SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
January 14, 1999
(Date of Report, date of earliest event reported)
CompX International Inc.
(Exact name of Registrant as specified in its charter)
Delaware 001-13905 57-0981653
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation or Identification No.)
organization)
16825 Northchase Drive, Suite 1200, Houston, TX 77060
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (281) 423-3377
Not applicable
(Former name or address, if changed since last report)
Item 2: Acquisition or Disposition of Assets
As previously reported, on January 14, 1999, the Registrant acquired in
excess of 99% of the outstanding shares of Thomas Regout Holding N.V. ("TRH")
from the shareholders of TRH. The Registrant acquired the remaining TRH shares
by the end of February 1999. The purchase price was funded using available cash
on hand and $20 million of borrowings under the Registrant's $100 million
revolving bank credit facility.
Item 7: Financial Statements and Exhibits
Pursuant to Item 7(a)(4) of Form 8-K, the Registrant hereby amends this
Current Report on Form 8-K to include (i) consolidated financial statements of
TRH filed pursuant to Rule 3-05 of Regulation S-X and (ii) pro forma condensed
consolidated financial statements of the Registrant filed pursuant to Article 11
of Regulation S-X.
(a) Financial Statements of Thomas Regout Holding N.V.:
Report of Independent Auditors
Consolidated Balance Sheets - June 30, 1998 and 1997;
September 30, 1998 (unaudited)
Consolidated Statements Of Income - Years ended June 30, 1998 and 1997;
three months ended September 30, 1998 and 1997 (unaudited)
Consolidated Statements of Cash Flows - Years ended June 30, 1998
and 1997; three months ended September 30, 1998 and 1997 (unaudited)
Notes to Consolidated Financial Statements
(b) Unaudited Pro Forma Condensed Consolidated Financial Statements of the
Registrant:
Unaudited Pro Forma Condensed Consolidated Balance Sheet -
September 30, 1998
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet
Unaudited Pro Forma Condensed Consolidated Statements of Income -
Year ended December 31, 1997 and nine months ended September 30, 1998
Notes to Unaudited Pro Forma Condensed Consolidated Statements of Income
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 hereunto duly authorized.
CompX International Inc.
(Registrant)
By: /s/ John A. Miller
John A. Miller
Vice President and Chief Financial Officer
By: /s/Todd W. Strange
Todd W. Strange
Vice President and Controller
Date: March 19, 1999
THOMAS REGOUT HOLDING N.V.
MAASTRICHT
ANNUAL REPORT 1997/98
WITH UNAUDITED INTERIM FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1997 AND 1998
CONTENTS
Report of Independent Auditors 2
Consolidated balance sheets 3
Consolidated income statements 5
Consolidated cash flow statements 6
Notes to the consolidated financial statements 7
REPORT OF INDEPENDENT AUDITORS
The Supervisory Board and the Managing Board of Thomas Regout Holding N.V.
We have audited the accompanying consolidated balance sheets of Thomas Regout
Holding N.V. and subsidiaries as of 30 June 1998 and 1997, and the related
consolidated statements of income, cash flows and changes in shareholders'
equity for each of the two years in the period ended 30 June 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in The Netherlands, which do not differ in any material respect from auditing
standards generally accepted in the United States of America. These standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statements presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, based on our audits, the financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Thomas Regout Holding N.V. and subsidiaries as of 30 June 1997 and 1998, and the
consolidated results of their operations and their cash flows for each of the
two years in the period ended 30 June 1998, in conformity with accounting
principles generally accepted in The Netherlands.
Accounting principles generally accepted in The Netherlands vary in certain
significant respects from accounting principles generally accepted in the United
States of America. Application of accounting principles generally accepted in
the United States of America would have affected shareholders' equity as of 30
June 1997 and 1998 and the net profits for each of the two years in the period
ended 30 June 1998 to the extent summarized on pages 15 and 16 to the
consolidated financial statements.
