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, 2003
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, 2003
TABLE OF CONTENTS
Page No.
--------
PART I. FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
Consolidated Statements of Financial Condition
June 30, 2003 (Unaudited) and March 31, 2003................3
Consolidated Statements of Operations (Unaudited)
Quarters ended June 30, 2003 and June 30, 2002..............4
Consolidated Statements of Changes in Net Assets Quarter ended June
30, 2003 (Unaudited) and year ended
March 31, 2003..............................................5
Consolidated Statements of Cash Flows (Unaudited)
Quarters ended June 30, 2003 and June 30, 2002..............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.................................................10
ITEM 4. Controls and Procedures........................................11
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K...............................11
Signatures .................................................................12
PART I. FINANCIAL INFORMATION
- ------------------------------
Item 1. Consolidated Financial Statements
CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition
----------------------------------------------
Assets June 30, 2003 March 31, 2003
-------------- --------------
(Unaudited)
Investments at market or fair value
Companies more than 25% owned
(Cost: June 30, 2003 - $23,114,865
March 31, 2003 - $23,114,865) $ 203,901,981 $ 202,893,981
Companies 5% to 25% owned
(Cost: June 30, 2003 - $31,120,124
March 31, 2003 - $30,120,124) 21,097,006 18,566,004
Companies less than 5% owned
(Cost: June 30, 2003 - $38,226,853
March 31, 2003 - $38,226,853) 76,532,410 65,600,452
-------------- --------------
Total investments
(Cost: June 30, 2003- $92,461,842
March 31, 2003 - $91,461,842) 301,531,397 287,060,437
Cash and cash equivalents 3,401,996 4,650,388
Receivables 93,926 297,664
Other assets 6,620,223 6,481,383
-------------- --------------
Totals $ 311,647,542 $ 298,489,872
============== ==============
Liabilities and Shareholders' Equity
Note payable to bank $ 15,500,000 $ 15,500,000
Notes payable to portfolio company 7,500,000 7,500,000
Accrued interest and other liabilities 1,854,379 1,868,991
Deferred income taxes 71,901,618 67,153,906
-------------- --------------
Total liabilities 96,755,997 92,022,897
-------------- --------------
Shareholders' equity
Common stock, $1 par value: authorized,
5,000,000 shares; issued, 4,266,416 shares
at June 30, 2003 and March 31, 2003 4,266,416 4,266,416
Additional capital 6,935,497 6,935,497
Undistributed net investment income 2,970,661 3,299,659
Undistributed net realized gain on investments 71,187,716 71,190,108
Unrealized appreciation of investments -
net of deferred income taxes 136,564,557 127,808,597
Treasury stock - at cost (437,365 shares) (7,033,302) (7,033,302)
-------------- --------------
Net assets at market or fair value, equivalent
to $56.12 per share at June 30, 2003 and
$53.92 per share at March 31, 2003 on the
3,829,051 shares outstanding 214,891,545 206,466,975
-------------- --------------
Totals $ 311,647,542 $ 298,489,872
============== ==============
(See Notes to Consolidated Financial Statements)
3
CAPITAL SOUTHWEST CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Operations
-------------------------------------
(Unaudited)
Three Months Ended
June 30,
2003 2002
------------ ------------
Investment income:
Interest $ 49,468 $ 64,675
Dividends 697,316 708,992
Management and directors' fees 170,115 131,350
------------ ------------
916,899 905,017
------------ ------------
Operating expenses:
Salaries 209,475 200,750
Net pension benefit (96,981) (126,135)
Other operating expenses 193,572 149,907
------------ ------------
306,066 224,522
------------ ------------
Income before interest expense and income taxes 610,833 680,495
Interest expense 140,021 160,956
------------ ------------
Income before income taxes 470,812 519,539
Income tax expense 34,000 44,200
------------ ------------
Net investment income $ 436,812 $ 475,339
============ ============
Proceeds from disposition of investments $ -- $ 1,459,220
Cost of investments sold 3,680 2,012,051
------------ ------------
Realized loss on investments before income taxes (3,680) (552,831)
Income tax benefit (1,288) (234,597)
------------ ------------
Net realized loss on investments (2,392) (318,234)
------------ ------------
Increase (decrease) in unrealized appreciation
of investments before income taxes 13,470,960 (22,332,457)
Increase (decrease) in deferred income
taxes on appreciation of investments 4,715,000 (7,804,000)
------------ ------------
Net increase (decrease) in unrealized
appreciation of investments 8,755,960 (14,528,457)
------------ ------------
Net realized and unrealized gain (loss)
on investments $ 8,753,568 $(14,846,691)
============ ============
Increase (decrease) in net assets from operations $ 9,190,380 $(14,371,352)
============ ============
(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, 2003 March 31, 2003
-------------- --------------
(Unaudited)
Operations
Net investment income $ 436,812 $ 2,299,252
Net realized gain (loss) on investments (2,392) 1,345,728
Net increase (decrease) in unrealized appreciation
of investments 8,755,960 (45,371,616)
-------------- --------------
Increase (decrease) in net assets from operations 9,190,380 (41,726,636)
Distributions from:
Undistributed net investment income (765,810) (2,297,431)
-------------- --------------
