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 MARCH 31, 1998 COMMISSION FILE NUMBER 1-13905
COMPX INTERNATIONAL INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 57-0981653
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
200 Old Mill Road, Mauldin, South Carolina 29662
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (864) 297-6655
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 NO X
NUMBER OF SHARES OF CLASS A COMMON STOCK OUTSTANDING ON MAY 5, 1998: 6,144,880.
COMPX INTERNATIONAL INC.
INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets - December 31, 1997
and March 31, 1998 3-4
Consolidated Statements of Income -
Three months ended March 31, 1997 and 1998 5
Consolidated Statements of Comprehensive Income -
Three months ended March 31, 1997 and 1998 6
Consolidated Statement of Stockholders' Equity -
Three months ended March 31, 1998 7
Consolidated Statements of Cash Flows -
Three months ended March 31, 1997 and 1998 8-9
Notes to Consolidated Financial Statements 10-14
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 15-17
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. 18
COMPX INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS DECEMBER 31, MARCH 31,
1997 1998
<S> <C> <C>
Current assets:
Cash and cash equivalents $19,187 $ 43,604
Accounts receivable 14,573 18,378
Receivable from affiliate - 770
Inventories 11,073 15,851
Prepaid expenses 161 439
Deferred income taxes 438 578
Total current assets 45,432 79,620
Other assets:
Intangible assets 66 23,061
Deferred income taxes 133 -
Other - 217
Total other assets 199 23,278
Property and equipment:
Land 383 886
Buildings 8,194 10,114
Equipment 24,343 31,662
Construction in progress 707 2,788
33,627 45,450
Less accumulated depreciation 15,464 16,146
Net property and equipment 18,163 29,304
$63,794 $132,202
</TABLE>
COMPX INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY DECEMBER 31, MARCH 31,
(DEFICIT) 1997 1998
<S> <C> <C>
Current liabilities:
Demand note payable to affiliate $50,000 $ -
Current maturities of long-term debt 113 480
Accounts payable and accrued liabilities 11,427 14,022
Payable to affiliates 331 52
Income taxes 2,559 1,125
Total current liabilities 64,430 15,679
Noncurrent liabilities:
Long-term debt 262 261
Deferred income taxes 115 2,581
Other 150 471
Total noncurrent liabilities 527 3,313
Minority interest - 122
Stockholders' equity:
Preferred stock - -
Class A common stock - 61
Class B common stock 100 100
Additional paid-in capital 4,412 118,027
Accumulated deficit (4,596) (4,230)
Currency translation adjustment (1,079) (870)
Total stockholders' equity (deficit) (1,163) 113,088
$63,794 $132,202
</TABLE>
Commitments and contingencies (Note 1)
COMPX INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1997 AND 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1998
<S> <C> <C>
Revenues and other income:
Net sales $25,829 $32,129
Other, net 121 497
25,950 32,626
Costs and expenses:
Cost of sales 17,023 21,393
Selling, general and administrative 2,890 6,913
Interest 9 736
19,922 29,042
Income before income taxes and minority 6,028 3,584
interest
Provision for income taxes 2,359 1,434
Income before minority interest 3,669 2,150
Minority interest - (16)
Net income $ 3,669 $ 2,166
Basic and diluted earnings per common share $ .37 $ .18
Shares used in the calculation of earnings
per common share:
Basic earnings per common share 10,000 11,775
Dilutive impact of outstanding stock - 22
options
Diluted earnings per common share 10,000 11,797
</TABLE>
COMPX INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
THREE MONTHS ENDED MARCH 31, 1997 AND 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1998
<S>
<C> <C>
Net income $3,669 $2,166
Other comprehensive income -
Currency translation adjustment:
Pre-tax amount (102) 322
Less income taxes (benefit) (36) 113
Total other comprehensive income (66) 209
Comprehensive income $3,603 $2,375
</TABLE>
