SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 2001 Commission file number 1-13905
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COMPX INTERNATIONAL INC.
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(Exact name of Registrant as specified in its charter)
Delaware 57-0981653
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(State or other jurisdiction of (IRS Employer
organization) Identification No.)
5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240-2697
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 448-1400
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Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
Number of shares of Class A common stock outstanding on October 24, 2001:
5,103,280.
COMPX INTERNATIONAL INC.
INDEX
Page
number
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets - December 31, 2000
and September 30, 2001 3-4
Consolidated Statements of Income -
Three months and nine months ended
September 30, 2000 and 2001 5
Consolidated Statements of Comprehensive Income -
Three months and nine months ended
September 30, 2000 and 2001 6
Consolidated Statements of Cash Flows -
Nine months ended September 30, 2000 and 2001 7-8
Consolidated Statement of Stockholders' Equity -
Nine months ended September 30, 2001 9
Notes to Consolidated Financial Statements 10-13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 14-16
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 17
COMPX INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS December 31, September 30,
2000 2001
------ ------
Current assets:
Cash and cash equivalents ........................ $ 9,820 $ 17,989
Accounts receivable .............................. 30,833 27,751
Income taxes receivable from affiliates .......... 305 247
Refundable income taxes .......................... 2,165 1,620
Inventories ...................................... 36,246 35,224
Deferred income taxes ............................ 1,209 1,220
Prepaid expenses and other ....................... 2,408 2,443
-------- --------
Total current assets ......................... 82,986 86,494
-------- --------
Other assets:
Goodwill ......................................... 42,213 39,916
Other intangible assets .......................... 2,646 2,502
Deferred income taxes ............................ 1,813 1,930
Other ............................................ 868 666
-------- --------
Total other assets ........................... 47,540 45,014
-------- --------
Property and equipment:
Land ............................................. 5,709 5,594
Buildings ........................................ 34,500 33,577
Equipment ........................................ 78,357 85,021
Construction in progress ......................... 9,787 10,891
-------- --------
128,353 135,083
Less accumulated depreciation .................... 33,394 41,418
-------- --------
Net property and equipment ................... 94,959 93,665
-------- --------
$225,485 $225,173
======== ========
See accompanying notes to consolidated financial statements.
COMPX INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY December 31, September 30,
2000 2001
-------- -------
Current liabilities:
Current maturities of long-term debt ........... $ 1,638 $ 68
Accounts payable and accrued liabilities ....... 26,487 19,331
Deferred income taxes .......................... 103 272
Income taxes ................................... 648 400
--------- ---------
Total current liabilities .................. 28,876 20,071
--------- ---------
Noncurrent liabilities:
Long-term debt ................................. 39,000 49,000
Deferred income taxes .......................... 4,852 5,936
Accrued pension costs .......................... 1,168 1,153
Other .......................................... 626 901
--------- ---------
Total noncurrent liabilities ............... 45,646 56,990
--------- ---------
Stockholders' equity:
Preferred stock ................................ -- --
Class A common stock ........................... 62 62
Class B common stock ........................... 100 100
Additional paid-in capital ..................... 119,194 119,224
Retained earnings .............................. 51,395 54,186
Accumulated other comprehensive income
- currency translation ........................ (11,123) (14,145)
Treasury stock ................................. (8,665) (11,315)
--------- ---------
Total stockholders' equity ................. 150,963 148,112
--------- ---------
$ 225,485 $ 225,173
========= =========
See accompanying notes to consolidated financial statements.
Commitments and contingencies (Note 1)
COMPX INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three months ended Nine months ended
September 30, September 30,
---------------- ----------------
2000 2001 2000 2001
------ ------ ------ ------
Net sales $63,045 $51,484 $194,248 $164,438
------- ------- -------- --------
Costs and expenses:
Cost of sales ..................... 47,129 40,255 142,268 127,062
Selling, general and administrative 6,784 7,113 20,616 21,111
Other income, net ................. (163) (691) (451) (910)
Interest expense .................. 573 604 1,643 2,276
-------- --------- --------- ---------
54,323 47,281 164,076 149,539
-------- --------- --------- ---------
Income before income taxes
and minority interest ........ 8,722 4,203 30,172 14,899
Provision for income taxes ......... 3,185 2,132 11,012 6,443
-------- --------- --------- ---------
Income before minority interest 5,537 2,071 19,160 8,456
Minority interest .................. -- -- (3) --
-------- --------- --------- ---------
Net income ..................... $ 5,537 $ 2,071 $ 19,163 $ 8,456
======== ========= ========= =========
Basic earnings per common share .... $ .34 $ .14 $ 1.19 $ .56
======== ========= ========= =========
Diluted earnings per common share .. $ .34 $ .14 $ 1.18 $ .56
======== ========= ========= =========
Cash dividends per share ........... $ .125 $ .125 $ .375 $ .375
======== ========= ========= =========
Shares used in the calculation
of per share amounts:
Basic common shares ............. 16,187 15,103 16,162 15,158
Dilutive impact of outstanding
Stock options .................. 87 13 42 7
-------- --------- --------- ---------
Diluted common shares ........... 16,274 15,116 16,204 15,165
======== ========= ========= =========
See accompanying notes to consolidated financial statements.
