PRESS RELEASE – February 5, 2009

SIMPSON MANUFACTURING CO., INC.
ANNOUNCES FOURTH QUARTER EARNINGS

Pleasanton, CA – Simpson Manufacturing Co., Inc. (the “Company”) announced today that its fourth quarter 2008 net sales decreased 14.6% to $149.8 million compared to net sales of $175.3 million for the fourth quarter of 2007. Net income was $1.8 million for the fourth quarter of 2008 compared to net income of $0.5 million for the fourth quarter of 2007. Diluted net income per common share was $0.04 for the fourth quarter of 2008 compared to $0.01 for the fourth quarter of 2007. In 2008, net sales decreased 7.4% to $756.5 million compared to net sales of $817.0 million for 2007. Net income decreased 21.5% to $53.9 million for 2008 compared to net income of $68.7 million for 2007. Diluted net income per common share was $1.10 for 2008 compared to $1.40 for 2007.

In the fourth quarter of 2008, sales declined throughout the United States, with the exception of the northeastern region of the country. California and the western states had the largest decrease in sales. Sales during the quarter decreased in the United Kingdom, most of continental Europe and Canada. Sales in Asia, although relatively small, have increased as Simpson Strong-Tie has opened sales offices in the region and prepares to open its new manufacturing facility outside of Shanghai, China. Simpson Strong-Tie’s fourth quarter sales decreased 18.9% from the same quarter last year, while Simpson Dura-Vent’s sales increased 16.0%. Simpson Strong-Tie’s sales to contractor distributors, dealer distributors and home centers decreased significantly as homebuilding continued to decline and general economic conditions continued to worsen. Sales decreased across most of Simpson Strong-Tie’s major product lines, particularly those used in new home construction. Sales of Anchor Systems products as a group were up slightly as a result of the acquisition of the Liebig companies in April 2008 and increased distribution in Asia. Sales of Simpson Dura-Vent’s pellet vent, chimney, special gas vent and relining products increased. The increase in special gas vent products and a significant component of the increase in relining products resulted from the acquisition of ProTech Systems, Inc. (“ProTech”) in June 2008.  Sales of Simpson Dura-Vent’s Direct-Vent and gas vent product lines decreased as a result of several factors, including the continuing weakness in new home construction.

Income from operations decreased 12.1% from $5.2 million in the fourth quarter of 2007 to $4.5 million in the fourth quarter of 2008. Gross margins increased from 33.8% in the fourth quarter of 2007 to 35.1% in the fourth quarter of 2008. The increase in gross margins was primarily due to lower manufacturing and labor costs, partly offset by higher fixed overhead costs, as a result of lower production volumes, and higher distribution costs. Steel prices have declined from their peak in July 2008, but management believes that they may have reached bottom and does not expect them to decrease further for the balance of the first quarter of 2009. The steel market continues to be dynamic, however, with a high degree of uncertainty about future pricing trends.

Research and development expenses increased 12.4% from $4.4 million in the fourth quarter of 2007 to $5.0 million in the fourth quarter of 2008. This increase was primarily due to a $0.8 million increase in expenses related to additional personnel in the acquisitions during 2008, partly offset by an overall reduction in other departmental overhead expenses. Selling expenses decreased 10.5% from $19.5 million in the fourth quarter of 2007 to $17.4 million in the fourth quarter of 2008. The decrease resulted from a $1.4 million decrease in promotional expenditures and a $0.7 million decrease in expenses associated with sales and marketing personnel, most of which related to cost cutting measures. General and administrative expenses increased 15.4% from $19.7 million in the fourth quarter of 2007 to $22.7 million in the fourth quarter of 2008. The increase was the result of several factors, including:  higher administrative personnel expenses of $2.0 million, including those at businesses acquired in 2008; higher bad debt expense of $1.9 million, primarily related to a single customer; increased legal and professional service expenses of $1.0 million; increased amortization of intangible assets of $0.6 million; and increases in other departmental overhead expenses of $0.7 million. These increases were partly offset by a decrease in cash profit sharing of $2.9 million, resulting primarily from decreased operating profit. Impairment of goodwill decreased 72.2% from $10.7 million in the fourth quarter of 2007 to $3.0 million in the fourth quarter of 2008. The impairment charge taken in the fourth quarter of 2008 was associated with assets that were acquired in England in 1999. The effective tax rate was 58.5% in the fourth quarter of 2008, down from 92.8% in the fourth quarter of 2007. The decrease in the effective tax rate was caused primarily by the absence of the impairment of goodwill charge taken in the fourth quarter of 2007, the majority of which was not deductible for tax purposes. The effective tax rate exceeded the U.S. statutory tax rate primarily as a result of valuation allowances taken against tax benefits on foreign losses.

 
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The following information was filed by Simpson Manufacturing Co Inc (SSD) on Friday, February 6, 2009 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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