##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended December 31, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission
File Number 1-5341
 ELKCORP
 (Exact
name of Registrant as specified in its charter)
 DELAWARE
    

75-1217920(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)14911 QUORUM DRIVE, SUITE
600, DALLAS,
TEXAS
    

75254-1491(Address of principal executive offices)
    
    (Zip Code)Registrants telephone number, including area code
    

(972)851-0500
 þ o
  Large accelerated filer o
    
    Accelerated filer
þ
    
    Non-accelerated filer o
 o þ




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##### 



ElkCorp and Subsidiaries
  
 For the Quarter Ended December 31, 2005
 Table of Contents
 PagePart I. FINANCIAL INFORMATION (unaudited)Item 1. Financial StatementsConsolidated Balance Sheets as of December 31, 2005 and June 30, 2005
    
    
    1Consolidated Statements of Operations for the Three Months and Six Months
Ended December 31, 2005 and 2004
    
    
    2Consolidated Statements of Cash Flows for the Six Months
Ended December 31, 2005 and 2004
    
    
    3Consolidated Statements of Shareholders Equity for the Six Months Ended
December 31, 2005 and 2004
    
    
    4Notes to Consolidated Financial Statements
    
    
    5-13Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    14-21Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    22Item 4. Controls and Procedures
    
    
    22Part II. OTHER INFORMATIONItem 1A. Risk Factors
    
    
    23Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 4. Submission of Matters to a Vote of Security Holders
    
    
    23Item 6. Exhibits
    
    
    24SIGNATURES
    
    
    25Certification of CEO Pursuant to Section 302Certification of CFO Pursuant to Section 302Certification of CEO Pursuant to Section 906Certification of CFO Pursuant to Section 906




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 ELKCORP AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
  December 31,
    
    
    June 30,2005
    
    
    2005AssetsCurrent AssetsCash and cash equivalents
    
    $
    5,385
    
    
    $
    9,261Short-term investments
    
    
    61,700
    
    
    
    69,160Trade receivables, less allowance of $633 and $695
    
    
    137,725
    
    
    
    148,928Inventories
    
    
    89,804
    
    
    
    71,467Prepaid expenses and other
    
    
    8,035
    
    
    
    8,223Deferred income taxes
    
    
    8,287
    
    
    
    7,849Discontinued operations
    
    
    2,606
    
    
    
    1,193Total current assets
    
    
    313,542
    
    
    
    316,081Property, Plant and Equipment, at cost
    
    
    468,623
    
    
    
    440,989Less  Accumulated depreciation
    
    
    (173,067
    )
    
    
    (156,901
    )Property, plant and equipment, net
    
    
    295,556
    
    
    
    284,088Goodwill and Intangible Assets
    
    
    23,350
    
    
    
    2,186Other Assets
    
    
    6,354
    
    
    
    7,496Discontinued Operations  Noncurrent
    
    
    2,251
    
    
    
    3,718$
    641,053
    
    
    $
    613,569Liabilities and Shareholders EquityCurrent LiabilitiesAccounts payable
    
    $
    51,266
    
    
    $
    56,742Accrued liabilities
    
    
    35,004
    
    
    
    31,171Current maturities on long-term debt
    
    
    971
    
    
    
    381Discontinued operations
    
    
    881
    
    
    
    937Total current liabilities
    
    
    88,122
    
    
    
    89,231Long-Term Debt
    
    
    202,985
    
    
    
    200,146Deferred Income Taxes
    
    
    53,150
    
    
    
    53,382Commitments and ContingenciesShareholders EquityCommon stock ($1 par, 20,432,038 and 20,297,905 shares
issued)
    
    
    20,432
    
    
    
    20,298Paid-in capital
    
    
    81,818
    
    
    
    70,412Unearned compensation  stock-based compensation
    
    
    (11,176
    )
    
    
    (5,620
    )Retained earnings
    
    
    205,886
    
    
    
    186,388296,960
    
    
    
    271,478Less  Treasury stock (4,164 and 22,761 shares, at cost)
    
    
    (164
    )
    
    
    (668
    )Total shareholders equity
    
    
    296,796
    
    
    
