Exhibit 99.1
WALTER INDUSTRIES ANNOUNCES THIRD QUARTER 2006 RESULTS
- Earnings of $1.23 Per Diluted Share; $1.27 from Continuing Operations -
- Strong Operating Results at Mueller Water Products; Spin-Off Remains on
Track -
- Higher Met Coal Shipments and Pricing Drive Natural Resources Improvement -
- Homebuilding and Financing Group Reports Significant Operating Income
Improvement -
- Company Revises Updated Full-Year Earnings Expectations -
TAMPA, Fla., Nov. 2 /PRNewswire-FirstCall/ -- Walter Industries, Inc. (NYSE:
WLT) today reported earnings from continuing operations of $65.2 million, or
$1.27 per diluted share for the third quarter ended Sept. 30, 2006, compared
with earnings of $20.4 million, or $0.44 per diluted share in the third quarter
last year. During the third quarter, the Company recorded a $1.7 million
after-tax, non-cash charge to discontinued operations. The charge resulted from
a write-down to net realizable value of a receivable related to the December
2003 sale of AIMCOR, a previously owned subsidiary of the Company.
"Our results for the third quarter reflected solid growth in revenue and income
at each of our operating groups," said Walter Industries Chairman and CEO
Gregory E. Hyland. "Mueller Water Products delivered strong volumes and margins,
and our Natural Resources group generated significant increases in met coal
shipments and operating income. Our Homebuilding and Financing group continues
to make excellent progress on its turnaround, resulting in a significant
improvement in combined profitability."
Hyland added, "Our spin-off of Mueller Water remains on track for mid- December
and our management teams are excited about the future prospects for each of our
businesses."
Consolidated net sales and revenues for the third quarter were $857.0 million,
up from $418.7 million in the prior-year period. Current quarter results include
the addition of $362.0 million in revenues from Mueller Co. and Anvil. Revenues
at Natural Resources increased 72.7 percent versus the prior-year period
primarily driven by higher metallurgical coal volumes and increased overall
average pricing. Third quarter results also reflect 9.1 percent revenue growth
at the Homebuilding and Financing group, principally as a result of higher
average net selling prices for delivered homes versus the prior-year period.
Operating income for the current quarter totaled $138.2 million compared to
$27.6 million in the third quarter of 2005. Current period results include $62.4
million from the addition of Mueller Co. and Anvil. Natural Resources' operating
income increased $26.4 million, reflecting higher overall average coal prices
and volumes, partially offset by increased coal production costs and freight
expenses. Results in the Homebuilding and Financing group improved $20.6
million, primarily driven by a $12.2 million decrease in hurricane- related
losses versus the prior year, higher on-your-lot unit completions and margins,
and lower selling, general and administrative costs.
"Although we experienced continued geological issues at Mine No. 4 during the
quarter, higher metallurgical coal shipments resulting from our shift away from
the lower-margin steam coal market enabled Jim Walter Resources to generate a
strong increase in profitability," Hyland said. "Mine No. 4, which has been
negatively impacted by thin coal seams conditions over the second and third
quarters this year, has operated near historical levels since late September."
Third Quarter Segment Results by Operating Group
Mueller Water Products
Walter Industries acquired Mueller Water Products on Oct. 3, 2005.
Therefore, Mueller Co. and Anvil's results for the quarter ended Sept.
30, 2005 are not included in the prior-year financial statements.
For the quarter ended Sept. 30, 2006, Mueller Water Products reported
consolidated net sales and revenues of $526.1 million and operating income for
the period of $75.2 million.
Detail on Mueller Water Products' performance for the quarter ended Sept. 30,
2006 and full fiscal year 2006 is included in its separate earnings press
release issued today.
Natural Resources & Sloss
Walter Industries' Natural Resources and Sloss businesses reported combined
revenues of $218.8 million and operating income for the quarter of $56.9
million.
Natural Resources reported revenues in the third quarter of $184.4 million, up
$77.6 million versus the same period last year as a result of increased
metallurgical coal sales and higher overall average pricing.
