TAMPA, Fla., Feb. 28 /PRNewswire-FirstCall/ -- Walter Industries, Inc. today reported a fourth quarter loss of $73.4 million, or $1.88 per share, and full-year 2005 net income of $7.0 million, or $0.18 per diluted share. The loss of $1.88 per share for the quarter was within the previously communicated expectation range of a $1.80 to $1.90 loss per share. Full-year earnings of $0.18 per diluted share were also within the previously communicated range of $0.15 to $0.25 per diluted share.
The Company recorded an operating loss for the fourth quarter of $40.8 million, compared with operating income in the same period in 2004 of $29.2 million. Excluding certain pre-tax charges of $167.5 million (see attached supplemental data), non-GAAP operating income for the fourth quarter of 2005 totaled $126.7 million. In this press release, the term "non-GAAP" refers to an adjustment to GAAP measures based on the applicable portion of the $167.5 million of pre-tax charges. Results for the current quarter reflect significant income improvements at Natural Resources and U.S. Pipe, primarily due to strong year-over-year pricing in both segments. Current quarter results also include non-GAAP operating income from Mueller and Anvil of $52.7 million, which excludes acquisition-related charges of $64.3 million.
The Company also announced that it increased the expected operating income synergies from integrating Mueller and U.S. Pipe from a previous range of $25.0 million to $35.0 million to a new range of $40.0 million to $50.0 million. The revised synergy benefits, which are expected to be realized on a run-rate basis over the next two years, were increased due to better than expected cost savings from the shutdown of U.S. Pipe's Chattanooga facility combined with Mueller and Anvil plant consolidation and rationalization activities.
"We are very pleased with Mueller's operating results, which were driven by strong volumes and improved valve and hydrant margins," said Walter Industries Chairman and CEO Gregory E. Hyland. "The integration of Mueller and U.S. Pipe has also progressed extremely well and we have determined that the original synergy benefits forecast should be increased substantially."
Hyland added, "2005 was a landscape-changing year for Walter Industries as we aggressively pursued our transformation and value creation strategy, and also generated significant revenue and earnings momentum from our Natural Resources and Water Products businesses. Our value creation strategy continues in 2006 as we move forward with the IPO and eventual spin-off of our Water Products business, as well as the evaluation of strategic alternatives for our remaining businesses."
Results for the quarter on a non-GAAP basis were $1.48 per diluted share, which compares to the previously expected range of $1.45 to $1.55 per diluted share. Full-year 2005 earnings on a non-GAAP basis were $3.18 per diluted share, compared with the previously communicated range of $3.10 to $3.20 per diluted share.
Fourth Quarter 2005 Financial Results
Net sales and revenues for the fourth quarter totaled $801.2 million, up from $391.0 million in 2004. Excluding Mueller and Anvil revenues of $309.3 million, fourth quarter revenues improved 25.8% on a year-over-year basis, primarily driven by higher metallurgical coal pricing and increases in ductile iron pipe pricing and shipments.
On a non-GAAP basis, operating income was $126.7 million, or $97.5 million higher than the prior-year period. The improvement in operating income was primarily due to the first-time inclusion of Mueller and Anvil results in the Company's fourth quarter, increased pricing for metallurgical coal and improved operating margins at U.S. Pipe. These favorable impacts were partially offset by charges related to the temporary idling of Mine No. 5 and Mine No. 7, which increased average production costs at Natural Resources.
Full-Year 2005 Financial Results
Net sales and revenues for 2005 totaled $2.1 billion, including fourth quarter revenue from the Mueller and Anvil segments of $309.3 million. Excluding Mueller and Anvil, revenue grew by $195.5 million, or 12.6%, principally due to an increase in metallurgical coal and ductile iron pipe prices.
Operating income for the full year totaled $83.7 million, compared with $75.8 million in 2004. Non-GAAP operating income was $251.2 million, an improvement of $175.4 million versus 2004. The year-over-year improvement reflects the addition of $52.7 million in non-GAAP operating income contributed by Mueller and Anvil, plus a dramatic increase in profitability at Jim Walter Resources and significant income growth at U.S. Pipe. These stronger operating results were partially offset by higher material and production costs at Natural Resources and U.S. Pipe, and $6.6 million of incremental hurricane-related charges at Financing.
