<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) October 19, 1999
ELCOR CORPORATION
----------------------------
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
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
-------------
</TABLE>
NOT APPLICABLE
--------------
(Former name or former address, if changed since last report)
<PAGE> 2
Item 5. Other Events
On October 19, 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 substantially
non-cyclical, but can be affected by weather and 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 $137 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 2000. 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 Cybershield's
conductive coatings 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.
2
<PAGE> 4
10. Each of the company's businesses is actively involved in the
development of new products, processes and services which
are expected to contribute to the company's long-term growth
and earnings. If such development activities are not
successful, or the company cannot provide the requisite
financial and other resources to successfully commercialize
such developments, the growth of future sales and earnings
may be adversely affected.
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, 1999, for further information about risks and uncertainties.
Item 7. Exhibits
27 Financial Data Schedule
99.1 Press release dated October 19, 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: October 19, 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>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
99.1 Press Release dated October 19, 1999 of Elcor Corporation
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,261
<SECURITIES> 0
<RECEIVABLES> 69,549
<ALLOWANCES> 968
<INVENTORY> 23,908
<CURRENT-ASSETS> 103,597
<PP&E> 225,314
<DEPRECIATION> 79,584
<TOTAL-ASSETS> 252,610
<CURRENT-LIABILITIES> 43,586
<BONDS> 44,200
0
0
<COMMON> 19,988
<OTHER-SE> 126,437
<TOTAL-LIABILITY-AND-EQUITY> 252,610
<SALES> 95,789
<TOTAL-REVENUES> 95,789
<CGS> 69,742
<TOTAL-COSTS> 79,254
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 417
<INCOME-PRETAX> 16,118
<INCOME-TAX> 6,109
<INCOME-CONTINUING> 10,009
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,009
<EPS-BASIC> .51
<EPS-DILUTED> .50
</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 2000 FIRST QUARTER SALES AND EARNINGS; ANNOUNCES
ADDITIONAL ERICSSON AND OTHER TELECOM ORDERS; EXPECTS CONTINUING STRONG
GROWTH IN FISCAL 2000 AND BEYOND
DALLAS, TEXAS, October 19, 1999 . . . . Elcor Corporation announced today that,
for its first quarter ending September 30, 1999, earnings, before considering
last year's change in accounting principle, rose 33%, and net income tripled on
a 12% gain in sales. Both sales and earnings 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 and record shipments of our Industrial Products segment's
Cybershield(TM) products for digital wireless cellular phones. Growing demand
for our Elk Prestique products and rapidly accelerating demand for our
Cybershield products are expected to drive strong sales and earnings growth in
fiscal 2000 and beyond."
OPERATING RESULTS
For the first quarter ending September 30, 1999, sales rose 12% to $95.8 million
from $85.9 million last year. Income before last year's change in accounting
principle rose 33% to $10,009,000, or $.50 per diluted share, from $7,526,000,
or $.38 per split-adjusted diluted share, in the year ago quarter. Net income
tripled to $10,009,000, or $.50 per diluted share, from $3,186,000, or $.16 per
split-adjusted diluted share, in the same quarter last year.
In the first quarter ending September 30, 1998, 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 $.22
per split-adjusted 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 $.16 per split-adjusted diluted share.
\more
<PAGE> 2
PRESS RELEASE
Elcor Corporation Quarterly Results
October 19, 1999
Page 2
ROOFING PRODUCTS SEGMENT ACHIEVED RECORD SALES AND OPERATING PROFITS
Elcor's Roofing Products segment achieved record sales and operating profits for
any quarter in its history, despite beginning the first quarter ending September
30, 1999, with substantially lower laminated shingle inventories as a result of
a 24% increase in demand during the preceding nine months. Roofing Products
operating profits rose 21% to $16,277,000 from $13,470,000 in the year-ago
quarter, and sales, which were held down by limited inventory, increased 8% to
$82,939,000 from $76,914,000 last year.
CONSTRUCTION OF NEW LAMINATED SHINGLE PLANT UNDERWAY
Mr. Work said, "Construction of Elk's new $70 million Myerstown, Pennsylvania
premium laminated asphalt shingle plant began during the September quarter and
should be completed next fall with manufacturing operations beginning in the
December quarter of calendar year 2000. The new plant should meet the rapidly
growing demand for Elk laminated shingles in the nation's Eastern and North
Central markets in the second half of fiscal 2001. The new Myerstown plant will
increase our overall laminated shingle capacity by about 38%, enabling Elk to
keep up with the rapid growth in demand."
