SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                 --------------

                                  SCHEDULE 13D
                                 (Rule 13d-101)

             INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
            TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
                                  RULE 13d-2(a)

                              (Amendment No. 1)(1)

                             Walter Industries, Inc.
                             -----------------------
                                (Name of Issuer)

                          Common Stock, $.01 Par Value
                          ----------------------------
                         (Title of Class of Securities)

                                    93317Q105
                                    ---------
                                 (CUSIP Number)

                              STEVEN WOLOSKY, ESQ.
                 OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
                                Park Avenue Tower
                               65 East 55th Street
                            New York, New York 10022
                                 (212) 451-2300
                                 --------------
                  (Name, Address and Telephone Number of Person
                Authorized to Receive Notices and Communications)

                                December 22, 2006
                                -----------------
             (Date of Event Which Requires Filing of This Statement)

         If the filing person has  previously  filed a statement on Schedule 13G
to report the  acquisition  that is the  subject of this  Schedule  13D,  and is
filing this schedule because of Rule 13d-1(e),  13d-1(f) or 13d-1(g),  check the
following box / /.

         NOTE.  Schedules  filed in paper format shall include a signed original
and five copies of the  schedule,  including  all  exhibits.  SEE Rule 13d-7 for
other parties to whom copies are to be sent.

                         (Continued on following pages)

                               (Page 1 of 7 Pages)

(1)      The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however, SEE the NOTES).




- ----------------------                                    ----------------------
CUSIP No. 93317Q105                   13D                    Page 2 of 7 Pages
- ----------------------                                    ----------------------


================================================================================
     1         NAME OF REPORTING PERSONS
               I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

                    STEEL PARTNERS II, L.P.
- --------------------------------------------------------------------------------
     2         CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*         (a) / /
                                                                         (b) / /
- --------------------------------------------------------------------------------
     3         SEC USE ONLY

- --------------------------------------------------------------------------------
     4         SOURCE OF FUNDS*

                    WC
- --------------------------------------------------------------------------------
     5         CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEM 2(d) OR 2(e)                                 / /
- --------------------------------------------------------------------------------
     6         CITIZENSHIP OR PLACE OF ORGANIZATION

                    DELAWARE
- --------------------------------------------------------------------------------
 NUMBER OF         7     SOLE VOTING POWER
   SHARES
BENEFICIALLY                  1,875,346
  OWNED BY     -----------------------------------------------------------------
    EACH           8     SHARED VOTING POWER
 REPORTING
PERSON WITH                   - 0 -
               -----------------------------------------------------------------
                   9     SOLE DISPOSITIVE POWER

                              1,875,346
               -----------------------------------------------------------------
                  10     SHARED DISPOSITIVE POWER

                              - 0 -
- --------------------------------------------------------------------------------
    11         AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
               PERSON

                   1,875,346
- --------------------------------------------------------------------------------
    12         CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
               CERTAIN SHARES*                                               / /
- --------------------------------------------------------------------------------
    13         PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

                    4.3%
- --------------------------------------------------------------------------------
    14         TYPE OF REPORTING PERSON*

                    PN
================================================================================

                      *SEE INSTRUCTIONS BEFORE FILLING OUT!




- ----------------------                                    ----------------------
CUSIP No. 93317Q105                   13D                    Page 3 of 7 Pages
- ----------------------                                    ----------------------


================================================================================
     1         NAME OF REPORTING PERSONS
               I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

                    STEEL PARTNERS, L.L.C.
- --------------------------------------------------------------------------------
     2         CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*         (a) / /
                                                                         (b) / /
- --------------------------------------------------------------------------------
     3         SEC USE ONLY

- --------------------------------------------------------------------------------
     4         SOURCE OF FUNDS*

                    OO
- --------------------------------------------------------------------------------
     5         CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEM 2(d) OR 2(e)                                 / /
- --------------------------------------------------------------------------------
     6         CITIZENSHIP OR PLACE OF ORGANIZATION

                    DELAWARE
- --------------------------------------------------------------------------------
 NUMBER OF         7     SOLE VOTING POWER
   SHARES
BENEFICIALLY                  1,875,346
  OWNED BY     -----------------------------------------------------------------
    EACH           8     SHARED VOTING POWER
 REPORTING
PERSON WITH                   - 0 -
               -----------------------------------------------------------------
                   9     SOLE DISPOSITIVE POWER

                              1,875,346
               -----------------------------------------------------------------
                  10     SHARED DISPOSITIVE POWER

                              - 0 -
- --------------------------------------------------------------------------------
    11         AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
               PERSON

                    1,875,346
- --------------------------------------------------------------------------------
    12         CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
               CERTAIN SHARES*                                               / /
- --------------------------------------------------------------------------------
    13         PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

                    4.3%
- --------------------------------------------------------------------------------
    14         TYPE OF REPORTING PERSON*

                    OO
================================================================================

                      *SEE INSTRUCTIONS BEFORE FILLING OUT!




