-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ASk9ecYkvBw6cxOWD3h53pLHLSfig/fJfgBk+9BNhaxD7kH6x+Dv4Sr+XuHrFQ5p oTea+lg9kncMJa3C1Ao2wg== 0001010549-05-000533.txt : 20050805 0001010549-05-000533.hdr.sgml : 20050805 20050805120055 ACCESSION NUMBER: 0001010549-05-000533 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050630 FILED AS OF DATE: 20050805 DATE AS OF CHANGE: 20050805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAPITAL SOUTHWEST CORP CENTRAL INDEX KEY: 0000017313 IRS NUMBER: 751072796 STATE OF INCORPORATION: TX FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 811-01056 FILM NUMBER: 051001589 BUSINESS ADDRESS: STREET 1: 12900 PRESTON RD STE 700 CITY: DALLAS STATE: TX ZIP: 75230 BUSINESS PHONE: 9722338242 MAIL ADDRESS: STREET 1: 12900 PRESTON RD STREET 2: SUITE 700 CITY: DALLAS STATE: TX ZIP: 75230 10-Q 1 capital10q063005.txt FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2005 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ..................... to ..................... Commission File Number: 814-61 CAPITAL SOUTHWEST CORPORATION (Exact name of registrant as specified in its charter) Texas 75-1072796 (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 12900 Preston Road, Suite 700, Dallas, Texas 75230 (Address of principal executive offices) (Zip Code) (972) 233-8242 (Registrant's telephone number, including area code) 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 3,857,051 shares of Common Stock, $1 Par Value as of July 31, 2005 TABLE OF CONTENTS Page No. -------- PART I. FINANCIAL INFORMATION ITEM 1. Consolidated Financial Statements Consolidated Statements of Financial Condition June 30, 2005 (Unaudited) and March 31, 2005.................3 Consolidated Statements of Operations (Unaudited) For the three months ended June 30, 2005 and June 30, 2004................................................4 Consolidated Statements of Changes in Net Assets For the three months ended June 30, 2005 (Unaudited) and year ended March 31, 2005....................................5 Consolidated Statements of Cash Flows (Unaudited) For the three months ended June 30, 2005 and June 30, 2004...6 Notes to Consolidated Financial Statements........................7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..........................8 ITEM 3. Quantitative and Qualitative Disclosure About Market Risk.................................................11 ITEM 4. Controls and Procedures.......................................11 PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K..............................12 Signatures .................................................................13
PART I. FINANCIAL INFORMATION - ------------------------------ Item 1. Consolidated Financial Statements CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES Consolidated Statements of Financial Condition ---------------------------------------------- Assets June 30, 2005 March 31, 2005 ------------- -------------- (Unaudited) Investments at market or fair value Companies more than 25% owned (Cost: June 30, 2005 - $23,114,866 March 31, 2005 - $23,114,866) $264,196,981 $259,628,981 Companies 5% to 25% owned (Cost: June 30, 2005 - $21,550,000 March 31, 2005 - $19,050,000) 47,690,852 44,890,852 Companies less than 5% owned (Cost: June 30, 2005 - $41,063,077 March 31, 2005 - $42,381,532) 115,457,505 117,502,389 ------------ ------------ Total investments (Cost: June 30, 2005- $85,727,943 March 31, 2005 - $84,546,398) 427,345,338 422,022,222 Cash and cash equivalents 3,678,770 5,104,935 Receivables 214,624 136,401 Other assets 7,191,792 7,120,043 ------------ ------------ Totals $438,430,524 $434,383,601 ============ ============ Liabilities and Shareholders' Equity Note payable to bank $ 8,000,000 $ 8,000,000 Note payable to portfolio company -- 5,000,000 Accrued interest and other liabilities 1,661,866 1,842,587 Income taxes payable 1,324,586 -- Deferred income taxes 119,006,326 117,007,107 ------------ ------------ Total liabilities 129,992,778 131,849,694 ------------ ------------ Shareholders' equity Common stock, $1 par value: authorized, 5,000,000 shares; issued, 4,294,416 shares at June 30, 2005 and March 31, 2005 4,294,416 4,294,416 Additional capital 7,904,997 7,904,997 Undistributed net investment income 3,473,094 3,669,805 Undistributed net realized gain on investments 76,725,145 73,316,166 Unrealized appreciation of investments - net of deferred income taxes 223,073,396 220,381,825 Treasury stock - at cost (437,365 shares) (7,033,302) (7,033,302) ------------ ------------ Net assets at market or fair value, equivalent to $79.97 per share at June 30, 2005 and $78.44 per share at March 31, 2005 on the 3,857,051 shares outstanding 308,437,746 302,533,907 ------------ ------------ Totals $438,430,524 $434,383,601 ============ ============
