Exhibit 99.1
| | Walter Energy, Inc.
P.O. Box 20608
Tampa, Florida 33622-0608
www.walterenergy.com |
FOR IMMEDIATE RELEASE | | Press Release |
Investor Contact: Mark H. Tubb
Vice President — Investor Relations
813.871.4027
mtubb@walterenergy.com
Media Contact: Michael A. Monahan
Director — Corporate Communications
813.871.4132
mmonahan@walterenergy.com
WALTER ENERGY ANNOUNCES SECOND QUARTER 2009 EARNINGS OF $0.21 PER DILUTED SHARE
First Half Income From Continuing Operations Up 33.8 Percent Versus Prior Year
First Half Metallurgical Coal Sales Totaled 2.8 Million Tons; Third Quarter 2009 Metallurgical Coal Sales Expected to Total 1.4 — 1.6 Million Tons
(TAMPA, Fla.) — Walter Energy (NYSE: WLT), a leading U.S. producer and exporter of premium metallurgical coal for the global steel industry, today reported income from continuing operations of $11.3 million, or $0.21 per diluted share, for the quarter ended June 30, 2009, compared to $45.6 million, or $0.85 per diluted share in the second quarter 2008. The Company’s former Financing and Homebuilding operations have now been classified as discontinued operations.
“The Company delivered a solid second quarter despite difficult market conditions,” said Walter Energy Vice Chairman and Chief Financial Officer Victor P. Patrick. “Our shipments improved dramatically in June after a lull in April and May and we are now seeing signs of improvement in the global steel industry. With ample inventory and the ability to start the Mine No. 7 East longwall as soon as market conditions warrant, we are well positioned to take advantage of a strengthening market.”
Second Quarter 2009 Financial & Operating Results from Continuing Operations
Net sales and revenues for the second quarter 2009 totaled $169.1 million, compared to $274.4 million in the prior-year period, and operating income totaled $21.4 million for the quarter, down $50.6 million versus the prior-year period. Both net sales and revenues and operating income were negatively impacted by lower metallurgical coal and coke sales volumes.
Operating income for the first six months of 2009 totaled $122.9 million, up 18.5 percent compared to the first six months of 2008.
Underground Mining
Metallurgical coal sales volumes were 1.1 million tons in the second quarter at an average selling price of $116.15 per short ton FOB Port, versus 1.7 million tons at an average price of $110.79 in the prior-year period. Sales volumes declined 37.6 percent on lower global metallurgical coal demand resulting from lower steel capacity utilization. Second quarter results also include fewer tons shipped due to the delivery of approximately 300,000 tons late in the first quarter originally expected to be shipped in the second quarter.
“The improving shipments were very encouraging, with 630,000 tons sold in June alone. As a result, we exceeded our initial sales expectations for the quarter by about 100,000 tons,” said Jim Walter Resources Chief Executive Officer George R. Richmond.
On a year-to-date basis, metallurgical coal sales volumes totaled 2.8 million tons, down 12 percent versus the first six months of 2008. This compares to steel production declines in Europe and Brazil of approximately 40 percent in the same period.
Total metallurgical coal production in the quarter was 1.3 million tons versus 1.4 million tons in the prior-year period. This is the result of management’s decision to reduce production to match sales by eliminating Saturday production for part of the quarter, as well as a longwall move at Mine No. 7.
Metallurgical coal production at Mine No. 4 totaled 0.7 million tons in the second quarter, down 0.1 million tons versus the prior year. Production costs at No. 4 were $59.66 per ton, an increase of $12.89 over the prior year, primarily as a result of the shortened production week.
Mine No. 7 produced 0.6 million tons in the second quarter, essentially even with the second quarter last year. Production costs at Mine No. 7 were $80.02 per ton compared to $70.64 per ton in the prior-year period. The increase resulted primarily from the shorter operating week and higher labor costs associated with management’s decision to continue development work to enhance productivity in the future. Depreciation was higher as a result of development costs associated with the East expansion.