Increase (decrease) in net assets 8,424,570 (44,024,067)
Net assets, beginning of period 206,466,975 250,491,042
-------------- --------------
Net assets, end of period $ 214,891,545 $ 206,466,975
============== ==============
(See Notes to Consolidated Financial Statements)
5
CAPITAL SOUTHWEST CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
-------------------------------------
(Unaudited)
Three Months Ended
June 30,
----------------------------
2003 2002
------------ ------------
Cash flows from operating activities
Increase (decrease) in net assets from operations $ 9,190,380 $(14,371,352)
Adjustments to reconcile increase (decrease) in net
assets from operations to net cash provided by
operating activities:
Depreciation and amortization 4,765 5,399
Net pension benefit (96,981) (126,135)
Net realized and unrealized (gain) loss
on investments (8,753,568) 14,846,691
Decrease in receivables 203,738 1,618,239
Increase in other assets (18,046) (16,630)
Decrease in accrued interest
and other liabilities (1,370) (120,175)
Decrease in accrued pension cost (41,820) (41,820)
Deferred income taxes 34,000 44,200
------------ ------------
Net cash provided by operating activities 521,098 1,838,417
------------ ------------
Cash flows from investing activities
Proceeds from disposition of investments -- 1,459,220
Purchases of securities (1,003,680) (40,233)
Maturities of securities -- 80,000
------------ ------------
Net cash provided by (used in) investing activities (1,003,680) 1,498,987
------------ ------------
Cash flows from financing activities
Increase in notes payable to bank -- 67,000,000
Decrease in subordinated debenture -- (5,000,000)
Distributions from undistributed net investment income (765,810) (765,810)
------------ ------------
Net cash provided by (used in) financing activities (765,810) 61,234,190
------------ ------------
Net increase (decrease)in cash and cash equivalents (1,248,392) 64,571,594
Cash and cash equivalents at beginning
of period 4,650,388 1,977,180
------------ ------------
Cash and cash equivalents at end of period $ 3,401,996 $ 66,548,774
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $140,022 $276,064
Income taxes $ -- $ --
(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 the
accounts of Capital Southwest Corporation, its wholly-owned small business
investment company subsidiary and its wholly-owned management company (the
"Company"), have been prepared on the fair value basis in accordance with
accounting principles generally accepted in the United States of America 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 of America
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 the
Company's annual report on Form 10-K for the year ended March 31, 2003. Certain
information and footnotes normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted, although the Company believes 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. Stock-Based Compensation
Effective April 1, 2003, the Company adopted the fair value method of
recording compensation expense related to all stock options granted after March
31, 2003, in accordance with SFAS Nos. 123 and 148. No stock options have been
granted since March 31, 2003; therefore, under the prospective method of
adoption selected by the Company, no stock-based compensation has been
recognized in the consolidated financial statements.
The following table illustrates the effect on net asset value and net asset
value per share as if the fair value method had been applied to all outstanding
options granted since January 1, 1995 in each period.
Quarter Ended June 30
2003 2002
------------- -------------
Net asset value, as reported $ 214,891,545 $ 235,353,880
Deduct: Total fair value computed
stock-based compensation 44,860 44,860
------------- -------------
Pro forma net asset value $ 214,846,685 $ 235,309,020
============= =============
Net asset value per share:
Basic - as reported $56.12 $61.47
====== ======
Basic - pro forma $56.11 $61.45
====== ======
Diluted - pro forma $55.96 $61.27
====== ======
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.
7
Notes to Consolidated Financial Statements
(continued)
3. Summary of Per Share Information
Three Months Ended
June 30
----------------------
2003 2002
--------- ---------
Investment income $ .24 $ .23
Operating expenses (.08) (.06)
Interest expense (.04) (.04)
Income taxes (.01) (.01)
--------- ---------
Net investment income .11 .12
Distributions from undistributed
net investment income (.20) (.20)
Net realized gain (loss) on investments -- (.08)
Net increase (decrease) in unrealized appreciation
of investments after deferred taxes 2.29 (3.79)
--------- ---------
Increase (decrease) in net asset value 2.20 (3.95)
Net asset value:
Beginning of period 53.92 65.42
--------- ---------
End of period $56.12 $61.47
========= =========
Increase (decrease) in deferred taxes on unrealized appreciation $ 1.24 $(2.03)
Deferred taxes on unrealized appreciation:
Beginning of period 17.70 24.05
--------- ---------
End of period $18.94 $22.02
========= =========
Shares outstanding at end of period
(000s omitted) 3,829 3,829
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Net asset value at June 30, 2003 was $214,891,545, equivalent to $56.12 per
share after deducting an allowance of $18.94 per share for deferred taxes on net
unrealized appreciation of investments. Assuming reinvestment of all dividends,
the June 30, 2003 net asset value reflects a decrease of 7.7% during the past
twelve months and an increase of 4.4% during the past three months.
