Walter Industries Reports First Quarter EPS of $0.13, Well Ahead of Estimates

--First Quarter EPS Exceeds Prior Year Period By 30%--

--Company Raises EPS Expectations for Full Year to $0.80 - $0.90--



Apr 24, 2001, 01:00 ET from Walter Industries, Inc.

    TAMPA, Fla., April 24 /PRNewswire Interactive News Release/ -- Walter
 Industries, Inc. (NYSE:   WLT) today reported earnings of $0.13 per share for
 the quarter ended March 31, 2001.  These results exceeded the prior year's
 first quarter by 30% and the Company's previously announced projection for the
 quarter of $0.07 to $0.10 per share.  Improved results were due to strong
 performances by the United States Pipe and Foundry Company, Inc. and Jim
 Walter Resources, Inc. subsidiaries.  Results for the quarter ended March 31,
 2001 are the first to be reported in accordance with the Company's change to a
 December 31 fiscal year-end.
     "We continue to make great progress in delivering meaningful improvement
 in operating results and, at the same time, advancing the implementation of
 strategic initiatives aimed at unlocking shareholder value," said President
 and Chief Executive Officer Don DeFosset.  "While the current economic climate
 presents challenges to a number of our operating subsidiaries, we are taking
 necessary action to meet these challenges and to take advantage of
 opportunities we have in this environment."
 
     First Quarter 2001 Financial Results
     Net income was $5.8 million, or $0.13 per basic and diluted share, during
 the quarter ended March 31, 2001. This compares with net income in the
 comparable period of last year of $4.8 million, or $0.10 per basic and diluted
 share, before a non-recurring credit of $2.4 million.  These results
 principally reflect improved operating income at U.S. Pipe and Jim Walter
 Resources, reduced corporate expenses, a lower income tax rate and reduced
 shares outstanding as a result of share buybacks.  Reduced mortgage
 prepayments and the impact of the current U.S. economic slowdown resulted in
 lower operating income at several of the Company's other subsidiaries,
 partially offsetting the positive results at U.S. Pipe and Jim Walter
 Resources.
     Net sales and revenues were essentially flat for the quarter at
 $463.5 million.  Revenue growth within the Industrial Products and Natural
 Resources segments was offset by a decline in unit sales of homes and time
 charge income.  Also, volumes for the Energy Services segment declined due to
 delayed timing of petroleum coke shipments.
     Earnings before senior debt interest, taxes, depreciation, amortization
 and non-cash OPEB (EBITDA) totaled $52.3 million during the first quarter,
 compared with $53.7 million in the comparable prior period before the non-
 recurring credit.
 
     Results By Operating Segment
     The Homebuilding and Financing segment reported quarterly revenues of
 $112.7 million compared with $122.2 million in the year-ago period. Operating
 income decreased $2.3 million, to $10.1 million, due principally to a
 $2.2 million decline in time charge income associated with lower prepayments.
 Prepayment speeds were 4.7% in the first quarter, compared to 5.3% in the
 prior-year period.  Improved operating margins on homebuilding, attributable
 to lower materials costs and other expense reductions, were offset by lower
 revenues from fewer unit completions in the current quarter.  Jim Walter Homes
 and its affiliated homebuilding operations completed 924 homes during the
 current quarter at an average net selling price of $58,500, compared with
 1,065 homes at a $57,700 average price for the same period last year.
     The Company's Industrial Products segment posted $197.7 million in
 revenues during the current period, compared to $196.5 million in the year
 earlier period.  Operating income for the segment declined $3.4 million from
 the first quarter of last year to $14.8 million.  Operating income at U.S.
 Pipe improved 16% during the current quarter on 14% higher revenues,
 reflecting strong demand for its ductile iron pipe products and continuing
 productivity improvements. However, this was more than offset by other
 decreases in operating income, primarily at Sloss Industries Corporation.
 Recent weakness in the domestic steel industry, caused by competition from
 foreign suppliers and a slowing economy, has significantly impacted sales at
 Sloss.  Sloss' revenues decreased $6.7 million and operating income declined
 $3.8 million from last year, principally due to reduced sales of furnace coke.
 JW Aluminum also experienced lower shipments during the current quarter,
 principally due to weather-related delays in seasonal demand for its fin stock
 products used in air conditioning applications, and energy costs that were
 $1.1 million higher than last year's first quarter.
     Operating income of the Energy Services segment, comprised of the
 operations of AIMCOR, was $5.2 million in the first quarter of 2001 on
 revenues of $85.6 million.  Lower revenues and operating income versus the
 prior year reflect lower margins per ton and first quarter delays of petroleum
 coke shipments that are now expected in the second quarter of this year.
 Reduced margins were primarily due to higher priced contracts being replaced
 at lower margins in the current period.  The metals additive business is also
 down due to the current distressed situation of the domestic steel industry.
 AIMCOR has been successful recently in winning new contracts for in-refinery
 servicing at three major U.S. refineries. AIMCOR also secured the rights to
 market
 1.3 million tons of petroleum coke from a major U.S. refiner beginning in
 2002.
     The Natural Resources segment, comprised of the coal mining and methane
 gas operations of Jim Walter Resources, Inc., reported a significant
 improvement in results for the quarter with $0.6 million in operating income,
 compared to an $8.3 million operating loss in the prior year period.  This
 improvement was principally driven by significant increases in natural gas
 prices that were 175% higher than in the year-earlier quarter.  The methane
 gas operation sold 2.3 billion cubic feet of gas at an average price of $6.84
 per million cubic foot in the current quarter, as compared to 2.4 billion
 cubic feet at $2.49 per million cubic foot in the year-earlier quarter.  As a
 result of first quarter sales and hedging transactions, the methane gas
 operation has already locked in over 50% of its estimated 2001 production at
 selling prices 60% greater than 2000 prices.  Jim Walter Resources' mining
 operations also continue to show significant improvement as average production
 costs have declined 5% from a year ago.  As announced earlier this month, Jim
 Walter Resources has negotiated price increases of up to 35% over last year's
 business during the current contract renewal period, which occurs between
 March and June of each year.  These new contracts are expected to come online
 between May and July of 2001.
 
