**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

**FORM 10-Q**

 

**(Mark One)**

 

**x****      QUARTERLY REPORT PURSUANT TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the quarterly period ended: March 31,2010**

 

**OR**

 

**o****         TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934**

 

**For thetransition 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 checkmark whether the registrant (1) has filed all reports required to be filedby Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.  Yes x No o

 

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

 

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

 

The number ofshares of the registrant’s common stock outstanding as of March 31, 2010: 49,391,387

 

 

 

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PART I — FINANCIALINFORMATION

 

**Item 1.Financial Statements.**

 

**Simpson Manufacturing Co., Inc. andSubsidiaries**

**Condensed Consolidated Balance Sheets**

*(In thousands, unaudited)*

 
| ** **                                       | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|--------------------------------------------------|------------|---------------|------------|------------------|------------|
| ** **                                       | ** ** | **2010**      | ** ** | **2009**         | ** ** | **2009** | ** ** |
|                                             |       |          |       |             |       |   |   |
| **ASSETS**                                       |       |          |       |             |       |   |   |
| Current  assets                                  |       |          |       |             |       |   |   |
| Cash  and cash equivalents                       |       | $             | 202,843    |             | $          | 158,208 |   | $ | 250,381 |   |
| Trade  accounts receivable, net                  |       | 93,030        |       | 79,383           |       | 77,317 |   |
| Inventories                                      |       | 180,684       |       | 225,568          |       | 163,754 |   |
| Deferred  income taxes                           |       | 13,657        |       | 13,672           |       | 13,970 |   |
| Assets  held for sale                            |       | 7,887         |       | 8,387            |       | 7,887 |   |
| Other  current assets                            |       | 13,054        |       | 13,236           |       | 16,766 |   |
| Total  current assets                            |       | 511,155       |       | 498,454          |       | 530,075 |   |
|                                             |       |          |       |             |       |   |   |
| Property,  plant and equipment, net              |       | 200,975       |       | 191,412          |       | 187,814 |   |
| Goodwill                                         |       | 79,608        |       | 69,160           |       | 81,626 |   |
| Intangible  assets, net                          |       | 26,889        |       | 22,137           |       | 28,852 |   |
| Equity  method investment                        |       | 604           |       | 21               |       | 748 |   |
| Other  noncurrent assets                         |       | 16,722        |       | 18,225           |       | 14,690 |   |
| Total  assets                                    |       | $             | 835,953    |             | $          | 799,409 |   | $ | 843,805 |   |
|                                             |       |          |       |             |       |   |   |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY**   |       |          |       |             |       |   |   |
| Current  liabilities                             |       |          |       |             |       |   |   |
| Line  of credit                                  |       | $             | —     |             | $          | 821 |   | $ | — |   |
| Trade  accounts payable                          |       | 25,606        |       | 22,232           |       | 28,462 |   |
| Accrued  liabilities                             |       | 29,548        |       | 28,873           |       | 29,209 |   |
| Accrued  profit sharing trust contributions      |       | 1,858         |       | 1,973            |       | 7,018 |   |
| Accrued  cash profit sharing and commissions     |       | 3,508         |       | 1,353            |       | 2,427 |   |
| Accrued  workers’ compensation              |       | 4,374         |       | 4,299            |       | 4,352 |   |
| Total  current liabilities                       |       | 64,894        |       | 59,551           |       | 71,468 |   |
|                                             |       |          |       |             |       |   |   |
| Long-term  liabilities                           |       | 8,924         |       | 9,289            |       | 8,553 |   |
| Total  liabilities                               |       | 73,818        |       | 68,840           |       | 80,021 |   |
|                                             |       |          |       |             |       |   |   |
| Commitments  and contingencies (Note 8)          |       |          |       |             |       |   |   |
|                                             |       |          |       |             |       |   |   |
| Stockholders’  equity                       |       |          |       |             |       |   |   |
| Common  stock, at par value                      |       | 493           |       | 490              |       | 493 |   |
| Additional  paid-in capital                      |       | 146,711       |       | 137,503          |       | 146,036 |   |
| Retained  earnings                               |       | 602,754       |       | 592,644          |       | 598,493 |   |
| Accumulated  other comprehensive income (loss)   |       | 12,177        |       | (68              | )          | 18,762 |   |
| Total  stockholders’ equity                 |       | 762,135       |       | 730,569          |       | 763,784 |   |
| Total  liabilities and stockholders’ equity |       | $             | 835,953    |             | $          | 799,409 |   | $ | 843,805 |   |

 

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

 

2

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**Simpson Manufacturing Co., Inc. andSubsidiaries**

**Condensed Consolidated Statements of Operations**

*(In thousands except per-share amounts, unaudited)*

 
| ** **                                      | ** ** | **Three Months Ended** | ** ** |
|-------------------------------------------------|------------|------------------------|------------|
| ** **                                      | ** ** | **March 31,**          | ** ** |
| ** **                                      | ** ** | **2010**               | ** ** | **2009** | ** ** |
|                                            |       |                   |       |   |   |
| Net  sales                                      |       | $                      | 133,900    |   | $ | 119,323 |   |
| Cost  of sales                                  |       | 78,465                 |       | 88,610 |   |
| Gross  profit                                   |       | 55,435                 |       | 30,713 |   |
|                                            |       |                   |       |   |   |
| Operating  expenses:                            |       |                   |       |   |   |
| Research  and development and other engineering |       | 5,051                  |       | 4,864 |   |
| Selling                                         |       | 16,193                 |       | 16,025 |   |
| General  and administrative                     |       | 18,145                 |       | 20,162 |   |
|                                            |       | 39,389                 |       | 41,051 |   |
|                                            |       |                   |       |   |   |
| Income  (loss) from operations                  |       | 16,046                 |       | (10,338 | ) |
|                                            |       |                   |       |   |   |
| Loss  on equity method investment, before tax   |       | (144                   | )          | (193 | ) |
| Interest  income, net                           |       | 10                     |       | 102 |   |
|                                            |       |                   |       |   |   |
| Income  (loss) before income taxes              |       | 15,912                 |       | (10,429 | ) |
|                                            |       |                   |       |   |   |
| Provision  for (benefit from) income taxes      |       | 6,713                  |       | (2,020 | ) |
|                                            |       |                   |       |   |   |
| Net  income (loss)                              |       | $                      | 9,199      |   | $ | (8,409 | ) |
|                                            |       |                   |       |   |   |
| Net  income (loss) per common share             |       |                   |       |   |   |
| Basic                                           |       | $                      | 0.19       |   | $ | (0.17 | ) |
| Diluted                                         |       | $                      | 0.19       |   | $ | (0.17 | ) |
|                                            |       |                   |       |   |   |
| Weighted  average number of shares outstanding  |       |                   |       |   |   |
| Basic                                           |       | 49,388                 |       | 48,987 |   |
| Diluted                                         |       | 49,520                 |       | 48,987 |   |
|                                            |       |                   |       |   |   |
| Cash  dividends declared per common share       |       | $                      | 0.10       |   | $ | 0.10 |   |

 

The accompanyingnotes are an integral part of these condensed consolidated financialstatements.

 

3

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**Simpson Manufacturing Co., Inc. and Subsidiaries**