    270,810$
    641,053
    
    
    $
    613,569
  - 1 -




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##### Table of Contents



ELKCORP AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
   Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Sales
    
    $
    228,949
    
    
    $
    194,099
    
    
    $
    444,806
    
    
    $
    357,111Cost and ExpensesCost of sales
    
    
    186,812
    
    
    
    152,897
    
    
    
    362,941
    
    
    
    286,319Selling, general and administrative
    
    
    21,521
    
    
    
    15,880
    
    
    
    41,627
    
    
    
    31,061Operating Income from Continuing Operations
    
    
    20,616
    
    
    
    25,322
    
    
    
    40,238
    
    
    
    39,731Interest Expense and Other, Net
    
    
    2,968
    
    
    
    2,382
    
    
    
    5,825
    
    
    
    4,476Income From Continuing Operations Before
Income Taxes
    
    
    17,648
    
    
    
    22,940
    
    
    
    34,413
    
    
    
    35,255Provision for income taxes
    
    
    6,567
    
    
    
    8,742
    
    
    
    12,805
    
    
    
    13,397Income From Continuing Operations
    
    
    11,081
    
    
    
    14,198
    
    
    
    21,608
    
    
    
    21,858Gain (Loss) From Discontinued Operations, Net
of Income Taxes
    
    
    (66
    )
    
    
    128
    
    
    
    (66
    )
    
    
    (723
    )Net Income
    
    $
    11,015
    
    
    $
    14,326
    
    
    $
    21,542
    
    
    $
    21,135Income (Loss) Per Share  BasicContinuing operations
    
    $
    .54
    
    
    $
    .72
    
    
    $
    1.07
    
    
    $
    1.11Discontinued operations
    
    
    
    
    
    
    .01
    
    
    
    
    
    
    
    (.04
    )Net income
    
    $
    .54
    
    
    $
    .73
    
    
    $
    1.07
    
    
    $
    1.07Income (Loss) Per Share  DilutedContinuing operations
    
    $
    .54
    
    
    $
    .70
    
    
    $
    1.05
    
    
    $
    1.09Discontinued operations
    
    
    
    
    
    
    .01
    
    
    
    
    
    
    
    (.04
    )Net income
    
    $
    .54
    
    
    $
    .71
    
    
    $
    1.05
    
    
    $
    1.05Dividends Per Common Share
    
    $
    .05
    
    
    $
    .05
    
    
    $
    .10
    
    
    $
    .10Average Common Shares Outstanding (000s)Basic
    
    
    20,270
    
    
    
    19,697
    
    
    
    20,227
    
    
    
    19,684Diluted
    
    
    20,595
    
    
    
    20,154
    
    
    
    20,586
    
    
    
    20,035
  - 2 -




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##### Table of Contents



ELKCORP AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  Six Months EndedDecember 31,2005
    
    
    2004Cash Flows From Operating ActivitiesIncome from continuing operations
    
    $
    21,608
    
    
    $
    21,858Adjustments to reconcile income from continuing operations to
net cash provided by continuing operations:Depreciation and amortization
    
    
    12,766
    
    
    
    11,457Deferred income taxes
    
    
    (842
    )
    
    
    5,508Stock-based compensation
    
    
    4,040
    
    
    
    1,399Changes in assets and liabilities, net of acquisition:Trade receivables
    
    
    16,911
    
    
    
    (26,832
    )Inventories
    
    
    (11,428
    )
    
    
    (5,155
    )Prepaid expenses and other
    
    
    517
    
    
    
    (85
    )Accounts payable and accrued liabilities
    
    
    (14,904
    )
    
    
    14,029Net cash provided by continuing operations
    
    
    28,668
    
    
    
    22,179Net cash provided by (used for) discontinued operations
    
    
    (68
    )
    
    
    1,628Net cash provided by operating activities
    
    
    28,600
    
    
    
    23,807Cash Flows From Investing ActivitiesAdditions to property, plant and equipment
    
    
    (9,538
    )
    
    
    (21,181
    )Purchases of short-term investments
    
    
    (191,500
    )
    
