WESTMORELAND COAL CO
10-Q, 2000-05-15
BITUMINOUS COAL & LIGNITE MINING
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                                    FORM 10-Q

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

              (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2000

                                       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 May 1, 2000: 7,069,663

<PAGE 2>
                         PART I - FINANCIAL INFORMATION

                                     Item 1
                              Financial Statements

<TABLE>
Westmoreland Coal Company and Subsidiaries
Consolidated Balance Sheets
- -------------------------------------------------------------------------------------------------------------
                                                                                 (Unaudited)
                                                                      March 31, 2000        December 31, 1999
- ------------------------------------------------------------ ------------------------ -----------------------
                                                                               (in thousands)
<CAPTION>
<S>                                                                        <C>                     <C>
Assets
Current assets:
   Cash and cash equivalents                                               $  17,670               $  20,122
   Receivables:
       Trade                                                                   3,168                   2,156
       Excess of trust assets over pneumoconiosis benefit
         obligation                                                                -                   6,397
       Terminated pension plan, net                                                -                     500
       Other                                                                     385                     621
- ------------------------------------------------------------ ------------------------ -----------------------
                                                                               3,553                   9,674
   Other current assets                                                        1,257                   1,180
- ------------------------------------------------------------ ------------------------ -----------------------
       Total current assets                                                   22,480                  30,976
- ------------------------------------------------------------ ------------------------ -----------------------
Property, plant and equipment:
       Land and mineral rights                                                10,641                  10,572
       Plant and equipment                                                    65,822                  66,231
- ------------------------------------------------------------ ------------------------ -----------------------
                                                                              76,463                  76,803
       Less accumulated depreciation and depletion                            40,672                  40,245
- ------------------------------------------------------------ ------------------------ -----------------------
                                                                              35,791                  36,558

Investment in independent power projects                                      45,824                  45,225
Investment in Dominion Terminal Associates (DTA)                               4,604                   4,672
Workers' compensation bond                                                     3,720                   4,748
Prepaid pension cost                                                           3,934                   3,897
Excess of trust assets over pneumoconiosis benefit
  obligation                                                                   5,502                   5,255
Security deposits                                                             15,368                  10,148
Other assets                                                                     833                     818
- ------------------------------------------------------------ ------------------------ -----------------------
       Total Assets                                                        $ 138,056               $ 142,297
============================================================ ======================== =======================
                                                                                                  (Continued)
See accompanying Notes to Consolidated Financial Statements.
</TABLE>

<PAGE 3>
<TABLE>
Westmoreland Coal Company and Subsidiaries
Consolidated Balance Sheets (Continued)
- -------------------------------------------------------------------------------------------------------------
                                                                                 (Unaudited)
                                                                      March 31, 2000        December 31, 1999
- ------------------------------------------------------------ ------------------------ -----------------------
                                                                               (in thousands)
<CAPTION>
<S>                                                                        <C>                     <C>
Liabilities and Shareholders' Equity
Current liabilities:
   Current installments of long-term debt                                  $       -               $     220
   Accounts payable and accrued expenses                                       6,231                   5,942
   Workers compensation                                                        3,200                   3,200
   Postretirement medical costs                                               10,130                  10,130
   UMWA 1974 Pension Plan obligation                                           1,212                   1,128
   Other accrued expenses                                                      1,269                     970
   Reorganization expenses                                                        73                     400
   Reclamation costs                                                             100                     100
- ------------------------------------------------------------ ------------------------ -----------------------
   Total current liabilities                                                  22,215                  22,090
- ------------------------------------------------------------ ------------------------ -----------------------
Long-term debt, less current installments                                          -                   1,343
Accrual for workers compensation                                              14,270                  15,072
Accrual for postretirement medical costs                                      79,105                  78,643
1974 UMWA Pension Plan obligations                                            10,385                  10,751
Accrual for reclamation costs, less current portion                            2,448                   2,537
Other liabilities                                                              1,974                   1,930

Minority interest                                                              7,093                   6,874

Commitments and contingent liabilities

Shareholders' equity
   Preferred stock of $1.00 par value
     Authorized 5,000,000 shares;
     Issued 208,708 shares at March 31, 2000                                     209                     209
   Common stock of $2.50 par value
     Authorized 20,000,000 shares;
     Issued 7,067,663 shares at March 31, 2000                                17,669                  17,669
   Other paid-in capital                                                      67,315                  67,315
   Accumulated deficit                                                       (84,627)                (82,136)
- ------------------------------------------------------------ ------------------------ -----------------------
   Total shareholders' equity                                                    566                   3,057
- ------------------------------------------------------------ ------------------------ -----------------------
   Total Liabilities and Shareholders' Equity                              $ 138,056               $ 142,297
============================================================ ======================== =======================

