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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 7, 1997
REGISTRATION NO. 33-59013
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 4 TO
FORM S-1 ON FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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WALTER INDUSTRIES, INC.
(Exact name of registrant as specified in charter)
DELAWARE
(State or other jurisdiction of
incorporation or organization)
6711
(Primary Standard Industrial
Classification Code Number)
13-3429953
(IRS Employer
Identification Number)
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1500 NORTH DALE MABRY HIGHWAY
TAMPA, FL 33607
(813) 871-4811
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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EDWARD A. PORTER, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
WALTER INDUSTRIES, INC.
1500 NORTH DALE MABRY HIGHWAY
TAMPA, FL 33607
(813) 871-4811
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPY OF ALL COMMUNICATIONS, INCLUDING SERVICE OF PROCESS, TO:
PETER J. GORDON, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NY 10017-3909
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / / ____________________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ____________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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PROSPECTUS
29,270,227 SHARES
WALTER INDUSTRIES, INC.
COMMON STOCK
This Prospectus relates to the offering from time to time of up to
29,270,227 shares (the "Shares") of common stock, par value $.01 per share (the
"Common Stock"), that were issued by Walter Industries, Inc. (the "Company" or
"Walter Industries"), a Delaware corporation formerly named Hillsborough
Holdings Corporation, to certain former creditors and stockholders of the
Company and its subsidiaries pursuant to the Company's Amended Joint Plan of
Reorganization dated as of December 9, 1994, as modified on March 1, 1995 (as so
modified, the "Plan of Reorganization"), under Section 1123(a) of the United
States Bankruptcy Code (the "Bankruptcy Code"). The Plan of Reorganization
became effective on March 17, 1995 (the "Effective Date of the Plan of
Reorganization"). Pursuant to the Plan of Reorganization, 50,494,313 shares of
Common Stock, including the Shares, were issued at that time.
The Shares may be sold to the public from time to time by certain holders
thereof (the "Selling Security Holders") in the amount and in the manner
described herein or as may be set forth in a Prospectus Supplement accompanying
this Prospectus. The Company will receive no proceeds from the sale of any of
the Shares by any of the Selling Security Holders. See "Plan of Distribution."
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SEE "CERTAIN RISK FACTORS" FOR INFORMATION CONCERNING CERTAIN RISKS
ASSOCIATED WITH AN INVESTMENT IN ANY OF THE SHARES.
The Company's Common Stock is listed on the Nasdaq National Market under the
symbol "WLTR". On November 5, 1997, the last reported sale price of the Common
Stock on the Nasdaq National Market was $20 3/8 per share.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is November , 1997
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Such reports,
proxy solicitation materials and other information concerning the Company may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the regional offices of the Commission located at Suite 1400, 500 West Madison
Street, Chicago, Illinois 60661-2511 and at Suite 1300, 7 World Trade Center,
New York, New York 10048. Copies of such material can also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 upon payment of the fees prescribed by the Commission.
The Commission maintains a Web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants
such as the Company that file electronically with the Commission. Such reports
and other information also can be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
ADDITIONAL INFORMATION
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Shares offered hereby. This Prospectus,
which forms a part of such Registration Statement, does not contain all the
information set forth in such Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document referred to are not necessarily complete; with respect to each
such contract, agreement or other document filed as an exhibit to such
Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference. Any interested parties may inspect
such Registration Statement, without charge, at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and may obtain copies of all or any part of it from the Commission upon payment
of the fees prescribed by the Commission. Such Registration Statement also can
be inspected at the offices of National Association of Securities Dealers, Inc.,
1735 K Street, N.W., Washington, D.C. 20006. Neither the delivery of this
Prospectus or any Prospectus Supplement nor any sales made hereunder or
thereunder shall under any circumstances create any implication that the
information contained herein or therein is correct as of any time subsequent to
the date hereof or thereof or that there has been no change in the affairs of
the Company since the date hereof or thereof.
PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT
This Prospectus (including the documents incorporated by reference herein)
contains certain forward-looking statements (as such term is defined in the
Private Securities Litigation Reform Act of 1995) and information relating to
the Company that is based on the beliefs of the management of the Company, as
well as assumptions made by and information currently available to the
management of the Company. When used in this Prospectus, the words "estimate,"
"project," "believe," "anticipate," "intend," "expect" and similar expressions
are intended to identify forward-looking statements. Such statements reflect the
current views of the Company with respect to future events and are subject to
risks and uncertainties that could cause actual results to differ materially
from those contemplated in such forward-looking statements. For a discussion of
such risks, see "Certain Risk Factors." Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. The Company does not undertake any obligation to publicly release any
revisions to these forward looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended May 31,
1997 (File No. 000-20537), as amended by the Company's Amendment No. 1 to its
Annual Report on Form 10-K/A, and the Company's Quarterly Report for the quarter
ended August 31, 1997, each filed with the Commission pursuant to the Exchange
Act, are incorporated herein by reference.
All documents and reports subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering made by this Prospectus
shall be deemed to be incorporated by reference herein. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document which is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the documents that are incorporated herein by reference,
other than exhibits to such information (unless such exhibits are specifically
incorporated by reference into such documents). Requests should be directed to
Walter Industries, Inc., Attention: David L. Townsend, Vice
President--Administration, 1500 North Dale Mabry Highway, Tampa, FL 33607,
Telephone (813) 871-4811.
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THE COMPANY
GENERAL
The Company, through its direct and indirect subsidiaries, currently offers
a diversified line of products and services for homebuilding, water and waste
water transmission, coal mining and related degasification, residential and
non-residential construction and industrial products markets. A brief
description of the Company's four major operating groups follows.
The Homebuilding and Financing Group sells, constructs on the customer's
site, and finances detached, single-family, partially finished homes. Sales are
made in approximately 24 states, primarily in the southern part of the United
States. Substantially all of the sales are made on credit provided by the Group.
A credit purchaser must provide his own land and give a first mortgage or deed
of trust to secure payment of the purchase price of the home.
The Water Transmission Products Group is one of the largest domestic
manufacturers of ductile iron pressure pipes and fittings. The Group also
manufactures valves, hydrants, fittings and castings.
The Natural Resources Group engages in coal mining and a related
degasification program. The Group owns four coal mines in Alabama and has the
capacity to produce a total of 9.7 million tons of coal annually. The Group
produced 7.6 million tons of coal in fiscal 1997. A substantial portion of this
output is sold under long-term contracts and the balance is used internally to
produce furnace and foundry coke or sold to other customers on a short-term
contract or spot market basis. The Company does not consider itself to be a
significant factor in the domestic or international coal markets.
The Industrial Products Group produces furnace and foundry grades of coke,
specialty chemicals, slag wool products, aluminum sheet, aluminum foil, window
components, fireplace products and accessories, municipal and original equipment
manufacturer castings, patterns, tooling and resin-coated sand.
The Company's executive offices are located at 1500 North Dale Mabry
Highway, Tampa, Florida 33607. The Company's telephone number is (813) 871-4811.
RECENT HISTORY
The Company was organized in August 1987 by a group of investors led by
Kohlberg Kravis Roberts & Co., L.P. ("KKR") for the purpose of acquiring Jim
Walter Corporation, a Florida corporation ("Original Jim Walter"), pursuant to a
leveraged buyout (the "LBO"). Following its organization, the Company organized
and acquired all of the outstanding shares of capital stock of a group of direct
and indirect wholly owned subsidiaries, including Hillsborough Acquisition
Corporation ("HAC"). On September 18, 1987, HAC acquired approximately 95% of
the outstanding shares of common stock of Original Jim Walter pursuant to a cash
tender offer (the "Tender Offer"). On January 7, 1988, (i) Original Jim Walter
merged (the "Merger") into HAC (which changed its name to Jim Walter
Corporation), (ii) HAC distributed substantially all of its assets (principally
excluding the stock of The Celotex Corporation ("Celotex") and several other
subsidiaries of Original Jim Walter) to a parent corporation of HAC (which was
merged into the Company on April 1, 1991) in redemption of all of the shares of
capital stock of HAC owned by such parent corporation, (iii) HAC merged into its
other stockholder, another indirect wholly owned subsidiary of the Company, and
(iv) the surviving corporation of such merger changed its name to Jim Walter
Corporation (and is hereinafter referred to as "J-II" or "Jim Walter
Corporation").
Following the Merger and prior to the commencement of the Chapter 11 Cases
(as defined below), the Company undertook a program of corporate reorganizations
and asset dispositions, which were contemplated by all of the debt agreements
entered into in connection with the Tender Offer and the Merger. Pursuant to
this program the Company restructured and/or disposed of certain of the
businesses of Original Jim Walter, including the disposition in April 1988 of
all of the stock of the parent corporation of J-II.
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Also during this time, the Company and certain of its subsidiaries and
certain of their former and current directors and officers, stockholders and
other persons and entities which were parties to or beneficiaries of
indemnification agreements and other indemnification obligations of the Company
and its subsidiaries (the "Indemnitees") were named as co-defendants in lawsuits
(the "Veil Piercing Litigation") brought by or on behalf of thousands of persons
("Asbestos Claimants") claiming asbestos-related damages against Celotex
alleging, among other things, that (i) Original Jim Walter, its successors and
other entities, including the Company and certain of its subsidiaries, were
liable for all damages, including asbestos-related damages, caused by products
manufactured, sold and distributed by a predecessor of Celotex, by reason of
claims sounding in veil piercing, alter ego and related theories ("Veil Piercing
Claims"), and (ii) the aforementioned distribution by HAC of substantially all
of its assets pursuant to the LBO constituted a fraudulent conveyance.
On December 27, 1989, the Company and 31 of its subsidiaries each filed a
voluntary petition for reorganization under Chapter 11 ("Chapter 11") of the
Bankruptcy Code with the Bankruptcy Court for the Middle District of Florida,
Tampa Division (the "Bankruptcy Court"); one additional subsidiary also filed a
voluntary petition for reorganization under Chapter 11 with the Bankruptcy Court
on December 3, 1990 (all such voluntary petitions for reorganization are
hereinafter referred to as the "Chapter 11 Cases"). Two other subsidiaries,
Cardem Insurance Co., Ltd. ("Cardem Insurance") and Jefferson Warrior Railroad
Company, Inc. ("J.W. Railroad"), did not file petitions for reorganization under
Chapter 11. The filing of the voluntary petitions resulted from a sequence of
events stemming primarily from an inability of the Company's interest reset
advisors to reset interest rates on approximately $624 million of outstanding
indebtedness, which indebtedness by its terms required that the interest rates
thereon be reset to the rate per annum such indebtedness should bear in order to
have a bid value of 101% of the principal amount thereof as of December 2, 1989.
The reset advisors' inability to reset the interest rates was primarily
attributable to two factors: (i) uncertainties arising from the then-pending
Veil Piercing Litigation, including the possibility either that such litigation
would lead to the prohibition of further asset sales and debt repayment or that
substantial new asbestos-related claims might become assertible against the
Company, which uncertainties materially hindered the ability of the Company and
its subsidiaries to pursue a refinancing or sell assets to reduce debt, and (ii)
general turmoil in the high yield bond markets at such time, both of which
depressed the bid value of such indebtedness.