Fourth Quarter Results by Operating Segment
Natural Resources
The Natural Resources segment reported fourth quarter revenue of $170.3 million, up 49.3% versus the year-ago period, primarily due to higher metallurgical coal selling prices and higher natural gas prices, partially offset by lower steam coal shipments and lower natural gas volumes in the current-year period. Operating income for the quarter was $51.7 million, which exceeded the prior-year period by 53.8%. The income improvement versus the prior-year period was primarily driven by increased metallurgical coal pricing, partially offset by $3.0 million of idle mine costs at Mine No. 5 and $2.7 million of expenses related to adverse geologic conditions in Mine No. 7, both of which were resolved in the fourth quarter.
Jim Walter Resources sold 1.49 million tons of coal at an average price of $99.18 per ton in the fourth quarter, compared to 1.61 million tons at an average price of $62.10 in the prior-year period. The natural gas operation sold 1.70 billion cubic feet of gas in the fourth quarter at an average price of $10.54 per thousand cubic feet, compared to sales of 1.93 billion feet at an average price of $6.61 per thousand cubic feet in the prior-year quarter.
Mueller and Anvil
Walter Industries acquired Mueller and Anvil on Oct. 3, 2005 and, therefore, this will be the first time they have been included in the Company's segment and consolidated results. However, in an effort to enhance comparability and evaluate calendar fourth quarter period-to-period performance, variance explanations refer to a pro forma calendar fourth quarter prior-year period, even though pro forma data is not included in the actual reported segment or consolidated results.
Revenue for the Mueller and Anvil segments totaled $309.3 million for the quarter, up from the prior-year period total of $256.1 million, primarily due to higher valve and hydrant volumes and higher selling prices of Mueller's butterfly valves, hydrants and brass products. Anvil also generated higher volumes of iron fittings. Non-GAAP operating income for both segments, excluding the effects of acquisition-related adjustments, was $52.7 million compared to operating income in the prior-year period of $32.2 million.
Including acquisition-related impacts, Mueller and Anvil reported an operating loss of $11.6 million in the current period fourth quarter. Operating results for the period included expected purchase accounting-related inventory step-up costs of $58.4 million and incremental ongoing intangible amortization expenses of $5.9 million.
Industrial Products (U.S. Pipe)
U.S. Pipe reported fourth quarter revenue of $172.0 million, up $30.8 million versus the prior-year period as the Company generated improvements in both pricing and volume. U.S. Pipe sold 155,804 tons of ductile iron pipe during the quarter, up 10.3% versus the prior-year period.
U.S. Pipe reported a loss in the fourth quarter 2005 of $25.6 million, compared to a loss in the prior year's fourth quarter of $0.5 million. The fourth quarter 2005 loss included $40.0 million in charges related to the announced closure of U.S. Pipe's Chattanooga valves, hydrants and fittings facility. Excluding these charges, U.S. Pipe's operating income was $14.4 million, an improvement of $14.9 million versus the prior-year as stronger margins more than offset higher natural gas costs.
Financing
Financing segment revenue for the fourth quarter was $54.8 million, down $4.9 million from the prior-year period, primarily due to a decline in the instalment note portfolio balance as a result of fewer note originations from the Homebuilding segment.
Fourth quarter operating income was $16.7 million, up $0.9 million over the prior-year period, driven by lower interest expense, a lower provision for losses and better workers compensation experience, partially offset by lower interest income. At Dec. 31, 2005, delinquencies (the percentage of amounts outstanding more than 30 days past due) were 5.2%, versus 4.9% at Dec. 31, 2004 due primarily to customer payment disruptions caused by the 2005 hurricanes.
Homebuilding
At Homebuilding, fourth quarter revenue was $65.0 million, up $11.1 million versus the year-ago period, driven primarily by an increase of 48 on-your-lot unit completions over the prior-year's fourth quarter. Homebuilding completed 641 on-your-lot homes during the fourth quarter at an average selling price of $80,300 versus 593 homes at an average selling price of $74,600 for the same period last year. Including Crestline Homes, the Company's modular home business, total unit deliveries for the quarter were 865, compared with 727 homes in the prior-year period.
