UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly period ended: June 30, 1999
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 0-23804
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Simpson Manufacturing Co., Inc.
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(Exact name of registrant as specified in its charter)
Delaware 94-3196943
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4637 Chabot Drive, Suite 200, Pleasanton, CA 94588
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(Address of principal executive offices)
(Registrant's telephone number, including area code): (925)460-9912
------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
The number of shares of the Registrant's Common Stock outstanding as of
June 30, 1999: 11,910,173
----------
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
SIMPSON MANUFACTURING CO., INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
----------------------------
(Unaudited)
1999 1998 1998
------------ ------------ ------------
ASSETS
Current assets
Cash and cash equivalents $ 37,215,287 $ 20,624,535 $ 37,402,450
Trade accounts receivable, net 52,597,778 41,884,459 34,089,122
Inventories 65,046,804 55,150,127 56,340,053
Deferred income taxes 4,119,507 4,048,369 3,749,599
Other current assets 2,635,866 1,243,017 1,282,814
------------ ------------ ------------
Total current assets 161,615,242 122,950,507 132,864,038
Net property, plant and equipment 58,712,214 51,059,397 54,964,704
Investments 503,346 537,582 524,964
Other noncurrent assets 3,161,456 3,067,138 3,246,045
------------ ------------ ------------
Total assets $223,992,258 $177,614,624 $191,599,751
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes Payable and current
portion of long-term debt $ 499,154 $ 330,010 $ 330,704
Trade accounts payable 16,211,194 11,622,431 11,761,237
Accrued liabilities 6,328,264 5,255,517 5,591,292
Income taxes payable - 2,951,963 1,465,384
Accrued profit sharing trust
contributions 5,095,397 4,545,941 3,173,362
Accrued cash profit sharing
and commissions 5,709,060 4,660,965 4,019,806
Accrued workers' compensation 579,272 779,272 879,272
------------ ------------ ------------
Total current liabilities 34,422,341 30,146,099 27,221,057
Long-term debt, net of current portion 2,429,526 2,727,799 2,565,182
Deferred income taxes and
long-term liabilities 367,194 678,034 531,149
------------ ------------ ------------
Total liabilities 37,219,061 33,551,932 30,317,388
------------ ------------ ------------
Commitments and contingencies (Notes 5 and 6)
Shareholders' equity
Common stock 41,885,081 33,519,125 33,723,845
Retained earnings 145,711,367 110,882,928 127,990,208
Accumulated other comprehensive income (823,251) (339,361) (431,690)
------------ ------------ ------------
Total shareholders' equity 186,773,197 144,062,692 161,282,363
------------ ------------ ------------
Total liabilities and
shareholders' equity $223,992,258 $177,614,624 $191,599,751
============ ============ ============
The accompanying notes are an integral part of these condensed
consolidated financial statements.
Simpson Manufacturing Co., Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
Net sales $ 83,752,743 $ 70,786,469 $158,414,333 $130,041,019
Cost of sales 49,088,742 41,708,697 95,301,719 79,089,853
------------ ------------ ------------ ------------
Gross profit 34,664,001 29,077,772 63,112,614 50,951,166
------------ ------------ ------------ ------------
Operating expenses:
Selling 8,041,724 6,129,472 15,939,530 11,754,247
General and administrative 9,878,575 8,916,134 17,917,336 15,780,630
Compensation related to stock plans 121,135 45,000 204,135 102,000
------------ ------------ ------------ ------------
18,041,434 15,090,606 34,061,001 27,636,877
------------ ------------ ------------ ------------
Income from operations 16,622,567 13,987,166 29,051,613 23,314,289
Interest income, net 255,190 114,302 603,546 320,954
------------ ------------ ------------ ------------
Income before income taxes 16,877,757 14,101,468 29,655,159 23,635,243
Provision for income taxes 6,805,000 5,728,000 11,934,000 9,601,000
------------ ------------ ------------ ------------
Net income $ 10,072,757 $ 8,373,468 $ 17,721,159 $ 14,034,243
============ ============ ============ ============
Net income per common share
Basic $ 0.86 $ 0.72 $ 1.52 $ 1.22
Diluted $ 0.82 $ 0.69 $ 1.46 $ 1.16
Number of shares outstanding
Basic 11,779,256 11,561,786 11,680,581 11,546,329
Diluted 12,225,229 12,081,026 12,165,456 12,059,737
Simpson Manufacturing Co., Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
Net income $ 10,072,757 $ 8,373,468 $ 17,721,159 $ 14,034,243
Other comprehensive income, net of tax:
Foreign currency translation
adjustments (111,940) (147,402) (391,561) (63,636)
------------ ------------ ------------ ------------
Comprehensive income $ 9,960,817 $ 8,226,066 $ 17,329,598 $ 13,970,607
============ ============ ============ ============
The accompanying notes are an integral part of these condensed
consolidated financial statements.
