- Earnings of $0.43 Per Diluted Share Reported - - Company Incurred $13.9 Million in Pre-Tax Hurricane-Related Expenses -
TAMPA, Fla., Oct. 26 - Walter Industries, Inc. (NYSE: WLT) today reported earnings of $0.43 per diluted share for the third quarter ended Sept. 30, 2005, compared with earnings of $0.42 per diluted share in the prior year's third quarter. Net income for the quarter totaled $20.2 million compared with $19.1 million in the third quarter last year.
Results for the quarter reflected higher year-over-year operating income from the Company's Natural Resources and Industrial Products segments primarily due to higher metallurgical coal and ductile iron pipe pricing, respectively. Results from the Natural Resources segment included $12.6 million of pre-tax idle mine costs associated with the previously announced water ingress problem at Jim Walter Resources' Mine No. 5.
Also during the quarter, the Financing segment incurred significant estimated losses related to Hurricanes Katrina and Rita, which included pre- tax insurance losses of $12.2 million, and an addition to the provision for losses on instalment notes of $1.3 million. In the prior year quarter, the Financing segment incurred pre-tax insurance-related hurricane losses of $4.9 million.
Earnings for the current period also included favorable tax adjustments of $1.7 million related to an exemption from U.S. tax for a portion of the profits from certain foreign sales and $2.3 million resulting from revising the Company's estimated effective tax rate from 32% to 30%.
Diluted earnings per share of $0.43 for the quarter compares to the Company's previously issued range of earnings expectations of $0.45 to $0.53 per diluted share, which did not include an $8 million-to-$15 million estimated impact to the Financing segment from Hurricane Katrina disclosed Sept. 6, 2005.
"Excluding hurricane impacts from Katrina and Rita, our earnings for the quarter reflected significant year-over-year improvement in our consolidated operating results," said Chairman and CEO Gregory E. Hyland. "We are well positioned to continue our success at Natural Resources and we are looking forward to realizing significant benefits from integrating U.S. Pipe with the recently acquired Mueller Water Products business."
Third Quarter 2005 Financial Results
Net sales and revenues for the third quarter totaled $399.9 million, up $13.5 million, or 3.5%, versus the year-ago period. This improvement primarily reflects higher metallurgical coal and ductile iron pipe pricing.
Operating income was $27.6 million for the quarter, down $1.3 million versus last year's third quarter, primarily due to lower operating income at Financing. The Financing segment's operating income decreased $8.0 million compared to the prior year, due to the increase in year-over-year hurricane- related impacts, including insurance losses of $7.3 million and a $1.3 million increase in the provision for losses on instalment notes. Excluding these impacts, the Financing segment continued its solid performance.
Operating income at Natural Resources improved $5.6 million versus the prior-year period, despite idle mine costs at Mine No. 5 of $12.6 million. Significantly higher metallurgical coal prices contributed to the period- over-period increase at Natural Resources. Industrial Products operating income improved $1.8 million on higher ductile iron pipe pricing. Operating results at Homebuilding were $0.9 million worse than the same period last year primarily due to higher construction, repair and materials costs, negative performance in its Crestline modular business and $0.4 million of hurricane- related expenses.
Third Quarter Results by Operating Segment
Natural Resources Segment
The Natural Resources segment reported third quarter revenue of $100.6 million, up 5.3% versus the same period last year. Operating income totaled $29.2 million, an increase of 23.5% versus the third quarter last year. The increase was primarily driven by higher metallurgical coal prices, partially offset by lower coal and gas volumes and $12.6 million in idle mine costs due to the previously announced Mine No. 5 water ingress problem. As previously reported the water ingress problem has been resolved.
Jim Walter Resources sold 1.08 million tons of coal at an average price of $79.25 per ton, compared to 1.58 million tons at $53.27 per ton during the same period last year. The Company realized metallurgical coal pricing of nearly $100 per ton in this year's third quarter. As disclosed in the second quarter of 2005, Jim Walter Resources delayed certain lower-priced metallurgical coal contracts into the second half of the year, which reduced average selling prices.
