<PAGE> 1
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 Quarter Ended September 30, 1995 Commission File number 1-5341
------------------ ------
ELCOR CORPORATION
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 75-1217920
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14643 DALLAS PARKWAY
SUITE 1000, WELLINGTON CENTRE, DALLAS, TEXAS 75240-8871
- -------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 851-0500
--------------
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
As of close of business on November 1, 1995, Registrant had
outstanding 8,730,039 shares of Common Stock, Par Value $1 per Share.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
- ----------------------------
ELCOR CORPORATION
CONSOLIDATED BALANCE SHEET
--------------------------
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
ASSETS 9-30-95 6-30-95
- ------ -------- --------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 2,014 $ 3,731
Trade receivables, less allowance of $331 and $306 31,673 32,910
Inventories -
Finished goods 6,388 6,091
Work-in-process 563 658
Raw materials 4,876 4,952
-------- --------
Total inventories 11,827 11,701
-------- --------
Prepaid expenses and other 1,818 2,931
Deferred income taxes 2,066 2,136
-------- --------
Total current assets 49,398 53,409
-------- --------
PROPERTY, PLANT AND EQUIPMENT, AT COST 129,603 123,469
Less - accumulated depreciation (54,547) (53,923)
-------- --------
Property, plant and equipment, net 75,056 69,546
-------- --------
DEFERRED PREOPERATING COSTS 7,283 5,503
NET ASSETS OF DISCONTINUED OPERATIONS - NONCURRENT 7,175 7,175
OTHER ASSETS 1,514 1,500
-------- --------
$140,426 $137,133
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES
Accounts payable $ 9,687 $ 10,849
Accrued liabilities 12,333 10,548
-------- --------
Total current liabilities 22,020 21,397
-------- --------
LONG-TERM DEBT 17,200 18,400
DEFERRED INCOME TAXES 4,507 3,720
SHAREHOLDERS' EQUITY
Common stock 8,802 8,802
Paid-in-capital 71,635 71,680
Retained earnings 17,456 14,316
-------- --------
97,893 94,798
Less - Treasury stock, at cost, 76,634 and 74,063 shares (1,194) (1,182)
-------- --------
Total shareholders' equity 96,699 93,616
-------- --------
$140,426 $137,133
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 3
ELCOR CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
------------------------------------
(Unaudited, $ in thousands
except per share data)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
9-30-95 9-30-94
-------- --------
<S> <C> <C>
SALES $ 48,528 $ 38,477
-------- --------
COST AND EXPENSES
Cost of sales 35,856 27,569
Selling, general and administrative 6,752 5,929
-------- --------
INCOME FROM OPERATIONS 5,920 4,979
-------- --------
OTHER INCOME (EXPENSE)
Interest and dividend income (expense), net (25) 103
-------- --------
INCOME BEFORE INCOME TAXES 5,895 5,082
Provision for income taxes 2,232 1,926
-------- --------
NET INCOME $ 3,663 $ 3,156
======== ========
INCOME PER COMMON AND COMMON EQUIVALENT SHARE $ .41 $ .35
======== ========
DIVIDENDS PER COMMON SHARE $ .06 $ --
======== ========
AVERAGE COMMON AND COMMON EQUIVALENT SHARES
OUTSTANDING 8,843 8,925
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
ELCOR CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
9-30-95 9-30-94
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 3,663 $ 3,156
Adjustments to reconcile net income
to net cash from operating activities:
Depreciation and amortization 775 962
Deferred income taxes 857 127
Changes in assets and liabilities:
Trade receivables 1,237 5,878
Inventories (126) (537)
Prepaid expenses and other 1,164 (698)
Accounts payable and accrued liabilities 573 (2,483)
-------- --------
Net cash provided by continuing operations 8,143 6,405
-------- --------
Net cash provided by discontinued operations -- 630
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant & equipment (6,286) (4,989)
Deferred preoperating costs (1,780) (681)
Other (14) (101)
-------- --------
Net cash provided by (used for) investing
activities (8,080) (5,771)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Long-term borrowings, net (1,200) --
Dividends on common stock (524) --
Treasury stock transactions and other, net (56) 37
-------- --------
Net cash provided by (used for) financing
activities (1,780) 37
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,717) 1,301
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 3,731 5,919
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,014 $ 7,220
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
ELCOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(Unaudited)
1. The attached condensed consolidated financial statements have been
prepared pursuant to the rules and regulations of the Securities
and Exchange Commission. As a result, certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The company believes
that the disclosures included herein are adequate to make the
information presented not misleading. These condensed consolidated
financial statements should be read in conjunction with the
consolidated financial statements and related notes included in
the Company's 1995 Annual Report on Form 10-K. The unaudited
financial information contained herein has been prepared in
conformity with generally accepted accounting principles on a
consistent basis and does reflect all adjustments which are, in
the opinion of management, necessary for a fair presentation of
the results of operations for the three-month period ended
September 30, 1995, and 1994, but are, however, subject to year-end
audit by the Company's independent auditors. Because of seasonal,
weather-related conditions in some of the Company's market areas,
sales can vary at times, and results of any one quarter should not
necessarily be considered as indicative of results for a full
fiscal year.
