Walter Energy Announces Fourth Quarter and Full-Year 2011 Results Results Driven by Acquisition of Western Coal
Results Driven by Acquisition of Western Coal
BIRMINGHAM, AL -- (Marketwire) -- 02/21/12 -- Walter Energy, Inc. (NYSE: WLT) (TSX: WLT)
- Achieves Record 2011 Revenue of $2.6 Billion, Up 62% Over 2010 Revenue of $1.6 Billion
- Earns $349 Million in Net Income, $5.76 of Diluted EPS
- Earns Record EBITDA of $822 Million in 2011, Up 19% Over 2010 EBITDA of $693 Million
- Produces Record Metallurgical Coal Sales of 8.7 Million Metric Tons in 2011
- Earns Fourth Quarter 2011 EBITDA of $207 Million
- Repays $103.5 Million of Debt
Walter Energy, Inc. (NYSE: WLT) (TSX: WLT), the world's leading, publicly traded pure-play producer of metallurgical (met) coal for the global steel industry, today announced results for the year and quarter ended Dec. 31, 2011. Summary highlights below.
Q4 FY
------------------------- -------------------------
2011 2010 2011 2010
------------ ------------ ------------ ------------
Revenue $700 million $401 million $2.6 billion $1.6 billion
Operating Income
(millions) $137 $145 $559 $594
Net Income (millions) $84 $92 $349 $386
EPS - Diluted $1.34 $1.72 $5.76 $7.18
EBITDA (millions)* $207 $171 $822 $693
Met Coal Sales (MMTs) 2.4 1.5 8.7** 6.3
*Earnings before interest, taxes, depreciation and amortization.
**Excludes first quarter 2011 pre-acquisition met coal sales of
approximately 1 million metric tons (MMTs) from Western Coal.
'Walter Energy delivered solid growth in 2011 growing revenue by almost $1 billion and earning a record EBITDA of $822 million,' said Walt Scheller, Chief Executive Officer. 'We completed a major met coal acquisition of Western Coal, which is contributing to significant sales growth, greater global diversification and the broadening of our portfolio of mining assets. For 2012, we remain well-positioned to achieve record met coal production, and we are on target for 11.5 - 13.0 MMTs comprised of approximately 75% hard coking coal and 25% PCI. We expect more than one-third of the increase to come from Mine No. 7, just under one-third to come from our other U.S. operations, and approximately one-third to come from our Canadian operations. Longer term, our development portfolio for new met coal projects is strong and should continue to make Walter Energy one of the largest and most profitable (measured by profit per ton) producers of met coal in the world.'
Sales of hard coking coal (HCC) were 1.9 MMTs in the fourth quarter of 2011, up 18% from 1.6 MMTs in the third quarter 2011. The average net selling price for HCC was $244/MT, as compared with $263/MT in the third quarter 2011. Average cash costs for HCC were $132/MT, the same as in third quarter 2011. In the fourth quarter 2011, cash margins for HCC were $112/MT.
Sales of low-volatility pulverized coal injection (low-vol PCI) were 523 thousand MTs in the fourth quarter 2011 and 562 thousand MTs in the third quarter. The average net selling price for PCI was $212/MT in the fourth quarter 2011 and $209/MT in the third quarter 2011. Average cash costs for PCI were $165/MT in the fourth quarter and $143/MT in the third quarter 2011. In the fourth quarter 2011, cash margins for PCI were $47/MT.
Full-Year 2011 Financial Results
For the full-year 2011, revenues were $2,571 million, a $983 million increase, or 62% over 2010 revenues of $1,588 million and were driven largely by the Western Coal acquisition. EBITDA was $822 million in 2011, up $129 million, or 19% from 2010 EBITDA of $693 million. The improvement in both revenue and EBITDA was largely due to the acquisition of Western Coal and more favorable pricing for HCC year over year.
Operating income for 2011 was $559 million and net income was $349 million, or $5.76 per diluted share. Operating income for 2010 was $594 million and net income was $386 million, or $7.18 per diluted share. The decreases are largely due to the acquisition of Western Coal and the related issuance of additional shares. The average number of shares outstanding was 60.6 million in 2011 and 53.7 million in 2010.
