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, 1999
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.)
2 North Cascade Avenue 14th Floor Colorado Springs, Colorado 80903
- --------------------------------------------------------------------------------
(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 August 1, 1999: 7,059,663
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1
Financial Statements
<TABLE>
Westmoreland Coal Company and Subsidiaries
Condensed Consolidated Balance Sheets
- -----------------------------------------------------------------------------------------------------------------------------
(Unaudited)
June 30, 1999 December 31, 1998
- ----------------------------------------------------------------------------- -------------------- -- -----------------------
(in thousands)
<CAPTION>
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 32,641 $ 84,073
Receivables:
Trade 2,390 2,566
Terminated pension plan, net 500 500
Other 919 2,730
- ----------------------------------------------------------------------------- -------------------- -- ----------------------
3,809 5,796
Other current assets 2,473 691
- ----------------------------------------------------------------------------- -------------------- -- ----------------------
Total current assets 38,923 90,560
- ----------------------------------------------------------------------------- -------------------- -- ----------------------
Property, plant and equipment:
Land and mineral rights 10,990 10,990
Plant and equipment 96,647 94,989
- ----------------------------------------------------------------------------- -------------------- -- ----------------------
107,637 105,979
Less accumulated depreciation and depletion 69,775 69,029
- ----------------------------------------------------------------------------- -------------------- -- ----------------------
37,862 36,950
Investment in independent power projects 44,947 62,386
Investment in Dominion Terminal Associates (DTA) 4,930 5,475
Workers' compensation bond 3,776 4,140
Prepaid pension cost 3,858 3,748
Excess of trust assets over pneumoconiosis benefit obligation 9,137 10,891
Security deposits 10,148 -
Other assets 1,514 1,456
- ----------------------------------------------------------------------------- -------------------- -- ----------------------
Total Assets $ 155,095 $ 215,606
============================================================================= ==================== == ======================
(Continued)
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
Westmoreland Coal Company and Subsidiaries
Condensed Consolidated Balance Sheets (Continued)
- -----------------------------------------------------------------------------------------------------------------------------
(Unaudited)
June 30, 1999 December 31, 1998
--------------------------------------------------------------------------- -------------------- -- ------------------------
(in thousands)
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of long-term debt $ 217 $ 200
Accounts payable and accrued expenses 7,927 11,249
Workers compensation 3,200 3,800
Postretirement medical costs 11,066 11,066
Reorganization expenses 1,257 7,900
Consent judgment payment obligation - 39,006
Reclamation costs 100 100
Income taxes 75 2,185
--------------------------------------------------------------------------- -------------------- -- -----------------------
Total current liabilities 23,842 75,506
--------------------------------------------------------------------------- -------------------- -- -----------------------
Long-term debt, less current installments 1,323 1,562
Accrual for workers compensation 16,161 17,338
Accrual for postretirement medical costs 78,358 73,143
1974 UMWA Pension Plan obligations 12,463 13,776
Accrual for reclamation costs, less current portion 3,220 3,046
Other liabilities 1,797 2,370
Minority interest 7,395 7,020
Commitments and contingent liabilities
Shareholders' equity
Preferred stock of $1.00 par value
Authorized 5,000,000 shares;
Issued 311,843 shares at June 30, 1999, 312 575
575,000 shares at December 31, 1998
Common stock of $2.50 par value
Authorized 20,000,000 shares;
Issued 7,059,663 shares at June 30, 1999, 17,649 17,413
6,965,328 shares at December 31, 1998
Other paid-in capital 75,046 94,630
Accumulated deficit (82,471) (90,773)
--------------------------------------------------------------------------- -------------------- -- -----------------------
Total shareholders' equity 10,536 21,845
--------------------------------------------------------------------------- -------------------- -- -----------------------
Total Liabilities and Shareholders' Equity $ 155,095 $ 215,606
=========================================================================== ==================== == =======================
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
<TABLE>
Westmoreland Coal Company and Subsidiaries
Consolidated Statements of Income
- ----------------------------------------------------------------------------------------------------------------------------
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
- ------------------------------------------------------ ----------------- ---------------- ----------------- ----------------
(in thousands except per share data)
<CAPTION>
<S> <C> <C> <C> <C>
Revenues:
Coal $ 8,675 $ 10,891 $ 17,234 $ 23,143
Independent power - equity in earnings 4,116 50,626 26,707 55,419
DTA - equity in earnings (share of losses) (397) 328 (718) 245
- ------------------------------------------------------ ----------------- ---------------- ----------------- ----------------
12,394 61,845 43,223 78,807
- ------------------------------------------------------ ----------------- ---------------- ----------------- ----------------
Costs and expenses:
Cost of sales - coal 7,670 9,298 14,963 19,494
Depreciation, depletion and amortization 378 631 744 1,237
Selling and administrative 2,102 1,627 6,777 3,038
Heritage costs 6,882 3,953 12,477 8,104
Pension benefit (55) (52) (110) (105)
Doubtful account recoveries (83) (115) (91) (228)
- ------------------------------------------------------ ----------------- ---------------- ----------------- ----------------
16,894 15,342 34,760 31,540
Operating income (loss) (4,500) 46,503 8,463 47,267
Other income (expense):
Gains on sales of assets 50 51 69 187
Interest expense (297) (40) (598) (95)
Interest income 441 - 965 -
Minority interest (149) (193) (375) (510)
Other income (expense) 247 (100) (177) 1,456
- ------------------------------------------------------ ----------------- ---------------- ----------------- ----------------
Income (loss) from operations before
reorganization items and income taxes (4,208) 46,221 8,347 48,305
Reorganization legal and consulting fees - (776) - (1,435)
Reorganization interest income - 691 - 1,328
Income taxes - - (45) -
- ------------------------------------------------------ ----------------- ---------------- ----------------- ----------------
Income (loss) before cumulative effect of change
in accounting principle (4,208) 46,136 8,302 48,198
Cumulative effect of change in accounting
principle - (9,876) - (9,876)
- ------------------------------------------------------ ----------------- ---------------- ----------------- ----------------
Net income (loss) (4,208) 36,260 8,302 38,322
