SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

                  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934





For the quarter ended September 30, 2006         Commission file number 1-13905
                      ------------------                                -------




                            COMPX INTERNATIONAL INC.
-------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)




           Delaware                                       57-0981653
-------------------------------                     ---------------------------
(State or other jurisdiction of                          (IRS Employer
        organization)                                  Identification No.)


             5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240-2697
-------------------------------------------------------------------------------
           (Address of principal executive offices)    (Zip Code)



Registrant's telephone number, including area code:              (972) 448-1400
                                                                 --------------


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 and (2) has been  subject  to such  filing  requirements  for the past 90
days. Yes X     No
         ---       ---

Whether the Registrant is a large accelerated  filer, an accelerated filer, or a
non-accelerated  filer (as  defined in Rule 12b-2 of the  Exchange  Act).  Large
accelerated filer         Accelerated filer            Non-Accelerated filer  X
                  ----                       ----                          ----

Whether  the  Registrant  is a shell  company  (as  defined in rule 12b-2 of the
Exchange Act).       Yes     No X
                        ---    ---

Number of shares of common stock outstanding on October 20, 2006:
        Class A:   5,248,280
        Class B:  10,000,000



                                     <PAGE>






                            COMPX INTERNATIONAL INC.

                                      INDEX




                                                                           Page
                                                                         number

Part I.  FINANCIAL INFORMATION

  Item 1.    Financial Statements.

             Condensed Consolidated Balance Sheets -
                 December 31, 2005; September 30, 2006 (unaudited)            3

             Condensed Consolidated Statements of Operations -
                 Three months and nine months ended
                 September 30, 2005 and 2006 (unaudited)                      5

             Condensed Consolidated Statements of Comprehensive
                 Income (Loss) - Nine months ended
                 September 30, 2005 and 2006 (unaudited)                      6

             Condensed Consolidated Statements of Cash Flows -
                 Nine months ended September 30, 2005 and 2006 (unaudited)    7

             Condensed Consolidated Statement of Stockholders' Equity -
                 Nine months ended September 30, 2006 (unaudited)             8

             Notes to Condensed Consolidated Financial Statements
                 (unaudited)                                                  9

     Item 2. Management's Discussion and Analysis of Financial
                 Condition and Results of Operations.                        16

     Item 3. Quantitative and Qualitative Disclosures
                 About Market Risk.                                          23

     Item 4. Controls and Procedures.                                        23

Part II.     OTHER INFORMATION

     Item 1A.Risk Factors.                                                   25

     Item 6. Exhibits.                                                       25

Items 1, 2, 3, 4 and 5 of Part II are omitted because there is no information to
report.


                                      - 2 -

                                     <PAGE>


                            COMPX INTERNATIONAL INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                 (In thousands)

<TABLE>
<CAPTION>

               ASSETS                                               December 31,        September 30,
                                                                         2005                2006
                                                                    -----------          -----------
                                                                                        (unaudited)

 Current assets:
<S>                                                                 <C>                      <C>
   Cash and cash equivalents                                        $     30,592             $ 25,772
   Accounts receivable, net                                               20,609               23,027
   Receivables from affiliates                                               620                  176
   Refundable income taxes                                                   401                  520
   Inventories, net                                                       22,538               23,631
   Prepaid expenses and other                                              1,496                1,051
   Deferred income taxes                                                   1,903                1,878
   Current portion of note receivable                                      2,612                1,306
                                                                        --------            ---------

       Total current assets                                               80,771               77,361
                                                                        --------            ---------

 Other assets:
   Goodwill                                                               35,678               40,287
   Note receivable                                                         1,567                1,567
   Other intangible assets                                                 2,317                3,323
   Other                                                                     230                  593
                                                                        --------            ---------

       Total other assets                                                 39,792               45,770
                                                                        --------            ---------

 Property and equipment:
   Land                                                                    7,868                8,843
   Buildings                                                              31,165               33,720
   Equipment                                                             107,333              111,619
   Construction in progress                                                2,015                8,637
                                                                        --------            ---------
                                                                         148,381              162,819
   Less accumulated depreciation                                          80,392               90,810
                                                                         -------            ---------

       Net property and equipment                                         67,989               72,009
                                                                        --------            ---------

         Total assets                                                  $ 188,552            $ 195,140
                                                                       =========            =========
</TABLE>



                                      - 3 -
                                     <PAGE>






                            COMPX INTERNATIONAL INC.

                CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

                                 (In thousands)
<TABLE>
<CAPTION>


 LIABILITIES AND STOCKHOLDERS' EQUITY                              December 31,       September 30,
                                                                       2005                2006
                                                                   -----------        ------------
                                                                                       (unaudited)

 Current liabilities:
<S>                                                                 <C>                   <C>
   Accounts payable and accrued liabilities                         $    19,238           $ 20,587
   Income taxes payable to affiliates                                       771                161
   Income taxes                                                             327                 -
                                                                       --------            -------

       Total current liabilities                                         20,336             20,748
                                                                       --------           --------

 Noncurrent liabilities:
   Deferred income taxes                                                 16,692             19,276
   Long term debt and other                                               1,425                 17
                                                                       --------           --------

       Total noncurrent liabilities                                      18,117             19,293
                                                                       --------           --------

 Stockholders' equity:
   Preferred stock                                                           -                  -
   Class A common stock                                                      52                 52
   Class B common stock                                                     100                100
   Additional paid-in capital                                           109,556            109,831
   Retained earnings                                                     31,320             35,173
   Accumulated other comprehensive income                                 9,071              9,943
                                                                       --------           --------

       Total stockholders' equity                                       150,099            155,099
                                                                       --------           --------

       Total liabilities and stockholders' equity                      $188,552           $195,140
                                                                       ========           ========
</TABLE>


Commitments and contingencies (Note 1)

    See accompanying Notes to Condensed Consolidated Financial Statements.

                                      - 4 -
                                     <PAGE>


                            COMPX INTERNATIONAL INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                      (In thousands, except per share data)


<TABLE>
<CAPTION>

                                                                 Three months ended           Nine months ended
                                                                   September 30,               September 30,
                                                                   ------------                -------------
                                                                 2005          2006           2005         2006
                                                               ------         ------         ------       -----
                                                                                   (unaudited)

<S>                                                           <C>             <C>           <C>         <C>
 Net sales                                                    $47,135         $48,812       $139,708    $145,984
 Cost of goods sold                                            36,153          35,955        107,916     109,150
                                                               ------         -------        -------     -------

     Gross margin                                              10,982         12,857          31,792      36,834

 Selling, general and administrative expense                    6,029          6,673          17,953      19,832

 Other operating income (expense):
   Currency transaction gains (losses),net                        (42)            31             (58)        (80)
   Disposition of property and equipment                         (135)            (3)           (141)        (94)
                                                              -------        -------         -------     -------

     Operating income                                           4,776          6,212          13,640      16,828

 Other non-operating income, net                                  277            318             538       1,005
 Interest expense                                                 (91)           (50)           (228)       (162)
                                                               ------        -------        --------     -------

     Income from continuing operations
      before income taxes                                       4,962          6,480          13,950      17,671

 Provision for income taxes                                    11,082          2,675          15,483       7,603
                                                              -------        -------         -------     -------

   Income (loss) from continuing operations                    (6,120)         3,805          (1,533)     10,068

 Discontinued operations, net of tax                               -              -             (477)       (500)
                                                              -------       --------        --------     -------



     Net income (loss)                                        $(6,120)      $  3,805        $ (2,010)   $  9,568
                                                              =======       ========        ========    ========

 Basic and diluted earnings (loss) per common share:
   Continuing operations                                      $  (.40)      $    .25        $   (.10)      $.66
   Discontinued operations                                         -              -             (.03)      (.03)
                                                              -------       --------        --------    --------

                                                                 (.40)      $    .25        $   (.13)   $    .63
                                                              =======       ========        ========    ========

 Cash dividends per share                                     $  .125       $   .125        $   .375    $   .375
                                                              =======       ========        ========    ========


 Shares used in the calculation of basic
  and diluted earnings per share                               15,246         15,260          15,225      15,253
                                                              =======       ========        ========    ========
</TABLE>

    See accompanying Notes to Condensed Consolidated Financial Statements.

