Walter Energy Announces Fourth Quarter and Full-Year 2010 Results Company Reports Earnings From Continuing Operations of $1.75 per Diluted Share for Fourth Quarter and $7.25 per Diluted Share for Full Year 2010$1.6 Billion in Full-Year 2010 Revenues
Company Reports Earnings From Continuing Operations of $1.75 per Diluted Share for Fourth Quarter and $7.25 per Diluted Share for Full Year 2010
$1.6 Billion in Full-Year 2010 Revenues on Record Coking Coal Sales of 7.2 Million Tons
Fourth Quarter EBITDA Triples to $171.5 Million; Full-Year EBITDA Climbs to Nearly $700 Million
Acquisition of Western Coal Corp. Progressing; Closing Anticipated on April 1, 2011
TAMPA, FL -- (Marketwire) -- 02/14/11 -- Walter
Energy (NYSE: WLT), a leading U.S. producer and exporter of premium hard coking coal for the
global steel industry, today announced earnings from continuing operations
of $1.75 per diluted share and EBITDA of $171.5 million for the quarter
ended Dec. 31, 2010, compared to earnings from continuing operations of
$0.62 per diluted share and EBITDA of $55.6 million in the fourth quarter
2009.
The Company also reported full-year 2010 earnings from continuing
operations of $7.25 per diluted share and EBITDA of $692.8 million compared
to full year 2009 earnings of $2.64 per diluted share and EBITDA of $275.1
million.
'We generated strong fourth quarter earnings on higher coking coal sales
volumes and prices,' said Walter Energy Interim Chief Executive Officer Joe
Leonard. 'For the full year, earnings increased by almost 175 percent over
2009, reflecting strong pricing and production growth from our organic
growth initiatives. Globally, events continue to limit availability of
premium coking coals and we see supply-demand imbalance continuing in our
favor as global steel production improves on its record 2010 output.'
'Strategically, we continue to make excellent progress on our
transformative acquisition of Western Coal, which, when completed, will
make Walter Energy the leading, publicly traded 'pure play' coking coal
producer in the world. In addition, the combination increases the size,
scale and diversity of our operations, significantly enhancing the
Company's financial profile and geographic reach, particularly into Asia.
We also recently completed the acquisition of a river terminal facility at
the Port of Mobile to ensure unconstrained shipping capacity for our
long-term coking coal production plans from our mines in Alabama, to
maintain low mine-to-vessel costs and to make us less reliant on third
parties,' he said.
Full-Year 2010 Financial Results
For the full year 2010, revenues were $1.6 billion, a $621 million increase
compared to 2009's full-year results. EBITDA also increased to $692.8
million, a $417.7 million improvement versus the prior year. The
improvement was largely due to record revenues and operating income at the
underground mining segment of $1.3 billion and $580.7 million,
respectively, on significant year-over-year coking coal pricing and volume
increases.
Fourth Quarter 2010 Financial Results
Revenues for the fourth quarter 2010 totaled $400.8 million compared to
$236.3 million in the prior-year period. Operating income totaled $144.7
million for the quarter, compared to $36.9 million in the prior-year
period. Revenue and operating income improvements were primarily due to
higher coking coal pricing and volumes in the Company's underground mining
operations.
Fourth quarter 2010 operating income includes $5.9 million in costs
associated with Walter Energy's impending acquisition of Western Coal and
$2.3 million in costs at Walter Coke related to long-term environmental
monitoring. These charges negatively impacted earnings for the quarter by
approximately $0.10 per diluted share.
Underground Mining
The underground mining segment reported revenues of $350.9 million in the
fourth quarter 2010, compared to $179.7 million in the prior-year period.
Operating income was $144.6 million, more than triple the segment's
operating income in the same period last year. Revenues and operating
income were higher primarily due to significantly higher average coking
coal contract pricing along with higher sales volumes versus the prior-year
period. The effect of these favorable items was partially offset by higher
royalty and freight costs.
