<PAGE> 1
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 20, 1999
--------------
ELCOR CORPORATION
---------------------------------------------------
(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
-------------
NOT APPLICABLE
--------------
(Former name or former address, if changed since last report)
<PAGE> 2
Item 5. Other Events
On April 20, 1999, 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/or 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 about $125 million in new
investments to expand capacity and improve productivity at existing
plants and to build new plants over a three year period beginning in
fiscal 1999. 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
<PAGE> 3
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.
2
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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 April 20, 1999 of Elcor Corporation.
3
<PAGE> 5
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: April 20, 1999 /s/ Richard J. Rosebery
-------------- -------------------------------------
Richard J. Rosebery
Vice Chairman, Chief Financial and
Administrative Officer, and Treasurer
/s/ Leonard R. Harral
-------------------------------------
Leonard R. Harral
Vice President and Chief
Accounting Officer
4
<PAGE> 6
INDEX TO EXHIBITS
<TABLE>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<CAPTION>
<S> <C>
27.1 Financial Data Schedule
99.1 Press release dated April 20, 1999 of Elcor Corporation.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 1,444
<SECURITIES> 0
<RECEIVABLES> 61,559
<ALLOWANCES> 1,012
<INVENTORY> 30,500
<CURRENT-ASSETS> 102,269
<PP&E> 206,304
<DEPRECIATION> 74,523
<TOTAL-ASSETS> 236,132
<CURRENT-LIABILITIES> 31,899
<BONDS> 57,500
0
0
<COMMON> 13,236
<OTHER-SE> 116,909
<TOTAL-LIABILITY-AND-EQUITY> 236,132
<SALES> 227,802
<TOTAL-REVENUES> 227,802
<CGS> 169,506
<TOTAL-COSTS> 198,488
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,468
<INCOME-PRETAX> 27,846
<INCOME-TAX> 10,527
<INCOME-CONTINUING> 17,319
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (4,340)
<NET-INCOME> 12,979
<EPS-PRIMARY> 1.00
<EPS-DILUTED> .98
</TABLE>
<PAGE> 1
EXHIBIT 99.1
FOR FURTHER INFORMATION: TRADED: NYSE
SYMBOL: ELK
Richard J. Rosebery, Vice Chairman,
Chief Financial and Administrative Officer,
and Treasurer
(972) 851-0510
PRESS RELEASE
FOR IMMEDIATE RELEASE
ELCOR REPORTS RECORD FISCAL 1999
THIRD QUARTER SALES AND EARNINGS
DALLAS, TEXAS, April 20, 1999 .... Elcor Corporation announced today that net
income rose 52% for the third quarter ending March 31, 1999, to $5,115,000, or
$.38 per diluted share, from $3,369,000, or $.25 per diluted share, in the
year-ago quarter. Sales increased 19% to $70.7 million from $59.2 million last
year. Both sales and earnings set new records for any March quarter.
For the nine months ending March 31, 1999, income before a change in accounting
principle rose 48% to $17,319,000, or $1.30 per diluted share, from $11,711,000,
or $.87 per diluted share, last year. Net income for the first nine months was
$12,979,000, or $.98 per diluted share, after a nonrecurring first quarter
charge of $4,340,000, or $.32 per diluted share, for the cumulative effect of a
change in accounting principle to apply AICPA AcSec Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities." Sales increased 18% to $227.8
million from $193.7 million in the first nine months last year, reflecting
strong growth in demand for its Elk Prestique premium laminated asphalt shingles
and its conductive coatings and gaskets for digital wireless cellular phones.
Harold K. Work, Elcor's Chairman, President and Chief Executive Officer, said,
"Sharply higher third quarter results were driven by record March quarter
shipments of our Elk Prestique premium laminated fiberglass asphalt shingles.
Growing homeowner demand for our Elk Prestique laminated shingles, along with
the relatively mild weather during much of the March quarter, sharply boosted
demand in the residential roofing replacement market, which now accounts for
about 83% of total asphalt shingle demand. In order to satisfy continuing strong
growth in demand, all three of Elk's roofing plants continued production at high
levels throughout the winter. During the March 31, 1999 quarter, net income
continued to grow much faster than sales because of the increased level of
production, higher prices for Elk laminated shingles and lower raw material
costs than in the year-ago quarter.
