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 June 30, 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 incorporation or organization) Identification No.) 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 July 31, 1996 there were 18,075,693 outstanding shares of the registrant's common stock, $1.00 par value each. PART I. FINANCIAL INFORMATION Consolidated Balance Sheets (Unaudited) (In thousands) June 30, 1996 and December 31, 1995 June 30 Dec. 31 ASSETS Current Assets Cash and cash equivalents $ 16,779 $ 13,490 Accounts receivable 54,740 47,218 Inventories 10,852 12,881 Customer tooling in process 2,233 1,334 Prepaid expenses and other current assets 5,277 7,068 Total Current Assets 89,881 81,991 Property, Plant and Equipment Cost 262,652 254,574 Less Allowance 116,786 107,908 145,866 146,666 Other Assets 2,756 3,854 $238,503 $232,511 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Current installment of long-term debt $ 1,982 $ 2,030 Accounts payable 21,501 21,353 Compensation and amounts withheld 8,113 9,876 Taxes, other than income taxes 2,630 2,942 Other accrued expenses 6,949 5,532 Total Current Liabilities 41,175 41,733 Long-Term Debt, excluding current installment 60,530 62,270 Accrued Retirement Benefits 13,398 12,439 Deferred Income Taxes 11,544 10,992 Shareholders' Equity 111,856 105,077 $238,503 $232,511 Consolidated Statement of Operations (Unaudited) (dollars in thousands, except per share amounts) Periods Ended June 30, 1996 and 1995 Six Months Three Months 1996 1995 1996 1995 Net sales $211,470 $210,837 $110,049 $103,600 Costs and expenses: Cost of products sold 186,821 186,544 95,783 91,688 Administrative and selling 6,199 5,266 3,364 2,857 193,020 191,810 99,147 94,545 Operating Earnings 18,450 19,027 10,902 9,055 Investment and other income, net 159 796 35 462 Interest expense (2,724) (2,862) (1,384) (1,481) Earnings Before Income Taxes 15,885 16,961 9,553 8,036 Income taxes 5,957 6,488 3,582 3,125 Net Earnings $ 9,928 $ 10,473 $ 5,971 $ 4,911 Net Earnings Per Share $0.55 $0.58 $0.33 $0.27 Cash dividends per share $0.20 $0.20 $0.10 $0.10 Average number of common equivalent shares 18,096,326 18,027,830 18,118,936 18,050,093 Consolidated Statements of Cash Flows (Unaudited) (in thousands) Six Months Ended June 30, 1996 and 1995 1996 1995 OPERATING ACTIVITIES Net Earnings $ 9,928 $10,473 Depreciation 10,192 9,052 Provision for deferred income taxes 552 187 Amortization of restricted stock 159 167 (Gain) loss on disposition of assets 237 (128) Changes in operating assets and liabilities (3,053) (7,338) Cash Provided By Operating Activities 18,015 12,413 INVESTING ACTIVITIES Sale of marketable securities 0 2,491 Capital expenditures (9,671) (11,228) Proceeds from disposal of property and equipment 43 341 Cash Used In Investing Activities (9,628) (8,396) FINANCING ACTIVITIES Cash dividends paid (3,616) (3,595) Proceeds (repayments) of long-term debt, net (1,788) 11,800 Cash provided by stock transactions, net 242 26 Cash Provided From (Used In) Financing Activities (5,162) 8,231 Effect of foreign currency exchange rate changes 64 (170) Increase In Cash and Cash Equivalents 3,289 12,078 Cash and cash equivalents at beginning of period 13,490 2,321 Cash and Cash Equivalents At End of Period $16,779 $14,399 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 June 30, 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 reached a record high in the second quarter of 1996, increasing 6.2%, or $6,449,000, from the second quarter of 1995. Year-to-date sales increased .3% or $633,000 from the first half of 1995. Sales for the first half of the year reflect the results of the first quarter's overall softness in the light vehicle market and the impact of the General Motors strike. The increased sales for the quarter was partially attributable to a 7% increase in the North American production volumes for autos and light trucks from the second quarter of last year. A 12% increase in sales to diesel engine manufacturers, fueled by new program volume at Caterpillar, also contributed to second quarter results. Cost of products sold as a percent of sales for the first six months of 1996, compared to the first half of 1995, remained approximately the same at 88.3%, versus 88.5%. Cost of products sold as a percent of sales for the second quarter of 1996 compared to the second quarter of 1995 decreased to 87% from 88.5%. In addition to continuing operating improvements, the results for the second quarter included the recovery of some out-of-period start-up costs. Administrative and selling costs remained at approximately 3% of sales for the six- and three- month periods ending June 30, 1996, with slight increases due to the operation of the Company's new Technical Center. Interest expense for the six- and three-month periods ending June 30, 1996 and 1995 remained approximately the same. Cash flow from operations was $18 million for the first half of 1996. The Company's investment in production capacity for new automotive, light truck and diesel engine programs was $9.7 million. Cash flows from operations exceeded these investments and dividends paid during the six months ended June 30, 1996, resulting in an increase of $3.3 million in cash and cash equivalents. With a quick ratio of 1.7 to 1, and a total debt to invested capital ratio of 35.9%, 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 as part of this Report. EXHIBIT NO. DESCRIPTION 11 Computation of Earnings Per Share 27 Financial Data Schedule (b) There were no reports filed on Form 8-K for the quarter ended June 30, 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 August 9, 1996 /S/ROY E. PARROTT By: Roy E. Parrott President and Chief Executive Officer August 9, 1996 And By: /S/KATHRYN L. WILLIAMS Kathryn L. Williams Chief Financial Officer