Coking coal sales totaled 1.7 million tons in the fourth quarter, up 25.1
percent compared to the prior-year period, at an average selling price of
$196.47 per short ton FOB Port, a 55.3 percent increase over average
selling prices of $126.48 per ton in the same period last year.
Total coking coal production was 1.5 million tons in the quarter, almost
200,000 tons higher than in the fourth quarter 2009. The increase in
production was generated from incremental tons from the Mine No. 7 East
expansion and from improved recovery rates at the No. 4 Mine. Production
costs for the quarter averaged $64.68 per ton, or $2.76 lower than in the
prior-year period, primarily due to volume improvements at both mines,
partially offset by higher labor and supply cost at Mine No. 7.
The natural gas business sold 3.4 billion cubic feet of gas at an average
price of $4.06 per thousand cubic feet in the fourth quarter 2010 compared
to 1.4 billion cubic feet at an average price of $4.09 per thousand cubic
feet in the prior-year period. Increased production and sales for the
quarter resulted from the Company's Walter Black Warrior Basin natural gas
subsidiary acquired in May 2010.
Surface Mining
The surface mining segment reported revenues of $35.9 million for the
fourth quarter 2010, compared to $26.0 million in the prior-year period on
increased sales volumes and pricing. Although revenues increased 37.8
percent, operating income in the fourth quarter 2010 only increased 7.0
percent due to higher depreciation, diesel and blasting costs.
Coal sales from the surface mining segment were 348,000 tons during the
fourth quarter, up 6.7 percent compared to the prior-year period primarily
due to incremental sales volumes from the recently opened Reid School
metallurgical coal mine. Production was 406,000 tons, up 35.3 percent
compared to the fourth quarter last year primarily from additional tons
produced at the Reid School Mine.
Walter Coke
Walter Coke reported revenues of $37.9 million in the fourth quarter 2010,
compared to $37.4 million in the prior-year period. Walter Coke generated
$5.4 million in operating income in the quarter, compared to a slight loss
in the prior-year period. Operating income improvements were driven
primarily by price increases and improved plant efficiencies, partially
offset by higher coal raw material costs and a $2.3 million environmental
charge. In addition, fourth quarter 2009 results included a $4.5 million
charge related to the closure of Walter Coke's fiber plant.
The Company sold 87,000 tons of metallurgical coke in the fourth quarter
2010 at an average price of $381.96 per ton compared to 88,000 tons sold in
the prior-year period at an average price of $312.11 per ton. Pricing
increases were primarily attributable to improved demand in the domestic
automotive and steel markets.
Corporate and Other
At Dec. 31, 2010, the Company had available liquidity of $533.5 million,
including cash of $293.4 million and $240.1 million available under its
credit facility.
Financial Summary & Business Outlook
Comparisons to the most recently provided business outlook are provided
below, alongside Walter Energy's business outlook for the first quarter
2011:
Underground Mining(1) Q4-2010 E Q4-2010 A Q1-2011 E
Coal Sales (short tons,
in millions) 1.7 - 2.0 1.7 1.6 - 1.8
Average Operating Margin(2)
Per Ton $84 - $87 $85 $83 - $87
Surface Mining Q4-2010 E Q4-2010 A Q1-2011 E
Coal Sales (short tons,
in thousands) 382 - 403 348 406 - 426
Average Operating Margin(2)
Per Ton $13 - $17 $18 $10 - $14
Walter Coke Q4-2010 E Q4-2010 A(3) Q1-2011 E
Coke Sales (tons, in thousands) 85 - 88 87 99 - 101
Average Operating Margin(2)
Per Ton $44 - $58 $63 $41 - $51
Quarter-to-quarter variability in timing, availability and pricing of
shipments may result in significant shifts in income between quarters.
(1) Includes the coking coal operation at Jim Walter Resources; excludes
the coal bed methane operations.
(2) Operating margin is defined as operating income (Earnings Before
Interest & Taxes) from each business shown.