Less preferred stock dividends (in arrears) (663) (1,222) (1,326) (2,444)
- ------------------------------------------------------ ----------------- ---------------- ----------------- ----------------
Net income (loss) applicable to common
shareholders $ (4,871) $ 35,038 $ 6,976 $ 35,878
====================================================== ================= ================ ================= ================
Net income (loss) per share applicable to common shareholders:
Before cumulative effect of change in accounting
principle $ (.69) $ 6.45 $ .99 $ 6.57
Cumulative effect of change in accounting
principle - (1.42) - (1.42)
====================================================== ================= ================ ================= ================
$ (.69) $ 5.03 $ .99 $ 5.15
====================================================== ================= ================ ================= ================
Weighted average number of common shares outstanding 7,020 6,965 7,020 6,965
====================================================== ================= ================ ================= ================
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
<TABLE>
Westmoreland Coal Company and Subsidiaries
Consolidated Statements of Cash Flows
- ----------------------------------------------------------------------------------------------------------------------------
(Unaudited)
Six Months Ended June 30, 1999 1998
---------------------------------------------------------------------------------- -------------------- -------------------
(in thousands)
<CAPTION>
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income $ 8,302 $ 38,322
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Equity earnings from independent power projects (26,707) (55,419)
Cash received from independent power projects 44,106 33,136
Equity in losses from DTA 718 (245)
Cash generated by DTA 665 1,298
Cash contributions to DTA (838) (1,066)
Depreciation, depletion and amortization 744 1,237
Combined Benefit Fund prepayments (1,492) -
Gain on disposition of assets (69) (187)
Minority interest 375 510
Cumulative effect of change in accounting principle - 9,876
Other (308) (490)
Changes in assets and liabilities:
Accounts receivable, net of allowance for doubtful accounts 1,987 14,411
Workers' compensation bond 364 1,428
Prepaid pension asset (110) (105)
Excess of trust assets over pneumoconiosis benefit obligation 1,754 50
Security deposits (10,148) -
Accounts payable and accrued expenses (3,322) (1,300)
Income tax payable (2,110) -
Accrual for workers compensation (1,777) -
Accrual for postretirement medical costs 5,215 -
Accrual for reorganization expenses (6,643) -
Consent judgment payment obligation (39,006) -
Other liabilities (399) -
1974 UMWA Pension Plan obligations (1,313) -
---------------------------------------------------------------------------------- -------------------- -------------------
Net cash provided by (used in) operating activities before reorganization items (30,012) 41,456
---------------------------------------------------------------------------------- -------------------- -------------------
Changes in reorganization items - 5,856
---------------------------------------------------------------------------------- -------------------- -------------------
Net cash provided by (used in) operating activities (30,012) 47,312
---------------------------------------------------------------------------------- -------------------- -------------------
Cash flows provided by (used in) investing activities:
Fixed asset additions (1,656) (125)
Net proceeds from sales of assets 69 196
---------------------------------------------------------------------------------- -------------------- -------------------
Net cash provided by (used in) investing activities (1,587) 71
---------------------------------------------------------------------------------- -------------------- -------------------
Cash flows provided by (used in) financing activities:
Repayment of long-term debt (222) (47)
Issuance of common stock 389 -
Purchase of preferred stock (20,000) -
---------------------------------------------------------------------------------- -------------------- -------------------
Net cash used in financing activities (19,833) (47)
---------------------------------------------------------------------------------- -------------------- -------------------
Net increase (decrease) in cash and cash equivalents (51,432) 47,336
Cash and cash equivalents, beginning of period 84,073 30,664
================================================================================== ==================== ===================
Cash and cash equivalents, end of period $ 32,641 $ 78,000
================================================================================== ==================== ===================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 5,446 $ 27
Taxes $ 2,110 $ -
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
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/A for the year
ended December 31, 1998. 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 "Chapter 11 Cases"). By order of the Bankruptcy Court
entered on December 23, 1998, pursuant to the request of the Debtor
Corporations, the Chapter 11 Cases were dismissed. There were no objections
during the ten day stay period that expired on January 4, 1999. Upon the
dismissal, the Debtor Corporations were and are no longer subject to the
protections afforded or restrictions imposed by the Bankruptcy Code.
2. Contingencies
Westmoreland Energy, Inc. ("WEI") - WEI Project Contingencies
Southampton Project - In October, 1998, the Southampton Partnership and Virginia
Power Company ("VEPCO") entered into a settlement agreement of their
administrative proceeding before the Federal Energy Regulatory Commission
concerning the project's compliance with Qualifying Facility ("QF") criteria and
payments arising out of plant performance in 1992. The settlement provided for,
among other items, payments by the Southampton Partnership to Virginia Power of
$1,000,000 annually for the years 1999-2001, followed by a reduction in capacity
payments from Virginia Power to the Southampton Partnership of $500,000 for the
years 2002-2008. Following 2008, Virginia Power may elect to terminate its power
purchases from the Southampton Partnership or continue to receive the $500,000
annual reduction in capacity payments for the remainder of the power purchase
agreement. The settlement was approved by the FERC.
Resolution of the FERC QF issue provides the Southampton Partnership an answer
about QF status in 1992, regulatory certainty regarding application of the
Federal Power Act to both the Southampton project and the upstream partners and
owners, including WEI and Westmoreland, and, assuming continued compliance with
loan covenants and appropriate project financial performance, the ability to
distribute earnings to the project partners.
A limited partner of LG&E-Southampton, L.P. has made a demand on the Southampton
Partnership and related LG&E and Westmoreland entities for reimbursement in the
amount of $1,979,000 in connection with its share of the settlement. The
Westmoreland entities have made a similar demand against the LG&E entities. The
parties have agreed to attempt to resolve the dispute through non-binding
mediation and a mediator has been appointed.