                                      - 5 -
                                     <PAGE>


                            COMPX INTERNATIONAL INC.

        CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

                  Nine months ended September 30, 2005 and 2006

                                 (In thousands)
<TABLE>
<CAPTION>

                                                                          2005          2006
                                                                         ------         ----
                                                                              (unaudited)

<S>                                                                     <C>           <C>
 Net income (loss)                                                      $(2,010)      $ 9,568

 Other comprehensive income, net of tax:
   Currency translation adjustment:
     Arising during the period                                              250           982
     Disposal of business unit                                              739            -
                                                                        -------       -------
                                                                            989           982

   Impact from cash flow hedges, net                                        (67)         (110)
                                                                        -------       -------

     Total other comprehensive income, net                                  922           872
                                                                        -------       -------

     Comprehensive income (loss)                                        $(1,088)      $10,440
                                                                        =======       =======

</TABLE>






     See accompanying Notes to Condensed Consolidated Financial Statements.

                                      - 6 -
                                     <PAGE>




                            COMPX INTERNATIONAL INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                  Nine months ended September 30, 2005 and 2006

                                 (In thousands)
<TABLE>
<CAPTION>

                                                                          2005               2006
                                                                          ----               ----
                                                                                 (unaudited)

 Cash flows from operating activities:
<S>                                                                     <C>                <C>
   Net income (loss)                                                    $(2,010)           $ 9,568
   Depreciation and amortization                                          8,118              8,326
   Goodwill impairment                                                      864                 -
   Deferred income taxes:
     Continuing operations                                                8,828              1,574
     Discontinued operations                                               (187)                -
   Other, net                                                               275                877
 Change in assets and liabilities (exclusive of
   acquisitions):
   Accounts receivable, net                                              (1,877)            (1,490)
   Inventories, net                                                        (763)               536
   Accounts payable and accrued liabilities                               2,641                748
   Accounts with affiliates                                               1,126               (166)
   Income taxes                                                          (2,264)              (322)
   Other, net                                                              (532)                87
                                                                        -------             ------

       Net cash provided by operating activities                         14,219             19,738
                                                                        -------             ------

 Cash flows from investing activities:
   Capital expenditures                                                  (8,654)            (9,070)
   Proceeds from disposal of assets held for sale                        18,094                 -
   Cash of disposed business unit                                        (4,006)                -
   Acquisitions, net of cash acquired                                    (7,342)            (9,832)
   Cash collected on note receivable                                         -               1,306
   Proceeds from sale of fixed assets                                       19                  45
                                                                        -------             ------

       Net cash used in investing activities                             (1,889)           (17,551)
                                                                        -------             ------

 Cash flows from financing activities:
   Principal payments on indebtedness                                       (48)            (1,516)
   Proceeds from issuance of common stock                                   639                104
   Deferred financing costs paid                                            (28)              (105)
   Dividends                                                             (5,704)            (5,715)
                                                                        --------            ------

       Net cash used in financing activities                             (5,141)            (7,232)
                                                                        --------            ------

 Cash and cash equivalents - net change from:
   Operating, investing and financing activities                          7,189             (5,045)
   Currency translation                                                     122                225
 Cash and cash equivalents at beginning of period                        21,037             30,592
                                                                        -------             ------

 Cash and cash equivalents at end of period                             $28,348            $25,772
                                                                        =======            =======

 Supplemental disclosures:
   Cash paid for:
     Interest                                                           $   105            $   105
     Income taxes,net                                                     7,860              6,524
   Noncash investing activity - note receivable received
     upon disposal of business unit                                     $ 4,179            $    -
</TABLE>

     See accompanying Notes to Condensed Consolidated Financial Statements.
                                      - 7 -
                                     <PAGE>





                            COMPX INTERNATIONAL INC.

            CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                      Nine months ended September 30, 2006

                                 (In thousands)
<TABLE>
<CAPTION>

                                                                                                              Accumulated other
                                                                                                           comprehensive income
                                                                                                                    (loss)
                                                                                                           --------------------
                                       Common stock        Additional                                                 Total
                                      ---------------       paid-in      Retained       Currency       Hedging    stockholders'
                                   Class A      Class B     capital      earnings      translation   derivatives      equity
                                   -------      -------    ---------     --------      -----------   -----------    --------
                                                                       (unaudited)


<S>                 <C> <C>           <C>        <C>        <C>           <C>            <C>             <C>        <C>
Balance at December 31, 2005          $52        $100       $109,556      $31,320        $8,961          $110       $150,099

Net income                              -           -             -         9,568            -             -           9,568

Other comprehensive income, net         -           -             -            -            982          (110)           872

Cash dividends                          -           -             -        (5,715)           -             -          (5,715)

Issuance of common stock                -           -            275           -             -             -             275
                                      ---        ----       --------      -------        ------         -----       --------

Balance at September 30, 2006         $52        $100       $109,831      $35,173        $9,943         $  -        $155,099
                                     ====        ====       ========      =======        ======         =====       ========
</TABLE>


     See accompanying Notes to Condensed Consolidated Financial Statements.

                                      - 8 -


                                     <PAGE>





                            COMPX INTERNATIONAL INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                               September 30, 2006

                                   (unaudited)

Note 1 -   Organization and basis of presentation:

     Organization - We are a leading  manufacturer of component products.  CompX
Group,  Inc.,  owns 83% of our  outstanding  common stock at September 30, 2006.
CompX Group, Inc. is a majority-owned  subsidiary of NL Industries,  Inc. (NYSE:
NL). NL owns 82% of CompX Group,  and Titanium Metals  Corporation  (NYSE:  TIE)
("TIMET")  owns the remaining 18% of CompX Group.  At September 30, 2006, (i) NL
and TIMET each own an additional 2% and 3%,  respectively  of us directly,  (ii)
Valhi, Inc. (NYSE: VHI) holds,  directly or through a subsidiary,  approximately
83%  of  NL's  outstanding   common  stock  and  approximately  35%  of  TIMET's
outstanding  common  stock and (iii)  Contran  Corporation  holds,  directly and
through  subsidiaries,  approximately 92% of Valhi's  outstanding  common stock.
Substantially  all of  Contran's  outstanding  voting  stock  is held by  trusts
established for the benefit of certain  children and  grandchildren of Harold C.
Simmons  (for which Mr.  Simmons is sole  trustee) or is held by Mr.  Simmons or
persons or other entities related to Mr. Simmons.  Consequently, Mr. Simmons may
be deemed to control each company and us.

Basis of presentation - Consolidated in this Quarterly Report are the results of
CompX International Inc. and subsidiaries.  The unaudited Condensed Consolidated
Financial  Statements  contained in this Quarterly  Report have been prepared on
the same basis as the audited  Consolidated  Financial  Statements in our Annual
Report on Form 10-K for the year ended  December 31, 2005 that we filed with the
Securities and Exchange  Commission  ("SEC") on March 16, 2006 (the "2005 Annual
Report").  In our opinion, we have made all necessary adjustments (which include
only normal  recurring  adjustments)  in order to state fairly,  in all material
respects,  our consolidated  financial position,  results of operations and cash
flows as of the dates  and for the  periods  presented.  We have  condensed  the
Consolidated  Balance  Sheet at December 31, 2005  contained  in this  Quarterly
Report as compared  to our audited  Consolidated  Financial  Statements  at that
date,  and  we  have  omitted  certain  information  and  footnote   disclosures
(including those related to the Consolidated Balance Sheet at December 31, 2005)
normally included in financial statements prepared in accordance with accounting
principles  generally  accepted in the United  States of America  ("GAAP").  Our
results of operations for the interim  periods ended  September 30, 2006 may not
be  indicative  of our  operating  results  for the  full  year.  The  Condensed
Consolidated  Financial  Statements contained in this Quarterly Report should be
read in conjunction with our 2005 Consolidated Financial Statements contained in
our 2005 Annual Report.  Certain  reclassifications have been made to prior year
balances to conform to the current year presentation.