Stronger operating income at Natural Resources reflected higher metallurgical coal pricing, partially offset by lower volumes, higher production costs of $5.17 per ton in Mine Nos. 4 and 7 and the temporary idling of Mine No. 5 throughout the this year's third quarter. The production cost increase at Mine Nos. 4 and 7 was principally due to higher supplies and energy expenses of approximately $2.50 per ton at both mines and lower production at Mine No. 7 versus last year's third quarter. The expected reduction in Mine No. 7 tonnage was principally due to lower yields as a result of mining in a thinner coal seam within the current panel. On a year- to-date basis, Mine Nos. 4 and 7 have together produced 4.6% more tonnage than in the same period last year.
The natural gas operation sold 1.7 billion cubic feet of gas at an average price of $8.03 per thousand cubic feet, versus gas sales of 1.9 billion cubic feet at $5.80 per thousand cubic feet in the prior-year quarter. The decrease in gas production volume is primarily attributable to Mine No. 4 coal production occurring in a heavily degassed area of the mine and the idling of Mine No. 5 in the third quarter.
Industrial Products Segment
The Industrial Products segment reported $158.1 million in revenue for the third quarter of 2005, up 1.8% versus the prior-year period. Revenues reflect a 13.2% increase in ductile iron pipe prices per ton compared to the same quarter last year, partially offset by a 9.0% decrease in volume. This temporary third quarter industry-wide decline in shipments is expected to rebound in the fourth quarter.
Operating income for the segment totaled $10.1 million for the quarter, compared to operating income of $8.3 million for the same period last year. Last year's operating income included a $1.9 million insurance claim settlement. Excluding last year's benefit, U.S. Pipe generated a significant increase in operating income of 57.9%, primarily due to improved pricing and favorable product mix. These positives were partially offset by lower volumes, higher scrap metal costs and increased energy expenses.
Financing Segment
The Financing segment reported third quarter revenue of $56.6 million compared with $59.3 million in the year-ago period, primarily due to lower prepayment revenue. The revenue decline was also attributed to a decrease in the instalment note portfolio due to high prepayment speeds and declining origination volume from the Homebuilding segment. Prepayment speeds were 11.5% during the third quarter, up 88 basis points versus the prior-year period.
Operating income for the segment was $0.5 million in the third quarter versus $8.6 million for the same period in 2004. The Financing segment recorded $12.2 million of pre-tax, estimated hurricane-related insurance losses, and an additional $1.3 million provision for estimated losses on instalment notes.
Excluding the effects of the hurricanes in both the current period and prior-year period, operating income increased 4.0% for the quarter reflecting strong delinquency performance, lower selling, general and administrative costs, lower interest expense and an improvement in the provision for losses due to lower foreclosure activity and better recovery rates on repossessed houses. However, these improvements were partially offset by the overall decline in the portfolio size and lower prepayment income. Delinquencies (the percentage of amounts outstanding more than 30 days past due) were 5.3%, up 30 basis points versus the third quarter of last year, largely due to job losses and shifting payment priorities among customers in the hurricane affected areas.
Homebuilding Segment
The Homebuilding segment reported third quarter revenue of $56.0 million, up 3.4% versus the same period last year. The Homebuilding segment delivered 759 homes during the quarter at an average net selling price of $73,400, compared with 733 homes at an average net selling price of $73,100 for the prior year period. During the third quarter, the average net selling price of on-your-lot homes delivered was $80,300, which was a 9.0% increase over the $73,700 average net selling price realized during the same quarter last year.
On-your-lot unit deliveries declined by 63-units versus the third quarter last year, primarily due to approximately 65 fewer-than-anticipated completions in the hurricane-affected areas. Deliveries of modular home units totaled 202 units in the third quarter, an increase of 89 units compared to the same period last year. Same store on-your-lot sales orders, net of cancellations, were 523, flat versus the third quarter last year. The on-your- lot backlog rose to 2,222 units, up 29.2% versus the prior year's third quarter.
The segment reported an operating loss for the third quarter totaling $10.5 million, compared to a loss in the third quarter last year of $9.6 million. The current period loss reflects $0.4 million in hurricane- related repair costs, lower margins due to repair and rework on aged units under construction and $0.4 million of additional operating losses from the modular housing business. These unfavorable results were partially offset by higher average on-your-lot selling prices and lower selling, general and administrative expenses. Additionally, the operating income shortfall attributable to lower deliveries in the hurricane-affected areas is approximately $1.5 million.
