-----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, TSOcjzaKwEiw5FRyBoVjdmK13M4KJG6ms9T2KX6RF9FNLp1LxBkMtLiACbuYJnU5 +CptiK0Eh79iicG4c/fw0g== 0000950134-03-000746.txt : 20030117 0000950134-03-000746.hdr.sgml : 20030117 20030117114031 ACCESSION NUMBER: 0000950134-03-000746 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030116 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: FILED AS OF DATE: 20030117 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELKCORP 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05341 FILM NUMBER: 03517257 BUSINESS ADDRESS: STREET 1: 14643 DALLAS PKWY STE 1000 STREET 2: WELLINGTON CTR CITY: DALLAS STATE: TX ZIP: 75254-8890 BUSINESS PHONE: 9728510500 MAIL ADDRESS: STREET 1: WELLINGTON CENTRE STE 1000 STREET 2: 14643 DALLAS PKWY CITY: DALLAS STATE: TX ZIP: 75254-8890 FORMER COMPANY: FORMER CONFORMED NAME: ELCOR CHEMICAL CORP DATE OF NAME CHANGE: 19761119 FORMER COMPANY: FORMER CONFORMED NAME: ELCOR CORP DATE OF NAME CHANGE: 19920703 8-K 1 d02553e8vk.txt FORM 8-K 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 16, 2003 ---------------- ELKCORP ------- (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 75254-8890 - -------------------------------------------- ---------- (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) Item 7. Exhibits 99.1 Press release dated January 16, 2003 of ElkCorp. Item 9. Regulation FD Disclosure Press Release On January 16, 2003, the company issued a press release containing "forward-looking statements" that involve risks and uncertainties about its prospects for the future. The statements that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements usually are accompanied by words such as "optimistic," "outlook," "believe," "estimate," "potential," "project," "expect," "anticipate," "plan," "predict," "could," "should," "may," "likely," or similar words that convey the uncertainty of future events or outcomes. These statements are based on judgments the company believes are reasonable; however, actual results could differ materially from those discussed here as a result of a number of factors, including the following: 1. The company's building products business is substantially non-cyclical, but can be affected by weather, the availability of financing, insurance claims paying practices, 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 and insurance 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 building 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 energy, trucking and rail costs. Furthermore, temporary shortages or disruption in supply of raw materials or transportation do result from time to time from a variety of causes. Historically, the company has been able to pass some of the higher raw material, energy and transportation costs through to the customer. Should the company be unable to recover higher raw material, energy and/or transportation costs from price increases of its products, or if the company experiences temporary shortages or disruption of supply of raw materials or transportation, operating results could be adversely affected and/or lower than projected. 3. The company has been involved in a significant expansion plan over the past several years, including the construction of new facilities and the expansion of existing facilities. Progress in achieving anticipated operating efficiencies and financial results is difficult to predict for new and expanded plant facilities. If such progress is slower than anticipated, or if demand for products produced at new or expanded plants does not meet current expectations, operating results could be adversely affected. 1 4. Certain facilities of the company's 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 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 or borrowings under its available credit facilities, significant increases in interest rates could substantially affect its borrowing costs or its cost of alternative sources of capital. 7. Each of the company's businesses, especially Cybershield's business, is subject to the risks of technological changes and competition that is based on technology improvement or labor savings. These factors could affect the demand for or the relative cost of the company's technology, products and services, or the method and profitability of the method of distribution or delivery of such technology, 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. Cybershield has lost substantial business as a result of most cellular handset production moving to Asia where Cybershield has no significant presence. Low labor costs in Asia make other coating processes competitive with those Cybershield would use. Cybershield's future viability may depend on the successful commercialization of the EXACT process, or other value added services, which are unproven as yet on a large commercial scale. 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, market demand is less than expected, 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. 2 Parties are cautioned not to rely on any such forward-looking beliefs or judgments in making investment decisions. Other Matters The company may, from time to time, find that it has commented on non-public information, including forward-looking information, to analysts. If that should occur, the company may post disclosures at www.elcor.com that it deems appropriate under Regulation F-D. No such disclosure, or similar information filed or furnished by Form 8-K, should be deemed an admission that such information is material to investors. 3 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. ElkCorp DATE: January 17, 2003 /s/ Harold R. Beattie, Jr. ------------------ -------------------------- Harold R. Beattie, Jr. Senior Vice President, Chief Financial Officer and Treasurer /s/ Leonard R. Harral --------------------- Leonard R. Harral Vice President and Chief Accounting Officer 4 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - ----------- ----------- 99.1 Press release dated January 16, 2003 of ElkCorp.
