-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QNiUqUGDhlGDZRuLMpLuJ8VwVw1tjIfxXjuwDDLcBx/Bspa8nxPQfomIUb1orvCY GLyHMZLouk+I5aY1c1pSww== 0000950134-96-001972.txt : 19960515 0000950134-96-001972.hdr.sgml : 19960515 ACCESSION NUMBER: 0000950134-96-001972 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960514 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELCOR CORP CENTRAL INDEX KEY: 0000032017 STANDARD INDUSTRIAL CLASSIFICATION: ASPHALT PAVING & ROOFING MATERIALS [2950] IRS NUMBER: 751217920 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05341 FILM NUMBER: 96562224 BUSINESS ADDRESS: STREET 1: 14643 DALLAS PKWY STE 1000 STREET 2: WELLINGTON CTR CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 2148510500 MAIL ADDRESS: STREET 1: WELLINGTON CENTRE STE 1000 STREET 2: 14643 DALLAS PKWY CITY: DALLAS STATE: TX ZIP: 75240-8871 FORMER COMPANY: FORMER CONFORMED NAME: ELCOR CHEMICAL CORP DATE OF NAME CHANGE: 19761119 10-Q 1 FORM 10-Q FOR QUARTER ENDED MARCH 31, 1996 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 --------- FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 --------- For Quarter Ended March 31, 1996 Commission File number 1-5341 -------------- ------ ELCOR CORPORATION ------------------------------------------------------ (Exact name of Registrant as specified in its charter) DELAWARE 75-1217920 - ------------------------------- ------------------- (State or other jurisdiction of (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 (214) 851-0500 -------------- Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . --- --- As of close of business on May 1, 1996, Registrant had outstanding 8,765,535 shares of Common Stock, Par Value $1 per Share. 2 PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements ELCOR CORPORATION CONSOLIDATED BALANCE SHEET (Unaudited, $ in thousands)
ASSETS 3-31-96 6-30-95 ----------- ---------- CURRENT ASSETS Cash and cash equivalents $ 2,708 $ 3,731 Trade receivables, less allowance of $427 and $306 39,710 32,910 Inventories - Finished goods 15,737 6,091 Work-in-process 769 658 Raw materials 5,710 4,952 ----------- ---------- Total inventories 22,216 11,701 ----------- ---------- Prepaid expenses and other 2,739 2,931 Deferred income taxes 2,168 2,136 ----------- ---------- Total current assets 69,541 53,409 ----------- ---------- PROPERTY, PLANT AND EQUIPMENT, AT COST 149,140 123,469 Less - accumulated depreciation (54,103) (53,923) ----------- ---------- Property, plant and equipment, net 95,037 69,546 ----------- ---------- DEFERRED PREOPERATING COSTS 10,189 5,640 NET ASSETS OF DISCONTINUED OPERATIONS 7,175 7,175 OTHER ASSETS 2,341 1,363 ----------- ---------- $ 184,283 $ 137,133 =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 13,447 $ 10,849 Accrued liabilities 12,392 10,548 ----------- ---------- Total current liabilities 25,839 21,397 ----------- ---------- LONG-TERM DEBT 50,400 18,400 DEFERRED INCOME TAXES 7,503 3,720 SHAREHOLDERS' EQUITY- Common stock 8,802 8,802 Paid-in-capital 71,577 71,680 Retained earnings 20,849 14,316 ----------- ---------- 101,228 94,798 Less - Treasury stock, at cost, 36,531 and 74,063 shares (687) (1,182) ----------- ---------- Total shareholders' equity 100,541 93,616 ----------- ---------- $ 184,283 $ 137,133 =========== ==========
See accompanying notes to consolidated financial statements. 2 3 ELCOR CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited, $ in thousands except per share data)
Three Months Ended Nine Months Ended -------------------- -------------------- 3-31-96 3-31-95 3-31-96 3-31-95 -------- -------- -------- -------- SALES $ 50,048 $ 37,816 $143,938 $112,266 -------- -------- -------- -------- COST AND EXPENSES Cost of sales 38,875 27,736 109,254 82,265 Selling, general and administrative 7,312 7,388 21,417 20,433 -------- -------- -------- -------- INCOME FROM OPERATIONS 3,861 2,692 13,267 9,568 -------- -------- -------- -------- OTHER (INCOME) EXPENSE Interest expense (income), net 61 39 105 (115) -------- -------- -------- -------- INCOME BEFORE INCOME TAXES 3,800 2,653 13,162 9,683 Provision for income taxes 1,479 1,039 5,054 3,746 -------- -------- -------- -------- NET INCOME $ 2,321 $ 1,614 $ 8,108 $ 5,937 ======== ======== ======== ======== INCOME PER COMMON AND COMMON EQUIVALENT SHARE $ .26 $ .18 $ .92 $ .67 ======== ======== ======== ======== DIVIDENDS PER COMMON SHARE $ .06 $ -- $ .18 $ -- ======== ======== ======== ======== AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 8,875 8,782 8,852 8,852 ======== ======== ======== ========
See accompanying notes to consolidated financial statements. 3 4 ELCOR CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited, $ in thousands)
Nine Months Ended ------------------------------- 3-31-96 3-31-95 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 8,108 $ 5,937 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 2,655 2,858 Write-off of assets 558 -- Deferred income taxes 3,751 456 Changes in assets and liabilities: Trade receivables (6,800) 3,424 Inventories (10,515) 3,280 Prepaid expenses and other 192 (52) Accounts payable and accrued liabilities 4,442 (4,613) -------- -------- Net cash provided by continuing operations 2,391 11,290 -------- -------- Net cash provided by discontinued operations -- 635 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant & equipment (28,528) (28,366) Deferred preoperating costs (4,705) (4,230) Other (999) 395 -------- -------- Net cash provided by (used for) investing activities (34,232) (32,201) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Long-term borrowings 32,000 17,800 Dividends on common stock (1,575) -- Treasury stock transactions and other, net 393 (1,149) -------- -------- Net cash provided by financing activities 30,818 16,651 -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,023) (3,625) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 3,731 5,919 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,708 $ 2,294 ======== ========