"Elcor's Industrial Products segment's sales were significantly higher than the
record levels in the year-ago March quarter. However, operating profits were
lower primarily as a result of reduced demand for Ortloff Engineers' patent
licensing and engineering consulting services to the petroleum industry, that
felt the impact of sharply lower oil and gas prices. Chromium Corporation's
Conductive Coatings Division (CCD) sales for the March 1999 quarter more than
doubled the year-ago level as a result of strong growth
/more
<PAGE> 2
PRESS RELEASE
Elcor Corporation Quarterly Results
April 20, 1999
Page 2
in demand for its conductive coatings and gaskets, plus the addition of results
from CCD's new Canton, Georgia plant subsequent to its acquisition on January
11, 1999. While the new Canton plant is making good progress in improving
performance, its operating losses reduced Elcor's after-tax earnings by about
$.01 per diluted share for the March quarter," he said.
FINANCIAL POSITION
Elcor's financial position remains strong. First nine months' net cash flows
from operating activities rose 63% to $20.1 million from $12.3 million during
the same period last year; net cash used for investing activities more than
tripled to $24.7 million from $7.4 million, as the company increased the pace of
investments to expand capacity to satisfy the rapidly growing demand for its
products; and net cash from financing activities was $0.8 million, compared with
a $5.8 million reduction during the same period last year. At March 31, 1999,
shareholders' equity was $130.2 million; total capital was $187.7 million;
long-term debt as a percent of total capital was 31%; and the current ratio was
3.2:1.
OUTLOOK
Mr. Work said, "At the present time, we expect 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 to substantially
boost fourth quarter 1999 sales and earnings. 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 fiscal 1998 earnings of
$1.36 per share over the next three fiscal 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, Forms 10Q for the fiscal
1999 quarters ending September 30, 1998 an December 31, 1998, and its Form 8-K
dated April 20, 1999.
- - - - - - - -
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 Canton, Georgia; Cleveland, Ohio; Dallas, Lufkin, and Midland, Texas.
/more
<PAGE> 3
PRESS RELEASE
Elcor Corporation Quarterly Results
April 20, 1999
Page 3
<TABLE>
<CAPTION>
CONDENSED RESULTS OF OPERATIONS
(Unaudited, $ in thousands)
Third Quarter Trailing
Three Months Ended Nine Months Ended Twelve Months Ended
March 31, March 31, March 31,
1999 1998 1999 1998 1999 1998 (a)
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
SALES $ 70,735 $ 59,225 $ 227,802 $ 193,706 $ 302,274 $ 252,170
--------- --------- --------- --------- --------- ---------
COSTS AND EXPENSES:
Cost of sales 53,132 45,225 169,506 147,927 224,206 192,195
Selling, general & administrative 8,898 8,257 28,982 25,446 38,052 33,014
Interest expense, net 464 514 1,468 1,887 2,158 2,776
--------- --------- --------- --------- --------- ---------
Total Costs and Expenses 62,494 53,996 199,956 175,260 264,416 227,985
--------- --------- --------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 8,241 5,229 27,846 18,446 37,858 24,185
Provision for income taxes 3,126 1,860 10,527 6,735 13,926 8,887
--------- --------- --------- --------- --------- ---------
INCOME BEFORE CHANGE IN
ACCOUNTING PRINCIPLE 5,115 3,369 17,319 11,711 23,932 15,298
Cumulative effect of change in
accounting principle (b) 0 0 (4,340) 0 (4,340) 0
--------- --------- --------- --------- --------- ---------
NET INCOME $ 5,115 $ 3,369 $ 12,979 $ 11,711 $ 19,592 $ 15,298
========= ========= ========= ========= ========= =========
INCOME PER COMMON SHARE-BASIC:
Before change in accounting principle $ 0.39 $ 0.25 $ 1.33 $ 0.88 $ 1.83 $ 1.16
Cumulative effect of change in
accounting principle 0.00 0.00 (0.33) 0.00 (0.33) 0.00
--------- --------- --------- --------- --------- ---------
Net Income Per Share-Basic $ 0.39 $ 0.25 $ 1.00 $ 0.88 $ 1.50 $ 1.16
========= ========= ========= ========= ========= =========
INCOME PER COMMON SHARE-DILUTED:
Before change in accounting principle $ 0.38 $ 0.25 $ 1.30 $ 0.87 $ 1.79 $ 1.13
Cumulative effect of change in
accounting principle 0.00 0.00 (0.32) 0.00 (0.32) 0.00
--------- --------- --------- --------- --------- ---------
Net Income Per Share-Diluted $ 0.38 $ 0.25 $ 0.98 $ 0.87 $ 1.47 $ 1.13
========= ========= ========= ========= ========= =========
AVERAGE COMMON SHARES OUTSTANDING
Basic 12,996 13,269 13,038 13,234 13,099 13,224
========= ========= ========= ========= ========= =========
Diluted 13,302 13,544 13,294 13,504 13,359 13,480
========= ========= ========= ========= ========= =========
</TABLE>
(a) Restated for a change in accounting for inventories in fiscal 1998.
