Exhibit 99.2
FINANCIAL STATEMENTS
Westmoreland Kemmerer, LLC (Formerly Westmoreland Kemmerer, Inc.)
(A Wholly Owned Subsidiary of Westmoreland Coal Company)
Six Months Ended June 30, 2015 and 2014
(Unaudited)
WESTMORELAND KEMMERER, LLC
(Formerly Westmoreland Kemmerer, Inc.)
(A Wholly Owned Subsidiary of Westmoreland Coal Company)
Contents
|
| | |
Financial Statements
| |
Balance Sheets
| 3 |
|
Statements of Operations
| 4 |
|
Statements of Comprehensive Income
| 5 |
|
Statements of Shareholder's Equity
| 6 |
|
Statements of Cash Flows
| 7 |
|
Notes to Financial Statements
| 8 |
|
WESTMORELAND KEMMERER, LLC
(Formerly Westmoreland Kemmerer, Inc.)
(A Wholly Owned Subsidiary of Westmoreland Coal Company)
Balance Sheets
(Unaudited)
|
| | | | | | | |
| | June 30, | | December 31, |
| | 2015 | | 2014 |
| ASSETS | (in thousands) |
| Current assets: | | | |
| Cash and cash equivalents | $ | 99 |
| | $ | 83 |
|
| Accounts receivable | | | |
| Trade | 11,471 |
| | 17,572 |
|
| Other | 97 |
| | 99 |
|
| | 11,568 |
| | 17,671 |
|
| Inventory | 11,370 |
| | 10,472 |
|
| Deferred income taxes | 984 |
| | 903 |
|
| Prepaid expenses | 1,449 |
| | 2,356 |
|
| Total current assets | 25,470 |
| | 31,485 |
|
| Property, plant and equipment, at cost | | | |
| Land and mineral rights | 21,301 |
| | 21,301 |
|
| Plant and equipment | 124,529 |
| | 115,855 |
|
| | 145,830 |
| | 137,156 |
|
| Less accumulated depreciation, depletion and amortization | (43,772 | ) | | (34,773 | ) |
| Net property, plant and equipment | 102,058 |
| | 102,383 |
|
| Restricted investments and bond collateral | 25,271 |
| | 25,282 |
|
| Deferred income taxes | 17,350 |
| | 15,477 |
|
| Total assets | $ | 170,149 |
| | $ | 174,627 |
|
| LIABILITIES AND SHAREHOLDER'S EQUITY | | | |
| Current liabilities: | | | |
| Current installments of long-term debt | $ | 2,574 |
| | $ | 2,310 |
|
| Accounts payable | 10,685 |
| | 10,607 |
|
| Deferred revenue | — |
| | 2,513 |
|
| Payable to related party | 1,188 |
| | 450 |
|
| Accrued production taxes | 15,451 |
| | 17,157 |
|
| Postretirement medical benefits | 436 |
| | 436 |
|
| Asset retirement obligations | 2,691 |
| | 2,658 |
|
| Total current liabilities | 33,025 |
| | 36,131 |
|
| Long-term debt, less current installments | 8,797 |
| | 9,321 |
|
| Deferred tax liabilities | 62,566 |
| | — |
|
| Postretirement medical cost, less current portion | 17,557 |
| | 60,245 |
|
| Pension obligations | 16,770 |
| | 17,762 |
|
| Asset retirement obligations, less current portion | 210 |
| | 16,202 |
|
| Total liabilities | 138,925 |
| | 139,661 |
|
| Shareholder's equity: | | | |
Common stock of $.01 par value. Authorized, issued and outstanding 100 shares at December 31, 2014 and 2013
| — |
| | — |
|
| Additional paid-in-capital | 50,683 |
| | 50,835 |
|
| Advances from (to) Parent | (25,994 | ) | | (16,527 | ) |
| Accumulated other comprehensive income | 603 |
| | 658 |
|
| Retained earnings | 5,932 |
| | — |
|
| Total Westmoreland Kemmerer, Inc. shareholder's equity | 31,224 |
| | 34,966 |
|
| Total liabilities and shareholder's equity | $ | 170,149 |
| | $ | 174,627 |
|
See accompanying Notes to Financial Statements.
WESTMORELAND KEMMERER, LLC
(Formerly Westmoreland Kemmerer, Inc.)