The natural gas business sold 1.6 billion cubic feet of gas, essentially even with the prior year, at an average price of $3.45 per thousand cubic feet in the second quarter 2009 compared to an average price of $8.99 per thousand cubic feet in the prior-year period.
Surface Mining
Steam and industrial coal sales were 277,000 tons during the second quarter compared to sales of 224,000 tons in the prior-year period. Average selling price increased by 19.3 percent due to higher contract prices. Production totaled 374,000 tons in the second quarter versus prior-year production of 221,000 tons. Sales and production increases resulted primarily from the acquisition of Taft Coal Sales in the third quarter 2008.
Walter Coke (formerly Sloss)
Walter Coke reported a $2.7 million operating loss in the second quarter on sales of 28,247 tons of metallurgical coke at an average price of $369.07 per ton. In the prior year, Walter Coke sold 106,431 tons at $397.50 per ton. Declines in revenue and operating income in the current period reflect significantly lower coke sales driven by lower demand from the domestic steel industry. Production has been reduced in response to weak demand; however, fixed costs negatively impacted profitability. Results in the current period also include $1.1 million in legal settlement costs.
Corporate and Other
Interest expense totaled $4.4 million in the quarter, down $6.8 million versus the prior-year period. The Company reduced interest expense in the current quarter by paying down its revolving credit facility balance to zero. Interest expense in the second quarter last year included $3.1 million in costs associated with the early repayment of debt and also reflected higher average debt outstanding.
As of June 30, 2009, the Company had available liquidity of $325.9 million, including cash of $42.0 million and $283.9 million available under its credit facility. Total net debt outstanding at June 30, 2009 was $147.2 million compared to $115.5 million at the end of the first quarter 2009. Total credit availability reflects a step down of the total revolver commitment to $350.0 million at June 30, 2009.
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Business Outlook
Third quarter 2009 expectations include the following:
Metallurgical Coal Sales(1) | | Q2-2009 A | | Q3-2009 E |
Tons Sold (short tons, in millions) | | 1.1 | | 1.4 - 1.6 |
Average Operating Margin(2) Per Ton | | $21.27 | | $13 - $17 |
| | | | |
Steam & Industrial Coal Sales(3) | | Q2-2009 A | | Q3-2009 E |
Tons Sold (short tons) | | 277,000 | | 300,000 - 330,000 |
Average Operating Margin(2) Per Ton | | $14.66 | | $12 - $17 |
| | | | |
Coke Sales | | Q2-2009 A | | Q3-2009 E |
Tons Sold | | 28,200 | | 20,000 - 28,000 |
Average Operating Margin (Loss)(2) Per Ton (4) | | $(53.79) | | $(141) - $(57) |
Quarter-to-quarter variability in timing, availability and pricing of shipments may result in significant shifts in income between quarters.
(1) | Includes the underground mining operation at Jim Walter Resources; excludes the coal bed methane operation |
(2) | Operating margin is defined as operating income (Earnings Before Interest & Taxes) from each business shown |
(3) | Includes the surface mining operations; excludes income from royalties and miscellaneous land sales reported in the surface mining segment |
(4) | Excludes $1.1 million in charges in the second quarter related to a legal settlement |
Third quarter 2009 metallurgical coal sales expectations are based on shipments to date and expected shipping schedules for the remainder of the quarter.
“In April and May, we sold tons into the spot market and delivered provisionally priced coal as we waited for the market to develop,” said Richmond. “We are now seeing strengthening demand and contract pricing opportunities in line with, and in some cases better than, the Australian benchmark of $129 per metric ton.”
Metallurgical coal production is expected to be between 1.4 and 1.6 million tons in the third quarter. Jim Walter Resources recently restarted Saturday production on improving sales demand early in the period. The Company plans to begin longwall production from its 7 East expansion in early January 2010.