Fourth Quarter 2011 Financial Results
Revenues for the fourth quarter 2011 were $700 million, a $299 million increase, or 75% over fourth quarter 2010 revenues of $401 million. EBITDA was $207 million in the fourth quarter 2011, an increase of $36 million, or 21% over fourth quarter 2010 EBITDA of $171 million.
Operating income for the fourth quarter 2011 was $137 million and net income was $84 million, or $1.34 per diluted share. The average number of shares outstanding for the quarter was 62.7 million.
Liquidity and Capital Expenditures
As of December 31, 2011, the Company had available liquidity of approximately $422 million, consisting of cash and cash equivalents of $128 million plus $294 million available under the Company's $375 million credit revolver. Capital expenditures for the fourth quarter 2011 were $121 million and for the year 2011 were $415 million.
2012 Production Guidance
The Company currently anticipates full-year 2012 met coal production will be between 11.5 MMTs and 13.0 MMTs of which approximately 75% will be HCC and 25% will be low-vol PCI.
Transaction with Chevron Mining
In May 2011, Walter Energy completed the execution of mineral leases for approximately 75 million tons of recoverable Blue Creek coking coal reserves. The transaction captured an integral portion of the last remaining block of Blue Creek coal and paves the way for a strategic opportunity to assemble 170 million tons of high quality coking coal and the development of a new underground mine.
Safety and Stewardship Highlights
The Company reduced its total reportable injury rate by 15% as compared with Walter Energy and Western Coal pro forma 2011 and 2010 rates. This reduction is the result of our commitment to improve employee health and safety and a workforce dedicated to a safety culture. Our aggressive commitment to safety continues in our 2012 goal to further reduce accidents and citations by 20%.
In May 2011, Walter Energy contributed $1 million to aid the victims of the April 27 tornadoes in central and west central Alabama of which $750,000 went to the American Red Cross and an additional $250,000 went to Alabama Governor Robert Bentley's Emergency Relief Fund.
The Company is also pleased to announce that it recently received the Surface Mine Reclamation Award 2011 at the 39th Annual West Virginia Coal Association Mining Symposium for its Lower Muddlety Nos. 1 and 2 Surface Mines in Nicholas County, West Virginia, for excellence in design, operation and reclamation of a surface mining operation.
Use of Non-GAAP Measures
This release contains the use of certain U.S. non-GAAP (Generally Accepted Accounting Principles) measures such as 'adjusted earnings per diluted share' and 'adjusted net income' as well as EBITDA. These non-GAAP measures are provided as supplemental to, and not as replacement of, nor equal to, financial measures prepared in accordance with GAAP. Management feels that these non-GAAP measures provide additional insights into the performance of the Company that they believe are helpful to investors and they reflect how management analyzes Company performance and compares that performance against other companies. A reconciliation of non-GAAP to GAAP measures is provided in the financial section of this release.
Conference Call Webcast
The Company will hold a conference call webcast to discuss fourth quarter and full-year 2011 results on Tuesday, Feb. 21, 2012, at 11 a.m. ET. To listen to the live event, visit www.walterenergy.com.
About Walter Energy
Walter Energy is the world's leading, publicly traded pure-play metallurgical coal producer for the global steel industry with strategic access to high-growth steel markets in Asia, South America and Europe. The Company also produces thermal coal and industrial coal, anthracite, metallurgical coke and coal bed methane gas. Walter Energy employs approximately 4,400 employees and contractors with operations in the United States, Canada and United Kingdom. For more information about Walter Energy, please visit 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. 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 2010 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 the date of this release unless otherwise noted.