     Operational Excellence Activities
     The Company remains on track with its previously announced cost reduction
 and productivity enhancement efforts.  Forty-five employees, designated as
 "black belt" and "green belt" candidates, have completed an intensive training
 program in Six Sigma and Lean Manufacturing methodologies and are currently
 working on cost reduction and quality improvement projects in both
 manufacturing and transactional areas of the Company.  These employees have
 identified and are working on projects that will enable the Company to achieve
 its goal of 5% annual productivity improvement.  These ongoing efforts
 reinforce a company-wide culture of continuous improvement.
     "The Company continues to make progress in other operational initiatives.
 We are aggressively implementing action plans to take advantage of the Natural
 Resources segment's recent strong recovery in coal and gas prices, as well as
 to offset the economy's impact on furnace coke volumes at our Sloss
 subsidiary.  For example, the carbon-related businesses are exploring a number
 of previously untapped marketing and administrative synergies and were
 recently successful in identifying additional export sales opportunities for
 Sloss' furnace coke.  This partially mitigates the reduced domestic demand for
 this product," said DeFosset.
 
     Divestiture Update
     The Company is currently negotiating with interested parties for a
 potential sale of its JW Aluminum Company subsidiary.  As previously
 announced, the Company believes that should an acceptable offer be received, a
 transaction could be finalized during the first half of 2001.
 
     Share Repurchases
     The Company repurchased approximately 526,900 shares of its common stock
 during the quarter ended March 31, 2001. As recently announced, the Walter
 Industries Board of Directors increased the amount available under its buyback
 program to $25 million, of which $22.7 remains available to repurchase shares.
 
     Outlook
     Based on results for the first quarter, current forecasts and anticipated
 market conditions, Walter Industries expects to generate 2001 second quarter
 earnings in the range of $0.23 to $0.26 per share.  The Company has also
 raised its full-year earnings per share expectations to $0.80 to $0.90.  These
 projections do not factor in the potential impact of divestitures or a change
 in goodwill accounting.
 
     Stockholders Meeting
     The Annual Meeting of Stockholders for 2001 will be held April 26, 2001,
 at 10:00 a.m. at the Marriott Tampa Waterside in Tampa, Florida.
 
     Conference Call Webcast
     Walter Industries President 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, April 25, 2001, at 9:00 a.m. EDT.  To listen to the event live or
 in archive, visit the Company Web site at www.walterind.com.
 
     Walter Industries, Inc. is a diversified company with four principal
 operating businesses and annual revenues of  $2.0 billion.  The Company is a
 leader in homebuilding and home financing, water transmission products, energy
 services and specialty aluminum products. Based in Tampa, Florida, the Company
 employs approximately 7,000.  For additional news on the Company or investor
 information, please contact Walter Industries Senior Vice President and
 Treasurer Joseph Troy at (813) 871-4404 or visit the corporate Web site.
 