(See Notes to Consolidated Financial Statements) 3
CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations ------------------------------------- (Unaudited) Three Months Ended June 30 -------------------------- 2005 2004 ----------- ----------- Investment income: Interest $ 141,903 $ 93,282 Dividends 782,246 702,207 Management and directors' fees 170,750 169,250 ----------- ----------- 1,094,899 964,739 ----------- ----------- Operating expenses: Salaries 233,000 230,375 Net pension benefit (63,717) (68,226) Other operating expenses 202,458 173,697 ----------- ----------- 371,741 335,846 ----------- ----------- Income before interest expense and income taxes 723,158 628,893 Interest expense 118,759 115,386 ----------- ----------- Income before income taxes 604,399 513,507 Income tax expense 29,700 24,000 ----------- ----------- Net investment income $ 574,699 $ 489,507 =========== =========== Proceeds from disposition of investments $ 6,884,240 $ 608,517 Cost of investments sold 1,623,656 3,002,325 ----------- ----------- Realized gain (loss) on investments before income taxes 5,260,584 (2,393,808) Income tax expense (benefit) 1,851,605 (837,833) ----------- ----------- Net realized gain (loss) on investments 3,408,979 (1,555,975) ----------- ----------- Increase (decrease) in unrealized appreciation of investments before income taxes 4,141,571 (3,681,261) Increase (decrease) in deferred income taxes on appreciation of investments 1,450,000 (1,289,000) ----------- ----------- Net increase (decrease) in unrealized appreciation of investments 2,691,571 (2,392,261) ----------- ----------- Net realized and unrealized gain (loss) on investments $ 6,100,550 $(3,948,236) =========== =========== Increase (decrease) in net assets from operations $ 6,675,249 $(3,458,729) =========== ===========
(See Notes to Consolidated Financial Statements) 4
CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES Consolidated Statements of Changes in Net Assets ------------------------------------------------ Three Months Ended Year Ended June 30, 2005 March 31, 2005 ------------------ -------------- (Unaudited) Operations Net investment income $ 574,699 $ 2,405,948 Net realized gain (loss) on investments 3,408,979 (6,065,814) Net increase in unrealized appreciation of investments 2,691,571 17,884,654 ------------ ------------ Increase in net assets from operations 6,675,249 14,224,788 Distributions from: Undistributed net investment income (771,410) (2,314,231) ------------ ------------ Increase in net assets 5,903,839 11,910,557 Net assets, beginning of period 302,533,907 290,623,350 ------------ ------------ Net assets, end of period $308,437,746 $302,533,907 ============ ============
(See Notes to Consolidated Financial Statements) 5
CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows ------------------------------------- (Unaudited) Three Months Ended June 30 -------------------------- 2005 2004 ----------- ----------- Cash flows from operating activities Increase (decrease) in net assets from operations $ 6,675,249 $(3,458,729) Adjustments to reconcile increase (decrease) in net assets from operations to net cash provided by operating activities: Proceeds from disposition of investments 6,884,240 608,517 Purchases of securities (2,805,201) (402,325) Depreciation and amortization 3,925 3,629 Net pension benefit (63,717) (68,226) Net realized and unrealized (gain) loss on investments (6,100,550) 3,948,236 Increase in receivables (78,223) (12,726) (Increase) decrease in other assets 5,425 (34,329) Decrease in accrued interest and other liabilities (159,435) (68,246) Decrease in accrued pension cost (38,668) (41,820) Deferred income taxes 22,200 24,000 ----------- ----------- Net cash provided by operating activities 4,345,245 497,981 ----------- ----------- Cash flows from financing activities Decrease in note payable to bank -- (7,500,000) Decrease in note payable to portfolio company (5,000,000) -- Distributions from undistributed net investment income (771,410) (771,410) ----------- ----------- Net cash used in financing activities (5,771,410) (8,271,410) ----------- ----------- Net decrease in cash and cash equivalents (1,426,165) (7,773,429) Cash and cash equivalents at beginning of period 5,104,935 10,150,796 ----------- ----------- Cash and cash equivalents at end of period $ 3,678,770 $ 2,377,367 =========== =========== Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $118,681 $115,814 Income taxes $ 7,500 $ --
