<PAGE> 1
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) January 21, 1999
ELCOR CORPORATION
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(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 1-5341 75-1217920
- ------------------------------- ---------------------- -------------------
<S> <C> <C>
(State or other jurisdiction of Commission File number (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
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)
<PAGE> 2
Item 5. Other Events
On January 21, 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 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
<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 January 21, 1999 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: January 21, 1999 /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
<PAGE> 6
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
99.1 Press release dated January 21, 1999 of Elcor Corporation.
</TABLE>
<PAGE> 1
EXHIBIT 99.1
Press Release dated January 21, 1999
of Elcor Corporation.
<PAGE> 2
[ELCOR CORPORATION LETTERHEAD]
- --------------------------------------------------------------------------------
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
SECOND QUARTER SALES AND EARNINGS
DALLAS, TEXAS, January 21, 1999 ......Elcor Corporation announced today that net
income rose 59% for the second quarter ending December 31, 1998, to $4,678,000,
or $.35 per diluted share, from $2,948,000, or $.22 per diluted share, in the
year-ago quarter. Sales increased 17% to $71.2 million from $61 million last
year. Both sales and earnings set new records for any December quarter.
For the six months ending December 31, 1998, income before a change in
accounting principle rose 46% to $12,204,000, or $.92 per diluted share, from
$8,342,000, or $.62 per diluted share, last year. Net income for the first six
months of $7,864,000, or $.59 per diluted share, includes a nonrecurring first
quarter charge of $4,340,000, or $.33 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
17% to $157.1 million from $134.5 million in the first half last year.
Harold K. Work, Elcor's Chairman, President and Chief Executive Officer, said,
"Sharply higher second quarter results were driven by record December quarter
shipments of our Elk Prestique(R) premium laminated fiberglass asphalt shingles.
Increasing homeowner preference for our Elk Prestique laminated shingles, along
with relatively mild weather during much of the December quarter, sharply
boosted demand in the residential roofing replacement market. New construction
also continued at a strong level. In order to satisfy continuing strong growth
in demand, all three of Elk's roofing plants plan to continue production at high
levels throughout the winter.
"Elcor's Industrial Products segment's results trailed the record levels in the
year-ago December quarter, primarily affected by reduced demand for our Ortloff
Engineers' patent licensing and engineering consulting services to the petroleum
industry, which were impacted by sharply lower oil and gas prices. During the
quarter, Chromium Corporation's Conductive Coatings Division (CCD) completed its
third major expansion of facilities to keep pace with accelerating demand for
its Compushield(R) coatings and formed-in-place dispense conductive gaskets for
components used in digital wireless cellular phones and other electronic
products. The prospects for sharply accelerating demand in this business led us
to create a new wholly owned Elcor subsidiary, CCD Acquisition Corporation
(CCDAC). Earlier this month,
/more
<PAGE> 3
PRESS RELEASE
Elcor Corporation
January 21, 1999
Page 2
CCDAC acquired all of the outstanding shares of YDK America, Inc. (YDKA), a
leading supplier to the computer industry of plastic enclosures and components
having electroless conductive coatings. CCD and YDKA will be combined to provide
a broad range of services to customers in current and emerging markets. We're
making significant capital investments in the conductive coatings business,
which demonstrates our commitment to keep ahead of sharply accelerating demand
for digital wireless cellular phones and other high-tech, high-growth electronic
applications," he said.
FINANCIAL POSITION
Elcor's financial position remains strong. First-half net cash flows from
operating activities of $28.5 million fully covered the $9.1 million spent in
investing activities and permitted a $14.5 million reduction in long-term debt
from $48 million at June 30, 1998 to $33.5 million at December 31, 1998, the low
point in our working capital cycle. At December 31, 1998, shareholders' equity
was $126 million; total capital was $159.5 million; long-term debt as a percent
of total capital was 21%; and the current ratio was 3:1.
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
also substantially boost second half fiscal 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 and its Form 8-K dated
January 21, 1999.
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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 Canton, Georgia; Cleveland, Ohio; Dallas, Lufkin, and Midland, Texas.
