CAPITAL SOUTHWEST CORP (Form: 10-K, Received: 05/31/2013 12:01:51)

			Black-Scholes Pricing Model Assumptions
Date of Issuance	Weighted Average Fair Value		Expected Dividend Yield			Risk- Free Interest Rate			Expected Volatility			Expected Life (in years)
2009 Plan
July 18, 2011	$	33.07		0.83	%		1.45	%		40.0	%		5
July 19, 2010	$	28.58		0.91	%		1.73	%		37.5	%		5
March 22, 2010	$	32.56		0.84	%		2.43	%		37.8	%		5
October 19, 2009	$	25.36		1.04	%		2.36	%		37.6	%		5
1999 Plan
July 30, 2008	$	29.93		0.62	%		3.36	%		20.2	%		5
July 21, 2008	$	27.35		0.67	%		3.41	%		20.2	%		5
July 16, 2007	$	41.78		0.39	%		4.95	%		19.9	%		5
July 17, 2006	$	33.05		0.61	%		5.04	%		21.2	%		7
May 15, 2006	$	31.28		0.64	%		5.08	%		21.1	%		7

The following table summarizes activity in the 2009 Plan and the 1999 Plan as of March 31, 2013:

	Number of Shares			Weighted Average Exercise Price
2009 Plan
Balance at March 31, 2011		73,750		$	84.24
Granted		10,000			96.92
Exercised		–			–
Canceled/Forfeited		–			–
Balance at March 31, 2012		83,750		$	85.75
Granted		–			–
Exercised		(27,023	)		79.82
Forfeited		(14,000	)		85.78
Balance at March 31, 2013		42,727		$	89.49

1999 Plan
Balance at March 31, 2011		96,500		$	114.78
Granted		–			–
Exercised		(1,500	)		65.70
Forfeited		–			–
Balance at March 31, 2012		95,000		$	113.63
Granted		–			–
Exercised		(19,105	)		95.33
Forfeited		(14,395	)		111.14
Balance at March 31, 2013		61,500		$	132.00
Combined Balance at March 31, 2013		104,227		$	114.58

March 31, 2013	Weighted Average Aggregate Intrinsic Remaining Contractual Term	Value
Outstanding	1.2 years	$	3,310,129
Exercisable	0.7 years	$	2,169,482

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At March 31, 2013, the range of exercise prices and weighted-average remaining contractual life of outstanding options was $76.74 to $152.98 and 1.2 year, respectively. The total number of options exercisable under both the 2009 Plan and the 1999 Plan at March 31, 2013, was 63,227 shares with a weighted-average exercise price of $128.47.

At March 31, 2012, the range of exercise prices and weighted-average remaining contractual life of outstanding options was $76.74 to $152.98 and 2.5 years, respectively. The number of options exercisable under the 2009 Plan and the 1999 Plan, at March 31, 2012, was 87,590 with a weighted-average exercise price of $112.25. During the year ended March 31, 2012, 1,500 options were exercised with exercise price at $65.70 per share and 11,400 options were exercised with exercise prices ranging from $65.00 to $65.70 per share during the year ended March 31, 2011. New shares were issued for $98,550 and $745,200 cash received from options exercised during the year ended March 31, 2012 and the year ended March 31, 2011, respectively.

At March 31, 2013, 2012 and 2011, the number of options exercisable was 63,227, 87,590 and 54,325, respectively, and the weighted average price of those options was $128.47, $112.25 and $115.57, respectively.

Stock Awards

Pursuant to the Capital Southwest Corporation 2010 Restricted Stock Award Plan, our Board of Directors reserved for issuance 47,000 shares of restricted stock to certain key employees. A restricted stock award is an award of shares of our common stock (which have full voting and dividend rights but are restricted with regard to sale or transfer), the restrictions on which lapse ratably over a specified period of time (generally five years). Restricted stock awards are independent of stock option grants and are subject to forfeit if employment terminates prior to these restrictions lapsing. These shares vest over a five-year period from the grant date and are expensed over the five-year service period starting on the grant date. On January 16, 2012, the Board of Directors granted 9,650 shares of restricted stock to key employees of the Company. On January 22, 2013, the Board of Directors granted 2,000 shares of restricted stock to officers of the Company. During the twelve months ended March 31, 2013, 3,000 shares of restricted stock were forfeited and 1,330 shares were fully vested. The following table summarizes the restricted stock available for issuance as of March 31, 2013:

Restricted stock available for issuance as of March 31, 2012	37,350
Restricted stock granted during the year	(2,000	)
Restricted stock forfeited during the year	3,000
Restricted stock available for issuance as of March 31, 2013	38,350

We expense the cost of the restricted stock awards, which is determined to equal the fair value of the restricted stock award at the date of the grant on a straight-line basis over the vesting period in which the restrictions on these stock awards lapse. For these purposes, the fair value of the restricted stock award is determined based on the closing price of our common stock on the date of grant. For the fiscal year ended March 31, 2013, we recognized total share based compensation expense of $109,083 related to the restricted stock issued to our employees and officers. For the fiscal year ended March 31, 2012, we recognized total share based compensation expense of $40,377 related to the restricted stock issued to our employees and officers. For the fiscal year ended March 31, 2011, no restricted stock was issued.

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As of March 31, 2013, the total remaining unrecognized compensation cost related to non-vested restricted stock awards was $615,200, which will be amortized over the weighted-average service period of approximately 4.1 years.

The following table represents a summary of the activity for our restricted stock awards for the fiscal year ended March 31, 2013:

Restricted Stock Awards	Number of Shares			Weighted Average Fair Value Per Share		Weighted Average Remaining Vesting Term (in Years)
Unvested at March 31, 2012		9,650		$	83.60		3.8
Granted		2,000			104.34		4.8
Vested		(1,330	)		83.60		−
Forfeited		(3,000	)		83.60		−
Unvested at March 31, 2013		7,320		$	89.27		4.1

Phantom Stock Plan

On January 16, 2012, our Board of Directors approved the issuance of 26,000 phantom stock options at an exercise price of $146.95/share (Net Asset Value at December 31, 2011) pursuant to the Capital Southwest Corporation Phantom Stock Option Plan to provide deferred compensation to certain key employees. On January 22, 2013, the Board of Directors granted 4,050 shares of phantom stock options at an exercise price of $158.65 (Net Asset Value at December 31, 2012) to officers of the Company. Under the plan, awards vest on the fifth anniversary of the award date. Upon exercise of the phantom option, a cash payment in an amount for each phantom share equal to estimated fair market value minus the phantom option exercise price will be distributed to plan participants. The estimated liability for phantom stock options is $693,401 as of March 31, 2013.

The following table represents a summary of the activity for our phantom stock plan for the fiscal year ended March 31, 2013:

Phantom Stock Awards	Number of Shares			Exercise Price Per Share		Weighted Average Remaining Vesting Term (in Years)
Unvested at March 31, 2012		26,000		$	146.95		3.8
Granted		4,050		$	158.65		4.8
Vested		−			−		−
Forfeited or expired		(7,500	)	$	146.95		−
Unvested at March 31, 2013		22,550		$	149.05		4.0

7.	EMPLOYEE STOCK OWNERSHIP PLAN

CSW and one of its controlled affiliates sponsor a qualified employee stock ownership plan (“ESOP”) in which certain employees participate. Contributions to the plan, which are invested in our stock, are made at the discretion of our Board of Directors. A participant’s interest in contributions to the ESOP fully vests after three years of active service.

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During the 3 years ended March 31, 2013, we made contributions to the ESOP, which were included in operating expenses, of $190,337 in 2013, $222,179 in 2012, and $147,212 in 2011.

8.	RETIREMENT PLANS

CSW sponsors a qualified defined benefit pension plan which covers its employees and employees of certain of its controlled affiliates. The following information about the plan represents amounts and information related to CSW’s participation in the plan and is presented as though CSW sponsored a single-employer plan. Benefits are based on years of service and an average of the highest five consecutive years of compensation during the last 10 years of employment. The funding policy of the plan is to contribute annual amounts that are currently deductible for tax reporting purposes. No contribution was made to the plan during the three years ended March 31, 2013.

Additionally, CSW sponsors an unfunded Retirement Restoration Plan, which is a nonqualified plan that provides for the payment, upon retirement, of the difference between the maximum annual payment permissible under the qualified retirement plan pursuant to Federal limitations and the amount which would otherwise have been payable under the qualified plan.