(A Wholly Owned Subsidiary of Westmoreland Coal Company)
Statements of Operations
(Unaudited)
|
| | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
| | (in thousands) |
| Revenues | $ | 37,518 |
| | $ | 39,893 |
| | $ | 79,041 |
| | $ | 83,016 |
|
| Costs and expenses: | | | | | | | |
| Cost of sales | 31,951 |
| | 27,800 |
| | 62,973 |
| | 56,880 |
|
| Depreciation, depletion and amortization | 4,358 |
| | 4,150 |
| | 9,067 |
| | 8,216 |
|
| Selling and administrative | 1,608 |
| | 1,231 |
| | 3,230 |
| | 2,641 |
|
| Loss on sale of assets | (7 | ) | | — |
| | 16 |
| | (3 | ) |
| Other operating expense | 4 |
| | — |
| | 4 |
| | — |
|
| | 37,914 |
| | 33,181 |
| | 75,290 |
| | 67,734 |
|
| Operating income | (396 | ) | | 6,712 |
| | 3,751 |
| | 15,282 |
|
| Other income (expense): | | | | | | | |
| Interest expense | (138 | ) | | (101 | ) | | (291 | ) | | (142 | ) |
| Interest income | 151 |
| | 127 |
| | 520 |
| | 133 |
|
| Other | 130 |
| | 114 |
| | 222 |
| | 153 |
|
| | 143 |
| | 140 |
| | 451 |
| | 144 |
|
| Income before income taxes | (253 | ) | | 6,852 |
| | 4,202 |
| | 15,426 |
|
| Income tax expense | (293 | ) | | 595 |
| | 45 |
| | 2,782 |
|
| Net income | $ | 40 |
| | $ | 6,257 |
| | $ | 4,157 |
| | $ | 12,644 |
|
See accompanying Notes to Financial Statements.
WESTMORELAND KEMMERER, LLC
(Formerly Westmoreland Kemmerer, Inc.)
(A Wholly Owned Subsidiary of Westmoreland Coal Company)
Statements of Comprehensive Income
(Unaudited)
|
| | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
| | (in thousands) |
| Net income | $ | 40 |
| | $ | 6,257 |
| | $ | 4,157 |
| | $ | 12,644 |
|
| Other comprehensive income (loss): | | | | | | | |
Adjustments to and amortization of accumulated actuarial gains or losses, postretirement medical benefits
| — |
| | (119 | ) | | — |
| | (238 | ) |
Unrealized and realized gains and losses on available-for-sale securities
| (670 | ) | | — |
| | (630 | ) | | — |
|
Tax effect
| 221 |
| | — |
| | 221 |
| | — |
|
| | (449 | ) | | (119 | ) | | (409 | ) | | (238 | ) |
Comprehensive income attributable to Westmoreland Kemmerer, Inc.
| $ | (409 | ) | | $ | 6,138 |
| | $ | 3,748 |
| | $ | 12,406 |
|
See accompanying Notes to Financial Statements.
WESTMORELAND KEMMERER, LLC
(Formerly Westmoreland Kemmerer, Inc.)
(A Wholly Owned Subsidiary of Westmoreland Coal Company)
Statements of Shareholder's Equity
Six Months Ended June 30, 20015
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | |
| | Additional Paid-in Capital | | Advance from (to) Parent | | Accumulated Other Comprehensive Income (Loss) | | Retained Earnings | | Total Shareholder's Equity |
| | (in thousands) |
| Balance at December 31, 2014 | $ | 50,481 |
| | $ | (16,527 | ) | | $ | 1,012 |
| | $ | — |
| | $ | 34,966 |
|
Westmoreland Coal Company common stock issued as compensation
| 202 |
| | — |
| | — |
| | — |
| | 202 |
|
Transactions with Parent/affiliates
| — |
| | (9,467 | ) | | — |
| | 1,775 |
| | (7,692 | ) |
Other comprehensive loss
| — |
| | — |
| | (409 | ) | | — |
| | (409 | ) |
Net income
| — |
| | — |
| | — |
| | 4,157 |
| | 4,157 |
|
| Balance at June 30, 2015 | $ | 50,683 |
| | $ | (25,994 | ) | | $ | 603 |
| | $ | 5,932 |
| | $ | 31,224 |
|
See accompanying Notes to Financial Statements.
WESTMORELAND KEMMERER, LLC
(Formerly Westmoreland Kemmerer, Inc.)