Maastricht, The Netherlands
8 September 1998
Moret Ernst & Young Accountants
THOMAS REGOUT HOLDING N.V.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 JUNE 30, 1998
(unaudited)
NLG'000 NLG'000 NLG'000 NLG'000
Fixed assets
TANGIBLE FIXED ASSETS
Land 1,513 1,513
Buildings 14,462 14,476
Machinery and equipment 16,811 18,105
Other plant and equipment 2,471 2,671
On order and in progress 3,301 3,883
38,558 40,648
Current assets
INVENTORY
Raw and ancillary materials 8,169 8,475
Work in progress and semi-
finished goods 5,156 5,579
Finished products and
merchandise 6,134 5,990
19,459 20,044
ACCOUNTS RECEIVABLE
Trade receivables 12,084 12,841
Other receivables 3,580 1,797
Prepayments and accrued
income 1,036 1,180
16,700 15,818
LIQUID ASSETS
Term deposits 17,876 16,760
Available cash 3,236
1,722
19,598 19,996
TOTAL ASSETS 94,315 96,506
JUNE 30, 1997
NLG'000 NLG'000
Fixed assets
TANGIBLE FIXED ASSETS
Land 1,587
Buildings 15,177
Machinery and equipment 20,080
Other plant and equipment 2,209
On order and in progress 1,879
40,932
Current assets
INVENTORY
Raw and ancillary materials 5,501
Work in progress and semi-
finished goods 4,067
Finished products and
merchandise 4,412
13,980
ACCOUNTS RECEIVABLE
Trade receivables 10,657
Other receivables 1,506
Prepayments and accrued
income 1,374
13,537
LIQUID ASSETS
Term deposits 18,500
Available cash 2,171
20,671
TOTAL ASSETS 89,120
THOMAS REGOUT HOLDING N.V.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
SEPTEMBER 30, 1998 JUNE 30, 1998
(unaudited)
NLG'000 NLG'000 NLG'000 NLG'000
SHAREHOLDERS' EQUITY 63,731 62,993
PROVISIONS
Pensions 949 953
Taxes 0 0
Employee profit sharing 869 869
Other 1,446 1,471
3,264 3,293
LONG-TERM LIABILITIES
Financial institutions 6,875 6,875
Other loans 1,500 1,500
8,375 8,375
SHORT-TERM LIABILITIES
Financial institutions 2,825 4,329
Liabilities to suppliers and trade
payables 3,651 5,593
Taxes and social insurance premiums 3,015 2,228
Employee profit sharing 2,229 1,889
Dividends 1,920 1,920
Other liabilities 2,775 2,648
Accruals and deferred income 2,530 3,238
18,945 21,845
TOTAL LIABILITIES 94,315 96,506
JUNE 30, 1997
NLG'000 NLG'000
SHAREHOLDERS' EQUITY 60,938
PROVISIONS
Pensions 1,993
Taxes 247
Employee profit sharing 0
Other 1,521
3,761
LONG-TERM LIABILITIES
Financial institutions 8,108
Other loans 0
8,108
SHORT-TERM LIABILITIES
Financial institutions 1,105
Liabilities to suppliers and trade
payables 4,628
Taxes and social insurance premiums 2,948
Employee profit sharing 1,654
Dividends 2,000
Other liabilities 1,710
Accruals and deferred income 2,268
16,313
TOTAL LIABILITIES 89,120
THOMAS REGOUT HOLDING N.V.
CONSOLIDATED INCOME STATEMENTS
THREE MONTHS ENDED SEPTEMBER 30,
1998 1997
(UNAUDITED) (UNAUDITED)
NLG'000 NLG'000 NLG'000 NLG'000
NET SALES 25,135 23,609
Changes in inventory of finished
product and work in progress (267) 414
Capitalized production 76 28
Other operating income 324 692
133 1,134
TOTAL OPERATING INCOME 25,268 24,743
Cost of raw and ancillary
materials and finished product 9,115 8,001
Cost of subcontracts 810 1,004
Personnel costs 10,141 10,104
Depreciation and write-down of
tangible fixed assets 1,732 1,760
Depreciation of intangible
fixed assets 0 0
Other operating expenses 2,250 2,152
TOTAL OPERATING EXPENSES 24,048 23,021
OPERATING INCOME 1,220 1,722
Interest income and similar income 104 167
Interest expenses and similar
expenses (219) (223)
(115) (56)
Income from ordinary business
operations before taxes 1,105 1,666
Taxes on income from ordinary
business operations 367 503
INCOME FROM ORDINARY BUSINESS
OPERATIONS AFTER TAXES 738 1,163
Extraordinary expenses 0 0
Taxes on extraordinary income 0 0
Extraordinary income after taxes 0 0
NET INCOME 738 1,163
FISCAL YEARS
1997/98 1996/97
NLG'000 NLG'000 NLG'000 NLG'000
NET SALES 109,335 95,223
Changes in inventory of finished
product and work in progress 2,978 49
Capitalized production 1,145 1,161
Other operating income 1,408 2,767
5,531 3,977
TOTAL OPERATING INCOME 114,866 99,200
Cost of raw and ancillary
materials and finished product 38,492 30,773
Cost of subcontracts 4,162 3,464
Personnel costs 46,077 41,387
Depreciation and write-down of
tangible fixed assets 7,339 7,333
Depreciation of intangible
fixed assets 0 440
Other operating expenses 9,988 9,282
TOTAL OPERATING EXPENSES 106,058 92,679
OPERATING INCOME 8,808 6,521
Interest income and similar income 719 558
Interest expenses and similar
expenses (892) (868)
(173) (310)
Income from ordinary business
operations before taxes 8,635 6,211
Taxes on income from ordinary
business operations 2,960 1,990
INCOME FROM ORDINARY BUSINESS
OPERATIONS AFTER TAXES 5,675 4,221
Extraordinary expenses 755 0
Taxes on extraordinary income (264) 0
Extraordinary income after taxes 491 0
NET INCOME 6,166 4,221
THOMAS REGOUT HOLDING N.V.