Natural Resources sold 1.6 million tons of metallurgical coal at an average
price of $105.48 per short ton FOB port during the quarter, compared to 0.7
million tons of metallurgical coal at an average price of $108.28 per short ton
FOB port during the same period last year. Shipments for the third quarter of
2005 also included 0.3 million tons of steam coal at an average price of $35.17
per ton.
The natural gas operation sold 2.0 billion cubic feet of gas at an average price
of $8.49 per thousand cubic feet in the third quarter, versus 1.7 billion cubic
feet of gas at $8.03 per thousand cubic feet in the prior-year period. Natural
gas prices realized in the current-year period reflect the benefit of hedging
approximately 55.0 percent of production at an average price of $10.05 per
thousand cubic feet.
Natural Resources reported operating income of $55.6 million in the third
quarter, compared to $29.2 million in the prior-year period. The growth in
operating income in the current-year period is primarily due to significant
increases in higher margin metallurgical coal sales volumes. The improvement was
partially offset by higher production costs, primarily as a result of a
continuation of thin coal seams and slower longwall advance rates at Mine No. 4
during the quarter. The prior-year period included $12.6 million of idle mine
costs at Mine No. 5. Freight costs for the quarter were also higher, reflecting
increased metallurgical coal shipments and higher freight rates.
Sloss Industries, included in the "Other" segment, reported revenues for the
third quarter of $34.4 million, up $2.5 million from the prior-year period.
Operating income for the quarter totaled $1.3 million, down $1.2 million from
the prior-year period, primarily reflecting higher legal and other costs.
Homebuilding & Financing
The Homebuilding and Financing group reported combined revenues of $122.9
million for the third quarter of 2006, compared to $112.6 million in the
prior-year period. The 9.1 percent increase versus the prior-year period was
primarily due to an 18.9 percent increase in on-your-lot completions and a 13.8
percent increase in average on-your-lot selling prices, partially offset by
lower prepayment income from the mortgage portfolio and fewer modular unit
deliveries.
The Homebuilding and Financing group's combined operating income was $10.6
million for the quarter, compared to a $9.9 million operating loss in last
year's third quarter. The significant improvement in results was primarily due
to a $12.2 million reduction in hurricane-related claims expense at Financing
and $6.8 million of enhanced operating performance at Homebuilding, reflecting
the revenue impacts noted above, a 100-basis-point improvement in on-your-lot
gross margins and a $2.0 million decrease in selling, general and administrative
expenses.
Total unit completions for the quarter were flat versus the prior-year period,
as the strong increase in on-your-lot deliveries was offset by fewer modular
home shipments. Modular units declined as the Company discontinued production of
certain low-margin product lines. Overall average net selling prices were
$92,500 versus $73,400 in the prior-year period.
Financing's provision for losses on its mortgage portfolio improved $1.1 million
versus the prior-year period. The prior-year period's provision included an
additional $1.3 million for potential incremental losses from last year's
hurricanes. At Sept. 30, 2006, delinquencies on the mortgage portfolio (the
percentage of amounts outstanding more than 30 days past due) were 4.2 percent,
down from 5.3 percent in the prior-year period and flat sequentially from the
quarter ended June 30, 2006.
Other
Third quarter corporate expenses, included in the "Other" segment, totaled $7.6
million compared with $6.1 million in the prior-year period. Interest expense
for the quarter totaled $36.4 million versus $3.6 million for the same period
last year, reflecting the increased debt associated with the Mueller Water
Products acquisition.
Full-Year Earnings Expectations
Based on current business forecasts and anticipated market conditions for the
full-year 2006, the Company expects to generate GAAP earnings from continuing
operations in the range of $4.20 to $4.60 per diluted share, compared to a prior
range of $4.80 to $5.35.
Excluding the impacts of acquisition-related purchase accounting and
restructuring charges, the Company expects non-GAAP earnings in the range of
$4.40 to $4.80, compared to a prior non-GAAP range of $5.00 to $5.55.
Reconciliation between GAAP and non-GAAP earnings per share is included below.