COMPX INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
THREE MONTHS ENDED MARCH 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL
PAID-IN
COMMON STOCK
CAPITAL
CLASS A CLASS B
<S> <C> <C> <C>
Balance at December 31, 1997 $ - $100 $ 4,412
Net income - - -
Other comprehensive income - - -
Issuance of common stock:
Initial public offering 60 - 110,318
Management shares 1 - 3,297
Dividends paid - - -
Balance at March 31, 1998 $61 $100 $118,027
</TABLE>
COMPX INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
THREE MONTHS ENDED MARCH 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
CURRENCY TOTAL
ACCUMULATED TRANSLATION STOCKHOLDERS'
DEFICIT ADJUSTMENT EQUITY (DEFICIT)
<S> <C> <C> <C>
Balance at December 31, 1997 $(4,596) $(1,079) $ (1,163)
Net income 2,166 - 2,166
Other comprehensive income - 209 209
Issuance of common stock:
Initial public offering - - 110,378
Management shares - - 3,298
Dividends paid (1,800)
Balance at March 31, 1998 $(4,230) $ (870) $113,088
</TABLE>
COMPX INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1998
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,669 $ 2,166
Depreciation, depletion and amortization 772 958
Deferred income taxes 89 93
Noncash stock award of Management Shares - 3,298
Other, net 57 (151)
4,587 6,364
Change in assets and liabilities:
Accounts receivable (1,746) (1,426)
Inventories 87 (438)
Accounts payable and accrued liabilities 469 (1,119)
Accounts with affiliates 524 (1,049)
Income taxes (548) (1,636)
Other, net 75 (353)
Net cash provided by operating 3,448 343
activities
Cash flows from investing activities:
Capital expenditures (558) (1,559)
Fort Lock Acquisition - (33,053)
Other, net - 275
Net cash used by investing activitie (558) (34,337)
Cash flows from financing activities:
Repayment of demand note to Valcor - (50,000)
Repayments of other indebtedness (38) (112)
Deferred financing costs paid - (220)
Dividends (1,500) (1,800)
Issuance of common stock - 110,378
Net cash provided (used) by financin
activities
(1,538) 58,246
Net increase in cash and cash equivalents $ 1,352 $ 24,252
</TABLE>
COMPX INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 1997 AND 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1998
<S> <C> <C>
Cash and cash equivalents:
Net changes from operating, investing
and financing activities $1,352 $24,252
Currency translation (62) 165
1,290 24,417
Balance at beginning of period 8,550 19,187
Balance at end of period $9,840 $43,604
Supplemental disclosures:
Cash paid for:
Interest $ 9 $ 897
Income taxes 2,289 3,914
Net assets consolidated - Fort Lock:
Acquisition:
Cash and cash equivalents $ - $ -
Goodwill and other intangibles - 23,080
Other non-cash assets - 17,782
Liabilities - (7,809)
Cash paid $ - $33,053
</TABLE>
COMPX INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION:
The consolidated balance sheet at December 31, 1997 has been condensed from
the Company's audited consolidated financial statements at that date. The
consolidated balance sheet at March 31, 1998 and the consolidated statements of
income, comprehensive income, cash flows and stockholders' equity (deficit) for
the interim periods ended March 31, 1997 and 1998 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 generally accepted accounting principles has been condensed or
omitted. The accompanying consolidated financial statements should be read in
conjunction with the Company's consolidated financial statements for the year
ended December 31, 1997 included in the Pre-effective Amendment No. 2 to Form S-
1 of the Company filed with the Securities and Exchange Commission on March 6,
1998.
NOTE 2 - BUSINESS SEGMENT INFORMATION:
The Company is a manufacturer of ergonomic computer support systems,
precision ball bearing slides and cabinet locks for furniture and other markets.
The Company is a 62%-owned subsidiary of Valcor, Inc., which is a wholly-owned
subsidiary of Valhi, Inc. (NYSE: VHI).
