Form 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from __________ to ___________
Commission File Number
0-752
WESTMORELAND COAL COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 23-1128670
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
700 The Bellevue, 200 South Broad Street
Philadelphia, Pennsylvania 19102
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code... 215-545-2500
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 X No ________
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of July 7, 1995: 6,960,966
PART I - FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS
WESTMORELAND COAL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, 1995 Dec. 31, 1994
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 14,704 $ 15,453
Notes and accounts receivable
Coal sales 12,154 21,333
Notes 3,805 4,946
Other 898 2,367
16,857 28,646
Less allowance for
doubtful accounts 2,477 3,317
14,380 25,329
Inventories
Coal 2,212 3,554
Mine supplies 4,099 5,050
6,311 8,604
Assets of Cleancoal Terminal Co.
held for sale 5,848 -
Other current assets 890 952
TOTAL CURRENT ASSETS 42,133 50,338
Property, plant and equipment
Land and mineral rights 30,036 30,175
Plant and equipment 253,701 278,400
283,737 308,575
Less accumulated depreciation
and depletion 204,808 218,847
78,929 89,728
Assets of Cleancoal Terminal Co.
held for sale - 6,149
Investment in Independent Power
Projects 44,035 43,046
Investment in DTA 19,642 20,375
Other assets 19,790 20,103
TOTAL ASSETS $ 204,529 $ 229,739
See accompanying notes to condensed consolidated financial statements.
WESTMORELAND COAL COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, 1995 Dec. 31, 1994
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current installments of
long-term debt $ 11,074 $ 3,561
Accounts payable and accrued expenses 19,208 30,311
Accrual for workers' compensation 5,433 5,409
Accrual for postretirement
medical costs 8,075 8,075
Preferred dividends payable 1,222 -
Taxes on income 3,623 3,963
Deferred income taxes 500 500
TOTAL CURRENT LIABILITIES 49,135 51,819
Long-term debt 2,725 12,370
Accrual for pneumoconiosis
benefits 14,809 15,004
Accrual for workers' compensation 22,174 21,771
Accrual for postretirement
medical costs 39,442 36,405
Other liabilities 11,789 16,613
Deferred income taxes 14,485 14,732
Minority interest 10,655 10,301
SHAREHOLDERS' EQUITY
Preferred stock of $1.00 par value
Authorized 5,000,000 shares;
Issued 575,000 shares 575 575
Common stock of $2.50 par value
Authorized 20,000,000 shares;
Issued 6,960,966 shares at 6/30/95 17,402 -
Issued 6,957,084 shares at 12/31/94 - 17,390
Other paid-in capital 94,641 94,653
Accumulated deficit (73,303) (61,894)
TOTAL SHAREHOLDERS' EQUITY 39,315 50,724
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY $ 204,529 $ 229,739
See accompanying notes to condensed consolidated financial statements.
WESTMORELAND COAL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
1995 1994* 1995 1994*
Revenues:
Coal $ 39,468 $ 107,003 $ 80,256 $ 205,163
Independent Power 3,786 1,759 8,681 2,833
43,254 108,762 88,937 207,996
Cost and expenses:
Cost of coal sold 43,602 97,358 88,160 188,625
Cost of sales-Independent
Power 629 684 1,007 1,311
Depreciation, depletion
and amortization 5,600 4,303 10,639 8,554
Selling and administrative 4,261 7,016 8,260 13,567
54,092 109,361 108,066 212,057
Operating loss (10,838) (599) (19,129) (4,061)
Gains on the sales of assets 23 - 9,538 -
Interest expense (339) (1,189) (681) (2,282)
Interest and other income 1,119 783 2,258 1,314
Loss before income tax
expense (benefit)
and minority interest (10,035) (1,005) (8,014) (5,029)
Income taxes (benefit):
Current 349 328 844 841
Deferred (110) 268 (247) 324
239 596 597 1,165
Minority interest 169 109 354 304
Net loss (10,443) (1,710) (8,965) (6,498)
Less preferred stock dividends
declared 1,222 - 2,444 1,222
in arrears - 1,222 - 1,222
Net loss applicable
to common shareholders $ (11,665) $ (2,932) $ (11,409) $ (8,942)
Net loss per share
applicable to common shareholders $(1.68) $ (.42) $(1.64) $ (1.28)
* Restated to conform with current classifications and to reflect
Westmoreland Energy, Inc. as a continuing operation.
Weighted average number of
common shares outstanding 6,961 6,955 6,960 6,955
See accompanying notes to condensed consolidated financial statements.
WESTMORELAND COAL COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30, 1995 1994*
(in thousands)
Cash flows from operating activities:
Net loss $ (8,965) $ (6,498)
Adjustments to reconcile net
loss to net cash provided (used) by
operating activities:
Gains on the sales of assets (9,538) -
Equity earnings from independent power
projects (6,076) (2,383)
Recognition of development fee income (1,750) -
Cash distributions from independent
power projects 5,087 1,105
Depreciation, depletion and amortization 10,639 8,554
Decrease in accrual for
pneumoconiosis benefits (195) (650)
Decrease in notes and accounts
receivable, net of allowance for
doubtful accounts 9,668 14,912
Decrease in inventories 2,018 2,900
Decrease in accounts payable and
accrued expenses (11,557) (10,511)
Increase in accrual for
postretirement medical costs 3,037 3,683
Other (41) 1,908
Net cash provided (used) by operating
activities (7,673) 13,020
Cash flows from investing activities:
Fixed assets additions (342) (2,617)
(Increase) decrease in notes receivable 1,592 (868)
Proceeds from sales of assets 10,131 85
LG&E support fee payment - (3,563)
Net cash provided (used) by
investing activities 11,381 (6,963)
Cash flows from financing activities:
Hampton lease buyout premium (1,103) -
Repayment of long-term debt (2,132) (6,159)
Cash deposits to support
surety bonds - (4,430)
Dividends paid to shareholders (1,222) (3,144)
Other - 4
Net cash used in financing activities (4,457) (13,729)
* Restated to conform with current classifications and to reflect
Westmoreland Energy, Inc. as a continuing operation.
