<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) January 20, 2000
----------------
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 January 19, 2000, 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, 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.
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.
1
<PAGE> 3
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. 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
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, 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.
Item 7. Exhibits
27 Financial Data Schedule (EDGAR submission only).
99.1 Press release dated January 19, 2000 of Elcor Corporation.
2
<PAGE> 4
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 20, 2000 /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
3
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
27 Financial Data Schedule (EDGAR submission only).
99.1 Press release dated January 19, 2000 of Elcor Corporation.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 3,270
<SECURITIES> 0
<RECEIVABLES> 52,282
<ALLOWANCES> 1,023
<INVENTORY> 35,027
<CURRENT-ASSETS> 96,887
<PP&E> 244,034
<DEPRECIATION> 82,223
<TOTAL-ASSETS> 261,932
<CURRENT-LIABILITIES> 40,871
<BONDS> 49,300
0
0
<COMMON> 19,988
<OTHER-SE> 133,024
<TOTAL-LIABILITY-AND-EQUITY> 261,932
<SALES> 177,525
<TOTAL-REVENUES> 177,525
<CGS> 130,416
<TOTAL-COSTS> 149,766
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 521
<INCOME-PRETAX> 28,127
<INCOME-TAX> 10,647
<INCOME-CONTINUING> 17,480
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,480
<EPS-BASIC> .89
<EPS-DILUTED> .87
</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 FISCAL 2000 SECOND QUARTER
RECORD SALES AND EARNINGS; EXPECTS CYBERSHIELD
RESULTS TO DOUBLE IN FISCAL 2000 AND 2001; ALSO EXPECTS
OVERALL CONTINUED STRONG GROWTH IN FISCAL 2000 AND BEYOND
DALLAS, TEXAS, January 19, 2000 . . . . Elcor Corporation announced today that
net income rose 60% on a 15% gain in sales for its second quarter ending
December 31, 1999, compared to the year-ago quarter. Both sales and net income
set new records for any second quarter.
Harold K. Work, Elcor's Chairman, President and Chief Executive Officer, said,
"Sharply higher second quarter results benefited from strong 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
products for digital wireless cellular phones. Growing demand for both product
lines are expected to drive strong sales and earnings growth in fiscal 2000 and
beyond."
OPERATING RESULTS
For the second quarter ending December 31, 1999, net income rose 60% to
$7,471,000, or $.37 per fully diluted share, from $4,678,000, or $.24 per fully
diluted share, in the year-ago quarter. Sales rose 15% to $81,736,000 from
$71,199,000 in the same quarter last year.
For the six months ending December 31, 1999, income before a change in
accounting principle rose 43% to $17,480,000, or $.87 per fully diluted share,
from $12,204,000, or $.61 per fully diluted share, in the year-ago first half.
Sales increased 13% to $177,525,000 from $157,067,000 in the first half last
year.
/more
<PAGE> 2
PRESS RELEASE
Elcor Corporation Quarterly Results
January 19, 2000
Page 2
Fiscal 2000 second quarter pre-tax results included an $889,000 nonrecurring
gain from involuntary conversion as a result of insurance proceeds exceeding the
book value of damaged equipment replaced, which was substantially offset by over
$800,000 of nonrecurring expenses associated with the previously announced
relocation and consolidation of Chromium Corporation manufacturing operations
from Lufkin, Texas into its Cleveland, Ohio plant.
ROOFING PRODUCTS SEGMENT ACHIEVED RECORD SALES AND OPERATING PROFITS
Elcor's Roofing Products segment achieved record sales and operating profits for
any second quarter in its history, despite its lack of inventory to satisfy all
sales orders available to it during the quarter. Sales for the quarter increased
10% to $68,830,000 from $62,366,000 in the year-ago quarter and operating
profits rose 20% to $11,318,000 from $9,445,000 in the year-ago quarter. During
the 12 months ending September 30, 1999, a 22% year over year increase in market
demand for premium laminated shingles, coupled with manufacturing inefficiencies
related to Elk's use of alternative sources of nonwoven fiberglass mat in its
manufacturing process as a result of the nonwoven mat plant accident, caused Elk
to begin the fiscal 2000 second quarter with substantially lower than desired
levels of laminated shingle inventories. Lost sales and operating profits
related to the inventory shortage were partially offset by $1,130,000 of
business interruption insurance recoveries recognized during the quarter. During
the first half of fiscal 2000, Elk was able to largely offset increasing asphalt
and glass fiber raw material costs by increasing laminated shingle prices. It is
anticipated that market conditions in the seasonally stronger spring and summer
months will permit Elk to pass through further sharp increases in these raw
material costs to its customers.
