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Capital Southwest Corp. Reports Operating Results (10-Q)

February 04, 2010 | About:

Capital Southwest Corp. (NASDAQ:CSWC) filed Quarterly Report for the period ended 2009-12-31.

Capital Southwest Corp. has a market cap of $306.2 million; its shares were traded at around $81.85 with and P/S ratio of 21.9. The dividend yield of Capital Southwest Corp. stocks is 1%. Capital Southwest Corp. had an annual average earning growth of 7.1% over the past 10 years. GuruFocus rated Capital Southwest Corp. the business predictability rank of 2.5-star.CSWC is in the portfolios of Third Avenue Management, Martin Whitman of Third Avenue Value Fund, Ian Cumming of Leucadia National, Kenneth Fisher of Fisher Asset Management, LLC.

Highlight of Business Operations:

At December 31, 2009, we had cash and cash equivalents of approximately $4.7 million. Pursuant to Small Business Administration (SBA) regulations, cash and cash equivalents of $2.6 million 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 the SBA’s approval of its credit application, CSVC would be entitled to borrow up to $20.6 million. 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 40 years. Retention of future gains is viewed as an important source of funds to sustain our investment activity. Approximately $16.0 million of our investment portfolio is represented by unrestricted publicly-traded securities, and represent a source of liquidity.

Heelys, Inc., its former Chief Executive Officer, its former Chief Financial Officer, and its directors who signed the Company's registration statement filed with the Securities and Exchange Commission in connection with its December 7, 2006 initial public offering (the "IPO")—along with us, Capital Southwest Corporation and CSVC, and the underwriters for the Heelys, Inc. IPO—are defendants in a lawsuit originally filed on May 16, 2008 by individual shareholder Carl Dick in the County Court of Law No. 1, Dallas County, Texas. This lawsuit asserts claims that are substantially similar to those asserted in the consolidated class action described above. The Plaintiff’s second petition alleges violations of Sections 11, and 15 of the Securities Act of 1933, Sections 33(A), (C), and (F) of the Texas Securities Act and Section 27.01 of the Texas Business and Commerce Code. Defendants withdrew their previously-filed special exceptions to Plaintiff’s petition seeking to have all claims dismissed on August 21, 2009. Plaintiff and Defendants agreed to settle this case for $5.25 million. Heelys’ insurance company paid approximately $2.0 million of the settlement amount, and Heelys paid the remainder. Pursuant to the settlement agreement, the lawsuit was dismissed with prejudice on September 18, 2009.

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GuruFocus has detected 3 Warning Signs with Capital Southwest Corp $CSWC.
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