Excluding the $63.2 million goodwill impairment charge, the operating loss at Homebuilding was $7.7 million, or an improvement of $0.6 million, versus the prior-year period. The fourth quarter loss reflects Homebuilding's efforts to complete and deliver lower-margin units out of its backlog, and proactively reduce the quantity of outstanding warranty-related claims. Overall, the period-over-period improvement primarily reflects the higher on-your-lot deliveries and price increases noted above.
Other
Sloss Industries generated revenue of $33.1 million, an increase of 34.1% over the prior-year period. Sloss reported operating income of $4.2 million, exceeding income in the prior-year period by $3.6 million. The revenue and income increases were due to significantly higher furnace and foundry coke pricing, partially offset by increases in metallurgical coal costs.
Parent company expenses in the fourth quarter were $4.7 million below the prior-year period, reflecting lower medical and Sarbanes-Oxley compliance costs. Interest expense increased by $39.8 million from the prior-year period, primarily reflecting higher debt balances related to the Mueller acquisition.
Restatement of Prior-Period Sales and Costs of Sales for Freight and Handling Costs
The Company announced that it will be restating its consolidated financial statements to correct the classification of certain prior-period shipping and handling costs in compliance with EITF 00-10: "Accounting for Shipping and Handling Fees and Costs" for U.S. Pipe, Jim Walter Resources and Sloss.
The Company's long-standing method of accounting for the cost to deliver products to the customer has been to include these costs as a deduction from net sales and revenues. Such costs are now included in cost of sales.
In addition to consolidated net sales and revenues and cost of sales, this change in classification affects reported net sales and revenues of our Industrial Products, Natural Resources and Other segments. The overall impact is to increase consolidated sales and cost of sales in equal amounts for the fourth quarter and full year of 2004. More specifically, the restatement has no effect on reported operating income, net income or EPS. In total, these costs were $23.5 million in the fourth quarter of 2004 and $87.6 million for the full year of 2004.
Conference Call Webcast
Walter Industries Chairman and CEO Greg Hyland 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 Wed., March 1, 2006, at 9 a.m. Eastern Standard 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 approximately $3.0 billion. The Company is a leader in water infrastructure, flow control and water transmission products, with respected brand names such as Mueller, U.S. Pipe, James Jones, Henry Pratt and Anvil. The Company is also a significant producer of high-quality metallurgical coal and natural gas for worldwide markets and is a leader in affordable homebuilding and financing. Based in Tampa, Fla., the Company employs approximately 10,000 people. For more information about Walter Industries, please visit the Company Web site at http://www.walterind.com/ .
Non-GAAP Financial Measures
Within this announcement, the Company makes reference to certain non-GAAP financial measures, which have directly comparable GAAP financial measures as identified in this release. These non-GAAP measures are provided so that investors have the same financial data that management uses with the belief that it will assist the investment community in properly assessing the underlying performance of the Company for the periods being reported. The reconciliation between GAAP and non-GAAP performance measures is reported in the Supplemental Information section of this earnings release and is presented in compliance with the provisions of the rules under Regulation G and Item 2.02.
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, changes in law, 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 markets, and general changes in economic conditions. Those risks also include the timing of and ability to execute on the initial public offering and spin-off of the Company's Water Products business and any other strategic action that may be pursued. Risks associated with forward-looking statements are more fully described in the Company's and Mueller's filings with the Securities and Exchange Commission. The Company assumes no duty to update its forward-looking statements as of any future date.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
SEGMENT INCOME COMPARISON
Unaudited
The purpose of this schedule is to reconcile the Company's GAAP and
non-GAAP operating income and earnings per share for the fourth
quarters of 2005 and 2004 and for the full years 2005 and 2004, as
referenced in the Company's press release dated February 28, 2006.