See accompanying Notes to Consolidated Financial Statements.
</TABLE>

<PAGE 4>
<TABLE>
Westmoreland Coal Company and Subsidiaries
Consolidated Statements of Income
- -------------------------------------------------------------------------------------------------------------------------
                                                                                                     (Unaudited)
Three Months Ended March 31,                                                               2000                    1999
- ---------------------------------------------------------------------- ------------------------- ------------------------
                                                                                    (in thousands except per share data)
<CAPTION>
<S>                                                                                 <C>                      <C>
Revenues:
   Coal                                                                             $     9,093              $    8,559
   Independent power - equity in earnings                                                 4,002                  22,591
   DTA - equity in earnings (share of losses)                                              (430)                   (321)
- ---------------------------------------------------------------------- ------------------------- ------------------------
                                                                                         12,665                  30,829
- ---------------------------------------------------------------------- ------------------------- ------------------------
Costs and expenses:
   Cost of sales - coal                                                                   7,537                   7,293
   Depreciation, depletion and amortization                                                 425                     366
   Selling and administrative                                                             1,601                   4,675
   Heritage costs                                                                         5,376                   5,595
   Pension benefit                                                                         (401)                    (55)
   Doubtful account recoveries                                                                -                      (8)
- ---------------------------------------------------------------------- ------------------------- ------------------------
                                                                                         14,538                  17,866

Operating income (loss)                                                                  (1,873)                 12,963

Other income (expense):
   Gains on sales of assets                                                                   -                      19
   Interest expense                                                                        (267)                   (301)
   Interest income                                                                          547                     524
   Minority interest                                                                       (219)                   (226)
   Other expenses                                                                          (679)                   (424)
- ---------------------------------------------------------------------- ------------------------- ------------------------
Income (loss) before income taxes                                                        (2,491)                 12,555
   Income taxes                                                                               -                     (45)
- ---------------------------------------------------------------------- ------------------------- ------------------------
Net income (loss)                                                                        (2,491)                 12,510

Less preferred stock dividend requirements                                                 (444)                 (1,222)
- ---------------------------------------------------------------------- ------------------------- ------------------------
Net income (loss) applicable to common shareholders                                 $    (2,935)             $   11,288
====================================================================== ========================= ========================
Net income (loss) per share applicable to common shareholders                       $      (.42)             $     1.62

Weighted average number of common shares outstanding                                      7,068                   6,980
====================================================================== ========================= ========================

See accompanying Notes to Consolidated Financial Statements.
</TABLE>

<PAGE 5>
<TABLE>
Westmoreland Coal Company and Subsidiaries
Consolidated Statements of Cash Flows
- ----------------------------------------------------------------------------------------------------------------------------
                                                                                                         (Unaudited)
Three Months Ended March 31,                                                                       2000                1999
- ----------------------------------------------------------------------------------- -------------------- -------------------
                                                                                                        (in thousands)
<CAPTION>
<S>                                                                                         <C>                  <C>
 Cash flows provided by operating activities:
 Net income (loss)                                                                          $    (2,491)         $   12,510
 Adjustments to reconcile net income to net cash provided by (used in) operating
   activities:
       Equity earnings from independent power projects                                           (4,002)            (22,591)
       Cash received from independent power projects                                              3,403              39,512
       Equity in losses from DTA                                                                    430                 321
       Cash generated by DTA                                                                         48                 383
       Cash contributions to DTA                                                                   (410)               (436)
       Depreciation, depletion and amortization                                                     425                 366
       Stock compensation expense                                                                     -                 271
       Gain on disposition of assets                                                                  -                 (19)
       Minority interest                                                                            219                 226
       Other                                                                                        (92)               (268)

 Changes in assets and liabilities:
       Accounts receivable, net of allowance for doubtful accounts                                6,121               3,193
       Workers' compensation bond                                                                 1,028                 (47)
       Prepaid pension asset                                                                        (37)                (55)
       Excess of trust assets over pneumoconiosis benefit obligation                               (247)                980
       Accounts payable and accrued expenses                                                        588              (3,547)
       Income tax payable                                                                             -              (2,110)
       Accrual for workers compensation                                                            (802)               (512)
       Accrual for postretirement medical costs                                                     462               3,031
       Consent judgment payment obligation                                                            -             (39,006)
       1974 UMWA Pension Plan obligations                                                          (282)             (1,050)
       Other liabilities                                                                            (45)               (561)
 ---------------------------------------------------------------------------------- -------------------- -------------------
 Net cash provided by (used in) operating activities before reorganization items                  4,316              (9,409)
 ---------------------------------------------------------------------------------- -------------------- -------------------
 Changes in reorganization items                                                                   (327)             (6,230)
 ---------------------------------------------------------------------------------- -------------------- -------------------
 Net cash provided by (used in) operating activities                                              3,989             (15,639)
 ---------------------------------------------------------------------------------- -------------------- -------------------