2. Net income per common and common equivalent share is computed
based on the average number of common and common equivalent shares
outstanding. Common equivalent shares include outstanding stock
options. There is no material difference between primary and fully
diluted earnings per share.
5
<PAGE> 6
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
During the first quarter ended September 30, 1995, net income increased 16% to
$3,663,000 from $3,156,000 in last year's first quarter. Sales increased 26%
compared to the prior year first quarter. The increase in sales was primarily
attributable to growing demand for, and increased production of premium
laminated fiberglass asphalt shingles in the Roofing Products Group. The
increased income primarily reflects the increased shipments of the Roofing
Products Group products.
Roofing Products
Sales in the Roofing Products Group for the first quarter of fiscal 1996 were
significantly higher compared to last year's first quarter, primarily as a
result of increased production and shipments of the Company's patented new
Enhanced High Definition(R) and Raised Profile(TM) Prestique(R) premium
laminated fiberglass asphalt shingles. In addition, average selling prices
improved slightly over the prior year quarter. Operating profit in the Roofing
Products Group increased in the first quarter of fiscal 1996 compared to the
same period in the prior year primarily as a result of increased sales.
Although sales from existing plants increased, the new plant at Shafter,
California accounted for a significant part of the sales increase. This major
new plant is still in startup operations, but production levels are increasing.
During this startup phase, certain costs are being expensed, thereby creating
an operating loss at the Shafter facility, but other costs from the facility
are being capitalized as deferred preoperating costs. In the first quarter of
fiscal 1996, net costs of $1,331,000 were so capitalized.
Demand is expected to be relatively good in some of the Company's major market
areas during the seasonally slower winter months. However, quarterly earnings
are expected to be reduced by higher operating losses at the new Shafter
facility following the completion of the startup phase until the plant's
operating level comes up to the break-even point in the year ahead.
The Company's roofing products business is cyclical and is affected by some of
the same economic factors that affect the housing industry generally, including
interest rates, the availability of financing and general economic conditions.
However, reroofing and remodeling, which constitute about 80% of industry unit
sales, are generally less severely affected by economic downturns than product
demand for new residential construction.
Industrial Products
Sales in the Industrial Products Group for the first quarter of fiscal 1996
increased 5% and the Group reported higher operating profit compared to the
prior year quarter. Increased sales volume for several of Chromium
Corporation's product lines, including electron beam welded cylinder liners and
large diesel engine cylinder liners for the transportation and stationary power
industries, and coatings of plastic enclosures for the telecommunication,
medical electronics and other electronics industries, together with reduced
operating costs at that subsidiary, accounted for the improvement in operating
results.
Ortloff Engineers Ltd. recorded lower patent licensing income during the
current quarter as compared to the same quarter in the prior year.
6
<PAGE> 7
FINANCIAL CONDITION
The Company's financial condition at September 30, 1995 remains very strong.
Total invested capital was $113,899,000. Long-term debt represents 15% of
total capitalization. At September 30, 1995, $30,518,000 was available under
the Company's $50 million unsecured revolving line of credit. Management is
currently in negotiations with several banks who desire to participate in
expanding the revolving credit facilities to $70 million to provide increased
financial resources for the Company's growth strategies.
In September 1994, the Company's Board of Directors authorized the purchase of
up to $10 million of the Company's common shares from time to time on the open
market to be used for general corporate purposes. As of September 30, 1995,
94,800 shares with a cumulative cost of $1,440,000 had been repurchased under
this program. In September 1995, the Board of Directors reinstated the
Company's quarterly cash dividend at six cents per common share.
Cash generated by operations for the three months ended September 30, 1995 was
$8,143,000. Working capital requirements (excluding cash and cash equivalents)
decreased $2,917,000. The current ratio was 2.2 to 1 at September 30, 1995.
Historically, working capital requirements fluctuate during the year because of
seasonality in some market areas. Generally, working capital requirements and
related borrowings are higher in the spring and summer months, and lower in the
fall and winter months.
