TAMPA, Fla., July 28 /PRNewswire-FirstCall/ -- Walter Industries, Inc. , a leading producer and exporter of U.S. metallurgical coal for the global steel industry, today reported net income of $50.8 million, or $0.94 per diluted share, for the quarter ended June 30, 2008 compared to $18.1 million, or $0.34 per diluted share, in the second quarter 2007.
"Our overall financial performance in the quarter was outstanding, particularly in our core Natural Resources and Sloss businesses, which reported their best quarterly performance ever," said Walter Industries Chairman Michael T. Tokarz. "These results have set the table for what we expect to be the most profitable year in Walter Industries' history."
He added, "We continue to make meaningful advances in executing the growth strategy of our core coal business and have also made significant progress toward the planned separation of the Financing and Homebuilding businesses."
Second Quarter 2008 Financial Results
Net sales and revenues for the second quarter 2008 totaled $370.0 million, up 24.8 percent from the prior-year period, driven by higher metallurgical coal and coke pricing, as well as improved sales volumes of both mined and purchased coal. These increases were partially offset by declines in unit deliveries at Homebuilding.
Operating income from continuing operations for the second quarter 2008 totaled $82.3 million compared to $33.0 million in the second quarter 2007. Operating income in the current period was higher primarily on strong metallurgical coal and coke pricing, as well as increased sales volumes.
Second Quarter Results by Operating Group Natural Resources & Sloss
The Natural Resources & Sloss group generated combined revenues of $290.7 million in the second quarter, up 68.9 percent versus the prior-year period. Results include a $16.50 per short ton increase in average metallurgical coal selling prices on 1.7 million tons sold in the quarter, which includes 0.2 million tons of purchased coal sales. Second quarter 2008 results also include increased metallurgical coke pricing at Sloss.
Natural Resources & Sloss reported combined operating income of $79.7 million in the second quarter compared to $25.3 million in the prior-year period. Operating income in the current-year period reflects the pricing and volume improvements at Jim Walter Resources and the increase in coke prices at Sloss, partially offset by higher freight and royalty costs associated with additional coal shipments and higher raw material coal costs at Sloss.
"We generated strong production during the second quarter, resulting in 3.0 million tons of met coal production in the first half of 2008, which was at the top end of our previously communicated expectations. Our first half results, when combined with approximately 1.0 million tons of expected incremental production from the Southwest 'A' panel, which will start up in late August, keep our full-year expectation of 6.7 to 7.1 million tons of metallurgical coal production squarely within reach," said Jim Walter Resources CEO George R. Richmond. "In addition, we have completed all the critical infrastructure associated with our 7 East expansion and are developing its first longwall panel."
Jim Walter Resources
Mine No. 4 produced 0.8 million tons in the second quarter 2008 compared to 0.7 million tons in last year's second quarter. The increase was primarily a result of improved longwall production during the quarter. Mine No. 4's production cost per ton in the quarter was $46.77, or $2.15 per ton higher than in the prior-year period, primarily driven by increased labor and material costs.
Mine No. 7 produced 0.6 million tons in the second quarter 2008, approximately 0.1 million tons more than in the same period last year. Production costs at Mine No. 7 were $70.64 per ton versus $71.23 per ton in the prior-year period. The improvement in average coal production costs was the result of the increase in production volume, which more than offset increased spending for labor and materials at the mine. Production costs at Mine No. 7 continue to reflect higher per-ton costs versus Mine No. 4 due to the disproportionate mix of continuous miner tons versus longwall tons associated with the development of the Southwest "A" panel and the East expansion.
Sloss
Sloss Industries generated second quarter revenues of $53.3 million, up 60.8 percent versus the prior-year period, and operating income of $15.1 million, an increase of $12.1 million and more than five times the amount earned in the prior-year period. Sloss' favorable results were driven by record-high pricing for metallurgical coke, partially offset by higher raw material coal costs and a $2.2 million charge related to the resolution of legal matters.
Sloss sold approximately 106,000 tons of metallurgical coke at an average price of $397.50 per ton compared to approximately 103,000 tons at $225.91 in the prior-year period. The pricing improvement of 76.0 percent stems from higher contract pricing and spot sales at prices in excess of $500 per short ton FOB plant.
