Our Mission.
(Left to right): Track/Motorman Reginald Beverly, Ramcar Operator Ronnie Crosby, Area Manager-Haulage and Degas Charles Dickey, General Inside Laborer Renea Aldridge, Mining Machine Operator Trey Langford, Continuous Miner Section Coordinator Andrew Harris, Engineering Manager Gary Nicosia and Roofbolter Operator Robbie Allen at the base of Jim Walter Resources new Mine No. 7 East portal near Brookwood, Ala. Mine No. 7 East, which cost $180 million to develop, is central to Walter Energy’s strategy to grow production capacity to as much as 9.5 million tons per year in 2012. The expansion also makes No. 7 the largest hard coking coal-producing mine in North America.
Our Vision.
To be the leading provider of premium coking coal for the global steel industry, and a company that is committed to the safety and well-being of our employees and communities; respect for the environment; the continued growth of our portfolio of energy businesses; and long-term shareholder value.Our Values.
Safety — Above all else, we value the safety and well-being of our employees, communities and those with whom we do business.Integrity — We expect integrity and ethical behavior of ourselves and of others.
Innovation —We rely on our experience and expertise to find innovative solutions for our customers.
Respect —We respect the individual, the value of our differences and how these differences build a stronger team. We respect the environment. We understand that we produce a scarce natural resource and that we have a duty to operate in an environmentally responsible way.
Energy —Energy is both our business and a core value. We approach our work with a sense of urgency and a determination to be proactive in meeting customer needs.
2009 Overview.
Walter Energy is a leading U.S. producer and exporter of premium hard coking coal for the
global steel industry; and also produces steam and industrial coal, metallurgical coke and
coal bed methane gas.Headquarters:
4211 W. Boy Scout Blvd.
Tampa,FL 33607
(813) 871-4811
www.walterenergy.com
By the Numbers.
Revenues: $966.8 millionNet Income: $137.2 million
Diluted Earnings Per Share: $2.55
Quarterly Dividend Per Share: $0.10
Tons of Premium Coking Coal Sold: 6.1 million
Tons of Steam & Industrial Coal Sold: 1.2 million
Tons of Metallurgical Coke Sold: 0.2 million
BCF of Natural Gas Sold: 6.1
Employees: 2,100
2009 Highlights.
- Spun off Walter Investment Management LLC, representing approximately $150 million in value distributed to shareholders.
- Completed the transformation of the Company from a diversified conglomerate into a “pure play” natural resources and energy company.
- Began production at Jim Walter Resources Mine No. 7 East expansion, a 5-year, $180 million project that will increase annual capacity for premium coking coal to as much as 9.5 million tons in 2012, making No. 7 the largest hard coking coal-producing mine in North America.
- Paid more than $21 million in regular dividends to shareholders and repurchased $34 million in stock.
Michael T. Tokarz
Chairman of the Board
Dear Shareholder.
Great Product. Great People. Great Performance. That is what you are investing in when you invest in Walter Energy. You’re investing in Blue Creek Coal, some of the highest quality coal for steelmaking on the planet. You are investing in strong ancillary businesses that produce steam and industrial coal, metallurgical coke and natural gas.You are investing in a group of people who are able to bring those products to the marketplace safely, reliably and at low cost. People like Dale Byram, who leads our safety efforts; people like Gary Nicosia and Rich Donnelly, who led the development of our Mine No. 7 East expansion and the additional coking coal capacity it brings; like Mike Madden and Rodney Camp, two of the best coal marketers in the world.
And, you are investing in performance.
In 2009, your investment was well rewarded. Your stock increased in value over the course of the year by more than 330 percent – in the face of historic declines internationally and domestically in the steel industry. We also returned more than $150 million in special dividends to you by way of the spin-off of our financing business in April and another $21 million in regular dividends in 2009.
We introduced Walter Energy as a new brand to the world and, despite the worst decline in global steel capacity utilization since the Great Depression, we generated operating income of $202 million on consolidated revenues of nearly $1.0 billion.