<PAGE>
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 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 June, 1999, Virginia Power withheld approximately
$16,700,000 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 commenced litigation against Virginia Power seeking damages,
contending that Virginia Power breached the Power Purchase Agreement in
withholding such payments. The case was tried beginning on October 26, 1998 in
the Circuit Court of the City of Richmond, Virginia. On December 2, 1998, the
Court entered judgment in the ROVA Partnership's favor for the amount of
$14,800,000 (the amount that Virginia Power had withheld at the trial date) plus
interest for a total of $19,336,214. On December 21, 1998, Virginia Power posted
its appeal bond and on December 29, 1998, noted its appeal of the Court's
decision to the Virginia Supreme Court. The Supreme Court agreed to hear
Virginia Power's appeal. Briefs are being prepared. The Court will likely set a
date for Oral Argument before the end of 1999 and a decision is expected to
follow in early 2000. Due to the uncertainty of the appeal, the financial
statements do not reflect any portion of this judgment.
Rensselaer - On March 15, 1999, LG&E-Westmoreland Rensselaer ("LWR") completed
the sale of the Rensselaer Project to Fulton Cogeneration Associates, L.P.
("Fulton"). LWR received approximately $68,000,000 in cash as consideration for
the sale of the Rensselaer plant and operating contracts. After payment of
expenses and remaining debts, Westmoreland Energy Inc.'s share of the proceeds
was approximately $33,000,000.
Other
In accordance with a Master Agreement entered into among the Company, the UMWA
Health and Benefit Funds, the Official Committee of Equity Security Holders, and
the United Mine Workers of America ("UMWA"), pursuant to which the parties
supported Westmoreland's dismissal from bankruptcy, the Company agreed to pay
"the reasonable and necessary professional fees and expenses of the Equity
Committee professionals, Andrews and Kurth, L.L.P. and Putnam Hayes and
Bartlett, for services rendered in connection with the Chapter 11 cases". The
Company paid a large portion of those fees but has disputed and not paid
remaining amounts which total approximately $488,000.
On April 7, 1999, Andrews & Kurth, L.L.P. and Putnam Hayes and Bartlett filed
suit in District court in the State of Colorado seeking payment of the amounts
allegedly owed. The Company believes the charges were not reasonable and
necessary in accordance with the Bankruptcy Code and the Master Agreement and
will vigorously contest the case. The parties have agreed to attempt to resolve
the dispute through mediation. If that is not successful, the case is scheduled
for trial commencing May 15, 2000. The likely outcome of the dispute is unknown
at this time. The Company has accrued the entire amount demanded.
<PAGE>
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 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 the requirements of
Delaware law, described below, 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 nineteen quarterly dividends which are accumulated
but unpaid (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, April 1, 1998, July 1, 1998, October 1, 1998, January 1, 1999, April 1,
1999, and July 1, 1999) amount to $12,591,000 in the aggregate ($40.38 per
preferred share or $10.09 per depositary share). Common stock dividends may not
be declared until the preferred stock dividends that are accumulated but unpaid
are made current.
On March 10, 1999, the Company offered to purchase up to 1,052,631 depositary
shares, each representing one quarter of a share of its Series A Convertible
Exchangeable Preferred Stock ("Series A Preferred Stock"). The offer price of
$19 per share was in full satisfaction of claims to accumulated but unpaid
dividends on the depositary shares tendered. On April 7, 1999, the offer expired
and 1,683,903 depositary shares were tendered in response to the offer. Because
the number of shares tendered exceeded the maximum number of shares the Company
had offered to purchase, a proration factor of approximately 62.5% was applied
to all shares tendered. A total of 1,052,631 depositary shares were purchased
for $20,000,000. The balance sheet effect of this transaction was to reduce cash
and shareholders' equity by $20,000,000. Following completion of the tender
offer, the depositary shares purchased in the offer were converted into shares
of Series A Preferred Stock, the shares of Series A Preferred Stock were
retired, and the capital of the Company was reduced by the par value of the
shares of Series A Preferred Stock retired. This reduced the number of shares of
Series A Preferred Stock outstanding from 575,000 to 311,843, accumulated but
unpaid dividends to $11,928,000, and the ongoing quarterly preferred dividend
from $1,222,000 to $663,000.
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 ($312,000 at June 30, 1999). The Company
had shareholders' equity at June 30, 1999 of $10,536,000 and the par value of
all outstanding depositary shares and shares of common stock aggregated
$17,961,000 at June 30, 1999.
The Company is also subject to certain financial ratio tests under the terms of
the Master Agreement. The Company agreed to secure its obligations under the
Master Agreement by providing a Contingent Promissory Note ("Note"). The
original principal amount of the Note is $12 million; the principal amount of
the Note decreases to $6 million in 2002. The Note is payable only in the event
the Company does not meet its Coal Act obligations, fails to meet certain
ongoing financial tests specified in the Note, fails to maintain the required
balance in the escrow account established under an escrow agreement or fails to
comply with certain covenants set forth in a security agreement.
4. DISPOSITION
On July 27, 1999, the Company sold all remaining recorded assets of its idled
Virginia Division. The assets consisted of the Bullitt Preparation Plant and
Transloader Complex. The Company received approximately $650,000 in cash and the
purchaser assumed reclamation liabilities of approximately $600,000. The
transaction resulted in a net gain of approximately $360,000. The Company
continues in its efforts to sell the Virginia Division refuse site as a source
of coal fines. The site has no recorded asset value.
<PAGE>
5. BUSINESS SEGMENT INFORMATION
The Company's operations have been classified into three segments: coal,
independent power operations and terminal operations. The coal segment includes
the production and sale of coal from the Powder River Basin in eastern Montana.
