EX-99 3 a2109870zex-99.txt EXHIBIT 99 EXHIBIT 99 [WALTER INDUSTRIES LETTERHEAD] FOR IMMEDIATE RELEASE --------------------- WALTER INDUSTRIES ANNOUNCES FIRST QUARTER 2003 RESULTS OF $0.26 PER SHARE (Tampa, Florida) April 29, 2003--Walter Industries, Inc. (NYSE: WLT) today reported net income of $0.26 per diluted share for the first quarter ended March 31, 2003, consistent with the Company's previously announced guidance range of $0.25 to $0.30 per share. The first quarter reflected strong performances by the Financing segment and JW Aluminum, and increased sales by the Homebuilding segment's stick-built divisions. At the same time, profitability declined at U.S. Pipe, the result of higher scrap iron and natural gas costs and the effects of an industry-wide price war. Operating income was also down at Jim Walter Resources, primarily due to geologic conditions in one mine that temporarily reduced coal production. "We were able to meet our earnings targets even though there were significant challenges in many of our businesses," said Chairman and Chief Executive Officer Don DeFosset. "We are expecting better second-half performance as U.S. Pipe's pricing improves and we continue to see positive results from our companywide productivity initiatives." FIRST QUARTER 2003 FINANCIAL RESULTS Net income was $11.7 million, or $0.26 per diluted share, during the first quarter ended March 31, 2003. These results were driven by solid performances by the Financing segment, the Homebuilding segment's stick-built businesses and JW Aluminum. Quarterly results also reflect a decline in operating income in the Industrial Products and Natural Resources segments. Net income in the year-ago period was $13.5 million, or $0.30 per diluted share, excluding the impact of adopting FAS 142. Net sales and revenues were up 3.6% for the quarter versus the year-ago period, with increases occurring in the Homebuilding, Industrial Products, Carbon and Metals, and Natural Resources segments. The Company's aluminum and coal mining businesses had higher volumes, while Homebuilding revenues reflected higher average sales prices. Partially offsetting these increases was lower pricing in the pipe business. -more- -2- Earnings before senior debt interest, taxes, depreciation, amortization and non-cash post-retirement health benefits totaled $38.1 million during the first quarter, compared with $40.5 million in the prior-year period. FIRST-QUARTER RESULTS BY OPERATING SEGMENT (PRO FORMA EXCLUDING IMPACT OF RESTRUCTURING AND OTHER CHARGES) The Homebuilding segment reported first-quarter revenues of $64.5 million, up $1.0 million from the year-ago period. This increase was primarily the result of higher average sales prices. Homebuilding completed 979 homes during the first quarter at an average net selling price of $65,900, compared with 1,020 homes at a $61,800 average price 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. Excluding its modular business, the Company completed 875 homes in the quarter, compared to 854 in the year-ago period. The modular business completed 104 homes in the current quarter, 62 fewer than the year-ago period, principally due to inclement weather and poor economic conditions in the Carolinas. Operating income for the segment was $2.4 million in the first quarter, down $0.7 million from the prior year period. The Financing segment reported quarterly revenues of $59.2 million compared with $60.5 million in the year-ago period. Operating income increased by $3.3 million, to $15.2 million, primarily due to lower interest expense as Mid-State Homes paid off Trust II in the fourth quarter of 2002. Prepayment speeds were 7.6% in both the first quarter of this year and last year. Delinquencies (the percentage of amounts outstanding over 30 days past due) were 6.8%, compared to 7.6% in the fourth quarter of 2002 and 6.5% in the first quarter of 2002. The Industrial Products segment posted $150.1 million in revenues during the first quarter, compared to $147.8 million in the year-earlier period. Operating income for the segment was $1.0 million, compared to $7.3 million in the prior-year period. U.S. Pipe's results were negatively impacted by higher scrap iron and natural gas costs and the continued impact of an industry price war that