COMPX INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Three months ended Nine months ended
September 30, September 30,
----------------- -----------------
2000 2001 2000 2001
---- ---- ---- ----
Net income .......................... $ 5,537 $2,071 $ 19,163 $ 8,456
Other comprehensive income -
Currency translation adjustment,
net of tax ........................ (2,795) 534 (6,192) (3,022)
------- ------ -------- -------
Comprehensive income .......... $ 2,742 $2,605 $ 12,971 $ 5,434
======= ====== ======== =======
See accompanying notes to consolidated financial statements.
COMPX INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 2000 and 2001
(In thousands)
2000 2001
---- ----
Cash flows from operating activities:
Net income ........................................... $ 19,163 $ 8,456
Depreciation and amortization ........................ 9,231 11,128
Deferred income taxes ................................ (244) 1,503
Other, net ........................................... (619) 370
-------- --------
27,531 21,457
Change in assets and liabilities:
Accounts receivable ................................ (2,085) 2,387
Inventories ........................................ (4,649) 309
Accounts payable and accrued liabilities ........... (1,636) (7,087)
Accounts with affiliates ........................... (198) --
Income taxes ....................................... 1,499 355
Other, net ......................................... (892) (108)
-------- --------
Net cash provided by operating activities ........ 19,570 17,313
-------- --------
Cash flows from investing activities:
Capital expenditures ................................. (16,722) (9,345)
Purchase of business unit ............................ (9,497) --
Other, net ........................................... 309 5
-------- --------
Net cash used by investing activities ............ (25,910) (9,340)
-------- --------
Cash flows from financing activities:
Indebtedness:
Additions ......................................... 13,081 14,919
Principal payments ................................ (2,754) (6,504)
Dividends ............................................ (6,064) (5,665)
Common stock reacquired .............................. -- (2,650)
Issuance of common stock ............................. 1,073 --
-------- --------
Net cash provided by financing activities ........ 5,336 100
-------- --------
Net increase (decrease) in cash and cash equivalents ... $ (1,004) $ 8,073
======== ========
See accompanying notes to consolidated financial statements.
COMPX INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Nine months ended September 30, 2000 and 2001
(In thousands)
2000 2001
---- ----
Cash and cash equivalents:
Net change from operating, investing
and financing activities .......................... $ (1,004) $ 8,073
Currency translation ............................... (664) 96
-------- -------
(1,668) 8,169
Balance at beginning of period ..................... 12,169 9,820
-------- -------
Balance at end of period ........................... $ 10,501 $17,989
======== =======
Supplemental disclosures:
Cash paid for:
Interest ......................................... $ 1,592 $ 2,590
Income taxes ..................................... 10,298 4,614
Business unit acquired - net assets consolidated:
Goodwill and other intangible assets ............. $ 2,561 $ --
Other non-cash assets ............................ 8,458 --
Liabilities ...................................... (1,522) --
-------- -------
Cash paid ........................................ $ 9,497 $ --
======== =======
See accompanying notes to consolidated financial statements.
COMPX INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Nine months ended September 30, 2001
(In thousands)
Accumulated
other
comprehensive
Additional income - Total
Common Stock paid-in Retained currency Treasury stockholders'
Class A Class B capital earnings translation stock equity
--- --- --------- -------- ----------- --------- --------
Balance at December 31, 2000 .. $62 $100 $119,194 $ 51,395 $(11,123) $ (8,665) $ 150,963
Net income .................... -- -- -- 8,456 -- -- 8,456
Other comprehensive income, net -- -- -- -- (3,022) -- (3,022)
Issuance of common stock ...... -- -- 30 -- -- -- 30
Cash dividends ................ -- -- -- (5,665) -- -- (5,665)
Common stock reacquired ....... -- -- -- -- -- (2,650) (2,650)
--- ---- -------- -------- -------- -------- ---------
Balance at September 30, 2001 . $62 $100 $119,224 $ 54,186 $(14,145) $(11,315) $ 148,112
=== ==== ======== ======== ======== ======== =========
See accompanying notes to consolidated financial statements.
