EX-99.A 2 a09-10798_1ex99da.htm EX-99.A

Exhibit 99(a)

 

(b)           Pro Forma Financial Information

 

Due to the spin-off of Walter Investment Management LLC on April 17, 2009, the historical results of operations of Walter Investment Management LLC through the date of the spin-off will be reflected in the historical financial statements of the Company as discontinued operations.

 

The following Unaudited Pro Forma Condensed Consolidated Financial Statements reflecting the spin-off are based on and should be read in conjunction with the Company’s historical Consolidated Financial Statements and related notes appearing in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

 

The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006 are prepared as though the Walter Investment Management LLC spin-off occurred as of the beginning of the earliest period presented.  The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2008 is prepared as if the Walter Investment Management LLC spin-off occurred as of December 31, 2008. Pro forma adjustments are described in the Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

The following Unaudited Pro Forma Condensed Consolidated Financial Statements are presented for illustrative and informational purposes only and are not intended to represent or be indicative of the financial condition or results of operations which would actually have been recorded if the Walter Investment Management LLC spin-off had occurred during the periods presented.  In addition, the Unaudited Pro Forma Condensed Consolidated Financial Statements are not intended to represent the Company’s financial position or results of operations for any future date or period.

 


 

WALTER INDUSTRIES, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF DECEMBER 31, 2008

(in thousands, except share amounts)

 

 

 

Historical

 

Discontinued 
Operations 
Adjustments (a)

 

Pro Forma 
Adjustments

 

Pro Forma

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

117,672

 

$

(1,319

)

$

(35,000

)(b)(c)

$

81,353

 

Short-term investments, restricted

 

56,275

 

(48,985

)

 

 

7,290

 

Instalment notes receivable, net

 

1,769,688

 

(1,769,077

)

 

 

611

 

Receivables, net

 

176,601

 

(4,208

)

 

 

172,393

 

Inventories

 

133,129

 

(48,198

)

 

 

84,931

 

Prepaid expenses

 

26,418

 

(3,063

)

 

 

23,355

 

Property, plant and equipment, net

 

515,418

 

(414

)

 

 

515,004

 

Deferred income taxes

 

206,733

 

61,312

 

 

 

268,045

 

Other assets

 

59,392

 

(23,792

)

 

 

35,600

 

Assets of discontinued operations

 

6,667

 

—

 

 

 

6,667

 

Total assets

 

$

3,067,993

 

$

(1,837,744

)

$

(35,000

)

$

1,195,249

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

72,801

 

$

(714

)

 

 

$

72,087

 

Accrued expenses

 

91,213

 

(15,963

)

 

 

75,250

 

Accrued interest

 

11,362

 

(9,717

)

 

 

1,645

 

Debt:

 

 

 

 

 

 

 

 

 

Mortgage-backed / asset-backed notes

 

1,372,821

 

(1,372,821

)

 

 

—

 

Other debt

 

225,385

 

—

 

 

 

225,385

 

Accumulated postretirement benefits obligation

 

369,055

 

(748

)

 

 

368,307

 

Other liabilities

 

293,759

 

(19,495

)

 

 

274,264

 

Liabilities of discontinued operations

 

1,328

 

—

 

 

 

1,328

 

Total liabilities

 

2,437,724

 

(1,419,458

)

—

 

1,018,266

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

 

Common stock, $.01 par value per share:

 

 

 

 

 

 

 

 

 

Authorized - 200,000,000 shares

Issued - 54,143,958

 

541

 

—

 

 

 

541

 

Capital in excess of par value

 

714,174

 

(365,549

)

(35,000

)(b)(c)

313,625

 

Retained earnings (deficit)

 

50,990

 

(50,990

)

 

 

—

 

Accumulated other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

Pension and other post-retirement benefit plans, net of tax

 

(137,364

)

(1,158

)

 

 

(138,522

)

Unrealized gain on hedges, net of tax

 

1,928

 

(589

)

 

 

1,339

 

 

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

630,269

 

(418,286

)

(35,000

)

176,983

 

Total liabilities and stockholders’ equity

 

$

3,067,993

 

$

(1,837,744

)

$

(35,000

)

$

1,195,249

 

