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 June 30, 2000 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
incorporation or organization) Identification No.)
16825 Northchase Drive, Suite 1200, Houston, Texas 77060
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (281) 423-3377
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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 August 4, 2000:
6,182,680.
<PAGE>
COMPX INTERNATIONAL INC. AND SUBSIDIARIES
INDEX
Page
number
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets - December 31, 1999
and June 30, 2000 3-4
Consolidated Statements of Income -
Three months and six months ended
June 30, 1999 and 2000 5
Consolidated Statements of Comprehensive Income -
Six months ended June 30, 1999 and 2000 6
Consolidated Statement of Stockholders' Equity -
Six months ended June 30, 2000 7
Consolidated Statements of Cash Flows -
Six months ended June 30, 1999 and 2000 8-9
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 4. Submission of Matters to a Vote of Security Holders 17
Item 6. Exhibits and Reports on Form 8-K. 17
<PAGE>
COMPX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
ASSETS December 31, June 30,
1999 2000
---- ----
Current assets:
<S> <C> <C>
Cash and cash equivalents ........................ $ 12,169 $ 12,784
Accounts receivable .............................. 29,053 32,603
Income taxes receivable from affiliates .......... 22 --
Refundable income taxes .......................... 462 704
Inventories ...................................... 27,659 35,993
Prepaid expenses and other ....................... 1,858 1,524
Deferred income taxes ............................ 1,258 1,293
-------- --------
Total current assets ......................... 72,481 84,901
-------- --------
Other assets:
Goodwill ......................................... 41,697 42,843
Other intangible assets .......................... 2,787 2,769
Deferred income taxes ............................ 2,499 1,710
Other ............................................ 203 656
-------- --------
Total other assets ........................... 47,186 47,978
-------- --------
Property and equipment:
Land ............................................. 3,549 3,626
Buildings ........................................ 27,898 28,807
Equipment ........................................ 70,242 70,353
Construction in progress ......................... 6,710 12,709
-------- --------
108,399 115,495
Less accumulated depreciation .................... 25,154 28,620
-------- --------
Net property and equipment ................... 83,245 86,875
-------- --------
$202,912 $219,754
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
COMPX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In thousands)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY December 31, June 30,
1999 2000
---- ----
Current liabilities:
<S> <C> <C>
Current maturities of long-term debt ........... $ 1,367 $ 450
Accounts payable and accrued liabilities ....... 25,389 26,388
Income taxes payable to affiliates ............. -- 20
Income taxes ................................... 91 569
--------- ---------
Total current liabilities .................. 26,847 27,427
--------- ---------
Noncurrent liabilities:
Long-term debt ................................. 20,900 31,101
Deferred income taxes .......................... 3,223 3,144
Accrued pension costs .......................... 1,209 1,326
Other .......................................... 1,274 1,125
--------- ---------
Total noncurrent liabilities ............... 26,606 36,696
--------- ---------
Minority interest ................................ 103 --
--------- ---------
Stockholders' equity:
Preferred stock ................................ -- --
Class A common stock ........................... 61 61
Class B common stock ........................... 100 100
Additional paid-in capital ..................... 118,067 118,151
Retained earnings .............................. 37,415 47,003
Accumulated other comprehensive income
- currency translation ........................ (6,287) (9,684)
--------- ---------
Total stockholders' equity ................. 149,356 155,631
--------- ---------
$ 202,912 $ 219,754
========= =========
</TABLE>
Commitments and contingencies (Note 1)
<PAGE>
COMPX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
----------- --------
1999 2000 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales .......................................... $ 54,970 $ 65,136 $ 110,173 $ 131,203
-------- -------- --------- ---------
Costs and expenses:
Cost of sales ..................................... 39,075 46,616 78,146 95,139
Selling, general and administrative ............... 6,166 7,014 12,700 13,832
Other income, net ................................. (30) (62) (155) (289)
Interest expense .................................. 442 538 836 1,071
-------- -------- --------- ---------
45,653 54,106 91,527 109,753
-------- -------- --------- ---------
Income before income taxes
and minority interest ........................ 9,317 11,030 18,646 21,450
Provision for income taxes ......................... 3,261 3,972 6,711 7,827
-------- -------- --------- ---------
Income before minority interest ................ 6,056 7,058 11,935 13,623
Minority interest .................................. (24) -- (66) (3)
-------- -------- --------- ---------
Net income ..................................... $ 6,080 $ 7,058 $ 12,001 $ 13,626
======== ======== ========= =========
Basic and diluted earnings
per common share .................................. $ .38 $ .44 $ .74 $ .84