    
    (53,910
    )Sales and redemptions of short-term investments
    
    
    198,960
    
    
    
    19,850Acquisition, net of cash acquired
    
    
    (24,285
    )
    
    
    Other, net
    
    
    (1,974
    )
    
    
    (872
    )Net cash used for investing activities
    
    
    (28,337
    )
    
    
    (56,113
    )Cash Flows From Financing ActivitiesProceeds from sale of Senior Notes
    
    
    
    
    
    
    50,000Repayments on Revolving Credit Facility, net
    
    
    
    
    
    
    (10,300
    )Payments on other borrowings
    
    
    (4,542
    )
    
    
    Dividends paid on common stock
    
    
    (2,044
    )
    
    
    (1,995
    )Purchases of common stock
    
    
    (1,444
    )
    
    
    (587
    )Exercises of stock options
    
    
    3,474
    
    
    
    1,198Excess tax benefits of stock option exercises
    
    
    417
    
    
    
    Net cash provided by (used for) financing activities
    
    
    (4,139
    )
    
    
    38,316Net Increase (Decrease) in Cash and Cash Equivalents
    
    
    (3,876
    )
    
    
    6,010Cash and Cash Equivalents at Beginning of Year
    
    
    9,261
    
    
    
    273Cash and Cash Equivalents at End of Period
    
    $
    5,385
    
    
    $
    6,283
  - 3 -




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ELKCORP AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
  Additional
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TotalCommon
    
    
    Paid-in
    
    
    Unearned
    
    
    Retained
    
    
    Treasury
    
    
    ShareholdersStock
    
    
    Capital
    
    
    Compensation
    
    
    Earnings
    
    
    Stock
    
    
    EquityBalance, June 30, 2004
    
    $
    19,988
    
    
    $
    57,852
    
    
    $
    (628
    )
    
    $
    143,540
    
    
    $
    (5,710
    )
    
    $
    215,042Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,135
    
    
    
    
    
    
    
    21,135Exercises of stock options
    
    
    
    
    
    
    (23
    )
    
    
    
    
    
    
    
    
    
    
    1,220
    
    
    
    1,197Restricted stock grants
    
    
    
    
    
    
    1,223
    
    
    
    (3,450
    )
    
    
    
    
    
    
    2,227
    
    
    
    Restricted stock vesting
    
    
    
    
    
    
    
    
    
    
    591
    
    
    
    
    
    
    
    
    
    
    
    591Performance stock grants
    
    
    
    
    
    
    4,806
    
    
    
    (4,806
    )
    
    
    
    
    
    
    
    
    
    
    Performance stock
amortization
    
    
    
    
    
    
    
    
    
    
    808
    
    
    
    
    
    
    
    
    
    
    
    808Purchases of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (587
    )
    
    
    (587
    )Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,995
    )
    
    
    
    
    
    
    (1,995
    )Other
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    Balance, December 31, 2004
    
    $
    19,988
    
    
    $
    63,851
    
    
    $
    (7,485
    )
    
    $
    162,680
    
    
    $
    (2,843
    )
    
    $
    236,191
 Additional
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TotalCommon
    
    
    Paid-in
    
    
    Unearned
    
    
    Retained
    
    
    Treasury
    
    
    ShareholdersStock
    
    
    Capital
    
    
    Compensation
    
    
    Earnings
    
    
    Stock
    
    
    EquityBalance, June 30, 2005
    
    $
    20,298
    
    
    $
    70,412
    
    
    $
    (5,620
    )
    
    $
    186,388
    
    
    $
    (668
    )
    
    $
    270,810Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,542
    
    
    
    
    
    
    
    21,542Stock option grants
    
    
    
    
    
    
    6,209
    
    
    
    (6,209
    )
    
    
    
    
    
    
    
    
    
    
    Exercises of stock options
    
    
    113
    
    
    
    1,636
    
    
    
    
    
    
    
    
    
    
    
    1,725
    
    
    
    3,474Excess tax benefit of
stock option exercises
    
    
    
    
    
    
    417
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    417Stock option vesting
    
    
    
    
    
    
    
    
    
    
    2,288
    
    
    
    
    
    
    
    
    
    
    