Other Segment
Sloss Industries reported revenue for the third quarter of $31.6 million, up $5.3 million versus the same period last year and operating income of $2.4 million compared to $2.0 million in the third quarter of 2004. Current-period results reflect higher furnace and foundry coke pricing and increased furnace coke volumes, partially offset by decreased foundry coke volumes and higher coking coal material costs.
Today, the Company's United Land subsidiary announced an investment in Kodiak Mining Company, LLC, a joint venture established to operate an underground coal mine in Shelby County, Ala. The mine has approximately 4.3 million tons of reserves, which can be sold as high vol hard coking coal or high BTU, low-sulfur steam coal. Production is expected to begin in the first quarter 2006, and the Company is expecting approximately 350,000 tons of incremental coal production from its share of this joint venture in 2006.
Mueller Water Products
On Oct. 3, Walter Industries announced that it completed its acquisition of Mueller. On Oct. 21, the Company announced its plan to initiate an IPO and subsequent spin-off of its Water Products business, which includes Mueller and U.S. Pipe.
Mueller's results will be included in Walter Industries consolidated results beginning in the fourth quarter of 2005. However, Mueller will continue to file separately with the Securities and Exchange Commission as a result of its publicly held debt.
The Company expects that Mueller will issue a press release in late November to announce its fourth quarter and full-year earnings for the quarter and year ended Sept. 30, 2005.
Conference Call Webcast
Walter Industries Chairman and CEO Gregory E. Hyland and members of the Company's leadership team will discuss third quarter 2005 results and other general business matters on a conference call and live Webcast to be held on Thursday, Oct. 27, 2005, at 9 a.m. EDT. To listen to the event live or in archive, visit the Company Web site at http://www.walterind.com. The call will remain available for 30 days.
Walter Industries, Inc. is a diversified company with annual revenues of $2.7 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, Hersey Meters, 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 10,600 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 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 $14 million of receivables associated with a working capital adjustment arising from the sale of a subsidiary in 2003, potential changes in the mortgage-backed capital market, and general changes in economic conditions. Those risks also include the timing of and ability to execute on the initial public offering and spin-off of the Company's Water Products business and any other strategic action that may be pursued. Risks associated with forward-looking statements are more fully described in the Company's and Mueller's filings with the Securities and Exchange Commission. The Company assumes no duty to update its forward-looking statements as of any future date.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in Thousands)
Unaudited
For the three months
ended September 30,
2005 2004
Net sales and revenues:
Net sales $ 343,264 $ 326,895
Interest income on instalment notes 50,977 54,961
Miscellaneous 5,672 4,520
399,913 386,376
Cost and expenses:
Cost of sales (exclusive of depreciation) 261,545 252,480
Depreciation 14,238 14,687
Selling, general and administrative 48,328 46,101
Provision for losses on instalment
notes 3,076 2,716
Postretirement benefits 3,240 2,053
Interest expense - mortgage-
backed/asset-backed notes 30,046 32,824
Interest expense - corporate debt 3,595 3,803
Amortization of other intangibles 837 1,079
Provision for estimated hurricane
insurance losses 12,200 4,918
Restructuring and impairment
(credits) charges (1,243) 534
375,862 361,195
Income from continuing operations
before income tax expense 24,051 25,181
Income tax expense (3,681) (6,108)
Income from continuing operations 20,370 19,073
Discontinued operations, net of
income taxes (1) (173) -
Net Income $ 20,197 $ 19,073
Basic Income per share:
Income from continuing operations $ 0.53 $ 0.51
Discontinued Operations (0.01) -