======== ======== ========= =========
Cash dividends per share ........................... $ -- $ .125 $ -- $ .25
======== ======== ========= =========
Shares used in the calculation of per share amounts:
Basic earnings per common share ................. 16,146 16,151 16,146 16,149
Dilutive impact of outstanding
stock options .................................. -- 31 -- 20
-------- -------- --------- ---------
Diluted earnings per common share ............... 16,146 16,182 16,146 16,169
======== ======== ========= =========
</TABLE>
<PAGE>
COMPX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------ -----------
1999 2000 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income ....................... $ 6,080 $ 7,058 $ 12,001 $ 13,626
Other comprehensive income -
currency translation adjustment,
net of tax ..................... (1,641) (1,395) (4,207) (3,397)
------- ------- -------- --------
Comprehensive income ....... $ 4,439 $ 5,663 $ 7,794 $ 10,229
======= ======= ======== ========
</TABLE>
<PAGE>
COMPX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Six months ended June 30, 2000
(In thousands)
<TABLE>
<CAPTION>
Accumulated
other
comprehensive
Additional income - Total
Common Stock paid-in Retained currency stockholders'
Class A Class B capital earnings translation equity
------- ------- ---------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999 .. $61 $100 $118,067 $ 37,415 $(6,287) $ 149,356
Net income .................... -- -- -- 13,626 -- 13,626
Other comprehensive income, net -- -- -- -- (3,397) (3,397)
Issuance of common stock ...... -- -- 84 -- -- 84
Cash dividends ................ -- -- -- (4,038) -- (4,038)
--- ---- -------- -------- ------- ---------
Balance at June 30, 2000 ...... $61 $100 $118,151 $ 47,003 $(9,684) $ 155,631
=== ==== ======== ======== ======= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
COMPX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 1999 and 2000
(In thousands)
<TABLE>
<CAPTION>
1999 2000
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income ........................................... $ 12,001 $ 13,626
Depreciation and amortization ........................ 4,607 6,264
Deferred income taxes ................................ (169) 209
Other, net ........................................... (178) (282)
-------- --------
16,261 19,817
Change in assets and liabilities:
Accounts receivable ................................ (1,968) (2,393)
Inventories ........................................ (26) (4,504)
Accounts payable and accrued liabilities ........... (6,326) 1,111
Accounts with affiliates ........................... 13 41
Income taxes ....................................... (1,326) 3
Other, net ......................................... 481 (205)
-------- --------
Net cash provided by operating activities ........ 7,109 13,870
-------- --------
Cash flows from investing activities:
Capital expenditures ................................. (8,924) (10,189)
Purchase of business units ........................... (53,084) (9,475)
Other, net ........................................... 3 309
-------- --------
Net cash used by investing activities ............ (62,005) (19,355)
-------- --------
Cash flows from financing activities:
Indebtedness:
Additions ......................................... 20,000 12,081
Principal payments ................................ (467) (1,728)
Dividends ............................................ -- (4,038)
Issuance of common stock ............................. -- 36
-------- --------
Net cash provided by financing activities ........ 19,533 6,351
-------- --------
Net increase (decrease) in cash and cash equivalents ... $(35,363) $ 866
======== ========
</TABLE>
<PAGE>
COMPX INTERNATIONAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
Six months ended June 30, 1999 and 2000
(In thousands)
<TABLE>
<CAPTION>
1999 2000
---- ----
Cash and cash equivalents:
Net change from operating, investing
<S> <C> <C>
and financing activities .......................... $(35,363) $ 866
Business units acquired ............................ 4,157 --
Currency translation ............................... (982) (251)
-------- --------
(32,188) 615
Balance at beginning of period ..................... 47,363 12,169
-------- --------
Balance at end of period ........................... $ 15,175 $ 12,784
======== ========
Supplemental disclosures:
Cash paid for:
Interest ......................................... $ 545 $ 973
Income taxes ..................................... 8,676 7,386
Business units acquired - net assets consolidated:
Cash and cash equivalents ........................ $ 4,157 --
Goodwill and other intangible assets ............. 15,800 2,539
Other non-cash assets ............................ 52,799 8,458
Liabilities ...................................... (19,672) (1,522)
-------- --------
Cash paid ........................................ $ 53,084 $ 9,475
======== ========
</TABLE>
<PAGE>
COMPX INTERNATIONAL INC. AND SUBSIDIARIES
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, 1999 has been
condensed from the Company's audited consolidated financial statements at that
date. The consolidated balance sheet at June 30, 2000 and the consolidated
statements of income, comprehensive income, stockholders' equity and cash flows
for the interim periods ended June 30, 1999 and 2000 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 Annual Report on Form 10-K for the year ended
December 31, 1999 (the "1999 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 1999
Annual Report.