Net decrease in cash
and cash equivalents (749) (7,672)
Cash and cash equivalents,
beginning of period 15,453 24,262
Cash and cash equivalents,
end of period $ 14,704 $ 16,590
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 768 $ 2,425
Income taxes, net $ 1,184 $ 214
Supplemental disclosure of non-cash financing activities:
In the first quarter of 1995, $8,000,000 was distributed from debt
reserve accounts of certain of the Company's independent power
projects and bank letters of credit were substituted for the amounts
distributed. The cash proceeds are restricted as to use and were
invested in certificates of deposit of the bank issuing the letters of
credit. The certificates of deposit collateralize the letters of
credit and are classified on the Company's Condensed Consolidated
Balance Sheets as an Investment in Independent Power Projects.
The Company, in the second quarter of 1994, recorded as a current
obligation and a non-current asset a $26,560,000 draw under a letter
of credit connected with Westmoreland Terminal Company. This
obligation was repaid in December 1994.
See accompanying notes to condensed consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Notes contained herein should be read in conjunction with the
Notes to the Company's Consolidated Financial Statements filed on
Form 10-K for the year ended December 31, 1994. The financial
information contained in this Form 10-Q is unaudited but reflects
all adjustments which are, in the opinion of management,
necessary for a fair presentation of the financial information
for the periods shown. Such adjustments are of a normal
recurring nature.
1. Commitments and Contingencies
Westmoreland Energy, Inc. ("WEI")
WEI, through subsidiaries and 100%-owned partnerships, holds
general and limited interests in partnerships which were formed
to develop and own cogeneration and other non-regulated
independent power plants. Ownership in these partnerships range
from 1.25 percent to 50 percent. Generally, the lenders to these
partnerships have recourse only against these projects and the
income and revenues therefrom. The project debt agreements
contain various restrictive covenants including restrictions on
making cash distributions to the partners. The partnerships are
in compliance with all of these covenants.
Equity Funding Commitments
WEI has one remaining equity funding commitment estimated to be
$4,600,000 for the Roanoke Valley II Project ("ROVA II") which is
expected to be paid in the second half of 1995. In the event
that after the start-up of this project the conversion of the
project construction loan to a term loan is delayed beyond
December 31, 1995, WEI's required equity funding commitment could
be up to $14,600,000. The conversion from a construction loan to
a term loan is expected to occur in the fourth quarter of 1995.
Additionally, if the total cost of ROVA II exceeds $91,700,000,
WEI's equity funding commitment could increase by up to 50% of
the amount of such overrun. ROVA II commenced commercial
operations in the second quarter of 1995 with a total cost
expected to be less than $91,700,000.
Equity Support Agreement
On April 15, 1993, the Company entered into an equity support
agreement with LG&E Power Inc. ("LG&E") whereby WEI's equity
funding commitments of the Roanoke Valley I Project ("ROVA I"),
the Rensselaer Project and ROVA II were guaranteed by LG&E. The
anticipated $4,600,000 equity funding commitment of ROVA II is
guaranteed by LG&E. As consideration for this guarantee and
those previous guarantees supporting ROVA I and the Rensselaer
Project (both funded by the Company in December 1994), the
Company had pledged its interest in all three of these Projects
as security to LG&E. WEI's ownership interest in the Rensselaer
Project, ROVA I and ROVA II will continue to be pledged to LG&E
until the ROVA II equity funding commitment is satisfied. The
Company pays fees of 1.25 percent per annum on the aggregate
amount of the unfunded guarantees and also paid a one-time fee of
$4,750,000 in 1994. The $4,750,000 fee is being amortized
through the required equity funding dates of the respective
projects and as of June 30, 1995 the amount remaining to be
amortized is insignificant.
Recent Developments Relating to Independent Power Projects
Southampton Project
WEI owns a 30% general partnership interest in LG&E-Westmoreland
Southampton ("Southampton Partnership"), which owns the
Southampton Project. The Southampton Project, which was engaged
in start-up and testing operations from September 1991 through
March 1992, failed to meet the Federal Energy Regulatory
Commission ("FERC") operating standards for a qualifying facility
("QF") in 1992. The failure was due to three factors: (i) the
facility was not dispatched by its power customer, Virginia
Electric and Power Company ("Virginia Power"), on a baseload
schedule as anticipated, (ii) the facility was engaged in start-
up and testing operations during a portion of that year, and
(iii) the facility operator mistakenly delivered non-sequential
steam to the host over a significant period of time. On February
23, 1994, the Southampton Partnership filed a request with the
FERC for a waiver of FERC's QF operating standard for 1992.
Virginia Power intervened in the FERC proceeding, opposed the
granting of a waiver, and alleged that its power contract with
the Southampton Partnership had been breached due to the failure
of the facility to maintain QF status in 1992.
On July 7, 1994, the FERC issued an order (1) denying the
application of the Southampton Partnership for a waiver of the
FERC's QF operating standard in 1992 with respect to the
Southampton Project and (2) directing the Southampton Partnership
to show cause why it should not be required to file rate
schedules with the FERC governing its 1992 electricity sales for
resale to Virginia Power. In 1994 the Southampton Project
established a reserve for the anticipated refund obligations
relating to this issue. On August 9, 1994, the Southampton
Partnership filed a request for rehearing of FERC's order or,
alternatively, a motion for reconsideration. If the FERC were to
deny the requested waiver on rehearing and to determine that the
Southampton Partnership had been a "public utility" in 1992, then
the Southampton Partnership's 1992 actions could be subject to
regulation under the Federal Power Act and state laws and
regulations; two other cogeneration projects in which the Company
holds ownership interests could also be subject to such
regulation; the Company and certain of its subsidiaries could
become subject to regulation for 1992 under the Public Utility
Holding Company Act; and defaults might be created under certain
existing agreements. No assurance can be provided as to the
timing of the FERC's decision or the outcome. The Company
believes that a denial by FERC of a waiver for the Southampton
facility would not have a material adverse effect on the
financial condition of the Company.
