Company Reports Fourth Quarter 2009 Earnings From Continuing Operations of $0.62 per Diluted Share; Full-Year Earnings From Continuing Operations of $2.64 per Diluted Share

Record Sales Volumes Expected in 2010 on Incremental Longwall Tons and Strong Demand for Premium Hard Coking Coal

Company Settles Remaining 2008-2009 Carryover Tons; Expects to Deliver Approximately 1.3 Million Short Tons by April 2011 at Prices in Excess of $315 per Metric Ton FOB Port

Tampa, FL – Walter Energy, a leading U.S. producer and exporter of premium hard coking coal for the global steel industry, has reported income from continuing operations of $33.3 million, or $0.62 per diluted share, for the quarter ended Dec. 31, 2009, compared to $97.0 million, or $1.77 per diluted share in the fourth quarter 2008.

"Our premium hard coking coal business demonstrated its resilience last year, as we produced and sold more of our Blue Creek coal in 2009 than in 2008, despite historic lows in global steel capacity utilization," said Walter Energy Chief Executive Officer Victor P. Patrick. "As we look to 2010, we see significant upside potential as we expect to increase sales to record levels and to achieve record average realized pricing."

Fourth Quarter 2009 Financial Results

Net sales and revenues for the fourth quarter 2009 totaled $236.3 million compared to $365.5 million in the prior-year period. Operating income totaled $36.9 million for the quarter, down $91.1 million versus the prior-year period. Revenues were impacted by lower coking coal and metallurgical coke pricing and sales volumes. Lower coking coal pricing contributed to 43 percent of the decrease in revenues, while lower coking coal volumes caused 44 percent of the decrease. In addition, approximately 61 percent of the decline in operating income resulted from lower coking coal pricing, with the remainder primarily due to a decrease in coking coal volumes.

Fourth quarter 2009 results from continuing operations include pre-tax charges of $4.5 million associated with the closure of Walter Coke's fiber plant, completing the last transaction in the disposition of the Company's non-energy businesses. Results for the quarter also included favorable tax benefits of $9.7 million related to non-taxable Medicare Part D subsidies and the favorable effect of a state tax rate change. Results in 2008 included a pre-tax credit of $26.9 million for a black lung excise tax refund claim and a pre-tax charge of $32.4 million related to impairment of Taft Coal Sales & Associates' mineral interests.

Full-Year 2009 Financial Results

For the full year 2009, net sales and revenues were $966.8 million, a decrease of $182.9 million versus the prior year. Approximately 52 percent of the decrease is attributed to lower metallurgical coke pricing and volumes, while the remainder is primarily due to lower coking coal pricing and lower volumes. The variance in coking coal sales volumes was due to lower sales of purchased coal.

Total year operating income was $202.2 million, down $139.0 million versus the prior year, primarily due to lower coking coal, metallurgical coke and natural gas pricing and lower metallurgical coke volumes, with lower pricing of these products making up 55 percent of the decrease in operating income.

Underground Mining

Coking coal sales volumes were 1.4 million tons in the fourth quarter at an average selling price of $126.48 per short ton FOB Port, versus 1.7 million tons at an average price of $167.19 in the prior-year period. The lower sales volumes reflect the impact of approximately 200,000 tons of coal that shipped in early January 2010 due to transportation delays in December. Pricing in the fourth quarter 2009 includes the impact of 0.1 million tons at 2008-2009 carryover pricing of approximately $315 per metric ton, while the sales in the prior-year period included 0.5 million tons at that pricing level.

Total coking coal production in the quarter was 1.4 million tons, down 0.4 million tons versus the prior-year period. Coking coal production at Mine No. 4 totaled 0.6 million tons in the fourth quarter, down 0.1 million tons compared to the prior year primarily due to a longwall move in the current-year period. Mine No. 7 produced 0.7 million tons in the fourth quarter, 0.3 million tons less than the fourth quarter last year, which included the operation of two longwalls for the full period. The current-year period reflects the operation of two longwalls for two weeks, as the Mine No. 7 East Expansion longwall began in mid December.

Average mine production costs for the period were $67.44 per ton, or $15.16 higher than in the prior-year period. At No. 4, production costs were $61.35 per ton, an increase of $9.76 per ton over the prior year. Production costs at No. 7 were $72.36 per ton compared to $52.74 per ton in the prior-year period. Production costs at both mines were higher than in the prior-year period primarily as a result of reduced production volumes.

The natural gas business sold 1.4 billion cubic feet of gas at an average price of $4.09 per thousand cubic feet in the fourth quarter 2009 compared to 1.8 billion cubic feet an average price of $7.92 per thousand cubic feet in the prior-year period.

Surface Mining

The surface mining segment reported net sales and revenues of $26.0 million in the fourth quarter 2009, compared to $24.1 million in the prior-year period, primarily resulting from higher contract prices. Operating income in the fourth quarter 2009 was $6.4 million, compared to operating income of $3.4 million in the fourth quarter 2008, excluding the impairment charge at Taft.

Steam and industrial coal sales were 326,000 tons during the fourth quarter compared to sales of 362,000 tons in the prior-year period. Production totaled 300,000 tons in the fourth quarter versus prior-year production of 348,000 tons, reflecting lower demand in the 2009 period.

Walter Coke

Walter Coke generated net sales and revenues of $37.4 million in the fourth quarter 2009, compared to $48.4 million in the prior-year period. Excluding the charge associated with the closure of Walter Coke's fiber plant, the business generated $4.4 million in operating income in the fourth quarter 2009 versus $12.2 million in the prior year. Lower revenue and operating income compared to the prior-year period were driven by reduced volume and pricing on lower domestic steel demand.

Fourth quarter 2009 metallurgical coke sales were 88,317 tons at an average price of $312.11 per ton. In the prior year, Walter Coke sold 97,927 tons at $391.28 per ton.

Corporate and Other

At Dec. 31, 2009, the Company had available liquidity of $401.6 million, including cash of $165.3 million and $236.3 million available under its credit facility. Total net debt outstanding at Dec. 31, 2009 was $11.2 million compared to $95.0 million at Sept. 30, 2009.

Capital expenditures were $29.0 million in the fourth quarter, totaling $96.3 million for the year.
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) Fourth quarter 2009 operating margin excludes a $4.5 million pre-tax
    charge related to the closure of Walter Coke's Fiber Division.

The Company recently concluded settlement of its remaining 2008-2009 carryover tons and expects to deliver 1.1 million short tons in 2010 and 0.2 million short tons in the first quarter of 2011.

Total coking coal sales are expected to total approximately 8.0 million tons in 2010. Pricing on all 2008-2009 carryover tons is at original contract of approximately $315 per metric ton FOB Port (approximately $286 per short ton FOB Port). Pricing on the 2009-2010 benchmark tons is at approximately $129 per metric ton FOB Port (approximately $117 per short ton FOB Port). The remainder of coking coal sales volume for 2010 is unpriced. Given the current market environment, the Company expects to achieve record average realized pricing for the year.

Coking coal production is expected to total 1.7 to 1.8 million tons in the first quarter, with production costs expected to average between $55 and $60 per ton.

Walter Coke should return to full capacity by the end of the first quarter and expects full-year 2010 sales to total 380,000 - 400,000 tons. In addition, returning to full production should improve cost leverage after the first quarter.

Walter Minerals expects to produce and sell 1.3 - 1.4 million tons of steam and industrial coal in 2010, with all expected sales volumes priced. Overall results for 2010 are expected to remain consistent with the results in 2009.

The Company expects 2010 full-year capital expenditures of approximately $110 million, including maintenance capital of approximately $80 million.