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 September 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 November 1, 1999: 7,059,663
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1
Financial Statements
<TABLE>
Westmoreland Coal Company and Subsidiaries
Consolidated Balance Sheets
- -------------------------------------------------------------------------------------------------
(Unaudited)
September 30, 1999 December 31, 1998
- ----------------------------------------------------------- ------------------ -----------------
(in thousands)
<CAPTION>
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 31,931 $ 84,073
Receivables:
Trade 3,794 2,566
Terminated pension plan, net 500 500
Other 1,043 2,730
- ----------------------------------------------------------- ------------------ -----------------
5,337 5,796
Other current assets 1,496 691
- ----------------------------------------------------------- ------------------ -----------------
Total current assets 38,764 90,560
- ----------------------------------------------------------- ------------------ -----------------
Property, plant and equipment:
Land and mineral rights 10,572 10,990
Plant and equipment 66,125 94,989
- ----------------------------------------------------------- ------------------ -----------------
76,697 105,979
Less accumulated depreciation and depletion 39,743 69,029
- ----------------------------------------------------------- ------------------ -----------------
36,954 36,950
Investment in independent power projects 42,831 62,386
Investment in Dominion Terminal Associates (DTA) 4,778 5,475
Workers' compensation bond 4,754 4,140
Prepaid pension cost 3,913 3,748
Excess of trust assets over pneumoconiosis benefit
obligation 8,691 10,891
Security deposits 10,148 -
Other assets 1,513 1,456
- ----------------------------------------------------------- ------------------ -----------------
Total Assets $ 152,346 $ 215,606
=========================================================== ================== =================
(Continued)
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
Westmoreland Coal Company and Subsidiaries
Consolidated Balance Sheets (Continued)
- -------------------------------------------------------------------------------------------------
(Unaudited)
September 30, 1999 December 31, 1998
- ----------------------------------------------------------- ------------------- -----------------
(in thousands)
<CAPTION>
<S> <C> <C>
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of long-term debt $ 218 $ 200
Accounts payable and accrued expenses 8,169 11,249
Workers compensation 3,200 3,800
Postretirement medical costs 11,066 11,066
UMWA 1974 Pension Plan obligation 1,170 -
Reorganization expenses 1,257 7,900
Consent judgment payment obligation - 39,006
Reclamation costs 100 100
Income taxes 75 2,185
- ----------------------------------------------------------- ------------------- -----------------
Total current liabilities 25,255 75,506
- ----------------------------------------------------------- ------------------- -----------------
Long-term debt, less current installments 1,333 1,562
Accrual for workers compensation 15,329 17,338
Accrual for postretirement medical costs 79,607 73,143
1974 UMWA Pension Plan obligations 11,030 13,776
Accrual for reclamation costs, less current portion 2,752 3,046
Other liabilities 1,947 2,370
Minority interest 7,692 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 September 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 September 30, 1999, 17,649 17,413
6,965,328 shares at December 31, 1998
Other paid-in capital 75,046 94,630
Accumulated deficit (85,606) (90,773)
- ----------------------------------------------------------- ------------------- -----------------
Total shareholders' equity 7,401 21,845
- ----------------------------------------------------------- ------------------- -----------------
Total Liabilities and Shareholders' Equity $ 152,346 $ 215,606
=========================================================== =================== =================
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
Westmoreland Coal Company and Subsidiaries
Consolidated Statements of Income
- ----------------------------------------------------------------------------------------------------
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
- ------------------------------------------------------ ----------- ----------- ---------- ----------
(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
- ------------------------------------------------------ ----------- ----------- ---------- ----------
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)
- ------------------------------------------------------ ----------- ----------- ---------- ----------
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
- ------------------------------------------------------ ----------- ----------- ---------- ----------
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)
- ------------------------------------------------------ ----------- ----------- ---------- ----------
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)
- ------------------------------------------------------ ----------- ----------- ---------- ----------
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