June 30, June 30,
2003 2002
------------ ------------
Net assets $214,891,545 $235,353,880
Shares outstanding 3,829,051 3,829,051
Net assets per share $56.12 $61.47
Results of Operations
The composite measure of the Company's 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 the Company's income from
interest, dividends and fees and its 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. 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 the Company's investment portfolio, compared with stated cost,
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
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. Conversely, when a loss is realized on a
depreciated portfolio security, an increase in net unrealized appreciation
occurs.
Net Investment Income
Interest income in the three months ended June 30, 2003 decreased from the
year-ago period primarily because of a decrease in loans to portfolio companies
and the prior year included interest earned on the $65,000,000 borrowed on June
30, 2002 and repaid July 1, 2002. During the three months ended June 30, 2003
and 2002, the Company recorded dividend income from the following sources:
Three Months Ended
June 30
-------------------
2003 2002
-------- --------
Alamo Group Inc. $169,278 $169,278
Dennis Tool Company 12,500 12,500
Kimberly-Clark Corporation 26,241 23,154
The RectorSeal Corporation 240,000 240,000
Skylawn Corporation 150,000 150,000
Sprint Corporation 9,000 9,000
TCI Holdings, Inc. 20,318 20,318
Texas Shredder, Inc. 1,875 14,161
The Whitmore Manufacturing Company 60,000 60,000
Other 8,104 10,581
-------- --------
$697,316 $708,992
======== ========
Interest expense in the three months ended June 30, 2003 decreased from the
year-ago period, reflecting the combined effect of interest paid in the same
quarter last year on the $5,000,000 subordinated debenture paid-off on June 3,
2002, and on the $65,000,000 borrowing repaid on July 1, 2002, offset by
interest on $12,000,000 of additional notes payable outstanding on June 30,
2003.
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
taxes and excluding the effect of gains or losses realized during the periods)
by portfolio company:
Three Months Ended
June 30
----------------------------
2003 2002
------------ ------------
All Components, Inc. $ 2,900,000 $ --
Balco, Inc. -- 2,000,000
Concert Industries Ltd. (442,998) (2,186,000)
Encore Wire Corporation 2,724,000 (2,725,000)
Extreme International, Inc. 2,216,000 --
Liberty Media Corporation 1,290,169 (1,788,368)
Mail-Well, Inc. 1,027,328 (1,363,000)
Palm Harbor Homes, Inc. -- (15,710,000)
PETsMART, Inc. 1,853,218 1,081,042
9
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (continued)
During the three months ended June 30, 2003, the value of our investment in
Palm Harbor Homes, Inc. remained unchanged from the March 31, 2003 value,
reflecting a continuation of the depressed manufactured housing market. During
the quarter ended June 30, 2002, the value of our investment in Palm Harbor
Homes, Inc. was reduced significantly due to the increasingly unfavorable
outlook for the manufactured housing industry.
Portfolio Investments
During the quarter ended June 30, 2003, the Company made an additional
investment of $1,000,000 in CMI Holding Company, Inc.
The Company has commitments, subject to certain conditions, to invest up to
$2,336,525 in four portfolio companies as requested by management.
Financial Liquidity and Capital Resources
At June 30, 2003, the Company had cash and cash equivalents of
approximately $3.4 million. Pursuant to Small Business Administration ("SBA")
regulations, cash and cash equivalents of $123,000 held by Capital Southwest
Venture Corporation ("CSVC") may not be transferred or advanced to Capital
Southwest Corporation 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 $63.8 million. The Company also has an unsecured
$25.0 million revolving line of credit from a commercial bank, of which $9.5
million was available at June 30, 2003. 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, the Company has elected to
retain all gains realized during the past 35 years. Retention of future gains is
viewed as an important source of funds to sustain the Company's investment
activity. Approximately $31.3 million of the Company's 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 the Company 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 of the Company, to the extent of their
available cash reserves and borrowing capacities. At June 30, 2003, the Company
owed $7,500,000 to Skylawn Corporation.
