-----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, RqVpKT3+jgtKdDq0vF5/ZSuc9KHjvNXPnyApg3H6tGkYlDlfiru+JEY31UN5P6oX uygp9OKKLiLdDm++lDI5Qw== 0000950134-96-005964.txt : 19961113 0000950134-96-005964.hdr.sgml : 19961113 ACCESSION NUMBER: 0000950134-96-005964 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961112 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: 96658930 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 SEPTEMBER 30, 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 September 30, 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) 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 ------------- 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 November 4, 1996, Registrant had outstanding 8,775,301 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 9-30-96 6-30-96 - ------ ------- ------- CURRENT ASSETS Cash and cash equivalents $ 2,775 $ 3,744 Trade receivables, less allowance of $490 and $477 47,301 42,482 Inventories - Finished goods 13,040 20,512 Work-in-process 761 604 Raw materials 5,678 5,632 ---------- ---------- Total inventories 19,479 26,748 ---------- ---------- Prepaid expenses and other 946 1,956 Deferred income taxes 2,691 2,734 ---------- ---------- Total current assets 73,192 77,664 ---------- ----------- PROPERTY, PLANT AND EQUIPMENT, AT COST 172,250 163,053 Less - accumulated depreciation (54,352) (52,846) ---------- ---------- Property, plant and equipment, net 117,898 110,207 ---------- ---------- NET ASSETS OF DISCONTINUED OPERATIONS 2,988 2,942 OTHER ASSETS 1,301 1,315 ---------- ---------- $ 195,379 $ 192,128 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES Accounts payable $ 14,730 $ 15,503 Accrued liabilities 14,414 13,091 ---------- ---------- Total current liabilities 29,144 28,594 ---------- ---------- LONG-TERM DEBT 51,900 53,000 DEFERRED INCOME TAXES 9,172 8,336 SHAREHOLDERS' EQUITY - Common stock 8,802 8,802 Paid-in-capital 71,244 71,555 Retained earnings 25,653 22,499 ---------- ---------- 105,699 102,856 Less - Treasury stock, at cost, 29,875 and 33,949 shares (536) (658) ---------- ---------- Total shareholders' equity 105,163 102,198 ---------- ---------- $ 195,379 $ 192,128 ========== ==========
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 ------------------------- 9-30-96 9-30-95 ------- ------- SALES $ 64,536 $ 48,528 --------- -------- COST AND EXPENSES Cost of sales 50,524 35,856 Selling, general and administrative 7,897 6,752 --------- -------- INCOME FROM OPERATIONS 6,115 5,920 --------- -------- OTHER EXPENSE Interest expense, net 161 25 --------- -------- INCOME BEFORE INCOME TAXES 5,954 5,895 Provision for income taxes 2,186 2,232 --------- -------- NET INCOME $ 3,768 $ 3,663 ========= ======== INCOME PER COMMON AND COMMON EQUIVALENT SHARE $ .43 $ .41 ========= ======== DIVIDENDS PER COMMON SHARE $ .07 $ .06 ========= ======== AVERAGE COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 8,793 8,843 ========= ========
See accompanying notes to consolidated financial statements. 3 4 ELCOR CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited, $ in thousands)
Three Months Ended ----------------------- 9-30-96 9-30-95 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 3,768 $ 3,663 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 1,915 775 Deferred income taxes 879 857 Changes in assets and liabilities: Trade receivables (4,819) 1,237 Inventories 7,269 (126) Prepaid expenses and other 1,010 1,164 Accounts payable and accrued liabilities 550 573 -------- -------- Net cash provided by operating activities 10,572 8,143 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant & equipment (9,599) (8,066) Other (39) (14) -------- -------- Net cash provided by (used for) investing activities (9,638) (8,080) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Long-term borrowings, net (1,100) (1,200) Dividends on common stock (614) (524) Treasury stock transactions and other, net (189) (56) -------- -------- Net cash provided by (used for) financing activities (1,903) (1,780) -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (969) (1,717) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 3,744 3,731 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,775 $ 2,014 ======== ========
