985 ------------ ------------ ------------ ------------ Number of shares for computation of diluted net income per share 12,225,229 12,081,026 12,165,456 12,059,737 ============ ============ ============ ============ Net income $ 10,072,757 $ 8,373,468 17,721,159 14,043,234 ============ ============ ============ ============ Diluted net income per share $ 0.82 $ 0.69 $ 1.46 $ 1.16 ============ ============ ============ ============
EX-27 5 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Condensed Consolidated Balance Sheet at June 30, 1999, (Unaudited) and the Condensed Consolidated Statement of Operations for the three months ended June 30, 1999, (Unaudited) and is qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 37,215,287 0 54,677,589 2,079,811 65,046,804 161,615,242 112,500,962 53,788,748 223,992,258 34,422,341 2,928,680 0 0 41,885,081 144,888,116 223,992,258 83,752,743 83,752,743 49,088,742 49,088,742 18,041,434 0 0 16,877,757 6,805,000 10,072,757 0 0 0 10,072,757 0.86 0.82 Interest income for the six months ended June 30, 1999, was $603,546.
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