(A Wholly Owned Subsidiary of Westmoreland Coal Company)
Statements of Cash Flows
(Unaudited)
|
| | | | | | | |
| | Six Months Ended June 30, |
| | 2015 | | 2014 |
| | (in thousands) |
| Cash flows from operating activities: | | | |
| Net income | $ | 4,157 |
| | $ | 12,644 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Depreciation, depletion and amortization | 9,067 |
| | 8,216 |
|
| Accretion of asset retirement obligation and receivable | 886 |
| | 807 |
|
| Share-based compensation | 202 |
| | 42 |
|
| Loss on sales of assets | 16 |
| | (3 | ) |
| (Loss) gain on sales of investment securities | (138 | ) | | — |
|
| Changes in: | | | |
| Accounts receivable | 6,103 |
| | 6,687 |
|
| Inventories | (898 | ) | | 555 |
|
| Accounts payable and accrued production taxes | (129 | ) | | 2,473 |
|
| Payable to related parties | 738 |
| | (161 | ) |
| Deferred revenues | (2,513 | ) | | (3,969 | ) |
| Asset retirement obligations | (261 | ) | | (226 | ) |
| Accrual for postretirement medical benefit | 2,321 |
| | 1,674 |
|
| Pension obligations | (205 | ) | | (236 | ) |
| Other assets and liabilities | 821 |
| | 2,329 |
|
| Net cash provided by operating activities | 20,167 |
| | 30,832 |
|
| Cash flows from investing activities: | | | |
| Additions to property, plant and equipment | (5,227 | ) | | (2,312 | ) |
| Increase in restricted investments and bond collateral | (10,343 | ) | | (111 | ) |
| Proceeds from the sale of investments | 9,862 |
| | — |
|
| Proceeds from sales of assets | 10 |
| | — |
|
| Net cash used in investing activities | (5,698 | ) | | (2,423 | ) |
| Cash flows from financing activities: | | | |
| Repayments of long-term debt | (6,261 | ) | | (960 | ) |
| Transactions with Parent/affiliates | 937 |
| | — |
|
| Distributions | (9,129 | ) | | (30,000 | ) |
| Net cash used in financing activities | (14,453 | ) | | (30,960 | ) |
| Net (decrease) increase in cash and cash equivalent | 16 |
| | (2,551 | ) |
| Cash and cash equivalents, beginning of the year | 83 |
| | 7,942 |
|
| Cash and cash equivalents, end of the year | $ | 99 |
| | $ | 5,391 |
|
Supplemental disclosures of cash flow information:
| | | |
Noncash transactions:
| | | |
Capital leases
| 5,065 |
| | 12,936 |
|
See accompanying Notes to Financial Statements.
WESTMORELAND KEMMERER, LLC
(Formerly Westmoreland Kemmerer, Inc.)
(A Wholly Owned Subsidiary of Westmoreland Coal Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Significant Accounting Policies
Basis of Operations
Westmoreland Kemmerer, Inc., a wholly owned subsidiary of Westmoreland Coal Company, or WCC, or the Parent, owns a surface coal mining operation located in southwestern Wyoming. On January 31, 2012, WCC acquired the Kemmerer Mine. Coal produced from the Kemmerer Mine is sold to electric utilities and various industrial customers based in the north central region of the United States. Westmoreland Coal Company owns and operates Westmoreland Kemmerer, Inc. On December 31, 2014, WCC completed the acquisition of Westmoreland Resources GP, LLC (the “GP”), the general partner of Westmoreland Resource Partners, LP (“WMLP”) and, concurrent with the GP acquisition, all of the royalty- bearing coal reserves owned by Westmoreland Kemmerer, Inc. were contributed to WCC. The basis of the royalty-bearing coal reserves transferred to WCC was the book value of $33.2 million. Also on December 31, 2014, WCC then contributed these royalty- bearing coal reserves to WMLP. In June 2015, Westmoreland Kemmerer, Inc. was converted into a limited liability company, Westmoreland Kemmerer, LLC ("WKL" or the "Company"). The conversion to an LLC had no impact on the basis of accounting for the entity. See Note 11, Subsequent Events, for a discussion of the contribution of WKL to the WMLP on August 1, 2015.
The Company’s financial statements reflect substantially all of its costs of doing business. Common expenses incurred by the Parent on behalf of the Company are charged to the Company based on proportional cost allocations. The Company believes the allocations used are reasonable; however, these financial statements may not necessarily be representative of a stand-alone company.
The Company’s financial statements have been prepared in accordance with United States generally accepted accounting principles and require use of management’s estimates. The financial information contained in these financial statements 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. The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of results to be expected for the year ending December 31, 2015.
