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 September 30, 2005 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ..................... to ..................... Commission File Number: 814-61 CAPITAL SOUTHWEST CORPORATION (Exact name of registrant as specified in its charter) Texas 75-1072796 (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 12900 Preston Road, Suite 700, Dallas, Texas 75230 (Address of principal executive offices) (Zip Code) (972) 233-8242 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes X No ----- ----- Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X ----- ----- 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 October 31, 2005
TABLE OF CONTENTS Page No. -------- PART I. FINANCIAL INFORMATION ITEM 1. Consolidated Financial Statements Consolidated Statements of Financial Condition September 30, 2005 (Unaudited) and March 31, 2005...........3 Consolidated Statements of Operations (Unaudited) For the three and six months ended September 30, 2005 and September 30, 2004..........................................4 Consolidated Statements of Changes in Net Assets For the six months ended September 30, 2005 (Unaudited) and year ended March 31, 2005...................................5 Consolidated Statements of Cash Flows (Unaudited) For the three and six months ended September 30, 2005 and September 30, 2004..........................................6 Notes to Consolidated Financial Statements........................7 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.........................8 ITEM 3. Quantitative and Qualitative Disclosure About Market Risk.................................................11 ITEM 4. Controls and Procedures........................................11 PART II. OTHER INFORMATION ITEM 6. Exhibits and Reports on Form 8-K...............................12 Signatures ..................................................................13
<TABLE> <CAPTION> PART I. FINANCIAL INFORMATION - ------------------------------ Item 1. Consolidated Financial Statements CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES Consolidated Statements of Financial Condition ---------------------------------------------- Assets September 30, 2005 March 31, 2005 ------------------ -------------- (Unaudited) <S> <C> <C> Investments at market or fair value Companies more than 25% owned (Cost: September 30, 2005 - $23,114,866 March 31, 2005 - $23,114,866) $271,943,981 $259,628,981 Companies 5% to 25% owned (Cost: September 30, 2005 - $27,050,000 March 31, 2005 - $19,050,000) 58,614,852 44,890,852 Companies less than 5% owned (Cost: September 30, 2005 - $38,281,525 March 31, 2005 - $42,381,532) 126,329,136 117,502,389 ------------ ------------ Total investments (Cost: September 30, 2005- $88,446,391 March 31, 2005 - $84,546,398) 456,887,969 422,022,222 Cash and cash equivalents 7,479,078 5,104,935 Receivables 256,193 136,401 Other assets 7,193,079 7,120,043 ------------ ------------ Totals $471,816,319 $434,383,601 ============ ============ Liabilities and Shareholders' Equity Note payable to bank $ 8,000,000 $ 8,000,000 Note payable to portfolio company -- 5,000,000 Accrued interest and other liabilities 1,643,775 1,842,587 Income taxes payable 2,642,433 -- Deferred income taxes 129,217,885 117,007,107 ------------ ------------ Total liabilities 141,504,093 131,849,694 ------------ ------------ Shareholders' equity Common stock, $1 par value: authorized, 5,000,000 shares; issued, 4,294,416 shares at September 30, 2005 and March 31, 2005 4,294,416 4,294,416 Additional capital 7,904,997 7,904,997 Undistributed net investment income 4,139,050 3,669,805 Undistributed net realized gain on investments 80,497,486 73,316,166 Unrealized appreciation of investments - net of deferred income taxes 240,509,579 220,381,825 Treasury stock - at cost (437,365 shares) (7,033,302) (7,033,302) ------------ ------------ Net assets at market or fair value, equivalent to $85.64 per share at September 30, 2005 and $78.44 per share at March 31, 2005 on the 3,857,051 shares outstanding 330,312,226 302,533,907 ------------ ------------ Totals $471,816,319 $434,383,601 ============ ============ </TABLE> (See Notes to Consolidated Financial Statements) 3
