-----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, LkPo3xdmzSP09i4QiJ/4AUG7YGkE8ejZZlKWjNimq/HvIdkbduD0eOd8oO2HuZJC xqKbIyWCTw3nV1kCnUqqOQ== 0001275287-05-000670.txt : 20050223 0001275287-05-000670.hdr.sgml : 20050223 20050222204749 ACCESSION NUMBER: 0001275287-05-000670 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20050222 ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20050223 DATE AS OF CHANGE: 20050222 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: 05632697 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 wi2110.txt ================================================================================ 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) February 22, 2005 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) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13-4(c)) ================================================================================ ITEM 2.01 RESULTS OF OPERATIONS AND FINANCIAL CONDITION On February 22, 2005, Walter Industries, Inc., issued a press release filed herewith as Exhibit 99.1 and incorporated herein by reference, announcing its financial results for the fourth quarter ended December 31, 2004. ITEM 5.02 CHANGE OF DIRECTORS/PRINCIPAL OFFICERS On February 22, 2005, Walters Industries, Inc. issued a press release filed herewith as Exhibit 99.2 and incorporated herein by reference, announcing the intended retirement of Don DeFosset, Chairman, President and Chief Executive Officer of the Company. Mr. DeFosset will continue in his current capacity until a successor has been hired, a process the Board of Directors anticipates will take several months. ITEM 7.01 REGULATION FD DISCLOSURE The following information is furnished pursuant to Item 7.01 "Regulation FD Disclosure." On February 22, 2005, Walter Industries, Inc., issued a press release announcing its first-quarter and full-year 2005 earnings expectations. A copy of the Walter Industries, Inc. press release is attached hereto as Exhibit 99.3. 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: February 22, 2005 EXHIBIT INDEX (99.1) Press release dated: February 22, 2005, Walter Industries Announces Strong 2004 Fourth Quarter and Annual Results (99.2) Press release dated: February 22, 2005,Walter Industries Announces Forthcoming Retirement of Chairman, President and CEO Don DeFosset (99.3) Press release dated: February 22, 2005,Walter Industries Announces First-Quarter and Full-Year 2005 Earnings Expectations EX-99.1 2 wi2110ex991.txt Exhibit 99.1 WALTER INDUSTRIES ANNOUNCES STRONG 2004 FOURTH-QUARTER AND ANNUAL RESULTS -- Diluted EPS of $0.59 for Fourth Quarter and $1.14 for Full Year Reported -- -- Coal Mining Operation Achieves Record Income -- TAMPA, Fla., Feb. 22 /PRNewswire-FirstCall/ -- Walter Industries, Inc. (NYSE: WLT) today reported net income of $27.2 million, or $0.59 per diluted share, for the fourth quarter ended December 31, 2004. The Company reported full-year net income of $49.9 million, or $1.14 per diluted share. Net income for both the quarter and year represent significant improvements over the losses incurred in comparable prior-year periods. The fourth-quarter and full-year diluted earnings per share amounts include the impact of adopting Emerging Issues Task Force Issue No. 04-8 ("EITF 04-8"), which requires that the dilutive effect of the Company's $175 million contingent convertible senior subordinated notes be included in calculating diluted earnings per share using the "if converted" method. Results for the quarter reflect higher coal and natural gas pricing and strong production output in the Natural Resources segment, increases in operating income in the Financing segment and at U.S. Pipe, and favorable adjustments to income tax valuation allowances principally due to improved profitability at Jim Walter Resources. Earnings of $0.59 per diluted share for the quarter and $1.14 per diluted share for the year compare to the previously issued range of earnings expectations, revised for EITF 04-8, of $0.29 to $0.36 per diluted share for the quarter and $0.83 to $0.92 per diluted share for the year. "Our solid fourth-quarter and full-year results were led by record operating income at Natural Resources and continued strong results at Financing," said Chairman and Chief Executive Officer Don DeFosset. "In 2004, we took numerous measures to improve our operations and further strengthen our balance sheet as well as increase