The following tables set forth the qualified plan’s net pension benefit, benefit obligation, fair value of plan assets, and amounts recognized in our consolidated statements of operations at March 31, 2013, 2012 and 2011, as well as amounts recognized in our consolidated statements of assets and liabilities at March 31, 2013 and 2012:

	Years Ended March 31
	2013			2012			2011
Net pension benefit
Service cost-benefits earned during the year	$	259,672		$	133,729		$	161,047
Interest cost on projected benefit obligation		286,639			256,558			231,332
Expected return on assets		(784,194	)		(781,299	)		(771,025	)
Net amortization		49,803			9,377			9,377
Net pension benefit from qualified plan	$	(188,080	)	$	(381,635	)	$	(369,269	)

	Years Ended March 31
	2013			2012			2011
Change in benefit obligation
Benefit obligation at beginning of year	$	5,136,555		$	4,213,349		$	3,450,443
Service cost		259,672			133,729			161,047
Interest cost		286,639			256,558			231,332
Actuarial gain (loss)		818,784			601,402			437,959
Benefits paid		(80,039	)		(68,483	)		(67,432	)
Benefit obligation at end of year	$	6,421,611		$	5,136,555		$	4,213,349

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	Years Ended March 31
	2013			2012			2011
Change in plan assets
Fair value of plan assets at beginning of year	$	12,485,876		$	11,610,994		$	10,519,400
Actual return on plan assets		2,777,996			943,365			1,159,026
Benefits paid		(80,039	)		(68,483	)		(67,432	)
Fair value of plan assets at end of year	$	15,183,833		$	12,485,876		$	11,610,994

	Years Ended March 31
	2013			2012
Funded status and amounts recognized in consolidated statements of assets and liabilities
Actuarial present value of benefit obligations: Accumulated benefit obligation	$	(5,636,366	)	$	(4,755,675	)
Projected benefit obligation for service rendered to date		(6,421,611	)		(5,136,555	)
Plan assets at fair value*		15,183,833			12,485,876
Funded status		8,762,222			7,349,321
Unrecognized net loss from past experience different from that assumed and effects of changes in assumptions		602,598			1,818,042
Unrecognized prior service costs		122,579			131,956
ASC 715 adjustment		(725,177	)		(1,949,998	)
Prepaid pension cost included in pension assets	$	8,762,222		$	7,349,321

* Primarily equities and bonds including approximately 25,000 shares of CSW Common Stock.

The following tables set forth the retirement restoration plan’s net pension benefit and benefit obligation amounts at March 31, 2013, 2012 and 2011, as well as amounts recognized in our consolidated statements of assets and liabilities at March 31, 2013, 2012:

	Years Ended March 31
	2013		2012			2011
Net pension cost
Service cost-benefits earned during the year	$	37,052	$	18,163		$	33,216
Interest cost on projected benefit obligation		106,939		79,056			69,248
Net amortization		9,731		(15,428	)		(24,507	)
Net pension cost from qualified plan	$	153,722	$	81,791		$	77,957

	Years Ended March 31
	2013		2012		2011
Change in benefit obligation
Benefit obligation at beginning of year	$	1,568,392	$	1,256,895	$	1,082,941
Service cost		37,052		18,163		33,216
Interest cost		106,939		79,056		69,248
Actuarial gain (loss)		810,303		214,278		132,940
Other adjustments		127,280		–		(61,450	)
Benefit obligation at end of year	$	2,649,966	$	1,568,392	$	1,256,895

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	Years Ended March 31
	2013			2012
Amounts recognized in our consolidated statements of assets and liabilities
Projected benefit obligation	$	(2,649,966	)	$	(1,568,392	)
Unrecognized net (gain) loss from past experience different from that assumed and effects of changes in assumptions		836,122			8,556
Unrecognized prior service costs		(122,296	)		(130,798	)
ASC 715 adjustment		(713,826	)		122,242
Accrued pension cost included in pension liabilities	$	(2,649,966	)	$	(1,568,392	)

The following assumptions were used in estimating the actuarial present value of the projected benefit obligations:

	Years Ended March 31
	2013			2012			2011
Discount rate		4.50	%		5.25	%		6.00	%
Rate of compensation increases		5.00	%		5.00	%		5.00	%

The following assumptions were used in estimating the net periodic (income)/expense:

	Years Ended March 31
	2013			2012			2011
Discount rate		4.50	%		5.25	%		6.00	%
Expected return on plan assets		6.50	%		6.50	%		6.50	%
Rate of compensation increases		5.00	%		5.00	%		5.00	%

Following are the expected benefit payments for the next five years and in the aggregate for the years 2019-2023:

(In thousands)	2014		2015		2016		2017		2018			2019-2023
Qualified Plan	$	222	$	238	$	250	$	334	$	338	$	1,921
Restoration Plan	$	100	$	119	$	134	$	181	$	183	$	965

During the plan year ended March 31, 2013, the discount rate was changed from 5.25% to 4.50%. The retirement assumption was changed from the prior assumption that all participants retire at age 65 with an assumption that reflects rates of retirement at each age between ages 55 and 70 for those participants who are retirement eligible to better reflect the anticipated experience of the plan. The expected rate of return on assets assumption was determined based on the anticipated performance of the various asset classes in the plan’s portfolio and the allocation of assets to each class. The anticipated asset class return is developed using historical and predicted asset return performance, considering the investments underlying each asset class and expected investment performance based on forecasts of inflation, interest rates and market indices for fixed income and equity securities.

Plan Assets

Our pension plan is administered by a board-appointed committee that has fiduciary responsibility for the plan’s management. The trustee of the plan is JPMorgan Asset Management. Currently, approximately 15% of the assets are selected and managed by the trustee and the remainder of the assets are managed by the committee, invested mostly in equity securities, including our stock. The plan assets are invested using a total return approach whereby a mix of equity securities, debt securities and other investments are used to preserve asset values, diversify risk and achieve our targeted investment return benchmark. Investment performance and asset allocation are measured and monitored on an ongoing basis.

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Plan assets are managed in a balanced portfolio comprised of two major components: an equity portion and a fixed income portion. The expected role of plan equity investments is to maximize the long-term real growth of the plan’s assets, while the role of fixed income investments is to generate current income, provide for more stable periodic returns and provide some protection against prolonged decline in the market value of the plan’s equity investments.

The current target allocations for plan assets are 60-80% equity, 15-40% for fixed income, and 0-15% for cash and cash equivalents. Equity investments include U.S. and foreign equities, as well as publicly traded and non-publicly traded mutual funds. Fixed income securities include long-duration government obligations, government agency obligations and corporate obligations.

CSW’s pension plan asset allocations are as follows:

	Percentage of Plan Assets at March 31
Asset Category	2013			2012
Equity securities		78.8	%		77.7	%
Fixed income securities		14.5	%		16.6	%
Cash and cash equivalents		6.7	%		5.7	%
		100.0	%		100.0	%

Below is the pension plan asset for Capital Southwest Corporation and its affiliates, of which Capital Southwest assets were $15,183,833 and $12,485,876 as of March 31, 2013 and 2012 respectively. The following fair value hierarchy table sets forth our pension plan investment portfolio by level as of March 31, 2013 (in millions):

			Fair Value Measurements at Reporting Date Using
Asset Category	Total		Quoted Prices in Active Markets for Identical Assets Level I		Significant Other Observable Inputs Level 2		Significant Observable Inputs Level 3
Equity securities (a)	$	40.1	$	26.7	$	13.4	$	–
Fixed income securities (b)		7.4		–		7.4		–
Cash and cash equivalents		3.4		3.4		–		–
Total	$	50.9	$	30.1	$	20.8	$	–

The following fair value hierarchy table sets forth our pension plan investment portfolio by level as of March 31, 2012 (in millions):

			Fair Value Measurements at Reporting Date Using
Asset Category	Total		Quoted Prices in Active Markets for Identical Assets Level I		Significant Other Observable Inputs Level 2		Significant Observable Inputs Level 3
Equity securities (a)	$	32.9	$	21.4	$	11.5	$	–
Fixed income securities (b)		7.0		–		7.0		–
Cash and cash equivalents		2.4		2.4		–		–
Total	$	42.3	$	23.8	$	18.5	$	–

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There were no plan assets valued using significant unobservable inputs (level 3) as of March 31, 2013 or 2012.

(a)

This category includes investment in equity securities of large, medium and small companies and equity investments in foreign companies. Mutual funds included in this category are valued using the net asset value per unit as of the valuation date. These investments include shares of our common stock. At March 31, 2013 and 2012, our common stock represented 19.9% and 19.7% respectively, of the plan assets.

(b)

This category includes investments in investment grade fixed income instruments, primarily U.S. government obligations.

9.	COMMITMENTS

As of March 31, 2013, we had agreed, subject to certain conditions, to invest up to $13,776,042 in eight portfolio companies.

We lease office space under an operating lease which requires base rentals of approximately $200,000 through September 2014. For the three years ended March 31, 2013, total rental expense charged to investment income was $141,155 in 2013, $117,199 in 2012, and $103,703 in 2011.