<TABLE> <CAPTION> CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations ------------------------------------- (Unaudited) Three Months Ended Six Months Ended September 30 September 30 -------------------------- -------------------------- 2005 2004 2005 2004 ----------- ----------- ----------- ----------- <S> <C> <C> <C> <C> Investment income: Interest $ 101,763 $ 94,660 $ 243,666 $ 187,942 Dividends 783,374 727,207 1,565,620 1,429,414 Management and directors' fees 308,720 154,750 479,470 324,000 ----------- ----------- ----------- ----------- 1,193,857 976,617 2,288,756 1,941,356 ----------- ----------- ----------- ----------- Operating expenses: Salaries 246,500 254,218 479,500 484,593 Net pension expense (benefit) 5,344 (59,212) (58,373) (127,438) Other operating expenses 181,534 231,745 383,992 405,442 ----------- ----------- ----------- ----------- 433,378 426,751 805,119 762,597 ----------- ----------- ----------- ----------- Income before interest expense and income taxes 760,479 549,866 1,483,637 1,178,759 Interest expense 96,323 86,483 215,082 201,869 ----------- ----------- ----------- ----------- Income before income taxes 664,156 463,383 1,268,555 976,890 Income tax expense (benefit) (1,800) 20,400 27,900 44,400 ----------- ----------- ----------- ----------- Net investment income $ 665,956 $ 442,983 $ 1,240,655 $ 932,490 =========== =========== =========== =========== Proceeds from disposition of investments $13,001,764 $ 155,877 $19,886,004 $ 764,394 Cost of investments sold 7,086,217 4,083,668 8,709,873 7,085,993 ----------- ----------- ----------- ----------- Realized gain (loss) on investments before income taxes 5,915,547 (3,927,791) 11,176,131 (6,321,599) Income tax expense (benefit) 2,143,206 (1,458,018) 3,994,811 (2,295,851) ----------- ----------- ----------- ----------- Net realized gain (loss) on investments 3,772,341 (2,469,773) 7,181,320 (4,025,748) ----------- ----------- ----------- ----------- Increase (decrease) in unrealized apprecia- tion of investments before income taxes 26,824,183 (3,791,414) 30,965,754 (7,472,675) Increase (decrease) in deferred income taxes on appreciation of investments 9,388,000 (1,244,000) 10,838,000 (2,533,000) ----------- ----------- ----------- ----------- Net increase (decrease) in unrealized appreciation of investments 17,436,183 (2,547,414) 20,127,754 (4,939,675) ----------- ----------- ----------- ----------- Net realized and unrealized gain (loss) on investments $21,208,524 $(5,017,187) $27,309,074 $(8,965,423) =========== =========== =========== =========== Increase (decrease) in net assets from operations $21,874,480 $(4,574,204) $28,549,729 $(8,032,933) =========== =========== =========== =========== </TABLE> (See Notes to Consolidated Financial Statements) 4
<TABLE> <CAPTION> CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES Consolidated Statements of Changes in Net Assets ------------------------------------------------ Six Months Ended Year Ended September 30, 2005 March 31, 2005 ------------------ -------------- (Unaudited) <S> <C> <C> Operations Net investment income $ 1,240,655 $ 2,405,948 Net realized gain (loss) on investments 7,181,320 (6,065,814) Net increase in unrealized appreciation of investments 20,127,754 17,884,654 ------------ ------------ Increase in net assets from operations 28,549,729 14,224,788 Distributions from: Undistributed net investment income (771,410) (2,314,231) ------------ ------------ Increase in net assets 27,778,319 11,910,557 Net assets, beginning of period 302,533,907 290,623,350 ------------ ------------ Net assets, end of period $330,312,226 $302,533,907 ============ ============ </TABLE> (See Notes to Consolidated Financial Statements) 5
<TABLE> <CAPTION> CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows ------------------------------------- (Unaudited) Three Months Ended Six Months Ended September 30 September 30 --------------------------- --------------------------- 2005 2004 2005 2004 ------------ ----------- ------------ ----------- <S> <C> <C> <C> <C> Cash flows from operating activities Increase (decrease) in net assets from operations $ 21,874,480 $(4,574,204) $ 28,549,729 $(8,032,933) Adjustments to reconcile increase (decrease) in net assets from operations to net cash provided by operating activities: Proceeds from disposition of investments 13,001,764 101,297 19,886,004 709,814 Purchases of securities (10,179,665) (545,078) (12,984,866) (947,403) Maturities of securities 375,000 228,000 375,000 228,000 Depreciation and amortization 3,924 