(Left to right): Security/Maintenance Assistant Darryl Dennis, Benefits Manager Cindy Cesani, Benefits Director Kelli Gant and Director - IT Compliance and Technical Services Bobby Warnick at the Galleria Tower in Birmingham, Alabama.
(Left to right): Dragline Master Mechanic Bob Tatarek, Mine Clerk Donna Jones, Manager - Engineering Bradley Brasfield, Warehouse Clerk Carolyn Drummond, Mechanic Curtis Rumley and Service Truck Operator Cory Moon at Taft Coal Sales & Associates’ Choctaw Mine near Jasper, Ala. Taft has one of the best safety records in the Company and has not had a lost-time employee injury since 2007.
| We produced 6.1 million tons of premium hard coking coal during the
year, and achieved our second highest average pricing in the history
of the Company for our Blue Creek coal at more than $124 per short
ton (FOB Port). Production and sales volumes from our steam and
industrial coal business also were strong in 2009, with 1.3 million tons
of production and 1.2 million tons of sales volumes in the year. On an operating basis, our metallurgical coke business nearly broke even in 2009, during a period when domestic steel output fell to half of total capacity, as steelmakers in the U.S. struggled even more than their international counterparts. And we sold approximately 6.1 billion cubic feet of natural gas. Our natural gas business continued to be profitable in 2009, despite a nearly 50 percent reduction in average gas prices compared to the prior year. We made important strategic decisions in 2009 as well. In addition to the spin-off of Walter Investment Management, LLC and the related closure of our legacy Jim Walter Homes business, we also divested our rail operation and closed Walter Coke’s fiber plant, the last of our nonenergy related businesses. |
 |
Improving metallurgical coke sales toward
the end of the year allowed us to retain many employees who would
have otherwise been affected by the fiber plant’s closure. We expanded
the capacity of our barge load-out facility to
more than 4 million
tons per year, improving our distribution flexibility. We also actively
continued our share repurchase program, buying back $34 million in
stock. Finally, we announced the important decision to relocate our
corporate headquarters from Tampa to Birmingham to be closer to our
Alabama operations. Moving forward, we will continue our emphasis on safety as a core value with new programs, people and equipment to help us reach our goal of zero accidents. One of our surface mining operations, Taft Coal Sales & Associates, recently completed two years without a single lost-time employee injury and is an example of what can be achieved. We entered this year with unprecedented liquidity and cash on hand, with $401.6 million in liquidity at year-end, including $165.3 million in cash and $236.3 million available under our credit facility. As we continue to look forward, you can expect us to use this liquidity position, along with our continued strong cash flows, as a platform for future growth. |
(Left to right): Turbine Generator Operator Danny Brown, Utilities Supervisor J. D. Taylor and Turbine Generator Operator Barry Harrell at Walter Coke’s cogeneration plant in Birmingham, Ala. Walter Coke typically generates enough of its own power to provide all of the facility’s electricity needs.
| We have great prospects for 2010. We expect continued recovery in the global steel industry to drive increases in demand for metallurgical coal, particularly premium hard coking coals such as ours, and we do not foresee any significant incremental supply coming online in the near-term. In addition, increases in demand for coking coal from Asia, coupled with supply constraints out of Australia, may limit available coking coal in the Atlantic Basin, where most of our customers are located. This supply/demand imbalance, coupled with our expectations for record production output in 2010, create the opportunity for Walter Energy to make 2010 our best year ever. Of all the publicly traded coal companies in North America, Walter Energy has the highest percentage of its production tied to the growing global steel industry. As a result, we expect our business results to outpace other coal companies as our production expands and demand for our premium hard coking coal increases. Walter Energy continues to have key strategic advantages over our peers: we have a premium quality product sold to long-term customers in growing regions; we have a growing production base and significant transportation advantages; and we are a low-cost producer, making our coal very competitive on a delivered basis. |
|
As you can see, you have a lot of reasons to be proud of your investment in Walter Energy. You’ve invested in a great product, great people and great performance. And, as always, we thank you for your continued investment in us, and in Walter Energy. Sincerely, Michael T. Tokarz,  Chairman of the Board |
Quarterly Highlights.