These quarterly financial statements should be read in conjunction with the Company’s audited financial statements and notes for the year ended December 31, 2014 (the “2014 Audited Financials”). The accounting principles followed by the Company are set forth in the the 2014 Audited Financials. Most of the descriptions of the accounting principles and other footnote disclosures previously made have been omitted in this report so long as the interim information presented is not misleading or inconsistent.
WCC Liquidity
The Company anticipates that its cash from operations, cash on hand and available WCC borrowing capacity will be sufficient to meet its investing, financing, and working capital requirements for the foreseeable future.
Under WCC’s revolving credit agreement, the maximum available borrowing amount is $50 million, with an additional seasonal increase of $25 million to the maximum borrowing amount between June 15th and August 15th of each year. The revolver may support an equal amount of letters of credit, which would reduce the balance available under the WCC revolving credit agreement. At June 30, 2015, availability on the revolver was $51.3 million with $21.2 million supporting letters of credit.
Debt Obligations
As of June 30, 2015, the Company is among the guarantors for the following material debt obligations of the Parent(1) $350.0 million in aggregate principal amount of 8.75% senior secured notes (the “8.75% Notes”); and (2) a secured term loan facility in the aggregate principal amount of $422.9 million (the “WCC Term Loan Facility”). The 8.75% Notes and the WCC Term Loan Facility are each guaranteed by the Company, Westmoreland Energy LLC, Westmoreland Mining LLC and Westmoreland Resources, Inc. and their respective subsidiaries (other than Absaloka Coal, LLC, Westmoreland Risk Management, Inc. and certain other immaterial subsidiaries).
WESTMORELAND KEMMERER, LLC
(Formerly Westmoreland Kemmerer, Inc.)
(A Wholly Owned Subsidiary of Westmoreland Coal Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Fair Value
The Company is required to disclose the fair value of financial instruments. The carrying amounts of cash equivalents, accounts receivable and accounts payable reflected on the balance sheet approximates the fair value of these instruments due to the short duration to maturities.
Fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value and is defined as:
| |
| • | Level 1, defined as observable inputs such as quoted prices in active markets for identical assets. Level 1 assets include available-for-sale equity securities generally valued based on independent third-party market prices. |
| |
| • | Level 2, defined as observable inputs other than Level 1 prices. These include quoted prices for similar assets or liabilities in an active market, quoted prices for identical assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
| |
| • | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. |
The Company’s non-recurring fair value measurements include asset retirement obligations. The Company determines the estimated fair value of its asset retirement obligations by calculating the present value of estimated cash flows related to reclamation liabilities using level 3 inputs. The significant inputs used to calculate such liabilities includes estimates of costs to be incurred, the Company’s credit adjusted discount rate, inflation rates and estimated dates of reclamation. The asset retirement liability is accreted to its present value each period.
See Note 3 for further disclosures related to the Company’s fair value estimates.
Accounting Pronouncements Adopted
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, issued as a new Topic, Accounting Standards Codification (ASC) Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle of the guidance is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU is effective beginning in fiscal 2017 and can be adopted by the Company either retrospectively or as a cumulative-effect adjustment as of the date of adoption. The Company is currently evaluating the effect that adopting this new accounting guidance will have on its results of operations, cash flows and financial position.
In August 2014, the FASB issued ASU 2014-15 Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The new standard provides guidance around management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company's financial statements.
WESTMORELAND KEMMERER, LLC
(Formerly Westmoreland Kemmerer, Inc.)
(A Wholly Owned Subsidiary of Westmoreland Coal Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
2. Inventories
Inventories consisted of the following (in thousands):
|
| | | | | | | |
| | June 30, | | December 31, |
| | 2015 | | 2014 |
| Coal | $ | 700 |
| | $ | 275 |
|
| Materials and supplies | 11,042 |
| | 10,569 |
|
| Reserve for obsolete inventory | (372 | ) | | (372 | ) |
| Total | $ | 11,370 |
| | $ | 10,472 |
|
3. Restricted Investments and Bond Collateral
The Company’s restricted investments and bond collateral consisted of the following (in thousands):
|
| | | | | | | |
| | June 30, | | December 31, |
| | 2015 | | 2014 |
| Reclamation bond collateral | $ | 25,271 |
| | $ | 25,282 |
|
The Company’s carrying value and estimated fair value of its restricted investments and bond collateral at June 30, 2015 were as follows (in thousands): |
| | | | | | | | | |
| | Carrying Value | | Fair Value | | Fair Value Hierarchy |
| Cash and cash equivalents | $ | 664 |
| | $ | 664 |
| | Level 1 |
| Available-for-sale securities | 24,607 |
| | 24,607 |
| | Level 1 |
| | $ | 25,271 |
| | $ | 25,271 |
| | |
These accounts include available-for-sale securities. Available-for-sale securities are reported at fair value with unrealized gains and losses excluded from earnings and reported in Accumulated other comprehensive income (loss).
