10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:  September 30, 2011

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                     

Commission file number:  1-13429

Simpson Manufacturing Co., Inc.

(Exact name of registrant as specified in its charter)

Delaware	94-3196943
(State or other jurisdiction of incorporation	(I.R.S. Employer
or organization)	Identification No.)

5956 W. Las Positas Blvd., Pleasanton, CA 94588

(Address of principal executive offices)

(Registrant’s telephone number, including area code):  (925) 560-9000

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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x

The number of shares of the registrant’s common stock outstanding as of September 30, 2011:  48,160,653

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

Simpson Manufacturing Co., Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, unaudited)

	September 30,				December 31,
	2011		2010		2010
ASSETS
Current assets
Cash and cash equivalents	$	265,162	$	291,846	$	335,049
Trade accounts receivable, net	98,032		93,635		68,256
Inventories	172,142		150,713		152,297
Deferred income taxes	12,117		10,748		10,189
Assets held for sale	6,792		7,887		10,787
Other current assets	9,598		16,012		14,678
Total current assets	563,843		570,841		591,256
Property, plant and equipment, net	191,016		176,464		177,072
Goodwill	69,688		75,585		70,069
Intangible assets, net	20,252		23,068		23,466
Equity method investment	—		319		213
Other noncurrent assets	10,670		15,557		12,633
Total assets	$	855,469	$	861,834	$	874,709
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Trade accounts payable	$	27,739	$	23,663	$	35,164
Accrued liabilities	36,314		33,517		31,372
Income taxes payable	1,251		—		—
Accrued profit sharing trust contributions	3,560		4,277		5,591
Accrued cash profit sharing and commissions	11,867		8,536		2,805
Accrued workers’ compensation	5,455		4,009		4,684
Total current liabilities	86,186		74,002		79,616
Long-term liabilities	7,001		8,705		7,300
Total liabilities	93,187		82,707		86,916
Commitments and contingencies (Note 8)
Stockholders’ equity
Common stock, at par value	481		494		500
Additional paid-in capital	169,117		148,191		165,425
Retained earnings	581,672		616,719		607,241
Accumulated other comprehensive income	11,012		13,723		14,627
Total stockholders’ equity	762,282		779,127		787,793
Total liabilities and stockholders’ equity	$	855,469	$	861,834	$	874,709

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Simpson Manufacturing Co., Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(In thousands except per-share amounts, unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2011			2010			2011		2010
Net sales	$	162,366		$	146,447		$	472,713	$	435,881
Cost of sales	86,919			80,750			256,819		239,370
Gross profit	75,447			65,697			215,894		196,511
Operating expenses:
Research and development and other engineering	6,804			5,715			19,743		16,156
Selling	18,633			15,946			55,527		47,429
General and administrative	25,174			20,001			72,250		57,457
Loss (gain) on sale of assets	(46		)	(5,217		)	1		(4,813		)
	50,565			36,445			147,521		116,229
Income from operations	24,882			29,252			68,373		80,282
Income (loss) in equity method investment, before tax	4,471			(153		)	4,389		(429		)
Interest income, net	79			110			258		148
Income from continuing operations before taxes	29,432			29,209			73,020		80,001
Provision for income taxes from continuing operations	10,052			10,801			27,069		30,704
Income from continuing operations, net of tax	19,380			18,408			45,951		49,297
Loss from discontinued operations, net of tax	—			(1,226		)	—		(16,212		)
Net income	$	19,380		$	17,182		$	45,951	$	33,085
Earnings (loss) per common share:
Basic
Continuing operations	$	0.40		$	0.37		$	0.93	$	1.00
Discontinued operations	—			(0.02		)	—		(0.33		)
Net income	0.40			0.35			0.93		0.67
Diluted
Continuing operations	$	0.40		$	0.37		$	0.93	$	0.99
Discontinued operations	—			(0.02		)	—		(0.33		)
Net income	0.40			0.35			0.93		0.67
Number of shares outstanding
Basic	48,253			49,427			49,247		49,411
Diluted	48,288			49,527			49,296		49,548
Cash dividends declared per common share	$	0.125		$	0.10		$	0.375	$	0.30

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Simpson Manufacturing Co., Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

for the nine months ended September 30, 2010 and 2011 and three months ended December 31, 2010

(In thousands except per-share amounts, unaudited)

												Accumulated
						Additional						Other
	Common Stock					Paid-in			Retained			Comprehensive			Treasury
	Shares		Par Value			Capital			Earnings			Income (Loss)			Stock			Total
Balance, January 1, 2010	49,377		$	493		$	146,036		$	598,493		$	18,762		—			$	763,784
Comprehensive income:
Net income	—		—			—			33,085			—			—			33,085
Other comprehensive income:
Translation adjustment, net of tax of ($14)	—		—			—			—			(5,039		)	—			(5,039		)
Comprehensive income																		28,046
Stock options exercised	39		1			977			—			—			—			978
Stock compensation	—		—			995			—			—						995
Tax effect of options exercised	—		—			(118		)	—			—			—			(118		)
Cash dividends declared on common stock, $0.30 per share	—		—			—			(14,859		)	—			—			(14,859		)
Common stock issued at $26.42 per share for stock bonus	12		—			301			—			—			—			301
Balance, September 30, 2010	49,428		494			148,191			616,719			13,723			—			779,127
Comprehensive loss:
Net loss	—		—			—			(4,499		)	—			—			(4,499		)
Other comprehensive income:
Translation adjustment, net of tax of $26	—		—			—			—			904			—			904
Comprehensive loss																		(3,595		)
Stock options exercised	668		6			16,964			—			—			—			16,970
Stock compensation	—		—			2,582			—			—			—			2,582
Tax effect of options exercised	—		—			(2,312		)	—			—			—			(2,312		)
Cash dividends declared on common stock, $0.10 per share	—		—			—			(4,979		)	—			—			(4,979		)
Balance, December 31, 2010	50,096		500			165,425			607,241			14,627			—			787,793
Comprehensive income:
Net income	—		—			—			45,951			—			—			45,951
Other comprehensive income:
Translation adjustment, net of tax of $4	—		—			—			—			(3,615		)	—			(3,615		)
Comprehensive income															—			42,336
Stock options exercised	6		—			154			—			—			—			154
Stock compensation	—		—			3,405			—			—			—			3,405
Tax effect of options exercised	—		—			(71		)	—			—			—			(71		)
Repurchase of common stock	(1,948	)	—			—			—			—			(53,208		)	(53,208		)
Retirement of common stock	—		(19		)	—			(53,189		)	—			53,208			—
Cash dividends declared on common stock, $0.375 per share	—		—			—			(18,331		)	—			—			(18,331		)
Common stock issued at $30.91 per share for stock bonus	7		—			204			—			—			—			204
Balance, September 30, 2011	48,161		$	481		$	169,117		$	581,672		$	11,012		$	—		$	762,282

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Simpson Manufacturing Co., Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands, unaudited)

	Nine Months
	Ended September 30,
	2011			2010
Cash flows from operating activities
Net income	$	45,951		$	33,085
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of assets	1			(4,813		)
Loss on sale of discontinued operation	—			657
Depreciation and amortization	14,988			17,746
Impairment loss on assets held for sale	1,094			16,916
Deferred income taxes	(1,049		)	4,811
Noncash compensation related to stock plans	3,812			1,278
Loss (income) in equity method investment	(4,389		)	429
Excess tax benefit of options exercised	4			(10		)
Provision for (recovery of) doubtful accounts	249			(5		)
Provision for excess and obsolete inventory	189			5,872
Accrued interest earned from related party	(58		)	—
Changes in operating assets and liabilities:
Trade accounts receivable	(30,174		)	(28,433		)
Inventories	(19,967		)	(12,248		)
Trade accounts payable	(4,211		)	(3,680		)
Income taxes payable	5,755			995
Accrued profit sharing trust contributions	(2,017		)	(2,741		)
Accrued cash profit sharing and commissions	9,068			6,147
Other current assets	(220		)	(204		)
Accrued liabilities	3,856			4,702
Long-term liabilities	(302		)	(80		)
Accrued workers’ compensation	771			(343		)
Other noncurrent assets	729			(226		)
Net cash provided by operating activities	24,080			39,855
Cash flows from investing activities
Capital expenditures	(23,515		)	(25,131		)
Proceeds from sale of capital assets	3,205			14,837
Proceeds from sale of discontinued operations	—			27,706
Loans made to related parties	—			(1,798		)
Loans repaid by related parties	552			50
Net cash provided by (used in) investing activities	(19,758		)	15,664
Cash flows from financing activities
Repurchase of common stock	(53,208		)	—
Issuance of common stock	154			978
Excess tax benefit of options exercised	(4		)	10
Dividends paid	(17,309		)	(14,821		)
Net cash used in financing activities	(70,367		)	(13,833		)
Effect of exchange rate changes on cash and cash equivalents	(3,842		)	(221		)
Net increase (decrease) in cash and cash equivalents	(69,887		)	41,465
Cash and cash equivalents at beginning of period	335,049			250,381
Cash and cash equivalents at end of period	$	265,162		$	291,846
Noncash activity during the period
Noncash capital expenditures	$	3,251		$	165
Dividends declared but not paid	5,805			4,942
Issuance of Company’s common stock for compensation	204			301

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Simpson Manufacturing Co., Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1.             Basis of Presentation

Principles of Consolidation

The consolidated financial statements include the accounts of Simpson Manufacturing Co., Inc. and its subsidiaries (the “Company”). Investments in 50% or less owned affiliates are accounted for using either cost or the equity method. All significant intercompany transactions have been eliminated.

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 accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These interim statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (the “2010 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 state fairly the financial information set forth therein, in accordance with GAAP. The year-end condensed consolidated balance sheet data were derived from audited financial statements, but do not include all disclosures required by GAAP. The Company’s quarterly results fluctuate. 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.

Revenue Recognition

The Company recognizes revenue when the earnings process is complete, net of applicable provision for discounts, returns and incentives, whether actual or estimated, based on the Company’s experience. This generally occurs when products are shipped to the customer in accordance with the sales agreement or purchase order, ownership and risk of loss pass to the customer, collectibility is reasonably assured and pricing is fixed or determinable. The Company’s general shipping terms are F.O.B. shipping point, where title is transferred and revenue is recognized when the products are shipped to customers. When the Company sells F.O.B. destination point, title is transferred and the Company recognizes revenue on delivery or customer acceptance, depending on terms of the sales agreement. Service sales, representing after-market repair and maintenance, engineering activities, software license sales and services and lease income, though significantly less than 1% of net sales and not material to the consolidated financial statements, are recognized as the services are completed or the software products and services are delivered. If actual costs of sales returns, incentives and discounts were to significantly exceed the recorded estimated allowance, the Company’s sales would be adversely affected.

Segment and Discontinued Operations Information

The Company had operated under two reportable segments, the connector products segment and the venting products segment. As set forth in Note 11 “Discontinued Operations,” on August 31, 2010, the Company sold substantially all of the assets and liabilities of its venting segment. Accordingly, the Company has classified the results of the venting products segment, including impairments and losses of goodwill and other assets, as discontinued operations in the Condensed Consolidated Statements of Operations for all periods presented. Except as otherwise stated below, discussion in these notes pertains to the Company’s continuing operations.

As a result of the sale of the assets of Simpson Dura-Vent Company, Inc (“Simpson Dura-Vent”), the Company has reorganized its operating segments into three reportable operating segments consisting of North America, Europe and Asia/Pacific.

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Net Earnings (Loss) Per Common Share

Basic earnings (loss) per common share is computed based on the weighted average number of common shares outstanding. Potentially dilutive securities, 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 (loss) per share (“EPS”) to diluted EPS:

	Three Months Ended					Nine Months Ended
(in thousands, except)	September 30,					September 30,
per-share amounts)	2011		2010			2011		2010
Earnings from continuing operations, net of tax	$	19,380	$	18,408		$	45,951	$	49,297
Loss from discontinued operations, net of tax	—		(1,226		)	—		(16,212		)
Net income available to common stockholders	$	19,380	$	17,182		$	45,951	$	33,085
Basic weighted average shares outstanding	48,253		49,427			49,247		49,411
Dilutive effect of potential common stock equivalents — stock options	35		100			49		137
Diluted weighted average shares outstanding	48,288		49,527			49,296		49,548
Net earnings (loss) per share — basic:
Continuing operations	$	0.40	$	0.37		$	0.93	$	1.00
Discontinued operations	—		(0.02		)	—		(0.33		)
Net income	0.40		0.35			0.93		0.67
Net earnings (loss) per share — diluted:
Continuing operations	$	0.40	$	0.37		$	0.93	$	0.99
Discontinued operations	—		(0.02		)	—		(0.33		)
Net income	0.40		0.35			0.93		0.67
Potentially dilutive securities excluded from earnings per diluted share because their effect is anti-dilutive	1,752		1,062			1,746		925

Anti-dilutive shares attributable to outstanding stock options were excluded from the calculation of diluted net income per share.

Accounting for Stock-Based Compensation

With the approval of the Company’s stockholders on April 26, 2011, the Company adopted the Simpson Manufacturing Co., Inc. 2011 Incentive Plan (the “2011 Plan”). The 2011 Plan amended and restated in their entirety, and incorporated and superseded, both the Simpson Manufacturing Co., Inc. 1994 Stock Option Plan (the “1994 Plan”), which was principally for the Company’s employees, and the Simpson Manufacturing Co., Inc. 1995 Independent Director Stock Option Plan (the “1995 Plan”), which was for its independent directors. Options previously granted under the 1994 Plan or the 1995 Plan will not be affected by the adoption of the 2011 Plan and will continue to be governed by the 1994 Plan or the 1995 Plan, respectively.

Under the 1994 Plan, the Company could grant incentive stock options and non-qualified stock options, although the Company granted only non-qualified stock options under the 1994 Plan and the 1995 Plan. The Company generally granted options under each of the 1994 Plan and the 1995 Plan once each year. The exercise price per share of each option granted in February 2011 and February 2010 under the 1994 Plan equaled the closing market price per share

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of the Company’s common stock as reported by the New York Stock Exchange on the day preceding the day that the Compensation and Leadership Development Committee of the Company’s Board of Directors met to approve the grant of the options. The exercise price per share under each option granted under the 1995 Plan was at the fair market value on the date specified in the 1995 Plan. Options vest and expire according to terms established at the grant date. Options granted under the 1994 Plan typically vest evenly over the requisite service period of four years and have a term of seven years. The vesting of options granted under the 1994 Plan will be accelerated if the grantee ceases to be employed by the Company after reaching age 60 or if there is a change in control of the Company. Options granted under the 1995 Plan are fully vested on the date of grant. Shares of common stock issued on exercise of stock options under the 1994 Plan and the 1995 Plan are registered under the Securities Act of 1933.

Under the 2011 Plan, the Company may grant incentive stock options, non-qualified stock options, restricted stock and restricted stock units, although the Company currently intends to award primarily restricted stock units and to a lesser extent, if at all, non-qualified stock options. The Company does not currently intend to award incentive stock options or restricted stock. Under the 2011 Plan, no more than 16.3 million shares of the Company’s common stock may be issued (including shares already sold) pursuant to all awards under the 2011 Plan, including on exercise of options previously granted under the 1994 Plan and the 1995 Plan. Shares of common stock to be issued pursuant to the 2011 Plan are registered under the Securities Act of 1933.

The following table represents the Company’s stock option and restricted stock unit activity, including both continuing and discontinued operations, for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands)	2011		2010			2011			2010
Stock-based compensation expense recognized in operating expenses	$	1,230	$	432		$	3,524		$	1,017
Tax benefit of stock-based compensation expense in provision for income taxes	449		148			1,267			318
Stock-based compensation expense, net of tax	$	781	$	284		$	2,257		$	699
Fair value of shares vested	$	1,287	$	434		$	3,405		$	995
Proceeds to the Company from the exercise of stock-based compensation	$	—	$	23		$	154		$	978
Tax effect from exercise of stock-based compensation, including shortfall tax benefits	$	—	$	(35	)	$	(71	)	$	(118	)

	At September 30,
	2011		2010
Stock-based compensation cost capitalized in inventory	$	166	$	23

The amounts included in cost of sales, research and development and other engineering, selling, or general and administrative expense depend on the job functions performed by the employees to whom the stock options were granted. The amounts attributed to discontinued operations were not significant for any of the periods presented.

The assumptions used to calculate the fair value of options or restricted stock units granted are evaluated and revised, as necessary, to reflect market conditions and the Company’s experience.

Fair Value of Financial Instruments

The “Fair Value Measurements and Disclosures” topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards CodificationTM (“ASC”) establishes a valuation hierarchy for disclosure of the inputs used to

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measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; Level 3 inputs are unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value. A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

As of September 30, 2011, the Company’s investments consisted of only United States Treasury securities and money market funds aggregating $164.2 million, which are maintained in cash equivalents and are carried at cost, approximating fair value, based on Level 1 inputs. There are no other recurring or non-recurring fair value measurements.

Income Taxes

The Company uses an estimated annual effective tax rate to measure the tax benefit or tax expense recognized in each interim period. The provision for income taxes for the first three quarters of 2010, however, was computed based on those quarters as discrete periods due to the uncertainty regarding the Company’s ability to reliably estimate income before taxes during 2010, primarily as a result of uncertainty in the construction markets in which the Company operates.

The following table presents the Company’s effective tax rates and income tax expense for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended						Nine Months Ended
(in thousands, except)	September 30,						September 30,
percentage amounts)	2011			2010			2011			2010
Effective tax rate	34.2		%	37.0		%	37.1		%	38.4		%
Provision for income taxes	$	10,052		$	10,801		$	27,069		$	30,704

Recently Issued Accounting Standards

In June 2011, the FASB issued an amendment to the comprehensive income guidance which eliminates the option to present components of other comprehensive income as part of the statement of stockholders’ equity. This amendment requires that all non-owner changes in stockholders’ equity be presented in a single continuous statement or in two separate but consecutive statements. This amendment is effective in fiscal years, and interim periods within those years, beginning after December 15, 2011. The implementation of this amended accounting guidance is not expected to have a material effect on the Company’s consolidated financial position and results of operations.

In September 2011, the FASB issued an amendment to the goodwill impairment guidance which provides an option for companies to use a qualitative approach to test goodwill for impairment if certain conditions are met. The amendment is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, and early adoption is permitted. The implementation of this amended accounting guidance is not expected to have a material effect on the Company’s consolidated financial position and results of operations.

Other recent authoritative guidance issued by the FASB (including technical corrections to the ASC), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or is not expected to have a material effect on the Company’s consolidated financial statements.

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2.             Trade Accounts Receivable, Net

Trade accounts receivable consist of the following:

	At September 30,						At December 31,
(in thousands)	2011			2010			2010
Trade accounts receivable	$	100,877		$	97,059		$	70,781
Allowance for doubtful accounts	(1,210		)	(1,637		)	(1,344		)
Allowance for sales discounts and returns	(1,635		)	(1,787		)	(1,181		)
	$	98,032		$	93,635		$	68,256

3.             Inventories

Inventories consist of the following:

	At September 30,				At December 31,
(in thousands)	2011		2010		2010
Raw materials	$	71,908	$	61,566	$	61,996
In-process products	21,454		18,860		18,364
Finished products	78,780		70,287		71,937
	$	172,142	$	150,713	$	152,297

4.             Property, Plant and Equipment, Net

Property, plant and equipment, net, consist of the following:

	At September 30,						At December 31,
(in thousands)	2011			2010			2010
Land	$	28,889		$	26,589		$	26,384
Buildings and site improvements	152,167			144,861			141,834
Leasehold improvements	3,736			3,551			3,693
Machinery and equipment	203,687			184,694			186,021
	388,479			359,695			357,932
Less accumulated depreciation and amortization	(199,614		)	(186,996		)	(189,751		)
	188,865			172,699			168,181
Capital projects in progress	2,151			3,765			8,891
	$	191,016		$	176,464		$	177,072

The Company’s vacant facility in San Leandro, California, remained classified as an asset held for sale as of September 30, 2011, consistent with the classification at December 31, 2010. The Company concluded, in the quarter ended June 30, 2011, that the San Leandro facility, associated with the North American segment, is expected to be sold below carrying value, and therefore recorded an impairment charge, within general and administrative expense, of $1.1 million, equal to the amount by which carrying value exceeds net estimated realizable value. In April 2011, the facility in France, which was acquired in the Agence Internationale Commerciale et Industrielle, S.A.S. (“Aginco”) purchase, was sold for an amount approximately equal to its carrying cost.

5.             Investments

Equity Method Investment

At December 31, 2010, the Company had a 40.6% equity interest in Keymark Enterprises, LLC (“Keymark”), for which the Company accounted using the equity method. In March 2011, Keymark’s other owner defaulted on its loan and pledge agreement, entered into with the Company in October 2008, for the payment of the remaining

10

balance of $0.7 million that was due in March 2011. As a result, the Company was assigned an additional 5.5% equity interest pursuant to the pledge agreement, which discharged the remaining debt and increased the Company’s equity interest in Keymark to 46.1%. During the third quarter of 2011, the Company purchased the software assets of Keymark valued at $11.5 million for $6.2 million in net cash payments and its 46.05% equity interest in Keymark. The transactions resulted in a gain of $4.3 million based on the difference between the fair value of the Company’s investment in Keymark less its carrying value of $1.0 million. The acquired software is used by customers of the Company in designing and engineering residential structures. The Company was also repaid $0.5 million for a loan made to Keymark in December 2009. As of September 30, 2011, the Company no longer had an equity interest in Keymark or any remaining receivables from Keymark.