CONSOLIDATED CASH FLOW STATEMENTS
THREE MONTHS ENDED SEPTEMBER 30,
1998 1997
(UNAUDITED) (UNAUDITED)
NLG'000 NLG'000 NLG'000 NLG'000
OPERATIONAL ACTIVITIES
Net income 738 1,163
Depreciation on fixed assets on
acquisition basis 1,732 1,760
Cash flow 2,470 2,923
Changes in working capital
Inventory 585 (2,311)
Receivables (882) (688)
Short-term debts (excluding debts
to financial institutions and
dividend) (1,396) (598)
(1,693) (3,597)
Changes in provisions (29) (58)
Dividends paid-out 0 0
Other changes 15 (41)
Cash flow from operational
activities 763 (773)
INVESTMENT ACTIVITIES
Tangible fixed assets 343 (490)
Disposal of tangible fixed assets 0 0
Acquisition of activities (net) 0 0
Cash flow from investment
activities 343 (490)
FINANCING ACTIVITIES
Changes in long-term debts 0 0
Changes in debts to financial
institutions (1,504) 123
Cash flow from financial
activities (1,504) 123
CHANGES IN LIQUID (398) (1,140)
FISCAL YEARS
1997/98 1996/97
NLG'000 NLG'000 NLG'000 NLG'000
OPERATIONAL ACTIVITIES
Net income 6,166 4,221
Depreciation on fixed assets on
acquisition basis 7,339 7,773
Cash flow 13,505 11,994
Changes in working capital
Inventory (6,064) (419)
Receivables (2,281) 62
Short-term debts (excluding debts
to financial institutions and
dividend) 2,388 1,626
(5,957) 1,269
Changes in provisions (468) (796)
Dividends paid-out (2,560) (1,200)
Other changes (173) (764)
Cash flow from operational
activities 4,347 10,503
INVESTMENT ACTIVITIES
Tangible fixed assets (7,689) (4,744)
Disposal of tangible fixed assets 1,126 185
Acquisition of activities (net) (1,950) 0
Cash flow from investment
activities (8,513) (4,559)
FINANCING ACTIVITIES
Changes in long-term debts 267 104
Changes in debts to financial
institutions 3,224 (343)
Cash flow from financial
activities 3,491 (239)
CHANGES IN LIQUID (675) 5,705
THOMAS REGOUT HOLDING N.V.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
General
Basis of consolidation
The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles in The Netherlands and are denominated
in Dutch guilders ("NLG"). Included in the consolidated financial statements of
Thomas Regout Holding N.V. is the financial data of:
- - Thomas Regout Holding N.V., Maastricht
- - Thomas Regout Nederland B.V., Maastricht 100%
- - Thomas Regout B.V., Maastricht 100%
- - Thomas Regout USA, Inc. Byron Center 100%
For the separate annual financial statements of the Dutch companies, the
exemption in Article 403, paragraph 1 of Book 2 of the Civil Code is used.
Unaudited interim financial information
Information included in the consolidated financial statements as of September
30, 1998, and for the interim periods ended September 30, 1997 and 1998, is
unaudited.
Cash flow statement
The consolidated cash flow statements have been prepared in accordance with
International Accounting Standards No. 7.
Basis for currency translation
Receivables, liquid assets and liabilities, where these are denominated in
foreign currency, are translated at the exchange rates at the end of the fiscal
year, or at the rates at which forward transactions are conducted. The exchange
rate differences involved are directly included in the financial results. Assets
and liabilities of the foreign subsidiaries are converted at the exchange rates
at the end of the fiscal year. The resulting exchange rate differences are
directly credited to, or charged against miscellaneous reserves. The income of
the foreign subsidiaries is converted at the average annual exchange rate during
the fiscal year. Differences between calculated results on the basis of average
annual exchange rates, and the rates on the balance sheet date are also credited
to, or charged against miscellaneous reserves.
Accounting principles
- - Intangible fixed assets
The intangible fixed assets are valued at cost price minus depreciation.
- - Tangible fixed assets
The tangible fixed assets are valued at cost price. From these cost prices,
capital expenditure premiums and/or subsidies have been subtracted, with
the exception of W.I.R.-premiums. From the thus calculated values,
depreciation amounts were subtracted.
Acquisitions before July 1, 1980 are depreciated according to the
degressive method. Acquisitions after July 1, 1980 are depreciated
according to the straight-line method. The percentages are based on life
expectancy.
- - Inventory
Raw and ancillary materials are valued at the lower of cost price including
freight or market price at the end of the fiscal year.
Work in progress and semi-finished products are valued at cost of
materials, increased by direct manufacturing cost, depending on the
finished stage of production. The finished product and the goods for resale
are valued at the lower of cost or cost price or market price at the end of
the fiscal year. Cost price includes cost of materials, direct
manufacturing costs and production overhead. Unmarketable and less
marketable inventory is valued at the expected selling price.
- - Receivables
Trade receivables are valued at nominal value. A reduction for non-
collectable risks has been applied to these receivables.
- - Provisions
Provisions for pensions involve the following obligations:
- Awarded active pensions to former employees, or their widows/widowers,
where these pensions were not reinsured with third parties. The amount
of these obligations is determined at actuarial value. The notional
interest used is 4.5%.
- The backservice-obligations that are incorporated in the Company
Pension Fund for the Steel Industry employee-pension insurance are
calculated in accordance with data that is supplied by this Fund.