CONSTRUCTION OF NEW LAMINATED SHINGLE PLANT IS ON SCHEDULE
Mr. Work said, "Construction of Elk's new $70 million Myerstown, Pennsylvania,
premium laminated fiberglass asphalt shingle plant is progressing on plan. The
shingle manufacturing plant building is now largely erected, and most of the
major equipment will be delivered during the March 2000 quarter, with
manufacturing operations beginning in the December quarter of calendar year
2000. The new plant should meet the rapidly growing demand for Elk's laminated
shingles in the nation's Eastern and North Central markets in the second half of
fiscal 2001. Myerstown will increase our overall laminated shingle capacity by
about 38%, enabling Elk to keep up with the rapid growth in demand," he said.
INDUSTRIAL PRODUCTS SEGMENT REPORTS STRONG GROWTH IN SALES AND OPERATING PROFITS
Industrial Products sales rose 46% to $12,861,000 from $8,798,000 in the second
quarter last year. Operating profits rose 29% to $1,407,000 from $1,089,000 in
the year-ago quarter. Within this segment, Cybershield's sales more than
doubled, and operating profits rose substantially from the year-ago quarter.
Chromium Corporation's sales were 30% below the strong year-ago levels, and an
operating loss of $866,000 was primarily the result of nonrecurring expenses
associated with the relocation of its manufacturing operations from Lufkin,
Texas to Cleveland, Ohio.
/more
<PAGE> 3
PRESS RELEASE
Elcor Corporation Quarterly Results
January 19, 2000
Page 3
When this relocation is completed in the March 2000 quarter, Chromium's
operating expenses will have been reduced by about $1 million per year as a
result of this consolidation. Ortloff Engineers, the third component within the
Industrial Products segment, had a small operating profit on lower sales during
the second quarter.
CYBERSHIELD EXPECTS SALES AND OPERATING PROFITS TO DOUBLE AGAIN IN EACH OF
FISCAL YEARS 2000 AND 2001
Richard J. Rosebery, Vice Chairman of Elcor and Chairman of Cybershield, said,
"We believe that Cybershield should have opportunities to about double
year-over-year sales and operating profits in each of the fiscal years ending
June 30, 2000, and 2001. This strong growth is a result of rapidly accelerating
demand for digital wireless handsets, plus a significant increase in the number
of value added products and services provided by Cybershield, the Western
Hemisphere's leading supplier of advanced shielding products and related
services for the digital wireless cellular phone industry. Cybershield's
important telecommunications customers include Nokia, Ericsson, Motorola, Lucent
Technologies, AT&T, Nortel and Denso. Cybershield has earned a 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.
"In fiscal 1999, Cybershield supplied shielding products for over 20 million
digital wireless cellular phones, and expects that demand could more than double
in fiscal 2000. Its 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 in
digital wireless communications as well as the higher frequencies used to
achieve faster microchip speeds.
In addition to the strong growth in demand for digital wireless handsets, recent
significant orders for new business in other areas include shielding of a new
laptop computer for one of the largest computer manufacturers, shielding of
components for telecommunications switching equipment for a leading
manufacturer, high performance coatings for magnesium components of lightweight
digital video projectors used for computerized business presentations, and
shielding of bar code readers for a leading manufacturer. As the second half of
fiscal 2000 progresses, Cybershield expects to announce the receipt of
significant orders for several new digital wireless handset models," he
concluded.
FINANCIAL POSITION STRONG
During the first half ending December 31, 1999, strong cash flows from
operations of $44.3 million funded $29.8 million of investments in property,
plant and equipment; $13.7 million in reductions of long-term debt; and about $2
million in dividends. At December 31, 1999, the company had
/more
<PAGE> 4
PRESS RELEASE
Elcor Corporation Quarterly Results
January 19, 2000
Page 4
$49.3 million of long-term debt, $153.0 million of shareholders' equity, and
$202.3 million of total capital. With the construction of Elk's new Myerstown,
Pennsylvania premium laminated shingle plant well under way, long-term debt as a
percent of total capital, rose to 24% from 21% last year.
OUTLOOK
Mr. Work said, "Presently, we look for growing demand for our Enhanced High
Definition(R) and Raised Profile(TM) Elk Prestique premium laminated fiberglass
asphalt shingles and for our Cybershield wireless 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 September and June 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 subsequent Form 10-Q and Forms 8-K.
- - - - - -
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.