INDUSTRIAL PRODUCTS SEGMENT REPORTS STRONG GROWTH IN SALES
Industrial Products sales rose 43% to $12,806,000 from $8,939,000 last year.
However, operating profits for the first quarter of fiscal 2000 of $1,529,000
were virtually flat compared to $1,542,000 for the year-ago period. Within this
segment, Cybershield's sales more than doubled, and operating profits rose
substantially from the year-ago quarter. Chromium Corporation's sales and
operating profits were substantially below the strong year-ago levels; however,
operating profits were about break-even before nonrecurring costs associated
with its plant consolidation plan. Ortloff Engineers, the third component within
the Industrial Products segment, made good year-over-year progress in sales and
operating profits.
CYBERSHIELD ANNOUNCES ADDITIONAL ERICSSON AND OTHER TELECOM ORDERS
Richard J. Rosebery, Vice Chairman of Elcor and Chairman of Cybershield, said,
"Our Cybershield subsidiaries have recently received additional production
tooling and prototype tooling orders from Ericsson and significant increases in
production tooling and production orders from other major wireless telecom
manufacturers for shielding digital wireless cellular phones. In fiscal 1999,
Cybershield supplied shielding products for over 20 million digital wireless
cellular phones, and we expect that demand could more than double in fiscal
2000. Our shielding products reduce the emission of electromagnetic and radio
frequency interference given off by microchips and electronic components to
levels below those required by the FCC. Rapidly expanding technology is driving
strong demand for Cybershield products because they provide superior shielding
effectiveness at the higher frequencies used to achieve faster microchip speeds.
\more
<PAGE> 3
PRESS RELEASE
Elcor Corporation Quarterly Results
October 19, 1999
Page 3
"Cybershield's important telecommunications customers also include Nokia,
Motorola, Lucent Technologies, AT&T, NEC, and Denso. Cybershield has earned the
leadership position in the high-growth/high-tech digital wireless cellular phone
market by consistently supplying superior quality products, making deliveries on
time and quickly responding to customers' needs with innovative technical
solutions that frequently enhance performance of their products," he said.
FINANCIAL POSITION STRONG
During the first quarter ending September 30, 1999, strong cash flows from
operations of $30.4 million and $1.9 million in cash funded $12.6 million of
investments in property, plant and equipment; $18.8 million in reductions of
long-term debt and about $1 million in dividends. At September 30, 1999, the
company had $44.2 million of long-term debt, $146.4 million of shareholders'
equity and $190.6 million of total capital. Long-term debt, as a percent of
total capital, declined to 23% from 26% last year.
OUTLOOK
Mr. Work said, "Presently, we look for growing demand for our patented Enhanced
High Definition(R) and Raised Profile(TM) Elk Prestique premium laminated
fiberglass asphalt shingles and for our Cybershield digital cellular phone
products to substantially boost fiscal 2000 sales and earnings. Once again, we
expect these gains to be characterized by higher sales and earnings in our
seasonally stronger first and fourth quarters. Looking ahead to the longer term,
we believe that the investments we have made and are continuing to make provide
Elcor with the potential to achieve high growth rates in both sales and earnings
in the years ahead."
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. The statements that are not historical facts are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements usually are accompanied by words
such as "outlook," "believe," "estimate," "potential," "project," "expect,"
"anticipate," "plan," "predict," "could," "should," "may," or similar words that
convey the uncertainty of future events or outcomes. These statements are based
on judgments the company believes are reasonable; however, 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, 1999, and its Form 8-K dated October 19, 1999.
- - - - - -
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<PAGE> 4
PRESS RELEASE
Elcor Corporation Quarterly Results
October 19, 1999
Page 4
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 currently are located in Tuscaloosa,
Alabama; Shafter, California; Dallas and Ennis, Texas; and a new facility is
under construction in Myerstown, Pennsylvania. Its industrial products
facilities are located in Canton, Georgia; Cleveland, Ohio; Dallas, Lufkin, and
Midland, Texas.
