Form 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report(Date of earliest event reported):
March 17, 2000
WESTMORELAND COAL COMPANY
-------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 0-752 23-1128670
-------- ----- ----------
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation or Number Identification No.)
organization)
2 North Cascade Avenue, 14th Floor, Colorado Springs, Colorado 80903
- -------------------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: 719-442-2600
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Item 5. Other Events
The Company reported 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.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit 99.2 -- Press release dated March 17, 2000.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WESTMORELAND COAL COMPANY
Date: March 17, 2000 /s/ Robert J. Jaeger
--------------------------
By: Robert J. Jaeger
Senior Vice President-Finance
and Treasurer
<PAGE 1>
Exhibit 99.2
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Westmoreland Reports 1999 Year End
Net Income from Continuing
Operations of $8.6 Million
----------------------------------
Colorado Springs, CO - March 17, 2000 -- Westmoreland Coal Company (AMEX: WLB)
today reported 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.
Impacting 1999 results were an expected decrease in revenues that resulted from
reduced sales at Westmoreland Resources, Inc. ("WRI") because of an eight week
scheduled maintenance outage at a major customer's facility, anticipated losses
at Dominion Terminal Associates ("DTA") due to a full year of continued decline
in the export coal market, an expected reduction in equity in earnings from
Westmoreland Energy compared to 1998 due to the sale of the Rensselaer Project,
and expenses of almost $22 million connected with retiree medical obligations,
or "heritage costs." Results for 1998 were negatively impacted by approximately
$10.0 million in reorganization fees, and a $12.2 million charge related to the
company's investment in DTA.
Positively affecting net income from continuing operations was the strong
performance of the Company's remaining independent power operations and
significant interest income. Equity in earnings of independent power projects
totaled over $34.0 million and included a gain of approximately $17.0 million
from the sale of the Rensselaer project during the first quarter. WRI produced
approximately 5.5 million tons of coal.
After recognition (for financial statement presentation purposes) of $1.8
million for undeclared, unpaid preferred dividends, net income applicable to
common shareholders in 1999 was $6.9 million or $0.97 per share compared to a
net loss applicable to common shareholders of $11.4 million, or $1.64 per share
in 1998. Positively affecting the calculation of net income applicable to common
shareholders were the two tender offers for preferred (depositary) shares
conducted in 1999. The tender offers resulted in the retirement of 366,292
shares of preferred stock (1,465,167 depositary shares), and a reduction of
accumulated but undeclared, unpaid preferred dividends from $20.8 million
immediately prior to the first offering to $8.9 million immediately following
the second offering, and a reduction of the ongoing quarterly preferred
dividends from $1.2 million to $444,000. Shareholders' equity was also reduced
by $27.8 million as a result of the two offerings. As of December 31, 1999, the
Company had shareholders' equity of $3.1 million compared to shareholders'
equity of $21.8 million as of December 31, 1998.
Cash used in operating activities was $23.5 million in 1999 compared to cash
provided of $55.9 million in 1998. 1999 was impacted by the payment of
pre-petition liabilities, catch-up payments for retiree health benefits and the
payment of reorganization and proxy contest expenses. In contrast, 1998 includes
cash received from the Rensselaer restructuring at WEI and from the termination
of the salaried pension plan, and reflects the deferral of health care benefit
payments during bankruptcy. Cash used in financing activities in 1999 was
primarily for the purchase of preferred stock. Consolidated cash and cash
equivalents as of December 31, 1999 totaled $20.1 million, including $12.1
million at WRI. Cash at WRI, an 80%-owned subsidiary, is available to the
Company through dividends. The Company also had restricted cash, which was not
classified as cash or cash equivalents, of $14,896,000 at December 31, 1999.
Annual Meeting of Shareholders
- ------------------------------
The Company will hold its Annual Meeting of Shareholders beginning at 10:00 a.m.
on Friday, June 9, 2000 at the Antlers Adam's Mark Hotel in Colorado Springs,
Colorado. An Annual Report, proxy materials and voting instructions will be
mailed to all common shareholders and holders of depositary shares eligible to
vote at the meeting.