 

See accompanying notes

 


 

WALTER INDUSTRIES, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2008

(in thousands, except per share and share amounts)

 

 

 

Historical

 

Discontinued 
Operations (a)

 

Pro Forma (d)

 

 

 

 

 

 

 

 

 

Net sales and revenues:

 

 

 

 

 

 

 

Net sales

 

$

1,263,834

 

$

(11,777

)

$

1,252,057

 

Interest income on instalment notes

 

187,094

 

(187,094

)

—

 

Miscellaneous income

 

36,142

 

(2,170

)

33,972

 

 

 

1,487,070

 

(201,041

)

1,286,029

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of sales (exclusive of depreciation)

 

729,833

 

(4,777

)

725,056

 

Depreciation

 

59,772

 

(416

)

59,356

 

Selling, general and administrative

 

142,912

 

(36,668

)

106,244

 

Provision for losses on instalment notes

 

21,315

 

(21,315

)

—

 

Postretirement benefits

 

26,494

 

456

 

26,950

 

Interest expense - mortgage-backed/asset-backed notes

 

102,115

 

(102,115

)

—

 

Interest rate hedge ineffectiveness

 

16,981

 

(16,981

)

—

 

Interest expense - other debt

 

26,223

 

—

 

26,223

 

Amortization of intangibles

 

1,278

 

(1,005

)

273

 

Restructuring and impairment charges

 

63,958

 

(10,895

)

53,063

 

Provision for estimated hurricane insurance losses

 

3,853

 

(3,853

)

—

 

 

 

1,194,734

 

(197,569

)

997,165

 

 

 

 

 

 

 

 

 

Income from continuing operations before income tax expense (benefit)

 

292,336

 

(3,472

)

288,864

 

Income tax expense (benefit)

 

(75,798

)

5,075

 

(80,873

)

Income from continuing operations

 

$

368,134

 

$

1,603

 

$

369,737

 

 

 

 

 

 

 

 

 

Basic income from continuing operations per share

 

$

6.84

 

 

 

$

6.87

 

 

 

 

 

 

 

 

 

Weighted average number of basic shares outstanding

 

53,791,058

 

 

 

53,791,058

 

 

 

 

 

 

 

 

 

Diluted income from continuing operations per share (e)

 

$

6.74

 

 

 

$

6.77

 

 

 

 

 

 

 

 

 

Weighted average number of diluted shares outstanding

 

54,584,672

 

 

 

54,584,672

 

 

See accompanying notes

 


 

WALTER INDUSTRIES, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2007

(in thousands, except per share and share amounts)

 

 

 

Historical

 

Discontinued
Operations (a)

 

Pro Forma (d)

 

 

 

 

 

 

 

 

 

Net sales and revenues:

 

 

 

 

 

 

 

Net sales

 

$

1,000,411

 

$

(9,766

)

$

990,645

 

Interest income on instalment notes

 

202,654

 

(202,654

)

—

 

Miscellaneous income

 

36,756

 

(4,113

)

32,643

 

 

 

1,239,821

 

(216,533

)

1,023,288

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of sales (exclusive of depreciation)

 

686,326

 

(4,468

)

681,858

 

Depreciation

 

45,559

 

(1,174

)

44,385

 

Selling, general and administrative

 

144,186

 

(27,924

)

116,262

 

Provision for losses on instalment notes

 

13,889

 

(13,889

)

—

 

Postretirement benefits

 

26,734

 

424

 

27,158

 

Interest expense - mortgage-backed/asset-backed notes

 

119,102

 

(119,102

)

—

 

Interest expense - other debt

 

18,830

 

—

 

18,830

 

Amortization of intangibles

 

1,932

 

(1,581

)

351

 

 

 

1,056,558

 

(167,714

)

888,844

 

 

 

 

 

 

 

 

 

Income from continuing operations before income tax expense

 

183,263

 

(48,819

)

134,444

 

Income tax expense

 

58,261

 

(18,594

)

39,667

 

Income from continuing operations

 

$

125,002

 

$

(30,225

)

$

94,777

 

 

 

 

 

 

 

 

 

Basic income from continuing operations per share

 

$

2.40

 