The independent power operations segment includes the ownership of interests in
cogeneration and other non-regulated independent power plants. The terminal
operation segment consists of the leasing of capacity at Dominion Terminal
Associates, a coal storage and vessel loading facility. Summarized financial
information by segment for the quarter and six months ended June 30, 1999 and
1998, is as follows:
<TABLE>
------------------------------------ -- -------------- ----------------- ---------------- --------------- ----------------
Independent
Power Terminal
Coal Operations Operations Corporate Total
------------------------------------ -- -------------- ----------------- ---------------- --------------- ----------------
(in thousands)
<CAPTION>
<S> <C> <C> <C> <C> <C>
Three months ended June 30, 1999:
Total assets $ 58,257 $ 51,832 $ 5,843 $ 39,163 $ 155,095
Revenues 8,675 4,116 (397) - 12,394
Operating income (loss) 297 3,615 201 (8,633) (4,500)
Reconciliation of operating income to income from operations before income taxes:
Operating income (loss) 297 3,615 201 (8,633) (4,500)
Gains on sale of assets - - - 50 50
Interest expense (36) - - (261) (297)
Interest income 158 53 21 209 441
Minority interest (149) - - - (149)
Other income (expense) 28 (17) 86 150 247
==================================== == ============== ================= ================ =============== ================
Income (loss) from operations
before income taxes $ 298 $ 3,651 $ 328 $ (8,485) $ (4,208)
==================================== == ============== ================= ================ =============== ================
Three months ended June 30, 1998:
Total assets $ 56,658 $115,703 $ 20,343 $ 32,538 $ 225,242
Revenues 10,891 50,626 328 - 61,845
Operating income (loss) 618 49,886 (223) (3,778) 46,503
Reconciliation of operating income to income from operations before income taxes:
Operating income (loss) 618 49,886 (223) (3,778) 46,503
Gains on sale of assets - - - 51 51
Interest expense (41) 7 - (6) (40)
Interest income 169 255 44 223 691
Minority interest (193) - - - (193)
Other income (expense) 14 57 - (171) (100)
Reorganization costs - - - (776) (776)
------------------------------------ -- -------------- ----------------- ---------------- --------------- ----------------
Income (loss) from operations
before income taxes $ 567 $ 50,205 $ (179) $ (4,457) $ 46,136
==================================== == ============== ================= ================ =============== ================
<PAGE>
------------------------------------ -- -------------- ----------------- ---------------- --------------- ----------------
Independent
Power Terminal
Coal Operations Operations Corporate Total
------------------------------------ -- -------------- ----------------- ---------------- --------------- ----------------
(in thousands)
Six months ended June 30, 1999:
Total assets $ 58,257 $ 51,832 $ 5,843 $ 39,163 $ 155,095
Revenues 17,234 26,707 (718) - 43,223
Operating income (loss) 1,308 25,366 (503) (17,708) 8,463
Reconciliation of operating income to income from operations before income taxes:
Operating income (loss) 1,308 25,366 (503) (17,708) 8,463
Gains on sale of assets - - - 69 69
Interest expense (72) - - (526) (598)
Interest income 292 290 24 359 965
Minority interest (375) - - - (375)
Other income (expense) 21 (502) 114 190 (177)
==================================== == ============== ================= ================ =============== ================
Income (loss) from operations
before income taxes $ 1,174 $ 25,154 $ (365) $(17,616) $ 8,347
==================================== == ============== ================= ================ =============== ================
Six months ended June 30, 1998:
Total assets $ 56,658 $115,703 $ 20,343 $ 32,538 $ 225,242
Revenues 23,143 55,419 245 - 78,807
Operating income (loss) 1,899 54,186 (727) (8,091) 47,267
Reconciliation of operating income to income from operations before income taxes:
Operating income (loss) 1,899 54,186 (727) (8,091) 47,267
Gains on sale of assets - - - 187 187
Interest expense (82) - - (13) (95)
Interest income 319 494 49 466 1,328
Minority interest (510) - - - (510)
Other income 20 - 24 1,412 1,456
Reorganization costs - - - (1,435) (1,435)
==================================== == ============== ================= ================ =============== ================
Income (loss) from operations
before income taxes $ 1,646 $ 54,680 $ (654) $ (7,474) $ 48,198
==================================== == ============== ================= ================ =============== ================
</TABLE>
<PAGE>
Item 2
Management's Discussion and Analysis of Financial Condition
and Results of Operations
- --------------------------------------------------------------------------------
Material Changes in Financial Condition From December 31, 1998 to June 30, 1999
Forward-Looking Disclaimer
This Quarterly Report on Form 10-Q contains "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Among such statements are comments regarding
the Company's projected cash balance, the Company's projected earnings, the
magnitude of future claims on the Company, the Company's ability to use its
NOLs, and the Company's future prospects, condition, and value. In addition, the
terms "anticipate," "believe," "estimate," "maintain," "intend," "may," "will,"
and "expect" and similar expressions, as they relate to the Company, are
intended to identify forward-looking statements. These statements are qualified
by important factors that could cause actual results to differ materially from
those in the forward-looking statements, including without limitation, general
economic and competitive conditions and the ability to reinvest excess cash at
an acceptable rate of return. Additional factors that could cause actual results
to differ materially from those in the forward-looking statements, or that could
contribute to such a difference, are identified in the Company's 1998 Form
10-K/A.
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
protection under Chapter 11 of the Bankruptcy Code on December 23, 1996. On
December 23, 1998, the Bankruptcy Court granted the Debtors' Motion to Dismiss
the cases. The automatic stay period pursuant to the Federal Rules of Bankruptcy
Procedure expired on January 4, 1999.