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 1996 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 periods ended September 30, 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 October 31, 1996, the Company increased its unsecured revolving credit facility from $70 million to $80 million, the term was extended by one year to October 31, 1999, and certain financial covenants were adjusted. There were no changes to the interest rate the Company currently pays for either LIBOR based borrowings or prime rate based borrowings. 5 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations RESULTS OF OPERATIONS During the first quarter ended September 30, 1996, net income increased to $3,768,000 from $3,663,000 in last year's first quarter. Sales increased 33% compared to the prior year first quarter. Sales for the first quarter of fiscal 1997 were significantly higher and net income improved compared to last year's first quarter, 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. A significant part of the increased shipments were from the new roofing plant at Shafter, California. The ability of this new plant to better serve customers in the Western United States has permitted the Company to expand its sales and marketing efforts to better serve customers in the Midwestern and Northeastern United States with products from its other roofing plants. Overall gross margin, as a percentage of sales, was 21.7% during the quarter ended September 30, 1996 compared to 26.1% during the same prior year quarter. This reduction in gross margin is primarily attributable to an operating loss of about $1,300,000 at the new Shafter, California plant during the quarter. Certain planned changes were being made to the new plant's production line towards the end of the first quarter which are expected to enhance the plant's overall performance in subsequent periods. Selling, general and administrative (S,G&A) expenses increased 17% during the first quarter of fiscal 1997 compared to the same prior year quarter. However, S,G&A costs were only 12% of sales in the current year quarter compared to 14% of sales in the prior year quarter. The Company has established a larger sales organization to better serve growing market areas. This larger organization has been able to service the significant increase in sales orders without a proportionate increase in overall selling costs. Start-up operations at the Company's new nonwoven fiberglass mat plant at Ennis, Texas were underway during the first quarter. During the quarter ended September 30, 1996, about $1,700,000 of deferred preoperating costs at the new Ennis facility were included in capital expenditures. The Company's industrial products businesses, which account for less than 10% of consolidated sales and earnings, also reported improved sales and operating income during the quarter ended September 30, 1996 as compared to the same prior year quarter. The Company's roofing products business is cyclical and is affected by some of the same economic factors that affect the housing industry generally, including interest rates, the availability of financing and general economic conditions. However, reroofing and remodeling, which now constitute about 85% of industry unit sales, are generally less severely affected by economic downturns than product demand for new residential construction. 6 7 FINANCIAL CONDITION The Company's financial condition at September 30, 1996 was very strong. Total invested capital was $157,063,000. Long-term debt represented 33% of total capitalization. At September 30, 1996, $16,100,000 was available under the Company's $70 million unsecured revolving line of credit. Effective October 31, 1996, the revolving credit facilities were increased to $80 million to provide additional financial resources to support the Company's growth strategies. Cash generated by operations for the three months ended September 30, 1996 was $10,572,000. Working capital requirements (excluding cash and cash equivalents) decreased $4,053,000. The current ratio was 2.5 to 1 at September 30, 1996. During the first quarter ended September 30, 1996, the substantial increase in sales resulted in a $7,269,000 decrease in inventory, partially offset by a $4,819,000 increase in trade receivables. 