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SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported) October 16, 1998
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ELCOR CORPORATION
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(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 1-5341 75-1217920
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(State or other jurisdiction of Commission File number (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 (972) 851-0500
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NOT APPLICABLE
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(Former name or former address, if changed since last report)
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Item 5. Other Events
On October 16, 1998, the company issued a press release containing
"forward-looking statements" about its prospects for the future. A copy of the
press release is attached hereto as Exhibit 99.1 and incorporated herein by
reference.
The above press release contains "forward-looking statements" about its
prospects for the future, and from time to time the company may make others.
Such statements are subject to certain risks and uncertainties which could cause
actual results to differ materially from those projected. Such risks and
uncertainties include, but are not limited to, the following:
1. The company's roofing products business is cyclical and is
affected by weather and some of the same economic factors that
affect the housing and home improvement industries generally,
including interest rates, the availability of financing and
general economic conditions. In addition, the asphalt roofing
products manufacturing business is highly competitive. Actions
of competitors, including changes in pricing, or slowing
demand for asphalt roofing products due to general or industry
economic conditions or the amount of inclement weather could
result in decreased demand for the company's products, lower
prices received or reduced utilization of plant facilities.
Further, changes in building codes and other standards from
time to time can cause changes in demand, or increases in
costs that may not be passed through to customers.
2. In the asphalt roofing products business, the significant raw
materials are ceramic coated granules, asphalt, glass fibers,
resins and mineral filler. Increased costs of raw materials
can result in reduced margins, as can higher trucking and rail
costs. Historically, the company has been able to pass some of
the higher raw material and transportation costs through to
the customer. Should the company be unable to recover higher
raw material and transportation costs from price increases of
its products, operating results could be lower than projected.
3. During fiscal 1997, the company completed the construction of
a plant at the company's Ennis, Texas facility to manufacture
nonwoven fiberglass roofing mats and other mats for a variety
of industrial uses. The company also expects to make up to
$100 million in new investments to expand capacity and improve
productivity at existing plants and to build new plants over
the next three years. Progress in achieving anticipated
operating efficiencies and financial results is difficult to
predict for new plant facilities. If such progress is slower
than anticipated, if substantial cost overruns occur in
building new plants, or if demand for products produced at new
plants does not meet current expectations, operating results
could be adversely affected.
1
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4. Certain facilities of the company's industrial products
subsidiaries must utilize hazardous materials in their
production process. As a result, the company could incur costs
for remediation activities at its facilities or off-site, and
other related exposures from time to time in excess of
established reserves for such activities.
5. The company's litigation, including its patent infringement
suits against GAF Building Materials Corporation and certain
affiliates, is subject to inherent and case-specific
uncertainty. The outcome of such litigation depends on
numerous interrelated factors, many of which cannot be
predicted.
6. Even with fully developed action and contingency plans for
Year 2000 readiness, it is possible that the company will not
achieve full internal readiness. Further, the company's
business may be adversely affected by external Year 2000
disruption that the company is not in position to control,
including but not limited to potential disruptions in power
and other energy supplies, telecommunications or other
infrastructure, potential disruptions in transportation and
the supply of raw materials, and potential disruptions in
financial and banking systems. Year 2000 problems therefore
could result in unanticipated expenses or liabilities,
production or disruption delays or other adverse effects on
the company.
7. Although the company currently anticipates that most of its
needs for new capital in the near future will be met with
internally generated funds, significant increases in interest
rates could substantially affect its borrowing costs under its
existing loan facility, or its cost of alternative sources of
capital.
8. Each of the company's businesses, especially its Conductive
Coatings Division's business, is subject to the risks of
technological changes that could affect the demand for or the
relative cost of the company's products and services, or the
method and profitability of the method of distribution or
delivery of such products and services. In addition, the
company's businesses each could suffer significant setbacks in
revenues and operating income if it lost one or more of its
largest customers.
9. Although the company insures itself against physical loss to
its manufacturing facilities, including business interruption
losses, natural or other disasters and accidents, including
but not limited to fire, earthquake, damaging winds and
explosions, operating results could be adversely affected if
any of its manufacturing facilities became inoperable for an
extended period of time due to such events.
Parties are cautioned not to rely on any such forward-looking beliefs or
judgments in making investment decisions.
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Reference is made to the company's Annual Report on Form 10-K for the year ended
June 30, 1998, for further information about risks and uncertainties.
