SEC Filing Html Data
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: February 6, 2004
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) 233-1700
(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 February 6,
2004, 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: February 6, 2004
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- --------------------------------------------------
99.1 Press release dated February 6, 2004 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 FOURTH QUARTER AND FULL YEAR 2003 OPERATING RESULTS
Dallas, TEXAS ... February 6, 2004 ... CompX International Inc. (NYSE: CIX)
announced today sales of $54.3 million for the fourth quarter of 2003 and net
income of $800,000, or $0.05 per diluted share. This represents an increase in
sales of 14% from $47.7 million in the year ago quarter. For the comparable 2002
quarter, the Company reported a net loss of $1.8 million, or $0.12 per diluted
share. Net sales for the year ended December 31, 2003 were $207.5 million
compared to $196.1 million the previous year. Net income for 2003 was $1.3
million, or $0.08 per diluted share, compared to $600,000, or $0.04 per diluted
share in 2002. Certain items affecting the comparability of CompX's fourth
quarter and annual results in 2002 and 2003 are discussed below.
Fourth quarter comparability
o Fourth quarter 2002 results included pre-tax charges of $3.5 million ($2.3
million, or $0.15 per diluted share, net of income tax benefit) relating to
retooling the Byron Center, Michigan precision slide facility and
inventory-related charges.
o Fourth quarter 2003 results were impacted by fluctuations in currency
exchange rates as compared to the fourth quarter of 2002, which favorably
affected net sales by $2.6 million but unfavorably affected operating
income by $1.2 million. The impact on net sales is primarily due to the
weakening U.S. dollar in relation to the euro and Canadian dollar. The
impact on operating income is primarily from 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.
Annual comparability
o In addition to the above mentioned fourth quarter 2002 charge, the 2002
results were positively impacted by a first quarter pension settlement gain
of $700,000 ($400,000, or $0.03 per diluted share, net of income taxes).
o The Company's results for 2003 included a third quarter pre-tax
restructuring charge of $3.3 million ($1.8 million, or $0.12 per diluted
share, net of income tax benefit) relating to a formal headcount reduction
plan at the Company's Maastricht, the Netherlands manufacturing facility.
o Fluctuations in currency exchange rates favorably affected net sales by
$8.9 million for the year ending December 31, 2003 as compared to the same
period in 2002, but negatively affected operating income by $3.8 million.
Excluding the 2003 restructuring charge, the 2002 pension settlement gain and
2002 plant retooling and inventory charges, net income for the year of 2003 was
$3.1 million, or $0.21 per diluted share, as compared to $2.5 million, or $0.17
per diluted share, in 2002.
"Fourth quarter sales were better than expected as we see signs of the economic
recovery taking hold in our markets." commented David A. Bowers, President &
CEO. "We are encouraged by fourth quarter performance which in part is the
result of the positive impact of lean manufacturing initiatives, rationalization
of production capacity and the addition of new customer business throughout
2003."
Security Products Segment
CompX Security Products experienced a 19% increase in net sales in the fourth
quarter of 2003 with $20.1 million compared to the same quarter last year of
$16.9 million. Net sales for this segment increased 4% year-to-year to $76.2
million from $73.4 million primarily, as a result of increased sales volumes.
Fourth quarter operating income increased from $1.4 million in 2002 to $2.2
million in 2003. For the year, operating income improved to $9.7 million in 2003
compared to $8.1 million in 2002. The quarter and year operating income
improvements were primarily due to the increase in sales volumes and lean
manufacturing initiatives implemented throughout the year. The operating income
improvement in 2003 also results in part from $600,000 in 2002 fourth quarter
inventory related charges.
Waterloo Segment
Net sales for the Waterloo segment increased 10% to $25.5 million in the fourth
quarter of 2003 from $23.1 million in the fourth quarter in 2002, and increased
5% from $93.1 million for the 2002 year to $97.5 million in 2003. Sales
comparisons were favorably impacted by relative changes in currency exchange
rates and higher slide products volume, which more than offset the unfavorable
impact of lower ergonomic products volume. Operating income for this segment
improved from a loss of $1.1 million in the fourth quarter of 2002 to income of
$200,000 for the fourth quarter of 2003, and improved year-to-year from a loss
of $1.1 million in 2002 to income of $400,000 in 2003. Operating income
comparisons were affected by unfavorable relative changes in currency exchange
rates of $1.1 million in the fourth quarter and $3.1 million year-to-year and
the comparative impact of fourth quarter 2002 retooling and inventory related
charges of $2.9 million. Excluding the currency effect and 2002 charges,
operating income improved from 2002 to 2003 primarily due to slide volume
increases and the positive impact in 2003 of the 2002 Byron Center, Michigan
plant retooling.
