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 March 31, 1998
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
-------------------------
(Debtor-in-Possession as of December 23, 1996)
----------------------------------------------
(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.)
2 North Cascade Avenue, 14th Floor Colorado Springs, Colorado 80903
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, area code 719-442-2600
------------
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 May 1, 1998: 6,965,328
<PAGE 2>
PART I - FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS
<TABLE>
Westmoreland Coal Company and Subsidiaries
Debtor-in-Possession
Condensed Consolidated Balance Sheets
- ------------------------------------------------------------------------------------
(Unaudited)
March 31, December 31,
1998 1997
- ------------------------------------------------------------------------------------
(in thousands)
<CAPTION>
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 48,458 $ 30,664
Receivables:
Trade 3,753 4,483
Pension plan termination receivable, net 500 13,040
Other 1,177 1,026
- ------------------------------------------------------------------------------------
5,430 18,549
Other current assets 636 402
- ------------------------------------------------------------------------------------
Total current assets 54,524 49,615
- ------------------------------------------------------------------------------------
Property, plant and equipment:
Land and mineral rights 10,990 11,684
Plant and equipment 93,692 94,265
- ------------------------------------------------------------------------------------
104,682 105,949
Less accumulated depreciation and depletion 69,399 70,262
- ------------------------------------------------------------------------------------
35,283 35,687
Investment in independent power projects 55,047 54,152
Investment in Dominion Terminal Associates (DTA) 18,297 18,680
Workers' compensation bond 5,964 6,665
Prepaid pension cost 3,580 3,528
Excess of trust assets over pneumoconiosis 11,650 11,700
benefit obligation
Other assets 1,853 1,970
- ------------------------------------------------------------------------------------
Total Assets $ 186,198 $ 181,997
====================================================================================
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of long-term debt $ 55 $ 51
Accounts payable and accrued expenses 7,860 9,307
Reorganization expenses 1,943 1,645
Reclamation costs 100 100
- ------------------------------------------------------------------------------------
Total current liabilities 9,958 11,103
- ------------------------------------------------------------------------------------
Liabilities subject to compromise 135,700 132,667
Long-term debt 356 407
Accrual for reclamation costs 3,167 3,182
Minority interest 6,562 6,245
Shareholders' equity 30,455 28,393
- ------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 186,198 $ 181,997
====================================================================================
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE 3>
<TABLE>
Westmoreland Coal Company and Subsidiaries
Debtor-in-Possession
Consolidated Statements of Income
- --------------------------------------------------------------------------------
(Unaudited)
Three Months Ended March 31, 1998 1997
- --------------------------------------------------------------------------------
(in thousands except
per share data)
<CAPTION>
<S> <C> <C>
Revenues:
Coal $ 12,252 $ 11,289
Independent power - equity in earnings 4,793 3,735
DTA - equity in earnings (share of losses) (83) 308
- --------------------------------------------------------------------------------
16,962 15,332
- --------------------------------------------------------------------------------
Costs and expenses:
Cost of sales - coal 10,196 11,175
Depreciation, depletion and amortization 606 597
Selling and administrative 1,411 1,355
Heritage costs 4,151 405
Pension benefit (53) (900)
Doubtful account recoveries (113) (897)
- --------------------------------------------------------------------------------
16,198 11,735
Operating income 764 3,597
Other income (expense):
Gains (losses) on the sales of assets 136 (763)
Interest expense (55) (145)
Minority interest (317) (332)
Other income 1,556 (51)
- --------------------------------------------------------------------------------
Income from continuing operations before
reorganization items 2,084 2,306
Reorganization legal and consulting fees (659) (750)
Reorganization interest income 637 324
- --------------------------------------------------------------------------------
Income from continuing operations 2,062 1,880
Discontinued operations - (521)
- --------------------------------------------------------------------------------
Net income 2,062 1,359
Less preferred stock dividends (1,222) (1,222)
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Net income applicable to common shareholders $ 840 $ 137
================================================================================
Net income (loss) per share applicable to common
shareholders:
Before loss from discontinued operations $ .12 $ .09
Loss from discontinued operations - (.07)
- --------------------------------------------------------------------------------
$ .12 $ .02
================================================================================
Weighted average number of common shares
outstanding 6,965 6,965
See accompanying notes to condensed consolidated financial statements.
</TABLE>
<PAGE 4>
<TABLE>
Westmoreland Coal Company and Subsidiaries
Debtor-in-Possession
Consolidated Statements of Cash Flows
- -------------------------------------------------------------------------------------------
(Unaudited)
Three Months Ended March 31, 1998 1997
- -------------------------------------------------------------------------------------------
(in thousands)
<CAPTION>
<S> <C> <C>
Cash flows provided by operating activities:
Net income $ 2,062 $ 1,359
Adjustments to reconcile net income to net cash provided by
Operating activities:
(Gain) loss on disposition of assets (136) 763
Equity earnings from independent power projects (4,793) (3,735)
Cash received from independent power projects 3,886 3,889
Equity earnings (losses) from DTA 83 (308)
Cash generated by DTA 826 1,450
Cash contributions to DTA (541) (819)
Depreciation, depletion and amortization 606 597
Pension benefit (52) -
Minority interest 317 332
Changes in working capital accounts of discontinued
operations - 217
Other (237) (1,044)
Changes in assets and liabilities:
Accounts receivable, net of allowance for doubtful
accounts 579 155
Pension termination receivable, net 12,540 -
Accounts payable and accrued expenses (1,467) 3,542
Workers' compensation bond 701 -
Excess of trust assets over pneumoconiosis benefit
obligation 50 -
- -------------------------------------------------------------------------------------------
Net cash provided by operating activities before
reorganization items 14,424 6,398
- -------------------------------------------------------------------------------------------
Changes in reorganization items:
Trade and other liabilities subject to compromise 3,033 1,566
Liabilities not subject to compromise 298 750
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Net change in reorganization items 3,331 2,316
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Net cash provided by operating activities 17,755 8,714
- -------------------------------------------------------------------------------------------
Cash flows provided by investing activities:
Fixed asset additions (75) (15)
Net proceeds from sales of assets 161 902
- -------------------------------------------------------------------------------------------
Net cash provided by investing activities 86 887
Cash flows (used in) financing activities:
Repayment of long-term debt (47) (51)
Net increase in cash and cash equivalents 17,794 9,550
Cash and cash equivalents, beginning of period 30,664 8,791
- -------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 48,458 $ 18,341
===========================================================================================
Supplemental disclosures of cash flow information:
Cash paid during the period for interest 27 31
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE 5>
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, 1997. 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. Certain prior year amounts have been reclassified to
conform to the current year presentation.