(See Notes to Consolidated Financial Statements) 6 CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements ------------------------------------------ (Unaudited) 1. Basis of Presentation The accompanying consolidated financial statements, which include our accounts and the accounts of our wholly-owned small business investment company subsidiary and our wholly-owned management company, have been prepared on the value method of accounting in accordance with accounting principles generally accepted in the United States for investment companies. All significant intercompany accounts and transactions have been eliminated in consolidation. The financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Article 6 of Regulation S-X. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended March 31, 2005. Certain information and footnotes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted, although we believe that the disclosures are adequate for a fair presentation. The information reflects all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods. 2. Indemnification We enter into agreements that contain customary indemnification provisions. The maximum exposure under these indemnification agreements is unknown, but we have had no previous claims or losses and expect the risk of losses to be remote. 3. Stock-Based Compensation Effective April 1, 2003, we adopted the fair value method of recording compensation expense related to all stock options granted after March 31, 2003, in accordance with FASB Statement Nos. 123 and 148. Accordingly, the fair value of stock options as determined on the date of grant using the Black-Scholes pricing model will be expensed over the vesting period of the related stock options. No stock options have been granted since March 31, 2003. The following table illustrates the effect on net asset value and net asset value per share if we had applied the fair value recognition provisions of FASB Statement No. 123 to stock-based compensation for options granted prior to the implementation of FASB Statement No. 123. June 30, June 30, 2005 2004 ------------ ------------ Net asset value, as reported $308,437,746 $286,393,211 Deduct: Total fair value computed stock-based compensation 37,734 40,191 ------------ ------------ Pro forma net asset value $308,400,012 $286,353,020 ============ ============ Net asset value per share: Basic - as reported $79.97 $74.25 ====== ====== Basic - pro forma $79.96 $74.24 ====== ====== Diluted - as reported $79.89 $74.22 ====== ====== Diluted - pro forma $79.88 $74.21 ====== ====== 7 Notes to Consolidated Financial Statements (continued) The diluted net asset value per share calculation assumes all vested outstanding options for which the market price exceeds the exercise price have been exercised. In December 2004, the FASB issued a revised SFAS No. 123(R), "Share-Based Payment." It requires us to measure all employee stock-based compensation awards using a fair value method and record such expense in our consolidated financial statements. In addition it requires additional accounting and disclosure related to the cash flow effects resulting from share-based payment arrangements. It is effective at the beginning of the fiscal year that begins after June 15, 2005. We expect that the adoption effective April 1, 2006, will not have a material effect on our financial condition, results of operations and cash flows and that the effect on our net asset value will be comparable to the pro forma disclosures presented above. 4. Summary of Per Share Information Three Months Ended June 30 ------------------ 2005 2004 ------ ------ Investment income $ .28 $ .25 Operating expenses (.09) (.09) Interest expense (.03) (.03) Income taxes (.01) (.01) ------ ------ Net investment income .15 .12 Distributions from undistributed net investment income (.20) (.20) Net realized gain (loss) on investments .88 (.40) Net increase (decrease) in unrealized appreciation of investments after deferred taxes .70 (.62) ------ ------ Increase (decrease) in net asset value 1.53 (1.10) Net asset value: Beginning of period 78.44 75.35 ------ ------ End of period $79.97 $74.25 ====== ====== Increase (decrease) in deferred taxes on unrealized appreciation $ 0.37 $(0.34) Deferred taxes on unrealized appreciation: Beginning of period 30.36 27.79 ------ ------ End of period $30.73 $27.45 ====== ====== Shares outstanding at end of period (000s omitted) 3,857 3,857 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Net asset value at June 30, 2005 was $308,437,746, equivalent to $79.97 per share after deducting an allowance of $30.73 per share for