**Condensed**Consolidated Statements ofStockholders’ Equity

**for thethree months ended March 31, 2009 and 2010, and nine months ended December 31,2009**

*(In thousands except per-share amounts, unaudited)*

 
| ** **                                                 | ** ** | ** **        | ** ** | ** **     | ** ** | ** **     | ** ** | ** **        | ** ** | **Accumulated**    | ** ** | ** ** | ** ** |
|------------------------------------------------------------|------------|-------------------|------------|----------------|------------|----------------|------------|-------------------|------------|--------------------|------------|------------|------------|
| ** **                                                 | ** ** | ** **        | ** ** | ** **     | ** ** | **Additional** | ** ** | ** **        | ** ** | **Other**          | ** ** | ** ** | ** ** |
| ** **                                                 | ** ** | **Common  Stock** | ** ** | **Paid-in**    | ** ** | **Retained**   | ** ** | **Comprehensive** | ** ** | ** **         | ** ** |
| ** **                                                 | ** ** | **Shares**        | ** ** | **Par  Value** | ** ** | **Capital**    | ** ** | **Earnings**      | ** ** | **Income  (Loss)** | ** ** | **Total**  | ** ** |
| Balance, January 1, 2009                              |       | 48,971            |       | $              | 490        |           | $          | 136,867           |       | $                  | 605,950    |       | $          | 5,719 |   | $ | 749,026 |   |
| Comprehensive loss:                                        |       |              |       |           |       |           |       |              |       |               |       |       |       |
| Net loss                                                   |       | —            |       | —         |       | —         |       | (8,409            | )          | —             |       | (8,409     | )          |
| Other comprehensive income:                                |       |              |       |           |       |           |       |              |       |               |       |       |       |
| Translation adjustment, net of tax of ($9)                 |       | —            |       | —         |       | —         |       | —            |       | (5,787             | )          | (5,787     | )          |
| Comprehensive loss                                         |       |              |       |           |       |           |       |              |       |               |       | (14,196    | )          |
| Stock options exercised                                    |       | 8                 |       | —         |       | 128            |       | —            |       | —             |       | 128        |       |
| Stock compensation                                         |       | —            |       | —         |       | 393            |       | —            |       | —             |       | 393        |       |
| Tax benefit of options exercised                           |       | —            |       | —         |       | (185           | )          | —            |       | —             |       | (185       | )          |
| Cash dividends declared on common stock ($0.10 per  share) |       | —            |       | —         |       | —         |       | (4,897            | )          | —             |       | (4,897     | )          |
| Common stock issued at $27.76 per share for stock  bonus   |       | 10                |       | —         |       | 300            |       | —            |       | —             |       | 300        |       |
| Balance, March 31, 2009                               |       | 48,989            |       | 490            |       | 137,503        |       | 592,644           |       | (68                | )          | 730,569    |       |
| Comprehensive income:                                      |       |              |       |           |       |           |       |              |       |               |       |       |       |
| Net income                                                 |       | —            |       | —         |       | —         |       | 20,626            |       | —             |       | 20,626     |       |
| Other comprehensive income:                                |       |              |       |           |       |           |       |              |       |               |       |       |       |
| Translation adjustment, net of tax of ($28)                |       | —            |       | —         |       | —         |       | —            |       | 18,830             |       | 18,830     |       |
| Comprehensive income                                       |       |              |       |           |       |           |       |              |       |               |       | 39,456     |       |
| Stock options exercised                                    |       | 388               |       | 3              |       | 7,496          |       | —            |       | —             |       | 7,499      |       |
| Stock compensation                                         |       | —            |       | —         |       | 1,297          |       | —            |       | —             |       | 1,297      |       |
| Tax benefit of options exercised                           |       | —            |       | —         |       | (260           | )          | —            |       | —             |       | (260       | )          |
| Cash dividends declared on common stock, $0.30 per  share  |       | —            |       | —         |       | —         |       | (14,777           | )          | —             |       | (14,777    | )          |
| Balance, December 31, 2009                            |       | 49,377            |       | 493            |       | 146,036        |       | 598,493           |       | 18,762             |       | 763,784    |       |
| Comprehensive income:                                      |       |              |       |           |       |           |       |              |       |               |       |       |       |
| Net income                                                 |       | —            |       | —         |       | —         |       | 9,199             |       | —             |       | 9,199      |       |
| Other comprehensive income:                                |       |              |       |           |       |           |       |              |       |               |       |       |       |
| Translation adjustment, net of tax of $3                   |       | —            |       | —         |       | —         |       | —            |       | (6,585             | )          | (6,585     | )          |
| Comprehensive income                                       |       |              |       |           |       |           |       |              |       |               |       | 2,614      |       |
| Stock options exercised                                    |       | 4                 |       | —         |       | 92             |       | —            |       | —             |       | 92         |       |
| Stock compensation                                         |       | —            |       | —         |       | 382            |       | —            |       | —             |       | 382        |       |
| Tax benefit of options exercised                           |       | —            |       | —         |       | (76            | )          | —            |       | —             |       | (76        | )          |
| Cash dividends declared on common stock, $0.10 per  share  |       | —            |       | —         |       | —         |       | (4,938            | )          | —             |       | (4,938     | )          |
| Common stock issued at $26.89 per share for stock  bonus   |       | 10                |       | —         |       | 277            |       | —            |       | —             |       | 277        |       |
| Balance, March 31, 2010                               |       | 49,391            |       | $              | 493        |           | $          | 146,711           |       | $                  | 602,754    |       | $          | 12,177 |   | $ | 762,135 |   |

 

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

 

4

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**Simpson Manufacturing Co., Inc. andSubsidiaries**

**CondensedConsolidated Statements of Cash Flows**

*(In thousands, unaudited)*

 
| ** **                                                                                           | ** ** | **Three Months**    | ** ** |
|------------------------------------------------------------------------------------------------------|------------|---------------------|------------|
| ** **                                                                                           | ** ** | **Ended March 31,** | ** ** |
| ** **                                                                                           | ** ** | **2010**            | ** ** | **2009** | ** ** |
| **Cash flows from operating activities**                                                             |       |                |       |   |   |
| Net  income (loss)                                                                                   |       | $                   | 9,199      |   | $ | (8,409 | ) |
| Adjustments  to reconcile net income (loss) to net cash provided by (used in) operating  activities: |       |                |       |   |   |
| (Gain)  loss on sale of assets                                                                       |       | 389                 |       | (111 | ) |
| Depreciation  and amortization                                                                       |       | 6,276               |       | 6,848 |   |
| Deferred  income taxes                                                                               |       | 225                 |       | (1,497 | ) |
| Noncash  compensation related to stock plans                                                         |       | 469                 |       | 557 |   |
| Loss  in equity method investment                                                                    |       | 144                 |       | 193 |   |
| Excess  tax benefit of options exercised                                                             |       | —              |       | (8 | ) |
| Provision  for (recovery of) doubtful accounts                                                       |       | (406                | )          | 1,760 |   |
| Provision  for obsolete inventory                                                                    |       | 477                 |       | 1,018 |   |
| Changes  in operating assets and liabilities, net of effects of acquisitions:                        |       |                |       |   |   |
| Trade  accounts receivable                                                                           |       | (16,286             | )          | (5,946 | ) |
| Inventories                                                                                          |       | (18,922             | )          | 23,381 |   |
| Trade  accounts payable                                                                              |       | (2,194              | )          | 835 |   |
| Income  taxes payable                                                                                |       | 5,341               |       | (2,965 | ) |
| Accrued  profit sharing trust contributions                                                          |       | (5,165              | )          | (7,556 | ) |
| Accrued  cash profit sharing and commissions                                                         |       | 1,126               |       | (880 | ) |
| Other  current assets                                                                                |       | (1,339              | )          | (2,374 | ) |
| Accrued  liabilities                                                                                 |       | 936                 |       | (4,428 | ) |
| Long-term  liabilities                                                                               |       | 108                 |       | 1 |   |
| Accrued  workers’ compensation                                                                  |       | 21                  |       | 13 |   |
| Other  noncurrent assets                                                                             |       | 95                  |       | 99 |   |
| Net  cash provided by (used in) operating activities                                                 |       | (19,506             | )          | 531 |   |
|                                                                                                 |       |                |       |   |   |
| **Cash flows from investing activities**                                                             |       |                |       |   |   |
| Capital  expenditures                                                                                |       | (20,293             | )          | (5,895 | ) |
| Proceeds  from sale of capital assets                                                                |       | 46                  |       | 41 |   |
| Asset  acquisitions, net of cash acquired                                                            |       | —              |       | (1,655 | ) |
| Loans  made to related parties                                                                       |       | (1,798              | )          | — |   |
| Loans  repaid by related parties                                                                     |       | 50                  |       | — |   |
| Net  cash used in investing activities                                                               |       | (21,995             | )          | (7,509 | ) |
|                                                                                                 |       |                |       |   |   |
| **Cash flows from financing activities**                                                             |       |                |       |   |   |
| Line  of credit borrowings                                                                           |       | —              |       | 817 |   |
| Issuance  of common stock                                                                            |       | 92                  |       | 128 |   |
| Excess  tax benefit of options exercised                                                             |       | —              |       | 8 |   |
| Dividends  paid                                                                                      |       | (4,939              | )          | (4,898 | ) |
| Net  cash used in financing activities                                                               |       | (4,847              | )          | (3,945 | ) |
|                                                                                                 |       |                |       |   |   |
| Effect  of exchange rate changes on cash                                                             |       | (1,190              | )          | (1,619 | ) |
|                                                                                                 |       |                |       |   |   |
| Net  decrease in cash and cash equivalents                                                           |       | (47,538             | )          | (12,542 | ) |
| Cash  and cash equivalents at beginning of period                                                    |       | 250,381             |       | 170,750 |   |
| Cash  and cash equivalents at end of period                                                          |       | $                   | 202,843    |   | $ | 158,208 |   |
|                                                                                                 |       |                |       |   |   |
| **Noncash activity during the period**                                                               |       |                |       |   |   |
| Noncash  capital expenditures                                                                        |       | $                   | —     |   | $ | 180 |   |
| Dividends  declared but not paid                                                                     |       | $                   | 4,938      |   | $ | 4,897 |   |
| Issuance  of Company’s common stock for compensation                                            |       | $                   | 277        |   | $ | 300 |   |

 

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

 

5

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**Simpson Manufacturing Co., Inc. andSubsidiaries**

**Notes to Condensed Consolidated FinancialStatements**

**(Unaudited)**

 

1.                                       Basis of Presentation

 

### ***Principles ofConsolidation***

 

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

 

*Interim Period Reporting*

 

The accompanyingunaudited interim condensed consolidated financial statements have beenprepared pursuant to the rules and regulations for reporting on Form 10-Q.Accordingly, certain information and footnotes required by accountingprinciples generally accepted in the United States of America (“GAAP”) havebeen condensed or omitted. These interim statements should be read inconjunction with the consolidated financial statements and the notes theretoincluded in the Company’s Annual Report on Form 10-K for the fiscal yearended December 31, 2009 (the “2009 Annual Report”).