In January 1990, the Company and each of its subsidiaries which were party
to the Chapter 11 Cases filed a declaratory judgment action (the "Adversary
Proceeding") in the Bankruptcy Court against all known Asbestos Claimants who
had filed Veil Piercing Claims, along with Celotex and Jim Walter Corporation,
seeking a declaration, among other things, that (i) the corporate veil between
Celotex and Original Jim Walter could not be pierced, (ii) the Company could not
be held liable for the asbestos-related liabilities of either Celotex or Jim
Walter Corporation on any grounds and (iii) the LBO could not be deemed a
fraudulent conveyance.
In October 1990, Celotex and one of its subsidiaries filed voluntary
petitions for reorganization under Chapter 11 with the Bankruptcy Court for the
Middle District of Florida, Tampa Division (the "Celotex Bankruptcy Court").
In January 1994, the indenture trustees for certain pre-LBO debentures of
Original Jim Walter assumed by the Company brought an action (the "Fraudulent
Conveyance Lawsuit") for the benefit of the Company's estate and its creditors,
which alleged that the issuance of debt in connection with the LBO constituted a
fraudulent conveyance under New York and Florida law. The plaintiffs sought to
avoid the obligations incurred by the Company and its subsidiaries in the LBO.
On the Effective Date of the Plan of Reorganization the Company and its
subsidiaries emerged from bankruptcy pursuant to the Plan of Reorganization. At
that time, pursuant to the Plan of Reorganization, 50,494,313 shares of Common
Stock were issued to certain former creditors and stockholders of the Company
and its subsidiaries and $490,000,000 aggregate principal amount of the
Company's 12.19%
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Series B Senior Notes Due 2000 (the "Senior Notes") were issued to certain
former creditors of the Company and its subsidiaries. The Senior Notes were
redeemed in full in January 1996. The plan of reorganization originally proposed
by certain creditors and committees (the "Creditors Plan") provided that
subordinated bondholders could elect to receive "Qualified Securities" (cash
and/or Senior Notes) in lieu of Common Stock of the Company. The Plan of
Reorganization confirmed by the Bankruptcy Court, which technically constituted
a modification of the Creditors Plan, kept in place the bondholders' election.
Certain subordinated bondholders, however, were unable to provide documentation
evidencing their right to receive Qualified Securities within the two year time
frame prescribed by the Plan of Reorganization. As a result, approximately
212,000 additional shares of Common Stock were issued in lieu of Qualified
Securities.
Also pursuant to the Plan of Reorganization, (i) the Veil Piercing Claims,
the Veil Piercing Litigation and the Adversary Proceeding, among other things,
were settled after a ruling by the Bankruptcy Court (which was affirmed on
appeal by the United States District Court for the Middle District of Florida)
finding in favor of the Company on every claim asserted in the Adversary
Proceeding and (ii) the Fraudulent Conveyance Lawsuit was settled. This
settlement of the Veil Piercing Litigation (the "Veil Piercing Settlement") was
entered into among the Company, certain of its creditors, Celotex, Jim Walter
Corporation and representatives of the Asbestos Claimants and provided for the
dismissal of all the Veil Piercing Claims and the release of the Company, KKR,
any and all of their present and former parents, subsidiaries, stockholders,
partners, officers, directors and employees and certain other parties
(collectively, the "Released Parties") from all liabilities relating to the LBO
or associated with asbestos-related liabilities of Celotex or Jim Walter
Corporation. The Veil Piercing Settlement is embodied in the Plan of
Reorganization. The Veil Piercing Settlement, among other things, required
Celotex and certain other parties to the Celotex bankruptcy proceedings to
propose and use their respective best efforts to obtain confirmation of a plan
of reorganization for Celotex that included an injunction pursuant to Section
524(g) of the Bankruptcy Code ("Section 524(g)") or other similar injunctive
relief providing the same protection as a Section 524(g) injunction acceptable
to each of the Released Parties.
On October 7, 1996, Celotex and various other parties in the Celotex
bankruptcy announced to the Celotex Bankruptcy Court that an agreement had been
reached between the Asbestos Bodily Injury Claimants Committee and others (the
"Bodily Injury Plan") and the Asbestos Property Damage Claimants Committee (the
"Property Damage Plan") pursuant to which the Bodily Injury Plan proponents
agreed to file with the Celotex Bankruptcy Court a Modified Joint Plant of
Reorganization (the "Modified Plan") which would provide, among other things,
for revised treatment of asbestos property damage claims. In accordance with the
agreement, the Modified Plan was filed with the Celotex Bankruptcy Court on
October 8, 1996 and superseded and replaced the Bodily Injury Plan and the
Property Damage Plan. The Modified Plan provides for a Section 524(g) injunction
as to all asbestos claimants. Such injunctive relief provides the Company with
additional assurance that Veil Piercing Claims cannot be asserted in the future
against the Company. See "Certain Risk Factors-Asbestos-Related Litigation
Settlements."
The Modified Plan was approved by a vote of the Celotex creditors and on
December 6, 1996 the Celotex Bankruptcy Court entered an order confirming the
Modified Plan. The Modified Plan became effective as of May 30, 1997.
See "Certain Risk Factors" for information concerning certain risks
associated with an investment in the Shares.
RECENT BUSINESS DEVELOPMENTS
On October 15, 1997 the Company completed the acquisition of Applied
Industrial Materials Corporation ("AIMCOR"), a leading international provider of
petroleum coke and related value added services, and a supplier of ferroalloys
and other metals. The purchase price was approximately $403 million, subject to
adjustments and certain indemnity obligations of the parties as required by the
Stock
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Purchase Agreement. Also on October 15, 1997 the Company completed a financing
with NationsBank, N.A. ("NationsBank") whereby NationsBank is providing credit
facilities consisting of a $350 million revolving credit facility and a $450
million term loan facility (collectively, the "$800 Million Credit Agreement").
The $800 Million Credit Agreement was used to (a) finance the acquisition of
AIMCOR, (b) replace an existing credit facility, (c) pay transaction costs and
(d) provide ongoing working capital. The $350 million revolving credit facility
includes a sub-facility for trade and other standby letters of credit in an
amount up to $75 million at any time outstanding and a sub-facility for
swingline advances in an amount not in excess of $25 million at any time
outstanding. See "Description of Certain Indebtedness."
In October 1997, the Company and its subsidiary, Jim Walter Resources, Inc.
("JWR"), agreed to settle the lawsuit filed in the Circuit Court for Tuscaloosa
County, Alabama, against certain insurance carriers seeking payment of insurance
pertaining to losses associated with a fire in November 1993 at JWR's Mine No.
5. Under the terms of the settlement, the remaining defendant insurance carriers
will pay the Company and JWR a total of approximately $11.5 million in full and
final settlement of the remainder of the contract claim by the Company and JWR.
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CERTAIN RISK FACTORS
Set forth below are certain significant risks involved in investing in the
Shares offered by this Prospectus. Certain of the matters described below as
well as other factors affecting the Company's businesses generally are described
in the Company's Annual Report on Form 10-K for the year ended May 31, 1997,
which is incorporated herein by reference, under the captions "Business and
Properties" and "Management's Discussion and Analysis of Results of Operations
and Financial Condition" and in certain Notes to the Consolidated Financial
Statements: Note 1 (Recent History), Note 8 (Debt), Note 9 (Income Taxes) and
Note 12 (Litigation) and the Company's Quarterly Report on Form 10-Q for the
quarter ended August 31, 1997, which is incorporated herein by reference, under
the caption "Management's Discussion and Analysis of Results of Operations and
Financial Condition" and in certain Notes to the Consolidated Financial
Statements: Note 3 (Instalment Notes Receivable and Mortgage-Backed/Asset-Backed
Notes) and Note 6 (Subsequent Events).
LEVERAGE
At August 31, 1997, the Company had total consolidated debt of approximately
$2,081,707,000 and a ratio of total consolidated debt to stockholders' equity of
approximately 6.7 to 1.0. Excluding the debt of the business trusts described
below, which debt is secured by and satisfied only from the instalment notes
held by the business trusts, the Company's leverage ratio was 0.8 to 1.0 at
August 31, 1997. The ability of the Company to meet its debt service obligations
will be dependent upon the future performance of the Company, which, in turn,
will be subject to general economic conditions and to financial, competitive,
business and other factors, including factors beyond the Company's control. The
level of the Company's indebtedness could restrict its flexibility in responding
to changing business and economic conditions. Mid-State Homes, Inc., an indirect
wholly owned subsidiary of the Company ("Mid-State Homes"), purchases instalment
notes from Jim Walter Homes, Inc., another indirect wholly owned subsidiary of
the Company ("Jim Walter Homes"), on homes constructed and sold by Jim Walter
Homes and services such instalment mortgage notes. Mid-State Trust II ("Trust
II"), Mid-State Trust III ("Trust III"), Mid-State Trust IV ("Trust IV") and
Mid-State Trust VI ("Trust VI") are business trusts organized by Mid-State
Homes, which owns all the beneficial interest in Trust III, Trust IV and Trust
VI. Trust IV owns all of the beneficial interest in Trust II. The assets of
Trust II, Trust III, Trust IV and Trust VI are not available to satisfy claims
of general creditors of Mid-State Homes or the Company and its other
subsidiaries. The liabilities of Trust II, Trust III, Trust IV and Trust VI for
their publicly issued debt are to be satisfied solely from proceeds of the
underlying instalment notes and are non-recourse to Mid-State Homes and the
Company and its other subsidiaries. On February 27, 1995, Mid-State Homes
established Mid-State Trust V ("Trust V"), a business trust in which Mid-State
Homes owns all the beneficial interest, to provide temporary financing to
Mid-State Homes for its current purchases of instalment notes and mortgages from
Jim Walter Homes. On March 3, 1995, Trust V entered into a Variable Funding Loan
Agreement (the "Mid-State Trust V Variable Funding Loan Agreement") with
Enterprise Funding Corporation, an affiliate of NationsBank N.A., as lender, and
NationsBank N.A. (Carolinas), as Administrative Agent. The agreement provides
for a three-year $500,000,000 credit facility (subsequently reduced to
$400,000,000 on July 31, 1997) (the "Mid-State Trust V Variable Funding Loan")
secured by the instalment notes and mortgages Trust V purchases from Mid-State
Homes. The Company believes that the Mid-State Trust V Variable Funding Loan
Agreement will provide Mid-State Homes with the funds needed to purchase the
instalment notes and mortgages generated by Jim Walter Homes. The Company also
believes that, under present operating conditions, sufficient operating cash
flow will be generated to make all required interest and principal payments and
planned capital expenditures and meet substantially all operating needs. It is
further expected that amounts available under the $800 Million Credit Agreement
(as defined in "Description of Certain Indebtedness--Credit Facilities") will be
sufficient to meet peak operating needs of the Company.