10.	SOURCES OF INCOME

	Investment Income						Realized Gain (Loss) on Investments before Income Taxes
Year Ended March 31, 2013	Interest		Dividends		Other Income
Companies more than 25% owned	$	−	$	6,944,214	$	484,800	$	20,861,458
Companies 5% to 25% owned		250,298		868,560		66,950		66,037,485
Companies less than 5% owned		1,756,452		279,917		111,963		2,658,871
Other sources, including temporary investments		71,136		−		971		−
	$	2,077,886	$	8,092,691	$	664,684	$	89,557,814
Distribution from Realized Gain		−		−		−		(77,300,714	)*
	$	2,077,886	$	8,092,691	$	664,684	$	12,257,100

* During the twelve months ended March 31, 2013, we distributed $77,300,714 or $20.34 per share of capital gains dividends.

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	Investment Income						Realized Gain (Loss) on Investments before Income Taxes
Year Ended March 31, 2012	Interest		Dividends		Other Income
Companies more than 25% owned	$	−	$	5,553,140	$	493,967	$	(10,933,517	)
Companies 5% to 25% owned		253,652		1,006,572		59,700		(45,287	)
Companies less than 5% owned		1,674,051		160,729		79,250		22,805,680
Other sources, including temporary investments		52,477		−		699		−
	$	1,980,180	$	6,720,441	$	633,616	$	11,826,876

	Investment Income						Realized Gain (Loss) on Investments
Year Ended March 31, 2011	Interest		Dividends		Other Income		Before Income Taxes
Companies more than 25% owned	$	−	$	5,024,061	$	671,867	$	70,294,097
Companies 5% to 25% owned		−		326,940		13,000		(6,863,347	)
Companies less than 25% owned		1,304,496		81,270		−		31,833
Other sources, including temporary investments		59,642		−		86,871		−
	$	1,364,138	$	5,432,271	$	771,738	$	63,462,583

11.	SELECTED QUARTERLY FINANCIAL DATA

The following presents a summary of the unaudited quarterly consolidated financial information for the years ended March 31, 2013 and 2012 (in thousands except per share amounts):

2013	First Quarter			Second Quarter			Third Quarter		Fourth Quarter			Total
Net investment income (loss)	$	18		$	(120	)	$	4,142	$	(2,133	)	$	1,907
Net realized gain (loss) on investments		66,888			(7	)		640		20,912			88,433
Net increase (decrease) in unrealized appreciation of investments		(78,521	)		50,321			22,296		22,271			16,367
Net increase (decrease) in net assets from operations		(11,615	)		50,194			27,078		41,050			106,707
Net increase (decrease) in net operations per share		(3.05	)		13.18			7.11		10.77			28.01

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2012	First Quarter			Second Quarter			Third Quarter			Fourth Quarter			Total
Net investment income (loss)	$	14		$	23		$	4,385		$	(1,878	)	$	2,544
Net realized gain (loss) on investments		(5,911	)		18,500			(2,360	)		349			10,578
Net increase(decrease) in unrealized appreciation of investments		(4,588	)		(44,076	)		48,798			78,501			78,635
Net increase (decrease) in net assets from operations		(10,455	)		(25,703	)		50,823			77,092			91,757
Net increase (decrease) in net operations per share		(2.79	)		(6.85	)		13.53			20.53			24.42

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12.	SELECTED PER SHARE DATA AND RATIOS

The following presents a summary of the selected per share data for the years ended March 31, 2009 through 2013 (in thousands except per share amounts):

	Years Ended March 31
Per Share Data	2013			2012			2011			2010			2009
Investment income	$	2.84		$	2.49		$	2.01		$	1.63		$	3.74
Operating expenses		(2.19	)		(1.78	)		(1.50	)		(1.04	)		(.98	)
Interest expense		–			–			–			–			–
Income taxes		(.15	)		(.03	)		(.03	)		(.03	)		(.04	)
Net investment income		.50			.68			.48			.56			2.72
Distributions from undistributed net investment income		(.79	)		(.80	)		(.80	)		(.80	)		(3.28	)
Net realized gain net of tax		23.22			2.81			10.36			.22			2.87
Dividends from capital gains		(20.29	)		–			–			–			–
Net increase (decrease) in unrealized appreciation of investments		4.30			20.93			3.46			18.88			(42.56	)
Exercise of employee stock options**		(.97	)		(.02	)		(.20	)		–			–
Forfeiture/ (Issuance) of restricted stock***		(.41	)
Stock option expense		.14			.28			.26			.18			.13
Net change in pension plan funded status		.05			(.11	)		(.02	)		.12			(.39	)
Treasury stock*		–			–			–			–			1.40
Adjustment to initially apply ASC 715, net of tax		–			–			–			–			–
Increase (decrease) in net asset value		5.75			23.77			13.54			19.16			(39.11	)
Net asset value
Beginning of year		167.45			143.68			130.14			110.98			150.09
End of year	$	173.20		$	167.45		$	143.68		$	130.14		$	110.98

Ratios and Supplemental Data
Ratio of operating expenses to average net assets		1.36	%		1.07	%		1.10	%		.87	%		.71	%
Ratio of net investment income to average net assets		.31	%		.41	%		.35	%		.47	%		1.96	%
Portfolio turnover rate		2.22	%		2.15	%		2.78	%		1.16	%		2.51	%
Net asset total return		27.00	%		18.07	%		18.40	%		18.50	%		(22.56	)%

Shares outstanding at end of period (000s) omitted		3,809			3,755			3,753			3,741			3,741

*	Net increase is due to purchases of common stock at prices less than beginning period net asset value.

**	Net decrease is due to the exercise of employee stock options at prices less than beginning of period net asset value.

***	Reflects impact of the different share amounts as a result of issuance or forfeiture of restricted stock during the period.

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13.	SUBSEQUENT EVENTS

On May 17, 2013, Capital Southwest Corporation announced that Gary L. Martin, president, chief executive officer and chairman of the Company will retire as president and chief executive officer effective June 17, 2013 and that its board of directors has named Joseph B. Armes to succeed Mr. Martin as president and chief executive officer. Additionally, the board increased the number of board seats from five to six and appointed Mr. Armes a director of the Company, effective June 17, 2013.

Effective June 17, 2013, Mr. Armes will receive cash compensation for FYE 2014 comprised of base pay at the annual rate of $430,000 and may earn an annual cash bonus of up to 150% based upon achievement of specified goals. In addition, he will also receive i) options to acquire 7,500 shares of common stock pursuant to our 2009 Stock Option Plan, the options vest equally over five years from the grant date; ii) 1,250 common shares underlying a restricted stock award that vests equally over five years from the grant date; iii) 6,000 shares of phantom stock options that will vest over five years from the grant date. These options and restricted stock awards will be awarded during the July 15, 2013 Compensation Committee Meeting, and the exercise and strike prices will be determined at that date.

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SCHEDULE 12-14

Schedule of Investments in and Advances to Affiliates

(In thousands)

Portfolio Company / Type of Investment (1)	Amount of Interest, Fees or Dividends Credited in Income (2)		Fair Value at March 31, 2012		Gross Additions (3)		Gross Reductions (4)		Fair Value at March 31, 2013
Control Investments
The RectorSeal Corporation 27,907 shares common stock	$	5,915	$	166,300	$	72,600		−	$	238,900
The Whitmore Manufacturing Company 80 shares common stock		1,509		67,200		13,300		−		80,500
Heelys, Inc. 9,317,310 shares common stock		−		20,498		−		20,498		−
Media Recovery, Inc. 800,000 shares Series A Convertible Preferred Stock, convertible into 800,000 shares common stock		−		3,100		−		1,100		2,000
4,000,002 shares common stock		−		15,600		−		5,700		9,900
Balco, Inc. 445,000 shares common stock; 60,920 shares Class B non-voting common		−		4,100		400		−		4,500
CapStar Holdings Corporation 500 shares common stock;		−		5,338		840		−		6,178
1,000,000 shares preferred stock		−		−		1,668		−		1,668
Discovery Alliance, LLC 90.0% limited liability company		−		1,280		−		324		956
Humac Company 1,041,000 shares of common stock		5		159		29		-		188
Total Control Investments	$	7,429	$	283,575	$	88,837	$	27,622	$	344,790

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Portfolio Company / Type of Investment (1)	Amount of Interest, Fees or Dividends Credited in Income (2)		Fair Value at March 31, 2012		Gross Additions (3)		Gross Reductions (4)		Fair Value at March 31, 2013
Affiliated Investments
Alamo Group, Inc. 2,830,300 shares common stock	$	764		85,139		23,139				108,278
Encore Wire Corporation 1,312,500 shares of common stock		172		121,458		−		75,507		45,951
PalletOne, Inc. 12.3% Senior Subordinated Notes, $2,000,000 due 2015		250		2,000		−		100		1,900
150,000 shares of common stock		−		−		−		−		−
Warrant to purchase 15,294 shares of common stock at $1,00 per share, expiring 2011		−		−		−		−		−

Boxx Technologies, Inc. 3,125,354 shares Series B Convertible Preferred Stock, convertible into 3,125,354 shares of common stock at $0.50 per share		−		600		640		−		1,240
Wellogix, Inc. 4,788,371 shares Series A-1 Convertible Preferred Stock, convertible into 4,788,371 shares of common stock at $1.0441 per share		−		25		−		−		25
Total Affiliated Investments	$	1,186	$	209,222	$	23,779	$	75,607	$	157,394
Total Control & Affiliated Investments	$	8,615	$	492,797	$	112,616	$	103,229	$	502,184

This schedule should be read in conjunction with our Consolidated Financial Statements, including the Consolidated Schedules of Investments and Notes to Consolidated Financial Statements.

