 When Liverpool beat Bolton Wanderers 2–1 in the 1995 League Cup final, again an unused substitute, Walters was being used less as Roy Evans was employing three centre-halves with Rob Jones and Stig Inge Bjørnebye as wing-backs and three midfielders – Steve McManaman, Jamie Redknapp and John Barnes.He had already been sent out on loan to Stoke City (9 games, 2 goals) and Wolverhampton Wanderers (11 games, 3 goals) during the 1993–94 and 1994–95 seasons, and thus it was not surprising that, after not appearing at all during the first half of the 1995–96 season, Walters was allowed to leave, joining Southampton on 18 January 1996 on a free transfer.Walters was signed by David Merrington in January 1996 to assist in the Saints' desperate fight against relegation from the Premiership.