The degree to which the Company is leveraged and the terms governing the
Company's debt instruments, including restrictive covenants and events of
default, could have important consequences to
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holders of the Shares, including the following: (i) the Company's ability to
obtain additional financing in the future for working capital, capital
expenditures, acquisitions, general corporate purposes or other purposes may be
impaired; (ii) a substantial portion of the Company's cash flow from operations
must be dedicated to service its indebtedness; (iii) terms of the Company's debt
instruments restrict the Company's ability to pay dividends and impose other
operating and financial restrictions; (iv) the Company may be more leveraged
than other providers of similar products and services, which may place the
Company at a competitive disadvantage; and (v) the Company's significant degree
of leverage could make it more vulnerable to changes in general economic
conditions. Unexpected declines in the Company's future business, increases in
interest rates or the inability to borrow additional funds for its operations if
and when required could impair the Company's ability to meet its debt service
obligations and, therefore, have a material adverse effect on the Company's
business and future prospects. No assurance can be given that additional debt or
equity funds will be available when needed or, if available, on terms which are
favorable to the Company. Moreover, the terms of the Company's indebtedness
contain change in control provisions which may have the effect of discouraging a
potential takeover of the Company.
Borrowings under the Company's $800 Million Credit Agreement bear interest
at rates that fluctuate. As of October 15, 1997, borrowings under this facility
totaled $685 million. In addition, there were $34.6 million face amount of
letters of credit outstanding thereunder. See "Description of Certain
Indebtedness--Credit Facilities."
DIVIDEND POLICY; RESTRICTIONS ON PAYMENT OF DIVIDENDS
The Company has never paid cash dividends on its Common Stock and has no
present intention of paying any cash dividends on the Common Stock. In addition,
the covenants in certain debt instruments to which the Company is a party
restrict the ability of the Company to pay cash dividends. Under the $800
Million Credit Agreement, the Company may pay dividends in an amount not to
exceed: $10,000,000 plus 50% of Consolidated Net Income (as defined in the $800
Million Credit Agreement) less the amount of any other Restricted Payments (as
defined in the $800 Million Credit Agreement) in any fiscal year provided that
no default under the $800 Million Credit Agreement has occurred or would result
from the payment of such dividends. See "Description of Certain
Indebtedness--Credit Facilities."
HOLDING COMPANY STRUCTURE
The Company has no business operations other than (i) holding the capital
stock of its operating subsidiaries and intermediate holding companies, (ii)
holding cash, cash equivalents and marketable securities and (iii) advancing
funds to, and receiving funds from, its subsidiaries. In repaying its
indebtedness the Company relies primarily on cash flows from its subsidiaries,
including debt service and dividends. The ability of the Company's subsidiaries
to make payments with respect to advances from the Company will be affected by
the obligations of such subsidiaries to their creditors. The ability of such
subsidiaries to pay dividends will be subject to applicable law. The $800
Million Credit Agreement is secured by guarantees and pledges of the capital
stock of all domestic subsidiaries of the Company other than Mid-State Holdings
Corporation and its subsidiary (collectively, "Mid-State Holdings").
RESTRICTIVE COVENANTS
The $800 Million Credit Agreement contains a number of significant covenants
that, among other things, restrict the ability of the Company and its
subsidiaries to dispose of assets, incur additional indebtedness, make capital
expenditures, pay dividends, create liens on assets, enter into leases,
investments or acquisitions, engage in mergers or consolidations, or engage in
certain transactions with subsidiaries and affiliates and that otherwise
restrict corporate activities (including change of control and asset sale
transactions). In addition, under the $800 Million Credit Agreement, the Company
is required to maintain specified financial ratios and comply with certain
financial tests, including fixed charge coverage and maximum leverage ratios,
some of which become more restrictive over time. The $800 Million Credit
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Agreement is secured by guarantees and pledges of the capital stock of all
domestic subsidiaries of the Company other than Mid-State Holdings. The Trust V
Variable Funding Loan Agreement's covenants, among other things, restrict the
ability of Trust V to dispose of assets, create liens and engage in mergers and
consolidations.
The Company currently is in compliance with the covenants and restrictions
contained in its existing debt instruments. However, its ability to continue to
so comply may be affected by events beyond its control. The breach of any of
these covenants or restrictions could result in a default under those debt
instruments, which would permit the lenders or other creditors thereunder to
declare all amounts borrowed thereunder to be due and payable together with
accrued and unpaid interest, would result in the termination of the commitments
of the lenders under the $800 Million Credit Agreement to make further loans and
issue letters of credit and could permit such lenders and other creditors to
proceed against the collateral securing the obligations owing to them. Any such
default could have a significant adverse effect on the market value and the
marketability of the Shares. See "Description of Certain Indebtedness-- Credit
Facilities."
RISKS OF BUSINESS DOWNTURN
Certain of the Company's businesses are affected by general economic or
other factors outside their control. The sales of United States Pipe and Foundry
Company, Inc. ("U.S. Pipe") are dependent to some extent upon the rate of
residential and non-residential building construction and other forms of
construction activity, and are thus subject to certain economic factors such as
general economic conditions, the underlying need for construction projects,
interest rates and governmental incentives provided to building projects. The
cyclical nature of U.S. Pipe's business is offset to some extent by U.S. Pipe's
sales to the replacement market. The replacement market generally fluctuates
less than the rate of new construction and therefore tends to have a stabilizing
influence during a period of depressed construction activity. Jim Walter Homes
is also sensitive to certain general economic and other factors. Its business
has tended to be countercyclical to national home construction activity. In
times of high interest rates or lack of availability of mortgage funds, and thus
limited new home construction, Jim Walter Homes' volume of home sales tends to
increase due to the terms of the financing it offers. However, in times of low
interest rates and increased availability of mortgage funds, Jim Walter Homes'
volume of home sales tends to decrease. Also, in times of low interest rates and
high availability of mortgage funds, additional competition is able to enter the
market. A significant portion of the sales of JWR are made pursuant to long-term
contracts, which tend to stabilize the results of its operations.
ASBESTOS-RELATED LITIGATION SETTLEMENTS
As discussed more fully under "The Company--Recent History," the Company and
the Indemnitees were defendants in the Veil Piercing Litigation and are
beneficiaries of the Veil Piercing Settlement.
In order for a holder of a Veil Piercing Claim or any claim related to the
LBO which is held by any person who has asserted or may in the future assert
Veil Piercing Claims (such claims and Veil Piercing Claims, whether asserted in
the past or in the future, collectively, the "Settlement Claims") to assert that
Settlement Claim against the Company or any of the Indemnitees, such holder
would have to attack (i) the Plan of Reorganization, (ii) the approval of a
class consisting of all present and future holders of Settlement Claims other
than Celotex, including Asbestos Claimants, (iii) the approval of the Veil
Piercing Settlement and (iv) all of the actions taken under the Veil Piercing
Settlement. Because there were no objections to the Plan of Reorganization or
the Veil Piercing Settlement (apart from an objection of the United States
Environmental Protection Agency (the "EPA") concerning the scope of certain
releases affecting government environmental claims, which appeal has been
dismissed), such an attack would have to be based upon an alleged failure to
provide due process under the United States Constitution. The Company believes,
and the Bankruptcy Court has found, that due process requirements have been met.
Should such an attack be sustained, however, the Company, the Indemnitees and
the other Released
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Parties could be exposed to additional liabilities in the future of an
indeterminate, but possibly substantial, amount.
Future holders of Settlement Claims may also attack injunctions issued in
connection with the Veil Piercing Settlement against legal actions against the
Released Parties in respect of Settlement Claims. Such attacks might be on the
grounds that the Bankruptcy Court did not have jurisdiction over such future
claims. The Company believes that the Bankruptcy Court and the Celotex
Bankruptcy Court have jurisdiction to issue "channeling" injunctions barring
such future claims, if any. In addition, the provisions of Section 524(g)
explicitly authorize an injunction barring claims by future claimants asserting
asbestos-related diseases. The Celotex Bankruptcy Court confirmed a plan of
reorganization containing such an injunction, as contemplated by the Veil
Piercing Settlement. That plan of reorganization has been consummated. Section
524(g) is thus an additional basis for preventing future Settlement Claims from
being asserted against the Company, the Indemnitees and the other Released
Parties. However, a future holder of a Settlement Claim may try to attack
Section 524(g) as unconstitutional or try to preclude its application. Should
that happen, the Company, the Indemnitees and the other Released Parties could
be exposed to additional liabilities in the future of an indeterminate, but
possibly substantial, amount.
It is also possible that some constituencies might seek to have the terms of
the Veil Piercing Settlement altered. In the National Gypsum reorganization, the
trust established to settle asbestos claims has sought an order requiring the
reorganized debtor in that case to make additional payments to the trust. The
Company believes that should not happen in its case because the settlement
amount was paid into a separate trust with allocation of such funds to be
decided in the Celotex bankruptcy proceeding pursuant to final court orders in
both cases. Any such request would have to be made to the Bankruptcy Court,
which has previously approved the settlement payment as fair, and/or the Celotex
Bankruptcy Court, which also has previously approved the settlement payment as
fair. However, should such a request be made and granted, the Company, the
Indemnitees and the other Released Parties could be exposed to additional
liabilities in the future of an indeterminate, but possibly substantial, amount.
EFFECT OF FUTURE SALES OF COMMON STOCK
No prediction can be made as to the effect, if any, that future sales of
Shares, or the availability of Common Stock for future sale, will have on the
market price of the Common Stock prevailing from time to time. Sales of
substantial amounts of Common Stock, or the perception that such sales could
occur, could adversely affect prevailing market prices for the Common Stock.
Pursuant to the Plan of Reorganization, an aggregate of 50,494,313 shares of
Common Stock were issued on the Effective Date of the Plan of Reorganization. On
September 13, 1995 (180 days after the Effective Date of the Plan of
Reorganization), 494,313 additional shares of Common Stock were issued to
certain current and former stockholders of the Company and 3,880,140 additional
shares were issued to an escrow account and may be distributed to such
stockholders to the extent that certain contingencies regarding Federal Income
Tax Claims (as defined in "Description of Capital Stock-Additional Stock
Issuances") of the Company are resolved satisfactorily. On July 12, 1997, 9,690
shares of Common Stock were released from escrow and cancelled because certain
former stockholders did not tender their shares of Walter Industries common
stock subject to Chapter 11 proceedings within the two-year time frame
prescribed by the Plan of Reorganization and thus are ineligible to receive the
escrowed shares. Approximately 212,000 shares have been issued to certain
subordinated bondholders who were unable to provide documentation evidencing
their right to receive Qualified Securities within the two-year time frame
prescribed by the Plan of Reorganization. See "Description of Capital
Stock-Additional Stock Issuances." Pursuant to Section 1145 of the Bankruptcy
Code, all of the issued and outstanding shares of Common Stock are freely
tradeable without registration under the Securities Act, except for shares
issued to an "underwriter" (as defined in Section 1145(b) of the Bankruptcy
Code) or subsequently acquired by an "affiliate" of the Company. Except in
limited circumstances, none of the holders of such shares has agreed to restrict
or otherwise limit in any way such holder's ability to dispose of such shares of
Common Stock. See "Description of Capital Stock-Common Stock
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Registration Rights Agreements." No assurance can be given that sales of
substantial amounts of Common Stock will not occur in the foreseeable future or
as to the effect that any such sales, or the perception that such sales may
occur, will have on the market or the market price of the Common Stock.