Simpson Manufacturing Co., Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
June 30,
----------------------------
1999 1998
------------ ------------
Cash flows from operating activities
Net income $ 17,721,159 $ 14,034,243
------------ ------------
Adjustments to reconcile net income
to net cash
provided by operating activities:
Gain (loss) on sale of capital equipment (53,246) 6,000
Depreciation and amortization 5,163,600 4,418,512
Deferred income taxes and
long-term liabilities (533,863) (657,319)
Noncash compensation related to stock plans 119,800 169,894
Changes in operating assets and liabilities,
net of effects of acquisitions:
Trade accounts receivable (18,779,983) (17,302,209)
Inventories (8,834,387) (167,602)
Trade accounts payable 4,449,957 2,809,235
Income taxes payable 3,119,596 3,452,536
Accrued profit sharing trust contributions 1,922,035 1,659,066
Accrued cash profit sharing and commissions 1,689,254 1,566,131
Other current assets (1,353,052) 480,569
Accrued liabilities 736,973 (251,386)
Accrued workers' compensation (300,000) 120,000
Other noncurrent assets (137,421) (194,665)
------------ ------------
Total adjustments (12,790,737) (3,891,238)
------------ ------------
Net cash provided by operating activities 4,930,422 10,143,005
------------ ------------
Cash flows from investing activities
Capital expenditures (8,857,824) (12,465,806)
Proceeds from sale of equipment 250,989 29,348
------------ ------------
Net cash used in investing activities (8,606,835) (12,436,458)
------------ ------------
Cash flows from financing activities
Issuance of debt 204,624 3,029,372
Repayment of debt (171,830) (1,168)
Issuance of Company's common stock 3,456,456 471,095
------------ ------------
Net cash provided by financing activities 3,489,250 3,499,299
------------ ------------
Net increase (decrease) in cash and
cash equivalents (187,163) 1,205,846
Cash and cash equivalents at beginning of period 37,402,450 19,418,689
------------ ------------
Cash and cash equivalents at end of period $ 37,215,287 $ 20,624,535
============ ============
The accompanying notes are an integral part of these condensed
consolidated financial statements.
Simpson Manufacturing Co., Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
1. Basis of Presentation
Interim Period Reporting
The accompanying unaudited interim condensed consolidated financial
statements have been prepared pursuant to the rules and regulations for
reporting on Form 10-Q. Accordingly, certain information and footnotes
required by generally accepted accounting principles have been condensed
or omitted. These interim statements should be read in conjunction with
the consolidated financial statements and the notes thereto included in
Simpson Manufacturing Co., Inc.'s (the "Company's") 1998 Annual Report on
Form 10-K (the "1998 Annual Report").
The unaudited quarterly condensed consolidated financial statements have
been prepared on the same basis as the audited annual consolidated
financial statements, and in the opinion of management, contain all
adjustments (consisting of only normal recurring adjustments) necessary to
present fairly the financial information set forth therein, in accordance
with generally accepted accounting principles. The year-end condensed
consolidated balance sheet data was derived from audited financial
statements, but does not include all disclosures required by generally
accepted accounting principles. The Company's quarterly results may be
subject to fluctuations. As a result, the Company believes the results of
operations for the interim periods are not necessarily indicative of the
results to be expected for any future period.
Certain prior year amounts have been reclassified to conform to the 1999
presentation with no effect on net income as previously reported.
Net Income Per Common Share
Basic net income per common share is computed based upon the weighted
average number of common shares outstanding. Common equivalent shares,
using the treasury stock method, are included in the diluted per-share
calculations for all periods when the effect of their inclusion is
dilutive.