Continued financial improvement of the Debtors during the bankruptcy provided
the basis for dismissal and settlement with the UMWA Health and Benefit Funds
("Funds"), the Company's principal creditors. On October 15, 1998, the Company,
the Funds, the United Mine Workers of America ("UMWA") and the Official
Committee of Equity Security Holders ("Equity Committee") reached agreement on a
settlement term sheet, which contained the principal terms of an agreement among
them and provided for, among other things, the resolution of the Chapter 11
cases. The agreement, which facilitated a consensual dismissal of the bankruptcy
cases, was announced during scheduled hearings on Westmoreland's Motion to
Dismiss and the Equity Committee's Motion to Convert to Chapter 7, and the
hearings were subsequently recessed. The agreement was subsequently documented
in certain stipulated judgments and in a Master Agreement among the Company, the
Funds, the UMWA, and the Equity Committee. On October 30, 1998, the Debtor
Corporations, the Funds, the UMWA, and the Equity Committee filed a joint motion
with the Bankruptcy Court, setting forth the outline of a procedure for
dismissal of the Chapter 11 Cases combined with the entry of "consent judgments"
in connection with certain of the pending litigation. The Debtor Corporations
filed motions requesting approval of the consent judgments on or around November
18, 1998. Notices of the filing of these motions were mailed to creditors as
directed by the Bankruptcy Court. There were no allowable objections and
dismissal of the Chapter 11 Cases occurred on December 23, 1998. The Master
Agreement was executed on January 29, 1999.
<PAGE>
Liquidity and Capital Resources
Cash used in operating activities was $30,012,000 for the six months ended June
30, 1999. Cash provided by operating activities was $47,312,000 for the six
months ended June 30, 1998. The decrease in cash from operations in 1999
compared to 1998 is mainly due to cash received from the Rensselaer
restructuring at WEI and the termination of the salaried pension plan in 1998,
as well as the payment of pre-petition liabilities and reorganization costs and
the funding of security deposits in 1999. Equity in the earnings of Rensselaer,
net of restructuring revenues, was approximately $2,700,000 in 1998.
Cash used in investing activities was $1,587,000 for the six months ended June
30, 1999. Cash provided by investing activities for the six months ended June
30, 1998 was $71,000. Cash used in investing activities in 1999 included fixed
asset additions of $1,633,000 at WRI offset by proceeds from sales of assets of
$69,000. Cash provided by operations in 1998 of $71,000 included $196,000 of
proceeds from sales of assets offset by fixed asset additions at WRI of
$125,000.
Cash used in financing activities for the six months ended June 30, 1999 and
1998 totaled $19,833,000 and $47,000, respectively. Cash used in financing
activities in 1999 related primarily to the purchase of preferred stock.
Consolidated cash and cash equivalents at June 30, 1999 totaled $32,641,000
(including $14,362,000 at WRI). At December 31, 1998, cash and cash equivalents
totaled $84,073,000 (including $14,712,000 at WRI). The cash at WRI, an
80%-owned subsidiary, is available to the Company only through dividends. In
addition, the Company had restricted cash, which was not classified as cash or
cash equivalents, of $13,924,000 at June 30, 1999 and $4,140,000 at December 31,
1998. The restricted cash represents interest-bearing cash deposit accounts
which collateralize the Company's Contingent Note ($6,000,000) required by the
Master Agreement and the surety bond for the security required by the 1992 UMWA
Benefit Plan ($4,148,000), as well as $3,776,000 that collateralizes the
outstanding surety bonds for its workers compensation self-insurance programs.
The restricted cash in 1998 represents collateral for the outstanding surety
bonds for its workers compensation self-insurance programs. The Company also has
$8,000,000 in interest-bearing debt reserve accounts for certain of the
Company's independent power projects. This cash is restricted as to its use and
is classified as part of the investment in independent power projects. In
addition, there is a surplus in the Company's pneumoconiosis trust of
approximately $9,137,000, that may be available to pay postretirement health
benefits dependent upon future actuarial calculations as well as $3,900,000 in
salaried pension plan overfunding.
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 nineteen
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, April 1, 1998 and
July 1, 1998, October 1998, January 1, 1999, April 1, 1999 and July 1, 1999)
amount to $12,591,000 in the aggregate ($40.38 per preferred share or $10.09 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 ($312,000 at June 30, 1999). The Company
had shareholders' equity at June 30, 1999 of $10,536,000 and the par value of
all outstanding depositary shares and shares of common stock aggregated
$17,961,000 at June 30, 1999.
<PAGE>
In July 1999, the Company announced that it expected to conduct an additional
tender offer at $19 per depositary share for approximately 600,000 shares, the
amount by which its tender offer earlier in 1999 was oversubscribed. The
schedule and details of the tender offer have not been finalized, but it is the
Company's intention to commence the tender offer as soon as practicable taking
into effect various factors such as income tax consequences. If fully
subscribed, the impact of the tender offer would be to reduce cash and
shareholders equity by approximately $11,400,000. In addition, if fully
subscribed at July 1, 1999, accumulated but unpaid dividends would have been
reduced to $6,534,000 and the annual ongoing dividend obligation would be
reduced to $1,376,000.
Liquidity Outlook
The major factors impacting the Company's liquidity outlook are its significant
"heritage costs" and its ongoing and future business needs. These heritage costs
consist primarily of cash payments for postretirement medical benefits, workers'
compensation costs and UMWA pension benefits. The Company also is obligated for
pension and pneumoconiosis benefits; however, both of these future obligations
have a funding surplus at present. The Company has ongoing cash expenditures of
approximately $16,000,000 per year for postretirement medical benefits which
will remain fairly constant over the next five years and then decline to zero
over the next approximately thirty-seven years. In addition, the Company has
cash expenditures of approximately $3,000,000 per year for workers' compensation
benefits which will steadily decline to zero over the next approximately twenty
years. Since the UMWA pension plan is a multiemployer plan under ERISA, a
contributing company is liable for its share of unfunded vested liabilities upon
termination or withdrawal from the plan. The Company believes the plan was fully
funded at the time of the Company's withdrawal in 1998. However, the plan has
asserted a claim of $13,800,000, which the Company vigorously contests. The
Company is contesting this amount through arbitration, as provided under ERISA.
In accordance with the Multiemployer Pension Plan Amendments Act of 1980, the
Company has made monthly principal and interest payments to the plan while it
pursues its rights and will continue to make such monthly payments until
arbitration is completed. Depending upon the results of arbitration, the Company
may be entitled to a refund or it could be required to pay any remaining
obligation over no more than nine and one-half years.