TAX CONSIDERATIONS
A substantial controversy exists with regard to federal income taxes
allegedly owed by the Company. Proofs of claim have been filed by the Internal
Revenue Service (the "IRS") for taxes, interest and penalties in the amounts of
$110,560,883 with respect to fiscal years ended August 31, 1980 and August 31,
1983 through August 31, 1987, $31,468,189 with respect to fiscal years ended May
31, 1988 (nine months) and May 31, 1989 and $44,837,693 with respect to fiscal
years ended May 31, 1990 and May 31, 1991. These proofs of claim represent total
adjustments to taxable income of approximately $360 million for all tax periods
at issue. Included in the proofs of claim is an adjustment to taxable income
disallowing a deduction of approximately $51 million for hedging losses incurred
during fiscal year 1988. This issue was conceded by the IRS pursuant to a joint
stipulation of parties approved by the Bankruptcy Court by an order dated
January 3, 1997. Objections to the proofs of claim have been filed by the
Company and the various issues are being litigated in the Bankruptcy Court. The
Company believes that the balance of such proofs of claim are substantially
without merit and intends to defend vigorously such claims, but there can be no
assurance as to the ultimate outcome.
Set forth under "Certain Federal Income Tax Consequences" is a description
of certain United States federal income tax consequences to prospective
purchasers expected to result from the purchase, ownership and sale or other
disposition of the Shares under currently applicable law.
CERTAIN CORPORATE GOVERNANCE MATTERS; ANTITAKEOVER LEGISLATION
The Restated Certificate of Incorporation of the Company (the "Charter") and
the Plan of Reorganization provide that until March 17, 1998 the Board of
Directors of the Company shall have nine members, two of whom must be
Independent Directors (as defined in the Charter), three of whom (currently
Kenneth E. Hyatt, Richard E. Almy and James W. Walter (a non-employee director
as of October 6, 1995)) are to be selected by the remaining directors from the
senior officers of the Company, two of whom must be designated by KKR, an
affiliate of certain principal stockholders of the Company, and two of whom must
be designated by Lehman Brothers Inc. ("Lehman"), whose affiliate Lehman
Brothers Holdings, Inc. ("Lehman Holdings") is another principal stockholder of
the Company (except that (i) in certain circumstances KKR will have the right to
compel the resignation of one of Lehman's designees and designate the successor,
(ii) in certain circumstances Lehman will have the right to compel the
resignation of one of KKR's designees and designate the successor and (iii)
Lehman's or KKR's designees must resign if Lehman or KKR, as the case may be,
cease to beneficially own a specified equity interest in the Company). As a
result of the foregoing provision, stockholders of the Company other than Lehman
and KKR will not have the ability to elect any of the Company's directors prior
to March 17, 1998.
In addition, the Charter and the Company's By-laws provide that until March
17, 1998 each committee of the Board of Directors (other than the Tax Oversight
Committee) must include a number of directors designated by KKR and Lehman,
respectively, so that each of KKR and Lehman has representation on the committee
proportionate to its representation on the Board of Directors. The Charter
provides that the foregoing provision and certain other provisions of the
By-laws cannot be amended by the Board of Directors prior to March 17, 1998,
unless 67% of the whole Board of Directors votes in favor of the amendment.
The foregoing provisions would, among other things, impede the ability of a
third party to acquire control of the Company by seeking election of its
nominees to the Board of Directors.
In addition, Section 203 ("Section 203") of the Delaware General Corporation
Law (the "DGCL") provides that, subject to certain exceptions specified therein,
an "interested stockholder" of a Delaware
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corporation shall not engage in any business combination, including mergers or
consolidations or acquisitions of additional shares of the corporation, with the
corporation for a three-year period following the date on which such stockholder
becomes an "interested stockholder" unless (i) prior to such date, the board of
directors of the corporation approved either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder," (ii) upon consummation of the transaction which resulted in the
stockholder becoming an "interested stockholder," the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at the
time the transaction commenced (excluding certain shares), or (iii) on or
subsequent to such date, the business combination is approved by the board of
directors of the corporation and authorized at an annual or special meeting of
stockholders by the affirmative vote of at least 66-2/3% of the outstanding
voting stock which is not owned by the "interested stockholder." Except as
otherwise specified in Section 203, an "interested stockholder" is defined to
include (x) any person that is the owner of 15% or more of the outstanding
voting stock of the corporation, or is an affiliate or associate of the
corporation and was the owner of 15% or more of the outstanding voting stock of
the corporation at any time within three years immediately prior to the relevant
date and (y) the affiliates and associates of any such person.
Under certain circumstances, Section 203 makes it more difficult for a
person who would be an "interested stockholder" to effect various business
combinations with a corporation for a three-year period, although the
stockholders may elect to exclude a corporation from the restrictions imposed
thereunder. The Charter does not exclude the Company from the restrictions
imposed under Section 203. The provisions of Section 203 may encourage companies
interested in acquiring the Company to negotiate in advance with the Board of
Directors because the stockholder approval requirement would be avoided if a
majority of the directors then in office approve either the business combination
or the transaction which results in the stockholder becoming an interested
stockholder. Such provisions also may have the effect of preventing changes in
the management of the Company. It is possible that such provisions could make it
more difficult to accomplish transactions which stockholders may otherwise deem
to be in their best interests.
For purposes of Section 203, the Board of Directors has approved the
transaction (the consummation of the Plan of Reorganization) which resulted in
Lehman and the Celotex Settlement Fund Recipient becoming "interested
stockholders" and, accordingly, the Company believes that neither of them will
be subject to the restrictions of Section 203 unless it ceases to be the owner
of 15% or more of the outstanding voting stock of the Company and seeks to
reattain such level of ownership. The Board of Directors also approved the
purchase of Common Stock by Channel One Associates, L.P., a limited partnership,
the general partner of which is KKR Associates, L.P. ("Channel One"), and its
affiliates and associates of 15% or more of the outstanding voting stock of the
Company through open market purchases or otherwise. Accordingly, the Company
believes that none of Channel One and its affiliates and associates (including
JWC Associates, L.P., JWC Associates II, L.P. and KKR Partners II, L.P. (the
"KKR Investors")) will be subject to the restrictions of Section 203. In
connection with the above-described approval of the Board of Directors, Channel
One and the KKR Investors agreed with the Company that they will not, and will
not permit any of their affiliates to, vote any shares of Common Stock of the
Company or otherwise take any other action to modify the composition of the
Board of Directors of the Company prior to April 6, 1998 other than as expressly
provided for in the Company's Charter and the Plan of Reorganization and that
during such period they will not participate in the solicitation of proxies to
vote, or seek to advise or influence any person with respect to voting
securities of the Company to modify the composition of the Board of Directors,
or propose, assist in or encourage any person in connection with any of the
foregoing.
ENVIRONMENTAL MATTERS
The Company and its subsidiaries are subject to a wide variety of laws and
regulations concerning the protection of the environment, both with respect to
the construction and operation of many of its plants, mines and other
facilities, and with respect to remediating environmental conditions that may
exist at its
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own and other properties. The Company believes that it and its subsidiaries are
in substantial compliance with federal, state and local environmental laws and
regulations. Expenditures for compliance of ongoing operations and for
remediation of environmental conditions arising from past operations in the
fiscal year ended May 31, 1997 and May 31, 1996 were approximately $6.8 million
and $5.1 million, respectively. Because environmental laws and regulations on
the federal, state and local levels continue to evolve, and because conditions
giving rise to obligations and liabilities under environmental laws are in some
circumstances not readily identifiable, it is difficult to forecast the amount
of such future environmental expenditures or the effects of changing standards
on future business operations. Consequently, the Company can give no assurance
that such expenditures will not be material in the future. Capital expenditures
for environmental requirements are anticipated to average approximately $6.0
million per year in the next five years.
U.S. Pipe, a wholly owned subsidiary of the Company, has implemented an
Administrative Consent Order ("ACO") for its Burlington, New Jersey plant that
was required under the New Jersey Environmental Cleanup Responsibility Act (now
known as the Industrial Site Recovery Act) in connection with the completion of
the LBO. The ACO required soil and ground water cleanup. U.S. Pipe has
completed, pending final approval, the soil cleanup required by the ACO. U.S.
Pipe also has completed, pending final approval, ground water treatment as
ordered in the ACO. Ground water monitoring as required by the ACO continues. It
is not known how long ground water monitoring will be required. Management does
not believe any further cleanup costs will have a material adverse effect on the
financial condition or results of operations of the Company and its
subsidiaries.
The Federal Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA"), generally imposes liability, which may be joint and several and
is without regard to fault or the legality of waste generation or disposal, on
certain classes of persons, including owners and operators of sites at which
hazardous substances are released into the environment (or pose a threat of such
release), persons that disposed or arranged for the disposal of hazardous
substances at such sites, and persons who owned or operated such sites at the
time of such disposal. CERCLA authorizes the United States Environmental
Protection Agency (the "EPA"), the states and, in some circumstances, private
entities to take actions in response to public health or environmental threats
and to seek to recover the costs they incur from the same classes of persons.
Certain governmental authorities can also seek recovery for damages to natural
resources. Currently, U.S. Pipe has been identified as a potentially responsible
party ("PRP") by the EPA under CERCLA with respect to cleanup of hazardous
substances at two sites to which its wastes allegedly were transported. U.S.
Pipe is one of many PRP's at such sites and is in the process of preliminary
investigation of its relationship to these sites, if any, to determine the
nature of its potential liability and amount of remedial costs to clean up such
sites. Although no assurances can be given that U.S. Pipe will not be required
in the future to make material expenditures relating to these sites, management
does not believe at this time that the cleanup costs it will be called on to
bear, if any, associated with these sites will have a material adverse effect on
the financial condition or results of operations of the Company and its
subsidiaries. Management believes the extent of U.S. Pipe's involvement, if any,
to be minor in relation to that of other named PRP's, a significant number of
which are substantial companies.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
CREDIT FACILITIES
In conjunction with the closing of the AIMCOR acquisition, on October 15,
1997 the Company completed an $800 million financing with NationsBank, National
Association. The financing consisted of a $350 million revolving credit facility
("Revolving Credit Facility") and a $450 million six-year term loan (the "Term
Loan"). Proceeds from the financing were used to (a) finance the acquisition of
AIMCOR, (b) pay transaction costs, (c) provide ongoing working capital and (d)
replace an existing bank credit facility. The $800 Million Credit Agreement is
secured by guarantees and pledges of the capital stock of all domestic
subsidiaries of the Company other than Mid-State Holdings. Net cash proceeds
from (a) asset sales where the aggregate consideration received exceeds
$20,000,000 and the cumulative amount of such proceeds from such sales since the
most recent preceding prepayment equals or exceeds $5,000,000, (b) each
Permitted Receivables Securitization (as defined in the $800 Million Credit
Agreement) or (c) the issuance of Consolidated Indebtedness (as defined in the
$800 Million Credit Agreement) permitted thereunder must be applied to
permanently reduce the $800 Million Credit Agreement. There have been no such
proceeds to date. The Revolving Credit Facility has a term of six years and the
Term Loan amortizes over a six-year period. Scheduled principal payments to be
made on the Term Loan in each of the six years commencing October 15, 1998 are
$25,000,000, $50,000,000, $75,000,000, $75,000,000, $100,000,000 and
$125,000,000, respectively.