6.             Goodwill and Intangible Assets, Net

Goodwill was as follows:

	At September 30,				At December 31,
(in thousands)	2011		2010		2010
North America	$	41,585	$	41,632	$	41,761
Europe	26,249		32,106		26,367
Asia/Pacific	1,854		1,847		1,941
Total	$	69,688	$	75,585	$	70,069

Intangible assets, net, were as follows:

	At September 30, 2011
	Gross					Net
	Carrying		Accumulated			Carrying
(in thousands)	Amount		Amortization			Amount
North America	$	24,022	$	(12,746	)	$	11,276
Europe	14,567		(5,591		)	8,976
Total	$	38,589	$	(18,337	)	$	20,252

	At September 30, 2010
	Gross					Net
	Carrying		Accumulated			Carrying
	Amount		Amortization			Amount
North America	$	24,022	$	(10,140	)	$	13,882
Europe	13,183		(3,997		)	9,186
Total	$	37,205	$	(14,137	)	$	23,068

	At December 31, 2010
	Gross					Net
	Carrying		Accumulated			Carrying
	Amount		Amortization			Amount
North America	$	24,022	$	(10,792	)	$	13,230
Europe	14,632		(4,396		)	10,236
Total	$	38,654	$	(15,188	)	$	23,466

Intangible assets consist primarily of customer relationships, patents, unpatented technology and non-compete agreements. Amortization expense, for continuing and discontinued operations, for intangible assets during the three months ended September 30, 2011 and 2010, totaled $1.0 million and $1.0 million, respectively, and during the nine months ended September 30, 2011 and 2010, totaled $3.2 million and $3.5 million, respectively.

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At September 30, 2011, estimated future amortization of intangible assets was as follows:

(in thousands)
Final three months of 2011	$	1,054
2012	3,754
2013	3,187
2014	2,970
2015	2,200
2016	2,062
Thereafter	5,025
	$	20,252

The changes in the carrying amount of goodwill and intangible assets from December 31, 2010, to September 30, 2011, were as follows:

				Intangible
(in thousands)	Goodwill			Assets
Balance at December 31, 2010	$	70,069		$	23,466
Amortization	—			(3,242		)
Reclassifications	(336		)	(109		)
Foreign exchange	(45		)	137
Balance at September 30, 2011	$	69,688		$	20,252

7.             Debt

The Company has revolving lines of credit with different banks in the United States and Europe. The Company’s primary credit facility, a revolving line of credit with $200.0 million in available credit, charges interest at LIBOR plus 0.27% (at September 30, 2011, LIBOR plus 0.27% was 0.51%), expires in October 2012, and has commitment fees payable at the annual rate of 0.08% on the unused portion of the facility. Other revolving credit lines, with combined available credit of $4.5 million at September 30, 2011, charge interest ranging from 2.4% to 3.6% and have various maturity dates. There were no outstanding balances at September 30, 2011 and 2010, and December 31, 2010, and the Company was in compliance with its financial covenants at September 30, 2011.

8.             Commitments and Contingencies

Note 9 to the consolidated financial statements in the 2010 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. The resolution of claims and litigation is subject to inherent uncertainty and could have a material adverse effect on the Company’s financial condition, cash flows and results of operations.

The Company’s policy with regard to environmental liabilities is to accrue for future environmental assessments and remediation costs when information becomes available that indicates that it is probable that the Company is liable for any related claims and assessments and the amount of the liability is reasonably estimable. The Company does not believe that these environmental matters will have a material adverse effect on the Company’s financial condition, cash flows or results of operations.

Corrosion, hydrogen enbrittlement, cracking, material hardness, wood pressure-treating chemicals, misinstallations, misuse, design and assembly flaws, manufacturing defects, environmental conditions or other factors can contribute to failure of fasteners, connectors, tools, anchors, adhesives and venting products. On occasion, some of the fasteners and connectors that the Company sells have failed, although the Company has not incurred any material liability resulting from those failures. The Company attempts to avoid such failures by establishing and monitoring appropriate product specifications, manufacturing quality control procedures, inspection procedures and information on appropriate installation methods and conditions. The Company subjects its products to extensive testing, with results and conclusions published in Company catalogues and on its websites.

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Pending Claims

Four lawsuits (the “Cases”) have been filed against the Company in the Hawaii First Circuit Court: Alvarez v. Haseko Homes, Inc. and Simpson Manufacturing, Inc., Civil No. 09-1-2697-11 (“Case 1”); Ke Noho Kai Development, LLC v. Simpson Strong-Tie Company, Inc., and Honolulu Wood Treating Co., LTD., Case No. 09-1-1491-06 SSM (“Case 2”); North American Specialty Ins. Co. v. Simpson Strong-Tie Company, Inc. and K.C. Metal Products, Inc., Case No. 09-1-1490-06 VSM (“Case 3”); and Charles et al. v. Haseko Homes, Inc. et al. and Third Party Plaintiffs Haseko Homes, Inc. et al. v. Simpson Strong-Tie Company, Inc., et al., Civil No. 09-1-1932-08 (“Case 4”). Case 1 was filed on November 18, 2009. Cases 2 and 3 were originally filed on June 30, 2009. Case 4 was filed on August 19, 2009. The Cases all relate to alleged premature corrosion of the Company’s strap tie holdown products installed in buildings in a housing development known as Ocean Pointe in Honolulu, Hawaii, allegedly causing property damage. Case 1 is a class action brought by the owners of allegedly affected Ocean Pointe houses. Case 1 was originally filed as Kai et al. v. Haseko Homes, Inc., Haseko Construction, Inc. and Simpson Manufacturing, Inc., Case No. 09-1-1476, but was voluntarily dismissed and then re-filed with a new representative plaintiff. Case 2 is an action by the builders and developers of Ocean Pointe against the Company, claiming that either the Company’s strap tie holdowns are defective in design or manufacture or the Company failed to provide adequate warnings regarding the products’ susceptibility to corrosion in certain environments. Case 3 is a subrogation action brought by the insurance company for the builders and developers against the Company claiming the insurance company expended funds to correct problems allegedly caused by the Company’s products. Case 4 is a putative class action brought, like Case 1, by owners of allegedly affected Ocean Pointe homes. In Case 4, Haseko Homes, Inc. (“Haseko”), the developer of the Ocean Pointe development, has brought a third party complaint against the Company alleging that any damages for which Haseko may be liable are actually the fault of the Company. None of the Cases alleges a specific amount of damages sought, although each of the Cases seeks compensatory damages, and Case 1 seeks punitive damages. The Company is currently investigating the facts underlying the claims asserted in the Cases, including, among other things, the cause of the alleged corrosion; the severity of any problems shown to exist; the buildings affected; the responsibility of the general contractor, various subcontractors and other construction professionals for the alleged damages; the amount, if any, of damages suffered; and the costs of repair, if needed. At this time, the likelihood that the Company will be found liable for any property damage allegedly suffered and the extent of such liability, if any, are unknown. Management believes the Cases may not be resolved for an extended period. The Company intends to defend itself vigorously in connection with the Cases.

Based on facts currently known to the Company, the Company believes that all or part of the claims alleged in the Cases may be covered by its insurance policies. On April 19, 2011, an action was filed in the United States District Court for the District of Hawaii, National Union Fire Insurance Company of Pittsburgh, PA v. Simpson Manufacturing Company, Inc., et al., Civil No. 11-00254 ACK. In this action, Plaintiff National Union Fire Insurance Company of Pittsburgh, Pennsylvania (“National Union”), which issued certain Commercial General Liability insurance policies to the Company, seeks declaratory relief in the Cases with respect to its obligations to defend or indemnify the Company, Simpson Strong-Tie Company Inc., and a vendor of the Company’s strap tie holdown products. The Company has moved to dismiss or stay, or transfer, National Union’s action.  If the National Union action is not dismissed, the Company intends vigorously to defend all claims advanced by National Union and to assert all of its own claims against National Union.

Nishimura v. Gentry Homes, Ltd; Simpson Manufacturing Co., Inc.; and Simpson Strong-Tie Company, Inc., Civil no. 11-1-1522-07, was filed in the Circuit Court of the First Circuit of Hawaii on July 20, 2011. The case alleges premature corrosion of the Company’s strap tie holdown products in a housing development at Ewa Beach in Honolulu, Hawaii. The case is a putative class action brought by owners of allegedly affected homes. The Complaint alleges that the Company’s strap products and mudsill anchors are insufficiently corrosion resistant and/or fail to comply with Honolulu’s building code. The Company is currently investigating the claims asserted in the complaint, including, among other things: the existence and extent of the alleged corrosion, if any; the building code provisions alleged to be applicable and, if applicable, whether the products complied; the buildings affected; the responsibility of the general contractor, various subcontractors and other construction professionals for the alleged damages; the amount, if any, of damages suffered; and the costs of repair, if any are needed. At this time, the likelihood that the Company will be found liable for any damage allegedly suffered and the extent of such liability, if any, are unknown. The Company has not yet been formally served with the Complaint, but denies any liability of any kind and intends to defend itself vigorously in this case.

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9.             Stock-Based Incentive Plans

The Company currently has one stock-based incentive plan, which incorporates and supersedes its two previous plans (see Note 1 “Basis of Presentation — Accounting for Stock-Based Compensation”). Participants are granted stock-based awards only if the applicable Company-wide or profit-center operating goals, or both, established by the Compensation and Leadership Development Committee of the Board of Directors at the beginning of the year, are met. Participants occasionally may have an additional goal that is based on a strategic initiative of the Company.

The fair value of each stock option award was estimated on the date of grant using the Black-Scholes option pricing model. Expected volatility is based on historical volatilities of the Company’s common stock measured monthly over a term that is equivalent to the expected life of the award. The expected term of awards granted is estimated based on the Company’s prior exercise experience and future expectations of the exercise and termination behavior of the grantees. The risk-free rate is based on the yield of United States Treasury zero-coupon bonds with maturities comparable to the expected life in effect at the time of grant. The dividend yield is based on the expected dividend yield on the grant date.

Black-Scholes option pricing model assumptions for options granted in 2011 and 2010 are as follows:

Number		Risk-								Weighted
of Options		Free								Average
Granted	Grant	Interest		Dividend		Expected				Fair
(in thousands)	Date	Rate		Yield		Life	Volatility		Exercise Price	Value
1994 Plan
1,362	02/03/11	2.62	%	1.75	%	6.2 years	39.0	%	$29.66 to $32.63	$	10.33
148	02/02/10	2.93	%	1.62	%	6.5 years	36.0	%	$24.75	$	8.46
1995 Plan
30	02/15/11	2.92	%	1.76	%	6.6 years	38.0	%	$29.58	$	10.49

No options were granted under the 1995 Plan in 2010.

The following table summarizes the Company’s stock option activity for the nine months ended September 30, 2011:

					Weighted-
			Weighted-		Average	Aggregate
			Average		Remaining	Intrinsic
	Shares		Exercise		Contractual	Value *
Non-Qualified Stock Options	(in thousands)		Price		Life (in years)	(in thousands)
Outstanding at January 1, 2011	1,124		$	34.19
Granted	1,392		29.66
Exercised	(7	)	23.74
Forfeited	(20	)	35.69
Outstanding at September 30, 2011	2,489		$	31.68	4.3	$	370
Outstanding and expected to vest at September 30, 2011	2,437		$	31.74	4.3	$	360
Exercisable at September 30, 2011	1,165		$	34.58	2.2	$	233

*  The intrinsic value represents the amount, if any, by which the fair market value of the underlying common stock exceeds the exercise price of the option, using the closing price per share of $24.93 as reported by the New York Stock Exchange on September 30, 2011.

The total intrinsic value of options exercised during the nine months ended September 30, 2011 and 2010, was $40 thousand and $0.3 million, respectively.

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A summary of the status of unvested options as of September 30, 2011, and changes during the nine months ended September 30, 2011, are presented below:

			Weighted-
			Average
	Shares		Grant-Date
Unvested Options	(in thousands)		Fair Value
Unvested at January 1, 2011	180		$	7.85
Granted	1,392		10.33
Vested	(242	)	9.86
Forfeited	(5	)	9.25
Unvested at September 30, 2011	1,325		$	10.09

As of September 30, 2011, $17.4 million of total unrecognized compensation cost was related to unvested share-based compensation arrangements under the 1994 Plan. This cost is expected to be recognized over a weighted-average period of 3.5 years. Options granted under the 1995 Plan are fully vested and are expensed on the date of grant.

10.           Segment Information

The Company is organized into three reportable segments. The segments are defined by the regions where the Company’s products are manufactured, marketed and distributed to the Company’s customers. The three regional segments are the North American segment, comprising primarily the United States and Canada, the European segment and the Asia/Pacific segment, comprising the Company’s operations in China, Hong Kong, the south Pacific and the Middle East. These segments are similar in several ways, including the types of materials, the production processes, the distribution channels and the product applications.

The following table illustrates certain measurements used by management to assess the performance as of or for the following periods:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands)	2011			2010			2011			2010
Net Sales
North America	$	127,998		$	115,206		$	371,732		$	350,700
Europe	31,761			28,545			93,206			78,137
Asia/Pacific	2,370			2,616			7,062			6,964
Administrative and all other	237			80			713			80
Total	$	162,366		$	146,447		$	472,713		$	435,881
Sales to Other Segments*
North America	$	1,093		$	1,674		$	3,905		$	3,282
Europe	—			18			250			85
Asia/Pacific	3,350			2,339			7,505			5,936
Total	$	4,443		$	4,031		$	11,660		$	9,303
Income (Loss) from Operations
North America	$	23,594		$	24,317		$	69,463		$	73,515
Europe	2,801			3,420			3,997			4,117
Asia/Pacific	(410		)	(11		)	(1,674		)	(320		)
Administrative and all other	(1,103		)	1,526			(3,413		)	2,970
Total	$	24,882		$	29,252		$	68,373		$	80,282

* The sales to other segments are eliminated on consolidation.

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					At
	At September 30,				December 31,
(in thousands)	2011		2010		2010
Total Assets
North America	$	608,350	$	546,726	$	557,762
Europe	131,138		132,988		123,669
Asia/Pacific	28,349		23,793		25,576
Administrative and all other	87,632		158,327		167,702
Total	$	855,469	$	861,834	$	874,709

Cash collected by the Company’s United States subsidiaries is routinely transferred into the Company’s cash management accounts and, therefore, has been included in the total assets of “Administrative and all other.” Cash and cash equivalent balances in the “Administrative and all other” segment were $177.5 million, $230.4 million, and $274.6 million, as of September 30, 2011 and 2010, and December 31, 2010, respectively. Real estate assets previously allocated to the venting products segment have been allocated to the “Administrative and all other” as of August 31, 2010. See Note 11.

11.           Discontinued Operations

On August 31, 2010, the Company sold substantially all of the assets and liabilities of Simpson Dura-Vent Company, Inc. pursuant to an agreement dated June 30, 2010, with M&G Holding B.V. (“M&G”) and M&G Dura-Vent, Inc. The Company decided to sell the assets of Simpson Dura-Vent in order to focus exclusively on the development of its profitable connector products business. Simpson Dura-Vent represented the Company’s entire venting operating segment.

The results from discontinued operations, including the impairments and losses recorded in operating expenses, for the three and nine months ended September 30, 2010, were as follows:

	Three Months			Nine Months
	Ended			Ended
(in thousands)	September 30, 2010			September 30, 2010
Revenues	$	10,300		$	33,372
Cost of sales	8,957			28,073
Gross profit	1,343			5,299
Operating expenses	1,882			6,711
Loss on sale	657			657
Impairment charge	—			21,350
Loss from discontinued operations	(1,196		)	(23,419		)
Provision for (benefit from) income taxes from discontinued operations	30			(7,207		)
Loss from discontinued operations, net of tax	$	(1,226	)	$	(16,212	)

12.           Subsequent Events

In October 2011, the Company’s Board of Directors declared a cash dividend of $0.125 per share, estimated to total $6.0 million, to be paid on January 26, 2012, to stockholders of record on January 5, 2012.

In October 2011, the Company entered into an agreement to purchase all of the shares of S&P Clever Reinforcement Company AG and S&P Reinforcement International AG, both companies incorporated under the laws of Switzerland (collectively, “S&P Clever”), for 54 million Swiss Francs (equivalent, at the exchange rate on October 26, 2011, to $61.4 million), subject to post-closing adjustments. S&P Clever manufactures and sells engineered materials to repair, strengthen, and restore concrete and masonry construction and has operations in Switzerland, Germany, Portugal, Poland, The Netherlands and Austria. The transaction is expected to close in January 2012.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This document contains forward-looking statements, based on numerous assumptions and subject to risks and uncertainties. Although the Company believes that the forward-looking statements are reasonable, it does not and cannot give any assurance that its beliefs and expectations will prove to be correct. Many factors could significantly affect the Company’s operations and cause the Company’s actual results to be substantially different from the Company’s expectations. See “Part II, Item 1A - Risk Factors.” Actual results might differ materially from results suggested by any forward-looking statements in this report. The Company does not have an obligation to publicly update any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events or otherwise.

The following is a discussion and analysis of the consolidated financial condition and results of continuing operations for the Company for the three and nine months ended September 30, 2011 and 2010. The following should be read in conjunction with the interim Condensed Consolidated Financial Statements and related Notes appearing elsewhere herein.

Results of Continuing Operations for the Three Months Ended September 30, 2011, Compared with the Three Months Ended September 30, 2010

Income from operations decreased 14.9% from $29.3 million in the third quarter of 2010 to $24.9 million in the third quarter of 2011. The following table illustrates the change in the Company’s continuing operations from the three months ended September 30, 2010, to the three months ended September 30, 2011, and the increases or decreases for each category by segment.

	Three Months Ended September 30,
	Continuing			Increase (Decrease) in Operating Segment												Continuing
	Operations			North						Asia/			Admin &			Operations
(in thousands)	2010			America			Europe			Pacific			All Other			2011
Net sales	$	146,447		$	12,792		$	3,216		$	(246	)	$	157		$	162,366
Cost of sales	80,750			2,643			3,078			330			118			86,919
Gross profit	65,697			10,149			138			(576		)	39			75,447
Research and development and other engineering expense	5,715			700			384			10			(5		)	6,804
Selling expense	15,946			2,218			338			136			(5		)	18,633
General and administrative expense	20,001			2,751			62			(318		)	2,678			25,174
Gain on sale of assets	(5,217		)	5,203			(27		)	(5		)	—			(46		)
Income from operations	29,252			(723		)	(619		)	(399		)	(2,629		)	24,882
Income (loss) in equity method investment, before tax	(153		)	4,624			—			—			—			4,471
Interest income, net	110			(36		)	3			29			(27		)	79
Income from continuing operations before income taxes	29,209			3,865			(616		)	(370		)	(2,656		)	29,432
Provision for income taxes from continuing operations	10,801			3,100			(119		)	(67		)	(3,663		)	10,052
Income from continuing operations, net of tax	$	18,408		$	765		$	(497	)	$	(303	)	$	1,007		$	19,380

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The following table represents net sales by segment for the three months ended September 30, 2010 and 2011:

	North						Asia/			Admin &
(in thousands)	America			Europe			Pacific			All Other			Total
Three months ended:
September 30, 2010	$	115,206		$	28,545		$	2,616		$	80		$	146,447
September 30, 2011	127,998			31,761			2,370			237			162,366
Increase (decrease)	12,792			3,216			(246		)	157			15,919
Percentage increase (decrease)	11.1		%	11.3		%	(9.4		)%	196.3		%	10.9		%

Net sales increased 10.9% from $146.4 million in the third quarter of 2010 to $162.4 million in the third quarter of 2011. The increase in net sales resulted from increases in both sales volume and average prices, as average prices  increased 4.2% as compared to the third quarter of 2010. The Company had income, net of tax, of $19.4 million for the third quarter of 2011 compared to income, net of tax, of $18.4 million for the third quarter of 2010. Diluted income, net of tax, per common share was $0.40 for the third quarter of 2011 compared to diluted income, net of tax, of $0.37 per common share for the third quarter of 2010.

In the third quarter of 2011, sales increased throughout North America and in Europe. Sales increased in the United States with above-average increases in the western, excluding California, midwestern and southeastern regions, as compared to the third quarter of 2010. Sales to contractor distributors, dealer distributors and lumber dealers increased, although economic conditions remain challenging, and sales to home centers decreased. The sales increase was broad-based across most of the Company’s major product lines as compared to the third quarter of 2010.

The following table represents gross profit by segment for the three months ended September 30, 2010 and 2011:

	North						Asia/			Admin &
(in thousands)	America			Europe			Pacific			All Other			Total
Three months ended:
September 30, 2010	$	54,113		$	10,790		$	657		$	137		$	65,697
September 30, 2011	64,262			10,928			81			176			75,447
Increase (decrease)	10,149			138			(576		)	39			9,750
Percentage increase (decrease)	18.8		%	1.3		%	(87.7		)%	28.5		%	14.8		%

Gross margins increased from 44.9% in the third quarter of 2010 to 46.5% in the third quarter of 2011, primarily due to lower manufacturing costs, including slightly lower costs of material and labor, partly offset by increased factory overhead costs. Steel prices increased from their levels in mid-2010, as steel mills have been raising prices as demand returns to global steel markets. The Company expects steel prices to remain at current levels for the remainder of 2011. The Company’s inventories increased 13.0% from $152.3 million at December 31, 2010, to $172.1 million at September 30, 2011.