Thomas Regout Segment
Net sales for the Thomas Regout segment increased 13% to $8.7 million in the
fourth quarter of 2003 from $7.7 million in the fourth quarter of 2002. However,
the increase is due to relative changes in currency exchange rates, which
favorably impacted net sales by $1.4 million and more than offset the effect of
lower volumes of precision slide shipments to European office furniture
manufacturers. For the year 2003, net sales increased 14% to $33.9 million as
compared to $29.6 million for 2002, as the favorable effect of fluctuations in
currency exchange rates of $5.6 million more than offset the impact of decreases
in precision slide shipments. The fourth quarter of 2003 operating loss for this
segment was $600,000 compared to an operating loss of $500,000 in 2002. The 2003
year operating loss for this segment was $6.0 million, compared to a loss of
$700,000 for 2002, which reflects the previously mentioned restructuring charge,
lower precision slide shipments to European office furniture manufacturers and a
negative currency exchange rate fluctuation impact of $800,000.
Mr. Bowers further commented, "The benefits from the restructuring actions at
Thomas Regout during the third quarter 2003 are expected to begin to have a
favorable affect on results by the second quarter of 2004 and beyond. While the
outlook for Thomas Regout is improving, we continue to evaluate strategic
alternatives, some of which could result in additional charges in the future."
He concluded, "While the 2003 industry and general economic environment
adversely impacted our operating results, we successfully executed a number of
cost savings initiatives that improve our competitive position for 2004 and
beyond. Our cost structure has been better aligned with expected demand, systems
upgrades are well underway and we have invested in both new product and customer
oriented strategies to enhance profitability of the Company. Our focus on
working capital has enabled us to generate $5.1 million in cash from inventory
during 2003 through implementation of more efficient inventory management
processes. Overall cash flow from operations improved for the year by 44%,
allowing us to reduce our outstanding debt and strengthen our financial position
as we continue to move the Company forward."
Liquidity and Cash Flow
Cash provided by operating activities improved to $24.4 million for the year
compared to $16.9 million in the prior year. The improvement in cash provided by
operating activities was primarily due to efficient management of working
capital. The Company improved total cash to $21.7 million as of December 31,
2003 compared to $12.4 million as of December 31, 2002, while total debt
declined $5 million over the same period. On January 28, 2004, the Company
utilized a portion of its cash balance to reduce debt by an additional $12.0
million.
Non-GAAP Measurements
In addition to the results provided throughout this release 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 and other specific charges and the
pension settlement gain. The Company has provided these non-GAAP measurements as
a measure to help investors better understand the comparability of the Company's
operating performance. Among other things, the Company's management uses this
non-GAAP measure of the Company's operating results, to evaluate the performance
of its business operations. Investors should consider this non-GAAP measure 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 items specified
below:
Fourth Quarter Year
(Dollars in millions, except per share data) 2002 2003 2002 2003
- ----------------------------------------------------------------------------------------------------------------
GAAP net income (loss) $ (1.8) $ 0.8 $ 0.6 $ 1.3
Adjustments:
Restructuring charge - (0.2) 3.3
Facility retooling and inventory charges 3.5 - 3.5 -
Pension settlement gain - - (0.7) -
Income tax expense (benefit) (1.2) 0.1 (0.9) (1.5)
--------- --------- --------- ---------
Adjusted net income $ 0.5 $ 0.7 $ 2.5 $ 3.1
======== ========= ========= =========
Adjusted net income per share $ 0.03 $ 0.05 $ 0.17 $ 0.21
======== ======== ======== =========
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
1,800 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. The Company's 2003 results are
subject to the completion of an audit and the filing of its 2003 Annual Report
on Form 10-K.
* * * * *
COMPX INTERNATIONAL INC.
SUMMARY OF CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share
amounts) (Unaudited)
Three months ended Year ended
December 31, December 31,
2002 2003 2002 2003
------------------------ ------------------------
Net sales $ 47.7 $ 54.3 $ 196.1 $ 207.5
Cost of goods sold 41.9 46.0 163.2 172.8
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Gross profit 5.8 8.3 32.9 34.7
Selling, general and administrative 6.1 6.8 26.7 27.3
Restructuring expense - (0.2) - 3.3
------------------------- -----------------------
Operating income (loss) (0.3) 1.7 6.2 4.1
Interest expense (0.2) (0.3) (1.9) (1.3)
Other income (expense) (0.9) - (0.9) (0.5)
------------------------ ------------------------
Income (loss) before income taxes (1.4) 1.4 3.4 2.3
Income tax expense 0.4 0.6 2.8 1.0
------------------------ -----------------------
Net income (loss) $ (1.8) $ 0.8 $ 0.6 $ 1.3
======================== =======================
Net income (loss) per diluted
common share $(0.12) $ 0.05 $ 0.04 $ 0.08
======================== =======================
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, December 31,
2002 2003
----------------- --------------
Assets (Unaudited)
Current assets:
Cash and equivalents $ 12.4 $ 21.7
Accounts receivable, net 22.9 25.7
Inventories 28.9 26.3
Prepaid expenses and other 7.1 6.5
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Total current assets 71.3 80.2
Intangibles 42.9 45.3
Net property and equipment 85.2 83.2
Other assets 0.7 0.4
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Total assets $ 200.1 $ 209.1
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 21.3 $ 24.0
Accrued income taxes and other 0.8 0.5
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Total current liabilities 22.1 24.5
Long-term debt 31.0 26.0
Other non-current liabilities 5.0 4.2
Stockholders' equity 142.0 154.4
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Total liabilities and stockholders' equity $ 200.1 $ 209.1
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