     Refer to our  2005  Annual  Report  for a  discussion  of  commitments  and
contingencies.

     Unless  otherwise  indicated,  references  in this report to "we",  "us" or
"our" refer to CompX  International Inc. and its subsidiaries (NYSE: CIX), taken
as a whole.

Note 2 -   Business segment information:

     We currently have three operating segments - Security  Products,  Furniture
Components,  and Marine  Components.  Prior to the second  quarter of 2006,  the
results  of the Marine  Components  segment  had been  presented  as Other.  Our
Security Products segment,  with manufacturing  facilities in South Carolina and
Illinois,  manufactures  locking mechanisms and other security products for sale
to  the  mailbox,   transportation,   furniture,   banking,  vending  and  other
industries.  Our  Furniture  Components  segment,  with  facilities  in  Canada,
Michigan and Taiwan,  manufactures  a complete  line of  precision  ball bearing
slides and  ergonomic  computer  support  systems  for use in office  furniture,
computer-related  equipment,  tool storage cabinets and other applications.  Our

                                      - 9 -
                                     <PAGE>


Marine   Components   segment  with   facilities   in  Wisconsin  and  Illinois,
manufactures and distributes marine instruments,  hardware,  and accessories for
performance boats.

     In April 2006, we completed the acquisition of a marine component  products
business for aggregate cash consideration of $9.8 million, net of cash acquired.
We completed this acquisition to expand our Marine Components  business segment.
We have  included  the  results of  operations  and cash  flows of the  acquired
business in our Condensed  Consolidated  Financial  Statements starting in April
2006. The purchase  price has been  allocated  among the tangible and intangible
net assets acquired based upon an estimate of the fair value of such net assets.
The pro forma effect to us,  assuming this  acquisition had been completed as of
January 1, 2005, is not material.

     During the first quarter of 2006, we  reorganized  our internal  management
structure,  and  as a  result  our  previously  separate  precision  slides  and
ergonomics   products  businesses  are  now  evaluated  as  a  single  Furniture
Components operating unit. Our segment information now reflects our new internal
management  structure.  Additionally,  prior to the first  quarter of 2006,  the
reported  amount  of  operating  income  for each of our  segments  included  an
allocation  of  corporate  operating  expenses  based  upon the  amount  of each
segment's net sales.  Corporate expenses are now no longer allocated but instead
are presented as a separate item within operating  income.  Prior period segment
information   shown   below  has  been   restated  to  conform  to  the  current
presentation.

<TABLE>
<CAPTION>
                                                      Three months ended            Nine months ended
                                                        September 30,                 September 30,
                                                     -------------------            ------------------
                                                     2005           2006           2005          2006
                                                     ----           ----           ----          ----
                                                                      (In thousands)
 Net sales:
<S>                                                  <C>           <C>           <C>           <C>
   Furniture Components                              $25,536       $23,661       $ 80,847      $ 71,690
   Security Products                                  19,791        21,247         57,053        62,114
   Marine Components                                   1,808         3,904          1,808        12,180
                                                     -------       -------       --------      --------
     Total net sales                                 $47,135       $48,812       $139,708      $145,984
                                                     =======       =======       ========      ========

 Operating income:
   Furniture Components                              $ 2,589       $ 3,306       $  7,788      $  7,848
   Security Products                                   3,324         4,021          9,716        11,604
   Marine Components                                     241           210            241         1,428
   Corporate operating expense                        (1,378)       (1,325)        (4,105)       (4,052)
                                                     -------       -------       --------      ---------

     Total operating income                            4,776         6,212         13,640        16,828

 Other non-operating income, net                         277           318            538         1,005
 Interest expense                                        (91)          (50)          (228)         (162)
                                                     -------       -------       --------      --------

   Income from continuing operations
    before income taxes                              $ 4,962       $ 6,480       $ 13,950      $ 17,671
                                                     =======       =======       ========      ========
</TABLE>


     The  information  below  provides  disclosure of segment  information  with
respect to each year in the three-year  period ended December 31, 2005, based on
our new operating unit structure.


                                     - 10 -
                                     <PAGE>


<TABLE>
<CAPTION>


                                                                          Years ended December 31,
                                                                         2003       2004         2005
                                                                         ----       ----         ----
                                                                               (In thousands)

 Net sales:
<S>                                                                  <C>          <C>          <C>
   Furniture Components                                              $ 97,811     $106,759     $105,524
   Security Products                                                   76,155       75,872       76,667
   Marine Components                                                     -            -           4,158
                                                                     --------     --------     --------

     Total net sales                                                 $173,966     $182,631     $186,349
                                                                     ========     ========     ========

 Operating income:
   Furniture Components                                              $  1,359     $  8,885     $ 10,985
   Security Products                                                   11,078       11,604       13,141
   Marine Components                                                        -            -          427
   Corporate operating expenses                                        (3,658)      (5,091)      (5,491)
                                                                     --------     --------     --------

     Total operating income                                             8,779       15,398       19,062

   Other non-operating income, net                                      1,676        2,419          724
   Interest expense                                                    (1,301)        (494)        (336)
                                                                     --------     --------     --------

     Income from continuing operations
      before income taxes                                            $  9,154     $ 17,323     $ 19,450
                                                                     ========     ========     ========

 Depreciation and amortization:
   Furniture Components                                              $  7,155     $  7,477     $  6,798
   Security Products                                                    4,744        4,191        3,876
   Marine Components                                                        -            -          207
   Corporate depreciation                                                 269          111           43
   Thomas Regout**                                                      2,612        2,421         -
                                                                     --------     --------     --------

      Total deprecation and amortization                             $ 14,780     $ 14,200     $ 10,924
                                                                     ========     ========     ========

 Capital expenditures:
   Furniture Components                                              $  6,446     $  2,521     $  5,549
   Security Products                                                    1,901        2,432        4,909
   Marine Components                                                        -            -           32
   Thomas Regout**                                                        561          395         -
                                                                     --------     --------     --------

      Total capital expenditures                                     $  8,908     $  5,348     $ 10,490
                                                                     ========     ========     ========

 Total assets:
   Furniture Components                                              $ 88,928     $ 77,717     $ 77,226
   Security Products                                                   77,024       72,794       76,875
   Marine Components                                                        -            -       10,614
   Thomas Regout**                                                     38,595       28,921            -
   Corporate and eliminations                                           6,196        6,847       23,837
                                                                     --------     --------     --------

      Total assets                                                   $210,743     $186,279     $188,552
                                                                     ========     ========     ========

 Goodwill:
   Furniture Components                                              $  4,986     $  5,270     $  6,594
   Security Products                                                   23,743       23,742       23,742
   Marine Components                                                     -            -           5,342
                                                                     --------     --------     --------

      Total goodwill                                                 $ 28,729     $ 29,012     $ 35,678
                                                                     ========     ========     ========

 ** Denotes discontinued operations.
</TABLE>

                                     - 11 -


                                     <PAGE>
Note 3 -       Inventories, net:
<TABLE>
<CAPTION>
                                                                     December 31,    September 30,
                                                                          2005           2006
                                                                     ----------      ------------
                                                                            (In thousands)

<S>                                                                    <C>             <C>
 Raw materials                                                         $ 6,801         $ 6,268
 Work in progress                                                        9,116           9,260
 Finished products                                                       6,621           8,103
                                                                       -------         -------

      Total                                                            $22,538         $23,631
                                                                       =======         =======
</TABLE>

Note 4 -       Accounts payable and accrued liabilities:
<TABLE>
<CAPTION>
                                                                     December 31,     September 30,
                                                                          2005            2006
                                                                     ----------       ------------
                                                                            (In thousands)
<S>                                                                    <C>              <C>
 Accounts payable                                                      $ 7,022          $ 7,266
 Accrued liabilities:
   Employee benefits                                                     8,179            8,927
   Customer tooling                                                      1,319              714
   Professional fees                                                       720              820
   Insurance                                                               516              597
   Taxes other than on income                                              299              608
   Other                                                                 1,183            1,655
                                                                       -------          -------

      Total                                                            $19,238          $20,587
                                                                       =======          =======
</TABLE>
Note 5 - Indebtedness:
<TABLE>
<CAPTION>

                                                                   December 31,     September 30,
                                                                          2005            2006
                                                                   -----------      -------------
                                                                            (In thousands)

<S>                                                                     <C>               <C>
 Other indebtedness                                                     $1,596            $  54
 Less current maturities                                                   171               37
                                                                        ------            -----

      Total                                                             $1,425            $  17
                                                                        ======            =====
</TABLE>

     Other indebtedness at December 31, 2005 includes certain industrial revenue
bonds which were prepaid at their carrying value in February 2006.