/more
<PAGE> 5
PRESS RELEASE
Elcor Corporation Quarterly Results
January 19, 2000
Page 5
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,
1999 1998 (a) 1999 1998 (a) 1999 1998 (a)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
SALES $ 81,736 $ 71,199 $ 177,525 $ 157,067 $ 338,332 $ 290,764
---------- ---------- ---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Cost of sales 60,674 53,311 130,416 116,374 250,712 216,299
Selling, general & administrative 9,838 9,812 19,350 20,084 38,965 37,411
Interest expense, net 104 445 521 1,004 1,492 2,208
Gain from involuntary conversion (889) 0 (889) 0 (889) 0
---------- ---------- ---------- ---------- ---------- ----------
Total Costs and Expenses 69,727 63,568 149,398 137,462 290,280 255,918
---------- ---------- ---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 12,009 7,631 28,127 19,605 48,052 34,846
Provision for income taxes 4,538 2,953 10,647 7,401 17,493 12,660
---------- ---------- ---------- ---------- ---------- ----------
INCOME BEFORE CHANGE IN
ACCOUNTING PRINCIPLE 7,471 4,678 17,480 12,204 30,559 22,186
Cumulative effect of change in
accounting principle (b) 0 0 0 (4,340) 0 (4,340)
---------- ---------- ---------- ---------- ---------- ----------
NET INCOME $ 7,471 $ 4,678 $ 17,480 $ 7,864 $ 30,559 $ 17,846
========== ========== ========== ========== ========== ==========
INCOME PER COMMON SHARE-BASIC:
Before change in accounting principle $ 0.38 $ 0.24 $ 0.89 $ 0.62 $ 1.57 $ 1.12
Cumulative effect of change in
accounting principle 0.00 0.00 0.00 (0.22)
---------- ---------- ---------- ---------- ---------- ----------
Net Income Per Share-Basic $ 0.38 $ 0.24 $ 0.89 $ 0.40 $ 1.57 $ 0.90
========== ========== ========== ========== ========== ==========
INCOME PER COMMON SHARE-DILUTED:
Before change in accounting principle $ 0.37 $ 0.24 $ 0.87 $ 0.61 $ 1.53 $ 1.10
Cumulative effect of change in
accounting principle 0.00 0.00 0.00 (0.22) 0.00 (0.22)
---------- ---------- ---------- ---------- ---------- ----------
Net Income Per Share-Diluted $ 0.37 $ 0.24 $ 0.87 $ 0.39 $ 1.53 $ 0.88
========== ========== ========== ========== ========== ==========
AVERAGE COMMON SHARES OUTSTANDING
Basic 19,564 19,485 19,546 19,589 19,525 19,751
========== ========== ========== ========== ========== ==========
Diluted 20,071 19,868 20,027 19,934 20,010 20,129
========== ========== ========== ========== ========== ==========
</TABLE>
(a) Adjusted for a three-for-two stock split paid 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
January 19, 2000
Page 6
CONDENSED BALANCE SHEET
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
December 31,
ASSETS 1999 1998
---------- ----------
<S> <C> <C>
Cash and cash equivalents $ 3,270 $ 2,356
Receivables, net 51,259 48,084
Inventories 35,027 26,520
Deferred income taxes 2,413 2,122
Prepaid expenses and other 4,918 1,458
---------- ----------
Total Current Assets 96,887 80,540
Property, plant and equipment, net 161,811 118,396
Other assets 3,234 1,968
---------- ----------
Total Assets $ 261,932 $ 200,904
========== ==========
</TABLE>
<TABLE>
<CAPTION>
December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1999 1998
---------- ----------
<S> <C> <C>
Accounts payable and accrued liabilities $ 40,871 $ 27,191
Current maturities on long-term debt 0 0
---------- ----------
Total Current Liabilities 40,871 27,191
Long-term debt, net 49,300 33,500
Deferred income taxes 18,749 14,237
Shareholders' equity 153,012 125,976
---------- ----------
Total Liabilities and Shareholders' Equity $ 261,932 $ 200,904
========== ==========
</TABLE>
<PAGE> 7
PRESS RELEASE
Elcor Corporation Quarterly Results
January 19, 2000
Page 7
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited, $ in thousands)
<TABLE>
<CAPTION>
For the Six Months Ended
December 31,
1999 1998
---------- ----------
<S> <C> <C>
CASH FLOWS FROM:
OPERATING ACTIVITIES
Net income $ 17,480 $ 7,864
Adjustments to net income
Depreciation and amortization 5,254 4,532
Deferred income taxes 401 804
Gain from involuntary conversion (889) 0
Cumulative effect of accounting change 0 4,340
Changes in assets and liabilities:
Trade receivables 21,607 8,366
Inventories (9,257) 2,302
Prepaid expenses and other 2,672 331
Accounts payable and accrued liabilities 6,987 (16)
---------- ----------
Net cash from operations 44,255 28,523
---------- ----------
INVESTING ACTIVITIES
Additions to property, plant & equipment (31,330) (12,062)
Insurance proceeds from involuntary conversion 1,651 2,000
Other (72) 999
---------- ----------
Net cash from investing activities (29,751) (9,063)
---------- ----------
FINANCING ACTIVITIES
Long-term borrowings, net (13,700) (14,500)
Dividends on common stock (1,956) (1,818)
Treasury stock transactions and other, net 236 (6,026)
---------- ----------
Net cash from financing activities (15,420) (22,344)
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (916) (2,884)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 4,186 5,240
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,270 $ 2,356
========== ==========
</TABLE>