The $800 Million Credit Agreement contains a number of covenants, including
restrictions on liens, indebtedness, leases, mergers, sales or dispositions of
assets, investments, dividends, repurchases of shares of capital stock,
prepayment of indebtedness and capital expenditures, as well as financial
covenants with respect to leverage ratios, and fixed charge coverage ratios. The
borrowers are required to maintain a leverage ratio (the ratio of indebtedness
to consolidated EBITDA) of not more than 3.90 to 1 for the measurement period
ending May 30, 1998, 3.75 to 1 for the measurement period commencing May 31,
1998 and ending May 30, 1999 and 3.25 to 1 thereafter. The borrowers' fixed
charge coverage ratio (the ratio of (a) EBITDA minus capital expenditures to (b)
the sum of all required principal payments on outstanding indebtedness, interest
expense and dividends paid) is required to be at least 1.25 to 1 at the end of
each Four Quarter Period (as defined in the $800 Million Credit Agreement) for
the duration of the $800 Million Credit Agreement. Compliance by the borrowers
with the above-referenced measures is required under the $800 Million Credit
Agreement beginning with the period ending February 28, 1998.
Borrowings under the Company's $800 Million Credit Agreement bear interest
at rates that fluctuate. As of October 15, 1997, borrowing under the $800
Million Credit Agreement totaled $685 million. In addition, there were $34.6
million face amount letters of credit outstanding thereunder.
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DESCRIPTION OF CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
The Company's authorized capital stock consists of 200,000,000 shares of
Common Stock, par value $.01 per share. On June 24, 1997, the Company
repurchased 1,387,092 shares of outstanding Common Stock and such shares are
being held as treasury stock. At August 15, 1997, there were 53,681,297 shares
of Common Stock issued and outstanding. See "Additional Stock Issuances" below.
Harris Trust and Savings Bank is the transfer agent and registrar for the Common
Stock.
COMMON STOCK
The holders of the Common Stock are entitled to one vote for each share held
of record on all matters as to which stockholders are entitled to vote. There
are no cumulative voting rights in the election of directors. The quorum
required at any stockholders' meeting for consideration of any matter is a
majority of the issued and outstanding shares of Common Stock, represented in
person or by proxy.
Holders of the Common Stock are entitled to receive dividends when, as and
if declared by the Board of Directors out of funds legally available for
dividends. See "Certain Risk Factors--Dividend Policy; Restrictions on Payment
of Dividends". In the event of any liquidation, dissolution or winding up of the
Company, the holders of the Common Stock are entitled to receive pro rata any
assets distributable to stockholders in respect of shares held by them, after
payment of all obligations of the Company.
The outstanding shares of the Common Stock (including the Shares offered
hereby) are duly authorized, validly issued, fully paid and nonassessable.
ADDITIONAL STOCK ISSUANCES
Pursuant to the Plan of Reorganization, the Company was or may be required
to issue additional Common Stock to the holders of common stock of the Company
immediately prior to the Effective Date of the Plan of Reorganization ("Original
Stockholders") on the dates and in the amounts described below, in each case on
a pro rata basis. Solely for the purpose of calculating the number of shares to
be issued in these issuances, such additional Common Stock will be valued at a
price per share of $22.86 (the "Common Stock Value Per Share"). Original
Stockholders have received and will be entitled to receive shares of Common
Stock as follows:
(A) On the date on which a final, non-appealable order is entered
resolving the total amount of claims of the IRS against the Company or any
of its subsidiaries (other than Cardem Insurance and J.W. Railroad) arising
prior to the Effective Date of the Plan of Reorganization and entitled to
priority under Section 507(a)(7) of the Bankruptcy Code ("Federal Income Tax
Claims"), the Original Stockholders will receive Common Stock with an
aggregate Common Stock Value Per Share equal to the amount by which the
total amount of the Federal Income Tax Claims is reduced below $27 million
(the "Federal Income Tax Claims Differential"). Such Common Stock shall be,
first, issued by the Company directly to the Original Stockholders up to a
number of shares having an aggregate Common Stock Value Per Share equal to
the excess, if any, of (A) $88.7 million over (B) the aggregate Common Stock
Value Per Share of all shares of Common Stock theretofore issued into escrow
as described in the next paragraph, and second, be satisfied by the release
from such escrow of any remaining shares of Common Stock issuable to
Original Stockholders pursuant to such provisions.
(B) The Plan of Reorganization provides that if, on or prior to August
24, 1995 (the 160th day following the Effective Date of the Plan of
Reorganization), (i) one or more Veil Piercing Settlement Tax Savings Events
(as defined below) had not occurred in respect of (and the Tax Oversight
Committee had not determined) the maximum Veil Piercing Settlement Tax
Savings Amount (as defined below) that could result from a good faith claim
by the Company's consolidated tax group of both (a) a refund with respect to
tax years prior to the tax year in which the Effective Date of the Plan
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of Reorganization occurred, and (b) a deduction with respect to the tax year
in which the Effective Date of the Plan of Reorganization occurs
(collectively, the "Initial Claim"), or (ii) the Company had not issued and
delivered into escrow with an escrow agent selected by the Company, Lehman
and AIF II, L.P., certain of its affiliates and certain accounts controlled
or managed by such affiliates (AIF II, L.P., such affiliates and accounts,
collectively, "Apollo") certificates representing shares of Common Stock
having an aggregate Common Stock Value Per Share equal to the full amount of
such maximum Veil Piercing Settlement Tax Savings Amount, then not later
than September 13, 1995 (the 180th day after the Effective Date of the Plan
of Reorganization) the Company was to issue and deliver into escrow
certificates representing Common Stock having an aggregate Common Stock
Value Per Share equal to the sum of (i) that part of the Veil Piercing
Settlement Tax Savings Amount arising from the Initial Claim in respect of
which shares of Common Stock had not theretofore been issued into escrow, as
such Veil Piercing Settlement Tax Savings Amount (whether or not a Veil
Piercing Settlement Tax Savings Event shall previously have occurred) was
estimated in good faith by the Chief Financial Officer of the Company and
set forth in a certificate delivered to the Tax Oversight Committee (and
such amount shall be the Veil Piercing Settlement Tax Savings Amount for
purposes of provisions described in this sentence) and (ii) an additional
amount equal to the lesser of (a) $13 million and (b) an amount that would
cause the total number of shares of Common Stock to be issued into escrow to
have an aggregate Common Stock Value Per Share equal to $88.7 million. A
"Veil Piercing Settlement Tax Savings Event" is any filing by the Company's
consolidated tax group or any member thereof of a tax return for a tax year
ending on or after May 31, 1995 or a claim for refund or deduction for a tax
year ending prior to May 31, 1995 on which a Veil Piercing Settlement Tax
Savings Amount was claimed. A "Veil Piercing Settlement Tax Savings Amount"
is the difference between (i) the aggregate amount of federal, state and
local tax payable by members of the Company's consolidated group as reported
on such members' relevant tax returns and (ii) the aggregate amount of
federal, state and local income tax that would have been reported on such
returns if the distribution under the Veil Piercing Settlement Agreement had
not been made, as determined by the Tax Oversight Committee. The Company
believes that it may properly deduct in full the payment made under the Plan
of Reorganization to Celotex, in its capacity as the Celotex Settlement Fund
Recipient, but there can be no assurance that the IRS will not challenge the
deduction and, if it does so, whether such challenge will succeed. On August
23, 1995, the Chief Financial Officer of the Company delivered the
aforementioned certificate to the Tax Oversight Committee, and on September
13, 1995 the Company delivered 3,880,140 shares of Common Stock into escrow.
The number of shares delivered in escrow was derived by dividing the
requisite amount of aggregate Common Stock Value Per Share ($88.7 million),
calculated as described above, by a negotiated per share valuation of $22.86
which was based upon a valuation of the Company (the "Net Enterprise Value")
negotiated by the various parties to the Plan of Reorganization. The Net
Enterprise Value, after certain adjustments, was divided by 50 million
shares anticipated to be issued pursuant to the Plan of Reorganization to
the creditors and Original Stockholders to derive the Common Stock Value Per
Share.
The Original Stockholders, on a pro rata basis, are entitled to exercise
all voting rights of, and receive all dividends and other distributions on,
Common Stock held in escrow. The amount of such dividends and other
distributions must be returned to the Company if such shares are
subsequently cancelled prior to release from escrow. Such shares will be
released from escrow as soon as practicable after the Tax Oversight
Committee determines that the applicable Veil Piercing Settlement Tax
Savings Amount is no longer subject to adjustment because (i) the statutory
period during which assessments (or denial of a refund claim) can be made
with respect to such Veil Piercing Settlement Tax Savings Amount has passed,
(ii) the Company and the IRS or other relevant taxing authority have entered
into a closing or similar agreement governing the years or issues in
question with respect to such Veil Piercing Settlement Tax Savings Amount,
or (iii) a court decision determining the income tax liability (or the right
to such refund) with respect to such Veil Piercing Settlement Tax Savings
Amount has been rendered and the time period for the filing of an appeal has
passed.
17
<PAGE>
Notwithstanding and in addition to the foregoing, the Plan of
Reorganization provides that $11.3 million of Common Stock (as calculated
using the Common Stock Value Per Share) be issued directly to the Original
Stockholders on a pro rata basis at the same time as shares of Common Stock
are first issued into escrow; accordingly, on September 13, 1995, the
Company issued 494,313 shares of Common Stock to the Original Stockholders
on a pro rata basis.
The Plan of Reorganization limits the number of shares issuable under the
provisions described in (A) and (B) above to that number of shares of Common
Stock that, when added to the shares issued to the Original Stockholders on the
Effective Date of the Plan of Reorganization, has an aggregate Common Stock
Value Per Share of $250 million. The Plan of Reorganization contains an
arbitration provision for the final determination of any dispute that may arise
between KKR (the principal Original Stockholder) and the Tax Oversight Committee
with respect to any determination made by the Tax Oversight Committee regarding
the provisions of the Plan of Reorganization described in (B) above. The Plan of
Reorganization also provides that, for purposes of the Federal Income Tax Claims
Differential, the amount of Federal Income Tax Claims shall not be reduced by
any Veil Piercing Settlement Tax Savings Amount and that any terms of any
settlement or agreement regarding Federal Income Tax Claims shall not be agreed
to by the Company or any subsidiary thereof without the prior consent of the Tax
Oversight Committee.
Pursuant to the Plan of Reorganization, a total of 54,868,766 shares of
Common Stock were issued to creditors and former stockholders of the Company.