1999 Form 10-K
- --------------
Westmoreland expects to file its 1999 Form 10-K with the SEC on or about March
23, 2000. Shareholders may request a copy by contacting the Company at the
following address: Westmoreland Coal Company, 2 North Cascade Avenue, 14th
Floor, Colorado Springs, CO, 80903. The Form 10-K is also available
electronically through the SEC EDGAR system.
Westmoreland Coal Company is a diversified energy company headquartered in
Colorado Springs, Colorado. It is currently engaged in western Powder River
Basin coal mining through its 80%-owned subsidiary Westmoreland Resources, Inc.
and independent power production through its wholly owned subsidiary
Westmoreland Energy, Inc. The Company also holds a 20% interest in Dominion
Terminal Associates, a coal shipping and terminal facility in Newport News,
Virginia.
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. 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.
THE ATTACHED FINANCIAL RESULTS should be read in conjunction with the Company's
COMPLETE financial statements contained in the 1999 Form 10-K.
###
For further information contact Diane Jones (719) 442-2600.
<PAGE>
<TABLE>
Westmoreland Coal Company and Subsidiaries
Consolidated Balance Sheets (Unaudited)
December 31, 1999 1998
- -------------------------------------------------------------------------- ---------- ----------
(in thousands)
<CAPTION>
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 20,122 $ 84,073
Receivables:
Trade 2,156 2,566
Excess of trust assets over pneumoconiosis benefit obligation 6,397 -
Terminated pension plan, net 500 500
Other 621 2,730
- -------------------------------------------------------------------------- ---------- ----------
9,674 5,796
Other current assets 1,180 691
- -------------------------------------------------------------------------- ---------- ----------
Total current assets 30,976 90,560
- -------------------------------------------------------------------------- ---------- ----------
Property, plant and equipment:
Land and mineral rights 10,572 10,990
Plant and equipment 66,231 94,989
- -------------------------------------------------------------------------- ---------- ----------
76,803 105,979
Less accumulated depreciation and depletion 40,245 69,029
- -------------------------------------------------------------------------- ---------- ----------
36,558 36,950
Investment in independent power projects 45,225 62,386
Investment in Dominion Terminal Associates (DTA) 4,672 5,475
Workers' compensation bond 4,748 4,140
Prepaid pension cost 3,897 3,748
Excess of trust assets over pneumoconiosis benefit
obligation 5,255 10,891
Security deposits 10,148 -
Other assets 818 1,456
- -------------------------------------------------------------------------- ---------- ----------
Total Assets $ 142,297 $ 215,606
========================================================================== ========== ==========
(Continued)
<PAGE>
Westmoreland Coal Company and Subsidiaries
Consolidated Balance Sheets (Unaudited) - Continued
December 31, 1999 1998
- -------------------------------------------------------------------------- ---------- ----------
(in thousands)
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of long-term debt $ 220 $ 200
Accounts payable and accrued expenses:
Trade 2,010 4,213
Taxes, other than income taxes 3,932 3,893
Workers compensation 3,200 3,800
Postretirement medical costs 10,130 11,066
Reorganization expenses 400 7,900
Consent judgment payment obligation - 39,006
Other accrued expenses 970 3,143
Reclamation costs 100 100
Income taxes - 2,185
- -------------------------------------------------------------------------- ---------- ----------
Total current liabilities 20,962 75,506
- -------------------------------------------------------------------------- ---------- ----------
Long-term debt, less current installments 1,343 1,562
Accrual for workers compensation 15,072 17,338
Accrual for postretirement medical costs 78,643 73,143
1974 UMWA Pension Plan obligations 11,879 13,776
Accrual for reclamation costs, less current portion 2,537 3,046
Other liabilities 1,930 2,370
Minority interest 6,874 7,020
Commitments and contingent liabilities
Shareholders' equity
Preferred stock of $1.00 par value
Authorized 5,000,000 shares;
Issued and outstanding 208,708 shares in 1999 and 209 575
575,000 shares in 1998
Common stock of $2.50 par value
Authorized 20,000,000 shares;
Issued and outstanding 7,067,663 shares in 1999 and 17,669 17,413
6,965,328 shares in 1998
Other paid-in capital 67,315 94,630
Accumulated deficit (82,136) (90,773)
- -------------------------------------------------------------------------- ---------- ----------