    2,288Restricted stock grants
    
    
    21
    
    
    
    628
    
    
    
    (857
    )
    
    
    
    
    
    
    208
    
    
    
    Restricted stock vesting
    
    
    
    
    
    
    
    
    
    
    700
    
    
    
    
    
    
    
    
    
    
    
    700Performance stock grants
    
    
    
    
    
    
    2,331
    
    
    
    (2,331
    )
    
    
    
    
    
    
    
    
    
    
    Performance stock
amortization
    
    
    
    
    
    
    
    
    
    
    1,053
    
    
    
    
    
    
    
    
    
    
    
    1,053Purchases of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,444
    )
    
    
    (1,444
    )Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,044
    )
    
    
    
    
    
    
    (2,044
    )Other
    
    
    
    
    
    
    185
    
    
    
    (200
    )
    
    
    
    
    
    
    15
    
    
    
    Balance, December 31, 2005
    
    $
    20,432
    
    
    $
    81,818
    
    
    $
    (11,176
    )
    
    $
    205,886
    
    
    $
    (164
    )
    
    $
    296,796
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##### Table of Contents



ELKCORP AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  Note 1
 General
  Note 2  Company Segments
   (In thousands)
    
    
    (In thousands)Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Sales from Continuing OperationsPremium Roofing Products
    
    $
    205,642
    
    
    $
    179,823
    
    
    $
    400,359
    
    
    $
    327,416Composite Building Products
    
    
    8,678
    
    
    
    3,259
    
    
    
    13,758
    
    
    
    6,242Specialty Fabric Technologies
    
    
    12,336
    
    
    
    8,791
    
    
    
    26,080
    
    
    
    18,794Surface Finishes
    
    
    2,293
    
    
    
    2,226
    
    
    
    4,609
    
    
    
    4,659$
    228,949
    
    
    $
    194,099
    
    
    $
    444,806
    
    
    $
    357,111Operating Profit (Loss) from Continuing OperationsPremium Roofing Products
    
    $
    26,160
    
    
    $
    32,034
    
    
    $
    53,719
    
    
    $
    49,813Composite Building Products
    
    
    (1,398
    )
    
    
    (3,183
    )
    
    
    (5,518
    )
    
    
    (3,900
    )Specialty Fabric Technologies
    
    
    1,373
    
    
    
    648
    
    
    
    2,883
    
    
    
    1,346Surface Finishes
    
    
    171
    
    
    
    (184
    )
    
    
    444
    
    
    
    143Corporate and Other
    
    
    (5,690
    )
    
    
    (3,993
    )
    
    
    (11,290
    )
    
    
    (7,671
    )20,616
    
    
    
    25,322
    
    
    
    40,238
    
    
    
    39,731Interest expense and other, net
    
    
    2,968
    
    
    
    2,382
    
    
    
    5,825
    
    
    
    4,476Income from continuing operations before income taxes
    
    $
    17,648
    
    
    $
    22,940
    
    
    $
    34,413
    
    
    $
    35,255
 - 5 -




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Note 3  Cash, Cash Equivalents and Short-Term Investments
   Note 4  Earnings Per Share
  (In thousands, except per share data)Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Income from continuing operations
    
    $
    11,081
    
    
    $
    14,198
    
    
    $
    21,608
    
    
    $
    21,858Denominator for basic earnings per share  weighted
average shares outstanding
    
    
    20,270
    
    
    
    19,697
    
    
    
    20,227
    
    
    
    19,684Effect of dilutive securities:Unvested restricted shares and outstanding stock
options
    
    
    325
    
    
    
    457
    
    
    
    359
    
    
    
    351Denominator
for dilutive earnings per share 
adjusted weighted average shares and assumed
issuance of shares purchased under stock option
plans and vesting of restricted shares using the
treasury stock method
    
    
    20,595
    
    
    
    20,154
    
    
    
    20,586
    
    
    
    20,035Basic earnings per share from continuing operations
    
    $
    .54
    
    
    $
    .72
    
    
    $
    1.07
    
    
    $
    1.11Diluted earnings per share from continuing operations
    
    $
    .54
    
    
    $
    .70
    
    
    $
    1.05
    
    
    $
    1.09Stock options excluded from computation of diluted
earnings per share due to anti-dilutive effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    365
 - 6 -