 Cash flows provided by (used in) investing activities:
    Fixed asset  additions                                                                         (188)             (1,280)
    Reimbursement from mine operator                                                                530                   -
    Long-term deposits                                                                           (5,220)            (10,148)
    Net proceeds from sales of assets                                                                 -                  19
 ---------------------------------------------------------------------------------- -------------------- -------------------
 Net cash used in investing activities                                                           (4,878)            (11,409)
 ---------------------------------------------------------------------------------- -------------------- -------------------

 Cash flows provided by (used in) financing activities:
    Repayment of long-term debt                                                                  (1,563)               (233)
    Exercise of stock options                                                                         -                  66
 ---------------------------------------------------------------------------------- -------------------- -------------------
 Net cash used in financing activities                                                           (1,563)               (167)
 ---------------------------------------------------------------------------------- -------------------- -------------------

 Net increase (decrease) in cash and cash equivalents                                            (2,452)            (27,215)
 Cash and cash equivalents, beginning of period                                                  20,122              84,073
 ================================================================================== ==================== ===================
 Cash and cash equivalents, end of period                                                   $    17,670          $   56,858
 ================================================================================== ==================== ===================

 Supplemental disclosures of cash flow information:  Cash paid during the period
 for:
    Interest                                                                                       $ 267             $5,195
    Taxes                                                                                          $   -             $2,110

See accompanying Notes to Consolidated Financial Statements.
</TABLE>

<PAGE 6>
                   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 for the year
ended December 31, 1999. 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 current principal activities,  conducted within the United States,
are:  (i) the  production  and sale of coal in the Powder River Basin in Eastern
Montana;  (ii)  the  development,  management  and  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.

2.  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").  Pursuant to the request of the
Debtor  Corporations,  the  Chapter  11  Cases  were  dismissed  by order of the
Bankruptcy  Court  entered on December  23,  1998.  Upon  dismissal,  the Debtor
Corporations were no longer subject to the protections  afforded or restrictions
imposed by the Bankruptcy Code.

3.  Contingencies

Westmoreland Energy, Inc. ("WEI") - WEI Project Contingencies

Southampton Project - In October, 1998, the Southampton Partnership and Virginia
Power  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 each of the years
2002-2008.  Following  2008,  Virginia  Power may elect to  terminate  its power
purchases  from the  Southampton  Partnership  or continue to be entitled to 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   administrative   proceeding   confirmed  the   Southampton
Partnership's QF status after 1992,  inapplicability 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 7>
Following resolution of the administrative proceeding,  Fourfold L.P., a limited
partner of  LG&E-Southampton  L.P. and a subsidiary of Chrysler Capital,  made a
demand on the  Southampton  Partnership  and the 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 in the amount of  $3,300,000.  Pursuant to a mediation
effort  in  1999,  the  project  participants  (general  partners,  including  a
Westmoreland subsidiary,  Westpower-Franklin ("Westpower"), and operator) agreed
to compromise and settle Fourfold  L.P.'s claim.  Westpower,  without  admitting
liability,   contributed  $100,000  of  a  significantly  larger  settlement  to
Fourfold.  The mediation which resolved the Fourfold claim did not  successfully
resolve  the  Westpower  claims  to the  Company's  satisfaction.  Westpower  is
evaluating its options and possible legal  remedies.  The outcome of the dispute
cannot  currently be determined and  accordingly  the Company has not recognized
any revenue related to the dispute.

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 (the
"Power  Purchase  Agreement").  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  March,  2000,  Virginia  Power withheld  approximately
$20,876,000 of these capacity  payments  during  periods of forced  outages.  To
date,  the  Company  has not  recognized  any  revenue on its 50% portion of the
capacity  payments being withheld by Virginia  Power.  In October 1994, the ROVA
Partnership filed a complaint against Virginia Power seeking damages, 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. Interest continued to accrue on the judgement. The Court
heard oral  arguments on January 11, 2000 and on March 3, 2000 at which time the
ROVA  partnership's  claim was  valued at  approximately  $26,000,000  including
interest  (50% of which would  ultimately  be WEI's  share)  reversed  the trial
Court's  decision to exclude  certain oral  evidence and remanded the matter for
further proceedings. The Circuit Court has now set those proceedings for October
of this year.  While the Company cannot predict the outcome of that  proceeding,
the Company is confident that the weight of the evidence supports its position.

