UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended March 31, 2007
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)
Registrant's telephone number, including area code: (972) 233-8242
Securities registered pursuant to section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act: Common Stock, $1.00
par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes No X
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes No X
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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
One):
Large accelerated filer ____ Accelerated filer X Non-accelerated filer ____
-----
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). Yes No X
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of September 30, 2006 was $332,548,127, based on the last sale
price of such stock as quoted by Nasdaq on such date (officers, directors and 5%
shareholders are considered affiliates for purposes of this calculation).
The number of shares of common stock outstanding as of May 15, 2007 was
3,888,151.
Documents Incorporated by Reference Part of Form 10-K
----------------------------------- -----------------
(1) Annual Report to Shareholders for the Year Parts I and II; and
Ended March 31, 2007 Part IV, Item 15(a)(1) and (2)
(2) Proxy Statement for Annual Meeting of Part III
Shareholders to be held July 16, 2007
TABLE OF CONTENTS
Page
PART I
Item 1. Business......................................................1
Item 1A. Risk Factors..................................................1
Item 1B. Unresolved Staff Comments.....................................4
Item 2. Properties....................................................4
Item 3. Legal Proceedings.............................................4
Item 4. Submission of Matters to a Vote of Security Holders...........4
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities..........4
Item 6. Selected Financial Data.......................................5
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................5
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk................................................5
Item 8. Financial Statements and Supplementary Data...................6
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure........................6
Item 9A. Controls and Procedures.......................................6
Item 9B. Other Information.............................................7
PART III
Item 10. Directors, Executive Officers and Corporate Governance........7
Item 11. Executive Compensation........................................8
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.................8
Item 13. Certain Relationships and Related Transactions, and
Director Independence......................................9
Item 14. Principal Accountant Fees and Services........................9
PART IV
Item 15. Exhibits and Financial Statement Schedules....................9
Signatures ...................................................................10
PART I
Item 1. Business
We were organized as a Texas corporation on April 19, 1961. Until September
1969, we operated as a licensee under the Small Business Investment Act of 1958.
At that time, we transferred to our wholly-owned subsidiary, Capital Southwest
Venture Corporation ("CSVC"), certain assets and our license as a small business
investment company ("SBIC"). CSVC is a closed-end, non-diversified investment
company of the management type registered under the Investment Company Act of
1940 (the "1940 Act"). Prior to March 30, 1988, we were registered as a
closed-end, non-diversified investment company under the 1940 Act. On that date,
we elected to become a business development company subject to the provisions of
the 1940 Act, as amended by the Small Business Incentive Act of 1980. Because we
wholly own CSVC, the portfolios of both entities are referred to collectively as
"our", "we" and "us".
We are a venture capital investment company whose objective is to achieve
capital appreciation through long-term investments in businesses believed to
have favorable growth potential. Our investment interests are focused on
expansion financings, management buyouts, recapitalizations, industry
consolidations and early-stage financings in a broad range of industry segments.
Our portfolio is a composite of companies in which we have major interests as
well as a number of developing companies and marketable securities of
established publicly-owned companies. We make available significant managerial
assistance to the companies in which we invest and believe that providing
material assistance to such investee companies is critical to their business
development activities.
The 12 largest investments we own had a combined cost of $38,566,269 and a
value of $638,196,845, representing 93.7% of the value of our consolidated
investment portfolio at March 31, 2007. For a narrative description of the 12
largest investments, see "Twelve Largest Investments - March 31, 2007" on pages
8 through 10 of our Annual Report to Shareholders for the Year Ended March 31,
2007 (our "2007 Annual Report") which is herein incorporated by reference.
Certain of the information presented on the 12 largest investments has been
obtained from the respective companies and, in certain cases, from public
filings of such companies. The financial information presented on each of the
respective companies is from such companies' audited financial statements.
We compete for attractive investment opportunities with venture capital
partnerships and corporations, venture capital affiliates of industrial and
financial companies, SBICs and wealthy individuals.
The number of persons employed by us at March 31, 2007 was seven.
Our internet website address is www.capitalsouthwest.com. You can review
the filings we have made with the U.S. Securities and Exchange Commission, free
of charge by linking directly from our website to NASDAQ, a database that links
to EDGAR, the Electronic Data Gathering, Analysis, and Retrieval System of the
SEC. You should be able to access our annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports on Form 8-K and amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934. The charters adopted by the committees of our board of
directors are also available on our website.