Safe Harbor Statement
Except for historical information contained herein, the statements in this report 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, including expressions such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “may,” “plan,” “predict,” “will,” and similar terms and expressions to identify forward-looking statements. 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 report, or elsewhere, speak only as of the date on which the statements were made. See also the “Risk Factors” in our 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 report, except as may be required by law. In light of these risks and uncertainties, you should keep in mind that any forward-looking statement made in this report might not occur.
Corporate Directory.
Nominees toto the 2010 Board of Directortors: Left to Right: Michael T. Tokarz, Chairman of the Board, Member, Tokarz Group, LLC, (2, 4, 5); AJ Wagner, Chief Executive Officer, AJ Wagner & Associates (1, 3); George R. Richmond, President & Chief Operating Officer; Joseph B. Leonard, Interim Chief Executive Officer; Patrick A. Kriegshauser, Executive Vice President, Chief Financial Officer, Sachs Electric Company (1, 3); Howard L. Clark, Jr., Vice Chairman, Barclays Capital (3, 4, 5); Bernard G. Rethore, Chairman Emeritus, Flowserve Corporation (2, 4, 5); Jerry W. Kolb, Retired Vice Chairman, Deloitte & Touche (1, 2)
Board of Directors Committees: (1) Audit Committee, (2) Compensation and Human Resources Committee, (3) Environmental, Health and Safety Committee, (4) Nominating and Corporate Governance Committee, (5) Executive Committee
| Officers of the Corporation Joseph B. Leonard Interim Chief Executive Officer George R. Richmond President & Chief Operating Officer Miles C. Dearden, III Senior Vice President, Treasurer Lisa A. Honnold Interim Chief Financial Officer; Senior Vice President, Controller Charles C. “Chuck” Stewart President – Walter Coke, Inc. & Walter Minerals, Inc. Michael T. Madden Sr. Vice President – Sales & Marketing |
Keith M. Shull Sr. Vice President – Human Resources Mark H. Tubb Vice President – Investor Relations & Strategic Planning Ronald L. Loida Vice President – Internal Audit Billy R. Philbeck Vice President – Risk Management Catherine C. Bona Vice President, Interim General Counsel & Secretary Michael Griffin Assistant Treasurer Michael R. Hurley Tax Director |
| Annual Meeting The annual meeting of shareholders of Walter Energy, Inc. will be held April 21, 2010 at 10 a.m. local time at the Wynfrey Hotel, located at 1000 Riverchase Galleria; Birmingham, AL 35235 |
|
| Corporate
Offices Walter Energy, Inc. 4211 W. Boy Scout Blvd. Tampa, FL 33607 (813) 871-4811 Web Site: www.walterenergy.com Investor Contact Investor Relations Walter Energy, Inc. 4211 W. Boy Scout Blvd. Tampa, FL 33607 investorrelations@ walterenergy.com Media Contact Corporate Communications Walter Energy, Inc. 4211 W. Boy Scout Blvd. Tampa, FL 33607 corporatecommunications@ walterenergy.com Common Stock Trading Symbol: WLT New York Stock Exchange |
Transfer Agent and Registrar American Stock Transfer & Trust Company, LLC Postal Address: 59 Maiden Lane Plaza Level New York, NY 10038 Overnight Address: Operations Center 6201 15th Avenue Brooklyn, NY 11219 Shareholder Services: (800) 937-5449 (718) 921-8124 TTY: (Teletypewriter for the hearing impaired) (866) 703-9077 (718) 921-8386 www.amstock.com Independent Accountants Ernst & Young LLP 401 East Jackson Street Suite 1200 Tampa, FL 33602 |
| Form 10-K Additional copies of the Company’s annual report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended Dec. 31, 2009 are available on the Company’s website or by written request to the Company’s Investor Relations Department. |
|