(3) Actual results include a $2.3 million charge related to long-term
environmental monitoring.
In the fourth quarter 2010, coking coal sales volumes were at the low end
of the previously issued expectations range due to a longer-than-expected
longwall move in December and difficult mining conditions at both of our
underground mines late in the quarter. These conditions continued into
January and, along with the impact of planned first quarter 2011 longwall
moves, the Company expects first quarter sales volumes to be in the range
of 1.6 to 1.8 million tons.
Given the loss of production through mid-February 2011, the Company
estimates that its full-year coking coal sales will be, at best, 8.5
million tons, with up to 500,000 tons of the total coming from purchased
coal opportunities.
First quarter 2011 coking coal operating margins reflect an average selling
price of $215 per metric ton FOB port ($195 per short ton FOB port), which
includes a mix of carryover tons at $209 per metric ton as well as new
contract tons for the quarter at or above the $225 per metric ton benchmark
price. The average realized selling price will also be affected by lower
priced purchased coal. First quarter 2011 coking coal production costs are
expected to be in line with the fourth quarter 2010 results.
In the surface mining segment, although fourth quarter 2010 shipments were
lower than expected due to lighter-than-expected customer demand, the
segment expects to sell between 406,000 and 426,000 tons of metallurgical,
steam and industrial coal in the first quarter 2011, with all expected
steam and industrial sales volumes contractually priced. Operating income
in the first quarter 2011 is expected to be negatively impacted by a shift
in sales mix to lower-margin coal contracts, higher cost due to unfavorable
mining ratios and higher fuel prices.
At Walter Coke, first quarter sales volumes are expected to be
approximately 100,000 tons. Operating margins are expected to reflect
higher metallurgical coke prices, offset by higher coal raw material costs.
Western Coal Acquisition Update
Walter Energy said it continues to make very good progress on its
acquisition of Western Coal Corp. Western Coal issued its Circular to its
shareholders on Feb. 4, 2011 and a vote of the Western Coal shareholders is
scheduled for March 8, 2011. As announced on Jan. 20, 2011, the Company
acquired a 9.15 percent stake in Western Coal from funds advised by Audley
Capital for $293.7 million. The Company remains on track to close on the
acquisition on April 1, 2011.
Conference Call Web Cast
Interim Chief Executive Officer Joe Leonard and members of the Company's
leadership team will discuss Walter Energy's fourth quarter results, its
outlook and other general business matters during a conference call and
live Web cast to be held Tuesday, Feb. 15, 2011, at 10 a.m. Eastern
Standard Time. To listen to the event live or in archive, visit the Company
Web site at www.walterenergy.com.
About Walter Energy
Walter Energy is a leading U.S.
producer and exporter of premium
hard coking coal for the global steel industry and also produces steam
coal and industrial
coal, metallurgical
coke and coal bed methane
gas. The Company has revenues of approximately $1.6 billion and employs
approximately 2,100 people. For more information about Walter Energy, please visit the
Company Web site at www.walterenergy.com.
