SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended March 31, 1996 Commission File Number 0-6611 SIMPSON INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Michigan 38-1225111 (State or other jurisdiction of IRS Employer Identification No.) incorporation or organization) 47603 Halyard Drive, Plymouth, Michigan 48170-2429 (Address of principal executive offices) (Zip Code) (313)207-6200 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) 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 and (2) has been subject to such filing requirements for the past 90 days. Yes X No At April 30, 1996 there were 18,079,674 outstanding shares of the registrant's common stock, $1.00 par value each. Consolidated Balance Sheets (Unaudited) (In thousands) March 31, 1996 and December 31, 1995 Mar. 31 Dec. 31 ASSETS Current Assets Cash and cash equivalents $ 10,802 $ 13,490 Accounts receivable 50,664 47,218 Inventories 12,744 12,881 Customer tooling in process 881 1,334 Prepaid expenses and other current assets 6,760 7,068 Total Current Assets 81,851 81,991 Property, Plant and Equipment Cost 260,175 254,574 Less Allowance 112,768 107,908 147,407 146,666 Other Assets 2,864 3,854 $232,122 $232,511 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Current installment of long-term debt $ 1,982 $ 2,030 Accounts payable 18,429 21,353 Compensation and amounts withheld 7,082 9,876 Taxes, other than income taxes 3,584 2,942 Other accrued expenses 7,003 5,532 Total Current Liabilities 38,080 41,733 Long-Term Debt, excluding current installment 62,173 62,270 Accrued Retirement Benefits 12,883 12,439 Deferred Income Taxes 11,294 10,992 Shareholders' Equity 107,692 105,077 $232,122 $232,511 Consolidated Statement of Operations (Unaudited) (dollars in thousands, except per share amounts) Periods Ended March 31, 1996 and 1995 Three Months 1996 1995 Net sales $101,421 $107,237 Costs and expenses: Cost of products sold 91,038 94,856 Administrative and selling 2,835 2,409 93,873 97,265 Operating Earnings 7,548 9,972 Investment and other income, net 124 334 Interest expense (1,340) (1,381) Earnings Before Income Taxes 6,332 8,925 Income taxes 2,375 3,363 Net Earnings $ 3,957 $ 5,562 Net Earnings Per Share $.22 $.31 Cash dividends per share $.10 $.10 Average number of common equivalent shares 18,073,716 18,005,567 Consolidated Statements of Cash Flows (Unaudited) (in thousands) Three Months Ended March 31, 1996 and 1995 1996 1995 OPERATING ACTIVITIES Net Earnings $ 3,957 $ 5,562 Depreciation 5,053 4,497 Provision for deferred income taxes 302 91 Amortization of restricted stock 73 87 (Gain) loss on disposition of assets 24 (87) Changes in operating assets and liabilities (4,719) (1,040) Cash Provided By Operating Activities 4,690 9,110 INVESTING ACTIVITIES Capital expenditures (5,843) (5,316) Proceeds from disposal of property and equipment 24 225 Cash Used In Investing Activities (5,819) (5,091) FINANCING ACTIVITIES Cash dividends paid (1,808) (1,797) Proceeds from long-term borrowings, net (144) 24,050 Cash provided by stock transactions, net 242 0 Cash Provided From (Used In) Financing Activities (1,710) 22,253 Effect of foreign currency exchange rate changes 151 (529) Increase (decrease) In Cash and Cash Equivalents (2,688) 25,743 Cash and cash equivalents at beginning of period 13,490 4,812 Cash and Cash Equivalents At End of Period $10,802 $30,555 Notes to Condensed Consolidated Financial Statements Note 1. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the period ended March 31, 1996 are not necessarily indicative of the results to be expected for the year ending December 31, 1996. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Net sales for the first quarter of 1996 were $101 million versus $107 million for the first three months of 1995. The sales decline in 1996 was partially attributable to a 10% decrease in the North American production volumes for autos and light trucks compared to a relatively robust early 1995. The 17-day strike at General Motors also negatively effected sales in the first quarter of 1996 with approximately $3 million of lost revenue during March. Increased sales to diesel engine manufacturers, with particular strength at Caterpillar and Cummins Engine Company, and Japanese manufacturers helped to offset the soft volumes in the automotive business and the impact of the General Motors work stoppage. Cost of products sold, as a percent of sales, for the first three months of 1996 compared to the first quarter of 1995 increased from 88.5% to 89.8%. This increase is principally due to slower volumes available to cover fixed expenses and the drastic falloff in sales with the GM strike in March. Administrative and selling costs, as a percent of sales, increased for the three months ending March 31, 1996, compared to the first quarter of 1995 due to additional costs related to the company's new Technical Center and related activities in support of future growth. Interest expense for the first quarters of 1996 and 1995 remained approximately the same. Cash flow from operations was $4.7 million for the first quarter. The Company's investment in production capacity for new automotive, light truck and diesel engine programs was $5.8 million. These investments, when added to dividends paid during the three months ended March 31, 1996, exceeded the cash flow from operations, resulting in a reduction of $2.7 million in cash and cash equivalents. With a quick ratio of 1.6 to 1, and a total debt to invested capital ratio of 37.3%, the Company's financial condition remains strong. Part II. Other Information Item 6. Exhibits and Reports on Form 8-K (a) The following exhibits are filed with this report. 11 Computation of earnings per share. 27 Financial data schedule. (b) There were no reports filed on Form 8-K for the quarter ended March 31, 1996. 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 INDUSTRIES, INC. Registrant May 7, 1996 /s/Roy E. Parrott Roy E. Parrott President and Chief Executive Officer May 7, 1996 /s/Kathryn L. Williams Kathryn L. Williams Chief Financial Officer INDEX TO EXHIBITS Exhibit Number Exhibits 11 Computation of earnings per share. 27 Financial data schedule.