COMPX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of presentation:
The consolidated balance sheet of CompX International Inc. and Subsidiaries
(collectively, the "Company") at December 31, 2000 has been condensed from the
Company's audited consolidated financial statements at that date. The
consolidated balance sheet at September 30, 2001 and the consolidated statements
of income, comprehensive income, stockholders' equity and cash flows for the
interim periods ended September 30, 2000 and 2001 have been prepared by the
Company, without audit. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly the
consolidated financial position, results of operations and cash flows have been
made. The results of operations for the interim periods are not necessarily
indicative of the operating results for a full year or of future operations.
Certain information normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America has been condensed or omitted. The accompanying consolidated financial
statements should be read in conjunction with the Company's Annual Report on
Form 10-K for the year ended December 31, 2000 (the "2000 Annual Report").
Basic earnings per share of common stock is based upon the weighted average
number of common shares actually outstanding during each period. Diluted
earnings per share of common stock includes the impact of outstanding dilutive
stock options.
Commitments and contingencies are discussed in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the 2000 Annual
Report.
The Company is 69% owned by Valhi, Inc. (NYSE: VHI) and Valhi's
wholly-owned subsidiary Valcor, Inc. Contran Corporation holds, directly or
through subsidiaries, approximately 94% of Valhi's outstanding common stock.
Substantially all of Contran's outstanding voting stock is held by trusts
established for the benefit of certain children and grandchildren of Harold C.
Simmons, of which Mr. Simmons is sole trustee. Mr. Simmons, the Chairman of the
Board and Chief Executive Officer of each of Contran, Valhi and Valcor, may be
deemed to control such companies and the Company.
The Company adopted Statement of Financial Accounting Standards ("SFAS")
No. 133, Accounting for Derivative Instruments and Hedging Activities, as
amended, effective January 1, 2001. Under SFAS No. 133, all derivatives are
recognized as either assets or liabilities and measured at fair value. The
accounting for changes in fair value of derivatives depends upon the intended
use of the derivative, and such changes are recognized either in net income or
other comprehensive income. As permitted by the transition requirements of SFAS
No. 133, as amended, the Company has exempted from the scope of SFAS No. 133 all
host contracts containing embedded derivatives which were issued or acquired
prior to January 1, 1999. Other than certain currency forward contracts, the
Company was not a party to any significant derivative or hedging instrument
covered by SFAS No. 133 during the first nine months of 2001. The accounting for
such currency forward contracts under SFAS No. 133 is not materially different
from the accounting for such contracts under prior accounting rules, and
therefore the impact to the Company of adopting SFAS No. 133 was not material.
Note 2 - Business segment information:
The Company operates in one business segment - the manufacture and sale of
hardware components for office furniture and other markets. The Company's
products consist of ergonomic computer support systems, precision ball bearing
slides and security products.