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##### Table of Contents



Note 5  Inventories
  (In thousands )December 31,
    
    
    June 30,2005
    
    
    2005Raw materials
    
    $
    21,172
    
    
    $
    15,380Work-in-process
    
    
    222
    
    
    
    219Finished goods
    
    
    68,410
    
    
    
    55,868$
    89,804
    
    
    $
    71,467
 Note 6  Long-Term Debt
  (In thousands)December 31,
    
    
    June 30,2005
    
    
    2005Senior Notes
    
    $
    195,000
    
    
    $
    195,000Revolving Credit Facility
    
    
    
    
    
    
    Fair value of interest rate swaps
    
    
    1,670
    
    
    
    4,463Other debt
    
    
    7,286
    
    
    
    1,064203,956
    
    
    
    200,527Less: Current maturities
    
    
    971
    
    
    
    381$
    202,985
    
    
    $
    200,146
  PrincipalAmount
    
    

Maturity
    
    Interest Rate$
    25,000
    
    
    July 2007
    
    
    4.69
    %$
    60,000
    
    
    June 2009
    
    
    6.99
    %$
    60,000
    
    
    June 2012
    
    
    7.49
    %$

50,000
    
    
    November 2014
    
    
    6.28
    %$
    195,000
    - 7 -




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##### Table of Contents



Note 7  Stock-Based Compensation
     Dividend yield:
    
    
    0.85
    %Risk-free interest rate:
    
    
    4.15
    %Expected market price volatility:
    
    
    .39Expected life of options:
    
    8 yearsFair value of grants:
    
    $
    13.37
  - 8 -




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##### Table of Contents



(In thousands, except per share data)Three Months
    
    
    Six MonthsEnded
    
    
    EndedDecember 31,
    
    
    December 31,2004
    
    
    2004Net income as reported
    
    $
    14,326
    
    
    $
    21,135Add: Stock-based employee
compensation expense
included in reported net
income under APB No. 25,
net of related tax
effects
    
    
    525
    
    
    
    525Deduct: Total stock-based
compensation expense
determined under fair
value based method, net
of related tax effects
    
    
    (1,075
    )
    
    
    (1,683
    )Pro forma earnings
    
    $
    13,776
    
    
    $
    19,977Earnings per common share:Basic  as reported
    
    $
    .73
    
    
    $
    1.07Basic  pro forma
    
    $
    .70
    
    
    $
    1.01Diluted  as reported
    
    $
    .71
    
    
    $
    1.05Diluted  pro forma
    
    $
    .68
    
    
    $
    1.00
 Note 8  Product Warranties
  (In thousands)
    
    Warranty LiabilityBalance, June 30, 2005
    
    $
    4,902Warranties of acquired business
    
    
    167Accrued for new warranties
    
    
    1,180Changes in estimates for pre-existing warranties
    
    
    1,064Warranty settlements during the period
    
    
    (1,734
    )Balance, December 31, 2005
    
    $
    5,579
 Note 9  Environmental Risk
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Note 10  Acquisitions
   - 11 -




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Note 11  Goodwill and Intangible Assets
  Balance, June 30, 2005
    
    $
    1,497Goodwill acquired
    
    
    10,816Balance, December 31, 2005
    
    $
    12,313
  Intangible Assets, Gross
    
    
    Accumulated Amortization
    
    
    Net Book ValueJune 30,
    
    
    
    
    
    
    Dec. 31,
    
    
    June 30,
    
    
    
    
    
    
    Dec. 31,
    
    
    June 30,
    
    
    Dec. 31,(in thousands)
    
    2005
    
    
    Additions
    
    
    2005
    
    
    2005
    
    
    Expense
    
    
    2005
    
    
    2005
    
    
    2005Patents
    
    $
    724
    
    
    $
    5,400
    
    
    $
    6,124
    
    
    $
    35
    
    
    $
    148
    
    
    $
    183
    
    
    $
    689
    
    
    $
    5,941Customer
relationships
    
    
    