(1)	The principal amount and ownership detail as shown in the Consolidated Schedules of Investments.

(2)	Represents the total amount of interest, fees and dividends, credited to income for the portion of the year an investment was included in the Control or Non-Control/Non-Affiliate categories, respectively.

(3)

Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation as well as movement of an existing portfolio company into this category and out of a different category.

(4)

Gross reductions included in decreases in the cost basis of investment resulting from principal payments or sales and exchanges of one or more existing securities for one or more new securities. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category.

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Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclos ure

None.

Item 9A.

Controls and Procedu res

(a)	Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this annual report on Form 10-K, our Chairman of the Board and President and Chief Financial Officer conducted an evaluation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (Exchange Act). Based upon this evaluation, our Chairman of the Board and President, and Chief Financial Officer concluded that our disclosure controls and procedures were effective to allow timely decisions regarding disclosure of any material information relating to us that is required to be disclosed by us in the reports we file or submit under the Exchange Act.

(b)	Management’s report on internal control over financial reporting

The management of Capital Southwest Corporation and its subsidiaries (the Company) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the Company's internal control over financial reporting based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the Company's evaluation under the framework in Internal Control — Integrated Framework, management concluded that the Company's internal control over financial reporting was effective as of March 31, 2013. Grant Thornton LLP, the Company's independent registered public accounting firm, has issued an attestation report on the effectiveness of the Company's internal control over financial reporting as of March 31, 2013, as stated in its report which is included herein.

(c)	Attestation report of the registered public accounting firm

Our independent registered public accounting firm, Grant Thornton LLP, has issued an attestation report on the effectiveness of our internal control over financial reporting as of March 31, 2013, which is set forth above under the heading “Report of Independent Registered Public Accounting Firm” in Item 8 of this Annual Report.

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(d)	Changes in internal control over financial reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during our most recently completed fiscal quarter, that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

Item 9B.

Other Informati on

None.

PART III

Item 10.

Directors, Executive Officers and Corporate Governa nce

The information required by this Item 10 will be contained in the definitive proxy statement relating to our 2013 annual meeting of shareholders under the headings of "Election of Directors," “Corporate Governance,” “Executive Officers” and "Section 16(a) Beneficial Ownership Reporting Compliance" to be filed with the Securities and Exchange Commission on or before June 15, 2013, and is incorporated herein by reference.

We have adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act that applies to all our directors, officers and employees. We have made the Code of Conduct and of Ethics available on our website at www.capitalsouthwest.com/investors/governance . Shareholders may request a free copy of the Code of Conduct and Code of Ethics from: Tracy L. Morris, Corporate Secretary and Chief Compliance Officer, at our principal executive office.

Item 11.

Executive Compensat ion

The information required by this Item 11 will be contained in the definitive proxy statement relating to our 2013 annual meeting of shareholders under the headings of "Compensation of Executive Officers," “Compensation of Directors,” “Compensation Discussion and Analysis” and "Compensation Committee Report" to be filed with the Securities and Exchange Commission on or before June 15, 2013, and is incorporated herein by reference.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matte rs

The information in the sections of our 2013 Proxy Statement captioned "Stock Ownership of Certain Beneficial Owners" is incorporated in this Item 12 by reference.

The table below sets forth certain information as of March 31, 2013 regarding the shares of our common stock available for grant or granted under stock option plans that (1) were approved by our shareholders, and (2) were not approved by our shareholders.

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Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights		Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans
Equity compensation plans approved by security holders (1)		104,227	$	114.58		70,250

Equity compensation plans not approved by security holders (2)		−		−		−
Total		104,227	$	114.58		70,250

Includes the 1999 Stock Option Plan and the 2009 Stock Incentive Plan and excludes restricted shares under 2010 Restricted Stock Award Plan. For a description of both plans, please refer to Footnote 5 contained in our consolidated financial statements.

We have no equity compensation plans that were not approved by security holders.

Other information required by this Item 12 will be contained in the definitive proxy statement relating to our 2013 annual meeting of shareholders under the heading of "Security Ownership of Certain Beneficial Owners and Management" to be filed with the Securities and Exchange Commission on or before June 15, 2013, and is incorporated herein by reference.

Item 13.

Certain Relationships and Related Transactions, and Director Indepen dence

The information required by this Item 13 will be contained in the definitive proxy statement relating to our 2013 annual meeting of shareholders under the headings of "Certain Relationships and Related Transactions” and "Corporate Governance" to be filed with the Securities and Exchange Commission on or before June 15, 2013, and is incorporated herein by reference.

Item 14.

Principal Accountant Fees and Serv ices

The information required by this Item 14 will be contained in the definitive proxy statement relating to our 2013 annual meeting of shareholders under the heading of "Ratification and Appointment of Independent Registered Public Accounting Firm for the Year ended March 31, 2014" to be filed with the Securities and Exchange Commission on or before June 15, 2013, and is incorporated herein by reference.

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PART IV

Item 15.

Exhibits and Financial Statement Schedu les

The following documents are filed or incorporated by reference as part of this Annual Report:

1.	Consolidated Financial Statements

	Page
Reports of Independent Registered Public Accounting Firm	30
Consolidated Statements of Assets and Liabilities as of March 31, 2013 and 2012	33
Consolidated Statements of Operations for Years Ended March 31, 2013, 2012 and 2011	34
Consolidated Statements of Changes in Net Assets for Years Ended March 31, 2013, 2012 and 2011	35
Consolidated Statements of Cash Flows for Years Ended March 31, 2013, 2012 and 2011	36
Consolidated Schedules of Investments as of March 31, 2013 and 2012	38
Notes to Consolidated Financial Statements	48

2.	Schedule of Investments In and Advances To Affiliates

Reports of Independent Registered Public Accounting Firm

Exhibits

The following exhibits are filed as part of this report or hereby incorporated by reference to exhibits previously filed with the SEC. Asterisk denotes exhibits filed with this report. Double asterisk 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 (filed as Exhibit 3.2 to Form 10-K for the fiscal year ended March 31, 2007).

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 (filed as Exhibit 10.1 to form 10-K for the fiscal year ended March 31, 2007).

10.2	Retirement Plan for Employees of Capital Southwest Corporation and Its Affiliates as amended and restated effective April 1, 2006 (filed as Exhibit 10.2 to form 10-K for the fiscal year ended March 31, 2007).

10.3	Capital Southwest Corporation and Its Affiliates Restoration of Retirement Income Plan as amended and restated effective January 1, 2008 (filed as Exhibit 10.3 to form 10-K for the fiscal year ended March 31, 2009).

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Exhibit No.	Description

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).

10.15	Retirement Plan for Employees of Capital Southwest Corporation and its Affiliates as amended and restated effective April 1, 2011

10.16*	Amendment one to Retirement Plan for employees of Capital Southwest Corporation and its affiliates as amended and restated effective April 1, 2011

10.17	Joseph B. Armes Revised Offer Letter (filed as Exhibit 99.2 to Form 8-K dated May 17, 2013).

13.1 *	Selected Consolidated Financial Data.

21.1 *	List of subsidiaries of the Company.

23.1 *	Consent of Independent Registered Public Accounting Firm – Grant Thornton LLP.

31.1 *	Certification of Chairman of the Board and President 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 Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act, filed herewith.

32.1 **	Certification of Chairman of the Board and President 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 Chief Financial Officer 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.

