-----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, BkUmVd9aQXppuNnkTnyvjRz2yTSwqBrIlslLTcmyQRjUOXV34d5nH4nnu9SaKWgq trmlIUFPIIuBFyriIizcSg== 0000891092-04-003599.txt : 20040728 0000891092-04-003599.hdr.sgml : 20040728 20040728102102 ACCESSION NUMBER: 0000891092-04-003599 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040727 ITEM INFORMATION: ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20040728 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WALTER INDUSTRIES INC /NEW/ CENTRAL INDEX KEY: 0000837173 STANDARD INDUSTRIAL CLASSIFICATION: GEN BUILDING CONTRACTORS - RESIDENTIAL BUILDINGS [1520] IRS NUMBER: 133429953 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13711 FILM NUMBER: 04934751 BUSINESS ADDRESS: STREET 1: 1500 N DALE MABRY HWY CITY: TAMPA STATE: FL ZIP: 33607 BUSINESS PHONE: 8138714811 MAIL ADDRESS: STREET 1: 1500 N DALE MABRY HWY STREET 2: 1500 NORTH MABRY HGWY CITY: TAMPA STATE: FL ZIP: 33607 FORMER COMPANY: FORMER CONFORMED NAME: HILLSBOROUGH HOLDINGS CORP DATE OF NAME CHANGE: 19910814 8-K 1 e18577_8k.txt FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 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) July 27, 2004 WALTER INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Delaware 001-13711 13-3429953 (State or other jurisdiction of (Commission (IRS Employer incorporation or organization) File Number) Identification No.) 4211 W. Boy Scout Boulevard, Tampa, Florida 33607 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (813) 871-4811 NOT APPLICABLE (Former name or former address, if changed since last report) - -------------------------------------------------------------------------------- Item 9. Regulation FD Disclosure Item 12. Results of Operations and Financial Condition The following information is furnished pursuant to Item 9 "Regulation FD Disclosure" and Item 12 "Results of Operations and Financial Condition": On July 27, 2004 Walter Industries, Inc. issued a press release setting forth Walter Industries, Inc.'s second quarter 2004 earnings. A copy of Walter Industries, Inc.'s press release is attached hereto as Exhibit 99 and hereby incorporated by reference. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. WALTER INDUSTRIES, INC. By: /s/ Victor P. Patrick ----------------------------------- Title: Victor P. Patrick Sr. Vice President, General Counsel and Secretary Date: July 28, 2004 - -------------------------------------------------------------------------------- Exhibit Index (99) Press release, dated: July 27, 2004, issued by Walter Industries, Inc. EX-99 2 e18577ex99.txt PRESS RELEASE Exhibit 99 [LOGO] WLT Investor Relations Department LISTED P.O. Box 31601 NYSE Tampa, Florida 33631-3601 Telephone: (813) 871-4404 www.walterind.com FOR IMMEDIATE RELEASE WALTER INDUSTRIES ANNOUNCES SECOND QUARTER 2004 RESULTS -- EPS of $0.21 Substantially Exceeds Prior Year Period and Earlier Expectations -- TAMPA, Fla., July 27 /PRNewswire-FirstCall/ -- Walter Industries, Inc. (NYSE: WLT) today reported earnings of $0.21 per diluted share for the second quarter ended June 30, 2004, compared to a net loss of $0.61 per diluted share for the year-ago period. Net income for the quarter was $8.3 million, compared to a net loss of $27.1 million in the year-ago period. Results for the prior year period included an after-tax loss of $44.1 million from discontinued operations. Earnings for the second quarter exceeded the Company's most recently issued guidance of $0.10 to $0.15 per diluted share. Pre-tax income from continuing operations for the second quarter was $14.4 million, versus a pre-tax loss from continuing operations of $4.8 million for the prior year period. The prior year period results included $12.4 million in expenses at U.S. Pipe related to settling litigation matters and the closure of U.S. Pipe's castings plant in Anniston, Alabama. "We achieved improved financial results in the quarter, including better than expected performance in our Natural Resources and Financing segments," said Chairman and Chief Executive Officer Don DeFosset. "We remain optimistic about further improvement in the second half of 2004, especially with higher priced contracts for metallurgical coal at Natural Resources. We also expect improved second-half performance in the Homebuilding and Industrial Products segments." Second quarter 2004 results included the following items, net of tax: * Unamortized debt costs of $1.6 million were expensed due to the early prepayment of $112 million in bank term debt, which resulted from the issuance of $175 million of convertible bonds * A valuation allowance of $1.8 million was established for certain deferred state tax assets in the Homebuilding segment * Vestal Manufacturing was sold for $6.0 million, resulting in a loss of $0.8 million * Other Post-Retirement