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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) August 18, 1998
ELCOR CORPORATION
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(Exact name of Registrant as specified in its charter)
DELAWARE 1-5341 75-1217920
- ------------------------------- ---------------------- ----------------
(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 August 18, 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.
2
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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.
Parties are cautioned not to rely on any such forward-looking beliefs or
judgments in making investment decisions.
Reference is made to the company's Annual Report on Form 10-K for the year ended
June 30, 1997, and its Quarterly Reports on Form 10-Q for the quarters ended
9/30/97, 12/31/97 and 3/31/98 for further information about risks and
uncertainties.
Item 7. Exhibits
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99.1 Press release dated August 18, 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: August 18, 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
EXHIBIT
NUMBER EXHIBIT
- ------- -------
99.1 Press Release dated August 18, 1998 of Elcor Corporation
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EXHIBIT 99.1
FOR FURTHER INFORMATION: TRADED: NYSE
SYMBOL: ELK
Richard J. Rosebery, Executive Vice President
and Chief Financial Officer
(972) 851-0510
PRESS RELEASE
FOR IMMEDIATE RELEASE
ELCOR REPORTS SHARPLY HIGHER SALES AND EARNINGS FOR ITS
FOURTH QUARTER AND FISCAL 1998; BOTH PERIODS ARE RECORDS;
EXPECTS CONTINUING STRONG GROWTH IN FISCAL 1999 AND BEYOND
DALLAS, TEXAS, August 18, 1998 . . . . Elcor Corporation today reported record
results for both the fourth quarter and fiscal year ending June 30, 1998. Fourth
quarter earnings rose 84% on a 27% gain in sales, while fiscal year earnings
rose 49% on a 16% gain in sales from the same periods in fiscal 1997.
Harold K. Work, Chairman, President and Chief Executive Officer, said, "Sharply
higher fourth quarter and fiscal year results were spearheaded by record
shipments of our Roofing Products segment's Elk Prestique(R) premium laminated
fiberglass asphalt shingles and record sales and earnings for our Industrial
Products segment. Growing demand for Elk Prestique products and nonwoven
fiberglass mats, along with rapidly accelerating demand for our Conductive
Coatings Division's products used in digital wireless cellular phones, should
contribute to strong sales and earnings growth in fiscal 1999."
/more
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PRESS RELEASE
Elcor Corporation Quarterly Results
August 18, 1998
Add One
OPERATING RESULTS
For the fourth quarter ending June 30, 1998, sales rose 27% to $74,472,000 from
$58,464,000 last year. Net income rose 84% to $6,613,000, or $.49 per diluted
share, from $3,587,000, or $.27 per diluted share, in the year-ago quarter.
For the fiscal year ending June 30, 1998, sales rose 16% to $268,178,000 from
$230,756,000 in fiscal 1997. Net income rose 49% to $18,324,000, or $1.36 per
diluted share, from $12,276,000, or $.92 per diluted share, last year.
In fiscal 1998, the company changed its method of accounting for inventories
from the last-in, first-out (LIFO) method to first-in, first-out (FIFO) method.
In accordance with Accounting Principle Board Opinion No. 20, prior year fourth
quarter and fiscal year results and inventories have been restated to reflect
this accounting change which reduced net income by $726,000, or $.06 per diluted
share, in the fourth quarter of fiscal 1997. In addition, prior years' earnings
per share have been adjusted for a 3-for-2 stock split in November 1997.
FINANCIAL POSITION
During fiscal 1998, strong cash flows from operations funded a $10.1 million
expansion in working capital; $12.6 million of net investments; increased
dividends and a stock buy back plan; plus a $4.6 million reduction in long-term
debt. At June 30, 1998, the company had $48 million in long-term debt, $126
million of shareholders' equity, and $174 million of total capital. Long-term
/more
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PRESS RELEASE
Elcor Corporation Quarterly Results
August 18, 1998
Add Two
debt as a percent of total capital declined to 28% from 32%, and the current
ratio improved to 3.5:1 from 3.0:1 last year.
OUTLOOK
Mr. Work said, "In the last three years, we have brought into production two
major new roofing manufacturing facilities costing over $100 million to provide
the capabilities to substantially increase sales and earnings in the years
ahead. In addition, we are planning to invest up to $100 million over the next
three years to expand capacity and improve productivity at existing plants and
to build new plants in both our Roofing Products and Industrial Products
segments to keep pace with rapidly growing demand in markets where we have
leadership positions. These present and future investments will also support the
introduction of new products and services which provide superior value for our
customers and earn premium pricing versus the competition.