Rensselaer Project
WEI owns a 50% general partnership interest in LG&E-Westmoreland
Rensselaer (the "Rensselaer Partnership"), which owns the
Rensselaer Project. The Rensselaer Project failed to meet the
FERC's QF operating and efficiency standards in 1993 and did not
meet the QF efficiency standard in 1994 as a result of a single
start-up and testing period that overlapped both years and was
prolonged due to a delay in the construction of necessary gas
pipeline facilities and unexpected equipment problems. On
October 17, 1994, the Rensselaer Partnership filed a request with
the FERC for waivers of the applicable QF standards in 1993 and
1994. On April 26, 1995 the FERC granted the Rensselaer
Project's request for waiver of the applicable QF standards for
1993 and 1994.
ROVA I Project
WEI owns a 50% partnership interest in Westmoreland-LG&E Partners
(the "ROVA Partnership"). The ROVA Partnership's principal
customer contracted to purchase the electricity generated by
ROVA I under a long-term contract. In the second quarter of
1994, that customer disputed the ROVA Partnership's
interpretation of the provisions of the contract dealing with the
payment of the capacity purchase price when the facility
experiences a forced outage day. A forced outage day is a day
when ROVA I is not able to generate a specified level of
electrical output. The ROVA Partnership believes that the
customer is required to pay the ROVA Partnership the full
capacity purchase price unless forced outage days exceed a
contractually stated annual number. The customer asserts that it
is not required to do so.
Since the commencement of commercial operations in May 1994
through June 30, 1995, the customer withheld approximately
$6,719,000, including $863,000 during the first six months of
1995, of capacity purchase price payments to the ROVA Partnership
because of this dispute. On October 31, 1994, the ROVA
Partnership filed a complaint in the Circuit Court of the City of
Richmond, Virginia (the "Court") to recover these amounts and to
confirm that such payments may not be withheld in the future. On
December 12, 1994 the customer filed a motion to dismiss the
complaint and on March 17, 1995 the Court granted this motion.
The ROVA Partnership filed an amended motion for Judgment with
the Court on April 17, 1995. On April 27, 1995, the customer
filed another motion to dismiss the complaint and on June 20,
1995 the Court held a hearing on the motion. No decision has
been issued by the Court as yet. No earnings have been
recognized by WEI in 1994 and 1995 for payments withheld by the
customer relating to forced outage days. The Company believes
that the ROVA Partnership's position is correct. However, the
Company is unable to predict the outcome of this proceeding, or
the amount, if any, that the customer may be ordered to pay
related to this matter. Additionally, WEI has evaluated and
implemented ways to minimize the number of forced outage days in
the future. Regardless of the outcome, the Company believes ROVA
I will continue to operate profitably and generate positive cash
flows.
Westmoreland Terminal Company
Westmoreland Terminal Company ("WTC"), a wholly-owned subsidiary
of the Company, has a 20% interest in Dominion Terminal
Associates ("DTA"), a partnership formed for the construction and
operation of a coal-storage and vessel-loading facility in
Newport News, Virginia. DTA's annual throughput capacity is 22
million tons, and its ground storage capacity is 1.7 million
tons.
Historically, the Company utilized the terminal for most of its
coal exporting business. In 1994, the Company disengaged from
the export sales market due to poor margins and the amount of
working capital required to participate in that market. The
Company currently utilizes the terminal's facilities for
supplying coal to domestic customers via coastal waterways (the
"domestic barge business"). The Company also leases the ground
storage space and the vessel-loading facilities to certain
unaffiliated parties (the "leasing activities").
The Company continues to believe it will recover its investment
in DTA. The Company will continue to market the use of its share
of DTA, aggressively manage related costs and monitor the
performance and value of this asset.
The DTA partners have a Throughput and Handling Agreement
whereby WTC is committed to fund its proportionate share of DTA
operating expenses. WTC's total cash funding obligations were
$893,000, including certain rebates related to the total
throughput at the DTA terminal, and $1,438,000 during the first
six months of 1995 and 1994, respectively. The decrease in the
cash funding obligation for the first six months of 1995 compared
to the same period of 1994 is largely attributable to the
elimination of interest expense on fees related to the DTA Bonds
during the first six months of 1994, and certain adjustments in
the first quarter of 1995 related to an overpayment of interest
expense in the fourth quarter of 1994.
Cleancoal Terminal Company
The Company has an agreement to sell the assets of Cleancoal
Terminal Company ("Cleancoal") to an indirect wholly-owned
subsidiary of CSX Corporation ("CSX"). This agreement terminates
on July 31, 1995, however, it may be extended if mutually agreed
to by both parties. In exchange for the assets of Cleancoal and
payment of $2,500,000, CSX has agreed to release the Company from
its $8,864,000 loan guarantee obligation. The loan guarantee
obligation was made to CSX in 1987 in connection with a loan from
CSX to affiliates of Adventure Resources, Inc. The Company will
also be released from related interest payments to CSX of
approximately $840,000 per year when this transaction closes.
Cleancoal's operations were discontinued in January 1995 and the
majority of its employees were laid off on January 31, 1995. The
Company expects to complete the Cleancoal transaction in the
near-term.
Other
In addition to the contingencies discussed in this Note, the
Company and its subsidiaries had various immaterial claims and
suits pending at June 30, 1995, all in the ordinary course of
business.
2) CAPITAL STOCK
The Company's preferred stock was issued in July 1992. Preferred
stock dividends at a rate of 8.5% per annum had been paid
quarterly for the third quarter of 1992 through the first quarter
of 1994. The declaration and payment of preferred stock dividends
was suspended in the second quarter of 1994 in connection with
extension agreements with the Company's principal lenders. On
February 1, 1995 the Board of Directors declared a first quarter
1995 preferred stock dividend which was paid April 1, 1995 to
holders of record as of March 10, 1995. On June 6, 1995 the
Board of Directors declared a second quarter 1995 preferred stock
dividend which was paid July 3, 1995 to holders of record as of
June 20, 1995. The three quarterly dividends which are in
arrears (those dividends whose payment dates would have been July
1, 1994, October 1, 1994 and January 1, 1995) amount to
$3,666,000 in the aggregate ($6.375 per preferred share or
$1.59375 per depositary share. Each share of preferred stock is
equivalent to four depositary shares.) Payment of common stock
dividends is not permitted until the preferred stock dividends
that are in arrears are made current. The Company's Board of
Directors will continue to review the payment of quarterly
preferred stock dividends as well as the three preferred stock
dividends which are in arrears, in light of the Company's ongoing
business circumstances.