The following is a reconciliation of basic earnings per share ("EPS") to
diluted EPS:
Three Months Ended Three Months Ended
June 30, 1998 June 30, 1997
---------------------------------- ----------------------------------
Per Per
Income Shares Share Income Shares Share
------------ ------------ ------ ------------ ------------ ------
Basic EPS
Income available to
common shareholders $ 10,072,757 11,779,256 $ 0.86 $ 8,373,468 11,561,786 $ 0.72
Effect of Dilutive Securities
Stock options - 445,973 (0.04) - 519,240 (0.03)
------------ ------------ ------ ------------ ------------ ------
Diluted EPS
Income available to
common shareholders $ 10,072,757 12,225,229 $ 0.82 $ 8,373,468 12,081,026 $ 0.69
============ ============ ====== ============ ============ ======
Six Months Ended Six Months Ended
June 30, 1998 June 30, 1997
---------------------------------- ----------------------------------
Per Per
Income Shares Share Income Shares Share
------------ ------------ ------ ------------ ------------ ------
Basic EPS
Income available to
common shareholders $ 17,721,159 11,680,581 $ 1.52 $ 14,034,243 11,546,329 $ 1.22
Effect of Dilutive Securities
Stock options - 484,875 (0.06) - 513,408 (0.06)
------------ ------------ ------ ------------ ------------ ------
Diluted EPS
Income available to
common shareholders $ 17,721,159 12,165,456 $ 1.46 $ 14,034,243 12,059,737 $ 1.16
============ ============ ====== ============ ============ ======
2. Trade Accounts Receivable
Trade accounts receivable consist of the following:
June 30, December 31,
----------------------------
1999 1998 1998
------------ ------------ ------------
Trade accounts receivable $ 54,677,589 $ 43,707,675 $ 35,550,836
Allowance for doubtful accounts (1,341,765) (1,247,263) (1,173,656)
Allowance for sales discounts (738,046) (575,953) (288,058)
------------ ------------ ------------
$ 52,597,778 $ 41,884,459 $ 34,089,122
============ ============ ============
3. Inventories
The components of inventories consist of the following:
June 30, December 31,
----------------------------
1999 1998 1998
------------ ------------ ------------
Raw materials $ 19,632,599 $ 17,486,981 $ 18,904,545
In-process products 6,646,652 5,357,076 5,255,755
Finished products 38,767,553 32,306,070 32,179,753
------------ ------------ ------------
$ 65,046,804 $ 55,150,127 $ 56,340,053
============ ============ ============
Approximately 91% of the Company's inventories are valued using the LIFO
(last-in, first-out) method. Because inventory determination under the
LIFO method is only made at the end of each year based on the inventory
levels and costs at that time, interim LIFO determinations must
necessarily be based on management's estimates of expected year-end
inventory levels and costs. Since future estimates of inventory levels and
costs are subject to change, interim financial results reflect the
Company's most recent estimate of the effect of LIFO and are subject to
adjustment based upon final year-end inventory amounts. At June 30, 1999
and 1998, and December 31, 1998, the replacement value of LIFO inventories
exceeded LIFO cost by approximately $79,000, $566,000 and $359,000,
respectively.
4. Net Property, Plant and Equipment
Net property, plant and equipment consists of the following:
June 30, December 31,
----------------------------
(Unaudited)
1999 1998 1998
------------ ------------ ------------
Land $ 4,216,519 $ 3,366,519 $ 3,891,519
Buildings and site improvements 26,721,362 17,158,155 25,743,968
Leasehold improvements 3,666,600 3,364,468 3,463,063
Machinery and equipment 68,494,297 58,769,568 67,052,907
------------ ------------ ------------
103,098,778 82,658,710 100,151,457
Less accumulated depreciation
and amortization (53,788,748) (46,182,977) (49,498,717)
------------ ------------ ------------
49,310,030 36,475,733 50,652,740
Capital projects in progress 9,402,184 14,583,664 4,311,964
------------ ------------ ------------
$ 58,712,214 $ 51,059,397 $ 54,964,704
============ ============ ============
5. Debt
Outstanding debt at June 30, 1999 and 1998, and December 31, 1998, and the
available credit at June 30, 1999, consisted of the following:
Debt Outstanding
Available --------------------------------------------
Credit at at June 30, at
June 30, ---------------------------- December 31,
1999 1999 1998 1998
------------ ------------ ------------ ------------
Revolving line of credit, interest
at bank's reference rate (at June
30, 1999, the bank's reference rate
was 7.75%), expires June 2000 $ 12,476,351 $ - $ - $ -
Revolving term commitment, interest at
bank's prime rate (at June 30, 1999,
the bank's prime rate was 7.75%),
expires June 2000 8,616,628 - - -
Revolving line of credit, interest rate
at the bank's base rate of interest
plus 2%, expires July 2000 393,763 - - -
Revolving line of credit, interest rate
at the weighted average Euro interbank
rate of interest plus 1%, expires
March 2000 - 157,403 - -
Standby letter of credit facilities 1,907,022 - - -
Term loan, interest at LIBOR plus 1.375%
(at June 30, 1999, the LIBOR plus
1.375% was 6.4413%), expires May 2008 - 2,700,000 3,000,000 2,850,000
Other notes payable and long-term debt - 71,277 57,809 45,886
------------ ------------ ------------ ------------
23,393,764 2,928,680 3,057,809 2,895,886
Less current portion - (499,154) (330,010) (330,704)
------------ ------------ ------------ ------------
$ 23,393,764 $ 2,429,526 $ 2,727,799 $ 2,565,182
============ ============ ============
Standby letters of credit issued
and outstanding (1,907,022)
------------
$ 21,486,742
============
As of June 30, 1999, the Company had three outstanding standby letters of
credit. Two of these letters of credit, in the aggregate amount of
$1,166,748, are used to support the Company's self-insured workers'
compensation insurance requirements. The third, in the amount of $740,274,
is used to guarantee performance on the Company's leased facility in the
UK. Other notes payable represent debt associated with foreign businesses.
