Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

Number of shares of common stock outstanding as of July 31, 2013: 62,576,200

	June 30, 2013			December 31, 2012

ASSETS
Cash and cash equivalents	$	170,878		$	116,601
Receivables, net		254,256			256,967
Inventories		339,584			306,018
Deferred income taxes		55,318			58,526
Prepaid expenses		60,151			53,776
Other current assets		23,754			23,928

Total current assets		903,941			815,816
Mineral interests, net of accumulated depletion of $218.8 million and $179.6 million, respectively		2,914,825			2,965,557
Property, plant and equipment, net of accumulated depreciation of $890.2 million and $796.7 million, respectively		1,657,123			1,732,131
Deferred income taxes		161,215			160,422
Other long-term assets		94,752			94,494

	$	5,731,856		$	5,768,420

LIABILITIES AND STOCKHOLDERS' EQUITY
Current debt	$	14,919		$	18,793
Accounts payable		123,540			114,913
Accrued expenses		135,772			184,875
Accumulated postretirement benefits obligation		30,074			29,200
Other current liabilities		202,300			206,473

Total current liabilities		506,605			554,254
Long-term debt		2,591,181			2,397,372
Accumulated postretirement benefits obligation		638,713			633,264
Deferred income taxes		848,748			921,687
Other long-term liabilities		237,320			251,272

Total liabilities		4,822,567			4,757,849

Commitments and contingencies (Note 8)
Stockholders' equity:
Common stock, $0.01 par value per share:
Authorized—200,000,000 shares,
Issued—62,571,807 and 62,521,300 shares, respectively		626			625
Capital in excess of par value		1,609,854			1,628,244
Accumulated deficit		(423,863	)		(347,448	)
Accumulated other comprehensive income (loss):
Pension and other postretirement benefit plans, net of tax		(256,725	)		(266,042	)
Foreign currency translation adjustment		(18,588	)		(1,502	)
Unrealized loss on hedges, net of tax		(2,955	)		(4,203	)
Unrealized investment gain, net of tax		940			897

Total stockholders' equity		909,289			1,010,571

	$	5,731,856		$	5,768,420

The accompanying notes are an integral part of these condensed consolidated financial statements.

	For the three months ended June 30,						For the six months ended June 30,

	2013			2012			2013			2012
Revenues:
Sales	$	437,798		$	668,605		$	927,407		$	1,295,903
Miscellaneous income		3,698			8,969			5,432			13,234

		441,496			677,574			932,839			1,309,137

Costs and expenses:
Cost of sales (exclusive of depreciation and depletion)		367,616			486,084			788,550			917,618
Depreciation and depletion		68,320			74,459			149,510			140,952
Selling, general and administrative		27,129			35,845			57,803			72,092
Postretirement benefits		14,725			13,213			29,450			26,426
Restructuring and asset impairment		(5,741	)		—			1,699			—

		472,049			609,601			1,027,012			1,157,088

Operating income (loss)		(30,553	)		67,973			(94,173	)		152,049
Interest expense		(53,129	)		(31,104	)		(105,747	)		(59,171	)
Interest income		144			341			794			618
Other loss, net		(714	)		(5,919	)		(609	)		(12,912	)

Income (loss) from continuing operations before income tax expense (benefit)		(84,252	)		31,291			(199,735	)		80,584
Income tax expense (benefit)		(49,760	)		4,535			(115,799	)		13,212

Income (loss) from continuing operations		(34,492	)		26,756			(83,936	)		67,372
Income from discontinued operations		—			5,180			—			5,180

Net income (loss)	$	(34,492	)	$	31,936		$	(83,936	)	$	72,552

Basic income (loss) per share:
Income (loss) from continuing operations	$	(0.55	)	$	0.43		$	(1.34	)	$	1.08
Income from discontinued operations		—			0.08			—			0.08

Net income (loss)	$	(0.55	)	$	0.51		$	(1.34	)	$	1.16

Diluted income (loss) per share:
Income (loss) from continuing operations	$	(0.55	)	$	0.43		$	(1.34	)	$	1.08
Income from discontinued operations		—			0.08			—			0.08

Net income (loss)	$	(0.55	)	$	0.51		$	(1.34	)	$	1.16

Dividends per share	$	0.125		$	0.125		$	0.25		$	0.25

The accompanying notes are an integral part of these condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

	For the three months ended June 30,						For the six months ended June 30,

	2013			2012			2013			2012
Net income (loss)	$	(34,492	)	$	31,936		$	(83,936	)	$	72,552

Other comprehensive income (loss), net of tax:
Change in pension and postretirement benefit plans, (net of tax expense: $2,883 and $5,765, and $2,422 and $4,844, for the three and six months ended June 30, 2013 and 2012, respectively)		4,658			3,897			9,317			7,795
Change in unrealized gain (loss) on hedges, (net of tax expense (benefit): $324 and $667, and $(1,235) and $(2,042), for the three and six months ended June 30, 2013 and 2012, respectively)		526			(1,987	)		1,248			(3,270	)
Change in foreign currency translation adjustment		(1,461	)		(3,209	)		(17,086	)		(790	)
Change in unrealized gain (loss) on investments, net of tax		(1	)		—			43			(369	)

Total other comprehensive income (loss), net of tax		3,722			(1,299	)		(6,478	)		3,366

Total comprehensive income (loss)	$	(30,770	)	$	30,637		$	(90,414	)	$	75,918

The accompanying notes are an integral part of these condensed consolidated financial statements.

	Total			Common Stock		Capital in Excess of Par Value			Accumulated Deficit			Accumulated Other Comprehensive Loss

Balance at December 31, 2012	$	1,010,571		$	625	$	1,628,244		$	(347,448	)	$	(270,850	)
Net loss		(83,936	)		—		—			(83,936	)		—
Other comprehensive loss, net of tax		(6,478	)		—		—			—			(6,478	)
Stock issued upon the exercise of stock options		279			1		278			—			—
Dividends paid, $0.25 per share		(15,638	)		—		(23,452	)		7,814			—
Stock based compensation		5,370			—		5,370			—			—
Tax effect from stock-based compensation arrangements		(586	)		—		(586	)		—			—
Other		(293	)		—		—			(293	)		—

Balance at June 30, 2013	$	909,289		$	626	$	1,609,854		$	(423,863	)	$	(277,328	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

	For the six months ended June 30,

	2013			2012
OPERATING ACTIVITIES
Net income (loss)	$	(83,936	)	$	72,552
Less income from discontinued operations		—			(5,180	)

Income (loss) from continuing operations		(83,936	)		67,372
Adjustments to reconcile income (loss) from continuing operations to net cash flows provided by (used in) operating activities:
Depreciation and depletion		149,510			140,952
Deferred income tax benefit		(77,717	)		(18,894	)
Amortization of debt issuance costs		14,015			9,033
Other		8,402			9,327
Decrease (increase) in current assets:
Receivables		(2,302	)		113,203
Inventories		(24,281	)		(66,213	)
Prepaid expenses and other current assets		(8,826	)		(22,095	)
Increase (decrease) in current liabilities:
Accounts payable		24,483			81,684
Accrued expenses and other current liabilities		(23,450	)		(5,807	)

Cash flows provided by (used in) operating activities		(24,102	)		308,562

INVESTING ACTIVITIES
Additions to property, plant and equipment		(80,251	)		(246,056	)
Proceeds from sales of investments		202			12,228
Other		762			582

Cash flows used in investing activities		(79,287	)		(233,246	)

FINANCING ACTIVITIES
Proceeds from issuance of debt		450,000			—
Borrowings under revolving credit agreement		529,382			112,350
Repayments on revolving credit agreement		(529,382	)		(63,341	)
Retirements of debt		(259,200	)		(118,003	)
Dividends paid		(15,638	)		(15,618	)
Debt issuance costs		(15,080	)		—
Other		(600	)		288

Cash flows provided by (used in) financing activities		159,482			(84,324	)

Cash flows provided by (used in) continuing operations		56,093			(9,008	)

CASH FLOWS FROM DISCONTINUED OPERATIONS		—			9,500

Effect of foreign exchange rates on cash		(1,816	)		(242	)

Net increase in cash and cash equivalents	$	54,277		$	250
Cash and cash equivalents at beginning of period		116,601			128,430

Cash and cash equivalents at end of period	$	170,878		$	128,680

The accompanying notes are an integral part of these condensed consolidated financial statements.

Walter Energy, Inc., together with its consolidated subsidiaries (the "Company"), is a leading producer and exporter of metallurgical coal for the global steel industry from underground and surface mines with mineral reserves located in the United States, Canada and the United Kingdom. The Company also extracts, processes, markets and/or possesses mineral reserves for thermal coal and anthracite coal, as well as produces metallurgical coke and coal bed methane gas.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. These financial statements should be read in conjunction with the audited financial statements and related notes as of and for the year ended December 31, 2012 included in the Company's Annual Report filed on Form 10-K with the U.S. Securities and Exchange Commission. The balance sheet at December 31, 2012 has been derived from the audited consolidated financial statements for the year ended December 31, 2012 included in the Company's 2012 Annual Report on Form 10-K.

During the first quarter of 2013, the Company determined that the cash dividend declared and paid in the fourth quarter of 2012 should have been reported as a reduction to the capital in excess of par value component of stockholders' equity rather than retained earnings as the Company was in an accumulated deficit position. The change of $7.8 million was included in the first quarter of 2013 results by reclassifying the amount from accumulated deficit to capital in excess of par value. Management has determined that the effect of this classification change was immaterial to prior reporting periods affected. The change has had no effect on total stockholders' equity.

During the first quarter of 2013, the Company began to classify certain indirect administrative costs as cost of sales as opposed to selling, general and administrative costs as it determined that these costs are directly supportive of operations. If this classification of these costs had been retrospectively applied, selling, general and administrative expenses for the three and six months ended June 30, 2012 would have been $4.3 million and $10.0 million, respectively, less and cost of sales would have been increased by similar amounts. Prior period balances have not been restated as management has determined that the effect of this classification change was immaterial to prior reporting periods. The change in classification has no effect on net income.

During the second quarter of 2013, the Company identified an immaterial cumulative error related to the mineral interest value of Western Coal Corp. The related correction resulted in an $8.4 million dollar reduction to depreciation and depletion expense in the current period. Prior period balances have not been restated as management has determined that the effect was not material to the current or prior reporting periods.

In response to the current depressed price environment for thermal coal and geological issues within the Company's North River mine, the Company announced plans to close the mine in 2013

approximately nine months earlier than the previously expected end of mine life of 2014. In connection with the accelerated closure, the Company renegotiated an unfavorably priced coal sales contract in the second quarter of 2013 to reduce the total tons committed for sale from this mine. The renegotiation will allow a closure of this mine in the latter half of 2013. For the three and six months ended June 30, 2013 the Company recognized a gain of approximately $17.0 million due to the release of the related below market contract liability that was obtained through the acquisition of North River. The benefit of $17.0 million was partially offset by asset impairment charges of approximately $8.0 million, all related to the accelerated closure of the North River Mine. The Company also incurred $3.3 million and $10.7 million of costs related to the curtailment of the Willow Creek mine for the three and six months ended June 30, 2013, respectively.

The Company estimates its annual effective tax rate based on projected financial income for the full year at the end of each interim reporting period unless projected financial income for the full year is close to break-even, in which case the annual effective tax rate could become volatile and could distort the income tax provision for an interim period. When this happens, the Company calculates the interim income tax provision using actual year-to-date financial results for certain jurisdictions. This method results in an income tax provision based solely on the year-to-date financial taxable income or loss for those jurisdictions. In both cases, the tax effect of unusual or infrequently occurring items, including effects of changes in tax laws or rates, are reported in the interim period in which they occur.

For the six months ended June 30, 2013, the income tax benefit was determined based on the annual effective tax rate method. The Company recognized an income tax benefit of $115.8 million for the six months ended June 30, 2013, compared to an income tax provision of $13.2 million for the six months ended June 30, 2012 as the Company incurred a pretax operating loss for the six months ended June 30, 2013 compared to pretax operating income for the same period in 2012. The 2013 and 2012 tax rates reflect the benefits of our Canadian and U.K. Operations which are taxed at statutory rates lower than the U.S. rate and the effects of additional tax losses related to foreign financing activities. The income tax provisions for the six months ended June 30, 2013 and 2012 also reflect a statutory depletion deduction from the Alabama mining operations. The current year provision for income taxes also includes a benefit of $13.7 million attributable to year-to-date foreign currency exchange rate fluctuations on foreign deferred tax liabilities.

	June 30, 2013			December 31, 2012

2011 term loan A	$	656,566		$	756,974		4.78	%	2016
2011 term loan B		978,178			1,127,770		5.75	%	2018
Revolving credit facility		—			—		N/A		2016
9.875% senior notes(1)		496,656			496,510		9.88	%	2020
8.50% senior notes		450,000			—		8.50	%	2021
Other(2)		24,700			34,911		Various		Various

Total debt		2,606,100			2,416,165
Less: current debt(2)		(14,919	)		(18,793	)

Total long-term debt	$	2,591,181		$	2,397,372

In March 2013, the Company issued $450.0 million aggregate principal amount of 8.50% senior notes due April 15, 2021 (the "2021 Notes"). These Notes are unconditionally guaranteed, jointly and severally, on an unsecured basis, by each of our current and future wholly-owned U.S. domestic restricted subsidiaries, exclusive of the West Virginia entities as they are owned by our U.K. Operations. Interest on the 2021 Notes is payable semi-annually in arrears on April 15 and October 15, commencing on October 15, 2013. At any time prior to April 15, 2016, the Company may redeem up to 35% of the aggregate principal amount of the 2021 Notes at a redemption price of 108.50% of the principal amount. The Company may redeem the 2021 Notes, in whole or in part, after April 15, 2016 and prior to April 15, 2017, at a redemption price equal to 100% of the aggregate principal amount of the 2021 Notes plus a "make-whole" premium and accrued and unpaid interest. The "make-whole" premium relates to the discount granted when the Company issued the bonds. The Company may redeem the 2021 Notes, in whole or in part at redemption prices equal to 104.25% for the twelve months commencing April 15, 2017, 102.125% for the twelve months commencing April 15, 2018 and 100% beginning on April 15, 2019, in each case plus accrued and unpaid interest.

Upon the occurrence of a change of control, unless the Company has exercised its right to redeem the 2021 Notes, the Company will be required to offer to repurchase each holder's 2021 Notes at a price equal to 101% of the aggregate principal amount, plus accrued and unpaid interest.

