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EXHIBIT 99.1
Press Release dated October 16, 2000
of Elcor Corporation.
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[ELCOR CORPORATION LETTERHEAD]
PRESS RELEASE TRADED: NYSE
FOR IMMEDIATE RELEASE SYMBOL: ELK
FOR FURTHER INFORMATION:
Richard J. Rosebery Harold R. Beattie
Vice Chairman, Chief Financial Vice President-Finance
and Administrative Officer and Treasurer
(972) 851-0510 (972) 851-0523
ELCOR REPORTS FISCAL 2001 FIRST QUARTER SALES AND EARNINGS; RESULTS IN LINE
WITH EXPECTATIONS, BUT LOWER THAN PRIOR YEAR
DALLAS, TEXAS, October 16, 2000 . . . . Elcor Corporation today reported lower
results for its fiscal 2001 first quarter ending September 30, 2000, with
income per diluted share down 50% on 10% lower sales, compared to the same
quarter last year. While lower results were anticipated, fiscal 2001 first
quarter fully diluted income per share of $.25 was slightly better than
consensus estimates.
For our first quarter ending September 30, 2000, net income was $4,944,000, or
$.25 per diluted share, compared to $10,009,000, or $.50 per diluted share, in
the year-ago quarter. Sales were $86,201,000, versus $95,789,000, in the same
quarter last year.
Harold K. Work, Chairman, President and Chief Executive Officer, said, "Fiscal
2001 first quarter lower results reflect slower demand, significantly higher
cost for asphalt raw materials and higher costs for start-up of new facilities
and products, compared to record results during the year-ago first quarter."
ROOFING PRODUCTS: HIGHER RAW MATERIAL COSTS AND LOWER UNIT SHIPMENTS WERE ONLY
PARTIALLY OFFSET BY HIGHER PRODUCT PRICES
Elk's roofing products sales declined 9% to $75.2 million from $82.9 million in
the record year-ago quarter. Operating profits declined 32% to $11.0 million
from $16.3 million in the record quarter last year. Sales reflected a decline
in both laminated asphalt shingle shipments and external shipments of nonwoven
fiberglass roofing mat to other roofing manufacturers.
First quarter operating profit comparisons were primarily affected by
significantly higher raw material costs (principally asphalt) and lower
production and shipments of laminated shingles, which were only partially
offset by increased selling prices in the face of lower industry demand. As a
result, cost of goods sold as a percent of sales for roofing shingles
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PRESS RELEASE
Elcor Corporation Quarterly Results
October 16, 2000
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rose to 75.8% in this year's first quarter from 72.7% in the year-ago quarter.
Under the circumstances, Elk is accelerating the development of several
initiatives with the potential to reduce costs and/or improve operating
profits.
NEW MYERSTOWN SHINGLE PLANT ON SCHEDULE TO BEGIN LIMITED PRODUCTION DURING THE
DECEMBER 2000 QUARTER
Construction of Elk's new $75 million premium laminated asphalt shingle plant
and related facilities in Myerstown, Pennsylvania is nearly complete. Initial
start-up activities are underway, with limited production of laminated shingles
scheduled to begin during the December 2000 quarter. The new Myerstown plant
puts Elk in a strong strategic position to meet the normal spring growth in
distributor demand for laminated shingles in the nation's Eastern and North
Central markets in 2001.
Myerstown will increase Elk's laminated shingle capacity by about 38% and will
provide Elk with the capacity needed to maintain market share with the expected
growth in demand moving forward. In addition, the Myerstown plant will
significantly reduce Elk's transportation costs to serve the Eastern and North
Central markets and will allow Elk to better serve its customers' growing
demand in other markets.
ELECTRONICS MANUFACTURING SERVICES: CYBERSHIELD BEGINS RAMP-UPS OF SIX NEW
WIRELESS DIGITAL CELLULAR PHONE PRODUCTS
Cybershield had lower operating profits of $697,000, compared to $1,360,000,
and sales of $8,389,000, compared to $9,144,000, in the record year-ago first
quarter. Lower sales and operating profits were the result of reduced demand
for mature digital cell phone models served by Cybershield as new models are
being introduced to the market. During this year's first quarter, Cybershield's
profit margins were reduced by higher costs during initial production ramp-ups
on six new digital wireless handset products for three of North America's four
leading digital wireless handset manufacturers. As fiscal 2001 progresses,
Cybershield's sales and operating profits are expected to increase
substantially as production volumes of these new products escalate.