deferred taxes on net unrealized appreciation of investments. Assuming reinvestment of dividends, the June 30, 2005 net asset value reflects an increase of 8.0% during the past twelve months. June 30, June 30, 2005 2004 ------------ ------------ Net assets $308,437,746 $286,393,211 Shares outstanding 3,857,051 3,857,051 Net assets per share $79.97 $74.25 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Results of Operations The composite measure of our financial performance in the Consolidated Statements of Operations is captioned "Increase (decrease) in net assets from operations" and consists of three elements. The first is "Net investment income", which is the difference between our income from interest, dividends and fees and our combined operating and interest expenses, net of applicable income taxes. The second element is "Net realized gain (loss) on investments", which is the difference between the proceeds received from disposition of portfolio securities and their stated cost, net of applicable income tax expense or benefit. The third element is the "Net increase (decrease) in unrealized appreciation of investments", which is the net change in the market or fair value of our investment portfolio, compared with stated cost, net of an increase or decrease in deferred income taxes which would become payable if the unrealized appreciation were realized through the sale or other disposition of the investment portfolio. It should be noted that the "Net realized gain (loss) on investments" and "Net increase (decrease) in unrealized appreciation of investments" are directly related in that when an appreciated portfolio security is sold to realize a gain, a corresponding decrease in net unrealized appreciation occurs by transferring the gain associated with the transaction from being "unrealized" to being "realized". Conversely, when a loss is realized on a depreciated portfolio security, an increase in net unrealized appreciation occurs. Net Investment Income Interest income of $141,903 in the three months ended June 30, 2005 increased from $93,282 in the year-ago period primarily because of an increase in loans to portfolio companies and an increase in interest rates. During the three months ended June 30, 2005 and 2004, we recorded dividend income from the following sources: Three Months Ended June 30 ------------------- 2005 2004 -------- -------- Alamo Group Inc. $169,278 $169,278 Dennis Tool Company 37,499 -- Kimberly-Clark Corporation 34,731 30,872 PalletOne, Inc. 44,921 -- The RectorSeal Corporation 240,000 240,000 Skylawn Corporation 150,000 150,000 Sprint Corporation 11,250 11,250 TCI Holdings, Inc. 20,318 20,318 The Whitmore Manufacturing Company 60,000 60,000 Other 14,249 20,489 -------- -------- $782,246 $702,207 ======== ======== Net Realized Gain (Loss) on Investments During the three months ended June 30, 2005, we reported a realized gain before income taxes of $5,260,584 which included a gain of $5,240,972 on our sale of 800,000 shares of Cenveo, Inc. Net Increase (Decrease) in Unrealized Appreciation of Investments Set forth in the following table are the significant increases and decreases in unrealized appreciation (before the related change in deferred income taxes and excluding the effect of gains or losses realized during the periods) by portfolio company: 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Three Months Ended June 30 ---------------------------- 2005 2004 ------------ ------------ Alamo Group Inc. $ (8,463,000) $ -- Cenveo, Inc. 2,489,449 (3,228,745) CMI Holding Company, Inc. -- (3,000,000) Encore Wire Corporation -- (10,898,000) Palm Harbor Homes, Inc. 11,783,000 -- The RectorSeal Corporation 2,100,000 4,000,000 As reflected in the above table, at June 30, 2005, the value of our investment in Alamo Group Inc. was decreased from the March 31, 2005 value by $8,463,000 due to less favorable conditions in certain markets served by Alamo and a decline in the public market price of the company's unrestricted stock. During the three months ended June 30, 2005, the value of our investment in Palm Harbor Homes, Inc. was increased due to an improvement in the company's earnings and a more favorable outlook for fiscal year 2006. During the three months ended June 30, 2004, the value of our investment in Encore Wire Corporation was decreased by $10,898,000 due to the cyclical nature of Encore's profit margins and the probable effect of lower copper prices on Encore's earnings in its second quarter ended June 30, 2004. Portfolio Investments During the quarter ended June 30, 2005, we made additional investments of $2,805,201 in existing portfolio