    
    
    
    3,700
    
    
    
    3,700
    
    
    
    
    
    
    
    123
    
    
    
    123
    
    
    
    
    
    
    
    3,577Trademarks
    
    
    
    
    
    
    600
    
    
    
    600
    
    
    
    
    
    
    
    14
    
    
    
    14
    
    
    
    
    
    
    
    586Noncompete agreement
    
    
    
    
    
    
    1,000
    
    
    
    1,000
    
    
    
    
    
    
    
    67
    
    
    
    67
    
    
    
    
    
    
    
    933$
    724
    
    
    $
    10,700
    
    
    $
    11,424
    
    
    $
    35
    
    
    $
    352
    
    
    $
    387
    
    
    $
    689
    
    
    $
    11,037
 
 Note 12  Discontinued Operations
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(In thousands)
    
    
    (In thousands)Three Months Ended
    
    
    Six Months EndedDec. 31,
    
    
    Dec. 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Sales
    
    $
    
    
    
    $
    1,059
    
    
    $
    
    
    
    $
    2,075Cost of sales
    
    
    
    
    
    
    105
    
    
    
    
    
    
    
    840Selling, general and administrative
    
    
    106
    
    
    
    747
    
    
    
    106
    
    
    
    1,711Impairment of assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    651Operating
income (loss)
    
    
    (106
    )
    
    
    207
    
    
    
    (106
    )
    
    
    (1,127
    )Provision
(credit) for income taxes
    
    
    (40
    )
    
    
    79
    
    
    
    (40
    )
    
    
    (404
    )Net income (loss) from discontinued operations
    
    $
    (66
    )
    
    $
    128
    
    
    $
    (66
    )
    
    $
    (723
    )
 Note 13  Income Taxes
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Executive Overview
     Performance Data
  Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2005
    
    
    2004
    
    
    2005
    
    
    2004Sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    81.6
    
    
    
    78.8
    
    
    
    81.6
    
    
    
    80.2Gross margin
    
    
    18.4
    
    
    
    21.2
    
    
    
    18.4
    
    
    
    19.8Selling, general and administrative
    
    
    9.4
    
    
    
    8.2
    
    
    
    9.4
    
    
    
    8.7Income from operations
    
    
    9.0
    
    
    
    13.0
    
    
    
    9.0
    
    
    
    11.1Interest
expense and other, net
    
    
    1.3
    
    
    
    1.2
    
    
    
    1.3
    
    
    
    1.2Income from continuing operations
before income taxes
    
    
    7.7
    
    
    
    11.8
    
    
    
    7.7
    
    
    
    9.9Provision for income taxes
    
    
    2.9
    
    
    
    4.5
    
    
    
    2.8
    
    
    
    3.8Income from continuing operations
    
    
    4.8
    %
    
    
    7.3
    %
    
    
    4.9
    %
    
    
    6.1
    %
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Changes in the Three-Month Period Ended December 31, 2005 Compared to the Three-Month Period Ended
December 31, 2004
 Overall Performance
      Results of Business Segments
    - 15 -




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Changes in the Six-Month Period Ended December 31, 2005 Compared to the Six-Month Period Ended
December 31, 2004
 Overall Performance
    - 16 -




---



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Results of Business Segments
       - 17 -




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Financial Condition
 Overview
  Operating Activities
   Investing Activities
  Financing Activities
   - 18 -




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Off-Balance Sheet Arrangements
  Critical Accounting Policies
  
    
    Collectibility of Accounts Receivable
    
    Accruals for Loss Contingencies, including Warranties
    
    Inventories
    
    Revenue Recognition
    
    Impairment of Long-Lived Assets
    
    Stock-Based Compensation
  Business Risks and Forward-Looking Statements
  Competitive Conditions
  Higher Raw Material, Energy and Transportation Costs
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Temporary Shortages or Disruptions
  Productivity of New Facilities
  Utilization of Hazardous Materials
  Litigation and Claims
  Higher Interest Rates
  Loss of Key Customers
  Physical Loss to Manufacturing Facilities
  - 20 -




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Development of New Products
  Technological Changes
  - 21 -