Employee Benefit liabilities at Natural Resources were reduced, which increased income by $1.0 million Net sales and revenues for the quarter were $379.9 million compared to $354.5 million in the prior year period. Increased sales in the current period were primarily attributable to favorable coal and ductile iron pipe selling prices, partially offset by lower volumes in the Homebuilding segment. -more- -2- In addition to strong second quarter performances in the Financing and Natural Resources segments, the Industrial Products segment returned to profitability compared to the previous year's quarter. A decrease in the provision for losses, improved delinquency rates, lower interest expense, and higher prepayment income led to better performance at Financing. Profitability at Natural Resources increased significantly over the prior year period primarily driven by favorable spot coal and gas pricing and increased coal production. At U.S. Pipe, higher scrap iron costs, which increased 58% over the prior year period, continue to impact profitability. U.S. Pipe has been aggressively pursuing higher prices to compensate for the escalation of raw material and transportation costs, recently announcing its fifth price increase since last summer. Revenues and operating income at Homebuilding were lower during the quarter due to fewer unit completions and increased lumber costs. Management is intensely focused on increasing sales and unit completions during the second half of the year and is implementing several new sales and marketing programs to facilitate a return to profitability. In July, the Company's Financing business completed a $294 million mortgage-backed security issuance, generating $38 million in cash proceeds for general corporate purposes. These cash proceeds were used to eliminate outstanding borrowings under the Company's revolver and added $30 million of cash to the balance sheet. Second-Quarter Results By Operating Segment The Homebuilding segment reported second quarter revenues of $61.5 million, compared to $75.0 million in the year-ago period. Homebuilding completed 878 homes during the second quarter at an average selling price of $70,063, compared to 1,145 homes at an average price of $65,125 for the same period the previous year. The higher average sales price reflects the Company's ongoing strategy to market and sell larger homes with more amenities. The segment operating loss for the quarter was $6.7 million, compared to operating income of $2.4 million in the year-ago period. Homebuilding continues to experience reduced on-your-lot margins as a result of lower unit completions and increased lumber costs. Since March 2004, sales prices have increased 8% to offset increased raw material costs. The Homebuilding group is aggressively taking further action to restore profitability, including: * Launching strategically focused marketing and advertising campaigns * Implementing numerous cost-containment initiatives such as closing 15 non-performing sales centers since the beginning of the year * Introducing new models and expanding customer promotions * Enhancing employee training and incentive programs Financing segment revenues for the second quarter were $62.8 million, compared to $59.9 million in the prior year period. Second quarter operating income was up 19% versus the prior year period largely due to lower delinquency rates, enhanced loss mitigation activities, and higher prepayment income. Foreclosure activity within the instalment note portfolio has also declined substantially primarily due to improved delinquency rates and better management of defaulted accounts. Prepayment speeds were 11% in the second quarter, compared to 8.5% in the year-ago period. Delinquencies (the percentage of -more- -3- amounts outstanding over 30 days past due) were 5.2% at June 30, 2004, versus 6.6% from the year-ago quarter. The Industrial Products segment reported revenues of $145.0 million, compared to $128.1 million in the prior year period. The increase in revenue was due to significantly improved pricing at U.S. Pipe. Operating income was $1.4 million, compared to a loss of $12.4 million in the prior year period. The prior year's second quarter included a pre-tax litigation expense settlement of $6.5 million and a $5.9 million pre-tax charge related to the closure of manufacturing operations at the Anniston, Alabama castings plant. Excluding these non-recurring items in 2003, operating income increased $1.4 million primarily due to increases in ductile iron pipe prices, which were partially offset by higher scrap iron costs. The Natural Resources segment reported second quarter revenues of $89.2 million, compared to $69.3 million in the year-ago period. Operating income was $14.7 million, significantly higher than the second