Low High
------ ------
GAAP Diluted EPS Expectations - Continuing Operations $ 4.20 $ 4.60
Acquisition-related purchase accounting for inventory
step-up and restructuring charges 0.20 0.20
Non-GAAP Diluted EPS Expectations - Continuing Operations $ 4.40 $ 4.80
"Our reduced earnings expectations range primarily reflects lower third quarter
coal production at Mine No. 4, which will result in higher costs and reduced
sales in the fourth quarter. We will also be negatively impacted by a higher
effective tax rate as we have a lower level of deductions for percentage
depletion. In addition, we have decided to stockpile our Kodiak Mining joint
venture coal until a new coal preparation plant comes on-stream in early 2007,
and will allow us to improve yields and realize improved pricing," Hyland said.
"Finally, we expect some potential moderation of current volume levels at
Mueller as a result of the decline in demand in the residential housing market."
Non-GAAP Financial Measures
Within this announcement, the Company makes reference to certain non-GAAP
financial measures, which have directly comparable GAAP financial measures as
identified in this release. These non-GAAP measures are provided so that
investors have the same financial data that management uses with the belief that
it will assist the investment community in properly assessing the underlying
performance of the Company for the periods being reported. The reconciliation
between GAAP and non-GAAP performance measures is presented in compliance with
the provisions of the rules under Regulation G.
Conference Call Web cast
Walter Industries Chairman and CEO Greg Hyland and members of the Company's
leadership team will discuss quarterly results and other general business
matters on a conference call and live Web cast to be held on Friday, Nov. 3,
2006, at 10 a.m. Eastern Standard Time. To listen to the event live or in
archive, visit the Company Web site at www.walterind.com.
About Walter Industries
Walter Industries, Inc. is a diversified company with consolidated annual
revenues of approximately $3.1 billion. The Company is a significant producer of
high-quality metallurgical coal and natural gas for worldwide markets and is a
leader in affordable homebuilding and financing. Walter Industries is also the
majority shareholder of Mueller Water Products, a leading water infrastructure,
flow control and water transmission products company. Including Mueller Water,
the Company employs approximately 10,000 people. For more information about
Walter Industries, please visit the Company Web site at
http://www.walterind.com.
Safe Harbor Statement
Except for historical information contained herein, the statements in this
release are forward-looking and made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
involve known and unknown risks and uncertainties that may cause the Company's
actual results in future periods to differ materially from forecasted results.
Those risks include, among others, changes in customers' demand for the
Company's products, changes in raw material, labor, equipment and transportation
costs and availability, geologic and weather conditions, changes in extraction
costs and pricing in the Company's mining operations, changes in customer
orders, pricing actions by the Company's competitors, changes in law, potential
changes in the mortgage-backed capital markets, and general changes in economic
conditions. Those risks also include the timing of and ability to execute on the
spin-off of Mueller Water Products, Inc. and any other strategic action that may
be pursued. Risks associated with forward- looking statements are more fully
described in the Company's and Mueller Water Products' filings with the
Securities and Exchange Commission. The Company assumes no duty to update its
forward-looking statements as of any future date.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in Thousands)
Unaudited
For the three months
ended September 30,
----------------------------
