SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934-
For the fiscal year ended December 31, 2005
Commission file number 1-13905
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A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
COMPX CONTRIBUTORY RETIREMENT PLAN
5430 LBJ Freeway, Suite 1700
Dallas, Texas 75240-2697
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
COMPX INTERNATIONAL INC.
5430 LBJ Freeway, Suite 1700
Dallas, Texas 75240-2697
SIGNATURE
Pursuant to the requirements of the Securities Act of 1934, the
Administrator has duly caused this Annual Report to be signed by the undersigned
thereunto duly authorized.
COMPX CONTRIBUTORY RETIREMENT PLAN
By: ADMINISTRATIVE COMMITTEE OF THE
COMPX CONTRIBUTORY RETIREMENT PLAN
By: /s/ Raymond S. Staton
------------------------------------
Raymond S. Staton
Committee Member
June 28, 2006
COMPX CONTRIBUTORY RETIREMENT PLAN
FINANCIAL STATEMENTS
December 31, 2005
with
REPORTS OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRMS
COMPX CONTRIBUTORY RETIREMENT PLAN
Index of Financial Statements
Page
Reports of Independent Registered Public Accounting Firms
Sutton Frost Cary LLP 2
PricewaterhouseCoopers LLP 3
Financial Statements
Statements of Net Assets Available for Benefits -
December 31, 2004 and 2005 4
Statement of Changes in Net Assets Available for Benefits -
Year ended December 31, 2005 5
Notes to Financial Statements 6-9
Exhibit A
Consent of Independent Registered Public Accounting Firm -
Sutton Frost Cary LLP
Exhibit B
Consent of Independent Registered Public Accounting Firm -
PricewaterhouseCoopers LLP
- 1 -
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Participants and Administrative Committee of
CompX Contributory Retirement Plan:
In our opinion, the accompanying statement of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the CompX Contributory Retirement Plan (the "Plan") at December 31, 2005, and
the changes in net assets available for benefits for the year then ended in
conformity with accounting principles generally accepted in the United States of
America. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Plan's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
As further described in Note 2, effective December 31, 2005, the Plan merged
into The Employee 401(k) Retirement Plan.
Sutton Frost Cary LLP
A Limited Liability Partnership
Certified Public Accountants
June 2, 2006
Arlington, Texas
- 2 -
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Participants and Administrative Committee of the CompX Contributory
Retirement Plan:
In our opinion, the accompanying statement of net assets available for
benefits presents fairly, in all material respects, the net assets available for
benefits of the CompX Contributory Retirement Plan (the "Plan") at December 31,
2004 in conformity with accounting principles generally accepted in the United
States of America. This financial statement is the responsibility of the Plan's
management. Our responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit of this statement in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Dallas, Texas
June 28, 2005
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COMPX CONTRIBUTORY RETIREMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2004 and 2005
2004 2005
---- ----
Assets:
Investments at fair value $16,568,572 $ -
Loans to participants 777,015 -
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17,345,587 -
Contributions receivable:
Employer 587,501 -
Participants 4,084 -
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Net assets available for benefits $17,937,172 $ -
=========== ===========
See accompanying notes to financial statements.
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COMPX CONTRIBUTORY RETIREMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
Year ended December 31, 2005
Additions:
Investment income:
Net appreciation in fair value of investments $ 393,140
Dividends 608,717
Interest 61,890
------------
1,063,747
Contributions:
Employer 647,643
Participants 1,314,457
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1,962,100
Total additions 3,025,847
------------
Deductions:
Benefits to participants 4,168,878
Administrative expenses 1,971
------------
Total deductions 4,170,849
------------
Net decrease in net assets available for benefits
prior to merger (1,145,002)
Merger to The Employee 401(k) Retirement Plan (16,792,170)
------------
Decrease in net assets available for benefits (17,937,172)
Net assets available for benefits:
Beginning of year 17,937,172
------------
End of year $ -
============
See accompanying notes to financial statements.
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COMPX CONTRIBUTORY RETIREMENT PLAN
NOTES TO FINANCIAL STATEMENTS
Note 1 - Description of Plan and significant accounting policies:
General. The following description of the CompX Contributory Retirement
Plan (the "Plan") provides only general information. Participants should refer
to the Plan agreement for a more complete description of the Plan's provisions.
The Plan was merged into The Employee 401(k) Retirement Plan on December 31,
2005. See Note 2.
The Plan is a defined contribution plan which covers eligible U.S.
employees of CompX International Inc. and its U.S. subsidiaries (collectively,
the "Employer"). Employees are eligible to participate in the Plan as of the
first entry date, as defined, concurrent with or next following the completion
of 90 days of eligible service and attaining 20 years of age. The Plan is
subject to the provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA").