The provision for taxes is based on the difference between the fiscal and
commercial valuation of the assets and liabilities, in accordance with the
current rates. In case of a deferred tax asset this will be included under
other receivables. The provision for profit sharing relates to the portion
of profit sharing that has not been made payable.
The other provisions refer to a provision for special risks, a provision
for self-insurance and a provision for reorganization costs. The provision
for special risks concerns an equalization reserve, covering multiple
fiscal years for additional V.U.T. (early retirement) costs. The amount of
this provision is determined on the basis of the net present value of
possible costs at retirement. The provision for reorganization costs
relates to personnel costs in connection with supplementary obligations for
terminated and yet to be terminated labor contracts.
Basis for calculation of income
- - Net sales
Net sales is the difference between invoiced proceeds to third parties, and
the direct costs that are associated with these sales.
- - Costs of raw and ancillary materials and finished goods. These expenses
are determined on the basis of historical costs.
- - Depreciation
Capitalized intangible fixed assets are depreciated over a period of 5
years. Depreciation on tangible fixed assets are calculated as a fixed
percentage, based on life expectancy on the cost price of these fixed
assets.
- - Taxes
Taxes are calculated on the basis of commercial results, taking tax
incentives into account. Possible compensation for losses is only taken
into account in the year in which the settlement is made.
- - Miscellaneous
On the basis of Article 402, title 9, Book 2 of the Civil Code, a condensed
income statement of the Company suffices.
Intangible fixed assets
The intangible fixed assets relate to the start-up costs of Thomas Regout USA,
Inc. These costs, which were fully depreciated at June 30, 1997, were
depreciated over a period of 5 years. Developments are as follows:
1997/98 1996/97
NLG'000 NLG'000
Book value as at June 30, 1997, respectively 1996 0 440
Depreciation of capitalized start-up costs 0 (440)
Book value as at June 30, 1998, respectively 1997 0 0
Total capitalized start-up costs 0 3,315
Cumulative depreciation capitalized start-up costs 0 (3,315)
Book value as at June 30, 1998, respectively 1997 0 0
Tangible fixed assets
Development of the tangible fixed assets is as follows:
LAND MACHINERY OTHER
AND AND FIXED
BUILDINGS EQUIPMENT ASSETS
NLG'000 NLG'000 NLG'000
Book value as at June 30, 1997 16,764 20,080 2,209
Assets put into operation 1,109 3,316 1,303
Disposals (989) (123) (14)
Change in assets in progress and on order 0 0 0
Currency differences 204 235 10
Depreciation (1,099) (5,403) (837)
Book value as at June 30, 1998 15,989 18,105 2,671
Total acquisition value 28,278 72,385 8,660
Cumulative depreciation 12,289 54,280 5,989
Book value as at June 30, 1998 15,989 18,105 2,671
Unaudited:
Book value as of June 30, 1998 15,989 18,105 2,671
Assets put into operation 239 0 0
Change in assets in progress,
and on order 0 0 0
Depreciation (253) (1,294) (200)
Book value as of September 30, 1998 15,975 16,811 2,471
Total acquisition value 28,517 72,385 8,660
Cumulative depreciation 12,542 55,574 6,189
Book value as at September 30, 1998 15,975 16,811 2,471
FIXED ASSETS
IN PROGRESS TOTAL TOTAL
AND ON ORDER 1997/98 1996/97
NLG'000 NLG'000 NLG'000
Book value as at June 30, 1997 1,879 40,932 41,936
Assets put into operation 0 5,728 5,864
Disposals 0 (1,126) (185)
Change in assets in progress and on order 1,961 1,961 (1,120)
Currency differences 43 492 1,770
Depreciation 0 (7,339) (7,333)
Book value as at June 30, 1998 3,883 40,648 40,932
Total acquisition value 3,883 113,206 108,498
Cumulative depreciation 0 72,558 67,566
Book value as at June 30, 1998 3,883 40,648 40,932
Unaudited:
Book value as of June 30, 1998 3,883 40,648
Assets put into operation 0 239
Change in assets in progress,
and on order (582) (582)
Depreciation 0 (1,747)
Book value as of September 30, 1998 3,301 38,558
Total acquisition value 3,301 112,863
Cumulative depreciation 0 74,305
Book value as at September 30, 1998 3,301 38,558
Provisions
The provision for pensions is established as follows:
30.09.98 30.06.98 30.06.97
(unaudited)
NLG'000 NLG'000 NLG'000
Active pensions under own management 134 138 143
Backservice-obligations 815 815 1,850
949 953 1,993
Based on a dramatically lower percentage used to calculate the provision a
substantial part of the provision for backservice has been released to income.
Miscellaneous
Miscellaneous provisions are specified as follows:
30.09.98 30.06.98 30.06.97
(unaudited)
NLG'000 NLG'000 NLG'000
Special risks 1,120 1,120 670
Insurance deductibles 101 101 101
Reorganization costs 225 250 750
1,446 1,471 1,521
In connection with layoffs of personnel, one-time payments were made in 1997/98,
and charged to the reorganization provisions. A part of the provision has been
release to income.
All provisions are long-term, with the exception of the provision for
reorganization costs.