Natural Gas
The natural gas business sold 1.6 billion cubic feet of gas at an average price of $8.99 per thousand cubic feet in the second quarter 2008 compared to sales of 1.8 billion cubic feet at an average price of $7.96 per thousand cubic feet in the prior-year period.
Financing & Homebuilding
The Financing & Homebuilding group reported second quarter revenues of $90.9 million, compared to $123.2 million in the prior-year period. Revenues were lower primarily as a result of fewer unit completions and a $4.2 million increase in the discount on instalment notes originated in the quarter. Operating income for the group was $11.1 million, compared to $12.6 million in the second quarter last year, also primarily due to fewer unit completions and the discount adjustment mentioned above, partially offset by lower selling, general and administrative expenses at Homebuilding resulting from the restructuring actions taken in February.
At Financing, operating income for the second quarter was $14.3 million, an increase of 9.9 percent compared to the same period last year, primarily on lower interest expense as a result of paying down debt, partially offset by lower income from prepayments. Delinquencies on the mortgage portfolio were 4.1 percent at June 30, 2008, compared to 3.8 percent at June 30, 2007.
"Our Financing business remains a strong, stable generator of income and cash flows, despite continued and unprecedented disruption in the residential mortgage market. Low delinquencies, strong recovery rates and, in particular, an effective, high-touch servicing platform with focused loss-mitigation strategies, have generated strong results," said JWH Holding Company Chairman and CEO Mark J. O'Brien. "Strategically, the recent refinancing of our warehouse facilities and the restructuring of Homebuilding in February better position us to separate these businesses from Walter Industries by year end."
Corporate and Other
In June, Walter Industries completed an offering of 3.2 million shares of its common stock, from which the Company received approximately $280.4 million of net proceeds. The Company used these proceeds to repay a portion of the term loan and revolving credit facility borrowings under the Company's Amended 2005 Credit Agreement. In the second quarter 2008, interest expense included $3.1 million in accelerated amortization of deferred financing fees associated with this debt repayment.
Income tax expense in the quarter included a $3.7 million credit resulting from the resolution of certain Federal tax matters.
Business Outlook
The Company affirms its previously communicated expectations for its key business drivers, and updates its sales volumes and operating margin per ton expectations as follows:
Metallurgical Coal Sales Outlook Q1A Q2A Q3E Q4E Tons Sold (short tons, in millions) 1.5 1.7 1.7 - 1.8 2.1 - 2.2 Average Operating Margin Per Ton $8 $33 $75 - $81 $95 - $100 Coke Sales Outlook Q1A Q2A Q3E Q4E Tons Sold 104,024 106,431 100,000 - 106,000 106,000 - 112,000 Average Operating Margin Per Ton $182 $162 $140 - $165 $140 - $165 Quarter-to-quarter variability in timing, availability and pricing of shipments may result in significant shifts in income between quarters.
Changes in metallurgical coal sales volumes between the third and fourth quarter reflect a change in the anticipated timing of shipments for approximately 100,000 tons versus prior expectations. The average metallurgical coal operating margin per ton is expected to improve by approximately $5 per ton in the fourth quarter compared to previously communicated expectations, driven largely by higher metallurgical coal sales prices.
The coke sales outlook for the second half of the year also reflects a shift in tons between the third and fourth quarter as coke oven repairs in the third quarter will reduce tonnage volumes slightly that will be made up in the fourth quarter. The operating margin per ton ranges are consistent with prior expectations and reflect favorable spot sales prices, offset by higher coal input costs.
Conference Call Webcast
Members of the Company's leadership team will discuss Walter Industries' second quarter 2008 results, its outlook for the remainder of the year and other general business matters during a conference call and live Web cast to be held on Tuesday, July 29, 2008, at 10 a.m. Eastern Daylight Time. To listen to the event live or in archive, visit the Company Web site at http://www.walterind.com/.