future metallurgical coal mining capacity at Jim Walter Resources. All of these actions position us very well to capitalize on opportunities we see for 2005 and beyond." Fourth-Quarter 2004 Financial Results Net income for the quarter ended December 31, 2004 was $27.2 million, a substantial improvement over the net loss of $4.3 million in the prior-year period. The prior period included a loss from continuing operations of $19.3 million and income from discontinued operations of $15.0 million. Net sales and revenues for the fourth quarter of 2004 totaled $367.5 million, an increase of 15% versus the year-ago period. Fourth-quarter 2004 results reflected the second consecutive quarter of record profitability in the Natural Resources segment. Average coal and natural gas prices exceeded last year's fourth quarter by 55% and 56%, respectively. In addition, coal production increased by 16%, or 256,000 tons, over the prior-year period, which contributed to higher spot sales of metallurgical coal and lower average extraction costs per ton. Accompanying the continued strong performance at Natural Resources, the Financing segment reported better delinquency performance and lower claims loss experience and reserves in its insurance unit. Also, results at U.S. Pipe improved, reflecting significantly higher year-over-year pricing and increased volumes. Partially offsetting these favorable impacts in the quarter, the Homebuilding segment incurred a larger than expected loss, primarily due to a decline in unit completions. The Company benefited from favorable adjustments to income tax valuation allowances of approximately $9.7 million that were primarily a result of profitability improvements at Jim Walter Resources. Corporate debt interest expense also declined by $3.5 million pre-tax as a result of reduced borrowings and lower rates obtained through a debt refinancing in the second quarter. Also, the Company recorded pre-tax environmental and legal accruals totaling $6.2 million and incurred higher audit and other costs of $3.3 million pre-tax, primarily related to the implementation of Sarbanes- Oxley Act requirements. The prior year's results reflected pre-tax restructuring and impairment charges of $9.3 million, principally related to the anticipated closure of Mine No. 5 and the sale of Southern Precision Corporation's assets. 2004 Financial Results Net income for 2004 was $49.9 million, a $78.9 million improvement over the prior year. The prior-year loss of $29.0 million included income from continuing operations of $3.3 million, which was more than offset by a loss from discontinued operations totaling $32.7 million. Net sales and revenues were approximately $1.5 billion for 2004, an increase of 10% over the prior year. The year-over-year increase in revenues was primarily the result of strong metallurgical coal pricing at Natural Resources as new higher-priced contracts became effective in the second half of the year, as well as coke pricing improvements at Sloss. In addition, pricing of ductile iron pipe at U.S. Pipe increased steadily throughout 2004 as prices were raised to keep pace with increased scrap raw material costs. Higher volumes at Natural Resources and U.S. Pipe also contributed to the increase in revenues. Lower unit volumes in the Homebuilding segment partially offset these improvements. The significant year-over-year improvement in operating income was the result of higher pricing and volumes, along with better operating performance at Natural Resources, Financing, U.S. Pipe and Sloss. Natural Resources achieved exceptional production levels in 2004, Financing continued to improve overall portfolio performance, Sloss improved margins on increased pricing and improved productivity and U.S. Pipe returned to profitability on higher pricing. Prior-year results also included $16.8 million of restructuring and impairment charges. These year-over-year improvements were partially offset by lower unit volumes and higher lumber and other costs at Homebuilding. Fourth-Quarter Results By Operating Segment Natural Resources Segment The Natural Resources segment reported fourth-quarter revenue of $102.0 million, up 69% versus the year-ago period, primarily due to increased coal shipments and higher metallurgical coal selling prices. Jim Walter Resources generated record quarterly operating income of $33.6 million, which exceeded prior-year quarterly results by $52.0 