Mueller
Water Industrial
$ in Millions Homebuilding Financing Products Products
Q4 2005 GAAP Operating
Income (Loss) (70.9) 16.7 (11.6) (25.6)
Adjustments to GAAP Operating
Income (Loss):
Homebuilding Goodwill
Impairment 63.2
Mueller Inventory Fair Value
Adjustment Charged to Cost
of Sales 58.4
Mueller Incremental Amortization of
Definite-Lived Intangible Assets 5.9
U.S.Pipe Charges - Restructuring 24.1
U.S.Pipe Charges - Inventory Write-
offs and Unabsorbed Overhead 15.9
Total Adjustments to GAAP
Operating Income (Loss) 63.2 -- 64.3(1) 40.0
Q4 2005 Non-GAAP Operating
Income (Loss) (7.7) 16.7 52.7 14.4
Q4 2004 GAAP Operating
Income (Loss) (8.3) 15.8 -- (0.5)
Q4 2005 Non-GAAP Variance to
Q4 2004 GAAP 0.6 0.9 52.7 14.9
Total
Operating
Natural Income
$ in Millions Resources Other Cons Elims (Loss)
Q4 2005 GAAP Operating Income
(Loss) 51.7 (0.3) (0.8) (40.8)
Adjustments to GAAP Operating
Income (Loss):
Homebuilding Goodwill Impairment 63.2
Mueller Inventory Fair Value
Adjustment Charged to Cost
of Sales 58.4
Mueller Incremental Amortization of
Definite-Lived Intangible Assets 5.9
U.S.Pipe Charges - Restructuring 24.1
U.S.Pipe Charges - Inventory Write-
offs and Unabsorbed Overhead 15.9
Total Adjustments to GAAP Operating
Income (Loss) -- -- -- 167.5
Q4 2005 Non-GAAP Operating Income
(Loss) 51.7 (0.3) (0.8) 126.7
Q4 2004 GAAP Operating Income
(Loss) 33.6 (10.7) (0.7) 29.2
Q4 2005 Non-GAAP Variance to
Q4 2004 GAAP 18.1 10.4 (0.1) 97.5
Mueller
Water Industrial
Homebuilding Financing Products Products
Full-Year 2005 GAAP Operating
Income (Loss) (103.9) 46.0 (11.6) 2.1
Adjustments to GAAP Operating
Income (Loss):
Homebuilding Goodwill Impairment 63.2
Mueller Inventory Fair Value
Adjustment Charged to Cost
of Sales 58.4
Mueller Incremental Amortization of
Definite-Lived Intangible Assets 5.9
U.S.Pipe Charges - Restructuring 24.1
U.S.Pipe Charges - Inventory Write-
offs and Unabsorbed Overhead 15.9
Total Adjustments to GAAP
Operating Income (Loss) 63.2 -- 64.3(1) 40.0
Full-Year 2005 Non-GAAP
Operating Income (Loss) (40.7) 46.0 52.7 42.1
Full-Year 2004 GAAP Operating
Income (Loss) (33.3) 54.8 -- 7.6
Full-Year 2005 Non-GAAP
Variance to Full-Year 2004 GAAP (7.4) (8.8) 52.7 34.5
Total
Natural Operating
Resources Other Cons Elims Income
Full-Year 2005 GAAP Operating Income
(Loss) 164.1 (9.3) (3.7) 83.7
Adjustments to GAAP Operating Income
(Loss):
Homebuilding Goodwill Impairment 63.2
Mueller Inventory Fair Value
Adjustment Charged to Cost of Sales 58.4
Mueller Incremental Amortization of
Definite-Lived Intangible Assets 5.9
U.S.Pipe Charges - Restructuring 24.1
U.S.Pipe Charges - Inventory Write-
offs and Unabsorbed Overhead 15.9
Total Adjustments to GAAP Operating
Income (Loss) -- -- -- 167.5
Full-Year 2005 Non-GAAP Operating
Income (Loss) 164.1 (9.3) (3.7) 251.2
Full-Year 2004 GAAP Operating Income
(Loss) 69.7 (20.3) (2.7) 75.8
Full-Year 2005 Non-GAAP Variance to
Full-Year 2004 GAAP 94.4 11.0 (1.0) 175.4
(1) Mueller acquisition-related charges total $66.8 million and
include bridge loan fees of $2.5 million reflected in interest
expense.