	Pension Benefits						Other Postretirement Benefits

	For the three months ended June 30,						For the three months ended June 30,
	2013			2012			2013		2012
Components of net periodic benefit cost:
Service cost	$	1,766		$	1,498		$	2,486	$	2,018
Interest cost		3,070			3,129			7,198		7,253
Expected return on plan assets		(4,235	)		(4,031	)		—		—
Amortization of prior service cost		66			64			307		261
Amortization of net actuarial loss		2,434			2,313			4,734		3,681

Net periodic benefit cost	$	3,101		$	2,973		$	14,725	$	13,213

	Pension Benefits						Other Postretirement Benefits

	For the six months ended June 30,						For the six months ended June 30,
	2013			2012			2013		2012
Components of net periodic benefit cost:
Service cost	$	3,532		$	2,996		$	4,972	$	4,036
Interest cost		6,140			6,258			14,396		14,506
Expected return on plan assets		(8,470	)		(8,062	)		—		—
Amortization of prior service cost		132			128			614		522
Amortization of net actuarial loss		4,868			4,626			9,468		7,362

Net periodic benefit cost	$	6,202		$	5,946		$	29,450	$	26,426

A reconciliation of the basic and diluted net income (loss) per share computations for the three and six months ended June 30, 2013 and 2012 is as follows (in thousands, except per share data):

	For the three months ended June 30,

	2013						2012
	Basic			Diluted			Basic		Diluted
Numerator:
Income (loss) from continuing operations	$	(34,492	)	$	(34,492	)	$	26,756	$	26,756

Income from discontinued operations		—			—		$	5,180	$	5,180

Denominator:
Average number of common shares outstanding		62,632			62,632			62,537		62,537
Effect of dilutive securities:
Stock awards and warrants(1)		—			—			—		243

		62,632			62,632			62,537		62,780

Income (loss) from continuing operations	$	(0.55	)	$	(0.55	)	$	0.43	$	0.43
Income from discontinued operations		—			—			0.08		0.08

Net income (loss) per share	$	(0.55	)	$	(0.55	)	$	0.51	$	0.51

	For the six months ended June 30,

	2013						2012
	Basic			Diluted			Basic		Diluted
Numerator:
Income (loss) from continuing operations	$	(83,936	)	$	(83,936	)	$	67,372	$	67,372

Income from discontinued operations		—			—		$	5,180	$	5,180

Denominator:
Average number of common shares outstanding		62,614			62,614			62,503		62,503
Effect of dilutive securities:
Stock awards and warrants(1)		—			—			—		256

		62,614			62,614			62,503		62,759

Income (loss) from continuing operations	$	(1.34	)	$	(1.34	)	$	1.08	$	1.08
Income from discontinued operations		—			—			0.08		0.08

Net income (loss) per share	$	(1.34	)	$	(1.34	)	$	1.16	$	1.16

securities is zero for such periods. The weighted average number of stock options outstanding for the three months ended June 30, 2013 and 2012 totaling 599,630 and 234,323, respectively, were excluded from the calculation above because their effect would have been anti-dilutive. Additionally, the weighted average number of stock options outstanding for the six months ended June 30, 2013 and 2012 totaling 481,635 and 205,378, respectively, were excluded from the calculation above because their effect would have been anti-dilutive.

The tables below set forth stock options exercised and restricted stock units vested for the three and six months ended June 30, 2013 and 2012:

On December 27, 1989, the Company and most of its U.S. subsidiaries each filed a voluntary petition for reorganization under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Proceedings") in the United States Bankruptcy Court for the Middle District of Florida, Tampa Division (the "Bankruptcy Court"). The Company emerged from bankruptcy on March 17, 1995 (the "Effective Date") pursuant to the Amended Joint Plan of Reorganization dated as of December 9, 1994, as modified on March 1, 1995 (as so modified the "Consensual Plan"). Despite the confirmation and effectiveness of the Consensual Plan, the Bankruptcy Court continues to have jurisdiction over, among other things, the resolution of disputed prepetition claims against the Company and other matters that may arise in connection with or related to the Consensual Plan, including claims related to federal income taxes.

In connection with the U.S. Bankruptcy Proceedings, the Internal Revenue Service ("IRS") filed a proof of claim in the Bankruptcy Court (the "Proof of Claim") for a substantial amount of taxes, interest and penalties with respect to fiscal years ended August 31, 1983 through May 31, 1994. The Company filed an adversary proceeding in the Bankruptcy Court disputing the Proof of Claim (the "Adversary Proceeding") and the various issues have been litigated in the Bankruptcy Court. An

opinion was issued by the Bankruptcy Court in June 2010 as to the remaining disputed issues. The Bankruptcy Court instructed both parties to submit a final order addressing all issues that have been litigated for the tax years 1983 through 1995 in the Adversary Proceeding by late August 2010. At the request of both parties, the Bankruptcy Court granted an extension of time of 90 days from the initial submission date to submit the final order. Additional extensions of time to submit the proposed final order were granted in November 2010, February 2011, May 2011, September 2011, January 2013, and May 2013. At the request of the Internal Revenue Service, in May 2013 the Bankruptcy Court granted an additional extension of time until November 14, 2013 to submit the final order.

The amounts initially asserted by the Proof of Claim do not reflect the subsequent resolution of various issues through settlements or concessions by the parties. The Company believes that any financial exposure with respect to those issues that have not been resolved or settled in the Proof of Claim is limited to interest and possible penalties and the amount of tax assessed has been offset by tax reductions in future years. All of the issues in the Proof of Claim, which have not been settled or conceded, have been litigated before the Bankruptcy Court and are subject to appeal but only at the conclusion of the entire Adversary Proceeding.

The IRS completed its audit of the Company's federal income tax returns for the years ended May 31, 2000 through December 31, 2005. The IRS issued 30-Day Letters to the Company in June 2010, proposing changes to tax for these tax years. The Company believes its tax filing positions have substantial merit and filed a formal protest with the IRS within the prescribed 30-day time limit for those issues which have not been previously settled or conceded. The IRS filed a rebuttal to the Company's formal protest and the case was assigned to the Appeals Division of the IRS. The Appeals Division convened a hearing on March 8, 2011 and heard arguments from both parties as to issues not settled or conceded for the 2000 through 2005 audit period. As of June 30, 2013, a final resolution has not been reached with the Appeals Division pertaining to these matters. The disputed issues in this audit period are similar to the issues remaining in the Proof of Claim.

In the second quarter of 2012, the IRS completed its audit of the Company's federal income tax returns for the years 2006 through 2008 and proposed adjustments to tax for these periods. The IRS issued a 30-Day Letter with proposed adjustments and the Company responded to the IRS within the prescribed 30-day time limit. The proposed adjustments are similar to issues in the prior Proof of Claim and included a proposed adjustment to a worthless stock deduction reported in the Company's 2008 federal income tax return. In the third quarter of 2012, the Company received notification from the IRS that the audit of the 2006 through 2008 tax years had been reopened for further review. The IRS issued a revised IRS Appeals Transmittal Letter in April 2013 conceding the proposed adjustment to the worthless stock deduction. As of June 30, 2013, a final resolution has not been reached with the Appeals Division pertaining to the remaining disputed matters. The disputed issues in this audit period are similar to the issues remaining in the Proof of Claim.

The IRS is conducting an audit of the Company's income tax returns filed for 2009 and 2010. Since the examination is ongoing, any resulting tax deficiency or overpayment cannot be estimated at this time. During 2013, the statute of limitations for assessing additional income tax deficiencies will expire for certain tax years in several state tax jurisdictions. The expiration of the statute of limitations for these years is expected to have an immaterial impact on total uncertain income tax positions and net income.

It is reasonably possible that the amount of unrecognized tax benefits will change in the next twelve months. The Company anticipates a final order will be issued by the Bankruptcy Court in 2013 settling the issues in the Proof of Claim. The final order by the Bankruptcy Court would permit a resolution of similar issues for the tax years currently in Appeals (2000-2008). As of June 30, 2013, the Company had $38 million of accruals for unrecognized tax benefits on the matters subject to disposition. Due to the uncertainty related to the potential outcome of these matters, any possible changes in unrecognized tax benefits cannot be reasonably estimated.

The Company believes that all of its current and prior tax filing positions have substantial merit and intends to vigorously defend any tax claims asserted. The Company believes that it has sufficient accruals to address any claims, including interest and penalties. Management does not believe that any potential difference between the final settlements and the amounts accrued will have a material effect on the Company's financial position, but such potential difference could be material to results of operations in a future reporting period.

The Company is subject to a wide variety of laws and regulations concerning the protection of the environment, both with respect to the construction and operation of its plants, mines and other facilities and with respect to remediating environmental conditions that may exist at its own and other properties.

The Company believes that it is in substantial compliance with federal, state, provincial and local environmental laws and regulations. The Company accrues for environmental expenses resulting from existing conditions that relate to past operations when the costs are probable and can be reasonably estimated.

Walter Coke entered into a decree order in 1989 ("the 1989 Order") relative to a Resource Conservation Recovery Act ("RCRA") compliance program mandated by the Environmental Protection Agency ("EPA"). A RCRA Facility Investigation ("RFI") Work Plan was prepared which proposed investigative tasks to assess the presence of contamination at the Walter Coke facility. In 2004, the EPA re-directed Walter Coke's RFI efforts toward completion of the Environmental Indicator ("EI") determinations for the Current Human Exposures, which were approved and finalized for Walter Coke's Birmingham facility in 2005. In 2008, as a follow-up to the EI determination, the EPA requested that Walter Coke perform additional soil sampling and testing in the neighborhoods surrounding its facility. The results of this sampling and testing were submitted to the EPA for review in 2009. In conjunction with the plan, Walter Coke agreed to remediate portions of 23 properties based on the 2009 sampling and that process was completed in 2012.

In 2011, the EPA notified Walter Coke in the form of a General Notice Letter that it proposed that the offsite remediation project be classified and managed as a Superfund site under CERCLA, allowing other Potentially Responsible Parties (PRP's) to potentially be held responsible. Under CERCLA authority, the EPA is proceeding directly with the offsite sampling work and deferring any further enforcement actions or decisions, including evaluating whether Walter Coke or any other company is in fact a PRP, to a subsequent time. In February 2013, the Agency for Toxic Substances and

Disease Registry (ATSDR) released a draft report concerning past, present and future exposures to residential soils in North Birmingham and concluded that there is no public health hazard. In March 2013, the EPA released the North Birmingham Air Toxics Risk Assessment showing the air quality around Company facilities to be acceptable.

A RCRA Section 3008(h) Administrative Order on Consent ("the 2012 Order") with the effective date of September 24, 2012 was signed by Walter Coke and the EPA. The 2012 Order declared that all of the approved investigation tasks of the RFI Work Plans required by the 1989 Order had been completed by Walter Coke and that the 1989 Order was terminated and no longer in effect. The objectives of the 2012 Order are to perform Corrective Measure Studies, implement remedies if necessary, and implement and maintain institutional controls if required at the Walter Coke facility.

The Company has incurred costs to investigate the presence of contamination at the Walter Coke facility and to define remediation actions to address this environmental liability in accordance with the agreements reached with the EPA under the RFI and the residential soil sampling conducted by Walter Coke in the neighborhoods surrounding its facility. At June 30, 2013, the Company has an amount accrued that is probable and can be reasonably estimated for the costs to be incurred to identify and define remediation actions, as well as to perform certain remedial tasks which can be quantified. The amount of this accrual is not material to the Company's consolidated financial statements. While it is probable that the Company will incur additional future costs to remediate environmental liabilities at the Walter Coke facility, the amount of such additional costs cannot be reasonably estimated at this time. Additionally, pending the EPA's sampling activities in the neighborhoods and identification of PRP's, the Company at this time is unable to reasonably estimate the cost of offsite remediation activities that may be required. Although no assurances can be given that the Company will not be required in the future to make material expenditures relating to the Walter Coke site or other sites, management does not believe at this time that the cleanup costs, if any, associated with these sites will have a material adverse effect on the Company's consolidated financial statements, but such cleanup costs could be material to the Company's results of operations in a future reporting period.

In 2011, the Company and Walter Coke were named in a suit filed by Louise Moore (Louise Moore v. Walter Energy, Inc. and Walter Coke, Inc., Case No. 2:11-CV-01391) in the federal District Court for the Northern District of Alabama. This is a putative civil class action alleging state law tort claims arising from the alleged presence on properties of substances, including arsenic, BaP, and other hazardous substances, allegedly as a result of current and/or historic operations in the area conducted by the defendants and/or their predecessors. Subsequently, the plaintiff filed an amended complaint eliminating Walter Energy as a defendant and amending the claims alleged against Walter Coke to relate to Walter Coke's alleged conduct for the period commencing after March 2, 1995. Thereafter, Walter Coke filed a Motion to Dismiss the amended complaint. On September 28, 2012, the Court issued a memorandum opinion and order granting in part and denying in part the motion. In partially granting Walter Coke's motion, the Court held that the plaintiff's claim for injunctive relief was not valid and that class action-related claims must be dismissed (with leave to re-plead) due to an improperly defined class. In partially ruling for the plaintiff, the Court held that at the pleading stage the plaintiff's claims could not be dismissed on rule of repose grounds or due to insufficient pleading. The plaintiff filed an amended complaint on October 29, 2012. On November 19, 2012, Walter Coke filed an answer and motion for partial dismissal of plaintiff's second amended complaint. The Court

held a hearing on Walter Coke's motion for partial dismissal of the second amended complaint on January 10, 2013 and a ruling is pending.

The Company and Walter Coke believe that there is no merit to the claims alleged in this action and intend to vigorously defend this matter.

On March 5, 2013, a complaint was received from British Columbia's Environmental Crown Counsel seeking a monetary penalty of $100,000 CAD for alleged violations of the Federal Fisheries Act associated with an April 2011 release of sediment and debris into Willow Creek from the forest service road leading to the Willow Creek mine. To date, we have incurred some costs in taking corrective actions in response to the 2011 release and are continuing to cooperate with regulatory authorities. We intend to negotiate with the authorities in pursuit of a mutually agreeable settlement.

On January 26, 2012 and March 15, 2012, putative class actions were filed against Walter Energy, Inc. and some of its current and former senior executive officers in the U.S. District Court for the Northern District of Alabama (Rush v. Walter Energy, Inc., et al.). The three executive officers named in the complaints are: Keith Calder, Walter's former CEO; Walter Scheller, the Company's current CEO and a director; and Neil Winkelmann, former President of Walter's Canadian and U.K. Operations (collectively the "Individual Defendants"). The complaints were filed by Peter Rush and Michael Carney, purported shareholders of Walter Energy who each sought to represent a class of Walter Energy shareholders who purchased common stock between April 20, 2011 and September 21, 2011.