companies. We have agreed, subject to certain conditions, to invest up to $1,606,275 in five portfolio companies. Financial Liquidity and Capital Resources At June 30, 2005, we had cash and cash equivalents of approximately $3.7 million. Pursuant to Small Business Administration (SBA) regulations, cash and cash equivalents of $188,727 held by Capital Southwest Venture Corporation (CSVC) may not be transferred or advanced to us without the consent of the SBA. Under current SBA regulations and subject to SBA's approval of its credit application, CSVC would be entitled to borrow up to $65.0 million. We also have an unsecured $25.0 million revolving line of credit from a commercial bank, of which $17.0 million was available at June 30, 2005. With the exception of a capital gain distribution made in the form of a distribution of the stock of a portfolio company in the fiscal year ended March 31, 1996, we have elected to retain all gains realized during the past 37 years. Retention of future gains is viewed as an important source of funds to sustain our investment activity. Approximately $56.1 million of our investment portfolio is represented by unrestricted publicly-traded securities, which have an ascertainable market value and represent a source of liquidity. Funds to be used by us for operating or investment purposes may be transferred in the form of dividends, management fees or loans from Skylawn Corporation, The RectorSeal Corporation and The Whitmore Manufacturing Company, wholly-owned portfolio companies, to the extent of their available cash reserves and borrowing capacities. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Management believes that our cash and cash equivalents and cash available from other sources described above are adequate to meet our expected requirements. Consistent with our long-term strategy, the disposition of investments from time to time may also be an important source of funds for future investment activities. Item 3. Quantitative and Qualitative Disclosure About Market Risk We are subject to financial market risks, including changes in marketable equity security prices. We do not use derivative financial instruments to mitigate any of these risks. The return on our investments is not materially affected by foreign currency fluctuations. Our investment performance is a function of our portfolio companies' profitability, which may be affected by economic cycles, competitive forces and production costs including labor rates, raw material prices and certain commodity prices. All of these factors may have an adverse effect on the value of our investments and on our net asset value. Most of the companies in our investment portfolio do not hedge their exposure to raw material and commodity price fluctuations. Our investment in portfolio securities includes fixed-rate debt securities which totaled $8,293,397 at June 30, 2005, equivalent to 1.9% of the value of our total investments. Generally these debt securities are below investment grade and have relatively high fixed rates of interest, therefore; minor changes in market yields of publicly-traded debt securities have little or no effect on the values of debt securities in our portfolio and no effect on interest income. Our investments in debt securities are generally held to maturity and their fair values are determined on the basis of the terms of the debt security and the financial condition of the issuer. A portion of our investment portfolio consists of debt and equity securities of private companies. We anticipate little or no effect on the values of these investments from modest changes in public market equity valuations. Should significant changes in market valuations of comparable publicly-owned companies occur, there may be a corresponding effect on valuations of private companies, which would affect the value and the amount and timing of proceeds eventually realized from these investments. A portion of our investment portfolio also consists of restricted common stock of publicly-owned companies. The fair values of these restricted securities are influenced by the nature of applicable resale restrictions, the underlying earnings and financial condition of the issuers of such restricted securities and the market valuations of comparable publicly-owned companies. A portion of our investment portfolio also consists of unrestricted, freely marketable common stocks of publicly-owned companies. These freely marketable investments, which are valued at the public market price, are directly exposed to equity price risks, in that a change in an issuer's public market equity price would result in an