Long-term liabilities
- - Financial institutions
On November 1, 1997, Thomas Regout USA, Inc., in order to refinance fixed
assets has pledged these fixed assets in a replacement of an existing
loan with a new loan of USD 4.5 million. No warrantees have been given by
the parent company. Interest is fixed for 6 years at 8%. Redemption in
quarterly installments amounts to USD 187,500. The redemption for 1998/99
has been included under short-term liabilities to financial institutions.
- - Other loans
These reflect a loan by a third party in respect of the acquisition by
Thomas Regout of trade activities and tools. It has been agreed that in
addition to a down payment in cash, during 3 years, an amount of NLG
750,000 per year will be paid. On these deferred payments interest will
be credited of interbank rate plus 1.5%. The payment due in 1998/99 is
included under short-term liabilities 'other'.
Short-term liabilities
TAXES AND SOCIAL SECURITY CONTRIBUTIONS
Specification of this item is as follows:
30.09.98 30.06.98 30.06.97
(unaudited)
NLG'000 NLG'000 NLG'000
Social security contributions 0 49 0
Transitional arrangements 503 353 0
Wage tax and sales tax 1,232 736 1,214
Corporate income tax 1,280 1,090 1,734
3,015 2,228 2,948
Net sales
The division of sales by product groups is as follows:
THREE MONTHS ENDED
SEPTEMBER 30,
FISCAL YEAR
1998 1997 1997/98 1996/97
(UNAUDITED)
% % % %
The Netherlands 21.4 20.6 21.0 23.6
Other European Union 39.4 39.0 39.5 38.3
countries
USA 29.1 33.3 28.7 27.2
Other exports 10.1 7.1 10.8 10.9
100.0 100.0 100.0 100.0
Other revenues
These revenues are related to services provided to Kontinex Profielen B.V.
Personnel costs
Personnel costs are composed as follows:
THREE MONTHS ENDED
SEPTEMBER 30,
FISCAL YEAR
1998 1997 1997/98 1996/97
(UNAUDITED)
NLG'000 NLG'000 NLG'000 NLG'000
Wages and salaries 6,631 6,572 28,573 27,148
Available for employee profit sharing 340 427 2,798 1,654
Statutory social security contributions
(including premium transfer allowances)
684 751 3,481 3,641
Pension contribution and transitional
arrangements 521 513 1,775 2,393
Other personnel costs 971 990 4,497 3,553
Temporary staff 994 851 4,953 2,998
10,141 10,104 46,077 41,387
The average number of employees was 508 525 526 509
Remuneration of the Supervisory Board
Remuneration of the five-member Supervisory Board, all of whom are paid, amounts
to NLG 249,000 for the fiscal year 1998/97 (1996/97: NLG 201,000); and amounts
to NLG 62,500 for the three months ended September 30, 1998 (three months ended
September 30, 1997 - NLG 62,500).
Extraordinary items
As a consequence of the sale of land and buildings to Kontinex, an extraordinary
gain has been realized in a book profit on fixed assets of NLG 1.7 million.
Our activities in China to establish a production facility incurred costs.
Included under extraordinary charges is an amount of NLG 1.0 million in this
respect.
Shareholders' equity
- - Issued capital
The authorized stock is NLG 7,900 common stock, NLG 100 preferred stock,
and NLG 4,000 cumulative preferred stock, for a total of NLG 12,000. Of
these, NLG 3,900 in common stock has been issued and fully paid (7,800
shares at NLG 500 nominal value), and NLG 100 preferred stock (200 shares
at NLG 500 nominal value). Shareholders with preferred stock have
priority of payments of the nominal value of these shares, in the event
of the Corporation's liquidation.
- - Miscellaneous reserves
The development of this item is as follows:
NLG'000
Situation as at June 30, 1997 56,938
Allocation from profit 3,686
Exchange rate differences in participation 319
Other changes participations (1,950)
Situation as at June 30, 1998 58,993
Unaudited:
Allocation from profit 738
Situation at September 30, 1998 59,731
Shareholders' equity and net profit under U.S. GAAP
The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in The Netherlands ("Dutch GAAP") which vary in
certain significant respects from those generally accepted in the United States
("U.S. GAAP"). The following is a summary of the adjustments to net profit and
shareholders' equity that would have been required if U.S. GAAP had been applied
instead of Dutch GAAP in the preparation of the consolidated financial
statements.
1. DEPRECIATION OF GOODWILL
In the 1997/1998 financial year, the Company paid goodwill of NLG 3 million on
the acquisition of rail and other activities in the form of an asset deal.
Under Dutch GAAP, the Company charged this goodwill immediately to shareholders'
equity, net of 35% corporate income tax. Under U.S. GAAP, goodwill is
capitalized and depreciated on a straight line basis over 20 years.
2. DEPRECIATION OF INTANGIBLE FIXED ASSETS
Under Dutch GAAP, the start-up costs of Thomas Regout USA Inc. were capitalized
by the Company and depreciated on a straight line basis over 5 years. Under
U.S. GAAP, these costs are expensed as incurred.
