Profile: Walter Energy, Inc. (WLT)

Walter Energy, Inc. (Walter Energy), formerly Walter Industries, Inc., is a producer and exporter of premium United States metallurgical coal for the global steel industry. The Company also produces steam coal and industrial coal, metallurgical coke and coal bed methane gas. The Company, through its operating segments, offers a line of products and services, including coal and natural gas, metallurgical coke, mortgage financing and home construction. The segments of the Company include Natural Resources, Sloss, Financing, Homebuilding and Other. The Natural Resources segment consists primarily of Jim Walter Resources, Inc. (JWR), Tuscaloosa Resources, Inc. (TRI), Taft Coal Sales & Associates (Taft) and United Land Corporation (United Land). Sloss Industries Corporation (Sloss) is a manufacturer of metallurgical coke, primarily for foundry and furnace use. The Financing segment includes Walter Mortgage Company (WMC), services non-conforming instalment notes and loans that are secured by mortgages and liens. The Homebuilding segment includes Jim Walter Homes, Inc. (JWH), which is an on-your-lot homebuilder. The Other segment includes the Company's other land subsidiaries and corporate expenses. On December 26, 2008, the Company announced the permanent closure of the underground coal mine owned by the Kodiak Mining Company, LLC (Kodiak), located in Shelby County, Alabama. On September 2, 2008, the Company acquired Taft Coal Sales & Associates. In April 2009, the Company announced the completion of the separation of its Financing business and the merger of that business with Hanover Capital Mortgage Holdings, Inc. (Hanover) to create Walter Investment Management Corp.

Natural Resources

The operations of JWR are conducted through its Mining Division, which mines and sells metallurgical coal from two underground mines in Alabama, and it’s De-Gas Division, which extracts and sells natural gas from the coal seams owned or leased by JWR. The Mining Division has approximately 6.5 million tons of rated annual coal production capacity from its mines located in west central Alabama between the cities of Birmingham and Tuscaloosa. The Mining Division's coal is sold to a base of offshore metallurgical coal customers. The division's metallurgical coal is sold to customers in numerous markets throughout Europe, South America, Turkey and Africa. The De-Gas Division extracts and sells natural gas from the coal seams owned or leased by JWR, through Black Warrior Methane Corp., an equal ownership joint venture with El Paso Production Co., a subsidiary of El Paso Corporation. JWR also operates a wholly owned low quality gas (LQG) facility. During the year ended December 31, 2008, there were 442 wells producing approximately 11.8 billion cubic feet of natural gas. JWR generated 6.6 billion cubic feet in 2008, including 1.3 billion cubic feet from its LQG operations. TRI is a producer of surface coal for the industrial and steam coal markets. TRI controls approximately 2.9 million tons of coal reserves as of December 31, 2008. Taft operates a surface steam and industrial coal mine and primarily mines coal for the industrial and electric utility markets.

Sloss

Sloss has two product lines: metallurgical coke and foundry applications, and slag fiber. metallurgical coke, which includes coke for furnace and foundry applications, and slag fiber. Foundry coke is marketed to ductile iron pipe plants and foundries producing castings, such as for the automotive and agricultural equipment industries. Furnace coke is sold primarily to the domestic steel industry for producing steel in blast furnaces. Slag fiber is an insulating fiber utilized principally as a raw material by acoustical ceiling tile manufacturers.

Financing

The Financing segment is primarily consisted of WMC that owns and services non-conforming instalment notes and loans that are secured by mortgages and liens on residential property. As of December 31, 2008, the Company held fixed (98%) and variable-rate (2%) instalment notes ranging from 2.13% to 13.66% annual percentage rate, without points or closing costs.

WMC is engaged in providing home financing to the customers of JWH and is the successor to MSH (Mid-State Homes). As of December 31, 2008, WMC's portfolio was geographically distributed as follows: Texas (33%), Mississippi (15%), Alabama (9%) and Florida and Louisiana, each (6%). The remaining portfolio was spread in other southeastern states. Best Insurors, Inc. (Best) is an agency that places fire and extended insurance coverage for homeowners who finance through WMC or JWH. Cardem Insurance Company Ltd. (Cardem) provides reinsurance of such insurance placed through Best and provides captive coverage for various other Company risks, including workers' compensation for Homebuilding.

Homebuilding

JWH and its subsidiaries markets and supervises the construction of detached, single-family residential homes, on land owned by its customers, primarily in the southeastern United States where the weather generally permits year-round construction. JWH's products consisted of approximately 60 models ranging in size from approximately 800 to 3,000 square feet.

Others

The Other segment includes the Company's land subsidiaries other than United Land and corporate expenses. The land subsidiaries engage in increasing the value of vacant land, through outright property sales and realizing royalty income on coal, timber and other minerals. Corporate expenses consist of salaries, overhead and other costs associated with executive management, finance, accounting, tax, treasury, legal, information technology, risk management, human resources, payroll and other management services.