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1997 1998
(IN THOUSANDS)
<S> <C> <C>
Net sales $25,829 $32,129
Operating income $ 6,266 $ 4,320
General corporate items, net (229) -
Interest expense (9) (736)
Income before income taxes $ 6,028 $ 3,584
</TABLE>
NOTE 3 - INVENTORIES:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1998
(IN THOUSANDS)
<S> <C> <C>
Raw materials $ 2,057 $ 5,465
Work in process 5,193 6,188
Finished products 3,775 4,151
Supplies 48 47
$11,073 $15,851
</TABLE>
NOTE 4 - INTANGIBLE ASSETS:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1998
(IN THOUSANDS)
<S> <C> <C>
Intangible assets:
Goodwill $ - $19,880
Other 66 3,181
$ 66 $23,061
</TABLE>
Goodwill, representing the excess of the purchase price over the estimated
fair value of underlying net assets acquired in the Fort Lock Acquisition, is
being amortized by the straight-line method over 20 years. Other intangible
assets consist primarily of the estimated fair value of certain patents acquired
in the Fort Lock Acquisition and are being amortized by the straight-line method
over the average remaining lives of 15 years.
NOTE 5 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1998
(IN THOUSANDS)
<S> <C> <C>
Accounts payable $ 5,497 $ 7,517
Accrued liabilities:
Employee benefits 3,490 3,310
Insurance 633 750
Royalties 447 39
Taxes other than income taxes 175 302
Other 1,185 2,104
$11,427 $14,022
</TABLE>
NOTE 6 - PROVISION FOR INCOME TAXES:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1997 1998
(IN THOUSANDS)
<S> <C> <C>
Expected tax expense $2,110 $1,254
Incremental tax on non-U.S. earnings 144 59
State income taxes and other, net 105 121
$2,359 $1,434
</TABLE>
NOTE 7 - LONG-TERM DEBT AND LOANS FROM VALCOR:
On December 12, 1997, the Company paid a $50 million dividend to Valcor in
the form of a $50 million demand note payable (the "Valcor Note"). The Valcor
Note was unsecured and bore interest at a fixed rate of 6%. Interest expense
related to the Valcor Note was $460,000 in 1998. The Valcor Note was repaid on
February 26, 1998 as discussed below.
On February 26, 1998, the Company entered into a new $100 million revolving
credit facility (the "Revolving Senior Credit Facility"). The Revolving Senior
Credit Facility is an unsecured five-year revolving facility. Borrowings are
available for the Company's general corporate purposes, including potential
acquisitions. On February 26, 1998, the Company utilized borrowings under the
Revolving Senior Credit Facility to repay fully the Valcor Note. Borrowings
under the Revolving Senior Credit Facility (nil outstanding at March 31, 1998)
were repaid with a portion of the net proceeds of the Company's initial public
offering discussed in Note 9.
The Revolving Senior Credit Facility matures in 2003. Borrowings of up to
$100 million are available under the Revolving Senior Credit Facility subject to
limitation with respect to compliance with certain coverage ratios and
covenants. At March 31, 1998, $100 million was available for borrowing under
this facility. The Revolving Senior Credit Facility has no required principal
amortization payments prior to maturity absent noncompliance with certain
covenants and conditions of the agreement. Amounts drawn under the Revolving
Senior Credit Facility will bear interest at the Eurodollar Rate plus between
17.5 and 90.0 basis points depending on certain coverage ratios for the most
recent prior four quarter period.
The Revolving Senior Credit Facility contains certain covenants and
restrictions customary in lending transactions of this type, including
restrictions on the payment of dividends and requirements to maintain specified
levels of Consolidated Net Worth (as defined).
NOTE 8 - ACQUISITION:
On March 3, 1998, the Company completed the acquisition of the Fort Lock
Corporation for an aggregate purchase price of approximately $33 million (the
"Fort Lock Acquisition"). Fort Lock, a vertically integrated manufacturer of
highly engineered mechanical locks for a diverse customer base of original
equipment manufacturers and locksmith distributors, is headquartered in River
Grove, Illinois. Funding for the Fort Lock Acquisition was provided by cash on
hand and $25 million of borrowings under the Revolving Senior Credit Facility
discussed above.