Note 6 - Other non-operating income, net:
<TABLE>
<CAPTION>
                                                           Three months ended      Nine months ended
                                                             September 30,           September 30,
                                                           ------------------      -----------------
                                                             2005       2006        2005       2006
                                                            ------     -----       -----      -----
                                                                          (In thousands)

<S>                                                          <C>         <C>        <C>       <C>
 Interest income                                             $144        $358       $408      $1,023
 Other, net                                                   133         (40)       130         (18)
                                                             ----        ----       ----      ------

      Total                                                  $277        $318       $538      $1,005
                                                             ====        ====       ====      ======

</TABLE>
                                     - 12 -
                                     <PAGE>



Note 7 - Provision for income taxes:
<TABLE>
<CAPTION>

                                                                     Nine months ended
                                                                       September 30,
                                                                    2005           2006
                                                                  --------       ------
                                                                       (In thousands)

<S>                                                                <C>           <C>
 Expected tax expense                                              $ 4,883       $ 6,186
 Non-U.S. tax rates                                                   (149)         (265)
 Incremental U.S. tax on earnings of non-U.S. subsidiaries          10,942         1,532
 U.S. state income taxes, net                                          303           460
 Canadian tax rate change                                               -           (159)
 Other, net                                                           (496)         (151)
                                                                   -------       -------

      Total                                                        $15,483       $ 7,603
                                                                   =======       =======
</TABLE>

     In June 2006,  Canada enacted a 2% reduction in the Canadian federal income
tax rate and the  elimination  of the federal  surtax.  The 2% reduction will be
phased in from 2008 to 2010,  and the federal surtax will be eliminated in 2008.
As a result,  during the second quarter of 2006 we recognized a $159,000  income
tax benefit  related to the effect of such reduction on our previously  recorded
net deferred income tax liability.

     Certain of our U.S.  tax  returns are  currently  being  examined,  and tax
authorities  could propose tax  deficiencies.  To date, the tax authorities have
not  proposed any tax  deficiencies.  We believe we have  adequate  accruals for
additional taxes and related  interest expense which may ultimately  result from
tax examinations. We believe the ultimate disposition of tax examinations should
not have a  material  adverse  effect on our  consolidated  financial  position,
results of operations or liquidity.


Note 8 - Currency forward exchange contracts:

     Certain of our sales  generated by our non-U.S.  operations are denominated
in U.S.  dollars.  We periodically  use currency  forward  contracts to manage a
portion of currency  exchange rate market risk associated with  receivables,  or
similar  exchange  rate risk  associated  with future  sales,  denominated  in a
currency other than the holder's functional  currency.  We have not entered into
these  contracts  for trading or  speculative  purposes  in the past,  nor do we
anticipate  entering into such contracts for trading or speculative  purposes in
the future.  Most of our currency forward  contracts meet the criteria for hedge
accounting under GAAP and are designated as cash flow hedges. For these currency
forward  contracts,  gains and losses  representing the effective portion of our
hedges are deferred as a component of accumulated  other  comprehensive  income,
and are subsequently  recognized in earnings at the time the hedged item affects
earnings.  Occasionally,  we enter into currency forward  contracts which do not
meet the criteria for hedge accounting.  For these contracts,  we mark-to-market
the estimated fair value of such contracts at each balance sheet date,  with any
resulting  gain or loss  recognized in income  currently as part of net currency
transactions. At September 30, 2006, we had no outstanding currency contracts.

Note 9 - Discontinued operations:

     Discontinued  operations  relates to our former Thomas Regout operations in
the Netherlands.  Prior to December 2004, the Thomas Regout European  operations
were classified as held for use. A formal plan of disposal  adopted by our board
of  directors  in  December  2004  resulted  in  the  reclassification  of  such
operations to held for sale. Based upon the estimated  realizable value (or fair
value less costs to sell) of the net assets  disposed,  we  determined  that the
goodwill  associated  with the assets held for sale was partially  impaired.  In
determining the estimated realizable value of the Thomas Regout operations as of
December 31, 2004,  when we  classified  it as held for sale,  we used the sales
price inherent in the definitive agreement reached with the purchaser in January
2005 and our estimate of the related  transaction  costs (or costs to sell).  In
January  2005, we completed the sale of Thomas Regout for net proceeds that were
approximately  $864,000 less than previously  estimated (primarily due to higher
expenses  associated  with  the  sale).  These  additional  expenses  reflect  a
refinement of our previous estimate of the realizable value of the Thomas Regout

                                     - 13 -
                                     <PAGE>

operations  and  accordingly  we  recognized a further  impairment  of goodwill.
Therefore,  discontinued operations for the nine months ended September 30, 2005
includes  a charge  for the  additional  expenses  ($477,000,  net of income tax
benefit).  Discontinued  operations for the nine months ended September 30, 2006
represents  an  expense  of  $500,000  for  a  change  in  estimate  of  certain
indemnification  obligations  we had  to the  purchaser  of  the  Thomas  Regout
operations.


Note 10 - Recent accounting pronouncements:

     Inventory costs - Statement of Financial  Accounting Standards ("SFAS") No.
151,  Inventory  Costs, an amendment of ARB No. 43, Chapter 4, became  effective
for us for inventory  costs  incurred on or after January 1, 2006.  SFAS No. 151
requires that  allocation  of fixed  production  overhead  costs to inventory be
based on normal  capacity of the production  facilities,  as defined by SFAS No.
151. SFAS No. 151 also  clarifies the  accounting  for abnormal  amounts of idle
facility  expense,  freight handling costs and wasted material,  requiring those
items be recognized as  current-period  charges.  Our existing  production  cost
policies complied with the requirements of SFAS No. 151,  therefore the adoption
of SFAS No. 151 did not affect our Condensed Consolidated Financial Statements.

     Stock  options - We adopted  the fair value  provisions  of SFAS No.  123R,
Share-Based   Payment,  on  January  1,  2006  using  the  modified  prospective
application  method.  SFAS No. 123R,  among other  things,  requires the cost of
employee  compensation paid with equity  instruments to be measured based on the
grant-date  fair value.  That cost is then  recognized  over the vesting period.
Using the  modified  prospective  method,  we will apply the  provisions  of the
standard to all new equity  compensation  granted  after January 1, 2006 and any
existing  awards vesting after January 1, 2006. The number of non-vested  equity
awards we had issued as of  December  31,  2005 was not  material.  Prior to the
adoption of SFAS No. 123R we accounted  for  stock-based  employee  compensation
related to stock  options using the  intrinsic  value method in accordance  with
Accounting Principles Board Opinion ("APBO") No. 25, Accounting for Stock Issued
to Employees.  Under APBO No. 25, no compensation cost was generally  recognized
for fixed stock options in which the exercise  price is greater than or equal to
the market  price on the grant date.  Recognized  compensation  cost  related to
stock  options was not  significant  during the nine months ended  September 30,
2005 or 2006.  If we had applied the fair value  recognition  provisions of SFAS
No. 123,  Accounting  for  Stock-Based  Compensation,  to  stock-based  employee
compensation  related  to stock  options  for all  options  granted  on or after
January 1, 1995,  the effect on our  results of  operations  for the nine months
ended September 30, 2005 would not have been material.