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share and share amounts)
Unaudited
For the three months
ended December 31,
----------------------------
2011 (1) 2010
------------- -------------
Revenues:
Sales $ 703,982 $ 396,863
Miscellaneous (loss) income (4,427) 3,934
------------- -------------
699,555 400,797
------------- -------------
Costs and expenses:
Cost of sales (exclusive of depreciation and
depletion) 455,104 192,421
Depreciation and depletion 64,679 26,743
Selling, general and administrative (2) 33,224 26,519
Postretirement benefits 10,011 10,379
------------- -------------
563,018 256,062
------------- -------------
Operating income 136,537 144,735
Interest expense (33,575) (4,130)
Interest income 250 151
Other income, net (3) 6,246 -
------------- -------------
Income from continuing operations before income
taxes 109,458 140,756
Income tax expense 25,674 47,108
------------- -------------
Income from continuing operations 83,784 93,648
Discontinued operations (4) - (1,780)
------------- -------------
Net income $ 83,784 $ 91,868
============= =============
Basic income per share:
Income from continuing operations $ 1.34 $ 1.77
Discontinued operations - (0.04)
------------- -------------
Net income $ 1.34 $ 1.73
============= =============
Weighted average number of shares outstanding
(5) 62,441,694 52,992,021
============= =============
Diluted income per share:
Income from continuing operations $ 1.34 $ 1.75
Discontinued operations - (0.03)
------------- -------------
Net income $ 1.34 $ 1.72
============= =============
Weighted average number of diluted shares
outstanding (5) 62,738,135 53,420,985
============= =============
(1) Includes the results of Western Coal since the April 1, 2011 date of
acquisition as well as the effect of related preliminary purchase
accounting.
(2) Amount for 2010 includes $5.9 million of costs associated with the
acquisition of Western Coal.
(3) Other income represents a gain on the remeasurement to fair value of
equity investments.
(4) Discontinued operations includes the results of our closed Homebuilding
and Kodiak operations for the fourth quarter 2010.
(5) The 2011 fourth quarter weighted average number of shares outstanding
gives effect to the issuance of 8,951,558 common shares on April 1, 2011
in connection with the acquisition of Western Coal.
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per share and share amounts)
Unaudited
For the years
ended December 31,
----------------------------
2011 (1) 2010
------------- -------------
Revenues:
Sales $ 2,562,325 $ 1,570,845
Miscellaneous income 9,033 16,885
------------- -------------
2,571,358 1,587,730
------------- -------------
Costs and expenses:
Cost of sales (exclusive of depreciation and
depletion) 1,561,112 766,516
Depreciation and depletion 245,509 98,702
Selling, general and administrative (2) 165,749 86,972
Postretirement benefits 40,385 41,478
------------- -------------
2,012,755 993,668
------------- -------------
Operating income 558,603 594,062
Interest expense (96,820) (17,250)
Interest income 606 784
Other income, net (3) 17,606 -
------------- -------------
Income from continuing operations before income
taxes 479,995 577,596
Income tax expense 130,819 188,171
------------- -------------
Income from continuing operations 349,176 389,425
Discontinued operations (4) - (3,628)
------------- -------------
Net income $ 349,176 $ 385,797
============= =============
Basic income per share:
Income from continuing operations $ 5.79 $ 7.32
Discontinued operations - (0.07)
------------- -------------
Net income $ 5.79 $ 7.25
============= =============
Weighted average number of shares outstanding
(5) 60,257,029 53,178,901
============= =============
Diluted income per share:
Income from continuing operations $ 5.76 $ 7.25
Discontinued operations - (0.07)
------------- -------------
Net income $ 5.76 $ 7.18
============= =============
Weighted average number of diluted shares
outstanding (5) 60,611,154 53,700,181
============= =============
(1) Includes the results of Western Coal since the April 1, 2011 date of
acquisition as well as the effect of related preliminary purchase
accounting.
(2) Amounts for 2011 and 2010 include $23.2 million and $5.9 million,
respectively, of costs associated with the acquisition of Western Coal.
(3) Results for 2011 include a gain recognized on April 1, 2011 of $20.6
million as a result of remeasuring to fair value Western shares acquired
from Audley Capital in January 2011, partially offset by a net loss on the
sale and remeasurment to fair value of our other equity investments.
(4) Discontinued operations includes the results of our closed Homebuilding
and Kodiak operations for 2010.
(5) The weighted average number of shares outstanding in 2011 gives effect
to the issuance of 8,951,558 common shares on April 1, 2011 in connection
with the acquisition of Western Coal.