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 $9,638,000 for investing activities in the first quarter of fiscal 1997. The majority of these investments were for capital expenditures and related deferred preoperating expenses incurred in connection with the new nonwoven fiberglass mat plant at the Ennis, Texas facility, which was in start-up during the quarter ended September 30, 1996, and changes in the production line at the Shafter, California plant to enhance the plant's overall performance. Total capital expenditures are expected to be significantly less in fiscal 1997 than in recent years, which included significant capital expenditures relating to the construction of the two new major manufacturing facilities. The Company utilized $1,903,000 for financing activities in the first quarter of fiscal 1996, primarily for repayment of long-term debt and dividends on common stock. 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 September 30, 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. In September 1996, the Board of Directors increased the regular quarterly cash dividend by 17% to seven cents per common share. 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 effect 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 off-site and at its facilities from time to time. The Company establishes and maintains reserves for such remediation activities, when appropriate, in accordance with Statement of Financial Accounting Standard 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 operations. 7 8 Management believes that cash and cash equivalents, cash flows from operations and its revolving credit facility should be sufficient during fiscal 1997 and beyond to fund its currently projected capital expenditure requirements, working capital needs, dividends, stock repurchases and other cash requirements. OUTLOOK At the present time, we expect that strong demand for our patented Enhanced High Definition and Raised Profile Prestique shingles will increase shipments and sales to record levels for fiscal 1997. We continue to believe that earnings per share during the second and third quarters should be in the general range of, or possibly lower than, the fiscal 1996 comparable quarters until the manufacturing output and sales at both new plants rise above the break-even point. We expect that fourth quarter earnings will benefit from the seasonal increase in demand for products produced by these two new major facilities. Our current forecast for earnings per share for fiscal year ending June 30, 1997 remains in the range of $1.30 to $1.50 per share, up from $1.16 per share in fiscal 1996. FORWARD-LOOKING STATEMENTS This Form 10-Q contains "forward-looking statements" about the Company's prospects for the future. 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. 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. The Company has completed a $100 million expansion program which included a new roofing plant in Shafter, California and the construction of a new plant at the Company's Ennis, Texas facility to manufacture nonwoven fiberglass roofing mat and industrial facer products for the construction 8 9 industry. As new facilities, their progress in achieving anticipated operating efficiencies and financial results is difficult to predict. If such progress is slower than anticipated, or if demand for products produced at either of these 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. 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. Parties are cautioned not to rely on any such forward-looking beliefs or judgments in making investment decisions. 9 10 PART II. OTHER INFORMATION ITEM 1: Legal Proceedings GAF Patent Litigation A hearing before the District Court for the Northern District of Texas to interpret the claims of Elk's design and utility patents is scheduled for December 9, 1996, with trial in the design patent case scheduled for April 21, 1997, and trial in the utility patent case yet to be scheduled. For further information and background on the GAF Patent Litigation and other legal proceedings involving the Company, see "Part I, Item 3. Legal Proceedings" in the Company's Annual Report on Form 10-K for the year ended June 30, 1996. ITEM 6. Exhibits and Reports of Form 8-K (a) Exhibits Exhibit (4.9): Third Amendment dated October 31, 1996 to Loan Agreement dated September 29, 1993 among Elcor Corporation, NationsBank of Texas, N.A., as Issuer, Administrative Lender, and Lender; and Bank of America - Texas, N.A. and Comerica Bank - Texas as Lenders. Exhibit (11): Computation of Income Per Common and Common Equivalent Share Exhibit (27): Financial Data Schedule (EDGAR Submission only) (b) The Registrant filed a Form 8-K on August 20, 1996 relating to a press release containing "forward-looking statements" about its prospects for the future. 