 

 

$

1.82

 

 

 

 

 

 

 

 

 

Weighted average number of basic shares outstanding

 

52,015,569

 

 

 

52,015,569

 

 

 

 

 

 

 

 

 

Diluted income from continuing operations per share (e)

 

$

2.38

 

 

 

$

1.81

 

 

 

 

 

 

 

 

 

Weighted average number of diluted shares outstanding

 

52,489,977

 

 

 

52,489,977

 

 

See accompanying notes

 


 

WALTER INDUSTRIES, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2006

(in thousands, except per share and share amounts)

 

 

 

Historical

 

Discontinued
Operations (a)

 

Pro Forma (d)

 

 

 

 

 

 

 

 

 

Net sales and revenues:

 

 

 

 

 

 

 

Net sales

 

$

1,009,781

 

$

(10,015

)

$

999,766

 

Interest income on instalment notes

 

199,659

 

(199,659

)

—

 

Miscellaneous income

 

63,468

 

(5,286

)

58,182

 

 

 

1,272,908

 

(214,960

)

1,057,948

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of sales (exclusive of depreciation)

 

662,877

 

(5,154

)

657,723

 

Depreciation

 

36,764

 

(1,387

)

35,377

 

Selling, general and administrative

 

141,265

 

(29,643

)

111,622

 

Provision for losses on instalment notes

 

9,062

 

(9,062

)

—

 

Postretirement benefits

 

13,540

 

1,544

 

15,084

 

Interest expense - mortgage-backed/asset-backed notes

 

118,743

 

(118,743

)

—

 

Interest expense - other debt

 

38,009

 

—

 

38,009

 

Amortization of intangibles

 

2,405

 

(2,405

)

—

 

Restructuring and impairment charges

 

1,639

 

—

 

1,639

 

Provision for estimated hurricane insurance losses

 

(1,046

)

1,046

 

—

 

Debt conversion expense

 

19,370

 

—

 

19,370

 

 

 

1,042,628

 

(163,804

)

878,824

 

 

 

 

 

 

 

 

 

Income from continuing operations before income tax expense

 

230,280

 

(51,156

)

179,124

 

Income tax expense

 

73,983

 

(18,244

)

55,739

 

Income from continuing operations

 

$

156,297

 

$

(32,912

)

$

123,385

 

 

 

 

 

 

 

 

 

Basic income from continuing operations per share

 

$

3.55

 

 

 

$

2.80

 

 

 

 

 

 

 

 

 

Weighted average number of basic shares outstanding

 

44,029,837

 

 

 

44,029,837

 

 

 

 

 

 

 

 

 

Diluted income from continuing operations per share (e)

 

$

3.07

 

 

 

$

2.43

 

 

 

 

 

 

 

 

 

Weighted average number of diluted shares outstanding

 

52,077,356

 

 

 

52,077,356

 

 

See accompanying notes

 


 

WALTER INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

(a)

Reflects the elimination of the financial results, assets, liabilities and accumulated other comprehensive income amounts associated with Walter Investment Management LLC and the distribution of Walter Investment Management LLC to the shareholders of Walter Industries, Inc.

(b)

Includes $31.3 million of cash contributed by Walter Industries, Inc. to Walter Investment Management LLC immediately prior to the spin-off. Walter Investment Management LLC will use these proceeds for general corporate purposes and for the payment of transaction and other related costs.

(c)

Estimated non-recurring costs, primarily legal, accounting and consulting fees, associated with the distribution of Walter Investment Management LLC in the amount of approximately $3.7 million are expected to be incurred subsequent to December 31, 2008. These costs have been shown separately as a charge directly to pro forma equity.

(d)

There were no pro forma adjustments required for the presentation of Pro Forma Continuing Operations in the Unaudited Pro Forma Condensed Consolidated Statements of Operations.

(e)

The interest expense, net of tax, and shares issuable upon conversion related to Walter Industries, Inc. contingent convertible senior subordinated notes were included in the calculation of historical and pro forma consolidated diluted income from continuing operations per share for the years ended December 31, 2006 and 2007.  In January 2008, the last of these notes were converted to shares of Walter Industries, Inc.’s common stock.