WALTER ENERGY, INC. AND SUBSIDIARIES
RESULTS BY OPERATING SEGMENT (1)
($ in thousands)
Unaudited
For the three months For the years
ended December 31, ended December 31,
------------------------ ------------------------
2011 2010 2011 2010
----------- ----------- ----------- -----------
REVENUES:
U.S. Operations $ 489,264 $ 399,951 $ 1,871,182 $ 1,584,734
Canadian and U.K.
Operations 209,798 - 698,054 -
Other 493 846 2,122 2,996
----------- ----------- ----------- -----------
Revenues $ 699,555 $ 400,797 $ 2,571,358 $ 1,587,730
=========== =========== =========== ===========
OPERATING INCOME (LOSS):
U.S. Operations $ 145,385 $ 157,432 $ 565,731 $ 634,442
Canadian and U.K.
Operations 5,664 - 67,349 -
Other (2) (14,512) (12,697) (74,477) (40,380)
----------- ----------- ----------- -----------
Operating income $ 136,537 $ 144,735 $ 558,603 $ 594,062
=========== =========== =========== ===========
DEPRECIATION AND
DEPLETION:
U.S. Operations $ 37,171 $ 26,547 $ 151,341 $ 98,170
Canadian and U.K.
Operations 27,304 - 93,392 -
Other 204 196 776 532
----------- ----------- ----------- -----------
Depreciation and
Depletion $ 64,679 $ 26,743 $ 245,509 $ 98,702
=========== =========== =========== ===========
CAPITAL EXPENDITURES:
U.S. Operations $ 23,453 $ 76,291 $ 149,996 $ 152,299
Canadian and U.K.
Operations 97,639 - 264,476 -
Other 97 955 94 5,177
----------- ----------- ----------- -----------
Capital Expenditures $ 121,189 $ 77,246 $ 414,566 $ 157,476
=========== =========== =========== ===========
(1) Beginning in the second quarter of 2011 the Company reports all
operations located in the U.S. in the U.S. Operations segment which
includes Walter Energy's historical operating segments of Underground
Mining, Surface Mining and Walter Coke along with the West Virginia mining
operations acquired through the April 1, 2011 acquisition of Western Coal.
The Company reports its mining operations located in northeast British
Columbia (Canada) and South Wales (United Kingdom), both acquired through
the Western Coal acquisition, in the Canadian and U.K. Operations segment.
The Other segment primarily includes corporate expenses.
(2) Amounts for the year ended December 31, 2011 include $23.2 million and
amounts for the 2010 fourth quarter and year ended December 31, 2010
include $5.9 million of costs associated with the acquisition of Western
Coal.
WALTER ENERGY, INC. AND SUBSIDIARIES
QUARTERLY STATISTICAL RESULTS AND FOURTH QUARTER GUIDANCE BY OPERATING
SEGMENT AND MAJOR PRODUCT
(Ton information in thousand metric tons and dollars in USD)
Consolidated Statistical
Information by Major Product
3 months ended 3 months ended 3 months ended
December 31, December 31, September 30,
2011 Actual 2010 Actual 2011 Actual
-------------- -------------- --------------
Hard Coking
Sales Metric Tons 1,878 1,493 1,588
Production Metric Tons 1,840 1,329 1,678
Average Net Selling Price $ 244.34 $ 217.64 $ 263.23
Average Cash Cost per Ton
(1)(2) $ 131.74 $ 91.14 $ 132.14
Low Vol PCI
Sales Metric Tons 523 - 562
Production Metric Tons 567 - 587
Average Net Selling Price $ 212.29 - $ 209.12
Average Cash Cost per Ton
(1)(2) $ 165.44 - $ 143.42
Thermal
Sales Metric Tons 1,068 235 1,337
Production Metric Tons 993 287 1,359
Average Net Selling Price $ 69.86 $ 87.67 $ 71.40
Average Cash Cost per Ton
(1)(2) $ 69.40 $ 75.09 $ 63.58
Total All
Sales Metric Tons 3,469 1,727 3,487
Production Metric Tons 3,401 1,616 3,625
Average Net Selling Price $ 185.79 $ 199.99 $ 180.96
Average Cash Cost per Ton
(1)(2) $ 117.63 $ 88.96 $ 107.67
US Segment Statistical
Information by Major Product
3 months ended 3 months ended 3 months ended
December 31, December 31, September 30,
2011 Actual 2010 Actual 2011 Actual
-------------- -------------- --------------
Hard Coking
Sales Metric Tons 1,390 1,493 1,232
Production Metric Tons 1,449 1,329 1,307
Average Net Selling Price $ 242.61 $ 217.64 $ 259.38