These complaints alleged that Walter Energy and the Individual Defendants made false and misleading statements regarding the Company's operations outlook for the second quarter of 2011. The complaints further alleged that the Company and the Individual Defendants knew that these statements were misleading and failed to disclose material facts that were necessary in order to make the statements not misleading. Plaintiffs claimed violations of Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 promulgated thereunder, and Section 20(a) of the 1934 Act. On May 30, 2012, the two actions were consolidated into In re Walter Energy, Inc. Securities Litigation. The court also appointed the Government of Bermuda Contributory and Public Service Superannuation Pension Plans as well as the Stephen C. Beaulieu Revocable Trust to be lead plaintiffs and approved lead plaintiffs' selection of Robbins Geller Rudman & Dowd LLP and Kessler Topaz Meltzer & Check, LLP as lead plaintiffs' counsel for the consolidated action. On August 20, 2012, Lead Plaintiffs filed a consolidated amended class action complaint in this action. The consolidated amended complaint names as an additional defendant Joseph Leonard, a current director and former interim CEO of Walter, in addition to the previously named defendants. Defendants filed a Motion to Dismiss the amended complaint on October 4, 2012. On January 29, 2013, the court denied that motion without prejudice. Defendants answered the complaint on February 15, 2013 and on March 5, 2013. The parties are now in the process of discovery.

Walter Energy and the other named defendants believe that there is no merit to the claims alleged and intend to vigorously defend these actions.

On February 7, 2012, a shareholder derivative lawsuit was filed in the 10th Judicial Circuit of Alabama (Israni v. Clark et al.). On February 10, 2012, a second shareholder derivative suit was filed in the same court (Himmel v. Scheller et al.), and on February 16, 2012 a third derivative suit was filed (Walters v. Scheller et al.). All three complaints named as defendants the Company's current Board of Directors, Keith Calder and Neil Winkelmann. The Company was named as a nominal defendant in each complaint. The three complaints alleged similar facts to those alleged in the Rush complaint. The complaints variously asserted state law claims for breaches of fiduciary duties for alleged failures to maintain internal controls and to properly manage the Company, unjust enrichment, waste of corporate assets, gross mismanagement and abuse of control. The three derivative actions sought, among other things, recovery for the Company for damages that the Company suffered as a result of alleged wrongful conduct. On April 11, 2012, the Court consolidated these shareholder derivative suits. Walter Energy thereafter entered into a stipulation with the lead plaintiffs in the consolidated derivative suit, pursuant to which all proceedings in the derivative action were stayed pending the filing of the consolidated amended complaint in the class action. On September 19, 2012, lead plaintiffs filed a consolidated shareholder derivative complaint. This action has been stayed pending the resolution of summary judgment motions in the putative securities class action. The derivative plaintiffs will have certain rights to participate in discovery taken in the federal securities action.

On March 1, 2012, a shareholder derivative lawsuit was filed in the U.S. District Court for the Northern District of Alabama (Makohin v. Clark, et al.). On September 27, 2012 a second shareholder derivative lawsuit was filed in the same court (Sinerius v. Beatty, et al.). Both complaints name as defendants the Company's current Board of Directors and Keith Calder. The Company is named as a nominal defendant in each complaint. These complaints, like the state court derivative claims, allege similar facts to those alleged in the Rush complaint. The Makohin complaint asserts state law claims for breaches of fiduciary duties and unjust enrichment, while the Sinerius complaint asserts these same claims as well as claims for abuse of control and gross mismanagement. Both actions seek, among other things, recovery for the Company for damages that the Company suffered as a result of alleged wrongful conduct and restitution from defendants of all profits, benefits and other compensation that they wrongfully obtained. Like the state court derivative action, both of these cases have been stayed pending resolution of summary judgment motions in the putative securities class action. The federal derivative plaintiffs will also have certain rights to participate in discovery taken in the federal securities action.

Walter Energy and the other named defendants believe that there is no merit to the claims alleged in these shareholder derivative lawsuits and intend to vigorously defend these actions.

The Company and its subsidiaries are parties to a number of other lawsuits arising in the ordinary course of their businesses. The Company records costs relating to these matters when a loss is probable and the amount can be reasonably estimated. The effect of the outcome of these matters on the Company's future results of operations cannot be predicted with certainty as any such effect depends on future results of operations and the amount and timing of the resolution of such matters. While the results of litigation cannot be predicted with certainty, the Company believes that the final outcome of such other litigation will not have a material adverse effect on the Company's consolidated financial statements.

In the opinion of management, accruals associated with contingencies incurred in the normal course of business are sufficient. Resolution of existing known contingencies is not expected to significantly affect the Company's financial position or results of operations.

On June 27, 2011, the Company entered into an interest rate swap agreement with a notional value of $450.0 million. The objective of the swap is to protect against the variability in expected future cash flows attributable to changes in the benchmark interest rate related to interest payments required under the 2011 Credit Agreement. The interest rate on the debt is subject to change due to fluctuations in the benchmark interest rate of 3-month LIBOR. The structure of the hedge is a three year amortizing interest rate swap based on a 1.17% fixed rate with quarterly fixed rate and floating rate payment dates beginning on July 18, 2011. The hedge will be settled upon maturity and is being accounted for as a cash flow hedge. Changes in the fair value of the hedge that take place through the date of maturity are reported in accumulated other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings.

On December 30, 2008, the Company entered into an interest rate hedge agreement with a notional value of $31.5 million. The objective of the hedge is to protect against the variability in expected future cash flows attributable to changes in the benchmark interest rate related to 62 of the 64 monthly interest payments required under an equipment financing arrangement for a new longwall shield system entered into on October 21, 2008. The interest rate on the debt is subject to change due to fluctuations in the benchmark interest rate of 1-month LIBOR. The structure of the hedge is a 62 month amortizing interest rate swap based on a 1.84% fixed rate with monthly fixed rate and floating rate payment dates beginning on February 1, 2009. The hedge will be settled upon maturity and is being accounted for as a cash flow hedge. Changes in the fair value of the hedge that take place through the date of maturity are reported in accumulated other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings.

On June 27, 2011, the Company entered into an interest rate cap agreement related to interest payments required under the 2011 Credit Agreement with a notional value of $255.0 million. The objective of the cap is to protect against the variability in expected future cash flows attributable to changes in the benchmark interest rate above 2.00%. The interest rate on the debt is subject to change due to fluctuations in the benchmark interest rate of 3-month LIBOR. The structure of the hedge is a three year amortizing interest rate cap based on a strike price of 2.00% with quarterly fixed rate and floating rate payment dates beginning on July 7, 2011. The hedge will be settled upon maturity and is being accounted for as a cash flow hedge. Changes in the fair value of the hedge that take place through the date of maturity are reported in accumulated other comprehensive income (loss) and

reclassified into earnings in the same period or periods during which the hedged transactions affect earnings.

Revenues derived from the sale of natural gas are subject to volatility based on changes in market prices. In order to reduce the risk associated with natural gas price volatility, on June 7, 2011 the Company entered into a one year swap contract to hedge 4.2 million MMBTUs of natural gas sales beginning in July 2011 and ending June 2012, at a price of $5.00 per MMBTU. The swap agreement hedged approximately 30% of anticipated natural gas sales from July 2011 until June 2012. The hedge was settled upon maturity and was accounted for as a cash flow hedge. The Company did not have any commodity hedges outstanding at June 30, 2013.

The following table presents the fair values of the Company's derivative instruments as well as their classification within the Condensed Consolidated Balance Sheets (in thousands). See Note 11 for additional information related to the fair values of our derivative instruments.

The following tables present the gains and losses from derivative instruments for the three and six months ended June 30, 2013 and 2012 and their location within the condensed consolidated financial

statements (in thousands). The Company utilizes only cash flow hedges that are considered highly effective.

	Gain (loss), net of tax, recognized in accumulated other comprehensive income (loss)						Gain (loss), net of tax, reclassified from accumulated other comprehensive income (loss) to earnings(1)(2)

	Three months ended June 30,						Three months ended June 30,
Derivatives designated as cash flow hedging instruments	2013			2012			2013			2012
Natural gas hedges	$	—		$	(3,666	)	$	—		$	1,837
Interest rate swaps		1,142			390			(614	)		(460	)
Interest rate cap		(2	)		(88	)		—			—

Total	$	1,140		$	(3,364	)	$	(614	)	$	1,377

	Gain (loss), net of tax, recognized in accumulated other comprehensive income (loss)						Gain (loss), net of tax, reclassified from accumulated other comprehensive income (loss) to earnings(1)(2)

	Six months ended June 30,						Six months ended June 30,
Derivatives designated as cash flow hedging instruments	2013			2012			2013			2012
Natural gas hedges	$	—		$	(5,798	)	$	—		$	3,279
Interest rate swaps		2,482			493			(1,230	)		(1,025	)
Interest rate cap		(4	)		(219	)		—			—

Total	$	2,478		$	(5,524	)	$	(1,230	)	$	2,254

The following table presents the changes in accumulated other comprehensive income (loss) by component for the three and six months ended June 30, 2013, net of tax (in thousands).

	Pension and other postretirement plans			Unrealized gain/(loss) on hedges			Foreign currency translation adjustment			Unrealized gain on investments		Total

Beginning balance as of December 31, 2012	$	(266,042	)	$	(4,203	)	$	(1,502	)	$	897	$	(270,850	)
Other comprehensive income (loss) before reclassifications		—			2,478			(17,086	)		39		(14,569	)
Amounts reclassified from accumulated other comprehensive income (loss)		9,317			(1,230	)		—	(1)		4		8,091

Net current-period other comprehensive income (loss)		9,317			1,248			(17,086	)		43		(6,478	)

Ending balance as of June 30, 2013	$	(256,725	)	$	(2,955	)	$	(18,588	)	$	940	$	(277,328	)

The following table presents amounts reclassified out of each component of accumulated other comprehensive income (loss) for the six months ended June 30, 2013 (in thousands).

Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)			Affected Line Item in the Condensed Consolidated Statements of Operations

Gains and losses on cash flow hedges:
Interest rate swaps	$	(1,991	)	Interest expense

		(1,991	)	Income (loss) from continuing
				operations before income tax
				expense (benefit)
		(761	)	Income tax expense (benefit)

	$	(1,230	)	Net income (loss)

Amortization of pension and postretirement benefit plans:
Prior service cost	$	746		(a)
Net actuarial loss		14,336		(a)

		15,082		Income (loss) from continuing
				operations before income tax
				expense (benefit)
		5,765		Income tax expense (benefit)

	$	9,317		Net income (loss)

Gains and losses on available-for-sale securities	$	4		Other income (loss)

		4		Income (loss) from continuing
				operations before income tax
				expense (benefit)
		—		Income tax expense (benefit)

	$	4		Net income (loss)

Total reclassifications for the period	$	8,091		Net income (loss)

Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A

three level hierarchy has been established for valuing assets and liabilities based on how transparent (observable) the inputs are that are used to determine fair value, with the inputs considered most observable categorized as Level 1 and those that are the least observable categorized as Level 3. Hierarchy levels are defined as follows:

The following table presents information about the Company's assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2013 and December 31, 2012 and indicates the fair value hierarchy of the valuation techniques utilized to determine such values. For some assets, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. When this is the case, the asset is categorized based on the level of the most significant input to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement requires judgment and considers factors specific to the assets being valued.

Below is a summary of the Company's valuation techniques for Level 1 and Level 2 financial assets and liabilities:

Equity securities—Changes in the fair value of trading securities are recorded in other income (loss) and determined using observable market prices. For the three and six months ended June 30, 2013, a loss of $277 thousand and $168 thousand, respectively, was recorded related to trading securities held at the reporting date. Realized gains of $9 thousand and $5 thousand on the sale of available-for-sale

securities were recorded in other loss during the three and six months ended June 30, 2013, respectively, and were determined using the specific identification method.

Interest rate cap—The fair value of the interest rate cap was determined using quoted dealer prices for similar contracts in active over-the-counter markets.

Interest rate swaps—The fair value of interest rate swaps were determined using quoted dealer prices for similar contracts in active over-the-counter markets.

The following methods and assumptions were used to estimate the fair value for which the fair value option was not elected:

Cash and cash equivalents, receivables and accounts payable—The carrying amounts reported in the balance sheet approximate fair value.

Debt—All of the Company's outstanding debt is carried at cost. There were no borrowings outstanding under the Revolver at June 30, 2013 or December 31, 2012. The estimated fair value of the Company's debt is based on similar transactions and yields in an active market for similarly rated debt (Level 2). The carrying amounts and fair values of the Company's debt are presented below (in thousands):

The Company's reportable segments are strategic business units arranged geographically which have separate management teams. These reportable segments are U.S. Operations, Canadian and U.K. Operations, and Other. Both the U.S. Operations and Canadian and U.K. Operations reportable segments' primary business is that of mining, processing and exporting metallurgical coal for the steel industry. The Other segment primarily includes unallocated corporate expenses.

The accounting policies of the segments are the same as those described in Note 2 of the Notes to Consolidated Financial Statements included in the Company's Annual Report filed with the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 2012. The Company evaluates performance primarily based on operating income of the respective business segments.

