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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) May 24, 2000
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ELCOR CORPORATION
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(Exact name of Registrant as specified in its charter)
DELAWARE 1-5341 75-1217920
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(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
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(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
Press Release
On May 23, 2000, the company issued a press release containing "forward-looking
statements" that involve risks and uncertainties about its prospects for the
future. 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," "plan," "project," "expect," "anticipate," "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. 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, 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
adversely affected and/or lower than projected.
3. The company expects to make up to $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.
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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 trade dress
litigation against GAF Building Materials Corporation and
certain affiliates, and its defense of the purported class
action brought by Wedgewood Knolls Condominium Association,
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. 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.
7. Each of the company's businesses, especially Cybershield's
digital wireless cellular phone 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, or if its
customers' plans and/or markets should change significantly.
8. 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.
9. 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 ongoing 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.
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Item 7. Exhibits
99.1 Press release dated May 23, 2000 of Elcor Corporation.
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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: May 24, 2000 /s/ Richard J. Rosebery
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Richard J. Rosebery
Vice Chairman, Chief Financial
and Administrative Officer
/s/ Leonard R. Harral
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Leonard R. Harral
Vice President and Chief
Accounting Officer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
99.1 Press release dated May 23, 2000 of Elcor Corporation.
</TABLE>
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EXHIBIT 99.1
Press Release dated May 23, 2000
of Elcor Corporation.
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[ELCOR CORPORATION LETTERHEAD]
FOR FURTHER INFORMATION: TRADED: NYSE
SYMBOL: ELK
Richard J. Rosebery, Vice Chairman,
Chief Financial and Administrative Officer
(972) 851-0510
PRESS RELEASE
FOR IMMEDIATE RELEASE
ELCOR EXPECTS RECORD FISCAL 2000 AND 2001 SALES AND EARNINGS,
BUT EARNINGS WILL BE LOWER THAN EXPECTED
DALLAS, TEXAS, May 23, 2000 . . . . Elcor Corporation said today that it now
expects sales for its fiscal year ending June 30, 2000, will be up 12% to 13%
to about $355 to $360 million from $318 million last year, and earnings should
be up 16% to 20% to about $1.48 to $1.53 per fully diluted share from $1.27 per
fully diluted share last year. Both sales and earnings per share are expected
to be at record levels for fiscal 2000 and 2001.
Dick Rosebery, Vice Chairman and Chief Financial Officer, said, "Currently,
security analysts' consensus estimates for our fiscal year ending June 30,
2000, are $1.63 per fully diluted share. Most of the difference between
consensus estimates and our lower expectations of $1.48 to $1.53 per fully
diluted share are attributable to reduced expectations at Cybershield
(approximately $.06 per fully diluted share), a continuation of higher than
expected consolidation costs at Chromium and less than expected licensing fees
at Ortloff Engineers (together, approximately $.05 per fully diluted share),
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Elcor Corporation
PRESS RELEASE
May 23, 2000
Page 2
and continuing pressure on Elk's margins for roofing products as a result of
rapidly escalating asphalt and other raw material costs."
Recent actions by a significant Cybershield customer to establish a second
production source for a portion of its cellular handset shielding requirements,
and temporary delays in the production launch of a new cellular handset which
contains significant Cybershield value-added content, have resulted in a
reduction of previously anticipated production volumes. For fiscal 2000, it is
now expected that Cybershield's sales will rise about 50% to 60% (to about $34
to $36 million) from $22.4 million in fiscal 1999, and that operating profits
will increase by approximately 30% to 45% (to about $5.0 to $5.5 million) from
$3.8 million in the previous fiscal year. Operating margins at Cybershield were
adversely affected as staffing was increased to accommodate previously
anticipated production volumes which have been changed or temporarily delayed.
Rosebery said, "While we are disappointed with this temporary pause in
Cybershield's sales and earnings momentum, we continue to be very encouraged by
Cybershield's overall progress in obtaining new business orders and its
longer-term growth outlook. We continue to believe that Cybershield should have
opportunities to about double revised fiscal 2000 sales and operating profits
during the fiscal year June 30, 2001. This strong growth will result from a
continuation of rapidly accelerating demand for digital wireless handsets,
previously announced new business orders at
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Elcor Corporation
PRESS RELEASE
May 23, 2000
Page 3
Cybershield, and expected increases in Cybershield's valued-added content per
handset in certain existing production programs which should substantially
offset volumes forfeited to a second source.
"We believe that some, but not all, of the items affecting Elcor's fiscal 2000
results will continue in fiscal 2001. Accordingly, we now would feel more
comfortable if consensus estimates of $1.96 per fully diluted share for the
fiscal year ending June 30, 2001, were reduced by about $.25 to $.30 per share.
Two factors account for most of the need to lower fiscal year 2001 estimates.
"The first is reduced sales and earnings expectations for Cybershield,
primarily because of delays in planned production ramp-up schedules for several
new models and services. We continue to believe that Cybershield should have
potential opportunities to about double sales and operating profits in fiscal
2001 from the aforementioned revised expectations for fiscal 2000 results;
however, Cybershield's profit contribution for fiscal 2001 is now expected to
be about $.16 per share lower than previously projected.
"Second, we now expect that initial operating losses during start-up and
commissioning of Elk's new Myerstown, Pennsylvania roofing plant, new product
development costs, and increases in SG&A costs are likely to reduce fiscal 2001
operating profits by about $3 to $5 million, or $.09 to $.15 per share, from
previously expected levels, as we do not believe that current conditions will
permit us to offset these costs in other areas.
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Elcor Corporation
PRESS RELEASE
May 23, 2000
Page 4
"Even though we expect strong sales growth in fiscal 2001, these factors are
presently expected to hold back Elcor's earnings per share growth to about 10%
year-over-year. Strong growth in earnings per share should resume in fiscal
2002 as the new Myerstown plant begins to contribute to earnings," 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. 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 subsequent Forms 10-Q and
Forms 8-K.
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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 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.