Safe Harbor Statement
Except for historical information contained herein, the statements in this
release are forward-looking and made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995 and may involve a
number of risks and uncertainties. Forward-looking statements are based on
information available to management at the time, and they involve judgments
and estimates. There can be no assurance that the transaction with Western
Coal will close. The transaction is subject to a number of closing
conditions which may be outside of Walter Energy's control. Forward-looking
statements include expressions such as 'believe,' 'anticipate,' 'expect,'
'estimate,' 'intend,' 'may,' 'plan,' 'predict,' 'will,' and similar terms
and expressions. These forward-looking statements are made based on
expectations and beliefs concerning future events affecting us and are
subject to various risks, uncertainties and factors relating to our
operations and business environment, all of which are difficult to predict
and many of which are beyond our control, that could cause our actual
results to differ materially from those matters expressed in or implied by
these forward-looking statements. The following factors are among those
that may cause actual results to differ materially from our forward-looking
statements: the market demand for coal, coke and natural gas as well as
changes in pricing and costs; the availability of raw material, labor,
equipment and transportation; changes in weather and geologic conditions;
changes in extraction costs, pricing and assumptions and projections
concerning reserves in our mining operations; changes in customer orders;
pricing actions by our competitors, customers, suppliers and contractors;
changes in governmental policies and laws, including with respect to safety
enhancements and environmental initiatives; availability and costs of
credit, surety bonds and letters of credit; and changes in general economic
conditions. Forward-looking statements made by us in this release, or
elsewhere, speak only as of the date on which the statements were made. See
also the 'Risk Factors' in our 2009 Annual Report on Form 10-K and
subsequent filings with the SEC which are currently available on our
website at www.walterenergy.com. New risks and uncertainties arise from
time to time, and it is impossible for us to predict these events or how
they may affect us or our anticipated results. We have no duty to, and do
not intend to, update or revise the forward-looking statements in this
release, except as may be required by law. In light of these risks and
uncertainties, readers should keep in mind that any forward-looking
statement made in this press release may not occur. All data presented
herein is as of Dec. 31, 2010 unless otherwise noted.
WALTER ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share and share amounts)
Unaudited
For the three months
ended
December 31,
----------------------
2010 2009
---------- ----------
Revenues:
Sales $ 396,863 $ 234,006
Miscellaneous income 3,934 2,259
---------- ----------
400,797 236,265
---------- ----------
Costs and expenses:
Cost of sales (exclusive of depreciation and
depletion) 192,421 150,287
Depreciation and depletion 26,743 18,723
Selling, general and administrative 26,519 19,084
Postretirement benefits 10,379 7,696
Restructuring and impairment charges (1) - 3,601
---------- ----------
256,062 199,391
---------- ----------
Operating income 144,735 36,874
Interest expense (4,130) (4,980)
Interest income 151 171
---------- ----------
Income from continuing operations before income
taxes 140,756 32,065
Income tax expense (benefit) (2) 47,108 (1,231)
---------- ----------
Income from continuing operations 93,648 33,296
Discontinued operations (3) (1,780) (4,120)
---------- ----------
Net income $ 91,868 $ 29,176
========== ==========
Basic income per share:
Income from continuing operations $ 1.77 $ 0.63
Discontinued operations (0.04) (0.08)
---------- ----------
Basic net income per share $ 1.73 $ 0.55
========== ==========
Weighted average number of shares outstanding 52,992,021 53,098,146
========== ==========
Diluted income per share:
Income from continuing operations $ 1.75 $ 0.62
Discontinued operations (0.03) (0.08)
---------- ----------
Diluted net income per share $ 1.72 $ 0.54
========== ==========
Weighted average number of diluted shares
outstanding 53,420,985 53,951,917
========== ==========
(1) The Company recorded a $3.6 million restructuring and impairment charge
in the fourth quarter 2009 related to the closure of Walter Coke's
fiber plant. In addition, inventory write-downs of $0.9 million are
included in cost of sales related to this closure, for total closure
costs recognized of $4.5 million.
(2) In the fourth quarter 2009, the Company recognized two large, unusual
tax benefits resulting in a net tax benefit on pre-tax income. The tax
benefits included (1) a permanent tax benefit of $5.9 million for
non-taxable OPEB Medicare Part D subsidies and (2) a $3.8 million net
tax benefit on certain deferred tax assets relating to a change in the
effective state tax rate resulting from the decision to open the
Company's administrative headquarters in Birmingham, AL. Excluding
these items, the Company's fourth quarter 2009 effective tax rate was
26.5%. This rate is lower than the effective tax rate in the fourth
quarter 2010 primarily due to greater benefits from permanent
percentage depletion deductions in 2009.
(3) Discontinued operations includes the results of our closed Homebuilding
and Kodiak operations for both periods.