Summarized financial information of the Company's reportable segments is shown in the following tables (in thousands):

	For the three months ended June 30,						For the six months ended June 30,

	2013			2012			2013			2012
Revenues:
U.S. Operations	$	321,009		$	466,761		$	660,234		$	918,911
Canadian and U.K. Operations		119,873			209,645			271,317			387,996
Other		614			1,168			1,288			2,230

Total Revenues	$	441,496		$	677,574		$	932,839		$	1,309,137

Segment operating income (loss):
U.S. Operations	$	37,333		$	107,245		$	30,376		$	214,226
Canadian and U.K. Operations		(66,347	)		(24,679	)		(115,113	)		(38,234	)
Other		(1,539	)		(14,593	)		(9,436	)		(23,943	)

Total operating income (loss)		(30,553	)		67,973			(94,173	)		152,049
Less interest expense, net		(52,985	)		(30,763	)		(104,953	)		(58,553	)
Other loss, net		(714	)		(5,919	)		(609	)		(12,912	)

Income (loss) from continuing operations before income tax expense (benefit)		(84,252	)		31,291			(199,735	)		80,584
Income tax expense (benefit)		(49,760	)		4,535			(115,799	)		13,212

Income (loss) from continuing operations	$	(34,492	)	$	26,756		$	(83,936	)	$	67,372

Depreciation and depletion:
U.S. Operations	$	31,189		$	43,704		$	78,662		$	85,846
Canadian and U.K. Operations		36,620			30,535			69,852			54,671
Other		511			220			996			435

Total	$	68,320		$	74,459		$	149,510		$	140,952

Capital expenditures:
U.S. Operations	$	38,803		$	43,851		$	66,204		$	79,963
Canadian and U.K. Operations		7,231			78,177			13,545			162,357
Other		190			3,183			502			3,736

Total	$	46,224		$	125,211		$	80,251		$	246,056

On November 21, 2012, the Company completed a private placement of $500.0 million in aggregate principal amount of 9.875% senior notes due December 15, 2020 ("2020 Notes") and on March 27, 2013, the Company completed a private placement of $450.0 million in aggregate principal amount of 8.50% senior notes due April 15, 2021 ("2021 Notes"). The 2020 Notes and 2021 Notes are unconditionally guaranteed, jointly and severally, on an unsecured basis, by each of the Company's current and future wholly-owned U.S. domestic restricted subsidiaries, exclusive of the West Virginia entities as they are owned by our U.K. Operations. In connection with the private placements, the guarantors entered into registration rights agreements with the initial purchasers in which the Company agreed, among other things, to file a registration statement covering an offer to exchange the 2020 Notes and 2021 Notes for a new issue of exchange notes registered under the Securities Act of 1933 with substantially identical terms. The Company intends to file a registration statement on Form S-4 with the Securities and Exchange Commission for each of the senior notes and is providing the information below to provide supplemental guarantor financial information pursuant to Rule 3-10(f) of Regulation S-X. The following tables present unaudited condensed consolidating financial information for (i) the Company, (ii) the issuer of the senior notes, (iii) the guarantors under the senior notes, and (iv) the entities which are not guarantors of the senior notes:

Note 13—Supplemental Guarantor and Non-Guarantor Financial Information (Continued)

WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEETS (UNAUDITED)
JUNE 30, 2013
(in thousands)

	Parent (Issuer)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Total Consolidated

ASSETS
Cash and cash equivalents	$	136,634	$	—	$	34,244		$	—		$	170,878
Receivables, net		96,820		91,498		65,938			—			254,256
Intercompany receivables		—		1,319,675		68,772			(1,388,447	)		—
Intercompany loans receivable		152,755		—		—			(152,755	)		—
Inventories		—		159,887		179,697			—			339,584
Deferred income taxes		39,656		14,914		748			—			55,318
Prepaid expenses		23,635		29,891		6,625			—			60,151
Other current assets		19,406		694		3,654			—			23,754

Total current assets		468,906		1,616,559		359,678			(1,541,202	)		903,941
Mineral interests, net		—		9,621		2,905,204			—			2,914,825
Property, plant and equipment, net		7,910		772,302		876,911			—			1,657,123
Deferred income taxes		53,157		112,560		(4,502	)		—			161,215
Investment in subsidiaries		4,537,487		—		—			(4,537,487	)		—
Other long-term assets		72,142		10,892		11,718			—			94,752

	$	5,139,602	$	2,521,934	$	4,149,009		$	(6,078,689	)	$	5,731,856

LIABILITIES AND STOCKHOLDERS' EQUITY
Current debt	$	—	$	6,734	$	8,185		$	—		$	14,919
Accounts payable		26,164		72,887		24,489			—			123,540
Accrued expenses		31,526		64,509		39,737			—			135,772
Intercompany payables		1,388,447		—		—			(1,388,447	)		—
Intercompany loans payable		—		—		152,755			(152,755	)		—
Accumulated postretirement benefits obligation		131		29,943		—			—			30,074
Other current liabilities		159,413		23,516		19,371			—			202,300

Total current liabilities		1,605,681		197,589		244,537			(1,541,202	)		506,605
Long-term debt		2,581,402		345		9,434			—			2,591,181
Accumulated postretirement benefits obligation		344		637,800		569			—			638,713
Deferred income taxes		—		—		848,748			—			848,748
Other long-term liabilities		42,886		125,843		68,591			—			237,320

Total liabilities		4,230,313		961,577		1,171,879			(1,541,202	)		4,822,567
Stockholders' equity		909,289		1,560,357		2,977,130			(4,537,487	)		909,289

	$	5,139,602	$	2,521,934	$	4,149,009		$	(6,078,689	)	$	5,731,856

WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEETS (Unaudited)
DECEMBER 31, 2012
(in thousands)

	Parent (Issuer)		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Total Consolidated

ASSETS
Cash and cash equivalents	$	83,833	$	61	$	32,707		$	—		$	116,601
Receivables, net		64,106		113,182		79,679			—			256,967
Intercompany receivables		153,933		507,519		—			(661,452	)		—
Intercompany loans receivable		118,079		—		—			(118,079	)		—
Inventories		—		131,893		174,125			—			306,018
Deferred income taxes		39,375		17,687		1,464			—			58,526
Prepaid expenses		1,869		45,327		6,580			—			53,776
Other current assets		17,559		1,109		5,260			—			23,928

Total current assets		478,754		816,778		299,815			(779,531	)		815,816
Mineral interests, net		—		18,475		2,947,082			—			2,965,557
Property, plant and equipment, net		8,448		790,900		932,783			—			1,732,131
Deferred income taxes		52,363		112,560		(4,501	)		—			160,422
Investment in subsidiaries		3,530,094		—		—			(3,530,094	)		—
Other long-term assets		71,622		9,375		13,497			—			94,494

	$	4,141,281	$	1,748,088	$	4,188,676		$	(4,309,625	)	$	5,768,420

LIABILITIES AND STOCKHOLDERS' EQUITY
Current debt	$	—	$	10,196	$	8,597		$	—		$	18,793
Accounts payable		5,128		78,260		31,525			—			114,913
Accrued expenses		27,197		83,155		74,523			—			184,875
Intercompany payables		507,519		—		153,933			(661,452	)		—
Intercompany loans payable		—		—		118,079			(118,079	)		—
Accumulated postretirement benefits obligation		131		29,069		—			—			29,200
Other current liabilities		157,044		24,389		25,040			—			206,473

Total current liabilities		697,019		225,069		411,697			(779,531	)		554,254
Long-term debt		2,381,255		1,784		14,333			—			2,397,372
Accumulated postretirement benefits obligation		452		632,812		—			—			633,264
Deferred income taxes		—		—		921,687			—			921,687
Other long-term liabilities		51,984		128,593		70,695			—			251,272

Total liabilities		3,130,710		988,258		1,418,412			(779,531	)		4,757,849
Stockholders' equity		1,010,571		759,830		2,770,264			(3,530,094	)		1,010,571

	$	4,141,281	$	1,748,088	$	4,188,676		$	(4,309,625	)	$	5,768,420

Note 13—Supplemental Guarantor and Non-Guarantor Financial Information (Continued)

WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED JUNE 30, 2013
(in thousands)

	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated

Revenues:
Sales	$	—		$	299,198		$	138,600		$	—		$	437,798
Miscellaneous income		220			779			2,699			—			3,698

		220			299,977			141,299			—			441,496

Cost and expenses:
Cost of sales (exclusive of depreciation and depletion)		—			211,314			156,302			—			367,616
Depreciation and depletion		511			33,673			34,136			—			68,320
Selling, general and administrative		11,684			7,144			8,301			—			27,129
Postretirement benefits		(55	)		14,780			—			—			14,725
Restructuring and asset impairment		—			(9,063	)		3,322			—			(5,741	)

		12,140			257,848			202,061			—			472,049

Operating income (loss)		(11,920	)		42,129			(60,762	)		—			(30,553	)
Interest expense		(49,414	)		(590	)		(3,125	)		—			(53,129	)
Interest income		28			116			—			—			144
Other loss		—			—			(714	)		—			(714	)

Income (loss) before income tax expense		(61,306	)		41,655			(64,601	)		—			(84,252	)
Income tax expense (benefit)		(22,108	)		8,533			(36,185	)		—			(49,760	)

		(39,198	)		33,122			(28,416	)		—			(34,492	)
Equity in earnings of subsidiaries		4,706			—			—			(4,706	)		—

Net income (loss)	$	(34,492	)	$	33,122		$	(28,416	)	$	(4,706	)	$	(34,492	)

Note 13—Supplemental Guarantor and Non-Guarantor Financial Information (Continued)

WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED JUNE 30, 2012
(in thousands)

	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated

Revenues:
Sales	$	—		$	435,395		$	233,210		$	—		$	668,605
Miscellaneous income (loss)		1,051			14,808			(6,890	)		—			8,969

		1,051			450,203			226,320			—			677,574

Cost and expenses:
Cost of sales (exclusive of depreciation and depletion)		—			271,977			214,107			—			486,084
Depreciation and depletion		2,235			34,296			37,928			—			74,459
Selling, general and administrative		12,941			10,818			12,086			—			35,845
Postretirement benefits		(113	)		13,326			—			—			13,213

		15,063			330,417			264,121			—			609,601

Operating income (loss)		(14,012	)		119,786			(37,801	)		—			67,973
Interest expense		(29,448	)		(254	)		(1,402	)		—			(31,104	)
Interest income		61			2			278			—			341
Other income (expense)		3,020			—			(8,939	)		—			(5,919	)

Income (loss) from continuing operations before income tax expense (benefit)		(40,379	)		119,534			(47,864	)		—			31,291
Income tax expense (benefit)		(13,583	)		33,220			(15,102	)		—			4,535

Income (loss) from continuing operations		(26,796	)		86,314			(32,762	)		—			26,756
Income from discontinued operations		—			—			5,180			—			5,180
Equity in earnings of subsidiaries		58,732			—			—			(58,732	)		—

Net income (loss)	$	31,936		$	86,314		$	(27,582	)	$	(58,732	)	$	31,936

Note 13—Supplemental Guarantor and Non-Guarantor Financial Information (Continued)

WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2013
(in thousands)

	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations		Total Consolidated

Revenues:
Sales	$	—		$	614,010		$	313,397		$	—	$	927,407
Miscellaneous income		773			2,969			1,690			—		5,432

		773			616,979			315,087			—		932,839

Cost and expenses:
Cost of sales (exclusive of depreciation and depletion)		—			458,991			329,559			—		788,550
Depreciation and depletion		996			74,083			74,431			—		149,510
Selling, general and administrative		25,251			14,087			18,465			—		57,803
Postretirement benefits		(110	)		29,560			—			—		29,450
Restructuring and asset impairment		—			(8,947	)		10,646			—		1,699

		26,137			567,774			433,101			—		1,027,012

Operating income (loss)		(25,364	)		49,205			(118,014	)		—		(94,173	)
Interest expense		(99,570	)		—			(6,177	)		—		(105,747	)
Interest income		43			116			635			—		794
Other loss		—			—			(609	)		—		(609	)

Income (loss) before income tax expense		(124,891	)		49,321			(124,165	)		—		(199,735	)
Income tax expense (benefit)		(48,775	)		5,137			(72,161	)		—		(115,799	)

		(76,116	)		44,184			(52,004	)		—		(83,936	)
Equity in losses of subsidiaries		(7,820	)		—			—			7,820		—

Net income (loss)	$	(83,936	)	$	44,184		$	(52,004	)	$	7,820	$	(83,936	)

Note 13—Supplemental Guarantor and Non-Guarantor Financial Information (Continued)

WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2012
(in thousands)

	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated

Revenues:
Sales	$	—		$	849,049		$	446,854		$	—		$	1,295,903
Miscellaneous income (loss)		1,726			18,879			(7,371	)		—			13,234

		1,726			867,928			439,483			—			1,309,137

Cost and expenses:
Cost of sales (exclusive of depreciation and depletion)		—			518,182			399,436			—			917,618
Depreciation and depletion		3,933			68,122			68,897			—			140,952
Selling, general and administrative		22,187			23,507			26,398			—			72,092
Postretirement benefits		(225	)		26,651			—			—			26,426

		25,895			636,462			494,731			—			1,157,088

Operating income (loss)		(24,169	)		231,466			(55,248	)		—			152,049
Interest expense		(56,672	)		(540	)		(1,959	)		—			(59,171	)
Interest income		108			2			508			—			618
Other income (loss)		6,039			—			(18,951	)		—			(12,912	)

Income (loss) before income tax expense		(74,694	)		230,928			(75,650	)		—			80,584
Income tax expense (benefit)		(23,565	)		65,481			(28,704	)		—			13,212

Income (loss) from continuing operations		(51,129	)		165,447			(46,946	)		—			67,372
Income from discontinued operations		—			—			5,180			—			5,180
Equity in earnings of subsidiaries		123,681			—			—			(123,681	)		—

Net income (loss)	$	72,552		$	165,447		$	(41,766	)	$	(123,681	)	$	72,552

Note 13—Supplemental Guarantor and Non-Guarantor Financial Information (Continued)

WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
THREE MONTHS ENDED JUNE 30, 2013
(in thousands)

	Parent (Issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Total Consolidated

Net income (loss)	$	(34,492	)	$	33,122	$	(28,416	)	$	(4,706	)	$	(34,492	)
Other comprehensive income (loss), net of tax:
Change in pension and postretirement benefit plans, net of tax		4,658			—		—			—			4,658
Change in unrealized gain on hedges, net of tax		526			16		—			(16	)		526
Change in foreign currency translation adjustment		(1,461	)		—		(1,461	)		1,461			(1,461	)
Change in unrealized loss on investments, net of tax		(1	)		—		(1	)		1			(1	)

Total other comprehensive income (loss), net of tax		3,722			16		(1,462	)		1,446			3,722

Total comprehensive income (loss)	$	(30,770	)	$	33,138	$	(29,878	)	$	(3,260	)	$	(30,770	)

Note 13—Supplemental Guarantor and Non-Guarantor Financial Information (Continued)

WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
THREE MONTHS ENDED JUNE 30, 2012
(in thousands)

	Parent (Issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Total Consolidated

Net income (loss)	$	31,936		$	86,314	$	(27,582	)	$	(58,732	)	$	31,936
Other comprehensive income (loss), net of tax:
Change in pension and postretirement benefit plans, net of tax		3,897			—		—			—			3,897
Change in unrealized gain (loss) on hedges, net of tax		(1,987	)		29		(1,829	)		1,800			(1,987	)
Change in foreign currency translation adjustment		(3,209	)		—		(3,209	)		3,209			(3,209	)

Total other comprehensive income (loss), net of tax		(1,299	)		29		(5,038	)		5,009			(1,299	)

Total comprehensive income (loss)	$	30,637		$	86,343	$	(32,620	)	$	(53,723	)	$	30,637

Note 13—Supplemental Guarantor and Non-Guarantor Financial Information (Continued)

WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2013
(in thousands)

	Parent (Issuer)			Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Eliminations			Total Consolidated

Net income (loss)	$	(83,936	)	$	44,184	$	(52,004	)	$	7,820		$	(83,936	)
Other comprehensive income (loss), net of tax:
Change in pension and postretirement benefit plans, net of tax		9,317			—		—			—			9,317
Change in unrealized gain on hedges, net of tax		1,248			37		—			(37	)		1,248
Change in foreign currency translation adjustment		(17,086	)		—		(17,086	)		17,086			(17,086	)
Change in unrealized gain on investments, net of tax		43			—		43			(43	)		43

Total other comprehensive income (loss), net of tax		(6,478	)		37		(17,043	)		17,006			(6,478	)

Total comprehensive income (loss)	$	(90,414	)	$	44,221	$	(69,047	)	$	24,826		$	(90,414	)

Note 13—Supplemental Guarantor and Non-Guarantor Financial Information (Continued)

WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2012
(in thousands)

	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated

Net income (loss)	$	72,552		$	165,447		$	(41,766	)	$	(123,681	)	$	72,552
Other comprehensive income (loss), net of tax:
Change in pension and postretirement benefit plans, net of tax		7,795			(50,756	)		—			50,756			7,795
Change in unrealized gain (loss) on hedges, net of tax		(3,270	)		49			(2,519	)		2,470			(3,270	)
Change in foreign currency translation adjustment		(790	)		—			(790	)		790			(790	)
Change in unrealized loss on investments, net of tax		(369	)		—			(369	)		369			(369	)

Total other comprehensive income (loss), net of tax		3,366			(50,707	)		(3,678	)		54,385			3,366

Total comprehensive income (loss)	$	75,918		$	114,740		$	(45,444	)	$	(69,296	)	$	75,918

Note 13—Supplemental Guarantor and Non-Guarantor Financial Information (Continued)

WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2013
(in thousands)

	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated

Cash flows provided by (used in) operating activities	$	(130,045	)	$	112,000		$	(6,057	)	$	—		$	(24,102	)

INVESTING ACTIVITIES
Additions to property, plant and equipment		(459	)		(58,130	)		(21,662	)		—			(80,251	)
Intercompany loans made		(54,736	)		—			—			54,736			—
Intercompany payments received		23,500			—			—			(23,500	)		—
Investments in subsidiaries		(50,103	)		—			—			50,103			—
Proceeds from sales of investments		—			—			202			—			202
Other		—			—			762			—			762

Cash flows used in investing activities		(81,798	)		(58,130	)		(20,698	)		81,339			(79,287	)

FINANCING ACTIVITIES
Proceeds from issuance of debt		450,000			—			—			—			450,000
Borrowings under revolving credit agreement		—			—			529,382			—			529,382
Repayments on revolving credit agreement		—			—			(529,382	)		—			(529,382	)
Retirements of debt		(250,000	)		(4,903	)		(4,297	)		—			(259,200	)
Dividends paid		(15,638	)		—			—			—			(15,638	)
Excess tax deficit from stock-based compensation arrangements		(586	)		—			—			—			(586	)
Proceeds from stock options exercised		279			—			—			—			279
Debt issuance costs		(15,080	)		—			—			—			(15,080	)
Advances from (to) consolidated entities		95,962			(49,028	)		(46,934	)		—			—
Intercompany borrowings		—			—			54,736			(54,736	)		—
Intercompany payments made		—			—			(23,500	)		23,500			—
Investment from Parent		—			—			50,103			(50,103	)		—
Other		(293	)		—			—			—			(293	)

Cash flows provided by (used in) financing activities		264,644			(53,931	)		30,108			(81,339	)		159,482

Effect of foreign exchange rates on cash		—			—			(1,816	)		—			(1,816	)

Net increase (decrease) in cash and cash equivalents	$	52,801		$	(61	)	$	1,537		$	—		$	54,277
Cash and cash equivalents at beginning of period		83,833			61			32,707			—			116,601

Cash and cash equivalents at end of period	$	136,634		$	—		$	34,244		$	—		$	170,878

Note 13—Supplemental Guarantor and Non-Guarantor Financial Information (Continued)

WALTER ENERGY, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2012
(in thousands)

	Parent (Issuer)			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Eliminations			Total Consolidated

Cash flows provided by (used in) operating activities	$	(92,589	)	$	334,473		$	66,678		$	—		$	308,562

INVESTING ACTIVITIES
Additions to property, plant and equipment		(3,785	)		(70,234	)		(172,037	)		—			(246,056	)
Proceeds from sales of investments		—			—			12,228			—			12,228
Intercompany loans made		(27,694	)		—			—			27,694			—
Other		—			512			70			—			582

Cash flows used in investing activities		(31,479	)		(69,722	)		(159,739	)		27,694			(233,246	)

FINANCING ACTIVITIES
Borrowings under revolving credit agreement		—			—			112,350			—			112,350
Repayments on revolving credit agreement		—			—			(63,341	)		—			(63,341	)
Retirements of debt		(100,000	)		(4,025	)		(13,978	)		—			(118,003	)
Dividends paid		(15,618	)		—			—			—			(15,618	)
Excess tax benefits from stock-based compensation arrangements		877			—			—			—			877
Proceeds from stock options exercised		122			—			—			—			122
Advances from (to) consolidated entities		241,244			(176,220	)		(65,024	)		—			—
Intercompany borrowings		—			—			27,694			(27,694	)		—
Other		(711	)		—			—						(711	)

Cash flows provided by (used in) financing activities		125,914			(180,245	)		(2,299	)		(27,694	)		(84,324	)

Cash flows provided by (used in) continuing operations		1,846			84,506			(95,360	)		—			(9,008	)

CASH FLOWS FROM DISCONTINUED OPERATIONS		—			9,500			—			—			9,500

Effect of foreign exchange rates on cash		—			—			(242	)		—			(242	)

Net increase (decrease) in cash and cash equivalents	$	1,846		$	94,006		$	(95,602	)	$	—		$	250
Cash and cash equivalents at beginning of period		99,086			79			29,265			—			128,430

Cash and cash equivalents at end of period	$	100,932		$	94,085		$	(66,337	)	$	—		$	128,680

In connection with the Fifth Amendment and in light of current market conditions, on July 23, 2013 the Company announced that its Board of Directors determined to reduce its regular quarterly dividend to $0.01 per share from the most recent quarterly dividend of $0.125 per share.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our financial statements and related notes included elsewhere in this Quarterly Report and our Annual Report filed on Form 10-K for the year ended December 31, 2012.

This report includes statements of our expectations, intentions, plans and beliefs that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and are intended to come within the safe harbor protection provided by those sections. These statements, which involve risks and uncertainties, relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable and may also relate to our future prospects, developments and business strategies. We have used the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "should" and similar terms and phrases, including references to assumptions, in this report 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 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. These risks and uncertainties include, but are not limited to:

When considering forward-looking statements made by us in this Quarterly Report on Form 10-Q ("Form 10-Q"), or elsewhere, such statements speak only as of the date on which we make them. 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. We have no duty to, and do not intend to, update or revise the forward-looking statements in this Form 10-Q after the date of this Form 10-Q, except as may be required by law. In light of these risks and uncertainties, keep in mind that any forward-looking statement made in this Form 10-Q or elsewhere might not occur.

Walter Energy, Inc. ("Walter") is a leading producer and exporter of metallurgical coal for the global steel industry from underground and surface mines with mineral reserves located in the United States, Canada and the United Kingdom. We also extract, process, market and/or possess mineral reserves of thermal coal and anthracite coal, as well as produce metallurgical coke and coal bed methane gas.

We currently operate 11 active coal mines, a coke plant and a coal bed methane extraction operation located within Alabama, West Virginia, Northeast British Columbia and the U.K. We operate our business through two principal business segments: U.S. Operations and Canadian and U.K. Operations. The U.S. Operations segment includes hard coking coal and thermal coal mines in both Alabama and West Virginia, a coke plant in Alabama, and coal bed methane extraction operations located in Alabama. The Canadian mining operations currently operate three metallurgical coal surface mines in Northeast British Columbia (the Wolverine Mine, the Brule Mine, and the Willow Creek Mine). Although the Willow Creek mine is an active coal mine, we have curtailed operations at this mine during the current quarter. Our U.K. mining operation consists of an active underground and a curtailed surface mine located in South Wales. The active underground mine produces anthracite coal, which can be sold as a low-volatile PCI coal and the curtailed surface mine operations produced thermal coal.

Sales of metallurgical coal for the three months ended June 30, 2013 were 2.4 million metric tons and accounted for approximately 89% of our coal sales volume. Comparatively, for the three months ended June 30, 2012, sales of metallurgical coal were 2.8 million metric tons and accounted for approximately 76% of our coal sales volume. The increase in metallurgical coal sales volume as a percentage of our total coal sales volume in comparison to the prior year comparable quarter is consistent with our business strategy of increasing profitable, high quality metallurgical coal production and sales volume, as metallurgical coal generally sells for prices significantly higher than those for thermal coal.

For the three months ended June 30, 2013, sales of thermal coal were 317 thousand metric tons and accounted for approximately 11% of our coal sales volume. Comparatively, for the three months ended June 30, 2012, sales of thermal coal were 891 thousand metric tons and accounted for approximately 24% of our coal sales volume.

The metallurgical coal market continues to be adversely impacted by a combination of slowing Chinese economic growth, the weak economic environment in Europe and excess Australian supply into the markets, all of which continue to result in an oversupply of metallurgical coal. The oversupply of metallurgical coal continues to put pressure on the selling price. The benchmark for high quality metallurgical coal in the first quarter of 2013 was approximately $165 per metric ton and in the second quarter of 2013 benchmark price of hard coking coal was approximately $172 per metric ton. During the second quarter of 2013, the metallurgical coal market weakened as the gradual erosion of spot prices in the first quarter of 2013 and in the month of April accelerated into a significant decline

during May and June. This resulted in a third quarter benchmark price of $145 per metric ton for premium hard coking metallurgical coal or a $27 per metric ton decrease from the benchmark in the second quarter of 2013.

The metallurgical coal benchmark price of $145 per metric ton in the third quarter reflects the increase in production by Australian and other producers as they increased output. The Australian producers are also benefiting from a weaker Australian Dollar in the foreign currency exchange market.

We believe the third quarter benchmark price of $145 per metric ton will continue to result in industry-wide idling or curtailment of mines that are either high cost or have lower quality products that are further discounted from the benchmark as many of these mines are expected to be operating at negative margins. While the short-term outlook for global metallurgical coal pricing remains depressed, we believe the long-term demand for metallurgical coal within all of our geographic markets is anticipated to be strong as industry projections indicate that global steelmaking will continue to require increasing amounts of high quality metallurgical coal, which is a limited commodity. As such, we are focused on the long-term metallurgical coal market as we anticipate strong long-term demand for the high-quality metallurgical coals we produce. Although we have responded to the short-term deterioration in market conditions by curtailing and in some cases idling higher-cost and lower-quality coal mines, when the market rebounds from its current weakness, we have the capability to increase our metallurgical coal production to take advantage of such potential opportunities in this highly volatile market.

We expect 2013 metallurgical coal production to be approximately 11.0 million metric tons. We also anticipate 2013 metallurgical coal sales to be in line with production.

	For the three months ended June 30, 2013

(in thousands)	U.S. Operations			Canadian and U.K. Operations			Other			Total
Sales	$	320,591		$	117,207		$	—		$	437,798
Miscellaneous income		418			2,666			614			3,698

Revenues		321,009			119,873			614			441,496
Cost of sales (exclusive of depreciation and depletion)		231,536			136,053			27			367,616
Depreciation and depletion		31,189			36,620			511			68,320
Selling, general and administrative		15,235			10,225			1,669			27,129
Postretirement benefits		14,779			—			(54	)		14,725
Restructuring and asset impairment		(9,063	)		3,322			—			(5,741	)

Operating income (loss)	$	37,333		$	(66,347	)	$	(1,539	)	$	(30,553	)

Interest expense, net											(52,985	)
Other loss, net											(714	)
Income tax benefit											49,760

Loss from continuing operations										$	(34,492	)

	For the three months ended June 30, 2012

(in thousands)	U.S. Operations		Canadian and U.K. Operations			Other			Total
Sales	$	456,935	$	211,715		$	(45	)	$	668,605
Miscellaneous income (loss)		9,826		(2,070	)		1,213			8,969

Revenues		466,761		209,645			1,168			677,574
Cost of sales (exclusive of depreciation and depletion)		290,830		195,255			(1	)		486,084
Depreciation and depletion		43,704		30,535			220			74,459
Selling, general and administrative		11,656		8,534			15,655			35,845
Postretirement benefits		13,326		—			(113	)		13,213

Operating income (loss)	$	107,245	$	(24,679	)	$	(14,593	)	$	67,973

Interest expense, net										(30,763	)
Other loss										(5,919	)
Income tax expense										(4,535	)

Income from continuing operations									$	26,756

	Dollar variance for the three months ended June 30, 2013 versus 2012

(in thousands)	U.S. Operations			Canadian and U.K. Operations			Other			Total
Sales	$	(136,344	)	$	(94,508	)	$	45		$	(230,807	)
Miscellaneous income (loss)		(9,408	)		4,736			(599	)		(5,271	)

Revenues		(145,752	)		(89,772	)		(554	)		(236,078	)
Cost of sales (exclusive of depreciation and depletion)		(59,294	)		(59,202	)		28			(118,468	)
Depreciation and depletion		(12,515	)		6,085			291			(6,139	)
Selling, general and administrative		3,579			1,691			(13,986	)		(8,716	)
Postretirement benefits		1,453			—			59			1,512
Restructuring charges		(9,063	)		3,322			—			(5,741	)

Operating income (loss)	$	(69,912	)	$	(41,668	)	$	13,054		$	(98,526	)

Interest expense, net											(22,222	)
Other income (loss)											5,205
Income tax benefit (expense)											54,295

Income (loss) from continuing operations										$	(61,248	)

Our net loss for the three months ended June 30, 2013 was $34.5 million, or $0.55 per diluted share, which compares to income from continuing operations of $26.8 million, or $0.43 per diluted share for the three months ended June 30, 2012. The net loss was primarily due to a decrease of approximately 22.2% in the average selling price of our metallurgical coal as a result of excess supply within the global metallurgical coal market. Earnings before interest expense, interest income, income taxes, depreciation, depletion and amortization ("EBITDA") for the second quarter of 2013 decreased $107.7 million as compared to the second quarter of 2012 primarily due to a decrease in revenues as a result of lower metallurgical coal prices. A reconciliation of net income (loss) to EBITDA is presented in the Liquidity and Capital Resources section below.