million, due primarily to higher contract pricing and improved production levels in the mines, including record production at Mine No. 4, which helped facilitate favorable spot sales of metallurgical coal. Jim Walter Resources sold 1.61 million tons of coal at an average price of $54.62 per ton in the fourth quarter, compared to 1.46 million tons in the prior-year quarter at an average price of $35.15 per ton. The natural gas operation sold 1.93 billion cubic feet of gas in the fourth quarter at an average price of $6.61 per thousand cubic feet, compared to sales of 2.09 billion cubic feet at an average price of $4.23 per thousand cubic feet in the prior-year quarter. Jim Walter Resources has negotiated substantially all of this year's annual metallurgical coal contracts at prices greater than $100 per net ton, FOB mine site. This pricing will become effective principally in July 2005 and run through June 2006. Financing Segment The Financing segment's revenue for the fourth quarter was $59.7 million, essentially equal to the prior-year period. Revenue increases from higher prepayment income and lower delinquencies were offset by a reduced yield on the instalment note portfolio. Prepayment speeds were 10.4% in the current- year fourth quarter, compared with 9.2% in the year-ago period. Fourth-quarter operating income was $15.8 million, up from $10.6 million a year earlier, primarily due to reduced workers' compensation and other claims experience in its insurance unit, including a $0.9 million reduction in loss accruals in the fourth quarter from lower-than-anticipated claims on the four hurricanes that occurred during the third quarter. Delinquencies (the percentage of amounts outstanding over 30 days past due) were 5.6% in the fourth quarter versus 6.3% in the year-ago period. Industrial Products Segment The Industrial Products segment reported fourth-quarter revenue of $130.2 million, up 23% versus the prior-year period, as U.S. Pipe continued to realize improvements in ductile iron pipe pricing. U.S. Pipe raised prices 26%, or $150 per ton, during 2004 to offset escalating scrap metal and other material costs. The Industrial Products segment reported a slight operating loss in the fourth quarter of 2004, as U.S. Pipe recognized a $4.0 million charge in the quarter related to legacy environmental issues in Anniston, Alabama. Excluding this charge, the segment generated $3.5 million of operating income in the quarter. Industrial Products results for the prior year included a $2.4 million goodwill impairment charge associated with the sale of the Southern Precision subsidiary. Excluding these charges, the segment improved operating profit by $4.2 million versus the prior-year period. Results in the current period reflected increased volumes and significant improvements in pricing, partially offset by higher scrap metal costs. Homebuilding Segment The Homebuilding segment reported fourth-quarter revenue of $53.9 million, down 23% from the year-ago period, as shortfalls in unit completions unfavorably impacted segment financial performance. Homebuilding completed 727 homes during the fourth quarter at an average selling price of $74,000, compared to 1,036 homes at an average selling price of $67,900 for the same period last year. These lower-unit completions reflect weak sales activity in the first half of 2004. Sales and marketing initiatives designed to drive higher volumes, including improved sales training, enhanced model offerings and financing promotions, are beginning to yield positive results. Specifically, new sales contracts, net of cancellations, totaled 903 units in the fourth quarter, up 7.5% versus the prior-year period. Some progress is also being made in construction processes and systems; however, due to long construction lead times, improvements in unit deliveries are not expected to fully materialize until the latter half of 2005. The segment's operating loss for the fourth quarter was $8.3 million, compared to a loss of $3.3 million in the prior-year period. Results for the quarter reflect lower unit completions and reduced margins due to higher lumber costs and job cost overruns. The quarter also included a $2.2 million increase in accruals related to warranty and litigation issues. These unfavorable impacts were partially offset by higher average net selling prices and expense savings from work force reductions and closures of underperforming branches. Other