SEC Filing Html Data
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report: October 29, 2003
COMPX INTERNATIONAL INC.
(Exact name of Registrant as specified in its charter)
Delaware 1-13905 57-0981653
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
5430 LBJ Freeway, Suite 1700, Dallas, TX 75240-2697
(Address of principal executive offices) (Zip Code)
(972) 448-1400
(Registrant's telephone number, including area code)
(Former name or address, if changed since last report)
Item 9: Regulation FD Disclosure
Item 12: Results of Operations and Financial Condition
Pursuant to Items 9 and 12 of this current report, the registrant
hereby furnishes the information set forth in the press release issued on
October 29, 2003, a copy of which is attached hereto as Exhibit 99.1 and
incorporated herein by reference.
The information, including the exhibit, the registrant furnishes in
this report is not deemed "filed" for purposes of section 18 of the Securities
Exchange Act of 1934, as amended, or otherwise subject to the liabilities of
that section. Registration statements or other documents filed with the
Securities and Exchange Commission shall not incorporate this information by
reference, except as otherwise expressly stated in such filing.
SIGNATURE
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/ A. Andrew R. Louis
----------------------
A. Andrew R. Louis
Secretary
Date: October 30, 2003
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- --------------------------------------------------
99.1 Press release dated October 29, 2003 issued by CompX
International Inc.
[LOGO GOES HERE]
PRESS RELEASE
FOR IMMEDIATE RELEASE: CONTACT:
CompX International Inc. David A. Bowers
5430 LBJ Freeway, Suite 1700 President & CEO
Dallas, Texas 75240 Tel. 864-286-1122
COMPX REPORTS THIRD QUARTER 2003 OPERATING
RESULTS AND RESTRUCTURING CHARGE
Dallas, TEXAS ... October 29, 2003 ... CompX International Inc. (NYSE: CIX)
announced today sales of $52.5 million for the third quarter of 2003 and net
loss of $400,000, or $0.03 per diluted share. This represents an increase in
sales of 8% from $48.8 million in the year ago quarter. The Company reported net
income of $200,000, or $0.02 per diluted share, for the comparable 2002 period.
The Company's results for the third quarter 2003 included a pre-tax
restructuring charge of $3.5 million ($2.0 million, or $0.13 per diluted share,
net of income tax benefit) relating to a formal headcount reduction plan at the
company's Maastricht, the Netherlands manufacturing facility. Excluding the
restructuring charge, net income for the quarter was $1.6 million, or $0.10 per
diluted share.
In addition to the restructuring charge, CompX's results in the third quarter
2003 as compared to the third quarter of 2002 were impacted by fluctuations in
currency exchange rates which favorably impacted net sales by $2.0 million, but
negatively impacted operating income by $1.3 million. The impact on net sales is
primarily due to relative changes in the U.S. dollar exchange rate to the euro
and the Canadian dollar. The impact on operating income is primarily due to the
effect of relative changes in the exchange rate between the U.S. dollar and the
Canadian dollar on the Company's Canadian operations, where the majority of net
sales are denominated in U.S. dollars while the majority of expenses are
denominated in Canadian dollars.
Net sales for the nine-month period ended September 30, 2003 were $153.3 million
compared to $148.4 million for the first nine months of the previous year. Net
income for the nine-month period was $500,000, or $0.03 per diluted share,
compared to $2.4 million, or $0.16 per diluted share for the same period in
2002. Excluding the restructuring charge and the previously-reported first
quarter 2002 pension curtailment gain, net income for the nine-month period of
2003 was $2.5 million or $0.16 per diluted share as compared to $2.0 million or
$0.14 per diluted share, for the same period in 2002.
The fluctuations in currency exchange rates discussed above favorably affected
net sales by $6.3 million in the nine-month period ending September 30, 2003 as
compared to the same period in 2002, but negatively impacted operating income by
$2.6 million.
"Our gross profit percentage for the quarter improved to 18.4% from 15.7% last
year, as the cost control initiatives we have been working on over the last 12
months have begun to be realized," commented David A. Bowers, President & CEO.
"We are also encouraged by the increase in sales for the quarter over last year
but remain cautious regarding the pace of the economic recovery and its impact
on our customers. The action taken at our Netherlands manufacturing facility
that resulted in the restructuring charge was a painful but necessary step in
helping to return that business to profitability."