 

The unaudited quarterlycondensed consolidated financial statements have been prepared on the samebasis as the audited annual consolidated financial statements and, in theopinion of management, contain all adjustments (consisting of only normalrecurring adjustments) necessary to state fairly the financial information setforth therein, in accordance with GAAP. The year-end condensed consolidatedbalance sheet data were derived from audited financial statements, but do notinclude all disclosures required by GAAP. The Company’s quarterly resultsfluctuate. As a result, the Company believes the results of operations for theinterim periods are not necessarily indicative of the results to be expectedfor any future period.

 

*Revenue Recognition*

 

The Company recognizes revenue whenthe earnings process is complete, net of applicable provision for discounts,returns and incentives, whether actual or estimated, based on the Company’sexperience. This generally occurs when products are shipped to the customer inaccordance with the sales agreement or purchase order, ownership and risk ofloss pass to the customer, collectibility is reasonably assured and pricing isfixed or determinable. The Company’s general shipping terms are F.O.B. shippingpoint, where title is transferred and revenue is recognized when the productsare shipped to customers. When the Company sells F.O.B. destination point,title is transferred and the Company recognizes revenue on delivery or customeracceptance, depending on terms of the sales agreement. Service sales,representing after-market repair and maintenance, engineering activities andsoftware license sales and service, though significantly less than 1% of netsales and not material to the consolidated financial statements, are recognizedas the services are completed or the software products and services aredelivered. If actual costs of sales returns, incentives and discounts were tosignificantly exceed the recorded estimated allowance, the Company’s saleswould be adversely affected.

 

*Net Income (Loss) Per CommonShare*

 

Basic net income(loss) per common share is computed based on the weighted average number ofcommon shares outstanding. Potentially dilutive securities, using the treasurystock method, are included in the diluted per-share calculations for allperiods when the effect of their inclusion is dilutive.

 

6

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The following is areconciliation of basic earnings per share (“EPS”) to diluted EPS:

 

*(inthousands, except*

*per-shareamounts)*

 
| ** **                                      | ** ** | **Three Months Ended,** | ** ** | **Three Months Ended,** | ** ** |
|-------------------------------------------------|------------|-------------------------|------------|-------------------------|------------|
| ** **                                      | ** ** | **March 31, 2010** | ** ** | **March 31, 2009** | ** ** |
| ** **                                      | ** ** | **Income**              | ** ** | ** **              | ** ** | **Per** | ** ** | **Income** | ** ** | ** ** | ** ** | **Per** | ** ** |
| ** **                                      | ** ** | **(Loss)**              | ** ** | **Shares**              | ** ** | **Share** | ** ** | **(Loss)** | ** ** | **Shares** | ** ** | **Share** | ** ** |
| **Basic EPS**                                   |       |                    |       |                    |       |   |   |   |   |   |   |   |   |
| Income  (loss) available to common stockholders |       | $                       | 9,199      |                    | 49,388     |   | $ | 0.19 |   | $ | (8,409 | ) | 48,987 |   | $ | (0.17 | ) |
|                                            |       |                    |       |                    |       |   |   |   |   |   |   |   |   |
| **Effect of Dilutive Securities**               |       |                    |       |                    |       |   |   |   |   |   |   |   |   |
| Stock  options                                  |       | —                  |       | 132                     |       | — |   | — |   | — |   | — |   |
|                                            |       |                    |       |                    |       |   |   |   |   |   |   |   |   |
| **Diluted EPS**                                 |       |                    |       |                    |       |   |   |   |   |   |   |   |   |
| Income  (loss) available to common stockholders |       | $                       | 9,199      |                    | 49,520     |   | $ | 0.19 |   | $ | (8,409 | ) | 48,987 |   | $ | (0.17 | ) |

 

Anti-dilutiveshares attributable to outstanding stock options were excluded from thecalculation of diluted net income per share. All potentially dilutivesecurities were excluded from the diluted loss per share calculation for thethree months ended March 31, 2009, because the effect of their inclusionwould be antidilutive, or would decrease the reported loss per share. For boththe three months ended March 31, 2010 and 2009, 1.1 million shares subjectto stock options were anti-dilutive.

 

*Accountingfor Stock-Based Compensation*

 

The Company maintains twostock option plans under which it may grant incentive stock options andnon-qualified stock options, although the Company has granted onlynon-qualified stock options under these plans. The Simpson Manufacturing Co., Inc.1994 Stock Option Plan (the “1994 Plan”) is principally for the Company’semployees, and the Simpson Manufacturing Co., Inc. 1995 IndependentDirector Stock Option Plan (the “1995 Plan”) is for its independent directors.The Company generally grants options under each of the 1994 Plan and the 1995Plan once each year. The exercise price per share of each option granted in February 2010and February 2009 under the 1994 Plan equaled the closing market price pershare of the Company’s common stock as reported by the New York Stock Exchangeon the day preceding the day that the Compensation Committee of the Company’sBoard of Directors met to approve the grant of the options. The exercise priceper share under each option granted under the 1995 Plan is at the fair marketvalue on the date specified in the 1995 Plan. Options vest and expire accordingto terms established at the grant date. There were no options granted under the1995 Plan in 2010 or 2009.

 

Under the 1994 Plan, nomore than 16 million shares of the Company’s common stock may be sold(including shares already sold) pursuant to all options granted under the 1994Plan. Under the 1995 Plan, no more than 320 thousand shares of common stock maybe sold (including shares already sold) pursuant to all options granted underthe 1995 Plan. Shares of common stockissued on exercise of stock options under both of the plans are registeredunder the Securities Act of 1933. Options granted under the 1994 Plantypically vest evenly over the requisite service period of four years and havea term of seven years. The vesting of options granted under the 1994 Plan willbe accelerated if the grantee ceases to be employed by the Company afterreaching age 60 or if there is a change in control of the Company. Optionsgranted under the 1995 Plan are fully vested on the date of grant.

 

7

----

 

The following tablerepresents the Company’s stock option activity for the three months ended March 31,2010 and 2009:

 

*(inthousands)*

 
| ** **                                                                                     | ** ** | **Three Months Ended** | ** ** |
|------------------------------------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                                                     | ** ** | **March 31,**          | ** ** |
| ** **                                                                                     | ** ** | **2010**               | ** ** | **2009** | ** ** |
|                                                                                           |       |                   |       |   |   |
| Stock  option expense recognized in operating expenses                                         |       | $                      | 366        |   | $ | 448 |   |
| Tax  benefit of stock option expense in provision for (benefit from) income taxes              |       | 110                    |       | 148 |   |
| Stock  option expense, net of tax                                                              |       | $                      | 256        |   | $ | 300 |   |
| Fair  value of shares vested                                                                   |       | $                      | 382        |   | $ | 393 |   |
| Proceeds  to the Company from the exercise of stock options                                    |       | $                      | 92         |   | $ | 128 |   |
| Tax  benefit from exercise of stock options, including windfall (shortfall) tax  benefits, net |       | $                      | (76        | ) | $ | (185 | ) |

 
| ** **                                  | ** ** | **At March 31,** | ** ** |
|---------------------------------------------|------------|-----------------------|------------|
| ** **                                  | ** ** | **2010**              | ** ** | **2009** | ** ** |
| Stock  option cost capitalized in inventory |       | $                     | 61         |   | $ | 46 |   |
|                                             |            |                       |            |  |  |  |  |

 

The amounts included incost of sales, research and development and other engineering, selling, orgeneral and administrative expense depend on the job functions performed by theemployees to whom the stock options were granted.

 

The assumptions used tocalculate the fair value of options granted are evaluated and revised, asnecessary, to reflect market conditions and the Company’s experience.

 

*Fair Value of FinancialInstruments*

 

As of March 31, 2010, the Company’s investmentsconsisted of only United States Treasury securities and money market fundsaggregating $127.5 million, which are maintained in cash equivalents and arecarried at cost, approximating fair value, based on Level 1 inputs. Level 1inputs are quoted prices (unadjusted) in active markets for identical assets orliabilities, as defined in the “Fair Value Measurements and Disclosures” topicof the Financial Accounting Standards Board (“FASB”) Accounting Standards CodificationTM (“ASC”).

