SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14A-101)
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SIMPSON INDUSTRIES, INC.
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(Name of Registrant as Specified in Its Charter)
MMI INVESTMENTS II-A, L.P.; MCM MANAGEMENT, LLC;
MILLBROOK CAPITAL MANAGEMENT, INC.; JOHN S. DYSON;
CLAY B. LIFFLANDER; ALAN L. RIVERA; ROBERT B. KAY AND JEROME LANDE
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THE MMI NOMINEES:
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QUALIFIED, OBJECTIVE, AND COMMITTED
TO MAXIMIZING YOUR INVESTMENT IN SIMPSON
March 27, 2000
Dear Fellow Simpson Shareholder:
By now, you have received materials from both MMI and Simpson
management, each requesting your support for a slate of directors. Simpson's
materials instruct you to "ignore" what MMI has to say and to support without
question the Company's current management. We, on the other hand, believe that
all the facts should be on the table and that you should examine both sides.
Based upon those facts, we think that you will agree that the MMI Nominees are
more qualified, more objective, and more aligned with your interests as a true
owner of Simpson.
Simpson management has failed to respond with any analysis to MMI's
statements regarding the missed opportunities, misdirection and poor performance
of Simpson. Instead, Simpson has chosen to deride MMI and hang disparaging
labels on our platform for value creation for shareholders.
ASK YOURSELF: SIMPSON HAS RESORTED TO CALLING US NAMES AND HAS
PROVIDED NO ANALYSIS, IS THIS A WARNING SIGN?
THE TRUTH ABOUT MMI
MMI'S DIRECTOR NOMINEES - MMI's three nominees, John S. Dyson, Clay B.
Lifflander, and Alan L. Rivera, represent a diverse background of industrial
manufacturing, corporate and investment management, finance, legal, and public
service. Together the MMI Nominees have over 60 years of significant business
experience. MOST IMPORTANTLY, THE MMI NOMINEES ARE COMMITTED TO EXPLORING ALL
AVENUES TO CREATE SHAREHOLDER VALUE. If elected, the MMI Nominees will be:
-- The largest shareholders on Simpson's Board of Directors, collectively
owning nearly twice the holdings of the entire incumbent board;
-- MMI PURCHASED 850,000 SHARES OF SIMPSON STOCK - SIMPSON
MANAGEMENT RECEIVED MANY OF THEIR SHARES AS FREE STOCK OPTIONS &
RESTRICTED STOCK AWARDS!
-- The only Directors who are committed to serving Simpson shareholders
as directors without compensation of any kind, whether Directors'
fees, salary, stock, bonus, stock options, or pensions;
-- THE CURRENT BOARD HAS RECEIVED MORE THAN $7 MILLION FROM THE
COMPANY IN THE LAST SIX YEARS!
-- Three new members; less than a third of the ten-member Simpson Board;
-- SIMPSON HAS STATED THAT "THE ELECTION OF ANY OF THE MMI NOMINEES
TO THE BOARD AT THIS TIME WOULD BE HIGHLY DISRUPTIVE TO THE
STRATEGY THE COMPANY IS ACTIVELY PURSUING," BUT NOT SAID WHY!
ASK YOURSELF: WHY IS A FRESH, NEW, MINORITY VOICE DEDICATED TO ENHANCING
SHAREHOLDER VALUE THREATENING TO THIS BOARD???
MMI'S PLATFORM FOR THE CREATION OF SHAREHOLDER VALUE - Our detailed
review of Simpson and the automotive supply industry indicates that the best way
to create shareholder value and continue to grow the business is an acquisition
by, or a merger with, a third party. We have proposed that Simpson explore this
strategic option by undertaking an auction process. MMI's proposal calls for the
Company to engage a recognized investment banking firm to explore a standard and
professionally-organized auction process seeking the sale of Simpson to a third
party at a substantial premium to current value. Simpson's incumbent Board has
made it clear, however, that they are unwilling even to explore such a process.