Management believes that the Company's cash and cash equivalents and cash
available from other sources described above are adequate to meet its expected
requirements. Consistent with the long-term strategy of the Company, 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
The Company is subject to financial market risks, including changes in
marketable equity security prices. The Company does not use derivative financial
instruments to mitigate any of these risks. The return on the Company's
investments is not materially affected by foreign currency fluctuations.
The Company's investment in portfolio securities consists of fixed rate
debt securities which totaled $5,567,750 at June 30, 2003, equivalent to 1.8% of
the value of the Company's total investments. Since these debt securities
usually have relatively high fixed rates of interest, minor changes in market
yields of publicly-traded debt securities have little or no effect on the values
of debt securities in the Company's portfolio and no effect on interest income.
The Company's 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.
10
Item 3. Quantitative and Qualitative Disclosure About Market Risk
(continued)
A portion of the Company's investment portfolio consists of debt and equity
securities of private companies. The Company anticipates 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 the
Company's investment portfolio also consists of restricted common stocks 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
the Company's 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 value of the Company's
investment in such security.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our President and Chairman of the Board and Secretary-Treasurer have
reviewed and evaluated the effectiveness of the Company's disclosure controls
and procedures (as defined in Exchange Act Rules 240.13a-14(c) and 15d-14(c) as
of a date within 90 days before the filing date of this quarterly report. Based
on that evaluation, the President and Chairman of the Board and
Secretary-Treasurer have concluded that the Company's current disclosure
controls and procedures are effective and timely, providing all material
information relating to the Company required to be disclosed in reports filed or
submitted under the Exchange Act.
Changes in Internal Controls
There have not been any significant changes in the Company's internal
controls or in other factors that could significantly affect these controls
subsequent to the date of their evaluation. We are not aware of any significant
deficiencies or material weaknesses, therefore no corrective actions were taken.
PART II. OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 31.1- Sarbanes-Oxley Section 302(a) Certification of the
President and Chairman of the Board of the Corporation.
Exhibit 31.2- Sarbanes-Oxley Section 302(a) Certification of the
Secretary-Treasurer of the Corporation.
Exhibit 32.1- Certification Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 of the President and Chairman of the Board of the
Corporation.
Exhibit 32.2- Certification Pursuant to 18 U.S.C. Section 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 of the Secretary-Treasurer of the Corporation.
(b) Reports on Form 8-K
On May 9, 2003, the Company filed a report on Form 8-K to
furnish, pursuant to Item 4, a change in the Company's certifying
accountant for the fiscal year ending March 31, 2004. The Company
filed no other reports on Form 8-K during the three months ended
June 30, 2003.
11
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 8, 2003 By: /s/ William R. Thomas
---------------- -----------------------------------------
William R. Thomas, President and Chairman
of the Board (chief executive officer)
Date: August 8, 2003 By: /s/ Susan K. Hodgson
---------------- -----------------------------------------
Susan K. Hodgson, Secretary-Treasurer
(chief financial/accounting officer)
12
Exhibit 31.1
SARBANES-OXLEY SECTION 302(a) CERTIFICATION
I, William R. Thomas, President and Chairman of the Company, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Capital Southwest
Corporation;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly 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-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures 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 quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, 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 in the design or operation of internal
controls which could aversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: August 8, 2003 By: /s/ William R. Thomas
-------------- --------------------------------
William R. Thomas, President and
Chairman of the Board
Exhibit 31.2
SARBANES-OXLEY SECTION 302(a) CERTIFICATION
I, Susan K. Hodgson, Secretary-Treasurer of the Company, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Capital Southwest
Corporation;
2. Based on my knowledge, this quarterly 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 quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly 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-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures 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 quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, 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 in the design or operation of internal
controls which could aversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: August 8, 2003 By: /s/ Susan K. Hodgson
-------------- -------------------------------------
Susan K. Hodgson, Secretary-Treasurer
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Capital Southwest Corporation
(the "Company") on Form 10-Q for the quarter ended June 30, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
William R. Thomas, President and Chairman of the Board of the Company, certify,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:
1. The 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 Report fairly presents, in all
material respects, the consolidated financial condition and results of
operations of the Company.
Date: August 8, 2003 By: /s/ William R. Thomas
-------------- ----------------------------
William R. Thomas, President
and Chairman of the Board
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Capital Southwest Corporation
(the "Company") on Form 10-Q for the quarter ended June 30, 2003 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Susan K. Hodgson, Secretary-Treasurer of the Company, certify, pursuant to 18
U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002, that:
1. The 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 Report fairly presents, in all
material respects, the consolidated financial condition and results of
operations of the Company.
Date: August 8, 2003 By: /s/ Susan K. Hodgson
-------------- -------------------------------------
Susan K. Hodgson, Secretary-Treasurer