     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 which 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 and equipment costs
 and availability, changes in customer orders, pricing actions by the Company's
 competitors, and general changes in economic conditions.  Those and other
 risks 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, except per share amounts)
 
                                                     For the three months
                                                         ended March 31,
                                                     2001              2000
     Net sales and revenues:
         Net sales                                 $404,867          $401,451
         Time charge income                          54,087            56,321
         Miscellaneous                                4,501             6,930
                                                    463,455           464,702
 
     Cost and expenses:
      Cost of sales                                 325,462           314,233
      Depreciation                                   16,118            19,471
      Selling, general and administrative            48,583            55,740
      Postretirement benefits                         5,472             5,465
      Interest and amortization of debt
       expense                                       46,767            46,819
      Amortization of goodwill and other
       intangibles                                    9,262             9,212
                                                    451,664           450,940
 
     Income before income tax expense                11,791            13,762
     Income tax expense                              (5,975)           (6,526)
 
     Net income                                      $5,816            $7,236
 
     Add (deduct): Restructuring,
      impairment and other charges
      (credits), net of taxes                           ---            (2,445)
 
     Net income before restructuring,
     impairment and other charges/credits            $5,816            $4,791
 
     Earnings per share:
 
     Net income                                       $0.13             $0.15
     Add (deduct): Restructuring,
      impairment and other charges
      (credits), net of taxes                           ---             (0.05)
     Net income before restructuring,
     impairment and other charges/credits             $0.13             $0.10
 
     Weighted average number of
     diluted shares outstanding                  45,861,604        47,584,292
 
 
                     WALTER INDUSTRIES, INC. AND SUBSIDIARIES
                           RESULTS BY OPERATING SEGMENT
                                 ($ in thousands)
 
                                                      For the three months
                                                        ended March 31,
                                                     2001              2000
     NET SALES AND REVENUES:
     Homebuilding and Financing                    $112,733          $122,244
     Industrial Products                            197,665           196,475
     Energy Services                                 85,620            92,251
     Natural Resources                               66,307            50,607
     Other                                            1,130             3,125
                                                   $463,455          $464,702
 
     OPERATING INCOME:
     Homebuilding and Financing                     $10,103           $12,398
     Industrial Products                             14,837            18,194
     Energy Services                                  5,164             8,770
     Natural Resources                                  607            (8,251)
     Segment operating income                        30,711            31,111
     General corporate expense                        7,604             6,066
     Senior debt interest expense                    11,316            11,283
     Pre-tax income                                 $11,791           $13,762
 
     EBITDA: (1)
     Homebuilding and Financing                     $15,878           $18,777
     Industrial Products                             27,675            30,363
     Energy Services                                  8,973            12,617
     Natural Resources                                6,119              (399)
     Other                                           (6,357)           (5,168)
                                                    $52,288           $56,190
 
     (1) Earnings before senior debt interest, taxes, depreciation,
     amortization and non-cash OPEB.
 
 
                     WALTER INDUSTRIES, INC. AND SUBSIDIARIES
                      RESULTS BY OPERATING SEGMENT, EXCLUDING
               RESTRUCTURING, IMPAIRMENT AND OTHER CHARGES / CREDITS
                                 ($ in thousands)
 
                                                     For the three months
                                                       ended March 31,
                                                     2001              2000
     NET SALES AND REVENUES:
     Homebuilding and Financing                    $112,733          $122,244
     Industrial Products                            197,665           196,475
     Energy Services                                 85,620            92,251
     Natural Resources                               66,307            50,607
     Other                                            1,130             3,125
                                                   $463,455          $464,702
 
     OPERATING INCOME:
     Homebuilding and Financing                     $10,103           $12,398
     Industrial Products                             14,837            18,194
     Energy Services                                  5,164             8,770
     Natural Resources                                  607            (8,251)
     Segment operating income before
      restructuring, impairment and other
      charges/credits                                30,711            31,111
     General corporate expense                        7,604             8,511
     Senior debt interest expense                    11,316            11,283
     Pre-tax income before restructuring,
      impairment and other charges/credits          $11,791           $11,317
 
     Pre-tax income before restructuring,
     impairment and other charges /
      credits                                       $11,791           $11,317
     Add (deduct): Restructuring,
      impairment and other (charges) /
      credits                                           ---             2,445
     Pre-tax income after restructuring,
     impairment and other charges /
      credits                                       $11,791           $13,762
 