/more
<PAGE> 4
PRESS RELEASE
Elcor Corporation Quarterly Results
January 21, 1999
Page 3
CONDENSED RESULTS OF OPERATIONS
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
Second Quarter Trailing
Three Months Ended Six Months Ended Twelve Months Ended
December 31, December 31, December 31,
1998 1997 1998 1997 1998 1997(a)
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<S> <C> <C> <C> <C> <C> <C>
SALES $ 71,199 $ 60,965 $ 157,067 $ 134,481 $ 290,764 $ 250,065
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COSTS AND EXPENSES:
Cost of sales 53,311 47,301 116,374 102,702 216,299 192,317
Selling, general & administrative 9,812 8,384 20,084 17,189 37,411 32,366
Interest expense, net 445 614 1,004 1,373 2,208 2,296
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Total Costs and Expenses 63,568 56,299 137,462 121,264 255,918 226,979
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INCOME BEFORE INCOME TAXES 7,631 4,666 19,605 13,217 34,846 23,086
Provision for income taxes 2,953 1,718 7,401 4,875 12,660 8,545
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INCOME BEFORE CHANGE IN
ACCOUNTING PRINCIPLE 4,678 2,948 12,204 8,342 22,186 14,541
Cumulative effect of change in
accounting principle(b) 0 0 (4,340) 0 (4,340) 0
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NET INCOME $ 4,678 $ 2,948 $ 7,864 $ 8,342 $ 17,846 $ 14,541
========== ========== ========== ========== ========== ==========
INCOME PER COMMON SHARE-BASIC:
Before change in accounting principle $ 0.36 $ 0.22 $ 0.93 $ 0.63 $ 1.69 $ 1.10
Cumulative effect of change in
accounting principle 0.00 0.00 (0.33) 0.00 (0.33) 0.00
---------- ---------- ---------- ---------- ---------- ----------
Net Income Per Share-Basic $ 0.36 $ 0.22 $ 0.60 $ 0.63 $ 1.36 $ 1.10
========== ========== ========== ========== ========== ==========
INCOME PER COMMON SHARE-DILUTED:
Before change in accounting principle $ 0.35 $ 0.22 $ 0.92 $ 0.62 $ 1.65 $ 1.08
Cumulative effect of change in
accounting principle 0.00 0.00 (0.33) 0.00 (0.32) 0.00
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Net Income Per Share-Diluted $ 0.35 $ 0.22 $ 0.59 $ 0.62 $ 1.33 $ 1.08
========== ========== ========== ========== ========== ==========
AVERAGE COMMON SHARES OUTSTANDING
Basic 12,990 13,231 13,059 13,217 13,167 13,207
========== ========== ========== ========== ========== ==========
Diluted 13,245 13,523 13,289 13,484 13,419 13,434
========== ========== ========== ========== ========== ==========
</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> 5
PRESS RELEASE
Elcor Corporation Quarterly Results
January 21, 1999
Page 4
CONDENSED BALANCE SHEET
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
December 31,
ASSETS 1998 1997(a)
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<S> <C> <C>
Cash and cash equivalents $ 2,356 $ 4,450
Receivables, net 48,084 34,757
Inventories 26,520 28,198
Deferred income taxes 2,122 2,769
Prepaid expenses and other 1,458 3,173
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Total Current Assets 80,540 73,347
Property, plant and equipment, net 118,396 117,860
Other assets 1,968 3,221
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Total Assets $ 200,904 $ 194,428
========= =========
</TABLE>
<TABLE>
<CAPTION>
December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997(a)
- ------------------------------------- --------- ---------
<S> <C> <C>
Accounts payable and accrued liabilities $ 27,191 $ 23,461
Current maturities on long-term debt 0 0
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Total Current Liabilities 27,191 23,461
Long-term debt, net 33,500 37,700
Deferred income taxes 14,237 14,508
Shareholders' equity 125,976 118,759
--------- ---------
Total Liabilities and Shareholders' Equity $ 200,904 $ 194,428
========= =========
</TABLE>
(a) Restated for a change in accounting for inventories in fiscal 1998.
<PAGE> 6
PRESS RELEASE
Elcor Corporation Quarterly Results
January 21, 1999
Page 5
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
For the Six Months Ended
December 31,
1998 1997
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<S> <C> <C>
CASH FLOWS FROM:
OPERATING ACTIVITIES
Net income $ 7,864 $ 8,342
Adjustments to net income
Depreciation and amortization 4,532 5,370
Deferred income taxes 804 1,096
Cumulative effect of accounting change 4,340 0
Changes in assets and liabilities:
Trade receivables 8,366 8,421
Inventories 2,302 4,008
Prepaid expenses and other 331 399
Accounts payable and accrued liabilities (16) (4,825)
-------- --------
Net cash from operations 28,523 22,811
-------- --------
INVESTING ACTIVITIES
Additions to property, plant & equipment (12,062) (5,748)
Insurance proceeds and other 2,999 254
-------- --------
Net cash from investing activities (9,063) (5,494)
-------- --------
FINANCING ACTIVITIES
Long-term borrowings, net (14,500) (14,900)
Dividends on common stock (1,818) (1,587)
Treasury stock transactions and other, net (6,026) 19
-------- --------
Net cash from financing activities (22,344) (16,468)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,884) 849
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 5,240 3,601
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,356 $ 4,450
======== ========
</TABLE>