4,262 7,849 7,891 Net pension expense (benefit) 5,344 (59,212) (58,373) (127,438) Net realized and unrealized (gain) loss on investments (21,208,524) 5,017,187 (27,309,074) 8,965,423 (Increase) decrease in receivables (41,569) 282 (119,792) (12,444) (Increase) decrease in other assets 10,272 29,783 15,697 (4,546) Decrease in accrued interest and other liabilities (250) (39,276) (159,685) (107,522) Decrease in accrued pension cost (38,668) (41,820) (77,336) (83,640) Deferred income taxes (1,800) 20,400 20,400 44,400 ------------ ----------- ------------ ----------- Net cash provided by operating activities 3,800,308 141,621 8,145,553 639,602 ------------ ----------- ------------ ----------- Cash flows from financing activities Decrease in note payable to bank -- -- -- (7,500,000) Decrease in note payable to portfolio company -- -- (5,000,000) -- Distributions from undistributed net investment income -- -- (771,410) (771,410) ------------ ----------- ------------ ----------- Net cash used in financing activities -- -- (5,771,410) (8,271,410) ------------ ----------- ------------ ----------- Net increase (decrease) in cash and cash equivalents 3,800,308 141,621 2,374,143 (7,631,808) Cash and cash equivalents at beginning of period 3,678,770 2,377,367 5,104,935 10,150,796 ------------ ----------- ------------ ----------- Cash and cash equivalents at end of period $ 7,479,078 $ 2,518,988 $ 7,479,078 $ 2,518,988 ============ =========== ============ =========== Supplemental disclosure of cash flow information: Cash paid during the period for: Interest $96,179 $86,386 $214,860 $202,200 Income taxes $ -- $ -- $ 7,500 $ -- </TABLE> (See Notes to Consolidated Financial Statements) 6
CAPITAL SOUTHWEST CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements ------------------------------------------ (Unaudited) 1. Basis of Presentation The accompanying consolidated financial statements, which include our accounts and the accounts of our wholly-owned small business investment company subsidiary and our wholly-owned management company, have been prepared on the value method of accounting in accordance with accounting principles generally accepted in the United States for investment companies. All significant intercompany accounts and transactions have been eliminated in consolidation. The financial statements included herein have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Article 6 of Regulation S-X. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended March 31, 2005. Certain information and footnotes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted, although we believe that the disclosures are adequate for a fair presentation. The information reflects all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the results of operations for the interim periods. 2. Indemnification We enter into agreements that contain customary indemnification provisions. The maximum exposure under these indemnification agreements is unknown, but we have had no previous claims or losses and expect the risk of losses to be remote. 3. Stock-Based Compensation Effective April 1, 2003, we adopted the fair value method of recording compensation expense related to all stock options granted after March 31, 2003, in accordance with FASB Statement Nos. 123 and 148. Accordingly, the fair value of stock options as determined on the date of grant using the Black-Scholes pricing model will be expensed over the vesting period of the related stock options. No stock options have been granted since March 31, 2003. The following table illustrates the effect on net asset value and net asset value per share if we had applied the fair value recognition provisions of FASB Statement No. 123 to stock-based compensation for options granted prior to the implementation of FASB Statement No. 123. September 30, September 30, 2005 2004 ------------ ------------ Net asset value, as reported $330,312,226 $281,819,007 Deduct: Total fair value computed stock-based compensation 75,468 80,382 ------------ ------------ Pro forma net asset value $330,236,758 $281,738,625 ============ ============ Net asset value per share: Basic - as reported $85.64 $73.07 ====== ====== Basic - pro forma $85.62 $73.05 ====== ====== Diluted - as reported $85.53 $73.04 ====== ====== Diluted - pro forma $85.51 $73.02 ====== ====== 7