2006 2005
------------ ------------
Net sales and revenues:
Net sales $ 795,555 $ 362,046
Interest income on instalment notes 49,434 50,977
Miscellaneous 12,036 5,672
857,025 418,695
Cost and expenses:
Cost of sales (exclusive of depreciation) 555,975 280,327
Depreciation 27,612 14,238
Selling, general and administrative 92,121 48,328
Provision for losses on instalment notes 1,946 3,076
Postretirement benefits 4,017 3,240
Interest expense - mortgage-
backed/asset-backed notes 29,465 30,046
Interest expense - other debt 36,390 3,595
Amortization of intangibles 7,684 837
Provision for estimated hurricane
insurance losses - 12,200
Restructuring and impairment credits - (1,243)
755,210 394,644
Income from continuing operations
before income tax expense and
minority interest 101,815 24,051
Income tax expense (29,744) (3,681)
Income from continuing operations
before minority interest 72,071 20,370
Minority interest in net income of
affiliates (6,889) -
Income from continuing operations 65,182 20,370
Discontinued operations, net of
income taxes (1) (1,937) (173)
Net income $ 63,245 $ 20,197
Basic income per share:
Income from continuing operations $ 1.49 $ 0.53
Discontinued operations (0.04) (0.01)
Net income $ 1.45 $ 0.52
Weighted average number of shares
outstanding 43,634,042 38,759,378
Diluted income per share:
Income from continuing operations $ 1.27 $ 0.44
Discontinued operations (0.04) (0.01)
Net income $ 1.23 $ 0.43
Weighted average number of
dilutive securities 52,176,845 49,215,063
(1) The 2005 expenses were associated with the Company's sale of its AIMCOR
subsidiary in December 2003. The 2006 amount primarily represents a write down
to net realizable value of the Company's receivable resulting from the 2003 sale
of AIMCOR.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
RESULTS BY OPERATING SEGMENT
($ in Thousands)
Unaudited
For the three months
ended September 30,
----------------------------
2006 2005
------------ ------------
NET SALES AND REVENUES:
Mueller Co. $ 222,975 $ -
Anvil 139,018 -
aU.S. Pipe 164,063 170,274
Mueller Water Products 526,056 170,274
Natural Resources 184,392 106,796
Homebuilding 68,287 55,994
Financing 54,587 56,621
Homebuilding and Financing Group 122,874 112,615
Other 38,616 35,758
Consolidating Eliminations (14,913) (6,748)
$ 857,025 $ 418,695
OPERATING INCOME (LOSS):
Mueller Co. $ 48,701 $ -
Anvil 13,661 -
U.S. Pipe 12,869 10,086
Mueller Water Products 75,231 10,086
Natural Resources 55,641 29,249
Homebuilding (3,608) (10,454)
Financing 14,225 521
Homebuilding and Financing Group 10,617 (9,933)
Other (3,506) (1,748)
Consolidating Eliminations 222 (8)
Operating income 138,205 27,646
Other debt interest expense (36,390) (3,595)
Income from continuing operations
before income tax expense and
minority interest $ 101,815 $ 24,051
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in Thousands)
Unaudited
For the nine months
ended September 30,
----------------------------
2006 2005
------------ ------------
Net sales and revenues:
Net sales $ 2,255,361 $ 1,079,287
Interest income on instalment notes 150,901 157,580
Miscellaneous 29,765 16,063
2,436,027 1,252,930
Cost and expenses:
Cost of sales (exclusive of
depreciation) 1,573,801 816,050
Depreciation 79,932 43,063
Selling, general and administrative 274,302 144,913
Provision for losses on instalment notes 6,761 8,210
Postretirement benefits 12,052 9,712
Interest expense - mortgage-
backed/asset-backed notes 88,399 92,583
Interest expense - other debt 121,045 11,304
Amortization of intangibles 23,413 2,823
Provision (credit) for estimated
hurricane insurance losses (1,046) 11,644
Restructuring and impairment
charges (credits) 5,622 (633)
2,184,281 1,139,669
Income from continuing operations
before income tax expense and
minority interest 251,746 113,261
Income tax expense (79,856) (32,228)
Income from continuing operations
before minority interest 171,890 81,033
Minority interest in net income of
affiliates (7,176) -