Third quarter metallurgical coal operating margins are expected to be reduced by higher costs in inventory at the beginning of the period. Production costs are expected to drop to an average $60 - $65 per ton in the quarter as production volumes increase and the mix of longwall tons to continuous miner tons improves.
Capital expenditures were $17.2 million in the second quarter, totaling $52.4 million in the first half. The Company expects capital expenditures to total about $34 million in the second half.
Conference Call Webcast
Members of the Company’s leadership team will discuss Walter Energy’s second quarter results, its outlook and other general business matters during a conference call and live Web cast to be held on Thursday, July 23, 2009, at 10 a.m. Eastern Daylight Time. To listen to the event live or in archive, visit the Company Web site at www.walterenergy.com.
About Walter Energy
Walter Energy, based in Tampa, Fla., is a leading U.S. producer and exporter of premium metallurgical 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 $1.2 billion and employs
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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. Forward-looking statements, including expressions such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “may,” “will,” and similar expressions involve known and unknown risks, uncertainties, and other factors that may cause Walter Energy’s actual results in future periods to differ materially from the expectations expressed or implied by such forward-looking statements. These factors include, among others, the following: the market demand for the Company’s products 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 Walter Energy’s mining operations; changes in customer orders; pricing actions by the Company’s competitors, customers, suppliers and contractors; changes in governmental policies and laws; and changes in general economic conditions. Forward- looking statements made by Walter Energy in this release, or elsewhere, speak only as of the date on which the statements were made. Any forward-looking statements should be considered in context with the various disclosures made by Walter Energy, including the Risk Factors described in the Company’s 2008 Annual Report on Form 10-K and Walter Energy’s other filings with the Securities and Exchange Commission. Walter Energy has no obligation to update its forward-looking statements as of any future date.
- WLT -
4
WALTER ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share and share amounts)
Unaudited
| | For the three months | |
| | ended June 30, | |
| | 2009 | | 2008 | |
Net sales and revenues: | | | | | |
Net sales | | $ | 167,005 | | $ | 269,439 | |
Miscellaneous income | | 2,115 | | 4,969 | |
| | 169,120 | | 274,408 | |
| | | | | |
Costs and expenses: | | | | | |
Cost of sales (exclusive of depreciation) | | 105,343 | | 164,123 | |
Depreciation | | 18,268 | | 12,180 | |
Selling, general and administrative | | 16,188 | | 19,192 | |
Postretirement benefits | | 7,781 | | 6,860 | |
Amortization of intangibles | | 111 | | 67 | |
| | 147,691 | | 202,422 | |
| | | | | |
Operating income | | 21,429 | | 71,986 | |
Interest expense | | (4,416 | ) | (11,183 | ) |
Interest income | | 202 | | 185 | |
Income from continuing operations before income taxes | | 17,215 | | 60,988 | |
Income tax expense | | 5,879 | | 15,357 | |
Income from continuing operations | | 11,336 | | 45,631 | |