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: November 12, 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 ------- ----------- Exhibit (4.9): Third Amendment dated October 31, 1996 to Loan Agreement dated September 29, 1993 among Elcor Corporation, NationsBank of Texas, N.A., as Issuer, Administrative Lender, and Lender; and Bank of America - Texas, N.A. and Comerica Bank - Texas as Lenders. Exhibit (11): Computation of Income Per Common and Common Equivalent Share Exhibit (27): Financial Data Schedule (EDGAR Submission only) 12 EX-4.9 2 3RD AMENDMENT TO LOAN AGREEMENT 1 EXHIBIT 4.9 THIRD AMENDMENT DATED OCTOBER 31, 1996 TO LOAN AGREEMENT DATED SEPTEMBER 19, 1993 AMONG ELCOR CORPORATION, NATIONSBANK OF TEXAS, N.A., AS ISSUER, ADMINISTRATIVE LENDER, AND LENDER; AND BANK OF AMERICA-TEXAS, N.A. AND COMERICA BANK - TEXAS AS LENDERS. 2 EXHIBIT 4.9 THIRD AMENDMENT TO LOAN AGREEMENT THIS THIRD AMENDMENT TO LOAN AGREEMENT (this "Third Amendment"), dated as of October 31, 1996, is entered into among ELCOR CORPORATION, a Delaware corporation ("Company"), the lenders listed on the signature pages hereof ("Lenders"), NATIONSBANK OF TEXAS, N.A., as Issuer (in said capacity, "Issuer"), and NATIONSBANK OF TEXAS, N.A., as Administrative Lender (in said capacity, "Administrative Lender"). BACKGROUND A. Company, the Lenders, Issuer and Administrative Lender are parties to that certain Loan Agreement, dated as of September 29, 1993, as amended by that certain First Amendment to Loan Agreement, dated as of October 31, 1994, and that certain Second Amendment to Loan Agreement, dated as of December 15, 1995 (said Loan Agreement, as amended, the "Loan Agreement"; the terms defined in the Loan Agreement and not otherwise defined herein shall be used herein as defined in the Loan Agreement). B. Company, Lenders, Issuer and Administrative Lender desire to amend the Loan Agreement to (i) increase the Commitment to $80,000,000, (ii) extend the Termination Date, and (iii) make certain other amendments thereto. NOW, THEREFORE, in consideration of the covenants, conditions and agreements hereafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are all hereby acknowledged, Company, Lenders, Issuer and Administrative Lender covenant and agree as follows: 1. AMENDMENTS TO LOAN AGREEMENT. (a) The dollar amount of "$70,000,000" set forth in the Background paragraph of the Credit Agreement is hereby amended to be "$80,000,000". (b) The definition of "Applicable Margin" set forth in Article I of the Loan Agreement is hereby amended to read as follows: "Applicable Margin" means the following per annum percentages, applicable in the following situations: 3
Prime Rate LIBOR Applicability Basis Basis ------------- ---------- ----- (i) If the Fixed Charge Coverage Ratio is less 0.000 1.000 than 1.25 to 1 (ii) If the Fixed Charge Coverage Ratio is greater 0.000 0.625 than or equal to 1.25 to 1 but less than 1.50 to 1 (iii) If the Fixed Charge Coverage Ratio is greater 0.000 0.500 than or equal to 1.50 to 1
In addition, the per annum percentages set forth above (A) in all cases for the LIBOR Basis shall be increased by 0.25% if the Capitalization Ratio is not less than 40% and (B) in the case of clause (i) above only for the Prime Rate Basis shall be increased by 0.25% if the Capitalization Ratio is not less than 40%. The Applicable Margin payable by Company on the Advances outstanding hereunder shall be subject to reduction or increase, as applicable and as set forth in the table above, on a quarterly basis according to the performance of Company as tested by the Fixed Charge Coverage Ratio and, where appropriate, the Capitalization Ratio. Any such increase or reduction in the Applicable Margin provided for herein shall be effective on the first calendar day of the month next succeeding the date of receipt by Administrative Lender of the applicable financial statements. If financial statements of Company setting forth the Fixed Charge Coverage Ratio and the Capitalization Ratio are not received by Administrative Lender by the date required pursuant to Section 5.5 hereof, the Applicable Margin shall be determined as if the Fixed Charge Coverage Ratio is less than 1.25 to 1 and the Capitalization Ratio is not less than 40% until such time as such financial statements are received. For the final quarter of any fiscal year of Company, Company may