EX-99.1 3 d02553exv99w1.txt PRESS RELEASE EXHIBIT 99.1 Press Release dated January 16, 2003 of ElkCorp PRESS RELEASE TRADED: NYSE FOR IMMEDIATE RELEASE SYMBOL: ELK FOR FURTHER INFORMATION: Harold R. Beattie, Jr. Sr. Vice President, Chief Financial Officer and Treasurer (972) 851-0523 ELKCORP REPORTS SECOND QUARTER FISCAL 2003 RESULTS DALLAS, TEXAS, January 16, 2003 . . . . ElkCorp today reported net income of $2.8 million, or $0.14 per diluted share, for its seasonally slower second fiscal quarter ending December 31, 2002, compared to net income of $1.3 million, or $0.06 per share, during the same quarter last year. Sales during the quarter were $109.1 million, compared to $113.1 million during the same quarter last year. Effective August 13, 2002, ElkCorp changed its method of accounting for employee stock options from the variable to fixed method. This change resulted from ElkCorp's termination of a cashless relinquishment alternative, previously available under its 1998 Incentive Stock Option Plan. The use of variable stock option accounting during the year-ago December 2001 quarter resulted in $4.0 million of pre-tax, noncash stock option compensation expense that would have not been present under fixed stock option accounting. If ElkCorp had used fixed stock option accounting during the year-ago December 2001 quarter, pro forma income would have been $3.9 million, or $0.20 per share. Thomas D. Karol, ElkCorp's Chairman of the Board and Chief Executive Officer, said, "Stronger than expected shingle shipments during the second half of December, and lower than previously anticipated expenses and customer rebates, enabled us to exceed our more conservative earnings outlook of just several weeks ago. We are very pleased to end an otherwise very challenging quarter on a positive note," he said. SEGMENT OPERATING RESULTS Second quarter Building Products sales increased 1.7% to $98.6 million, compared to $97.0 million in the year-ago quarter. Operating profit was $7.5 million, compared to $9.7 million in the same quarter last year. Compared to the same quarter last year, higher sales reflected a 10.4% increased in unit shingle shipments, a 2.6% decline in average selling prices, a sales mix containing a higher proportion of lower value products, and /more PRESS RELEASE ElkCorp January 16, 2003 Page 2 lower external nonwoven mat sales. Lower external nonwoven volumes were largely offset by higher internal consumption of nonwoven mat utilized in the manufacture of roofing products. Comparable profit contributions are derived from both external and internal nonwoven consumption. Significantly higher asphalt costs ($2.5 million), unusually high litigation costs ($0.5 million), limited production of a new "beta" shingle product ($0.5 million), and start-up losses at Elk Composite Building Products ($0.5 million), reduced operating profit by a total of $4.0 million. Good expense control during the quarter resulted in lower controllable expenses. Second quarter sales for the Other, Technologies segment totaled $10.4 million, compared to $16.2 million in the year-ago quarter. Operating profit was $1.2 million, compared to $1.1 million in the same quarter last year. Seasonal increases in cellular handset related sales and growing sales momentum in other product categories resulted in a $0.2 million operating profit at Cybershield during the quarter. Ortloff recorded operating profit of $1.1 million and Chromium experienced an operating loss of $0.1 million during the quarter. FINANCIAL CONDITION At December 31, 2002, the principal amount of ElkCorp's long-term debt was $120.0 million. In June 2002, the company entered into an interest rate swap that effectively converted the interest rate from fixed to floating on $60.0 million of its long-term debt through 2012. At December 31, 2002, the fair market value of this interest rate hedge was