Net Income $ 0.52 $ 0.51
Weighted average number of shares
outstanding 38,759,378 37,424,525
Diluted Income per share:
Income from continuing operations $ 0.44 $0.42
Discontinued Operations (0.01) -
Net Income $ 0.43 $ 0.42
Weighted average number of dilutive
securities 49,215,063 48,087,227
(1) 2005 expenses incurred during the period resulted from the Company's
sale of its AIMCOR subsidiary in December 2003.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
RESULTS BY OPERATING SEGMENT
($ in Thousands)
Unaudited
For the three months
ended September 30,
2005 2004
NET SALES AND REVENUES:
Homebuilding $ 55,994 $ 54,172
Financing 56,621 59,262
Industrial Products 158,093 155,281
Natural Resources 100,578 95,549
Other 35,375 28,816
Consolidating Eliminations (6,748) (6,704)
$ 399,913 $ 386,376
OPERATING INCOME (LOSS):
Homebuilding $ (10,454) $ (9,550)
Financing 521 8,569
Industrial Products 10,086 8,286
Natural Resources 29,249 23,674
Other (1,748) (1,288)
Consolidating Eliminations (8) (707)
Operating income 27,646 28,984
Corporate debt interest expense (3,595) (3,803)
Income before income tax expense $ 24,051 $ 25,181
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in Thousands)
Unaudited
For the nine months
ended September 30,
2005 2004
Net sales and revenues:
Net sales $ 1,012,817 $ 914,941
Interest income on instalment
notes 157,580 166,634
Miscellaneous 16,063 10,705
1,186,460 1,092,280
Cost and expenses:
Cost of sales (exclusive of
depreciation) 749,024 736,870
Depreciation 43,063 45,188
Selling, general and administrative 144,913 144,614
Provision for losses on instalment
notes 8,210 9,109
Postretirement benefits 9,712 5,158
Interest expense - mortgage-
backed/asset-backed notes 92,583 94,826
Interest expense - corporate debt 11,304 13,954
Amortization of other intangibles 2,823 3,916
Provision for estimated hurricane
insurance losses 12,200 4,918
Restructuring and impairment
(credits) charges (633) 1,048
1,073,199 1,059,601
Income from continuing operations
before income tax expense 113,261 32,679
Income tax expense (32,228) (9,945)
Income from continuing operations 81,033 22,734
Discontinued operations, net of
income taxes (1) (590) -
Net Income $ 80,443 $ 22,734
Basic Income per share:
Income from continuing operations $ 2.11 $ 0.58
Discontinued Operations (0.01) -
Net Income $ 2.10 $ 0.58
Weighted average number of shares
outstanding 38,325,408 39,154,490
Diluted Income per share:
Income from continuing operations $ 1.72 $ 0.54
Discontinued Operations (0.01) -
Net Income $ 1.71 $ 0.54
Weighted average number of dilutive
securities 48,960,982 45,724,983
(1) 2005 expenses incurred during the period resulted from the Company's
sale of its AIMCOR subsidiary in December 2003.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
RESULTS BY OPERATING SEGMENT
($ in Thousands)
Unaudited
For the nine months
ended September 30,
2005 2004
NET SALES AND REVENUES:
Homebuilding $161,790 $179,832
Financing 174,320 183,040
Industrial Products 425,543 414,365
Natural Resources 344,738 249,372
Other 103,068 82,898
Consolidating Eliminations (22,999) (17,227)
$1,186,460 $1,092,280
OPERATING INCOME (LOSS):
Homebuilding $(32,997) $(25,071)
Financing 29,323 39,065
Industrial Products 27,687 8,137
Natural Resources 112,409 36,080
Other (9,018) (9,518)
Consolidating Eliminations (2,839) (2,060)
Operating income 124,565 46,633
Corporate debt interest expense (11,304) (13,954)
Income from continuing operations
before income tax expense $113,261 $32,679
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Unaudited
For the three For the three For the nine For the nine
months ended months ended months ended months ended
September 30, September 30, September 30, September 30,
2005 2004 2005 2004
Depreciation
($ in thousands):
Homebuilding $ 1,233 $ 1,213 $ 3,645 $ 3,671
Financing 341 401 1,056 1,093
Industrial
Products 6,224 6,415 19,401 20,158
Natural Resources 5,121 5,464 15,351 16,628
Other 1,319 1,194 3,610 3,638
$14,238 $14,687 $ 43,063 $ 45,188
Amortization of
other intangibles
($ in thousands):
Financing $ 837 $ 1,079 $ 2,823 $ 3,916
Restructuring and
impairment charges
(credits) ($ in
thousands):
U.S. Pipe Anniston