provide its unaudited financial statements, subject only to year-end adjustments, for the purpose of adjusting the Applicable Margin." (c) The definition of "Commitment" set forth in Article 1 of the Loan Agreement is hereby amended to read as follows: "Commitment" means as to any Lender, the amount set forth opposite such Lender's name under the column titled "Commitment" on Schedule 7 hereto, as the same may be reduced or terminated pursuant to Article 2, which at no time shall exceed such Lender's Specified Percentage of $80,000,000." (d) The definition of "Termination Date" set forth in Article 1 of the Loan Agreement is hereby amended to read as follows: -2- 4 "Termination Date" means October 31, 1999, or such earlier date that the Commitment is terminated or such later date that the Commitment is extended pursuant to Section 2.19 hereof." (e) Section 5.13 of the Loan Agreement is hereby amended to read as follows: "5.13 Capitalization Ratio. Company and its Subsidiaries will maintain a Capitalization Ratio at the end of each fiscal quarter of not greater than 45%." (f) Schedule 1 to the Loan Agreement is hereby amended and supplemented as set forth on Schedule 1 to this Third Amendment. (g) Schedule 4 to the Loan Agreement is hereby amended and supplemented as set forth on Schedule 4 to this Third Amendment. (h) Schedule 5 to the Loan Agreement is hereby amended and supplemented as set forth on Schedule 5 to this Third Amendment. (i) Schedule 7 to the Loan Agreement is hereby amended to be in the form of Schedule 7 to this Third Amendment. 2. REPRESENTATIONS AND WARRANTIES TRUE: NO EVENT OF DEFAULT. By its execution and delivery hereof, Company represents and warrants that, as of the date hereof and after giving effect to the amendments contemplated by the foregoing Section 1: (a) the representations and warranties contained in the Loan Agreement are true and correct on and as of the date hereof as if made on and as of such date; (b) no event has occurred and is continuing which constitutes a Default or an Event of Default; (c) Company has full power and authority to execute and deliver this Third Amendment, the $40,000,000 Note payable to the order of NationsBank in the form of Exhibit A hereto (the "NationsBank Note"), the $25,000,000 Note payable to the order of Bank of America in the form of Exhibit B hereto (the "Bank of America Note"), and the $15,000,000 Note payable to the order of Comerica in the form of Exhibit C hereto (the "Comerica Note") (the NationsBank Note, the Bank of America Note and the Comerica Note are collectively referred to herein as the "Notes"), and this Third Amendment, the Loan Agreement, as amended hereby, and the Notes constitute the legal, valid and binding obligations of Company, enforceable in accordance with their respective terms, except as enforceability may be limited by applicable debtor relief laws and by general principles of equity (regardless of whether enforcement is sought in a -3- 5 proceeding in equity or at law) and except as rights to indemnity may be limited by federal or state securities law; and (d) no authorization, approval, consent, or other action by, notice to, or filing with, any governmental authority or other Person (other than the Board of Directors of Company), is required for the execution, delivery or performance by Company of this Third Amendment or the Notes or the acknowledgement of this Third Amendment by each Subsidiary which executed the Guaranty Agreement (a "Guarantor"). 3. CONDITIONS OF EFFECTIVENESS. This Third Amendment shall be effective as of October 31, 1996, subject to the following: (a) Administrative Lender shall have received counterparts of this Third Amendment executed by each Lender and Issuer; (b) Administrative Lender shall have received counterparts of this Third Amendment executed by Company and acknowledged by each Guarantor; (c) Each Lender shall have received its respective Note executed by Company; (d) Administrative Lender shall have received certified copies of resolutions of Company authorizing execution, delivery and performance of this Third Amendment and the Notes; and (e) Administrative Lender shall have received, in form and substance satisfactory to Administrative Lender and its counsel, such other documents, certificates and instruments as Administrative Lender shall require. 