Total shareholders' equity 3,057 21,845
- -------------------------------------------------------------------------- ---------- ----------
Total Liabilities and Shareholders' Equity $ 142,297 $ 215,606
========================================================================== ========== ==========
</TABLE>
<PAGE>
<TABLE>
Westmoreland Coal Company and Subsidiaries
Consolidated Statements of Operations (Unaudited)
Years Ended December 31, 1999 1998 1997
- -------------------------------------------------------- --------- --------- ---------
(in thousands)
<CAPTION>
<S> <C> <C> <C>
Revenues:
Coal $ 38,539 $ 44,010 $ 47,182
Independent power projects - equity in earnings 34,492 64,465 17,770
Dominion Terminal Associates ("DTA") - equity in
earnings (losses) (1,464) 94 880
- -------------------------------------------------------- --------- --------- ---------
71,567 108,569 65,832
- -------------------------------------------------------- --------- --------- ---------
Cost and expenses:
Cost of sales - coal 33,637 37,472 42,063
Depreciation, depletion and amortization 1,571 2,289 1,715
Selling and administrative 9,660 7,040 5,932
Heritage costs 18,737 31,449 16,673
Pension expense (benefit) (including termination
gain of $1,512,000 in 1997) (149) 111 (5,547)
Unusual charges (credits) - 2,000 (27,214)
Doubtful accounts recoveries (174) (1,028) (1,410)
DTA impairment charge - 12,164 -
- -------------------------------------------------------- --------- --------- ---------
63,282 91,497 32,212
- -------------------------------------------------------- --------- --------- ---------
Operating income 8,285 17,072 33,620
Other income (expense):
Gains on sales of assets 433 475 969
Interest expense (1,135) (190) (320)
Interest income 2,052 - -
Minority interest (854) (775) (1,092)
Other income (expense) (226) 1,999 713
- -------------------------------------------------------- --------- --------- ---------
270 1,509 270
- -------------------------------------------------------- --------- --------- ---------
Income from continuing operations before
reorganization items and income taxes 8,555 18,581 33,890
Reorganization items:
Legal and consulting fees - (9,872) (2,484)
Interest expense - (5,188) -
Interest income - 3,594 1,552
- -------------------------------------------------------- --------- --------- ---------
Income before income taxes 8,555 7,115 32,958
Income tax (expense) benefit 82 (3,787) -
- -------------------------------------------------------- --------- --------- ---------
Income from continuing operations 8,637 3,328 32,958
Discontinued operations:
Operating loss - - (1,284)
Impairment and loss on disposal - - (3,518)
- -------------------------------------------------------- --------- --------- ---------
Loss from discontinued operations - - (4,802)
Cumulative effect of change in accounting principle - (9,876) -
- -------------------------------------------------------- --------- --------- ---------
Net income (loss) 8,637 (6,548) 28,156
Less preferred stock dividends in arrears 1,776 4,888 4,888
======================================================== ========= ========= =========
Net income (loss) applicable to common shareholders $ 6,861 $(11,436) $ 23,268
======================================================== ========= ========= =========
(Continued)
<PAGE>
Westmoreland Coal Company and Subsidiaries
Consolidated Statements of Operations (Unaudited) - Continued
Years Ended December 31, 1999 1998 1997
- -------------------------------------------------------- --------- --------- ---------
(in thousands except per share data)
Income (loss) per share applicable to common shareholders:
Continuing operations $ .97 $ (.22) $ 4.03
Discontinued operations - - (0.69)
Cumulative effect of changes in accounting principles - (1.42) -
- -------------------------------------------------------- --------- --------- ---------
$ .97 $ (1.64) $ 3.34
======================================================== ========= ========= =========
Pro forma amounts assuming the changes in accounting
principles are applied retroactively:
Net loss applicable to common shareholders $ - $ (1,560) $ -
Loss per share applicable to common shareholders $ - $ (.22) $ -
======================================================== ========= ========= =========
Weighted average number of common
shares outstanding - basic and diluted 7,040 6,965 6,965
</TABLE>
<PAGE>
<TABLE>
Westmoreland Coal Company and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
Years Ended December 31, 1999 1998 1997
- ------------------------------------------------------------- --------- --------- ---------