====================================================== =========== =========== ========== ==========
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
Westmoreland Coal Company and Subsidiaries
Consolidated Statements of Cash Flows
- ----------------------------------------------------------------------------------------------
(Unaudited)
Nine Months Ended September 30, 1999 1998
------------------------------------------------------------------- ------------ ------------
(in thousands)
<CAPTION>
<S> <C> <C>
Cash flows provided by operating activities:
Net income $ 5,167 $ 38,621
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Equity earnings from independent power projects (29,990) (59,548)
Cash received from independent power projects 49,545 42,881
Equity in losses from DTA 1,135 (218)
Cash generated by DTA 759 1,926
Cash contributions to DTA (1,197) (1,515)
Depreciation, depletion and amortization 1,071 1,855
Stock compensation expense 271 -
Gain on disposition of assets (433) (391)
Minority interest 672 696
Cumulative effect of change in accounting principle - 9,876
Other (861) (1,077)
Changes in assets and liabilities:
Accounts receivable, net of allowance for doubtful accounts 459 13,128
Workers' compensation bond (614) 1,843
Prepaid pension asset (165) -
Excess of trust assets over pneumoconiosis benefit obligation 2,200 -
Security deposits (10,148) -
Accounts payable and accrued expenses (3,080) (663)
Income tax payable (2,110) -
Accrual for workers compensation (2,609) -
Accrual for postretirement medical costs 6,464 -
Consent judgment payment obligation (39,006) -
Other liabilities (68) -
1974 UMWA Pension Plan obligations (1,576) -
------------------------------------------------------------------- ------------ ------------
Net cash provided by (used in) operating activities
before reorganization items (24,114) 47,414
------------------------------------------------------------------- ------------ ------------
Changes in reorganization items (6,643) 9,062
------------------------------------------------------------------- ------------ ------------
Net cash provided by (used in) operating activities (30,757) 56,476
------------------------------------------------------------------- ------------ ------------
Cash flows provided by (used in) investing activities:
Fixed asset additions (1,959) (296)
Net proceeds from sales of assets 719 357
------------------------------------------------------------------- ------------ ------------
Net cash provided by (used in) investing activities (1,240) 61
------------------------------------------------------------------- ------------ ------------
Cash flows provided by (used in) financing activities:
Repayment of long-term debt (211) (47)
Purchase of preferred stock (20,000) -
Exercise of stock options 66 -
------------------------------------------------------------------- ------------ ------------
Net cash used in financing activities (20,145) (47)
------------------------------------------------------------------- ------------ ------------
Net increase (decrease) in cash and cash equivalents (52,142) 56,490
Cash and cash equivalents, beginning of period 84,073 30,664
=================================================================== ============ ============
Cash and cash equivalents, end of period $ 31,931 $ 87,154
=================================================================== ============ ============
Supplemental disclosures of cash flow information: Cash paid during the period
for:
Interest $ 5,708 $ 27
Taxes $ 2,110 $ -
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to 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.
<PAGE>
A limited partner of LG&E-Southampton, L.P. 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 made a similar demand against the LG&E entities. All
parties agreed to attempt to resolve the dispute through non-binding mediation
and met with the mediator on October 13 and 14, 1999. During this mediation
session the claims of the LG&E-Southampton L.P. limited partner were resolved.
The Westmoreland entity agreed to contribute $100,000 of a significantly larger
total settlement amount. A second round of mediation talks regarding the
Westmoreland claims has been scheduled for early December, 1999.
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 September, 1999, Virginia Power withheld approximately
$19,800,000 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 have been submitted. The Company anticipates
that the Court will hear Oral Arguments in January, 2000. A decision is expected
to follow in 30-60 days. 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". These
two firms billed approximately $453,000 and $816,000 for services rendered in
the short period between June and December, 1998 in the case of Andrews and
Kurth and July and December, 1998 in the case of Putnam Hayes. Moreover, the
Settlement Term Sheet among the parties for resolution of the Chapter 11
proceeding was entered in the Court on October 15, 1998. The Company has paid
approximately $802,000 of these fees, but believes that the balance
(approximately $466,000) reflects services that did not and were not reasonably
expected to benefit the estate and may have been performed in preparation for
the proxy contest that took place after the bankruptcy ended. This amount has
been disputed and not paid.