1.NATURE OF OPERATIONS
The Company's principal activities, conducted within the United
States are, (i) the production and sale of coal from a contractor
operated mine in the Powder River Basin in Eastern Montana; (ii)
the ownership of interests in cogeneration and other non-
regulated independent power plants; and (iii) the leasing of
capacity at Dominion Terminal Associates, a coal storage and
vessel loading facility.
CHAPTER 11 REORGANIZATION PROCEEDINGS
On December 23, 1996 ("Petition Date"), Westmoreland Coal Company
and four subsidiaries, Westmoreland Resources, Inc., Westmoreland
Coal Sales Company, Westmoreland Energy, Inc., and Westmoreland
Terminal Company (the "Debtor Corporations"), filed voluntary
petitions for reorganization under Chapter 11 of the United
States Bankruptcy Code in the United States Bankruptcy Court for
the District of Colorado. The Debtor Corporations are in
possession of their respective properties and assets and are
operating as debtors in possession pursuant to provisions of the
Bankruptcy Code. On April 15, 1998, the Debtor Corporations
submitted an amended joint plan of reorganization and disclosure
statement, which are subject to Bankruptcy Court review, for
these entities pursuant to Chapter 11 of the Bankruptcy Code.
The original joint plan of reorganization and disclosure
statement had been filed on February 2, 1998. On April 15, 1998,
the 1974 UMWA Pension Plan, the 1992 UMWA Benefit Plan and the
UMWA Combined Fund ("the Funds") filed an amended plan of
reorganization and disclosure statement. Their original plan of
reorganization and disclosure statement had been filed on
February 2, 1998. The Bankruptcy Court has scheduled hearings to
determine the adequacy of the amended disclosure statements for
June 11, 1998.
The consolidated financial statements contained herein have been
prepared in accordance with generally accepted accounting
principles applicable to a going concern and do not purport to
reflect or to provide for all of the possible consequences of the
ongoing Chapter 11 reorganization cases. Specifically, the
consolidated financial statements do not present the amount which
will ultimately be paid to settle liabilities and contingencies
which may be allowed in the Chapter 11 reorganization cases or
the effect of any changes which may be made in connection with
the Debtor Corporations' capitalization or operations resulting
from a plan of reorganization. Costs incurred related to the
reorganization were $549,000 and $750,000 in the first quarters
of 1998 and 1997, respectively.
Because of the ongoing nature of the reorganization cases, the
outcome of which is not presently determinable, the consolidated
financial statements contained herein are subject to material
uncertainties and may not be indicative of the results of the
Company's future operations or financial position. No assurance
can be given that the Company will be successful in reorganizing
its affairs within the Chapter 11 bankruptcy proceedings. The
Funds' competing plan would, if confirmed, terminate all
interests of existing shareholders without any consideration.
<PAGE 6>
LIABILITIES SUBJECT TO COMPROMISE
The filing of the Chapter 11 cases by the Debtor Corporations (i)
automatically stayed actions by creditors and other parties in
interest to recover any claim that arose prior to the
commencement of the cases, and (ii) served to accelerate, for
purposes of allowance, all prepetition liabilities of the
Company, whether or not those liabilities were liquidated or
contingent as of the Petition Date. In accordance with AICPA
Statement of Position 90-7 ("Financial Reporting by Entities in
Reorganization under the Bankruptcy Code") liabilities subject to
compromise are segregated from those that are not, in the
accompanying balance sheet. The following table sets forth the
liabilities of the Company that are subject to compromise as of
March 31, 1998 and December 31, 1997:
March 31, December 31,
1998 1997
----------------------------------------------------------------
Trade and other liabilities $ 7,035,000 $ 7,035,000
Long-term debt 1,607,000 1,607,000
1974 UMWA Pension Plan 13,800,000 13,800,000
Workers' compensation 23,611,000 24,341,000
1992 UMWA Benefit Plan 43,557,000 40,469,000
1993 Wage Agreement Plan 32,477,000 32,067,000
UMWA Combined Benefit Fund - -
Salaried Plan 12,386,000 12,175,000
SERP 1,227,000 1,173,000
----------------------------------------------------------------
Total $135,700,000 $132,667,000
================================================================
The liabilities subject to compromise include obligations to pay
future pension, workers' compensation, health care and other post
retirement benefits ("future benefit obligations"). The
estimates of the present value of these future benefit
obligations are actuarially determined. The actuarial
assumptions underlying these calculations are not subject to
precise estimation. Accordingly, these estimates are subject to
change as new information becomes available.
In determining future benefit obligations for purposes of
preparing financial statements in accordance with generally
accepted accounting principles and the related disclosures,
certain assumptions and methodologies must be used with respect
to some actuarial factors. For other factors, there is a range
of actuarial assumptions that would be considered reasonable.
While the Company believes that the assumptions used in
estimating the present value of these liabilities for future
benefits fall within this acceptable range, there are other
reasonable assumptions which, if used, would reduce those
estimates.