6. Commitments and Contingencies
Note 9 to the consolidated financial statements in the Company's 1998
Annual Report provides information concerning commitments and
contingencies. From time to time, the Company is involved in various legal
proceedings and other matters arising in the normal course of business.
7. Segment Information
The Company is organized into two primary segments. The segments are
defined by types of products manufactured, marketed and distributed to the
Company's customers. The two product segments are connector products and
venting products. These segments are differentiated in several ways,
including the types of materials used, the production process, the
distribution channels used and the applications in which the products are
used. Transactions between the two segments were immaterial for each of
the periods presented.
The following table illustrates certain measurements used by management to
assess the performance of the segments described above as of or for the
three and six months ended:
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
Net Sales
Connector products $ 68,544,000 $ 58,285,000 $ 128,382,000 $105,697,000
Venting products 15,209,000 12,501,000 30,032,000 24,344,000
------------ ------------ ------------ ------------
Total $ 83,753,000 $ 70,786,000 $158,414,000 $130,041,000
============ ============ ============ ============
Income from Operations
Connector products $ 14,465,000 $ 12,740,000 $ 24,741,000 $ 20,971,000
Venting products 2,302,000 1,369,000 4,434,000 2,743,000
All other (144,000) (122,000) (123,000) (400,000)
------------ ------------ ------------ ------------
Total $ 16,623,000 $ 13,987,000 $ 29,052,000 $ 23,314,000
============ ============ ============ ============
Total Assets
Connector products $134,806,000 $113,930,000
Venting products 46,479,000 40,219,000
All other 42,707,000 23,466,000
------------ ------------
Total $223,992,000 $177,615,000
============ ============
Cash collected by the Company's subsidiaries is routinely transferred into
the Company's cash management accounts and, therefore, has been included
in the total assets of the segment entitled "All other." Cash and cash
equivalent balances in this segment were approximately $36,387,000 and
$19,089,000 as of June 30, 1999 and 1998, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Certain matters discussed below are forward-looking statements that
involve risks and uncertainties, certain of which are discussed in this
report and in other reports filed by the Company with the Securities and
Exchange Commission. Actual results might differ materially from results
suggested by any forward-looking statements in this report.
The following is a discussion and analysis of the consolidated financial
condition and results of operations for the Company for the three months
ended June 30, 1999 and 1998. The following should be read in conjunction
with the interim Condensed Consolidated Financial Statements and related
Notes appearing elsewhere herein.
Results of Operations for the Three Months Ended June 30, 1999,
Compared with the Three Months Ended June 30, 1998
Sales increased 18.3% in the second quarter of 1999 as compared to the
second quarter of 1998. The increase reflected sales growth throughout the
United States, particularly in California. Sales in most of the Company's
international markets continued to grow. Simpson Strong-Tie's second
quarter sales increased 17.6% over the same quarter last year, while
Simpson Dura-Vent's sales increased 21.7%. Homecenters were the fastest
growing connector sales channel. The sales increase was broad based across
all of Simpson Strong-Tie's major product lines. Anchoring Systems
products had the highest growth rate in sales and the Company's new
Strong-Wall product line also contributed to the increased sales. Sales of
most of Simpson Dura-Vent's major product lines increased compared to the
second quarter of 1998, led by above average growth rates for its Direct-
Vent and chimney product lines.