Item 7. Exhibits
99.1 Press release dated October 16, 1998 of Elcor Corporation.
3
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SIGNATURES
Pursuant to the requirement 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: October 16, 1998 /s/ Richard J. Rosebery
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Richard J. Rosebery
Vice Chairman, Chief
Financial and Administrative Officer,
and Treasurer
/s/ Leonard R. Harral
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Leonard R. Harral
Vice President and Chief
Accounting Officer
4
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Index to Exhibits
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<CAPTION>
Exhibit
Number Description
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<S> <C>
99.1 Press release dated October 16, 1998 of Elcor Corporation.
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EXHIBIT 99.1
FOR FURTHER INFORMATION: TRADED: NYSE
SYMBOL: ELK
Richard J. Rosebery, Vice Chairman
and Chief Financial Officer
(972) 851-0510
PRESS RELEASE
FOR IMMEDIATE RELEASE
ELCOR REPORTS SHARPLY HIGHER FISCAL 1999
FIRST QUARTER SALES AND EARNINGS;
EXPECTS CONTINUING STRONG GROWTH IN FISCAL 1999 AND BEYOND
DALLAS, TEXAS, October 16, 1998 . . . . Elcor Corporation announced today that
for its first quarter ending September 30, 1998, earnings before a change in
accounting principle rose 40% on a 17% gain in sales. Both sales and earnings
before the accounting change set new records for any quarter.
Harold K. Work, Elcor's Chairman, President and Chief Executive Officer, said,
"Sharply higher first quarter results were spearheaded by record shipments of
our Roofing Products segment's Elk Prestique(R) premium laminated fiberglass
asphalt shingles. Growing demand for Elk Prestique products and rapidly
accelerating demand for our Conductive Coatings Division's products used in
digital wireless cellular phones are expected to drive strong sales and earnings
growth in fiscal 1999 and beyond."
OPERATING RESULTS
For the first quarter ending September 30, 1998, sales rose 17% to $85.9 million
from $73.5 million last year. Income before a change in accounting principle
rose 40% to $7,526,000, or $.56 per diluted share, from $5,394,000, or $.40 per
diluted share, in the year-ago quarter.
/more
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PRESS RELEASE
Elcor Corporation Quarterly Results
October 16, 1998
Add One
In the first quarter of fiscal 1999, the company adopted Statement of Position
98-5, "Reporting on the Costs of Start-up Activities," issued by the Accounting
Standards Executive Committee of the American Institute of Certified Public
Accountants, which resulted in a $4,340,000 charge, net of tax, or $.32 per
diluted share, for the cumulative effect of this accounting change. This
one-time cumulative charge reduced net income for the first quarter of fiscal
1999 to $3,186,000, or $.24 per diluted share, from $5,394,000, or $.40 per
diluted share, in the same quarter last year. In addition, the prior year
earnings per share have been adjusted for a three-for-two stock split in
November 1997.
FINANCIAL POSITION
During the first quarter ending September 30, 1998, strong cash flows from
operations of $13.1 million and $2 million in cash funded $5.0 million of
investments in property, plant and equipment; $5.3 million of net treasury stock
repurchases and dividends; and a $4.7 million reduction in long-term debt.
During this year's first quarter, Elcor's Board of Directors boosted the regular
quarterly cash dividend rate by 17% to $.07 per share and authorized an
additional $10 million stock repurchase program. At September 30, 1998, the
company had $43 million in long-term debt, $124 million of shareholders' equity
and $167 million of total capital. Long-term debt, as a percent of total
capital, declined to 26% from 28% last year.
/more
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PRESS RELEASE
Elcor Corporation Quarterly Results
October 16, 1998
Add Two
OUTLOOK
Mr. Work said, "At the present time, we expect that growing demand for Elk's
patented Enhanced High Definition(R) and Raised Profile(TM) Prestique premium
laminated fiberglass asphalt shingles and for our Industrial Products should
substantially boost fiscal 1999 sales and earnings. We expect fiscal year
earnings gains to continue to reflect greater growth in our seasonally stronger
first and fourth fiscal quarters. The third expansion of our conductive coatings
facilities will be completed during this year's second quarter as we ramp up
production of wireless digital cellular phone components to meet soaring demand.
Looking ahead to the longer term, we believe the investments we have made
already and are continuing to make provide Elcor with the potential to more than
double earnings over the next three years and to continue strong growth in the
new millennium," he concluded.
SAFE HARBOR PROVISIONS
In accordance with the safe harbor provisions of the securities law regarding
forward-looking statements, except for the historical information contained
herein, the above discussion contains forward-looking statements that involve
risks and uncertainties. Elcor's actual results could differ materially from
those discussed here. Factors that could cause or contribute to such differences
could include, but are not limited to, changes in demand, prices, raw material
costs, transportation costs, changes in economic conditions of the various
markets the company serves, changes in the amount and severity of inclement
weather, as well as the other risks detailed herein and in the company's reports
filed with the Securities and Exchange Commission, including, but not limited to
its Form 10-K for the fiscal year ended June 30, 1998 and its Form 8-K dated
October 16, 1998.
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Elcor, through its subsidiaries, manufactures roofing products and industrial
products. Each of Elcor's principal operating subsidiaries is the leader or one
of the leaders within its particular market. Its common stock is listed on the
New York Stock Exchange (ticker symbol: ELK).
Elcor's roofing products facilities are located in Tuscaloosa, Alabama; Shafter,
California; Dallas and Ennis, Texas. Its industrial products facilities are
located in Cleveland, Ohio; Dallas, Lufkin, and Midland, Texas.