Reconciliation to Non-GAAP Net Income
and EPS Q4 Total Year
Non-GAAP Operating Income Per Above 126.7 251.2
Interest Expense on Non-GAAP Pre-tax
Income (42.0) (53.4)
Taxes (12.7) (44.8)
Disc Ops (0.1) (0.7)
Non-GAAP Net Income 71.9 152.3
Add Back Interest on Convertible Debt
Notes 1.1 4.3
Non-GAAP Net Income Excluding
Interest on Convertible Debt Notes 73.0 156.6
Non-GAAP EPS $1.48 $3.18
Shares outstanding (millions) 49.3 49.2 Assumes fully
diluted shares
for Non-GAAP
calculation to
account for
convertible
debt, per
EITF 04-08.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in Thousands)
Unaudited
For the three months
ended December 31,
As Restated
2005 2004
Net sales and revenues:
Net sales $744,367 $332,847
Interest income on instalment
notes 49,002 53,407
Miscellaneous 7,841 4,754
801,210 391,008
Cost and expenses:
Cost of sales (exclusive of
depreciation) 600,284 247,491
Depreciation 25,398 15,032
Selling, general and administrative 87,123 60,077
Provision for losses on instalment
notes 2,514 4,105
Postretirement benefits 3,236 2,982
Interest expense - mortgage-
backed/asset-backed notes 29,422 32,447
Interest expense - other debt 44,548 4,733
Amortization of intangibles 7,444 1,060
Credit for estimated hurricane
insurance losses (1,600) (935)
Impairment of goodwill 63,210 --
Restructuring and impairment charges
(credits) 25,006 (457)
886,585 366,535
Income (loss) from continuing
operations before income tax benefit (85,375) 24,473
Income tax benefit (1) 12,087 2,710
Income (loss) from continuing
operations (73,288) 27,183
Discontinued operations, net of
income taxes (2) (109) --
Net income (loss) $(73,397) $27,183
Basic income (loss) per share:
Income (loss) from continuing
operations $(1.88) $0.74
Discontinued operations -- --
Net income (loss) $(1.88) $0.74
Weighted average number of shares
outstanding 38,982,151 36,963,534
Diluted income (loss) per share:
Income (loss) from continuing
operations $(1.88) $0.59
Discontinued operations -- --
Net income (loss) $(1.88) $0.59
Weighted average number of dilutive
securities (3) 38,982,151 48,066,504
(1) Results for the fourth quarter of 2004 include a net income tax
benefit of approximately $9.7 million associated with favorable
adjustments to income tax valuation allowances, primarily resulting
from profitability improvements at Jim Walter Resources.
(2) 2005 expenses resulted from the Company's sale of its AIMCOR
subsidiary in December 2003.
(3) Weighted average basic shares outstanding was used in the 2005
quarter period, as the use of fully diluted shares would have had an
anti-dilutive effect.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
RESULTS BY OPERATING SEGMENT
($ in Thousands)
Unaudited
For the three months
ended December 31,
As Restated
2005 2004
NET SALES AND REVENUES:
Homebuilding $65,006 $53,923
Financing 54,836 59,737
Mueller (1) 176,747 --
Anvil (1) 132,581 --
Industrial Products 171,993 141,157
Natural Resources 170,253 114,062
Other 36,823 27,458
Consolidating Eliminations (7,029) (5,329)
$801,210 $391,008
OPERATING INCOME (LOSS):
Homebuilding $(70,884) $(8,276)
Financing 16,696 15,773
Mueller (1) (7,460) --
Anvil (1) (4,183) --
Industrial Products (25,608) (528)
Natural Resources 51,694 33,622
Other (257) (10,735)
Consolidating Eliminations (825) (650)
Operating income (loss) (40,827) 29,206
Other debt interest expense (44,548) (4,733)
Income (loss) from continuing operations
before income tax benefit $(85,375) $24,473
(1) The results of Mueller and Anvil are included from the date of
acquisition on October 3, 2005.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in Thousands)
Unaudited
For the years
ended December 31,
As Restated
2005 2004
Net sales and revenues:
Net sales $1,823,654 $1,311,831
Interest income on instalment
notes 206,582 220,041
Miscellaneous 23,904 17,407
2,054,140 1,549,279
Cost and expenses:
Cost of sales (exclusive of
depreciation) 1,415,778 1,048,404
Depreciation 68,461 60,220
Selling, general and administrative 232,036 207,451
Provision for losses on instalment
notes 10,724 12,402
Postretirement benefits 12,948 8,140
Interest expense - mortgage-
backed/asset-backed notes 122,005 127,273
Interest expense - other debt 55,852 18,687
Amortization of intangibles 10,267 4,976
Provision for estimated hurricane
insurance losses 10,600 3,983
Impairment of goodwill 63,210 --
Restructuring and impairment charges 24,373 591
2,026,254 1,492,127
Income from continuing operations
before income tax expense 27,886 57,152
Income tax expense (20,142) (7,235)
Income from continuing operations 7,744 49,917
Discontinued operations, net of
income taxes (1) (698) --
Net income $7,046 $49,917
Basic income per share:
Income from continuing operations $0.20 $1.29
Discontinued operations (0.02) --
Net income $0.18 $1.29
Weighted average number of shares
outstanding 38,484,675 38,581,893
Diluted income per share (2):
Income from continuing operations $0.20 $1.14
Discontinued operations (0.02) --
Net income $0.18 $1.14
Weighted average number of dilutive
securities (2) 39,403,873 46,254,746
(1) 2005 expenses resulted from the Company's sale of its AIMCOR
subsidiary in December 2003.