Three months ended Nine months ended
September 30, September 30,
------------------ ----------------
2000 2001 2000 2001
---- ---- ---- ----
(In thousands)
Net sales .................... $ 63,045 $ 51,484 $ 194,248 $ 164,438
======== ======== ========= =========
Operating income ............. $ 9,132 $ 4,116 $ 31,364 $ 16,265
Interest expense ............. (573) (604) (1,643) (2,276)
Other, net ................... 163 691 451 910
-------- -------- --------- ---------
Income before income taxes ... $ 8,722 $ 4,203 $ 30,172 $ 14,899
======== ======== ========= =========
Note 3 - Inventories:
December 31, September 30,
2000 2001
------ -------
(In thousands)
Raw materials ............................ $11,866 $12,003
Work in process .......................... 11,454 12,807
Finished products ........................ 12,811 10,275
Supplies ................................. 115 139
------- -------
$36,246 $35,224
======= =======
Note 4 - Accounts payable and accrued liabilities:
December 31, September 30,
2000 2001
------ --------
(In thousands)
Accounts payable ........................... $12,560 $ 9,174
Accrued liabilities:
Employee benefits ........................ 7,898 5,896
Insurance ................................ 311 242
Royalties ................................ 470 316
Other .................................... 5,248 3,703
------- -------
$26,487 $19,331
======= =======
Note 5 - Indebtedness:
December 31, September 30,
2000 2001
---- ----
(In thousands)
Revolving bank credit facility ................... $39,000 $49,000
Capital lease obligations and other .............. 1,638 68
------- -------
40,638 49,068
Less current maturities .......................... 1,638 68
------- -------
$39,000 $49,000
======= =======
Note 6 - Other income:
Three months ended Nine months ended
September 30, September 30,
---------------- ---------------
2000 2001 2000 2001
------- ------- ------ ------
(In thousands)
Interest income ............................ $ 153 $145 $ 438 $432
Foreign currency transactions, net ......... 18 533 (29) 445
Other, net ................................. (8) 13 42 33
----- ---- ----- ----
$ 163 $691 $ 451 $910
===== ==== ===== ====
Note 7 - Provision for income taxes:
Three months ended Nine months ended
September 30, September 30,
------------------ ------------------
2000 2001 2000 2001
------- ------ ------- ------
(In thousands)
Expected tax expense .............. $ 3,053 $ 1,471 $ 10,560 $ 5,215
Non-U.S. tax rates ................ (139) (90) (55) (264)
Incremental U.S. tax and rate
differences on earnings of foreign
subsidiaries ..................... (90) 722 (375) 684
No tax benefit for amortization of
goodwill ......................... 204 174 515 520
U.S. state income taxes, net ...... 128 12 436 145
Other, net ........................ 29 (157) (69) 143
------- -------- -------- -------
$ 3,185 $ 2,132 $ 11,012 $ 6,443
======= ======== ======== =======
Note 8 - Foreign currency forward contracts:
Certain of the Company's sales generated by its non-U.S. operations are
denominated in U.S. dollars. The Company periodically uses currency forward
contracts to manage a portion of foreign exchange rate risk associated with
receivables denominated in a currency other than the holder's functional
currency. At each balance sheet date, any such outstanding currency forward
contracts are marked-to-market with any resulting gain or loss recognized in
income currently. These contracts are not accounted for as hedging instruments
under SFAS No. 133. At December 31, 2000, the Company held contracts to manage
such exchange rate risk to exchange an aggregate of U.S. $9.1 million for an
equivalent amount of Canadian dollars at an exchange rate of Cdn. $1.482 per
U.S. dollar. Such contracts matured through March 2001. At September 30, 2001,
the Company did not hold any such contracts.
Note 9 - Accounting principles not yet adopted:
The Company will adopt Statement of Financial Accounting Standards ("SFAS")
No. 141, Business Combinations, for all business combinations initiated on or
after July 1, 2001, and all purchase business combinations completed on or after
July 1, 2001. Under SFAS No. 141, all business combinations initiated on or
after July 1, 2001 will be accounted for by the purchase method, and the
pooling-of-interests method will be prohibited.
The Company will adopt SFAS No. 142, Goodwill and Other Intangible Assets,
effective January 1, 2002. Under SFAS No. 142, goodwill will not be amortized on
a periodic basis, but instead will be subject to an impairment test to be
performed at least annually. Under the transition provisions of SFAS No. 142,
goodwill existing as of June 30, 2001 will cease to be periodically amortized as
of January 1, 2002, but any goodwill arising in a purchase business combination
completed on or after July 1, 2001 would not be periodically amortized from the
date of such combination. The Company will complete its initial goodwill
impairment analysis under the new accounting standard during 2002. If any
goodwill impairment under the new standard is determined to exist, such
impairment would be recognized as a cumulative effect of a change in accounting
principle no later than December 31, 2002, as required by the transition
requirements of SFAS No. 142. The Company would have reported net income of
$10.2 million, or $.67 per diluted share, in the first nine months of 2001 if
the goodwill amortization included in the Company's reported net income had not
been recognized.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
------------------------------------------------------------------------------
Overview
The Company reported net income of $2.1 million in the third quarter of
2001, a decrease of 63% from net income of $5.5 million for the third quarter of
2000. The Company reported net income of $8.5 million in the first nine months
of 2001, a 56% decrease from net income of $19.2 million in the first nine
months of 2000.