The aggregate purchase price is subject to possible reduction pending the
completion of a post closing audit and the outcome of certain contingencies for
which the Company has been indemnified by the sellers.
The Company accounted for the Fort Lock Acquisition by the purchase method
of accounting and, accordingly, Fort Lock's results of operations and cash flows
are included in the Company's consolidated financial statements subsequent to
the Fort Lock Acquisition. The purchase price has been allocated to the
individual assets acquired and liabilities assumed of Fort Lock based upon
preliminary estimated fair values. The actual allocation of the purchase price
may be different from the preliminary allocation due to adjustments in the
purchase price and refinements in estimates of the fair values of the net assets
acquired.
Assuming the Fort Lock Acquisition occurred as of January 1, 1997, the
Company's pro forma net sales would have been $32.4 million and $36.8 million,
net income would have been $3.9 million and $2.3 million and diluted earnings
per common share would have been $.39 and $.20 for the three months ended March
31, 1997 and 1998, respectively. The pro forma financial information is not
necessarily indicative of actual results had the transactions occurred at the
beginning of these periods, nor do they purport to represent results of future
operations of the combined companies.
NOTE 9 - CAPITALIZATION:
Recapitalization. In February 1998, the Company amended and restated its
certificate of incorporation. The authorized capital stock of the Company now
consists of shares of Class A Common Stock (20,000,000 shares authorized) and
Class B Common Stock (10,000,000 shares authorized), each par value $.01 per
share, and 1,000 shares of preferred stock, par value $.01 per share. Upon the
effectiveness of the amendment and restatement of the certificate of
incorporation, the 1,000 shares of the Company's common stock, $1 par value,
previously outstanding and all held by Valcor, Inc. were reclassified into
10,000,000 shares of the Company's Class B Common Stock. The accompanying
consolidated financial statements have been retroactively restated to reflect
this recapitalization.
The shares of Class A Common Stock and Class B Common Stock are identical in
all respects, except for certain voting rights and certain conversion rights in
respect of the shares of the Class B Common Stock. Holders of Class A Common
Stock are entitled to one vote per share. Holders of Class B Common Stock are
entitled to one vote per share in all matters except for election of directors
where such holders are entitled to ten votes per share. Holders of all classes
of common stock entitled to vote will vote together as a single class on all
matters presented to the stockholders for their vote or approval, except as
otherwise required by applicable law. Each share of Class A Common Stock and
Class B Common Stock have an equal and ratable right to receive dividends to be
paid from the Company's assets when, and if declared by the Board of Directors.
In the event of the dissolution, liquidation or winding up of the Company, the
holders of Class A Common Stock and Class B Common Stock will be entitled to
share equally and ratably in the assets available for distribution after
payments are made to the Company's creditors and to the holders of any preferred
stock of the Company that may be outstanding at the time. Shares of the Class A
Common Stock have no conversion rights. Under certain conditions, shares of
Class B Common Stock will convert, on a share-for-share basis, into shares of
Class A Common Stock.
Public offering. In March 1998, the Company completed an initial public
offering of 5,980,000 shares of the Company's Class A Common Stock at an
offering price to the public of $20.00 per share. The net proceeds to the
Company were approximately $110.4 million. A majority of the net proceeds to
the Company from the offering were used to repay borrowings under the Revolving
Senior Credit Facility discussed above.
Stock award grants. In March 1998, the Company granted 164,880 shares of
Class A Common Stock to certain key individuals of the Company (the "Management
Shares") for their services in connection with the public offering. The Company
valued such Class A shares awarded at the public offering price, and the
aggregate value of the Class A shares awarded was approximately $3.3 million.