     EBITDA: (1)
     Homebuilding and Financing                     $15,878           $18,777
     Industrial Products                             27,675            30,363
     Energy Services                                  8,973            12,617
     Natural Resources                                6,119              (399)
     Other                                           (6,357)           (7,613)
     EBITDA before cash restructuring,
      impairment and other charges/credits           52,288            53,745
     Cash restructuring, impairment and
      other (charges)/credits                           ---             2,445
     EBITDA after cash restructuring,
     impairment and other charges /
      credits                                       $52,288           $56,190
 
     (1)  Earnings before senior debt interest, taxes, depreciation,
     amortization and non-cash OPEB.
 
 
                     WALTER INDUSTRIES, INC. AND SUBSIDIARIES
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                 ($ in thousands)
 
                                                  March 31,        December 31,
                                                     2001              2000
     ASSETS
     Cash and cash equivalents                      $13,612           $11,513
     Short-term investments, restricted             105,351           100,901
     Marketable securities                            2,180             1,980
     Instalment notes receivable, net             1,335,439         1,332,019
     Receviables, net                               239,126           239,620
     Inventories                                    281,880           262,002
     Prepaid expenses                                12,955            13,079
     Property, plant and equipment, net             479,167           480,361
     Investments                                     13,307            13,226
     Deferred income taxes                          112,783           111,818
     Unamortized debt expense                        41,325            42,432
     Other long-term assets, net                     38,658            37,129
     Goodwill, net                                  443,093           452,234
                                                 $3,118,876        $3,098,314
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Accounts payable                              $169,650          $171,949
     Accrued expenses                               113,849           118,644
     Income taxes payable                            67,213            61,027
     Debt:
      Mortgage-backed/asset-backed notes          1,747,021         1,769,833
      Other senior debt                             450,250           411,500
     Accrued interest                                30,320            28,231
     Accumulated postretirement benefits
      obligation                                    290,704           286,903
     Other long-term liabilities                     54,605            54,679
     Stockholders' equity                           195,264           195,548
                                                 $3,118,876        $3,098,314
 
 
                     WALTER INDUSTRIES, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENT OF CASH FLOWS
                                 ($ in thousands)
 
                                                    For the three months ended
                                                    March 31,         March 31,
                                                      2001              2000
     OPERATING ACTIVITIES
     Net income                                      $5,816            $7,236
     Charges to income not affecting cash:
        Depreciation                                 16,118            19,471
        Provision for deferred income
         taxes                                         (965)            5,698
        Accumulated postretirement
         benefits obligation                          3,801             2,461
        Provision for other long-term
         liabilities                                    (74)              156
        Amortization of goodwill and other
         intangibles                                  9,262             9,212
        Amortization of debt expense                  1,440             1,997
                                                     35,398            46,231
     Decrease (increase) in assets:
        Short-term investments, restricted           (4,450)          (19,195)
        Marketable securities                          (200)           42,471
        Instalment notes receivable, net             (3,420)           (9,329)
        Receivables, net                                494            (6,407)
        Inventories                                 (19,878)          (34,347)
        Prepaid expenses                                124            (1,051)
     Increase (decrease) in liabilities:
        Accounts payable                             (2,299)          (14,081)
        Accrued expenses                             (4,795)              656
        Income taxes payable                          6,186            (3,755)
        Accrued interest                              2,089            (1,534)
                  Cash flows from (used
                   in) operating
                   activities                         9,249              (341)
 
     INVESTING ACTIVITIES
        Additions to property, plant and
         equipment, net of retirements              (14,924)          (17,543)
        Decrease (increase) in investments
         and other assets, net                       (1,731)            2,354
                  Cash flows used in
                   investing activities             (16,655)          (15,189)
 
     FINANCING ACTIVITIES
         Issuance of debt                           302,803           184,689
         Retirement of debt                        (286,865)         (180,597)
         Additions to unamortized debt
          expense                                      (333)              ---
         Purchases of treasury stock                 (4,453)          (11,094)
         Dividends paid                              (1,830)           (1,450)
         Net unrealized gain on hedge                   368               ---
         Exercise of employee stock
          options                                       ---                82
                  Cash flows from (used
                   in) financing
                   activities                         9,690            (8,370)
 
     EFFECT OF EXCHANGE RATE ON CASH                   (185)             (725)
 
     Net increase (decrease) in cash and
      cash equivalents                                2,099           (24,625)
     Cash and cash equivalents at
      beginning of period                            11,513            57,508
     Cash and cash equivalents at end of
      period                                        $13,612           $32,883
 