The Company is 64% owned by Valhi, Inc. (NYSE: VHI) and Valhi's
wholly-owned subsidiary Valcor, Inc. Contran Corporation holds, directly or
through subsidiaries, approximately 93% of Valhi's outstanding common stock.
Substantially all of Contran's outstanding voting stock is held either by trusts
established for the benefit of certain children and grandchildren of Harold C.
Simmons, of which Mr. Simmons is sole trustee, or by Mr. Simmons directly. 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 will adopt Statement of Financial Accounting Standards
("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities,
as amended, no later than the first quarter of 2001. Under SFAS No. 133, all
derivatives will be recognized as either assets or liabilities and measured at
fair value. The accounting for changes in fair value of derivatives will depend
upon the intended use of the derivative. The impact on the Company of adopting
SFAS No. 133, if any, has not yet been determined, but will be dependent upon
the extent to which the Company is a party to derivative contracts or hedging
activities covered by SFAS No. 133 at the time of adoption, including
derivatives embedded in non-derivative host contracts. As permitted by the
transition requirements of SFAS No. 133, as amended, the Company will exempt
from the scope of SFAS No. 133 all host contracts containing embedded
derivatives which were issued or acquired prior to January 1, 1999.
<PAGE>
The Company will adopt the Securities and Exchange Commission's Staff
Accounting Bulletin ("SAB") No. 101, Revenue Recognition, as amended, in the
fourth quarter of 2000. SAB No. 101 provides guidance on the recognition,
presentation and disclosure of revenue, including specifying basic criteria
which must be met before revenue can be recognized. The impact on the Company of
adopting SAB No. 101 has not been determined, in part because the SEC is
continuing to provide additional informal guidance and clarification concerning
the exact requirements of SAB No. 101. If the impact of adopting SAB No. 101 is
material, the Company will adopt SAB No. 101 retroactively to the beginning of
2000, and previously reported results of operations for the first three quarters
of 2000 would be restated.
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.
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
---------- --------
1999 2000 1999 2000
---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C>
Net sales ................ $ 54,970 $ 65,136 $ 110,173 $ 131,203
======== ======== ========= =========
Operating income ......... $ 9,729 $ 11,506 $ 19,327 $ 22,232
Interest expense ......... (442) (538) (836) (1,071)
Other, net ............... 30 62 155 289
-------- -------- --------- ---------
Income before
income taxes ............ $ 9,317 $ 11,030 $ 18,646 $ 21,450
======== ======== ========= =========
</TABLE>
Note 3 - Inventories:
<TABLE>
<CAPTION>
December 31, June 30,
1999 2000
------ ------
(In thousands)
<S> <C> <C>
Raw materials ............................ $ 9,038 $11,390
Work in process .......................... 8,669 12,524
Finished products ........................ 9,898 11,938
Supplies ................................. 54 141
------- -------
$27,659 $35,993
======= =======
</TABLE>
<PAGE>
Note 4 - Accounts payable and accrued liabilities:
<TABLE>
<CAPTION>
December 31, June 30,
1999 2000
---- ----
(In thousands)
<S> <C> <C>
Accounts payable $ 9,850 $12,256
Accrued liabilities:
Employee benefits ........................ 7,746 8,369
Insurance ................................ 707 612
Royalties ................................ 504 301
Other .................................... 6,582 4,850
------- -------
$25,389 $26,388
======= =======
</TABLE>
Note 5 - Indebtedness:
<TABLE>
<CAPTION>
December 31, June 30,
1999 2000
--------- --------
(In thousands)
<S> <C> <C>
Revolving bank credit facility ................... $20,000 $31,000
Capital lease obligations and other .............. 2,267 551
------- -------
22,267 31,551
Less current maturities .......................... 1,367 450
------- -------
$20,900 $31,101
======= =======
</TABLE>
Note 6 - Other income:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
----------------- -----------------
1999 2000 1999 2000
------- ------ ------ ------
(In thousands)
<S> <C> <C> <C> <C>
Interest income ........................ $ 175 $ 157 $ 420 $ 285
Foreign currency transactions, net ..... (218) (131) (411) (47)
Other, net ............................. 73 36 146 51
----- ----- ----- -----
$ 30 $ 62 $ 155 $ 289
===== ===== ===== =====
</TABLE>
<PAGE>
Note 7 - Provision for income taxes:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
------------------ ------------------
1999 2000 1999 2000
------- ------- ------- ------
(In thousands)
<S> <C> <C> <C> <C>
Expected tax expense ............... $ 3,261 $ 3,861 $ 6,525 $ 7,508
Non-U.S. tax rates ................. 57 22 115 84
No tax benefit for amortization of
goodwill .......................... 131 155 278 311
Other, net ......................... (188) (66) (207) (76)
------- ------- ------- -------
$ 3,261 $ 3,972 $ 6,711 $ 7,827
======= ======= ======= =======
</TABLE>
Note 8 - Acquisitions:
In January 2000, the Company acquired substantially all of the
operating assets of Chicago Lock Company for approximately $9.4 million in cash.
