Form 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report(Date of earliest event reported):
November 15, 1999
WESTMORELAND COAL COMPANY
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(Exact name of registrant as specified in its charter)
DELAWARE 0-752 23-1128670
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(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation or Number Identification No.)
organization)
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,
including area code: 719-442-2600
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Item 5. Other Events
The Company reported a net loss of $3.1 million for the third quarter ended
September 30, 1999, which is a $1.1 million improvement over second quarter 1999
results.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit 99.14 -- Press release dated November 15, 1999.
SIGNATURE
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: November 16, 1999 /s/ Robert J. Jaeger
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By: Robert J. Jaeger
Senior Vice President-Finance
and Treasurer
<PAGE 1>
Exhibit 99.14
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Westmoreland Reports Reduced
Third Quarter 1999 Loss;
Nine Months 1999 Income of $5.2 Million
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Colorado Springs, CO - November 15, 1999 -- Westmoreland Coal Company (AMEX:
WLB) today reported a net loss of $3.1 million for the third quarter ended
September 30, 1999, which is a $1.1 million improvement over second quarter 1999
results. The improvement was due to increased revenues at Westmoreland
Resources, Inc. ("WRI"), lower overhead costs and higher interest income. Set
against a background of $6.4 million in retiree benefit expenses for the period,
the loss for the third quarter 1999 was influenced primarily by the continued
decline in the bond market during the quarter which caused a $450,000 non-cash
negative adjustment in the value of the black lung trust fund investment; a
continued reduction in coal throughput at Dominion Terminal Associates ("DTA")
due to the further decline in the export coal market; and a reduction in equity
in earnings from Westmoreland Energy, Inc. ("WEI") due to the previous sale of
the Rensselaer project. Net income was $0.3 million for the comparable quarter
in 1998 when certain retiree benefit expenses were stayed while the Company
operated under protection of the Bankruptcy Court.
Christopher K. Seglem, Westmoreland's Chairman, President, and CEO said:
"Results from operations were improved, but still somewhat lower than expected
this quarter. Our independent power facilities operated well, and endured the
heat, drought and hurricanes that plagued the east coast. However, coal
shipments from WRI, while reflecting completion of the scheduled maintenance
outage at WRI's largest customer, fell short because of the loss of shipments to
another customer, Otter Tail Power, due to test burns of other coals there. That
contract will expire at the end of this year when Otter Tail, whose power plant
we supply is not now scrubbed, shifts to lower sulfur coal in order to comply
with Phase II of the Clean Air Act. DTA experienced increased losses in the
third quarter in connection with the further downturn in the export coal market.
Finally, an additional decline in the bond market resulted in a further negative
non-cash adjustment of our black lung trust fund investment. The Company is
taking steps to address these issues."
<PAGE>
"In another important area, the impact of substantial accumulated, unpaid
preferred dividends was further lessened during the third quarter as a result of
the second tender offer completed in October," continued Seglem. "The decision
to offer that additional opportunity for our preferred shareholders to sell
their shares back at a price above current market even when it might create a
shareholders' deficit, reflects the importance of the preferred dividend issue
to all of us and the strategic use of cash by the Company."
"Underlying all operating results, of course, are the very large heritage costs
which continue to burden the Company. They will cause the Company to operate at
a loss until they are reduced or new sources of income are brought on line. On
the legislative front, we continue to follow developments regarding the
insolvency of the UMWA Combined Benefit Fund and the possible transfer of
additional subsidies to it from the Abandoned Mine Land Reclamation Fund, at
least as a stop-gap measure. Separately, we are also tracking the possible
inclusion of prescription drug costs under Medicare coverage, which could
alleviate the UMWA Combined Benefit Fund situation and lower our costs."
"Aside from such initiatives which could reduce our industry's and Company's
singularly high retiree costs, future profitability lies in the growth and
expansion of the Company. The energy industry is undergoing extraordinary change
at this time, presenting both great challenges and great opportunities. We are
concentrating current efforts on maximizing the value of existing operations and
assets and are actively pursuing opportunities to use available cash to
reinforce and grow our base in the energy sector in order to achieve sustained
profitability. Available cash balances of $31.9 million are currently earning
money market returns, pending investment in higher return opportunities," Seglem
concluded.
Net loss applicable to common shareholders was $3.8 million after deduction of
$0.7 million for unpaid preferred dividends for the third quarter of 1999
compared to a net loss of $0.9 million for the same period in 1998. As a result
of the repurchase of 412,536 depositary shares through the second tender offer
completed on October 26, quarterly preferred stock dividends in future quarters
will be reduced from $0.7 million to $0.4 million. Accumulated but unpaid
preferred dividends were reduced to $8.9 million from $13.3 million because of
the October tender offer and from $22.0 million before the first tender. The
Company currently has 834,833 depositary shares outstanding, each representing
one-quarter of a share of preferred stock. Payment of preferred stock dividends
are subject to restrictions under Delaware law.
Shareholders' equity was $7.4 million at September 30, 1999, and will be reduced
at October 31, 1999 by $7.8 million, the cost of repurchasing the depositary
shares in the second tender offer. Consolidated cash and cash equivalents at
September 30, 1999 totaled $31.9 million and will also be reduced by $7.8
million for the tender offer. If a shareholders' deficit results from the second
tender offer, payment of dividends is prohibited until such time as positive
shareholders' equity is attained and other requirements under Delaware law are
met.