The Creditors Plan provided that subordinated bondholders could elect to receive
"Qualified Securities" (cash and/or new Senior Notes) in lieu of Common Stock of
the Company. The Plan of Reorganization confirmed by the Bankruptcy Court, which
technically constituted a modification of the Creditors Plan, kept in place the
bondholders' election. Certain subordinated bondholders, however, were unable to
provide documentation evidencing their right to receive Qualified Securities
within the two-year time frame prescribed by the Plan of Reorganization. As a
result, approximately 212,000 additional shares of Common Stock were issued in
lieu of Qualified Securities in 1997. In addition, certain former stockholders
did not tender their shares, which resulted in approximately 17,000 shares not
being issued. On July 12, 1997, 9,690 shares of Common Stock were released from
escrow and cancelled because certain former stockholders did not tender their
shares of Walter Industries Common Stock subject to Chapter 11 proceedings
within the two-year time frame prescribed by the Plan of Reorganization and thus
were ineligible to receive the escrowed shares.
The Company is authorized to issue additional shares of capital stock from
time to time. There are no specific restrictions upon such issuances, except
that the Charter prohibits the issuance of non-voting equity securities if, and
only to the extent that and so long as, Section 1123 of the Bankruptcy Code is
applicable and would prohibit such issuance. The Company's stockholders will not
have preemptive rights to purchase additional shares of capital stock of the
Company upon any issuance of such shares authorized by the Board.
STOCKHOLDER'S AGREEMENT
Pursuant to the Stockholder's Agreement dated as of the Effective Date of
the Plan of Reorganization (the "Stockholder's Agreement") between the Company
and the Celotex Settlement Fund Recipient, the Celotex Settlement Fund Recipient
has agreed that it or its successor, in any vote or action by written consent by
holders of Common Stock on any matter submitted to a vote of holders of Common
Stock, will vote, and execute written consents with respect to, the shares of
Common Stock held by it for and/or against such matter in proportion to the
votes cast or consents executed and delivered by all other holders of Common
Stock. Identical restrictions on the voting of the Celotex Settlement Fund
Recipient's Common Stock are contained in the Charter and in the Plan of
Reorganization. Pursuant to the Stockholder's Agreement, the Celotex Settlement
Fund Recipient further agreed not to, and to cause its affiliates not to, offer,
sell, assign, give, pledge, encumber or otherwise dispose of any shares of its
Common Stock or any interest therein or right thereto to any person that is a
successor to or creditor of the Celotex Settlement Fund Recipient or a creditor
of Celotex (any such creditor, a "Celotex Settlement
18
<PAGE>
Fund Beneficiary"), in such person's capacity as such, unless such person
executes and delivers an instrument, in form and substance reasonably
satisfactory to the Company, pursuant to which it agrees to be bound by the
Stockholder's Agreement to the same extent as the Celotex Settlement Fund
Recipient. Pursuant to the Modified Plan, the shares of Common Stock held of
record by the Celotex Settlement Fund Recipient are vested in the Asbestos
Settlement Trust. The Asbestos Settlement Trust has agreed to be bound by the
Stockholder's Agreement to the same extent as the Celotex Settlement Fund
Recipient.
TAG-ALONG AND VOTING RIGHTS AGREEMENT
Pursuant to the Tag-Along and Voting Rights Agreement dated as of the
Effective Date of the Plan of Reorganization (the "Tag-Along and Voting Rights
Agreement") among Celotex, on behalf of the Celotex Settlement Fund Recipient,
Apollo and Lehman (collectively, the "Tag-Along Stockholders") each Tag-Along
Stockholder agreed that if it proposes to dispose of any Common Stock held by it
on the Effective Date of the Plan of Reorganization to any third party (other
than transactions described below), the other Tag-Along Stockholders will have
the right to include the shares of Common Stock held by them on the Effective
Date of the Plan of Reorganization in such disposition transaction on the same
terms and conditions, provided, however, that if the initiating Tag-Along
Stockholder is Lehman or Apollo, then Lehman or Apollo, respectively, will not
be entitled to participate in such disposition transaction. If the Tag-Along
Stockholders collectively desire to sell more shares of Common Stock than the
proposed purchaser desires to purchase, each Tag-Along Stockholder shall sell a
pro rata number of its shares. The foregoing does not apply to any transaction
effected on a national securities exchange, on the National Association of
Securities Dealers Automated Quotation System or through a registered broker-
dealer or made pursuant to a public offering under an effective registration
statement under the Securities Act. The foregoing also does not apply to any
disposition by a Tag-Along Stockholder to an affiliate or by the Celotex
Settlement Fund Recipient to a successor or a Celotex Settlement Fund
Beneficiary. The parties have agreed that any of their transferees which is an
affiliate or, in the case of the Celotex Settlement Fund Recipient, a successor
or a Celotex Settlement Fund Beneficiary must, prior to such transfer, agree in
writing to be bound by the Tag-Along and Voting Rights Agreement as if it had
been an original party thereto.
The Celotex Settlement Fund Recipient also has agreed, and will cause each
of its affiliates, to vote and execute written consents with respect to their
shares of Common Stock in proportion to the votes cast or consents executed and
delivered by all other holders of Common Stock, in any vote or action by written
consent by holders of Common Stock.
COMMON STOCK REGISTRATION RIGHTS AGREEMENTS
The Company has entered into a Registration Rights Agreement, dated as of
the Effective Date of the Plan of Reorganization (the "Common Stock Registration
Rights Agreement"), with certain holders (Lehman Brothers, Inc., JWC Associates,
L.P., JWC Associates II, L.P., KKR Partners II, L.P., Kenneth J. Matlock, James
W. Walter, William H. Weldon, William N. Temple, Donald M. Kurucz, Robert W.
Michael, William Carr, Sam J. Salario, David L. Townsend and Celotex,
collectively, the "Common Stock Holders") of Common Stock pursuant to which the
Company agreed to file an initial shelf registration statement (the "Initial
Shelf Common Stock Registration Statement") and the Registration Statement of
which this Prospectus forms a part (the "Second Common Stock Shelf
Registration") and use its reasonable best efforts to keep such Second Common
Stock Shelf Registration continuously effective for up to nine months.
After each period of effectiveness, one or more Common Stock Holders may
request to have all or part of their Common Stock as to which registration
pursuant to the Securities Act is required for public sale ("Registrable Common
Stock") registered under the Securities Act, and all other Common Stock Holders
have the right to participate in any such registration; provided that (i) the
Company is not required to effect more than two such registrations, (ii) no such
registration may be requested within 180
19
<PAGE>
days of the effectiveness of any such earlier registration or a registration as
to which Common Stock Holders have "piggyback" registration rights (as discussed
below), (iii) the Company is not required to effect any such registration unless
at least 5% of the shares of Registrable Common Stock outstanding at the time of
such request is to be included in such registration and (iv) if the intended
method of distribution is an underwritten public offering, the Company may
require the underwriting to be conducted on a "firm commitment" basis. Any such
requested registration may be effected pursuant to a shelf registration
statement under Rule 415 of the Securities Act (a "Shelf Registration"); any
such registration (other than a Shelf Registration, which must be kept effective
by the Company for up to one year, if made pursuant to the first demand under
the provisions described in this paragraph or nine months otherwise) need not be
kept effective by the Company for more than 90 days. If the intended method of
distribution is an underwritten public offering, the underwriters must be
nationally recognized, selected by Common Stock Holders owning at least a
majority of the shares of Registrable Common Stock being registered (the
"Majority Selling Common Stock Holders") and reasonably acceptable to the
Company. In addition, if the managing underwriter advises the Company in writing
that, in its opinion, the number of shares requested to be registered exceeds
the number that can be sold within a price range specified by the Majority
Selling Common Stock Holders, the shares requested to be included by Common
Stock Holders shall be included in the registration on a pro rata basis in
preference to any other shares which the Company or any person wishes to include
in such registration.
The KKR Investors and Lehman Holdings, as Common Stock Holders which own
more than 5% of the shares of Registrable Common Stock outstanding, have
exercised the first of the two demand registration rights described above and
have agreed with the Company that such demand shall be satisfied by the Company
causing the Initial Common Stock Shelf Registration to remain effective beyond
the first anniversary of the effective date of the Initial Common Stock Shelf
Registration for an additional year.
If the Company at any time following the termination of the Initial Common
Stock Shelf Registration proposes to register any of its securities under the
Securities Act (other than any registration of any securities on Form S-4 or
Form S-8), the Common Stock Holders have the right, pursuant to a written
request submitted within 20 days (10 days in certain circumstances) of receipt
of notice thereof from the Company, to participate in such registration.
Upon a request of Common Stock Holders owning at least a majority of the
shares of Registrable Common Stock requested to be included in a demand or
"piggyback" registration made at any time on or after March 17, 1996, the
Company has agreed to use its best efforts to (i) cause the Common Stock covered
by such registration to be listed on a national securities exchange or to be
quoted through NASDAQ or (ii) provide for at least two market makers for the
Common Stock.
All expenses of the Company in connection with the performance of its
obligations under the Common Stock Registration Rights Agreement and the
reasonable fees, disbursements and other charges of one firm of counsel (per
registration) selected by the Majority Selling Common Stock Holders (but
excluding underwriting discounts and commissions and transfer taxes) shall be
borne by the Company, except where some or all of the Common Stock Holders
withdraw or terminate their requests prior to the registration statement
becoming effective, in which case such Common Stock Holders shall be required to
bear some or all of such expenses, provided that if the Company elects not to
proceed with a registration as to which Common Stock Holders have "piggyback"
registration rights as described above or elects not to proceed with any
registration as described in the second succeeding paragraph, the Company must
bear all reasonable out-of-pocket costs (other than counsel fees, disbursements
and other charges not specifically referred to above) incurred by a Common Stock
Holder in connection with such terminated registration. In addition, pursuant to
the Common Stock Registration Rights Agreement, the Company has agreed to
indemnify each offeror of Registrable Common Stock covered by a registration
statement filed pursuant to the Common Stock Registration Rights Agreement, each
other person who participates as an underwriter in such offering, each other
person who controls such offerors or underwriters and their respective
20
<PAGE>
directors, officers, partners, agents and affiliates against certain
liabilities, including liabilities under the Securities Act.
The Company is not obligated to file any registration statement under the
Common Stock Registration Rights Agreement or any amendment or supplement
thereto (other than the Registration Statement of which this Prospectus forms a
part and amendments and supplements thereto) and may suspend any seller's rights
to make sales pursuant to any effective registration statement (provided that
the right to effect sales pursuant to the Registration Statement of which this
Prospectus forms a part may not be suspended prior to the ninetieth day
following the date hereof) at any time when the Company, in the good faith
judgment of its Board of Directors, reasonably believes that the filing thereof
at the time requested, or the offering of securities thereto, would adversely
affect a pending or proposed public offering of the Company's securities, a
material financing, or a material acquisition, merger, recapitalization,
consolidation, reorganization or similar transaction, or negotiations,
discussions or pending proposals with respect thereto. Such a deferral of the
filing of a registration statement or an amendment or supplement thereto or
suspension of a seller's right to effect sales may continue for no more than 10
days after the abandonment or consummation of any of the foregoing proposals or
transactions or 60 days after the date of the Board's determination referred to
in the preceding sentence. In the event of such a suspension, the applicable
registration period will be extended by the number of days of the suspension.