The Employer is 83% owned by CompX Group, a majority-owned subsidiary of NL
Industries, Inc. at December 31, 2005. NL owns 82% of CompX Group, and Titanium
Metals Corporation ("TIMET") owns the remaining 18% of CompX Group. At December
31, 2005 (i) NL and TIMET own an additional 2% and 3%, respectively, of CompX
directly, (ii) Valhi, Inc. holds, directly or through a subsidiary,
approximately 83% of NL's outstanding common stock and approximately 39% of
TIMET's outstanding common stock and (iii) Contran Corporation holds, directly
or through subsidiaries, approximately 92% of Valhi's outstanding common stock.
Substantially all of Contran's outstanding voting stock is held by trusts
established for the benefit of certain children and grandchildren of Harold C.
Simmons, of which Mr. Simmons is sole trustee, or is held by Mr. Simmons or
persons or other entities related to Mr. Simmons. Consequently, Mr. Simmons may
be deemed to control each of such companies and the Plan.
Contributions. The Plan permits participants to defer 1% to 100% (highly
compensated employees are limited to a maximum of 25%) of their annual
compensation as pre-tax contributions, not to exceed a deferral of $14,000 in
2005 (subject to adjustment in future years), through payroll deductions.
Participants who will be at least age 50 by the end of the Plan year may elect
to make "catch-up" contributions, not to exceed an additional deferral of $4,000
in 2005 (subject to adjustments in future years) through payroll deductions.
Pursuant to the Internal Revenue Code, total participant contributions (pre-tax
and after-tax) and employer contributions are limited to an aggregate of $42,000
from all employer defined contribution plans in 2005. The Employer's
contribution is based upon a profit-sharing formula and the Employer's profit,
as defined, during the Plan year. The Employer's contribution is allocated to
participants' accounts on a percentage or matching basis relative to the
participants' contributions (excluding catch-up contributions) for the year. The
Employer's contribution is reduced, as provided by the Plan, by nonvested
amounts forfeited by participants who withdraw from the Plan. At December 31,
2004 and 2005, unallocated forfeited nonvested accounts were $103,175 and nil
respectively. Forfeitures of $116,855 were used to reduce employer contributions
for the year ended December 31, 2005.
Vesting and benefits. Salary deferrals (including earnings thereon) are
immediately vested while Employer contributions (including earnings thereon)
vest at the rate of 20% per year of service, as defined.
Upon termination of employment, retirement or death, a participant (or
beneficiary, if applicable) may elect to receive either (i) a lump sum amount
equal to the vested value of the participant's accounts or (ii) installments
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over a period of not more than 30 years. Distribution of a participant's account
balance in a lump sum without the participant's consent may be made if the
vested portion of the participant's account is not greater than $5,000 or
distribution commences after the participant attains 65 years. With the consent
of the Plan administrators, participants can borrow amounts from their vested
account balances, subject to certain limitations under the Plan.
Benefits are recorded when paid.
Participants' accounts. Participants can direct the Plan administrator to
invest, in 1% increments, their account balance in publicly-traded registered
investment companies or commingled trusts administered by Putnam Investments or
in CompX International Inc. common stock (not to exceed 25% of account
balances). On September 23, 2005, participants were notified that they would no
longer be able to invest in CompX stock effective December 30, 2005. In
addition, no new contributions or account transfers could be made to the CompX
Stock Fund after September 30, 2005; and if the participant had not liquidated
the balance of his CompX Stock Fund by December 12, 2005, the Company would
begin to liquidate it and transfer the proceeds to the Putnam S&P Index Fund.
Each participant's account is credited with the participant's contribution
and an allocation of the Employer's contribution and Plan earnings, and charged
with an allocation of administrative expenses. Allocations are based on
participant earnings, matching or account balances, as defined in the Plan.
In addition to the investment fund options, a "Loan Fund" is maintained to
account for loans to participants, as permitted by the Plan. A participant is
able to borrow from his/her fund account an amount ranging from a minimum of
$1,000 up to a maximum that is generally equal to the lesser of $50,000 or 50%
of his/her vested account balance. A loan is collateralized by the balance in
the participant's account and bears interest at rates commensurate with local
prevailing rates. For outstanding loans at December 31, 2005 prior to transfer
to the Retirement Plan, interest rates ranged from 5.0% to 10.5%.