Segment Sloss Industries reported revenue of $24.2 million, a 16% increase over the prior-year period. Sloss' operating income was $0.6 million for the quarter, representing a $2.4 million improvement over the year-ago period due to higher furnace and foundry coke contract pricing and favorable spot shipments. Parent company expenses in the fourth quarter increased $6.3 million versus the prior-year period, primarily due to costs related to Sarbanes-Oxley Act compliance and increased incentive accruals. During the quarter, the Company repurchased 2 million shares of stock at an aggregate price of approximately $32 million, funded from cash on hand. Including the fourth-quarter buyback, the Company repurchased over $95 million in stock during 2004. 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, February 23, 2005, at 10:00 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 $1.5 billion. The Company is a leader in affordable homebuilding, related financing, and water transmission products, and is a significant producer of high-quality metallurgical coal for worldwide markets. Based in Tampa, Florida, the Company employs approximately 5,000 people. For more information about Walter Industries, please call Joe Troy, Senior Vice President-Financial Services, at (813) 871-4404, or 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, the collection of approximately $14 million of receivables associated with a working capital adjustment arising from the sale of a subsidiary in 2003, potential changes in the mortgage-backed capital market, and general changes in economic conditions. Risks associated with forward-looking statements are more fully described in the Company's filings with the Securities and Exchange Commission. The Company assumes no duty to update its outlook statements as of any future date. WALTER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ($ in Thousands) Unaudited
For the three months ended December 31, ---------------------------- 2004 2003 ------------ ------------ Net sales and revenues: Net sales $ 309,333 $ 259,223 Interest income on instalment notes 53,407 53,757 Miscellaneous 4,754 6,776 367,494 319,756 Cost and expenses: Cost of sales (exclusive of depreciation) 223,977 231,205 Depreciation 15,032 12,915 Selling, general and administrative 60,077 45,559 Provision for losses on instalment notes 4,105 4,416 Postretirement benefits 2,982 1,653 Interest expense - mortgage- backed/asset-backed notes 32,447 32,867 Interest expense - corporate debt 4,733 8,201 Amortization of other intangibles 1,060 1,448 Provision (credit) for estimated hurricane losses (935) -- Restructuring and impairment charges (credits) (457) 9,255 343,021 347,519 Income (loss) from continuing operations before income tax expense 24,473 (27,763) Income tax benefit (1) 2,710 8,467 Income (loss) from continuing operations 27,183 (19,296) Discontinued operations, net of income taxes -- 15,000 Net Income (loss) $ 27,183 $ (4,296) Basic Income (Loss) per share: Income (loss) from continuing operations $ 0.74 $ (0.46) Discontinued Operations -- 0.36 Net Income (Loss) $ 0.74 $ (0.10) Weighted average number of basic shares outstanding 36,963,534 41,856,987 Diluted Income (Loss) per share: Income (loss) from continuing operations $ 0.59 $ (0.46) Discontinued Operations -- 0.36 Net Income (Loss) $ 0.59 $ (0.10) Weighted average number of diluted shares outstanding (2) 48,066,504 41,856,987
(1) Results for the fourth quarter of 2004 include a net income tax benefit of approximately $9.7 million associated with favorable adjustments to income tax valuation allowances, primarily resulting from profitability improvements at Jim Walter Resources. (2) Weighed average basic shares outstanding was used in 2003, as the use of fully diluted shares would have had an anti-dilutive effect. WALTER INDUSTRIES, INC. AND SUBSIDIARIES RESULTS BY OPERATING SEGMENT ($ in Thousands) Unaudited For the three months ended December 31, ---------------------------- 2004 2003 ------------ ------------ NET SALES AND REVENUES: Homebuilding $ 53,923 $ 70,388 Financing 59,737 59,511 Industrial Products 130,242 106,165 Natural Resources 101,980 60,452 Other 26,941 25,861 Consolidating Eliminations (5,329) (2,621) $ 367,494 $ 319,756 OPERATING INCOME (LOSS): Homebuilding $ (8,276) $ (3,271) Financing 15,773 10,590 Industrial Products (528) (3,185) Natural Resources 33,622 (18,377) Other (10,735) (4,693) Consolidating Eliminations (650) (626) Operating income (loss) 29,206 (19,562) Corporate debt interest expense (4,733) (8,201) Income (loss) from continuing operations before income tax expense $ 24,473 $ (27,763) WALTER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ($ in Thousands) Unaudited