plant shutdown
costs $ - $ - $ - $ 121
Mine No. 5
shutdown costs (1,243) 534 (633) 927
$(1,243) $ 534 $ (633) $ 1,048
Operating Data:
Homebuilding
New sales
contracts,
net of
cancellations 829 646 2,666 2,289
Unit completions 759 733 2,157 2,524
Average sale
price $73,400 $73,100 $74,600 $ 71,000
Ending homes
backlog 2,510 1,825 2,510 1,825
Financing
Delinquencies 5.3% 5.0% 5.3% 5.0%
Prepayment speeds 11.5% 10.6% 10.7% 10.0%
Industrial Products
Ending pipe &
fittings backlog,
tons 132,356 142,065 132,356 142,065
Ending pipe &
fittings backlog,
dollars ($ in
thousands) $106,557 $106,102 $106,557 $ 106,102
Sloss Industries
Tons of foundry
coke sold 27,396 39,765 97,028 108,245
Tons of furnace
coke sold 70,356 66,623 194,826 211,218
Foundry coke
average sale
price per ton $ 265.40 $ 168.51 $ 253.46 $ 166.96
Furnace coke
average sale
price per ton $ 205.80 $ 140.80 $ 205.83 $ 142.31
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Unaudited
For the three For the three For the nine For the nine
months ended months ended months ended months ended
September 30, September 30, September 30, September 30,
2005 2004 2005 2004
Operating Data:
Natural Resources
Tons sold by type
(in thousands):
Metallurgical coal,
contracts 736 901 3,138 3,180
Metallurgical coal,
spot sales - 247 144 395
Steam coal 344 431 1,131 1,325
1,080 1,579 4,413 4,900
Average sale price
per ton:
Metallurgical
coal, contracts $ 99.83 $ 48.54 $ 79.71 $ 40.50
Metallurgical
coal, spot sales $ - $102.17 $102.97 $ 95.07
Steam coal $ 35.17 $ 35.12 $ 35.06 $ 35.14
Tons sold by mine
(in thousands):
Mine No. 4 644 625 2,207 2,146
Mine No. 7 424 626 1,561 1,746
Mine No. 5 12 328 645 1,008
1,080 1,579 4,413 4,900
Coal cost of sales:
Mine No. 4 per
ton $ 36.18 $ 32.75 $ 31.28 $ 29.53
Mine No. 7 per
ton $ 40.04 $ 33.28 $ 39.62 $ 33.53
Mine No. 5 per
ton $ 65.68 $ 39.30 $ 45.38 $ 36.66
Mine No. 5 idle
costs (in
thousands)(1) $12,573 $ - $16,133 $ -
Other costs
(in
thousands) (2) $ 1,286 $ 1,133 $ 3,991 $ 5,539
Tons of coal
produced
(in thousands) 1,178 1,679 4,634 5,060
Coal production
costs per
ton: (3)
Mine No. 4 $ 33.27 $ 29.08 $ 30.42 $ 29.33
Mine No. 7 $ 45.22 $ 33.09 $ 37.46 $ 32.65
Mine No. 5 $ - $ 40.84 $ 52.35 $ 38.57
Total $ 38.32 $ 33.15 $ 35.49 $ 32.51
Natural gas sales,
in mmcf (in
thousands) 1,731 1,906 5,241 5,964
Natural gas
average sale
price per mmcf $ 8.03 $ 5.80 $ 7.11 $ 5.91
Natural gas cost
of sales per
mmcf $ 2.77 $ 2.21 $ 2.64 $ 2.23
(1) Idle costs are charged to period expense when incurred.
(2) Consists of charges 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 postretirement benefits, asset retirement obligation
expenses, royalties and Black Lung excise taxes.
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in Thousands)
Unaudited
September December September
30, 2005 31, 2004 30, 2004
ASSETS
Cash and cash equivalents $ 20,547 $ 46,924 $ 47,572
Short-term investments, restricted 93,289 99,905 105,692
Instalment notes receivable, net of
allowance of $12,306,
$11,200 and $11,293, respectively 1,688,080 1,717,205 1,734,370
Receivables, net 204,977 170,219 189,788
Income tax receivable 19,834 14,977 15,369
Inventories 290,559 233,547 221,618
Prepaid expenses 19,642 16,871 13,089
Property, plant and equipment, net 379,184 334,678 333,502
Investments 6,095 6,165 6,153
Deferred income taxes 34,131 47,943 37,185
Unamortized debt expense 32,883 36,726 38,166
Other long-term assets, net 48,814 46,340 48,303
Goodwill and other intangibles, net 142,163 144,986 146,046
$2,980,198 $2,916,486 $2,936,853
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 110,664 $ 90,217 $ 100,947
Accrued expenses 141,850 125,681 122,918
Debt:
Mortgage-backed/asset-backed notes 1,664,263 1,763,827 1,796,071
Senior debt 10,000 - -
Convertible senior subordinated notes 175,000 175,000 175,000
Accrued interest 16,932 16,813 17,992
Accumulated postretirement benefits
obligation 277,563 282,599 283,906
Other long-term liabilities 221,855 203,122 198,479
Total liabilities 2,618,127 2,657,259 2,695,313
Stockholders' equity 362,071 259,227 241,540
$2,980,198 $2,916,486 $2,936,853
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
($ in Thousands)
Unaudited
Comprehensive Accum.