Plan termination. The Employer has the right under the Plan to discontinue
its contributions at any time and to terminate the Plan, in compliance with the
provisions of ERISA. In the event the Plan is terminated, the accounts of all
participants will become fully vested. The merger of the Plan into The Employee
401(k) Retirement Plan (see Note 2) was not a termination of the Plan.
Basis of accounting. The financial statements of the Plan are prepared in
accordance with accounting principles generally accepted in the United States of
America. Valuation of investments is more fully described in Note 3.
Management estimates. The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, and changes therein, and disclosure of
contingent assets and liabilities. Actual results may, in some instances, differ
from previously estimated amounts.
Risks and uncertainties. The Plan provides for various investment options
in a variety of stocks, bonds, fixed income securities, mutual funds, and other
investment securities. Investment securities are exposed to various risks, such
as interest rate, market, and credit risks. Due to the level of risk associated
with certain investment securities, it is at least reasonably possible that
changes in the values of investment securities will occur in the near term and
that such changes could materially affect participants' account balances and the
amounts reported in the Plan's statement of net assets available for benefits.
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Expenses of administering the Plan. The Plan provides that the Employer
will generally reimburse the Plan for administrative expenses paid by the Plan.
The Employer paid a significant portion of the 2005 administrative expenses.
Tax status. The Plan has been notified by the Internal Revenue Service in a
letter dated December 13, 2004 that it is a qualified plan under Section 401(a)
and Section 401(k) of the Internal Revenue Code (the "Code"), and is therefore
exempt from federal income taxes under provisions of Section 501(a) of the Code.
The Plan has been amended since it was notified of its exempt status by the
Internal Revenue Service. Management believes that the Plan currently is
designed and operates in accordance with the applicable requirements of the Code
and therefore remains exempt from federal income taxes under provisions of
Section 501(a) of the Code.
Note 2 - Plan Merger:
On December 31, 2005, the Plan was merged into The Employee 401(k)
Retirement Plan ("Retirement Plan") resulting in the transfer of net assets of
$16,792,170 into the Retirement Plan. Participants of the Plan began to
participate in the Retirement Plan on January 1, 2006.
The merger initiated a "Black Out" period beginning December 27, 2005 and
continuing through January 15, 2006. During this period, changes could not be
made to participant accounts and funds could not be withdrawn from either the
Plan or the Retirement Plan.
Note 3 - Investments:
General. Prior to December 31, 2005, the assets of the Plan were held and
the related investment transactions were executed by Putnam Fiduciary Trust
Company as trustee (the "Trustee") of the CompX Master 401(k) Plan Trust (the
"Trust"). The Trust invested in publicly-traded registered investment companies,
commingled trusts administered by Putnam Investments and CompX International
Inc. class A common stock (see Note 1). The Plan assets invested in Putnam
mutual funds and commingled trusts qualify as party-in-interest transactions.
The Plan's investments are stated at fair value based on quoted market prices
and net appreciation for the year is reflected in the Plan's statement of
changes in net assets available for plan benefits. The net appreciation consists
of realized gains or losses and unrealized appreciation or depreciation on
investments. Purchases and sales of securities are recorded on a trade-date
basis. Dividends are recorded on the ex-dividend date.
The following presents investments that represent 5 percent or more of the
Plan's net assets at year end:
December 31,
2004 2005
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Putnam Stable Value Fund (commingled trust) $4,201,986 $ -
Putnam Voyager Fund (class Y shares) 2,287,495 -
Calamos Growth Fund (class A shares) 2,017,371 -
PIMCO Total Return Fund (class A shares) 1,282,783 -
Putnam S&P 500 Index Fund (commingled trust) 1,241,106 -
UAM ICM Small Company Portfolio Fund
(Institutional shares) 1,154,597 -
Managers Special Equity Fund 1,046,159 -
- 8 -
During 2005, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated in
value by $393,140 as follows:
Mutual funds $ 343,078
Commingled trusts 57,163
Common stock (7,101)
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$ 393,140
EXHIBIT A
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-56163) of CompX International Inc. of our report
dated June 2, 2006 relating to the financial statements of CompX Contributory
Retirement Plan, which appears in this Form 11-K.
Sutton Frost Cary LLP
Arlington, Texas
June 28, 2006
EXHIBIT B
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-56163) of CompX International Inc. of our report
dated June 28, 2005 relating to the financial statements of CompX Contributory
Retirement Plan, which appears in this Form 11-K.
PricewaterhouseCoopers LLP
Dallas, Texas
June 28, 2006