(b) Represents cumulative effect of applying AICPA AcSec Statement of Position
98-5, "Reporting on the Costs of Start-Up Activities."
<PAGE> 4
PRESS RELEASE
Elcor Corporation Quarterly Results
April 20, 1999
Page 4
CONDENSED BALANCE SHEET
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
March 31,
ASSETS 1999 1998 (a)
- ------ -------- --------
<S> <C> <C>
Cash and cash equivalents $ 1,444 $ 2,823
Receivables, net 60,547 47,773
Inventories 30,500 33,785
Deferred income taxes 847 2,723
Prepaid expenses and other 8,931 2,816
-------- --------
Total Current Assets 102,269 89,920
Property, plant and equipment, net 131,781 118,454
Other assets 2,082 1,749
-------- --------
Total Assets $236,132 $210,123
======== ========
</TABLE>
<TABLE>
<CAPTION>
March 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1999 1998 (a)
- ------------------------------------ -------- --------
<S> <C> <C>
Accounts payable and accrued liabilities $ 31,899 $ 24,669
Current maturities on long-term debt 0 0
-------- --------
Total Current Liabilities 31,899 24,669
Long-term debt, net 57,500 48,700
Deferred income taxes 16,498 14,920
Shareholders' equity 130,235 121,834
-------- --------
Total Liabilities and Shareholders' Equity $236,132 $210,123
======== ========
</TABLE>
(a) Restated for a change in accounting for inventories in fiscal 1998.
<PAGE> 5
PRESS RELEASE
Elcor Corporation Quarterly Results
April 20, 1999
Page 5
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
For the Nine Months Ended
March 31,
1999 1998
-------- --------
<S> <C> <C>
CASH FLOWS FROM:
OPERATING ACTIVITIES
Net income $ 12,979 $ 11,711
Adjustments to net income
Depreciation and amortization 6,825 8,116
Deferred income taxes 4,340 1,554
Cumulative effect of accounting change 4,340 0
Changes in assets and liabilities:
Trade receivables (3,101) (4,595)
Inventories (1,355) (1,579)
Prepaid expenses and other (7,131) 756
Accounts payable and accrued liabilities 3,157 (3,616)
-------- --------
Net cash from operations 20,054 12,347
-------- --------
INVESTING ACTIVITIES
Additions to property, plant & equipment 22,236) (9,079)
Acquisition of business, net of cash (5,298) 0
Insurance proceeds and other 2,883 1,718
-------- --------
Net cash from investing activities (24,651) (7,361)
-------- --------
FINANCING ACTIVITIES
Long-term borrowings, net 9,500 (3,900)
Dividends on common stock (2,729) (2,385)
Treasury stock transactions and other, net (5,970) 521
-------- --------
Net cash from financing activities 801 (5,764)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,796) (778)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 5,240 3,601
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,444 $ 2,823
======== ========
</TABLE>