INDUSTRIAL PRODUCTS: SEGMENT NEARS TURNAROUND
The Industrial Products segment had lower sales of $2,564,000, compared to
$3,662,000, and an operating loss of $1,245,000, compared to an operating
profit of $169,000, in the same quarter last year. Most of the operating loss
occurred in July 2000 and was related to the consolidation of manufacturing
operations and initial production of products new to Chromium's Cleveland, Ohio
plant. Chromium generated a small operating profit for the months of August and
September 2000, and the outlook appears good for substantial improvement as
fiscal 2001 progresses. Ortloff Engineers also experienced lower operating
results for the first quarter; however, its outlook appears bright for awards
of significant projects for licenses of Elcor's leading edge patented cryogenic
gas processing technology as fiscal year 2001 progresses.
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PRESS RELEASE
Elcor Corporation Quarterly Results
October 16, 2000
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FINANCIAL POSITION REMAINS STRONG
During the first quarter ending September 30, 2000, cash flows from operations
of $4.1 million, $.5 million in cash and $14.0 million in increased long-term
debt, funded $16.2 million of net investments in property, plant and equipment
and $2.4 million in dividends and share repurchases. Elcor ended the first
quarter with $47 million of inventory (66 days), compared to $24 million of
inventory (35 days) at the end of the year-ago quarter. Inventory levels for
the year-ago quarter were below desired levels as a result of a 24% increase in
demand during the preceding nine months.
At September 30, 2000, the company had $105.3 million of long-term debt, $164.5
million of shareholders' equity and $269.8 million of total capital. Long-term
debt, as a percent of total capital, increased to 39% from 23% last year.
OUTLOOK
Mr. Work said, "Fiscal 2001 will be a challenging year for several reasons.
First, the price of asphalt was up about 50% year-over-year during the fiscal
2001 September quarter. Asphalt is a major raw material, accounting for about
24% of our laminated asphalt shingle cost of goods sold. At the same time,
stiff competition is presently keeping prices low. Elk's average selling price
for its laminated shingle products was up only 2.9% year-over-year for the
September quarter. Presently, we believe the supply of laminated shingles
currently exceeds demand because some asphalt shingle manufacturers may have
increased their production of laminated shingles to compensate for the current
lower demand for commodity shingles. Under the circumstances, pressure on
prices will likely continue until supply comes into better balance with demand.
"In addition, Elk's new Myerstown laminated shingle plant will be commencing
limited operations during the first half of fiscal 2001 and is expected to
generate an operating loss of $3 million to $5 million during its first partial
year of operation. We expect Myerstown to begin contributing to operating
profits in fiscal 2002, its first full year of operation.
"We expect that our Industrial Products segment will achieve a significant
turnaround in operating results as the year progresses. Cybershield's
electronics manufacturing services business could also achieve sharply higher
sales and operating profits as production escalates on six new digital cell
phone products and additional new orders are received.
"While it appears that fiscal 2001 will challenge Elcor, we believe the
investments we have made and are continuing to make will provide the company
with the potential to achieve high growth rates for both sales and earnings in
fiscal 2002 and beyond," he concluded.
CORPORATE QUARTERLY EARNINGS CONFERENCE CALLS
Elcor's quarterly earnings conference call for the quarter ended September 30,
2000, will be held tomorrow at 10:00 a.m. Central Time on Tuesday, October 17,
2000. Shareholders,
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PRESS RELEASE
Elcor Corporation Quarterly Results
October 16, 2000
Page 4
investors, media and other interested parties may participate in the
teleconference by dialing (913) 981-4910 a few minutes before start time and
providing confirmation code 829210. Future quarterly earnings conference calls
will also be held at 10:00 a.m. Central Time on the day following the release
of quarterly results. Shareholders, investors, media and other interested
parties are also invited to participate in Elcor's quarterly earnings
conference calls through Elcor Corporation's website www.elcor.com.
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 ending June 30, 2000, and its Form 8-K dated October
17, 2000.
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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; Myerstown, Pennsylvania; Dallas and Ennis, Texas. Its
electronics manufacturing services facilities are located in Canton, Georgia;
Dallas and Lufkin, Texas; and its industrial products facilities are located in
Cleveland, Ohio and Midland, Texas.