Item 1A. Risk Factors
You should carefully consider the risks described below and all other
information contained in this annual report on Form 10-K, including our
consolidated financial statements and the related notes thereto. The risks and
uncertainties described below are not the only ones facing us. Additional risks
and uncertainties not presently known to us, or not presently deemed material by
us, may also impair our operations and performance. If any of the following
risks actually occur, our business, financial condition or results of operations
could be materially adversely affected. If that happens, the trading price of
our common stock could decline, and you may lose all or part of your investment.
1
There is uncertainty regarding the value of our investments in restricted
securities.
Our net asset value is based on the values assigned to the various
investments in our portfolio, determined in good faith by our board of
directors. Because of the inherent uncertainty of the valuation of portfolio
securities which do not have readily ascertainable market values, our fair value
determinations may differ materially from the values which would be applicable
to unrestricted securities having a public market.
The lack of liquidity of our restricted securities may adversely affect our
business.
Our portfolio contains many securities which are subject to restrictions on
sale because they were acquired from issuers in "private placement" transactions
or because we are deemed to be an affiliate of the issuer. Unless an exemption
from the registration requirements of the Securities Act of 1933 is available,
we will not be able to sell these securities publicly without the expense and
time required to register the securities under applicable federal and state
securities laws. In addition, contractual or practical limitations may restrict
our ability to liquidate our securities in portfolio companies, because we may
own a relatively large percentage of the issuer's outstanding securities. Sales
may also be limited by unfavorable market conditions. The illiquidity of our
investments may preclude or delay the disposition of such securities, which may
make it difficult for us to obtain cash equal to the value at which we record
our investments.
There is limited publicly available information regarding the companies in which
we invest.
Many of the securities in our portfolio are issued by privately held
companies. There is generally little or no publicly available information about
such companies, and we must rely on the diligence of our management to obtain
the information necessary for our decision to invest. There can be no assurance
that such diligence efforts will uncover all material information necessary to
make fully informed investment decisions.
Certain of our portfolio companies are highly leveraged.
Many of our portfolio companies have incurred substantial indebtedness in
relation to their overall capital base. Such indebtedness often has a term that
will require the balance of the loan to be refinanced when it matures. If
portfolio companies cannot generate adequate cash flow to meet the principal and
interest payments on their indebtedness, the value of our investments could be
reduced or eliminated through foreclosure on the portfolio company's assets or
by the portfolio company's reorganization or bankruptcy.
Fluctuations may occur in our quarterly results.
Our quarterly operating results may fluctuate materially due to a number of
factors including, among others, variations in and the timing of the recognition
of realized and unrealized gains or losses, the degree to which we encounter
competition in our portfolio companies' markets, the ability to find and close
suitable investments, and general economic conditions. As a result of these
factors, results for any period should not be relied upon as being indicative of
performance in future periods. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
We may not continue to qualify for pass-through tax treatment.
We may not qualify for conduit tax treatment as a Regulated Investment
Company ("RIC") if we are unable to comply with the requirements of Subchapter M
of the Internal Revenue Code. If we fail to satisfy such requirements and cease
to qualify for conduit tax treatment, we will be subject to federal taxes on our
net investment income. The loss of this pass-through tax treatment could have a
material adverse effect on the total return, if any, obtainable from an
investment in our common stock.
Historically, we have distributed net investment income semi-annually. Our
current intention is to continue these distributions of ordinary income to our
shareholders. Also, historically, we have retained net realized capital gains,
paid the resulting tax at the corporate level and retained the after-tax gains
2
to supplement our equity capital and support continuing additions to our
portfolio. Our shareholders then report such capital gains on their tax returns,
receive credit for the tax we paid and are deemed to have reinvested the amount
of the retained after-tax gain. We cannot assure you that we will achieve
investment results or maintain a RIC tax status that will allow any specified
level of cash distributions or our shareholders' current tax treatment of
realized and retained capital gains.
Our financial condition and results of operations will depend on our ability to
effectively manage any future growth.