began in the second quarter of 2002. U.S. Pipe's average price for pipe in the first quarter of 2003 was essentially flat with the fourth quarter of 2002, as prices have stabilized and are now showing signs of returning to historical levels. Meanwhile, JW Aluminum continued its strong performance, as revenues increased $9.5 million and operating income improved $2.6 million from the year-ago period, due to increased volume and productivity enhancements. Revenues in the Carbon and Metals segment were $125.7 million in the first quarter, up $4.0 million from the year-earlier period, while operating income was $4.3 million, compared to $6.5 million in the same quarter of last year. This decrease reflected lower volumes and margins for specialty petroleum coke at AIMCOR and a $1.5 million increase in accruals for environmental issues at Sloss. -more- -3- The Natural Resources segment reported operating income of $1.5 million in the quarter, a $3.5 million decline from the prior year. This decline was primarily due to temporary increases in production costs at Mine No. 7 due to unanticipated adverse geologic conditions that stopped longwall production for 16 days during the quarter. Partially offsetting this, the de-gas operation posted increased revenue and operating income, the result of higher natural gas prices. Jim Walter Resources sold 1.53 million tons of coal at an average price of $35.49 per ton in the first quarter, compared to 1.44 million tons at $35.57 per ton in the prior year's quarter. The natural gas operation sold 2.26 billion cubic feet of gas in the first quarter at an average price of $5.24 per thousand cubic feet, compared to 2.36 billion cubic feet at $2.25 per thousand cubic feet in the prior-year quarter. OUTLOOK Based on current internal business forecasts and anticipated market conditions, Walter Industries expects to generate 2003 second-quarter earnings in the range of $0.27 to $0.32 per share, while full year EPS guidance remains unchanged at $1.70 to $1.80. This guidance excludes the impact of restructuring and other charges anticipated primarily in the second quarter of approximately $6.5 million before taxes, or $0.10 per diluted share, related to discontinuing manufacturing operations at U.S. Pipe's foundry and casting plant in Anniston, Alabama, which was announced earlier today. 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, April 30, 2003, at 9:00 a.m. Eastern time. To listen to the event live or in archive, visit the Company Web site at www.walterind.com. Walter Industries, Inc. is a diversified company with five principal operating businesses and annual revenues of $1.9 billion. The Company is a leader in homebuilding, home financing, water transmission products, energy services and specialty aluminum products. Based in Tampa, Florida, the Company employs approximately 6,300. For additional news on the Company or investor information, please contact Walter Industries at (813) 871-4404 or visit the corporate Web site. -more- -4- 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, CHANGES IN EXTRACTION COSTS IN THE COMPANY'S MINING OPERATIONS, CHANGES IN CUSTOMER ORDERS, PRICING ACTIONS BY THE COMPANY'S COMPETITORS, THE ULTIMATE OUTCOME WITH RESPECT TO RECOVERY OF INSURANCE PROCEEDS FROM THE 2001 MINING ACCIDENT, 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 March 31, ----------------------------------- 2003 2002 ---------------- --------------- Basic Net Income (Loss) per share: Basic net income per share before restructuring charges and cumulative effect of change in accounting principle, net of tax $ 0.26 $ 0.30 Restructuring charges, net of tax (0.01) -- Cumulative effect of change in accounting principle, net of tax 0.01 (2.84) -------------- ------------- Basic Net Income (Loss) per share $ 0.26 $ (2.54) ============== ============= Weighted average number of basic shares outstanding 44,316,883 44,241,624 ============== ============= Diluted Net Income (Loss) per share: Diluted net income per share before restructuring charges and cumulative effect of change in accounting principle, net of tax $ 0.26 $ 0.30 Restructuring charges, net of tax (0.01) -- Cumulative effect of change in accounting principle, net of tax 0.01 (2.82) -------------- ------------- Diluted Net Income (Loss) per share $ 0.26 $ (2.52) ============== ============= Weighted average number of diluted shares outstanding 44,534,504 44,573,359 ============== =============