Revenues for the three months ended June 30, 2013 were $441.5 million, representing a decrease of $236.1 million from $677.6 million in the same period in 2012. The decrease in revenues was primarily due to a decrease in the average selling price of our metallurgical coal of $42.91 per metric ton, or approximately 22.2%, per metric ton, due to weaker worldwide demand for metallurgical coal and a decrease in metallurgical coal sales volume of approximately 402,000 tons or 14.1%.

Cost of sales, exclusive of depreciation and depletion, for the three months ended June 30, 2013 decreased $118.5 million to $367.6 million as compared to $486.1 million in the second quarter of 2012 and was primarily the result of a significant improvement in per ton cost of sales in hard coking coal across all of our operations combined with a decrease in coal sales volume. The average cash cost of sales per metric ton of total metallurgical coal decreased approximately 9.7% from $135.17 in the three months ended June 30, 2012 to $122.04 for the three months ended June 30, 2013 primarily due to a concerted effort throughout the year to lower costs across all operations. The substantial improvement continues to reflect the results of our cost containment and restructuring initiatives.

Selling, general and administrative expense for the three months ended June 30, 2013 decreased $8.7 million or approximately 24.3% to $27.1 million, as compared to $35.8 million in the second quarter of 2012. The decrease was primarily due to our cost containment initiatives. Additionally, the reduction reflects the reclassification of selling, general and administrative expenses to the operations they support as discussed in Note 1 of the "Notes to Condensed Consolidated Financial Statements" in

this Form 10-Q combined with the results of our cost containment initiatives partially offset by approximately $8.1 million in proxy contest expenses.

The $0.7 million other loss for the three months ended June 30, 2013 and $5.9 million other loss for the three months ended June 30, 2012 was primarily attributable to losses on the sale and re-measurement to fair value of equity investments.

We recognized an income tax benefit of $49.8 million for the three months ended June 30, 2013, compared to an income tax provision of $4.5 million for the three months ended June 30, 2012 as the Company incurred a pretax operating loss for the three months ended June 30, 2013 compared to pretax operating income for the same period in 2012. The 2013 and 2012 effective tax rates also reflect the benefit of our Canadian and U.K. operations which are taxed at statutory rates lower than the U.S. rate, and the effects of additional tax losses related to foreign financing activities. The effective tax rates also reflect statutory depletion deductions in the Alabama mining operations. On July 25, 2013, the provincial government of British Columbia increased the general corporate income tax rate to 11% from 10% effective April 1, 2013. The Company anticipates a one-time non-cash deferred income tax charge in the third quarter of 2013 of approximately $21.0 million as a result of the revaluation of its Canadian deferred tax liabilities.

The current and prior year period results also include the impact of factors discussed in the following segment analysis.

Hard coking coal sales totaled 1.6 million metric tons for the three months ended June 30, 2013, representing a decrease of 9.1% compared to 1.8 million metric tons during the same period in 2012. Our hard coking coal production totaled 2.1 million metric tons in the second quarter of 2013, an increase of 20.0% from the same period in the prior year due to increased production at our Alabama underground mines. The average selling price of hard coking coal in the second quarter of 2013 was $153.99 per metric ton, representing a 20.7% decrease from the average selling price of $194.10 per metric ton for the same period in 2012. The decrease in the average selling price of hard coking coal continues to reflect the pricing pressure being experienced due to rising metallurgical coal inventories and soft steel demand. Our average cash cost of sales per metric ton of hard coking coal sold during the second quarter of 2013 was $101.12, a decrease of $6.07 from the average cash cost of sales per ton of hard coking coal sold during the second quarter of 2012 of $107.19.

Thermal coal sales and production totaled approximately 305 thousand metric tons for the three months ended June 30, 2013, representing a decrease of approximately 65.0% compared to approximately 871 thousand metric tons produced during the same period in 2012 primarily due to difficult mining conditions at the North River mine in Alabama and the idling of a West Virginia thermal coal surface mine in June 2012 due to lower demand and pricing. Our average selling price of thermal coal for the second quarter of 2013 was $68.03 per metric ton, consistent with our average selling price of $68.11 per metric ton for the same period in 2012. The average cash cost of sales per metric ton of thermal coal sold during the second quarter of 2013 was $92.48 compared to $65.39 for the same period in 2012 due to difficult mining conditions at our North River mine. In response to the continued price deterioration in coal markets, we continue to take steps to reduce operations at lower margin mines and in the second quarter of 2013 we renegotiated an unfavorably priced coal supply agreement to allow the accelerated closure of the North River mine in the fourth quarter of 2013.

	Three months ended June 30,

	2013		2012
Tons of hard coking coal sold(1) (in thousands)		1,621		1,784
Tons of hard coking coal produced (in thousands)		2,070		1,724
Average hard coking coal selling price(1) (per metric ton)	$	153.99	$	194.10
Average hard coking coal cash cost of sales(1) (per metric ton)	$	101.12	$	107.19
Average hard coking coal cash cost of production (per metric ton)	$	68.22	$	73.55
Tons of thermal coal sold (in thousands)		305		871
Tons of thermal coal produced (in thousands)		407		908
Average thermal coal selling price (per metric ton)	$	68.03	$	68.11
Average thermal coal cash cost of sales (per metric ton)	$	92.48	$	65.39
Average thermal coal cash cost of production (per metric ton)	$	63.34	$	55.35

Our U.S. Operations segment reported revenues of $321.0 million for the three months ended June 30, 2013, representing a decrease of $145.8 million from the same period last year. The decrease in revenues during the second quarter of 2013 as compared to the second quarter of 2012 was primarily attributable to the decline in the average selling price of hard coking coal combined with a decrease in hard coking coal sales volumes from the Alabama underground operations.

Cost of sales, exclusive of depreciation and depletion, of our U.S. Operations segment decreased $59.3 million to $231.5 million as compared to $290.8 million in the second quarter of 2012 primarily due to a 9.1% decrease in hard coking coal sales volumes to 1.6 million metric tons from 1.8 million metric tons and due to reduced unit costs resulting from our cost containment efforts.

Our U.S. Operations segment reported operating income of $37.3 million for the three months ended June 30, 2013, compared to operating income of $107.2 million in the same period in 2012. Operating income for the U.S. Operations segment includes a net gain recognized of approximately $9.1 million due to the settlement of a negotiated contract partially offset by related asset impairment charges; all related to the contract renegotiation and accelerated closure of the North River mine in Alabama. The decrease in operating income was primarily due to an approximately 31.0% decrease in revenues as a result of lower global metallurgical coal pricing and sales volumes.

Metallurgical coal sales for the three months ended June 30, 2013 consisted of 354 thousand metric tons of hard coking coal at an average selling price of $153.51 per metric ton and 465 thousand metric tons of low-volatile PCI coal at an average selling price of $135.55 per metric ton. Metallurgical coal sales in the second quarter of 2012 consisted of 506 thousand metric tons of hard coking coal at an average selling price of $223.06 per metric ton and 552 thousand metric tons of low-volatile PCI coal at an average selling price of $163.51 per metric ton. The declines in the average selling price of hard coking coal and low-volatile PCI coal reflect the weakened worldwide demand for metallurgical coal. The average cash cost of sales per metric ton of hard coking coal sold during the second quarter of 2013 was $168.73, representing an increase of $24.75 from the average cash cost of sales per ton of hard coking coal sold during the second quarter of 2012 of $143.98. The increase was primarily due to higher mining ratios and a resulting increase in lower of cost or market charges recognized in the current quarter. The average cash cost of sales per metric ton of low-volatile PCI coal sold during the second quarter of 2013 was $159.48 representing a 26.7% decrease from the average cash cost of sales

per ton of low-volatile PCI coal sold during the second quarter of 2012 of $217.50 which primarily reflects the conversion of the Brule mine from a contractor-operated to owner-operated mine, other cost reduction initiatives and productivity improvements.

Our Canadian and U.K. Operations segment produced a total of 414 thousand metric tons of hard coking coal and 465 thousand metric tons of low-volatile PCI in the second quarter of 2013. During the second quarter of 2012, the segment produced 536 thousand metric tons of hard coking coal and 440 thousand metric tons of low-volatile PCI. During the second quarter of 2012, the Willow Creek mine primarily produced low-volatile PCI coal. The Willow Creek mine produced approximately 3 thousand metric tons of low-volatile hard coking coal and 44 thousand tons of low-volatile PCI in the second quarter of 2013 as compared to 66 thousand metric tons of low-volatile hard coking coal and 154 thousand tons of low-volatile PCI in the second quarter of 2012. The Willow Creek mine was curtailed during the first quarter of 2013.

Statistics for Canadian and U.K. Operations are presented in the following table:

	Three months ended June 30,

	2013		2012
Tons of hard coking coal sold (in thousands)		354		506
Tons of hard coking coal produced (in thousands)(1)		414		536
Average hard coking coal selling price (per metric ton)	$	153.51	$	223.06
Average hard coking coal cash cost of sales (per metric ton)	$	168.73	$	143.98
Average hard coking coal cash cost of production (per metric ton)(1)	$	123.24	$	96.30
Tons of low-volatile PCI coal sold (in thousands)		465		552
Tons of low-volatile PCI coal produced (in thousands)(1)		465		440
Average low-volatile PCI coal selling price (per metric ton)	$	135.55	$	163.51
Average low-volatile PCI cash cost of sales (per metric ton)	$	159.48	$	217.50
Average low-volatile PCI cash cost of production (per metric ton)(1)	$	84.24	$	221.91

Our Canadian and U.K. Operations segment reported revenues of $119.9 million for the second quarter of 2013, a decrease of $89.8 million from the same period last year. The decrease in revenues during the second quarter of 2013 as compared to the second quarter of 2012 was attributable to a decline of 31.2% and 17.1% in the average selling price of hard coking coal and low-volatile PCI coal, respectively, combined with a decrease of 152 thousand metric tons of hard coking coal and 87 thousand metric tons of low-volatile PCI coal sold, respectively.

Cost of sales, exclusive of depreciation and depletion, in our Canadian and U.K. Operations segment for the three months ended June 30, 2013 decreased $59.2 million to $136.1 million as compared to the second quarter of 2012. The decrease in cost of sales was primarily attributable to lower sales volumes and a significant improvement in cost of sales for low-volatile PCI which reflects

the cost savings from converting our Brule mine from contractor-operated to owner-operated and the results of cost containment initiatives.

Our Canadian and U.K. Operations segment reported an operating loss of $66.3 million for the three months ended June 30, 2013 as compared to an operating loss of $24.7 million for the same period in 2012. Operating loss for the Canadian and U.K. Operations segment includes a restructuring charge of approximately $3.3 related to the curtailment of the Willow Creek mine. The increase in the operating loss was primarily due to lower average selling prices and sales volumes for hard coking and low-volatile PCI coal as a result of excess supply within the global metallurgical coal market.

	For the six months ended June 30, 2013

(in thousands)	U.S. Operations			Canadian and U.K. Operations			Other			Total
Sales	$	657,332		$	270,010		$	65		$	927,407
Miscellaneous income		2,902			1,307			1,223			5,432

Revenues		660,234			271,317			1,288			932,839
Cost of sales (exclusive of depreciation and depletion)		501,084			287,424			42			788,550
Depreciation and depletion		78,662			69,852			996			149,510
Selling, general and administrative		29,500			18,508			9,795			57,803
Postretirement benefits		29,559			—			(109	)		29,450
Restructuring and asset impairment		(8,947	)		10,646			—			1,699

Operating income (loss)	$	30,376		$	(115,113	)	$	(9,436	)	$	(94,173	)

Interest expense, net											(104,953	)
Other loss, net											(609	)
Income tax benefit											115,799

Loss from continuing operations										$	(83,936	)

	For the six months ended June 30, 2012

(in thousands)	U.S. Operations		Canadian and U.K. Operations			Other			Total
Sales	$	903,053	$	392,545		$	305		$	1,295,903
Miscellaneous income (loss)		15,858		(4,549	)		1,925			13,234

Revenues		918,911		387,996			2,230			1,309,137
Cost of sales (exclusive of depreciation and depletion)		567,405		349,659			554			917,618
Depreciation and depletion		85,846		54,671			435			140,952
Selling, general and administrative		24,783		21,900			25,409			72,092
Postretirement benefits		26,651		—			(225	)		26,426

Operating income (loss)	$	214,226	$	(38,234	)	$	(23,943	)	$	152,049

Interest expense, net										(58,553	)
Other loss, net										(12,912	)
Income tax expense										(13,212	)

Income from continuing operations									$	67,372

	Dollar variance for the six months ended June 30, 2013 versus 2012

(in thousands)	U.S. Operations			Canadian and U.K. Operations			Other			Total
Sales	$	(245,721	)	$	(122,535	)	$	(240	)	$	(368,496	)
Miscellaneous income (loss)		(12,956	)		5,856			(702	)		(7,802	)

Revenues		(258,677	)		(116,679	)		(942	)		(376,298	)
Cost of sales (exclusive of depreciation and depletion)		(66,321	)		(62,235	)		(512	)		(129,068	)
Depreciation and depletion		(7,184	)		15,181			561			8,558
Selling, general and administrative		4,717			(3,392	)		(15,614	)		(14,289	)
Postretirement benefits		2,908			0			116			3,024
Restructuring and asset impairment		(8,947	)		10,646			0			1,699

Operating income (loss)		(183,850	)		(76,879	)		14,507			(246,222	)

Interest expense, net											(46,400	)
Other income (loss), net											12,303
Income tax benefit (expense)											129,011

Income (loss) from continuing operations										$	(151,308	)

Our net loss for the six months ended June 30, 2013 was $83.9 million, or $1.34 per diluted share, which compares to income from continuing operations of $67.4 million, or $1.08 per diluted share for the six months ended June 30, 2012. Earnings before interest expense, interest income, income taxes, depreciation, depletion and amortization ("EBITDA") for the six months ended June 30, 2013 decreased $233.6 million as compared to the six months ended June 30, 2012 primarily due to the decrease in revenues as a result of lower global metallurgical coal pricing. A reconciliation of net income (loss) to EBITDA is presented in the Liquidity and Capital Resources section below.

Revenues for the six months ended June 30, 2013 were $932.8 million, representing a decrease of $376.3 million from $1.3 billion in the same period in 2012. The decrease in revenues was primarily due to a decrease in the average selling price of metallurgical coal of $53.18, or approximately 26.0% per ton due to weaker worldwide demand for metallurgical coal.