 

*Income Taxes*

 

In general, the Companyis required to use an estimated annual effective tax rate to measure the taxbenefit or tax expense recognized in an interim period. The income tax expensefor the first quarters of both 2010 and 2009, however, has been computed basedon those quarters as discrete periods due to the uncertainty regarding theCompany’s ability to reliably estimate pre-tax income for the remainder ofthose years, primarily as a result of the continued uncertainty in theconstruction markets in which the Company operates. The effective tax rate was42.2% in the first quarter of 2010, which resulted in income tax expense of$6.7 million. The effective tax rate was 19.4% in the first quarter of 2009,which, as a result of the loss beforetaxes in the first quarter of 2009, resulted in income tax benefit of$2.0 million.

 

*Recently Issued AccountingStandards*

 

In May 2009, theFASB issued guidance codified in the “Subsequent Events” topic of the FASB ASC,which establishes general standards of accounting for, and disclosure of,events that occur after the balance sheet date but before the financialstatements are issued or are available to be issued. In February 2010, theFASB amended this guidance to remove the requirement for companies that file orfurnish financial statements with the Securities and Exchange Commission todisclose the date through which subsequent events have been evaluated.

 

8

----

 

2.                                       Trade Accounts Receivable, Net

 

Trade accounts receivableconsist of the following:

 

*(inthousands)*

 
| ** **                                 | ** ** | **At March 31,** | ** ** | **At December 31,** | ** ** |
|--------------------------------------------|------------|------------------|------------|---------------------|------------|
| ** **                                 | ** ** | **2010**         | ** ** | **2009**            | ** ** | **2009** | ** ** |
|                                       |       |             |       |                |       |   |   |
| Trade  accounts receivable                 |       | $                | 100,051    |                | $          | 87,154 |   | $ | 83,892 |   |
| Allowance  for doubtful accounts           |       | (4,198           | )          | (5,924              | )          | (4,667 | ) |
| Allowance  for sales discounts and returns |       | (2,823           | )          | (1,847              | )          | (1,908 | ) |
|                                       |       | $                | 93,030     |                | $          | 79,383 |   | $ | 77,317 |   |

 

3.                                       Inventories

 

Inventories consist ofthe following:

 

*(inthousands)*

 
| ** **           | ** ** | **At March 31,** | ** ** | **At December 31,** | ** ** |
|----------------------|------------|------------------|------------|---------------------|------------|
| ** **           | ** ** | **2010**         | ** ** | **2009**            | ** ** | **2009** | ** ** |
|                 |       |             |       |                |       |   |   |
| Raw materials        |       | $                | 75,953     |                | $          | 86,411 |   | $ | 61,408 |   |
| In-process  products |       | 20,267           |       | 24,890              |       | 21,113 |   |
| Finished  products   |       | 84,464           |       | 114,267             |       | 81,233 |   |
|                 |       | $                | 180,684    |                | $          | 225,568 |   | $ | 163,754 |   |

 

4.                                       Property, Plant and Equipment, Net

 

Property, plant andequipment, net, consist of the following:

 

*(inthousands)*

 
| ** **                                      | ** ** | **At March 31,** | ** ** | **At December 31,** | ** ** |
|-------------------------------------------------|------------|------------------|------------|---------------------|------------|
| ** **                                      | ** ** | **2010**         | ** ** | **2009**            | ** ** | **2009** | ** ** |
|                                            |       |             |       |                |       |   |   |
| Land                                            |       | $                | 23,543     |                | $          | 22,654 |   | $ | 23,729 |   |
| Buildings  and site improvements                |       | 147,446          |       | 137,589             |       | 148,381 |   |
| Leasehold  improvements                         |       | 3,819            |       | 4,261               |       | 3,893 |   |
| Machinery  and equipment                        |       | 225,594          |       | 219,372             |       | 226,436 |   |
|                                            |       | 400,402          |       | 383,876             |       | 402,439 |   |
| Less  accumulated depreciation and amortization |       | (220,303         | )          | (197,788            | )          | (216,157 | ) |
|                                            |       | 180,099          |       | 186,088             |       | 186,282 |   |
| Capital  projects in progress                   |       | 20,876           |       | 5,324               |       | 1,532 |   |
|                                            |       | $                | 200,975    |                | $          | 191,412 |   | $ | 187,814 |   |

 

The Company’s vacant facility in San Leandro,California, remained classified as an asset held for sale as of March 31,2010, consistent with the classification at December 31, 2009, and isbeing actively marketed. The Company, in March 2010, acquired a facilityin San Bernadino, California, for $19.2 million, in which it will consolidateits owned manufacturing and warehouse facilities in Brea, California, and itsformer leased warehouse in Ontario, California. The Company intends to sell theBrea facilities. These facilities are associated with the connector segment.

 

5.                                       Investments

 

*Equity Method Investment*

 

At March 31, 2010,the Company had a 40.6% equity interest in Keymark Enterprises, LLC (“Keymark”),for which the Company accounts using the equity method. Keymark developssoftware that assists in designing and engineering residential structures. TheCompany’s relationship with Keymark includes the specification of the 

 

9

----

 

Company’s products in theKeymark software. The Company has no obligation to make any additional capitalcontributions to Keymark.

 

6.                                       Goodwill and Intangible Assets, Net

 

Goodwill by segment wasas follows:

 

*(inthousands)*

 
| ** **          | ** ** | **At March 31,** | ** ** | **At December 31,** | ** ** |
|---------------------|------------|------------------|------------|---------------------|------------|
| ** **          | ** ** | **2010**         | ** ** | **2009**            | ** ** | **2009** | ** ** |
| Connector  products |       | $                | 75,173     |                | $          | 64,749 |   | $ | 77,191 |   |
| Venting  products   |       | 4,435            |       | 4,411               |       | 4,435 |   |
| Total               |       | $                | 79,608     |                | $          | 69,160 |   | $ | 81,626 |   |

 

Intangible assets,net, by segment were as follows:

 

*(inthousands)*

 
| ** **          | ** ** | **At March 31, 2010** | ** ** |
|---------------------|------------|-----------------------|------------|
| ** **          | ** ** | **Gross**             | ** ** | ** ** | ** ** | **Net** | ** ** |
| ** **          | ** ** | **Carrying**          | ** ** | **Accumulated** | ** ** | **Carrying** | ** ** |
| ** **          | ** ** | **Amount**            | ** ** | **Amortization** | ** ** | **Amount** | ** ** |
| Connector  products |       | $                     | 36,410     |   | $ | (11,366 | ) | $ | 25,044 |   |
| Venting  products   |       | 3,291                 |       | (1,446 | ) | 1,845 |   |
| Total               |       | $                     | 39,701     |   | $ | (12,812 | ) | $ | 26,889 |   |

 
| ** **          | ** ** | **At March 31, 2009** | ** ** |
|---------------------|------------|-----------------------|------------|
| ** **          | ** ** | **Gross**             | ** ** | ** ** | ** ** | **Net** | ** ** |
| ** **          | ** ** | **Carrying**          | ** ** | **Accumulated** | ** ** | **Carrying** | ** ** |
| ** **          | ** ** | **Amount**            | ** ** | **Amortization** | ** ** | **Amount** | ** ** |
| Connector  products |       | $                     | 32,546     |   | $ | (12,789 | ) | $ | 19,757 |   |
| Venting  products   |       | 2,962                 |       | (582 | ) | 2,380 |   |
| Total               |       | $                     | 35,508     |   | $ | (13,371 | ) | $ | 22,137 |   |

 
| ** **          | ** ** | **At December 31, 2009** | ** ** |
|---------------------|------------|--------------------------|------------|
| ** **          | ** ** | **Gross**                | ** ** | ** ** | ** ** | **Net** | ** ** |
| ** **          | ** ** | **Carrying**             | ** ** | **Accumulated** | ** ** | **Carrying** | ** ** |
| ** **          | ** ** | **Amount**               | ** ** | **Amortization** | ** ** | **Amount** | ** ** |
| Connector  products |       | $                        | 37,987     |   | $ | (11,182 | ) | $ | 26,805 |   |
| Venting  products   |       | 3,291                    |       | (1,244 | ) | 2,047 |   |
| Total               |       | $                        | 41,278     |   | $ | (12,426 | ) | $ | 28,852 |   |

 

Intangible assetsconsist primarily of customer relationships, patents, unpatented technology andnon-compete agreements. Amortization expense for intangible assets during thethree months ended March 31, 2010 and 2009, was $1.3 million and $1.2million, respectively.