Research and development and other engineering expense increased 19.1% from $5.7 million in the third quarter of 2010 to $6.8 million in the third quarter of 2011, including increases in professional fees of $0.4 million, personnel costs of $0.4 million and cash profit sharing of $0.3 million. Selling expense increased 16.8% from $15.9 million in the third quarter of 2010 to $18.6 million in the third quarter of 2011, including increases in personnel costs of $1.9 million and cash profit sharing and commissions of $1.1 million, partly offset by a decrease in promotional costs of $0.3 million. General and administrative expense increased 25.9% from $20.0 million in the third quarter of 2010 to $25.2 million in the third quarter of 2011, including increases in professional and legal fees of $3.2 million, personnel costs of $1.0 million and cash profit sharing of $0.7 million. General and administrative professional fees incurred during the third quarter of 2011 included fees to identify and analyze potential acquisition targets. The Company also accrued an expense of $1.1 million in the quarter related to an anticipated legal settlement. The changes in operating costs were mostly attributable to the North American segment. During the third quarter of 2011, the Company purchased the software assets of Keymark valued at $11.5 million for $6.2 million in net cash payments and its 46.05% equity interest in Keymark. The transactions resulted in a gain of $4.3 million based on the difference between the fair value of the Company’s investment in Keymark less its carrying value of $1.0 million. The acquired software is used by customers of the Company in designing and engineering residential structures. The Company was also repaid $0.5 million for a loan it made to Keymark in December 2009. As of September 30, 2011, the Company no longer had an equity interest in Keymark or any remaining receivables from Keymark. The Company’s effective tax rate was 34.2% in the third quarter of 2011, as compared to 37.0% in the third quarter of 2010, primarily due to the release of valuation allowances related to the liquidation of the equity interest in Keymark.

18

Results of Continuing Operations for the Nine Months Ended September 30, 2011, Compared with the Nine Months Ended September 30, 2010

Income from operations decreased 14.8% from $80.3 million in the first nine months of 2010 to $68.4 million in the first nine months of 2011. The following table illustrates the change in the Company’s continuing operations from the nine months ended September 30, 2010, to the nine months ended September 30, 2011, and the increases or decreases for each category by segment.

	Nine Months Ended September 30,
	Continuing			Increase (Decrease) in Operating Segment												Continuing
	Operations			North						Asia/			Admin &			Operations
(in thousands)	2010			America			Europe			Pacific			All Other			2011
Net sales	$	435,881		$	21,032		$	15,069		$	98		$	633		$	472,713
Cost of sales	239,370			3,372			11,368			1,701			1,008			256,819
Gross profit	196,511			17,660			3,701			(1,603		)	(375		)	215,894
Research and development and other engineering expense	16,156			2,742			861			(7		)	(9		)	19,743
Selling expense	47,429			6,173			1,534			412			(21		)	55,527
General and administrative expense	57,457			11,598			1,708			(648		)	2,135			72,250
Loss (gain) on sale of assets	(4,813		)	1,199			(282		)	(6		)	3,903			1
Income from operations	80,282			(4,052		)	(120		)	(1,354		)	(6,383		)	68,373
Income (loss) in equity method investment, before tax	(429		)	4,818			—			—			—			4,389
Interest income, net	148			73			51			53			(67		)	258
Income from continuing operations before income taxes	80,001			839			(69		)	(1,301		)	6,450			73,020
Provision for income taxes from continuing operations	30,704			(1,641		)	757			(240		)	(2,511		)	27,069
Income from continuing operations, net of tax	$	49,297		$	2,480		$	(826	)	$	(1,061	)	$	(3,939	)	$	45,951

The following table represents net sales by segment for the nine months ended September 30, 2010 and 2011:

	North						Asia/			Admin &
(in thousands)	America			Europe			Pacific			All Other			Total
Nine months ended:
September 30, 2010	$	350,700		$	78,137		$	6,964		$	80		$	435,881
September 30, 2011	371,732			93,206			7,062			713			472,713
Increase	21,032			15,069			98			633			36,832
Percentage increase	6.0		%	19.3		%	1.4		%	791.3		%	8.5		%

In the first nine months of 2011, net sales increased 8.5% to $472.7 million as compared to net sales of $435.9 million in the first nine months of 2010. The increase in net sales resulted from increases in both sales volume and average prices, as average prices increased 4.7% as compared to the first nine months of 2010. The Company had income, net of tax, of $46.0 million for the first nine months of 2011 compared to income, net of tax, of $49.3 million for the first nine months of 2010. Diluted income, net of tax, per common share was $0.93 for the first nine months of 2011 compared to diluted income, net of tax, of $0.99 per common share for the first nine months of 2010.

In the first nine months of 2011, sales increased throughout most of North America and in Europe. Sales increased in the United States with above-average increases in the midwestern and southeastern regions as compared to the first nine months of 2010. Sales in Canada decreased compared to the first nine months of 2010. Sales to contractor distributors, dealer distributors, lumber dealers and home centers increased. The sales increase was broad-based across most of the Company’s major product lines as compared to the first nine months of 2010, although sales of shearwalls decreased slightly.

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The following table represents gross profit by segment for the nine months ended September 30, 2010 and 2011:

	North						Asia/			Admin &
(in thousands)	America			Europe			Pacific			All Other			Total
Nine months ended:
September 30, 2010	$	166,863		$	26,894		$	2,322		$	432		$	196,511
September 30, 2011	184,523			30,595			719			57			215,894
Increase (decrease)	17,660			3,701			(1,603		)	(375		)	19,383
Percentage increase (decrease)	10.6		%	13.8		%	(69.0		)%	(86.8		)%	9.9		%

Gross margins increased from 45.1% in the first nine months of 2010 to 45.7% in the first nine months of 2011, primarily due to slightly lower manufacturing costs, including lower costs of material and labor, partly offset by increased factory overhead costs.

Research and development and other engineering expense increased 22.2% from $16.2 million in the first nine months of 2010 to $19.7 million in the first nine months of 2011, including increases in personnel costs of $1.6 million, cash profit sharing of $1.1 million and professional services of $0.9 million. Selling expense increased 17.1% from $47.4 million in the first nine months of 2010 to $55.5 million in the first nine months of 2011, including increases in personnel costs of $4.4 million, cash profit sharing and commissions of $2.6 million, and promotional costs of $0.6 million. General and administrative expense increased 25.7% from $57.5 million in the first nine months of 2010 to $72.3 million in the first nine months of 2011, including increases in professional and legal fees of $5.0 million, personnel costs of $3.6 million, cash profit sharing of $3.0 million, impairment of available for sale assets of $1.1 million and various other items. The Company concluded, in the second quarter of 2011, that its San Leandro facility is expected to be sold below carrying value, and therefore recorded an impairment charge of $1.1 million, equal to the amount by which carrying value exceeds the estimated net realizable value. The changes in operating costs were mostly attributable to the North American segment. The effective tax rate was 37.1% in the first nine months of 2011, as compared to 38.4% in the first nine months of 2010.

Critical Accounting Policies and Estimates

The Company did not make any significant changes to its critical accounting policies and estimates during the three or nine months ended September 30, 2011, from those disclosed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in the Company’s 2010 Annual Report. Recent authoritative guidance issued by the FASB (including technical corrections to the ASC), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or is not expected to have a material effect on the Company’s consolidated financial statements.

Liquidity and Sources of Capital

As of September 30, 2011, working capital was $477.7 million as compared to $496.8 million at September 30, 2010, and $511.6 million at December 31, 2010. The decrease in working capital from December 31, 2010, was primarily due to decreases in cash and cash equivalents of $69.9 million, other current assets of $5.0 million and assets held for sale of $4.0 million, and increases in accrued cash profit sharing and commissions of $9.1 million and accrued liabilities of $4.9 million. The decrease in cash and cash equivalents was primarily due to the repurchase of the Company’s common stock for $53.2 million during the second and third quarters of 2011. The decrease in assets held for sale was a result of the sale of two properties and the impairment of the Company’s property in San Leandro, California. The increase in cash profit sharing and commissions was due to increased seasonal operating profits in the third quarter of 2011 compared to the fourth quarter of 2010. These decreases in working capital were partly offset by increases in net trade accounts receivable of $29.8 million and inventories of $19.8 million, and decreases in trade accounts payable of $7.4 million and accrued profit sharing trust contributions of $2.0 million. Net trade accounts receivable increased 43.6% from December 31, 2010, as a result of a seasonal increase in sales in the latter part of the third quarter of 2011 compared to the latter part of the fourth quarter of 2010. Raw material inventories increased 16.0% as compared to December 31, 2010, and in-process and finished goods inventories increased 11.0% over the same period. The balance of the change in working capital was due to the fluctuation of various other asset and liability accounts, none of which was individually material. The working capital change and changes in noncurrent assets and liabilities, combined with net income of $46.0 million and noncash expenses,

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primarily depreciation, amortization, impairment of assets held for sale and stock-based compensation charges totaling $19.9 million, resulted in net cash used by operating activities of $24.1 million. As of September 30, 2011, the Company had unused credit facilities available of $204.5 million.

The Company’s vacant facility in San Leandro, California, remained classified as an asset held for sale as of September 30, 2011, consistent with the classification at December 31, 2010. The Company concluded, in the quarter ended June 30, 2011, that the San Leandro facility is expected to be sold below carrying value, and therefore recorded an impairment charge of $1.1 million, equal to the amount by which carrying value exceeds net estimated realizable value.

The Company’s investing activities used cash of $19.8 million and are primarily due to capital expenditures. The Company’s capital expenditures were primarily to acquire machinery and equipment for its operations in North America, to improve its facility in San Bernardino, California, and to acquire real estate in Germany, and the cash received was primarily from the sale of facilities in Visalia, California, and in France. The Company estimates that its full-year capital spending will total $30 million in 2011.

In October 2011, the Company entered into an agreement to purchase all of the shares of S&P Clever Reinforcement Company AG and S&P Reinforcement International AG, both companies incorporated under the laws of Switzerland (collectively, “S&P Clever”), for 54 million Swiss Francs (equivalent, at the exchange rate on October 26, 2011, to $61.4 million), subject to post-closing adjustments. S&P Clever manufactures and sells engineered materials to repair, strengthen, and restore concrete and masonry construction and has operations in Switzerland, Germany, Portugal, Poland, The Netherlands and Austria. The transaction is expected to close in January 2012.

The Company’s financing activities used net cash of $70.4 million. The repurchase of 1.9 million shares of the Company’s common stock in the amount of $53.2 million and the payments of cash dividends in the amount of $17.3 million were the primary uses of cash. In October 2011, the Company’s Board of Directors declared a cash dividend of $0.125 per share, estimated to total $6.0 million, to be paid on January 26, 2012, to stockholders of record on January 5, 2012. The Company has $46.8 million remaining of its common stock repurchase authorization for 2011.

The Company believes that cash generated by operations and borrowings available under its credit facility will be sufficient for the Company’s working capital needs and planned capital expenditures for the next 12 months. Depending, however, on the Company’s future growth and possible acquisitions, it may become necessary to secure additional sources of financing, which may not be available on reasonable terms, or at all.

The Company believes that the effect of inflation on the Company has not been material in recent years, as general inflation rates have remained relatively low. Because, however, the Company’s main raw material is steel, increases in steel prices may adversely affect the Company’s gross margins if it cannot recover the higher costs through price increases.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company has foreign exchange rate risk in its international operations, primarily Europe and Canada, and through purchases from foreign vendors. The Company does not currently hedge this risk. If the exchange rate were to change by 10% in any one country or currency where the Company has operations, the change in net income would not be material to the Company’s operations as a whole. The translation adjustment resulted in a decrease in accumulated other comprehensive income of $13.9 million and $3.6 million for the three and nine months ended September 30, 2011. The translation adjustment in the third quarter was primarily due to the effect of the strengthening of the United States dollar in relation to the Canadian and European currencies. The translation adjustment in the nine-month period was primarily due to the effect of the strengthening of the United States dollar in relation to the Canadian currency, partly offset by the weakening of the United States dollar in relation to most European currencies.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures.As of September 30, 2011, an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures was performed under the supervision and with the participation of the Company’s management, including the chief executive officer (“CEO”) and the chief financial officer (“CFO”). Based on that evaluation, the CEO and the CFO concluded that the Company’s disclosure controls

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and procedures were effective at the reasonable assurance level as of that date and that the Company’s disclosure controls and procedures at that date were designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, including ensuring that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including the CEO and the CFO, as appropriate to allow timely decisions regarding required disclosures.

The Company’s management, including the CEO and the CFO, does not, however, expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting will necessarily prevent all fraud and material errors. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the facts that there are resource constraints and that the benefits of controls must be considered relative to their costs. The inherent limitations in an internal control system include the realities that judgments can be faulty and that breakdowns can occur because of simple error or mistake. Controls also can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of internal control is also based in part on assumptions about the likelihood of future events, and there can be only reasonable, not absolute, assurance that any design will succeed in achieving its stated goals under all potential events and conditions. Over time, controls may become inadequate because of changes in circumstances, or the degree of compliance with the policies and procedures may deteriorate.

Changes in Internal Control over Financial Reporting.During the three months ended September 30, 2011, the Company made no changes to its internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

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.

Four lawsuits (the “Cases”) have been filed against the Company in the Hawaii First Circuit Court: Alvarez v. Haseko Homes, Inc. and Simpson Manufacturing, Inc., Civil No. 09-1-2697-11 (“Case 1”); Ke Noho Kai Development, LLC v. Simpson Strong-Tie Company, Inc., and Honolulu Wood Treating Co., LTD., Case No. 09-1-1491-06 SSM (“Case 2”); North American Specialty Ins. Co. v. Simpson Strong-Tie Company, Inc. and K.C. Metal Products, Inc., Case No. 09-1-1490-06 VSM (“Case 3”); and Charles et al. v. Haseko Homes, Inc. et al. and Third Party Plaintiffs Haseko Homes, Inc. et al. v. Simpson Strong-Tie Company, Inc., et al., Civil No. 09-1-1932-08 (“Case 4”). Case 1 was filed on November 18, 2009. Cases 2 and 3 were originally filed on June 30, 2009. Case 4 was filed on August 19, 2009. The Cases all relate to alleged premature corrosion of the Company’s strap tie holdown products installed in buildings in a housing development known as Ocean Pointe in Honolulu, Hawaii, allegedly causing property damage. Case 1 is a class action brought by the owners of allegedly affected Ocean Pointe houses. Case 1 was originally filed as Kai et al. v. Haseko Homes, Inc., Haseko Construction, Inc. and Simpson Manufacturing, Inc., Case No. 09-1-1476, but was voluntarily dismissed and then re-filed with a new representative plaintiff. Case 2 is an action by the builders and developers of Ocean Pointe against the Company, claiming that either the Company’s strap tie holdowns are defective in design or manufacture or the Company failed to provide adequate warnings regarding the products’ susceptibility to corrosion in certain environments. Case 3 is a subrogation action brought by the insurance company for the builders and developers against the Company claiming the insurance company expended funds to correct problems allegedly caused by the Company’s products. Case 4 is a putative class action brought, like Case 1, by owners of allegedly affected Ocean Pointe homes. In Case 4, Haseko Homes, Inc. (“Haseko”), the developer of the Ocean Pointe development, has brought a third party complaint against the Company alleging that any damages for which Haseko may be liable are actually the fault of the Company. None of the Cases alleges a specific amount of damages sought, although each of the Cases seeks compensatory damages, and Case 1 seeks punitive damages. The Company is currently investigating the facts underlying the claims asserted in the Cases, including, among other things, the cause of the alleged corrosion; the severity of any problems shown to exist; the buildings affected; the responsibility of the general contractor, various subcontractors and other construction professionals for the alleged damages; the amount, if any, of damages suffered; and the costs of repair, if needed. At this time, the likelihood that the Company will be found liable for any

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property damage allegedly suffered and the extent of such liability, if any, are unknown. Management believes the Cases may not be resolved for an extended period. The Company intends to defend itself vigorously in connection with the Cases.

Based on facts currently known to the Company, the Company believes that all or part of the claims alleged in the Cases may be covered by its insurance policies. On April 19, 2011, an action was filed in the United States District Court for the District of Hawaii, National Union Fire Insurance Company of Pittsburgh, PA v. Simpson Manufacturing Company, Inc., et al., Civil No. 11-00254 ACK. In this action, Plaintiff National Union Fire Insurance Company of Pittsburgh, Pennsylvania (“National Union”), which issued certain Commercial General Liability insurance policies to the Company, seeks declaratory relief in the Cases with respect to its obligations to defend or indemnify the Company, Simpson Strong-Tie Company Inc., and a vendor of the Company’s strap tie holdown products. The Company has moved to dismiss or stay, or transfer, National Union’s action.  If the National Union action is not dismissed, the Company intends vigorously to defend all claims advanced by National Union and to assert all of its own claims against National Union.

Nishimura v. Gentry Homes, Ltd; Simpson Manufacturing Co., Inc.; and Simpson Strong-Tie Company, Inc., Civil no. 11-1-1522-07, was filed in the Circuit Court of the First Circuit of Hawaii on July 20, 2011. The case alleges premature corrosion of the Company’s strap tie holdown products in a housing development at Ewa Beach in Honolulu, Hawaii. The case is a putative class action brought by owners of allegedly affected homes. The Complaint alleges that the Company’s strap products and mudsill anchors are insufficiently corrosion resistant and/or fail to comply with Honolulu’s building code. The Company is currently investigating the claims asserted in the complaint, including, among other things: the existence and extent of the alleged corrosion, if any; the building code provisions alleged to be applicable and, if applicable, whether the products complied; the buildings affected; the responsibility of the general contractor, various subcontractors and other construction professionals for the alleged damages; the amount, if any, of damages suffered; and the costs of repair, if any are needed. At this time, the likelihood that the Company will be found liable for any damage allegedly suffered and the extent of such liability, if any, are unknown. The Company has not yet been formally served with the Complaint, but denies any liability of any kind and intends to defend itself vigorously in this case.

The Company is not engaged in any other legal proceedings as of the date hereof, which the Company expects individually or in the aggregate to have a material adverse effect on the Company’s financial condition, cash flows or results of operations. The resolution of claims and litigation is subject to inherent uncertainty and could have a material adverse effect on the Company’s financial condition, cash flows or results of operations.

Item 1A. Risk Factors

We are affected by risks specific to us, as well as risks that generally affect businesses operating in global markets. Some of the significant factors that could materially adversely affect our business, financial condition and operating results appear in “Item 1A. Risk Factors” of our most recent Annual Report on Form 10-K (available at www.simpsonmfg.com/docs/10K-2010.pdf or www.sec.gov).

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

In February 2011, the Board of Directors authorized the Company to repurchase up to $100.0 million of the Company’s common stock. This replaced the $50.0 million repurchase authorization from December 2009. The authorization will remain in effect through the end of 2011. The following table presents the monthly purchases by the Company during the third quarter of 2011:

					(d)
				(c)	Approximate
	(a)			Total Number	Dollar Value of
	Total	(b)		of Shares Purchased	Shares that May Yet
	Number of	Average		as Part of Publicly	Be Purchased under
	Shares	Price Paid		Announced Plans	the Plans or
Period	Purchased	per Share		or Programs	Programs
September 2011	120,400	$	26.02	120,400	$46.8 million
Total	120,400

Item 6. Exhibits.

The following exhibits are either incorporated by reference into this report or filed with this report, as indicated below.

3.1	Certificate of Incorporation of Simpson Manufacturing Co., Inc., as amended, is incorporated by reference to Exhibit 3.1 of its Quarterly Report on Form 10-Q for the quarter ended September 30, 2007.
3.2	Bylaws of Simpson Manufacturing Co., Inc., as amended through December 13, 2010, are incorporated by reference to Exhibit 3.2 of its Current Report on Form 8-K dated December 16, 2010.
4.1	Amended Rights Agreement dated as of June 15, 2009, between Simpson Manufacturing Co., Inc. and Computershare Trust Company, N.A., which includes as Exhibit B the form of Rights Certificate, is incorporated by reference to Exhibit 4.1 of Simpson Manufacturing Co., Inc.’s Registration Statement on Form 8-A/A dated June 15, 2009.
4.2	Certificate of Designation, Preferences and Rights of Series A Participating Preferred Stock of Simpson Manufacturing Co., Inc., dated July 30, 1999, is incorporated by reference to Exhibit 4.2 of its Registration Statement on Form 8-A dated August 4, 1999.
4.3	Simpson Manufacturing Co., Inc. 401(k) Profit Sharing Plan for Salaried Employees is incorporated by reference to Exhibit 4.3 of Simpson Manufacturing Co., Inc.’s Registration Statement on Form S-8, File Number 333-173811, dated April 29, 2011.
4.4	Simpson Manufacturing Co., Inc. 401(k) Profit Sharing Plan for Hourly Employees is incorporated by reference to Exhibit 4.4 of Simpson Manufacturing Co., Inc.’s Registration Statement on Form S-8, File Number 333-173811, dated April 29, 2011.
10.1	Simpson Manufacturing Co., Inc. 1994 Stock Option Plan, as amended through February 13, 2008, is incorporated by reference to Exhibit 10.1 of Simpson Manufacturing Co., Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.
10.2	Simpson Manufacturing Co., Inc. 1995 Independent Director Stock Option Plan, as amended through November 18, 2004, is incorporated by reference to Exhibit 10.2 of Simpson Manufacturing Co., Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.