Average Cash Cost per Ton
(1)(2) $ 118.88 $ 91.14 $ 126.03
Thermal
Sales Metric Tons 1,036 235 1,302
Production Metric Tons 965 287 1,329
Average Net Selling Price $ 68.71 $ 87.67 $ 70.35
Average Cash Cost per Ton
(1)(2) $ 66.92 $ 75.09 $ 61.85
Total All
Sales Metric Tons 2,425 1,727 2,535
Production Metric Tons 2,414 1,616 2,637
Average Net Selling Price $ 168.35 $ 199.99 $ 162.25
Average Cash Cost per Ton
(1)(2) $ 96.69 $ 88.96 $ 93.06
Canada and UK Segment
Statistical Information by Major
Product
3 months ended 3 months ended 3 months ended
December 31, December 31, September 30,
2011 Actual 2010 Actual 2011 Actual
-------------- -------------- --------------
Hard Coking
Sales Metric Tons 488 - 356
Production Metric Tons 391 - 371
Average Net Selling Price $ 249.24 - $ 276.56
Average Cash Cost per Ton
(1)(2) $ 168.34 - $ 153.26
Low Vol PCI
Sales Metric Tons 523 - 562
Production Metric Tons 567 - 587
Average Net Selling Price $ 212.29 - $ 209.12
Average Cash Cost per Ton
(1)(2) $ 165.44 - $ 143.42
Thermal
Sales Metric Tons 32 - 35
Production Metric Tons 28 - 30
Average Net Selling Price $ 106.94 - $ 111.13
Average Cash Cost per Ton
(1)(2) $ 149.08 - $ 128.70
Total All
Sales Metric Tons 1,044 - 952
Production Metric Tons 987 - 988
Average Net Selling Price $ 226.32 - $ 230.78
Average Cash Cost per Ton
(1)(2) $ 166.29 - $ 146.57
(1) Average Cash Cost per Ton is based on reported Cost of Sales and
includes items such as freight, royalties, manpower, fuel and other similar
production and sales cost items but excludes depreciation, depletion and
post retirement benefits. Average Cash Cost per Ton is a non-GAAP 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 Cash Cost per Ton is a useful measure as
our management uses that as a measure of performance and we believe it aids
some investors and analysts in comparing us against other companies to help
analyze our current and future potential performance.
(2) Reconcilliation of Cash Cost per Ton to Cost of Sales as disclosed (in
thousands USD):
3 months ended 3 months ended 3 months ended
December 31, December 31, September 30,
2011 Actual 2010 Actual 2011 Actual
-------------- -------------- --------------
Cash Costs as Calculated from
Above (sales tons times average
cash cost per ton) $ 408,058 $ 153,634 $ 375,405
Cash Costs of Other Products 42,746 38,787 45,285
Purchase Accounting One-Time
Effects on Cost of Sales 4,300 0 4,797
-------------- -------------- --------------
Total Cost of Sales $ 455,104 $ 192,421 $ 425,487
============== ============== ==============
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)
Unaudited
As of
---------------------------
December 31, December 31,
2011 (1) (2) 2010
------------- -------------
ASSETS
Cash and cash equivalents $ 128,430 $ 293,410
Receivables, net 313,343 143,238
Inventories 242,607 97,631
Deferred income taxes 61,079 62,371
Prepaid expenses 49,974 28,179
Other current assets 45,627 10,710
------------- -------------
Total current assets 841,060 635,539
Mineral interests, net 2,946,113 17,305
Property, plant and equipment, net 1,637,182 772,696
Deferred income taxes 109,300 149,520
Goodwill 1,124,597 -
Other long-term assets 153,951 82,705
------------- -------------
TOTAL ASSETS $ 6,812,203 $ 1,657,765
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current debt $ 56,695 $ 13,903
Accounts payable 112,661 70,692
Accrued expenses 229,067 52,399
Accumulated postretirement benefits obligation 27,247 24,753
Other current liabilities 59,827 32,100
------------- -------------
Total current liabilities 485,497 193,847
Long-term debt 2,269,020 154,570
Deferred income taxes 1,003,383 -
Accumulated postretirement benefits obligation 550,671 451,348
Other long-term liabilities 381,537 262,934
------------- -------------
TOTAL LIABILITIES 4,690,108 1,062,699
STOCKHOLDERS' EQUITY 2,122,095 595,066