     Effective  January 1, 2006,  SFAS No.  123R  requires  the cash  income tax
benefit resulting from the exercise of stock options in excess of the cumulative
income tax benefit previously  recognized for GAAP financial  reporting purposes
(which for us did not  represent a  significant  amount in the nine months ended
September 30, 2006) to be reflected as a component of cash flows from  financing
activities in our Condensed  Consolidated  Financial  Statements.  SFAS No. 123R
also requires certain expanded disclosures regarding equity compensation, and we
provided these expanded disclosures in our 2005 Annual Report.

     Uncertain  tax  positions  - In the second  quarter  of 2006 the  Financial
Accounting  Standards Board ("FASB") issued FASB  Interpretation No. ("FIN") 48,
Accounting  for Uncertain Tax Positions,  which will become  effective for us on
January  1,  2007.  FIN No. 48  clarifies  when and how much of a benefit we can
recognize in our Consolidated  Financial  Statements for certain positions taken
in our income tax returns under SFAS No. 109,  Accounting for Income Taxes,  and
enhances the disclosure  requirements  for our income tax policies and reserves.
Among other things, FIN No. 48 will prohibit us from recognizing the benefits of
a tax position  unless we believe it is  more-likely-than-not  that our position
would prevail with the applicable tax  authorities  and limits the amount of the
benefit to the largest amount for which we believe the likelihood of realization
is greater than 50%. FIN No. 48 also requires  companies to accrue penalties and
interest on the difference  between tax positions taken on their tax returns and
the amount of benefit recognized for financial  reporting purposes under the new
standard.  Our current income tax accounting policies comply with this aspect of
the new  standard.  We will also be required to classify  any  reserves we might
have for uncertain tax positions in a separate current or noncurrent  liability,
depending on the nature of the tax  position.  We are currently  evaluating  the
impact of FIN No. 48 on our Consolidated Financial Statements.

                                     - 14 -
                                     <PAGE>

     Quantifying  Financial Statement  Misstatements - In September 2006 the SEC
issued  Staff  Accounting  Bulletin  ("SAB")  No.  108  expressing  their  views
regarding the process of quantifying financial statement misstatements.  The SAB
is effective for us no later than the fourth  quarter of 2006.  According to SAB
No. 108 both the  "rollover" and "iron  curtain"  approaches  must be considered
when evaluating a misstatement for materiality. We do not expect the adoption of
SAB No. 108 to have a material  effect on our previously  reported  consolidated
financial position or results of operations at the date of adoption.

     Fair Value  Measurements  - In September 2006 the FASB issued SFAS No. 157,
Fair Value Measurements,  which will become effective for us on January 1, 2007.
SFAS No. 157 generally  provides a consistent,  single fair value definition and
measurement techniques for GAAP pronouncements.  SFAS No. 157 also establishes a
fair value hierarchy for different measurement techniques based on the objective
nature of the inputs in various valuation methods. We will be required to ensure
all of our fair  value  measurements  are in  compliance  with SFAS No. 157 on a
prospective  basis beginning in the first quarter of 2007. In addition,  we will
be required to expand our disclosures  regarding the valuation methods and level
of inputs we utilize in the first quarter of 2007. The adoption of this standard
will not have a material effect on our Consolidated Financial Statements.

                                     - 15 -
                                     <PAGE>

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
-------------------------------------------------------------------------------

Overview

     We are a leading  manufacturer of precision ball bearing  slides,  security
products and ergonomic  computer  support systems used in the office  furniture,
transportation,  tool  storage  and a variety of other  industries.  We recently
entered the performance  marine  components  industry through our acquisition of
two performance marine components manufacturers.

     Operating  income was $6.2 million in the third quarter of 2006 compared to
$4.8 million in the same period of 2005.  Operating income was $16.8 million for
the nine-month period ended September 30, 2006 compared to $13.6 million for the
comparable  period of 2005. The increase in results during the third quarter and
for the  comparative  nine-month  periods is primarily  due to a more  favorable
product mix, the impact of our two marine  acquisitions in August 2005 and April
2006, and our on-going focus on reducing costs partially  offset by the negative
impact of changes in currency exchange rates within Furniture Components.

     We  reported  a net loss of $6.1  million  in the  third  quarter  of 2005,
principally  due to a $9.0 million  provision  for deferred  income taxes on the
aggregate  undistributed  earnings of certain of our non-U.S.  subsidiaries,  as
further discussed below.

Results of Operations
<TABLE>
<CAPTION>
                                    Three months ended                        Nine months ended
                                      September 30,                            September 30,
                                  -------------------                         ---------------
                           2005         %      2006         %          2005         %     2006        %
                           ----         -      ----         -          ----         -     ----        -
                                                     (Dollars in thousands)
<S>                       <C>        <C>      <C>        <C>         <C>        <C>     <C>       <C>
Net sales                 $47,135    100.0%   $48,812    100.0%      $139,708   100.0%  $145,984  100.0%
Cost of goods sold         36,153     76.7     35,955     73.7        107,916    77.2    109,150   74.8
                           ------     ----     ------     ----       --------   -----   --------   ----
  Gross margin             10,982     23.3     12,857     26.3         31,792    22.8     36,834   25.2
Operating costs
 and expenses               6,206     13.2      6,645     13.6         18,152    13.0     20,006   13.7
                           ------     ----     ------     ----       --------    ----   --------   ----
  Operating income        $ 4,776     10.1%   $ 6,212     12.7%       $13,640     9.8%  $ 16,828   11.5%
                          =======     ====    =======     ====       ========   =====   ========   ====
</TABLE>


     Net sales. Net sales increased $1.7 million, or 4%, to $48.8 million in the
third quarter of 2006 from $47.1 million in the third quarter of 2005. Net sales
increased $6.3 million, or 4%, to $146 million for the first nine months of 2006
from $139.7  million in the first nine months of 2005.  The increases are due to
sales volume from the acquisition of two marine component products businesses in
April 2006 and August  2005,  which  increased  sales by $2.1  million and $10.4
million in the third quarter and first nine months of 2006, respectively,  sales
volume  increases in Security  Products due to improved demand and the favorable
effect of currency exchange rates on Furniture  Components sales, offset in part
by sales volume decreases in Furniture  Components due to competition from lower
priced Asian manufacturers.

     Cost of goods sold and gross margin. Our cost of good sold percent improved
to 74% from 77% in the third  quarter of 2006  compared to the third  quarter of
2005. Our cost of goods sold percent also improved to 75% from 77% for the first
nine months of 2006  compared  to the first nine months of 2005.  As a result of
our  improvements in cost of goods sold, our gross margin  percentage  increased
from 23% in the third  quarter  of 2005 to 26% in the third  quarter of 2006 and
increased  from 23% to 25% in the first nine  months of 2006 as  compared to the
first nine months of 2005. The improvements in gross margin  percentages for the
comparable  periods are primarily due to an improved  product mix as the decline
in lower margin  Furniture  Components  sales were offset by increased  sales of
higher-margin Security Products and Marine Components.

                                     - 16 -
                                     <PAGE>

     Operating costs and expenses. As a percentage of net sales, operating costs
and expenses were relatively flat in the third quarter of 2006 and 2005, and for
the first nine months of each year.

     Operating income.  Operating income increased $1.4 million, or 30%, to $6.2
million in the third  quarter of 2006 from $4.8 million in the third  quarter of
2005.  Operating income in the first nine months of 2006 increased $3.2 million,
or 23%, to $16.8 million  compared to $13.6 million for the first nine months of
2005. As a percentage of net sales,  operating  income  increased to 12% for the
first nine months of 2006 from 10% for the first nine  months of 2005  primarily
due to the increase in net sales and more  favorable  product mix as well as the
favorable  impact of a continuous  focus on reducing  costs across all segments,
partially offset by the negative impact of currency exchange rates (as discussed
below).