Security Products Segment
The CompX Security Products segment experienced a 1% decrease in net sales in
the third quarter of 2003 to $18.8 million compared to the same quarter last
year of $19.0 million. However, operating income increased by 29% from $2.2
million to $2.9 million primarily due to efforts to improve manufacturing
efficiencies that resulted in reductions in manufacturing costs for this
segment. Operating income was 15.2% of net sales for the third quarter of 2003,
which compares favorably to operating income of 11.7% of net sales for the
comparable prior period. Net sales on a year-to-date basis for the Security
Products segment are down less than 1% from the prior year to $56.1 million from
$56.5 million. However, operating income improved 12.7% to $7.6 million compared
to $6.7 million in 2002.
Waterloo Segment
Net sales for the CompX Waterloo segment increased 11.3% to $25.3 million in the
third quarter of 2003 from $22.7 million in the third quarter in 2002 as the
favorable effect of relative changes in currency exchange rates and higher slide
products volume more than offset the impact of lower ergonomic products volume.
Favorable changes in currency exchange rates from the third quarter of 2002
accounted for approximately one-third of the increase in net sales. Net sales on
a year-to-date basis increased slightly from $70.0 million in 2002 to $72.0
million in 2003, with changes in currency exchange rates accounting for all of
the increase. Operating income for this segment improved from a loss of $800,000
in the third quarter of 2002 to income of $300,000 for the third quarter of
2003, and improved from break-even in the first nine months of 2002 compared to
income of $200,000 in the first nine months of 2003, as the favorable impact of
cost control initiatives and higher slide products volume more than offset the
unfavorable impact of lower ergonomic products volume (which generally have a
higher margin than slide products), relative changes in currency exchange rates,
and plant consolidation costs. Relative changes in foreign currency exchange
rates negatively impacted operating income by approximately $900,000 in the
third quarter of 2003 compared to the same period in 2002, and by $1.9 million
in the year-to-date period.
Regout Segment
Net sales for the CompX Regout segment increased 18.9% to $8.4 million in the
third quarter of 2003 from $7.1 million in the third quarter of 2002. Changes in
currency exchange rates from the third quarter of 2002 accounted for
substantially all of the increase. For the first nine months of 2003, net sales
increased 14.9% to $25.2 million as compared to $21.9 million in the first nine
months of 2002, as the favorable effect of fluctuations in currency exchange
rates was partially offset by decreases in precision slide shipments to office
furniture manufacturers. The operating loss for this segment of $3.5 million for
the third quarter of 2003, compared to an operating loss of $100,000 in 2002,
reflects the previously mentioned restructuring charge of $3.5 million and a
negative currency exchange rate fluctuation impact of $400,000, partially offset
by an increase in sales volume. The year-to-date operating loss for this segment
was $5.4 million, compared to a loss of $200,000 for the 2002 period, which
reflects the previously mentioned restructuring charge, a negative currency
exchange rate fluctuation impact of $700,000 and lower precision slide shipments
to office furniture manufacturers.
Mr. Bowers further commented, "We currently expect approximately $3.5 million to
$4.0 million in annual cost savings to be realized from the restructuring action
at Regout, which we anticipate will begin to positively impact our results
during the second quarter of 2004. We continue to evaluate other potential
efficiency initiatives and strategic alternatives at Regout, some of which may
result in additional charges."
He concluded, "While the current business environment continues to pose ongoing
challenges, we are building on the progress we have made over the last year and
remain optimistic about the opportunities ahead of us. We continue to focus on
improving efficiency in all areas of the business, including reducing costs and
actively managing working capital, and we are accelerating new product
development activities that are anticipated to position the Company to better
address new sales opportunities expected to surface as the economy improves."
Liquidity and Cash Flow
Cash provided by operating activities improved to $14.1 million for the first
nine months compared to $9.4 million in the same period in the prior year. The
improvement in cash provided by operating activities was primarily due to
efficient management of working capital. Capital expenditures decreased from
$9.9 million in the first nine months of 2002 to $7.9 million in the same 2003
period. The capital spending for the first nine months of 2002 was higher than
the same period in 2003 primarily due to the purchase of equipment to increase
manufacturing capacity in response to specific customer contracts. The Company
improved total cash to $17.8 million as of September 30, 2003 compared to $12.4
million as of December 31, 2002, while total debt declined $1 million over the
same period.
Non-GAAP Measurements
In addition to the results provided throughout this document calculated in
accordance with accounting standards generally accepted in the United States
("GAAP"), the Company has provided non-GAAP measurements, which present results
on a basis excluding the restructuring charge and pension curtailment gain. The
Company has provided these non-GAAP measurements as a measure to help investors
better understand its core operating performance from period to period and to
allow appropriate comparisons of the Company's operating performance. Among
other things, the Company's management uses the non-GAAP operating results,
excluding the restructuring charge and pension curtailment gain, to evaluate the
performance of its business operations. Investors should consider these non-GAAP
measures in addition to, and not in substitution for, or as superior to, the
measures of financial performance prepared in accordance with GAAP.