LOCK-UP AGREEMENTS
Pursuant to the Common Stock Registration Rights Agreement, each Common
Stock Holder has agreed, if required by the managing underwriter of any
underwritten offering and except as required otherwise under applicable law, not
to sell any equity securities of the Company during the 10 days preceding or 120
days following the effective date of an underwritten registration under the
Common Stock Registration Rights Agreement. The Company has agreed not to (and
to cause certain other holders of equity securities acquired after the Effective
Date of the Plan of Reorganization to agree not to) effect any public offering
and sale of Common Stock pursuant to an effective registration statement during
such period of time.
CHANNEL ONE REGISTRATION RIGHTS AGREEMENT
The Company has entered into a Registration Rights Agreement dated as of
September 12, 1995 (the "Channel One Registration Rights Agreement") with
Channel One pursuant to which the Company has agreed to include in the Initial
Common Stock Shelf Registration all shares of Common Stock owned by Channel One.
The Company has also agreed to include all shares of Common Stock owned by
Channel One in each registration statement filed by the Company subsequent to
the filing of the Initial Common Stock Shelf Registration which includes shares
of Registrable Common Stock to the extent that the Company may do so without
breaching any of its obligations under the Common Stock Registration Rights
Agreement and otherwise on the terms and subject to the conditions of the Common
Stock Registration Rights Agreement that are applicable to the holders of the
shares of Registrable Common Stock included in such registration statement. The
Channel One Registration Rights Agreement provides that certain provisions of
the Common Stock Registration Rights Agreement are binding upon and applicable
to the parties thereto, including those provisions described above relating to
expenses, indemnification, postponements and suspensions.
ANTITAKEOVER LEGISLATION
For information concerning the Delaware statute restricting business
combinations between a Delaware corporation and "interested stockholders" of
such corporation, see "Certain Risk Factors--Certain Corporate Governance
Matters; Antitakeover Legislation."
21
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain United States federal income tax and
estate tax consequences of the ownership of Shares by Non-United States Holders
(as defined below) as of the date hereof. This discussion does not address all
aspects of United States federal income taxation and does not deal with foreign,
state and local consequences that may be relevant to such Non-United States
Holders in light of their personal circumstances. Furthermore, the discussion
below is based upon the provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), and regulations, rulings and judicial decisions thereunder
as of the date hereof, and such authorities may be repealed, revoked or modified
so as to result in federal income tax consequences different from those
discussed below. PERSONS CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF
SHARES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE FEDERAL INCOME TAX
CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES
ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION.
As used herein, a "Non-United States Holder" of Shares means a holder who is
not (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, (iii) an estate, the income
of which is subject to United States federal income taxation regardless of its
source or (iv) a trust which is subject to the supervision of a court within the
United States and the control of a United States fiduciary as described in
section 7701(a)(30) of the Code.
PAYMENT OF DIVIDENDS
If the Company pays dividends on its Shares, such dividends paid to a
Non-United States Holder of Shares will be subject to withholding of United
States federal income tax rate at a 30% rate or such lower rate as may be
specified by an applicable income tax treaty, unless the dividends are
effectively connected with the conduct of a trade or business of the Non-United
States Holder within the United States. Certain certification and disclosure
requirements must be complied with in order to be exempt from withholding under
the effectively connected income exception. Dividends that are effectively
connected with the conduct of a trade or business within the United States and,
where a tax treaty applies, attributable to a United States permanent
establishment of the Non-United States Holder, are subject to United States
federal income tax on a net income basis at applicable graduated individual or
corporate rates. Any such effectively connected dividends received by a foreign
corporation may, under certain circumstances, be subject to an additional
"branch profits tax" at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty.
Under current United States Treasury regulations, dividends paid to an
address outside the United States are presumed to be paid to a resident of such
country (unless the payor has knowledge to the contrary) for purposes of the
withholding discussed above, and, under the current interpretation of United
States Treasury regulations, for purposes of determining the applicability of a
tax treaty rate. Under recently finalized Treasury regulations (the "Final
Regulations"), a Non-United States Holder of Shares who wishes to claim the
benefit of an applicable treaty rate (and avoid back-up withholding as discussed
below) for dividends paid after December 31, 1998 would be required to satisfy
applicable certification and other requirements. A Non-United States Holder of
Shares eligible for a reduced rate of United States withholding tax pursuant to
an income tax treaty may obtain a refund of any excess amounts withheld by
filing an appropriate claim for refund with the IRS.
SALE OR EXCHANGE
A Non-United States Holder will generally not be subject to United States
federal income tax with respect to gain recognized on a sale, exchange or other
disposition of Shares unless (i) the gain is effectively connected with the
conduct of a trade or business of the Non-United States Holder in the United
States and, where a tax treaty applies, attributable to a United States
permanent establishment of the Non-United States Holder, (ii) in the case of a
Non-United States Holder who is an individual and
22
<PAGE>
holds the Shares as capital assets, such holder is present in the United States
for 183 days or more in the taxable year of sale, exchange or other disposition
and certain other conditions are met, or (iii) the Company is or has been a
"U.S. real property holding corporation" for United States federal income tax
purposes. The Company does not believe it is a "U.S. real property holding
corporation" (a "USRPHC") for United States federal income tax purposes and does
not anticipate becoming a USRPHC.
An individual Non-United States Holder described in clause (i) above will be
taxed on the net gain derived from the sale under regular graduated United
States federal income tax rates. An individual Non-United States Holder
described in clause (ii) above will be subject to a flat 30% tax on the gain
derived from the sale, which may be offset by United States capital losses
(notwithstanding the fact that the individual is not considered a resident of
the United States). If a Non-United States Holder that is a foreign corporation
falls under clause (i) above, it will be taxed on its gain under regular
graduated United States federal income tax rates and, in addition, may be
subject to the branch profits tax equal to 30% of its effectively connected
earnings and profits within the meaning of the Code for the taxable year, as
adjusted for certain items, unless it qualifies for a lower rate under an
applicable income tax treaty.
FEDERAL ESTATE TAX
Common Stock held by an individual Non-United States Holder at the time of
death will be included in such holder's gross estate for United States federal
estate tax purposes, unless an applicable estate tax treaty provides otherwise.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The Company must report annually to the IRS and to each Non-United States
Holder the amount of dividends paid to such holder and the tax withheld with
respect to such dividends, regardless of whether withholding was required.
Copies of the information returns reporting such dividends and withholding may
also be made available to the tax authorities in the country in which the
Non-United States Holder resides under the provisions of an applicable income
tax treaty.
Under current law, backup withholding (which generally is a withholding tax
imposed at the rate of 31% on certain payments to persons that fail to furnish
certain information under the United States information reporting requirements)
generally will not apply to dividends paid to a Non-United States Holder at an
address outside the United States (unless the payer has knowledge that the payee
is a U.S. person). Under the Final Regulations, a Non-United States Holder will
be subject to backup withholding unless applicable certification requirements
are met.
The payment of the proceeds of the sale, exchange or other disposition of
Shares to or through the United States office of a broker is subject to both
backup withholding and information reporting unless the owner certifies under
penalties of perjury that it is a Non-United States Holder or otherwise
establishes an exemption. In general, backup withholding and information
reporting will not apply if a foreign office of a broker pays the proceeds of
the sale of Shares to the owner thereof. If, however, such broker is, for United
States federal income tax purposes, a U.S. person, a controlled foreign
corporation or a foreign person that derives 50% or more of its gross income for
certain periods from the conduct of a trade or business in the United States,
such payments will be subject to information reporting, but not backup
withholding, unless (1) such broker has documentary evidence in its records that
the beneficial owner is not a U.S. person and certain other conditions are met
or (2) the beneficial owner otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF ANY INVESTMENT IN THE SHARES, INCLUDING
THE APPLICATION OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.
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<PAGE>
SELLING SECURITY HOLDERS
The following table sets forth information with respect to the Shares
offered hereby beneficially owned by each of the Selling Security Holders as of
August 15, 1997. The Shares offered hereby may be offered in whole or in part
from time to time by or on behalf of the Selling Security Holders named below.
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON
STOCK OWNED
AND PERCENTAGE OF
REGISTERED OUTSTANDING
SELLING SECURITY HOLDER HEREUNDER COMMON STOCK*
- ------------------------------------------------------------------------------------- ------------ ---------------
<S> <C> <C>
Lehman Brothers Holdings, Inc........................................................ 7,869,525 14.7%
JWC Associates L.P................................................................... 5,862,448 10.9%
JWC Associates II, L.P............................................................... 38,846 **
KKR Partners II, L.P................................................................. 142,115 **
Channel One Associates, L.P.......................................................... 4,361,800 8.1%
Robert W. Michael.................................................................... 7,801 **
William N. Temple.................................................................... 2,228 **
David L. Townsend.................................................................... 1,783 **
James W. Walter...................................................................... 42,355 **
Asbestos Settlement Trust (1)........................................................ 10,941,326 20.4%
------------ ---
Total................................................................................ 29,270,227 54.5%
------------ ---
------------ ---
</TABLE>
- ------------------------
* All percentages in the table are based on 53,681,297 shares of Common Stock
being issued and outstanding. See "Security Ownership of Management and
Principal Stockholders."
** Owns less than 1% of outstanding Common Stock.
(1) The Asbestos Settlement Trust is the successor to The Celotex Corporation in
its capacity as the Celotex Settlement Fund Recipient.
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<PAGE>
PLAN OF DISTRIBUTION
The Company will receive no proceeds from this offering. The Shares may be
sold from time to time to purchasers directly by any of the Selling Security
Holders. Alternatively, any of the Selling Security Holders may from time to
time offer the Shares through underwriters, dealers or agents, who may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Selling Security Holders and/or the purchasers of Shares for whom they
may act as agent. The Selling Security Holders and any underwriters, dealers or
agents that participate in the distribution of Shares may be deemed to be
underwriters, and any profit on the sale of Shares by them and any discounts,
commissions or concessions received by any such underwriters, dealers or agents
might be deemed to be underwriting discounts and commissions under the
Securities Act.
At the time a particular offer of Shares is made, to the extent required, a
Prospectus Supplement will be provided by the Company and distributed by the
relevant Selling Security Holder which will set forth the aggregate amount and
type of Shares being offered and the terms of the offering, including the name
or names of any underwriters, dealers or agents, any discounts, commissions and
other items constituting compensation from the Selling Security Holders and any
discounts, commissions or concessions allowed or reallowed or paid to dealers.
The Shares may be sold from time to time in one or more transactions at a
fixed offering price, which may be changed, or at varying prices determined at
the time of sale or at negotiated prices. Such prices will be determined by the
Selling Security Holders or by agreement between the Selling Security Holders
and underwriters or dealers. To the extent not prohibited by applicable
securities laws, Selling Security Holders may sell the Shares other than
pursuant to the Registration Statement of which this Prospectus forms a part.
The Common Stock is listed on the Nasdaq National Market under the symbol
"WLTR".
Under applicable rules and regulations under the Exchange Act any person
engaged in a distribution of the Shares may not simultaneously engage in
market-making activities with respect to such Shares for a period of one
business day prior to the commencement of such distribution and ending upon the
completion of such distribution. In addition to and without limiting the
foregoing, each Selling Security Holder will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder, including without
limitation Regulation M, which provisions may limit the timing of purchases of
any of the Shares by the Selling Security Holders. All of the foregoing may
affect the marketability of the Shares and the ability of any person or entity
engaged in a distribution of the Shares to engage in market-making activities
with respect to the Shares.