Discontinued operations (1) | | (265 | ) | 5,145 | |
Net income | | $ | 11,071 | | $ | 50,776 | |
| | | | | |
Basic income per share: | | | | | |
Income from continuing operations | | $ | 0.21 | | $ | 0.86 | |
Discontinued operations | | — | | 0.10 | |
| | | | | |
Basic net income per share | | $ | 0.21 | | $ | 0.96 | |
| | | | | |
Weighted average number of shares outstanding | | 52,874,868 | | 52,982,775 | |
| | | | | |
Diluted income per share: | | | | | |
Income from continuing operations | | $ | 0.21 | | $ | 0.85 | |
Discontinued operations | | — | | 0.09 | |
| | | | | |
Diluted net income per share | | $ | 0.21 | | $ | 0.94 | |
| | | | | |
Weighted average number of diluted shares outstanding | | 53,412,056 | | 53,771,216 | |
(1) | Discontinued operations includes the results of Financing, Homebuilding and Kodiak Mining, Co., (“Kodiak”), for all periods presented. On April 17, 2009, Financing was spun off to shareholders and merged with Hanover Capital Mortgage Holdings, Inc., creating Walter Investment Management Corporation, a publicly traded real estate investment trust. The Company announced the closure of its Homebuilding business in January 2009 and continues to liquidate the remaining assets. The Company’s Kodiak mining operations were closed in December 2008. |
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WALTER ENERGY, INC. AND SUBSIDIARIES
RESULTS BY OPERATING SEGMENT
($ in thousands)
Unaudited
| | For the three months | |
| | ended June 30, | |
| | 2009 | | 2008 | |
| | | | | |
NET SALES AND REVENUES: | | | | | |
Underground Mining (1) | | $ | 130,411 | | $ | 227,664 | |
Surface Mining (1) | | 21,680 | | 15,218 | |
Walter Coke | | 18,650 | | 53,265 | |
Other | | 809 | | 550 | |
Consolidating eliminations of intersegment activity | | (2,430 | ) | (22,289 | ) |
| | $ | 169,120 | | $ | 274,408 | |
| | | | | |
OPERATING INCOME (LOSS): | | | | | |
Underground Mining (1) | | $ | 22,637 | | $ | 63,717 | |
Surface Mining (1) | | 5,338 | | 1,351 | |
Walter Coke | | (2,665 | ) | 15,091 | |
Other | | (4,663 | ) | (8,012 | ) |
Consolidating eliminations of intersegment activity | | 782 | | (161 | ) |
Operating income | | $ | 21,429 | | $ | 71,986 | |
(1) | The previous year’s presentation has been revised to reflect a change in reportable segments from Natural Resources to Underground Mining and Surface Mining and to exclude Kodiak, which is reported as discontinued operations. Underground Mining includes the Company’s deep underground metallurgical coal operations from the No. 4 and No. 7 mines, and its natural gas operations. Surface Mining includes the operations of Tuscaloosa Resources, Inc., Taft Coal Sales & Associates and Walter Minerals. |
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WALTER ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share and share amounts)
Unaudited
| | For the six months | |
| | ended June 30, | |
| | 2009 | | 2008 | |
Net sales and revenues: | | | | | |
Net sales | | $ | 445,171 | | $ | 467,415 | |
Miscellaneous income | | 7,086 | | 7,926 | |
| | 452,257 | | 475,341 | |
| | | | | |
Costs and expenses: | | | | | |
Cost of sales (exclusive of depreciation) | | 245,809 | | 297,811 | |
Depreciation | | 36,002 | | 24,308 | |
Selling, general and administrative | | 31,853 | | 35,657 | |
Postretirement benefits | | 15,425 | | 13,717 | |
Amortization of intangibles | | 223 | | 139 | |
| | 329,312 | | 371,632 | |
| | | | | |
Operating income | | 122,945 | | 103,709 | |