<TABLE> <CAPTION> Notes to Consolidated Financial Statements (continued) The diluted net asset value per share calculation assumes all vested outstanding options for which the market price exceeds the exercise price have been exercised. In December 2004, the FASB issued a revised SFAS No. 123(R), "Share-Based Payment." It requires us to measure all employee stock-based compensation awards using a fair value method and record such expense in our consolidated financial statements. In addition it requires additional accounting and disclosure related to the cash flow effects resulting from share-based payment arrangements. It is effective at the beginning of the fiscal year that begins after June 15, 2005. We expect that the adoption effective April 1, 2006, will not have a material effect on our financial condition, results of operations and cash flows and that the effect on our net asset value will be comparable to the pro forma disclosures presented above. 4. Summary of Per Share Information Three Months Ended Six Months Ended September 30 September 30 ------------------ ------------------ 2005 2004 2005 2004 ------ ------ ------ ------ <S> <C> <C> <C> <C> Investment income $ .31 $ .25 $ .59 $ .50 Operating expenses (.12) (.11) (.21) (.20) Interest expense (.02) (.02) (.05) (.05) Income taxes -- -- (.01) (.01) ------ ------ ------ ------ Net investment income .17 .12 .32 .24 Distributions from undistributed net investment income -- -- (.20) (.20) Net realized gain (loss) on investments .98 (.64) 1.86 (1.04) Net increase (decrease) in unrealized appreciation of investments after deferred taxes 4.52 (.66) 5.22 (1.28) ------ ------ ------ ------ Increase (decrease) in net asset value 5.67 (1.18) 7.20 (2.28) Net asset value: Beginning of period 79.97 74.25 78.44 75.35 ------ ------ ------ ------ End of period $85.64 $73.07 $85.64 $73.07 ====== ====== ====== ====== Increase (decrease) in deferred taxes on unrealized appreciation $ 2.44 $ (.32) $ 2.81 $ (.66) Deferred taxes on unrealized appreciation: Beginning of period 30.73 27.45 30.36 27.79 ------ ------ ------ ------ End of period $33.17 $27.13 $33.17 $27.13 ====== ====== ====== ====== Shares outstanding at end of period (000s omitted) 3,857 3,857 3,857 3,857 </TABLE> Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Net asset value at September 30, 2005 was $330,312,226 equivalent to $85.64 per share after deducting an allowance of $33.17 per share for deferred taxes on net unrealized appreciation of investments. Assuming reinvestment of dividends, the September 30, 2005 net asset value reflects an increase of 18.1% during the past twelve months. September 30, September 30, 2005 2004 ------------ ------------ Net assets $330,312,226 $281,819,007 Shares outstanding 3,857,051 3,857,051 Net assets per share $85.64 $73.07 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Results of Operations The composite measure of our financial performance in the Consolidated Statements of Operations is captioned "Increase (decrease) in net assets from operations" and consists of three elements. The first is "Net investment income", which is the difference between our income from interest, dividends and fees and our combined operating and interest expenses, net of applicable income taxes. The second element is "Net realized gain (loss) on investments", which is the difference between the proceeds received from disposition of portfolio securities and their stated cost, net of applicable income tax expense or benefit. The third element is the "Net increase (decrease) in unrealized appreciation of investments", which is the net change in the market or fair value of our investment portfolio, compared with stated cost, net of an increase or decrease in deferred income taxes which would become payable if the unrealized appreciation were realized through the sale or other disposition of the investment portfolio. It should be noted that the "Net realized gain (loss) on investments" and "Net increase (decrease) in unrealized appreciation of investments" are directly related in that when an appreciated portfolio security is sold to realize a gain, a corresponding decrease in net unrealized appreciation occurs by transferring the gain associated with the transaction from being "unrealized" to being "realized". Conversely, when a loss is realized on a depreciated portfolio security, an increase in net unrealized appreciation occurs. Net Investment Income