See accompanying notes to consolidated financial statements. 4 5 ELCOR CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. The attached condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. As a result, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The Company believes that the disclosures included herein are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's 1995 Annual Report on Form 10-K. The unaudited financial information contained herein has been prepared in conformity with generally accepted accounting principles on a consistent basis and does reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations for the three-month and nine-month periods ended March 31, 1996, and 1995, but are, however, subject to year-end audit by the Company's independent auditors. Because of seasonal, weather-related conditions in some of the Company's market areas, sales can vary at times, and results of any one quarter should not necessarily be considered as indicative of results for a full fiscal year. 2. Net income per common and common equivalent share is computed based on the average number of common and common equivalent shares outstanding. Common equivalent shares include outstanding stock options. There is no material difference between primary and fully diluted earnings per share. 3. Effective December 15, 1995, the Company increased its unsecured revolving credit facility from $50 million to $70 million and the term was extended by one year to October 31, 1998. The rate the Company pays on LIBOR borrowings, based on current financial ratios, was lowered from LIBOR plus.625% to LIBOR plus.5%. There was no change to the interest rate for any borrowings based on the lender's prime rate. 5 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS CHANGES IN THE THREE-MONTH PERIOD ENDED MARCH 31, 1996 COMPARED TO THE THREE-MONTH PERIOD ENDED MARCH 31, 1995. During the three-month period ended March 31, 1996, net income increased 44% to $2,321,000 from $1,614,000 for the same three-month period last year. Sales increased 32% compared to the same prior year quarter. The increases in sales and income were primarily attributable to increased production and shipments of premium laminated fiberglass asphalt shingles in the Roofing Products Group. Roofing Products Sales and operating profit in the Roofing Products Group for the three-month period ended March 31, 1996 were significantly higher compared to the same period in the prior year, primarily as a result of increased production and shipments of the Company's patented Enhanced High Definition(R) and Raised Profile(TM) Prestique(R) premium laminated fiberglass asphalt shingles. In addition, average selling prices improved over the prior year quarter and transportation costs were lower. Although sales from existing plants increased, the new plant at Shafter, California accounted for a significant part of the sales increase. This major new plant achieved its production performance criteria in February 1996. Accordingly, the Company ended capitalizing startup costs for this plant. During the three-month period ended March 31, 1996, costs of $584,000 were capitalized at the Shafter facility prior to the plant reaching its production performance criteria. Demand is expected to remain good in the Company's major market areas for the remainder of fiscal 1996. However, quarterly earnings are expected to be affected by operating losses at the new Shafter facility until the plant's operating level and product mix reach its break-even point. The Company's roofing products business is cyclical and is affected by some of the same economic factors that effect the housing industry generally, including interest rates, the availability of financing and general economic conditions. However, reroofing and remodeling, which constitute about 80% of industry unit sales, are generally less severely affected by economic downturns than product demand for new residential construction. Industrial Products Sales in the Industrial Products Group for the three months ended March 31, 1996 decreased compared to the prior year quarter. The Group reported a small operating loss for the three months ended March 31, 1996 compared to an operating profit in the prior year quarter. Chromium Corporation's customers have reduced shipment orders due to model changes and inventory adjustments. These factors have resulted in decreased sales at Chromium, which led to a small operating loss for this subsidiary during the three months ended March 31, 1996. These trends are expected to continue to result in reduced sales and lower operating results for Chromium in the fourth quarter of fiscal 1996 as compared to the prior year. 6 7 Ortloff Engineers LTD. recorded lower patent licensing income during the three month period ended March 31, 1996, as compared to the same quarter in the prior year. However, this subsidiary expects a significant improvement in patent licensing