Interest expense | | (9,215 | ) | (16,897 | ) |
Interest income | | 476 | | 365 | |
Income from continuing operations before income taxes | | 114,206 | | 87,177 | |
Income tax expense | | 30,020 | | 24,266 | |
Income from continuing operations | | 84,186 | | 62,911 | |
Discontinued operations (1) | | (12 | ) | (11,636 | ) |
Net income | | $ | 84,174 | | $ | 51,275 | |
| | | | | |
Basic income (loss) per share: | | | | | |
Income from continuing operations | | $ | 1.58 | | $ | 1.20 | |
Discontinued operations | | — | | (0.22 | ) |
| | | | | |
Basic net income per share | | $ | 1.58 | | $ | 0.98 | |
| | | | | |
Weighted average number of shares outstanding | | 53,113,659 | | 52,581,857 | |
| | | | | |
Diluted income (loss) per share: | | | | | |
Income from continuing operations | | $ | 1.57 | | $ | 1.18 | |
Discontinued operations | | — | | (0.22 | ) |
| | | | | |
Diluted net income per share | | $ | 1.57 | | $ | 0.96 | |
| | | | | |
Weighted average number of diluted shares outstanding | | 53,514,579 | | 53,332,579 | |
(1) | Discontinued operations includes the results of Financing, Homebuilding and Kodiak Mining, Co., (“Kodiak”), for all periods presented. On April 17, 2009, Financing was spun off to shareholders and merged with Hanover Capital Mortgage Holdings, Inc., creating Walter Investment Management Corporation, a publicly traded real estate investment trust. The Company announced the closure of its Homebuilding business in January 2009 and continues to liquidate the remaining assets. The Company’s Kodiak mining operations were closed in December 2008. |
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WALTER ENERGY, INC. AND SUBSIDIARIES
RESULTS BY OPERATING SEGMENT
($ in thousands)
Unaudited
| | For the six months | |
| | ended June 30, | |
| | 2009 | | 2008 | |
| | | | | |
NET SALES AND REVENUES: | | | | | |
Underground Mining (1) | | $ | 374,610 | | $ | 370,869 | |
Surface Mining (1) | | 48,298 | | 29,695 | |
Walter Coke | | 40,557 | | 104,136 | |
Other | | 1,129 | | 841 | |
Consolidating eliminations of intersegment activity | | (12,337 | ) | (30,200 | ) |
| | $ | 452,257 | | $ | 475,341 | |
| | | | | |
OPERATING INCOME (LOSS): | | | | | |
Underground Mining (1) | | $ | 122,490 | | $ | 83,045 | |
Surface Mining (1) | | 10,853 | | 3,982 | |
Walter Coke | | (1,072 | ) | 33,791 | |
Other | | (9,814 | ) | (16,441 | ) |
Consolidating eliminations of intersegment activity | | 488 | | (668 | ) |
Operating income | | $ | 122,945 | | $ | 103,709 | |
(1) | The previous year’s presentation has been revised to reflect a change in reportable segments from Natural Resources to Underground Mining and Surface Mining and to exclude Kodiak, which is reported as discontinued operations. Underground Mining includes the Company’s deep underground metallurgical coal operations from the No. 4 and No. 7 mines, and its natural gas operations. Surface Mining includes the operations of Tuscaloosa Resources, Inc., Taft Coal Sales & Associates and Walter Minerals. |
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WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Unaudited
| | For the three months | | For the six months | |
| | ended June 30, | | ended June 30, | |
| | 2009 | | 2008 | | 2009 | | 2008 | |
Operating Data: | | | | | | | | | |
Underground Mining Tons sold by type (in thousands): | | | | | | | | | |
Metallurgical coal, contracts | | 1,051 | | 1,535 | | 2,749 | | 3,012 | |
Purchased coal | | 39 | | 212 | | 94 | | 229 | |