4. GUARANTORS ACKNOWLEDGEMENT. By signing below, each of the Guarantors (i) acknowledges and consents to the execution, delivery and performance by Company of this Third Amendment, (ii) agrees that its obligations in respect of the Guaranty Agreement (A) are not released, modified, impaired or affected in any manner by this Third Amendment or any of the provisions contemplated herein, and (B) cover, among other things, the Commitment as increased by this Third Amendment, and (ii) acknowledges that it has no claims or offsets against, or defenses or counterclaims to, the Guaranty Agreement. 5. REFERENCE TO THE LOAN AGREEMENT. (a) Upon the effectiveness of this Third Amendment, each reference in the Loan Agreement to "this Agreement", "hereunder", or words of like import shall mean and be a reference to the Loan Agreement, as affected and amended by this Third Amendment. -4- 6 (b) The Loan Agreement, as amended by this Third Amendment, and all other Loan Papers shall remain in full force and effect and are hereby ratified and confined. 6. COSTS, EXPENSES AND TAXES. Company agrees to pay on demand all costs and expenses of Administrative Lender in connection with the preparation, reproduction, execution and delivery of this Third Amendment, the Notes, and the other instruments and documents to be delivered hereunder (including the reasonable fees and out-of-pocket expenses of counsel for Administrative Lender with respect thereto and with respect to advising Administrative Lender as to its rights and responsibilities under the Loan Agreement, as amended by this Third Amendment). 7. EXECUTION IN COUNTERPARTS. This Third Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. 8. GOVERNING LAW: BINDING EFFECT. This Third Amendment shall be governed by and construed in accordance with the laws of the State of Texas and shall be binding upon Company, each Lender, Issuer and Administrative Lender and their respective successors and assigns. 9. HEADINGS. Section headings in this Third Amendment are included herein for convenience of reference only and shall not constitute a part of this Third Amendment for any other purpose. 10. ENTIRE AGREEMENT. THE LOAN AGREEMENT, AS AMENDED BY THIS THIRD AMENDMENT, AND THE OTHER LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AS TO THE SUBJECT MATTER THEREIN AND HEREIN AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. *************************************************************************** * * * REMAINDER OF PAGE LEFT INTENTIONALLY BLANK* * * * *************************************************************************** -5- 7 IN WITNESS WHEREOF, the parties hereto have executed this Third Amendment as of the date first above written. ELCOR CORPORATION By: /s/ RICHARD J. ROSEBERY ---------------------------------------- Richard J. Rosebery, Executive Vice President, Treasurer, Chief Administrative and Financial Officer NATIONSBANK OF TEXAS, N.A. as Administrative Lender, Lender and Issuer By: /s/ BIANCA HEMMEN ---------------------------------------- Name: Bianca Hemmen ----------------------------------- Title: Senior Vice President ---------------------------------- BANK OF AMERICA - TEXAS, N.A. By: /s/ DONALD P. HELLMAN ---------------------------------------- Name: Donald P. Hellman ----------------------------------- Title: Vice President ---------------------------------- COMERICA BANK - TEXAS By: /s/ GARY L. EMERY ---------------------------------------- Name: Gary L. Emery ----------------------------------- Title: Vice President ---------------------------------- -6- 8 ELK CORPORATION OF DALLAS ELK CORPORATION OF TEXAS ELK CORPORATION OF AMERICA ELK CORPORATION OF ARKANSAS ELK CORPORATION OF ALABAMA CHROMIUM CORPORATION OEL, LTD. By: /s/ RICHARD J. ROSEBERY ------------------------------------- Richard J. Rosebery Vice President for all GA INDUSTRIES CORPORATION M MACHINERY COMPANY, INCORPORATED (formerly known as Mosley Machinery Company, Incorporated) M SERVICE CORPORATION (formerly known as Mosley Service Corporation) By: /s/ RICHARD J. ROSEBERY ------------------------------------- Richard J. Rosebery President for all ELCOR SERVICE CORPORATION By: /s/ RICHARD J. ROSEBERY ------------------------------------- Richard J. Rosebery Executive Vice President -7- 9 EXHIBIT A PROMISSORY NOTE $40,000,000.00 Dated: ,1996 -------- FOR VALUE RECEIVED, the undersigned, ELCOR CORPORATION, a Delaware corporation ("Company"), hereby promises to pay to the order of NATIONSBANK OF TEXAS, N.A. ("Lender") the principal amount of each Advance made by Lender