revenues in the fourth quarter of fiscal 1996 which should result in an overall improvement in profitability for the Industrial Products Group in the fourth quarter of fiscal 1996 as compared to the fourth quarter of fiscal 1995. CHANGES IN THE NINE-MONTH PERIOD ENDED MARCH 31, 1996, AS COMPARED TO THE NINE-MONTH PERIOD ENDED MARCH 31, 1995. During the nine-month period ended March 31, 1996, net income increased 37% to $8,108,000 from $5,937,000 in the same period last year. Sales increased 28% compared to the comparable prior year period. The increases in sales and income were primarily attributable to increased shipments in the Roofing Products Group during the nine-month period ended March 31, 1996. Roofing Products Sales in the Roofing Products Group for the first nine months of fiscal 1996 increased compared to the same period last year and operating profit was substantially higher. Increased shipments, higher prices and lower transportation costs improved both sales and operating profit for the Roofing Products Group. Sales from the new plant at Shafter, California accounted for a significant part of the sales increase. During the nine-month period ended March 31, 1996, costs of $3,913,000 were capitalized as deferred preoperating costs for the Shafter facility before this plant reached its production performance criteria in February 1996. Asphalt and glass fiber raw material costs were significantly higher in the first nine months of fiscal 1996 as compared to the same period in the prior year. However, the Company was able to implement price increases to offset these higher raw material costs. Industrial Products Sales in the Industrial Products Group for the first nine months of fiscal 1996 decreased and the Group reported lower operating profit compared to the same prior year period due to reduced shipments at Chromium Corporation as a result of Chromium's customers reducing orders due to model changes and inventory adjustments. In addition, Ortloff Engineers LTD. recorded lower patent licensing income. Operating Costs The Company's overall gross margin on sales was 24.1% in the fiscal 1996 period compared to 26.7% in the same fiscal 1995 period. The reduction in gross margin percentage to sales is primarily attributable to significantly higher sales with losses during the first year at the new Shafter facility. Selling, general and administrative costs as a percentage of sales were 14.9% for the fiscal 1996 period compared to 18.2% for the same fiscal 1995 period. During fiscal 1995, the Company established a larger sales organization to better serve growing market areas. This larger organization has been able to service the increase in sales orders without a proportionate increase in overall selling costs. 7 8 FINANCIAL CONDITION Total invested capital at March 31, 1996 was $150,941,000. Long-term debt represented 33% of total capitalization. At March 31, 1996, $17,318,000 was available under the Company's $70 million unsecured revolving line of credit. In September 1994, the Company's Board of Directors authorized the purchase of up to $10 million of the Company's common shares from time to time on the open market to be used for general corporate purposes. As of March 31, 1996, 94,800 shares with a cumulative cost of $1,440,000 had been repurchased under this program. In September 1995, the Board of Directors reinstated the Company's regular quarterly cash dividend at six cents per common share. Cash generated by operations for the nine month period ended March 31, 1996 was $2,391,000. Working capital increased $11,690,000 primarily as a result of a $6,800,000 increase in receivables and a $10,515,000 increase in inventory since June 30, 1995. The increase in receivables at March 31, 1996 is primarily due to the higher level of sales and seasonal marketing programs to certain customers that provided deferred payment terms. The deferred receivables are primarily due in the May 1996 through July 1996 timeframe. The significant increase in finished goods inventories is primarily due to higher production during the quarter with the addition of the new Shafter plant and building inventories for the seasonally stronger months from spring through fall. The current ratio was 2.7 to 1 at March 31, 1996. Historically, working capital requirements fluctuate during the year because of seasonality in some market areas. Generally, working capital requirements and related borrowings are higher in the spring and summer months, and lower in the fall and winter months. The Company used $34,232,000 for investing activities in the first nine months of fiscal 1996. The majority of these expenditures were for capital expenditures and related deferred preoperating expenses incurred in connection with the completion of the new roofing plant in Shafter, California, and the construction of a new plant at the Company's Ennis, Texas facility to manufacture nonwoven fiberglass substrate materials for roofing products and industrial facer products for the construction industry. The new nonwoven plant is nearing completion, and initial testing should be underway before the end of fiscal 1996. The new facility is expected to begin supplying the Company's three manufacturing plants with its nonwoven fiberglass mats this summer. The Company is spending about $100,000,000 in capital expenditures and related deferred pre-operating startup costs over a three-year period on the two new facilities. As of March 31, 1996, cumulative total expenditures for this expansion program have been about $92,000,000. The new plants should provide the potential to significantly increase the Company's sales, earnings and cash flow when completed and operating at expected levels in the years ahead. Net financing activities provided $30,818,000 in the first nine months of fiscal 1996, primarily resulting from a $32,000,000 increase in long-term borrowings to finance the expansion program, partially offset by dividends on common stock. 