 

10

----

 

At March 31, 2010,estimated future amortization of intangible assets was as follows:

 

*(inthousands)*

 
| Final  nine months of 2010 |   | $     | 3,716  |   |
|----------------------------|--------|-------|--------|--------|
| 2011                       |   | 4,907 |   |
| 2012                       |   | 4,023 |   |
| 2013                       |   | 3,085 |   |
| 2014                       |   | 2,849 |   |
| 2015                       |   | 2,111 |   |
| Thereafter                 |   | 6,198 |   |
|                       |   | $     | 26,889 |   |

 

The changes in thecarrying amount of goodwill and intangible assets from December 31, 2009,to March 31, 2010, were as follows:

 

*(inthousands)*

 
| ** **                         | ** ** | ** **   | ** ** | **Intangible** | ** ** |
|------------------------------------|------------|--------------|------------|----------------|------------|
| ** **                         | ** ** | **Goodwill** | ** ** | **Assets**     | ** ** |
|                               |       |         |       |           |       |
| Balance  at December 31, 2009 |       | $            | 81,626     |           | $          | 28,852 |   |
| Amortization                       |       | —       |       | (1,276         | )          |
| Foreign  exchange                  |       | (2,018       | )          | (687           | )          |
| Balance  at March 31, 2010    |       | $            | 79,608     |           | $          | 26,889 |   |

 

7.                                       Debt

 

Outstanding debt at March 31,2010 and 2009, and December 31, 2009, and the available lines of credit atMarch 31, 2010, consisted of the following:

 

***(dollar amountsin thousands)***

 
| ** **                                                                                                                                                                                                                      | ** ** | **Available** | ** ** | **Debt Outstanding** | ** ** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------|------------|----------------------|------------|
| ** **                                                                                                                                                                                                                      | ** ** | **Credit at** | ** ** | **at**               | ** ** | **at** | ** ** |
| ** **                                                                                                                                                                                                                      | ** ** | **March 31,** | ** ** | **March 31,**        | ** ** | **December 31,** | ** ** |
| ** **                                                                                                                                                                                                                      | ** ** | **2010**      | ** ** | **2010**             | ** ** | **2009** | ** ** | **2009** | ** ** |
|                                                                                                                                                                                                                            |       |          |       |                 |       |   |   |   |   |
| Revolving  line of credit, interest at LIBOR plus 0.27% (at March 31, 2010, LIBOR  plus 0.27% was 0.52%), expires October 2012, commitment fees payable at the  annual rate of 0.08% on the unused portion of the facility |       | $             | 200,000    |                 | $          | — |   | $ | — |   | $ | — |   |
|                                                                                                                                                                                                                            |       |          |       |                 |       |   |   |   |   |
| Revolving  line of credit, interest at the bank’s base rate plus 3% (at March 31,  2010, the bank’s base rate plus 3% was 3.50%), expires December 2010                                                     |       | 379           |       | —               |       | — |   | — |   |
|                                                                                                                                                                                                                            |       |          |       |                 |       |   |   |   |   |
| Revolving  lines of credit, interest rates between 1.14% and 3.13%                                                                                                                                                              |       | 4,293         |       | —               |       | 821 |   | — |   |
| Line  of credit                                                                                                                                                                                                                 |       |          |       | $                    | —     |   | $ | 821 |   | $ | — |   |
| Available  credit                                                                                                                                                                                                               |       | $             | 204,672    |                 |       |   |   |   |   |   |

 

8.                                       Commitments and Contingencies

 

Note 9 to the consolidated financialstatements in the 2009 Annual Report provides information concerningcommitments and contingencies. From time to time, the Company is involved invarious legal proceedings and other matters arising in the normal course ofbusiness. The resolution of claims and litigation is subject to inherentuncertainty and could have a material adverse effect on the Company’s financialcondition, cash flows and results of operations.

 

11

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The Company’spolicy with regard to environmental liabilities is to accrue for futureenvironmental assessments and remediation costs when information becomesavailable that indicates that it is probable that the Company is liable for anyrelated claims and assessments and the amount of the liability is reasonablyestimable. The Company does not believe that these matters will have a materialadverse effect on the Company’s financial condition, cash flows or results ofoperations.

 

Corrosion, hydrogenenbrittlement, cracking, material hardness, wood pressure-treating chemicals,misinstallations, misuse, design and assembly flaws, environmental conditionsor other factors can contribute to failure of fasteners, connectors, tools andventing products. On occasion, some of the fasteners and connectors that theCompany sells have failed, although the Company has not incurred any materialliability resulting from those failures. The Company attempts to avoid suchfailures by establishing and monitoring appropriate product specifications,manufacturing quality control procedures, inspection procedures and informationon appropriate installation methods and conditions. The Company subjects itsproducts to extensive testing, with results and conclusions published inCompany catalogues and on its websites. Based on test results to date, theCompany believes that, generally, if its products are appropriately selected,installed and used in accordance with the Company’s guidance, they may bereliably used in appropriate applications.

 

Four lawsuits (the “HawaiiCases”) 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 (“Hawaii Case 1”); *Ke Noho KaiDevelopment, LLC v. Simpson Strong-Tie Company, Inc.*, *and Honolulu Wood Treating Co., LTD.*, Hawaii Case No. 09-1-1491-06SSM (“Hawaii Case 2”); *North American SpecialtyIns. Co. v. Simpson Strong-Tie Company, Inc. and K.C. Metal Products, Inc.*,Case No. 09-1-1490-06 VSM (“Hawaii Case 3”); and *Charles etal. 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(“Hawaii Case 4”). Hawaii Case 1 was filed on November 18, 2009. HawaiiCases 2 and 3 were originally filed on June 30, 2009. Hawaii Case 4 wasfiled on August 19, 2009. The Hawaii Cases all relate to alleged prematurecorrosion of the Company’s strap tie holdown products installed in buildings ina housing development known as Ocean Pointe in Honolulu, Hawaii, allegedlycausing property damage. Hawaii Case 1 is a putative class action brought bythe owners of allegedly affected Ocean Pointe houses. Hawaii Case 1 wasoriginally 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 anew representative plaintiff. Hawaii Case 2 is an action by the builders anddevelopers of Ocean Pointe against the Company, claiming that either theCompany’s strap tie holdowns are defective in design or manufacture or theCompany failed to provide adequate warnings regarding the products’susceptibility to corrosion in certain environments. Hawaii Case 3 is a subrogationaction brought by the insurance company for the builders and developers againstthe Company claiming the insurance company expended funds to correct problemsallegedly caused by the Company’s products. Hawaii Case 4, like Hawaii Case 1,is a putative class action brought by owners of allegedly affected Ocean Pointehomes. In Hawaii Case 4, Haseko Homes, Inc. (“Haseko”), the developer ofthe Ocean Pointe development, has brought a third party complaint against theCompany alleging that any damages for which Haseko may be liable are actuallythe fault of the Company. None of the Hawaii Cases alleges a specific amount ofdamages sought, although each of the Hawaii Cases seeks compensatory damages,and Hawaii Case 1 seeks punitive damages. The Company is currentlyinvestigating the facts underlying the claims asserted in the Hawaii Cases,including, among other things, the cause of the alleged corrosion; the severityof any problems shown to exist; the buildings affected; the responsibility ofthe general contractor, various subcontractors and other constructionprofessionals for the alleged damages; the amount, if any, of damages suffered;and the costs of repair, if needed. At this time, the likelihood that theCompany will be found liable for any property damage allegedly suffered and theextent of such liability, if any, are unknown. Based on facts currently knownto the Company, the Company believes that all or part of the claims alleged inthe Hawaii Cases may be covered by its insurance policies. The Company intendsto defend itself vigorously in connection with the Hawaii Cases.

 

12

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9.                                       Stock Option Plans

 

The Company currently hastwo stock option plans (see Note 1 “Basis of Presentation — *Accounting for Stock-Based Compensation”*). Participants aregranted stock options only if the applicable Company-wide or profit-centeroperating goals, or both, established by the Compensation Committee of theBoard of Directors at the beginning of the year, are met.

 

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

 

Black-Scholes optionpricing model assumptions for options granted in 2010 and 2009 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**       |       |       |       |         |       |         |       |         |       |           |       |               |       |         |       |
| 148                 |       |       | 02/02/10   |         | 2.93       | %            | 1.62       | %            | 6.5 years  |           | 36.0       | %                  | $          | 24.75        |       | $ | 8.46 |   |
| 24                  |       |       | 02/23/09   |         | 2.08       | %            | 2.48       | %            | 6.5 years  |           | 30.9       | %                  | $          | 16.10        |       | $ | 4.06 |   |
| 29                  |       |       | 02/04/09   |         | 2.17       | %            | 1.88       | %            | 6.5 years  |           | 30.9       | %                  | $          | 21.25        |       | $ | 5.86 |   |

 

No options were grantedunder the 1995 Plan in 2010 or 2009.