The Company believes that different assumptions and methodologies
will be used by the Bankruptcy Court to determine the amount of
the allowed claims relating to these future benefit obligations,
including a requirement by the Bankruptcy Court that the
actuarial calculations give effect to the implementation of the
managed care and cost containment provisions required by the Coal
Act. The Company believes that those assumptions and
methodologies will result in allowed claims significantly less
than the estimated present value of the benefit obligations used
in preparing these financial statements and disclosures.
LONG-TERM DEBT. The Company maintains that to the extent
unsecured long-term debt pertains to transactions arising prior
to the Petition Date, such liabilities constitute liabilities
subject to compromise. The Company believes that substantially
all of its liability for unsecured long-term debt arose and was
incurred prepetition and constitute prepetition claims. A number
of proofs of claim have been filed in the Chapter 11 case in
connection with this liability.
<PAGE 7>
1974 UMWA PENSION PLAN. The Company maintains that for
bankruptcy purposes, to the extent any withdrawal liability will
be assessed under the Multiemployer Pension Plan Act ("MPPA"),
that liability would be in respect of consideration furnished by
employees of the Company prior to the Petition Date, and that any
such liability was incurred prior to the Petition Date and
constitutes a liability subject to compromise. The Company
believes that except for a small percentage (i.e., 2% to 3%) of
the aggregate withdrawal liability of $13,800,000 estimated by
the 1974 UMWA Pension Plan as of June 30, 1996, and in their
proof of claim, such liability is in respect of consideration
furnished by employees of the Company prior to the Petition Date.
The Company maintains that a withdrawal will not occur until the
completion of certain reclamation work at the Company's Virginia
Division, which is to be performed by UMWA represented employees
and is expected to be completed sometime in the second quarter of
1998. Accordingly, the Company believes that the withdrawal
liability will be determined using an asset valuation date of
June 30, 1997, in accordance with the provisions of MPPA. The
1974 UMWA Pension Plan has not provided the Company with an
updated actuarial estimate of the withdrawal liability calculated
as of June 30, 1997. Accordingly, the amount of the liability
subject to compromise at March 31, 1998 reflects the actuarial
estimate of the withdrawal liability calculated as of June 30,
1996.
The 1974 UMWA Pension Plan and its Trustees have filed a total of
ten proofs of claim asserting, as against each of the Debtors
Corporations: (i) an administrative priority claim in the amount
of $13,775,912, based upon an assessment of withdrawal liability
under MPPA; and (ii) an administrative priority claim in the
amount of $64,398, which allegedly is subject to the protections
of Bankruptcy Code section 1113. The Debtor Corporations have
filed objections before the Bankruptcy Court with respect to each
of these claims disputing this liability in its entirety. The
Bankruptcy Court has scheduled a hearing to consider the
Company's objections for July 14, 15, and 16, 1998.
WORKERS' COMPENSATION BENEFITS. The Company maintains that to
the extent workers' compensation benefits pertain to matters and
transactions arising prior to the Petition Date, such liabilities
constitute liabilities subject to compromise. The Company
believes that substantially all of its liability for workers'
compensation benefits arose and was incurred prepetition and
constitute prepetition claims.
A number of proofs of claim have been filed in the Chapter 11
case in connection with this liability, including: (i) the
state of West Virginia has filed an unsecured priority claim in
the amount of $55,314,265; (ii) the Commonwealth of Virginia has
filed a secured claim in the amount of $7,000,000 and an
unsecured priority claim in the amount of $10,000,000; (iii)
Travelers Casualty & Surety, formerly known as the Aetna Casualty
& Surety Company, member of Travelers Group, has filed a secured
claim in the amount of $7,015,255 and an unsecured non-priority
claim in the amount of $19,720,988; (iv) Safeco Insurance Company
of America has filed an unsecured non-priority claim in the
amount of $11,452,473 and (v) Federal Insurance Company has filed
an unsecured non-priority claim in an unliquidated amount. The
Company currently is evaluating these proofs of claim. The
Company believes that certain of these claims relate to the same
underlying liability and therefore are duplicative, and that
other claims are overstated and should be disallowed, at least in
part.
1992 UMWA BENEFIT PLAN. Until shortly before the Petition Date,
the Company provided health care benefits under its individual
employer plan for beneficiaries (and their dependents) who were
age- and service-eligible to receive benefits under the Coal
Industry Retiree Health Benefits Act ("Coal Act") as of February
1, 1993, and who retired before October 1, 1994. Prepetition,
the Company ceased providing such benefits. The Company
maintains that pursuant to applicable law, prior to the Petition
Date, the 1992 Plan became obligated to provide health care
coverage for such beneficiaries and their dependents. The
Company further maintains that, as a result thereof and in
accordance with law, all claims of the 1992 Plan arising under
the Coal Act were incurred by the Company before the Petition
Date and constitute prepetition liabilities subject to
compromise.
<PAGE 8>
The Company estimates the present value of the Company's
obligations to the 1992 Plan is approximately $117,494,000, not
including any reduction attributable to implementation of the
managed care and cost containment provisions required by the Coal
Act. The liability recorded at March 31, 1998 of $43,557,000,
represents the aggregate amount of the liability, less the
unamortized transition obligation of $59,632,000 and the
unrecognized net loss of $14,305,000 at that date. The Company
believes that for bankruptcy purposes the total amount of
$117,494,000 represents the present value of the liability
subject to compromise at March 31, 1998. Pursuant to Bankruptcy
Code section 502(b), the Bankruptcy Court will be required to
determine the allowed amount of the claims of the 1992 Plan. The
preceding estimate does not take into account any reductions
resulting from claims objections, the allowance process and the
litigation described below.