Sustaining growth depends on our ability to identify, evaluate, finance,
and invest in companies that meet our investment criteria. Accomplishing such
results on a cost-effective basis is a function of our marketing capabilities
and skillful management of the investment process. Failure to achieve future
growth could have a material adverse effect on our business, financial
condition, and results of operations.
We are dependent upon management for our future success.
Selection, structuring and closing our investments depends upon the
diligence and skill of our management, which is responsible for identifying,
evaluating, negotiating, monitoring and disposing of our investments. Our
management's capabilities may significantly impact our results of operations. If
we lose any member of our management team and he/she cannot be promptly replaced
with an equally capable team member, our results of operations could be
significantly impacted.
We operate in a highly competitive market for investment opportunities.
We compete with a number of private equity funds, other investment entities
and individuals for investment opportunities. Some of these competitors are
substantially larger and have greater financial resources, and some are subject
to different and frequently less stringent regulation. As a result of this
competition, we may not be able to take advantage of attractive investment
opportunities from time to time and there can be no assurance that we will be
able to identify and make investments that satisfy our objectives.
Changes in laws or regulations governing our operations or our failure to comply
with those laws or regulations may adversely affect our business.
We and our portfolio companies are subject to regulation by laws at the
local, state and federal level. These laws and regulations, as well as their
interpretation, may be changed from time to time. Accordingly, any changes in
these laws and regulations or failure to comply with them could have a material
adverse effect on our business. Certain of these laws and regulations pertain
specifically to business development companies such as ours.
Failure to deploy new capital may reduce our return on equity.
If we fail to invest our capital effectively, our return on equity may be
decreased, which could reduce the price of the shares of our common stock.
Investment in shares of our common stock should not be considered a complete
investment program.
Our stock is intended for investors seeking long-term capital appreciation.
Our investments in portfolio securities generally require many years to reach
maturity, and such investments generally are illiquid. An investment in our
shares should not be considered a complete investment program. Each prospective
purchaser should take into account his or her investment objectives as well as
his or her other investments when considering the purchase of our shares.
3
Our common stock often trades at a discount from net asset value.
Our common stock is listed on The Nasdaq Global Market ("NASDAQ").
Shareholders desiring liquidity may sell their shares on NASDAQ at current
market value, which has often been below net asset value. Shares of closed-end
investment companies frequently trade at discounts from net asset value, which
is a risk separate and distinct from the risk that a fund's performance will
cause its net asset value to decrease.
The market price of our common stock may fluctuate significantly.
The market price and marketability of shares of our common stock may from
time to time be significantly affected by numerous factors, including our
investment results, market conditions, and other influences and events over
which we have no control and that may not be directly related to us.
Item 1B. Unresolved Staff Comments
We have no unresolved staff comments to report pursuant to Item 1B.
Item 2. Properties
We maintain our offices at 12900 Preston Road, Suite 700, Dallas, Texas,
75230, where we rent approximately 3,700 square feet of office space pursuant to
a lease agreement expiring in February 2008. We believe that our offices are
adequate to meet our current and expected future needs.
Item 3. Legal Proceedings
We have no material pending legal proceedings to which we are a party or to
which any of our property is subject.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the quarter
ended March 31, 2007.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
Information set forth under the captions "Shareholder Information -
Shareholders, Market Prices and Dividends" on page 37 of our 2007 Annual Report
is herein incorporated by reference.
Performance Graph
The following graph compares our cumulative total shareholder return during
the last five years (based on the market price of our common stock and assuming
reinvestment of all dividends and tax credits on retained long-term capital
gains) with the Total Return Index for NASDAQ (U.S. Companies) and with the
Total Return Index for Nasdaq Financial Stocks, both of which indices have been
prepared by the Center for Research in Security Prices at the University of
Chicago.
4
Comparison of Five Year Cumulative Total Returns
[GRAPH OMITTED]
Nasdaq Total Nasdaq Financial Capital Southwest
Return (U.S.) Stocks Corporation
2002 100.000 100.000 100.000
2003 73.397 92.777 70.744
2004 108.335 133.387 112.003
2005 109.059 138.745 118.299
2006 128.607 162.999 143.785
2007 133.404 170.643 241.089
Item 6. Selected Financial Data
"Selected Consolidated Financial Data" on page 36 of our 2007 Annual Report
is herein incorporated by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Pages 33 through 35 of our 2007 Annual Report are herein incorporated by
reference.