Under the Coal Act, the Company is required to provide postretirement medical
benefits for UMWA miners by making payments into three benefit plans: (i)
premiums to the UMWA Combined Benefit Fund (the "Combined Fund"), a
multiemployer plan which benefits miners who retired before January 1, 1976 or
who retired thereafter but whose last employer did not provide benefits pursuant
to an operator-specific Individual Employer Plan ("IEP"), (ii) payments to
maintain an IEP for miners who retired after January 1, 1976 and (iii) premiums
to the 1992 UMWA Benefit Plan, a multiemployer plan which benefits (A) miners
who were eligible to retire on February 1, 1993, who did retire on or before
September 30, 1994 and whose former employers are no longer in business, (B)
miners receiving benefits under an IEP whose former employer has gone out of
business and ceased to maintain the IEP, and (C) new spouses or new dependents
of retirees in the Combined Fund who would be eligible for coverage thereunder
but for the fact that the Combined Fund closed to new beneficiaries as of July
20, 1992. The premiums paid by the Company cover its own retirees and its
allocated portion of the pool of retired miners whose previous employers have
gone out of business.
<PAGE>
The Company, on January 4, 1999, as a result of its improved financial position
and subsequent dismissal from bankruptcy, satisfied all of its premium
obligations to the Combined Fund through the end of 1998, and has made
prepayments to the Combined Fund for its premiums for the first three quarters
of 1999. Normal monthly payments will resume on October 1, 1999. Beginning on
October 25, 1999, the Company will begin receiving premium differential credits
of approximately $1,400,000. The credits will be offset against Combined Fund
premiums at a rate of approximately $200,000 per month through April, 2000.
In addition, the Coal Act authorized the Trustees of the 1992 UMWA Benefit Plan
to implement security provisions pursuant to the Act. In 1995, the Trustees
issued security provisions which give contributors to the Plan several options
for satisfying the Coal Act's security requirements, and set the level of
security to be provided by the Company at approximately $21,000,000. In 1999,
the Company secured its obligation to provide retiree health benefits under the
1992 Plan by posting a bond in the amount of three years benefits (or $22.7
million). The bond is collateralized by U.S. Government-backed securities. The
amount to be secured and the bond amount will be reviewed and adjusted on an
annual basis.
The Company's current principal sources of cash flow include cash distributions
from its independent power projects, dividends from WRI, cash from operations of
DTA and interest earned on its cash reserves. In addition, the Company will
receive its share of the judgment in the ROVA litigation if VEPCO's appeal to
the Virginia Supreme Court is unsuccessful. Distributions from the overfunded
pneumoconiosis trust to pay post retirement health benefits are also possible
depending on future actuarial calculations. Management believes that cash
generated from these sources and cash reserves should be sufficient to pay the
Company's heritage costs and fund its ongoing operations and other capital
requirements for the foreseeable future.
Capital commitments include $4,200,000 to repair the dragline at WRI.
Approximately $2,000,000 was expended in 1998 with the majority of the remainder
expended by June 30, 1999. The Company has undertaken to pay for the repair to
assure continued, uninterrupted production at WRI, but the Company believes the
obligation to repair the dragline is solely Morrison-Knudsen's and, therefore,
is in discussion with them on this and other matters, including enforcement of
the Company's right to require Morrison-Knudsen to pay for the repair.
The Company hopes to further improve its long-term liquidity in a number of
ways, including the development of additional cash flow from existing and new
business operations and monetizing assets where proceeds on sale would exceed
the expected return from continued operation. The Company also plans to seek
further cost reductions wherever feasible and prudent, and will attempt to
reduce certain postretirement medical, workers' compensation and related
payments. The Company is also monitoring certain legislative developments, such
as the proposed inclusion of prescription drug costs under Medicare coverage,
which could significantly reduce the Company's retiree health care expenses.
Although management expects to improve the Company's profitability, the time
required to realize such increases cannot be estimated at this time nor can
assurances be given that the Company can achieve any such improvements.
Year 2000
The Year 2000 ("Y2K") problem concerns the inability of information and
technology-based operating systems to properly recognize and process
date-sensitive information beyond December 31, 1999. This could result in
systems failures and miscalculations which could cause business disruptions.
Equipment that uses a date, such as computers and operating control systems, may
be affected. This includes equipment used by our customers and suppliers, as
well as the Company's independent power projects.
<PAGE>
Most of the Company's systems and related software are already Y2K compliant.
The Company has actively reviewed all hardware and software associated with its
computers, personal computers and client/servers, telecommunications and
embedded systems found in equipment throughout its operations. This program
consists of identifying and inventorying all software applications and systems,
making required replacements, modifications, and testing.
All of the independent power projects have completed Y2K testing. The projects
operated normally with only minor errors in the reporting process.
Computer systems at WRI and its mining contractor have been replaced or
appropriately modified. WRI's rail supplier has embarked on an aggressive
campaign to bring its systems into compliance by the end of the third quarter.
The Company is monitoring those activities.
Compliance at Dominion Terminal Associates ("DTA") has been nearly completed
through replacement of non-compliant systems. The Company expects that efforts
to upgrade the few remaining systems will be completed by September 30, 1999.
The terminal is dependent on efficient and timely rail service and DTA is
closely monitoring the compliance efforts of the terminal's rail service
providers.
The nature of the Company's operations make substantive contingency plans
extremely difficult. No reasonable alternatives exist for the inability of the
railroads to provide timely service to WRI and the DTA terminal. As previously
mentioned, the Company is closely following the compliance efforts of the
railroads and other major suppliers.
Based on information currently available, it is estimated that the costs to
replace and modify Company systems to achieve Y2K compliance will not exceed
$125,000, of which approximately $27,000 has been incurred through June 30,
1999.
The goal is to have all critical Company systems Y2K compliant by September 30,
1999. This should allow time before December 31, 1999, to validate the system
modifications and complete contingency plans for customers, suppliers and others
who may not be Y2K compliant. While there can be no assurance that all such
modifications and plans will be successful, the Company does not expect that any
disruptions will have a material adverse effect on its overall financial
position, results of operations, or liquidity.