Results of Operations
Net sales. Net sales decreased $11.6 million, or 18%, to $51.5 million in
the third quarter of 2001 from $63.0 million in the third quarter of 2000. For
the first nine months of 2001, net sales of $164.4 million decreased 15% when
compared to net sales of $194.2 million for the first nine months of 2000. The
decrease is principally due to decreased demand for the Company's products
resulting from continued weak economic conditions in the manufacturing sector in
North America, Europe and Asia, and to a lesser extent the negative effects of
fluctuations in currency exchange rates. Net sales of slide products decreased
32% and 25%, respectively, for the three and nine month periods ended September
30, 2001 compared to the same periods in 2000, with sales of security products
decreasing 11% for each of the same comparable periods. For the three and nine
month periods ending September 30, 2001, sales of ergonomic products declined
12% and 13%, respectively, over the corresponding periods of the prior year.
Operating income. Operating income in the third quarter of 2001 decreased
55% to $4.1 million compared to $9.1 million for the third quarter of 2000,
while operating income margins were 8% for the third quarter of 2001 compared to
14% for the third quarter of 2000. For the first nine months of 2001, operating
income decreased 48% to $16.3 million compared to $31.4 million for the first
nine months of 2000, while operating income margins were 10% for the 2001 period
compared to 16% for the 2000 period. Reductions in manufacturing fixed costs
beginning in the first quarter of 2001 partially offset the effect of the
decline in net sales. Despite these cost reductions, operating income margins
for the third quarter and first nine months of 2001 were adversely impacted by
the decline in volume levels and the related impact on manufacturing
efficiencies, the effects of unfavorable changes in the sales mix and general
pricing pressures.
CompX has substantial operations and assets located outside the United
States (principally in Canada, the Netherlands and Taiwan). A portion of CompX's
sales generated from its non-U.S. operations are denominated in currencies other
than the U.S. dollar, principally the Canadian dollar, the Dutch guilder (the
euro), and the New Taiwan dollar. In addition, approximately 60% of CompX's net
sales generated from its Canadian operations are denominated in the U.S. dollar.
Most raw materials, labor and other production costs for such non-U.S.
operations are denominated primarily in local currencies. Consequently, the
translated U.S. dollar value of CompX's foreign sales and operating results are
subject to currency exchange rate fluctuations which may favorably or
unfavorably impact reported earnings and may affect comparability of
period-to-period operating results. During the third quarter and first nine
months of 2001, currency exchange rate fluctuations of the Canadian dollar, the
New Taiwan dollar and the euro negatively impacted the Company's sales
comparisons with the corresponding periods of the prior year (principally with
respect to slide products), decreasing net sales by 1% in the third quarter and
2% in the first nine months of 2001. Currency exchange rate fluctuations with
respect to the Canadian dollar positively affected CompX's operating income
comparisons with the corresponding three and nine month periods of the prior
year whereas exchange rate fluctuations in the euro and other currencies did not
materially impact these operating income comparisons. Excluding the effect of
currency, operating income decreased 52% and 45%, respectively, in the three and
nine month periods ending September 30, 2001 as compared to the corresponding
period in 2000.
Outlook. The Company remains concerned and uncertain regarding the duration
and severity of the current weak economic cycle and its impact on the Company's
business. The Company continues to see downward pressure on sales as its
customers and the overall industry respond to the continued contracting economic
environment, indicating the Company's results of operations in the fourth
quarter of 2001 will be lower than the Company's previous expectations.
Therefore, the Company continues implementing various cost control initiatives,
including ongoing company-wide headcount rationalization efforts and operational
cost improvements. These cost reduction measures are designed to minimize the
adverse effect of lower sales and more favorably position the Company to meet
demand when the economy recovers.
Liquidity and Capital Resources
Consolidated cash flows
Operating activities. Trends in cash flows from operating activities,
excluding changes in assets and liabilities, are generally similar to the trends
in the Company's earnings. Such cash flows totaled $27.5 million and $21.5
million in the first nine months of 2000 and 2001, respectively, compared to net
income of $19.2 million and $8.5 million, respectively.
Changes in assets and liabilities result primarily from the timing of
production, sales and purchases. Such changes in assets and liabilities
generally tend to even out over time and result in trends in cash flows from
operating activities generally reflecting earnings trends.
Investing activities. Net cash used by investing activities totaled $25.9
million and $9.3 million in the first nine months of 2000 and 2001,
respectively. Investing activities in the first nine months of 2000 included
$9.5 million used to acquire substantially all of the operating assets of
Chicago Lock Company. No such business acquisitions occurred in the first nine
months of 2001.