Simpson management may find such a process for value creation threatening to
their PERSONAL objectives and is therefore misrepresenting our proposal as
unusual, inherently disruptive and lacking in flexibility. We believe this is
just plain wrong. The implementation of a standard auction process:
- -- Has routinely been used by companies in the automotive supply industry
seeking to enhance value for shareholders;
- -- Has historically not resulted in significant demonstrable disruptions of
customer and employee relationships, but instead allows a company to review
the range of suitors and transactions that may be available to it;
- -- Is an accountable process that forces a company's Board and management to
consider all alternatives available to it;
- -- Is accepted, and often welcomed, by auto manufacturers as a means to shrink
their supplier base and cut costs;
- -- Can lead to acquisition by a company that will provide a larger,
better-capitalized platform for future growth;
AND MOST IMPORTANTLY:
- -- IS NOT A FIRESALE AND DOES NOT REQUIRE A COMPANY TO ACCEPT THE HIGHEST BID,
IRRESPECTIVE OF THE VALUE OFFERED.
ASK YOURSELF: IF THE SIMPSON BOARD IS SERIOUSLY WILLING TO CONSIDER OFFERS,
ISN'T AN ORGANIZED PROCESS RUN BY PROFESSIONALS
THE BEST WAY TO INVITE STRATEGIC INTEREST?
WITHOUT A FORMAL PROCESS, DOESN'T SIMPSON PRECLUDE BONA
FIDE OFFERS BEING MADE?
ASK YOURSELF: WHY HASN'T SIMPSON MANAGEMENT EVEN ATTEMPTED TO
DEFEND ITS OWN PERFORMANCE?
SIMPSON'S INEXCUSABLE TRACK RECORD
POOR LONG-TERM STOCK PRICE PERFORMANCE - One simple reason Simpson
management cannot defend their performance is the long-term negative return of
the Company's stock. As the graph below shows, even with the re-investment of
dividends, Simpson stock is worth significantly less today than it was over six
years ago. In fact, Simpson stock has been outperformed consistently over the
last six years by the accepted benchmarks of large companies, small companies,
industrial manufacturers, and Simpson's own self-defined peer group of
companies.
[GRAPH]
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 2/29/00
-------- -------- -------- -------- -------- ---------- -------
Simpson $ 100 $ 68 $ 69 $ 87 $ 97 $ 83 $ 89
S&P 500 100 101 139 170 227 291 328
S&P MAND 100 103 145 194 266 326 326
Russell 2000 100 98 126 147 180 175 243
Peer Group Index 100 83 89 113 141 140 105
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POOR OPERATIONAL PERFORMANCE - Simpson cannot defend its operational
performance either. In 1999 the Company's gross, operating, and net margins were
all below the levels achieved six years ago in 1994! The 1999 record earnings
performance masks the Company's true performance. While the Company has improved
performance on an earnings basis, we believe Simpson has done so at the expense
of cash flow through egregious capital expenditures in order to win costly new
business. Capital expenditures ballooned in 1999, nearly halving the Company's
margins of free cash flow - at the same time as Chairman Parrott's salary and
bonus increased by nearly $100,000!
SIMPSON'S DISMAL FUTURE PROSPECTS - During the last decade the
automobile and auto parts industries have undergone a massive consolidation
which we believe has isolated small companies like Simpson and put enormous
pressure on margins. As THE NEW YORK TIMES stated this week "THE CONSOLIDATION
OF THE GLOBAL AUTO INDUSTRY HAS REACHED A FULL-THROTTLE ROAR AS AUTOMAKERS
AROUND THE WORLD RESPOND TO THE CHANGING ECONOMICS OF THE BUSINESS." In the
meantime, Simpson has made only one major acquisition within the last five years
and experienced modest growth as a result. As such,
Simpson has left itself without the means (whether in the form of an attractive
stock price or debt capacity) to execute a credible acquisition program.
SELF-SERVING MANAGEMENT - Simpson wants you to believe that MMI's
Shareholder Value Proposal is "self-serving," even though the entire purpose of
our proposal is to have the Company at least attempt a process that could result
in significant value creation. We believe it is self-serving to torpedo the
Shareholder Value Proposal simply because it threatens one's personal position.
We believe it is self-serving to entrench management with increasing bonuses,
stock option grants, and accelerating pension benefits when the Company's share
price is lower than it was six years ago. CHAIRMAN PARROTT GOT A $100,000 RAISE
AND 30,000 OPTIONS FROM OUR COMPANY LAST YEAR - WHAT DID YOU GET?