The Company recognized a charge, at the time of the completion of the public
offering, equal to the aggregate value of the Class A shares awarded.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
The Company reported net income of $3.7 million in the first quarter of
1997 compared to $2.2 million in the first quarter of 1998. Operating results
in the first quarter of 1998 include a nonrecurring charge of $3.3 million ($2.3
million after tax) related to shares of the Company's Class A common stock
awarded to key individuals in connection with the Company's recently completed
initial public offering. Excluding the charge associated with the stock award,
the Company's first quarter of 1998 operating results improved compared to first
quarter of 1997 primarily due to increased sales volumes in all product lines.
Sales volumes continue to benefit from continued strong demand in the office
furniture market and new product introductions in the slide and ergonomic
product areas.
On March 3, 1998, the Company completed the Fort Lock Acquisition for an
aggregate purchase price of approximately $33 million. The aggregate purchase
price is subject to possible reduction pending completion of a post closing
audit and the outcome of certain contingencies for which the Company has been
indemnified. Funding of the Fort Lock Acquisition was provided by available
cash on hand and borrowings under the Revolving Senior Credit Facility, which
borrowings were repaid with a portion of the net proceeds of the Company's
initial public offering.
Assuming the Fort Lock Acquisition occurred January 1 of the respective
periods, the Company's pro forma net sales would have been $32.4 million and
$36.8 million for the three months ended March 31, 1997 and 1998, respectively,
and pro forma operating income would have been $6.6 million and $4.8 million
($8.1 million in the 1998 period excluding the stock award charge). The pro
forma financial information is not necessarily indicative of actual results had
the transactions occurred at the beginning of the periods, nor do they purport
to represent results of future operations of the merged companies.
The statements in this Quarterly Report on Form 10-Q relating to matters
that are not historical facts, including, but not limited to, statements found
in this "Management's Discussion and Analysis of Financial Condition and Results
of Operations", are forward-looking statements that involve a number of risks
and uncertainties. Factors that could cause actual future results to differ
materially from those expressed in such forward-looking statements include, but
are not limited to, future supply and demand for the Company's products
(including cyclicality thereof), general economic conditions, competitive
products and substitute products, customer and competitor strategies, the impact
of pricing and production decisions, potential difficulties in integrating
acquisitions, environmental matters, government regulations and possible changes
therein, and other risks and uncertainties as discussed in this Quarterly Report
and the Company's consolidated financial statements for the year ended December
31, 1997 included in the pre-effective amendment No. 2 to Form S-1 of the
Company filed with the Securities and Exchange Commission on March 6, 1998.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, %
1997 1998 CHANGE
(IN THOUSANDS)
<S> <C> <C> <C>
Net sales $25,829 $32,129 +24%
Operating income 6,266 4,320 -31%
</TABLE>
Net sales. Net sales increased $6.3 million, or 24%, to $32.1 million for
the period ended March 31, 1998 from $25.8 million of the period ended March 31,
1997. The increase was primarily due to increased volumes in ergonomic computer
support systems, precision ball bearing slides and medium-security cabinet
locks. Combined net sales from the Company's ergonomic computer support systems
and precision ball bearing slide products increased $4.6 million, or 25%, based
on higher unit volumes and relatively stable prices. Medium-security cabinet
lock sales increased $1.9 million, or 28%, primarily due to sales attributable
to Fort Lock.
Operating income. Operating income decreased $1.9 million, or 31% to $4.3
million for the period ended March 31, 1998 from $6.3 million for the period
ended March 31, 1997, due to the $3.3 million stock award charge discussed
above. Excluding the stock award charge, operating income margins in both
periods were approximately 24%. Also excluding the effect of the Fort Lock
Acquisition in early March 1998, operating income margins increased by
approximately 1% in the first quarter of 1998 compared to the first quarter of
1997.
LIQUIDITY AND CAPITAL RESOURCES
Consolidated cash flows
Operating activities. Trends in cash flows from operating activities,
excluding changes in assets and liabilities and non-cash stock award charges are
generally similar to the trends in the Company's earnings. Cash flow provided
by operating activities totaled $3.4 million and nil for the periods ended March
31, 1997 and March 31, 1998, respectively, compared to net income of $3.7
million and $2.2 million.