WALTER ENERGY, INC. AND SUBSIDIARIES
RESULTS BY OPERATING SEGMENT
($ in thousands)
Unaudited
For the three months
ended
December 31,
----------------------
2010 2009
---------- ----------
REVENUES:
Underground Mining $ 350,948 $ 179,655
Surface Mining 35,862 26,029
Walter Coke 37,923 37,369
Other 846 430
Consolidating eliminations of intersegment activity (24,782) (7,218)
---------- ----------
$ 400,797 $ 236,265
========== ==========
OPERATING INCOME (LOSS):
Underground Mining $ 144,608 $ 41,579
Surface Mining 6,861 6,415
Walter Coke (1) 5,445 (43)
Other (2) (12,697) (10,869)
Consolidating eliminations of intersegment activity 518 (208)
---------- ----------
Operating income $ 144,735 $ 36,874
========== ==========
(1) The Company recorded a $4.5 million charge in the 2009 fourth quarter
related to the closure of Walter Coke's fiber plant.
(2) Results for 2010 include $5.9 million in costs associated with the
pending acquisition.
WALTER ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share and share amounts)
Unaudited
For the year ended
December 31,
------------------------
2010 2009
----------- -----------
Revenues:
Sales $ 1,570,845 $ 955,508
Miscellaneous income 16,885 11,319
----------- -----------
1,587,730 966,827
----------- -----------
Costs and expenses:
Cost of sales (exclusive of depreciation and
depletion) 766,516 586,774
Depreciation and depletion 98,702 72,939
Selling, general and administrative 86,972 70,510
Postretirement benefits 41,478 30,833
Restructuring and impairment charges (1) - 3,601
----------- -----------
993,668 764,657
----------- -----------
Operating income 594,062 202,170
Interest expense (17,250) (18,975)
Interest income 784 799
----------- -----------
Income from continuing operations before income
taxes 577,596 183,994
Income tax expense 188,171 42,144
----------- -----------
Income from continuing operations 389,425 141,850
Discontinued operations (2) (3,628) (4,692)
----------- -----------
Net income $ 385,797 $ 137,158
=========== ===========
Basic income per share:
Income from continuing operations $ 7.32 $ 2.67
Discontinued operations (0.07) (0.09)
----------- -----------
Basic net income per share $ 7.25 $ 2.58
=========== ===========
Weighted average number of shares outstanding 53,178,901 53,075,622
=========== ===========
Diluted income per share:
Income from continuing operations $ 7.25 $ 2.64
Discontinued operations (0.07) (0.09)
----------- -----------
Diluted net income per share $ 7.18 $ 2.55
=========== ===========
Weighted average number of diluted shares
outstanding 53,700,181 53,819,396
=========== ===========
(1) The Company recorded a $3.6 million restructuring and impairment charge
in the fourth quarter 2009 related to the closure of Walter Coke's
fiber plant. In addition, inventory write-downs of $0.9 million are
included in cost of sales related to this closure, for total closure
costs recognized of $4.5 million.
(2) Discontinued operations includes the results of our closed Homebuilding
and Kodiak operations for both periods, while 2009 also includes the
results of our Financing segment, which was spun off in April 2009.
WALTER ENERGY, INC. AND SUBSIDIARIES
RESULTS BY OPERATING SEGMENT
($ in thousands)
Unaudited
For the year ended
December 31,
------------------------
2010 2009
----------- -----------
REVENUES:
Underground Mining $ 1,349,748 $ 787,325
Surface Mining 133,734 99,556
Walter Coke 181,979 101,233
Other 2,996 2,469
Consolidating eliminations of intersegment
activity (80,727) (23,756)
----------- -----------
$ 1,587,730 $ 966,827
=========== ===========
OPERATING INCOME (LOSS):
Underground Mining $ 580,650 $ 208,189
Surface Mining 24,170 24,045
Walter Coke (1) 32,471 (1,338)
Other (2) (40,380) (29,086)
Consolidating eliminations of intersegment
activity (2,849) 360
----------- -----------
Operating income $ 594,062 $ 202,170
=========== ===========
(1) The Company recorded a $4.5 million charge in the 2009 fourth quarter
related to the closure of Walter Coke's fiber plant.