IN CLOSING, WE URGE YOU TO REMEMBER THAT OUR NOMINEES ARE DEDICATED TO
ENHANCING THE VALUE OF YOUR SIMPSON INVESTMENT. OUR NOMINEES ARE PLEDGED TO WORK
FOR YOU AND TO TAKE ONLY THOSE MEASURES WHICH MAKE SENSE. TO SUCCEED WE NEED
YOUR SUPPORT. PLEASE SIGN, DATE AND MAIL YOUR BLUE MMI PROXY CARD. Over the
coming weeks, we will try to speak with as many shareholders as we can. However,
we simply cannot reach all of you. If you have any questions regarding MMI's
platform for the creation of value for shareholders, please contact Jerome Lande
of MMI at (212) 586-4333 or MMI's representatives at D.F.
King at (888) 242-8149.
We thank you for your support.
Sincerely,
John S. Dyson Clay B. Lifflander Alan L. Rivera
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**************IMPORTANT**************
1. Be sure to vote on the BLUE card. Vote "FOR" the MMI nominees and "FOR" the
Shareholder Value Proposal. We urge you not to sign any proxy card which is
sent to you by Simpson, even as a protest vote against the incumbent Board
of Directors. REMEMBER, EACH PROPERLY EXECUTED PROXY YOU SUBMIT REVOKES ALL
PRIOR PROXIES. EVEN IF YOU HAVE ALREADY SUBMITTED A PROXY SENT TO YOU BY
SIMPSON, YOU SHOULD SIGN AND RETURN THE MMI BLUE PROXY.
2. If any of your shares are held in the name of a bank broker or other
nominee, please contact the person responsible for your account and direct
him/her to vote on the BLUE PROXY CARD "FOR" THE MMI NOMINEES AND THE
SHAREHOLDER VALUE PROPOSAL.
3. If you have any questions or need assistance in voting your shares, please
feel free to contact:
D.F. KING & CO. INC.
(888) 242-8149
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MMI NOMINEES FOR DIRECTOR OF SIMPSON INDUSTRIES:
QUALIFIED, EXPERIENCED, AND DEDICATED
MMI is seeking to elect 3 nominees - A MINORITY POSITION - to the
ten-member Board of Directors of Simpson Industries. All three MMI nominees
bring to Simpson an incredible wealth of experience in the areas of industrial
manufacturing, corporate and investment management, finance, corporate law, and
public service. CONSIDER FOR YOURSELF HOW THE ACCOMPLISHMENTS, BACKGROUND AND
EXPERIENCE OF THE MMI NOMINEES WOULD BENEFIT SIMPSON.
JOHN S. DYSON
- -- Chairman and Director, Millbrook -- Former Commissioner: New York -- Chairman, NYC Mayor's Council of
Capital Management, Inc. State Department of Commerce; New Economic Advisors. Former Deputy Mayor
York State Department of for Finance and Economic Development for
- -- Chairman and Director: Key Agriculture; and New York State the City of New York.
Components, Inc., a $145 million, Power Authority.
industrial manufacturing company. -- Trustee: Cornell University Morgan
-- Former Vice-Chairman, Library and Middlesex School.
Dyson-Kissner-Moran Corp.
CLAY B. LIFFLANDER
- -- President and Director, Millbrook -- Former Managing Director, -- Former President, New York City
Capital Management, Inc. Mergers and Acquisitions Group, Economic Development Corporation.
Smith Barney Inc.
- -- CEO and Director: Key Components, -- Former Chairman, New York City -- Director: United Nations Development
Inc., a $145 million, industrial Corporation and Hudson River Museum.
manufacturing company. Industrial Development Agency
ALAN L. RIVERA
- -- Chief Financial Officer and General -- Former Public Finance and -- Director: New York City Industrial
Counsel, Millbrook Capital Management, Corporate Attorney: Mudge, Rose, Development Agency and CancerCare, Inc.
Inc. Guthrie Alexander and Ferdon;
Townley & Updike.
- -- Director: Key Components, Inc., a -- Former Executive V.P. and -- Former Director, New York City Health
$145 million, industrial manufacturing General Counsel, New York City and Hospitals Corp.
company. Economic Development Corporation.
PLEASE REMEMBER THAT MMI IS SEEKING A MINORITY POSITION ON SIMPSON'S
BOARD - ONLY 3 OF 10 SEATS - NOT CONTROL. EVEN IF WE ARE ELECTED, SIMPSON'S
CONTINUING DIRECTORS WILL STILL CONTROL THE BOARD. WE PLEDGE, HOWEVER, TO
REPRESENT YOUR INTERESTS AS SHAREHOLDERS ON THE BOARD. PLEASE SIGN, DATE AND
PROMPTLY MAIL YOUR BLUE PROXY CARD