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SIGNA TURES

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
	By:	/s/ Gary L. Martin
		Gary L. Martin
		Chairman of the Board and President

Date: May 31, 2013

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS that each of Capital Southwest Corporation and its Subsidiaries undersigned directors hereby constitutes and appoints Gary L. Martin, it’s or his true and lawful attorney-in-fact and agent, for it or him and in its or his name, place and stead, in any and all capacities, with full power to act alone, to sign any and all amendments to this Report, and to file each such amendment to the Report, with all exhibits thereto, and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorney-in-fact and agent full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as it or he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirement of the Securities and 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 dates indicated:

Signature	Title	Date

/s/ Gary L. Martin	Chairman of the Board and President	May 31, 2013
Gary L. Martin	(chief executive officer)

/s/ Samuel B. Ligon	Director	May 31, 2013
Samuel B. Ligon

/s/ Gary L. Martin	Director	May 31, 2013
Gary L. Martin

/s/ T. Duane Morgan	Director	May 31, 2013
T. Duane Morgan

/s/ Richard F. Strup	Director	May 31, 2013
Richard F. Strup

/s/ John H. Wilson	Director	May 31, 2013
John H. Wilson

/s/ Tracy L. Morris	Chief Financial Officer	May 31, 2013
Tracy L. Morris	(chief financial/accounting officer)

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EXHIBIT INDEX

Exhibit Number	Description

21.1	List of Subsidiaries

23.1	Consent of Grant Thornton LLP, independent registered public accounting firm

31.1	Rule 13a-15(e) and 15d-15(e) an 13a-15(f) and 15d-15(f) Certification of Chief Executive Officer

31.2	Rule 13a-15(e) and 15d-15(e) an 13a-15(f) and 15d-15(f) Certification of Chief Financial Officer

32.1	Section 13(a) or 15(d) Certification of Chief Executive Officer

32.2	Section 13(a) or 15(d) Certification of Chief Financial Officer

AMEND M ENT ONE TO

RETIREMENT PLAN FOR EMPLOYEES OF

CAPITAL S OUTHW ES T CO R PO R ATION AND ITS AFF I LIATES

As A m end e d and Restated Effective April 1, 2011

WHEREAS, effective as of April 1, 2011, the Retirement Plan for Employees of Capital Southwest Corporation and Its Affiliates (the "Plan") was amended and restated in its entirety;

WHEREAS, by the terms of Section 6.4 of the Plan, the Plan may be amended; and WHEREAS, it is necessary that certain technical amendments be made to the Plan in order to comply with final regulations issued under section 436 of the Internal Revenue Code;

NOW, THEREFORE, the Plan is hereby amended, effective as of the dates specified below, as follows:

Section 4.9 of the Plan is amended to read in its entirety as follows:

“4.9 - FUNDING - BASED LIMITATIONS

(A) Li m itations Applicable I f the Plan ' s Adjusted Funding Target Attain m ent Percentage Is Less Than 80 Percent, But Not Less Than 60 Perce n t:

Notwithstanding any other provisions of the Plan, if the Plan's adjusted funding target attainment percentage for a Plan Year is less than 80 percent (or would be less than 80 percent to the extent described in Section 4.9(A)(2) below) but is not less than 60 percent, then the limitations set forth in this paragraph (A) apply.

(1)

50 Percent L i m itation on Single Sum Pay m ents, Other Accelerated For m s of D i stribution, and Other Prohibited Pay m ents: A Participant or Beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a prohibited payment with an annuity starting date on or after the applicable Section 436 measurement date, and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a prohibited payment, unless the present value of the portion of the benefit that is being paid in a prohibited payment does not exceed the lesser of:

(a)

50 percent of the present value of the benefit payable in the optional form of benefit that includes the prohibited payment;

(b)

100 percent of the PBGC maximum benefit guarantee amount (as defined in Section 1.436-1(d)(3)(iii)(C) of the Treasury Regulations).

The limitation set forth in this Section 4.9(A)(1) does not apply to any payment of a benefit which under Section 411(a)(11) of the Internal Revenue Code may be immediately distributed without the consent of the Participant. If an optional form of benefit that is otherwise available under the terms of the Plan is not available to a Participant or Beneficiary as of the annuity starting date because of the application of the requirements of this Section 4.9(A)(1), the Participant or Beneficiary is permitted to elect to bifurcate the benefit into unrestricted and restricted portions (as described in Section 1.436-1(d)(3)(iii)(D) of the Treasury Regulations). The Participant or Beneficiary may also elect any other optional form of benefit otherwise available under the Plan at that annuity starting date that would satisfy the 50 percent/PBGC maximum benefit guarantee amount limitation described in this Section 4.9(A)(1), or may elect to defer the benefit in accordance with any general right to defer commencement of benefits under the Plan.

(2)

Plan A m end m ents Increasing Lia b ility for Benefits: No amendment to the Plan that has the effect of increasing liabilities of the Plan by reason of increases in benefits, establishment of new benefits, changing the rate of benefit accrual, or changing the rate at which benefits become nonforfeitable shall take effect in a Plan Year if the adjusted funding target attainment percentage for the Plan Year is:

(a)

Less than 80 percent;

(b)

80 percent or more, but would be less than 80 percent if the benefits attributable to the amendment were taken into account in determining the adjusted funding target attainment percentage.

The limitation set forth in this Section 4.9(A)(2) does not apply to any amendment to the Plan that provides a benefit increase under a Plan formula that is not based on compensation, provided that the rate of such increase does not exceed the contemporaneous rate of increase in the average wages of Participants covered by the amendment.

(B)

Li m itations Applicable I f the Plan ' s Adjusted Funding Target Attain m ent Percentage Is Less Than 60 Percent: Notwithstanding any other provisions of the Plan, if the Plan's adjusted funding target attainment percentage for a Plan Year is less than 60 percent (or would be less than 60 percent to the extent described in Section 4.9(B)(2) below), then the limitations in this paragraph (B) apply.

(1)

Single Su m s , Other Accelerated F o r m s of Distribution, and Other Prohibited P ay m ents Not Per m itted: A Participant or Beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a prohibited payment with an annuity starting date on or after the applicable Section 436 measurement date, and the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a prohibited payment. The limitation set forth in this Section 4.9(B)(1) does not apply to any payment of a benefit which under Section 411(a)(11) of the Internal Revenue Code may be immediately distributed without the consent of the Participant.

(2)

Shutdown Benefits and Other Unpredi c ta b l e Co n tinge n t Eve n t Bene f its Not Per m itted to Be Paid: An unpredictable contingent event benefit with respect to an unpredictable contingent event occurring during a Plan Year shall not be paid if the adjusted funding target attainment percentage for the Plan Year is:

(a)

Less than 60 percent;

(b)

60 percent or more, but would be less than 60 percent if the adjusted funding target attainment percentage were redetermined applying an actuarial assumption that the likelihood of occurrence of the unpredictable contingent event during the Plan Year is 100 percent.

(3)

Benefit Accruals Frozen: Benefit accruals under the Plan shall cease as of the applicable Section 436 measurement date. In addition, if the Plan is required to cease benefit accruals under this Section 4.9(B)(3), then the Plan is not permitted to be amended in a manner that would increase the liabilities of the Plan by reason of an increase in benefits or establishment of new benefits.

(C)

Li m itations Applicable If the Plan Sponsor Is In Bankruptcy: Notwithstanding any other provisions of the Plan, a Participant or Beneficiary is not permitted to elect, and the Plan shall not pay, a single sum payment or other optional form of benefit that includes a prohibited payment with an annuity starting date that occurs during any period in which the Plan Sponsor is a debtor in a case under title 11, United States Code, or similar Federal or State law, except for payments made within a Plan Year with an annuity starting date that occurs on or after the date on which the Plan's enrolled actuary certifies that the Plan's adjusted funding target attainment percentage for that Plan Year is not less than 100 percent. In addition, during such period in which the Plan Sponsor is a debtor, the Plan shall not make any payment for the purchase of an irrevocable commitment from an insurer to pay benefits or any other payment or transfer that is a prohibited payment, except for payments that occur on a date within a Plan Year that is on or after the date on which the Plan's enrolled actuary certifies that the Plan's adjusted funding target attainment percentage for that Plan Year is not less than 100 percent. The limitation set forth in this Section 4.9(C) does not apply to any payment of a benefit which under Section 411(a)(11) of the Internal Revenue Code may be immediately distributed without the consent of the Participant.

(D)

Provisions Applicable After Li m itations Cease to Apply:

(1)

Resu m ption of Prohibited Pay m ents: If a limitation on prohibited payments under Section 4.9(A)(1), Section 4.9(B)(1) or Section 4.9(C) applied to the Plan as of a Section 436 measurement date, but that limit no longer applies to the Plan as of a later Section 436 measurement date, then that limitation does not apply to benefits with annuity starting dates that are on or after that later Section 436 measurement date.

In addition, after the Section 436 measurement date on which the limitation on prohibited payments under Section 4.9(A)(1) ceases to apply to the Plan, any Participant or Beneficiary who had an annuity starting date within the period during which that limitation applied to the Plan is permitted to make a new election (within 90 days after the Section 436 measurement date on which the limit ceases to apply or, if later, 30 days after receiving notice of the right to make such election) under which the form of benefit previously elected is modified at a new annuity starting date to be changed to a single sum payment for the remaining value of the Participant or Beneficiary's benefit under the Plan, subject to the other rules in this section of the Plan and applicable requirements of Section 401(a) of the Internal Revenue Code, including spousal consent.

In addition, after the Section 436 measurement date on which the limitation on prohibited payments under Section 4.9(B)(1) ceases to apply to the Plan, any Participant or Beneficiary who had an annuity starting date within the period during which that limitation applied to the Plan is permitted to make a new election (within 90 days after the Section 436 measurement date on which the limit ceases to apply or, if later, 30 days after receiving notice of the right to make such election) under which the form of benefit previously elected is modified at a new annuity starting date to be changed to a single sum payment for the remaining value of the Participant's or Beneficiary's benefit under the Plan, subject to the other rules in this section of the Plan (including Section 4.9(A)(1)) and applicable requirements of Section 401(a) of the Internal Revenue Code, including spousal consent.