Interest income of $243,666 in the six months ended September 30, 2005 increased from $187,942 in the year-ago period primarily because of an increase in interest rates. During the six months ended September 30, 2005 and 2004, we recorded dividend income from the following sources: Six Months Ended September 30 2005 2004 ---------- ---------- Alamo Group Inc. $ 338,556 $ 338,556 Dennis Tool Company 49,999 25,000 Kimberly-Clark Corporation 69,462 61,744 Lifemark Group (formerly Skylawn Corp.) 300,000 300,000 PalletOne, Inc. 89,842 -- The RectorSeal Corporation 480,000 480,000 Sprint Nextel Corporation 13,500 22,500 TCI Holdings, Inc. 40,635 40,635 The Whitmore Manufacturing Company 120,000 120,000 Other 63,626 40,979 ---------- ---------- $1,565,620 $1,429,414 ========== ========== Net Realized Gain (Loss) on Investments During the six months ended September 30, 2005, we reported a realized gain before income taxes of $11,176,131 which included a gain of $6,846,510, on our sale of 1,000,000 shares of Cenveo, Inc., a gain of $8,708,891 on our sale of Texas Shredder, Inc. and a loss of $6,000,000 on our investment in Organized Living, Inc. Net Increase (Decrease) in Unrealized Appreciation of Investments Set forth in the following table are the significant increases and decreases in unrealized appreciation (before the related change in deferred income taxes and excluding the effect of gains or losses realized during the periods) by portfolio company: 9
<TABLE> <CAPTION> Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Three Months Ended Six Months Ended September 30 September 30 ------------------------ --------------------------- 2005 2004 2005 2004 ---------- ----------- ----------- ------------ <S> <C> <C> <C> <C> Alamo Group Inc $2,821,000 $ 5,643,000 $(5,642,000) $ 5,643,000 Cenveo, Inc. 3,081,412 1,195,055 5,570,861 (2,033,690) Encore Wire Corporation 8,174,000 (8,173,000) 8,174,000 (19,071,000) Heeling, Inc. 6,600,000 -- 7,750,000 -- Hologic, Inc. 2,847,690 (620,163) 4,095,928 (170,861) Media Recovery, Inc. 7,744,000 -- 7,744,000 -- Palm Harbor Homes, Inc. 3,927,000 (7,855,000) 15,710,000 (7,855,000) The RectorSeal Corporation -- -- 2,100,000 4,000,000 </TABLE> As reflected in the above table, at September 30, 2005, the value of our investment in Encore Wire Corporation was increased from the March 31, 2005 value by $8,174,000 due to an expected increase in the company's earnings during the last half of calendar year 2005. During the six months ended September 30, 2005, the value of our investment in Palm Harbor Homes, Inc. was increased from the March 31, 2005 value by $15,710,000 due to an improvement in the company's earnings and a more favorable outlook for the remainder of the company's fiscal year ending March 31, 2006. Portfolio Investments During the quarter ended September 30, 2005, we invested $9,559,000 in two new portfolio companies and made additional investments of $620,665 in existing portfolio companies. We have agreed, subject to certain conditions, to invest up to $986,900 in two portfolio companies. Financial Liquidity and Capital Resources At September 30, 2005, we had cash and cash equivalents of approximately $7.5 million. Pursuant to Small Business Administration (SBA) regulations, cash and cash equivalents of $716,791 held by Capital Southwest Venture Corporation (CSVC) may not be transferred or advanced to us without the consent of the SBA. Under current SBA regulations and subject to SBA's approval of its credit application, CSVC would be entitled to borrow up to $65.0 million. We also have an unsecured $25.0 million revolving line of credit from a commercial bank, of which $17.0 million was available at September 30, 2005. With the exception of a capital gain distribution made in the form of a distribution of the stock of a portfolio company in the fiscal year ended March 31, 1996, we have elected to retain all gains realized during the past 37 years. Retention of future gains is viewed as an important source of funds to sustain our investment activity. Approximately $56.3 million of our investment portfolio is represented by unrestricted publicly-traded securities, which have an ascertainable market value and represent a source of liquidity. Funds to be used by us for operating or investment purposes may be transferred in the form of dividends, management fees or loans from Lifemark Group (formerly Skylawn Corporation), The RectorSeal Corporation and The Whitmore Manufacturing Company, wholly-owned portfolio companies, to the extent of their available cash reserves and borrowing capacities. Management believes that our cash and cash equivalents and cash available from other sources described above are adequate to meet our expected requirements. Consistent with our long-term strategy, the disposition of investments from time to time may also be an important source of funds for future investment activities. 10