Following the Petition Date, the Trustees of the 1992 Plan
commenced an adversary proceeding against the Company requesting
that the Bankruptcy Court: (a) enter a permanent injunction
requiring the Company to "reinstate" its individual employer plan
for those beneficiaries who were eligible and were receiving
benefits under the individual employer plan as of February 1,
1993 and who retired before October 1, 1994, and their
dependents; (b) enter a declaratory judgment that the pre-funding
premiums and monthly per-beneficiary premiums that arise under
the Coal Act constitute "taxes" and administrative liabilities of
the estate; and (c) enter an injunction requiring all of the
Debtor Corporations to pay these pre-funding premiums and monthly
per-beneficiary premiums to the 1992 Plan as and when statements
are submitted by the Trustees. The Company filed answers and
counterclaims in the Bankruptcy Court vigorously opposing this
requested relief.
The Trustees of the 1992 Plan filed a motion with the Bankruptcy
Court requesting that the Bankruptcy Court enter summary judgment
in its favor with respect to substantially all of the relief
requested in the above-referenced adversary proceeding. The
Company filed pleadings in the Bankruptcy Court opposing this
motion. The Bankruptcy Court held a hearing on May 8, 1997 and
took the matter under advisement. On September 5, 1997, the
Bankruptcy Court held that the 1992 Plan's claims related to
Westmoreland's liability to pay for health benefits and the 1992
Plan's claims for pre-funding premiums were prepetition claims,
not entitled to administrative priority. The Bankruptcy Court
also held that Westmoreland was not required to reinstate its IEP
because doing so would effectively elevate the 1992 Plan's claims
above those of other unsecured creditors.
The Bankruptcy Court designated the order on the summary judgment
motion as final, thereby allowing an immediate appeal and the
1992 Plan has appealed. The Bankruptcy Court has set aside June
1, 2 and 3, 1998 for trial of the remaining issues, comprised of
the Company's other defenses and counter claims, not resolved by
the summary judgment ruling. The Company moved to dismiss
without prejudice certain counterclaims previously asserted by
the Company in the adversary proceeding alleging that the 1992
Plan received a prepetition preference and alleging that the
terms of the Pledge Agreement (described in the next paragraph
below) are ambiguous. This motion has been granted. In
addition, the Company has augmented the counterclaims to assert
that if the 1992 Plan is correct in contending that the 1992 Plan
premiums should be deemed "taxes," then those provisions of the
Coal Act mandating the payment of such premiums are an
unconstitutional direct tax that is not apportioned among the
states, in violation of the Direct Tax Clause of Article I of the
United States Constitution.
In an effort to reach an accommodation with the Funds prior to
the Petition Date, on or about August 21, 1996, the Company
entered into an Interim Agreement and "Pledge Agreement" with the
1992 Plan and the "Combined Benefit Plan" under which, among
other things, the Company pledged its interest in certain
subsidiaries to secure certain obligations specified therein. In
pleadings filed before the Bankruptcy Court, the Company has
maintained that the 1992 Plan does not hold any allowed secured
claims against the Company by reason of the Pledge Agreement.
The Trustees have disputed the Company's contentions. If the
Bankruptcy Court ultimately determines that the 1992 Plan holds
allowed secured claims, then to that extent, such claims would
constitute secured liabilities of the Company.
<PAGE 9>
The 1992 Plan has filed a total of fifteen proofs of claim
against the Debtor Corporations: (i) an unsecured claim (without
designation of an entitlement to priority or security) in the
amount of $1,103,384 based upon alleged "tax assessments" and
liabilities under the Coal Act; (ii) a "protective" proof of
claim (without designation of an entitlement to priority or
security) in the amount of $154,156,912 based upon alleged "tax
assessments" and liabilities arising under the Coal Act; and
(iii) a secured claim against Westmoreland (and an unsecured
claim in each of the subsidiary Debtors) in the amount of
$20,870,000 allegedly based upon liabilities arising under the
Coal Act. The Company has objected to all of these claims. The
allowability of the 1992 Plan's claims also has been raised in
this adversary proceeding.
1993 WAGE AGREEMENT PLAN. The 1993 Wage Agreement between the
Company and the UMWA requires the Company to establish and
provide health care benefits under an individual employer plan
for certain additional retirees. The Company currently provides
benefits through its individual employer plan to age and service
eligible retirees (and their dependents) who retire prior to the
termination or expiration of the 1993 Wage Agreement. The UMWA
1993 Benefit Plan ("the 1993 Benefit Plan") is a multiemployer
benefit plan providing health care benefits to specified
beneficiaries entitled to such benefits under a UMWA Wage
Agreement where such benefits are not provided by former
employers through individual employer plans. The Company's
liabilities under the 1993 Wage Agreement, whether provided under
the Company's individual employer plan or by the 1993 Benefit
Plan, are shown as subject to compromise, by virtue of the
provisions of Bankruptcy Code section 1113, which authorizes the
rejection of collective bargaining agreements. The Company
maintains that any obligation of the Company to provide benefits
under the 1993 Wage Agreement pursuant to its individual employer
plan or to make contributions to the 1993 Plan extend only
through the scheduled expiration of the 1993 Wage Agreement.
The Company estimates that the present value of the Company's
alleged obligations under the 1993 Wage Agreement, if its
liability extends beyond the expiration of the 1993 Wage
Agreement (which the Company denies), determined in accordance
with generally accepted accounting principles, is approximately
$33,828,000, not including any reduction attributable to
implementation of managed care and cost containment efforts. The
liability recorded at March 31, 1998 of $32,477,000, represents
the aggregate amount of such a liability, less the unrecognized
net loss of $1,351,000 at that date. The Company believes that
for bankruptcy purposes the total of these amounts represents the
present value of the liability subject to compromise at March 31,
1998. Pursuant to Bankruptcy Code section 502(b), the Bankruptcy
Court is required to determine the allowed amount of any claims
of the UMWA under the 1993 Wage Agreement. The preceding estimate
does not take into account any reductions resulting from claims
objection and the litigation discussed below.