About Walter Industries
Walter Industries, Inc., based in Tampa, Fla., is a leading producer and exporter of metallurgical coal for the global steel industry and also produces steam coal, coal bed methane gas, furnace and foundry coke and other related products. The Company also operates a mortgage financing and affordable homebuilding business. The Company has annual revenues of approximately $1.2 billion and employs approximately 2,500 people. For more information about Walter Industries, please 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, including expressions such as "believe," "anticipate," "expect," "estimate," "intend," "may," "will," and similar expressions involve known and unknown risks, uncertainties, and other factors that may cause the Company's actual results in future periods to differ materially from the expectations expressed or implied by such forward-looking statements. These factors include, among others, the following: the market demand for the Company's products as well as changes in costs and the availability of raw material, labor, equipment and transportation; changes in weather and geologic conditions; changes in extraction costs, pricing and our assumptions and projections concerning our reserves in the Company's mining operations; changes in customer orders; pricing actions by the Company's competitors, customers, suppliers and contractors; changes in governmental policies and laws; changes in the mortgage-backed capital markets; changes in general economic conditions; and the successful implementation and anticipated timing of any strategic actions and objectives that may be pursued, including our announced separation of the Financing and Homebuilding business from the Company. Forward-looking statements made by the Company in this release, or elsewhere, speak only as of the date on which the statements were made. Any forward-looking statements should be considered in context with the various disclosures made by us about our businesses, including the Risk Factors described in our 2007 Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission. The Company disclaims any duty to update its forward-looking statements as of any future date.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ($ in Thousands) Unaudited For the three months ended June 30, 2008 2007 Net sales and revenues: Net sales $315,686 $239,146 Interest income on instalment notes 48,022 50,662 Miscellaneous 6,328 6,716 370,036 296,524 Costs and expenses: Cost of sales (exclusive of depreciation) 200,893 174,457 Depreciation 13,633 11,591 Selling, general and administrative 37,400 38,125 Provision for losses on instalment notes 3,002 2,493 Postretirement benefits 6,596 6,687 Interest expense - mortgage- backed/asset-backed notes 25,846 29,745 Interest expense - other debt 11,184 7,218 Amortization of intangibles 340 442 298,894 270,758 Income from continuing operations before income tax expense 71,142 25,766 Income tax expense (1) 20,366 7,996 Income from continuing operations 50,776 17,770 Discontinued operations (2) - 281 Net income $50,776 $18,051 Basic income per share: Income from continuing operations $0.96 $0.34 Discontinued operations - $0.01 Net income $0.96 $0.35 Weighted average number of shares outstanding 52,982,775 52,081,436 Diluted income per share: Income from continuing operations $0.94 $0.33 Discontinued operations - $0.01 Net income $0.94 $0.34 Weighted average number of diluted shares outstanding 53,771,216 52,574,803
(1) Income tax expense for the quarter ended June 30, 2008 includes a $3.7 million credit resulting from the resolution of certain Federal tax matters associated with an ongoing IRS audit.
(2) The Company sold its modular home manufacturing business, which operated as Crestline Homes, Inc., in May 2007. Operating results of this business for the quarter ended June 30, 2007 have been classified as discontinued operations.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES RESULTS BY OPERATING SEGMENT ($ in Thousands) Unaudited For the three months ended June 30, 2008 2007 NET SALES AND REVENUES: Natural Resources (1) $237,428 $139,019 Sloss 53,265 33,122 Natural Resources and Sloss 290,693 172,141 Financing 51,722 55,046 Homebuilding 39,227 68,175 Financing and Homebuilding Group 90,949 123,221 Other (1) 706 3,268 Consolidating Eliminations (12,312) (2,106) $370,036 $296,524 OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS: Natural Resources (1) $64,573 $22,399 Sloss 15,091 2,948 Natural Resources and Sloss 79,664 25,347 Financing 14,334 13,045 Homebuilding (3,243) (467) Financing and Homebuilding Group 11,091 12,578 Other (1) (8,184) (4,941) Consolidating Eliminations (245) - Operating income from continuing operations 82,326 32,984 Other debt interest expense (11,184) (7,218) Income from continuing operations before income tax expense $71,142 $25,766
(1) Results for 2007 have been revised to reflect the reclassification of United Land (the parent company of Kodiak and TRI) from "Other" to Natural Resources.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS ($ in Thousands) Unaudited For the six months ended June 30, 2008 2007 Net sales and revenues: Net sales $558,686 $498,533 Interest income on instalment notes 96,732 100,227 Miscellaneous 10,308 18,058 665,726 616,818 Cost and expenses: Cost of sales (exclusive of depreciation) 374,929 346,097 Depreciation 27,600 22,221 Selling, general and administrative 75,270 75,576 Provision for losses on instalment notes 7,327 5,390 Postretirement benefits 13,188 13,019 Interest expense - mortgage- backed/asset-backed notes 54,154 59,516 Interest rate hedge ineffectiveness (1) 16,981 - Interest expense - other debt 16,899 14,565 Amortization of intangibles 705 920 Restructuring and impairment charges (2) 6,770 - 593,823 537,304 Income from continuing operations before income tax expense and minority interest 71,903 79,514 Income tax expense (3) 20,628 29,609 Income from continuing operations 51,275 49,905 Discontinued operations (4) - (2,229) Net income $51,275 $47,676 Basic income (loss) per share: Income from continuing operations $0.98 $0.96 Discontinued operations - (0.04) Net income $0.98 $0.92 Weighted average number of shares outstanding 52,581,857 52,046,083 Diluted income (loss) per share: Income from continuing operations $0.96 $0.95 Discontinued operations - (0.04) Net income $0.96 $0.91 Weighted average number of diluted shares outstanding 53,332,579 52,525,490
(1) During the quarter ended March 31, 2008, the Company recognized a loss of $17.0 million for the ineffectiveness of interest rate hedges held by Financing that were intended to hedge an April 2008 securitization of instalment notes receivable. Unfavorable market conditions precluded an April 2008 securitization and management could not predict when such a securitization might occur.