The Company is reviewing its options with respect to its Virginia
Division, which include the possible future sale, downsizing or
shutdown of all or part of the Virginia Division, at which time
the Company may be required to recognize, for accounting
purposes, a significant portion of its postretirement medical
liabilities and possibly recognize its share of the unfunded
vested pension liabilities (the "Pension Withdrawal Liability")
as they pertain to the multiemployer United Mine Workers' of
America (the "UMWA") Retirement Funds. The total amount of the
liabilities, which would be expensed at the time the Virginia
Division sale, downsizing or shutdown occurs, can not be
determined until a definitive plan is finalized. The impact of
this non-cash expense on shareholders' equity could be material
and could affect the Company's ability to pay preferred stock
dividends. (Refer to Management's Discussion and Analysis of
Financial Condition and Results of Operations ("MD&A") details
pertaining to the Virginia Division.)
There are statutory restrictions limiting the payment of
preferred stock dividends under Delaware law, the state in which
the Company is incorporated. Under Delaware law, the Company is
permitted to pay dividends only: (1) out of surplus, that being
the amount of shareholders' equity in excess of the par value of
the Company's two classes of stock (the combined par value of the
Company's two classes of stock was $17,977,000 as of June 30,
1995); or (2) in the event there is no surplus, out of net
profits for the fiscal year in which a dividend is declared
(and/or out of net profits from the preceding fiscal year), but
only to the extent that shareholders' equity exceeds the par
value of preferred stock ($575,000). The Company's shareholders'
equity at June 30, 1995 was $39,315,000.
3) Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
("SFAS 121") in March 1995 when SFAS 121 was issued. Management
has evaluated its assets in accordance with SFAS 121 and believes
no adjustment for permanent impairment is required at this time.
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS ("MD&A")
MATERIAL CHANGES IN FINANCIAL CONDITION
FROM DECEMBER 31, 1994 TO JUNE 30,1995
Liquidity
The Company's liquidity position weakened during the first six
months of 1995 due primarily to increased losses at the Company's
Virginia Division. Net cash used by operating activities was
$7,673,000 during the first six months of 1995 primarily due to a
$15,920,00 operating loss at the Virginia Division. During the
second quarter of 1995, net cash used by operating activities
totalled $7,202,000, primarily due to a $8,390,000 operating loss
at the Virginia Division. For the first six months of 1995, net
cash provided by investing activities included $10,131,000 of net
cash from the disposition of various assets, primarily through
the sale of the Hampton Division. Due to the continuing losses
at the Virginia Division, the ongoing cash costs related to
postretirement medical and workers' compensation benefits and the
scheduled funding requirements related to ROVA II and the sale of
Cleancoal Terminal, the Company's liquidity resources would be
inadequate to meet operating requirements through December 31,
1995. Accordingly, management expects to address this near-term
problem by reducing costs and selling all or a part of the
Virginia Division's assets and/or related businesses. Refer to
the Liquidity Outlook section of MD&A for further details
relating to the Company's ongoing liquidity challenges beyond
1995 and refer to the Results of Operations section of MD&A for
further details relating to the Virginia Division.
In January of 1995 the Company sold the assets of its Hampton
Division located in Boone and Logan Counties, West Virginia to
Burco Resources Corporation and Wind River Resources Corporation
and sold its Hampton Division mineral lease to the lessor, Penn
Virginia Resources Corporation ("Penn Virginia"), for $9,045,000
in cash. Penn Virginia holds an 18.94% voting interest in the
Company at June 30, 1995. The Company wrote off a substantial
portion of the Hampton Division's assets in 1993. The proceeds to
the Company were approximately $7,376,000 after payments related
to a capital lease. The elimination of this capital lease
resulted in a further reduction of the Company's long-term debt.
The gain on the sale was $9,088,000 after the reversal of certain
liabilities. The purchasers (including Penn Virginia) assumed
the reclamation and environmental liabilities associated with
the Hampton Division as part of the sales transaction.
Cash used by operating activities in the first six months of 1995
was $7,673,000 compared to cash provided by operating activities
in the first six months of 1994 of $13,020,000. Unfavorable
variances include:
1)Unexpected continuing and increasing operating losses from
the Virginia Division;
2)The absence of a positive operating cash flow from Criterion
Coal Company which was sold in December 1994, and the Hampton
Division, sold in January 1995; and
3)The absence of the one-time cash improvement realized by the
Company in 1994 resulting from the collection of export
receivables as the Company withdrew from the export market.
These unfavorable variances were partially offset by increased
cash distributions from the Company's independent power projects
in 1995. Cash distributions from independent power projects
totalled $5,087,000 and $1,105,000 in the first six months of
1995 and 1994, respectively.
Cash provided by investing activities in the first six months of
1995 was $11,381,000, including proceeds of $9,045,000 from the
sale of the assets of the Company's Hampton Division and $925,000
from the sale of Virginia Division's Dump Train. WEI collected
$1,592,000 of its subordinated loans receivable from project
partnerships in the first six months of 1995. Cash used by
investing activities in the first six months of 1994 amounted to
$6,963,000. The Company paid $3,563,000 in fees during the first
six months of 1994 in connection with the Equity Support
Agreement for three independent power projects. Fixed asset
additions were $342,000 and $2,617,000 in the first six months of
1995 and 1994, respectively.
Cash used in financing activities totalled $4,457,000 and
$13,729,000 in the first six months of 1995 and 1994,
respectively. Repayment of long-term debt amounted to $2,132,000
(including $566,000 related to the Hampton capital lease) and
$6,159,000 in the first six months of 1995 and 1994,
respectively. Also included in the first six months of 1995 was
a payment of $1,103,000 for the buyout premium for leased assets
of the Hampton Division. In the first six months of 1994 the
Company transferred $4,430,000 to a cash deposit account to
collateralize the Company's outstanding surety bonds for its
workers' compensation self-insurance programs. The Company paid
preferred stock dividends of $1,222,000 and $2,444,000 in the
first six months of 1995 and 1994, respectively.