(2) Results for 2010 include $9.5 million of costs associated with
completed and pending acquisitions.
WALTER ENERGY, INC. AND SUBSIDIARIES
RECONCILIATION OF EBITDA TO AMOUNTS REPORTED UNDER US GAAP
($ in thousands)
Unaudited
For the three months For the year
ended ended
December 31, December 31,
-------------------- --------------------
2010 2009 2010 2009
--------- --------- --------- ---------
Net income $ 91,868 $ 29,176 $ 385,797 $ 137,158
Add loss from discontinued
operations 1,780 4,120 3,628 4,692
Add (less) income tax
expense (benefit) 47,108 (1,231) 188,171 42,144
Add interest expense 4,130 4,980 17,250 18,975
Less interest income (151) (171) (784) (799)
Add depreciation and
depletion expense 26,743 18,723 98,702 72,939
Earnings from continuing
operations before interest,
income taxes, and depreciation --------- --------- --------- ---------
and depletion (EBITDA) (1) $ 171,478 $ 55,597 $ 692,764 $ 275,109
========= ========= ========= =========
(1) EBITDA represents earnings from continuing operations before interest
expense, interest income, income taxes, and depreciation and depletion
expense. EBITDA is a financial measure which is not calculated in
conformity with U.S. Generally Accepted Accounting Principles (GAAP)
and should be considered supplemental to, and not as a substitute or
superior to financial measures calculated in conformity with GAAP.
We believe that EBITDA is a useful measure as some investors and
analysts use EBITDA to compare us against other companies and to help
analyze our ability to satisfy principal and interest obligations and
capital expenditure needs. EBITDA may not be comparable to similarly
titled measures used by other entities.
WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Unaudited
For the For the
three months ended year ended
December 31, December 31,
----------------- -----------------
2010 2009 2010 2009
-------- -------- -------- --------
Operating Data:
Underground Mining
Tons sold by type (in thousands):
Metallurgical coal, contracts 1,589 1,369 6,833 5,986
Purchased coal 124 - 331 98
-------- -------- -------- --------
1,713 1,369 7,164 6,084
======== ======== ======== ========
Average selling price per short ton $ 196.47 $ 126.48 $ 180.80 $ 124.64
Tons sold by mine (in thousands):
Mine No. 4 673 680 2,788 2,789
Mine No. 7 916 689 4,045 3,197
-------- -------- -------- --------
Total 1,589 1,369 6,833 5,986
======== ======== ======== ========
Coal cost of sales (exclusive of
depreciation):
Mine No. 4 per ton $ 76.93 $ 75.42 $ 77.86 $ 71.31
Mine No. 7 per ton $ 91.74 $ 77.99 $ 80.35 $ 72.36
Weighted average cost of sales
per ton $ 85.47 $ 76.71 $ 79.33 $ 71.87
Purchased coal costs (in thousands) $ 13,526 $ 23 $ 33,916 $ 4,071
Other costs (in thousands) (1) $ 8,619 $ 802 $ 16,226 $ 12,142
Tons of coal produced (in thousands):
Mine No. 4 689 605 2,798 2,719
Mine No. 7 855 749 3,870 3,366
-------- -------- -------- --------
Total 1,544 1,354 6,668 6,085
======== ======== ======== ========
Coal production costs per ton: (2)
Mine No. 4 $ 55.35 $ 61.35 $ 57.79 $ 56.77
Mine No. 7 $ 72.19 $ 72.36 $ 62.08 $ 64.64
Weighted average production costs
per ton $ 64.68 $ 67.44 $ 60.28 $ 61.12
Natural gas sales, in mmcf (in
thousands) 3,405 1,352 10,615 6,132
Natural gas average sale price per
mcf $ 4.06 $ 4.09 $ 4.52 $ 4.27
Natural gas cost of sales per mcf $ 2.56 $ 2.87 $ 2.50 $ 2.61
Surface Mining
Tons sold (in thousands) 348 326 1,477 1,234
Tons of coal produced (in thousands) 406 300 1,511 1,328
Average selling price per short ton $ 96.78 $ 77.47 $ 85.64 $ 76.20
Coal production costs per ton $ 59.77 $ 69.29 $ 65.65 $ 62.20
(1) Consists of charges (credits) not directly allocable to a specific
underground mine.