Available-for-Sale Restricted Investments and Bond Collateral
The cost basis, gross unrealized holding gains and losses and fair value of available-for-sale securities at June 30, 2015 are as follows:
|
| | | |
| | June 30, |
| | 2015 |
| Cost basis | $ | 25,343 |
|
| Gross unrealized holding gains | 84 |
|
| Gross unrealized holding losses | (820 | ) |
| Fair value | $ | 24,607 |
|
Maturities of available-for sale securities are as follows at June 30, 2015:
WESTMORELAND KEMMERER, LLC
(Formerly Westmoreland Kemmerer, Inc.)
(A Wholly Owned Subsidiary of Westmoreland Coal Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
|
| | | | | | | |
| | Cost Basis | | Fair Value |
| | (in thousands) |
| Due in five year or less | $ | 9,852 |
| | $ | 9,562 |
|
| Due after five years to ten years | 4,168 |
| | 3,935 |
|
| Due in more than ten years | 11,323 |
| | 11,110 |
|
| | $ | 25,343 |
| | $ | 24,607 |
|
4. Long-Term Debt
The amounts outstanding under the Company’s long-term debt consisted of the following at June 30, 2015:
|
| | | |
| | Total Debt Outstanding |
| | (in thousands) |
| Capital lease obligations | $ | 10,482 |
|
| Other debt | 889 |
|
| | 11,371 |
|
| Less current portion | (2,574 | ) |
| Total debt outstanding, less current portion | $ | 8,797 |
|
The following table presents aggregate contractual debt maturities of all long-term debt:
|
| | | |
| | As of June 30, 2015 |
| | (in thousands) |
| 2015 | $ | 1,260 |
|
| 2016 | 2,560 |
|
| 2017 | 2,425 |
|
| 2018 | 2,470 |
|
| 2019 | 2,459 |
|
| Thereafter | 197 |
|
| Total debt | $ | 11,371 |
|
The Company engages in leasing transactions for equipment utilized in its mining operations. At June 30, 2015, the capital leases outstanding had a weighted average interest rate of 3.11% and mature at various dates beginning in 2016 through 2020. During the six months ended June 30, 2015, the Company acquired $5.1 million of equipment under capital leases.
WESTMORELAND KEMMERER, LLC
(Formerly Westmoreland Kemmerer, Inc.)
(A Wholly Owned Subsidiary of Westmoreland Coal Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
5. Postretirement Medical Benefits
The Company provides postretirement medical benefits pursuant to collective bargaining agreements. These benefits are provided through self-insured programs.
The components of net periodic postretirement medical benefit cost are as follows:
|
| | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
| | (in thousands) |
| Components of net periodic benefit cost: | | | | | |
| Service cost | $ | 816 |
| | $ | 650 |
| | $ | 1,632 |
| | $ | 1,300 |
|
| Interest cost | 642 |
| | 626 |
| | 1,285 |
| | 1,252 |
|
| Amortization of deferred items | — |
| | (119 | ) | | — |
| | (239 | ) |
| Total net periodic benefit cost | $ | 1,458 |
| | $ | 1,157 |
| | $ | 2,917 |
| | $ | 2,313 |
|
These costs are included in the accompanying statements of operations in Cost of sales and Selling and administrative expenses.
6. Pension
Defined Benefit Pension Plans
The Company provides a defined benefit pension plan to qualified full-time employees pursuant to a collective bargaining agreement. Benefits are generally based on years of service and a specific dollar amount per year of service as specified in the plan agreement.
The components of net periodic benefit cost are as follows:
|
| | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2015 | | 2014 | | 2015 | | 2014 |
| | (in thousands) |
| Components of net periodic benefit cost: | | | | | |
| Service cost | $ | 244 |
| | $ | 280 |
| | $ | 623 |
| | $ | 561 |
|
| Interest cost | 603 |
| | 430 |
| | 1,228 |
| | 859 |
|
| Amortization of deferred items | (844 | ) | | (596 | ) | | (1,688 | ) | | (1,192 | ) |
| Total net periodic benefit cost | $ | 3 |
| | $ | 114 |
| | $ | 163 |
| | $ | 228 |
|
These costs are included in the accompanying statements of operations in Cost of sales and Selling and administrative expenses.