The following table provides a reconciliation of GAAP net income and earnings
per share to net income and earnings per share excluding the restructuring
charge and pension curtailment gain:
Third Quarter Nine months
(Dollars in millions, except per share data) 2002 2003 2002 2003
- ----------------------------------------------------------------------------------------------------------------
GAAP net income (loss) $ 0.2 $ (0.4) $ 2.4 $ 0.5
Adjustments:
Restructuring charge - 3.5 3.5
Pension curtailment gain - - (0.7) -
Income tax expense (benefit) - (1.5) 0.3 (1.5)
-------- --------- --------- ---------
Adjusted net income $ 0.2 $ 1.6 $ 2.0 $ 2.5
======== ========= ========= =========
Adjusted net income per share $ 0.02 $ 0.10 $ 0.14 $ 0.16
======== ======== ======== =========
Shares used in computing basic and diluted
adjusted net income per share 15.1 15.1 15.1 15.1
======== ========= ======== =========
About CompX International
CompX is a leading manufacturer of precision ball bearing slides, security
products and ergonomic computer support systems. It operates from seven
locations in the U.S., Canada, the Netherlands and Taiwan and employs more than
1,900 people.
Statements in this release relating to matters that are not historical facts are
forward-looking statements based upon management's belief and assumptions using
currently available information. Although CompX believes the expectations
reflected in such forward-looking statements are reasonable, it cannot give any
assurances that these expectations will prove to be correct. Such statements, by
their nature, involve substantial risks and uncertainties that could
significantly impact expected results, and actual future results could differ
materially from those described in such forward-looking statements. While it is
not possible to identify all factors, CompX continues to face many risks and
uncertainties. Among the factors that could cause actual future results to
differ materially include, but are not limited to, general economic and
political conditions, demand for office furniture, service industry employment
levels, competitive products and prices, fluctuations in currency exchange
rates, the introduction of trade barriers, potential difficulties in integrating
completed acquisitions, negotiations with employee and government groups
relating to employee severance, the timing and amount of future cost savings
from restructuring actions, the ability to sustain or increase operating income
improvement resulting from cost control initiatives, uncertainties associated
with new product development and other risks and uncertainties detailed in
CompX's Securities and Exchange Commission filings. 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 forecast or expected. CompX disclaims any intention or
obligation to publicly update or revise such statements whether as a result of
new information, future events or otherwise.
* * * * *
COMPX INTERNATIONAL INC.
SUMMARY OF CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2002 2003 2002 2003
Net sales $ 48.8 $ 52.5 $ 148.4 $ 153.3
Cost of goods sold 41.2 42.8 121.3 126.9
------------------------ -----------------------
Gross profit 7.6 9.7 27.1 26.4
Selling, general and administrative 6.4 6.5 20.6 20.5
Restructuring expense - 3.5 - 3.5
------------------------ -----------------------
Operating income (loss) 1.2 (0.3) 6.5 2.4
Interest expense (0.3) (0.3) (1.6) (1.0)
Other income (expense) 0.1 (0.1) (0.1) (0.5)
------------------------- ------------------------
Income (loss) before income taxes 1.0 (0.7) 4.8 0.9
Income tax expense (benefit) 0.8 (0.3) 2.4 0.4
------------------------- -----------------------
Net income (loss) $ 0.2 $ (0.4) $ 2.4 $ 0.5
========================= =======================
Net income (loss) per diluted
common share $ 0.02 $ (0.03) $ 0.16 $ 0.03
========================= =======================
Weighted average diluted common
shares outstanding 15.1 15.1 15.1 15.1
======================== =======================
COMPX INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
December 31, September 30,
2002 2003
----------------- --------------
Assets (Unaudited)
Current assets:
Cash and equivalents $ 12.4 $ 17.8
Accounts receivable, net 22.9 26.0
Inventories 28.9 28.6
Prepaid expenses and other 7.1 5.7
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Total current assets 71.3 78.1
Intangibles 42.9 44.1
Net property and equipment 85.2 84.5
Other assets 0.7 0.4
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Total assets $ 200.1 $ 207.1
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 21.3 $ 24.1
Accrued income taxes and other 0.8 0.9
----------- -----------
Total current liabilities 22.1 25.0
Long-term debt 31.0 30.0
Other non-current liabilities 5.0 2.4
Stockholders' equity 142.0 149.7
----------- -----------
Total liabilities and stockholders' equity $ 200.1 $ 207.1
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