 
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SOURCE Walter Industries, Inc.
    TAMPA, Fla., April 24 /PRNewswire Interactive News Release/ -- Walter
 Industries, Inc. (NYSE:   WLT) today reported earnings of $0.13 per share for
 the quarter ended March 31, 2001.  These results exceeded the prior year's
 first quarter by 30% and the Company's previously announced projection for the
 quarter of $0.07 to $0.10 per share.  Improved results were due to strong
 performances by the United States Pipe and Foundry Company, Inc. and Jim
 Walter Resources, Inc. subsidiaries.  Results for the quarter ended March 31,
 2001 are the first to be reported in accordance with the Company's change to a
 December 31 fiscal year-end.
     "We continue to make great progress in delivering meaningful improvement
 in operating results and, at the same time, advancing the implementation of
 strategic initiatives aimed at unlocking shareholder value," said President
 and Chief Executive Officer Don DeFosset.  "While the current economic climate
 presents challenges to a number of our operating subsidiaries, we are taking
 necessary action to meet these challenges and to take advantage of
 opportunities we have in this environment."
 
     First Quarter 2001 Financial Results
     Net income was $5.8 million, or $0.13 per basic and diluted share, during
 the quarter ended March 31, 2001. This compares with net income in the
 comparable period of last year of $4.8 million, or $0.10 per basic and diluted
 share, before a non-recurring credit of $2.4 million.  These results
 principally reflect improved operating income at U.S. Pipe and Jim Walter
 Resources, reduced corporate expenses, a lower income tax rate and reduced
 shares outstanding as a result of share buybacks.  Reduced mortgage
 prepayments and the impact of the current U.S. economic slowdown resulted in
 lower operating income at several of the Company's other subsidiaries,
 partially offsetting the positive results at U.S. Pipe and Jim Walter
 Resources.
     Net sales and revenues were essentially flat for the quarter at
 $463.5 million.  Revenue growth within the Industrial Products and Natural
 Resources segments was offset by a decline in unit sales of homes and time
 charge income.  Also, volumes for the Energy Services segment declined due to
 delayed timing of petroleum coke shipments.
     Earnings before senior debt interest, taxes, depreciation, amortization
 and non-cash OPEB (EBITDA) totaled $52.3 million during the first quarter,
 compared with $53.7 million in the comparable prior period before the non-
 recurring credit.
 
     Results By Operating Segment
     The Homebuilding and Financing segment reported quarterly revenues of
 $112.7 million compared with $122.2 million in the year-ago period. Operating
 income decreased $2.3 million, to $10.1 million, due principally to a
 $2.2 million decline in time charge income associated with lower prepayments.
 Prepayment speeds were 4.7% in the first quarter, compared to 5.3% in the
 prior-year period.  Improved operating margins on homebuilding, attributable
 to lower materials costs and other expense reductions, were offset by lower
 revenues from fewer unit completions in the current quarter.  Jim Walter Homes
 and its affiliated homebuilding operations completed 924 homes during the
 current quarter at an average net selling price of $58,500, compared with
 1,065 homes at a $57,700 average price for the same period last year.
     The Company's Industrial Products segment posted $197.7 million in
 revenues during the current period, compared to $196.5 million in the year
 earlier period.  Operating income for the segment declined $3.4 million from
 the first quarter of last year to $14.8 million.  Operating income at U.S.
 Pipe improved 16% during the current quarter on 14% higher revenues,
 reflecting strong demand for its ductile iron pipe products and continuing
 productivity improvements. However, this was more than offset by other
 decreases in operating income, primarily at Sloss Industries Corporation.
 Recent weakness in the domestic steel industry, caused by competition from
 foreign suppliers and a slowing economy, has significantly impacted sales at
 Sloss.  Sloss' revenues decreased $6.7 million and operating income declined
 $3.8 million from last year, principally due to reduced sales of furnace coke.
 JW Aluminum also experienced lower shipments during the current quarter,
 principally due to weather-related delays in seasonal demand for its fin stock
 products used in air conditioning applications, and energy costs that were
 $1.1 million higher than last year's first quarter.
     Operating income of the Energy Services segment, comprised of the
 operations of AIMCOR, was $5.2 million in the first quarter of 2001 on
 revenues of $85.6 million.  Lower revenues and operating income versus the
 prior year reflect lower margins per ton and first quarter delays of petroleum
 coke shipments that are now expected in the second quarter of this year.
 Reduced margins were primarily due to higher priced contracts being replaced
 at lower margins in the current period.  The metals additive business is also
 down due to the current distressed situation of the domestic steel industry.
 AIMCOR has been successful recently in winning new contracts for in-refinery
 servicing at three major U.S. refineries. AIMCOR also secured the rights to
 market
 1.3 million tons of petroleum coke from a major U.S. refiner beginning in
 2002.
     The Natural Resources segment, comprised of the coal mining and methane
 gas operations of Jim Walter Resources, Inc., reported a significant
 improvement in results for the quarter with $0.6 million in operating income,
 compared to an $8.3 million operating loss in the prior year period.  This
 improvement was principally driven by significant increases in natural gas
 prices that were 175% higher than in the year-earlier quarter.  The methane
 gas operation sold 2.3 billion cubic feet of gas at an average price of $6.84
 per million cubic foot in the current quarter, as compared to 2.4 billion
 cubic feet at $2.49 per million cubic foot in the year-earlier quarter.  As a
 result of first quarter sales and hedging transactions, the methane gas
 operation has already locked in over 50% of its estimated 2001 production at
 selling prices 60% greater than 2000 prices.  Jim Walter Resources' mining
 operations also continue to show significant improvement as average production
 costs have declined 5% from a year ago.  As announced earlier this month, Jim
 Walter Resources has negotiated price increases of up to 35% over last year's
 business during the current contract renewal period, which occurs between
 March and June of each year.  These new contracts are expected to come online
 between May and July of 2001.
 