Cost of sales, exclusive of depreciation and depletion, for the six months ended June 30, 2013 decreased $129.1 million to $788.6 million as compared to the same period in 2012. The average cash cost of sales per ton of total metallurgical coal decreased approximately 11.0% from $135.57 per metric ton in the six months ended June 30, 2012 to $120.67 per metric ton for the six months ended June 30, 2013, primarily due to a concerted effort throughout the year to lower costs across all operations. The substantial improvement continues to reflect the results of our cost containment and restructuring initiatives.

Selling, general and administrative expense for the six months ended June 30, 2013 decreased $14.3 million or approximately 19.8% to $57.8 million, as compared to $72.1 million for the six months ended June 30, 2012. The decrease was due to the reclassification of selling, general and administrative expenses as discussed in Note 1 of the "Notes to Condensed Consolidated Financial Statements" in this Form 10-Q combined with the results of our cost containment initiatives partially offset by approximately $13.3 million in proxy contest expenses.

The $0.6 million other loss for the six months ended June 30, 2013 and $12.9 million other loss for the six months ended June 30, 2012 was primarily attributable to losses on the sale and re-measurement to fair value of equity investments.

We recognized an income tax benefit of $115.8 million for the six months ended June 30, 2013, compared to an income tax provision of $13.2 million for the six months ended June 30, 2012 as the Company incurred a pretax operating loss for the six months ended June 30, 2013 compared to pretax operating income for the same period in 2012. The 2013 and 2012 effective tax rates also reflect the benefit of our Canadian and U.K. operations which are taxed at statutory rates lower than the U.S. rate, and the effects of additional tax losses related to foreign financing activities. The effective tax rates also reflect statutory depletion deductions in the Alabama mining operations. On July 25, 2013, the provincial government of British Columbia increased the general corporate income tax rate to 11% from 10% effective April 1, 2013. The Company anticipates a one-time non-cash deferred income tax charge in the third quarter of 2013 of approximately $21.0 million as a result of the revaluation of its Canadian deferred tax liabilities.

The current and prior year period results also include the impact of factors discussed in the following segment analysis.

Hard coking coal sales totaled 3.3 million metric tons for the six months ended June 30, 2013 and 2012, respectively. Our hard coking coal production totaled 3.8 million metric tons in the six months ended June 30, 2013, an increase of 3.1% from the same period in the prior year due to increased production at our Alabama underground mines. The average selling price per metric ton of hard coking coal for the six months ended June 30, 2013 was $155.68, representing a $50.96 or a 24.7% decrease from the average selling price of $206.64 for the same period in 2012. The decrease in the average selling price of hard coking coal continues to reflect the pricing pressure being experienced due to an oversupply of metallurgical coal and soft steel demand. The average cash cost of sales per metric ton of hard coking coal sold for the six months ended June 30, 2013 was $105.55, a slight decrease from the average cash cost of sales per ton of hard coking coal in the prior year of $108.64.

Thermal coal sales totaled 688 thousand metric tons for the six months ended June 30, 2013, representing a decrease of approximately 965 thousand metric tons or 58.4% compared to approximately 1.7 million metric tons during the same period in 2012 primarily due to difficult mining conditions at the North River mine in Alabama and the idling of a West Virginia thermal coal surface mine in June 2012 due to lower demand and pricing. The average selling price per metric ton of thermal coal for the six months ended June 30, 2013 was $65.91, representing a 5.3% decrease from the average selling price of $69.60 for the same period in 2012. The average cash cost of sales per ton of thermal coal sold during the six months ended 2013 was $91.29 compared to $71.76 for the same period in 2012 as a result of difficult mining conditions at our North River mine. In response to the continued deterioration in coal markets, we continue to take steps to reduce operations at lower margin mines and in the second quarter of 2013 we renegotiated an unfavorably priced coal supply agreement to allow the accelerated closure of the North River mine in the fourth quarter of 2013.

	Six months ended June 30,

	2013		2012
Tons of hard coking coal sold(1) (in thousands)		3,326		3,319
Tons of hard coking coal produced (in thousands)		3,808		3,693
Average hard coking coal selling price(1) (per metric ton)	$	155.68	$	206.64
Average hard coking coal cash cost of sales(1) (per metric ton)	$	105.55	$	108.64
Average hard coking coal cash cost of production (per metric ton)	$	72.73	$	72.55
Tons of thermal coal sold (in thousands)		688		1,653
Tons of thermal coal produced (in thousands)		842		1,725
Average thermal coal selling price (per metric ton)	$	65.91	$	69.60
Average thermal coal cash cost of sales (per metric ton)	$	91.29	$	71.76
Average thermal coal cash cost of production (per metric ton)	$	69.96	$	57.90

Our U.S. Operations segment reported revenues of $660.2 million for the six months ended June 30, 2013, representing a decrease of $258.7 million from the same period last year. The decrease in revenues during the six months ended June 30, 2013 as compared to the same period in 2012 was primarily attributable to the decline in the average selling price of hard coking coal.

Cost of sales, exclusive of depreciation and depletion, of our U.S. Operations segment decreased $66.3 million to $501.1 million for the six months ended June 30, 2013 as compared to $567.4 million in the second quarter of 2012 primarily due to lower thermal coal sales volume combined with our cost containment and restructuring efforts.

Our U.S. Operations segment reported operating income of $30.4 million for the six months ended June 30, 2013, compared to operating income of $214.2 million in the same period in 2012. Operating income for the U.S. Operations segment included a net gain recognized of approximately $9.1 million due to the settlement of a negotiated contract partially offset by related asset impairment charges; all related to the contract renegotiation and accelerated closure of the North River mine in Alabama. The decrease in operating income was primarily due to an approximately 28.2% decrease in revenues as a result of lower global metallurgical coal pricing.

Metallurgical coal sales for the six months ended June 30, 2013 consisted of 1.0 million metric tons of hard coking coal at an average selling price of $149.29 per metric ton and 884 thousand metric tons of low-volatile PCI coal at an average selling price of $137.29 per metric ton. Metallurgical coal sales for the six months ended June 30, 2012 consisted 828 thousand metric tons of hard coking coal at an average selling price of $233.53 per metric ton and 1.1 million metric tons of low-volatile PCI coal at an average selling price of $175.23 per metric ton. The declines in the average selling price of hard coking coal and low-volatile PCI coal reflect the weakened worldwide demand for metallurgical coal. The average cash cost of sales per metric ton of hard coking coal sold during the six months ended June 30, 2013 was $151.45, representing an increase of $7.04 from the average cash cost of sales per ton of hard coking coal sold during the six months ended June 30, 2012 of $144.41. The increase was primarily due to an increase in lower of cost or market charges recognized in the current year. The average cash cost of sales per metric ton of low-volatile PCI coal sold during the six months ended June 30, 2013 was $142.49 representing a 33% decrease from the average cash cost of sales per ton of

coal sold during the six months ended June 30, 2012 of $212.79. This reduction reflects the conversion of the Brule mine from a contractor-operated to an owner-operated mine.

Our Canadian and U.K. Operations segment produced a total of 946 thousand metric tons of hard coking coal and 951 thousand metric tons of low-volatile PCI in the six months ended June 30, 2013. During the six months ended June 30, 2012, the segment produced 950 thousand metric tons of hard coking coal and 1,051 thousand metric tons of low-volatile PCI. The Willow Creek mine produced approximately 102 thousand metric tons of low-volatile hard coking coal and 198 thousand tons of low-volatile PCI in the six months ended June 30, 2013 as compared to 75 thousand metric tons of low-volatile hard coking coal and 270 thousand tons of low-volatile PCI in the six months ended June 30, 2012.

Statistics for Canadian and U.K. Operations are presented in the following table:

	Six months ended June 30,

	2013		2012
Tons of hard coking coal sold (in thousands)		1,007		828
Tons of hard coking coal produced (in thousands)(1)		946		950
Average hard coking coal selling price (per metric ton)	$	149.29	$	233.53
Average hard coking coal cash cost of sales (per metric ton)	$	151.45	$	144.41
Average hard coking coal cash cost of production (per metric ton)(1)	$	115.92	$	101.77
Tons of low-volatile PCI coal sold (in thousands)		884		1,062
Tons of low-volatile PCI coal produced (in thousands)(1)		951		1,051
Average low-volatile PCI coal selling price (per metric ton)	$	137.29	$	175.23
Average low-volatile PCI cash cost of sales (per metric ton)	$	142.49	$	212.79
Average low-volatile PCI cash cost of production (per metric ton)(1)	$	96.94	$	171.57

Our Canadian and U.K. Operations segment reported revenues of $271.3 million for the six months ended June 30, 2013, representing a decrease of $116.7 million from the same period in 2012. The decrease in revenues during the six months ended June 30, 2013 as compared to the six months ended June 30, 2012 was attributable to a decline of 36.1% and 21.6% in the average selling price of hard coking coal and low-volatile PCI coal, respectively.

Cost of sales, exclusive of depreciation and depletion, in our Canadian and U.K. Operations segment for the six months ended June 30, 2013 decreased $62.2 million to $287.4 million as compared to the second quarter of 2012. The decrease in cost of sales was primarily attributable to a significant improvement in cost of sales for low-volatile PCI which reflects improved operating performance by our Brule mine and the cost savings from converting our Brule mine from contractor-operated to owner-operated.

Our Canadian and U.K. Operations segment reported an operating loss of $115.1 million for the six months ended June 30, 2013 as compared to an operating loss of $38.2 million for the same period in 2012. The increase in the operating loss was primarily due to lower average selling prices for hard coking and low-volatile PCI coal as a result of excess supply within the global metallurgical coal market.

Cash and cash equivalents increased by $54.3 million at June 30, 2013 compared to December 31, 2012 primarily due to net cash flows provided by financing activities of $159.5 million due to the issuance of the 2021 Senior Notes in March 2013. Cash flows provided by financing activities is partially offset by cash flows used in investing activities of $79.3 million primarily due to capital expenditures and cash flows used in operating activities of $24.1 million.

Net property, plant and equipment decreased by $75.0 million at June 30, 2013 as compared to December 31, 2012 primarily due to depreciation and depletion expense, partially offset by capital expenditures of $80.3 million.

Our principal sources of short-term funding are our existing cash balances, operating cash flows and the unused portion of our revolving credit facility. Our principal sources of long-term funding are our bank term loans entered into on April 1, 2011 and our senior notes issued in 2012 and 2013, as discussed below. Our available liquidity as of June 30, 2013 was $487.5 million, consisting of cash and cash equivalents of $170.9 million and $316.6 million available under the Company's $375 million revolving credit facility, net of outstanding letters of credit of $58.4 million. In recent quarters, we have entered into the financing transactions and amendments discussed below which have increased our interest expense. These transactions were completed to enhance liquidity, secure covenant relief and extend our debt maturities.

As of June 30, 2013, the Revolver, term loan A and term loan B interest rates were tied to LIBOR or CDOR, plus a credit spread ranging from 350 to 450 basis points for the Revolver and term loan A and 475 basis points on the term loan B, adjusted quarterly based on the Company's total leverage ratio as defined by the amended 2011 Credit Agreement. The term loan B has a minimum LIBOR floor of 1.0%. The Revolver loans can be denominated in either U.S. dollars or Canadian dollars at our option. The commitment fee on the unused portion of the Revolver is 0.5% per year for all pricing levels. The interest margins under the Credit Agreement were increased by 1.00% from their existing levels as defined in the Fifth Amendment to the 2011 Credit Agreement beginning on July 23, 2013.

Borrowings at June 30, 2013 under the amended 2011 Credit Agreement consisted of a term loan A balance of $656.6 million with a weighted average interest rate of 4.78%, a term loan B balance of $978.2 million with a weighted average interest rate of 5.75% and no borrowings under the Revolver, with $58.4 million in outstanding stand-by letters of credit and $316.6 million of availability for future borrowings.

Based on current forecasts and anticipated market conditions, we believe that funding provided by operating cash flows and available sources of liquidity are sufficient to meet substantially all of our operating needs, to make planned capital expenditures, to make all required interest and principal payments on indebtedness for the foreseeable future and to meet the minimum liquidity covenant of $255.0 million as required by the Fifth Amendment to the 2011 Credit Agreement. However, our operating cash flows and liquidity are significantly influenced by numerous factors including prices of coal, coal production levels, costs of raw materials, interest rates and the general economy.

While we believe we have sufficient liquidity to meet substantially all of our operating needs, we remain focused on increasing our financial flexibility. We are exploring potential asset sales and joint ventures and are targeting proceeds of approximately $250.0 million to be achieved over the next nine months.

In March 27, 2013, the Company issued $450.0 million aggregate principal amount of 8.50% senior notes due April 15, 2021 (the "2021 Notes"). These Notes are unconditionally guaranteed, jointly and severally, on an unsecured basis, by each of our current and future wholly-owned U.S. domestic restricted subsidiaries, exclusive of the West Virginia entities as they are owned by our U.K. Operations. Interest on the 2021 Notes is payable semi-annually in arrears on April 15 and October 15, commencing on October 15, 2013. At any time prior to April 15, 2016, the Company may redeem up to 35% of the aggregate principal amount of the 2021 Notes at a redemption price of 108.50% of the principal amount. The Company may redeem the 2021 Notes, in whole or in part, after April 15, 2016 and prior to April 15, 2017, at a redemption price equal to 100% of the aggregate principal amount of the 2021 Notes plus a "make-whole" premium and accrued and unpaid interest. The "make-whole" premium relates to the discount granted when the Company issued the bonds. The Company may redeem the 2021 Notes, in whole or in part at redemption prices equal to 104.25% for the twelve months commencing April 15, 2017, 102.125% for the twelve months commencing April 15, 2018 and 100% beginning on April 15, 2019, in each case plus accrued and unpaid interest.

On November 21, 2012, we issued $500.0 million aggregate principal amount of 9.875% senior notes due December 15, 2020 (the "2020 Notes") at an initial price of 99.302% of their face amount. The 2020 Notes are unconditionally guaranteed, jointly and severally, on an unsecured basis, by each of our current and future wholly-owned U.S. domestic restricted subsidiaries. Interest on the 2020 Notes accrues at the rate of 9.875% per year and is payable semi-annually in arrears on June 15 and December 15, beginning on June 15, 2013. At any time prior to December 15, 2015, the Company may redeem up to 35% of the aggregate principal amount of the 2020 Notes at a redemption price of 109.875% of the principal amount, plus accrued and unpaid interest. We may redeem the 2020 Notes, in whole or in part, at any time prior to December 15, 2016, at a price equal to 100.000% of the aggregate principal amount of the 2020 Notes plus a "make-whole" premium, plus accrued and unpaid interest. We may redeem the 2020 Notes, in whole or in part, at any time during the twelve months commencing December 15, 2016, at 104.938% of the aggregate principal amount of the 2020 Notes, at any time during the twelve months commencing December 15, 2017, at 102.469% of the aggregate principal amount of the 2020 Notes, and at any time after December 15, 2018, at 100.000% of the aggregate principal amount of the 2020 Notes, in each case plus accrued and unpaid interest.