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.

Westmoreland Resources, Inc.

Westmoreland  Resources,  Inc.  ("WRI") has spent  approximately  $3,800,000  to
repair the  dragline in 1998 and 1999 and another  approximately  $330,000  have
recently been billed.  WRI's mining  contractor,  Morrison  Knudsen ("MK"),  has
reimbursed WRI for only $530,000 of these costs. The Company believes, under the
terms of WRI's agreements with Morrison Knudsen,  that MK is responsible for all
dragline   repairs.   WRI  has  expended  these  amounts  to  assure  continued,
uninterrupted  production at WRI, and has demanded  reimbursement  from Morrison
Knudsen for the full cost of the repair plus interest.  On February 24, 2000, MK
notified WRI that it sought to arbitrate  the issue.  Believing the issue to not
be subject to arbitration,  on March 7, 2000, WRI commenced  litigation  against
Morrison Knudsen in the United States District Court for the District of Montana
seeking,  among  other  things,  payment by  Morrison  Knudsen of  approximately
$3,600,000  of dragline  repair  costs paid or expected to be paid by WRI,  plus
accrued interest.  The Company has not recorded in its financial  statements any
amounts that may be recovered from Morrison Knudsen.

<PAGE 8>
4.  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 quarterly dividends which are accumulated but unpaid
through  April 1,  2000  amount  to  $9,757,000  in the  aggregate  ($46.75  per
preferred share or $11.69 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  was to reduce  cash and
shareholders'  equity by $7,838,000.  Following  completion of the tender offer,
the depositary  shares purchased in the offer were converted to 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 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 9>
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 (which par value was $208,708 at March 31,
2000).  The Company had  shareholders'  equity at March 31, 2000 of $566,000 and
the par value of all outstanding  shares of preferred stock and shares of common
stock aggregated $17,878,000 at March 31, 2000.

5.  DISPOSITION

On July 27,  1999,  the  Company  sold all  remaining  book  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.

6.  DEBT

During the first quarter of 2000,  WRI retired its remaining  long-term  debt in
the principal amount of $1,563,000 plus accrued interest.

7.  BUSINESS SEGMENT INFORMATION

The Company's current 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 development,  management
and 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  quarters  ended March 31, 2000 and 1999,  is as
follows:

<PAGE 10>
<TABLE>
Quarter ended March 31, 2000

                                              Coal   Independent Power         Terminal
                                                                             Operations        Corporate            Total
                                    --------------- ------------------- ---------------- ---------------- ----------------
                                                                       (in thousands)
<CAPTION>
<S>                                       <C>                  <C>              <C>              <C>             <C>
Revenues:
Coal revenue                              $  9,093             $     -          $     -          $     -         $  9,093
Equity in earnings (losses)                      -               4,002             (430)               -            3,572
                                    --------------- ------------------- ---------------- ---------------- ----------------
                                             9,093               4,002             (430)               -           12,665

Costs and expenses:
Cost of sales - coal                         7,537                   -                -                -            7,537
Depreciation, depletion, and
  Amortization                                 388                   5                -               32              425
Selling and administrative
  expense                                      152                 103              130            1,216            1,601
Heritage costs                                   -                   -                -            5,376            5,376
Pension benefit                                  -                   -                -             (401)            (401)
                                    --------------- ------------------- ---------------- ---------------- ----------------
Operating income (loss)                   $  1,016             $ 3,894          $  (560)         $(6,223)        $ (1,873)
                                    =============== =================== ================ ================ ================
Capital expenditures                      $    182             $     6          $     -          $     -         $    188
                                    =============== =================== ================ ================ ================
Property, plant and equipment (net)       $ 35,608             $    81          $     8          $    94         $ 35,791
                                    =============== =================== ================ ================ ================

Information  for the  Company's  reportable  segments  relates to March 31, 2000
consolidated totals as follows:

Income before income taxes:                                in thousands

Operating loss                                               $  (1,873)
Gains on sales of assets                                             -
Interest expense                                                  (267)
Interest income                                                    547
Minority interest                                                 (219)
Other expense                                                     (679)
                                              --------------------------
Loss before income taxes                                     $  (2,491)
                                              ==========================
</TABLE>

<PAGE 11>
<TABLE>
Quarter ended March 31, 1999

                                              Coal   Independent Power         Terminal
                                                                             Operations        Corporate            Total
                                    --------------- ------------------- ---------------- ---------------- ----------------
                                                                       (in thousands)
<CAPTION>
<S>                                       <C>                 <C>               <C>              <C>             <C>
Revenues:
Coal revenue                              $  8,559            $      -          $     -          $     -         $  8,559
Equity in earnings (losses)                      -              22,591             (321)               -           22,270
                                    --------------- ------------------- ---------------- ---------------- ----------------
                                             8,559              22,591             (321)               -           30,829