"Presently, we look for growing demand for our patented Enhanced High Definition
and Raised Profile Prestique premium laminated fiberglass asphalt shingles and
for our industrial products to substantially boost fiscal 1999 sales and
earnings. We expect these gains to be characterized by greater growth in our
seasonally stronger first and fourth quarters. Looking ahead to the longer term,
we believe the investments we have made 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," Work concluded.
/more
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PRESS RELEASE
Elcor Corporation Quarterly Results
August 18, 1998
Add Three
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 8-K dated August 18, 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
August 18, 1998
Add Four
CONDENSED RESULTS OF OPERATIONS (a)
($ in thousands)
<TABLE>
<CAPTION>
Unaudited Audited
Three Months Ended Fiscal Year Ended
June 30, June 30,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
SALES $ 74,472 $ 58,464 $268,178 $230,756
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of sales 54,700 44,268 202,627 179,381
Selling, general & administrative 9,516 7,783 34,962 30,969
Interest expense and other, net 244 674 2,131 921
-------- -------- -------- --------
Total Costs and Expenses 64,460 52,725 239,720 211,271
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 10,012 5,739 28,458 19,485
Provision for income taxes 3,399 2,152 10,134 7,209
-------- -------- -------- --------
NET INCOME $ 6,613 $ 3,587 $ 18,324 $ 12,276
======== ======== ======== ========
NET INCOME PER SHARE (b)
Basic $ 0.50 $ 0.27 $ 1.38 $ 0.93
======== ======== ======== ========
Diluted $ 0.49 $ 0.27 $ 1.36 $ 0.92
======== ======== ======== ========
AVERAGE COMMON SHARES OUTSTANDING (b)
Basic 13,281 13,192 13,245 13,175
======== ======== ======== ========
Diluted 13,553 13,408 13,513 13,306
======== ======== ======== ========
</TABLE>
(a) Appropriate fiscal 1997 amounts have been restated for a change in
accounting for inventories adopted in fiscal 1998.
(b) References to number of shares and per share information have been
adjusted for a three-for-two stock split in November 1997.
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PRESS RELEASE
Elcor Corporation Quarterly Results
August 18, 1998
Add Five
CONDENSED BALANCE SHEETS (a)
(Audited, $ in thousands)
<TABLE>
<CAPTION>
June 30,
ASSETS 1998 1997
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<S> <C> <C>
Cash and cash equivalents $ 5,240 $ 3,601
Receivables, net 56,450 43,178
Inventories 28,822 32,206
Deferred income taxes 2,228 2,935
Prepaid expenses and other 1,789 3,572
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Total Current Assets 94,529 85,492
Property, plant and equipment, net 120,732 117,467
Other assets 1,783 3,490
-------- --------
Total Assets $217,044 $206,449
======== ========
</TABLE>
<TABLE>
<CAPTION>
June 30,
LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997
-------- --------
<S> <C> <C>
Accounts payable & accrued liabilities $ 27,207 $ 28,285
Current maturities on long-term debt 0 0
-------- --------
Total Current Liabilities 27,207 28,285
Long-term debt 48,000 52,600
Deferred income taxes 15,881 13,578
Shareholders' equity 125,956 111,986
-------- --------
Total Liabilities and Shareholders' Equity $217,044 $206,449
======== ========
</TABLE>
(a) Appropriate fiscal 1997 amounts have been restated for a change in
accounting for inventories adopted in fiscal 1998.
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PRESS RELEASE
Elcor Corporation Quarterly Results
August 18, 1998
Add Six
CONDENSED STATEMENT OF CASH FLOWS(a)
(Audited, $ in thousands)
<TABLE>
<CAPTION>
Fiscal Year Ended
June 30,
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM:
OPERATING ACTIVITIES
Net income $ 18,324 $ 12,276
Adjustment to net income
Depreciation and amortization 11,056 8,664
Deferred income taxes 3,010 5,042
Changes in assets and liabilities:
Trade receivables (13,272) (696)
Inventories 3,384 (5,527)
Prepaid expenses and other 1,783 (1,616)
Accounts payable and accrued liabilities (1,078) (309)
-------- --------
Net cash from operating activities 23,207 17,834
-------- --------
INVESTING ACTIVITIES
Additions to property, plant & equipment (14,288) (15,896)
Other 1,674 739
-------- --------
Net cash from investing activities (12,614) (15,157)
-------- --------
FINANCING ACTIVITIES
Long-term borrowings (4,600) (400)
Dividends on common stock (3,175) (2,462)
Treasury stock transactions and other, net (1,179) 42
-------- --------
Net cash from financing activities (8,954) (2,820)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,639 (143)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 3,601 3,744
-------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 5,240 $ 3,601
======== ========
</TABLE>
(a) Appropriate fiscal 1997 amounts have been restated for a change in
accounting for inventories adopted in fiscal 1998.