The foregoing constitutes a "forward-looking statement" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. It is based on management's current expectations,
estimates and projections, which could ultimately prove to be inaccurate.
Factors which could affect the Company's ability to be Y2K compliant by the end
of 1999 include the failure of customers, suppliers, governmental entities and
others to achieve compliance and the inaccuracy of certifications received from
them.
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Quarter Ended June 30, 1999 Compared to Quarter Ended June 30, 1998.
Revenues for the quarter ending June 30, 1999 were $12,394,000 compared to
$61,845,000 for the quarter ending June 30, 1998. The decrease is due to the
significant earnings in 1998 at WEI's Rensselaer project as a result of the
restructuring of its power purchase contract with Niagara Mohawk, slightly
decreased sales volumes at WRI due to scheduled plant maintenance at a major
customer's facility and decreased earnings from terminal operations due to a
decline in the export market.
<PAGE>
Costs and expenses for the quarter ending June 30, 1999 were $16,894,000
compared to $15,342,000 for the quarter ending June 30, 1998. The majority of
the increase is due to an increase in the accrual for heritage costs. Upon the
termination of the bankruptcy the Company was required to resume monthly
payments of approximately $500,000 to the Combined Benefit Fund. In addition,
there was approximately $1,300,000 in Workers Compensation expense and market
related adjustments to the Black Lung Trust. Sales volumes at WRI have decreased
slightly, decreasing costs and expenses accordingly. Selling and administrative
costs in 1999 increased as a result of approximately $500,000 of charges
relating to the proxy contest and tender offer.
Gains on the sales of assets were $50,000 during the quarter ending June 30,
1999, compared to $51,000 for the quarter ending June 30, 1998. The gains relate
primarily to sales of various assets from the Company's idled Virginia Division.
Interest expense was $297,000 and $40,000 for the three months ended June 30,
1999 and 1998, respectively. The increase is due to installment payments being
made monthly to the 1974 UMWA Pension Plan as provided for in the Master
Agreement.
Interest income was $441,000 for the three months ended June 30, 1999. No
interest income was recorded for operations in 1998 as all such income was
considered a reorganization item.
Other income was $247,000 for the three months ended June 30, 1999. Other
expense was $100,000 for the three months ended June 30, 1998. The increase is
due to dividends received from the Company's Fort Lupton project and receipts of
a court ordered payment from a former coal customer of $114,000 in 1999.
Six Months Ended June 30, 1999 Compared to Six Months Ended June 30, 1998.
- --------------------------------------------------------------------------
Revenues for the six months ending June 30, 1999 were $43,223,000 compared to
$78,807,000 for the six months ending June 30, 1998. The decrease is mainly due
to elevated 1998 earnings at WEI's Renssalaer project as a result of the
restructuring of its power purchase contract with Niagara Mohawk and slightly
decreased sales volumes at WRI as well as decreased earnings at the terminal
operations.
Costs and expenses for the six months ending June 30, 1999 were $34,760,000
compared to $31,540,000 for the six months ending June 30, 1998. The majority of
the increase is due to an increase in the accrual for heritage costs. Upon the
termination of the bankruptcy the Company was required to resume monthly
payments of approximately $500,000 to the Combined Benefit Fund. In addition
there was approximately $1,300,000 in Workers Compensation expense and market
related adjustments to the Black Lung Trust. Sales volumes at WRI have decreased
slightly, decreasing costs and expenses accordingly. Selling and administrative
costs increased in 1999 as a result of approximately $2,700,000 of bonuses paid
to employees as well as approximately $600,000 in final bankruptcy, proxy
contest and tender offer expenses. The Company also incurred approximately
$270,000 in expenses related to the exercise of stock options and payment of
stock bonuses.
Gains on the sale of assets were $69,000 and $187,000 for the six months ended
June 30, 1999 and 1998, respectively, all of which related to the sales of
various equipment from the idled Virginia Division.
Interest expense was $598,000 and $95,000 for the six months ended June 30, 1999
and 1998, respectively. The increase is due to installment payments being made
monthly to the 1974 UMWA Pension Plan as provided for in the Master Agreement.
<PAGE>
Interest income was $965,000 for the six months ended June 30, 1999. No interest
income was recorded for operations in 1998 as all such income was considered a
reorganization item.
Other expense was $177,000 for the six months ended June 30, 1999. Other income
was $1,456,000 for the six months ended June 30, 1998. The 1998 period included
income relating to a production tax holdback of $650,000 and $750,000 received
for the buyout of a royalty agreement from a former contract miner.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1
LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
See Note 1 "Chapter 11 Reorganization Proceedings" and Note 2 "Contingencies" of
Notes to Condensed Consolidated Financial Statements, which are incorporated by
reference herein.
ITEM 2
CHANGES IN SECURITIES AND USE OF PROCEEDS
- --------------------------------------------------------------------------------
(C) Recent Sales of Unregistered Securities
The Company issued shares of its Common Stock, $2.50 par value, in the following
transactions exempt from registration pursuant to Section 4(2) of the Securities
Act of 1933:
o On March 12, 1999, the Company issued 22,182 shares to directors in lieu of
directors' fees in the total amount of $47,993 and issued 2,153 shares to a
former director pursuant to a directors' deferred compensation plan.
o On March 19, 1999, the Company issued 27,000 shares to executives as
compensation pursuant to an incentive stock plan.
o On March 22, 1999, the Company issued 25,000 shares to executives upon
exercise of incentive stock options for which the aggregate exercise price
was $65,625 and issued 18,000 shares to executives as compensation pursuant
to an incentive stock plan.
ITEM 4
SUBMISION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- --------------------------------------------------------------------------------
A Special Meeting of Stockholders in lieu of an Annual Meeting was held on May
12, 1999. Proxies for the meeting were solicited pursuant to Section 14A of the
Securities Exchange Act of 1934, and there was a solicitation in opposition to
management's solicitation. Two proposals were voted upon at the meeting.