For the twelve months ended December 31, ---------------------------- 2004 2003 ------------ ------------ Net sales and revenues: Net sales $ 1,224,274 $ 1,084,426 Interest income on instalment notes 220,041 220,401 Miscellaneous 17,407 20,634 1,461,722 1,325,461 Cost and expenses: Cost of sales (exclusive of depreciation) 960,847 921,961 Depreciation 60,220 53,376 Selling, general and administrative 207,451 178,340 Provision for losses on instalment notes 12,402 15,660 Postretirement benefits 8,140 8,080 Interest expense - mortgage- backed/asset-backed notes 127,273 129,344 Interest expense - corporate debt 18,687 22,572 Amortization of other intangibles 4,976 6,132 Provision for estimated hurricane losses 3,983 -- Restructuring and impairment charges 591 16,792 1,404,570 1,352,257 Income (loss) from continuing operations before income tax expense 57,152 (26,796) Income tax (expense) benefit (1) (7,235) 30,115 Income from continuing operations 49,917 3,319 Discontinued operations, net of income taxes -- (32,700) Cumulative effect of change in accounting principle, net of income taxes -- 376 Net Income (loss) $ 49,917 $ (29,005) Basic Income (Loss) per share: Income from continuing operations $ 1.29 $ 0.08 Discontinued Operations -- (0.76) Cumulative effect of change in accounting principle -- 0.01 Net Income (Loss) $ 1.29 $ (0.67) Weighted average number of basic shares outstanding 38,581,893 43,025,909 Diluted Income (Loss) per share: Income from continuing operations $ 1.14 $ 0.08 Discontinued Operations -- (0.76) Cumulative effect of change in accounting principle -- 0.01 Net Income (Loss) $ 1.14 $ (0.67) Weighted average number of diluted shares outstanding 46,254,746 43,363,826
(1) Results for 2004 include a net income tax benefit of approximately $7.9 million associated with favorable adjustments to income tax valuation allowances, primarily resulting from profitability improvements at Jim Walter Resources. Results for 2003 include a tax benefit of approximately $18.9 million associated with a favorable settlement of a dispute with the IRS. WALTER INDUSTRIES, INC. AND SUBSIDIARIES RESULTS BY OPERATING SEGMENT ($ in Thousands) Unaudited For the twelve months ended December 31, --------------------------- 2004 2003 ----------- ----------- NET SALES AND REVENUES: Homebuilding $ 233,755 $ 276,855 Financing 242,777 239,754 Industrial Products 546,555 461,850 Natural Resources 351,352 257,835 Other 109,839 106,995 Consolidating Eliminations (22,556) (17,828) $ 1,461,722 $ 1,325,461 OPERATING INCOME (LOSS): Homebuilding $ (33,347) $ (462) Financing 54,838 51,423 Industrial Products 7,609 (13,542) Natural Resources 69,702 (26,424) Other (20,253) (12,558) Consolidating Eliminations (2,710) (2,661) Operating income (loss) 75,839 (4,224) Corporate debt interest expense (18,687) (22,572) Income (loss) from continuing operations before income tax expense $ 57,152 $ (26,796) WALTER INDUSTRIES, INC. AND SUBSIDIARIES SUPPLEMENTAL INFORMATION Unaudited
For the For the For the For the three three twelve twelve months months months months ended ended ended ended December December December December 31, 31, 31, 31, 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Depreciation ($ in thousands): Homebuilding $ 1,121 $ 1,290 $ 4,792 $ 4,755 Financing 378 238 1,471 860 Industrial Products 6,514 6,325 26,672 26,119 Natural Resources 5,836 3,753 22,464 16,312 Other 1,183 1,309 4,821 5,330 $ 15,032 $ 12,915 $ 60,220 $ 53,376 Amortization of other intangibles ($ in thousands): Financing $ 1,060 $ 1,448 $ 4,976 $ 6,132 Restructuring and impairment charges ($ in thousands): U.S. Pipe Anniston plant shutdown costs $ -- $ 51 $ 121 $ 5,938 Write-off of Southern Precision goodwill -- 2,409 -- 2,409 Mine No. 5 shutdown costs (457) 6,698 470 6,698 Former headquarters impairment charge -- 97 -- 1,747 $ (457) $ 9,255 $ 591 $ 16,792 Operating Data: Homebuilding New sales contracts, net of cancellations 903 840 3,192 4,218 Unit completions 727 1,036 3,251 4,164 Average sale price $ 74,000 $ 67,900 $ 71,700 $ 66,200 Ending homes backlog 2,001 2,060 2,001 2,060 Financing Delinquencies 5.6% 6.3% 5.6% 