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10.3	Simpson Manufacturing Co., Inc. Executive Officer Cash Profit Sharing Plan, as amended through February 25, 2008, is incorporated by reference to Exhibit 10.3 of Simpson Manufacturing Co., Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008.
10.4	Credit Agreement dated as of October 10, 2007, among Simpson Manufacturing Co., Inc. as Borrower, the Lenders party thereto, Wells Fargo Bank as Agent, and Simpson Strong Tie Company Inc., and Simpson Strong-Tie International, Inc. as Guarantors, is incorporated by reference to Exhibit 10.4 of Simpson Manufacturing Co., Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010.
10.5	Form of Indemnification Agreement between Simpson Manufacturing Co., Inc. and its directors and executive officers, as well as the officers of Simpson Strong-Tie Company Inc., is incorporated by reference to Exhibit 10.2 of Simpson Manufacturing Co., Inc.’s Annual Report on Form 10-K for the year ended December 31, 2004.
10.6	Compensation of Named Executive Officers is incorporated by reference to Exhibit 10 of Simpson Manufacturing Co., Inc.’s Current Report on Form 8-K dated February 8, 2011.
10.7	Compensation of Named Executive Officers is incorporated by reference to Simpson Manufacturing Co., Inc.’s Schedule 14A Proxy Statement dated March 10, 2011.
10.8	Simpson Manufacturing Co., Inc. 2011 Incentive Plan is incorporated by reference to Exhibit A of Simpson Manufacturing Co., Inc.’s Schedule 14A Proxy Statement dated March 10, 2011.
10.9	Share Purchase Agreement dated as of October 26, 2011, between Josef Scherer and Yvonne Scherer, owners of S&P Clever Reinforcement Company AG and S&P Reinforcement International AG, both companies incorporated under the laws of Switzerland, on the one hand, and Simpson Manufacturing Co., Inc., on the other hand, is filed herewith.
31.	Rule 13a-14(a)/15d-14(a) Certifications are filed herewith.
32.	Section 1350 Certifications are filed herewith.
99.1	Simpson Manufacturing Co., Inc. 1994 Employee Stock Bonus Plan, as amended through November 18, 2004, is incorporated by reference to Exhibit 99.1 of Simpson Manufacturing Co., Inc.’s Annual Report on Form 10-K for the year ended December 31, 2007.
101	Financial statements from the quarterly report on Form 10-Q of Simpson Manufacturing Co., Inc. for the quarter ended September 30, 2011, formatted in XBRL, are filed herewith and include: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Stockholders’ Equity, (iv) the Condensed Consolidated Statements of Cash Flows and (v) the Notes to Condensed Consolidated Financial Statements.

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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:	November 8, 2011	By	/s/Karen Colonias
			Karen Colonias
			Chief Financial Officer
			(principal accounting and financial officer)

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EX-10.9

Exhibit 10.9

SHARE PURCHASE AGREEMENT

I.Parties

1.Josef Scherer, c/o S & P Clever Reinforcement Company AG, Seewernstrasse 127, CH-6423 Seewen, Switzerland

2.Yvonne Scherer, c/o S & P Clever Reinforcement Company AG, Seewernstrasse 127, CH-6423 Seewen, Switzerland

(each a “Seller”)
(together “Sellers”)

3.Simpson Manufacturing Co., Inc., 5956 West Las Positas Boulevard, Pleasanton, California 94588

(“Buyer”)

(each a „Party”)

(together „Parties”)

II.Introduction

1Sellers together own all shares in S&P Clever Reinforcement Company AG (“S&P Clever”) and S&P Reinforcement International AG (“S&P International”), both companies incorporated under the laws of Switzerland, with registered offices in Schwyz, Switzerland (both companies together “S&P Companies”). Buyer intends to purchase and Sellers intend to sell the aforesaid shares in accordance with the terms of this share purchase agreement (hereinafter the “SPA”).

III.Object of Sale

2Buyer shall purchase from Sellers the following shares (together “Shares”):

2.11’000 registered shares of S&P Clever with a nominal value of CHF 1’000.— each, equal to 100 % of the share capital of S&P Clever;

2.2100 registered shares of S&P International with a nominal value of CHF 1’000 each, equal to 100 % of the share capital of S&P International.

IV.Purchase Price

3The purchase price for all Shares is 54,000,000 Swiss Francs (“Purchase Price”) and is payable in cash at Closing (as defined in clause V.1) as follows:

3.150,000,000 Swiss Francs to the bank account to be designated by Sellers;

3.24,000,000 Swiss Francs to the escrow account in accordance with an escrow agreement, subject to the terms and conditions as substantially set forth in Annex 3.2.

4The amount of the Purchase Price shall be reduced as follows in the following events:

4.1If S&P Clever transfers the “real estate property Brunnen” to Sellers before the Closing Date, the Purchase Price shall be reduced by 275’000 Euros as per the actual currency rate, and the amount according to clause IV/3.1 shall be reduced by the same amount.

4.2If S&P Clever transfers the solar panels on the “Seewen property” to Sellers before the Closing Date (as defined in clause V.1), the Purchase Price shall be reduced by 430,000 Swiss Francs, and the amount according to clause IV/3.1 shall be reduced by the same amount.

4.3In case the soil and water sampling conducted by Buyer between signing of the SPA and the Closing Date at S&P Clever and at the subsidiaries in Germany, Poland and Portugal (see clause VIII hereinafter) will evidence remediation expenses exceeding 3,000,000 Swiss Francs for the examinated properties, Buyer shall have the right (but not the obligation) to have such property (or properties) sold by S&P Clever, or the respective subsidiary, to Sellers, and to lease back such property (or properties) from Sellers immediately after the sale of such property. Sellers hereby accept such sale and lease-back for the aforesaid case. The purchase price for such property sale shall be the value of the contaminated land and the building on such land. This value shall be based on the original costs of land and building plus yearly local index rate adjustments (usually between 2-3%). The lease agreement with Sellers (lease back of property sold to Sellers in accordance with this paragraph) shall provide for an annual rent of 6.5% of the purchase price of the respective property sale (calculated specified above), adjusted by a yearly local index rate (usually between 2-3%), and a fixed lease term of eight years. In case of a sale and lease back of property in accordance with this paragraph, Sellers shall pay the purchase price for the property sale to Buyer or the respective S&P company against transfer of the property. In case the Purchase Price according to clause IV/3.1 has not been paid by the time of such property transfer, the Purchase Price amount according to clause IV/3.1.1 is reduced by (i.e. set-off against) the purchase price for such property transfer.

V.Closing

1.Place and Date

5The closing of the SPA (hereinafter the “Closing”) will take place on January 10, 2012, or any other date mutually agreed by the Parties, but in any event no later than January 16, 2012 (“Closing Date”). Closing will take place at the premises of Bratschi Wiederkehr & Buob, Bahnhofstrasse 70, 8021 Zurich.

2.Conditions Precedent

6The obligations of both Parties to perform the closing actions set forth in clause V/3 hereinafter is subject to the execution of employment agreements with, among others, the following provisions:

2

6.1Employment agreement between S&P Clever and Mr Josef Scherer, substantially reflecting the following terms: Employment as general counsel and advisor, 160,000 Swiss Francs yearly gross salary for a 80%-employment (or, subject to mutual agreement, 120,000 Swiss Francs yearly gross salary for a 60%-employment);

6.2Employment agreement between S&P Clever and Ms Yvonne Scherer, substantially reflecting the following terms: Employment as advisor, 56,000 Swiss Francs yearly gross salary for a 40%-employment (or, subject to mutual agreement, 84,000 Swiss Francs yearly gross salary for a 60%-employment).

7The obligations of Buyers to perform the closing actions set forth in clause V/3  hereinafter are subject to the execution of share purchase agreements between S&P Clever and at least three of the current five minority shareholders in subsidiaries of S&P Clever; provided that Buyer will contribute at least 100,000 Euros to accelerate the share purchase from Mr Dirk Grunewald, CEO of the German subsidiary of S&P Clever. Sellers undertake to support Buyer in the negotiations with the minority shareholders.

3.Closing Actions

8At Closing, Sellers shall deliver to Buyer, against payment of the Purchase Price as set forth in clause IV above, the following documents:

8.1the share certificates representing all Shares, duly endorsed to Buyer and free and clear of any lien or encumbrance;

8.2a copy of a resolution of the board of directors of S&P Clever, resolving the approval of the transfer of the Shares in S&P Clever to Buyer and the entering of the Buyer as the new holder of the Shares in S&P Clever in the share register of S&P Clever as of the Closing Date;

8.3a copy of a resolution of the board of directors of S&P International, resolving the approval of the transfer of the Shares in S&P International to Buyer and the entering of the Buyer as the new holder of the Shares in S&P International in the share register of S&P International as of the Closing Date;

8.4the share register of S&P Clever, evidencing the Buyer as the new holder of the Shares in S&P Clever;

8.5the share register of S&P International, evidencing the Buyer as the new holder of the Shares in S&P International;

8.6resignation letters of such members of the board of directors of each S&P Company and/or each subsidiary of S&P Clever Buyer does not wish to remain in the aforesaid boards of directors (the names of such board members to be communicated to Sellers until November 15, 2011); in the aforesaid resignation letters the members of the board shall (i) resign from such board and (ii) waive any rights and declare to have no claims towards the relevant company;

8.7the share register or any equivalent document available under applicable laws of subsidiaries of S&P Clever evidencing S&P Clever as their sole shareholder.

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VI.Representations and Warranties

9Sellers represents and warrants for the S&P Companies as of the Closing Date as follows:

9.1Title to Shares: Sellers are the sole legal and beneficial owners of the Shares, free and clear of any lien or encumbrance. All Shares are validly issued and fully paid-up. The Shares in S&P Clever constitute and represent 100% of all shares in S&P Clever that are outstanding, and the Shares in S&P International constitute and represent 100% of all shares in S&P International that are outstanding. There are no outstanding options, warrants, calls, rights, commitments or agreements regarding the sale or issuance of any shares in either of S&P Companies or any of their subsidiaries.

9.2Tax Exposures: The tax exposures set forth in Annex 9.2 do not exist.

9.3Intellectual Property: Sellers have validly transferred all those intellectual property rights used for the business of the S&P Companies that have formerly been registered in the name of Sellers or otherwise owned by Sellers (including, but not limited to, patents, patent applications, trademarks, copyrights, formula S&P RESIN 220 used or to be used by the German subsidiary of S&P Clever, and software).

9.4Employment Matters: There are no claims of employees of any of the S&P Companies or any of their subsidiaries for due but outstanding wages, commissions, holiday pay, or pension fund contributions.

9.5Environmental Issues: There are no contaminated soils on the properties of the subsidiaries of S&P Companies in Austria, Germany, Poland and Portugal.

10Other than as expressly provided in clauses 9.1 to 9.5 above, there are no representations or warranties of Sellers, express or implied, pertaining to the subject matter of the SPA.

The Parties agree that art. 197 para. 1 and art. 200 para. 1 Swiss Code of Obligations (“CO”) shall not apply.

VII.Remedies

1.Misrepresentation or Breach of Warranties

11Subject to the limitations set forth in clause VII/3 and VII/4, Sellers are jointly and severally obliged to remedy any loss, costs or damages of Buyer, or any of the S&P Companies or their subsidiaries, as the case may be, resulting from any misrepresentation or breach of warranties, it being understood that such damage shall be determined on a Swiss Franc by Swiss Franc basis. The liability of Sellers for indirect damage caused by such breach of obligation, warranty or misrepresentation shall be limited to the extent attributable to Sellers’ fault.

2.Notice of Misrepresentation or Breach of Warranties

12Buyer shall deliver to Sellers a notice in writing reasonably describing the under-lying facts of a claim for Sellers’ misrepresentation or breach of warranty referring to the specific representation or warranty allegedly breached and stating, to the extent reasonable, the amount of reasonably anticipated damage relating to such

4

claim as well as disclosing to Sellers such documents and information supporting its claim as is reason-able (the “Notice of Breach”) within 90 days after Buyer obtains actual knowledge of a misrepresentation or breach of warranty pursuant to clause VI/9 or breach of obligation.

13Failure to give Notice of Breach within the time period set forth above shall not exclude Sellers’ liability hereunder; provided, however, that Sellers shall not be liable for any damage to the extent that the same is caused by Buyer’s failure to give due and timely notice set forth in the previous paragraph.

14The regime provided in this clause VII/2 shall be in lieu of, not in addition to, Buyer’s duty to immediately inspect and notify the Sellers in accordance with article 201 CO.

3.Time Limitations

15Claims by Buyer against Sellers under this clause VII shall be time-barred unless Buyer has delivered to Sellers a Notice of Breach in accordance with clause VII/2 within the following time periods, art. 210 para. 1 CO not being applicable:

15.1Ten years after the Closing Date with respect to the representation and warranty in clause VI/9.1 (“Title to Shares”);

15.2Four years after the Closing Date with respect to the representation and warranty in clause VI/9.2 (“Tax Exposure”);

15.3Three years after the Closing Date with respect to the representation and warranty in clause VI/9.4 (“Employment Matters”);

15.4One year after the Closing Date with respect to the representations and warranties in clause VI/9.3 (“Intellectual Property”) and 9.5 (“Environmental Issues”).

4.Limitations on Liability

16Sellers’ total liability under this SPA shall be limited to the following amounts:

16.1With respect to the representation and warranty in clause VI/9.1 (“Title to Shares”): The Purchase Price in accordance with clause IV/3;

16.2With respect to the representation and warranty in clause VI/9.2 (“Tax Exposure”); 2,000,000 Swiss Francs from the amount held in the escrow account as set forth in clause IV/3.2;

16.3With respect to the representation and warranty in clause VI/9.4 (“Employment Matters”); 1,000,000 Swiss Francs from the amount held in the escrow account as set forth in clause IV/3.2;

16.4With respect to the representation and warranty in clause VI/9.5 (“Environmental Issues”): 1,000,000 Swiss Francs from the amount held in the escrow account as set forth in clause IV/3.2.

16.5With respect to the representation and warranty in clause VI/9.3 (“Intellectual Property”): 1,000,000 Swiss Francs.

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5.Exclusive Remedies

17The remedies in this clause VII for breach of representations and warranties shall be in lieu of, and not in addition to, the remedies provided for by law. All other remedies, including, but not limited to, the right to rescind this SPA following Closing, for mistake, breach of warranty or any other ground, shall not apply and are hereby explicitly waived.

VIII.Specific Provisions for Real Estate Property

18Between signing and Closing of the SPA, Buyer is entitled to conduct or have conducted soil and water samplings at the sites of S&P Clever and all its subsidiaries, except for the subsidiary in the Netherlands. All costs of such samplings are to be borne by Buyer.

19In case a contamination of one ore more of the aforesaid sites is detected, firstly the representation and warranty in accordance with clause VI/9.5 applies. Remediation expenses between 1,000,000 and 3,000,000 Swiss Francs are to be borne by Buyer. In case proven remediation expenses for one site should exceed 3,000,000 Swiss Francs, Buyer is entitled to a reduction of the purchase price in accordance with clause IV/4.3.

20It is the intention of Buyer that the real estate property of the S&P Clever subsidiary in the Netherlands will be sold to the current CEO of this subsidiary, Mr Michael Van Beek, and subsequently leased from Mr Van Beek. The purchase price for such sale should possibly be based on the original costs of land and building plus a yearly local index rate (usually 2-3%). The lease agreement with Mr Van Beek should possibly provide for an annual rent of 6.5% of the purchase price, adjusted by a yearly local index rate, and a fixed lease term of eight years. Sellers undertake to support Buyer in its negotiations with Mr Van Beek about a property sale agreement and a lease agreement between signing and Closing of the SPA.

IX.Non-Compete Covenant of Sellers

21For a period of 3 years following the Closing Date, none of the Sellers shall, directly or in-directly, including, without limitation, through any entity owned or controlled by a Seller, neither as business owner nor as employee or independent advisor, conduct or support the conduct of any activity that competes with the business of any of the S&P Companies or any of their subsidiaries or conducts a business that is equal or similar to the business as conducted by any of the S&P Companies or any of their subsidiaries in any country worldwide, including, without limitation, establishing or acquiring any business anywhere in the world that competes with or conducts or is intended to conduct a business that is equal or similar to the business as conducted by any of the S&P Companies or any of their subsidiaries.

X.Tax Covenant of Buyer

22Buyer shall hold Sellers fully harmless against any tax liabilities and costs resulting from any act of Buyer or an affiliated company of Buyer that leads to the classification of the present sale for tax purposes as indirect partial liquidation on the part of Sellers.

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XI.Miscellaneous

1.Binding Effect

1This SPA shall become binding on the Parties if and when it has been duly exe-cuted by both Parties.

2.Entire Agreement; Amendments

2This SPA (including the Annexes and any other documents referred to herein or therein) constitutes the entire agreement of the Parties regarding the transactions contemplated by this SPA and supersedes all previous agreements or arrangements, negotiations, discussions, correspondence, undertakings and communications, whether oral or in writing, explicit or implied, with respect to the transactions contemplated by this SPA.

3This SPA (including this clause XI/2/3) may only be modified by an instrument in writing executed by both Parties.

3.No Waiver

4The failure of a Party to enforce any of the provisions of this SPA or any rights with respect to this SPA shall in no way be considered as a waiver of such provisions or rights or in any way affect the validity of this SPA. The waiver of any breach of this SPA by a Party shall not operate or be construed as a waiver of any other prior or subsequent breach.

4.Severability

5If any provision of this SPA is held to be invalid or unenforceable for any reason, such provision shall, if possible, be adjusted rather than voided, in order to achieve a result which corresponds to the fullest possible extent to the intention of the Parties. The nullity or adjustment of any provision of this SPA shall not affect the validity and enforceability of any other provision of this SPA.

5.Notices

6All notices, requests, demands or other communications made under or in connection with this SPA shall be made in English and be delivered in writing (including electronic transmission) to the following addresses (or such other addresses as may from time to time have been notified according to this clause XI/5):

7If to Sellers:

8SwissLegal (Zürich) AG

Attn.: Michel Pola

Zolliker-/Alfred Ulrich-Strasse 2

P.O. Box 575

8072 Zürich / Switzerland

9If to Buyer:

Bratschi Wiederkehr & Buob

Attn.: Florian Jörg

Bahnhofstrasse 70

P.O. Box 1130

8021 Zürich / Switzerland

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10Any notice made under or in connection with this SPA shall be given prior to the expiry of a term or deadline set forth in this SPA (if any) or the notice shall be deemed null and void. All notices, communications or instructions made under or in connection with this SPA shall only be effective when received by the Party to whom it is addressed.

6.Assignments

11Neither Seller shall assign this SPA (in whole or in part) or any rights, claims, obligations or duties hereunder to any person without the prior written consent of Buyer.

12Buyer is entitled to assign this SPA (in whole or in part) or any rights, claims, obligations or duties hereunder to any of its affiliated companies and the Sellers hereby explicitly consent to any such assignment. However, in case of such assignment, Simpson Manufacturing Co., Inc., shall be jointly and severally liable together with Buyer for all obligations of Buyer under this SPA.

7.Effects on Third Parties

13No person other than the Parties shall have any rights or benefits under this SPA, and nothing in this SPA is intended to confer on any person other than the Parties any rights, benefits or remedies.

8.Communication

14Any public announcement, press release or similar publicity with respect to this SPA or the transactions contemplated hereby will be issued, if at all, at such time and in such manner as the Parties may mutually agree. Except with the prior consent of Buyer or as otherwise permitted by this SPA, none of Sellers, S&P Companies, their subsidiaries or any of their representatives shall disclose to any person any information relating to this SPA or the transactions contemplated hereby.

15The Parties will consult with each other concerning the means by which the employees, customers, suppliers of the S&P Companies or any of their subsidiaries and others having dealings with any S&P Companies or any of their subsidiaries will be informed of the entering into this SPA, and Buyer will have the right to be, or have a representative be, present for any such communication.

16Notwithstanding any other provision hereof to the contrary:

16.1without the prior consent of Buyer, Sellers shall not, and shall not suffer or permit any person to, issue any public notice, press release or other publicity concerning the existence or any of the terms and conditions of this SPA or any of the transactions contemplated hereby; and

16.2Buyer may issue any public notice, press release or other publicity concerning this SPA or any transaction contemplated hereby that Buyer believes in good faith is required by the United States Securities Exchange Act of 1934 and the rules and regulations thereunder, by any other applicable law or by the rules of the New York Stock Exchange, Inc.

9.Costs

17Sellers and Buyer shall each bear one half of the drafting costs of SwissLegal (Zurich) AG for this SPA and its Annexes

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10.Applicable Law and Arbitration

18This SPA shall be subject to and governed by Swiss substantive law (excluding its provisions on the conflict of laws and the UN Convention on the International Sale of Goods).

19Any dispute, controversy or claim arising out of or in relation to this SPA, including the validity, invalidity, breach or termination thereof, shall be exclusively resolved by arbitration in accordance with the Swiss Rules of International Arbitration of the Swiss Chambers of Commerce in force on the date when the notice of arbitration is submitted in accordance with these rules. The number of arbitrators shall be three. The seat of the arbitration shall be in Zurich, Switzerland. The arbitral proceedings shall be conducted in English.