Item 7A. Quantitative and Qualitative Disclosures 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.
Our investment performance is a function of our portfolio companies'
profitability, which may be affected by economic cycles, competitive forces,
foreign currency fluctuations and production costs including labor rates, raw
material prices and certain basic commodity prices. Most of the companies in our
investment portfolio do not hedge their exposure to raw material and commodity
price fluctuations. However, the portfolio company with the greatest exposure to
foreign currency fluctuations generally hedges its exposure. All of these
factors may have an adverse effect on the value of our investments and on our
net asset value.
Our investment in portfolio securities includes fixed-rate debt securities
which totaled $6,109,238 at March 31, 2007, equivalent to 0.9% 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.
5
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 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 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
value of our investment in such security.
Item 8. Financial Statements and Supplementary Data
Pages 11 through 32 of our 2007 Annual Report are herein incorporated by
reference. See also Item 15 of this Form 10-K - "Exhibits and Financial
Statement Schedules".
Selected Quarterly Financial Data (Unaudited)
---------------------------------
The following presents a summary of the unaudited quarterly consolidated
financial information for the years ended March 31, 2007 and 2006.
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- -----
(In thousands, except per share amounts)
2007
----
Net investment income $ 492 $ 1,170 $ 1,617 $ 954 $ 4,233
Net realized gain (loss) on investments 258 5,986 12,805 (2,715) 16,334
Net increase (decrease) in unrealized
appreciation of investments (3,023) (2,120) 86,187 15,300 96,344
Net increase (decrease) in net assets
from operations (2,273) 5,036 100,609 13,539 116,911
Net increase (decrease) in net assets
from operations per share (0.59) 1.30 25.89 3.48 30.08
2006
----
Net investment income $ 574 $ 666 $ 893 $ 256 $ 2,389
Net realized gain on investments 3,409 3,772 4,132 1,803 13,116
Net increase in unrealized
appreciation of investments 2,692 17,436 9,755 46,521 80,685
Net increase in net assets
from operations 6,675 21,874 14,780 48,580 96,190
Net increase in net assets
from operations per share 1.73 5.67 3.83 12.58 24.92
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Item 9A. Controls and Procedures
(i) Disclosure Controls and Procedures.
As of March 31, 2007, an evaluation was performed under the supervision and
with the participation of our management, including the President and Chairman
6
of the Board and Secretary-Treasurer, of the effectiveness of the design and
operation of our disclosure controls and procedures (as defined in Rules 13a-15
and 15d-15 of the Securities Exchange Act of 1934). Based on that evaluation,
the President and Chairman of the Board and Secretary-Treasurer concluded that
our disclosure controls and procedures are effective to ensure that the
information required to be disclosed is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and is accumulated and communicated to management,
including the President and Chairman of the Board and Secretary-Treasurer, as
appropriate, to allow timely decisions regarding such required disclosure.
During the fiscal quarter ended March 31, 2007, there were no changes to
the internal control over financial reporting that have materially affected, or
are reasonably likely to materially affect our internal controls over financial
reporting.
(ii) Internal Control Over Financial Reporting.
(a) Management's annual report on internal control over financial reporting.
The Company's management report on internal control over financial
reporting is set forth in our 2007 Annual Report on page 30 and is incorporated
herein by reference.
(b) Attestation report of the registered public accounting firm
The report of Grant Thornton LLP, the Company's independent registered
public accounting firm, on management's assessment of the effectiveness of the
Company's internal control over financial reporting and the effectiveness of the
Company's internal control over financial reporting is set forth in our 2007
Annual Report on page 31 and is incorporated herein by reference.
Item 9B. Other Information
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The section of our 2007 Proxy Statement captioned "Nominees for Director"
under "Proposal 1. Election of Directors" identifies members of our board of
directors and nominees, and is incorporated in this Item 10 by reference.
The names and ages of our executive officers as of June 1, 2007, together
with certain biographical information, are as follows:
William M. Ashbaugh, age 52, has served as Senior Vice President since 2005
and Vice President since 2001. He previously served as Managing
Director in the corporate finance departments of Hoak Breedlove
Wesneski & Co. from 1998 to 2001, Principal Financial Securities from
1997 to 1998 and Southwest Securities from 1995 to 1997.