to Company pursuant to the Loan Agreement (as hereinafter defined). All Advances remaining unpaid shall be repaid in full on the Termination Date. Company promises to pay interest on the unpaid principal balance of each Advance from the date of such Advance until said principal amount is paid in full, at the times and at the rate or rates as specified in the Loan Agreement. Both principal and interest are payable in lawful money of the United States of America to NationsBank of Texas, N.A., as Administrative Lender, at 901 Main Street, Dallas, Texas 75202, in immediately available funds. Each Advance made by Lender to Company pursuant to the Loan Agreement and all payments made on account of principal hereof shall be recorded by Lender and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Note; provided, however, failure to make any such recordation or endorsement shall not affect the obligations of Company hereunder or under the Loan Agreement. This Note is one of the Notes referred to in, and is entitled to the benefits of and obligations pertaining to, the Loan Agreement dated as of September 29, 1993 (said Loan Agreement, as amended, modified or supplemented from time to time, the "Loan Agreement") among Company, Lender, certain other Lenders, and NationsBank of Texas, N.A., as Administrative Lender, and this Note is a substitution for (but is not an extinguishment or novation of any indebtedness in respect of) that certain Note of Company payable to the order of Lender dated December 15, 1995, in the principal amount of $40,000,000.00. The Loan Agreement, among other things, (i) provides for the making of Advances by Lender to Company from time to time in an aggregate amount not to exceed at any time outstanding the U.S. dollar amount first above mentioned, the indebtedness of Company resulting from each such Advance being evidenced by this Note, and (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. All terms not expressly defined herein shall have the same definitions as set forth in the Loan Agreement. ELCOR CORPORATION By: --------------------------------------- Richard J. Rosebery Executive Vice President, Treasurer, Chief Administrative and Financial Officer 10 EXHIBIT B PROMISSORY NOTE $25,000,000.00 Dated: ,1996 ------ FOR VALUE RECEIVED, the undersigned, ELCOR CORPORATION, a Delaware corporation ("Company"), hereby promises to pay to the order of BANK OF AMERICA TEXAS, N.A. ("Lender") the principal amount of each Advance made by Lender to Company pursuant to the Loan Agreement (as hereinafter defined). All Advances remaining unpaid shall be repaid in full on the Termination Date. Company promises to pay interest on the unpaid principal balance of each Advance from the date of such Advance until said principal amount is paid in full, at the times and at the rate or rates as specified in the Loan Agreement. Both principal and interest are payable in lawful money of the United States of America to NationsBank of Texas, N.A., as Administrative Lender, at 901 Main Street, Dallas, Texas 75202, in immediately available funds. Each Advance made by Lender to Company pursuant to the Loan Agreement and all payments made on account of principal hereof shall be recorded by Lender and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Note; provided, however, failure to make any such recordation or endorsement shall not affect the obligations of Company hereunder or under the Loan Agreement. This Note is one of the Notes referred to in, and is entitled to the benefits of and obligations pertaining to, the Loan Agreement dated as of September 29, 1993 (said Loan Agreement, as amended, modified or supplemented from time to time, the "Loan Agreement") among Company, Lender, certain other Lenders, and NationsBank of Texas, N.A., as Administrative Lender, and this Note is a substitution for (but is not an extinguishment or novation of any indebtedness in respect of) that certain Note of Company payable to the order of Lender dated December 15, 1995 in the principal amount of $20,000,000.00. The Loan Agreement, among other things, (i) provides for the making of Advances by Lender to Company from time to time in an aggregate amount not to exceed at any time outstanding the U.S. dollar amount first above mentioned, the indebtedness of Company resulting from each such Advance being evidenced by this Note, and (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. All terms not