     Currency.  Our Furniture Components segment has substantial  operations and
assets located outside the United States (in Canada and Taiwan). The majority of
sales generated from our non-U.S.  operations are denominated in the U.S. dollar
with the remainder  denominated in foreign currencies,  principally the Canadian
dollar and the New Taiwan dollar. Most raw materials, labor and other production
costs for our non-U.S. operations are denominated primarily in local currencies.
Consequently,  the  translated  U.S.  dollar  values of our  non-U.S.  sales and
operating results are subject to currency  exchange rate fluctuations  which may
favorably or unfavorably  impact reported earnings and may affect  comparability
of  period-to-period  operating results.  Our Furniture  Component segment's net
sales were  positively  impacted  while their  operating  income was  negatively
impacted by currency  exchange rates in the following amounts as compared to the
currency exchange rates in effect during the  corresponding  period in the prior
year:

<TABLE>
<CAPTION>
                                             Three months ended      Nine months ended
                                             September 30, 2005      September 30, 2005
                                                  vs. 2006                vs. 2006
                                             ------------------    ------------------
                                                                       (In thousands)

<S>                                               <C>                   <C>
Currency impact on net sales                      $ 265                 $ 1,009

Currency impact on operating income               $(226)                $(1,178)
</TABLE>

     The  positive  impact on sales  relates to sales  denominated  in  non-U.S.
dollar   currencies   translating  into  higher  U.S.  dollar  sales  due  to  a
strengthening of the local currency in relation to the U.S. dollar. The negative
impact on operating  income results from the U.S.  dollar  denominated  sales of
non-U.S.  operations  converting  into lower local  currency  amounts due to the
weakening of the U.S.  dollar.  This negatively  impacts margin as it results in
less  local  currency  generated  from  sales to  cover  the  costs of  non-U.S.
operations which are denominated in local currency.

     Other  non-operating  income,  net. Other  non-operating  income  increased
primarily due to increases in interest income of approximately  $615,000 for the
nine-month  period  ending  September 30, 2006 as compared to the same period in
2005 primarily due to higher interest rates on invested cash balances.

     Interest  expense.  Interest expense  declined in the nine-month  period of
2006 compared to 2005 due primarily to lower average levels of outstanding debt.

     Provision for income taxes. A tabular  reconciliation between our effective
income  tax  rates  and the U.S.  federal  statutory  income  tax rate of 35% is
included  in Note 7 to the  Condensed  Consolidated  Financial  Statements.  Our
income tax rates vary by  jurisdiction  (country  and/or  state),  and  relative
changes in the geographic mix of pre-tax  earnings can result in fluctuations in
the  effective  income tax rate.  Generally,  the  effective  tax rate on income
derived  from our U.S.  operations,  including  the effect of U.S.  state income
taxes,  is lower than the effective tax rate on income derived from our non-U.S.
operations,  in part due to an election  to not claim a credit  with  respect to
foreign income taxes paid but instead claim a tax deduction, consistent with our
inclusion in Contran's  consolidated U.S. federal income tax group. The election
to not claim foreign tax credits is the primary reason our effective  income tax
rate in 2006 is higher than the 35% U.S. federal statutory income tax rate.

                                     - 17 -
                                     <PAGE>

     Under GAAP,  we are required to recognize a deferred  income tax  liability
with respect to the incremental U.S. (federal and state) and foreign withholding
taxes  that we  would  incur  when the  undistributed  earnings  of our  foreign
subsidiaries  are  subsequently  repatriated,  unless we  determine  that  those
undistributed  earnings are permanently  reinvested for the foreseeable  future.
Prior to the  third  quarter  of 2005,  we had not  recognized  a  deferred  tax
liability related to the incremental income taxes on the undistributed  earnings
of  certain  of our  non-U.S.  operations,  as we deemed  those  earnings  to be
permanently reinvested.  GAAP requires us to reassess the permanent reinvestment
conclusion on an ongoing basis to determine if our intentions  have changed.  As
of September 30, 2005, and based  primarily upon changes in our strategic  plans
for certain of our non-U.S.  operations,  we determined  that the  undistributed
earnings of such  subsidiaries  could no longer be considered to be  permanently
reinvested  except for the  pre-2005  earnings  in Taiwan.  Accordingly,  and in
accordance  with GAAP,  in the third  quarter of 2005 we recognized an aggregate
$9.0 million provision for deferred income taxes on the aggregate  undistributed
earnings of these non-U.S. subsidiaries.

     Our  effective  income tax rate from  continuing  operations  for the third
quarter  and the first  nine  months of 2006 was 41% and 43%,  respectively,  as
compared  to our  effective  income  tax  rates  for the same  periods  in 2005,
excluding  the  $9.0  million  provision   discussed  above,  of  42%  and  46%,
respectively.  Our  provision for income taxes for the first nine months of 2006
includes a $159,000 income tax benefit recorded in the second quarter related to
the effect of the  reduction  in the  Canadian  federal  income tax rate and the
elimination of the federal surtax on our previously recorded net deferred income
tax  liability.  Other than the effect of the $159,000  income tax  benefit,  we
currently  expect our  effective  income tax rate for the remainder of 2006 will
approximate  our effective  income tax rate for the nine months ended  September
30, 2006.

     Discontinued operations. See Note 9 to the Condensed Consolidated Financial
Statements.

                                     - 18 -
                                     <PAGE>

Segment Results

     The  key  performance  indicator  for  our  segments  is the  level  of its
operating income margins.
<TABLE>
<CAPTION>

                                      Three months ended                     Nine months ended
                                       September 30,             %            September 30,        %
                                      2005        2006        Change       2005      2006        Change
                                      ----       ----        ------      ----        ----        ------
                                                  (Dollars in thousands)

 Net sales:
<S>                                 <C>          <C>         <C>         <C>         <C>        <C>
   Furniture Components             $25,536      $23,661     (7.3%)      $ 80,847    $ 71,690   (11.3%)
   Security Products                 19,791       21,247      7.4%         57,053      62,114     8.9%
   Marine Components                  1,808        3,904      116%          1,808      12,180     574%
                                   ---------    ---------                --------    --------

     Total net sales                $47,135      $48,812      3.6%       $139,708    $145,984     4.5%
                                    =======      =======                 ========    ========

 Gross margin:
   Furniture Components             $ 5,089      $ 5,553      9.1%       $ 15,191    $ 14,979     (1.4%)
   Security Products                  5,535        6,399     15.6%         16,243      18,581     14.4%
   Marine Components                    358          905      153%            358       3,274      814%
                                    -------      -------                 -------     --------

     Total gross margin             $10,982      $12,857     17.1%       $ 31,792    $ 36,834     15.9%
                                    =======      =======                 ========    ========

 Operating income:
   Furniture Components             $ 2,589      $ 3,306     27.7%       $  7,788    $  7,848      0.8%
   Security Products                  3,324        4,021     21.0%          9,716      11,604     19.4%
   Marine Components                    241          210    (12.9%)           241       1,428      493%
   Corporate operating
    expense                          (1,378)      (1,325)    (3.8%)        (4,105)     (4,052)    (1.3%)
                                    -------      -------                 --------     -------

     Total operating income         $ 4,776      $ 6,212     30.1%       $ 13,640    $ 16,828     23.4%
                                    =======      =======                 ========    ========
</TABLE>


     Furniture  Components.  Furniture Components net sales declined 7% to $23.7
million  in the third  quarter  of 2006  compared  to $25.5  million in the same
period last year,  and declined 11% to $71.7 million in the first nine months of
2006  compared  to $80.8  million  in the same  period in the prior  year as the
unfavorable  effect of lower sales volumes more than offset the favorable effect
of  changes  in foreign  currency  exchange  rates.  However,  operating  income
improved  from $2.6 million in the third  quarter of 2005 to $3.3 million in the
third  quarter  of 2006  and was flat at $7.8 for the  comparative  nine-  month
periods, as the negative effects of foreign exchange rates were more than offset
by  improvements  in gross margin.  Our Furniture  Components  business  faces a
number of operational  challenges including  competitive pressures from Asia and
an  unfavorable  Canadian  dollar  exchange  rate which has  caused  operational
difficulties  for  many  of our  Canadian  customers.  We are  actively  seeking
additional  sales  opportunities  to  offset  the  decline  in  Canadian  sales.
Furniture  Components  gross margin was 20% in the third quarter of 2005 and 24%
in the third quarter of 2006.  Gross margin  improved from 19% in the first nine
months of 2005 to 21% in the first nine months of 2006. The improvement in gross
margin is the result of our focus over the last several years on reducing  costs
and gaining operational  efficiencies  through workforce  reductions and process
improvements in all of our facilities,  particularly our Canadian  facility,  as
well as on replacing high volume, low margin customers lost to Asian competitors
with lower volume, higher margin sales.