     Operational Excellence Activities
     The Company remains on track with its previously announced cost reduction
 and productivity enhancement efforts.  Forty-five employees, designated as
 "black belt" and "green belt" candidates, have completed an intensive training
 program in Six Sigma and Lean Manufacturing methodologies and are currently
 working on cost reduction and quality improvement projects in both
 manufacturing and transactional areas of the Company.  These employees have
 identified and are working on projects that will enable the Company to achieve
 its goal of 5% annual productivity improvement.  These ongoing efforts
 reinforce a company-wide culture of continuous improvement.
     "The Company continues to make progress in other operational initiatives.
 We are aggressively implementing action plans to take advantage of the Natural
 Resources segment's recent strong recovery in coal and gas prices, as well as
 to offset the economy's impact on furnace coke volumes at our Sloss
 subsidiary.  For example, the carbon-related businesses are exploring a number
 of previously untapped marketing and administrative synergies and were
 recently successful in identifying additional export sales opportunities for
 Sloss' furnace coke.  This partially mitigates the reduced domestic demand for
 this product," said DeFosset.
 
     Divestiture Update
     The Company is currently negotiating with interested parties for a
 potential sale of its JW Aluminum Company subsidiary.  As previously
 announced, the Company believes that should an acceptable offer be received, a
 transaction could be finalized during the first half of 2001.
 
     Share Repurchases
     The Company repurchased approximately 526,900 shares of its common stock
 during the quarter ended March 31, 2001. As recently announced, the Walter
 Industries Board of Directors increased the amount available under its buyback
 program to $25 million, of which $22.7 remains available to repurchase shares.
 
     Outlook
     Based on results for the first quarter, current forecasts and anticipated
 market conditions, Walter Industries expects to generate 2001 second quarter
 earnings in the range of $0.23 to $0.26 per share.  The Company has also
 raised its full-year earnings per share expectations to $0.80 to $0.90.  These
 projections do not factor in the potential impact of divestitures or a change
 in goodwill accounting.
 
     Stockholders Meeting
     The Annual Meeting of Stockholders for 2001 will be held April 26, 2001,
 at 10:00 a.m. at the Marriott Tampa Waterside in Tampa, Florida.
 
     Conference Call Webcast
     Walter Industries President 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, April 25, 2001, at 9:00 a.m. EDT.  To listen to the event live or
 in archive, visit the Company Web site at www.walterind.com.
 
     Walter Industries, Inc. is a diversified company with four principal
 operating businesses and annual revenues of  $2.0 billion.  The Company is a
 leader in homebuilding and home financing, water transmission products, energy
 services and specialty aluminum products. Based in Tampa, Florida, the Company
 employs approximately 7,000.  For additional news on the Company or investor
 information, please contact Walter Industries Senior Vice President and
 Treasurer Joseph Troy at (813) 871-4404 or visit the corporate Web site.
 