The capital expenditures for 2001 relate primarily to capacity
rationalization and tooling costs at the Company's facilities and equipment
additions designed to improve manufacturing efficiencies at the Company's
security products and ergonomic and slide products facilities. Capital
expenditures for 2001 are estimated at approximately $13 million, the majority
of which relate to projects that emphasize improved production efficiency. Firm
purchase commitments for capital projects not commenced at September 30, 2001
were not material.
Financing activities. Net cash provided by financing activities totaled
$5.3 million and $100,000 in the first nine months of 2000 and 2001,
respectively. The Company paid its regular quarterly dividend of $1.9 million or
$.125 per share, in each of the first, second and third quarters of 2001. The
Company also used $2.7 million to reacquire approximately 260,000 shares of its
Class A common stock. Borrowings under the Company's unsecured revolving bank
credit facility were increased by a net amount of $10.0 million. The Company
repaid its short-term bank borrowing denominated in New Taiwan dollars during
the first quarter of 2001 and borrowed and repaid an additional $900,000 of New
Taiwan dollar short-term bank borrowings in the second quarter of 2001.
In July 2001, the Company's board of directors authorized the repurchase of
up to 500,000 shares of its common stock in open market or privately-negotiated
transactions at unspecified prices and over an unspecified period of time. No
shares were repurchased during the quarter ended September 30, 2001.
Management believes that cash generated from operations and borrowing
availability under the Company's unsecured revolving bank credit facility ($51
million available for borrowing at September 30, 2001), together with cash on
hand, will be sufficient to meet the Company's liquidity needs for working
capital, capital expenditures, debt service and dividends for the foreseeable
future.
The Company periodically evaluates its liquidity requirements, alternative
uses of capital, capital needs and available resources in view of, among other
things, its capital expenditure requirements in light of its capital resources
and estimated future operating cash flows. As a result of this process, the
Company may in the future seek to raise additional capital, refinance or
restructure indebtedness, issue additional securities, modify its dividend
policy, repurchase shares of its common stock or take a combination of such
steps to manage its liquidity and capital resources. In the normal course of
business, the Company may review opportunities for acquisitions, divestitures,
joint ventures or other business combinations in the component products
industry. In the event of any such transaction, the Company may consider using
available cash, issuing additional equity securities or increasing the
indebtedness of the Company or its subsidiaries.
As provided by the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, the Company cautions that the statements in this
Quarterly Report on Form 10-Q relating to matters that are not historical facts
are forward-looking statements that represent management's beliefs and
assumptions based on currently available information. Forward-looking statements
can be identified by the use of words such as "believes," "intends," "may,"
"should," "anticipates," "expected" or comparable terminology, or by discussions
of strategies or trends. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, it cannot give any
assurances that these expectations will prove to be correct. Such statements by
their nature involve substantial risks and uncertainties that could
significantly impact expected results, and actual future results could differ
materially from those described in such forward-looking statements. Among the
factors that could cause actual future results to differ materially are the
risks and uncertainties discussed in this Quarterly Report and those described
from time to time in the Company's other filings with the Securities and
Exchange Commission. While it is not possible to identify all factors, the
Company continues to face many risks and uncertainties including, but not
limited to, future supply and demand for the Company's products, changes in
costs of raw materials and other operating costs (such as energy costs), general
global economic and political conditions, demand for office furniture, service
industry employment levels, the possibility of labor disruptions, competitive
products and prices, substitute products, customer and competitor strategies,
the introduction of trade barriers, the impact of pricing and production
decisions, fluctuations in the value of the U.S. dollar relative to other
currencies (such as the euro and Canadian dollar), potential difficulties in
integrating completed acquisitions, uncertainties associated with new product
development, environmental matters (such as those requiring emission and
discharge standards for existing and new facilities), government regulations and
possible changes therein, possible future litigation and other risks and
uncertainties. Should one or more of these risks materialize (or the
consequences of such a development worsen), or should the underlying assumptions
prove incorrect, actual results could differ materially from those forecasted or
expected. The Company disclaims any intention or obligation to update publicly
or revise such statements whether as a result of new information, future events
or otherwise.
Part II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
None
(b) Reports on Form 8-K
Reports on Form 8-K for the quarter ended September 30, 2001:
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMPX INTERNATIONAL INC.
-----------------------------
(Registrant)
Date October 26, 2001 By /s/ Stuart M. Bitting
------------------- ---------------------------
Stuart M. Bitting
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date October 26, 2001 By /s/ Darryl R. Halbert
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Darryl R. Halbert
Vice President and Controller
(Principal Accounting Officer)