| | 1,090 | | 1,747 | | 2,843 | | 3,241 | |
| | | | | | | | | |
Average selling price per short ton | | $ | 113.63 | | $ | 110.79 | | $ | 125.72 | | $ | 98.61 | |
| | | | | | | | | |
Tons sold by mine (in thousands): | | | | | | | | | |
Mine No. 4 | | 571 | | 995 | | 1,360 | | 1,846 | |
Mine No. 7 | | 480 | | 540 | | 1,389 | | 1,166 | |
Total | | 1,051 | | 1,535 | | 2,749 | | 3,012 | |
| | | | | | | | | |
Coal cost of sales (exclusive of depreciation): | | | | | | | | | |
Mine No. 4 per ton | | $ | 72.46 | | $ | 60.23 | | $ | 68.28 | | $ | 56.39 | |
Mine No. 7 per ton | | $ | 55.64 | | $ | 78.36 | | $ | 58.61 | | $ | 77.30 | |
Weighted average cost of sales per ton | | $ | 64.78 | | $ | 66.62 | | $ | 63.39 | | $ | 64.48 | |
Purchased coal costs (in thousands) | | $ | 1,535 | | $ | 11,728 | | $ | 3,956 | | $ | 12,416 | |
Other costs (in thousands) (1) | | $ | 4,664 | | $ | 4,796 | | $ | 6,357 | | $ | 7,402 | |
| | | | | | | | | |
Tons of coal produced (in thousands): | | | | | | | | | |
Mine No. 4 | | 656 | | 773 | | 1,426 | | 1,742 | |
Mine No. 7 | | 599 | | 622 | | 1,768 | | 1,260 | |
Total | | 1,255 | | 1,395 | | 3,194 | | 3,002 | |
| | | | | | | | | |
Coal production costs per ton: (2) | | | | | | | | | |
Mine No. 4 | | $ | 59.66 | | $ | 46.77 | | $ | 54.10 | | $ | 40.79 | |
Mine No. 7 | | $ | 80.02 | | $ | 70.64 | | $ | 62.41 | | $ | 68.98 | |
Weighted average production costs per ton | | $ | 69.38 | | $ | 57.41 | | $ | 58.70 | | $ | 52.62 | |
| | | | | | | | | |
Natural gas sales, in mmcf (in thousands) | | 1,589 | | 1,612 | | 3,273 | | 3,177 | |
Natural gas average sale price per mmcf | | $ | 3.45 | | $ | 8.99 | | $ | 4.79 | | $ | 8.48 | |
Natural gas cost of sales per mmcf | | $ | 2.63 | | $ | 3.99 | | $ | 2.60 | | $ | 3.47 | |
| | | | | | | | | |
Surface Mining | | | | | | | | | |
Tons sold (in thousands) | | 277 | | 224 | | 606 | | 423 | |
Tons of coal produced (in thousands) | | 374 | | 221 | | 669 | | 433 | |
Average selling price per short ton | | $ | 73.60 | | $ | 61.71 | | $ | 71.90 | | $ | 60.64 | |
Coal production costs per ton | | $ | 50.52 | | $ | 61.83 | | $ | 57.42 | | $ | 56.42 | |
(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. |
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WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Unaudited
| | For the three months | | For the six months |
| | ended June 30, | | ended June 30, |
| | 2009 | | 2008 | | 2009 | | 2008 | |
Operating Data (continued): | | | | | | | | | |
| | | | | | | | | |
Walter Coke: | | | | | | | | | |
Metallurigical coke tons sold | | 28,247 | | 106,431 | | 73,447 | | 210,454 | |
Metallurigical coke average sales price per ton | | $ | 369.07 | | $ | 397.50 | | $ | 331.65 | | $ | 393.05 | |
| | | | | | | | | |
Depreciation ($ in thousands): | | | | | | | | | |
Underground Mining | | $ | 14,787 | | $ | 9,995 | | $ | 28,936 | | $ | 19,755 | |
Surface Mining | | 2,226 | | 978 | | 4,552 | | 2,108 | |
Walter Coke | | 1,151 | | 979 | | 2,278 | | 1,985 | |
Other | | 104 | | 228 | | 236 | | 460 | |
| | $ | 18,268 | | $ | 12,180 | | $ | 36,002 | | $ | 24,308 | |
| | | | | | | | | |
Capital expenditures ($ in thousands): | | | | | | | | | |
Underground Mining | | $ | 13,791 | | $ | 28,828 | | $ | 37,497 | | $ | 49,022 | |
Surface Mining | | 2,110 | | 493 | | 11,808 | | 1,272 | |
Walter Coke | | 1,336 | | 2,017 | | 3,051 | | 3,592 | |
Other | | — | | 7 | | 7 | | 113 | |
| | $ | 17,237 | | $ | 31,345 | | $ | 52,363 | | $ | 53,999 | |