/more
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PRESS RELEASE
Elcor Corporation Quarterly Results
October 16, 1998
Add Three
CONDENSED RESULTS OF OPERATIONS
(Unaudited, $ in thousands)
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<CAPTION>
First Quarter Trailing
Three Months Ended Twelve Months Ended
September 30, September 30,
1998 1997 (a) 1998 1997 (b)
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<S> <C> <C> <C> <C>
SALES $ 85,868 $ 73,516 $ 280,530 $ 239,736
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COSTS AND EXPENSES:
Cost of sales 63,063 55,401 210,289 184,258
Selling, general & administrative 10,272 8,805 35,983 31,662
Interest expense, net 559 759 2,377 1,734
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Total Costs and Expenses 73,894 64,965 248,649 217,654
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INCOME BEFORE INCOME TAXES 11,974 8,551 31,881 22,082
Provision for income taxes 4,448 3,157 11,425 8,180
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INCOME BEFORE CHANGE IN
ACCOUNTING PRINCIPLE 7,526 5,394 20,456 13,902
Cumulative effect of change in
accounting principle (c) (4,340) 0 (4,340) 0
--------- --------- --------- ---------
NET INCOME $ 3,186 $ 5,394 $ 16,116 $ 13,902
========= ========= ========= =========
INCOME PER COMMON SHARE-BASIC:
Before change in accounting principle $ 0.57 $ 0.41 $ 1.55 $ 1.05
Cumulative effect of change in
accounting principle (0.33) 0.00 (0.33) 0.00
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Net Income Per Share-Basic $ 0.24 $ 0.41 $ 1.22 $ 1.05
========= ========= ========= =========
INCOME PER COMMON SHARE-DILUTED:
Before change in accounting principle $ 0.56 $ 0.40 $ 1.52 $ 1.04
Cumulative effect of change in
accounting principle (0.32) 0.00 (0.32) 0.00
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Net Income Per Share-Diluted $ 0.24 $ 0.40 $ 1.20 $ 1.04
========= ========= ========= =========
AVERAGE COMMON SHARES OUTSTANDING
Basic 13,127 13,202 13,226 13,192
========= ========= ========= =========
Diluted 13,333 13,444 13,485 13,370
========= ========= ========= =========
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(a) Adjusted for a three-for-two stock split in November 1997.
(b) Restated for a change in accounting for inventories in fiscal 1998.
(c) Represents cumulative effect of applying AICPA AcSec Statement of Position
98-5, "Reporting on the Costs of Start-Up Activities."
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PRESS RELEASE
Elcor Corporation Quarterly Results
October 16, 1998
Add Four
CONDENSED BALANCE SHEET
(Unaudited, $ in thousands)
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<CAPTION>
September 30,
ASSETS 1998 1997 (a)
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Cash and cash equivalents $ 3,210 $ 3,242
Receivables, net 65,567 50,826
Inventories 22,471 26,688
Deferred income taxes 2,153 2,860
Prepaid expenses and other 1,361 1,455
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Total Current Assets 94,762 85,071
Property, plant and equipment, net 116,866 116,582
Other assets 1,909 3,512
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Total Assets $213,537 $205,165
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<CAPTION>
September 30,
LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997 (a)
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<S> <C> <C>
Accounts payable and accrued liabilities $ 32,314 $ 28,683
Current maturities on long-term debt 0 0
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Total Current Liabilities 32,314 28,683
Long-term debt, net 43,300 45,500
Deferred income taxes 14,044 14,276
Shareholders' equity 123,879 116,706
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Total Liabilities and Shareholders' Equity $213,537 $205,165
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(a) Restated for a change in accounting for inventories in fiscal 1998.
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PRESS RELEASE
Elcor Corporation Quarterly Results
October 16, 1998
Add Five
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited, $ in thousands)
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<CAPTION>
For the Three Months Ended
September 30,
1998 1997
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CASH FLOWS FROM:
OPERATING ACTIVITIES
Net income $ 3,186 $ 5,394
Adjustments to net income
Depreciation and amortization 2,230 2,683
Deferred income taxes 580 773
Cumulative effect of accounting change 4,340 0
Changes in assets and liabilities:
Trade receivables (9,117) (7,648)
Inventories 6,351 5,518
Prepaid expenses and other 428 2,117
Accounts payable and accrued liabilities 5,107 398
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Net cash from operations 13,105 9,235
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INVESTING ACTIVITIES
Additions to property, plant & equipment (5,037) (1,791)
Other (134) (29)
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Net cash from investing activities (5,171) (1,820)
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FINANCING ACTIVITIES
Long-term borrowings, net (4,700) (7,100)
Dividends on common stock (909) (794)
Treasury stock transactions and other, net (4,355) 120
-------- --------
Net cash from financing activities (9,964) (7,774)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,030) (359)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 5,240 3,601
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,210 $ 3,242
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