Costs and    expenses:
Cost of sales - coal                         7,293                   -                -                -            7,293
Depreciation, depletion, and
  Amortization                                 329                   8                -               29              366
Selling and administrative
  expense                                      163                 898              367            3,247            4,675
Heritage costs                                   -                   -                -            5,595            5,595
Pension benefit                                  -                   -                -              (55)             (55)
Doubtful account recoveries                      -                   -                -               (8)              (8)
                                    --------------- ------------------- ---------------- ---------------- ----------------
Operating income (loss)                   $    774            $ 21,685          $  (688)        $ (8,808)        $ 12,963
                                    =============== =================== ================ ================ ================
Capital expenditures                      $  1,280            $      -          $     -         $      -         $  1,280
                                    =============== =================== ================ ================ ================
Property, plant and equipment (net)       $ 37,604            $     79          $     8         $    173         $ 37,864
                                    =============== =================== ================ ================ ================

Information  for the  Company's  reportable  segments  relates to March 31, 1999
consolidated totals as follows:

Income before income taxes:                               in thousands

Operating income                                             $  12,963
Gains on sales of assets                                            19
Interest expense                                                  (301)
Interest income                                                    524
Minority interest                                                 (226)
Other expense                                                     (424)
                                              -------------------------
Income before income taxes                                   $  12,555
                                              =========================
</TABLE>

<PAGE 12>
                                     Item 2
- --------------------------------------------------------------------------------
           Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

Material Changes in Financial Condition From December 31, 1999 to March 31, 2000

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.  Any
statements  contained  herein that are not statements of historical  fact may be
deemed to be  forward-looking  statements.  For  example,  words  such as "may,"
"will," "should," "estimates,"  "predicts," "potential," "continue," "strategy,"
"believes,"   "anticipates,"   "plans,"   "expects,"   "intends,"   and  similar
expressions   are  intended  to  identify   forward-looking   statements.   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;  demand for  electricity;  the effect of regulatory
and legal  proceedings  and other  factors  discussed in Item 1 of the Company's
Form 10-K for the year ended December 31, 1999. 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.

Liquidity and Capital Resources

Cash provided by operating  activities was $3,989,000 for the three months ended
March 31, 2000. Cash used by operating  activities was $15,639,000 for the three
months  ended  March 31,  1999.  The  increase in cash from  operations  in 2000
compared  to 1999  is  mainly  due to cash  distributions  from  the  overfunded
pneumoconiosis  trust  and  workers'  compensation  bond  in 2000 as well as the
payment of pre-petition  liabilities and reorganization costs and the payment of
alternative minimum income taxes in 1999.

Cash used in  investing  activities  was  $4,878,000  for the three months ended
March 31,  2000.  Cash used in investing  activities  for the three months ended
March 31,  1999 was  $11,409,000.  Cash  used in  investing  activities  in 2000
included fixed asset additions of $197,000 (including $191,000 at WRI) offset by
the  partial  reimbursement  from the mine  operator of  $530,000.  Cash used in
investing activities in 1999 included fixed asset additions of $1,280,000 at WRI
offset by  proceeds  from  sales of assets of  $19,000.  Cash used in  investing
activities also included collateral required for long-term security deposits and
bond obligations of $5,219,000 in 2000 and $10,148,000 in 1999.

Cash used in financing  activities for the three months ended March 31, 2000 and
1999  totaled  $1,563,000  and  $167,000,  respectively.  Cash used in financing
activities  in 2000 related to the  retirement of debt at WRI. Cash used in 1999
is primarily  related to  repayment  of debt at WRI offset by proceeds  from the
exercise of stock options.

<PAGE 13>
Consolidated  cash and cash  equivalents  at March 31, 2000 totaled  $17,670,000
(including  $14,520,000 at WRI). At December 31, 1999, cash and cash equivalents
totaled  $20,122,000  (including  $14,314,000 at WRI).  Subject to WRI's working
capital requirements,  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 $19,088,000 at
March 31, 2000 and  $14,896,000  at December 31, 1999.  The  restricted  cash at
March  31,  2000  represents   interest-bearing   cash  deposit  accounts  which
collateralize the Company's Contingent Note required by the Master Agreement and
the surety  bond for the  security  required  by the 1992 UMWA  Benefit  Plan of
$6,000,000   and   $9,368,000,   respectively,   as  well  as  $3,720,000   that
collateralizes  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  $5,502,000,   that  may  be
available to pay postretirement  health benefits dependent upon future actuarial
calculations,  as well as $3,934,000 of surplus in the salaried  pension plan, a
portion of which may not be available depending upon the form of distribution.