quarter of 2003, as favorable pricing from metallurgical coal and natural gas sales, plus higher coal production, drove profitability. Coal production in the second quarter increased 29% over the same period last year due to strong operating performance at each of the mines. Jim Walter Resources sold 1.85 million tons of coal at an average price of $41.47 per ton in the second quarter, compared to 1.66 million tons in the prior year's quarter at an average price of $35.58. The natural gas operation sold 2.05 billion cubic feet of gas in the second quarter at an average price of $5.77 per thousand cubic feet, compared to sales of 2.21 billion cubic feet at $4.49 per thousand cubic feet in the prior year quarter. Operating income for Sloss Industries, which is included in the Other segment, was $2.4 million. Results exceeded the prior year period by $3.9 million, primarily due to improved production and higher prices for furnace and foundry coke. Outlook Based on current business forecasts and anticipated market conditions, Walter Industries expects to generate third quarter earnings in the range of $0.40 to $0.45 per diluted share. The Company's full-year 2004 EPS guidance remains at $0.85 - $1.00 per diluted share. Conference Call Webcast Walter Industries Chairman and CEO Don DeFosset and members of the Company's leadership team will discuss quarterly results and other general business matters on a conference call and live Webcast to be held on Wednesday, July 28, 2004, at 9:00 a.m. Eastern time. To listen to the event live or in archive, visit the Company Web site at http://www.walterind.com. Walter Industries, Inc. is a diversified company with annual revenues of $1.3 billion. The Company is a leader in affordable homebuilding, related financing, and water transmission products, and is a significant producer of high-quality coal for worldwide markets. Based in Tampa, Florida, the Company employs approximately 5,200 people. For more information about Walter Industries, please call Joe Troy, Senior Vice President-Financial Services at (813) 871-4404, or visit the corporate Web site at http://www.walterind.com. -more- -4- 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 and equipment costs and availability, geologic conditions and changes in extraction costs and pricing in the Company's mining operations, changes in customer orders, pricing actions by the Company's competitors, the collection of approximately $16 million of receivables associated with working capital adjustments arising from the sales of subsidiaries in 2003, potential changes in the mortgage- backed capital market, and general changes in economic conditions. Risks associated with forward-looking statements are more fully described in the Company's filings with the Securities and Exchange Commission. The Company assumes no duty to update its outlook statements as of any future date. -more- -5- WALTER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED EARNINGS PER SHARE Unaudited For the three months ended June 30, --------------------------------- 2004 2003 -------------- -------------- Basic Income (Loss) per share: Income from continuing operations $ 0.22 $ 0.39 Discontinued Operations -- (1.01) -------------- -------------- Basic Net Income (Loss) per share $ 0.22 $ (0.62) ============== ============== Weighted average number of basic shares outstanding 38,304,441 43,824,464 ============== ============== Diluted Income (Loss) per share: Income from continuing operations $ 0.21 $ 0.38 Discontinued Operations -- (0.99) -------------- -------------- Diluted Net Income (Loss) per share $ 0.21 $ (0.61) ============== ============== Weighted average number of diluted shares outstanding 39,009,031 44,149,539 ============== ============== -more- -6- WALTER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ($ in Thousands) Unaudited For the three months ended June 30, ------------------------ 2004 2003 --------- --------- Net sales and revenues: Net sales $ 322,363 $ 294,231 Interest income on instalment notes 56,407 55,552 Miscellaneous 1,098 4,752 --------- --------- 379,868 354,535 --------- --------- Cost and expenses: Cost of sales (exclusive of depreciation) 258,398 247,306 Depreciation 15,249 13,388 Selling, general and administrative 50,114 43,497 Provision for losses on instalment notes 2,902 3,306 Postretirement benefits 593 2,066 Interest expense - mortgage- backed/asset-backed notes 30,276 31,530 Interest expense - senior debt 6,206 4,235 Amortization of other intangibles 1,352 1,624 Litigation expense -- 6,500 Restructuring and impairment charges 359 5,887 --------- --------- 365,449 359,339 --------- --------- Income (loss) from continuing operations before income tax expense 14,419 (4,804) Income tax (expense) benefit (6,156) 21,760 --------- --------- Income