<PAGE>
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.
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 twenty 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,
July 1, 1999, and October 1, 1999) amount to $13,253,000 in the aggregate
($42.50 per preferred share or $10.63 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 from $21,994,000 to $11,928,000, and the ongoing quarterly
preferred dividend requirement from $1,222,000 to $663,000.
On September 16, 1999, the Company made a second offer to purchase up to an
additional 631,000 depositary shares at $19 per depositary share. The offer
price of $19 per share was in full satisfaction of claims to accumulated but
unpaid dividends on the depositary shares tendered. On October 26, 1999, the
offer expired and 412,536 depositary shares were tendered in response to the
offer. The balance sheet effect of the transaction will be to reduce cash and
shareholders' equity by $7,838,000. Following completion of the tender offer,
the depositary shares purchased in the offer will be converted to shares of
Series A Preferred Stock, the shares of Series A Preferred Stock will be
retired, and the capital of the Company will be reduced by the par value of the
shares of Series A Preferred Stock retired. This will reduce the number of
shares of Series A Preferred Stock outstanding from 311,843 to 208,709,
accumulated but unpaid dividends from $13,253,000 to $8,870,000 and the ongoing
quarterly dividend requirement from $663,000 to $444,000.
<PAGE>
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 September 30, 1999). The
Company had shareholders' equity at September 30, 1999 of $7,401,000 and the par
value of all outstanding depositary shares and shares of common stock aggregated
$17,961,000 at September 30, 1999.
4. DISPOSITION
On July 27, 1999, the Company sold all remaining 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. The site has no recorded
asset value.
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. The Corporate
classification noted in the tables represents all costs not otherwise classified
including corporate office charges, heritage costs, and all residual costs of
the idled Virginia Division. Summarized financial information by segment for the
quarter and nine months ended September 30, 1999 and 1998, is as follows:
<TABLE>
------------------------------------ -- -------------- ----------------- ---------------- --------------- ----------------
Independent Terminal
Coal Power Operations Operations Corporate Total
------------------------------------ -- -------------- ----------------- ---------------- --------------- ----------------
(in thousands)
<CAPTION>
<S> <C> <C> <C> <C> <C>
Three months ended September 30, 1999:
Total assets $ 60,492 $ 55,216 $ 5,243 $ 31,395 $ 152,346
Revenues 11,426 3,283 (417) - 14,292
Operating income (loss) 1,002 3,515 (711) (7,754) (3,948)
Reconciliation of operating income to income from operations before income taxes:
Operating income (loss) 1,002 3,515 (711) (7,754) (3,948)
Gains on sale of assets - - - 364 364
Interest expense (36) - - (262) (298)
Interest income 192 122 6 332 652
Minority interest (297) - - - (297)
Other income (expense) (12) (265) (114) 684 293
==================================== == ============== ================= ================ =============== ================
Income (loss) from operations
before income taxes $ 849 $ 3,372 $ (819) $ (7,636) $ (3,234)
==================================== == ============== ================= ================ =============== ================
Three months ended September 30, 1998:
Total assets $ 58,269 $ 119,921 $ 19,482 $ 31,859 $ 229,531
Revenues 11,383 4,129 (27) - 15,485
Operating income (loss) 586 4,765 (123) (4,969) 259
Reconciliation of operating income to income from operations before income taxes:
Operating income (loss) 586 4,765 (123) (4,969) 259
Gains on sale of assets - - - 204 204
Interest expense (41) - - (7) (48)
Interest income 182 686 5 229 1,102
Minority interest (186) - - - (186)
Other income (expense) 2 (954) (24) 1,462 486
Reorganization costs - - - (1,321) (1,321)
------------------------------------ -- -------------- ----------------- ---------------- --------------- ----------------
Income (loss) from operations
before income taxes $ 543 $ 4,497 $ (142) $ (4,402) $ 496
==================================== == ============== ================= ================ =============== ================
</TABLE>
<TABLE>
------------------------------------ -- -------------- ----------------- ---------------- --------------- ----------------