The UMWA has filed a proof of claim against the Debtor
Corporations, asserting an unsecured non-priority claim in the
amount of $62,189,106. The proof of claim allegedly seeks to
recover the estimated costs of providing medical benefits for
life of former Westmoreland employees who retired during the term
of the 1993 Wage Agreement and those who were laid off. The
Company believes this claim covers only the period of time
following expiration of the 1993 Wage Agreement on August 1,
1998. The Debtor Corporations have filed objections to this
proof of claim on the ground that none of the Debtor Corporations
has liability under the 1993 Wage Agreement after August 1, 1998.
In addition, the Debtor Corporations asserted counterclaims
against the UMWA and the 1993 Benefit Plan. In their
counterclaims, the Debtor Corporations sought a declaration (i)
that Westmoreland's obligations to provide medical benefits for
certain of its recent retirees and to make contributions to the
1993 Benefit Plan were established by and expire with the 1993
Wage Agreement (ii) that Westmoreland's subsidiaries are not
liable for any obligations created by the 1993 Wage Agreement;
and (iii) that the 1993 Benefit Plan was established to provide
medical benefits to retirees who no longer receive benefits from
their former employer, and is therefore required to provide
medical benefits to Westmoreland's recent retirees after
expiration of the 1993 Wage Agreement. The 1993 Benefit Plan
sought and received an order dismissing the counterclaims against
it. The counterclaim against the UMWA remains and the Debtor
Corporations have filed a motion for summary judgment on this
counterclaim.
<PAGE 10>
UMWA COMBINED BENEFIT PLAN. The UMWA Combined Benefit Plan is a
multiemployer plan established by the Coal Act for purposes of
providing health care benefits to beneficiaries, and their
dependents, who were age- and service-eligible as of July 20,
1992 under the 1950 UMWA Benefit Plan or the 1974 UMWA Benefit
Plan. Prior to the Petition Date, the Company ceased making
payments to the Combined Benefit Plan. The Company maintains
that any liability of the Company to the Combined Benefit Plan
arose and was incurred pre-petition and constitutes a pre-
petition liability subject to compromise. The Company has not
recorded a liability for the Combined Benefit Plan, as payments
to this multiemployer plan are accounted for on a "pay-as-you-go"
basis under the provisions of FAS 106. The Company estimates
that the present value of the Company's obligation to the
Combined Benefit Plan is approximately $41,800,000 not including
any reduction attributable to implementation of the managed care
and cost containment provisions required by the Coal Act. The
Company believes that for bankruptcy purposes this amount
represents the present value of the liability subject to
compromise at March 31, 1998. Pursuant to Bankruptcy Code
502(b), the Bankruptcy Court will be required to determine the
allowed amount of any claims of the Combined Benefit Plan. The
preceding estimate does not take into account any reductions
resulting from claims objections and the litigation discussed
below.
On November 3, 1997, the Combined Benefit Plan filed a motion for
allowance and ongoing payment of the premiums as administrative
claims and to withdraw the reference of this issue from the
Bankruptcy Court to the District Court. The Company has opposed
this motion as well as the efforts of the Combined Benefit Plan
to have the matter resolved by the District Court rather than the
Bankruptcy Court. The matter is still pending.
The Combined Benefit Plan has filed two proofs of claim asserting
liability against all of the Debtor Corporations based upon
alleged "tax assessments" and liabilities arising under the Coal
Act: (i) an unsecured non-priority claim in the amount
$63,554,715 plus unliquidated "secured and priority" claims; and
(ii) an unsecured non-priority claim in the amount of $8,583,175
plus unliquidated "secured and priority" claims. The Combined
Benefit Plan asserts liability under Bankruptcy Code section
1114. In a statement accompanying the proof of claim, the
Combined Fund also asserts a secured claim against Westmoreland
in the amount of $4,522,000 allegedly based upon certain
prepetition agreements. Finally, the Combined Benefit Plan has
asserted an "unliquidated" priority claim for "contributions" to
an employee benefit plan under Bankruptcy Code section 507(a)(4).
The Debtor Corporations have objected to each of these claims.
The Bankruptcy Court has scheduled a hearing to consider the
Company's objections for July 14, 15 and 16, 1998.
PROOFS OF CLAIMS. The nature of the Chapter 11 cases is to have
all claims against and interests in the Company resolved. In
September, 1997 the Bankruptcy Court set December 1, 1997 as the
deadline for non-employee/retiree creditors of the Debtor
Corporations to file proof of claim and interests. Accordingly,
on September 30, 1997, the Company's Claims Administrator sent
claim forms to potential creditors, and other parties in
interest. The Company's estimate of liabilities subject to
compromise is subject to change based upon the Company's review
of the proofs of claim that were timely filed.
SALARIED PLAN AND SERP. The Company maintains that to the extent
salaried retiree and SERP benefits pertain to matters and
transactions arising prior to the Petition Date, such liabilities
constitute liabilities subject to compromise. The Company
believes that substantially all of its liability for salaried
retiree and SERP benefits arose and was incurred prepetition and
constitute prepetition claims. A number of proofs of claim have
been filed in the Chapter 11 case in connection with these
liabilities.
<PAGE 11>
2. CONTINGENCIES
WESTMORELAND ENERGY, INC. ("WEI") - WEI PROJECT CONTINGENCIES
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 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 the 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.