(2)

Resu m ption of Benefit Accruals: If a limitation on benefit accruals under Section 4.9(B)(3) applied to the Plan as of a Section 436 measurement date, but that limitation no longer applies to the Plan as of a later Section 436 measurement date, then benefit accruals shall resume prospectively and that limitation does not apply to benefit accruals that are based on service on or after that later Section 436 measurement date, except as otherwise provided under the Plan. The Plan shall comply with the rules relating to partial years of participation and the prohibition on double proration under Department of Labor regulation 29 CFR Section 2530.204-2(c) and (d).

In addition, benefit accruals that were not permitted to accrue because of the application of Section 4.9(B)(3) shall be restored when that limitation ceases to apply if the continuous period of the limitation was 12 months or less and the Plan's enrolled actuary certifies that the adjusted funding target attainment percentage for the Plan Year would not be less than 60 percent taking into account any restored benefit accruals for the prior Plan Year.

(3)

Shutdown and Other Unpredictable Contingent Event Benefits: If an unpredictable contingent event benefit with respect to an unpredictable contingent event that occurs during the Plan Year is not permitted to be paid after the occurrence of the event because of the limitation of Section 4.9(B)(2), but is permitted to be paid later in the same Plan Year (as a result of additional contributions or pursuant to the enrolled actuary's certification of the adjusted funding target attainment percentage for the Plan Year that meets the requirements of Section 1.436-1(g)(5)(ii)(B) of the Treasury Regulations), then that unpredictable contingent event benefit shall be paid, retroactive to the period that benefit would have been payable under the terms of the Plan (determined without regard to Section 4.9(B)(2)). If the unpredictable contingent event benefit does not become payable during the Plan Year in accordance with the preceding sentence, then the Plan is treated as if it does not provide for that benefit.

(4)

Treat m ent of Plan A m end m ents That Do Not Take Effect: If a Plan amendment does not take effect as of the effective date of the amendment because of the limitation of Section 4.9(A)(2) or Section 4.9(B)(3), but is permitted to take effect later in the same Plan Year (as a result of additional contributions or pursuant to the enrolled actuary's certification of the adjusted funding target attainment percentage for the Plan Year that meets the requirements of Section 1.436-1(g)(5)(ii)(C) of the Treasury Regulations), then the Plan amendment must automatically take effect as of the first day of the Plan Year (or, if later, the original effective date of the amendment). If the Plan amendment cannot take effect during the same Plan Year, then it shall be treated as if it were never adopted, unless the Plan amendment provides otherwise.

(E)

Notice Req u ire m ent: See Section 101(j) of ERISA for rules requiring the Plan Administrator of a single employer defined benefit pension Plan to provide a written notice to Participants and Beneficiaries within 30 days after certain specified dates if the Plan has become subject to a limitation described in Section 4.9(A)(1), Section 4.9(B) or Section 4.9(C).

(F)

Methods to Avoid or Ter m inate Ben e fit Li m itations: See Section 436(b)(2), (c)(2), (e)(2), and (f) of the Internal Revenue Code and Section 1.436-1(f) of the Treasury Regulations for rules relating to employer contributions and other methods to avoid or terminate the application of the limitations set forth in Sections 4.9(A), (B) and (C) for a Plan Year. In general, the methods a Plan Sponsor may use to avoid or terminate one or more of the benefit limitations under Sections 4.9(A), (B) and (C) for a Plan Year include employer contributions and elections to increase the amount of Plan assets which are taken into account in determining the adjusted funding target attainment percentage, making an employer contribution that is specifically designated as a current year contribution that is made to avoid or terminate application of certain of the benefit limitations, or providing security to the Plan.

(G)

Special Rules:

(1)

Rules of Operation for Periods Prior to and A f ter Certi f ic a tion of Plan ' s Adjusted Funding Target Attain m ent Percentage:

(a)

In General. Section 436(h) of the Internal Revenue Code and Section 1.436-1(h) of the Treasury Regulations set forth a series of presumptions that apply (i) before the Plan's enrolled actuary issues a certification of the Plan's adjusted funding target attainment percentage for the Plan Year and (ii) if the Plan's enrolled actuary does not issue a certification of the Plan's adjusted funding target attainment percentage for the Plan Year before the first day of the 10th month of the Plan Year (or if the Plan's enrolled actuary issues a range certification for the Plan Year pursuant to Section 1.436-1(h)(4)(ii) of the Treasury Regulations but does not issue a certification of the specific adjusted funding target attainment percentage for the Plan by the last day of the Plan Year). For any period during which a presumption under Section 436(h) of the Internal Revenue Code and Section 1.436-1(h) of the Treasury Regulations applies to the Plan, the limitations under Sections 4.9(A), (B) and (C) are applied to the Plan as if the adjusted funding target attainment percentage for the Plan Year were the presumed adjusted funding target attainment percentage determined under the rules of Section 436(h) of the Internal Revenue Code and Section 1.436-1(h)(1), (2), or (3) of the Treasury Regulations. These presumptions are set forth in Section 4.9(G)(1)(b), (c) and (d).

(b)

Presu m ption of Continued Underfunding Beginning First Day of Plan Year. If a limitation under Section 4.9(A), (B) or (C) applied to the Plan on the last day of the preceding Plan Year, then, commencing on the first day of the current Plan Year and continuing until the Plan's enrolled actuary issues a certification of the adjusted funding target attainment percentage for the Plan for the current Plan Year, or, if earlier, the date Section 4.9(G)(1)(c) or Section 4.9(G)(1)(d) applies to the Plan:

(i)

The adjusted funding target attainment percentage of the Plan for the current Plan Year is presumed to be the adjusted funding target attainment percentage in effect on the last day of the preceding Plan Year; and

(ii)

The first day of the current Plan Year is a Section 436 measurement date.

(c)

Presu m ption of Underfunding Beginning First Day of 4th Month.

If the Plan's enrolled actuary has not issued a certification of the adjusted funding target attainment percentage for the Plan Year before the first day of the 4th month of the Plan Year and the Plan's adjusted funding target attainment percentage for the preceding Plan Year was either at least 60 percent but less than 70 percent or at least 80 percent but less than 90 percent, or is described in Section 1.436-1(h)(2)(ii) of the Treasury Regulations, then, commencing on the first day of the 4th month of the current Plan Year and continuing until the Plan's enrolled actuary issues a certification of the adjusted funding target attainment percentage for the Plan for the current Plan Year, or, if earlier, the date Section 4.9(G)(1)(d) applies to the Plan:

(i)

The adjusted funding target attainment percentage of the Plan for the current Plan Year is presumed to be the Plan's adjusted funding target attainment percentage for the preceding Plan Year reduced by 10 percentage points; and

(ii)

The first day of the 4th month of the current Plan Year is a Section 436 measurement date.

(d)

Presu m ption of Underfunding On and After First Day of 10th Month. If the Plan's enrolled actuary has not issued a certification of the adjusted funding target attainment percentage for the Plan Year before the first day of the 10th month of the Plan Year (or if the Plan's enrolled actuary has issued a range certification for the Plan Year pursuant to Section 1.436-1(h)(4)(ii) of the Treasury Regulations but has not issued a certification of the specific adjusted funding target attainment percentage for the Plan by the last day of the Plan Year), then, commencing on the first day of the 10th month of the current Plan Year and continuing through the end of the Plan Year:

(i)

The adjusted funding target attainment percentage of the Plan for the current Plan Year is presumed to be less than 60 percent; and

(ii)

The first day of the 10th month of the current Plan Year is a section 436 measurement date.

(2)

New Plans, Plan Ter m ination, Certain Frozen Plans, and Other Special Rules:

(a)

First 5 Plan Years. The limitations in Section 4.9(A)(2), Section 4.9(B)(2), and Section 4.9(B)(3) do not apply to a new plan for the first 5 plan years of the plan, determined under the rules of Section 436(i) of the Internal Revenue Code and Section 1.436-1(a)(3)(i) of the Treasury Regulations.

(b)

Plan Ter m ination. The limitations on prohibited payments in Section 4.9(A)(1), Section 4.9(B)(1), and Section 4.9(C) do not apply to prohibited payments that are made to carry out the termination of the Plan in accordance with applicable law. Any other limitations under this section of the Plan do not cease to apply as a result of termination of the Plan.

(c)

Exception to Li m itations on Prohibited Pay m ents Under Certain Frozen Plans. The limitations on prohibited payments set forth in Sections 4.9(A)(1), 4.9(B)(1) and 4.9(C) do not apply for a Plan Year if the terms of the Plan, as in effect for the period beginning on September 1, 2005, and continuing through the end of the Plan Year, provide for no benefit accruals with respect to any participants. This Section 4.9(G)(2)(c) shall cease to apply as of the date any benefits accrue under the Plan or the date on which a Plan amendment that increases benefits takes effect.

