-----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, N94ykbVn3g/fwPQXe9G08il3JLWk5Ra9Sp20KaVWHPWYTGyYGhvDEhsF4UIv5nYx 1cBLoO1EPd3JzI4VmxDFZw== 0001010549-07-000989.txt : 20071120 0001010549-07-000989.hdr.sgml : 20071120 20071120163446 ACCESSION NUMBER: 0001010549-07-000989 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20071120 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing ITEM INFORMATION: Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20071120 DATE AS OF CHANGE: 20071120 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 333-118681 FILM NUMBER: 071260101 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 8-K 1 cswc8k112007.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) November 20, 2007 Capital Southwest Corporation - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Texas 811-1056 75-1072796 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 12900 Preston Road, Suite 700, Dallas,Texas 75230 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 972-233-8242 - -------------------------------------------------------------------------------- Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition. As more fully discussed below in Item 4.02, on November 19, 2007 Capital Southwest Corporation (the "Company") concluded its previously issued audited financial statements for the fiscal year ended March 31, 2007 and its unaudited interim financial statements for the quarter ended June 30, 2007 should not be relied upon and that those financial statements would be restated as to make the necessary accounting adjustments. Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing. On November 15, 2007, Capital Southwest Corporation (the "Company") received a NASDAQ Staff Determination letter stating that the Company is not in compliance with the filing requirements for continued listing set forth in NASDAQ Marketplace Rule 4310(c)(14) and that its common stock is subject to delisting from The NASDAQ Stock Market. The notice, which the Company expected, was issued as a result of the Company's failure to file its semi-annual report on Form 10-Q for the quarter ended September 30, 2007 with the Securities and Exchange Commission by the required deadline. The Company had previously filed a Form 12b-25 with the SEC indicating that the Company would be unable to file its Form 10-Q by the original filing deadline of November 9, 2007 due to the Company's ongoing review of its deferred taxes on unrealized appreciation of investments. The Company will request a hearing before the NASDAQ Listing Qualifications Panel to review the Staff Determination letter and request continued listing. The Company can make no assurances that the NASDAQ Listing Qualifications Panel will grant the Company's request for continued listing. Under NASDAQ Marketplace rules, the Company's request for a hearing will automatically stay the delisting of the Company's common stock pending the issuance of a written determination by the NASDAQ Listing Qualifications Panel. The Company plans to file its Form 10-Q for the quarter ended September 30, 2007 as soon as reasonably practicable. A copy of the press release announcing the receipt of this letter is attached hereto as Exhibit 99.1 and is incorporated herein by reference. Item 4.02 Non-Reliance on Previously Issued Financial Statements or Related Audit Report or Complete Interim Review. On November 19, 2007, Management and the Audit Committee (the "Committee") of the Board of Directors of Capital Southwest Corporation (the "Company") concluded that its long-standing practice of recording deferred taxes on unrealized appreciation of investments was not in conformity with GAAP and its previously issued financial statements related to accounting for deferred taxes on unrealized appreciation of investments requires restatement. Specifically, the AICPA Audit and Accounting Guide for Investment Companies' paragraph 6.04 requires that Regulated Investment Companies record a deferred tax when it is probable that the investment company subject to Subchapter M of the IRC will not qualify under that subchapter for a period longer than one year. Management has determined that while it was possible that the Company would not maintain its qualifying status, as a Regulated Investment Company, it was probable that it would maintain such qualifying status. Thus the deferred tax liability consistently recorded and disclosed since inception should not have been recognized. As a result the Company's reported net asset value, as well as its increase in net assets from operations will increase for each corresponding period. As a result of its review, Management and the Committee concluded that previously issued consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2007, as well as the Company's quarterly report on Form 10-Q for the period ended June 30, 2007 can no longer be relied upon, as these statements include the balance sheet presentation of deferred taxes on unrealized appreciation of investments and the statement of operations presentation of deferred income taxes on appreciation of investments. In connection with the Company's refiling of its Annual Report on Form 10-K for the fiscal year ended March 31, 2007 and its Form 10-Q for the quarter ended June 30, 2007, the Company will be amending and restating its financial statements. The Company's management and the Committee have discussed this matter with the Company's current and prior independent registered public accounting firm. Item 9.01. Financial Statements and Exhibits. (d) Exhibits Exhibit Number Description - -------------------------------------------------------------------------------- 99.1 Press Release, dated November 20, 2007, issued by Capital Southwest Corporation. 