Independent Terminal
Coal Power Operations Operations Corporate Total
------------------------------------ -- -------------- ----------------- ---------------- --------------- ----------------
(in thousands)
<CAPTION>
<S> <C> <C> <C> <C> <C>
Nine months ended September 30, 1999:
Total assets $ 60,492 $ 55,216 $ 5,243 $ 31,395 $ 152,346
Revenues 28,660 29,990 (1,135) - 57,515
Operating income (loss) 2,310 28,881 (1,214) (25,462) 4,515
Reconciliation of operating income to income from operations before income
taxes:
Operating income (loss) 2,310 28,881 (1,214) (25,462) 4,515
Gains on sale of assets - - - 433 433
Interest expense (108) - - (788) (896)
Interest income 484 412 30 691 1,617
Minority interest (672) - - - (672)
Other income (expense) 9 (767) - 874 116
==================================== == ============== ================= ================ =============== ================
Income (loss) from operations
before income taxes $ 2,023 $ 8,526 $ (1,184) $ (25,252) $ 5,113
==================================== == ============== ================= ================ =============== ================
Nine months ended September 30, 1998:
Total assets $ 58,269 $ 119,921 $ 19,482 $ 31,859 $ 229,531
Revenues 34,526 59,548 218 - 94,292
Operating income (loss) 2,485 58,951 (850) (13,060) 47,526
Reconciliation of operating income to income from operations before income taxes:
Operating income (loss) 2,485 58,951 (850) (13,060) 47,526
Gains on sale of assets - - - 391 391
Interest expense (123) - - (20) (143)
Interest income 501 1,180 54 695 2,430
Minority interest (696) - - - (696)
Other income (expense) 22 (954) - 2,874 1,942
Reorganization costs - - - (2,756) (2,756)
==================================== == ============== ================= ================ =============== ================
Income (loss) from operations
before income taxes $ 2,189 $ 59,177 $ (796) $ (11,876) $ 48,694
==================================== == ============== ================= ================ =============== ================
</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 September 30,
1999
Forward-Looking Disclaimer
Certain statements in this report which are not historical facts or information
are "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,
including, but not limited to, the information set forth in Management's
Discussion and Analysis of Financial Condition and Results of Operations. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, levels of activity,
performance or achievements of the Company, or industry results, to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: 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; the Company's ability to achieve anticipated cost
savings and profitability targets; changes in the industry; competition; 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; the effect of regulatory and legal proceedings and
other factors discussed in Item 1 of the Company's Form 10-K. As a result of the
foregoing and other factors, no assurance can be given as to the future results
and achievement of the Company. Neither the Company nor any other person assumes
responsibility for the accuracy and completeness of these statements.
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 $30,757,000 for the nine months ended
September 30, 1999. Cash provided by operating activities was $56,476,000 for
the nine months ended September 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 $1,240,000 for the nine months ended
September 30, 1999. Cash provided by investing activities for the nine months
ended September 30, 1998 was $61,000. Cash used in investing activities in 1999
included fixed asset additions of $1,959,000 at WRI offset by proceeds from
sales of assets of $719,000. Cash provided by investing activities in 1998 of
$61,000 included $357,000 of proceeds from sales of assets offset by fixed asset
additions at WRI of $296,000.
Cash used in financing activities for the nine months ended September 30, 1999
and 1998 totaled $20,145,000 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 September 30, 1999 totaled $31,931,000
(including $15,438,000 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 $14,902,000 at September 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 $4,754,000 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 $8,691,000, that may be available to pay postretirement health
benefits dependent upon future actuarial calculations as well as $3,900,000 of
excess funds in the salaried pension plan.