3. ADDITIONAL PENSION PROVISION ACCORDING TO U.S. STATEMENT OF FINANCIAL
ACCOUNTING STANDARDS ("FAS") NO. 87
The Company operates four pension schemes. The employees of the Company
participate in the industry-wide pension fund for the Metal Industry. As an
addition to this industry-wide fund there are surplus schemes for employees and
management and a separate pension scheme for the managing director. FAS 87
applies only to the surplus schemes for employees and management. Under Dutch
GAAP, FAS 87 does not apply as compared to U.S. GAAP.
4. PROVISION FOR INSURANCE DEDUCTIBLES
Not applicable under U.S. GAAP.
5. INCOME TAX EFFECT OF U.S. GAAP ADJUSTMENTS
Calculated at the nominal tax rate of 35%.
6. DIVIDENDS PAYABLE
Under Dutch GAAP, dividends are deductible from equity when granted. Under U.S.
GAAP dividends are deducted from equity when payable.
7. NET OPERATING TAX LOSS CARRYFORWARDS
The subsidiary Thomas Regout USA Inc. has at 30 June 1998 net operating loss
carryforwards for income tax purposes of approximately $8.7 million, available
to offset taxable income generated through 2013. The Company utilized net
operating loss carryforwards of $436,000 in 1997.
For reasons of prudence resulting tax assets were provided for full for both
Dutch GAAP and U.S. GAAP purposes.
The following table summarizes the significant adjustments to consolidated
shareholders' equity and net profits which would result from application of U.S.
GAAP.
NET PROFIT
SHAREHOLDERS' EQUITY THREE MONTHS ENDED
SEPTEMBER 30, JUNE 30, SEPTEMBER 30, FISCAL YEARS
1998 1998 1997 1998 1997 1997/98 1996/97
(UNAUDITED) (UNAUDITED)
NLG'000 NLG'000 NLG'000 NLG'000 NLG'000 NLG'000 NLG'000
Shareholders' equity/net
profit under Dutch GAAP 63,731 62,993 60,938 738 1,163 6,166 4,221
Goodwill 2,910 2,950 0 (40) 0 (50) 0
Intangible fixed assets 0 0 0 0 0 0 440
Additional pension
provision according to
FAS No. 87 (2,581) (2,542) (2,573) (39) 8 31 0
Provision for insurance
deductibles 101 101 101 0 0 0 0
Income tax effect of
US GAAP adjustments (150) (179) 865 29 (3) 6 (154)
Dividends payable 1,920 1,920 2,000 0 0 0 0
Shareholders' equity/net
profit under U.S. GAAP 65,931 65,243 61,331 688 1,168 6,153 4,507
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited pro forma condensed consolidated financial
statements set forth the Company's Pro Forma Condensed Consolidated Balance
Sheet as of September 30, 1998, and the Pro Forma Condensed Consolidated
Statements of Income for the year ended December 31, 1997 and for the nine
months ended September 30, 1998. These pro forma financial statements are
presented to illustrate the effect of certain adjustments to the historical
consolidated financial statements as explained in the accompanying notes.
The accompanying Pro Forma Condensed Consolidated Financial Statements
should be read in conjunction with the Company's historical consolidated
financial statements previously-filed with the Securities and Exchange
Commission, the historical consolidated financial statements of The Fort Lock
Group (acquired by the Company in March 1998) previously-filed with the
Commission and the historical consolidated financial statements of Thomas Regout
Holding N.V. ("TRH") included elsewhere in this Current Report on Form 8-K. The
pro forma condensed consolidated financial statements are presented for
information purposes only and are not necessarily indicative of actual results
had the transactions reflected therein occurred at the dates indicated, nor do
they purport to represent results of future operations of the Company.
COMPX INTERNATIONAL INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1998
(In millions)
ASSETS
CompX
TRH
historical historical
Current assets:
Cash and cash equivalents $ 50.5 $10.4
Accounts receivable 19.4 8.3
Receivable from affiliate .7 -
Inventories 15.9 10.3
Deferred income taxes 1.3 -
Other current assets .7 .5
Total current assets 88.5 29.5
Net property and equipment 32.0 20.5
Goodwill 23.2 1.5
Deferred income taxes - .4
Other assets .4 -
$144.1 $51.9
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current
maturities of long-term debt $ .7 $ 1.5
Accounts payable and accrued
liabilities 15.9 7.6
Income taxes 1.2 1.7
Deferred income taxes - .3
Total current liabilities 17.8 11.1
Noncurrent liabilities:
Long-term debt .9 4.4
Deferred income taxes 1.5 -
Other - 1.4
Total noncurrent liabilities 2.4 5.8
Stockholders' equity 123.9 35.0
$144.1 $51.9
ASSETS
Pro forma
adjustments
Note 2 Amount Pro forma
Current assets:
Cash and cash equivalents (a) $(32.2)
(b) (.6)
(d) (5.9) $ 22.2
Accounts receivable - 27.7
Receivable from affiliate .7
Inventories - 26.2
Deferred income taxes - 1.3
Other current assets - 1.2
Total current assets (38.7) 79.3
Net property and equipment (c) 6.7 59.2
Goodwill (c) 11.0 35.7
Deferred income taxes (c) 3.2 3.6
Other assets - .4
$(17.8) $178.2
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current
maturities of long-term debt (d) $ (1.5) $ .7
Accounts payable and accrued
liabilities (c) .6 24.1
Income taxes - 2.9
Deferred income taxes - .3
Total current liabilities (.9) 28.0
Noncurrent liabilities:
Long-term debt (a) 20.0
(d) (4.4) 20.9
Deferred income taxes (c) 2.0 3.5
Other (c) .5 1.9
otal noncurrent liabilities 18.1 26.3
Stockholders' equity (c) (35.0) 123.9
$(17.8) $178.2
COMPX INTERNATIONAL INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1998
Note 1 - Basis of presentation:
The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1998 has been prepared assuming the Company's acquisition of 100%
of the outstanding shares of TRH, more fully described in Item 2 and Item 7(c)
to this Current Report on Form 8-K, had occurred on September 30, 1998. The
acquisition is accounted for by the purchase method of accounting.