Liquidity Outlook

The major factors impacting the Company's  liquidity outlook are its significant
"heritage  costs".  The heritage  costs  consist  primarily of cash payments for
postretirement  medical  benefits and workers'  compensation  costs. The Company
also is obligated for salaried  employee  pension and  pneumoconiosis  benefits;
however, both of these future obligations have a funding surplus at present. The
Company has ongoing  cash  expenditures  in excess of  $16,000,000  per year for
postretirement  medical benefits which the Company  believes,  in the absence of
possible  legislative  action,  will remain  fairly  constant over the next four
years and then decline to zero over the next approximately  thirty-six 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 nineteen years.

One element of heritage cost is UMWA pensions under the 1974 (Retirement)  Plan.
Since this 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 the Company  terminated  its last UMWA  employees in 1998 and withdrew from
the plan.  However,  the plan claims the Company withdrew at an earlier date and
has asserted a claim of $13,800,000,  which the Company is vigorously contesting
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 2000 is interest of  approximately  $235,000,  which is
reflected as an expense.  At the  conclusion of  arbitration  the Company may be
entitled to a refund or it could be required to pay any remaining  obligation in
installments through 2008. It is currently  anticipated that arbitration will be
concluded by the first quarter of 2001.

Under the Coal Industry Retiree Health Benefits Act ("Coal Act"), the Company is
required to provide  postretirement  medical  benefits for UMWA miners by making
premium  payments into three benefit plans:  (i) 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) an IEP for miners who  retired  after  January 1, 1976 whose last
employers  remain in  business  and  maintains  an IEP,  and (iii) 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 goes out of business and ceases 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 was 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 14>
On January 4, 1999,  in  connection  with its  dismissal  from  bankruptcy,  the
Company  satisfied all of its premium  obligations to the Combined Fund from the
date of filing in December, 1996 through the end of 1998 plus interest, and made
prepayments  to the Combined Fund for its premiums for the first three  quarters
of 1999.  Normal  monthly  payments  resumed in October 1999.  Beginning on that
date,  however,  the Company also 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,  as a 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.

The Coal Act  authorized the Trustees of the 1992 UMWA Benefit Plan to implement
security  provisions for the future payment of benefits pursuant to the Act. The
Trustees  set the level of security for each company at an amount equal to three
years' benefits.  In  Westmoreland's  case this obligation was stayed during the
pendency of the  bankruptcy.  The  Company  secured  its  obligation  to provide
retiree  health  benefits under the 1992 Plan by posting a bond in the amount of
$22 million in 1999 which was  increased to $23 million in 2000.  The  Company's
bonding agent required collateral equal to 40% of the bonded amount. The bond is
collateralized by U.S. Government-backed  securities in the amount of $9,368,000
at March 31, 2000. The bond amount and the amount to be secured will be reviewed
and adjusted on an annual basis.

The Combined  Benefit  Fund,  faced with an impending  solvency  crisis  because
benefit  expenses  are  exceeding  premiums  from  covered   companies,   sought
additional  funding  relief from  Congress  in 1999.  Under the  sponsorship  of
Senators Byrd and Rockefeller of West Virginia,  the House and Senate conference
committee   approved,   as  a  part  of  the  Interior   and  Related   Agencies
appropriations  bill, a transfer of $68,000,000  of accumulated  interest in the
Abandoned Mine Land  Reclamation Fund to the Combined Fund. This bill was signed
by the President and the funds were  transferred.  As a 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.  On
January 27, 2000 the  Administration  announced  it will include $346 million in
its current  budget  proposal for the UMWA  Combined  Benefit Fund to secure the
long-term  solvency of the Fund.  There can be no assurance  that this  proposal
will be enacted into law.

Over the course of the past year,  varying  versions of a Medicare  prescription
drug benefit have also  generated a great deal of interest  both on Capitol Hill
and in the press around the country.  While health care generally remains one of
the most discussed  matters of public policy,  the specific  concern of adequate
resources to meet the pharmaceutical  needs of our Medicare eligible  population
is of growing importance.

A  Medicare   prescription   drug  benefit  that  includes   Medicare   eligible
beneficiaries  covered by the Coal Act under that law would  address  one of the
largest and fastest growing costs at a time when funding for coal field retirees
is in serious jeopardy. Westmoreland currently expends over $16 million per year
on retirees'  health care costs and over 50% of that expense is for prescription
drugs. There is no assurance at this time what, if any, proposal will be enacted
into law.