The Company's current ratio was .86 at June 30, 1995 compared to
.97 at December 31, 1994. The Company's total debt to
capitalization ratio (total debt divided by the sum of total
debt, minority interest and shareholders' equity) was 22% at June
30, 1995 compared to 21% at December 31, 1994. Debt balances at
June 30, 1995 were $13,799,000 compared to $15,931,000 at
December 31, 1994.
The Company's consolidated cash and cash equivalents at June 30,
1995 totalled $14,704,000 (including $3,703,000 at WRI). At
March 31, 1995, cash and cash equivalents totalled $23,643,000
(including $3,432,000 at WRI). At December 31, 1994, cash and
cash equivalents totalled $15,453,000 (including $2,445,000 at
WRI). None of the Company's cash and cash equivalents was or is
restricted as to use or disposition. The cash at WRI, a 60% owned
subsidiary, is available to the Company only through dividends.
In addition, the Company had restricted cash, which was not
classified as cash and cash equivalents on the Company's
Condensed Consolidated Balance Sheets, of $17,210,000 at June 30,
1995 compared to $9,210,000 at December 31, 1994. The $17,210,000
is comprised of two items: a $9,210,000 interest-bearing cash
deposit account, which collateralizes the Company's outstanding
surety bonds for its workers' compensation self-insurance
programs and is classified on the Company's Condensed
Consolidated Balance Sheets as long-term in Other assets at June
30, 1995 and at December 31, 1994; and $8,000,000 invested in
certificates of deposit at June 30, 1995 which is classified on
the Company's Condensed Consolidated Balance Sheets as an
Investment in Independent Power Projects (also a long-term
asset). The $8,000,000 in certificates of deposit represents cash
proceeds which were transferred from debt reserve accounts of
certain of the Company's independent power projects and for which
bank letters of credit were substituted. The cash proceeds are
restricted as to use and were invested in certificates of deposit
of the bank issuing the letters of credit. The certificates of
deposit collateralize the letters of credit.
Liquidity Outlook
The Company continues its strategic review of operations as part
of its plan to reduce costs, improve cash flow, eliminate non-
strategic or under-performing assets and reposition the Company
so that it can try to achieve meaningful and sustainable
profitability and positive cash flow.
The Company has continued its efforts to improve the
competitiveness and profitability of its Virginia Division
through cost control, productivity improvement and closure of
non-essential high cost operations. However, unexpected
continuing and increasing operating losses over the past three
quarters requires further action. Accordingly, the Company
announced on June 20, 1995 that it was issuing notices, pursuant
to the Worker Adjustment and Retraining Notification ("WARN")
Act, to its employees and to the employees of its wholly owned
subsidiary, Pine Branch Mining Incorporated ("Pine Branch"),
working in Lee County and Wise County, Virginia that it will
close the Holton Low Splint Mine, which employs 25 people, on
August 23, 1995, and that during the fourteen day period
beginning August 23, 1995, it expects to implement a further
significant layoff at its other Virginia mining facilities.
Although the notices were issued for all Westmoreland and Pine
Branch employees working in Virginia, the letters of notification
also state: "The Company is working on tentative plans which
could result in the retention of a reduced workforce to continue
to operate certain facilities." The Company is hopeful that by
August 23, 1995 an agreement will be reached with a purchaser of
the Virginia assets that will allow for the continued operation
of some of the facilities. The notices were issued to comply
with the WARN Act. The Company is working diligently to develop
the best available alternative for Westmoreland's long-term
success and to implement it promptly. Management deems that the
sale of a portion or all of the Virginia Division's assets and/or
related businesses is essential to meeting its near-term
operating obligations and scheduled funding requirements in
connection with ROVA II and Cleancoal Terminal.
In conjunction with issuing the WARN notices to its employees,
the Company also offered an Early Retirement Incentive Program
(the "ERIP") on July 7, 1995 to all salaried Westmoreland and
Pine Branch employees working in Lee County and Wise County,
Virginia. The ERIP will be principally funded out of
Westmoreland's Pension Plan surplus. The Company cannot predict
the number of employees who might elect to take the ERIP and
therefore is unable to forecast its financial impact.
Management believes that the fair value of the Virginia
Division's assets exceeds the carrying value of the assets, and
therefore, an impairment adjustment to the assets is not
appropriate at this time.
Upon a sale, downsizing or shutdown of all or a part of the
Virginia Division the Company may be required to recognize, for
accounting purposes, a significant portion of its postretirement
medical liabilities and possibly recognize its Pension Withdrawal
liability pertaining to the multiemployer UMWA Retirement Funds.
The total amount of the liabilities, which would be expensed at
the time the Virginia Division's sale, downsizing or shutdown
occurs can not be determined until a definitive plan is
finalized. The impact of this non-cash expense on shareholders'
equity could be material and could affect the Company's ability
to pay preferred stock dividends.
The other major factor hampering the Company's long-term liquidity
outlook is its significant "heritage costs." These heritage costs
consist primarily of cash payments for postretirement medical
benefits and for workers' compensation. The Company has ongoing cash
expenditures in excess of $14,000,000 per year for postretirement
medical benefits and over $6,000,000 per year for workers'
compensation benefits. More than $10,000,000 per year of those costs
are attributable to idled operations of the Virginia Division and
these obligations will be retained by the Company. During the first
six months of 1995, the Company incurred cash heritage costs for all
operations of $10,869,000.
In addition, the Coal Industry Retiree Health Benefit Act of 1992
(the "Act") authorized the Trustees of the 1992 UMWA Benefit Plan
to implement security provisions pursuant to the Act. In May,
1995, the Trustees issued proposed security provisions which give
contributors to the Plan several options for satisfying the Act's
security requirements, and set the level of security to be
provided by the Company at approximately $22,000,000. The
provisions are not final and the Company has not made a final
determination as to which option it will select. Currently, the
least costly option from a cash point of view that would be
available to the Company appears to be the funding of a cash
collateral account with cash installments of approximately
$2,500,000 per annum (over 9 years) plus an annual finance fee of
2.5% on the remaining unfunded balance. The first installment,
estimated to be approximately $2,900,000, would be due in January
1996.