(2) Homebuilding recorded restructuring charges totaling $6.8 million during the quarter ended March 31, 2008 related to the closure of 36 sales offices.
(3) Income tax expense for the six months ended June 30, 2008 includes a $3.7 million credit resulting from the resolution of certain Federal tax matters associated with an ongoing IRS audit. Income tax expense for the six months ended June 30 , 2007 included a $4.4 million write-off of certain deferred tax assets no longer considered realizable.
(4) The Company sold its modular home manufacturing business, which operated as Crestline Homes, Inc., in May 2007. Operating results of this business for the six months ended June 30, 2007 have been classified as discontinued operations.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES RESULTS BY OPERATING SEGMENT ($ in Thousands) Unaudited For the six months ended June 30, 2008 2007 NET SALES AND REVENUES: Natural Resources (1) $390,459 $310,465 Sloss 104,136 65,923 Natural Resources and Sloss 494,595 376,388 Financing 103,826 108,793 Homebuilding 79,299 130,308 Financing and Homebuilding Group 183,125 239,101 Other (1) 1,124 4,538 Consolidating Eliminations (13,118) (3,209) $665,726 $616,818 OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS: Natural Resources (1) $82,383 $79,940 Sloss 33,791 4,254 Natural Resources and Sloss 116,174 84,194 Financing (2) 7,622 23,616 Homebuilding (3) (17,970) (3,145) Financing and Homebuilding Group (10,348) 20,471 Other (1) (16,380) (10,586) Consolidating Eliminations (644) - Operating income from continuing operations 88,802 94,079 Other debt interest and debt conversion expense (16,899) (14,565) Income from continuing operations before income tax expense and minority interest $71,903 $79,514
(1) Results for 2007 have been revised to reflect the reclassification of United Land (the parent company of Kodiak and TRI) from "Other" to Natural Resources.
(2) Includes a loss of $17.0 million for the ineffectiveness of interest rate hedges that were intended to hedge an April 2008 securitization of instalment notes receivable.
(3) Homebuilding recorded restructuring charges totaling $6.8 million during the quarter ended March 31, 2008 related to the closure of 36 sales offices.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES SUPPLEMENTAL INFORMATION Unaudited For the three months For the six months ended June 30, ended June 30, 2008 2007 2008 2007 Operating Data: Jim Walter Resources Tons sold by type (in thousands): Metallurgical coal, contracts 1,535 1,301 3,012 2,727 Purchased metallurgical coal 212 - 229 96 1,747 1,301 3,241 2,823 Average sale price per short ton: Metallurgical coal, contracts $110.79 $94.29 $98.61 $97.55 Coal cost of sales (exclusive of depreciation): Mine No. 4 per ton $60.23 $51.40 $56.39 $50.18 Mine No. 7 per ton $78.36 $73.71 $77.30 $62.60 Mines No. 4 and No. 7 per ton average $66.61 $62.24 $64.48 $56.65 Mine No. 5 per ton (1) $- $- $- $57.98 Total average $66.61 $62.24 $64.48 $56.65 Other costs (in thousands)(2) $16,086 $2,776 $19,380 $15,553 Tons of coal produced (in thousands) Mine No. 4 773 665 1,742 1,454 Mine No. 7 622 521 1,260 1,404 Total 1,395 1,186 3,002 2,858 Coal production costs per ton: (3) Mine No. 4 $46.77 $44.62 $40.79 $40.66 Mine No. 7 $70.64 $71.23 $68.98 $52.89 Total average $57.41 $56.31 $52.62 $46.67 Natural gas sales, in mmcf (in thousands) 1,612 1,752 3,177 3,615 Natural gas average sale price per mmcf $8.99 $7.96 $8.48 $7.94 Natural gas cost of sales per mmcf $3.99 $3.27 $3.47 $3.01 Tuscaloosa Resources, Inc. (4) Tons sold (in thousands) 224 - 423 - Tons of coal produced (in thousands) 221 - 433 - Kodiak Tons sold (in thousands) 40 - 83 15 Tons of coal produced (in thousands) 25 20 45 46
(1) Mine No. 5 ceased production in December 2006 as planned. Sales and cost of sales amounts in 2007 resulted from the sale of residual inventory on hand at December 31, 2006.