     Security  Products.  Security  Products  net  sales  increased  7% to $21.2
million  in the third  quarter  of 2006  compared  to $19.8  million in the same
period last year,  and increased 9% to $62.1 million in the first nine months of
2006 compared to $57.1 million in the same period in the prior year. We expanded
our business to existing Security Products customers while gaining new customers
during 2006.  We also improved our gross margin from 28% in the third quarter of
2005 to 30% in the same  period in 2006,  and from 28% for the first nine months
of 2005 to 30% in the first nine months of 2006 by focusing on controlling costs
and increasing higher margin business during 2006. As a result, operating income
in the  segment  increased  21% and 19% in the  quarter  and nine  months  ended
September 30, 2006 compared to the same periods in 2005.

                                     - 19 -
                                     <PAGE>

     Marine  Components.  Marine Components net sales increased during the third
quarter  and  nine-month  periods  as  compared  to 2005  due to the  impact  of
acquisitions.  We acquired an initial  marine  component  company in August 2005
with an additional acquisition occurring in April 2006.

     Outlook. The component product markets we operate in are highly competitive
in terms of product  pricing  and  features.  Our  strategy is to focus on areas
where we can provide products that have value-added, user-oriented features that
enable our customers to compete more  effectively in their  markets.  One of the
focal points of our strategy is to replace low margin,  commodity  type products
with higher margin user-oriented feature products. While this strategy is likely
to result in lower volumes in the short term,  management expects the long term
effect to increase both sales and profits. Additionally, we believe our focus on
collaborating  with customers to identify solutions and our ability to provide a
high level of customer service enable us to compete effectively.  In response to
competitive pricing pressure,  we continuously focus on reducing production cost
through product reengineering,  improvement in manufacturing processes or moving
production to lower-cost facilities.

     Raw material  prices,  especially  steel,  zinc and copper,  continue to be
volatile  putting  pressure on our  margins.  We actively  seek to mitigate  the
margin  impact by  entering  into raw  material  supply  agreements  in order to
stabilize the cost for a period of time,  execute  larger  volume  tactical spot
purchases at prices that are expected to be favorable  compared to future prices
and, if necessary,  pass on the cost increases to customers  through  surcharges
and  price  increases.  To date we have been able to  effectively  mitigate  the
impact of higher  material  cost on our  margins  through  raw  material  supply
agreements, tactical spot purchases, surcharges and price increases; however, we
may not be able to achieve these same results in future periods.

Liquidity and Capital Resources

  Consolidated cash flows.

     Operating  activities.  Trends in cash  flows  from  operating  activities,
excluding  changes in assets and liabilities  have generally been similar to the
trends in operating earnings. Changes in assets and liabilities result primarily
from the timing of production,  sales, and purchases. Such changes in assets and
liabilities  generally  tend to even out over  time.  However,  period-to-period
relative  changes  in  assets  and  liabilities  can  significantly  affect  the
comparability of cash flows from operating activities. For the first nine months
of 2006 and 2005, changes in assets and liabilities are comparable, resulting in
a net use of cash of approximately  $.6 million and $1.7 million,  respectively.
The change in cash provided by operating  activities  from September 30, 2006 as
compared  to  September  30,  2005 is the  result of an  increase  in net income
combined with the change in deferred income taxes, discussed above.

     Relative  changes in working capital can have a significant  effect on cash
flows from  operating  activities.  Our average days sales  outstanding  ("DSO")
increased from 40 days at December 31, 2005 to 43 days at September 30, 2006 due
to timing of collection on the higher accounts  receivable balance at the end of
September.  For comparative purposes,  our average DSO increased from 38 days at
December 31, 2004 to 43 days at September 30, 2005.  Our average  number of days
in  inventory  ("DII") was 59 days at December 31, 2005 and 60 days at September
30, 2006.  The increase in days in inventory is primarily due to the higher cost
of commodity raw materials at September 30, 2006. For comparative purposes,  our
average DII was 52 and 57 days at  December  31, 2004 and  September  30,  2005,
respectively,  primarily as a result of lower  commodity raw materials  costs in
the first nine months of 2005 compared to 2006.

     Investing  activities.  Net cash used in investing  activities totaled $1.9
million in the first nine months of 2005  compared to $17.6  million used in the
first nine months of 2006.  Net cash for 2005 includes the net proceeds from the
sale of the Thomas Regout  operations in Europe offset by cash paid for a marine
component  product  business.  Net cash  used in 2006  includes  cash paid for a
marine component  products business offset by the collection of $1.3 million for
the first payment on the $4.2 million  subordinated  note which  originated as a
result of the sale of the European Thomas Regout operations in 2005. See Notes 2
and 9 to the Condensed Consolidated Financial Statements.

     Financing  activities.  Net cash used in financing  activities totaled $5.1
million and $7.2 million for the nine months ended  September 30, 2005 and 2006,
respectively.  In the first nine months of 2006, we prepaid certain indebtedness
we assumed in a prior acquisition,  reducing debt by $1.5 million.  In addition,
we paid aggregate  quarterly  dividends of $5.7 million,  or $.38 per share,  in
each of the first nine months of 2005 and 2006.

                                     - 20 -
                                     <PAGE>


     Other.  We  believe  that cash  generated  from  operations  and  borrowing
availability under our $50 million revolving credit facility, together with cash
on hand,  will be sufficient to meet our  liquidity  needs for working  capital,
capital  expenditures,  debt service and dividends (if declared).  To the extent
that  actual   operating   results  or  other   developments   differ  from  our
expectations, our liquidity could be adversely affected.

     Provisions  contained in our revolving  credit facility could result in the
acceleration  of  outstanding  indebtedness  prior to its  stated  maturity  for
reasons  other than  defaults  from  failing to comply  with  typical  financial
covenants. For example, the Credit Agreement allows the lender to accelerate the
maturity  of the  indebtedness  upon a change of  control  (as  defined)  of the
borrower.  The terms of the Credit Agreement could result in the acceleration of
all or a portion of the  indebtedness  following a sale of assets outside of the
ordinary course of business.

     Periodically,  we  evaluate  liquidity  requirements,  alternative  uses of
capital,  capital needs and available  resources in view of, among other things,
our capital  expenditure  requirements,  dividend  policy and  estimated  future
operating cash flows.  As a result of this process,  we have in the past and may
in the  future  seek to  raise  additional  capital,  refinance  or  restructure
indebtedness,  issue additional securities, modify our dividend policy or take a
combination  of such steps to manage  liquidity  and capital  resources.  In the
normal course of business,  we may review opportunities for acquisitions,  joint
ventures or other business  combinations in the component products industry.  In
the event of any such transaction, we may consider using available cash, issuing
additional equity securities or increasing our indebtedness.


     Future cash requirements.

     Our primary  source of liquidity on an ongoing  basis is our cash flow from
operating activities,  which is generally used to (i) fund capital expenditures,
(ii) repay  short-term  indebtedness  incurred  primarily  for  working  capital
purposes and (iii)  provide for the payment of  dividends  (if  declared).  From
time-to-time,  we will incur  indebtedness,  primarily  for  short-term  working
capital needs or to fund capital  expenditures.  From time-to-time,  we may also
sell assets outside the ordinary  course of business,  the proceeds of which are
generally used to repay indebtedness (including indebtedness which may have been
collateralized  by the assets sold) or to fund capital  expenditures or business
acquisitions.

     At September 30, 2006, we had $50 million  available  under our $50 million
revolving  credit  facility that matures in January 2009. We do not expect to be
required to use any of our cash flow from operating  activities generated during
2006 to repay indebtedness.