Total Income Deficit
Balance at December 31, 2004 $ 259,227 $ (609,048)
Comprehensive income:
Net income 80,443 $ 80,443 80,443
Other comprehensive income (loss),
net of tax:
Net unrealized loss on hedges (6,870) (6,870)
Comprehensive income $ 73,573
Stock issued upon exercise of stock
options 17,124
Tax benefit from the exercise of
stock options 15,645
Dividends paid, $.12 per share (4,587)
Stock-based compensation 1,089
Balance at September 30, 2005 $ 362,071 $(528,605)
Accum Other
Comprehensive Common Capital in Treasury
Income (Loss) Stock Excess Stock
Balance at December 31, 2004 $ (51,109) $ 580 $ 1,178,121 $(259,317)
Comprehensive income:
Net income
Other comprehensive income
(loss), net of tax:
Net unrealized loss on hedges (6,870)
Comprehensive income
Stock issued upon exercise of
stock options 17 17,107
Tax benefit from the exercise
of stock options 15,645
Dividends paid, $.12 per share (4,587)
Stock-based compensation 1,089
Balance at September 30, 2005 $ (57,979) $597 $1,207,375 $(259,317)
WALTER INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in Thousands)
Unaudited
For the nine months
ended September 30,
2005 2004
OPERATING ACTIVITIES
Income from continuing operations $ 81,033 $ 22,734
Adjustments to reconcile income to
net cash provided by continuing
operations:
Provision for losses on instalment
notes receivable 8,210 9,109
Depreciation 43,063 45,188
Provision for deferred income taxes 15,827 10,208
Tax benefit on the exercise of
employee stock options 15,645 -
Accumulated postretirement benefits
obligation (5,036) (8,394)
Provision for (decrease in) other
long-term liabilities 8,491 (2,337)
Amortization of other intangibles 2,823 3,916
Amortization of debt expense 4,760 6,986
Loss on sale of assets - 1,294
Stock-based compensation expense 1,089 472
Decrease (increase) in assets:
Receivables (34,758) (36,157)
Income tax receivable (3,176) 2,007
Inventories (57,012) (153)
Prepaid expenses (2,771) (6,561)
Increase (decrease) in liabilities:
Accounts payable 20,447 2,277
Accrued expenses 16,169 17,559
Accrued interest 119 873
Cash flows provided by continuing
operations 114,923 69,021
Cash flows used in discontinued
operations (590) (3,611)
Cash flows provided by operating
activities 114,333 65,410
INVESTING ACTIVITIES
Notes originated from sales and
resales of homes and purchases of
loan portfolios (322,681) (345,364)
Cash collections on accounts and
payouts in advance of maturity 343,596 351,047
Decrease (increase) in short-term
investments, restricted 6,616 (5,377)
Additions to property, plant and
equipment, net of retirements (87,569) (29,316)
Increase in investments and other
assets, net (2,728) (13,603)
Proceeds from sale of subsidiary - 6,000
Cash flows used in investing
activities (62,766) (36,613)
FINANCING ACTIVITIES
Issuance of debt 198,032 670,218
Retirement of debt (287,596) (644,239)
Additions to unamortized debt expense (917) (7,902)
Purchases of treasury stock - (63,020)
Dividends paid (4,587) (3,489)
Exercise of employee stock options 17,124 7,225
Cash flows used in financing
activities (77,944) (41,207)
Net decrease in cash and cash
equivalents (26,377) (12,410)
Cash and cash equivalents at
beginning of period 46,924 59,982
Cash and cash equivalents at end of
period $ 20,547 $ 47,572