Sellers:

Seewen October 26, 2011	Seewen October 26, 2011
Place and Date	Place and Date
/s/ Josef Scherer	/s/ Yvonne Scherer
Josef Scherer	Yvonne Scherer
Buyer:
Pleasanton, Calif. October 26, 2011
Place and Date
/s/ Karen Colonias
Karen Colonias
(CFO)	(                                 )

Table of Annexes

Annex 3.2      Escrow Agreement

Annex 9.2Tax Exposures

9

Annex 3.2Escrow Agreement

ESCROW AGREEMENT

between

1.Josef Scherer, Schiller 16, 6440 Brunnen/SZ

(“JS”)

and

2.Yvonne Scherer, Schiller 16, 6440 Brunnen/SZ

(“YS”)

and

3.Simpson Manufacturing Co., Inc., 5956 West Las Positas Boulevard, Pleasanton, California 94588

(“Buyer”)

and

4. [Name of Escrow Agent]

(“Escrow Agent”)

(Parties 1 and 2 jointly “Sellers” or a “Party”,

Party 3 and Party 4 a “Party” and

Parties 1-4 collectively “Parties”)

Regarding

an amount of 4,000,000 Swiss Francs deposited by Buyer

(“Escrow Amount”)

WHEREAS, Sellers and Buyer have entered into a share purchase agreement regarding all shares of S&P Clever Reinforcement Company AG and S&P Reinforcement International AG on [date] (“SPA”), and Sellers and Buyer are delivering herewith to the Escrow Agent a true and complete copy of the SPA;

WHEREAS, clause VI/3.2 of the SPA provides for a part of the purchase price equal to the Escrow Amount to be deposited with the Escrow Agent;

WHEREAS, the Escrow Agent has agreed to safeguard the Escrow Amount;

NOW, THEREFORE, the Parties agree as follows (this “Agreement”):

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1.Definitions

Capitalised terms used in this Agreement and not otherwise defined herein have the meanings respectively given to them in the SPA.

2.The Escrow Agent

2.1Appointment of the Escrow Agent

Sellers and Buyer hereby appoint the Escrow Agent as escrow agent under the terms and conditions of this Agreement.

Escrow Agent hereby declares that it assumes all rights and duties as escrow agent according to the terms of this Agreement.

2.2Duties of the Escrow Agent

2.2.1Safe custody

Escrow Agent shall hold the Escrow Amount in safe custody in the separate and bankruptcy remote Escrow Account and release it in accordance with clause 3.

2.2.2Investment policy

The Escrow Amount shall be placed by the Escrow Agent in Swiss Franks deposits with a sign A (or higher rated) financial institution(s) or in other investments to be indicated by Sellers and Buyer jointly.

Escrow Agent shall provide the Parties biannually with account statements concerning the Escrow Account and shall, in addition, on request by any Party at any time, promptly give such Party detailed information as to the balance and investments of the Escrow Account.

2.3Remuneration of the Escrow Agent

The remuneration for all services rendered by the Escrow Agent as escrow agent under this Agreement shall be [amount] Swiss Francs per calendar year, on a pro rata basis, plus out of pocket expenses, to be borne equally by Sellers and Buyer.

The fee according to the preceding paragraph does not cover any work by Escrow Agent in connection with the drawing up and entering into this Agreement and the opening of the Escrow Account, nor any extraordinary work in connection with this Agreement during the term of this Agreement, nor any out-of-pocket expenses for telephone, faxes, postage, photocopies, travelling etc. Escrow Agent shall be paid for such extraordinary work at an hourly rate of [amount] Swiss Francs plus VAT, if applicable, and shall be reimbursed for such out-of-pocket expenses, in each case payable one-half by Sellers and one-half by Buyer. The giving of instructions to the Escrow Agent in the ordinary and necessary course of this Agreement as well as the Escrow Agent’s provision of biannual account statements concerning the Escrow Account shall not be deemed extraordinary work.

2.4Replacement of the Escrow Agent

Escrow Agent shall be allowed to renounce its appointment upon 30 Business Days’ notice to the other Parties. If Sellers and Buyer do not jointly appoint a new Escrow Agent within such notice period, Escrow Agent shall deposit the Escrow Amount and all interest thereon then accrued or received with a fiduciary or attorney appointed by the President

11

of the Zurich District court or, if this is not possible, directly with the Zurich District Court. The same applies if the Escrow Agent ceases to have legal capacity or is for any other reason no longer in a position to fulfil the Escrow Agent’s duties hereunder.

Sellers and Buyer shall also be allowed jointly to replace the Escrow Agent at any time, provided that the replacement escrow agent has capacity to, and agrees to, take over all the rights and obligations of the Escrow Agent under this Agreement.

3.Release of the Escrow Amount

Escrow Agent shall release the Escrow Amount plus interest received thereon not in excess of 3% of the Escrow Amount to Sellers and shall release the remaining interest, if any, to Buyer at the following dates (the “Release Dates”) and in the following partial amounts, unless the Escrow Agent receives a copy of a Notice of Breach in accordance with clause VII/2 of the SPA and as specified below before the respective Release Date:

Part of Escrow Amount(Swiss Francs)	Release Date	To be released unless receipt of specified Notice of Breach:
1,000,000	[Closing Date + 2 months]	Relating to clause VI/9.5 (“Environmental Issues”)
1,000,000	[Closing Date + 3 years]	Relating to clause VI/9.4 (“Employment Matters”)
2,000,000	[Closing Date + 4 years]	Relating to clause VI/9.2 (“Tax Exposure”)

If the Escrow Agent receives a copy of a Notice of Breach specified above before the respective Release Date, the Escrow Agent will not release any of the Escrow Amount or any interest; provided that, if all Notices of Breach state maximum amounts and if the sum of such maximum amounts (the “Total Claims”) is less than the Escrow Amount plus 3% of the Escrow Amount, the Escrow Agent may release to Sellers on the respective Release Date the difference between the Total Claims and the sum of the Escrow Amount plus 3% of the Escrow Amount.

Notwithstanding the foregoing, the Escrow Agent shall at any time release funds from the Escrow Account:

a)According to joint instructions by JS, YS and Buyer;

b)According to a final award of a competent arbitration court or state court as provided for in the SPA or this Agreement and subject to the terms and conditions as may be set out in the arbitration award or the judgment provided that such arbitration award or judgment has been declared enforceable by a competent Swiss court or is enforceable in Switzerland, in which case the award itself shall replace the instruction(s) by the Party/Parties according to the preceding paragraph a).

Notwithstanding anything herein to the contrary, Escrow Agent shall have no obligation to make any payment from the Escrow Account if to do so would result in a debit balance in the Escrow Account or to make any payment or take any other positive action of any kind pursuant to this Agreement, other than for the purposes of giving notices and except as otherwise provided in this Agreement, unless the Parties jointly agree to do so.

If the total interest earned exceeds 3% of the Escrow Amount, such surplus shall be released by the Escrow Agent to the Buyer on the respective Release Date or, if earlier, concurrently with any other release of any of the Escrow Amount. If the total interest does not reach 3% of the Escrow Amount, and if the Total Claims are less than the sum of the Escrow Amount and the interest earned, the difference shall be paid by Buyer directly to the Sellers within 30 days after the respective Release Date.

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4.Release of liability

Sellers and Buyer hereby release the Escrow Agent from any and all liabilities incurred in connection with the due performance of the Escrow Agent’s duties under this Agreement, except for liabilities resulting from the Escrow Agent’s gross negligence or wilful misconduct.

5.Term and termination

This Agreement is entered into for an indefinite period of time.

It shall terminate automatically on the release, in accordance with this Agreement, by the Escrow Agent of the entire amount remaining in the Escrow Account.

The provisions of clauses 6.6 (Confidentiality), 6.7 (Governing Law) and 6.8 (Arbitration) shall survive the termination of this Agreement and continue in effect for an indefinite period of time.

6.General provisions

6.1Costs

Each Party shall bear its own costs and expenses (including the fees of such Party’s counsel and advisors) incurred in the negotiation, preparation and completion of this Agreement.

6.2Notice

Any notice, request, instruction or other document deemed to be necessary or desirable by any Party to be given to any other Party, shall be in writing and shall be forwarded by registered mail or courier, addressed as stated on the cover page of this Agreement.

Any change of address needs to be communicated as set forth under this clause.

6.3No waiver

The failure of any of the Parties to enforce any of the provisions of this Agreement or any rights with respect thereto shall in no way be considered as a waiver of such provisions or rights or in any way to affect the validity of this Agreement. The waiver of any breach of any provision of this Agreement by any Party hereto shall not operate to be construed as a waiver of any prior or subsequent breach of the same provision or any breach of any other provision of this Agreement.

6.4Entire Agreement

This instrument embodies the entire agreement among the Parties with respect to the Escrow Account. This Agreement may be amended only in writing through a document signed by all of the Parties.

6.5No Assignment

Unless otherwise provided herein, a Party may not assign all or part of its rights and obligations under this Agreement without the written consent of the other Parties, except that Buyer may, without the consent of any other Party, assign this Agreement or any rights hereunder or delegate any duties hereunder to any affiliate of Buyer.

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6.6Confidentiality

Except with the prior consent of Buyer or as otherwise permitted by this Agreement or required by statutory law or by any competent judicial or regulatory authority, none of the Parties shall disclose to any person any information relating to this Agreement or the transactions contemplated hereby.

The Parties also undertake to limit any disclosure of the terms of this Agreement to those of their directors, officers, employees, agents or advisors who are absolutely required to receive such information to carry out their duties.

6.7Governing Law

This Agreement shall be subject to and governed by Swiss substantive laws.

6.8Arbitration

Any dispute, controversy or claim arising out of or in relation to this Agreement, including the validity, invalidity, breach or termination thereof, shall be exclusively resolved by arbitration in accordance with the Swiss Rules of International Arbitration of the Swiss Chambers of Commerce in force on the date when the notice of arbitration is submitted in accordance with these rules. The number of arbitrators shall be three. The seat of the arbitration shall be in Zurich, Switzerland. The arbitral proceedings shall be conducted in English.

Seewen October 26, 2011	/s/Josef Scherer	/s/Yvonne Scherer
Place, date	Josef Scherer	Yvonne Scherer
Simpson Manufacturing Co., Inc.
Pleasanton, Calif. October 26, 2011	/s/Karen Colonias
Place, date	Karen Colonias	[Name]
Escrow Agent
Place, date	[Name]

14

Annex 9.2Tax Exposures

S&P Tax Exposure  (total €1.76M)

Switzerland (any amount)

Germany  (total €793K)

Austria  (total €110K)

Netherlands (any amount)

Poland  (total €507K)

Portugal  (total €346K)

15

EX-31

Exhibit 31

Simpson Manufacturing Co., Inc. and Subsidiaries

Rule 13a-14(a)/15d-14(a) Certifications

I, Thomas J Fitzmyers, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Simpson Manufacturing Co., Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

DATE:	November 8, 2011	By	/s/Thomas J Fitzmyers
			Thomas J Fitzmyers
			Chief Executive Officer

Simpson Manufacturing Co., Inc. and Subsidiaries

Rule 13a-14(a)/15d-14(a) Certifications

I, Karen Colonias, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Simpson Manufacturing Co., Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

DATE:	November 8, 2011	By	/s/Karen Colonias
			Karen Colonias
			Chief Financial Officer

EX-32

Exhibit 32

Simpson Manufacturing Co., Inc. and Subsidiaries

Section 1350 Certifications

The undersigned, Thomas J Fitzmyers and Karen Colonias, being the duly elected and acting Chief Executive Officer and Chief Financial Officer, respectively, of Simpson Manufacturing Co., Inc., a Delaware corporation (the “Company”), hereby certify that the quarterly report of the Company on Form 10-Q for the quarterly period ended September 30, 2011, fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934, as amended, and that information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	November 8, 2011	/s/Thomas J Fitzmyers
		Thomas J Fitzmyers
		Chief Executive Officer
		/s/Karen Colonias
		Karen Colonias
		Chief Financial Officer

A signed original of this written statement required by Section 1350 of Chapter 63 of Title 18 of the United States Code has been provided to Simpson Manufacturing Co., Inc. and will be retained by Simpson Manufacturing Co., Inc. and furnished to the Securities and Exchange Commission or its staff on request.

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Condensed Consolidated Statements of Stockholders' Equity (USD $) In Thousands	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock	Comprehensive Income
Balance at Dec. 31, 2009	$ 763,784	$ 493	$ 146,036	$ 598,493	$ 18,762
Balance (in shares) at Dec. 31, 2009		49,377
Comprehensive income (loss):
Net income (loss)	33,085			33,085			33,085
Other comprehensive income:
Translation adjustment, net of tax expense (benefit) of $4 and $(14) for the nine months ended September 30, 2011 and 2010, respectively and $26 for the three months ended December 31, 2010	(5,039)				(5,039)		(5,039)
Comprehensive income (loss)	28,046						28,046
Stock options exercised	978	1	977
Stock options exercised (in shares)		39
Stock compensation	995		995
Tax effect of options exercised	(118)		(118)
Cash dividends declared on common stock, $0.375 and $0.30 per share for the nine months ended September 30, 2011 and 2010, respectively and $0.10 per share for the three months ended December 31, 2010	(14,859)			(14,859)
Common stock issued for stock bonus at $30.91 and $26.42 per share for the nine months ended September 30, 2011 and 2010, respectively	301		301
Common stock issued for stock bonus (in shares)		12
Balance at Sep. 30, 2010	779,127	494	148,191	616,719	13,723
Balance (in shares) at Sep. 30, 2010		49,428
Comprehensive income (loss):
Net income (loss)	(4,499)			(4,499)			(4,499)
Other comprehensive income:
Translation adjustment, net of tax expense (benefit) of $4 and $(14) for the nine months ended September 30, 2011 and 2010, respectively and $26 for the three months ended December 31, 2010	904				904		904
Comprehensive income (loss)	(3,595)						(3,595)
Stock options exercised	16,970	6	16,964
Stock options exercised (in shares)		668
Stock compensation	2,582		2,582
Tax effect of options exercised	(2,312)		(2,312)
Cash dividends declared on common stock, $0.375 and $0.30 per share for the nine months ended September 30, 2011 and 2010, respectively and $0.10 per share for the three months ended December 31, 2010	(4,979)			(4,979)
Balance at Dec. 31, 2010	787,793	500	165,425	607,241	14,627
Balance (in shares) at Dec. 31, 2010		50,096
Comprehensive income (loss):
Net income (loss)	45,951			45,951			45,951
Other comprehensive income:
Translation adjustment, net of tax expense (benefit) of $4 and $(14) for the nine months ended September 30, 2011 and 2010, respectively and $26 for the three months ended December 31, 2010	(3,615)				(3,615)		(3,615)
Comprehensive income (loss)	42,336						42,336
Stock options exercised	154		154
Stock options exercised (in shares)		6
Stock compensation	3,405		3,405
Tax effect of options exercised	(71)		(71)
Repurchase of common stock	(53,208)					(53,208)
Repurchase of common stock (in shares)		(1,948)
Retirement of common stock		(19)		(53,189)		53,208
Cash dividends declared on common stock, $0.375 and $0.30 per share for the nine months ended September 30, 2011 and 2010, respectively and $0.10 per share for the three months ended December 31, 2010	(18,331)			(18,331)
Common stock issued for stock bonus at $30.91 and $26.42 per share for the nine months ended September 30, 2011 and 2010, respectively	204		204
Common stock issued for stock bonus (in shares)		7
Balance at Sep. 30, 2011	$ 762,282	$ 481	$ 169,117	$ 581,672	$ 11,012
Balance (in shares) at Sep. 30, 2011		48,161

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Condensed Consolidated Statements of Stockholders' Equity (Parenthetical) (USD $) In Thousands, except Per Share data	3 Months Ended	9 Months Ended
	Dec. 31, 2010	Sep. 30, 2011	Sep. 30, 2010
Condensed Consolidated Statements of Stockholders' Equity
Translation adjustment, tax expense (benefit) (in dollars)	$ 26	$ 4	$ (14)
Cash dividends declared on common stock, per share	$ 0.10	$ 0.375	$ 0.30
Common stock issued, per share		$ 30.91	$ 26.42

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Goodwill and Intangible Assets, Net (Tables)

9 Months Ended

Sep. 30, 2011

Goodwill and Intangible Assets, Net

Schedule of goodwill, by segment

	At September 30,				At December 31,
(in thousands)	2011		2010		2010
North America	$	41,585	$	41,632	$	41,761
Europe	26,249		32,106		26,367
Asia/Pacific	1,854		1,847		1,941
Total	$	69,688	$	75,585	$	70,069

Schedule of net intangible assets, by segment

	At September 30, 2011
	Gross					Net
	Carrying		Accumulated			Carrying
(in thousands)	Amount		Amortization			Amount
North America	$	24,022	$	(12,746	)	$	11,276
Europe	14,567		(5,591		)	8,976
Total	$	38,589	$	(18,337	)	$	20,252

	At September 30, 2010
	Gross					Net
	Carrying		Accumulated			Carrying
	Amount		Amortization			Amount
North America	$	24,022	$	(10,140	)	$	13,882
Europe	13,183		(3,997		)	9,186
Total	$	37,205	$	(14,137	)	$	23,068

	At December 31, 2010
	Gross					Net
	Carrying		Accumulated			Carrying
	Amount		Amortization			Amount
North America	$	24,022	$	(10,792	)	$	13,230
Europe	14,632		(4,396		)	10,236
Total	$	38,654	$	(15,188	)	$	23,466

Estimated future amortization of intangible assets

(in thousands)
Final three months of 2011	$	1,054
2012	3,754
2013	3,187
2014	2,970
2015	2,200
2016	2,062
Thereafter	5,025
	$	20,252

Changes in the carrying amount of goodwill and intangible assets

				Intangible
(in thousands)	Goodwill			Assets
Balance at December 31, 2010	$	70,069		$	23,466
Amortization	—			(3,242		)
Reclassifications	(336		)	(109		)
Foreign exchange	(45		)	137
Balance at September 30, 2011	$	69,688		$	20,252

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Condensed Consolidated Balance Sheets (USD $) In Thousands	Sep. 30, 2011	Dec. 31, 2010	Sep. 30, 2010
Current assets
Cash and cash equivalents	$ 265,162	$ 335,049	$ 291,846
Trade accounts receivable, net	98,032	68,256	93,635
Inventories	172,142	152,297	150,713
Deferred income taxes	12,117	10,189	10,748
Assets held for sale	6,792	10,787	7,887
Other current assets	9,598	14,678	16,012
Total current assets	563,843	591,256	570,841
Property, plant and equipment, net	191,016	177,072	176,464
Goodwill	69,688	70,069	75,585
Intangible assets, net	20,252	23,466	23,068
Equity method investment		213	319
Other noncurrent assets	10,670	12,633	15,557
Total assets	855,469	874,709	861,834
Current liabilities
Trade accounts payable	27,739	35,164	23,663
Accrued liabilities	36,314	31,372	33,517
Income taxes payable	1,251
Accrued profit sharing trust contributions	3,560	5,591	4,277
Accrued cash profit sharing and commissions	11,867	2,805	8,536
Accrued workers' compensation	5,455	4,684	4,009
Total current liabilities	86,186	79,616	74,002
Long-term liabilities	7,001	7,300	8,705
Total liabilities	93,187	86,916	82,707
Commitments and contingencies (Note 8)
Stockholders' equity
Common stock, at par value	481	500	494
Additional paid-in capital	169,117	165,425	148,191
Retained earnings	581,672	607,241	616,719
Accumulated other comprehensive income	11,012	14,627	13,723
Total stockholders' equity	762,282	787,793	779,127
Total liabilities and stockholders' equity	$ 855,469	$ 874,709	$ 861,834

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Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2011

Discontinued Operations

Results from discontinued operations, including impairments and losses recorded in operating expenses

	Three Months			Nine Months
	Ended			Ended
(in thousands)	September 30, 2010			September 30, 2010
Revenues	$	10,300		$	33,372
Cost of sales	8,957			28,073
Gross profit	1,343			5,299
Operating expenses	1,882			6,711
Loss on sale	657			657
Impairment charge	—			21,350
Loss from discontinued operations	(1,196		)	(23,419		)
Provision for (benefit from) income taxes from discontinued operations	30			(7,207		)
Loss from discontinued operations, net of tax	$	(1,226	)	$	(16,212	)

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Debt

9 Months Ended

Sep. 30, 2011

Debt

Debt

7.             Debt

The Company has revolving lines of credit with different banks in the United States and Europe. The Company’s primary credit facility, a revolving line of credit with $200.0 million in available credit, charges interest at LIBOR plus 0.27% (at September 30, 2011, LIBOR plus 0.27% was 0.51%), expires in October 2012, and has commitment fees payable at the annual rate of 0.08% on the unused portion of the facility. Other revolving credit lines, with combined available credit of $4.5 million at September 30, 2011, charge interest ranging from 2.4% to 3.6% and have various maturity dates. There were no outstanding balances at September 30, 2011 and 2010, and December 31, 2010, and the Company was in compliance with its financial covenants at September 30, 2011.