approximately $5.4 million. Accounting rules require that this amount be recorded on the balance sheet as an increase in "other assets", offset by a corresponding increase in the carrying value of "long-term debt". Therefore, ElkCorp's balance sheet at December 31, 2002 reflects long-term debt of $125.4 million. ElkCorp has no off-balance sheet arrangements or transactions with unconsolidated, special purpose entities. At December 31, 2002, ElkCorp's liquidity consisted of $17.8 million of cash and cash equivalents and $97.4 million of available borrowings under a $100 million committed revolving credit facility. ElkCorp's debt to capital ratio (after deducting cash and marketable securities from ElkCorp's $120.0 million of principal debt) was 35.4%. OUTLOOK Mr. Karol said, "Surprising strength in our roofing shipments during the month of December was likely the result of a higher incidence of storm activity in some regions, and inventory purchases by distributors in advance of scheduled price increases and to hedge against potential asphalt shortages. Demand was particularly strong in West Coast markets and was probably related to the series of El Nino storms, containing heavy rain and strong winds, that affected the area. We expect to see continued strengthening in the roofing market during the coming spring and summer months. /more PRESS RELEASE ElkCorp January 16, 2003 Page 3 "It has become apparent that the extended paralysis of Venezuela's oil industry will result in asphalt shortages to the U.S. roofing industry. Asphalt in is in short supply in certain eastern markets and suppliers have begun to allocate available supplies to contractual customers based upon historical usage. As a result of our strong current inventory position, we do not expect that the current asphalt allocations will significantly impair our future sales. We do, however, expect that our near term asphalt costs could increase by $30-$40 per ton over December levels. Effective January 6, 2003, we implemented a 3% price increase intended to recover prior increases in our asphalt costs. We intend to implement another larger price increase in February 2003 to recover the latest round of asphalt cost escalation. We believe that current market conditions are conducive to our realization of both price increases. "During the quarter, we completed the assimilation of our new composite building products acquisition, and expanded and improved its product line for decking, transportation and other applications. We also purchased additional equipment to bring its manufacturing capacity up to a critical mass. By the end of March 2003, this entity will have the manufacturing capacity to generate $15-$20 million of annual sales and should begin contributing to profitability at that time. "We are very pleased with the progress made by Cybershield during the quarter, and believe we are on the right track to successfully reposition this business for sustained profitability. Ortloff's activity backlog is strong and we expect it will generate good, to potentially excellent, results over the remainder of fiscal 2003. We expect that Chromium's operating profits will improve during the second half the year as a result of increasing sales from new wear tile and abrasion plate products. "California has not yet announced its definitive new fire standard for mattress products. We currently expect a decision by the end of January 2003, with compliance being required by January 2004. We are hopeful that meaningful sales opportunities will begin to develop during the second half of calendar 2003. We continue to be very excited about the future market potential of our VersaShield TB 129 fire-barrier fabric. "Our earnings outlook for full fiscal year 2003 remains unchanged at $1.23 to $1.33 per diluted share ($1.05 to $1.15 per diluted share excluding first quarter income from variable stock