(2) The interest, net of tax, and shares issuable upon conversion related
to the Company's $175 million contingent convertible senior
subordinated notes were not included in the calculation of diluted
income per share for 2005 as they would have an anti-dilutive effect.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
RESULTS BY OPERATING SEGMENT
($ in Thousands)
Unaudited
For the years
ended December 31,
As Restated
2005 2004
NET SALES AND REVENUES:
Homebuilding $226,796 $233,755
Financing 229,156 242,777
Mueller (1) 176,747 --
Anvil (1) 132,581 --
Industrial Products 628,922 587,755
Natural Resources 548,577 395,532
Other 141,389 112,016
Consolidating Eliminations (30,028) (22,556)
$2,054,140 $1,549,279
OPERATING INCOME (LOSS):
Homebuilding $(103,881) $(33,347)
Financing 46,019 54,838
Mueller (1) (7,460) --
Anvil (1) (4,183) --
Industrial Products 2,079 7,609
Natural Resources 164,103 69,702
Other (9,275) (20,253)
Consolidating Eliminations (3,664) (2,710)
Operating income 83,738 75,839
Other debt interest expense (55,852) (18,687)
Income from continuing operations
before income tax expense $27,886 $57,152
(1) The results of Mueller and Anvil are included from the date of
acquisition on October 3, 2005.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Unaudited
For the For the
three three For the For the
months months year year
ended ended ended ended
December December December December
31, 2005 31, 2004 31, 2005 31, 2004
Depreciation ($ in thousands):
Homebuilding $1,321 $1,121 $4,966 $4,792
Financing 347 378 1,403 1,471
Mueller (1) 6,235 -- 6,235 --
Anvil (1) 4,574 -- 4,574 --
Industrial Products 6,276 6,514 25,677 26,672
Natural Resources 5,504 5,836 20,855 22,464
Other 1,141 1,183 4,751 4,821
$25,398 $15,032 $68,461 $60,220
Amortization of intangibles ($ in
thousands):
Financing $818 $1,060 $3,641 $4,976
Mueller (1) 5,902 -- 5,902 --
Anvil (1) 724 -- 724 --
$7,444 $1,060 $10,267 $4,976
Restructuring and impairment charges
(credits) ($ in thousands):
Homebuilding goodwill impairment $63,210 $-- $63,210 $--
U.S. Pipe Anniston plant shutdown
costs -- -- -- 121
U.S. Pipe Chattanooga plant shutdown
costs 24,138 -- 24,138 --
Mine No. 7 longwall shield
impairment 853 -- 853 --
Mine No. 5 shutdown costs 15 (457) (618) 470
$88,216 $(457) $87,583 $591
Operating Data:
Homebuilding
New sales contracts 807 1,057 4,042 4,123
Cancellations 274 154 843 931
Unit completions 865 727 3,022 3,251
Average sale price $75,000 $74,000 $74,700 $71,700
Ending homes backlog 2,178 2,001 2,178 2,001
Financing
Delinquencies 5.2% 4.9% 5.2% 4.9%
Prepayment speeds 10.5% 10.4% 10.7% 10.1%
Industrial Products
Ending pipe & fittings backlog,
tons 88,959 100,388 88,959 100,388
Ending pipe & fittings backlog,
dollars ($ in thousands) $78,795 $85,876 $78,795 $85,876
Sloss Industries
Tons of foundry coke sold 24,325 36,698 121,353 144,941
Tons of furnace coke sold 82,358 62,510 277,184 273,728
Foundry coke average sale price per
ton $276.68 $185.32 $269.27 $181.18
Furnace coke average sale price per
ton $205.74 $140.34 $205.80 $141.86
(1) The results of Mueller and Anvil are included from the date of
acquisition on October 3, 2005.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Unaudited
For the For the
three three For the For the
months months year year
ended ended ended ended
December December December December
31, 2005 31, 2004 31, 2005 31, 2004
Operating Data:
Natural Resources
Tons sold by type (in thousands):
Metallurgical coal, contracts 1,218 835 4,356 4,028
Metallurgical coal, spot sales -- 339 144 720
Steam coal 273 440 1,404 1,766