identical change in the fair value of our investment in such security. Item 4. Controls and Procedures As of June 30, 2005, an evaluation was performed under the supervision and with the participation of our management, including the President and Chairman of the Board and Secretary-Treasurer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our management, including the President and Chairman of the Board and Secretary-Treasurer concluded that our disclosure controls and procedures were effective as of June 30, 2005. There have been no significant changes during the quarter covered by this report in our internal control over financial reporting or in other factors that could significantly affect internal control over financial reporting. 11 PART II. OTHER INFORMATION - --------------------------- Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 31.1- Certification of President and Chairman of the Board required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), filed herewith. Exhibit 31.2- Certification of Secretary-Treasurer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act, filed herewith. Exhibit 32.1- Certification of President and Chairman of the Board required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, furnished herewith. Exhibit 32.2- Certification of Secretary-Treasurer required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, furnished herewith. (b) Reports on Form 8-K No reports on Form 8-K have been filed during the quarter for which this report is filed. 12 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. CAPITAL SOUTHWEST CORPORATION Date: August 5, 2005 By: /s/ William R. Thomas ---------------------- ----------------------------------------- William R. Thomas, President and Chairman of the Board (chief executive officer) Date: August 5, 2005 By: /s/ Susan K. Hodgson ---------------------- ----------------------------------------- Susan K. Hodgson, Secretary-Treasurer (chief financial/accounting officer) 13 EX-31.1 2 capital10qex311063005.txt SECTION 302 CERTIFICATION OF PRESIDENT Exhibit 31.1 CERTIFICATIONS I, William R. Thomas, President and Chairman of the Board of Capital Southwest Corporation, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Capital Southwest Corporation (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the consolidated financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 5, 2005 By: /s/ William R. Thomas -------------- -------------------------------- William R. Thomas, President and Chairman of the Board EX-31.2 3 capital10qex312063005.txt SECTION 302 CERTIFICATION OF TREASURER Exhibit 31.2 CERTIFICATIONS I, Susan K. Hodgson, Secretary-Treasurer of Capital Southwest Corporation, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Capital Southwest Corporation (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the consolidated financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 5, 2005 By: /s/ Susan K. Hodgson -------------- ------------------------------------- Susan K. Hodgson, Secretary-Treasurer EX-32.1 4 capital10qex321063005.txt SECTION 906 CERTIFICATION OF PRESIDENT Exhibit 32.1 Certification of President and Chairman of the Board Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code I, William R. Thomas, President and Chairman of the Board of Capital Southwest Corporation, certify that, to my knowledge: 1. the Form 10-Q, filed with the Securities and Exchange Commission on August 5, 2005 ("accompanied report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in the accompanied report fairly presents, in all material respects, the consolidated financial condition and results of operations of Capital Southwest Corporation. Date: August 5, 2005 By: /s/ William R. Thomas -------------- -------------------------------- William R. Thomas, President and Chairman of the Board EX-32.2 5 capital10qex322063005.txt SECTION 906 CERTIFICATION OF TREASURER Exhibit 32.2 Certification of Secretary-Treasurer Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code I, Susan K. Hodgson, Secretary-Treasurer of Capital Southwest Corporation, certify that, to my knowledge: 1. the Form 10-Q, filed with the Securities and Exchange Commission on August 5, 2005 ("accompanied report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. the information contained in the accompanied report fairly presents, in all material respects, the consolidated financial condition and results of operations of Capital Southwest Corporation. Date: August 5, 2005 By: /s/ Susan K. Hodgson -------------- ------------------------------------- Susan K. Hodgson, Secretary-Treasurer -----END PRIVACY-ENHANCED MESSAGE-----