option accounting), and we remain comfortable with the current analysts' consensus estimate of $0.23 per diluted share for our third fiscal quarter ending March 31, 2003," he concluded. /more PRESS RELEASE ElkCorp January 16, 2003 Page 4 CONFERENCE CALL ElkCorp will host a conference call tomorrow, Friday, January 17, 2003, at 11:00 a.m. Eastern time (10:00 a.m. Central time). The conference call will be broadcast live over the Internet. Interested parties can access the conference call through the ElkCorp website at www.elkcorp.com (Investor Relations / Calls & Presentations) or by visiting www.prnewswire.com. SAFE HARBOR PROVISIONS In accordance with the safe harbor provisions of the securities law regarding forward-looking statements, in addition to 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 "optimistic," "outlook," "believe," "estimate," "potential," "project," "expect," "anticipate," "plan," "predict," "could," "should," "may," "likely," or similar words that convey the uncertainty of future events or outcomes. These statements are based on judgments the company believes are reasonable; however, ElkCorp'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, acts of God, war or terrorism, as well as the other risks detailed herein, and in the company's reports filed with the Securities and Exchange Commission, including but not limited to, its Form 10-K for the fiscal year ending June 30, 2002, and subsequent Forms 8-K and 10-Q. ---------- ElkCorp, through its subsidiaries, manufactures Elk brand premium roofing and building products (over 90% of consolidated sales) and provides technologically advanced products and services to other industries. Each of ElkCorp'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). /more PRESS RELEASE ElkCorp January 16, 2003 Page 5 CONDENSED RESULTS OF OPERATIONS (Unaudited, $ in thousands)
Trailing Three Months Ended Six Months Ended Twelve Months Ended December 31, December 31, December 31, 2002 2001 2002 2001 2002 2001 ---------- ---------- ---------- ---------- ---------- ---------- SALES $ 109,063 $ 113,128 $ 229,145 $ 256,347 $ 479,324 $ 453,215 ---------- ---------- ---------- ---------- ---------- ---------- COSTS AND EXPENSES: Cost of sales 89,131 90,107 184,559 206,611 388,225 372,505 Selling, general & administrative 13,970 15,421 28,072 30,461 57,002 54,671 Noncash stock option compensation 0 4,040 (5,378) 5,477 (4,821) 5,954 Interest expense, net 1,373 1,337 3,053 3,617 5,523 5,880 ---------- ---------- ---------- ---------- ---------- ---------- Total Costs and Expenses 104,474 110,905 210,306 246,166 445,929 439,010 ---------- ---------- ---------- ---------- ---------- ---------- INCOME BEFORE INCOME TAXES 4,589 2,223 18,839 10,181 33,395 14,205 Provision for income taxes 1,773 960 7,027 4,018 12,653 5,539 ---------- ---------- ---------- ---------- ---------- ---------- NET INCOME $ 2,816 $ 1,263 $ 11,812 $ 6,163 $ 20,742 $ 8,666 ========== ========== ========== ========== ========== ========== INCOME PER COMMON SHARE-BASIC $ 0.14 $ 0.07 $ 0.61 $ 0.32 $ 1.07 $ 0.45 ========== ========== ========== ========== ========== ========== INCOME PER COMMON SHARE-DILUTED $ 0.14 $ 0.06 $ 0.60 $ 0.32 $ 1.05 $ 0.45 ========== ========== ========== ========== ========== ========== PRO FORMA INFORMATION: EXCLUDING NONCASH STOCK OPTION COMPENSATION - NET INCOME $ 2,816 $ 3,889 $ 8,316 $ 9,723 $ 17,608 $ 12,536 ========== ========== ========== ========== ========== ========== INCOME PER COMMON SHARE-BASIC $ 0.14 $ 0.20 $ 0.43 $ 0.51 $ 0.91 $ 0.65 ========== ========== ========== ========== ========== ========== INCOME PER COMMON SHARE-DILUTED $ 0.14 $ 0.20 $ 0.42 $ 0.50 $ 0.90 $ 0.64 ========== ========== ========== ========== ========== ========== AVERAGE COMMON SHARES OUTSTANDING Basic 19,484 19,244 19,473 19,238 19,429 19,231 ========== ========== ========== ========== ========== ========== Diluted 19,580 19,648 19,587 19,556 19,672 19,473 ========== ========== ========== ========== ========== ==========