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
 Item 4. Controls and Procedures
 a)
    
    Evaluation of Disclosure Controls and ProceduresWe completed an evaluation, under the supervision and with the participation of management,
including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of
the design and operation of our disclosure controls and procedures pursuant to Exchange Act
Rules 13a-15(e) and 15d-15(e) as of the end of the period covered by this report. Based
upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded
that our disclosure controls and procedures are effective to ensure that information
required to be disclosed by the company in the reports that it files or submits under the
Exchange Act is (1) recorded, processed, summarized and reported within the time periods
specified in applicable rules and forms and (2) accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer, to allow
timely discussions regarding required disclosures.b)
    
    Changes in Internal Control Over Financial ReportingDuring the last fiscal quarter, there have been no changes in our internal controls over
financial reporting or in other factors that have materially affected, or are reasonably
likely to materially affect, these controls subsequent to the date of the evaluation,
including any corrective actions with regard to significant deficiencies and material
weaknesses.
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PART II. OTHER INFORMATION
 
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Maximum Number (orApproximate DollarTotal Number of
    
    
    Value) ofTotal Number
    
    
    
    
    
    
    Shares Purchased as
    
    
    Shares that may yet beof Shares
    
    
    Average
    
    
    Part of Publicly
    
    
    Purchased under thePurchased
    
    
    Price Paid
    
    
    Announced Plans or
    
    
    Plans orPeriod
    
    (Note 1)
    
    
    per Share
    
    
    Programs
    
    
    Programs (Note 2)October, 2005
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    10,600,000November, 2005
    
    
    410
    
    
    $
    31.49
    
    
    $
    
    
    
    $
    10,600,000December, 2005
    
    
    
    
    
    
    
    
    
    $
    
    
    
    $
    10,600,000Total
    
    
    410
    
    
    $
    31.49
    
    
    $
    
 
 (1)
    
    Represents repurchases of 410 restricted shares from officers and employees for income tax
withholding payments.(2)
    
    On September 28, 1998, the companys Board of Directors authorized the purchase of up to
$10,000,000 of common stock from time to time on the open market to be used for general
corporate purposes. On August 28, 2000, the Board of Directors authorized the repurchase of
an additional $10,000,000 of common stock. The authorizations did not specify an expiration
date. Purchases may be increased, decreased or discontinued by the Board of Directors at any
time without prior notice. 
 Item 4. Submission of Matters to a Vote of Security Holders
 (a)
    
    The companys Annual Meeting of Shareholders was held on October 25, 2005 for the
purpose of electing two directors and ratifying the appointment of the companys
independent auditors.(b)
    
    Directors Elected
 NUMBER OF VOTESFOR
    
    AGAINST
    
    WITHHELDSteven J. Demetriou
    
    
    19,005,301
    
    
    
    21,596
    
    
    
    492,590Michael L. McMahan
    
    
    19,006,002
    
    
    
    20,895
    
    
    
    492,590Richard A. Nowak
    
    
    18,727,410
    
    
    
    299,487
    
    
    
    492,590
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(c)
    
    Other Directors whose term continued after the meeting:
 
 Effective October 25, 2005, Mr. David W. Quinn retired from the Board of Directors.(d)
    
    Other matters voted upon at the meeting and the number of affirmative votes, negative
votes, and abstentions.
 NUMBER OF VOTESFOR
    
    AGAINST
    
    ABSENTIONSRatification of Grant Thornton LLP
as independent auditors of the
company for the fiscal year ending
June 30, 2006.
    
    
    19,346,994
    
    
    
    19,271
    
    
    
    153,222
 
 Item 6. Exhibits
 31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.32.1
    
    Certificate of the Chief Executive Officer of ElkCorp Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certificate of the Chief Financial Officer of ElkCorp Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
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##### Table of Contents



SIGNATURES
  ElkCorpDATE: February 8, 2006
    
    /s/ Gregory J. FisherGregory J. FisherSenior Vice President,
Chief Financial Officer and Controller/s/ Leonard R. HarralLeonard R. HarralVice President,Chief Accounting Officer and Treasurer
 - 25 -