The historical consolidated financial statements of TRH contained elsewhere
in this Current Report on Form 8-K are denominated in Dutch guilders and have
been prepared in accordance with Dutch generally accepted accounting principles
("Dutch GAAP"). As explained in the accompanying notes to TRH's historical
consolidated financial statements, Dutch GAAP varies in certain significant
respects from accounting principles generally accepted in the United States
("U.S. GAAP"). Amounts shown for "TRH historical" in the Unaudited Pro Forma
Condensed Consolidated Balance Sheet have been derived from TRH's historical
consolidated balance sheet as of September 30, 1998 included elsewhere in this
Current Report on Form 8-K, as adjusted to give effect to these Dutch GAAP/U.S.
GAAP differences. In addition, the amounts are presented in U.S. dollars using
the September 30, 1998 exchange rate of 1.88 Dutch guilders per U.S. dollar.
Note 2 - Pro forma adjustments:
Pro forma adjustments to reflect the acquisition of TRH are described
below.
(a) CompX pays $52.2 million for 100% of the outstanding shares of capital
stock of TRH. The purchase price is funded using cash on hand of $32.2
million and $20.0 of borrowings under CompX's revolving bank credit
facility.
(b) CompX incurs $.6 million in acquisition related costs.
(c) Allocate purchase price as follows:
Amount
(In millions)
Purchase price to be allocated:
Cash paid to acquire TRH $52.2
Transaction costs .6
52.8
Historical TRH equity (on a U.S. GAAP basis) 35.0
$17.8
Amount
(In millions)
Purchase price allocation:
Adjust TRH property, plant and equipment to estimated
fair value:
Land $ 2.1
Buildings 4.6
Record accrual for estimated environmental
remediation costs not recorded by TRH (.5)
Other accrued liabilities (.6)
Reverse TRH's deferred income tax asset valuation
allowance with respect to TRH's U.S. federal income
tax net operating loss carryforwards 3.2
Deferred income taxes related to other purchase price
allocations at The Netherlands effective income tax
rate of 35% (2.0)
Goodwill 11.0
$17.8
As explained in the accompanying notes to TRH's historical consolidated
financial statements, TRH's U.S. subsidiary has approximately $9 million of
U.S. federal income tax net operating loss carryforwards for which the
benefit had not been recognized under the "more-likely-than-not"
recognition criteria of U.S. Statement of Financial Accounting Standards
No. 109. However, based on the Company's assessment of its ability to
utilize such net operating loss carryforwards in the future, the Company is
recognizing the deferred income tax asset associated with such
carryforwards as part of its purchase price allocation.
The above purchase price allocation has been allocated to TRH's individual
assets and liabilities based upon preliminary estimates of fair value. The
actual allocation of the purchase price may differ from the preliminary
allocation due to adjustments to the purchase price and refinements of the
fair values of the net assets acquired.
(d) TRH retires its outstanding U.S. indebtedness of $5.9 million.
COMPX INTERNATIONAL INC.
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF INCOME
Year ended December 31, 1997
(In thousands, except per share amounts)
Pro forma
CompX TRH adjustments
pro forma historical Note 2 Amount Pro forma
Total revenues $138.7 $52.9 $ - $191.6
Costs and expenses:
Cost of sales 91.2 42.2 (c) .4 133.8
Selling, general and
administration 19.7 6.0 (a) .6 26.3
Interest .1 .4 (b) 1.2
(d) (.4) 1.3
111.0 48.6 1.8 161.4
Income before income 27.7 4.3 (1.8) 30.2
taxes
Provision for income taxe 11.5 1.3 (f) (.4) 12.4
Minority interest in net .1 - - .1
loss
Net income $ 16.3 $ 3.0 $(1.4) $ 17.9
Diluted net income per
common share $ 1.01 $ 1.10
Weighted average diluted
common shares
outstanding 16.2 16.2
COMPX INTERNATIONAL INC.