The Company used $8,080,000 for investing activities in the first quarter of
fiscal 1996. The majority of these expenditures were for capital expenditures
and related deferred preoperating expenses incurred in connection with the
roofing plant in Shafter, California, which is currently in startup, and the
construction of a new plant at the Company's Ennis, Texas facility to
manufacture nonwoven fiberglass substrate materials and industrial facer
products for the construction industry. This new plant is scheduled to begin
operations in the spring of 1996.
The Company is spending about $80 million in capital expenditures over a
three-year period on these two new facilities. As of September 30, 1995,
cumulative capital expenditures for this expansion program have been
approximately $60 million. The new plants should provide the potential to
significantly increase the Company's sales, earnings and cash flow when
completed and operating at expected levels in the years ahead.
The Company utilized $1,780,000 for financing activities in the first quarter
of fiscal 1996, primarily for repayment of long-term debt and dividends on
common stock.
The Company's operations are subject to extensive federal, state and local laws
and regulations relating to environmental matters. Although the company does
not believe it will be required to expend amounts which will have a material
adverse affect on the Company's consolidated financial position or results of
operations by reason of environmental laws and regulations, such laws and
regulations are frequently changed and could result in significantly increased
cost of compliance. Further, certain of the Company's industrial products
operations utilize hazardous materials in their production process. As a
result, the Company incurs costs for remediation activities at its facilities
from time to time.
7
<PAGE> 8
The Company establishes and maintains reserves for such remediation activities,
when appropriate, in accordance with Statement of Accounting Standard No. 5,
Accounting for Contingencies. Current reserves established for known or
probable remediation activities are not material to the Company's financial
position or results of operation.
Management believes that current cash and cash equivalents, cash flows from
operations and its revolving credit facility should be sufficient during fiscal
1996 and beyond to fund the construction of the two new plants, other capital
expenditures, working capital needs, dividends, stock repurchases and other
cash requirements.
8
<PAGE> 9
PART II. OTHER INFORMATION
ITEM 6: Exhibits and Reports of Form 8-K
- ----------------------------------------------
<TABLE>
<S> <C>
(a) Exhibits:
Exhibit (11): Computation of Income Per Common and Common
Equivalent Share
Exhibit (27): Financial Data Schedule (EDGAR Submission only)
(b) No reports on Form 8-K were filed during the quarter ended
September 30, 1995.
</TABLE>
9
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ELCOR CORPORATION
DATE: November 13, 1995 /s/ Richard J. Rosebery
----------------------------------------
Richard J. Rosebery
Executive Vice President,
Chief Administrative & Financial
Officer, and Treasurer
/s/ Leonard R. Harral
----------------------------------------
Leonard R. Harral
Vice President and Chief
Accounting Officer
10
<PAGE> 11
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
Exhibit (11): Computation of Income Per Common and Common
Equivalent Share
Exhibit (27): Financial Data Schedule (EDGAR Submission only)
11
<PAGE> 1
EXHIBIT (11)
Elcor Corporation and Subsidiaries
Computation of Income Per Common and Common Equivalent Share
(In thousands, except per share amounts)
<TABLE>
1. Three Months Ended September 30, 1995 Three Months Ended
and September 30, 1994 -------------------------------
9-30-95 9-30-94
------- -------
<S> <C> <C>
Net Income $ 3,663 $ 3,156
======= =======
Shares:
Weighted average common shares
outstanding 8,723 8,788
Adjustments:
(a) Assumed issuance of shares purchased
under incentive stock option plan using
the treasury stock method 120 137
-------- -------
Total Common and Common Equivalent Shares 8,843 8,925
======= =======
Income per Common and Common Equivalent Share $ .41 $ .35
======= =======
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10Q FOR QUARTER ENDED SEPTEMBER 30, 1995.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 2,014
<SECURITIES> 0
<RECEIVABLES> 32,044
<ALLOWANCES> 331
<INVENTORY> 11,827
<CURRENT-ASSETS> 49,398
<PP&E> 129,603
<DEPRECIATION> 54,547
<TOTAL-ASSETS> 140,426
<CURRENT-LIABILITIES> 22,020
<BONDS> 17,200
<COMMON> 8,802
0
0
<OTHER-SE> 87,897
<TOTAL-LIABILITY-AND-EQUITY> 140,426
<SALES> 48,528
<TOTAL-REVENUES> 48,528
<CGS> 35,856
<TOTAL-COSTS> 42,608
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25
<INCOME-PRETAX> 5,895
<INCOME-TAX> 2,232
<INCOME-CONTINUING> 3,663
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,663
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