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 twenty 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, July 1, 1999, and October 1,
1999) amount to $13,253,000 in the aggregate ($42.50 per preferred share or
$10.63 per depositary share). As described in Note 3 of Notes to Consolidated
Financial Statements, this amount of accrued but unpaid dividends decreased
after September 30, 1999 as a result of the second offer to purchase which
expired on October 26, 1999.
<PAGE>
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 September 30, 1999). The
Company had shareholders' equity at September 30, 1999 of $7,401,000 and the par
value of all outstanding depositary shares and shares of common stock aggregated
$17,961,000 at September 30, 1999.
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. Included in the payments made in 1999 was interest of
approximately $785,000. 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.
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 made prepayments
to the Combined Fund for its premiums for the first three quarters of 1999.
Normal monthly payments resumed on October 25, 1999. Beginning on that date, the
Company began receiving credits against its Combined Fund premiums at a rate of
approximately $200,000 per month through April, 2000, for a total of $1,400,000.
This credit is the result of a recalculation of premiums by the Combined Fund
pursuant to an order of the U.S. District Court for the Northern District of
Alabama entered July 20, 1995 in National Coal Association v. Chater.
<PAGE>
Faced with an impending solvency crisis as a result of benefit expenses
exceeding premiums, the Combined Benefit Fund has sought relief from Congress.
Under sponsorship of Senators Byrd and Rockefeller of West Virginia, the House
and Senate conference committee approved, as part of the Interior and Related
Agencies appropriations bill, a further transfer of $68,000,000 of accumulated
interest in the Abandoned Mine Land Reclamation Fund to the Combined Fund. This
bill has been forwarded to the President. However, the Interior bill along with
several other appropriations bills have not been signed by the President due to
differences over a number of issues. The AML transfer does not appear to be one
of the disputed issues. As part of its report, the conference committee noted
that this was a short term solution and urged that the Congressional committees
with jurisdiction over the matter work with the concerned parties to insure the
long term solvency of the Combined Fund. One concept that has been discussed
within the industry would be to cause Medicare to cover the cost of prescription
drug benefits for eligible retirees.
In addition, the Coal Act authorized the Trustees of the 1992 UMWA Benefit Plan
to implement security provisions for three years benefits pursuant to the Act.
In 1995, the Trustees set the level of security to be provided by the Company.
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, 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 included $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 paid 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 is 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.
<PAGE>
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 which
could reduce the Company's retiree health care expenses. Although management
expects to improve the Company's profitability, the time required to realize
such improvements 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.
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 virtually completed an
aggressive campaign to bring its systems into compliance.
Compliance at Dominion Terminal Associates ("DTA") has been completed through
replacement of non-compliant systems. 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
$60,000, of which approximately $38,000 has been incurred through September 30,
1999.
While there can be no assurance that all modifications and contingency plans to
date 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.
<PAGE>
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Quarter Ended September 30, 1999 Compared to Quarter Ended September 30, 1998.
Revenues for the quarter ending September 30, 1999 were $14,292,000 compared to
$15,485,000 for the quarter ending September 30, 1998. The decrease is due to
lower equity in earnings at WEI due to the sale of the Rensselaer facility early
in 1999 and decreased earnings from terminal operations due to a decline in the
export market.
Costs and expenses for the quarter ending September 30, 1999 were $18,240,000
compared to $15,226,000 for the quarter ending September 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 $450,000 in market-related adjustments to the Black Lung
Trust due to fluctuations in the assets of the bond portfolio that satisfies the
Black Lung obligation. Sales volumes at WRI have decreased slightly, decreasing
costs and expenses accordingly.
Gains on the sales of assets were $364,000 during the quarter ending September
30, 1999, compared to $204,000 for the quarter ending September 30, 1998. The
gains relate primarily to sales of various assets from the Company's idled
Virginia Division.