WESTMORELAND KEMMERER, LLC
(Formerly Westmoreland Kemmerer, Inc.)
(A Wholly Owned Subsidiary of Westmoreland Coal Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
7. Asset Retirement Obligations
Changes in the Company’s asset retirement obligations were as follows:
|
| | | | | | | |
| | Six Months Ended June 30, |
| | 2015 | | 2014 |
| | (in thousands) |
| Asset retirement obligations, beginning of period | $ | 18,860 |
| | $ | 17,174 |
|
| Accretion | 886 |
| | 807 |
|
| Liabilities settled | (285 | ) | | (252 | ) |
| Asset retirement obligations, end of year | 19,461 |
| | 17,729 |
|
| Less current portion | (2,691 | ) | | (2,023 | ) |
| Asset retirement obligations, less current portion | $ | 16,770 |
| | $ | 15,706 |
|
As permittee, the Company is responsible for the total amount.
| |
| 8. | Commitments and Contingencies |
The company is subject to litigation in the ordinary course of business. No material litigation exists.
| |
| 9. | Accumulated Other Comprehensive Income (Loss) |
Changes in Accumulated Other Comprehensive Income (Loss)
The following table reflects the changes in accumulated other comprehensive income (loss) by component:
|
| | | | | | | | | | | | | | | |
| | Pension | | Postretirement Medical Benefits | | Available for Sale Securities | | Accumulated Other Comprehensive Income (Loss) |
| | (in thousands) |
| Balance at December 31, 2014 | $ | (1,599 | ) | | $ | 2,718 |
| | $ | (107 | ) | | $ | 1,012 |
|
| Other comprehensive income (loss) before reclassifications | — |
| | — |
| | (768 | ) | | (768 | ) |
| Amounts reclassified from accumulated other comprehensive income (loss) | — |
| | — |
| | 138 |
| | 138 |
|
| Balance at June 30, 2015 | $ | (1,599 | ) | | $ | 2,718 |
| | $ | (737 | ) | | $ | 382 |
|
The following table reflects the reclassifications out of accumulated other comprehensive income (loss) for the three and six months ended June 30, 2015 (in thousands):
|
| | | | | | | | |
| Details about accumulated other comprehensive income (loss) components | Amount reclassified from accumulated other comprehensive income loss | Affected line item in the statement where net income (loss) is presented |
| Three Months Ended June 30, 2015 | | Six Months Ended June 30, 2015 |
| Realized gains and losses on available-for-sale securities | $ | 123 |
| | $ | 138 |
| Other income |
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| 10. | Related Party Transactions |
The Company was allocated audit and tax fees and information technology costs incurred by its Parent. For the six months ended June 30, 2015 and 2014, these fees were $0.6 million, and $0.4 million, respectively, which are included in Selling and administrative expenses.
WESTMORELAND KEMMERER, LLC
(Formerly Westmoreland Kemmerer, Inc.)
(A Wholly Owned Subsidiary of Westmoreland Coal Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Advances to Parent of $9.5 million for the six months ended June 30, 2015 represent the net movement of cash from the Company's bank accounts to bank accounts held by WCC.
Additionally, in December 2014, the Company entered into an arm's length agreement to mine certain coal reserves contributed to WCC in connection with WCC's acquisition of the GP. Under this lease, the Company pays a per ton royalty as these coal reserves are mined. For the three and six months ended June 30, 2015, the Company recognized royalties of $1.6 million and $3.4 million, respectively, which was included in Cost of sales, with $1.6 million included in Accounts payable at June 30, 2015.
On August 1, 2015, WCC contributed 100% of the outstanding equity interests in WKL to WMLP in exchange for $115 million of cash and $115 million of new WMLP Series A Convertible Units at a price of $7.54 per unit (the "Contribution"). Immediately prior to the Contribution, in accordance with the terms of the Contribution agreement, all employees of WKL became employees of Parent, and Parent assumed all employee related liabilities, including, but not limited to all liabilities related to postretirement pension and postretirement medical plans. Parent also retained all deferred and current income tax balances. As of August 1, 2015, WKL no longer had access to the WCC's revolving line of credit.
The Company has evaluated subsequent events through October 14, 2015, the date of issuance of the financial statements.