Susan K. Hodgson, age 45, has served as Secretary-Treasurer since 2001 and
was Controller from 1994 to 2001.
Gary L. Martin, age 60, has been a director since July 1988 and has served
as Vice President since 1984. He previously served as Vice President
from 1978 to 1980. Since 1980, Mr. Martin has served as President of
The Whitmore Manufacturing Company, a wholly-owned portfolio company.
7
Jeffrey G. Peterson, age 33, has served as Vice President since 2005 and
was an Investment Associate since 2001. He previously held positions
with the investment banking division of Scott & Stringfellow, Inc. and
the corporate lending division of Bank One.
William R. Thomas, age 78, has served as Chairman of the Board of Directors
since 1982 and President since 1980. In addition, he has been a
director since 1972 and was previously Senior Vice President from 1969
to 1980.
The sections of our 2007 Proxy Statement captioned "Meetings and Committees
of the Board of Directors under "Proposal 1. Election of Directors" and "Report
of the Audit Committee" identifies members of our audit committee of our board
of directors and our audit committee financial expert, and are incorporated in
this Item 10 by reference.
The section of our 2007 Proxy Statement captioned "Section 16(a) Beneficial
Ownership Reporting Compliance" is incorporated in this Item 10 by reference.
Code of Ethics
We have adopted a code of ethics that applies to all our directors,
officers and employees. We have made the Code of Conduct and Ethics available on
our website at www.capitalsouthwest.com.
Item 11. Executive Compensation
The information in the section of our 2007 Proxy Statement captioned
"Compensation Discussion and Analysis" is incorporated in this Item 11 by
reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
The information in the sections of our 2007 Proxy Statement captioned
"Stock Ownership of Certain Beneficial Owners" are incorporated in this Item 12
by reference.
The table below sets forth certain information as of March 31, 2007
regarding the shares of our common stock available for grant or granted under
stock option plans that (i) were approved by our shareholders, and (ii) were not
approved by our shareholders.
Equity Compensation Plan Information
Number of Securities
Number of Securities Remaining Available For
To Be Issued Upon Weighted-Average Exercise Future Issuance Under Equity
Exercise of Price Of Outstanding Compensation Plans
Outstanding Options, Options, (excluding securities reflected
Plan Category Warrants And Rights Warrants And Rights in column (a)
------------- ------------------- ------------------- -------------
(a) (b) (c)
Equity 52,500 $86.184 58,500
compensation plans
approved by security
holders(1)
Equity - - -
compensation plans
not approved by
security holders ______ ______ ______
Total 52,500 $86.184 58,500
------
(1) Includes the 1999 Stock Option Plan. For a description of this plan, please
refer to Footnote 5 contained in our consolidated financial statements.
8
Item 13. Certain Relationships and Related Transactions, and Director
Independence
The information in the sections of our 2007 Proxy Statement captioned
"Meetings and Committees of the Board of Directors" - "Committee Member
Independence" and "Certain Relationships and Related Party Transactions" are
incorporated in this Item 13 by reference.
Item 14. Principal Accountant Fees and Services
The information in the sections of our 2007 Proxy Statement captioned
"Proposal 2: Ratification of Appointment of Independent Registered Accounting
Firm" and "Audit and Other Fees" are incorporated in this Item 14 by reference.
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)(1) The following information included in pages 11 through 32 of our
2007 Annual Report are herein incorporated by reference:
(A) Portfolio of Investments - March 31, 2007
Consolidated Statements of Financial Condition - March 31, 2007
and 2006
Consolidated Statements of Operations - Years Ended March 31,
2007, 2006 and 2005
Consolidated Statements of Changes in Net Assets - Years Ended
March 31, 2007, 2006 and 2005
Consolidated Statements of Cash Flows - Years Ended March 31,
2007, 2006 and 2005
(B) Notes to Consolidated Financial Statements
(C) Notes to Portfolio of Investments
(D) Selected Per Share Data and Ratios
(E) Management's Report on Internal Control over Financial Reporting
(F) Reports of Independent Registered Public Accounting Firm
(G) Portfolio Changes During the Year
(a)(2) All schedules are omitted because they are not applicable or not
required, or the information is otherwise supplied.