1,491 1,614 5,904 6,514
Average sale price per ton:
Metallurgical coal, contracts $113.59 $59.55 $96.56 $51.64
Metallurgical coal, spot sales $-- $103.62 $113.08 $104.46
Steam coal $34.84 $34.96 $35.02 $35.10
Tons sold by mine (in thousands):
Mine No. 4 754 748 2,961 2,895
Mine No. 7 578 522 2,139 2,267
Mine No. 5 159 344 804 1,352
1,491 1,614 5,904 6,514
Coal cost of sales:
Mine No. 4 per ton $47.40 $33.91 $40.29 $36.44
Mine No. 7 per ton $73.20 $44.97 $56.08 $41.01
Mine No. 5 per ton $66.59 $41.60 $53.64 $41.15
Mine No. 5 idle costs
(in thousands) (1) $3,031 $-- $19,164 $--
Mine No. 7 idle costs
(in thousands) (1) $2,732 $-- $2,732 $--
Other costs (in thousands) (2) $4,590 $(2,688) $8,581 $2,851
Tons of coal produced (in thousands) 1,092 1,816 5,726 6,876
Coal production costs per ton: (3)
Mine No. 4 $36.07 $26.11 $30.42 $29.33
Mine No. 7 $93.42 $38.81 $37.46 $32.65
Mine No. 5 $56.07 $35.04 $52.35 $38.57
Total $51.38 $31.86 $35.49 $32.35
Natural gas sales, in mmcf (in
thousands) 1,696 1,926 6,937 7,890
Natural gas average sale price per
mmcf $10.54 $6.61 $7.95 $6.08
Natural gas cost of sales per mmcf $3.56 $2.34 $2.87 $2.26
(1) Idle costs are charged to period expense when incurred.
(2) Consists of charges (credits) not directly allocable to a specific
mine.
(3) Coal production costs per ton are a component of inventoriable costs.
Other inventoriable costs not included in coal production costs per
ton include Company-paid outbound freight, postretirement benefits,
asset retirement obligation expenses, royalties and Black Lung excise
taxes.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in Thousands)
Unaudited
December 31, December 31,
2005 2004
ASSETS
Cash and cash equivalents $137,396 $46,924
Short-term investments, restricted 124,573 99,905
Instalment notes receivable, net of
allowance of $12,489 and
$11,200, respectively 1,693,922 1,717,205
Receivables, net 334,322 170,219
Income tax receivable 16,793 14,977
Inventories 551,293 233,547
Prepaid expenses 31,320 19,590
Property, plant and equipment, net 603,350 331,959
Investments 6,056 6,165
Deferred income taxes -- 47,943
Unamortized debt expense 75,062 36,726
Other long-term assets 73,247 46,340
Identifiable intangibles, net 858,122 12,470
Goodwill 867,556 132,516
$5,373,012 $2,916,486
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $161,215 $90,217
Accrued expenses 213,596 125,681
Deferred income taxes 215,874 --
Debt:
Mortgage-backed/asset-backed notes 1,727,329 1,763,827
Senior bank debt 1,498,594 --
10% Senior subordinated debt 333,162 --
14 3/4% Senior discount notes 165,697 --
Convertible senior subordinated notes 175,000 175,000
Accrued interest 32,619 16,813
Accumulated postretirement benefits
obligation 275,336 282,599
Other long-term liabilities 285,974 203,122
Total liabilities 5,084,396 2,657,259
Stockholders' equity 288,616 259,227
$5,373,012 $2,916,486
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
AND COMPREHENSIVE LOSS
FOR THE YEAR ENDED DECEMBER 31, 2005
($ in Thousands)
Unaudited
Accumulated
Other
Comprehensive Accumulated Comprehensive
Total Loss Deficit Loss
Balance at December 31, 2004 $259,227 $(609,048) $(51,109)
Comprehensive loss:
Net income 7,046 $7,046 7,046
Other comprehensive
income (loss), net of tax:
Increase in additional
minimum pension liability (9,573) (9,573) (9,573)
Cumulative foreign currency
translation adjustment (113) (113) (113)
Net unrealized loss on hedges (619) (619) (619)
Comprehensive loss $(3,259)
Stock issued upon exercise of
stock options 19,872
Tax benefit from the