On August 1, 1996, FERC entered its decision in the Southampton
case. FERC determined that the Partnership's request for
reconsideration should be treated as timely filed, but that the
Southampton facility was not in complete compliance with the QF
requirements for 1992. FERC ordered Southampton to comply with
Section 205 for the Federal Power Act ("FPA"), and file, for
FERC's review, rates for calendar year 1992 for wholesale power
sales to Virginia Power. Otherwise, the Southampton project
remains exempt from regulation under the Public Utility Holding
Company Act ("PUHCA"), utility laws of Virginia and the other
provisions of the FPA. In August 1996, the Partnership filed a
motion seeking clarification of the August 1, 1996 order. The
Partnership also filed an additional request for rehearing. On
May 13, 1998 the FERC entered an Order clarifying its August 1,
1996 decision in the Southampton case. While affirming the
requirement to make a refund to Virginia Power, the FERC ruled
that Virginia Power must compensate Southampton for every hour in
which the unit was available for dispatch, but not actually
dispatched. FERC referred the matter for a settlement judge to
attempt to resolve the amount of refund.
The ultimate resolution of this matter cannot yet be determined.
The FERC Order does not completely settle this matter. The rate
must be determined through negotiations with Virginia Power and
further FERC proceedings may result in refunds to Virginia Power,
the ultimate amount of which cannot be determined at this time.
The Partnership is evaluating its options.
<PAGE 12>
ROVA I PROJECT - WEI owns a 50% partnership interest in
Westmoreland-LG&E Partners (the "ROVA Partnership"). The ROVA
Partnership's principal customer, Virginia Power contracted to
purchase the electricity generated by ROVA I, one of two units
included in the ROVA partnership, 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 allowed annual number. The customer asserts
that it is not required to do so.
From May 1994 through March 1998, Virginia Power withheld
approximately $14,000,000 of these capacity payments during
periods of forced outages. To date, the Company has not
recognized any revenue on its 50% portion of the capacity
payments being withheld by Virginia Power. In October 1994, The
ROVA Partnership filed a complaint against Virginia Power seeking
damages of at least $5,700,000, contending that Virginia Power
breached the Power Purchase Agreement in withholding such
payments. In December, 1994, Virginia Power filed a motion to
dismiss the complaint and in March, 1995, the court granted this
motion. WLP filed an amended complaint in April, 1995. Virginia
Power filed another motion to dismiss the complaint and in June
1995, the Circuit Court of the City of Richmond, Virginia denied
Virginia Power's motion to dismiss the complaint. In November
1995, Virginia Power filed with the court a motion for summary
judgment, and a hearing on the motion was held in early December
1995. In late January 1996, the court denied Virginia Power's
motion for summary judgment. Virginia Power filed a second
summary judgment motion on March 1, 1996. On March 18, 1996, the
Court granted Virginia Power's second summary judgment motion and
effectively dismissed the complaint. The ROVA partnership
appealed the Court's decision granting summary judgment to the
Virginia Supreme Court. On June 6, 1997 the Virginia Supreme
Court reversed the trial Court's decision to grant the customer's
summary judgment motion and remanded the matter for trial. The
case is set to be tried on October 26, 1998. Regardless of the
outcome, the Company believes Roanoke Valley I will operate
profitability and generate positive cash flows.
RENSSELAER - LG&E - Westmoreland Rensselaer ("LWR"), in which the
Company has a 50% interest through an indirect subsidiary, has
executed a Master Restructuring Agreement ("MRA") with Niagara
Mohawk Power Corporation ("NIMO") and 15 other independent power
companies ("IPP"s) effective July 9, 1997. Under this agreement,
LWR has an obligation to attempt to restructure the Rensselaer
Cogeneration Project. Upon completion of a restructuring and
satisfaction of conditions precedent, including all IPPs
receiving necessary approvals and NIMO successfully arranging
financing, LWR would receive consideration from NIMO for
terminating its Power Purchase Agreement. In February, 1998 the
New York Public Service Commission ("PSC") approved the MRA as
part of NIMO's Power Choice filing. Power Choice described how
NIMO intends to implement a competitive wholesale and retail
power market. NIMO and 14 IPPs, including LWR, successfully
reached the Conditions Determination Date ("CDD") of May 7, 1998.
Reaching the CDD is a major milestone in the process and allows
the IPPs and NIMO to work toward finalizing the transactions
contemplated by the MRA. There can be no assurance that the
restructuring will be consummated.
3. CAPITAL STOCK
Preferred stock dividends at a rate of 8.5% per annum were paid
quarterly from 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 of the Company's principal
lenders. Upon the expiration of these extension agreements, the
Company paid a quarterly dividend on April 1, 1995 and July 1,
1995. Pursuant to the requirements of Delaware law, the
preferred stock dividend was suspended in the third quarter of
1995 as a result of recognition of losses and the subsequent
shareholders' deficit. The fourteen quarterly dividends which
are in arrears (dividend payment dates July 1, 1994, October 1,
1994, January 1, 1995, October 1, 1995, January 1, 1996, April
1, 1996, July 1, 1996, October 1, 1996, January 1, 1997, April 1,
1997, July 1, 1997, October 1, 1997, January 1, 1998 and April 1,
1998) amount to $17,106,000 in the aggregate ($29.75 per
preferred share or $7.44 per depositary share). Common stock
dividends may not be declared until the preferred stock dividends
that are in arrears are made current.
<PAGE 13>
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 preferred stock dividends only: (1) out of
surplus, surplus being the amount of shareholders' equity in
excess of the par value of the Company's two classes of stock; or
(2) in the event there is no surplus, out of net profits for the
fiscal year in which a preferred stock 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 the preferred stock ($575,000). The Company had
shareholders' equity at March 31, 1998 of $30,455,000.
As a result of the filing of voluntary petitions for
reorganization under Chapter 11 of the United States Bankruptcy
Code, the Company is prohibited from paying dividends, either
common or preferred.
<PAGE 14>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
MATERIAL CHANGES IN FINANCIAL CONDITION FROM DECEMBER 31, 1997 TO
MARCH 31, 1998
BANKRUPTCY PROCEEDING
Westmoreland Coal Company and four subsidiaries, Westmoreland
Resources, Inc., Westmoreland Coal Sales Company, Westmoreland
Energy, Inc., and Westmoreland Terminal Company ("the Debtor
Corporations"), filed voluntary petitions for reorganization
under Chapter 11 of the Bankruptcy Code on December 23, 1996.