from continuing operations 8,263 16,956 Discontinued Operations, net of income taxes -- (44,068) --------- --------- Net Income (Loss) $ 8,263 $ (27,112) ========= ========= -more- -7- WALTER INDUSTRIES, INC. AND SUBSIDIARIES RESULTS BY OPERATING SEGMENT ($ in Thousands) Unaudited For the three months ended June 30, ------------------------- 2004 2003 --------- --------- NET SALES AND REVENUES: Homebuilding $ 61,543 $ 74,969 Financing 62,798 59,905 Industrial Products 145,007 128,104 Natural Resources 89,169 69,263 Other 27,260 27,361 Consolidating Eliminations (5,909) (5,067) --------- --------- $ 379,868 $ 354,535 ========= ========= OPERATING INCOME (LOSS): Homebuilding $ (6,712) $ 2,437 Financing 16,649 13,993 Industrial Products 1,401 (12,397) Natural Resources 14,719 304 Other (4,301) (4,228) Consolidating Eliminations (1,131) (678) --------- --------- Operating income (loss) 20,625 (569) Senior debt interest expense (6,206) (4,235) --------- --------- Income (loss) from continuing operations before income tax expense $ 14,419 $ (4,804) ========= ========= -more- -8- WALTER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED EARNINGS PER SHARE Unaudited For the six months ended June 30, --------------------------------- 2004 2003 -------------- -------------- Basic Income (Loss) per share: Income from continuing operations $ 0.09 $ 0.51 Discontinued Operations -- (0.87) Cumulative effect of change in accounting principle -- 0.01 -------------- -------------- Basic Net Income (Loss) per share $ 0.09 $ (0.35) ============== ============== Weighted average number of basic shares outstanding 39,851,145 44,035,213 ============== ============== Diluted Income (Loss) per share: Income from continuing operations $ 0.09 $ 0.51 Discontinued Operations -- (0.87) Cumulative effect of change in accounting principle -- 0.01 -------------- -------------- Diluted Net Income (Loss) per share $ 0.09 $ (0.35) ============== ============== Weighted average number of diluted shares outstanding 40,447,642 44,298,484 ============== ============== -more- -9- WALTER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ($ in Thousands) Unaudited For the six months ended June 30, ------------------------ 2004 2003 --------- --------- Net sales and revenues: Net sales $ 588,046 $ 544,555 Interest income on instalment notes 111,673 110,092 Miscellaneous 6,185 7,063 --------- --------- 705,904 661,710 --------- --------- Cost and expenses: Cost of sales (exclusive of depreciation) 484,390 450,471 Depreciation 30,501 27,136 Selling, general and administrative 99,874 83,922 Provision for losses on instalment notes 5,032 6,336 Postretirement benefits 3,105 4,332 Interest expense - mortgage- backed/asset-backed notes 62,002 62,986 Interest expense - senior debt 10,151 7,767 Amortization of other intangibles 2,837 3,098 Litigation expense -- 6,500 Restructuring and impairment charges 514 5,887 --------- --------- 698,406 658,435 --------- --------- Income from continuing operations before income tax expense 7,498 3,275 Income tax (expense) benefit (3,837) 19,369 --------- --------- Income from continuing operations 3,661 22,644 Discontinued Operations, net of income taxes -- (38,471) Cumulative effect of change in accounting principle (net of income tax expense of $123) -- 376 --------- --------- Net Income (Loss) $ 3,661 $ (15,451) ========= ========= -more- -10- WALTER INDUSTRIES, INC. AND SUBSIDIARIES RESULTS BY OPERATING SEGMENT ($ in Thousands) Unaudited For the six months ended June 30, -------------------------- 2004 2003 --------- --------- NET SALES AND REVENUES: Homebuilding $ 125,660 $ 139,499 Financing 123,778 119,134 Industrial Products 259,084 223,948 Natural Resources 153,823 135,939 Other 54,082 53,841 Consolidating Eliminations (10,523) (10,651) --------- --------- $ 705,904 $ 661,710 ========= ========= OPERATING INCOME (LOSS): Homebuilding $ (15,521) $ 4,400 Financing 30,496 29,052 Industrial Products (149) (16,322) Natural Resources 12,406 1,631 Other (8,230) (6,362) Consolidating Eliminations (1,353) (1,357) --------- --------- Operating income 17,649 11,042 Senior debt interest expense (10,151) (7,767) --------- --------- Income from continuing operations before income tax expense $ 7,498 $ 3,275 ========= ========= -more- -11- WALTER INDUSTRIES, INC. AND SUBSIDIARIES SUPPLEMENTAL INFORMATION ($ in Thousands) Unaudited For the For the For the For the three six three six months months months months ended ended ended ended June 30, June 30, June 30, June 30, 2004 2004 2003 2003 -------- -------- -------- -------- Depreciation: Homebuilding $ 1,213 $ 2,458 $ 1,227 $ 2,208 Financing 354 692 204 403 Industrial Products 6,890 13,743 6,516 13,334 Natural Resources 5,570 11,164 4,238 8,476 Other 1,222 2,444 1,203 2,715 ------- ------- ------- -------- $15,249 $30,501 $13,388 $ 27,136 ======= ======= ======= ======== Amortization of other intangibles: Financing $ 1,352 $ 2,837 $ 1,624 $ 3,098 Restructuring and impairment charges (recoveries) (pretax): Mine No. 5 shutdown costs $ 534 $ 393 $ -- $ -- U.S. Pipe Anniston plant shutdown costs (175) 121 5,887 5,887 ------- ------- ------- -------- $ 359 $ 514 $ 5,887 $ 5,887 ======= ======= ======= ======== -more- -12- WALTER INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ($ in Thousands) Unaudited June 30, December 31, June 30, 2004 2003 2003 ---------- ---------- ---------- ASSETS Cash and cash equivalents $ 15,650 $ 59,982 $ 15,446 Short-term investments, restricted 103,177 100,315 112,279 Marketable securities 604 652 651 Instalment notes receivable, net of allowance of $12,685, $12,675 and $11,203, respectively 1,750,296 1,757,832 1,748,729 Receivables, net 178,038 155,497 181,157 Income tax receivables 14,801 17,271 45,647 Inventories 215,178 215,855 199,290 Prepaid expenses 9,236 6,528 9,930 Property, plant and equipment, net 337,242 352,529 358,062 Assets held for sale -- -- 12,171 Assets of discontinued operations held for sale -- -- 302,114 Investments 6,117 6,326 6,525 Deferred income taxes 43,381 47,498 43,151 Unamortized debt expense 37,842 35,810 39,122 Other long-term assets, net 40,042 35,472 35,296 Goodwill and other intangibles, net 147,125 149,962 155,452 ---------- ---------- ---------- $2,898,729 $2,941,529 $3,265,022 ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 95,071 $ 99,889 $ 103,132 Accrued expenses 111,636 109,136 97,330 Debt: Mortgage-backed/asset-backed notes 1,780,950 1,829,898 1,862,539 Other senior debt 187,300 113,754 301,155 Accrued interest 16,124 17,119 17,130 Liabilities of discontinued operations held for sale -- -- 86,432 Accumulated postretirement benefits obligation 286,463 292,300 292,659 Other long-term liabilities 202,091 202,823 194,779 ---------- ---------- ---------- Total liabilities 2,679,635 2,664,919 2,955,156 Stockholders' equity 219,094 276,610 309,866 ---------- ---------- ---------- $2,898,729 $2,941,529 $3,265,022 ========== ========== ========== -more- -13- WALTER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in Thousands) Unaudited For the six months ended June 30, ------------------------ 2004 2003 --------- --------- OPERATING ACTIVITIES Income from continuing operations $ 3,661 $ 22,644 Adjustments to reconcile income to net cash provided by (used in) continuing operations: Provision for losses on instalment notes receivable 5,032 6,336 Depreciation 30,501 27,136 Provision for deferred income taxes 3,978 5,839 Accumulated postretirement benefits obligation (5,837) (3,743) Provision for (benefit from) other long-term liabilities 1,389 (1,360) Amortization of other intangibles 2,837 3,098 Amortization of debt expense 5,475 2,887 Loss on sale of assets 1,294 -- Restructuring and impairment charges 238 4,700 Stock-based compensation expense 364 -- Decrease (increase) in assets: Short-term investments, restricted (2,862) (14,393) Marketable securities 48 959 Receivables, net (24,407) (21,144) Income taxes receivable 2,609 (21,338) Inventories (2,383) (9,982) Prepaid expenses (2,708) (2,285) Increase (decrease) in liabilities: Accounts payable (3,599) 8,402 Accrued expenses 6,039 (6,344) Accrued interest (995) (1,522) --------- --------- Cash flows provided by (used in) continuing operations 20,674 (110) Cash flows (used in) provided by discontinued operations (3,611) 20,105 --------- --------- Cash flows provided by operating activities 17,063 19,995 --------- --------- INVESTING ACTIVITIES Notes originated from sales/resales of homes and purchases of loans (234,939) (255,169) Cash collections on accounts and payouts in advance of maturity 237,443 217,827 Additions to property, plant and equipment, net of retirements (18,369) (23,870) (Increase) decrease in investments and other assets, net (5,958) 1,784 Additions to property, plant and equipment of discontinued operations -- (13,131) Proceeds from sale of subsidiary 6,000 -- --------- --------- Cash flows used in investing activities (15,823) (72,559) --------- --------- FINANCING ACTIVITIES Issuance of debt 370,600 881,370 Retirement of debt (347,442) (802,596) Additions to unamortized debt expense (6,067) (6,756) Dividends paid (2,370) (2,629) Purchases of treasury stock (63,020) (10,014) Exercise of employee stock options 2,727 401 --------- --------- Cash flows (used in) provided by financing activities (45,572) 59,776 --------- --------- Net (decrease) increase in cash and cash equivalents (44,332) 7,212 Cash and cash equivalents at beginning of period 59,982 8,234 --------- --------- Cash and cash equivalents at end of period $ 15,650 $ 15,446 ========= ========= #### -----END PRIVACY-ENHANCED MESSAGE-----