Income from continuing operations 164,714 81,033
Discontinued operations, net of
income taxes (1) (2,209) (590)
Net income $ 162,505 $ 80,443
Basic income per share:
Income from continuing operations $ 3.87 $ 2.11
Discontinued operations (0.05) (0.01)
Net income $ 3.82 $ 2.10
Weighted average number of shares
outstanding 42,511,178 38,325,408
Diluted income per share:
Income from continuing operations $ 3.25 $ 1.72
Discontinued operations (0.05) (0.01)
Net income $ 3.20 $ 1.71
Weighted average number of dilutive
securities 51,601,866 48,960,982
(1) The 2005 expenses were associated with the Company's sale of its AIMCOR
subsidiary in December 2003. The 2006 amount primarily represents a write down
to net realizable value of the Company's receivable resulting from the 2003 sale
of AIMCOR.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
RESULTS BY OPERATING SEGMENT
($ in Thousands)
Unaudited
For the nine months
ended September 30,
---------------------------
2006 2005
------------ ------------
NET SALES AND REVENUES:
Mueller Co. $ 641,539 $ -
Anvil 403,028 -
U.S. Pipe 427,515 456,929
Mueller Water Products 1,472,082 456,929
Natural Resources 526,584 378,324
Homebuilding 197,421 161,790
Financing 166,425 174,320
Homebuilding and Financing Group 363,846 336,110
Other 112,833 104,566
Consolidating Eliminations (39,318) (22,999)
$ 2,436,027 $ 1,252,930
OPERATING INCOME (LOSS):
Mueller Co. $ 134,761 $ -
Anvil 24,522 -
U.S. Pipe 18,149 27,687
Mueller Water Products 177,432 27,687
Natural Resources 182,670 112,409
Homebuilding (16,748) (32,997)
Financing 40,575 29,323
Homebuilding and Financing Group 23,827 (3,674)
Other (9,791) (9,018)
Consolidating Eliminations (1,347) (2,839)
Operating income 372,791 124,565
Other debt interest expense (121,045) (11,304)
Income from continuing operations
before income tax expense and
minority interest $ 251,746 $ 113,261
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Unaudited
For the three months For the nine months
ended September 30, ended September 30,
----------------------- -----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Depreciation ($ in thousands):
Mueller Co. $ 6,816 $ - $ 20,172 $ -
Anvil 4,905 - 14,829 -
U.S. Pipe 5,709 6,224 16,447 19,401
Natural Resources 7,004 5,121 19,549 15,351
Homebuilding 1,346 1,233 3,980 3,645
Financing 349 341 1,031 1,056
Other 1,483 1,319 3,924 3,610
$ 27,612 $ 14,238 $ 79,932 $ 43,063
Amortization of intangibles ($ in
thousands):
Mueller Co. $ 6,264 $ - $ 18,802 $ -
Anvil 859 - 2,711 -
Financing 561 837 1,900 2,823
$ 7,684 $ 837 $ 23,413 $ 2,823
Restructuring and impairment charges
(credits) ($ in thousands):
U.S. Pipe Chattanooga plant
shutdown costs $ - $ - $ 4,487 $ -
Mine No. 5 shutdown costs - (1,243) - (633)
Other - Sloss chemical business asset
impairment - - 1,135 -
$ - $ (1,243) $ 5,622 $ (633)
Operating Data:
Homebuilding
New sales contracts 768 1,032 2,338 3,235
Cancellations 194 203 504 569
Unit completions 736 759 2,257 2,157
Average sale price $ 92,500 $ 73,400 $ 87,200 $ 74,600
Ending homes backlog 1,755 2,510 1,755 2,510
Financing
Delinquencies 4.2% 5.3% 4.2% 5.3%
Prepayment speeds 10.6% 11.5% 10.0% 10.7%
U.S. Pipe
Ending pipe & fittings backlog,
tons 65,086 87,556 65,086 87,556
Ending pipe & fittings
backlog, dollars ($ in
thousands) $ 62,088 $ 76,314 $ 62,088 $ 76,314
Sloss Industries
Tons of foundry coke sold 27,838 27,396 80,520 97,028
Tons of furnace coke sold 72,786 70,356 225,243 194,826
Foundry coke average sale
price per ton $ 259.82 $ 277.93 $ 260.49 $ 267.41
Furnace coke average sale
price per ton $ 208.38 $ 205.80 $ 208.57 $ 205.83
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Unaudited
For the three months For the nine months
ended September 30, ended September 30,
----------------------- -----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Operating Data:
Natural Resources
Tons sold by type (in thousands):
Metallurgical coal, contracts 1,511 736 4,165 3,138
Metallurgical coal, spot sales - - - 144
Purchased metallurgical coal 56 - 56 -