The Debtor Corporations are in possession of their respective
properties and assets and are operating as debtors in possession
pursuant to provisions of the Bankruptcy Code.
Recognizing that it would not be able to meet charges and terms
associated with the United Mine Workers of America Health and
Retirement Funds (the "Funds"), Westmoreland initiated
discussions with the Funds in November 1995. The Company
submitted several proposals. After the Funds failed to accept
any of Westmoreland's proposals and offered no realistic counter
proposals, the Company made the decision to file for protection
under Chapter 11 of the Bankruptcy Code to protect the Company's
value from the demands of the Funds.
The Company believes that cash generated from existing operations
and the proceeds from the sale of its non-operating assets are
not sufficient to meet the liabilities to the Funds in the
amounts and on the terms they demand and that substantial value
would be lost if the Company liquidated, including that of its
tax loss carryforwards.
The Chapter 11 filings raise substantial doubt about the
Company's ability to continue as a going concern. However, the
consolidated financial statements contained herein have been
prepared in accordance with generally accepted accounting
principles applicable to a going concern and do not purport to
reflect or to provide for all of the consequences of the ongoing
Chapter 11 reorganization cases. Specifically, the consolidated
financial statements do not present the amount which will
ultimately be paid to settle liabilities and contingencies which
may be allowed in the Chapter 11 reorganization cases or the
effect of any changes which may be made in connection with the
Debtor Corporations' capitalization or operations resulting from
a plan of reorganization. The Company believes that different
assumptions and methodologies other than generally accepted
accounting principles will be used by the Bankruptcy Court to
determine the amount paid to settle liabilities and contingencies
that will be allowed in the Chapter 11 reorganization.
Westmoreland has sought to structure a consensual plan of
reorganization and in mid-April, 1997, the Company presented a
settlement proposal to the Funds upon which a consensual plan of
reorganization could be based. While the Company subsequently
had discussions with and provided extensive backup information to
the Funds' financial advisor, and was assured of a prompt reply,
no response or counter proposal was received until October 14,
1997. On that date a meeting between representatives of the
parties was held in Denver, Colorado during which the Funds
presented an entirely different settlement approach to the
Company. The Funds' proposal came after nearly two years' effort
by Westmoreland and the submission of numerous proposals by the
Company over that period. It also followed a September 5, 1997
ruling by the U.S. Bankruptcy Court that denied a motion for
summary judgment filed by the 1992 Benefit Plan and held that the
1992 Benefit Plan's claims are general, unsecured pre-petition
claims, and not entitled to administrative priority. The Company
rejected this opening proposal from the Funds, but attempted to
use certain features of that proposal as a basis for further
discussions with financial advisors to the Funds. These
discussions continued until December 7, 1997 when, at a meeting
between representatives of Westmoreland and representatives of
the Funds, Westmoreland was advised that the financial advisors
to the Funds had no authority to negotiate and that their
statements did not reflect the views of counsel or the trustees
of the Funds, who had not even been briefed on these discussions.
The Funds' counsel demanded that any further negotiations be
between counsel and solely pursuant to the exchange of formal
written proposals. On January 7, 1998, Westmoreland made a
further and written proposal to the Funds and two weeks later
counsel to the Funds informed the Company that the proposal was
unacceptable, declining to provide any explanation or analysis or
whether any elements of the proposal might form the basis for
further discussion. The Funds stated that further discussions
were not likely to be fruitful and that the Funds intended to
file their own plan of reorganization.
<PAGE 15>
On February 2, 1998, the Debtor Corporations filed a plan of
reorganization which provides for, among other things, the
payment in full (or substantially in full) of all allowed claims
entitled to satisfaction ahead of the Company's shareholders
(including the Funds, to the extent they hold allowed claims).
An amended, but substantially similar, plan of reorganization was
filed on April 15, 1998. The final plan of reorganization may
differ from the plan currently filed with the Bankruptcy Court.
On February 2, 1998, the Funds filed a competing plan of
reorganization (the "Funds' Plan"). An amended Funds' Plan was
filed on April 15, 1998. Among other things, the Funds' Plan
provides for the elimination of all preferred and common
shareholder interests. The Company intends to vigorously oppose
the Funds' Plan.
The Bankruptcy Court will hold hearings to determine the adequacy
of the disclosure statements on June 11, 1998, and if either or
both of the statements is deemed adequate, approval solicitation
will take place and confirmation hearings will be scheduled by
the Bankruptcy Court. No assurances can be given that the
Company will be successful in reorganizing its affairs within the
Chapter 11 bankruptcy proceedings or in preventing confirmation
of the Funds' competing plan which terminates all shareholders
interests.
Because of the ongoing nature of the reorganization cases, the
outcome of which is not presently determinable, the consolidated
financial statements contained herein are subject to material
uncertainties and may not be indicative of the results of the
Company's future operations or financial position.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities was $17,755,000 and
$8,714,000 for the three months ended March 31, 1998 and 1997,
respectively. The increase in cash provided by operations in
1998 compared to 1997 is mainly proceeds from the termination of
the Company's previous overfunded salaried pension plan.
Cash provided by investing activities for the three months ended
March 31, 1998 and 1997 was $86,000, and $887,000, respectively.
The reduction in cash provided from investing activities in 1998
as compared to 1997 is a result of a decrease in proceeds from
sales of investments and assets in 1998.
Cash used in financing activities for the three months ended
March 31, 1998 and 1997 totaled $47,000, and $51,000,
respectively. Cash used in 1998 and 1997 related to the
repayment of long-term debt.