The Company has recently been notified by the Commonwealth of
Virginia, that as a result of the Company's workers' compensation
experience, the Company will be required to post an additional
$750,000 of surety bonds in connection with its workers'
compensation self-insurance programs in Virginia. Such
additional surety bonds are to be obtained by September 1995. In
the past, the Company has been required by its surety bond
underwriter to fully collateralize such surety bonds with cash
deposits.
The Company expects to fund its near-term heritage costs out of
current cash balances, regular cash distributions from the
Company's independent power projects and WRI, the divestment of
all or a part of the Virginia Division, continued divestment or
improvement of under-performing assets and further cost
reductions.
As previously reported, the Company will be required to take
additional steps, such as the acquisition of new income-producing
properties, to generate enough cash to meet its cash requirements
through 1996 and beyond. The Company, however, cannot give
assurances at this time that these steps can be accomplished.
RESULTS OF OPERATIONS:
SECOND QUARTER ENDED JUNE 30,1995 COMPARED
TO SECOND QUARTER ENDED JUNE 30,1994
Three Months Ended
June 30,
1995 1994*
(in thousands)
Coal Operations:
Virginia Division $ (8,390) $ 1,168
Pine Branch Mining Incorporated (173) (501)
Westmoreland Resources, Inc. 627 507
Westmoreland Coal Sales Company (621) (64)
Net corporate expenses (2,286) (2,574)
West Virginia - Idled Operations (2,187) (2,631)
Hampton Division - 611
Criterion Coal Company - 3,456
Cleancoal Terminal Company (597) (279)
Total Coal Operations (13,627) (307)
Independent Power Operations:
Westmoreland Energy, Inc. 2,789 (292)
Operating loss $ (10,838) $ (599)
Gains on the sales of assets $ 23 $ -
* Certain amounts have been reclassed to agree with current
classifications.
Details of tons sold (in thousands) and average revenue per ton
sold were as follows:
Three Months Ended
June 30,
1995 1994
By Source and Geographic Sector:
Tons Sold:
Own Operations - Inland 1,935 3,171
Own Operations - Export - 96
For Others - Inland 94 689
For Others - Export - 316
Total Tons Sold 2,029 4,272
By Segment:
Virginia Division* 794 1,249
Westmoreland Resources, Inc. 1,141 1,089
Hampton Division - 359
Criterion Coal Company - 570
Total Westmoreland Operations 1,935 3,267
For Others 94 1,005
Total Tons Sold 2,029 4,272
Average revenue per ton sold:
Eastern Operations $ 35.50 $ 31.27
Westmoreland Resources, Inc. 6.96 6.85
Weighted Average 19.45 25.05
*Includes tons:
Sold by Pine Branch Mining Incorporated 61 63
Purchased from unaffiliated producers 164 207
COAL OPERATIONS
Coal operations reported operating losses of $13,627,000 and
$307,000 for the second quarter of 1995 and 1994, respectively.
The deterioration is primarily attributable to the continuing and
increasing operating loss from the Company's Virginia Division
and the absence of operating profits from Criterion Coal Company,
sold in December, 1994 and the Hampton Division, sold in January
1995.
Those continuing business units reporting significant changes in
results of operations are discussed below.
Virginia Division - $9,558,000 worse
The Virginia Division had an operating loss of $8,390,000 in the
second quarter of 1995 compared to operating income of $1,168,000
in the second quarter of 1994. The increased operating loss at
the Virginia Division is largely attributable to higher costs per
ton of coal mined as a result of a production shortfall of
397,000 tons from Company mines and increasingly difficult mining
conditions in the second quarter of 1995 compared to the second
quarter of 1994. A portion of the decline in production is
attributable to the cessation of the Company's Holton longwall
mine in October 1994. This mine produced 156,000 tons in the
second quarter of 1994. The Company expected other Company mines
to make up the lost Holton production, however, difficult mining
conditions have prevented this. Poor mining conditions and 29
less workdays (due to the timing of a longwall move) at the
Pierrepont mine resulted in a decrease of 202,000 tons in the
second quarter of 1995 compared to the second quarter of 1994.
Productivity is expected to improve later in the year when the
longwall is scheduled to move to a new area of the Pierrepont
mine. Also, contributing to the increased operating losses at
the Virginia Division in the second quarter of 1995 compared to
the second quarter of 1994 was a $2,186,000 increase in
depreciation expense primarily related to a reduction in the
estimated useful life of plant and equipment so that these assets
are depreciated to their estimated salvage value by July 31,
1996. The tons sold from the Virginia Division also decreased by
455,000 tons in the second quarter of 1995 compared to the second
quarter of 1994. The decline in tonnage is outlined below:
1) A decrease of 233,000 tons to customers other than its two
largest customers. Virginia shipped 20,000 tons and 253,000 tons
to these customers in the second quarter of 1995 and 1994,
respectively.
2) A decrease of 160,000 tons to its second largest customer
(Georgia Power Company). Virginia shipped 103,000 tons and
263,000 tons to Georgia Power Company during the second quarter
of 1995 and 1994, respectively. The above-market coal supply
agreement with Georgia Power Company expired in April 1995.
3) A decrease of 63,000 tons to its largest customer (Duke Power
Company). Virginia shipped 671,000 tons and 734,000 tons to Duke
Power Company during the second quarter of 1995 and 1994,
respectively. This decrease was due to an agreement between the
two parties to defer shipments during the first four months of
1995 to later periods.
Pine Branch Mining Incorporated ("Pine Branch") - $328,000 better
Pine Branch is a mountain top surface operation which had
operating losses of $173,000 and $501,000 in the second quarter
of 1995 and 1994, respectively. The improvement is due to a
reduction in operating costs as a result of a new mining plan
implemented during the second half of 1994. The continued
operation of Pine Branch is directly related to the ultimate
resolution of the Virginia Division.
Westmoreland Coal Sales Co. ("WCSC") - $557,000 worse
WCSC had operating losses of $621,000 and $64,000 in the second
quarter of 1995 and 1994, respectively. The increase in 1995's
operating loss was primarily due to the absence of profits from
participating in the export market and a decrease in its domestic
brokering business. WCSC reduced its selling and administrative
expenses by $461,000 in the second quarter of 1995 compared to
the same period of 1994.