8 9 The Company's operations are subject to extensive federal, state and local laws and regulations relating to environmental matters. Although the company does not believe it will be required to expend amounts which will have a material adverse affect on the Company's consolidated financial position or results of operations by reason of environmental laws and regulations, such laws and regulations are frequently changed and could result in significantly increased cost of compliance. Further, certain of the Company's industrial products operations utilize hazardous materials in their production process. As a result, the Company incurs costs for remediation activities at its facilities from time to time. The Company establishes and maintains reserves for remediation activities, when appropriate, in accordance with Statement of Accounting Standards No. 5, Accounting for Contingencies. Current reserves established for known or probable remediation activities are not material to the Company's financial position or results of operation. Management believes that current cash and cash equivalents, cash flows from operations and its unsecured revolving credit facility should be sufficient during fiscal 1996 and beyond to fund the remainder of its current expansion program, other capital expenditures, working capital needs, dividends, stock repurchases and other cash requirements. Management also believes its revolving credit facility could be amended to provide additional cash resources. 9 10 PART II. OTHER INFORMATION ITEM 1: Legal Proceedings GAF Patent Litigation The District Court for the Northern District of Texas ordered GAF and Elk Corporation of Dallas to submit the design and utility patent cases to mediation. In mid-April 1996, the mediation was held but did not result in a resolution of the cases. The May 6, 1996 trial date for the design patent case has been continued to be reset at a later date. The utility patent case remains set for trial on September 16, 1996. Frontier Chemical Site Certain Phase I and Phase II PRPs have instituted proceedings seeking recovery of approximately $1.2 million in proceeds from a closure bond posted with the State of New York by the operators of the Frontier Site. If such proceedings are successful, participating Phase I and Phase II PRPs will share in any recovery. For further information and background on the above matters, see "Part I, Item 3. Legal Proceedings" in the Company's Annual Report on Form 10K for the year ended June 30, 1995. ITEM 6: Exhibits and Reports of Form 8-K (a) Exhibits: Exhibit (11): Computation of Income Per Common and Common Equivalent Share Exhibit (27): Financial Data Schedule (EDGAR Submission only) (b) No reports on Form 8-K were filed during the quarter ended March 31, 1996. 10 11 SIGNATURES Pursuant to the requirements 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 13, 1996 /s/ Richard J. Rosebery ------------------- ----------------------------------------- Richard J. Rosebery Executive Vice President, Chief Administrative & Financial Officer, and Treasurer /s/ Leonard R. Harral ----------------------------------------- Leonard R. Harral Vice President and Chief Accounting Officer 11 12 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 11 Computation of Income per Common and Common Equivalent Share 27 Financial Data Schedule
EX-11 2 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT (11) Elcor Corporation and Subsidiaries Computation of Income Per Common and Common Equivalent Share (In thousands, except per share amounts)
1. Three Months Ended March 31, 1996 Three Months Ended and March 31, 1995 ------------------------------ 3-31-96 3-31-95 ------- ------- Net Income $ 2,321 $ 1,614 ======= ======= Shares: Weighted average common shares outstanding 8,764 8,739 Adjustments: (a) Assumed issuance of shares purchased under incentive stock option plan using the treasury stock method 111 43 ------- ------- Total Common and Common Equivalent Shares 8,875 8,782 ======= ======= Income per Common and Common Equivalent Share $ .26 $ .18 ======= =======
2. Nine Months Ended March 31, 1996 Nine Months Ended and March 31, 1995 ------------------------------ 3-31-96 3-31-95 ------- ------- Net Income $ 8,108 $ 5,937 ======= ======= Shares: Total Common and Common Equivalent Shares Three months ended 9/30/95 and 9/30/94 8,843 8,925 Three months ended 12/31/95 and 12/31/94 8,838 8,849 Three months ended 3/31/96 and 3/31/95 8,875 8,782 ------- ------- Average nine months ended 3/31/96 and 3/31/95 8,852 8,852 ======= ======= Income per Common and Common Equivalent Share $ .92 $ .67 ======= =======
12 EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS JUN-30-1996 JUL-01-1995 MAR-31-1996 2,708 0 40,137 427 22,216 69,541 149,140 54,103 184,283 25,839 50,400 8,802 0 0 91,739 184,283 143,938 143,938 109,254 130,671 0 0 105 13,162 5,054 8,108 0 0 0 8,108 .92 .92
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