(in thousands)
<CAPTION>
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 8,637 $ (6,548) $ 28,156
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Equity in earnings of independent power projects (34,492) (64,465) (17,770)
Cash distributions from independent power projects 51,653 46,355 14,995
Equity in losses (earnings) from Dominion Terminal
Associates 1,464 (94) (880)
Cash generated by Dominion Terminal
Associates facility 942 2,952 4,865
Cash contributions to Dominion Terminal
Associates (1,603) (1,877) (2,883)
Depreciation, depletion and amortization 1,571 2,289 1,715
Stock compensation expense 297 - -
Gain on termination of pension plan - - (1,512)
Unusual charges (credits) - 2,000 (27,214)
DTA impairment charge - 12,164 -
Gains on sales of assets (433) (475) (969)
Cash from pension termination, net - 12,540 -
Distribution from pneumoconiosis trust - 2,634 -
Minority interest 854 775 1,092
Deferred income tax benefit - - -
Impairment and loss on disposition of
discontinued operations - - 3,518
Cumulative effect of change in accounting principle - 9,876 -
Other 147 (358) 96
Changes in assets and liabilities:
Receivables, net of allowance for
doubtful accounts 2,519 213 1,392
Inventories - - 660
Prepaid pension cost (149) (220) (4,035)
Excess of trust assets over pneumoconiosis
benefit obligation (761) (1,825) 1,188
Accounts payable and accrued expenses (4,337) 1,690 880
Income taxes payable (2,185) 2,185 -
Accrual for workers' compensation (3,474) (678) -
Accrual for postretirement medical costs 4,564 (2,502) -
1974 UMWA Pension Plan (1,897) - -
Consent judgment payment obligation (39,006) 39,006 -
Other liabilities (300) (5,998) 15
- ------------------------------------------------------------- --------- --------- ---------
Net cash provided by (used in) operating activities
before reorganization items (15,989) 49,639 3,309
- ------------------------------------------------------------- --------- --------- ---------
Changes in reorganization items:
Trade and other liabilities subject to compromise - - 14,977
Reorganization expenses (7,500) 6,255 1,645
- ------------------------------------------------------------- --------- --------- ---------
Net change in reorganization items (7,500) 6,255 16,622
- ------------------------------------------------------------- --------- --------- ---------
Net cash provided by (used in) operating activities (23,489) 55,894 19,931
- ------------------------------------------------------------- --------- --------- ---------
(Continued)
<PAGE>
Westmoreland Coal Company and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited) - Continued
Years Ended December 31, 1999 1998 1997
- ------------------------------------------------------------- --------- --------- ---------
(in thousands)
Cash flows from investing activities:
Additions to property, plant and equipment (2,069) (2,945) (174)
Net proceeds from sales of investments and assets 726 511 2,757
Security deposits (10,148) - -
Cash held by subsidiary disposed of - - (490)
- ------------------------------------------------------------- --------- --------- ---------
Net cash (used in) provided by investing activities (11,491) (2,434) 2,093
- ------------------------------------------------------------- --------- --------- ---------
Cash flows from financing activities:
Repayment of long-term debt (199) (51) (151)
Dividends paid to minority shareholders of subsidiary (1,000) - -
Exercise of stock options 66 - -
Repurchase of preferred stock (27,838) - -
- ------------------------------------------------------------- --------- --------- ---------
Net cash used in financing activities (28,971) (51) (151)
- ------------------------------------------------------------- --------- --------- ---------
Net increase (decrease) in cash and cash equivalents (63,951) 53,409 21,873
Cash and cash equivalents, beginning of year 84,073 30,664 8,791
============================================================= ========= ========= =========
Cash and cash equivalents, end of year $ 20,122 $ 84,073 $ 30,664
============================================================= ========= ========= =========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 6,076 $ 27 $ 31
Income taxes 1,606 120 -
</TABLE>
In January 1999, the Company issued 45,000 shares of restricted stock valued at
$297,000 to several employees as compensation.
In September 1997, the Company completed the sale of the Corona Group Inc.
("Corona"). Corona was sold for $895,000 in notes receivable, the Company
retained a 15% interest in Corona, and the purchaser assumed a contingent
liability.