(d)

Special Rules Relating to Unpredi c table Contingent Event B enefits and Plan A m endments Increas i ng B enefit Liability. During any period in which none of the presumptions under Section 4.9(G)(1) apply to the Plan and the Plan's enrolled actuary has not yet issued a certification of the Plan's adjusted funding target attainment percentage for the Plan Year, the limitations under Section 4.9(A)(2) and Section 4.9(B)(2) shall be based on the inclusive presumed adjusted funding target attainment percentage for the Plan, calculated in accordance with the rules of Section 1.436- 1(g)(2)(iii) of the Treasury Regulations.

(3)

Spec ial Rules Under PRA 2010:

(a)

Pay m ents Under Social Security Leveling Options. For purposes of determining whether the limitations under Section 4.9(A)(1) or Section 4.9(B)(1) apply to payments under a social security leveling option, within the meaning of Section 436(j)(3)(C)(i) of the Internal Revenue Code, the adjusted funding target attainment percentage for a Plan Year shall be determined in accordance with the “Special Rule for Certain Years” under Section 436(j)(3) of the Internal Revenue Code and any Treasury Regulations or other published guidance thereunder issued by the Internal Revenue Service.

(b)

Li m itation on Benefit Accruals. For purposes of determining whether the accrual limitation under Section 4.9(B)(3) applies to the Plan, the adjusted funding target attainment percentage for a Plan Year shall be determined in accordance with the “Special Rule for Certain Years” under Section 436(j)(3) of the Internal Revenue Code (except as provided under Section 203(b) of the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, if applicable).

(4)

Interpretation of Provisions: The limitations imposed by this section of the Plan shall be interpreted and administered in accordance with Section 436 of the Internal Revenue Code and Section 1.436-1 of the Treasury Regulations.

(H)

Definitions: The definitions in the following Treasury Regulations apply for purposes of Sections 4.9(A) through (G): Section 1.436-1(j)(1) defining adjusted funding target attainment percentage; Section 1.436-1(j)(2) defining annuity starting date; Section 1.436-1(j)(6) defining prohibited payment; Section 1.436- 1(j)(8) defining Section 436 measurement date; and section 1.436-1(j)(9) defining an unpredictable contingent event and an unpredictable contingent event benefit.

(I)

Effective Date: The rules in Sections 4.9(A) through (H) are effective for Plan Years beginning after December 31, 2007.”

IN WITNESS WHEREOF, CAPITAL SOUTHWEST CORPORATION has caused this instrument to be executed by its duly authorized officer on this 20 th day of January, 2013.

	CAPITAL SOUTHWEST CORPORATION

	By	/s/ Tracy L. Morris

	Title:	Chief Operating Officer,

	Chief Financial Officer, Secretary and Treasurer

Texas		75-1072796
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

12900 Preston Road, Suite 700, Dallas, Texas		75230
(Address of principal executive offices)		(Zip Code)

	CSW
	Cost		Value

The RectorSeal Corporation	$	52,600	$	238,900,000
Alamo Group Inc.		2,190,937		108,278,100
The Whitmore Manufacturing Company		1,600,000		80,500,000
Encore Wire Corporation		5,200,000		45,950,625
Trax Holdings, Inc.		9,000,000		19,400,000
Hologic, Inc.		202,529		13,165,904
Media Recovery, Inc.		5,415,000		11,900,000
Capstar Holdings Corporation		4,703,619		7,846,000
Instawares Holding Company, LLC		5,000,000		5,975,000
TitanLiner,Inc.		5,950,000		5,950,000
iMemories, Inc.		5,826,479		5,826,479
KBI Biopharma, Inc.		5,000,000		5,200,000
	$	50,141,164	$	548,892,108

Quarter Ended	High		Low
March 31, 2013	$	131.52	$	99.04
December 31, 2012		116.63		97.10
September 30, 2012		118.50		95.65
June 30, 2012		115.79		82.46

March 31, 2012	$	96.46	$	81.42
December 31, 2011		92.10		70.07
September 30, 2011		101.67		71.79
June 30, 2011		98.26		89.90

Payment Date	Cash Dividend
May 29, 2009	$	0.40
November 30, 2009		0.40
May 28, 2010		0.40
November 30, 2010		0.40
May 31, 2011		0.40
November 30, 2011		0.40
May 31, 2012		0.40
June 8, 2012		17.59
November 30, 2012		0.40
March 28, 2013		2.75

Financial Position (as of March 31)	2013			2012			2011			2010			2009
Investments at cost	$	88,266		$	88,993		$	98,355		$	100,023		$	89,339
Unrealized appreciation		485,921			469,553			390,918			377,920			307,296
Investments at market or fair value		574,187			558,546			489,273			477,943			396,635
Total assets		667,672			632,989			543,214			491,175			417,543
Net assets		659,777			628,706			539,233			486,926			415,263
Shares outstanding		3,809			3,755			3,753			3,741			3,741

Changes in Net Assets (years ended March 31)
Net investment income	$	1,907		$	2,544		$	1,804		$	2,091		$	10,183
Net realized gain on investments		88,433			10,578			38,885			826			10,756
Net increase (decrease) in unrealized appreciation before distributions*		16,367			78,635			12,999			70,624			(159,246	)
Increase (decrease) in net assets from operations before distributions		106,707			91,757			53,688			73,541			(138,307	)
Cash dividends paid		(80,326	)		(3,003	)		(2,994	)		(2,993	)		(12,257	)
Employee stock options exercised		3,981			99			745			–			–
Stock option expense		515			1,050			957			675			503
Change in pension plan funded status		193			(430	)		(88	)		440			(1,473	)
Treasury stock		–			–			–			–			(16,903	)
Increase (decrease) in net assets	$	31,070		$	89,473		$	52,308		$	71,663		$	(168,437	)

Per share data (as of March 31)
Net assets	$	173.20		$	167.45		$	143.68		$	130.14		$	110.98
Closing market price		115.00			94.55			91.53			90.88			76.39
Cash dividends paid		21.14			.80			.80			.80			3.26

PART I		Page
Item 1.	Business	1
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	19
Item 2.	Properties	19
Item 3.	Legal Proceedings	19
Item 4.	Mine Safety Disclosures	19

PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	19
Item 6.	Selected Financial Data	21
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 8.	Financial Statements and Supplementary Data	30
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	74
Item 9A.	Controls and Procedures	74
Item 9B.	Other Information	75

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	75
Item 11.	Executive Compensation	75
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	75
Item 13.	Certain Relationships and Related Transactions, and Director Independence	76
Item 14.	Principal Accountant Fees and Services	76

PART IV
Item 15.	Exhibits and Financial Statement Schedules	77

Signatures		79

	Payments Due By Period (In thousands)
Contractual Obligations	Total		1 Year		2-3 Years		More Than 3 Years
Operating lease obligations	$	200	$	133	$	67	$	−

Additions to Previous Investments	Purchase Amount
Ballast Point Ventures II, L.P.	$	300,000
BankCap Partners Fund I, L.P.		88,806
Capstar Holdings Corp.		1,000,000
Cinatra Clean Technologies, Inc.		759,043
Discovery Alliance, LLC		135,000
iMemories, Inc.		748,000
Trax Holdings, Inc.		800,000	*
	$	3,830,849

	Proceeds		Cost		Realized gain/(loss)
Diamond State Venture, L.P.	$	50,000		−	$	50,000
Encore Wire Corporation		66,637,485		600,000		66,037,485
Extreme International, Inc.		10,926,000		3,325,875		7,600,125
Heelys, Inc.		20,963,948		102,490		20,861,458
Hologic, Inc.		868,019		17,471		850,548
Lifemark Group		−		7,000		(7,000	)
Palm Harbor Homes, Inc.		2,823		−		2,823
StarTech Seed Fund I, L.P.		27,472		178,066		(150,594	)
Sterling Group Partners, L.P.		66,315		827,057		(760,742	)
VIA Holdings, Inc.		1		4,926,290		(4,926,289	)
	$	99,542,063	$	9,984,249	$	89,557,814
Cash distributions from net realized gain					$	(77,300,714	)
Undistributed realized gain before income taxes					$	12,257,100

	March 31 2013			March 31 2012
Assets
Investments at market or fair value
Companies more than 25% owned (Cost: March 31, 2013 - $13,711, March 31, 2012 - $14,870)	$	344,790		$	283,575
Companies 5% to 25% owned (Cost: March 31, 2013 - $15,594, March 31, 2012 - $14,003)		157,394			209,222
Companies less than 5% owned (Cost: March 31, 2013 - $58,961, March 31, 2012 - $60,120)		72,003			65,749
Total investments (Cost: March 31, 2013 - $88,266, March 31, 2012 - $88,993)		574,187			558,546
Cash and cash equivalents		81,767			64,895
Receivables
Dividends and interest		2,465			1,741
Affiliates		291			220
Pension assets		8,762			7,349
Other assets		200			238
Total assets	$	667,672		$	632,989