<PAGE 16>
Consolidated cash and cash equivalents at March 31, 1998 totaled
$48,458,000. As a result of the Chapter 11 bankruptcy filings,
the Company is not permitted to consolidate the individual
subsidiary cash balances but continues to manage those balances
on their behalf. As of March 31, 1998, the cash balances at the
filed subsidiaries were: Westmoreland Resources, Inc. ("WRI") -
$13,431,000; Westmoreland Coal Sales Company - $376,000;
Westmoreland Terminal Company - $1,679,000; and Westmoreland
Energy, Inc. - $19,438,000. The cash balance for Westmoreland
Coal Company was $13,534,000. At December 31, 1997, cash and
cash equivalents totaled $30,664,000 (including $11,378,000 at
WRI). The Company's cash and cash equivalents are not restricted
as to use or disposition under the normal course of business,
except for the bankruptcy restrictions. The cash at WRI, an 80%-
owned subsidiary, is available to the Company only through
dividends. Such dividends may not be paid while WRI is in its
bankruptcy case. In addition, the Company had restricted cash,
which was not classified as cash or cash equivalents, of
$5,964,000 at March 31, 1998 and $6,665,000 at December 31, 1997.
The amounts represent an interest-bearing cash deposit account,
which collateralizes the Company's outstanding surety bonds for
its workers compensation self-insurance programs. The decrease
in restricted cash collateralizing Workers' Compensation surety
bonds reflects amounts drawn in 1998 to pay claims pursuant to an
approved order of the bankruptcy court, net of interest earned on
the bonds.
Preferred stock dividends at a rate of 8.5% per annum were paid
quarterly from 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 entered into with the
Company's principal lenders. Upon the expiration of these
extension agreements, the Company paid a quarterly dividend on
April 1, 1995 and July 1, 1995. Pursuant to Delaware law, the
preferred stock dividend was suspended in the third quarter of
1995 as a result of the recognition of losses related to the
idling of the Virginia division and the resulting shareholders'
deficit. The fourteen quarterly dividends which are in arrears
(those dividends whose payment dates would have been July 1,
1994, October 1, 1994, January 1, 1995, October 1, 1995, January
1, 1996, April 1, 1996, July 1, 1996, October 1, 1996, January 1,
1997, April 1, 1997, July 1, 1997, October 1, 1997, January 1,
1998, and April 1, 1998) amount to $17,106,000 in the aggregate
($29.75 per preferred share or $7.44 per depositary share).
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 preferred stock dividends only: (1) out of
surplus, surplus being the amount of shareholders' equity in
excess of the par value of the Company's two classes of stock; or
(2) in the event there is no surplus, out of net profits for the
fiscal year in which a preferred stock dividend is declared
(and/or out of net profits for the preceding fiscal year), but
only to the extent that shareholders' equity exceeds the par
value of the preferred stock ($575,000). The Company had
shareholders' equity at March 31, 1998 of $30,455,000.
As a result of the filing of voluntary petitions for
reorganization under Chapter 11 of the United States Bankruptcy
Code, the Company is prohibited from paying dividends, either
common or preferred.
<PAGE 17>
RESULTS OF OPERATIONS
- -----------------------------------------------------------------
QUARTER ENDED MARCH 31, 1998 COMPARED TO QUARTER ENDED MARCH 31,
1997.
Revenues for the quarter ending March 31, 1998 were $16,962,000
compared to $15,332,000 for the quarter ending March 31, 1997.
The increase is due to a slightly higher volume of tons sold at
WRI and higher earnings at independent power projects. Equity in
earnings at DTA were lower in the first quarter of 1998 compared
to the first quarter of 1997 because of a decrease in throughput
volumes.
Costs and expenses for the quarter ending March 31, 1998 were
$16,198,000 compared to $11,735,000 for the quarter ending March
31, 1997. The majority of the increase is due to an increase in
the accrual for heritage costs associated with the 1992 Plan. In
addition, the Company continues to reduce expenses at its idled
Virginia Division.
Gains of $136,000 on the sales of assets during the first quarter
of 1998 resulted from the sale of various pieces of equipment
from the Company's idled Virginia Division. Losses on the sales
of assets were $905,000 during the first quarter of 1997,
included a loss of $1,609,000 related to the removal and sale of
a longwall mining machine at the idled Virginia Division. Cash
proceeds of $3,200,000 were received in 1997 from the sale of the
longwall mining machine but were offset by $2,000,000 of costs to
remove the machine, $1,500,000 of remaining book value, and
$1,300,000 relating to the buy-out of the lease on the machine.
Proceeds of $704,000 were received from the sale of various
equipment from the idled Virginia Division, all of which was
recorded as a gain in 1997.
Other income for the quarter ending March 31, 1998 included a
$711,000 payment relating to the buyout of a royalty agreement
and the recognition of $854,000 relating to the resolution of a
tax escrow account established in conjunction with a previous
sale of property.
<PAGE 18>
PART II - OTHER INFORMATION
---------------------------
ITEM 1
LEGAL PROCEEDINGS
- -----------------------------------------------------------------
See Note 1 "Chapter 11 Reorganization Proceedings" of Notes to
Condensed Consolidated Financial Statements, which is
incorporated by reference herein.
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------------------------------
a) Exhibit 27 - Financial Data Schedule
b) On April 20, 1998 the Company filed a report on Form 8-K
regarding the issuance of a press release announcing the
Company's 1997 results. In addition, the Company announced
it had filed its 1997 Form 10-K with the SEC and an amended
plan of reorganization and disclosure statement related to
its Chapter 11 proceedings with the Bankruptcy Court.
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: May 14, 1998 /s/ Robert J. Jaeger
---------------------------
Robert J. Jaeger
Senior Vice President -
Finance and Treasurer
/s/ Larry W. Mikkola
----------------------------
Larry W. Mikkola
Controller
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<PERIOD-END> MAR-31-1998
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575
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