     Firm purchase  commitments for capital projects in process at September 30,
2006 approximated $2.9 million.

     There have been no material changes in our contractual obligations since we
filed our 2005  Annual  Report,  and we refer you to the  report  for a complete
description of these commitments.

     Off-balance  sheet financing  arrangements.  We do not have any off-balance
sheet financing agreements other than the operating leases discussed in our 2005
Annual Report.

     Recent accounting  pronouncements.See Note 10 to the Condensed Consolidated
Financial Statements.

     Critical  Accounting  Policies.  There  have been no  changes  in the third
quarter of 2006 with respect to our critical  accounting  policies  presented in
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations in our 2005 Annual Report.

                                     - 21 -
                                     <PAGE>


Forward-Looking Information

     As  provided  by the  safe  harbor  provisions  of the  Private  Securities
Litigation  Reform Act of 1995, we caution that the statements in this Quarterly
Report  on Form 10-Q  relating  to  matters  that are not  historical  facts are
forward-looking  statements that represent our beliefs and assumptions  based on
currently available information. Forward-looking statements can be identified by
the use of words such as "believes," "intends," "may," "should,"  "anticipates,"
"expects" or comparable terminology,  or by discussions of strategies or trends.
Although we believe  that the  expectations  reflected  in such  forward-looking
statements are reasonable,  we do not know if our expectations  will prove to be
correct.   Such  statements  by  their  nature  involve  substantial  risks  and
uncertainties  that could  significantly  impact  expected  results,  and actual
future   results  could  differ   materially   from  those   described  in  such
forward-looking  statements.  Among the factors that could cause  actual  future
results to differ materially are the risks and  uncertainties  discussed in this
Quarterly  Report and those described from time to time in the our other filings
with  the  Securities  and  Exchange  Commission.  While it is not  possible  to
identify  all  factors,  we  continue  to  face  many  risks  and  uncertainties
including, but not limited to the following:

     o    Future supply and demand for our products,
     o    Changes in costs of raw materials and other  operating  costs (such as
          energy costs),
     o    General global economic and political conditions,
     o    Demand for office furniture,
     o    Service industry employment levels,
     o    The possibility of labor disruptions,
     o    Competitive products and prices,  including increased competition from
          low-cost manufacturing sources (such as China),
     o    Substitute products,
     o    Customer and competitor strategies,
     o    Costs  and   expenses   associated   with   compliance   with  certain
          requirements  of  the  Sarbanes-Oxley  Act  of  2002  relating  to the
          evaluation of our internal control over financial reporting,
     o    The introduction of trade barriers,
     o    The impact of pricing and production decisions,
     o    Fluctuations  in the  value  of the  U.S.  dollar  relative  to  other
          currencies (such as the Canadian dollar and New Taiwan dollar),
     o    Potential    difficulties   in   integrating   completed   or   future
          acquisitions,
     o    Decisions to sell operating  assets other than in the ordinary  course
          of business,
     o    Uncertainties associated with new product development,
     o    Environmental  matters (such as those requiring emission and discharge
          standards for existing and new facilities),
     o    Our ability to comply with  covenants  contained in our revolving bank
          credit facility,
     o    The ultimate outcome of income tax audits,
     o    The impact of current or future government regulations,
     o    Possible future litigation and o Other risks and uncertainties.

     Should one or more of these risks  materialize (or the consequences of such
a development  worsen) or should the  underlying  assumptions  prove  incorrect,
actual results could differ  materially  from those  forecasted or expected.  We
disclaim  any  intention  or  obligation  to  update  publicly  or  revise  such
statements whether as a result of new information, future events or otherwise.

                                     - 22 -
                                    <PAGE>


ITEM 3. QUANTITATIVE AND QUALITATITVE DISCLOSURE ABOUT MARKET RISK.

     We are exposed to market risk,  including  foreign currency exchange rates,
interest rates and security prices. There have been no material changes in these
market  risks  since we filed our 2005  Annual  Report,  and we refer you to the
report for a complete description of these risks.


ITEM 4. Controls and Procedures.

     Evaluation of Disclosure  Controls and Procedures.  We maintain a system of
disclosure   controls  and  procedures.   The  term  "disclosure   controls  and
procedures,"  as defined by  regulations  of the SEC,  means  controls and other
procedures that are designed to ensure that information required to be disclosed
in the reports we file or submit to the SEC under the Securities Exchange Act of
1934, as amended (the "Act"), is recorded,  processed,  summarized and reported,
within the time  periods  specified  in the SEC's  rules and  forms.  Disclosure
controls and procedures  include,  without  limitation,  controls and procedures
designed  to ensure  that  information  required  to be  disclosed  by us in the
reports  that we file or  submit to the SEC  under  the Act is  accumulated  and
communicated to our management,  including our principal  executive  officer and
principal  financial  officer,  or  persons  performing  similar  functions,  as
appropriate to allow timely decisions to be made regarding required  disclosure.
Each of David A. Bowers,  our Vice  Chairman of the Board,  President  and Chief
Executive Officer,  and Darryl R. Halbert,  our Vice President,  Chief Financial
Officer and Controller, have evaluated our disclosure controls and procedures as
of September 30, 2006.  Based upon their  evaluation,  these executive  officers
have concluded  that our disclosure  controls and procedures are effective as of
September 30, 2006.

     Internal  Control  Over  Financial  Reporting.  We also  maintain  internal
control over  financial  reporting.  The term  "internal  control over financial
reporting," as defined by  regulations of the SEC, means a process  designed by,
or under the  supervision  of, our principal  executive and principal  financial
officers, or persons performing similar functions,  and effected by our board of
directors,  management  and other  personnel,  to provide  reasonable  assurance
regarding  the  reliability  of  financial  reporting  and  the  preparation  of
financial statements for external purposes in accordance with GAAP, and includes
those policies and procedures that:

     o    Pertain  to the  maintenance  of  records  that in  reasonable  detail
          accurately and fairly reflect the transactions and dispositions of our
          assets.

     o    Provide  reasonable   assurance  that  transactions  are  recorded  as
          necessary to permit preparation of financial  statements in accordance
          with GAAP, and that our receipts and  expenditures are being made only
          in accordance with authorizations of our management and directors, and

                                     - 23 -
                                     <PAGE>


     o    Provide reasonable  assurance regarding prevention or timely detection
          of  unauthorized  acquisition,  use or  disposition of our assets that
          could have a material effect on our Condensed  Consolidated  Financial
          Statements.

     Changes in Internal  Control Over  Financial  Reporting.  There has been no
change to our internal control over financial reporting during the quarter ended
September 30, 2006 that has  materially  affected,  or is  reasonably  likely to
materially affect, our internal control over financial reporting.

                                     - 24 -
                                     <PAGE>


Part II. OTHER INFORMATION

ITEM 1A.       Risk Factors.

     There  have been no  material  changes  in the third  quarter  of 2006 with
respect to our risk factors presented in Item 1A. in our 2005 Annual Report.

ITEM 6. Exhibits.

               31.1           Certification

               31.2           Certification

               32.1           Certification

               32.2           Certification

     We have  retained  a signed  original  of any of the  above  exhibits  that
contains  signatures,  and we will provide such exhibit to the Commission or its
staff upon request. We will also furnish,  without charge, a copy of our Code of
Business Conduct and Ethics, Corporate Governance Guidelines and Audit Committee
Charter, each as adopted by our board of directors,  upon request. Such requests
should be directed to the attention of our Corporate  Secretary at our corporate
offices located at 5430 LBJ Freeway, Suite 1700, Dallas, Texas 75240.


                                     - 25 -
                                     <PAGE>


                                   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.





                                    COMPX INTERNATIONAL INC.
                                    ------------------------
                                         (Registrant)





Date November 1, 2006            By /s/ Darryl R. Halbert
     --------------------            ---------------------------
                                    Darryl R. Halbert
                                    Vice President, Chief Financial Officer
                                    and Controller
                                    (Principal Financial and Accounting Officer)



                                     - 26 -
                                     <PAGE>