Under guidelines adopted by the National Association of Securities Dealers,
Inc. (the "NASD"), the maximum commission that any NASD member firm can receive
in connection with a distribution of the Shares, without further clearance from
the NASD, is 8%.
Pursuant to the Common Stock Registration Rights Agreement, the Company is
obligated to pay substantially all of the expenses incident to the registration,
offering and sale of the Shares to the public other than commissions and
discounts of underwriters, dealers or agents, and the Selling Security Holders,
and any underwriter they may utilize, and their respective controlling persons
are entitled to be indemnified by the Company against certain liabilities,
including liabilities under the Securities Act. See "Description of Capital
Stock--Common Stock Registration Rights Agreements."
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<PAGE>
LEGAL MATTERS
The validity of the Shares offered hereby has been passed upon for the
Company by Simpson Thacher & Bartlett (a partnership which includes professional
corporations), New York, New York.
EXPERTS
The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-K of Walter Industries, Inc. for the year ended May 31,
1997, as amended by the Company's Amendment No. 1 to its Annual Report on Form
10-K/A, have been so incorporated in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
26
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT, IN CONNECTION WITH THE OFFERING MADE BY
THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT, AND INFORMATION OR AND
REPRESENTATIONS NOT HEREIN CONTAINED, IF GIVEN OR MADE, MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION MAY NOT BE MADE. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALES MADE HEREUNDER OR
THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF OR THEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION................. 2
ADDITIONAL INFORMATION................ 2
PRIVATE SECURITIES LITIGATION REFORM
ACT SAFE HARBOR STATEMENT........... 2
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE........................... 3
THE COMPANY........................... 4
CERTAIN RISK FACTORS.................. 8
DESCRIPTION OF CERTAIN INDEBTEDNESS... 15
DESCRIPTION OF CAPITAL STOCK.......... 16
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES........................ 22
SELLING SECURITY HOLDERS.............. 24
PLAN OF DISTRIBUTION.................. 25
LEGAL MATTERS......................... 26
EXPERTS............................... 26
</TABLE>
29,270,227 SHARES
WALTER INDUSTRIES, INC.
COMMON STOCK
---------------------
PROSPECTUS
---------------------
NOVEMBER , 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Registration fee............................................................... $139,072.62
Blue Sky fees and expenses..................................................... 1,500.00
Printing and engraving expenses................................................ 95,000.00
Legal fees and expenses........................................................ 360,000.00
Accounting fees and expenses................................................... 80,000.00
Miscellaneous.................................................................. 2,000.00
----------
Total...................................................................... $677,572.62
----------
----------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the DGCL empowers a Delaware corporation to indemnify any
persons who are, or are threatened to be made, parties to any threatened,
pending or completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests and, for criminal proceedings,
had no reasonable cause to believe his conduct was illegal. A Delaware
corporation may indemnify officers and directors against expenses (including
attorneys' fees) in connection with the defense or settlement of an action by or
in the right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or director actually and reasonably incurred.
Article IV of the By-laws of the Company provides for indemnification of its
officers and directors to the fullest extent permitted by Section 145 of the
DGCL.
Section 102(b)(7) of the DGCL provides that a Delaware corporation may
eliminate or limit the personal liability of a director to a Delaware
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, provided that such provision shall not eliminate or limit
the liability of a director (i) for any breach of the director's duty of loyalty
to the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the DGCL relating to the unlawful payment of a
dividend or an unlawful stock purchase or redemption or (iv) for any transaction
from which the director derived an improper personal benefit.
Article 6 of the Restated Certificate of Incorporation of the Company
provides for the elimination of personal liability of its directors for monetary
damages for breach of fiduciary duty as a director, except as otherwise provided
by the DGCL.
The Company has entered into a Directors and Officers Indemnification
Agreement which provides that directors and officers shall be indemnified to the
fullest extent permitted by applicable law and obligates the Company to
indemnify the directors and officers of the Company (a) if any director or
officer is or may become a party to any proceeding against all expenses
reasonably incurred by such director or
II-1
<PAGE>
officer in connection with the defense or settlement of such proceeding, but
only if such director or officer acted in good faith and in a manner which such
director or officer reasonably believed to be in or not opposed to the best
interests of the Company and, in the case of a criminal action or proceeding,
only if such director or officer had no reasonable cause to believe that his or
her conduct was unlawful, (b) if a director or officer is or may become a party
to any proceeding by or in the name of the Company to procure a judgement in its
favor against all expenses reasonably incurred by such director or officer in
connection with the defense or settlement of such proceeding, but only if such
director or officer acted in good faith and in a manner which such director or
officer reasonably believed to be in or not opposed to the best interests of the
Company, except no indemnification for expenses need be made in respect of any
claim in which such director or officer shall have been adjudged liable to the
Company unless a court in which the proceeding is brought determines otherwise
and (c) if a director or officer has been successful on the merits or otherwise
in defense of any proceeding or claim.
The Common Stock Registration Rights Agreement and the Channel One
Registration Rights Agreement each requires the Company, on the one hand, and
the Holders referred to therein, on the other hand, under certain circumstances,
to indemnify each other and, in the case of the Company's indemnification
obligations, each other person who participates as an underwriter in an offering
thereunder and each other person who controls such parties and/or underwriters
and their respective directors, officers, partners, agents and affiliates
against certain liabilities, including liabilities under the Securities Act,
incurred in connection with each registration of securities pursuant to such
registration rights agreement.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described hereunder or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment to the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted against
the Registrant by such director, officer or controlling person, in connection
with the Shares being registered hereby, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- ------------------- -----------------------------------------------------------------------------------------
<C> <C> <S>
2(a)(i) -- Amended Joint Plan of Reorganization of Walter Industries, Inc. and certain of its
subsidiaries, dated as of December 9, 1994 (1)
2(a)(ii) -- Modification to the Amended Joint Plan of Reorganization of Walter Industries, Inc. and
certain of its subsidiaries, as filed in the Bankruptcy Court on March 1, 1995 (2)
2(a)(i )** -- Findings of Fact, Conclusions of Law and Order Confirming Amended Joint Plan of
Reorganization of Walter Industries, Inc. and certain of its subsidiaries, as modified
3(a)** -- Restated Certificate of Incorporation of the Company
3(b)** -- By-Laws of the Company
4(a)(i)** -- Restated Certificate of Incorporation of the Company (see Exhibit 3(a))
4(a)(i )** -- By-Laws of the Company (see Exhibit 3(b))
4(b)** -- Specimen Stock Certificate
5** -- Opinion of Simpson Thacher & Bartlett regarding legality of the securities being
registered
23(a) -- Consent of Price Waterhouse LLP
23(b)** -- Consent of Simpson Thacher & Bartlett (included in their opinion filed as Exhibit 5
hereto)
24** -- Powers of Attorney
27** -- Financial Data Schedule
</TABLE>
- ------------------------
** Previously filed
(1) This Exhibit is incorporated by reference to the Application for
Qualification of Indenture on Form T-3 filed by the Company with the
Commission on February 6, 1995.
(2) This Exhibit is incorporated by reference to Amendment No. 2 to the
Application for Qualification of Indenture on Form T-3 filed by the Company
with the Commission on March 7, 1995.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represents a fundamental change in the information set forth
in the registration statement;
II-3
<PAGE>
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Form S-3 or Form S-8 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to section 13
or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement Amendment to be signed on its behalf by the undersigned, hereunto duly
authorized in the City of Tampa, State of Florida on the 6th day of November,
1997.
WALTER INDUSTRIES, INC.
BY /S/ DEAN M. FJELSTUL
-----------------------------------------
Dean M. Fjelstul
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement Amendment has been signed by the following persons in the
capacities indicated on November 6, 1997.
SIGNATURE TITLE
- ------------------------------ ---------------------------
*
- ------------------------------
James W. Walter Chairman Emeritus and
Director
*
- ------------------------------
Kenneth E. Hyatt Chairman of the Board,
President,
Chief Executive Officer
and Director
(Principal Executive
Officer)
*
- ------------------------------
Dean M. Fjelstul Senior Vice President and
Chief Financial Officer
(Principal Financial
Officer)
/s/ FRANK A. HULT
- ------------------------------
Frank A. Hult Vice President, Controller
and
Chief Accounting Officer
(Principal Accounting
Officer)
*
- ------------------------------
Howard L. Clark, Jr. Director
*
- ------------------------------
James B. Farley Director
*
- ------------------------------
Eliot M. Fried Director
*
- ------------------------------
Perry Golkin Director
*
- ------------------------------
James L. Johnson Director
*
- ------------------------------
Michael T. Tokarz Director
*By: /s/ FRANK A. HULT
-------------------------
Frank A. Hult
ATTORNEY-IN-FACT
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------ ---------
2(a)(i) -- Amended Joint Plan of Reorganization of Walter Industries, Inc. and
certain of its subsidiaries, dated as of December 9, 1994 (1)
<S> <C> <C>
2(a)(ii) -- Modification to the Amended Joint Plan of Reorganization of Walter
Industries, Inc. and certain of its subsidiaries, as filed in the
Bankruptcy Court on March 1, 1995 (2)
-- Findings of Fact, Conclusions of Law and Order Confirming Amended Joint
2(a)(iii)** Plan of Reorganization of Walter Industries, Inc. and certain of its
subsidiaries, as modified
3(a)** -- Restated Certificate of Incorporation of the Company
3(b)** -- By-Laws of the Company
4(a)(i)** -- Restated Certificate of Incorporation of the Company (see Exhibit 3(a))
4(a)(ii)** -- By-Laws of the Company (see Exhibit 3(b))
4(b)** -- Specimen Stock Certificate
5** -- Opinion of Simpson Thacher & Bartlett regarding legality of the
securities being registered
23(a) -- Consent of Price Waterhouse LLP
23(b)** -- Consent of Simpson Thacher & Bartlett (included in their opinion filed
as Exhibit 5 hereto)
24** -- Powers of Attorney
27** -- Financial Data Schedule
</TABLE>
- ------------------------
** Previously filed
(1) This Exhibit is incorporated by reference to the Application for
Qualification of Indenture on Form T-3 filed by the Company with the
Commission on February 6, 1995.
(2) This Exhibit is incorporated by reference to Amendment No. 2 to the
Application for Qualification of Indenture on Form T-3 filed by the Company
with the Commission on March 7, 1995.
<PAGE>
EXHIBIT 23(a)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Post Effective Amendment No. 4 to the Registration
Statement on Form S-3 of our report dated July 10, 1997, appearing on page
F-2 of Walter Industries, Inc., Annual Report on Form 10-K/A Amendment No. 1
for the year ended May 31, 1997. We also consent to the incorporation by
reference of our report on the Financial Statement Schedules, which appears on
page F-29 of such Annual Report on Form 10-K/A Amendment No. 1.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Tampa, Florida
November 3, 1997