<PAGE 15>
The Company is closely monitoring energy deregulation.  At both the national and
state level,  there is an ongoing debate about removing  regulatory  constraints
and  allowing   competition   and  market  forces  to  determine  the  price  of
electricity.  Several states have already passed  legislation  either permitting
immediate  wholesale  and/or  retail  competition  or providing a mechanism  for
transitioning  to a competitive  marketplace.  The  Commonwealth of Virginia has
passed  legislation  which  allows  wholesale  competition  to begin in 2004 and
retail  competition  to begin in 2007. At this time, the  promulgation  of state
legislation is not expected to have any immediate  impact on existing  long-term
power purchase  agreements.  Several proposed bills, calling for deregulation of
the traditional utility monopolies,  are pending in the U.S. Congress.  When, or
if, some form of national deregulation  legislation is enacted is uncertain. The
Company is unable to predict the effect of deregulation on WEI.

The Company agreed to secure its  obligations to the UMWA Funds under the Master
Agreement  for a period of six years 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, or fails to
maintain the required balance of $6 million in an escrow account  established in
connection with the Note.

The Company's  principal  current sources of cash flow from  operations  include
cash  distributions  from its  independent  power  projects,  dividends from WRI
(which could be reduced in 2000 as a result of the  expiration of the Otter Tail
contract but could be increased by any recovery  from MK for dragline  repairs),
and interest earned on cash reserves.

Potential sources of additional liquidity include the Company's 50% share of any
recovery in the ROVA  litigation  and  reimbursement  of amounts  paid to the 74
Pension Plan. Other sources of possible  additional  liquidity include remaining
overfunded  amounts  from the black lung trust (in  February  2000,  the Company
obtained a $6,400,000  distribution from this trust),  ongoing increased project
earnings from a favorable ROVA decision,  the recovery from Morrison Knudsen for
dragline  repairs and the effect of any future  legislation that causes Medicare
to cover the cost of prescription drug benefits for eligible retirees.

Management  believes  that  available  cash  should  be  sufficient  to pay  the
Company's  heritage costs and fund its ongoing  operations  for the  foreseeable
future.  The Company  intends to strengthen its long-term  liquidity and improve
shareholder   value  by  enhancing  the  performance  of  existing   operations,
monetizing  assets where proceeds on sale would exceed the expected  return from
continued  operation,  and acquiring and  developing  new  opportunities  in the
energy  sector.  Each of  these  strategies  should  enjoy  the  benefit  of the
Company's  substantial  tax loss carry  forward  which  offset  taxes  otherwise
payable on profitable operations. The Company will also continue to seek further
reductions  in its costs  wherever  feasible  and prudent.  Although  management
expects to improve the Company's profitability and cash flows, 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.

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  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 subsequent shareholders' deficit.  Quarterly dividends which are accumulated
but unpaid  through April 1, 2000 amount to $9,757,000 in the aggregate  ($46.75
per preferred share or $11.69 per depositary share).  Common stock dividends may
not be declared until the preferred  stock  dividends that are  accumulated  but
unpaid are made current.

<PAGE 16>
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 (which par value was $208,708 at March 31,
2000).  The Company had  shareholders'  equity at March 31, 2000 of $566,000 and
the par value of all  outstanding  depositary  shares and shares of common stock
aggregated $17,878,000 at March 31, 2000.

Going forward the Company's Board of Directors will consider quarterly preferred
stock  dividends,  preferred stock  dividends  which are in arrears,  and common
stock  dividends,  in light  of the  above  restrictions  and  opportunities  to
increase profitability and liquidity.

Results of Operations
- --------------------------------------------------------------------------------

Quarter Ended March 31, 2000 Compared to Quarter Ended March 31, 1999.

Revenues  for the quarter  ending  March 31, 2000 were  $12,665,000  compared to
$30,829,000  for the quarter ending March 31, 1999. The decrease is due to lower
equity in earnings from the independent power projects due to a gain on the sale
of the  Rensselaer  facility  of  approximately  $17,000,000  early  in 1999 and
decreased earnings from terminal  operations in 2000 due to a further decline in
the export market.

Costs and  expenses  for the  quarter  ending  March 31,  2000 were  $14,538,000
compared to $17,866,000 for the quarter ending March 31, 1999.  Sales volumes at
WRI have increased  slightly,  increasing  costs and expenses  accordingly.  The
decrease in selling and  administrative  expenses  is related to  $2,600,000  of
bonuses paid to employees during the first quarter of 1999.