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WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)
Unaudited
| | As of | |
| | June 30, | | December 31, | |
| | 2009 | | 2008 | |
ASSETS | | | | | |
Current assets of continuing operations: | | | | | |
Cash and cash equivalents | | $ | 42,030 | | $ | 116,074 | |
Receivables, net | | 102,469 | | 140,423 | |
Inventories | | 136,583 | | 75,172 | |
Deferred income taxes | | 27,329 | | 84,669 | |
Other current assets | | 34,466 | | 26,119 | |
Total current assets | | 342,877 | | 442,457 | |
Property, plant and equipment, net | | 519,847 | | 504,585 | |
Deferred income taxes | | 224,747 | | 179,402 | |
Other long-term assets | | 67,215 | | 69,251 | |
Total assets of continuing operations | | 1,154,686 | | 1,195,695 | |
| | | | | |
Assets of discontinued operations: | | | | | |
Current assets (1) | | 26,505 | | 16,158 | |
Long-term assets (1) | | — | | 18,396 | |
Unclassified assets (2) | | — | | 1,837,744 | |
Total assets of discontinued operations | | 26,505 | | 1,872,298 | |
TOTAL ASSETS | | $ | 1,181,191 | | $ | 3,067,993 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
Current liabilities of continuing operations | | | | | |
Accounts payable | | $ | 46,858 | | $ | 60,497 | |
Accrued expenses | | 39,231 | | 57,230 | |
Current debt | | 21,835 | | 13,480 | |
Accumulated postretirement benefits obligation | | 19,130 | | 19,124 | |
Other current liabilities | | 19,663 | | 20,801 | |
Total current liabilities of continuing operations | | 146,717 | | 171,132 | |
Long-term debt | | 167,353 | | 211,905 | |
Accumulated postretirement benefits obligation | | 351,116 | | 349,184 | |
Other long-term liabilities | | 262,532 | | 273,645 | |
Total liabilities of continuing operations | | 927,718 | | 1,005,866 | |
| | | | | |
Liabilities of discontinued operations: | | | | | |
Current liabilities (1) | | 9,419 | | 12,400 | |
Unclassified liabilities (2) | | — | | 1,419,458 | |
Total liabilities of discontinued operations | | 9,419 | | 1,431,858 | |
TOTAL LIABILITIES | | 937,137 | | 2,437,724 | |
| | | | | |
STOCKHOLDERS’ EQUITY | | 244,054 | | 630,269 | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 1,181,191 | | $ | 3,067,993 | |
(1) Includes the remaining assets and liabilities of the Company’s closed businesses: Homebuilding and Kodiak.
(2) Represents the assets and liabilities of the Company’s Financing business, which was spun off to shareholders on April 17, 2009.
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WALTER ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2009
($ in thousands)
Unaudited
| | | | | | | | | | | | Accumulated | |
| | | | | | Capital in | | | | | | Other | |
| | | | Common | | Excess of | | Comprehensive | | Retained | | Comprehensive | |
| | Total | | Stock | | Par Value | | Income | | Earnings | | Loss | |
| | | | | | | | | | | | | |
Balance at December 31, 2008 | | $ | 630,269 | | $ | 541 | | $ | 714,174 | | | | $ | 50,990 | | $ | (135,436 | ) |
| | | | | | | | | | | | | |
Comprehensive income: | | | | | | | | | | | | | |
Net income | | 84,174 | | | | | | $ | 84,174 | | 84,174 | | | |
Other comprehensive income (loss), net of tax: | | | | | | | | | | | | | |
Change in pension and postretirement benefit plans | | 3,711 | | | | | | 3,711 | | | | 3,711 | |
Change in unrealized gain (loss) on hedges | | (1,338 | ) | | | | | (1,338 | ) | | | (1,338 | ) |
Comprehensive income | | | | | | | | $ | 86,547 | | | | | |