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Basis of Presentation (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended			9 Months Ended
	Sep. 30, 2011	Dec. 31, 2010	Sep. 30, 2010	Sep. 30, 2011 Y segment plan	Sep. 30, 2010
Basis of Presentation
High end of the range of the required percentage voting interest held to account for investments with the equity method of accounting				50.00%
Service sales as a percentage of net sales				less than 1%
Number of reportable segments prior to the sale of Simpson Dura-Vent Company, Inc.				2
Number of reportable segments				3
Reconciliation of basic earnings per share ("EPS") to diluted EPS
Earnings from continuing operations, net of tax	$ 19,380		$ 18,408	$ 45,951	$ 49,297
Loss from discontinued operations, net of tax			(1,226)		(16,212)
Net income available to common stockholders	$ 19,380	$ (4,499)	$ 17,182	$ 45,951	$ 33,085
Basic weighted average shares outstanding	48,253		49,427	49,247	49,411
Dilutive effect of potential common stock equivalents - stock options (in shares)	35		100	49	137
Diluted weighted average shares outstanding	48,288		49,527	49,296	49,548
Net earnings (loss) per share - basic:
Continuing operations (in dollars per share)	$ 0.40		$ 0.37	$ 0.93	$ 1.00
Discontinued operations (in dollars per share)			$ (0.02)		$ (0.33)
Net income (in dollars per share)	$ 0.40		$ 0.35	$ 0.93	$ 0.67
Net earnings (loss) per share - diluted:
Continuing operations (in dollars per share)	$ 0.40		$ 0.37	$ 0.93	$ 0.99
Discontinued operations (in dollars per share)			$ (0.02)		$ (0.33)
Net income (in dollars per share)	$ 0.40		$ 0.35	$ 0.93	$ 0.67
Potentially dilutive securities excluded from earnings per diluted share because their effect is anti-dilutive (in shares)	1,752		1,062	1,746	925

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011 Y segment plan lawsuit	Sep. 30, 2010	Dec. 31, 2010	Dec. 31, 2009
Segment Information
Number of reportable segments			3
Segment Information
Net sales	$ 162,366	$ 146,447	$ 472,713	$ 435,881
Sales to Other Segments	4,443	4,031	11,660	9,303
Income (Loss) from Operations	24,882	29,252	68,373	80,282
Total Assets	855,469	861,834	855,469	861,834	874,709
Cash and cash equivalents	265,162	291,846	265,162	291,846	335,049	250,381
North America
Segment Information
Net sales	127,998	115,206	371,732	350,700
Sales to Other Segments	1,093	1,674	3,905	3,282
Income (Loss) from Operations	23,594	24,317	69,463	73,515
Total Assets	608,350	546,726	608,350	546,726	557,762
Europe
Segment Information
Net sales	31,761	28,545	93,206	78,137
Sales to Other Segments		18	250	85
Income (Loss) from Operations	2,801	3,420	3,997	4,117
Total Assets	131,138	132,988	131,138	132,988	123,669
Asia/Pacific
Segment Information
Net sales	2,370	2,616	7,062	6,964
Sales to Other Segments	3,350	2,339	7,505	5,936
Income (Loss) from Operations	(410)	(11)	(1,674)	(320)
Total Assets	28,349	23,793	28,349	23,793	25,576
Administrative and all other
Segment Information
Net sales	237	80	713	80
Income (Loss) from Operations	(1,103)	1,526	(3,413)	2,970
Total Assets	87,632	158,327	87,632	158,327	167,702
Cash and cash equivalents	$ 177,500	$ 230,400	$ 177,500	$ 230,400	$ 274,600

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2011

Segment Information

Performance of reporting segments

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands)	2011			2010			2011			2010
Net Sales
North America	$	127,998		$	115,206		$	371,732		$	350,700
Europe	31,761			28,545			93,206			78,137
Asia/Pacific	2,370			2,616			7,062			6,964
Administrative and all other	237			80			713			80
Total	$	162,366		$	146,447		$	472,713		$	435,881
Sales to Other Segments*
North America	$	1,093		$	1,674		$	3,905		$	3,282
Europe	—			18			250			85
Asia/Pacific	3,350			2,339			7,505			5,936
Total	$	4,443		$	4,031		$	11,660		$	9,303
Income (Loss) from Operations
North America	$	23,594		$	24,317		$	69,463		$	73,515
Europe	2,801			3,420			3,997			4,117
Asia/Pacific	(410		)	(11		)	(1,674		)	(320		)
Administrative and all other	(1,103		)	1,526			(3,413		)	2,970
Total	$	24,882		$	29,252		$	68,373		$	80,282

* The sales to other segments are eliminated on consolidation.

					At
	At September 30,				December 31,
(in thousands)	2011		2010		2010
Total Assets
North America	$	608,350	$	546,726	$	557,762
Europe	131,138		132,988		123,669
Asia/Pacific	28,349		23,793		25,576
Administrative and all other	87,632		158,327		167,702
Total	$	855,469	$	861,834	$	874,709

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Subsequent Events

9 Months Ended

Sep. 30, 2011

Subsequent Events

Subsequent Events

12.           Subsequent Events

In October 2011, the Company’s Board of Directors declared a cash dividend of $0.125 per share, estimated to total $6.0 million, to be paid on January 26, 2012, to stockholders of record on January 5, 2012.

In October 2011, the Company entered into an agreement to purchase all of the shares of S&P Clever Reinforcement Company AG and S&P Reinforcement International AG, both companies incorporated under the laws of Switzerland (collectively, “S&P Clever”), for 54 million Swiss Francs (equivalent, at the exchange rate on October 26, 2011, to $61.4 million), subject to post-closing adjustments. S&P Clever manufactures and sells engineered materials to repair, strengthen, and restore concrete and masonry construction and has operations in Switzerland, Germany, Portugal, Poland, The Netherlands and Austria. The transaction is expected to close in January 2012.

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Inventories

9 Months Ended

Sep. 30, 2011

Inventories

Inventories

3.             Inventories

Inventories consist of the following:

	At September 30,				At December 31,
(in thousands)	2011		2010		2010
Raw materials	$	71,908	$	61,566	$	61,996
In-process products	21,454		18,860		18,364
Finished products	78,780		70,287		71,937
	$	172,142	$	150,713	$	152,297

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Debt (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2011
Primary revolving line of credit
Revolving line of credit
Credit facility, available credit	$ 200.0
Credit facility, interest rate basis	LIBOR
Credit facility, interest rate spread (as a percent)	0.27%
Credit facility, interest rate at end of period (as a percent)	0.51%
Commitment fees payable on unused portion of the facility (as a percent)	0.08%
Other revolving credit lines
Revolving line of credit
Credit facility, available credit	$ 4.5
Credit facility, interest rate low end of range (as a percent)	2.40%
Credit facility, interest rate high end of range (as a percent)	3.60%

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Stock-Based Incentive Plans

9 Months Ended

Sep. 30, 2011

Stock-Based Incentive Plans

Stock-Based Incentive Plans

9.             Stock-Based Incentive Plans

The Company currently has one stock-based incentive plan, which incorporates and supersedes its two previous plans (see Note 1 “Basis of Presentation — Accounting for Stock-Based Compensation”). Participants are granted stock-based awards only if the applicable Company-wide or profit-center operating goals, or both, established by the Compensation and Leadership Development Committee of the Board of Directors at the beginning of the year, are met. Participants occasionally may have an additional goal that is based on a strategic initiative of the Company.

The fair value of each stock option award was estimated on the date of grant using the Black-Scholes option pricing model. Expected volatility is based on historical volatilities of the Company’s common stock measured monthly over a term that is equivalent to the expected life of the award. The expected term of awards granted is estimated based on the Company’s prior exercise experience and future expectations of the exercise and termination behavior of the grantees. The risk-free rate is based on the yield of United States Treasury zero-coupon bonds with maturities comparable to the expected life in effect at the time of grant. The dividend yield is based on the expected dividend yield on the grant date.

Black-Scholes option pricing model assumptions for options granted in 2011 and 2010 are as follows:

Number		Risk-								Weighted
of Options		Free								Average
Granted	Grant	Interest		Dividend		Expected				Fair
(in thousands)	Date	Rate		Yield		Life	Volatility		Exercise Price	Value
1994 Plan
1,362	02/03/11	2.62	%	1.75	%	6.2 years	39.0	%	$29.66 to $32.63	$	10.33
148	02/02/10	2.93	%	1.62	%	6.5 years	36.0	%	$24.75	$	8.46
1995 Plan
30	02/15/11	2.92	%	1.76	%	6.6 years	38.0	%	$29.58	$	10.49

No options were granted under the 1995 Plan in 2010.

The following table summarizes the Company’s stock option activity for the nine months ended September 30, 2011:

					Weighted-
			Weighted-		Average	Aggregate
			Average		Remaining	Intrinsic
	Shares		Exercise		Contractual	Value *
Non-Qualified Stock Options	(in thousands)		Price		Life (in years)	(in thousands)
Outstanding at January 1, 2011	1,124		$	34.19
Granted	1,392		29.66
Exercised	(7	)	23.74
Forfeited	(20	)	35.69
Outstanding at September 30, 2011	2,489		$	31.68	4.3	$	370
Outstanding and expected to vest at September 30, 2011	2,437		$	31.74	4.3	$	360
Exercisable at September 30, 2011	1,165		$	34.58	2.2	$	233

*  The intrinsic value represents the amount, if any, by which the fair market value of the underlying common stock exceeds the exercise price of the option, using the closing price per share of $24.93 as reported by the New York Stock Exchange on September 30, 2011.

The total intrinsic value of options exercised during the nine months ended September 30, 2011 and 2010, was $40 thousand and $0.3 million, respectively.

A summary of the status of unvested options as of September 30, 2011, and changes during the nine months ended September 30, 2011, are presented below:

			Weighted-
			Average
	Shares		Grant-Date
Unvested Options	(in thousands)		Fair Value
Unvested at January 1, 2011	180		$	7.85
Granted	1,392		10.33
Vested	(242	)	9.86
Forfeited	(5	)	9.25
Unvested at September 30, 2011	1,325		$	10.09

As of September 30, 2011, $17.4 million of total unrecognized compensation cost was related to unvested share-based compensation arrangements under the 1994 Plan. This cost is expected to be recognized over a weighted-average period of 3.5 years. Options granted under the 1995 Plan are fully vested and are expensed on the date of grant.

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Basis of Presentation (Tables)

9 Months Ended

Sep. 30, 2011

Basis of Presentation

Reconciliation of basic earnings (loss) per share ("EPS") to diluted EPS

	Three Months Ended					Nine Months Ended
(in thousands, except)	September 30,					September 30,
per-share amounts)	2011		2010			2011		2010
Earnings from continuing operations, net of tax	$	19,380	$	18,408		$	45,951	$	49,297
Loss from discontinued operations, net of tax	—		(1,226		)	—		(16,212		)
Net income available to common stockholders	$	19,380	$	17,182		$	45,951	$	33,085
Basic weighted average shares outstanding	48,253		49,427			49,247		49,411
Dilutive effect of potential common stock equivalents — stock options	35		100			49		137
Diluted weighted average shares outstanding	48,288		49,527			49,296		49,548
Net earnings (loss) per share — basic:
Continuing operations	$	0.40	$	0.37		$	0.93	$	1.00
Discontinued operations	—		(0.02		)	—		(0.33		)
Net income	0.40		0.35			0.93		0.67
Net earnings (loss) per share — diluted:
Continuing operations	$	0.40	$	0.37		$	0.93	$	0.99
Discontinued operations	—		(0.02		)	—		(0.33		)
Net income	0.40		0.35			0.93		0.67
Potentially dilutive securities excluded from earnings per diluted share because their effect is anti-dilutive	1,752		1,062			1,746		925

Stock option and restricted stock unit activity, including both continuing and discontinued operations of the entity

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands)	2011		2010			2011			2010
Stock-based compensation expense recognized in operating expenses	$	1,230	$	432		$	3,524		$	1,017
Tax benefit of stock-based compensation expense in provision for income taxes	449		148			1,267			318
Stock-based compensation expense, net of tax	$	781	$	284		$	2,257		$	699
Fair value of shares vested	$	1,287	$	434		$	3,405		$	995
Proceeds to the Company from the exercise of stock-based compensation	$	—	$	23		$	154		$	978
Tax effect from exercise of stock-based compensation, including shortfall tax benefits	$	—	$	(35	)	$	(71	)	$	(118	)

	At September 30,
	2011		2010
Stock-based compensation cost capitalized in inventory	$	166	$	23

Schedule of effective tax rates and income tax expense

	Three Months Ended						Nine Months Ended
(in thousands, except)	September 30,						September 30,
percentage amounts)	2011			2010			2011			2010
Effective tax rate	34.2		%	37.0		%	37.1		%	38.4		%
Provision for income taxes	$	10,052		$	10,801		$	27,069		$	30,704

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Segment Information

9 Months Ended

Sep. 30, 2011

Segment Information

Segment Information

10.           Segment Information

The Company is organized into three reportable segments. The segments are defined by the regions where the Company’s products are manufactured, marketed and distributed to the Company’s customers. The three regional segments are the North American segment, comprising primarily the United States and Canada, the European segment and the Asia/Pacific segment, comprising the Company’s operations in China, Hong Kong, the south Pacific and the Middle East. These segments are similar in several ways, including the types of materials, the production processes, the distribution channels and the product applications.

The following table illustrates certain measurements used by management to assess the performance as of or for the following periods:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(in thousands)	2011			2010			2011			2010
Net Sales
North America	$	127,998		$	115,206		$	371,732		$	350,700
Europe	31,761			28,545			93,206			78,137
Asia/Pacific	2,370			2,616			7,062			6,964
Administrative and all other	237			80			713			80
Total	$	162,366		$	146,447		$	472,713		$	435,881
Sales to Other Segments*
North America	$	1,093		$	1,674		$	3,905		$	3,282
Europe	—			18			250			85
Asia/Pacific	3,350			2,339			7,505			5,936
Total	$	4,443		$	4,031		$	11,660		$	9,303
Income (Loss) from Operations
North America	$	23,594		$	24,317		$	69,463		$	73,515
Europe	2,801			3,420			3,997			4,117
Asia/Pacific	(410		)	(11		)	(1,674		)	(320		)
Administrative and all other	(1,103		)	1,526			(3,413		)	2,970
Total	$	24,882		$	29,252		$	68,373		$	80,282

* The sales to other segments are eliminated on consolidation.

					At
	At September 30,				December 31,
(in thousands)	2011		2010		2010
Total Assets
North America	$	608,350	$	546,726	$	557,762
Europe	131,138		132,988		123,669
Asia/Pacific	28,349		23,793		25,576
Administrative and all other	87,632		158,327		167,702
Total	$	855,469	$	861,834	$	874,709

Cash collected by the Company’s United States subsidiaries is routinely transferred into the Company’s cash management accounts and, therefore, has been included in the total assets of “Administrative and all other.” Cash and cash equivalent balances in the “Administrative and all other” segment were $177.5 million, $230.4 million, and $274.6 million, as of September 30, 2011 and 2010, and December 31, 2010, respectively. Real estate assets previously allocated to the venting products segment have been allocated to the “Administrative and all other” as of August 31, 2010. See Note 11.

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Investments (Details) (Keymark Enterprises, LLC, USD $) In Millions, unless otherwise specified	3 Months Ended	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2011	Mar. 31, 2011	Dec. 31, 2010
Equity Method Investment
Equity method investment ownership percentage			46.10%	40.60%
Remaining balance, loan and pledge agreement defaulted on by the other owner of Keymark				$ 0.7
Carrying value of software acquired	11.5
Net cash payments to purchase software assets	6.2
Income (loss) in equity method investment, before tax	4.3
Carrying value of investments	1.0
Loans made to other owner		$ 0.5
Initial ownership percentage
Equity Method Investment
Equity method investment ownership percentage				40.60%
Ownership percentage adjustment due to default
Equity Method Investment
Equity method investment ownership percentage			5.50%

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2011

Commitments and Contingencies

Commitments and Contingencies

8.             Commitments and Contingencies

Note 9 to the consolidated financial statements in the 2010 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. The resolution of claims and litigation is subject to inherent uncertainty and could have a material adverse effect on the Company’s financial condition, cash flows and results of operations.

The Company’s policy with regard to environmental liabilities is to accrue for future environmental assessments and remediation costs when information becomes available that indicates that it is probable that the Company is liable for any related claims and assessments and the amount of the liability is reasonably estimable. The Company does not believe that these environmental matters will have a material adverse effect on the Company’s financial condition, cash flows or results of operations.

Corrosion, hydrogen enbrittlement, cracking, material hardness, wood pressure-treating chemicals, misinstallations, misuse, design and assembly flaws, manufacturing defects, environmental conditions or other factors can contribute to failure of fasteners, connectors, tools, anchors, adhesives and venting products. On occasion, some of the fasteners and connectors that the Company sells have failed, although the Company has not incurred any material liability resulting from those failures. The Company attempts to avoid such failures by establishing and monitoring appropriate product specifications, manufacturing quality control procedures, inspection procedures and information on appropriate installation methods and conditions. The Company subjects its products to extensive testing, with results and conclusions published in Company catalogues and on its websites.

Pending Claims

Four lawsuits (the “Cases”) have been filed against the Company in the Hawaii First Circuit Court: Alvarez v. Haseko Homes, Inc. and Simpson Manufacturing, Inc., Civil No. 09-1-2697-11 (“Case 1”); Ke Noho Kai Development, LLC v. Simpson Strong-Tie Company, Inc., and Honolulu Wood Treating Co., LTD., Case No. 09-1-1491-06 SSM (“Case 2”); North American Specialty Ins. Co. v. Simpson Strong-Tie Company, Inc. and K.C. Metal Products, Inc., Case No. 09-1-1490-06 VSM (“Case 3”); and Charles et al. v. Haseko Homes, Inc. et al. and Third Party Plaintiffs Haseko Homes, Inc. et al. v. Simpson Strong-Tie Company, Inc., et al., Civil No. 09-1-1932-08 (“Case 4”). Case 1 was filed on November 18, 2009. Cases 2 and 3 were originally filed on June 30, 2009. Case 4 was filed on August 19, 2009. The Cases all relate to alleged premature corrosion of the Company’s strap tie holdown products installed in buildings in a housing development known as Ocean Pointe in Honolulu, Hawaii, allegedly causing property damage. Case 1 is a class action brought by the owners of allegedly affected Ocean Pointe houses. Case 1 was originally filed as Kai et al. v. Haseko Homes, Inc., Haseko Construction, Inc. and Simpson Manufacturing, Inc., Case No. 09-1-1476, but was voluntarily dismissed and then re-filed with a new representative plaintiff. Case 2 is an action by the builders and developers of Ocean Pointe against the Company, claiming that either the Company’s strap tie holdowns are defective in design or manufacture or the Company failed to provide adequate warnings regarding the products’ susceptibility to corrosion in certain environments. Case 3 is a subrogation action brought by the insurance company for the builders and developers against the Company claiming the insurance company expended funds to correct problems allegedly caused by the Company’s products. Case 4 is a putative class action brought, like Case 1, by owners of allegedly affected Ocean Pointe homes. In Case 4, Haseko Homes, Inc. (“Haseko”), the developer of the Ocean Pointe development, has brought a third party complaint against the Company alleging that any damages for which Haseko may be liable are actually the fault of the Company. None of the Cases alleges a specific amount of damages sought, although each of the Cases seeks compensatory damages, and Case 1 seeks punitive damages. The Company is currently investigating the facts underlying the claims asserted in the Cases, including, among other things, the cause of the alleged corrosion; the severity of any problems shown to exist; the buildings affected; the responsibility of the general contractor, various subcontractors and other construction professionals for the alleged damages; the amount, if any, of damages suffered; and the costs of repair, if needed. At this time, the likelihood that the Company will be found liable for any property damage allegedly suffered and the extent of such liability, if any, are unknown. Management believes the Cases may not be resolved for an extended period. The Company intends to defend itself vigorously in connection with the Cases.

Based on facts currently known to the Company, the Company believes that all or part of the claims alleged in the Cases may be covered by its insurance policies. On April 19, 2011, an action was filed in the United States District Court for the District of Hawaii, National Union Fire Insurance Company of Pittsburgh, PA v. Simpson Manufacturing Company, Inc., et al., Civil No. 11-00254 ACK. In this action, Plaintiff National Union Fire Insurance Company of Pittsburgh, Pennsylvania (“National Union”), which issued certain Commercial General Liability insurance policies to the Company, seeks declaratory relief in the Cases with respect to its obligations to defend or indemnify the Company, Simpson Strong-Tie Company Inc., and a vendor of the Company’s strap tie holdown products. The Company has moved to dismiss or stay, or transfer, National Union’s action.  If the National Union action is not dismissed, the Company intends vigorously to defend all claims advanced by National Union and to assert all of its own claims against National Union.

Nishimura v. Gentry Homes, Ltd; Simpson Manufacturing Co., Inc.; and Simpson Strong-Tie Company, Inc., Civil no. 11-1-1522-07, was filed in the Circuit Court of the First Circuit of Hawaii on July 20, 2011. The case alleges premature corrosion of the Company’s strap tie holdown products in a housing development at Ewa Beach in Honolulu, Hawaii. The case is a putative class action brought by owners of allegedly affected homes. The Complaint alleges that the Company’s strap products and mudsill anchors are insufficiently corrosion resistant and/or fail to comply with Honolulu’s building code. The Company is currently investigating the claims asserted in the complaint, including, among other things: the existence and extent of the alleged corrosion, if any; the building code provisions alleged to be applicable and, if applicable, whether the products complied; the buildings affected; the responsibility of the general contractor, various subcontractors and other construction professionals for the alleged damages; the amount, if any, of damages suffered; and the costs of repair, if any are needed. At this time, the likelihood that the Company will be found liable for any damage allegedly suffered and the extent of such liability, if any, are unknown. The Company has not yet been formally served with the Complaint, but denies any liability of any kind and intends to defend itself vigorously in this case.

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Basis of Presentation

9 Months Ended

Sep. 30, 2011

Basis of Presentation

Basis of Presentation

1.             Basis of Presentation

Principles of Consolidation

The consolidated financial statements include the accounts of Simpson Manufacturing Co., Inc. and its subsidiaries (the “Company”). Investments in 50% or less owned affiliates are accounted for using either cost or the equity method. All significant intercompany transactions have been eliminated.

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 accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These interim statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 (the “2010 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 state fairly the financial information set forth therein, in accordance with GAAP. The year-end condensed consolidated balance sheet data were derived from audited financial statements, but do not include all disclosures required by GAAP. The Company’s quarterly results fluctuate. 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.