There were no gains on the sales of assets  during the quarter  ending March 31,
2000,  compared to $19,000  for the quarter  ending  March 31,  1999.  The gains
relate  primarily to sales of various  assets from the Company's  idled Virginia
Division.

Interest  expense was $267,000 and $301,000 for the three months ended March 31,
2000 and 1999, respectively.  The decrease is due to a reduction in the interest
portion 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 $547,000 for the quarter ending March 31, 2000,  compared to
$524,000 for the quarter  ending March 31, 1999. The increase is due to interest
received  on the  long-term  deposits,  offset by the effect of a  reduction  in
invested cash balances.


<PAGE 17>
                                     Item 3
            QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
- --------------------------------------------------------------------------------

The  Company is  exposed to market  risk,  including  the  effects of changes in
commodity prices and interest rates as discussed below.

Commodity Price Risk

The  Company  produces  and sells  coal to third  parties  from its coal mine in
Montana and produces and sells  electricity  and steam to third parties from its
independent power projects located in the eastern United States.  Currently, all
of the Company's coal production and all of its electricity and steam production
is sold through long-term  contracts with customers.  These long-term  contracts
serve to minimize the  Company's  exposure to changes in commodity  prices.  The
Company  generally  has not  entered  into  derivative  contracts  to manage its
exposure  to  changes  in  commodity  prices,  and is not a  party  to any  such
contracts at March 31, 2000.

Interest Rate Risk

The  Company  finances a portion of its  operations  with  long-term  debt.  The
Company's long-term debt at December 31, 1999 was repaid during the three months
ended March 31, 2000.

<PAGE 18>
                           PART II - OTHER INFORMATION

                                     ITEM 1
                                LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------

See Note 2 "Chapter 11 Reorganization Proceedings" and Note 3 "Contingencies" of
Notes to Consolidated Financial Statements,  which are incorporated by reference
herein.


                                     ITEM 3
                         DEFAULTS UPON SENIOR SECURITIES
- --------------------------------------------------------------------------------

See Note 4 "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 March 6, 2000,  the  Company  filed a report on Form 8-K  announcing
         that in an appeal by Virginia  Power of an earlier trial court decision
         in favor of Westmoreland regarding payments withheld by Virginia Power,
         the  Virginia  Supreme  Court has reversed  that ruling  insofar as the
         trial  court  limited  its  inquiry to the intent of the parties at the
         time the original  contract was entered into in 1989,  and remanded the
         case to trial court for further proceedings.

         On March 17, 2000,  the Company  filed a report on Form 8-K  announcing
         net income from continuing operations of $8.6 million for the full year
         ended  December  31,  1999  compared  with net income  from  continuing
         operations of $3.3 million for 1998.

         On March 22, 2000,  the Company filed a report on Form 8-K announcing a
         correction to the  calculation of earnings per share for the year ended
         December 31, 1999.


<PAGE 19>
                                   Signatures
- --------------------------------------------------------------------------------

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


WESTMORELAND COAL COMPANY


Date:  May 15, 2000                    /s/ Robert J. Jaeger
                                       ------------------------------
                                           Robert J. Jaeger
                                           Senior Vice President - Finance and
                                           Treasurer


                                       /s/ Laurel B. Placido
                                       ------------------------------
                                           Laurel B. Placido
                                           Controller


<TABLE> <S> <C>


<ARTICLE>                     5

<MULTIPLIER>                                   1,000

<S>                             <C>
<PERIOD-TYPE>                   3-MOS
<FISCAL-YEAR-END>                              DEC-31-2000
<PERIOD-END>                                   MAR-31-2000
<CASH>                                         17,670
<SECURITIES>                                   0
<RECEIVABLES>                                  3,553
<ALLOWANCES>                                   0
<INVENTORY>                                    0
<CURRENT-ASSETS>                               22,480
<PP&E>                                         76,463
<DEPRECIATION>                                 40,672
<TOTAL-ASSETS>                                 138,056
<CURRENT-LIABILITIES>                          22,215
<BONDS>                                        0
                          0
                                    209
<COMMON>                                       17,669
<OTHER-SE>                                     (17,312)
<TOTAL-LIABILITY-AND-EQUITY>                   138,056
<SALES>                                        12,665
<TOTAL-REVENUES>                               12,665
<CGS>                                          7,537
<TOTAL-COSTS>                                  14,538
<OTHER-EXPENSES>                               (351)
<LOSS-PROVISION>                               0
<INTEREST-EXPENSE>                             (267)
<INCOME-PRETAX>                                (2,491)
<INCOME-TAX>                                   0
<INCOME-CONTINUING>                            (2,491)
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<CHANGES>                                      0
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<EPS-BASIC>                                  (.42)
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</TABLE>


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