The first proposal was to elect five members to the Board of Directors to
represent common stockholders. The tabulation of the votes cast with respect to
each of the nominees for election as a Director is set forth as follows:
---------------------------- ------------------------ -------------------------
Name Votes For Votes Withheld
---------------------------- ------------------------ -------------------------
Pemberton Hutchinson 3,128,280 33,247
William R. Klaus 3,133,729 27,798
Thomas W. Ostrander 3,140,229 21,298
Christopher K. Seglem 3,138,638 22,889
Edwin E. Tuttle 3,134,929 26,598
Robert A. Fowler 2,634,923 1,940
Nelson Obus 2,634,923 1,940
R. Bentley Offutt 2,634,923 1,940
Matthew S. Sakurada 2,634,923 1,940
William J. Sim 2,634,923 1,940
---------------------------- ------------------------ -------------------------
Messrs. Hutchinson, Klaus, Ostrander, Seglem, and Tuttle were elected.
<PAGE>
CT Corporation System, the independent inspector of election, did not report any
abstentions or broker non-votes.
The second proposal was to elect two directors to the Board of Directors to
represent preferred stockholders. Each depositary share represents one-quarter
share of the Company's Series A Convertible Exchangeable Preferred Stock
("Series A Preferred Stock"), the terms of which entitle the holders to elect
two directors if the Company is in arrears on six or more Preferred Stock
dividends. The tabulation of the votes cast with respect to each of the nominees
for election as a Director, expressed in terms of the number of shares of Series
A Preferred Stock, is set forth as follows:
---------------------------- ------------------------ -------------------------
Name Votes For Votes Withheld
---------------------------- ------------------------ -------------------------
Robert E. Killen 87,063 35,961
James W. Sight 87,013 36,011
Guy O. Dove, III 70,002 0
Frank E. Williams, Jr. 70,002 0
---------------------------- ------------------------ -------------------------
Messrs. Killen and Sight were elected.
CT Corporation System, the independent inspector of election, did not report any
abstentions or broker non-votes.
Item 5
OTHER INFORMATION
- --------------------------------------------------------------------------------
As reported in a Current Report on Form 8-K filed June 21, 1999 (the "June 21
8-K"), the Board of Directors of the Company approved amendments to the
Company's bylaws on June 18, 1999. The full text of the bylaws as amended (the
"Bylaws") was included as an exhibit to the Form 8-K.
Among other things, the Bylaws provide that, at an annual meeting of
stockholders, business may be conducted only if it is properly brought before
the meeting. The Bylaws specify how a stockholder may properly bring business
before an annual meeting. The stockholder must give timely notice of the
stockholder's proposal to the Secretary of the Company. In general, to be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Company not less than 90 days nor more
than 120 days in advance of the anniversary date of the preceding year's annual
meeting of stockholders (or special meeting in lieu of an annual meeting). Thus,
for a stockholder to make a timely proposal to conduct business at the 2000
Annual Meeting of Stockholders of the Company, the stockholder must deliver a
notice to the Company, or the notice must be delivered to or mailed and received
at the principal executive offices of the Company, not earlier than January 12,
2000 nor later than February 11, 2000. A stockholder's notice regarding the
conduct of business at an annual meeting must contain the information required
by Section 2.5 of the Bylaws. In addition, a stockholder proposing to conduct
business at an annual meeting must comply with the other requirements specified
in the Bylaws, including Section 2.5 thereof, and, if applicable, Federal law.
Business not properly brought before an annual meeting shall not be transacted
at the meeting.
The Bylaws also provide that only persons who are nominated in accordance with
the procedures set forth in Section 2.6 thereof shall be eligible for election
as directors of the Company. Among other requirements, for a nomination to be
properly brought before a meeting by a stockholder, the stockholder must give
timely notice thereof to the Secretary of the Company. In general, to be timely
with respect to an election to be held at an annual meeting of stockholders, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Company not less than 90 days nor more than
120 days in advance of the anniversary date of the preceding year's annual
meeting of stockholders (or special meeting in lieu of an annual meeting). Thus,
for a stockholder to nominate a person for election to the Company's Board of
Directors at the 2000 Annual Meeting of Stockholders, the stockholder must
deliver a notice to the Company, or the notice must be delivered to or mailed
and received at the principal executive offices of the Company, not earlier than
January 12, 2000 nor later than February 11, 2000. A stockholder's notice
regarding the nomination of a person for election to the Board of Directors must
contain the information required by Section 2.6 of the Bylaws. In addition, a
stockholder proposing to nominate a person for election to the Board of
Directors must comply with the other requirements specified in Section 2.6 of
the Bylaws, and, if applicable, Federal law. If a nomination is not made in
accordance with the provisions of Section 2.6 of the Bylaws, the defective
nomination shall be disregarded.
<PAGE>
The description of the Bylaws set forth above is a summary only, does not
purport to be complete, and is qualified in its entirety by the Bylaws, which
were included as an exhibit to the Form 8-K.
Item 6
Exhibits and Reports on Form 8-K
- --------------------------------------------------------------------------------
a) Exhibit 27 - Financial Data Schedule
b) Reports on Form 8-K - On June 4, 1999, the Company filed a report on
Form 8-K announcing that it had received certified results of the
recent proxy contest in connection with the election of common and
preferred directors.
On June 21, 1999, the Company filed a report on Form 8-K stating that
the Virginia Supreme Court had agreed to hear the appeal by Virginia
Power of the December 2, 1998, decision of the Circuit Court of the
City of Richmond and filed an exhibit that included the full text of
the Bylaws of the Company as amended on June 18, 1999.
On July 1, 1999, the Company filed a report on Form 8-K announcing that
it expects to conduct an additional tender offer at $19 per depositary
share for approximately 600,000 shares.
On July 28, 1999, the Company filed a report on Form 8-K announcing the
sale of its Bullitt preparation plant and transloader complex to
Mountain, LLC for approximately $650,000 in cash and the assumption
$600,000 of associated reclamation liabilities.
<PAGE>
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: 08/16/99 /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> JUN-30-1999
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312
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