Revenue Recognition

The Company recognizes revenue when the earnings process is complete, net of applicable provision for discounts, returns and incentives, whether actual or estimated, based on the Company’s experience. This generally occurs when products are shipped to the customer in accordance with the sales agreement or purchase order, ownership and risk of loss pass to the customer, collectibility is reasonably assured and pricing is fixed or determinable. The Company’s general shipping terms are F.O.B. shipping point, where title is transferred and revenue is recognized when the products are shipped to customers. When the Company sells F.O.B. destination point, title is transferred and the Company recognizes revenue on delivery or customer acceptance, depending on terms of the sales agreement. Service sales, representing after-market repair and maintenance, engineering activities, software license sales and services and lease income, though significantly less than 1% of net sales and not material to the consolidated financial statements, are recognized as the services are completed or the software products and services are delivered. If actual costs of sales returns, incentives and discounts were to significantly exceed the recorded estimated allowance, the Company’s sales would be adversely affected.

Segment and Discontinued Operations Information

The Company had operated under two reportable segments, the connector products segment and the venting products segment. As set forth in Note 11 “Discontinued Operations,” on August 31, 2010, the Company sold substantially all of the assets and liabilities of its venting segment. Accordingly, the Company has classified the results of the venting products segment, including impairments and losses of goodwill and other assets, as discontinued operations in the Condensed Consolidated Statements of Operations for all periods presented. Except as otherwise stated below, discussion in these notes pertains to the Company’s continuing operations.

As a result of the sale of the assets of Simpson Dura-Vent Company, Inc (“Simpson Dura-Vent”), the Company has reorganized its operating segments into three reportable operating segments consisting of North America, Europe and Asia/Pacific.

Net Earnings (Loss) Per Common Share

Basic earnings (loss) per common share is computed based on the weighted average number of common shares outstanding. Potentially dilutive securities, 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 (loss) per share (“EPS”) to diluted EPS:

	Three Months Ended					Nine Months Ended
(in thousands, except)	September 30,					September 30,
per-share amounts)	2011		2010			2011		2010
Earnings from continuing operations, net of tax	$	19,380	$	18,408		$	45,951	$	49,297
Loss from discontinued operations, net of tax	—		(1,226		)	—		(16,212		)
Net income available to common stockholders	$	19,380	$	17,182		$	45,951	$	33,085
Basic weighted average shares outstanding	48,253		49,427			49,247		49,411
Dilutive effect of potential common stock equivalents — stock options	35		100			49		137
Diluted weighted average shares outstanding	48,288		49,527			49,296		49,548
Net earnings (loss) per share — basic:
Continuing operations	$	0.40	$	0.37		$	0.93	$	1.00
Discontinued operations	—		(0.02		)	—		(0.33		)
Net income	0.40		0.35			0.93		0.67
Net earnings (loss) per share — diluted:
Continuing operations	$	0.40	$	0.37		$	0.93	$	0.99
Discontinued operations	—		(0.02		)	—		(0.33		)
Net income	0.40		0.35			0.93		0.67
Potentially dilutive securities excluded from earnings per diluted share because their effect is anti-dilutive	1,752		1,062			1,746		925

Anti-dilutive shares attributable to outstanding stock options were excluded from the calculation of diluted net income per share.

Accounting for Stock-Based Compensation

With the approval of the Company’s stockholders on April 26, 2011, the Company adopted the Simpson Manufacturing Co., Inc. 2011 Incentive Plan (the “2011 Plan”). The 2011 Plan amended and restated in their entirety, and incorporated and superseded, both the Simpson Manufacturing Co., Inc. 1994 Stock Option Plan (the “1994 Plan”), which was principally for the Company’s employees, and the Simpson Manufacturing Co., Inc. 1995 Independent Director Stock Option Plan (the “1995 Plan”), which was for its independent directors. Options previously granted under the 1994 Plan or the 1995 Plan will not be affected by the adoption of the 2011 Plan and will continue to be governed by the 1994 Plan or the 1995 Plan, respectively.

Under the 1994 Plan, the Company could grant incentive stock options and non-qualified stock options, although the Company granted only non-qualified stock options under the 1994 Plan and the 1995 Plan. The Company generally granted options under each of the 1994 Plan and the 1995 Plan once each year. The exercise price per share of each option granted in February 2011 and February 2010 under the 1994 Plan equaled the closing market price per share of the Company’s common stock as reported by the New York Stock Exchange on the day preceding the day that the Compensation and Leadership Development Committee of the Company’s Board of Directors met to approve the grant of the options. The exercise price per share under each option granted under the 1995 Plan was at the fair market value on the date specified in the 1995 Plan. Options vest and expire according to terms established at the grant date. Options granted under the 1994 Plan typically vest evenly over the requisite service period of four years and have a term of seven years. The vesting of options granted under the 1994 Plan will be accelerated if the grantee ceases to be employed by the Company after reaching age 60 or if there is a change in control of the Company. Options granted under the 1995 Plan are fully vested on the date of grant. Shares of common stock issued on exercise of stock options under the 1994 Plan and the 1995 Plan are registered under the Securities Act of 1933.

Under the 2011 Plan, the Company may grant incentive stock options, non-qualified stock options, restricted stock and restricted stock units, although the Company currently intends to award primarily restricted stock units and to a lesser extent, if at all, non-qualified stock options. The Company does not currently intend to award incentive stock options or restricted stock. Under the 2011 Plan, no more than 16.3 million shares of the Company’s common stock may be issued (including shares already sold) pursuant to all awards under the 2011 Plan, including on exercise of options previously granted under the 1994 Plan and the 1995 Plan. Shares of common stock to be issued pursuant to the 2011 Plan are registered under the Securities Act of 1933.

The following table represents the Company’s stock option and restricted stock unit activity, including both continuing and discontinued operations, for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands)	2011		2010			2011			2010
Stock-based compensation expense recognized in operating expenses	$	1,230	$	432		$	3,524		$	1,017
Tax benefit of stock-based compensation expense in provision for income taxes	449		148			1,267			318
Stock-based compensation expense, net of tax	$	781	$	284		$	2,257		$	699
Fair value of shares vested	$	1,287	$	434		$	3,405		$	995
Proceeds to the Company from the exercise of stock-based compensation	$	—	$	23		$	154		$	978
Tax effect from exercise of stock-based compensation, including shortfall tax benefits	$	—	$	(35	)	$	(71	)	$	(118	)

	At September 30,
	2011		2010
Stock-based compensation cost capitalized in inventory	$	166	$	23

The amounts included in cost of sales, research and development and other engineering, selling, or general and administrative expense depend on the job functions performed by the employees to whom the stock options were granted. The amounts attributed to discontinued operations were not significant for any of the periods presented.

The assumptions used to calculate the fair value of options or restricted stock units granted are evaluated and revised, as necessary, to reflect market conditions and the Company’s experience.

Fair Value of Financial Instruments

The “Fair Value Measurements and Disclosures” topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards CodificationTM (“ASC”) establishes a valuation hierarchy for disclosure of the inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; Level 3 inputs are unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value. A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

As of September 30, 2011, the Company’s investments consisted of only United States Treasury securities and money market funds aggregating $164.2 million, which are maintained in cash equivalents and are carried at cost, approximating fair value, based on Level 1 inputs. There are no other recurring or non-recurring fair value measurements.

Income Taxes

The Company uses an estimated annual effective tax rate to measure the tax benefit or tax expense recognized in each interim period. The provision for income taxes for the first three quarters of 2010, however, was computed based on those quarters as discrete periods due to the uncertainty regarding the Company’s ability to reliably estimate income before taxes during 2010, primarily as a result of uncertainty in the construction markets in which the Company operates.

The following table presents the Company’s effective tax rates and income tax expense for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended						Nine Months Ended
(in thousands, except)	September 30,						September 30,
percentage amounts)	2011			2010			2011			2010
Effective tax rate	34.2		%	37.0		%	37.1		%	38.4		%
Provision for income taxes	$	10,052		$	10,801		$	27,069		$	30,704

Recently Issued Accounting Standards

In June 2011, the FASB issued an amendment to the comprehensive income guidance which eliminates the option to present components of other comprehensive income as part of the statement of stockholders’ equity. This amendment requires that all non-owner changes in stockholders’ equity be presented in a single continuous statement or in two separate but consecutive statements. This amendment is effective in fiscal years, and interim periods within those years, beginning after December 15, 2011. The implementation of this amended accounting guidance is not expected to have a material effect on the Company’s consolidated financial position and results of operations.

In September 2011, the FASB issued an amendment to the goodwill impairment guidance which provides an option for companies to use a qualitative approach to test goodwill for impairment if certain conditions are met. The amendment is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, and early adoption is permitted. The implementation of this amended accounting guidance is not expected to have a material effect on the Company’s consolidated financial position and results of operations.

Other recent authoritative guidance issued by the FASB (including technical corrections to the ASC), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or is not expected to have a material effect on the Company’s consolidated financial statements.

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Property, Plant and Equipment, Net

9 Months Ended

Sep. 30, 2011

Property, Plant and Equipment, Net

Property, Plant and Equipment, Net

4.             Property, Plant and Equipment, Net

Property, plant and equipment, net, consist of the following:

	At September 30,						At December 31,
(in thousands)	2011			2010			2010
Land	$	28,889		$	26,589		$	26,384
Buildings and site improvements	152,167			144,861			141,834
Leasehold improvements	3,736			3,551			3,693
Machinery and equipment	203,687			184,694			186,021
	388,479			359,695			357,932
Less accumulated depreciation and amortization	(199,614		)	(186,996		)	(189,751		)
	188,865			172,699			168,181
Capital projects in progress	2,151			3,765			8,891
	$	191,016		$	176,464		$	177,072

The Company’s vacant facility in San Leandro, California, remained classified as an asset held for sale as of September 30, 2011, consistent with the classification at December 31, 2010. The Company concluded, in the quarter ended June 30, 2011, that the San Leandro facility, associated with the North American segment, is expected to be sold below carrying value, and therefore recorded an impairment charge, within general and administrative expense, of $1.1 million, equal to the amount by which carrying value exceeds net estimated realizable value. In April 2011, the facility in France, which was acquired in the Agence Internationale Commerciale et Industrielle, S.A.S. (“Aginco”) purchase, was sold for an amount approximately equal to its carrying cost.

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Subsequent Events (Details)	3 Months Ended			9 Months Ended		3 Months Ended
	Sep. 30, 2011 USD ($)	Dec. 31, 2010 USD ($)	Sep. 30, 2010 USD ($)	Sep. 30, 2011 USD ($)	Sep. 30, 2010 USD ($)	Sep. 30, 2011 Dividend declared, October 2011 USD ($)	Oct. 31, 2011 Acquisitions USD ($)	Oct. 31, 2011 Acquisitions CHF
Subsequent Events
Cash dividends declared per common share (in dollars per share)	$ 0.125	$ 0.10	$ 0.10	$ 0.375	$ 0.30	$ 0.125
Cash dividend declared on common stock		$ 4,979,000		$ 18,331,000	$ 14,859,000	$ 6,000,000
Purchase consideration							$ 61,400,000	54,000,000

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Property, Plant and Equipment, Net (Details) (USD $) In Thousands	9 Months Ended																		3 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Dec. 31, 2010	Sep. 30, 2011 Land	Dec. 31, 2010 Land	Sep. 30, 2010 Land	Sep. 30, 2011 Buildings and site improvements	Dec. 31, 2010 Buildings and site improvements	Sep. 30, 2010 Buildings and site improvements	Sep. 30, 2011 Leasehold improvements	Dec. 31, 2010 Leasehold improvements	Sep. 30, 2010 Leasehold improvements	Sep. 30, 2011 Machinery and equipment	Dec. 31, 2010 Machinery and equipment	Sep. 30, 2010 Machinery and equipment	Sep. 30, 2011 Capital projects in progress	Dec. 31, 2010 Capital projects in progress	Sep. 30, 2010 Capital projects in progress	Jun. 30, 2011 San Leandro Facility
Property, Plant and Equipment
Property, plant and equipment, gross	$ 388,479	$ 359,695	$ 357,932	$ 28,889	$ 26,384	$ 26,589	$ 152,167	$ 141,834	$ 144,861	$ 3,736	$ 3,693	$ 3,551	$ 203,687	$ 186,021	$ 184,694
Accumulated depreciation and amortization	(199,614)	(186,996)	(189,751)
Property, plant and equipment excluding capital projects in progress, net	188,865	172,699	168,181
Capital projects in progress																2,151	8,891	3,765
Property, plant and equipment, net	191,016	176,464	177,072
Impairment charges for facility closure	$ 1,094	$ 16,916																	$ 1,100

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Investments

9 Months Ended

Sep. 30, 2011

Investments

Investments

5.             Investments

Equity Method Investment

At December 31, 2010, the Company had a 40.6% equity interest in Keymark Enterprises, LLC (“Keymark”), for which the Company accounted using the equity method. In March 2011, Keymark’s other owner defaulted on its loan and pledge agreement, entered into with the Company in October 2008, for the payment of the remaining balance of $0.7 million that was due in March 2011. As a result, the Company was assigned an additional 5.5% equity interest pursuant to the pledge agreement, which discharged the remaining debt and increased the Company’s equity interest in Keymark to 46.1%. During the third quarter of 2011, the Company purchased the software assets of Keymark valued at $11.5 million for $6.2 million in net cash payments and its 46.05% equity interest in Keymark. The transactions resulted in a gain of $4.3 million based on the difference between the fair value of the Company’s investment in Keymark less its carrying value of $1.0 million. The acquired software is used by customers of the Company in designing and engineering residential structures. The Company was also repaid $0.5 million for a loan made to Keymark in December 2009. As of September 30, 2011, the Company no longer had an equity interest in Keymark or any remaining receivables from Keymark.

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Basis of Presentation (Details 2) (USD $) Share data in Millions, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Stock option and restricted stock unit activity, including both continuing and discontinued operations
Stock-based compensation expense recognized in operating expenses	$ 1,230,000	$ 432,000	$ 3,524,000	$ 1,017,000
Tax benefit of stock-based compensation expense in provision for income taxes	449,000	148,000	1,267,000	318,000
Stock-based compensation expense, net of tax	781,000	284,000	2,257,000	699,000
Fair value of shares vested	1,287,000	434,000	3,405,000	995,000
Proceeds to the Company from the exercise of stock-based compensation		23,000	154,000	978,000
Tax effect from exercise of stock-based compensation, including shortfall tax benefits		(35,000)	(71,000)	(118,000)
Stock-based compensation cost capitalized in inventory			166,000	23,000
Fair value of financial instruments
United States Treasury securities and money market funds included in cash equivalents	164,200,000		164,200,000
Income Taxes
Effective tax rate (as a percent)	34.20%	37.00%	37.10%	38.40%
Provision for income taxes	$ 10,052,000	$ 10,801,000	$ 27,069,000	$ 30,704,000
1994 Plan
Stock-Based Compensation
Number of grants generally made annually under stock option plans			Once
Requisite service period for options to vest (in years)			4
Expiration period for options granted (in years)			7
Age after which vesting of options granted accelerates if the grantee ceases to be employed by the entity (in years)			60
1995 Plan
Stock-Based Compensation
Number of grants generally made annually under stock option plans			Once
2011 Plan
Stock-Based Compensation
Maximum common stock shares that may be sold under plan (in shares)	16.3		16.3

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Goodwill and Intangible Assets, Net (Details) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010	Dec. 31, 2010
Goodwill
Goodwill	$ 69,688	$ 75,585	$ 69,688	$ 75,585	$ 70,069
Intangible assets, net
Gross Carrying Amount	38,589	37,205	38,589	37,205	38,654
Accumulated Amortization	(18,337)	(14,137)	(18,337)	(14,137)	(15,188)
Net Carrying Amount	20,252	23,068	20,252	23,068	23,466
Amortization expense of intangible assets, for continuing and discontinued operations	1,000	1,000	3,242	3,500
Estimated future amortization of intangible assets
Final three months of 2011			1,054
2012			3,754
2013			3,187
2014			2,970
2015			2,200
2016			2,062
Thereafter			5,025
Total estimated future amortization of intangible assets			20,252
North America
Goodwill
Goodwill	41,585	41,632	41,585	41,632	41,761
Intangible assets, net
Gross Carrying Amount	24,022	24,022	24,022	24,022	24,022
Accumulated Amortization	(12,746)	(10,140)	(12,746)	(10,140)	(10,792)
Net Carrying Amount	11,276	13,882	11,276	13,882	13,230
Europe
Goodwill
Goodwill	26,249	32,106	26,249	32,106	26,367
Intangible assets, net
Gross Carrying Amount	14,567	13,183	14,567	13,183	14,632
Accumulated Amortization	(5,591)	(3,997)	(5,591)	(3,997)	(4,396)
Net Carrying Amount	8,976	9,186	8,976	9,186	10,236
Asia/Pacific
Goodwill
Goodwill	$ 1,854	$ 1,847	$ 1,854	$ 1,847	$ 1,941

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2011
Document and Entity Information
Entity Registrant Name	SIMPSON MANUFACTURING CO INC /CA/
Entity Central Index Key	0000920371
Document Type	10-Q
Document Period End Date	Sep. 30, 2011
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	48,160,653
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q3

XML

Inventories (Details) (USD $) In Thousands	Sep. 30, 2011	Dec. 31, 2010	Sep. 30, 2010
Inventories
Raw materials	$ 71,908	$ 61,996	$ 61,566
In-process products	21,454	18,364	18,860
Finished products	78,780	71,937	70,287
Total inventories	$ 172,142	$ 152,297	$ 150,713

XML

Basis of Presentation (Policies)

9 Months Ended

Sep. 30, 2011

Basis of Presentation

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of Simpson Manufacturing Co., Inc. and its subsidiaries (the “Company”). Investments in 50% or less owned affiliates are accounted for using either cost or the equity method. All significant intercompany transactions have been eliminated.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue when the earnings process is complete, net of applicable provision for discounts, returns and incentives, whether actual or estimated, based on the Company’s experience. This generally occurs when products are shipped to the customer in accordance with the sales agreement or purchase order, ownership and risk of loss pass to the customer, collectibility is reasonably assured and pricing is fixed or determinable. The Company’s general shipping terms are F.O.B. shipping point, where title is transferred and revenue is recognized when the products are shipped to customers. When the Company sells F.O.B. destination point, title is transferred and the Company recognizes revenue on delivery or customer acceptance, depending on terms of the sales agreement. Service sales, representing after-market repair and maintenance, engineering activities, software license sales and services and lease income, though significantly less than 1% of net sales and not material to the consolidated financial statements, are recognized as the services are completed or the software products and services are delivered. If actual costs of sales returns, incentives and discounts were to significantly exceed the recorded estimated allowance, the Company’s sales would be adversely affected.

Segment and Discontinued Operations Information

Segment and Discontinued Operations Information

The Company had operated under two reportable segments, the connector products segment and the venting products segment. As set forth in Note 11 “Discontinued Operations,” on August 31, 2010, the Company sold substantially all of the assets and liabilities of its venting segment. Accordingly, the Company has classified the results of the venting products segment, including impairments and losses of goodwill and other assets, as discontinued operations in the Condensed Consolidated Statements of Operations for all periods presented. Except as otherwise stated below, discussion in these notes pertains to the Company’s continuing operations.

As a result of the sale of the assets of Simpson Dura-Vent Company, Inc (“Simpson Dura-Vent”), the Company has reorganized its operating segments into three reportable operating segments consisting of North America, Europe and Asia/Pacific.

Net Earnings (Loss) Per Common Share

Net Earnings (Loss) Per Common Share

Basic earnings (loss) per common share is computed based on the weighted average number of common shares outstanding. Potentially dilutive securities, 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 (loss) per share (“EPS”) to diluted EPS:

	Three Months Ended					Nine Months Ended
(in thousands, except)	September 30,					September 30,
per-share amounts)	2011		2010			2011		2010
Earnings from continuing operations, net of tax	$	19,380	$	18,408		$	45,951	$	49,297
Loss from discontinued operations, net of tax	—		(1,226		)	—		(16,212		)
Net income available to common stockholders	$	19,380	$	17,182		$	45,951	$	33,085
Basic weighted average shares outstanding	48,253		49,427			49,247		49,411
Dilutive effect of potential common stock equivalents — stock options	35		100			49		137
Diluted weighted average shares outstanding	48,288		49,527			49,296		49,548
Net earnings (loss) per share — basic:
Continuing operations	$	0.40	$	0.37		$	0.93	$	1.00
Discontinued operations	—		(0.02		)	—		(0.33		)
Net income	0.40		0.35			0.93		0.67
Net earnings (loss) per share — diluted:
Continuing operations	$	0.40	$	0.37		$	0.93	$	0.99
Discontinued operations	—		(0.02		)	—		(0.33		)
Net income	0.40		0.35			0.93		0.67
Potentially dilutive securities excluded from earnings per diluted share because their effect is anti-dilutive	1,752		1,062			1,746		925

Anti-dilutive shares attributable to outstanding stock options were excluded from the calculation of diluted net income per share.

Accounting for Stock-Based Compensation

Accounting for Stock-Based Compensation

With the approval of the Company’s stockholders on April 26, 2011, the Company adopted the Simpson Manufacturing Co., Inc. 2011 Incentive Plan (the “2011 Plan”). The 2011 Plan amended and restated in their entirety, and incorporated and superseded, both the Simpson Manufacturing Co., Inc. 1994 Stock Option Plan (the “1994 Plan”), which was principally for the Company’s employees, and the Simpson Manufacturing Co., Inc. 1995 Independent Director Stock Option Plan (the “1995 Plan”), which was for its independent directors. Options previously granted under the 1994 Plan or the 1995 Plan will not be affected by the adoption of the 2011 Plan and will continue to be governed by the 1994 Plan or the 1995 Plan, respectively.