Upon the occurrence of a change of control with respect to the 2020 Notes, unless the Company has exercised its right to redeem the 2020 Notes, the Company will be required to offer to repurchase each holder's 2020 Notes at a price equal to 101% of the aggregate principal amount, plus accrued and unpaid interest, if any, to the date of purchase.

As market conditions warrant, we may from time to time repurchase our debt securities in privately negotiated transactions, in open market purchases, by tender offer or otherwise.

On April 1, 2011, we entered into a $2.725 billion credit agreement (the "2011 Credit Agreement") to partially fund the acquisition of Western Coal and to pay off all outstanding loans under the 2005 Credit Agreement. The 2011 Credit Agreement consists of (1) a $950.0 million principal amortizing term loan A facility maturing in April 2016, at which time the remaining outstanding principal is due, (2) a $1.4 billion principal amortizing term loan B facility maturing in April 2018, at which time the remaining outstanding principal is due and (3) a $375.0 million multi-currency revolving credit facility ("Revolver") maturing in April 2016, at which time any remaining balance is due. The Revolver provides for operational needs and letters of credit. Our obligations under the 2011 Credit Agreement are secured by our domestic and foreign real, personal and intellectual property. The 2011 Credit Agreement contains customary events of default and covenants, including among other things, covenants that do not prevent but restrict us and our subsidiaries' ability to incur certain additional indebtedness, create or permit liens on assets, pay dividends and repurchase stock, engage in mergers or acquisitions, and make investments and loans. The 2011 Credit Agreement also includes certain financial covenants that must be maintained.

On July 23, 2013, the Company entered into an amendment (the "Fifth Amendment") to the 2011 Credit Agreement dated as of April 1, 2011, as amended by the First Amendment to Credit Agreement, dated as of January 20, 2012, the Second Amendment to Credit Agreement, dated as of August 16, 2012, the Third Amendment to Credit Agreement dated as of October 29, 2012, and as further amended by the Fourth Amendment to Credit Agreement, dated as of March 22, 2013, among the Company, the various lenders, Morgan Stanley Senior Funding, Inc. as administrative agent, and other agents named therein. The Fifth Amendment provides for, among other things (1) increased interest margins of 1.00% from their existing levels; (2) less restrictive interest expense coverage ratio and suspension of compliance until March 31, 2015; (3) less restrictive senior secured leverage ratio and suspension of compliance until June 30, 2014; (4) an additional minimum liquidity covenant of $225.0 million that applies at the end of each fiscal quarter through June 30, 2014 and at any time thereafter when the senior secured leverage ratio is greater than 5.50:1.00; (5) an additional capital expenditures covenant limiting capital expenditures to $175.0 million in 2013 and $200.0 million in 2014 with a potential that up to $20.0 million in unused 2013 capital spending may be carried forward and utilized in the succeeding fiscal year increasing the 2014 capital spending limit up to $220.0 million; (6) modifies the requirement that 100% of the net cash proceeds from the incurrence or issuance of unsecured indebtedness shall be applied as a mandatory repayment to exclude the mandatory repayment requirement for the first $250.0 million of such indebtedness; and (7) a restriction on cash dividends allowed in any fiscal quarter when the secured leverage ratio exceeds 4.50:1.00.

Cash balances were $170.9 million and $116.6 million at June 30, 2013 and December 31, 2012, respectively. The increase in cash during the six months ended June 30, 2013 of $54.3 million primarily resulted from net cash provided by financing activities of $159.5 million. This was partially offset by cash used in operating activities of $24.1 million and cash used in investing activities of $79.3 million, which included capital expenditures of $80.3 million.

The following table sets forth, for the periods indicated, selected consolidated cash flow information (in thousands):

	Six months ended June 30,

	2013			2012
Cash flows provided by (used in) operating activities	$	(24,102	)	$	308,562
Cash flows used in investing activities		(79,287	)		(233,246	)
Cash flows provided by (used in) financing activities		159,482			(84,324	)
Cash flows provided by discontinued operations		—			9,500
Effect of foreign exchange rates on cash		(1,816	)		(242	)

Net increase in cash and cash equivalents	$	54,277		$	250

The decrease of $332.7 million in cash provided by operating activities was primarily attributable to a $151.3 million decrease in net income as compared to the same period in 2012, resulting from the decline in the average selling price and volume of metallurgical coal.

The decrease in cash flows used in investing activities of $154.0 million was primarily attributable to a $165.8 million decrease in capital expenditures.

The increase in cash flows provided by financing activities of $243.8 million was primarily attributable to $450.0 million of proceeds from the issuance of the 2021 Notes partially offset by retirements of existing debt of $141.2 million, a reduction in net borrowing under the revolving credit agreement of $49.0 million and debt issuance costs of $15.1 million.

Capital expenditures totaled $46.2 and $80.3 million during the three and six months ended June 30, 2013 compared to $125.2 and $246.1 million during the three and six months ended June 30, 2012, respectively. We currently expect 2013 capital expenditures to total approximately $150.0 million, a reduction of $20.0 million from our earlier estimate of $170.0 million.

EBITDA from continuing operations is defined as earnings from continuing operations before interest expense, interest income, income taxes, and depreciation and depletion expense. EBITDA is defined as earnings before interest expense, interest income, income taxes, and depreciation and depletion expense. Adjusted EBITDA is defined as EBITDA further adjusted to exclude restructuring and asset impairment, proxy contest expenses and other miscellaneous items. EBITDA from continuing operations, EBITDA and adjusted EBITDA are financial measures which are not calculated in conformity with 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 these non-GAAP measures provide additional insights into the performance of the Company, and they reflect how management analyzes Company performance and compares that performance against other companies. In addition, we believe that EBITDA from continuing operations, EBITDA and adjusted EBITDA are useful measures as some investors and analysts use EBITDA from continuing operations, EBITDA and adjusted EBITDA to compare us against other companies and to help analyze our ability to satisfy principal and interest obligations and capital expenditure needs. We believe that EBITDA from continuing operations, EBITDA and adjusted EBITDA present a useful measure of our ability to incur and service debt based on ongoing operations. EBITDA from continuing operations, EBITDA and adjusted EBITDA may not be comparable to similarly titled measures used by other entities.

Reconciliation of Net Income (Loss) to EBITDA from continuing operations, EBITDA and Adjusted EBITDA (in thousands):

	For the three months ended June 30,						For the six months ended June 30,

	2013			2012			2013			2012
Income (loss) from continuing operations	$	(34,492	)	$	26,756		$	(83,936	)	$	67,372
Interest expense		53,129			31,104			105,747			59,171
Interest income		(144	)		(341	)		(794	)		(618	)
Income tax expense (benefit)		(49,760	)		4,535			(115,799	)		13,212
Depreciation and depletion expense		68,320			74,459			149,510			140,952

Earnings from continuing operations before interest, income taxes, and depreciation and depletion (EBITDA from continuing operations)		37,053			136,513			54,728			280,089
Pretax income from discontinued operations		—			8,282			—			8,282

Earnings before interest, income taxes, and depreciation and depletion (EBITDA)		37,053			144,795			54,728			288,371
Restructuring and asset impairment		(5,741	)		—			1,699			—
Proxy contest expenses and other		5,429			—			12,267			—

Adjusted EBITDA	$	36,741		$	144,795		$	68,694		$	288,371

We are exposed to certain market risks inherent in our operations. These risks generally arise from transactions entered into in the normal course of business. Our primary market risk exposures relate to interest rate risk, commodity price risk and foreign currency risks. We do not enter into derivatives or other financial instruments for trading or speculative purposes.

We have exposure to changes in interest rates under the 2011 Credit Agreement through our term loan A, term loan B and Revolver loans. As of June 30, 2013, the interest rates for the term loan A, term loan B and revolver loans are tied to LIBOR or CDOR, plus a credit spread ranging from 350 to 450 basis points for the revolver and term loan A and 475 basis points on the term loan B adjusted quarterly based on our total leverage ratio as defined by the 2011 Credit Agreement. As of June 30, 2013, our borrowings due under the 2011 Credit Agreement totaled $1.6 billion. As of June 30, 2013 a 100 basis point increase in interest rates would increase our quarterly interest expense by approximately $1.2 million while a 100 basis point decrease in interest rates would decrease our quarterly interest expense by approximately $141 thousand due to the LIBOR floor.

Our objective in managing exposure to interest rate changes is to protect against the variability in expected future cash flows attributable to changes in the benchmark interest rate related to interest payments required under the 2011 Credit Agreement. To achieve this objective, we manage a portion of our interest rate exposure through the use of interest rate swaps and an interest rate cap. To reduce our exposure to rising interest rates and the risk that changing interest rates could have on our operations, we entered into an interest rate swap agreement and an interest rate cap agreement during June 2011. The interest rate swap agreement has a notional value of $450.0 million and is based on a 1.17% fixed rate. The interest rate cap agreement has a notional value of $255.0 million and has a strike price of 2.00%.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report on Form 10-Q. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of June 30, 2013 to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosures. There has been no change in our internal control over financial reporting as such term is defined in Rule 13a-15(f) of the Exchange Act, during the three months ended June 30, 2013 that would materially affect, or is reasonably likely to materially affect, our internal control over financial reporting.

See Note 8 of the "Notes to Condensed Consolidated Financial Statements" in this Form 10-Q for a description of current legal proceedings, which is incorporated by reference in this Part II, Item 1.

We and our subsidiaries are parties to a number of other lawsuits arising in the ordinary course of our businesses. Most of these cases are in a preliminary stage and we are unable to predict a range of possible loss, if any. We record costs relating to these matters when a loss is probable and the amount can be reasonably estimated. The effect of the outcome of these matters on our future results of operations cannot be predicted with certainty as any such effect depends on future results of operations and the amount and timing of the resolution of such matters. While the results of litigation cannot be predicted with certainty, we believe that the final outcome of such litigation will not have a material adverse effect on our consolidated financial statements.

Our business, financial condition, operating results and cash flows can be impacted by a number of factors, any one of which could cause actual results to vary materially from recent results or from anticipated future results. In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report filed on Form 10-K for the fiscal year ended December 31, 2012, and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Industry Overview and Outlook," which could materially affect our business, financial condition or future results. Other than as described in this report, there have been no material changes to the risk factors disclosed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012. The risks described in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

The following table provides a summary of all repurchases by Walter Energy of its common stock during the three-month period ended June 30, 2013:

The information concerning mine safety violations and other regulatory matters is filed as Exhibit 95 to this quarterly report on Form 10-Q pursuant to the requirements of Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104).



31.1	*	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002—Chief Executive Officer
31.2	*	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002—Chief Financial Officer
32.1	*	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350—Chief Executive Officer
32.2	*	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350—Chief Financial Officer
95	*	Mine Safety Disclosures Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 299.104)
101	*	XBRL (Extensible Business Reporting Language)—The following materials from Walter Energy, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income (iv) the Condensed Consolidated Statement of Changes in Stockholders' Equity, (v) the Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2013
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to


Delaware (State or other jurisdiction of incorporation or organization)		13-3429953 (I.R.S Employer Identification No.)
3000 Riverchase Galleria, Suite 1700 Birmingham, Alabama (Address of principal executive offices)		35244 (Zip Code)


Large accelerated filer ý		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

		Page

Part I—Financial Information
Item 1.	Financial Statements
	Walter Energy, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited)	1
	Walter Energy, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited)	2
	Walter Energy, Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	3
	Walter Energy, Inc. and Subsidiaries Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited)	4
	Walter Energy, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited)	5
	Walter Energy, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	58
Item 4.	Controls and Procedures	58
Part II—Other Information
Item 1.	Legal Proceedings	59
Item 1A.	Risk Factors	59
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 4.	Mine Safety Disclosures	60
Item 6.	Exhibits	60
Signatures		61

	June 30, 2013		December 31, 2012

Coal	$	258,181	$	228,910
Raw materials and supplies		81,403		77,108

Total inventories	$	339,584	$	306,018

	For the three months ended June 30,

	2013		2012
Stock options		—		—
Restricted stock units		8,803		10,856

Total		8,803		10,856

	June 30, 2013		December 31, 2012

Asset derivatives designated as cash flow hedging instruments:
Interest rate cap(1)	$	6	$	12

Total asset derivatives	$	6	$	12

Liability derivatives designated as cash flow hedging instruments:
Interest rate swaps(2)	$	4,693	$	6,615

Total liability derivatives	$	4,693	$	6,615


Level 1:		Quoted prices in active markets for identical assets and liabilities;
Level 2:		Quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar instruments in markets that are not active; and
Level 3:		Unobservable inputs that are supported by little or no market data which require the reporting entity to develop its own assumptions.

	June 30, 2013

	Fair Value Measurements Using
	Fair Value Measurements Using						Total Fair Value
(in thousands)	Level 1		Level 2		Level 3		Total Fair Value
Assets:
Interest rate cap	$	—	$	6	$	—	$	6

Liabilities:
Interest rate swaps	$	—	$	4,693	$	—	$	4,693

	June 30, 2013				December 31, 2012

(in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
2011 Term Loan A	$	656,566	$	636,869	$	756,974	$	758,867
2011 Term Loan B	$	978,178	$	948,833	$	1,127,770	$	1,135,293
9.875% Senior Notes	$	496,656	$	433,125	$	496,510	$	500,000
8.50% Senior Notes	$	450,000	$	358,875	$	—	$	—

	June 30, 2013		December 31, 2012

Identifiable assets:
U.S. Operations	$	1,199,787	$	1,603,745
Canadian and U.K. Operations		3,800,009		3,728,817
Other		732,060		435,858

Total	$	5,731,856	$	5,768,420

Period		Average Price Paid per Share

April 1, 2013 - April 30, 2013	2,120	$	20.45
May 1, 2013 - May 31, 2013	—		—
June 1, 2013 - June 30, 2013	—		—

	2,120


WALTER ENERGY, INC.
/s/ WALTER J. SCHELLER, III Chief Executive Officer (Principal Executive Officer)
Date: August 7, 2013
/s/ WILLIAM G. HARVEY Chief Financial Officer (Principal Financial Officer)
Date: August 7, 2013