PRESS RELEASE ElkCorp January 16, 2003 Page 6 FINANCIAL INFORMATION BY COMPANY SEGMENTS (Unaudited, $ in thousands)
Trailing Three Months Ended Six Months Ended Twelve Months Ended December 31, December 31, December 31, 2002 2001 2002 2001 2002 2001 ---------- ---------- ---------- ---------- ---------- ---------- SALES Building Products $ 98,622 $ 96,964 $ 211,938 $ 227,989 $ 443,622 $ 404,652 Other, Technologies 10,441 16,164 17,207 28,358 35,702 48,526 Corporate & Eliminations 0 0 0 0 0 37 ---------- ---------- ---------- ---------- ---------- ---------- $ 109,063 $ 113,128 $ 229,145 $ 256,347 $ 479,324 $ 453,215 ========== ========== ========== ========== ========== ========== OPERATING PROFIT (LOSS) Building Products $ 7,491 $ 9,672 $ 21,989 $ 24,297 $ 51,017 $ 35,474 Other, Technologies 1,189 1,073 100 1,166 (5,420) 1,155 Corporate & Eliminations Before noncash stock option compensation (2,718) (3,145) (5,575) (6,188) (11,500) (10,590) Noncash stock option compensation 0 (4,040) 5,378 (5,477) 4,821 (5,954) ---------- ---------- ---------- ---------- ---------- ---------- Total Corporate & Eliminations (2,718) (7,185) (197) (11,665) (6,679) (16,544) ---------- ---------- ---------- ---------- ---------- ---------- $ 5,962 $ 3,560 $ 21,892 $ 13,798 $ 38,918 $ 20,085 ========== ========== ========== ========== ========== ==========
PRESS RELEASE ElkCorp January 16, 2003 Page 7 CONDENSED BALANCE SHEET (Unaudited, $ in thousands)
December 31, ASSETS 2002 2001 - ------ ---------- ---------- Cash and cash equivalents $ 17,804 $ 179 Receivables, net 67,309 59,168 Inventories 61,846 47,445 Deferred income taxes 3,920 5,987 Prepaid expenses and other 9,537 9,367 ---------- ---------- Total Current Assets 160,416 122,146 Property, plant and equipment, net 217,848 216,087 Other assets 12,231 2,418 ---------- ---------- Total Assets $ 390,495 $ 340,651 ========== ==========
December 31, LIABILITIES AND SHAREHOLDERS' EQUITY 2002 2001 - ------------------------------------ ---------- ---------- Accounts payable and accrued liabilities $ 43,913 $ 57,068 Current maturities on long-term debt 0 0 ---------- ---------- Total Current Liabilities 43,913 57,068 Long-term debt, net 125,421 84,000 Deferred income taxes 35,096 32,878 Shareholders' equity 186,065 166,705 ---------- ---------- Total Liabilities and Shareholders' Equity $ 390,495 $ 340,651 ========== ==========
PRESS RELEASE ElkCorp January 16, 2003 Page 8 CONDENSED STATEMENT OF CASH FLOWS (Unaudited, $ in thousands)
Six Months Ended December 31, 2002 2001 ---------- ---------- CASH FLOWS FROM: OPERATING ACTIVITIES Net income $ 11,812 $ 6,163 Adjustments to net income Depreciation and amortization 9,101 8,977 Deferred income taxes 3,358 4,256 Changes in assets and liabilities: Trade receivables 27,635 14,492 Inventories (14,708) 3,571 Prepaid expenses and other 16 (880) Accounts payable and accrued liabilities (8,160) 9,034 ---------- ---------- Net cash from operations 29,054 45,613 ---------- ---------- INVESTING ACTIVITIES Additions to property, plant and equipment (19,354) (4,989) Acquisition of business (2,224) 0 Other, net (301) 287 ---------- ---------- Net cash from investing activities (21,879) (4,702) ---------- ---------- FINANCING ACTIVITIES Long-term borrowings (repayments), net 0 (39,300) Dividends on common stock (1,948) (1,931) Treasury stock transactions and other, net 141 371 ---------- ---------- Net cash from financing activities (1,807) (40,860) ---------- ---------- NET INCREASE IN CASH AND CASH EQUIVALENTS 5,368 51 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 12,436 128 ---------- ---------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 17,804 $ 179 ========== ==========
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