Liabilities
Other liabilities	$	3,102		$	688
Pension liability		2,650			1,568
Deferred income taxes		2,143			2,027
Total liabilities		7,895			4,283

Net Assets
Common stock, $1 par value: authorized, 5,000,000 shares; issued, 4,394,194 shares at March 31, 2013 and 4,339,416 shares at March 31, 2012		4,394			4,339
Additional capital		183,668			177,841
Accumulated net investment income		(706	)		412
Accumulated net realized gain		10,437			498
Unrealized appreciation of investments		485,921			469,553
Treasury stock - at cost on 584,878 shares		(23,937	)		(23,937	)
Total net assets		659,777			628,706
Total liabilities and net assets	$	667,672		$	632,989
Net asset value per share (on the 3,809,316 shares outstanding at March 31, 2013 and 3,754,538 shares outstanding at March 31, 2012)	$	173.20		$	167.45

Company	Equity (a)			Investment (b)	Cost		Value (c)
*† ALAMO GROUP INC. Seguin, Texas Tractor-mounted mowing and mobile excavation equipment for governmental, industrial and agricultural markets; street-sweeping equipment for municipalities.		22.0	%	‡2,832,300 shares common stock (acquired 4-1-73 thru 5-09-11)	$	2,190,937	$	108,278,100
ATLANTIC CAPITAL BANCSHARES, INC Atlanta, Georgia Holding company of Atlantic Capital Bank, a full service commercial bank.		1.9	%	300,000 shares common stock (acquired 4-10-07)		3,000,000		2,950,000
¥ BALCO, INC. Wichita, Kansas Specialty architectural products used in the construction and remodeling of commercial and institutional buildings.		95.7	%	445,000 shares common stock and 60,920 shares Class B non-voting common stock (acquired 10-25-83 and 5-30-02)		624,920		4,500,000
*BOXX TECHNOLOGIES, INC. Austin, Texas Workstations for computer graphic imaging and design.		14.9	%	3,125,354 shares Series B Convertible Preferred Stock, convertible into 3,125,354 shares of common stock at $0.50 per share (acquired 8-20-99 thru 8-8-01)		1,500,000		1,240,000
CINATRA CLEAN TECHNOLOGIES, INC. Houston, Texas		73.4	%	12% subordinated secured promissory note, due 5-9-16 (acquired 5-19-10 thru 10-20-10)		779,278		81,000
Cleans above ground oil storage tanks with a patented, automated system.				12% subordinated secured promissory note, due 5-9-17 (acquired 5-9-11 thru 10-26-11)		2,285,700		237,000
				12% subordinated secured promissory note, due 3-31-17 (acquired 9-9-11 and 10-26-11)		1,523,800		158,000
				10% subordinated secured promissory note, due 5-9-17 (acquired 7-14-08 thru 4-28-10)		6,200,700		643,000
				12% subordinated secured promissory note, due 10-31-17 (acquired 10-19-12)		499,997		52,000
				3,033,410 shares Series A Convertible Preferred Stock, convertible into 3,033,410 shares common stock at $1.00 per share (acquired 7-14-08 thru 11-18-10)		3,033,410		1
				Warrants to purchase 1,436,499 shares of common stock at $1.00 per share, expiring 10-31-2027 (acquired 5-9-11 thru 10-19-12)		–		–
						14,322,885		1,171,001

Type	Valuation Technique	Fair Value at 3/31/2013 (in millions)		Unobservable Input	Range			Weighted Average
Preferred & Common Equity	Market Approach	$	342.2	EBITDA Multiple		3.25x – 7.00x			6.45	x
	Market Approach	$	11.1	Revenue Multiple		0.25x – 1.82x			0.97	x
	Market Approach	$	7.9	Cash and Asset Value	NA			NA
	Discounted Cash Flow	$	0.7	Discount Rate		1.75	%		1.75	%
	Market Approach	$	3.0	Multiple of Tangible Book Value		1.22	x		1.22	x
	Market Approach	$	22.6	Recent Transaction Price	NA			NA
	Market Approach	$	0.2	Market Value of Held Securities	NA			NA
		$	387.7
Debt	Discounted Cash Flow	$	3.1	Discount Rate		10.02% -12.00	%		10.77	%
	Recent Transaction Price	$	3.5	Recent Transaction Price	NA			NA
		$	6.6
Partnership Interests	Net Asset Value*	$	12.2	Fund Value	NA			NA
	Total	$	406.5

Type	Valuation Technique	Fair Value at 3/31/2012 (in millions)		Unobservable Input	Range			Weighted Average
Preferred & Common Equity	Market Approach	$	270.2	EBITDA Multiple		3.25x - 6.50x			5.71	x
	Market Approach	$	11.7	Revenue Multiple		1.10x – 1.97x			1.48	x
	Market Approach	$	5.5	Cash and Asset Value	NA			NA
	Discounted Cash Flow	$	0.8	Discount Rate		3.56	%		3.56	%
	Market Approach	$	2.3	Multiple of Tangible Book Value		1.00	x		1.00	x
	Market Approach	$	5.0	Recent Transaction Price	NA			NA
	Market Approach	$	0.1	Market Value of Held Securities	NA			NA
		$	295.6
Debt	Discounted Cash Flow	$	8.0	Discount Rate		10.31%-16.22	%		14.74	%
	Recent Transaction Price	$	3.2	Recent Transaction Price	NA			NA
		$	11.2
Partnership Interests	Net Asset Value*	$	11.0	Fund Value	NA			NA
	Total	$	317.8

			Fair Value Measurements at 3/31/13 Using
Asset Category	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Debt	$	6.6	$	−	$	−	$	6.6
Partnership Interests		12.2		−		−		12.2
Preferred Equity		44.6		−		−		44.6
Common Equity		510.8		167.7		−		343.1
Total Investments	$	574.2	$	167.7	$	−	$	406.5

			Fair Value Measurements at 3/31/12 Using
Asset Category	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Debt	$	11.2	$	−	$	−	$	11.2
Partnership Interests		11.0		−		−		11.0
Preferred Equity		33.9		−		−		33.9
Common Equity		502.4		240.7		−		261.7
Total Investments	$	558.5	$	240.7	$	−	$	317.8

	Fair Value 3/31/12		Net Unrealized Appreciation (Depreciation)			New Investments		Divestitures			Net Changes from Unrealized to Realized			Conversion of Security from Debt to Equity			Transfer out of Level 3		Fair Value at 3/31/13
Debt	$	11.2	$	(5.4	)	$	4.0	$	−		$	−		$	(3.2	)	$	−	$	6.6
Partnership Interest		11.0		1.5			0.5		−			(0.8	)		−			−		12.2
Preferred Equity		33.9		12.3			−		(9.8	)		5			3.2			−		44.6
Common Equity		261.7		82.1			−		−			(0.7	)		−			−		343.1
Total Investments	$	317.8	$	90.5		$	4.5	$	(9.8	)	$	3.5		$	−		$	−	$	406.5

	Fair Value 3/31/11		Net Unrealized Appreciation (Depreciation)			New Investments		Divestitures			Net Changes from Unrealized to Realized			Conversion of Security from Debt to Equity		Transfer out of Level 3		Fair Value at 3/31/12
Debt	$	12.7	$	(4.6	)	$	6.6	$	(1.0	)	$	(2.5	)		−	$	−	$	11.2
Partnership Interest		9.5		0.2			1.3		−			−			−		−		11.0
Preferred Equity		45.8		(2.9	)		6.3		(6.1	)		(9.2	)		−		−		33.9
Common Equity		394.5		87.0			0.0		−			7.3			−		227.1		261.7
Total Investments	$	462.5	$	79.7		$	14.2	$	(7.1	)	$	(4.4	)		−	$	227.1	$	317.8

Net Realized Gains on Transactions In	For the Tax Year Ended December 31
Investment Securities of	2012			2011
Control Investments	$	−		$	−
Affiliated Investments		66,037,485			−
Non-Control/Non-Affiliated Investments		3,107,309			4,465,088
Net realized gain on investments	$	69,144,794		$	4,465,088
Capital gain distribution		(66,825,782	)		−
Income tax expense		1,125,092			1,248,932
Net realized gains on investments	$	1,193,920		$	3,216,156
Net realized gains on investment (for tax purposes)	$	3,214,547		$	3,568,376

Name of Subsidiary	State of Incorporation

Balco, Inc.	Delaware
CapStar Holdings Corporation	Nevada
Discovery Alliance, LLC	Texas
Humac Company	Texas
Media Recovery, Inc.	Nevada
The RectorSeal Corporation	Delaware
The Whitmore Manufacturing Company	Delaware