     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 which 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 and equipment costs
 and availability, changes in customer orders, pricing actions by the Company's
 competitors, and general changes in economic conditions.  Those and other
 risks 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, except per share amounts)
 
                                                     For the three months
                                                         ended March 31,
                                                     2001              2000
     Net sales and revenues:
         Net sales                                 $404,867          $401,451
         Time charge income                          54,087            56,321
         Miscellaneous                                4,501             6,930
                                                    463,455           464,702
 
     Cost and expenses:
      Cost of sales                                 325,462           314,233
      Depreciation                                   16,118            19,471
      Selling, general and administrative            48,583            55,740
      Postretirement benefits                         5,472             5,465
      Interest and amortization of debt
       expense                                       46,767            46,819
      Amortization of goodwill and other
       intangibles                                    9,262             9,212
                                                    451,664           450,940
 
     Income before income tax expense                11,791            13,762
     Income tax expense                              (5,975)           (6,526)
 
     Net income                                      $5,816            $7,236
 
     Add (deduct): Restructuring,
      impairment and other charges
      (credits), net of taxes                           ---            (2,445)
 
     Net income before restructuring,
     impairment and other charges/credits            $5,816            $4,791
 
     Earnings per share:
 
     Net income                                       $0.13             $0.15
     Add (deduct): Restructuring,
      impairment and other charges
      (credits), net of taxes                           ---             (0.05)
     Net income before restructuring,
     impairment and other charges/credits             $0.13             $0.10
 
     Weighted average number of
     diluted shares outstanding                  45,861,604        47,584,292
 
 
                     WALTER INDUSTRIES, INC. AND SUBSIDIARIES
                           RESULTS BY OPERATING SEGMENT
                                 ($ in thousands)
 
                                                      For the three months
                                                        ended March 31,
                                                     2001              2000
     NET SALES AND REVENUES:
     Homebuilding and Financing                    $112,733          $122,244
     Industrial Products                            197,665           196,475
     Energy Services                                 85,620            92,251
     Natural Resources                               66,307            50,607
     Other                                            1,130             3,125
                                                   $463,455          $464,702
 
     OPERATING INCOME:
     Homebuilding and Financing                     $10,103           $12,398
     Industrial Products                             14,837            18,194
     Energy Services                                  5,164             8,770
     Natural Resources                                  607            (8,251)
     Segment operating income                        30,711            31,111
     General corporate expense                        7,604             6,066
     Senior debt interest expense                    11,316            11,283
     Pre-tax income                                 $11,791           $13,762
 
     EBITDA: (1)
     Homebuilding and Financing                     $15,878           $18,777
     Industrial Products                             27,675            30,363
     Energy Services                                  8,973            12,617
     Natural Resources                                6,119              (399)
     Other                                           (6,357)           (5,168)
                                                    $52,288           $56,190
 
     (1) Earnings before senior debt interest, taxes, depreciation,
     amortization and non-cash OPEB.
 
 
                     WALTER INDUSTRIES, INC. AND SUBSIDIARIES
                      RESULTS BY OPERATING SEGMENT, EXCLUDING
               RESTRUCTURING, IMPAIRMENT AND OTHER CHARGES / CREDITS
                                 ($ in thousands)
 
                                                     For the three months
                                                       ended March 31,
                                                     2001              2000
     NET SALES AND REVENUES:
     Homebuilding and Financing                    $112,733          $122,244
     Industrial Products                            197,665           196,475
     Energy Services                                 85,620            92,251
     Natural Resources                               66,307            50,607
     Other                                            1,130             3,125
                                                   $463,455          $464,702
 
     OPERATING INCOME:
     Homebuilding and Financing                     $10,103           $12,398
     Industrial Products                             14,837            18,194
     Energy Services                                  5,164             8,770
     Natural Resources                                  607            (8,251)
     Segment operating income before
      restructuring, impairment and other
      charges/credits                                30,711            31,111
     General corporate expense                        7,604             8,511
     Senior debt interest expense                    11,316            11,283
     Pre-tax income before restructuring,
      impairment and other charges/credits          $11,791           $11,317
 
     Pre-tax income before restructuring,
     impairment and other charges /
      credits                                       $11,791           $11,317
     Add (deduct): Restructuring,
      impairment and other (charges) /
      credits                                           ---             2,445
     Pre-tax income after restructuring,
     impairment and other charges /
      credits                                       $11,791           $13,762
 
     EBITDA: (1)
     Homebuilding and Financing                     $15,878           $18,777
     Industrial Products                             27,675            30,363
     Energy Services                                  8,973            12,617
     Natural Resources                                6,119              (399)
     Other                                           (6,357)           (7,613)
     EBITDA before cash restructuring,
      impairment and other charges/credits           52,288            53,745
     Cash restructuring, impairment and
      other (charges)/credits                           ---             2,445
     EBITDA after cash restructuring,
     impairment and other charges /
      credits                                       $52,288           $56,190
 
     (1)  Earnings before senior debt interest, taxes, depreciation,
     amortization and non-cash OPEB.
 