Interest expense was $298,000 and $48,000 for the three months ended September
30, 1999 and 1998, respectively. The increase is due to interest on installment
payments being made monthly to the 1974 UMWA Pension Plan pending resolution of
the Company's arbitration proceeding with the Plan.
Interest income was $652,000 for the three months ended September 30, 1999.
Interest income of $1,102,000 in 1998 was recorded as a reorganization item.
Nine Months Ended September 30, 1999 Compared to Nine Months Ended September 30,
1998.
Revenues for the nine months ended September 30, 1999 were $57,515,000 compared
to $94,292,000 for the nine months ended September 30, 1998. The decrease is
mainly due to elevated 1998 earnings as a result of the restructuring of the
power purchase contract at WEI's Renssalaer project with Niagara Mohawk and
reduced 1999 sales volumes at WRI and DTA.
Costs and expenses for the nine months ended September 30, 1999 were $53,000,000
compared to $46,766,000 for the nine months ended September 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 $2,700,000 in Workers Compensation expense and
market related adjustments to the Black Lung Trust due to fluctuations in the
assets of the bond portfolio that satisfies the Black Lung obligation. Sales
volumes at WRI have decreased, decreasing costs and expenses accordingly.
Selling and administrative costs increased in 1999 as a result of approximately
$3,900,000 in final bankruptcy, proxy contest and tender offer expenses along
with employee bonuses paid following the Company's dismissal from bankruptcy.
Interest expense was $896,000 and $143,000 for the nine months ended September
30, 1999 and 1998, respectively. The increase is due to interest on installment
payments being made monthly to the 1974 UMWA Pension Plan pending resolution of
the Company's arbitration proceeding with the Plan.
<PAGE>
Interest income was $1,617,000 for the nine months ended September 30, 1999.
Interest income of $2,430,000 in 1998 was recorded as a reorganization item. The
decrease is due to the reduced cash balance that resulted from pre-petition
payments made on January 4,1999 following the Company's dismissal from
bankruptcy.
Other income was $116,000 and $1,942,000 for the nine months ended September 30,
1999 and 1998, respectively. The 1998 period included income relating to a
production tax holdback of $650,000 and to a $750,000 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 Consolidated Financial Statements, which are incorporated by reference
herein.
ITEM 3
DEFAULTS UPON SENIOR SECURITIES
- --------------------------------------------------------------------------------
See Note 3 "Capital Stock" of Notes to Consolidated Financial Statements, which
is incorporated by reference herein.
Item 6
Exhibits and Reports on Form 8-K
- --------------------------------------------------------------------------------
a) Exhibit 27 - Financial Data Schedule
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.
On October 27, 1999 the Company filed a report on Form 8-K announcing
the results of its tender offer to purchase up to 631,000 shares of its
depositary shares.
<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: November 15, 1999 /s/ Robert J. Jaeger
---------------------------------------
Robert J. Jaeger
Senior Vice President - Finance and
Treasurer
/s/ Larry W. Mikkola
---------------------------------------
Larry W. Mikkola
Controller
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 31,931
<SECURITIES> 0
<RECEIVABLES> 5,337
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 38,764
<PP&E> 76,697
<DEPRECIATION> 39,743
<TOTAL-ASSETS> 152,346
<CURRENT-LIABILITIES> 24,085
<BONDS> 0
0
312
<COMMON> 17,649
<OTHER-SE> (10,560)
<TOTAL-LIABILITY-AND-EQUITY> 152,346
<SALES> 57,515
<TOTAL-REVENUES> 57,515
<CGS> 24,943
<TOTAL-COSTS> 53,000
<OTHER-EXPENSES> 1,494
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 896
<INCOME-PRETAX> 5,113
<INCOME-TAX> 54
<INCOME-CONTINUING> 5,167
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,167
<EPS-BASIC> .45
<EPS-DILUTED> .45
</TABLE>