| | | | | | | | | | | | | |
Purchases of stock under stock repurchase program | | (27,963 | ) | (13 | ) | (27,950 | ) | | | | | | |
Stock dividend for spin-off of Financing | | (439,093 | ) | | | (321,301 | ) | | | (116,106 | ) | (1,686 | ) |
Dividends paid, $0.20 per share | | (10,598 | ) | | | | | | | (10,598 | ) | | |
Stock-based compensation | | 4,053 | | | | 4,053 | | | | | | | |
Other | | 839 | | 1 | | 838 | | | | | | | |
Balance at June 30, 2009 | | $ | 244,054 | | $ | 529 | | $ | 369,814 | | | | $ | 8,460 | | $ | (134,749 | ) |
12
WALTER ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
Unaudited
| | For the six months ended June 30, | |
| | 2009 | | 2008 | |
| | | | | |
OPERATING ACTIVITIES | | | | | |
Net income | | $ | 84,174 | | $ | 51,275 | |
Loss from discontinued operations | | 12 | | 11,636 | |
Income from continuing operations | | 84,186 | | 62,911 | |
| | | | | |
Adjustments to reconcile income from continuing operations to net cash flows provided by operating activities: | | | | | |
Depreciation | | 36,002 | | 24,308 | |
Other | | 20,694 | | 9,556 | |
| | | | | |
Decrease (increase) in assets: | | | | | |
Receivables | | 37,960 | | (49,527 | ) |
Inventories | | (61,411 | ) | (16,236 | ) |
Other current assets | | 6,968 | | 13,976 | |
Increase (decrease) in liabilities: | | | | | |
Accounts payable | | (13,639 | ) | 15,938 | |
Accrued expenses and other current liabilities | | (17,601 | ) | (10,051 | ) |
Cash flows provided by operating activities | | 93,159 | | 50,875 | |
| | | | | |
INVESTING ACTIVITIES | | | | | |
Additions to property, plant and equipment | | (52,363 | ) | (53,999 | ) |
Other | | 2,278 | | (1,134 | ) |
Cash flows used in investing activities | | (50,085 | ) | (55,133 | ) |
| | | | | |
FINANCING ACTIVITIES | | | | | |
Proceeds from issuance of debt | | — | | 280,000 | |
Retirements of debt | | (48,907 | ) | (315,669 | ) |
Proceeds from stock offering | | — | | 280,432 | |
Dividends paid | | (10,598 | ) | (5,225 | ) |
Cash spun off to Financing | | (33,821 | ) | — | |
Purchases of stock under stock repurchase program | | (27,963 | ) | (1,765 | ) |
Other | | 63 | | 6,307 | |
Cash flows provided by (used in) financing activities | | (121,226 | ) | 244,080 | |
Cash flows provided by (used in) continuing operations | | (78,152 | ) | 239,822 | |
| | | | | |
CASH FLOWS FROM DISCONTINUED OPERATIONS | | | | | |
Cash flows provided by (used in) operating activities | | 21,981 | | (6,856 | ) |
Cash flows provided by investing activities | | 23,006 | | 20,521 | |
Cash flows used in financing activities | | (41,385 | ) | (266,448 | ) |
Cash flows provided by (used in) discontinued operations | | 3,602 | | (252,783 | ) |
| | | | | |
Net decrease in cash and cash equivalents | | $ | (74,550 | ) | $ | (12,961 | ) |
| | | | | |
Cash and cash equivalents at beginning of period | | $ | 116,074 | | $ | 27,459 | |
Add: Cash and cash equivalents of discontinued operations at beginning of year | | 1,598 | | 3,155 | |
Net decrease in cash and cash equivalents | | (74,550 | ) | (12,961 | ) |
Less: Cash and cash equivalents of discontinued operations at end of period | | 1,092 | | 2,455 | |
Cash and cash equivalents at end of period | | $ | 42,030 | | $ | 15,198 | |
| | | | | |
SUPPLEMENTAL DISCLOSURE | | | | | |
Non-cash transaction: financing of one-year property insurance policy | | $ | 12,710 | | $ | 17,355 | |
Non-cash transaction: dividend to spin off Financing | | $ | 437,407 | | NA | |
13