INDEPENDENT POWER OPERATIONS - $3,081,000 better
The Company's Independent Power Operations, through its wholly-
owned subsidiary, WEI, recorded operating income of $2,789,000 in
the second quarter of 1995 compared to an operating loss of
$292,000 in the second quarter of 1994. The improvement is due
to two factors:
1) increased equity earnings of $2,497,000 from the ROVA I,
Rensselaer and Ft. Lupton Projects which became operational in
the second quarter of 1994; and
2) decreased expenses of $605,000 related to the amortization of
an equity support agreement for three independent power projects.
Additionally, ROVA II commenced commercial operations on June 1,
1995.
RESULTS OF OPERATIONS:
SIX MONTHS ENDED JUNE 30,1995 COMPARED
TO SIX MONTHS ENDED JUNE 30,1994
Six Months Ended
June 30,
1995 1994*
(in thousands)
Coal Operations:
Virginia Division $ (15,920) $ 673
Pine Branch Mining Incorporated (367) (1,681)
Westmoreland Resources, Inc. 1,326 1,291
Westmoreland Coal Sales Company (100) 563
Net corporate expenses (5,618) (4,832)
West Virginia - Idled Operations (4,738) (4,906)
Hampton Division - 581
Criterion Coal Company - 5,800
Cleancoal Terminal Company (701) (709)
Total Coal Operations (26,118) (3,220)
Independent Power Operations:
Westmoreland Energy, Inc. 5,239 (841)
WEI - recognition of deferred income 1,750 -
Total Independent Power Operations 6,989 (841)
Operating loss $ (19,129) $ (4,061)
Gains on the sales of assets $ 9,538 $ -
* Certain amounts have been reclassed to agree with current
classifications.
Details of tons sold (in thousands) and average revenue per ton
sold were as follows:
Six Months Ended
June 30,
1995 1994
By Source and Geographic Sector:
Tons Sold:
Own Operations - Inland 3,804 5,971
Own Operations - Export - 145
For Others - Inland 170 1,119
For Others - Export - 763
Total Tons Sold 3,974 7,998
By Segment:
Virginia Division* 1,657 2,321
Westmoreland Resources, Inc. 2,147 2,084
Hampton Division - 665
Criterion Coal Company - 1,046
Total Westmoreland Operations 3,804 6,116
For Others 170 1,882
Total Tons Sold 3,974 7,998
Average revenue per ton sold:
Eastern Operations $ 35.64 $ 34.41
Westmoreland Resources, Inc. 7.05 7.03
Weighted Average 20.20 25.65
*Includes tons:
Sold by Pine Branch Mining Incorporated 131 98
Purchased from unaffiliated producers 415 359
COAL OPERATIONS
Coal operations reported operating losses of $26,118,000 and
$3,220,000 for the first six months of 1995 and 1994,
respectively. The deterioration is primarily attributable to an
unexpected continuing and increasing operating loss from the
Company's Virginia Division and the absence of operating profits
from Criterion Coal Company, sold in December 1994 and the
Hampton Division, sold in January 1995.
Those continuing business units reporting significant changes in
results of operations are discussed below.
Virginia Division - $16,593,000 worse
The Virginia Division had an operating loss of $15,920,000 in the
first six months of 1995 compared to operating income of $673,000
in the first six months of 1994. The operating loss at the
Virginia Division is largely attributable to higher costs per ton
of coal mined as a result of a production shortfall of 616,000
tons from Company mines and increasing difficult mining
conditions in the first six months of 1995 compared to the first
six months of 1994. A portion of the decline in production is
attributable to the cessation of the Company's Holton longwall
mine in October 1994. This mine produced 376,000 tons in the
first six months of 1994. The Company expected other Company
mines to make up the lost Holton production, however, difficult
mining conditions have prevented this. Poor mining conditions at
the Pierrepont mine have been experienced but productivity is
expected to improve later in the year when the longwall is
scheduled to move to a new area of the Pierrepont mine. Also,
contributing to the increased operating losses at the Virginia
Division in the first six months of 1995 compared to the first
six months of 1994 was a $3,786,000 increase in depreciation
expense which was primarily related to a reduction in the
estimated useful life of plant and equipment so that these assets
are depreciated to their estimated salvage value by July 31,
1996. The tons sold from the Virginia Division also decreased by
664,000 tons in the first six months of 1995 compared to the
first six months of 1994. The decline in tonnage is outlined
below:
1) A decrease of 273,000 tons to its largest customer (Duke
Power Company). Virginia shipped 1,149,000 tons and 1,422,000
tons to Duke Power Company during the first six months of 1995
and 1994, respectively. This decrease was due to an agreement
between the two parties to defer shipments during the first four
months of 1995 to later periods.
2) A decrease of 322,000 tons to customers other than its two
largest customers. Virginia shipped 130,000 tons and 452,000
tons to these customers in the first six months of 1995 and 1994,
respectively.
3) A decrease of 69,000 tons to its second largest customer
(Georgia Power Company). Virginia shipped 378,000 tons and
447,000 tons to Georgia Power Company during the first six months
of 1995 and 1994, respectively. The above-market coal supply
agreement with Georgia Power Company expired in April 1995.
Pine Branch - $1,314,000 better
Pine Branch is a mountain top surface operation which had
operating losses of $367,000 and $1,681,000 in the first six
months of 1995 and 1994, respectively. Unusually severe weather
conditions in the first quarter of 1994 adversely impacted
production and operating costs. The first quarter is always the
most difficult for Pine Branch due to weather conditions at the
mountain top and the shorter work days. The continued operation
of Pine Branch is directly related to the ultimate resolution of
the Virginia Division.
Westmoreland Coal Sales Co. ("WCSC") - $663,000 worse
WCSC had operating losses of $100,000 in the first six months of
1995 compared to operating income of $563,000 in the first six
months of 1994. Included in the first six months of 1995 results
was $967,000 in income generated from the reversal of bad debt
allowances related to reserved accounts receivable subsequently
collected. Excluding this benefit, the decrease in 1995's
operating income was primarily due to the absence of profits from
participating in the export market and a decrease in its domestic
brokering business. WCSC reduced its selling and administrative
expenses by $785,000 in the first six months of 1995 compared to
the same period of 1994.