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,812,203 $ 1,657,765
============= =============
(1) Includes accounts of Western Coal acquired on April 1, 2011. The
purchase price has been preliminarily allocated to the assets acquired and
liabilities assumed based on their estimated fair values at the date of
acquisition. A full and detailed valuation of the assets and liabilities is
being completed and certain information and analysis remains pending at
this time. Accordingly, the allocation is preliminary and is expected to
change as additional information becomes available and is assessed by the
Company. The impact of such changes may be material. The purchase price
allocation will be finalized during the 2012 first quarter.
(2) In January 2011, we acquired approximately 25.3 million common shares of
Western Coal from funds advised by Audley Capital for $293.7 million in
cash. On April 1, 2011 we acquired the remaining common shares of Western
Coal for $3.4 billion, funded through $2.2 billion in long-term debt and
the issue of approximately 9.0 million common shares valued at $1.2
billion.
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2011
($ in thousands)
Unaudited
Capital in
Common Excess of
Total Stock Par Value
------------- ------------- -------------
Balance at December 31, 2010 $ 595,066 $ 531 $ 355,540
Comprehensive income:
Net income 349,176
Other comprehensive income:
Change in pension and
postretirement benefit plans,
net of tax (53,224)
Change in unrealized loss on
investments, net of tax 128
Change in unrealized loss on
hedges, net of tax (716)
Change in foreign currency
translation adjustment (3,276)
Comprehensive income
Stock issued upon the exercise
of stock options 8,920 3 8,917
Dividends paid, $0.50 per share (30,042)
Stock-based compensation 9,384 9,384
Excess tax benefits from stock-
based compensation arrangements 8,929 8,929
Issuance of common stock in
connection with the Western
acquisition 1,224,126 90 1,224,036
Replacement stock options and
warrants issued in connection
with the Western acquisition 18,844 - 18,844
Other (5,220) - (5,220)
------------- ------------- -------------
Balance at December 31, 2011 $ 2,122,095 $ 624 $ 1,620,430
============= ============= =============
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2011
($ in thousands)
Unaudited
Accumulated
Other
Comprehensive Retained Comprehensive
Income Earnings Loss
------------- ------------- -------------
Balance at December 31, 2010 $ 411,383 $ (172,388)
Comprehensive income:
Net income $ 349,176 349,176
Other comprehensive income:
Change in pension and
postretirement benefit plans,
net of tax (53,224) (53,224)
Change in unrealized loss on
investments, net of tax 128 128
Change in unrealized loss on
hedges, net of tax (716) (716)
Change in foreign currency
translation adjustment (3,276) (3,276)
-------------
Comprehensive income $ 292,088
=============
Stock issued upon the exercise
of stock options
Dividends paid, $0.50 per share (30,042)
Stock-based compensation
Excess tax benefits from stock-
based compensation arrangements
Issuance of common stock in
connection with the Western
acquisition
Replacement stock options and
warrants issued in connection
with the Western acquisition
Other
------------- -------------
Balance at December 31, 2011 $ 730,517 $ (229,476)
============= =============
WALTER ENERGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)
Unaudited
For the years
ended December 31,
-----------------------------
2011 2010
------------- -------------
OPERATING ACTIVITIES
Net income $ 349,176 $ 385,797
Loss from discontinued operations - 3,628
------------- -------------
Income from continuing operations 349,176 389,425
Adjustments to reconcile income from
continuing operations to net cash flows
provided by operating activities:
Depreciation and depletion 245,509 98,702
Deferred income taxes 66,397 83,174