The purchase price has been allocated to the individual assets acquired and
liabilities assumed based upon preliminary estimated fair values. The actual
allocation may be different from the preliminary allocation due to refinements
in the estimates of the fair values of the net assets acquired. CompX used
borrowings under its existing credit facility to pay the cash purchase price.
The pro forma effect of this acquisition is not material.
Note 9 - 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 such
receivables, or similar exchange rate risk associated with future sales,
denominated in a currency other than the holder's functional currency. At each
balance sheet date, outstanding currency forward contracts are marked-to-market
with any resulting gain or loss recognized in income currently. At June 30,
2000, the Company held such forward exchange contracts to exchange an aggregate
of $18.2 million for an equivalent amount of Canadian dollars at exchange rates
between Cdn. $1.4547 and Cdn. $1.4676. Such contracts mature through December
2000.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
--------------------------------------------------------------------------------
Overview
The Company reported net income of $7.1 million in the second quarter
of 2000, an increase of 16% over net income of $6.1 million for the second
quarter of 1999. The Company reported net income of $13.6 million in the first
six months of 2000, a 13% increase over net income of $12.0 million in the first
six months of 1999. In January 2000, the company acquired substantially all the
operating assets of Chicago Lock Company. The purchase price of approximately
$9.4 million in cash includes substantially all of Chicago Lock's operating
assets, excluding real estate.
Results of Operations
Net sales. Net sales increased $10.1 million, or 18%, to $65.1 million
in the second quarter of 2000 from $55.0 million in the second quarter of 1999.
For the first six months of 2000, net sales of $131.2 million increased 19% when
compared to net sales of $110.2 million for the first six months of 1999. The
increases are principally due to increased demand for the Company's office
furniture products, market share gains in slide products, and acquisitions.
Excluding the effect of acquisitions, net sales increased 6% over the second
quarter of 1999 with net sales of slides increasing 14%, and net sales of
ergonomics and security products remaining essentially flat. For the six month
period ended June 30, 2000, net sales, exclusive of acquisitions, increased 7%
over the corresponding period of the prior year. Net sales of slides provided
the majority of the change, increasing 13%, while net sales of ergonomics and
security products remained flat. During the second quarter of 2000, weakness in
the euro negatively impacted certain of the Company's net sales (principally
slide products) which are denominated in euros. Excluding the effects of
currency and acquisitions, net sales increased 8% and 9%, respectively, for the
three and six month periods ended June 30, 2000 compared to the same periods in
1999, with net sales of slide products increasing 19% and 18% over the
corresponding periods in 1999.
Operating income. Operating income in the second quarter of 2000 was
$11.5 million, a 19% increase over operating income of $9.7 million for the
second quarter of 1999. For the first six months of 2000, operating income
increased $2.9 million, or 15%, to $22.2 million from $19.3 million for the
first six months of 1999. Excluding acquisitions and the negative effects of
foreign currency fluctuations, discussed above, operating income in the second
quarter and first six months of 2000 increased 15% and 12%, respectively,
compared to the same periods in 1999. The increases are due primarily to the
increase in net sales discussed above. As a percentage of net sales, operating
income in the second quarter and the first six months of 2000 remained
essentially constant with the comparable 1999 periods. Excluding the effect of
acquisitions, operating income as a percentage of net sales increased from 18%
to 19% in the second quarter of 2000 compared to the second quarter of 1999, and
increased from 19% to 20%, respectively, in the six month periods ended June 30,
1999 and 2000. These increases reflect improved manufacturing efficiencies
associated with increased net sales. The effect of acquisitions in the second
quarter and first six months of 2000 reflects lower margin sales of the
Company's newly acquired Chicago Lock operations.