Net Corporate Expenses - $786,000 worse
Net corporate expenses were $5,618,000 and $4,832,000 in the
first six months of 1995 and 1994, respectively. Expenses in
1995 increased due to a $1,411,000 non-cash charge for an early
retirement incentive program related to the restructuring and
downsizing of the Corporate office. The early retirement will be
funded principally out of Westmoreland's Pension Plan surplus.
Excluding the $1,411,000 charge in the first quarter of 1995, the
reduction in net corporate expenses for the first six months of
1995 compared to the same period of 1994 is due to decreased
staffing and lower legal expenses.
INDEPENDENT POWER OPERATIONS - $7,830,000 better
The Company's Independent Power Operations, through its wholly-
owned subsidiary, WEI, recorded operating income of $6,989,000 in
the first six months of 1995 compared to an operating loss of
$841,000 in the first six months of 1994. The improvement is due
to three factors:
1) increased equity earnings of $4,362,000 from the ROVA I,
Rensselaer and Ft. Lupton Projects which became operational in
the second quarter of 1994;
2) the recognition of $1,750,000 of deferred development fees
received in prior years in connection with the ROVA I; and
3) decreased expenses of $1,311,000 related to the amortization
of an equity support agreement for three independent power
projects.
Additionally, ROVA II commenced commercial operations on June 1,
1995.
GAINS ON THE SALES OF ASSETS
In January of 1995 the Company sold the assets of its Hampton
Division located in Boone and Logan Counties, West Virginia to
Burco Resources Corporation and Wind River Resources Corporation
and sold its Hampton Division mineral lease to the lessor, Penn
Virginia Resources Corporation, for $9,045,000 in cash. The net
proceeds to the Company were approximately $7,376,000 after
payments related to a capital lease. The elimination of this
capital lease resulted in a further reduction of the Company's
long-term debt. The Company wrote off a substantial portion of
the Hampton Division's assets in 1993. The gain on the sale was
$9,088,000 after the reversal of certain liabilities. The
purchasers assumed the reclamation and environmental liabilities
associated with the Hampton Division as part of the sales
transaction. In February 1995, the Company sold the Virginia
Division's Dump Train for cash of $945,000 and the related gain
on the sale was $425,000.
Inflation did not have a material impact on the Company's
operations in 1995.
PART II - OTHER INFORMATION
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of Westmoreland was held on
June 6, 1995. Proxies for the meeting were solicited pursuant to
Section 14A of the Securities Exchange Act of 1934, and there was
no solicitation in opposition to management's solicitation. Two
proposals were voted upon at the meeting.
1. The first proposal was to elect a Board of Directors, to
which the issue of broker non-votes did not apply. The
tabulation of the votes cast with respect to each of the
nominees for election as a Director, in aggregate constituting
the full Board of Directors, is set forth as follows:
NAME VOTES FOR VOTES WITHHELD
Pemberton Hutchinson 7,817,225 422,545
Lennox K. Black 7,951,431 288,339
Brenton S. Halsey 7,844,129 395,641
William R. Klaus 7,827,784 411,986
E. B. Leisenring, Jr. 7,829,627 410,143
Christopher K. Seglem 7,889,087 350,683
Edwin E. Tuttle 7,830,937 408,833
No nominee for election as a Director received less than 84.4% of
the 9,260,966 shares of the Company's securities entitled to vote
at the meeting, and no nominee received less than 94.9% of the
votes cast at the meeting.
2.The second proposal was to approve the adoption of the 1995
Long-Term Incentive Stock Plan. The proposal was approved and
the Plan was adopted. The tabulation of the votes is set
forth as follows:
Votes For Votes Against Abstentions Broker Non-votes
5,531,190 655,777 145,034 1,907,769
The 5,531,190 shares of voting securities voted for adoption of
the Plan represented 59.7% of the 9,260,966 shares of the
Company's securities entitled to vote at the meeting, and 67.1%
of the total shares cast with respect to the proposal, the latter
calculation including abstentions and broker non-votes in the
determination of the quorum.
PART II - OTHER INFORMATION
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibit 28 - Financial Data Schedule.
b) On May 9, 1995, the Company filed a report on Form 8-K,
announcing that the Company will move its corporate office
from Philadelphia, Pa. to Colorado Springs, Co.
On June 14, 1995, the Company filed a report on Form 8-K,
which distributed a copy of the speech given by
Christopher K. Seglem, President of the Company, at the
Company's Annual Shareholders' Meeting held on June 6, 1995.
On June 21, 1995, the Company filed a report on Form 8-K,
announcing that on June 20, 1995 the Company had issued WARN
notices to its employees at its Virginia Division.
SIGNATURES
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.
WESTMORELAND COAL COMPANY
Date: July 21, 1995
Francis J. Boyle
Senior Vice President,
Chief Financial Officer
and Treasurer
Thomas C. Sharpe
Controller
14
[ARTICLE] 5
[MULTIPLIER] 1,000
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-mos
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-END] jun-30-1995
[CASH] 14,704
[SECURITIES] 0
[RECEIVABLES] 16,857
[ALLOWANCES] 2,477
[INVENTORY] 6,311
[CURRENT-ASSETS] 42,133
[PP&E] 283,737
[DEPRECIATION] 204,808
[TOTAL-ASSETS] 204,529
[CURRENT-LIABILITIES] 49,135
[BONDS] 0
[COMMON] 17,402
[PREFERRED-MANDATORY] 0
[PREFERRED] 575
[OTHER-SE] 21,338
[TOTAL-LIABILITY-AND-EQUITY] 204,529
[SALES] 88,937
[TOTAL-REVENUES] 88,937
[CGS] 89,167
[TOTAL-COSTS] 108,066
[OTHER-EXPENSES] (2,258)
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 681
[INCOME-PRETAX] (8,368)
[INCOME-TAX] 597
[INCOME-CONTINUING] (8,965)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (8,965)
[EPS-PRIMARY] (1.65)
[EPS-DILUTED] (1.65)
</TABLE>