(2) Consists of charges (credits) not directly allocable to a specific mine as well as cost of purchased coal.
(3) Coal production costs per ton are a component of inventoriable costs, including depreciation. Other 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.
(4) Tuscaloosa Resources, Inc. was acquired on August 31, 2007. WALTER INDUSTRIES, INC. AND SUBSIDIARIES SUPPLEMENTAL INFORMATION Unaudited For the three months For the six months ended June 30, ended June 30, 2008 2007 2008 2007 Operating Data (continued): Sloss Industries Furnace and foundry coke tons sold 106,431 102,780 210,454 211,736 Furnace and foundry coke average sale price per ton $397.50 $225.91 $393.05 $221.09 Financing Delinquencies, as of period end 4.1% 3.8% 4.1% 3.8% Prepayment speeds 6.0% 8.7% 5.7% 8.4% Number of repossessions 255 301 580 589 Repossession rate, annualized 2.6% 3.0% 3.0% 2.9% Recovery rate on repossessions 89.9% 87.4% 86.3% 85.9% Homebuilding (excluding Crestline) New sales contracts 287 688 737 1,422 Cancellations 154 109 252 193 Unit completions 421 687 863 1,315 Average contractual sales price $106,500 $105,500 $106,400 $104,900 Average revenue per home sold (1) $90,200 $98,900 $90,333 $98,500 Ending backlog of homes 707 1,426 707 1,426 Depreciation ($ in thousands): Natural Resources $11,528 $8,776 $22,903 $16,656 Sloss 979 943 1,985 1,859 Financing 123 273 258 554 Homebuilding 775 1,272 1,994 2,506 Other 228 327 460 646 $13,633 $11,591 $27,600 $22,221 Capital expenditures ($ in thousands): Natural Resources $32,240 $33,786 $53,548 $55,864 Sloss 2,017 1,003 3,592 3,123 Financing 122 29 164 60 Homebuilding 223 610 652 1,856 Other 7 1 113 53 $34,609 $35,429 $58,069 $60,956
(1) Includes the effect of the discount required to sell instalment notes receivable to Financing at the estimated market value.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ($ in Thousands) Unaudited June 30, December 31, 2008 2007 ASSETS Cash and cash equivalents $17,653 $30,614 Short-term investments, restricted 61,822 75,851 Instalment notes receivable, net of allowance of $13,946 and $13,992, respectively 1,821,745 1,837,059 Receivables, net 148,475 81,698 Inventories 119,937 101,676 Prepaid expenses 42,720 38,340 Property, plant and equipment, net 460,984 435,035 Other assets 153,566 156,113 Goodwill 10,895 10,895 $2,837,797 $2,767,281 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $81,113 $72,072 Accrued expenses 82,618 83,072 Accrued interest on debt 12,503 13,940 Debt: Mortgage-backed/asset-backed notes 1,437,387 1,706,218 Other debt 206,852 225,860 Accumulated postretirement benefits obligation 342,769 335,034 Other liabilities 223,361 216,372 Total liabilities 2,386,603 2,652,568 Stockholders' equity 451,194 114,713 $2,837,797 $2,767,281 WALTER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2008 ($ in Thousands) Unaudited Capital in Common Excess of Comprehensive Total Stock Par Value Income Balance at December 31, 2007 $114,713 $520 $497,032 Comprehensive income: Net income 51,275 $51,275 Other comprehensive income (loss), net of tax: Change in pension and postretirement benefit plans 1,273 1,273 Net unrealized loss on hedges (4,311) (4,311) Comprehensive income $48,237 Effects of changing the pension plan measurement date pursuant to FASB 158: Service cost, interest cost, and expected return on plan assets for October 1 - December 31, 2007, net of taxes (4,603) Amortization of actuarial gain and prior service cost for October 1 - December 31, 2007, net of taxes 670 Purchases of stock under stock repurchase program (363) (363) Proceeds from public stock offering (1) 280,432 32 280,400 Stock issued upon the exercise of stock options 7,544 4 7,540 