6.3% Prepayment speeds 10.4% 9.2% 10.1% 8.9% Industrial Products Ending pipe & fittings backlog, tons 140,388 126,036 140,388 126,036 Ending pipe & fittings backlog, dollars ($ in thousands) $ 110,577 $ 82,672 $ 110,577 $ 82,672 Natural Resources Tons sold Metallurgical coal, contracts (in thousands) 835 903 4,028 4,181 Metallurgical coal, spot sales (in thousands) 339 13 720 13 Steam coal (in thousands) 440 544 1,766 1,950 Average sale price per ton Metallurgical coal, contracts $ 49.26 $ 35.12 $ 42.34 $ 35.39 Metallurgical coal, spot sales $ 93.33 $ 64.78 $ 95.17 $ 64.78 Steam coal $ 34.96 $ 34.53 $ 35.10 $ 34.67 Tons of coal produced (in thousands) 1,816 1,560 6,876 6,075 Mining costs per ton: (1) Mines No. 4 & 7 $ 31.00 $ 29.57 $ 30.88 $ 30.80 Mine No. 5 $ 35.04 $ 44.28 $ 37.66 $ 42.83 Total $ 31.86 $ 33.04 $ 32.35 $ 33.60 Natural gas sales, in mmcf (in thousands) 1,926 2,086 7,890 8,676 Natural gas average sale price $ 6.61 $ 4.23 $ 6.08 $ 4.58 Sloss Industries Tons of foundry coke sold 36,698 25,662 144,941 121,791 Tons of furnace coke sold 62,510 83,409 273,728 292,253 Foundry coke average sale price per ton $ 172.14 $ 153.75 $ 168.28 $ 153.41 Furnace coke average sale price per ton $ 140.34 $ 108.92 $ 141.86 $ 103.37
(1) Mining costs exclude selling, general and administrative expenses, OPEB expenses, ARO expenses, royalties, Black Lung excise taxes and certain other costs related to post-mining activities. WALTER INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ($ in Thousands) Unaudited December 31, December 31, 2004 2003 ------------ ------------ ASSETS Cash and cash equivalents $ 46,924 $ 59,982 Short-term investments, restricted 99,905 100,315 Instalment notes receivable, net of allowance of $11,200 and $10,907, respectively 1,717,205 1,749,162 Receivables, net 170,219 155,497 Income tax receivable 14,977 17,271 Inventories 233,547 224,525 Prepaid expenses 19,590 6,528 Property, plant and equipment, net 331,959 352,529 Investments 6,165 6,326 Deferred income taxes 47,943 47,498 Unamortized debt expense 36,726 35,810 Other long-term assets, net 46,340 36,124 Goodwill and other intangibles, net 144,986 149,962 $ 2,916,486 $ 2,941,529 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 90,217 $ 99,889 Accrued expenses 125,681 109,136 Debt: Mortgage-backed/asset-backed notes 1,763,827 1,829,898 Senior debt -- 113,754 Convertible senior subordinated notes 175,000 -- Accrued interest 16,813 17,119 Accumulated postretirement benefits obligation 282,599 292,300 Other long-term liabilities 203,122 202,823 Total liabilities 2,657,259 2,664,919 Stockholders' equity 259,227 276,610 $ 2,916,486 $ 2,941,529 WALTER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEAR ENDED DECEMBER 31, 2004 ($ in Thousands) Unaudited
Accumulated Other Comprehensive Comprehensive Income Accumulated Income Total (Loss) Deficit (Loss) ------------ ------------- ------------ ------------- Balance at December 31, 2003 $ 276,610 $ (658,965) $ (51,406) Comprehensive income: Net income 49,917 $ 49,917 49,917 Other comprehensive income (loss), net of tax: Increase in additional pension liability (405) (405) (405) Net unrealized gain on hedge 702 702 702 Comprehensive income $ 50,214 Stock issued upon exercise of stock options 26,580 Tax benefit from the exercise of stock options 5,363 Purchases of treasury stock (95,299) Dividends paid, $.13 per share (4,939) Stock-based compensation 698 Balance at December 31, 2004 $ 259,227 $ (609,048) $ (51,109)
Common Capital in Treasury Stock Excess Stock ------------ ------------- ------------ Balance at December 31, 2003 $ 557 $ 1,150,442 $ (164,018) Comprehensive income: Net income Other comprehensive income (loss), net of tax: Increase in additional pension liability Net unrealized gain on hedge Comprehensive income Stock issued upon exercise of stock options 23 26,557 Tax benefit from the exercise of stock options 5,363 Purchases of treasury stock (95,299) Dividends paid, $.13 per share (4,939) Stock-based compensation 698 Balance at December 31, 2004 $ 580 $ 1,178,121 $ (259,317)