Income from operations increased 18.8% from $13,987,166 in the second
quarter of 1998 to $16,622,567 in the second quarter of 1999 as a result
of higher sales and gross margins and lower general and administrative
costs as a percentage of sales. Gross margins increased from 41.1% in the
second quarter of 1998 to 41.4% in the second quarter of 1999 primarily
due to better absorption of fixed overhead costs as a result of the
increased production. Selling expenses increased 31.2% from $6,129,472 in
the second quarter of 1998 to $8,041,724 in the second quarter of 1999.
The increase was primarily due to higher promotional expenses as well as
higher costs related to an increase in the number of sales and marketing
personnel. General and administrative expenses increased 10.8% from
$8,916,134 in the second quarter of 1998 to $9,878,575 in the second
quarter of 1999 primarily due to increased cash profit sharing resulting
from higher operating income. The effective tax rate was 40.3% in the
second quarter of 1999, a slight decrease from the second quarter of 1998.
Results of Operations for the Six Months Ended June 30, 1999,
Compared with the Six Months Ended June 30, 1998
Sales increased 21.8% in the first half of 1999 as compared to the first
half of 1998. The increase reflected sales growth throughout the United
States, particularly in California and in the southeastern portion of the
country. Sales in most of the Company's international markets continued to
grow. Simpson Strong-Tie's sales through June 30, 1999, increased 21.5%
over the same period in the prior year, while Simpson Dura-Vent's sales
increased 23.4%. Homecenters were the fastest growing connector sales
channel. The sales increase was broad based across all of Simpson Strong-
Tie's major product lines. Anchoring Systems products had the highest
growth rate in sales. Sales of all of Simpson Dura-Vent's major product
lines increased in the first half of 1999 compared to the same period in
1998, led by above average growth rates for its Direct-Vent and chimney
product lines.
Income from operations increased 24.6% from $23,314,289 in the first half
of 1998 to $29,051,613 in the first half of 1999 as a result of higher
sales and gross margins and lower general and administrative costs as a
percentage of sales. Gross margins increased from 39.2% in the first half
of 1998 to 39.8% in the first half of 1999 primarily due to better
absorption of fixed overhead costs as a result of the increased
production. Selling expenses increased 35.6% from $11,754,247 in the first
half of 1998 to $15,939,530 in the first half of 1999. The increase was
primarily due to higher promotional expenses as well as higher costs
related to an increase in the number of sales and marketing personnel.
General and administrative expenses increased 13.5% from $15,780,630 in
the first half of 1998 to $17,917,336 in the first half of 1999 primarily
due to increased cash profit sharing resulting from higher operating
income. The effective tax rate was 40.2% in the first half of 1999, a
slight decrease from the first half of 1998.
Liquidity and Sources of Capital
As of June 30, 1999, working capital was $127.2 million as compared to
$92.8 million at June 30, 1998, and $105.6 million at December 31, 1998.
The principal components of the increase in working capital from December
31, 1998, were increases in the Company's trade accounts receivable and
inventories totaling approximately $27.2 million, primarily due to higher
sales levels. In addition, a reduction in income taxes payable resulting
from the exercise of stock options by employees of the Company, most of
which occurred in the second quarter, increased working capital by
approximately $4.6 million. Partially offsetting these increases were
increases in trade accounts payable, accrued profit sharing trust
contributions and accrued cash profit sharing. These accounts increased an
aggregate of approximately $8.1 million. The balance of the change in
working capital was due to the fluctuation of various other asset and
liability accounts. The working capital change and changes in noncurrent
assets and liabilities combined with net income and noncash expenses,
primarily depreciation and amortization, totaling approximately $23.0
million, resulted in net cash provided by operating activities of
approximately $4.9 million. As of June 30, 1999, the Company had unused
credit facilities available of approximately $21.5 million.
The Company used approximately $8.6 million in its investing activities,
primarily to purchase the capital equipment and property needed to expand
its capacity. The Company plans to continue this expansion throughout the
remainder of the year and into 2000.
Financing activities provided the Company with approximately $3.5 million
in cash. Substantially all of this cash was generated by the issuance of
stock upon the exercise of stock options by current employees and a
director of the Company.
The Company believes that cash generated by operations and borrowings
available under its existing credit agreements, will be sufficient for the
Company's working capital needs and planned capital expenditures through
the remainder of 1999 and into 2000. Depending on the Company's future
growth, it may become necessary to secure additional sources of financing.