Stock issued upon conversion of convertible notes 785 1 784 Tax benefit from the exercise of stock options 6,322 6,322 Dividends paid, $0.10 per share (5,225) (5,225) Stock-based compensation 4,084 4,084 Other (1,402) (1,402) Balance at June 30, 2008 $451,194 $557 $789,172 Accumulated Other Accumulated Comprehensive Deficit Income (Loss) Balance at December 31, 2007 $(290,986) $(91,853) Comprehensive income: Net income 51,275 Other comprehensive income (loss), net of tax: Change in pension and postretirement benefit plans 1,273 Net unrealized loss on hedges (4,311) Comprehensive income Effects of changing the pension plan measurement date pursuant to FASB 158: Service cost, interest cost, and expected return on plan assets for October 1 - December 31, 2007, net of taxes (4,603) Amortization of actuarial gain and prior service cost for October 1 - December 31, 2007, net of taxes 670 Purchases of stock under stock repurchase program Proceeds from public stock offering (1) Stock issued upon the exercise of stock options Stock issued upon conversion of convertible notes Tax benefit from the exercise of stock options Dividends paid, $0.10 per share Stock-based compensation Other Balance at June 30, 2008 $(244,314) $(94,221)
(1) In June, the Company completed an offering of 3.2 million shares of its common stock at $90.75 per share and received $280.4 million in proceeds net of underwriting discounts and offering expenses.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ($ in Thousands) Unaudited For the six months ended June 30, 2008 2007 OPERATING ACTIVITIES Net income $51,275 $47,676 Loss from discontinued operations - 2,229 Income from continuing operations 51,275 49,905 Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Provision for losses on instalment notes receivable 7,327 5,390 Depreciation 27,600 22,221 Other 15,353 4,802 Decrease (increase) in assets: Receivables (51,054) 8,874 Inventories (18,261) (5,175) Prepaid expenses 5,352 (639) Instalment notes receivable, net (41) (41,099) Increase (decrease) in liabilities: Accounts payable 10,473 (2,888) Accrued expenses (2,568) (23,852) Accrued interest (1,437) (2,198) Cash flows provided by operating activities 44,019 15,341 INVESTING ACTIVITIES Purchases of loans - (34,988) Principal payments received on purchased loans 8,028 20,908 Decrease in short-term investments, restricted 14,029 6,525 Additions to property, plant and equipment (58,069) (60,956) Other 1,400 2,613 Cash flows used in investing activities (34,612) (65,898) FINANCING ACTIVITIES Issuances of mortgage-backed/asset- backed notes 25,000 113,350 Payments of mortgage-backed/asset- backed notes (293,864) (118,598) Proceeds from issuances of other debt 280,000 - Retirements of other debt (315,669) (29,071) Proceeds from stock offering 280,432 - Other 1,733 (3,633) Cash flows used in financing activities (22,368) (37,952) Cash flows used in continuing operations $(12,961) $(88,509) CASH FLOWS FROM DISCONTINUED OPERATIONS Cash flows used in operating activities $- $630 Cash flows used in investing activities - - Cash flows provided by financing activities - - Cash flows used in discontinued operations $- $630 Net decrease in cash and cash equivalents $(12,961) $(87,879) Cash and cash equivalents at beginning of period $30,614 $127,369 Add: Cash and cash equivalents of discontinued operations at beginning of period - 1 Net decrease in cash and cash equivalents (12,961) (87,879) Cash and cash equivalents at end of period $17,653 $39,491 SUPPLEMENTAL DISCLOSURES Financing Activities Non-cash transaction: One-year property insurance policy financing agreement $17,355 $12,516
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