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 $.6
million and $34.3 million for the periods ended March 31, 1997 and March 31,
1998, respectively. The majority of the increase in the first quarter of 1998
relates to the Fort Lock Acquisition as discussed below. The increase in
capital expenditures in 1998 relates primarily to office building additions at
the Company's Kitchener facility.
Capital expenditures of 1998 are estimated at approximately $13 million, the
majority of which relate to projects that emphasize improved production
efficiency and increased production capacity. Firm purchase commitments for
capital projects not commenced at March 31, 1998 were not material.
Financing activities. Net cash (used) provided by financing activities
totaled ($1.5) million, and $58.3 million for the periods ended March 31, 1997
and 1998, respectively. Net cash provided in 1998 includes $110.4 million of
net proceeds from the recently completed initial public offering and the
repayment of the $50 million Valcor Note. The Company paid dividends to its
parent company aggregating $1.5 million in 1997, and $1.8 million in 1998 prior
to completion of the Company's initial public offering.
OTHER
On December 12, 1997, the Company paid a $50 million dividend to Valcor in
the form of the Valcor Note. The Valcor Note was unsecured and bore interest at
a fixed rate of 6%. On February 26, 1998, the Company repaid the Valcor Note
with borrowings under the Revolving Senior Credit Facility.
On February 26, 1998, the Company entered into a new $100 million Revolving
Senior Credit Facility and utilized borrowings thereunder to repay the Valcor
Note. The Revolving Senior Credit Facility is an unsecured five-year revolving
facility. Borrowings are available for the Company's general corporate
purposes, including potential acquisitions. The Revolving Senior Credit
Facility contains provisions which, among other things, require the maintenance
of minimum levels of net worth, require the maintenance of certain financial
ratios, limit dividends and additional indebtedness and contain other provisions
and restrictive covenants customary in lending transactions of this type.
The net proceeds to the Company from its initial public offering completed
in March 1998 was approximately $110.4 million. Approximately $75 million of
such net proceeds were used to repay borrowings under the Revolving Senior
Credit Facility.
Management believes that cash generated from operations and borrowing
availability under the Revolving Senior Credit Facility, together with cash on
hand, will be sufficient to meet the Company's liquidity needs for working
capital, capital expenditures and debt service.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27.1 Financial Data Selected for the three-month period ended
March 31, 1998.
(b) Reports on Form 8-K
Reports on Form 8-K for the quarter ended March 31, 1998.
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 May 12, 1998 By /s/ Joseph S. Compofelice
Joseph S. Compofelice
Chairman of the Board and
Chief Executive Officer
(Principal Financial Officer)
Date May 12, 1998 By /s/ Bobby D. O'Brien
Bobby D. O'Brien
Vice President and Treasurer
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM COMPX
INTERNATIONAL INC.'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE
MONTHS ENDED MARCH 31, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 43,604
<SECURITIES> 0
<RECEIVABLES> 18,868
<ALLOWANCES> 490
<INVENTORY> 15,851
<CURRENT-ASSETS> 79,620
<PP&E> 45,450
<DEPRECIATION> 16,146
<TOTAL-ASSETS> 132,202
<CURRENT-LIABILITIES> 15,679
<BONDS> 261
0
0
<COMMON> 161
<OTHER-SE> 112,927
<TOTAL-LIABILITY-AND-EQUITY> 132,202
<SALES> 32,129
<TOTAL-REVENUES> 32,129
<CGS> 21,393
<TOTAL-COSTS> 21,393
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 80
<INTEREST-EXPENSE> 736
<INCOME-PRETAX> 3,584
<INCOME-TAX> 1,434
<INCOME-CONTINUING> 2,166
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,166
<EPS-PRIMARY> .18
<EPS-DILUTED> 0
</TABLE>