WALTER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in Thousands) Unaudited For the twelve months ended December 31, ------------------------------ 2004 2003 ------------- ------------- OPERATING ACTIVITIES Income from continuing operations $ 49,917 $ 3,319 Adjustments to reconcile income to net cash provided by continuing operations: Provision for losses on instalment notes 12,402 15,660 Depreciation 60,220 53,376 Provision for deferred income taxes (6,232) 2,820 Tax benefit on the exercise of employee stock options 5,363 -- Accumulated postretirement benefits obligation (9,701) (9,892) Provision for other long-term liabilities 1,595 1,827 Amortization of other intangibles 4,976 6,132 Amortization of debt expense 8,554 8,553 Loss on sale of assets 1,294 -- Restructuring and impairment charges -- 14,646 Stock-based compensation expense 698 -- Decrease (increase) in assets: Receivables (16,588) 20,714 Income taxes receivable 8,081 (7,495) Inventories (12,082) (29,249) Prepaid expenses (13,062) 1,117 Increase (decrease) in liabilities: Accounts payable (8,453) 5,159 Accrued expenses 20,322 6,245 Accrued interest (306) (1,533) Cash flows provided by continuing operations 106,998 91,399 Cash flows (used in) provided by discontinued operations (3,611) 13,663 Cash flows provided by operating activities 103,387 105,062 INVESTING ACTIVITIES Notes originated from sales and resales of homes and purchases of loan portfolios (455,242) (505,661) Cash collections on accounts and payouts in advance of maturity 474,797 452,594 Decrease (increase) in short-term investments, restricted 410 (2,429) Additions to property, plant and equipment, net of retirements (42,805) (49,277) (Increase) decrease in investments and other assets, net (11,652) 2,764 Disposal of assets held for sale -- 10,425 Additions to property, plant and equipment of discontinued operations -- (21,907) Proceeds from sale of subsidiaries, net of cash disposed 6,000 242,286 Cash flows (used in) provided by investing activities (28,492) 128,795 FINANCING ACTIVITIES Issuance of debt 720,218 1,209,331 Retirement of debt (726,483) (1,351,887) Additions to unamortized debt expense (8,030) (7,822) Dividends paid (4,939) (5,140) Purchases of treasury stock (95,299) (27,566) Exercise of employee stock options 26,580 975 Cash flows used in financing activities (87,953) (182,109) Net (decrease) increase in cash and cash equivalents (13,058) 51,748 Cash and cash equivalents at beginning of period 59,982 8,234 Cash and cash equivalents at end of period $ 46,924 $ 59,982 SOURCE Walter Industries, Inc. -0- 02/22/2005 /CONTACT: Joe Troy, Senior Vice President-Financial Services, Walter Industries, Inc., +1-813-871-4404/ /Photo: http://www.newscom.com/cgi-bin/prnh/20020429/FLM010LOGO-c AP Archive: http://photoarchive.ap.org PRN Photo Desk, photodesk@prnewswire.com / /Web site: http://www.walterind.com / EX-99.2 3 wi2110ex992.txt Exhibit 99.2 Walter Industries Announces Forthcoming Retirement of Chairman, President and CEO Don DeFosset TAMPA, Fla., Feb. 22 /PRNewswire-FirstCall/ -- Walter Industries, Inc. (NYSE: WLT) announced today that Don DeFosset, Chairman, President and Chief Executive Officer of the Company, intends to retire after more than four years of leading this diversified corporation. The Board of Directors said an external search for a successor will begin immediately and Mr. DeFosset will continue in his current capacities until his replacement has been hired, a process that will take several months. Commenting on his upcoming retirement, Don DeFosset said, "I've had the unique opportunity to make significant changes in this corporation since joining in November, 2000. With the help of a very capable senior leadership team, we have made strategic and operational improvements that posture the Company well for the future. I feel this is the opportune time to turn leadership over to another qualified individual." Mr. DeFosset's accomplishments have been many, most notably a dramatic increase in shareholder value. He also directed a strategic simplification of the corporation and fostered a strong operating culture of commitment to excellence. The board expressed its deep appreciation for Mr. DeFosset's contributions to the Company. Walter Industries, Inc. is a diversified company with annual revenues of $1.5 billion. The Company is a leader in affordable homebuilding, related financing, and water transmission products, and is a significant producer of high-quality metallurgical coal for worldwide markets. Based in Tampa, Florida, the Company employs approximately 5,000 people. For more information about Walter Industries, please call Joe Troy, Senior Vice President-Financial Services, at (813) 871-4404, or 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, the collection of approximately $14 million of receivables associated with a working capital adjustment arising from the sale of a subsidiary 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. SOURCE Walter Industries, Inc. -0- 02/22/2005 /CONTACT: Joe Troy, Senior Vice President-Financial Services, Walter Industries, Inc., +1-813-871-4404/ /Photo: http://www.newscom.com/cgi-bin/prnh/20020429/FLM010LOGO-c AP Archive: http://photoarchive.ap.org PRN Photo Desk, photodesk@prnewswire.com / /Web site: http://www.walterind.com / EX-99.3 4 wi2110ex993.txt Exhibit 99.3 Walter Industries Announces First-Quarter and Full-Year 2005 Earnings Expectations TAMPA, Fla., Feb. 22 /PRNewswire-FirstCall/ -- Walter Industries, Inc. (NYSE: WLT) today announced first-quarter and full-year 2005 earnings expectations. Based on current business forecasts and anticipated market conditions, the Company expects to generate full-year 2005 earnings in the range of $2.20 to $2.80 per diluted share. Expectations for first-quarter earnings are in the range of $0.25 to $0.33 per diluted share. These expectation ranges reflect the adoption of Emerging Issues Task Force Issue No. 04-8 ("EITF 04- 8") in December 2004, which requires that the dilutive effect of the Company's $175 million contingent convertible senior subordinated notes be included in calculating diluted earnings per share using the "if converted" method. The range of full-year expectations reflects sensitivity in the coal business related to potential production and transportation issues, and the ability to achieve significant, attractively priced spot sales of metallurgical coal. Also, U.S. Pipe's margins are heavily impacted by scrap raw material costs, which have been volatile and difficult to predict. Key factors driving the Company's earnings expectations: * Significantly higher metallurgical coal pricing, especially in the third and fourth quarters of 2005, as well as higher coke and ductile iron pipe prices, are expected to drive increases in revenues and operating income at Jim Walter Resources, Sloss and U.S. Pipe, respectively. * Jim Walter Resources is expecting seven longwall moves to occur throughout the year, including three moves in the first quarter, which will impact production volume and temporarily increase extraction costs per ton. Also, less than optimal geologic conditions within Mine No. 5 could negatively impact production and operating results as its remaining coal reserves have become more costly and difficult to extract. * Financing is expected to continue its solid operating performance in 2005, however, a lower overall mortgage portfolio balance and slowing prepayment income is expected to negatively impact operating income. * Unit completions and margins at Homebuilding are expected to improve during 2005. However, given the long cycle times in the business, a profitable run rate is not anticipated until the latter part of 2005. * First-quarter expectations reflect seasonality in volumes, primarily at U.S. Pipe and Homebuilding. Earnings Announcement and Conference Call Webcast Walter Industries Chairman and CEO Don DeFosset and members of the Company's leadership team will discuss fourth-quarter and full-year 2004 results, the outlook for 2005 and other general business matters on a conference call and live Webcast to be held on Wednesday, February 23, 2005, at 10:00 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 $1.5 billion. The Company is a leader in affordable homebuilding, related financing, and water transmission products, and is a significant producer of high-quality metallurgical coal for worldwide markets. Based in Tampa, Florida, the Company employs approximately 5,000 people. For more information about Walter Industries, please call Joe Troy, Senior Vice President-Financial Services at (813) 871-4404, or 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, the collection of approximately $14 million of receivables associated with a working capital adjustment arising from the sale of a subsidiary 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. SOURCE Walter Industries, Inc. -0- 02/22/2005 /CONTACT: Joe Troy, Senior Vice President-Financial Services, Walter Industries, Inc., +1-813-871-4404/ /Photo: http://www.newscom.com/cgi-bin/prnh/20020429/FLM010LOGO-c AP Archive: http://photoarchive.ap.org PRN Photo Desk, photodesk@prnewswire.com / /Web site: http://www.walterind.com / -----END PRIVACY-ENHANCED MESSAGE-----