 

The following tablesummarizes the Company’s stock option activity for the three months ended March 31,2010:

 
| ** **                                               | ** ** | ** **         | ** ** | ** **    | ** ** | **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, 2010                     |       | 1,792              |       | $             | 31.31      |                |       |               |       |   |
| Granted                                                  |       | 148                |       | 24.75         |       |                |       |               |       |
| Exercised                                                |       | (4                 | )          | 25.43         |       |                |       |               |       |
| Forfeited                                                |       | (14                | )          | 35.91         |       |                |       |               |       |
| Outstanding  at March 31, 2010                      |       | 1,922              |       | $             | 30.78      |                | 2.3        |               | $          | 2,862 |   |
| Outstanding  and expected to vest at March 31, 2010 |       | 1,911              |       | $             | 30.82      |                | 2.3        |               | $          | 2,810 |   |
| Exercisable  at March 31, 2010                      |       | 1,678              |       | $             | 31.64      |                | 1.7        |               | $          | 1,980 |   |

 

----

*  The intrinsic value represents the amount, ifany, by which the fair market value of the underlying common stock exceeds theexercise price of the option, using the closing price per share of $27.76 asreported by the New York Stock Exchange on March 31, 2010.

 

The total intrinsic value of options exercised during thethree months ended March 31, 2010 and 2009, was $11 thousand and $60thousand, respectively.

 

13

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A summary of the status of unvested options as of March 31,2010, and changes during the three months ended March 31, 2010, arepresented below:

 
| ** **                        | ** ** | ** **         | ** ** | **Weighted-**  | ** ** |
|-----------------------------------|------------|--------------------|------------|----------------|------------|
| ** **                        | ** ** | ** **         | ** ** | **Average**    | ** ** |
| ** **                        | ** ** | **Shares**         | ** ** | **Grant-Date** | ** ** |
| **Unvested  Options**             | ** ** | **(in thousands)** | ** ** | **Fair Value** | ** ** |
|                              |       |               |       |           |       |
| Unvested  at January 1, 2010 |       | 140                |       | $              | 8.57       |   |
| Granted                           |       | 148                |       | 8.46           |       |
| Vested                            |       | (44                | )          | 11.45          |       |
| Unvested  at March 31, 2010  |       | 244                |       | $              | 7.98       |   |

 

Asof March 31,2010, $1.4 million of total unrecognizedcompensation cost was related to unvested share-based compensation arrangementsunder the 1994 Plan. This cost is expected to be recognized over a weighted-averageperiod of 3.0 years. Options granted under the 1995 Plan are fullyvested and are expensed on the date of grant.

 

10.                                 Segment Information

 

The Company is organizedinto two primary operating segments. The segments are defined by types ofproducts manufactured, marketed and distributed to the Company’s customers. Thetwo product segments are connector products and venting products. Thesesegments are differentiated in several ways, including the types of materials,the production processes, the distribution channels and the productapplications. Transactions between the two segments were immaterial for each ofthe periods presented.

 

The following tableillustrates certain measurements used by management to assess the performanceof the segments described above as of or for the following periods:

 

*(in thousands)*

 
| ** **                      | ** ** | **Three Months****Ended** | ** ** |
|---------------------------------|------------|---------------------------|------------|
| ** **                      | ** ** | **March 31,**        | ** ** |
| ** **                      | ** ** | **2010**                  | ** ** | **2009** | ** ** |
| *Net Sales*                     |       |                      |       |   |   |
| Connector  products             |       | $                         | 123,820    |   | $ | 109,144 |   |
| Venting  products               |       | 10,080                    |       | 10,179 |   |
| Total                           |       | $                         | 133,900    |   | $ | 119,323 |   |
|                            |       |                      |       |   |   |
| *Income (Loss) from Operations* |       |                      |       |   |   |
| Connector  products             |       | $                         | 18,194     |   | $ | (7,088 | ) |
| Venting  products               |       | (1,299                    | )          | (3,260 | ) |
| Administrative  and all other   |       | (849                      | )          | 10 |   |
| Total                           |       | $                         | 16,046     |   | $ | (10,338 | ) |

 

*(inthousands)*

* *
| ** **                    | ** ** | ** **            | ** ** | ** **            | ** ** | **At**   | ** ** |
|-------------------------------|------------|-----------------------|------------|-----------------------|------------|----------|------------|
| ** **                    | ** ** | **At March 31,** | ** ** | **December 31,** | ** ** |
| ** **                    | ** ** | **2010**              | ** ** | **2009**              | ** ** | **2009** | ** ** |
| *Total Assets*                |       |                  |       |                  |       |     |       |
| Connector  products           |       | $                     | 668,427    |                  | $          | 596,575  |       | $ | 650,796 |   |
| Venting  products             |       | 69,526                |       | 72,804                |       | 71,587   |       |
| Administrative  and all other |       | 98,000                |       | 130,030               |       | 121,422  |       |
| Total                         |       | $                     | 835,953    |                  | $          | 799,409  |       | $ | 843,805 |   |

 

Cash collected by the Company’s subsidiaries is routinelytransferred into the Company’s cash management accounts and, therefore, hasbeen included in the total assets of “Administrative and all other.” Cash andcash equivalent balances in the “Administrative and all other” segment were$160.6 million, $107.2 million, and $205.1 million, as of March 31, 2010and 2009, and December 31, 2009, respectively.

 

11.                                 Subsequent Events

 

In April 2010, theCompany’s Board of Directors declared a cash dividend of $0.10 per share,estimated at $4.9 million, to be paid on July 29, 2010, to stockholders ofrecord on July 8, 2010.

 

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

 

*Thisdocument contains forward-looking statements, based on numerous assumptions andsubject to risks and uncertainties. Although the Company believes that theforward-looking statements are reasonable, it does not and cannot give anyassurance that its beliefs and expectations will prove to be correct. Manyfactors could significantly affect the Company’s operations and cause theCompany’s actual results to be substantially different from the Company’sexpectations. See “Part II, Item 1A -**RiskFactors.**”**Actual results might differ materially from resultssuggested by any forward-looking statements in this report.**The Company does nothave an obligation to publicly update any forward-looking statements, whetheras a result of the receipt of new information, the occurrence of future eventsor otherwise.*

 

The following is a discussion andanalysis of the consolidated financial condition and results of operations forthe Company for the three months ended March 31, 2010 and 2009. Thefollowing should be read in conjunction with the interim Condensed ConsolidatedFinancial Statements and related Notes appearing elsewhere herein.

 

Results of Operations for the ThreeMonths Ended March 31, 2010, Compared

with the Three MonthsEnded March 31, 2009

 

Net sales increased 12.2% to $133.9million in the first quarter of 2010 from $119.3 million in the first quarterof 2009. The Company had net income of $9.2 million for the first quarter of2010 compared to a net loss of $8.4 million for the first quarter of 2009.Diluted net income per common share was $0.19 for the first quarter of 2010compared to a diluted net loss per common share of $0.17 for the first quarterof 2009.

 

In the first quarter of 2010, sales increased throughoutNorth America and Europe. The growth in the United States was strongest in themidwestern, western (excluding California) and northeastern regions, whilesales in California and the southeastern states were flat as compared to thefirst quarter of 2009. Sales in Asia, although relatively small, have increasedas Simpson Strong-Tie has recently expanded its presence in the region. SimpsonStrong-Tie’s first quarter sales increased 13.4% from the same quarter lastyear, while Simpson Dura-Vent’s sales were down slightly. Simpson Strong-Tie’ssales to dealer distributors and home centers increased as homebuilding andgeneral economic conditions compared favorably to the first quarter of 2009.Sales increased across most of Simpson Strong-Tie’s major product lines,including those used in new home construction. Sales of Simpson Dura-Vent’sproduct lines were mixed, with decreases in sales of chimney products, pelletvents and special gas vent products, mostly offset by increases in sales of gasvent, Direct-Vent and relining products.

 

Income from operations increased from a loss of $10.3 millionin the first quarter of 2009 to income of $16.0 million in the first quarter of2010. Gross margins increased from 25.7% in the first quarter of 2009 to 41.4%in the first quarter of 2010. The increase in gross margins was primarily dueto increased absorption of fixed overhead, as a result of higher productionvolumes, as well as lower manufacturing costs, including lower cost ofmaterial, labor and distribution. Steel prices have increased from their recentlow levels experienced in mid-2009 as demand has returned to the steel markets.The Company expects steel prices to increase further in 2010 as demandcontinues to return to the market. The Company’s inventories increased 10.3%from $163.8 million at December 31, 2009, to $180.7 million at March 31,2010, primarily due to purchases of raw materials.