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENT OF INCOME
Nine months ended September 30, 1998
(In thousands, except per share amounts)
Pro forma
CompX TRH adjustments
pro formahistorical Note 2 Amount Pro forma
Total Revenues $115.1 $ 41.0 $ - $156.1
Costs and expenses: -
Cost of sales 77.5 32.5 (c) .3 110.3
Selling, general and 15.0 4.4 (a) .4
administration
(e) (3.3) 16.5
Other expense (income), net (1.2) - - (1.2)
Interest .6 .3 (b) .9
(d) (.3) 1.5
91.9 37.2 (2.0) 127.1
Income before income taxes 23.2 3.8 2.0 29.0
Provision for income taxes 8.6 1.2 (f) .8 10.6
Minority interest in net loss -
Net income $ 14.8 $ 2.6 $ 1.2 $ 18.6
Diluted net income per common
share $ .91 $ 1.15
Weighted average diluted
common shares outstanding 16.2 16.2
COMPX INTERNATIONAL INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
Year ended December 31, 1997 and
Nine Months Ended September 30, 1998
Note 1 - Basis of presentation:
The Unaudited Pro Forma Condensed Consolidated Statements of Income for the
year ended December 31, 1997 and the nine months ended September 30, 1998 have
been prepared assuming the Company's acquisition of 100% of the outstanding
shares of capital stock of TRH, more fully described in Item 2 and Item 7(c) to
this Current Report on Form 8-K, had occurred as of January 1, 1997. The
acquisition will be accounted for by the purchase method of accounting.
As previously reported, (i) in February 1998 the Company entered into a new
$100 million revolving bank credit facility and utilized $50 million of
borrowings to repay a demand note payable to the Company's former parent
company, Valcor, Inc., which demand note was issued to Valcor in December 1997
in the form of a dividend, (ii) in March 1998 the Company acquired Fort Lock
Corporation in a purchase business combination for an aggregate purchase price
of $33 million funded by $25 million of borrowings under the new bank credit
facility and funds on hand, (iii) in March 1998 the Company completed an initial
public offering of 6 million shares of its common stock and utilized a portion
of the net proceeds to repay the $75 million of borrowings outstanding under the
new bank credit facility and (iv) granted 164,880 shares of its Class A common
stock (the "Management Shares") to certain key individuals in connection with
the public offering and recognized a $3.3 million pre-tax charge associated with
such grant. The accompanying Unaudited Pro Forma Condensed Consolidated
Statements of Income have been prepared as if all of these transactions had also
occurred on January 1, 1997. In this regard, (a) the amounts shown for CompX
pro forma for the year ended December 31, 1997 reflect the transactions
described in (i) through (iv) above and are shown in the Company's Unaudited Pro
Forma Condensed Consolidated Financial Statements included in the Company's
Registration Statement on Form S-1 (File No. 333-42643) and (b) the amounts
shown for CompX pro forma for the nine months ended September 30, 1998 reflect
the transactions described in (i) through (iii) above and are shown in the
Company's Current Report on Form 8-K dated October 16, 1998 (File No. 1-13905).
The pro forma impact of the Company's November 1998 acquisition of another lock
competitor is not significant.
The historical consolidated financial statements of TRH contained elsewhere
in this Current Report on Form 8-K are denominated in Dutch guilders and have
been prepared in accordance with Dutch generally accepted accounting principles
("Dutch GAAP"). As explained in the accompanying notes to TRH's historical
consolidated financial statements, Dutch GAAP varies in certain significant
respects from accounting principles generally accepted in the United States
("U.S. GAAP"). Amounts shown for "TRH historical" in the Unaudited Pro Forma
Condensed Consolidated Statements of Income have been derived from TRH's
historical consolidated statements of income included elsewhere in this Current
Report on Form 8-K, as adjusted to give effect to these Dutch GAAP/U.S. GAAP
differences. In addition, the amounts are presented in U.S. dollars using
weighted average exchange rates of 1.94 Dutch guilders per U.S. dollar for the
year ended December 31, 1997 and 2.04 Dutch guilders per U.S. dollar for the
nine months ended September 30, 1998.
The shares used in the calculation of diluted earnings per share is based
upon the 16.1 million shares of the Company's common stock outstanding after
completion of its initial public offering, plus an assumed 100,000 shares for
the estimated dilutive impact of outstanding stock options.
Note 2 - Pro forma adjustments:
Pro forma adjustments to reflect the acquisition of TRH and other pro forma
adjustments are described below.
(a) Amortization of goodwill related to the acquisition of TRH by the
straight-line method over 20 years.
(b) Increase in interest expense resulting from assumed borrowings of $20
million using effective interest rates of 5.9% for the year ended
December 31, 1997 and 5.7% for the nine months ended September 30,
1998.
(c) Increase in depreciation expense resulting from amortization of
purchase accounting basis differences allocated to buildings using the
average remaining useful life of 11 years.
(d) Eliminate interest expense resulting from the assumed retirement of
TRH's U.S. debt.
(e) Reverse the Management Share charge included in the 1998 pro forma
results for CompX because such charge is assumed to have been recorded
as of January 1, 1997.
(f) Income tax expense related to pro forma adjustments (b) through (e) at
applicable income tax rates (35% for adjustments related to The
Netherlands and 37%, the combined U.S. federal and state tax rates,
for adjustments related to the U.S.).