<PAGE>
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 $7.1 million and $13.9
million in the first six months of 1999 and 2000, respectively, compared to net
income of $12.0 million and $13.6 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
$62.0 million and $19.4 million in the first six months of 1999 and 2000,
respectively. Included in cash used by investing activities in the first six
months of 1999 and 2000 is the $53.1 million and $9.4 million related to the
acquisitions of Thomas Regout and substantially all of the operating assets of
Chicago Lock Company, respectively.
Capital expenditures for 2000 relate primarily to capacity expansion,
equipment additions designed to improve manufacturing efficiencies and tooling.
Capital expenditures for 2000 are estimated at approximately $25 million, the
majority of which relate to projects emphasizing improved production efficiency
and increased production capacity. In connection with the expansion of certain
of its domestic production facilities, the Company has outstanding firm purchase
commitments of $1.9 million at June 30, 2000. Firm purchase commitments for
capital projects not commenced at June 30, 2000 were not material.
Financing activities. Net cash provided by financing activities totaled
$19.5 million and $6.4 million in the first six months of 1999 and 2000,
respectively. The Company paid its quarterly dividend of $2.0 million, or $.125
per share, in the first and second quarters of 2000. No dividends were paid
during the first six months of 1999. Cash flows from financing activities in the
first six months of 1999 includes $20.0 million of borrowings used to finance a
portion of the acquisition of Thomas Regout. Similarly, cash flows from
financing activities in the first quarter of 2000 includes $12.1 million of
borrowings, $9.4 million of which were used to finance the acquisition of
substantially all of the assets of Chicago Lock Company. Repayments of long-term
debt totaled $1.7 million during the first six months of 2000 compared to $.5
million for the first six months of 1999.
Management believes that cash generated from operations and borrowing
availability under the Company's unsecured Revolving Senior Credit Facility ($69
million available for borrowing at June 30, 2000), together with cash on hand,
will be sufficient to meet the Company's liquidity needs for working capital,
capital expenditures, debt service and dividends.
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, its capital resources
and its 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 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, 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,
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 represent management's beliefs and assumptions
based on currently available information. Forward-looking statements can be
identified by the use of such words 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
assurance 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. While it is
not possible to identify all factors, the Company continues to face many risks
and uncertainties. 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, cost of
raw materials, 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 tariff or non-tariff trade barriers,
the impact of pricing and production decisions, potential difficulties in
integrating completed acquisitions, 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 or revise any forward-looking statement whether as a result of new
information, future events or otherwise.
<PAGE>
Part II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders.
The Company held its Annual Meeting of Shareholders on May 11, 2000.
Paul M. Bass, Jr., David A. Bowers, Joseph S. Compofelice, Edward J. Hardin, Ann
Manix, Glenn R. Simmons and Steven L. Watson were elected as directors, each
receiving votes "For" their election from over 99% of the 104.9 million votes
eligible to be voted at the Annual Meeting.
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.1 Intercorporate Services Agreement between the Registrant and Valhi,
Inc. effective as of January 1, 2000.
10.2 Intercorporate Services Agreement between the Registrant and NL
Industries, Inc. effective as of January 1, 2000 - incorporated by
reference to Exhibit 10.6 to NL Industries, Inc.'s Quarterly Report on
Form 10-Q (File No. 1-640) for the quarter ended June 30, 2000.
27.1 Financial Data Schedule for the six-month period ended June 30, 2000.
(b) Reports on Form 8-K
Reports on Form 8-K for the quarter ended June 30, 2000.
April 17, 2000 - Reported Items 5 and 7. April 18, 2000 -
Reported Items 5 and 7. May 11, 2000 - Reported Items 5
and 7. May 30, 2000 - Reported Items 5 and 7.
<PAGE>
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 August 10, 2000 By: /s/ John A. Miller
------------------ ------------------
John A. Miller
Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date August 10, 2000 By: /s/ Todd W. Strange
------------------ -------------------
Todd W. Strange
Vice President and Controller
(Principal Accounting Officer)