(a)(3) See the Exhibit Index.
9
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
/s/ William R. Thomas
By:___________________________
William R. Thomas, President
and Chairman of the Board
Date: May 25, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ William R. Thomas
____________________ President and Chairman May 25, 2007
William R. Thomas of the Board and Director
(chief executive officer)
/s/ Gary L. Martin
___________________ Director May 25, 2007
Gary L. Martin
/s/ Donald W. Burton
___________________ Director May 25, 2007
Donald W. Burton
/s/ Graeme W. Henderson
___________________ Director May 25, 2007
Graeme W. Henderson
/s/ Samuel B. Ligon
___________________ Director May 25, 2007
Samuel B. Ligon
/s/ John H. Wilson
______________________ Director May 25, 2007
John H. Wilson
/s/ Susan K. Hodgson
___________________ Secretary-Treasurer May 25, 2007
Susan K. Hodgson (chief financial/accounting officer)
10
EXHIBIT INDEX
The following exhibits are filed with this report or are incorporated
herein by reference to a prior filing, in accordance with Rule 12b-32 under the
Securities Exchange Act of 1934. Asterisk denotes exhibits filed with this
report. Double asterick denotes exhibits furnished with this report.
Exhibit No. Description
----------- -----------
3.1(a) Articles of Incorporation and Articles of Amendment to
Articles of Incorporation, dated June 25, 1969 (filed as
Exhibit 1(a) and 1(b) to Amendment No. 3 to Form N-2 for the
fiscal year ended March 31, 1979).
3.1(b) Articles of Amendment to Articles of Incorporation, dated
July 20, 1987 (filed as an exhibit to Form N-SAR for the six
month period ended September 30, 1987).
3.2 * By-Laws of the Company, as amended.
4.1 Specimen of Common Stock certificate (filed as Exhibit 4.1
to Form 10-K for the fiscal year ended March 31, 2002).
10.1 * The RectorSeal Corporation and Jet-Lube, Inc. Employee Stock
Ownership Plan as revised and restated effective April 1,
2007.
10.2 * Retirement Plan for Employees of Capital Southwest
Corporation and Its Affiliates as amended and restated
effective April 1, 2006.
10.3 Capital Southwest Corporation and Its Affiliates Restoration
of Retirement Income Plan for certain highly-compensated
superseded plan participants effective April 1, 1993 (filed
as Exhibit 10.4 to Form 10-K for the fiscal year ended March
31, 1995).
10.4 Amendment One to Capital Southwest Corporation and Its
Affiliates Restoration of Retirement Income Plan for certain
highly-compensated superceded plan participants effective
April 1, 1993 (filed as Exhibit 10.6 to Form 10-K for the
fiscal year ended March 31, 1998).
10.5 Capital Southwest Corporation Retirement Income Restoration
Plan as amended and restated effective April 1, 1989 (filed
as Exhibit 10.5 to Form 10-K for the fiscal year ended March
31, 1995).
10.6 Form of Indemnification Agreement which has been established
with all directors and executive officers of the Company
(filed as Exhibit 10.9 to Form 8-K dated February 10, 1994).
10.7 Capital Southwest Corporation 1999 Stock Option Plan (filed
as Exhibit 10.10 to Form 10-K for the fiscal year ended
March 31, 2000).
10.8 Severance Pay Agreement with William M. Ashbaugh (filed as
Exhibit 10.1 to Form 8-K dated July 18, 2005).
10.9 Severance Pay Agreement with Susan K. Hodgson (filed as
Exhibit 10.3 to Form 8-K dated July 18, 2005).
10.10 Severance Pay Agreement with Jeffrey G. Peterson (filed as
Exhibit 10.4 to Form 8-K dated July 18, 2005).
13.1 * Annual Report to Shareholders for the fiscal year ended
March 31, 2007.
21.1 * List of subsidiaries of the Company.
23.1 * Consent of Independent Registered Public Accounting Firm -
Grant Thornton LLP.
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.
31.2 * Certification of Secretary-Treasurer required by Rule
13a-14(a) or Rule 15d-14(a) of the Exchange Act, filed
herewith.
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.
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.