<PAGE> 5
PRESS RELEASE
Elcor Corporation Quarterly Results
October 19, 1999
Page 5
CONDENSED RESULTS OF OPERATIONS
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
First Quarter Trailing
Three Months Ended Twelve Months Ended
September 30, September 30,
1999 1998 (a) 1999 1998 (a)
----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
SALES $ 95,789 $ 85,868 $ 327,795 $ 280,530
----------- ------------ ------------- -------------
COSTS AND EXPENSES:
Cost of sales 69,742 63,063 243,349 210,289
Selling, general & administrative 9,512 10,272 38,939 35,983
Interest expense, net 417 559 1,833 2,377
----------- ------------ ------------- -------------
Total Costs and Expenses 79,671 73,894 284,121 248,649
----------- ------------ ------------- -------------
INCOME BEFORE INCOME TAXES 16,118 11,974 43,674 31,881
Provision for income taxes 6,109 4,448 15,908 11,425
----------- ------------ ------------- -------------
INCOME BEFORE CHANGE IN
ACCOUNTING PRINCIPLE 10,009 7,526 27,766 20,456
Cumulative effect of change in
accounting principle (b) 0 (4,340) 0 (4,340)
----------- ------------ ------------- -------------
NET INCOME $ 10,009 $ 3,186 $ 27,766 $ 16,116
=========== ============ ============= =============
INCOME PER COMMON SHARE-BASIC:
Before change in accounting principle $ 0.51 $ 0.38 $ 1.42 $ 1.03
Cumulative effect of change in
accounting principle 0.00 (0.22) 0.00 (0.22)
----------- ------------ ------------- -------------
Net Income Per Share-Basic $ 0.51 $ 0.16 $ 1.42 $ 0.81
=========== ============ ============= =============
INCOME PER COMMON SHARE-DILUTED:
Before change in accounting principle $ 0.50 $ 0.38 $ 1.39 $ 1.01
Cumulative effect of change in
accounting principle 0.00 (0.22) 0.00 (0.21)
----------- ------------ ------------- -------------
Net Income Per Share-Diluted $ 0.50 $ 0.16 $ 1.39 $ 0.80
=========== ============ ============= =============
AVERAGE COMMON SHARES OUTSTANDING
Basic 19,528 19,691 19,506 19,839
=========== ============ ============= =============
Diluted 19,982 20,000 19,960 20,228
=========== ============ ============= =============
</TABLE>
(a) Adjusted for a three-for-two stock split in August 1999.
(b) Represents cumulative effect of applying AICPA AcSec Statement of Position
98-5, "Reporting on the Costs of Start-Up Activities."
<PAGE> 6
PRESS RELEASE
Elcor Corporation Quarterly Results
October 19, 1999
Page 6
CONDENSED BALANCE SHEET
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
September 30,
ASSETS 1999 1998
-------- --------
<S> <C> <C>
Cash and cash equivalents $ 2,261 $ 3,210
Receivables, net 68,581 65,567
Inventories 23,908 22,471
Deferred income taxes 2,274 2,153
Prepaid expenses and other 6,573 1,361
-------- --------
Total Current Assets 103,597 94,762
Property, plant and equipment, net 145,730 116,866
Other assets 3,283 1,909
-------- --------
Total Assets $252,610 $213,537
======== ========
<CAPTION>
September 30,
LIABILITIES AND SHAREHOLDERS' EQUITY 1999 1998
-------- --------
<S> <C> <C>
Accounts payable and accrued liabilities $ 43,586 $ 32,314
Current maturities on long-term debt 0 0
-------- --------
Total Current Liabilities 43,586 32,314
Long-term debt, net 44,200 43,300
Deferred income taxes 18,399 14,044
Shareholders' equity 146,425 123,879
-------- --------
Total Liabilities and Shareholders' Equity $252,610 $213,537
======== ========
</TABLE>
<PAGE> 7
PRESS RELEASE
Elcor Corporation Quarterly Results
October 19, 1999
Page 7
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
For the Three Months Ended
September 30,
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOWS FROM:
OPERATING ACTIVITIES
Net income $ 10,009 $ 3,186
Adjustments to net income
Depreciation and amortization 2,607 2,230
Deferred income taxes 190 580
Cumulative effect of accounting change 0 4,340
Changes in assets and liabilities:
Trade receivables 4,285 (9,117)
Inventories 1,862 6,351
Prepaid expenses and other 1,779 428
Accounts payable and accrued liabilities 9,702 5,107
-------- --------
Net cash from operations 30,434 13,105
-------- --------
INVESTING ACTIVITIES
Additions to property, plant & equipment (12,610) (5,037)
Other (114) (134)
-------- --------
Net cash from investing activities (12,724) (5,171)
-------- --------
FINANCING ACTIVITIES
Long-term repayments, net (18,800) (4,700)
Dividends on common stock (977) (909)
Treasury stock transactions and other, net 142 (4,355)
-------- --------
Net cash from financing activities (19,635) (9,964)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,925) (2,030)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 4,186 5,240
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,261 $ 3,210
======== ========
</TABLE>