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. Dated: November 20, 2007 By: /s/ Gary L. Martin -------------------------------------------- Name: Gary L. Martin Title: President and Chief Executive Officer EX-99.1 2 cswc8kex991112007.txt PRESS RELEASE CAPITAL SOUTHWEST Receives Notice From NASDAQ Due to Delay in Filing of Form 10-Q and Announces Restatement of Previously Issued Audited Financial Statements Dallas, TX, November 20, 2007 - Capital Southwest Corporation (NASDAQ - CSWC) On November 15, 2007, Capital Southwest Corporation (the "Company") received a NASDAQ Staff Determination letter stating that the Company is not in compliance with the filing requirements for continued listing set forth in NASDAQ Marketplace Rule 4310(c)(14) and that its common stock is subject to delisting from The NASDAQ Stock Market. The notice, which the Company expected, was issued as a result of the Company's failure to file its semi-annual report on Form 10-Q for the quarter ended September 30, 2007 with the Securities and Exchange Commission by the required deadline. The Company had previously filed a Form 12b-25 with the SEC indicating that the Company would be unable to file its Form 10-Q by the original filing deadline of November 9, 2007 due to the Company's ongoing review of its deferred taxes on unrealized appreciation of investments. The Company will request a hearing before the NASDAQ Listing Qualifications Panel to review the Staff Determination letter and request continued listing. The Company can make no assurances that the NASDAQ Listing Qualifications Panel will grant the Company's request for continued listing. Under NASDAQ Marketplace rules, the Company's request for a hearing will automatically stay the delisting of the Company's common stock pending the issuance of a written determination by the NASDAQ Listing Qualifications Panel. After reviewing the accounting treatment for deferred taxes on unrealized appreciation of investments, the company has determined its long-standing policy of recording deferred taxes on unrealized appreciation of investments was not in conformity with AICPA Audit and Accounting Guide for Investment Company standards. Management has determined that while it was possible that the Company would not maintain its qualifying status, as a Regulated Investment Company, it was probable that it would maintain such status. Thus the deferred tax liability consistently recorded and disclosed since inception should not have been recognized. As a result, the Company will be restating its audited financial statements for the fiscal year ended March 31, 2007, as well as its unaudited interim financial statements for the quarter ended June 30, 2007. The restatement will eliminate the accrual for deferred taxes on unrealized appreciation of investments, thus increasing the net asset value per share for the periods to be restated. The Company plans to file its Form 10-K/A for the fiscal year ended March 31, 2007, Form 10-Q/A for the quarter ended June 30, 2007, and Form 10-Q for the quarter ended September 30, 2007 as soon as reasonably practicable. Our delay in filing has been a result of our reviewing the accounting treatment related to deferred taxes. On October 23, 2007 the Company released its net asset value at September 30, 2007 of $437,546,529, equivalent to $112.50 per share after deducting an allowance of $169,785,000, equivalent to $43.66 per share for deferred taxes. The Company now plans to restate its previously reported net asset value at September 30, 2007 to reflect the following: o An increase in net assets from operations $169,785,000 o An increase in net asset value per share $43.66 Net Asset Value at September 30, 2007, as previously reported $437,546,529 Add back allowance for deferred taxes 169,785,000 Net asset value at September 30, 2007, as restated $607,331,529 Net asset value per share at September 30, 2007, as restated $156.16 Capital Southwest Corporation, founded in 1961, is a venture capital business development investment company headquartered in Dallas, Texas. This press release contains forward-looking statements regarding the Company's plans to request a hearing with NASDAQ. These forward-looking statements are subject to risks and uncertainties, and actual results could differ materially from those projected. These risks and uncertainties include, but are not limited to, the timing and outcome of the NASDAQ hearing; the impact of any actions required or taken as a result of such review or the NASDAQ hearing and review process. Contact: Gary L. Martin or Tracy L. Morris 972-233-8242 # # # -----END PRIVACY-ENHANCED MESSAGE-----