 
                     WALTER INDUSTRIES, INC. AND SUBSIDIARIES
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                 ($ in thousands)
 
                                                  March 31,        December 31,
                                                     2001              2000
     ASSETS
     Cash and cash equivalents                      $13,612           $11,513
     Short-term investments, restricted             105,351           100,901
     Marketable securities                            2,180             1,980
     Instalment notes receivable, net             1,335,439         1,332,019
     Receviables, net                               239,126           239,620
     Inventories                                    281,880           262,002
     Prepaid expenses                                12,955            13,079
     Property, plant and equipment, net             479,167           480,361
     Investments                                     13,307            13,226
     Deferred income taxes                          112,783           111,818
     Unamortized debt expense                        41,325            42,432
     Other long-term assets, net                     38,658            37,129
     Goodwill, net                                  443,093           452,234
                                                 $3,118,876        $3,098,314
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Accounts payable                              $169,650          $171,949
     Accrued expenses                               113,849           118,644
     Income taxes payable                            67,213            61,027
     Debt:
      Mortgage-backed/asset-backed notes          1,747,021         1,769,833
      Other senior debt                             450,250           411,500
     Accrued interest                                30,320            28,231
     Accumulated postretirement benefits
      obligation                                    290,704           286,903
     Other long-term liabilities                     54,605            54,679
     Stockholders' equity                           195,264           195,548
                                                 $3,118,876        $3,098,314
 
 
                     WALTER INDUSTRIES, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENT OF CASH FLOWS
                                 ($ in thousands)
 
                                                    For the three months ended
                                                    March 31,         March 31,
                                                      2001              2000
     OPERATING ACTIVITIES
     Net income                                      $5,816            $7,236
     Charges to income not affecting cash:
        Depreciation                                 16,118            19,471
        Provision for deferred income
         taxes                                         (965)            5,698
        Accumulated postretirement
         benefits obligation                          3,801             2,461
        Provision for other long-term
         liabilities                                    (74)              156
        Amortization of goodwill and other
         intangibles                                  9,262             9,212
        Amortization of debt expense                  1,440             1,997
                                                     35,398            46,231
     Decrease (increase) in assets:
        Short-term investments, restricted           (4,450)          (19,195)
        Marketable securities                          (200)           42,471
        Instalment notes receivable, net             (3,420)           (9,329)
        Receivables, net                                494            (6,407)
        Inventories                                 (19,878)          (34,347)
        Prepaid expenses                                124            (1,051)
     Increase (decrease) in liabilities:
        Accounts payable                             (2,299)          (14,081)
        Accrued expenses                             (4,795)              656
        Income taxes payable                          6,186            (3,755)
        Accrued interest                              2,089            (1,534)
                  Cash flows from (used
                   in) operating
                   activities                         9,249              (341)
 
     INVESTING ACTIVITIES
        Additions to property, plant and
         equipment, net of retirements              (14,924)          (17,543)
        Decrease (increase) in investments
         and other assets, net                       (1,731)            2,354
                  Cash flows used in
                   investing activities             (16,655)          (15,189)
 
     FINANCING ACTIVITIES
         Issuance of debt                           302,803           184,689
         Retirement of debt                        (286,865)         (180,597)
         Additions to unamortized debt
          expense                                      (333)              ---
         Purchases of treasury stock                 (4,453)          (11,094)
         Dividends paid                              (1,830)           (1,450)
         Net unrealized gain on hedge                   368               ---
         Exercise of employee stock
          options                                       ---                82
                  Cash flows from (used
                   in) financing
                   activities                         9,690            (8,370)
 
     EFFECT OF EXCHANGE RATE ON CASH                   (185)             (725)
 
     Net increase (decrease) in cash and
      cash equivalents                                2,099           (24,625)
     Cash and cash equivalents at
      beginning of period                            11,513            57,508
     Cash and cash equivalents at end of
      period                                        $13,612           $32,883
 
 
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 SOURCE  Walter Industries, Inc.