Item 3. Quantitative and Qualitative Disclosure About Market Risk We are subject to financial market risks, including changes in marketable equity security prices. We do not use derivative financial instruments to mitigate any of these risks. The return on our investments is not materially affected by foreign currency fluctuations. Our investment performance is a function of our portfolio companies' profitability, which may be affected by economic cycles, competitive forces and production costs including labor rates, raw material prices and certain commodity prices. All of these factors may have an adverse effect on the value of our investments and on our net asset value. Most of the companies in our investment portfolio do not hedge their exposure to raw material and commodity price fluctuations. Our investment in portfolio securities includes fixed-rate debt securities which totaled $8,418,397 at September 30, 2005, equivalent to 1.8% of the value of our total investments. Generally these debt securities are below investment grade and have relatively high fixed rates of interest; therefore, minor changes in market yields of publicly-traded debt securities have little or no effect on the values of debt securities in our portfolio and no effect on interest income. Our investments in debt securities are generally held to maturity and their fair values are determined on the basis of the terms of the debt security and the financial condition of the issuer. A portion of our investment portfolio consists of debt and equity securities of private companies. We anticipate little or no effect on the values of these investments from modest changes in public market equity valuations. Should significant changes in market valuations of comparable publicly-owned companies occur, there may be a corresponding effect on valuations of private companies, which would affect the value and the amount and timing of proceeds eventually realized from these investments. A portion of our investment portfolio also consists of restricted common 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 fair value of our investment in such security. Item 4. Controls and Procedures As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of our management, including the President and Chairman of the Board and Secretary-Treasurer, of the effectiveness of the design and operation of our disclosure controls and procedures (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 September 30, 2005, there were no changes to the internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting. 11
PART II. OTHER INFORMATION - -------------------------- Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 31.1- Certification of President and Chairman of the Board required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), filed herewith. Exhibit 31.2- Certification of Secretary-Treasurer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act, filed herewith. Exhibit 32.1- Certification of President and Chairman of the Board required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, furnished herewith. Exhibit 32.2- Certification of Secretary-Treasurer required by Rule 13a-14(b) or Rule 15d-14(b) of the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, furnished herewith. (b) Reports on Form 8-K No reports on Form 8-K have been filed during the quarter for which this report is filed. 12
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CAPITAL SOUTHWEST CORPORATION Date: November 2, 2005 By: /s/ William R. Thomas ----------------------- ----------------------------------------- William R. Thomas, President and Chairman of the Board (chief executive officer) Date: November 2, 2005 By: /s/ Susan K. Hodgson ----------------------- ----------------------------------------- Susan K. Hodgson, Secretary-Treasurer (chief financial/accounting officer) 13