expressly defined herein shall have the same definitions as set forth in the Loan Agreement. ELCOR CORPORATION By: ------------------------------------------ Richard J. Rosebery Executive Vice President, Treasurer, Chief Administrative and Financial Officer 11 EXHIBIT C PROMISSORY NOTE $15,000,000.00 Dated: ,1996 ------ FOR VALUE RECEIVED, the undersigned, ELCOR CORPORATION, a Delaware corporation ("Company"), hereby promises to pay to the order of COMERICA BANK - TEXAS ("Lender") the principal amount of each Advance made by Lender to Company pursuant to the Loan Agreement (as hereinafter defined). All Advances remaining unpaid shall be repaid in full on the Termination Date. Company promises to pay interest on the unpaid principal balance of each Advance from the date of such Advance until said principal amount is paid in full, at the times and at the rate or rates as specified in the Loan Agreement. Both principal and interest are payable in lawful money of the United States of America to NationsBank of Texas, N.A., as Administrative Lender, at 901 Main Street, Dallas, Texas 75202, in immediately available funds. Each Advance made by Lender to Company pursuant to the Loan Agreement and all payments made on account of principal hereof shall be recorded by Lender and, prior to any transfer hereof, endorsed on the grid attached hereto which is part of this Note; provided, however, failure to make any such recordation or endorsement shall not affect the obligations of Company hereunder or under the Loan Agreement. This Note is one of the Notes referred to in, and is entitled to the benefits of and obligations pertaining to, the Loan Agreement dated as of September 29, 1993 (said Loan Agreement, as amended, modified or supplemented from time to time, the "Loan Agreement") among Company, Lender, certain other Lenders, and NationsBank of Texas, N.A., as Administrative Lender, and this Note is a substitution for (but is not an extinguishment or novation of any indebtedness in respect of) that certain Note of Company payable to the order of Lender dated December 15, 1995 in the principal amount of $10,000,000.00. The Loan Agreement, among other things, (i) provides for the making of Advances by Lender to Company from time to time in an aggregate amount not to exceed at any time outstanding the U.S. dollar amount first above mentioned, the indebtedness of Company resulting from each such Advance being evidenced by this Note, and (ii) contains provisions for acceleration of the maturity hereof upon the happening of certain stated events and also for prepayments on account of principal hereof prior to the maturity hereof upon the terms and conditions therein specified. All terms not expressly defined herein shall have the same definitions as set forth in the Loan Agreement. ELCOR CORPORATION By: ------------------------------------------ Richard J. Rosebery Executive Vice President, Treasurer, Chief Administrative and Financial Officer 12 SCHEDULE 1 EXISTING LITIGATION This schedule is confidential and has been omitted. 13 SCHEDULE 4 FIXED ASSETS HELD FOR SALE This schedule is confidential and has been omitted. 14 SCHEDULE 5 ENVIRONMENTAL MATTERS This schedule is confidential and has been omitted. 15 SCHEDULE 7
LENDER COMMITMENT SPECIFIED PERCENTAGE ------ ---------- -------------------- NationsBank of Texas, N.A. $40,000,000 50.00% Bank of America - Texas, N.A. $25,000,000 31.25% Comerica Bank - Texas $15,000,000 18.75%
EX-11 3 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11 COMPUTATION OF INCOME PER COMMON AND COMMON EQUIVALENT SHARE 2 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 September 30, 1996 Three Months Ended ------------------ and September 30, 1995 9-30-96 9-30-95 ------------------ Net Income $ 3,768 $ 3,663 ======= ======= Shares: Weighted average common shares outstanding 8,758 8,723 Adjustments: (a) Assumed issuance of shares purchased under incentive stock option plan using the treasury stock method 35 120 ------- ------- Total Common and Common Equivalent Shares 8,793 8,843 ======= ======= Income per Common and Common Equivalent Share $ .43 $ .41 ======= =======
EX-27 4 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS JUN-30-1997 JUL-01-1996 SEP-30-1996 2,775 0 47,791 490 19,479 73,192 172,250 54,352 195,379 29,144 51,900 0 0 8,802 96,361 195,379 64,536 64,536 50,524 58,421 0 0 161 5,954 2,186 3,768 0 0 0 3,768 .43 .43
-----END PRIVACY-ENHANCED MESSAGE-----