Under the 1994 Plan, the Company could grant incentive stock options and non-qualified stock options, although the Company granted only non-qualified stock options under the 1994 Plan and the 1995 Plan. The Company generally granted options under each of the 1994 Plan and the 1995 Plan once each year. The exercise price per share of each option granted in February 2011 and February 2010 under the 1994 Plan equaled the closing market price per share of the Company’s common stock as reported by the New York Stock Exchange on the day preceding the day that the Compensation and Leadership Development Committee of the Company’s Board of Directors met to approve the grant of the options. The exercise price per share under each option granted under the 1995 Plan was at the fair market value on the date specified in the 1995 Plan. Options vest and expire according to terms established at the grant date. Options granted under the 1994 Plan typically vest evenly over the requisite service period of four years and have a term of seven years. The vesting of options granted under the 1994 Plan will be accelerated if the grantee ceases to be employed by the Company after reaching age 60 or if there is a change in control of the Company. Options granted under the 1995 Plan are fully vested on the date of grant. Shares of common stock issued on exercise of stock options under the 1994 Plan and the 1995 Plan are registered under the Securities Act of 1933.

Under the 2011 Plan, the Company may grant incentive stock options, non-qualified stock options, restricted stock and restricted stock units, although the Company currently intends to award primarily restricted stock units and to a lesser extent, if at all, non-qualified stock options. The Company does not currently intend to award incentive stock options or restricted stock. Under the 2011 Plan, no more than 16.3 million shares of the Company’s common stock may be issued (including shares already sold) pursuant to all awards under the 2011 Plan, including on exercise of options previously granted under the 1994 Plan and the 1995 Plan. Shares of common stock to be issued pursuant to the 2011 Plan are registered under the Securities Act of 1933.

The following table represents the Company’s stock option and restricted stock unit activity, including both continuing and discontinued operations, for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(in thousands)	2011		2010			2011			2010
Stock-based compensation expense recognized in operating expenses	$	1,230	$	432		$	3,524		$	1,017
Tax benefit of stock-based compensation expense in provision for income taxes	449		148			1,267			318
Stock-based compensation expense, net of tax	$	781	$	284		$	2,257		$	699
Fair value of shares vested	$	1,287	$	434		$	3,405		$	995
Proceeds to the Company from the exercise of stock-based compensation	$	—	$	23		$	154		$	978
Tax effect from exercise of stock-based compensation, including shortfall tax benefits	$	—	$	(35	)	$	(71	)	$	(118	)

	At September 30,
	2011		2010
Stock-based compensation cost capitalized in inventory	$	166	$	23

The amounts included in cost of sales, research and development and other engineering, selling, or general and administrative expense depend on the job functions performed by the employees to whom the stock options were granted. The amounts attributed to discontinued operations were not significant for any of the periods presented.

The assumptions used to calculate the fair value of options or restricted stock units granted are evaluated and revised, as necessary, to reflect market conditions and the Company’s experience.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The “Fair Value Measurements and Disclosures” topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards CodificationTM (“ASC”) establishes a valuation hierarchy for disclosure of the inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; Level 3 inputs are unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value. A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

As of September 30, 2011, the Company’s investments consisted of only United States Treasury securities and money market funds aggregating $164.2 million, which are maintained in cash equivalents and are carried at cost, approximating fair value, based on Level 1 inputs. There are no other recurring or non-recurring fair value measurements.

Income Taxes

Income Taxes

The Company uses an estimated annual effective tax rate to measure the tax benefit or tax expense recognized in each interim period. The provision for income taxes for the first three quarters of 2010, however, was computed based on those quarters as discrete periods due to the uncertainty regarding the Company’s ability to reliably estimate income before taxes during 2010, primarily as a result of uncertainty in the construction markets in which the Company operates.

The following table presents the Company’s effective tax rates and income tax expense for the three and nine months ended September 30, 2011 and 2010:

	Three Months Ended						Nine Months Ended
(in thousands, except)	September 30,						September 30,
percentage amounts)	2011			2010			2011			2010
Effective tax rate	34.2		%	37.0		%	37.1		%	38.4		%
Provision for income taxes	$	10,052		$	10,801		$	27,069		$	30,704

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Goodwill and Intangible Assets, Net

9 Months Ended

Sep. 30, 2011

Goodwill and Intangible Assets, Net

Goodwill and Intangible Assets, Net

6.             Goodwill and Intangible Assets, Net

Goodwill was as follows:

	At September 30,				At December 31,
(in thousands)	2011		2010		2010
North America	$	41,585	$	41,632	$	41,761
Europe	26,249		32,106		26,367
Asia/Pacific	1,854		1,847		1,941
Total	$	69,688	$	75,585	$	70,069

Intangible assets, net, were as follows:

	At September 30, 2011
	Gross					Net
	Carrying		Accumulated			Carrying
(in thousands)	Amount		Amortization			Amount
North America	$	24,022	$	(12,746	)	$	11,276
Europe	14,567		(5,591		)	8,976
Total	$	38,589	$	(18,337	)	$	20,252

	At September 30, 2010
	Gross					Net
	Carrying		Accumulated			Carrying
	Amount		Amortization			Amount
North America	$	24,022	$	(10,140	)	$	13,882
Europe	13,183		(3,997		)	9,186
Total	$	37,205	$	(14,137	)	$	23,068

	At December 31, 2010
	Gross					Net
	Carrying		Accumulated			Carrying
	Amount		Amortization			Amount
North America	$	24,022	$	(10,792	)	$	13,230
Europe	14,632		(4,396		)	10,236
Total	$	38,654	$	(15,188	)	$	23,466

Intangible assets consist primarily of customer relationships, patents, unpatented technology and non-compete agreements. Amortization expense, for continuing and discontinued operations, for intangible assets during the three months ended September 30, 2011 and 2010, totaled $1.0 million and $1.0 million, respectively, and during the nine months ended September 30, 2011 and 2010, totaled $3.2 million and $3.5 million, respectively.

At September 30, 2011, estimated future amortization of intangible assets was as follows:

(in thousands)
Final three months of 2011	$	1,054
2012	3,754
2013	3,187
2014	2,970
2015	2,200
2016	2,062
Thereafter	5,025
	$	20,252

The changes in the carrying amount of goodwill and intangible assets from December 31, 2010, to September 30, 2011, were as follows:

				Intangible
(in thousands)	Goodwill			Assets
Balance at December 31, 2010	$	70,069		$	23,466
Amortization	—			(3,242		)
Reclassifications	(336		)	(109		)
Foreign exchange	(45		)	137
Balance at September 30, 2011	$	69,688		$	20,252

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Inventories (Tables)

9 Months Ended

Sep. 30, 2011

Inventories

Schedule of carrying values of inventories

	At September 30,				At December 31,
(in thousands)	2011		2010		2010
Raw materials	$	71,908	$	61,566	$	61,996
In-process products	21,454		18,860		18,364
Finished products	78,780		70,287		71,937
	$	172,142	$	150,713	$	152,297

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Discontinued Operations (Details) (USD $) In Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2010	Sep. 30, 2010
Results from discontinued operations recorded in operating expenses
Loss on sale of discontinued operation		$ 657
Loss from discontinued operations, net of tax	(1,226)	(16,212)
Simpson Dura-Vent Company, Inc.
Results from discontinued operations recorded in operating expenses
Revenues	10,300	33,372
Cost of sales	8,957	28,073
Gross profit	1,343	5,299
Operating expenses	1,882	6,711
Loss on sale of discontinued operation	657	657
Impairment charge		21,350
Loss from discontinued operations	(1,196)	(23,419)
Provision for (benefit from) income taxes from discontinued operations	30	(7,207)
Loss from discontinued operations, net of tax	$ (1,226)	$ (16,212)

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Trade Accounts Receivable, Net (Details) (USD $) In Thousands	Sep. 30, 2011	Dec. 31, 2010	Sep. 30, 2010
Trade Accounts Receivable, Net
Trade accounts receivable	$ 100,877	$ 70,781	$ 97,059
Allowance for doubtful accounts	(1,210)	(1,344)	(1,637)
Allowance for sales discounts and returns	(1,635)	(1,181)	(1,787)
Trade accounts receivable, net	$ 98,032	$ 68,256	$ 93,635

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands	9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010
Cash flows from operating activities
Net income	$ 45,951	$ 33,085
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of assets	1	(4,813)
Loss on sale of discontinued operation		657
Depreciation and amortization	14,988	17,746
Impairment loss on assets held for sale	1,094	16,916
Deferred income taxes	(1,049)	4,811
Noncash compensation related to stock plans	3,812	1,278
Loss (income) in equity method investment	(4,389)	429
Excess tax benefit of options exercised	4	(10)
Provision for (recovery of) doubtful accounts	249	(5)
Provision for excess and obsolete inventory	189	5,872
Accrued interest earned from related party	(58)
Changes in operating assets and liabilities:
Trade accounts receivable	(30,174)	(28,433)
Inventories	(19,967)	(12,248)
Trade accounts payable	(4,211)	(3,680)
Income taxes payable	5,755	995
Accrued profit sharing trust contributions	(2,017)	(2,741)
Accrued cash profit sharing and commissions	9,068	6,147
Other current assets	(220)	(204)
Accrued liabilities	3,856	4,702
Long-term liabilities	(302)	(80)
Accrued workers' compensation	771	(343)
Other noncurrent assets	729	(226)
Net cash provided by operating activities	24,080	39,855
Cash flows from investing activities
Capital expenditures	(23,515)	(25,131)
Proceeds from sale of capital assets	3,205	14,837
Proceeds from sale of discontinued operations		27,706
Loans made to related parties		(1,798)
Loans repaid by related parties	552	50
Net cash provided by (used in) investing activities	(19,758)	15,664
Cash flows from financing activities
Repurchase of common stock	(53,208)
Issuance of common stock	154	978
Excess tax benefit of options exercised	(4)	10
Dividends paid	(17,309)	(14,821)
Net cash used in financing activities	(70,367)	(13,833)
Effect of exchange rate changes on cash and cash equivalents	(3,842)	(221)
Net increase (decrease) in cash and cash equivalents	(69,887)	41,465
Cash and cash equivalents at beginning of period	335,049	250,381
Cash and cash equivalents at end of period	265,162	291,846
Noncash activity during the period
Noncash capital expenditures	3,251	165
Dividends declared but not paid	5,805	4,942
Issuance of Company's common stock for compensation	$ 204	$ 301

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Property, Plant and Equipment, Net (Tables)

9 Months Ended

Sep. 30, 2011

Property, Plant and Equipment, Net

Schedule of property, plant and equipment, net

	At September 30,						At December 31,
(in thousands)	2011			2010			2010
Land	$	28,889		$	26,589		$	26,384
Buildings and site improvements	152,167			144,861			141,834
Leasehold improvements	3,736			3,551			3,693
Machinery and equipment	203,687			184,694			186,021
	388,479			359,695			357,932
Less accumulated depreciation and amortization	(199,614		)	(186,996		)	(189,751		)
	188,865			172,699			168,181
Capital projects in progress	2,151			3,765			8,891
	$	191,016		$	176,464		$	177,072

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Stock-Based Incentive Plans (Tables)

9 Months Ended

Sep. 30, 2011

Stock-Based Incentive Plans

Assumptions used to determine the fair value of options granted

Black-Scholes option pricing model assumptions for options granted in 2011 and 2010 are as follows:

Number		Risk-								Weighted
of Options		Free								Average
Granted	Grant	Interest		Dividend		Expected				Fair
(in thousands)	Date	Rate		Yield		Life	Volatility		Exercise Price	Value
1994 Plan
1,362	02/03/11	2.62	%	1.75	%	6.2 years	39.0	%	$29.66 to $32.63	$	10.33
148	02/02/10	2.93	%	1.62	%	6.5 years	36.0	%	$24.75	$	8.46
1995 Plan
30	02/15/11	2.92	%	1.76	%	6.6 years	38.0	%	$29.58	$	10.49

Summary of stock option activity

					Weighted-
			Weighted-		Average	Aggregate
			Average		Remaining	Intrinsic
	Shares		Exercise		Contractual	Value *
Non-Qualified Stock Options	(in thousands)		Price		Life (in years)	(in thousands)
Outstanding at January 1, 2011	1,124		$	34.19
Granted	1,392		29.66
Exercised	(7	)	23.74
Forfeited	(20	)	35.69
Outstanding at September 30, 2011	2,489		$	31.68	4.3	$	370
Outstanding and expected to vest at September 30, 2011	2,437		$	31.74	4.3	$	360
Exercisable at September 30, 2011	1,165		$	34.58	2.2	$	233

*  The intrinsic value represents the amount, if any, by which the fair market value of the underlying common stock exceeds the exercise price of the option, using the closing price per share of $24.93 as reported by the New York Stock Exchange on September 30, 2011.

Summary of unvested options activity

			Weighted-
			Average
	Shares		Grant-Date
Unvested Options	(in thousands)		Fair Value
Unvested at January 1, 2011	180		$	7.85
Granted	1,392		10.33
Vested	(242	)	9.86
Forfeited	(5	)	9.25
Unvested at September 30, 2011	1,325		$	10.09

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Trade Accounts Receivable, Net

9 Months Ended

Sep. 30, 2011

Trade Accounts Receivable, Net

Trade Accounts Receivable, Net

2.             Trade Accounts Receivable, Net

Trade accounts receivable consist of the following:

	At September 30,						At December 31,
(in thousands)	2011			2010			2010
Trade accounts receivable	$	100,877		$	97,059		$	70,781
Allowance for doubtful accounts	(1,210		)	(1,637		)	(1,344		)
Allowance for sales discounts and returns	(1,635		)	(1,787		)	(1,181		)
	$	98,032		$	93,635		$	68,256

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Discontinued Operations

9 Months Ended

Sep. 30, 2011

Discontinued Operations

Discontinued Operations

11.           Discontinued Operations

On August 31, 2010, the Company sold substantially all of the assets and liabilities of Simpson Dura-Vent Company, Inc. pursuant to an agreement dated June 30, 2010, with M&G Holding B.V. (“M&G”) and M&G Dura-Vent, Inc. The Company decided to sell the assets of Simpson Dura-Vent in order to focus exclusively on the development of its profitable connector products business. Simpson Dura-Vent represented the Company’s entire venting operating segment.

The results from discontinued operations, including the impairments and losses recorded in operating expenses, for the three and nine months ended September 30, 2010, were as follows:

	Three Months			Nine Months
	Ended			Ended
(in thousands)	September 30, 2010			September 30, 2010
Revenues	$	10,300		$	33,372
Cost of sales	8,957			28,073
Gross profit	1,343			5,299
Operating expenses	1,882			6,711
Loss on sale	657			657
Impairment charge	—			21,350
Loss from discontinued operations	(1,196		)	(23,419		)
Provision for (benefit from) income taxes from discontinued operations	30			(7,207		)
Loss from discontinued operations, net of tax	$	(1,226	)	$	(16,212	)

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Goodwill and Intangible Assets, Net (Details 2) (USD $) In Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Changes in the carrying amount of goodwill
Balance at the beginning of the period			$ 70,069
Reclassifications			(336)
Foreign exchange			(45)
Balance at the end of the period	69,688	75,585	69,688	75,585
Changes in the carrying amount of intangible assets
Balance at the beginning of the period			23,466
Amortization	(1,000)	(1,000)	(3,242)	(3,500)
Reclassifications			(109)
Foreign exchange			137
Balance at the end of the period	$ 20,252	$ 23,068	$ 20,252	$ 23,068

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Trade Accounts Receivable, Net (Tables)

9 Months Ended

Sep. 30, 2011

Trade Accounts Receivable, Net

Schedule of trade accounts receivable, net

	At September 30,						At December 31,
(in thousands)	2011			2010			2010
Trade accounts receivable	$	100,877		$	97,059		$	70,781
Allowance for doubtful accounts	(1,210		)	(1,637		)	(1,344		)
Allowance for sales discounts and returns	(1,635		)	(1,787		)	(1,181		)
	$	98,032		$	93,635		$	68,256

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Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data	3 Months Ended		9 Months Ended
	Sep. 30, 2011	Sep. 30, 2010	Sep. 30, 2011	Sep. 30, 2010
Net sales	$ 162,366	$ 146,447	$ 472,713	$ 435,881
Cost of sales	86,919	80,750	256,819	239,370
Gross profit	75,447	65,697	215,894	196,511
Operating expenses:
Research and development and other engineering	6,804	5,715	19,743	16,156
Selling	18,633	15,946	55,527	47,429
General and administrative	25,174	20,001	72,250	57,457
Loss (gain) on sale of assets	(46)	(5,217)	1	(4,813)
Total operating expenses	50,565	36,445	147,521	116,229
Income from operations	24,882	29,252	68,373	80,282
Income (loss) in equity method investment, before tax	4,471	(153)	4,389	(429)
Interest income, net	79	110	258	148
Income from continuing operations before taxes	29,432	29,209	73,020	80,001
Provision for income taxes from continuing operations	10,052	10,801	27,069	30,704
Income from continuing operations, net of tax	19,380	18,408	45,951	49,297
Loss from discontinued operations, net of tax		(1,226)		(16,212)
Net income	$ 19,380	$ 17,182	$ 45,951	$ 33,085
Basic
Continuing operations (in dollars per share)	$ 0.40	$ 0.37	$ 0.93	$ 1.00
Discontinued operations (in dollars per share)		$ (0.02)		$ (0.33)
Net income (in dollars per share)	$ 0.40	$ 0.35	$ 0.93	$ 0.67
Diluted
Continuing operations (in dollars per share)	$ 0.40	$ 0.37	$ 0.93	$ 0.99
Discontinued operations (in dollars per share)		$ (0.02)		$ (0.33)
Net income (in dollars per share)	$ 0.40	$ 0.35	$ 0.93	$ 0.67
Number of shares outstanding
Basic (in shares)	48,253	49,427	49,247	49,411
Diluted (in shares)	48,288	49,527	49,296	49,548
Cash dividends declared per common share (in dollars per share)	$ 0.125	$ 0.10	$ 0.375	$ 0.30

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Commitments and Contingencies (Details)	Sep. 30, 2011 Y lawsuit
Commitments and Contingencies
Number of lawsuits filed against the entity	4

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Stock-Based Incentive Plans (Details) (USD $) Share data in Thousands, except Per Share data, unless otherwise specified	9 Months Ended		1 Months Ended		9 Months Ended		1 Months Ended
	Sep. 30, 2011 Y segment plan lawsuit	Sep. 30, 2010	Feb. 28, 2011 1994 Plan Y	Feb. 28, 2010 1994 Plan Y	Sep. 30, 2011 1994 Plan Y	Feb. 02, 2010 1994 Plan	Feb. 28, 2011 1995 Plan Y	Feb. 15, 2011 1995 Plan
Stock-Based Incentive Plans
Number of stock-based incentive plans	1
Number of stock option plans superseded	2
Black-Scholes option pricing model assumptions for options granted
Number of Options Granted (in shares)	1,392		1,362	148			30
Risk Free Interest Rate (as a percent)			2.62%	2.93%			2.92%
Dividend Yield (as a percent)			1.75%	1.62%			1.76%
Expected Life (in years)			6.2	6.5			6.6
Volatility (as a percent)			39.00%	36.00%			38.00%
Exercise price for options granted, low end of range (in dollars per share)			$ 29.66
Exercise price for options granted, high end of range (in dollars per share)			$ 32.63
Exercise Price (in dollars per share)						$ 24.75		$ 29.58
Weighted Average Fair Value (in dollars per share)			$ 10.33	$ 8.46			$ 10.49
Non-Qualified Stock Options activity
Outstanding at the beginning of the period (in shares)	1,124
Granted (in shares)	1,392		1,362	148			30
Exercised (in shares)	(7)
Forfeited (in shares)	(20)
Outstanding at the end of the period (in shares)	2,489
Outstanding and expected to vest at the end of the period (in shares)	2,437
Exercisable at the end of the period (in shares)	1,165
Weighted-Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 34.19
Granted (in dollars per share)	$ 29.66
Exercised (in dollars per share)	$ 23.74
Forfeited (in dollars per share)	$ 35.69
Outstanding at the end of the period (in dollars per share)	$ 31.68
Outstanding and expected to vest at end of the period (in dollars per share)	$ 31.74
Exercisable at end of the period (in dollars per share)	$ 34.58
Weighted-Average Remaining Contractual Life
Outstanding at the end of the period (in years)	4.3
Outstanding and expected to vest at end of the period (in years)	4.3
Exercisable at end of the period (in years)	2.2
Aggregate Intrinsic Value
Outstanding at the end of the period (in dollars)	$ 370,000
Outstanding and expected to vest at end of the period (in dollars)	360,000
Exercisable at end of the period (in dollars)	233,000
Closing price of share (in dollars per share)	$ 24.93
Total intrinsic value of options exercised (in dollars)	40,000	300,000
Number of shares, unvested options
Unvested at the beginning of the period (in shares)	180
Granted (in shares)	1,392
Vested (in shares)	(242)
Forfeited (in shares)	(5)
Unvested at the end of the period (in shares)	1,325
Weighted-Average Grant-Date Fair Value, unvested stock options
Unvested at the beginning of the period (in dollars per share)	$ 7.85
Granted (in dollars per share)	$ 10.33
Vested (in dollars per share)	$ 9.86
Forfeited (in dollars per share)	$ 9.25
Unvested at the end of the period (in dollars per share)	$ 10.09
Unrecognized compensation cost
Unrecognized compensation costs related to unvested share-based compensation arrangements (in dollars)					$ 17,400,000
Weighted-average period for recognition of unrecognized stock-based compensation expense (in years)					3.5