<PAGE>
Nine Months 1999 Financial Results
Net income was $5.2 million for the first nine months of 1999 and included
increased equity in earnings from WEI as a result of the sale of its remaining
interest in the Rensselaer Project in the first quarter. Net income for the
comparable period in 1998 was $38.6 million and included increased equity in
earnings from WEI resulting from the restructuring of the Rensselaer Project
power purchase contract. Net income applicable to common shareholders was $3.2
million for the first nine months of 1999 and $35.0 million for the same period
in 1998.
Cash used in operating activities was $30.8 million for the first nine months of
1999 compared to cash provided by operating activities of $56.5 million for the
same period in 1998. The difference is largely due to the payment of
pre-petition liabilities and reorganization costs and the funding of security
deposits in 1999, and the cash received from the restructuring of the Rensselaer
Project power purchase contract and the termination of the Company's over-funded
salaried pension plan in 1998.
Westmoreland will file its third quarter 1999 Form 10-Q with the Securities and
Exchange Commission today. Shareholders and others interested in receiving a
copy of the third quarter 1999 Form 10-Q or 1998 Form 10-K/A can request copies
by writing to the Company at the following address: Westmoreland Coal Company, 2
North Cascade Avenue, 14th Floor, Colorado Springs, CO, 80903. The Forms are
also available electronically through the Securities and Exchange Commission's
EDGAR system.
Westmoreland Coal Company, headquartered in Colorado Springs, CO, emerged form
Chapter 11 on January 4, 1999 satisfying all debt obligations with interest and
with its shareholders' interests undiluted. The Company is currently engaged in
western Powder River Basin Coal mining through its 80%-owned subsidiary
Westmoreland Resources, Inc. and independent power production through its wholly
owned subsidiary Westmoreland Energy, Inc. The Company also holds a 20% interest
in Dominion Terminal Associates, a coal shipping and terminal facility in
Newport News, Virginia.
This press release (including the discussion of second
quarter results and the Company's focus going forward) and
the attached financial statements (including the
accompanying notes) contain "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.
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 business conditions; the
ability of the Company to implement its business strategy;
the Company's access to financing; the Company's ability to
successfully identify new business opportunities; funding
status of the UMWA Combined Benefit Fund; the Company's
ability to achieve anticipated cost savings and
profitability targets; changes in the industry; competition;
legislative developments; the Company's ability to utilize
its tax net operating losses; the ability to reinvest excess
cash at an acceptable rate of return; weather conditions;
the availability of transportation; price of alternative
fuels; costs of coal produced by other countries; and, the
effect of regulatory and legal proceedings. Other 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 and the third quarter 1999 Form
10-Q filed with the SEC.
# # #
For further information contact Diane Jones (719) 442-2600
<PAGE>
<TABLE>
Westmoreland Coal Company and Subsidiaries
Consolidated Statements of Income
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(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
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(in thousands except per share data)
<CAPTION>
<S> <C> <C> <C> <C>
Revenues:
Coal $ 11,426 $ 11,383 $ 28,660 $ 34,526
Independent power - equity in earnings 3,283 4,129 29,990 59,548
DTA - equity in earnings (share of losses) (417) (27) (1,135) 218
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14,292 15,485 57,515 94,292
- ------------------------------------------------------ ----------- ----------- ---------- ----------
Costs and expenses:
Cost of sales - coal 9,980 9,771 24,943 29,265
Depreciation, depletion and amortization 327 618 1,071 1,855
Selling and administrative 1,622 1,640 8,399 4,678
Heritage costs 6,440 3,975 18,917 12,079
Pension benefit (55) (53) (165) (158)
Doubtful account recoveries (74) (725) (165) (953)
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18,240 15,226 53,000 46,766
Operating income (loss) (3,948) 259 4,515 47,526
Other income (expense):
Gains on sales of assets 364 204 433 391
Interest expense (298) (48) (896) (143)
Interest income 652 - 1,617 -
Minority interest (297) (186) (672) (696)
Other income (expense) 293 486 116 1,942
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Income (loss) from operations before
reorganization items and income taxes (3,234) 715 5,113 49,020
Reorganization legal and consulting fees - (1,321) - (2,756)
Reorganization interest income - 1,102 - 2,430
Income taxes 99 (197) 54 (197)
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Income (loss) before cumulative effect of change
in accounting principle (3,135) 299 5,167 48,497
Cumulative effect of change in accounting
principle - - - (9,876)
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Net income (loss) (3,135) 299 5,167 38,621
Less preferred stock dividends (in arrears) (663) (1,222) (1,989) (3,666)
- ------------------------------------------------------ ----------- ----------- ---------- ----------
Net income (loss) applicable to common
shareholders $ (3,798) $ (923) $ 3,178 $ 34,955
====================================================== =========== =========== ========== ==========
Net income (loss) per share applicable to common shareholders:
Before cumulative effect of change in accounting
principle $ (.54) $ (.13) $ .45 $ 6.44
Cumulative effect of change in accounting
principle - - - (1.42)
====================================================== =========== =========== ========== ==========
$ (.54) $ (.13) $ .45 $ 5.02
====================================================== =========== =========== ========== ==========
Weighted average number of common shares
outstanding 7,033 6,965 7,033 6,965
====================================================== =========== =========== ========== ==========
</TABLE>
The foregoing Consolidated Statement of Income should be read in conjunction
with the Form 10-Q for the period ending September 30, 1999.