- ----------------------                                    ----------------------
CUSIP No. 93317Q105                   13D                    Page 4 of 7 Pages
- ----------------------                                    ----------------------


================================================================================
     1         NAME OF REPORTING PERSONS
               I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

                    WARREN G. LICHTENSTEIN
- --------------------------------------------------------------------------------
     2         CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*         (a) / /
                                                                         (b) / /
- --------------------------------------------------------------------------------
     3         SEC USE ONLY

- --------------------------------------------------------------------------------
     4         SOURCE OF FUNDS*

                    OO
- --------------------------------------------------------------------------------
     5         CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEM 2(d) OR 2(e)                                 / /
- --------------------------------------------------------------------------------
     6         CITIZENSHIP OR PLACE OF ORGANIZATION

                    USA
- --------------------------------------------------------------------------------
 NUMBER OF         7     SOLE VOTING POWER
   SHARES
BENEFICIALLY                  1,875,346
  OWNED BY     -----------------------------------------------------------------
    EACH           8     SHARED VOTING POWER
 REPORTING
PERSON WITH                   - 0 -
               -----------------------------------------------------------------
                   9     SOLE DISPOSITIVE POWER

                              1,875,346
               -----------------------------------------------------------------
                  10     SHARED DISPOSITIVE POWER

                              - 0 -
- --------------------------------------------------------------------------------
    11         AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
               PERSON

                    1,875,346
- --------------------------------------------------------------------------------
    12         CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
               CERTAIN SHARES*                                               / /
- --------------------------------------------------------------------------------
    13         PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)

                    4.3%
- --------------------------------------------------------------------------------
    14         TYPE OF REPORTING PERSON*

                    IN
================================================================================

                      *SEE INSTRUCTIONS BEFORE FILLING OUT!




- ----------------------                                    ----------------------
CUSIP No. 93317Q105                   13D                    Page 5 of 7 Pages
- ----------------------                                    ----------------------


         The following  constitutes  Amendment No. 1 ("Amendment  No. 1") to the
Schedule 13D filed by the undersigned.  This Amendment No. 1 amends the Schedule
13D as specifically set forth.

         Item 3 is hereby amended and restated to read as follows:

         The aggregate purchase price of the 1,875,346 Shares beneficially owned
by Steel Partners II is $43,662,176, including brokerage commissions. The Shares
owned by Steel Partners II were acquired with  partnership  funds.  The purchase
price for the Shares reflects  adjustment  resulting from the shares of Series B
common  stock,  par value  $.01 per  share,  of  Mueller  Water  Products,  Inc.
("Mueller")  received by Steel  Partners II in  connection  with the spin-off of
Mueller by the Issuer.

         Item 5(a) is hereby amended and restated to read as follows:

         (a) The aggregate  percentage of Shares  reported  owned by each person
named herein is based upon  43,672,440  Shares  outstanding,  which is the total
number of Shares  outstanding  as reported in the Issuer's  Quarterly  Report on
Form 10-Q for the quarter ended September 30, 2006, as filed with the Securities
and Exchange Commission on November 9, 2006.

         As of the close of business on December  26,  2006,  Steel  Partners II
beneficially  owned  1,875,346  Shares  constituting  approximately  4.3% of the
Shares  outstanding.  As the general  partner of Steel Partners II, Partners LLC
may be deemed to beneficially  own the 1,875,346  Shares owned by Steel Partners
II,  constituting  approximately  4.3% of the  Shares  outstanding.  As the sole
executive  officer and  managing  member of Partners  LLC,  which in turn is the
general  partner  of Steel  Partners  II,  Mr.  Lichtenstein  may be  deemed  to
beneficially own the 1,875,346  Shares owned by Steel Partners II,  constituting
approximately 4.3% of the Shares  outstanding.  Mr. Lichtenstein has sole voting
and  dispositive  power with  respect  to the  1,875,346  Shares  owned by Steel
Partners II by virtue of his authority to vote and dispose of such Shares. Steel
Partners II no longer has a short position in put options of the Issuer.

         Item 5(c) is hereby amended and restated to read as follows:

         (c)  Schedule A annexed  hereto  lists all  transactions  in the Shares
during the past sixty days by the Reporting  Persons.  All of such  transactions
were effected in the open market.

         Item 5(e) is hereby amended and restated to read as follows:

         (e) As of December 22, 2006,  the  Reporting  Persons  ceased to be the
beneficial owners of more than 5% of the Shares of the Issuer.




- ----------------------                                    ----------------------
CUSIP No. 93317Q105                   13D                    Page 6 of 7 Pages
- ----------------------                                    ----------------------


                                   SIGNATURES

         After  reasonable  inquiry and to the best of his knowledge and belief,
each of the  undersigned  certifies  that  the  information  set  forth  in this
statement is true, complete and correct.


Dated:   December 27, 2006                  STEEL PARTNERS II, L.P.

                                            By: Steel Partners, L.L.C.
                                                General Partner

                                            By: /s/ Lauren Isenman
                                                --------------------------------
                                                Lauren Isenman
                                                as Attorney-In-Fact for Warren G. Lichtenstein,
                                                Managing Member


                                            STEEL PARTNERS, L.L.C.

                                            By: /s/ Lauren Isenman
                                                --------------------------------
                                                Lauren Isenman
                                                as Attorney-In-Fact for Warren G. Lichtenstein,
                                                Managing Member


                                            /s/ Lauren Isenman
                                            ------------------------------------
                                            LAUREN ISENMAN
                                            As Attorney-In-Fact for Warren G. Lichtenstein




- ----------------------                                    ----------------------
CUSIP No. 93317Q105                   13D                    Page 7 of 7 Pages
- ----------------------                                    ----------------------


                                   SCHEDULE A

               TRANSACTIONS IN THE SHARES DURING THE PAST 60 DAYS

Shares of Common Stock             Price Per                         Date of
  Purchased / (Sold)                Share($)                     Purchase / Sale
  ------------------                --------                     ---------------

                             STEEL PARTNERS II, L.P.
                             -----------------------

    (135,500)                       27.5743                         12/21/06
    (176,950)                       27.0865                         12/22/06
    (226,104)                       27.1400                         12/26/06

                             STEEL PARTNERS, L.L.C.
                             ----------------------
                                      None

                             WARREN G. LICHTENSTEIN
                             ----------------------
                                      None