(2) Coal production costs per ton are a component of inventoriable costs,
including depreciation. Other costs not included in coal production
costs per ton include Company-paid outbound freight, postretirement
benefits, asset retirement obligation expenses, royalties, and Black
Lung excise taxes.
WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Unaudited
For the For the
three months ended year ended
December 31, December 31,
------------------- -------------------
2010 2009 2010 2009
--------- --------- --------- ---------
Operating Data (continued):
Walter Coke:
Metallurgical coke tons sold (in
thousands) 87 88 434 200
Metallurgical coke average sales
price per ton $ 381.96 $ 312.11 $ 372.76 $ 328.85
Depreciation and depletion ($ in
thousands):
Underground Mining $ 21,749 $ 15,633 $ 81,563 $ 59,393
Surface Mining 3,760 1,880 12,515 8,574
Walter Coke 1,038 1,148 4,092 4,566
Other 196 62 532 406
--------- --------- --------- ---------
$ 26,743 $ 18,723 $ 98,702 $ 72,939
========= ========= ========= =========
Capital expenditures ($ in
thousands):
Underground Mining $ 65,936 $ 23,778 $ 130,582 $ 74,625
Surface Mining 5,629 3,490 14,320 16,210
Walter Coke 4,726 1,475 7,397 4,837
Other 955 243 5,177 626
--------- --------- --------- ---------
$ 77,246 $ 28,986 $ 157,476 $ 96,298
========= ========= ========= =========
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)
Unaudited
As of
-----------------------
December December
31, 31,
2010 2009
----------- -----------
ASSETS
Cash and cash equivalents $ 293,410 $ 165,279
Receivables, net 143,238 70,500
Inventories 97,631 99,278
Deferred income taxes 62,371 110,576
Prepaid expenses 28,179 22,702
Other current assets 4,798 4,363
Current assets of discontinued operations (1) 5,912 15,197
----------- -----------
Total current assets 635,539 487,895
Property, plant and equipment, net 790,001 522,931
Deferred income taxes 149,520 178,338
Other long-term assets 82,705 70,192
----------- -----------
TOTAL ASSETS $ 1,657,765 $ 1,259,356
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 70,692 $ 44,211
Accrued expenses 52,399 39,034
Current debt 13,903 13,351
Accumulated postretirement benefits obligation 24,753 23,563
Other current liabilities 24,362 18,513
Current liabilities of discontinued operations (1) 7,738 7,310
----------- -----------
Total current liabilities 193,847 145,982
Long-term debt 154,570 163,147
Accumulated postretirement benefits obligation 451,348 429,096
Other long-term liabilities 262,934 261,736
----------- -----------
TOTAL LIABILITIES 1,062,699 999,961
STOCKHOLDERS' EQUITY 595,066 259,395
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,657,765 $ 1,259,356
=========== ===========
(1) Includes the remaining assets and liabilities of the Company's closed
Homebuilding and Kodiak businesses.