Steam coal - 344 300 1,131
1,567 1,080 4,521 4,413
Average sale price per ton:
Metallurgical coal, contracts $ 105.48 $ 108.28 $ 108.96 $ 89.82
Metallurgical coal, spot sales $ - $ - $ - $ 116.00
Steam coal $ - $ 35.17 $ 35.02 $ 35.06
Tons sold by mine (in thousands):
Mine No. 4 423 644 1,862 2,207
Mine No. 7 806 424 1,974 1,561
Mine No. 5 282 12 629 645
1,511 1,080 4,465 4,413
Coal cost of sales:
Mine No. 4 per ton $ 78.01 $ 40.48 $ 59.80 $ 37.86
Mine No. 7 per ton $ 57.20 $ 48.00 $ 53.50 $ 49.73
Mine No. 5 per ton $ 63.76 $ 72.05 $ 71.28 $ 50.45
Idle mine costs ($ in
thousands) (1) $ 200 $ 12,573 $ 582 $ 16,133
Other costs ($ in
thousands) (2) $ 8,857 $ 1,286 $ 14,350 $ 3,991
Tons of coal produced (in thousands)
Mine No. 4 385 680 1,538 2,344
Mine No. 7 567 498 1,981 1,795
Mine No. 5 216 - 654 495
1,168 1,178 4,173 4,634
Coal production costs per ton: (3)
Mine No. 4 $ 65.26 $ 33.27 $ 47.35 $ 30.42
Mine No. 7 $ 44.17 $ 45.22 $ 39.07 $ 37.46
Mine No. 5 $ 47.03 $ - $ 56.10 $ 52.35
Total $ 51.66 $ 38.32 $ 44.79 $ 35.49
Natural gas sales, in mmcf (in
thousands) 1,972 1,731 5,778 5,241
Natural gas average sale price
per mmcf $ 8.49 $ 8.03 $ 8.74 $ 7.11
Natural gas cost of sales per mmcf $ 2.45 $ 2.77 $ 2.74 $ 2.64
(1) Idle mine costs are charged to period expense when incurred.
(2) Consists of charges (credits) not directly allocable to a specific mine and
cost related to purchased coal.
(3) Coal production costs per ton are a component of inventoriable costs. Other
costs of sales not included in coal production costs per ton include
Company-paid outbound freight, post-retirement benefits, asset retirement
obligation expenses, royalties and Black Lung excise taxes.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in Thousands)
Unaudited
September 30, December 31,
2006 2005
-------------- --------------
ASSETS
Cash and cash equivalents $ 160,644 $ 137,396
Short-term investments, restricted 86,296 124,573
Installment notes receivable, net of
allowance of $12,945 and
$12,489, respectively 1,765,794 1,693,922
Receivables, net 436,954 351,115
Inventories 557,183 551,293
Prepaid expenses 63,987 31,320
Property, plant and equipment, net 637,272 603,350
Other long-term assets 159,061 154,365
Identifiable intangibles, net 842,271 858,122
Goodwill 876,370 867,556
$ 5,585,832 $ 5,373,012
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 197,457 $ 161,215
Accrued expenses 215,772 213,596
Deferred income taxes 252,464 215,874
Debt:
Mortgage-backed/asset-backed notes 1,687,968 1,727,329
Other debt 1,549,992 2,172,453
Accrued interest 32,143 32,619
Accumulated postretirement benefits
obligation 271,634 275,336
Other long-term liabilities 271,346 285,974
Total liabilities 4,478,776 5,084,396
Minority interest 304,733 -
Stockholders' equity 802,323 288,616
$ 5,585,832 $ 5,373,012
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2006
($ in Thousands)
Unaudited
Accumu-
lated
Other
Compre-
Compre- Accumu- hensive
hensive lated Income
Total Income Deficit (Loss)
---------- ---------- ---------- ----------
Balance at December 31, 2005 $ 288,616 $ (602,002) $ (61,414)
Comprehensive income:
Net income 162,505 $ 162,505 162,505
Other comprehensive income, net
of tax:
Cumulative foreign currency
translation adjustment 2,182 2,182 2,182
Net unrealized gain on hedges 6,912 6,912 6,912
Comprehensive income $ 171,599
Sale of common stock 168,680
Stock issued upon conversion of
convertible notes 25,862
Gain on sale of investment in
subsidiary through initial
public offering 132,353 6,960
Stock issued upon exercise of
stock options 4,558
Tax benefit on the exercise of
stock options 7,150
Dividends paid, $0.12 per share (5,053)
Stock-based compensation 8,558
Balance at September 30, 2006 $ 802,323 $ (439,497) $ (45,360)
Capital in
Common Excess of Treasury
Stock Par Value Stock
------------ ------------ ------------
Balance at December 31, 2005 $ 598 $ 1,210,751 $ (259,317)
Comprehensive income:
Net income
Other comprehensive income, net of
tax:
Cumulative foreign currency
translation adjustment
Net unrealized gain on hedges
Comprehensive income
Sale of common stock 26 168,654
Stock issued upon conversion of
convertible notes 15 25,847
Gain on sale of investment in
subsidiary through initial
public offering 125,393
Stock issued upon exercise of stock
options 6 4,552
Tax benefit on the exercise of stock
options 7,150
Dividends paid, $0.12 per share (5,053)
Stock-based compensation 8,558
Balance at September 30, 2006 $ 645 $ 1,545,852 $ (259,317)
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (1)
($ in Thousands)
Unaudited
For the nine months
ended September 30,
---------------------------
2006 2005
------------ ------------
OPERATING ACTIVITIES
Net income $ 162,505 $ 80,443
Adjustments to reconcile income to
net cash provided by continuing
operations:
Minority interest in net income of
affiliates 7,176 -
Discontinued operations, net of tax 2,209 590
Provision for losses on instalment
notes receivable 6,761 8,210
Depreciation 79,932 43,063
Restructuring and impairment charges 1,135 -
Provision for deferred income taxes 36,053 15,827
Tax (benefit on) provision for the
exercise of employee stock options (7,150) 15,645
Amortization of intangibles 23,413 2,823
Amortization of debt expense 13,115 4,760
Other (4,384) 4,544
Decrease (increase) in assets:
Receivables (92,859) (37,934)
Inventories (1,510) (57,012)
Prepaid expenses (32,127) (2,771)
Installment notes receivable, net (1) (14,808) 46,760
Increase (decrease) in liabilities:
Accounts payable 19,603 20,447
Accrued expenses (11,072) 16,169
Accrued interest (476) 119
Cash flows provided by continuing
operations 187,516 161,683
Cash flows used in discontinued
operations (377) (590)
Cash flows provided by operating
activities 187,139 161,093
INVESTING ACTIVITIES
Acquisitions, net of cash acquired (5,095) -
Purchases of loans (96,083) (41,444)
Principal payments received on
purchased loans 32,258 15,599
Decrease in short-term investments,
restricted 38,277 6,616
Additions to property, plant and
equipment (131,523) (94,847)
Cash proceeds from sale of
property, plant and equipment 10,432 7,278
Increase in investments (86) (2,728)
Cash flows used in investing
activities (151,820) (109,526)
FINANCING ACTIVITIES
Issuances of mortgage-backed/asset-
backed notes 145,000 104,532
Retirements of mortgage-
backed/asset-backed notes (184,478) (204,096)
Proceeds from issuance of other
debt - 93,500
Retirements of other debt (590,916) (83,500)
Sale of common stock 168,680 -
Proceeds from initial public
offering 428,924 -
Tax benefit on the exercise of
employee stock options 7,150 -
Other 15,656 11,620
Cash flows used in financing
activities (9,984) (77,944)
Effect of exchange rate changes on cash (2,087) -
Net increase (decrease) in cash and
cash equivalents 23,248 (26,377)
Cash and cash equivalents at
beginning of period 137,396 46,924
Cash and cash equivalents at end of
period $ 160,644 $ 20,547
(1) The Company has revised its statement of cash flows to reflect the change in
Financing's instalment note receivable balance relating to the portfolio of
assets originated by Homebuilding as a change in operating activities.
Previously, this item was reported in investing activities. The previous cash
flow treatment followed our principal lines of business reporting, however, on a
consolidated basis, there is no cash flow resulting from Financing's purchase of
installment notes from Homebuilding. Financing's purchase of loans from third
parties, as well as the cash collections on those loans, remains in investing
activities.
SOURCE Walter Industries, Inc.
-0- 11/02/2006
/CONTACT: media, Michael A. Monahan, Director - Corporate Communications
of Walter Industries, Inc., +1-813-871-4132, or mmonahan@walterind.com, or
investors, Mark H. Tubb, Vice President - Investor Relations of Walter
Industries, Inc., +1-813-871-4027, or mtubb@walterind.com /
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/Web site: http://www.walterind.com /
(WLT)