exercise of stock options 17,469
Dividends paid, $.16
per share (6,145)
Stock-based compensation 1,452
Balance at December 31, 2005 $288,616 $(602,002) $(61,414)
Capital in
Common Excess of Treasury
Stock Par Value Stock
Balance at December 31, 2004 $580 $1,178,121 $(259,317)
Comprehensive loss:
Net income
Other comprehensive income (loss),
net of tax:
Increase in additional minimum
pension liability
Cumulative foreign currency
translation adjustment
Net unrealized loss on hedges
Comprehensive loss
Stock issued upon exercise of stock
options 18 19,854
Tax benefit from the exercise of
stock options 17,469
Dividends paid, $.16 per share (6,145)
Stock-based compensation 1,452
Balance at December 31, 2005 $598 $1,210,751 $(259,317)
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in Thousands)
Unaudited
For the three months
ended December 31, $
2004 2004 Change
Net sales and revenues: As Reported As Restated
Net sales $309,333 $332,847 $23,514
Interest income on instalment
notes 53,407 53,407 0
Miscellaneous 4,754 4,754 0
367,494 391,008 23,514
Cost and expenses:
Cost of sales (exclusive of
depreciation) 223,977 247,491 23,514
Depreciation 15,032 15,032 --
Selling, general and administrative 60,077 60,077 --
Provision for losses on instalment
notes 4,105 4,105 --
Postretirement benefits 2,982 2,982 --
Interest expense - mortgage-
backed/asset-backed notes 32,447 32,447 --
Interest expense - other debt 4,733 4,733 --
Amortization of intangibles 1,060 1,060 --
Credit for estimated hurricane
insurance losses (935) (935) --
Restructuring and impairment credits (457) (457) --
343,021 366,535 23,514
Income from continuing operations
before income tax benefit 24,473 24,473 --
Income tax benefit (1) 2,710 2,710 --
Net income $27,183 $27,183 $--
Basic income per share:
Net income $0.74 $0.74
Weighted average number of shares
outstanding 36,963,534 36,963,534
Diluted income per share:
Net income $0.59 $0.59
Weighted average number of dilutive
securities 48,066,504 48,066,504
(1) Results for the fourth quarter of 2004 include a net income tax
benefit of approximately $9.7 million associated with favorable
adjustments to income tax valuation allowances, primarily resulting from
profitability improvements at Jim Walter Resources.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in Thousands)
Unaudited
For the year
ended December 31, $
2004 2004 Change
Net sales and revenues: As Reported As Restated
Net sales $1,224,274 $1,311,831 $87,557
Interest income on instalment
notes 220,041 220,041 0
Miscellaneous 17,407 17,407 0
1,461,722 1,549,279 87,557
Cost and expenses:
Cost of sales (exclusive of
depreciation) 960,847 1,048,404 87,557
Depreciation 60,220 60,220 --
Selling, general and administrative 207,451 207,451 --
Provision for losses on instalment
notes 12,402 12,402 --
Postretirement benefits 8,140 8,140 --
Interest expense - mortgage-
backed/asset-backed notes 127,273 127,273 --
Interest expense - other debt 18,687 18,687 --
Amortization of intangibles 4,976 4,976 --
Provision for estimated hurricane
insurance losses 3,983 3,983 --
Restructuring and impairment charges 591 591 --
1,404,570 1,492,127 87,557
Income from continuing operations
before income tax expense 57,152 57,152 --
Income tax expense (7,235) (7,235) --
Net income $49,917 $49,917 $--
Basic income per share:
Net income $1.29 $1.29
Weighted average number of shares
outstanding 38,581,893 38,581,893
Diluted income per share:
Net income $1.14 $1.14
Weighted average number of dilutive
securities 46,254,746 46,254,746
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