Year 2000 Problem
The year 2000 problem is primarily the result of computer programs and
computer controlled equipment using two digits rather than four to define
the applicable year. Such software may recognize a date using "00" as the
year 1900 rather than the year 2000. This could potentially result in
system failures or miscalculations leading to disruptions in the Company's
activities or those of its significant customers, suppliers and banks.
The Company does not produce or sell any computer components, software or
electronic parts in its normal business environment and, therefore, does
not believe that it has any material risk of product liability or
obsolescence resulting from the year 2000 problem.
In 1998, the Company established a Year 2000 Committee (the "Committee")
to evaluate the extent, if any, of its year 2000 and associated problems,
to make any required changes and to establish contingency plans. The
Company's computer systems are PC based with few interfaces to other
internal systems. These systems use a date handling routine that the
Company believes to be year 2000 compliant. The Company has completed
tests of its internal software which demonstrated no significant risk from
the year 2000 problem.
The Company is also focusing on major customers, suppliers and equipment
used in its operations to assess compliance. The Committee will continue
to evaluate these areas of exposure and, where possible, will develop
contingency plans and alternative sources to avoid interruptions in the
Company's business. Nevertheless, the Company cannot give any assurance
that there will not be a material adverse effect on the Company if third
parties with whom the Company conducts business do not adequately address
the year 2000 problem and, therefore, are unable to conduct operations
without interruption.
Costs related to the year 2000 problem are funded through operating cash
flows. The Committee estimates that the costs of addressing the year 2000
problem are expected to be less than $100,000, most of which has been
spent. The Company presently expects that the total cost of achieving year
2000 compliant systems will not be material to its financial condition,
liquidity or results of operations.
Time and cost estimates are based on currently available information.
Developments that could affect estimates include, but are not limited to,
the availability and cost of trained personnel, the ability to locate and
correct all relevant computer code and systems, and the degree of
remediation success of the Company's customers, suppliers and banks in
finding and resolving their year 2000 problems.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, the Company is involved in various legal proceedings
and other matters arising in the normal course of business.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Annual Meeting of Shareholders ("Annual Meeting") was held on May 20,
1999. The following seven nominees were elected as director by the votes
indicated:
Total Votes
Total Votes Withheld
For Each From Each Term
Name Director Director Expires*
- ------------------------ ------------ ------------ ------------
Earl F. Cheit 10,077,303 5,210 2002
Thomas J Fitzmyers 10,077,003 5,510 2002
Stephen B. Lamson 10,077,003 5,510 2001
Peter N. Louras 10,077,303 5,210 2001
Sunne Wright McPeak 10,077,303 5,210 2000
Barclay Simpson 10,077,303 5,210 2000
Barry Lawson Williams 10,077,003 5,510 2002
______________
* The term expires on the date of the Annual Meeting in the year
indicated.
The following proposal was also adopted at the Annual Meeting by the vote
indicated:
Broker
Proposal For Against Abstain Non-Vote
- ------------------------------------------- ------------ ------------ ------------ ------------
To ratify the appointment of
PriceWaterhouseCoopers LLP
as independent auditors of
the Company for 1999 10,076,517 1,810 4,186 -
To reincorporate under Delaware
law with new charter provisions 7,730,838 1,159,109 19,789 1,172,777
A. Reincorporate under Delaware law 7,767,583 1,125,904 16,249 1,172,777
B. Classified Board of Directors 6,776,007 2,102,939 30,790 1,172,777
C. No shareholder action by written consent 6,333,937 1,741,509 834,290 1,172,777
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits.
EXHIBIT
NO DESCRIPTION
------- ------------------------------------------------------
10.1 Credit Agreement, dated July 16, 1999, between
Barclays Bank PLC and Simpson Strong-Tie International,
Inc.
10.2 Indemnification Agreements, dated May 21, 1999,
between Simpson Manufacturing Co., Inc. and each of
its directors.
11 Statements re computation of earnings per share
27 Financial Data Schedule, which is submitted
electronically to the Securities and Exchange
Commission for information only and not filed.
b. Reports on Form 8-K
Report on Form 8-K dated May 20, 1999, reporting
under Item 5 that the Company had changed its state
of incorporation from California to Delaware.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Simpson Manufacturing Co., Inc.
-------------------------------
(Registrant)
DATE: AUGUST 11, 1999 By: /s/Stephen B. Lamson
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Stephen B. Lamson
Chief Financial Officer