 

General and administrative expense decreased 10.0% from $20.2million in the first quarter of 2009 to $18.1 million in the first quarter of2010. The decrease was primarily the result of lower bad debt expense of $2.2million, decreased legal and professional service expenses of $0.8 million andvarious other items. This decrease was partly offset by an increase in cashprofit sharing of $0.8 million and higher administrative personnel expenses of$0.9 million, including those related to the Aginco acquisition in April 2009.The effective tax rate was 42.2% in the first quarter of 2010, as compared to19.4% in the first quarter of 2009. Asa result of the loss before taxes in the first quarter of 2009, the lowereffective tax rate resulted in a smaller benefit than if the Company had ahigher effective tax rate. The effective tax rate in the first quarterof 2010 is higher than the statutory rate primarily due to the valuation allowances taken on foreign lossesand differences between the U.S. statutory tax rate and local tax rates incountries where the Company operates. In general, the Company isrequired to use an estimated annual effective tax rate to measure the taxbenefit or tax expense recognized in an interim period. The income tax expensefor the three month periods ended March 31, 2010 and 2009, however, havebeen computed based on those periods as discrete periods due to the uncertaintyregarding the Company’s ability to reliably estimate pre-tax income for theremainder of each year. The Company cannot reliably estimate pre-tax income forthe remainder of 2010 or for the full year, primarily due to the continueduncertainty in the construction markets in which the Company operates.

 

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***ConnectorProducts — Simpson Strong-Tie***

 

Simpson Strong-Tie’s netsales increased 13.4% to $123.8 million in the first quarter of 2010 from$109.1 million in the first quarter of 2009.Simpson Strong-Tie accounted for92.5% of the Company’s total net sales in the first quarter of 2010, up from91.5% in the first quarter of 2009. The increase in net sales at SimpsonStrong-Tie resulted primarily from an increase in sales volume, althoughaverage prices decreased 6.0% as compared to the first quarter of 2009. Inthe first quarter of 2010, sales increased throughout North America and Europe.The growth in the United States was strongest in the midwestern, western(excluding California) and northeastern regions, while sales in California andthe southeastern states were flat as compared to the first quarter of 2009.Sales in Asia, although relatively small, have increased as Simpson Strong-Tiehas recently expanded its presence in the region. Simpson Strong-Tie’s sales todealer distributors and home centers increased as homebuilding and generaleconomic conditions compared favorably to the first quarter of 2009. Salesincreased across most of Simpson Strong-Tie’s major product lines, includingthose used in new home construction.

 

SimpsonStrong-Tie’s income from operations increased to $18.2 million in the firstquarter of 2010 from a loss of $7.1 million in the first quarter of 2009. Grossmargin increased to43.5% in the first quarter of 2010 from 28.1% in the first quarter of 2009. This increase was primarily due toincreased absorption of fixed overhead, as a result of higher productionvolumes, and cost-cutting measures, as well as lower manufacturing costs,including lower costs of material, labor and distribution.

 

Simpson Strong-Tie’sgeneral and administrative expense decreased 13.4% from $18.5 million in thefirst quarter of 2009 to $16.1 million in the first quarter of 2010, primarilydue to a $2.1 million decrease in bad debt expense, and a $0.7 million decreasein administrative personnel expenses, related in part to cost-cutting measures.These decreases were partly offset by an increase of $0.4 million in cashprofit sharing, due to increased operating profits.

 

For its European operations, SimpsonStrong-Tie recorded a loss from operationsof $1.8 million in the first quarter of 2010 compared to a loss from operationsof $4.2 million in the first quarter of 2009.

 

***VentingProducts — Simpson Dura-Vent***

 

Simpson Dura-Vent’s netsales decreased 1.0% from $10.2 million in the first quarter of 2009 to $10.1million in the first quarter of 2010.  Simpson Dura-Vent accounted for 7.5% of the Company’s total net sales in the first quarterof 2010, a decrease from 8.5% in the first quarter of 2009. The decrease in netsales at Simpson Dura-Vent resultedprimarily from a decrease in sales volume, as average prices were flat as compared to the first quarter of 2009. Inthe first quarter of 2010, sales ofSimpson Dura-Vent’s product lines were mixed, with decreases in sales ofchimney products, pellet vents and special gas vent products, mostly offset byincreases in sales of gas vent, Direct-Vent and relining products.

 

SimpsonDura-Vent’s loss from operations decreased from $3.3 million in the firstquarter of 2009 to $1.3 million in the first quarter of 2010. Gross margin increased to 15.8% in the first quarterof 2010 from 0.9% in the first quarter of2009, primarily due to lower costs of material, labor and distribution,slightly offset by higher fixed overhead costs.

 

Simpson Dura-Vent’sgeneral and administrative expense decreased 24.6% from $1.7 million in thefirst quarter of 2009 to $1.3 million in the first quarter of 2010, which wasprimarily due to an overall reduction in departmental spending.

 

CriticalAccounting Policies and Estimates

 

The Company did not makeany significant changes to its critical accounting policies and estimatesduring the three months ended March 31, 2010, from those disclosed in “Item 7.Management’s Discussion and Analysis of Financial Condition and Results ofOperations,” included in the Company’s Annual Report on Form 10-K for thefiscal year ended December 31, 2009. SeeNote 1, “Basis of Presentation*— Recently IssuedAccounting Standards,*”  tothe Company’s Condensed Consolidated Financial Statements appearing elsewherein this report regarding recently issued accounting standards.

 

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Liquidity and Sources of Capital

 

As of March 31, 2010, working capital was $446.3million as compared to $438.9 million at March 31, 2009, and $458.6million at December 31, 2009. The decrease in working capital from December 31,2009, was primarily due to a $47.5 million decrease in cash and cashequivalents, a $3.7 million decrease in other current assets, and a $1.1million increase in accrued cash profit sharing and commissions. Partlyoffsetting these decreases to working capital were increases in inventories andnet trade accounts receivable of $16.9 million and $15.7 million, respectively,and decreases in accrued profit sharing trust contributions and trade accountspayable of $5.2 million and $2.9 million, respectively. Net trade accountsreceivable increased 20.3% from December 31, 2009, as a result ofincreased sales in the latter part of the first quarter of 2010 compared to thelatter part of the fourth quarter of 2009. Raw material inventories increased23.7% from December 31, 2009, and in-progress and finished goodsinventories increased 2.3% over the same period. The balance of the change inworking capital was due to the fluctuation of various other asset and liabilityaccounts, none of which was individually material. The working capital changeand changes in noncurrent assets and liabilities, combined with net income of$9.2 million and noncash expenses, primarily depreciation, amortization andstock-based compensation charges totaling $6.7 million, resulted in net cashused by operating activities of $19.5 million. As of March 31, 2010, theCompany had unused credit facilities available of $204.7 million.

 

The Company used $22.0 million in its investingactivities, primarily for the acquisition, in March 2010, of amanufacturing and distribution facility in San Bernadino, California, for $19.2million. The Company will consolidate its owned manufacturing and warehousefacilities in Brea, California, and its former leased warehouse in Ontario,California, into the new facility. The Company intends to sell the Breafacilities. The relocation is planned to be completed in 2011. In January 2010,the Company also used $1.8 million to make a new loan and adjust an existingloan to related parties. These loans, to entities related to Keymark, bearinterest at an annual rate of 5.5%, payable monthly, and the principal amountswill be due and payable in February 2013, or earlier if Keymark is sold.These loans are backed by real property deeds of trust. The Company estimatesthat its full-year capital spending will total $28 million in 2010.

 

The Company hasclassified its vacant facility in San Leandro, California, as an asset held forsale and is actively marketing the facility.

 

The Company’s financingactivities used net cash of $4.8 million. The payment of cash dividends in theamount of $4.9 million was the primary use of cash. Cash was provided from theissuance of the Company’s common stock through the exercise of stock optionstotaling $0.1 million. In April 2010, the Company’s Board of Directorsdeclared a cash dividend of $0.10 per share, estimated at $4.9 million, to bepaid on July 29, 2010, to stockholders of record on July 8, 2010.

 

The Company believes that cash generated by operations andborrowings available under its credit facility will be sufficient for theCompany’s working capital needs and planned capital expenditures for the next12 months. Depending, however, on the Company’s future growth and possibleacquisitions, it may become necessary to secure additional sources offinancing, which may not be available on reasonable terms, or at all.

 

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

 

**Item 3.Quantitative and Qualitative Disclosures About Market Risk.**

 

The Company hasforeign exchange rate risk in its international operations, primarily Europeand Canada, and through purchases from foreign vendors. The Company does notcurrently hedge this risk. If the exchange rate were to change by 10% in any onecountry or currency where the Company has operations, the change in net incomewould not be material to the Company’s operations as a whole. The translationadjustment resulted in a decrease in accumulated other comprehensive income of$6.6 million for the three months ended March 31, 2010, primarily due tothe effect of the strengthening of the United States dollar in relation to mostEuropean currencies partly offset by the weakening of the United States dollarin relation to the Canadian currency.