Amortization of debt issuance costs 21,154 2,975
Excess tax benefits from stock-based
compensation arrangements (8,929) (28,875)
Gain on initial investment in Western Coal
Corp. (20,553) -
Other 18,764 14,433
Decrease (increase) in current assets, net
of effect of business acquisitions:
Receivables (1,605) (65,935)
Inventories (1,885) 1,966
Other current assets 18,929 13,155
Increase (decrease) in current liabilities,
net of effect of business acquisitions:
Accounts payable 13,676 23,717
Accrued expenses and other current
liabilities 6,233 41,413
------------- -------------
Cash flows provided by operating activities 706,866 574,150
------------- -------------
INVESTING ACTIVITIES
Additions to property, plant and equipment (436,705) (157,476)
Acquisition of Western Coal Corp., net of
cash acquired (2,432,693) -
Acquisition of HighMount Exploration &
Production Alabama, LLC. - (209,964)
Proceeds from the sales of investments 27,325 -
Other 1,413 (3,414)
------------- -------------
Cash flows used in investing activities (2,840,660) (370,854)
------------- -------------
FINANCING ACTIVITIES
Proceeds from issuance of debt 2,350,000 -
Borrowings under revolving credit agreement 71,259 -
Repayments on revolving credit agreement (61,259) -
Retirements of debt (290,630) (26,972)
Dividends paid (30,042) (25,266)
Purchases of stock under stock repurchase
program - (65,438)
Excess tax benefits from stock-based
compensation arrangements 8,929 28,875
Proceeds from stock options exercised 8,920 17,134
Debt issuance costs (80,027) -
Other (5,203) (3,015)
------------- -------------
Cash flows provided by (used in)
financing activities 1,971,947 (74,682)
------------- -------------
Cash flows provided by (used in)
continuing operations (161,847) 128,614
------------- -------------
CASH FLOWS FROM DISCONTINUED OPERATIONS
Cash flows used in operating activities - (6,268)
Cash flows provided by investing activities - 5,066
Cash flows provided by (used in) financing
activities - -
------------- -------------
Cash flows used in discontinued
operations - (1,202)
------------- -------------
EFFECT OF FOREIGN EXCHANGE RATES ON CASH (3,668) -
------------- -------------
Net increase (decrease) in cash and cash
equivalents $ (165,515) $ 127,412
============= =============
Cash and cash equivalents at beginning of
period $ 293,410 $ 165,279
Add: Cash and cash equivalents of
discontinued operations at beginning of
period 535 1,254
Net increase (decrease) in cash and cash
equivalents (165,515) 127,412
Less: Cash and cash equivalents of
discontinued operations at end of period - 535
------------- -------------
Cash and cash equivalents at end of period $ 128,430 $ 293,410
============= =============
WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
Unaudited
RECONCILIATION OF EBITDA TO AMOUNTS REPORTED UNDER US GAAP:
For the three months ended For the years ended
December 31, December 31,
---------------------------- ----------------------------
($ in thousands) 2011 2010 2011 2010
------------- ------------- ------------- -------------
Net income $ 83,784 $ 91,868 $ 349,176 $ 385,797
Add interest
expense 33,575 4,130 96,820 17,250
Less interest
income (250) (151) (606) (784)
Add income tax
expense 25,674 47,108 130,819 188,171
Add
depreciation
and depletion
expense 64,679 26,743 245,509 98,702
Add loss from
discontinued
operations - 1,780 - 3,628
------------- ------------- ------------- -------------
Earnings from
continuing
operations
before interest,
income taxes,
and depreciation
and depletion
(EBITDA) (1) $ 207,462 $ 171,478 $ 821,718 $ 692,764
============= ============= ============= =============
(1) EBITDA is defined as 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.
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Investor Relations Contact:
Paul Blalock
Vice President, Investor Relations
205.745.2627
paul.blalock@walterenergy.com