-more- -6- WALTER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ($ in Thousands ) Unaudited
For the three months ended March 31, -------------------------- 2003 2002 ------------ ---------- Net sales and revenues: Net sales $ 404,825 $ 388,038 Time charge income 54,541 55,440 Miscellaneous 3,985 3,633 --------- --------- 463,351 447,111 --------- --------- Cost and expenses: Cost of sales 339,792 313,123 Depreciation 17,693 16,558 Selling, general and administrative 46,728 51,058 Provision for losses on instalment notes 3,030 3,196 Postretirement benefits 2,341 4,379 Interest and amortization of debt expense 35,091 40,341 Amortization of other intangibles 1,474 1,880 Restructuring charges 276 -- --------- --------- 446,425 430,535 --------- --------- Income before income tax expense 16,926 16,576 Income tax expense (5,642) (3,093) --------- --------- Income before cumulative effect of change in accounting principle 11,284 13,483 Cumulative effect of change in accounting principle -- (net of income taxes of $(123) and $75,053 respectively) 376 (125,947) --------- --------- Net Income (Loss) $ 11,660 $(112,464) ========= ========= Add: Restructuring charges, net of tax 180 -- --------- --------- Net income (loss) before restructuring charges, net of tax $ 11,840 $(112,464) ========= =========
-more- -7- WALTER INDUSTRIES, INC. AND SUBSIDIARIES RESULTS BY OPERATING SEGMENT ($ in Thousands) Unaudited
For the three months ended March 31, ------------------------------- 2003 2002 ------------ ---------- NET SALES AND REVENUES: Homebuilding $ 64,530 $ 63,511 Financing 59,230 60,487 Industrial Products 150,073 147,790 Carbon and Metals 125,735 121,746 Natural Resources 66,676 56,917 Other 2,431 1,588 Consolidating Eliminations (5,324) (4,928) --------- --------- $ 463,351 $ 447,111 ========= ========= OPERATING INCOME: Homebuilding $ 2,441 $ 3,125 Financing 15,177 11,906 Industrial Products 1,041 7,322 Carbon and Metals 3,997 3,942 Natural Resources 1,542 5,047 Consolidating eliminations (679) (828) --------- --------- Segment operating income 23,519 30,514 General corporate expense 2,957 9,030 Senior debt interest expense 3,636 4,908 --------- --------- Pre-tax income $ 16,926 $ 16,576 ========= =========
-more- -8- WALTER INDUSTRIES, INC. AND SUBSIDIARIES RESULTS BY OPERATING SEGMENT EXCLUDING RESTRUCTURING AND OTHER CHARGES ($ in Thousands) Unaudited
For the three months ended March 31, ----------------------------- 2003 2002 ------------ ----------- PRO FORMA OPERATING INCOME: (1) Homebuilding $ 2,441 $ 3,125 Financing 15,177 11,906 Industrial Products 1,041 7,322 Carbon and Metals 4,273 6,520 Natural Resources 1,542 5,047 Consolidating eliminations (679) (828) --------- --------- Segment operating income 23,795 33,092 General corporate expense 2,957 9,030 Senior debt interest expense 3,636 4,908 --------- --------- Pro forma pre-tax income 17,202 19,154 Add (deduct): Restructuring (3) (276) -- Other charges (4) -- (2,578) --------- --------- Pre-tax income $ 16,926 $ 16,576 ========= ========= EBITDA: (1) (2) Homebuilding $ 3,335 $ 4,350 Financing 16,827 13,675 Industrial Products 8,840 16,026 Carbon and Metals 6,701 9,173 Natural Resources 5,724 8,572 Other (3,054) (8,672) --------- --------- EBITDA before cash restructuring and other charges 38,373 43,124 Cash restructuring and other charges (276) (2,578) --------- --------- EBITDA $ 38,097 $ 40,546 ========= ========= EBITDA: (1) (2) $ 38,097 $ 40,546 Less: Depreciation 17,693 16,558 Amortization of definite lived intangibles 1,474 1,880 Non-cash postretirement benefits (1,632) 624 Corporate interest expense 3,636 4,908 Income tax expense 5,642 3,093 Cumulative effect of change in accounting principle, net of tax (376) 125,947 --------- --------- Net income (loss) $ 11,660 $(112,464) ========= ========= FREE CASH FLOW: (1) Cash flow from operating activities 9,543 8,229 Less: Additions to property, plant and equipment, net of retirements (17,990) (13,549) --------- --------- Free cash flow $ (8,447) $ (5,320) ========= =========