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PRESS RELEASE
Elcor Corporation Quarterly Results
October 16, 2000
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CONDENSED RESULTS OF OPERATIONS
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
Trailing
Three Months Ended Twelve Months Ended
September 30, September 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
SALES $ 86,201 $ 95,789 $ 340,687 $ 327,795
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Cost of sales 66,419 69,742 259,194 243,349
Selling, general & administrative 11,439 9,512 41,626 38,939
Interest expense and other, net 505 417 1,250 1,833
Gain from involuntary conversion 0 0 (1,292) 0
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Total Costs and Expenses 78,363 79,671 300,778 284,121
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INCOME BEFORE INCOME TAXES 7,838 16,118 39,909 43,674
Provision for income taxes 2,894 6,109 15,042 15,908
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NET INCOME $ 4,944 $ 10,009 $ 24,867 $ 27,766
========== ========== ========== ==========
INCOME PER COMMON SHARE-BASIC $ 0.25 $ 0.51 $ 1.27 $ 1.42
========== ========== ========== ==========
INCOME PER COMMON SHARE-DILUTED $ 0.25 $ 0.50 $ 1.24 $ 1.39
========== ========== ========== ==========
AVERAGE COMMON SHARES OUTSTANDING
Basic 19,524 19,528 19,577 19,506
========== ========== ========== ==========
Diluted 19,755 19,982 20,029 19,960
========== ========== ========== ==========
</TABLE>
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PRESS RELEASE
Elcor Corporation Quarterly Results
October 16, 2000
Page 6
FINANCIAL INFORMATION BY COMPANY SEGMENTS
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
Trailing
Three Months Ended Twelve Months Ended
September 30, September 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
SALES
Roofing Products $ 75,218 $ 82,939 $ 297,675 $ 284,943
Electronics Manufacturing Services 8,389 9,144 32,665 27,524
Industrial Products 2,564 3,662 10,202 15,159
Corporate & Eliminations 30 44 145 169
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$ 86,201 $ 95,789 $ 340,687 $ 327,795
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OPERATING PROFIT (LOSS)
Roofing Products $ 10,999 $ 16,277 $ 47,746 $ 48,638
Electronics Manufacturing Services 697 1,360 4,241 3,793
Industrial Products (1,245) 169 (6,067) (240)
Corporate & Eliminations (2,108) (1,271) (6,053) (6,684)
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$ 8,343 $ 16,535 $ 39,867 $ 45,507
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</TABLE>
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PRESS RELEASE
Elcor Corporation Quarterly Results
October 16, 2000
Page 7
CONDENSED BALANCE SHEET
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
September 30,
ASSETS 2000 1999
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<S> <C> <C>
Cash and cash equivalents $ 4,146 $ 2,261
Receivables, net 71,435 68,581
Inventories 47,010 23,908
Deferred income taxes 2,897 2,274
Prepaid expenses and other 2,631 6,573
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Total Current Assets 128,119 103,597
Property, plant and equipment, net 207,990 145,730
Other assets 2,901 3,283
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Total Assets $ 339,010 $ 252,610
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</TABLE>
<TABLE>
<CAPTION>
September 30,
LIABILITIES AND SHAREHOLDERS' EQUITY 2000 1999
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<S> <C> <C>
Accounts payable and accrued liabilities $ 47,395 $ 43,586
Current maturities on long-term debt 0 0
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Total Current Liabilities 47,395 43,586
Long-term debt, net 105,300 44,200
Deferred income taxes 21,831 18,399
Shareholders' equity 164,484 146,425
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Total Liabilities and Shareholders' Equity $ 339,010 $ 252,610
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</TABLE>
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PRESS RELEASE
Elcor Corporation Quarterly Results
October 16, 2000
Page 8
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
For the Three Months Ended
September 30,
2000 1999
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<S> <C> <C>
CASH FLOWS FROM:
OPERATING ACTIVITIES
Net income $ 4,944 $ 10,009
Adjustments to net income
Depreciation and amortization 3,419 2,607
Deferred income taxes 673 190
Changes in assets and liabilities:
Trade receivables 277 4,285
Inventories (6,045) 1,862
Prepaid expenses and other 1,681 1,779
Accounts payable and accrued liabilities (892) 9,702
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Net cash from operations 4,057 30,434
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INVESTING ACTIVITIES
Additions to property, plant & equipment (16,298) (12,610)
Other 49 (114)
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Net cash from investing activities (16,249) (12,724)
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FINANCING ACTIVITIES
Long-term borrowings, net 14,000 (18,800)
Dividends on common stock (975) (977)
Treasury stock transactions and other, net (1,389) 142
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Net cash from financing activities 11,636 (19,635)
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (556) (1,925)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 4,702 4,186
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,146 $ 2,261
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</TABLE>