WALTER ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2010
($ in thousands)
Unaudited
Capital in Accumulated
Excess of Other
Common Par Comprehensive Retained Comprehensive
Total Stock Value Income Earnings Loss
-------- ----- -------- ------------- -------- ------------
Balance at
December
31, 2009 $259,395 $ 533 $374,522 $ 50,852 $ (166,512)
Comprehensive
income:
Net income 385,797 $ 385,797 385,797
Other
comprehensive
income, net
of tax:
Change in
pension and
post-
retirement
benefit
plans (5,280) (5,280) (5,280)
Change in
unrealized
gain on
hedges (596) (596) (596)
-------------
Comprehensive
income $ 379,921
=============
Purchases of
stock under
stock
repurchase
program (65,438) (9) (65,429)
Stock issued
upon the
exercise
of stock
options 17,134 8 17,126
Dividends
paid,
$0.475 per
share (25,266) (25,266)
Stock-based
compensation 3,460 - 3,460
Excess tax
benefit from
stock-based
compensation
arrange-
ments 28,875 28,875
Other (3,015) (1) (3,014)
Balance at
December 31,
2010 $595,066 $ 531 $355,540 $411,383 $ (172,388)
======== ===== ======== ======== ============
WALTER ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
Unaudited
For the year ended
December 31,
----------------------
2010 2009
---------- ----------
OPERATING ACTIVITIES
Net income $ 385,797 $ 137,158
Loss (income) from discontinued operations 3,628 4,692
---------- ----------
Income from continuing operations 389,425 141,850
Adjustments to reconcile income from continuing
operations to net cash flows provided by operating
activities:
Depreciation and depletion 98,702 72,939
Decrease in deferred income taxes 83,174 29,038
Non cash restructuring and impairment charges - 3,601
Tax benefit on the exercise of stock awards (28,875) -
Other 17,408 18,337
Decrease (increase) in assets, net of effect of
business acquisition:
Receivables (65,935) 69,772
Inventories 1,966 (25,076)
Other current assets 13,155 17,624
Increase (decrease) in liabilities, net of effect
of business acquisition:
Accounts payable 23,717 (16,286)
Accrued expenses and other current liabilities 41,413 (27,831)
Cash flows provided by (used in) operating
---------- ----------
activities 574,150 283,968
---------- ----------
INVESTING ACTIVITIES
Additions to property, plant and equipment (157,476) (96,298)
Acquisition (1) (209,964) -
Other (3,414) 3,270
---------- ----------
Cash flows provided by (used in) investing
activities (370,854) (93,028)
---------- ----------
FINANCING ACTIVITIES
Retirements of debt (26,972) (61,597)
Dividends paid (25,266) (21,190)
Cash spun off to Financing - (33,821)
Purchases of stock under stock repurchase program (65,438) (34,254)
Tax benefit on the exercise of stock awards 28,875 -
Proceeds from stock options exercised 17,134 9,888
Other (3,015) (6,169)
---------- ----------
Cash flows provided by (used in) financing
activities (74,682) (147,143)
---------- ----------
Cash flows provided by (used in) continuing
operations 128,614 43,797
---------- ----------
CASH FLOWS FROM DISCONTINUED OPERATIONS
Cash flows provided by (used in) operating
activities (6,268) 19,070
Cash flows provided by (used in) investing
activities 5,066 27,379
Cash flows provided by (used in) financing
activities - (41,385)
---------- ----------
Cash flows provided by (used in)
discontinued operations (1,202) 5,064
---------- ----------
Net increase (decrease) in cash and cash
equivalents $ 127,412 $ 48,861
========== ==========
Cash and cash equivalents at beginning of period $ 165,279 $ 116,074
Add: Cash and cash equivalents of discontinued
operations at beginning of period 1,254 1,598
Net increase (decrease) in cash and cash
equivalents 127,412 48,861
Less: Cash and cash equivalents of discontinued
operations at end of period 535 1,254
---------- ----------
Cash and cash equivalents at end of period $ 293,410 $ 165,279
========== ==========
SUPPLEMENTAL DISCLOSURES
Non-cash transactions:
Financing of one-year property insurance policy $ 18,947 $ 12,710
========== ==========
Dividend to spin off Financing $ - $ 437,407
========== ==========
(1) On May 28, 2010, the Company acquired HighMount Exploration &
Production Alabama, LLC for a cash payment of $210.0 million. The fair
value of the assets acquired and the liabilities assumed totaled $217.6
and $7.6 million, respectively.
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