(1) Management believes this financial measure provides improved comparability and consistency associated with recurring operating results. (2) Earnings before senior debt interest, taxes, depreciation, amortization, non-cash OPEB, and cumulative effect of change in accounting principle, net of tax. (3) Restructuring charges in 2003 consisted of $0.3 million charge for the restructuring of certain AIMCOR European operations in Carbon & Metals (4) Other Charges in 2002 consisted of $2.6 million charge for bad debt write off related to customer bankruptcy at Sloss in Carbon & Metals. -more- -9- WALTER INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ($ in Thousands) Unaudited
March 31, December 31, March 31, 2003 2002 2002 ------------- ------------ ------------ ASSETS Cash and cash equivalents $ 19,540 $ 13,361 $ 13,511 Short-term investments, restricted 99,530 97,886 115,358 Marketable securities 1,165 1,610 1,874 Instalment notes receivable, net 1,730,005 1,717,723 1,692,063 Receivables, net 251,235 273,615 246,890 Inventories 268,194 250,507 258,804 Prepaid expenses 15,412 12,208 9,513 Property, plant and equipment, net 491,413 490,216 482,702 Assets held for sale 12,171 12,171 12,333 Investments 13,718 13,672 13,146 Deferred income taxes 27,771 32,904 26,604 Unamortized debt expense 34,383 35,253 38,584 Other long-term assets, net 37,163 38,604 34,844 Goodwill and other intangibles, net 214,020 215,494 220,839 ------------- ------------- ------------- $ 3,215,720 $ 3,205,224 $ 3,167,065 ============= ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 153,089 $ 158,882 $ 123,118 Accrued expenses 106,187 119,161 131,442 Income taxes payable 50,930 52,223 67,996 Debt: Mortgage-backed/asset-backed notes 1,787,041 1,776,020 1,817,219 Other senior debt 315,000 308,900 324,000 Accrued interest 33,492 33,162 31,822 Accumulated postretirement benefits obligation 294,770 296,402 296,802 Other long-term liabilities 128,301 121,480 48,086 Stockholders' equity 346,910 338,994 326,580 ------------- ------------- ------------- $ 3,215,720 $ 3,205,224 $ 3,167,065 ============= ============= =============
-more- -10- WALTER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS ($ in Thousands) Unaudited
For the three months ended March 31, 2003 2002 ----------- ----------- OPERATING ACTIVITIES -------------------- Net income (loss) $ 11,660 $(112,464) Charges to income not affecting cash: Depreciation 17,693 16,558 Cumulative effect of change in accounting principle, net of tax (376) 125,947 Provision for deferred income taxes 5,133 (1,424) Accumulated postretirement benefits obligation (1,632) 624 Provision for other long-term liabilities 3,578 (460) Amortization of other intangibles 1,474 1,880 Amortization of debt expense 1,016 1,386 Restructuring charges 276 -- --------- --------- 38,822 32,047 Decrease (increase) in assets: Short-term investments, restricted (1,644) 11,393 Marketable securities 445 (375) Instalment notes receivable, net (12,282) (2,290) Receivables, net 22,380 (23,260) Inventories (17,687) (6,023) Prepaid expenses (3,204) (735) Increase (decrease) in liabilities: Accounts payable (5,793) 7,825 Accrued expenses (10,407) (11,123) Income taxes payable (1,417) (540) Accrued interest 330 1,310 --------- --------- Cash flows from operating activities 9,543 8,229 --------- --------- INVESTING ACTIVITIES -------------------- Additions to property, plant and equipment, net of retirements (17,990) (13,549) Decrease in investments and other assets, net 1,395 9,676 --------- --------- Cash flows used in investing activities (16,595) (3,873) --------- --------- FINANCING ACTIVITIES -------------------- Issuance of debt 114,213 160,601 Retirement of debt (97,092) (161,324) Additions to unamortized debt expense (146) (52) Purchases of treasury stock -- (726) Dividends paid (1,330) (1,327) Net unrealized gain (loss) on hedge (2,321) 259 Exercise of employee stock options 65 96 --------- --------- Cash flows from (used in) financing activities 13,389 (2,473) --------- --------- EFFECT OF EXCHANGE RATE ON CASH (158) 92 ------------------------------- --------- --------- Net increase in cash and cash equivalents 6,179 1,975 Cash and cash equivalents at beginning of period 13,361 11,536 --------- --------- Cash and cash equivalents at end of period $ 19,540 $ 13,511 ========= =========
# # # #