 

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**Item 4. Controls and Procedures.**

 

*DisclosureControls and Procedures.*As of March 31, 2010, an evaluation of theeffectiveness of the design and operation of the Company’s disclosure controlsand procedures was performed under the supervision and with the participationof the Company’s management, including the chief executive officer (“CEO”) andthe chief financial officer (“CFO”). Based on that evaluation, the CEO and theCFO concluded that the Company’s disclosure controls and procedures wereeffective as of that date, at the reasonable assurance level, in ensuring thatinformation required to be disclosed is recorded, processed, summarized andreported within the time periods specified in the rules and forms of theSecurities and Exchange Commission and in seasonably alerting them to materialinformation required to be included in this report.

 

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

 

*Changesin Internal Control over Financial Reporting.*During the three months ended March 31,2010, the Company made no changes to its internal control over financialreporting (as defined in Rules 13a-15(f) and 15d-15(f) under theSecurities Exchange Act of 1934) that have materially affected, or arereasonably likely to materially affect, its internal control over financialreporting.

 

PART II — OTHERINFORMATION

 

**Item 1.Legal Proceedings.**

 

From time to time,the Company is involved in various legal proceedings and other matters arisingin the normal course of business.

 

Four lawsuits (the “HawaiiCases”) 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 (“Hawaii Case 1”); *Ke Noho KaiDevelopment, LLC v. Simpson Strong-Tie Company, Inc.*, *and Honolulu Wood Treating Co., LTD.*, Hawaii Case No. 09-1-1491-06SSM (“Hawaii Case 2”); *North American SpecialtyIns. Co. v. Simpson Strong-Tie Company, Inc. and K.C. Metal Products, Inc.*,Case No. 09-1-1490-06 VSM (“Hawaii Case 3”); and *Charles etal. 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(“Hawaii Case 4”). Hawaii Case 1 was filed on November 18, 2009. HawaiiCases 2 and 3 were originally filed on June 30, 2009. Hawaii Case 4 wasfiled on August 19, 2009. The Hawaii Cases all relate to alleged prematurecorrosion of the Company’s strap tie holdown products installed in buildings ina housing development known as Ocean Pointe in Honolulu, Hawaii, allegedlycausing property damage. Hawaii Case 1 is a putative class action brought bythe owners of allegedly affected Ocean Pointe houses. Hawaii Case 1 wasoriginally 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 anew representative plaintiff. Hawaii Case 2 is an action by the builders anddevelopers of Ocean Pointe against the Company, claiming that either theCompany’s strap tie holdowns are defective in design or manufacture or theCompany failed to provide adequate warnings regarding the products’susceptibility to corrosion in certain environments. Hawaii Case 3 is asubrogation action brought by the insurance company for the builders anddevelopers against the Company claiming the insurance company expended funds tocorrect problems allegedly caused by the Company’s products. Hawaii Case 4,like Hawaii Case 1, is a putative class action brought by owners of allegedlyaffected Ocean Pointe homes. In Hawaii Case 4, Haseko Homes, Inc. (“Haseko”),the developer of the Ocean Pointe development, has brought a third partycomplaint against the Company alleging that any damages for which Haseko may beliable are actually the fault of the Company. None of the Hawaii Cases allegesa specific amount of damages sought, although each of the Hawaii 

 

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Cases seeks compensatorydamages, and Hawaii Case 1 seeks punitive damages. The Company is currentlyinvestigating the facts underlying the claims asserted in the Hawaii Cases,including, among other things, the cause of the alleged corrosion; the severityof any problems shown to exist; the buildings affected; the responsibility ofthe general contractor, various subcontractors and other constructionprofessionals for the alleged damages; the amount, if any, of damages suffered;and the costs of repair, if needed. At this time, the likelihood that theCompany will be found liable for any property damage allegedly suffered and theextent of such liability, if any, are unknown. Based on facts currently knownto the Company, the Company believes that all or part of the claims alleged in theHawaii Cases may be covered by its insurance policies. The Company intends todefend itself vigorously in connection with the Hawaii Cases.

 

The Company is notengaged in any other legal proceedings as of the date hereof, which the Companyexpects individually or in the aggregate to have a material adverse effect onthe Company’s financial condition, cash flows or results of operations. Theresolution of claims and litigation, however, is subject to inherentuncertainty and could have a material adverse effect on the Company’s financialcondition, cash flows or results of operations.

 

**Item 1A.Risk Factors**

 

We are affected by risksspecific to us, as well as risks that affect all businesses operating inglobal markets. Some of the significant factors that could materially adverselyaffect our business, financial condition and operating results appear in “Item1A. Risk Factors” of our most recent Annual Report on Form 10-K(available at www.simpsonmfg.com/docs/10K-2009.pdf or www.sec.gov).

 

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

 

In December 2009,the Board of Directors authorized the Company to repurchase up to $50.0 millionof the Company’s common stock. This replaced the $50.0 million repurchaseauthorization from December 2008. The authorization will remain in effectthrough the end of 2010. The Company did not repurchase any of its common stockin the first three months of 2010.

 

**Item 6.Exhibits.**

 

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

 

3.1       Certificate of Incorporation of Simpson ManufacturingCo., Inc., as amended, is incorporated by reference to Exhibit 3.1 ofits Quarterly Report on Form 10-Q for the quarter ended September 30,2007.

 

3.2       Bylaws of Simpson Manufacturing Co., Inc., asamended through August 1, 2008, are incorporated by reference to Exhibit 3.2of its Current Report on Form 8-K dated August 4, 2008.

 

4.1      Amended Rights Agreement dated as of June 15,2009, between Simpson Manufacturing Co., Inc. and Computershare TrustCompany, 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.’sRegistration Statement on Form 8-A/A dated June 15, 2009.

 

4.2      Certificate of Designation, Preferences and Rights of Series AParticipating Preferred Stock of Simpson Manufacturing Co., Inc., dated July 30,1999, is incorporated by reference to Exhibit 4.2 of its RegistrationStatement on Form 8-A dated August 4, 1999.

 

10.1    Simpson Manufacturing Co., Inc. 1994 Stock OptionPlan, as amended through February 13, 2008, is incorporated by referenceto Exhibit 10.1 of Simpson Manufacturing Co., Inc.’s Quarterly Reporton Form 10-Q for the quarter ended June 30, 2008.

 

10.2    Simpson Manufacturing Co., Inc. 1995 IndependentDirector Stock Option Plan, as amended through November 18, 2004, isincorporated by reference to Exhibit 10.2 of Simpson Manufacturing Co., Inc.’sQuarterly Report on Form 10-Q for the quarter ended June 30, 2008.

 

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10.3    Simpson Manufacturing Co., Inc. Executive OfficerCash Profit Sharing Plan, as amended through February 25, 2008, isincorporated by reference to Exhibit 10.3 of Simpson Manufacturing Co., Inc.’sQuarterly 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 partythereto, Wells Fargo Bank as Agent, and Simpson Dura-Vent Company, Inc.,Simpson Strong Tie Company Inc., and Simpson Strong-Tie International, Inc.as Guarantors, is incorporated by reference to Exhibit 10.1 of SimpsonManufacturing Co., Inc.’s Current Report on Form 8-K dated October 15,2007.

 

10.5    Form of Indemnification Agreement between SimpsonManufacturing Co., Inc. and its directors and executive officers, as wellas the officers of Simpson Strong-Tie Company Inc. and Simpson Dura-VentCompany, Inc., is incorporated by reference to Exhibit 10.2 of SimpsonManufacturing Co., Inc.’s Annual Report on Form 10-K for the yearended December 31, 2004.

 

10.6     Compensation of Named Executive Officers of Simpson Manufacturing Co., Inc.is incorporated byreference to Exhibit 10 of Simpson Manufacturing Co., Inc.’s CurrentReport on Form 8-K dated October 2, 2009.

 

10.7     Compensation of Named Executive Officers is incorporated by reference to Exhibit 10 ofSimpson Manufacturing Co., Inc.’s Current Report on Form 8-K dated December 18,2009.

 

31.       Rule 13a-14(a)/15d-14(a) Certifications arefiled herewith.

 

32.       Section 1350 Certifications are filed herewith.

 

99.1     Simpson Manufacturing Co., Inc. 1994 EmployeeStock Bonus Plan, as amended through November 18, 2004, is incorporated byreference to Exhibit 99.1 of Simpson Manufacturing Co., Inc.’s AnnualReport on Form 10-K for the year ended December 31, 2007.

 

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**SIGNATURES**

 

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

 

 

|      | ** **       |       | **Simpson  Manufacturing Co., Inc.**    |
|-----------|------------------|------------|----------------------------------------------|
|      |             | ** ** | (Registrant)                                 |
|      |             |       |                                         |
|      |             |       |                                         |
| **DATE:** | May 7, 2010 |       | By                                           | /s/Karen Colonias |
|      |             |       | Karen Colonias                               |
|      |             |       | Chief Financial Officer                      |
|      |             |       | (principal accounting and financial officer) |
|           |                  |            |                                              |  |

 

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