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Westmoreland Announces
Second Quarter 1995 Results
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Philadelphia, PA -- July 21, 1995 -- Westmoreland Coal Company (NYSE:WCX)
today announced its second quarter 1995 financial results.
Second Quarter 1995 Financial Results
Westmoreland Coal Company's net loss was $10.4 million in the second quarter
of 1995 compared to a net loss of $1.7 million in the second quarter of 1994.
Net loss applicable to common shareholders was $11.7 million, or a loss of $1.68
per share, in the second quarter of 1995 compared to a net loss applicable to
common shareholders of $2.9 million, or a loss of $0.42 per share, in the
second quarter of 1994. The difference between net loss and net loss applicable
to common shareholders is the result of the recognition of dividends payable to
preferred shareholders, even if a preferred stock dividend was not declared.
The Company's operating loss was $10.8 million in the second quarter of 1995
compared to a $0.6 million operating loss in the same period in 1994.
Operating income for the Independent Power Operations segment improved by $3.1
million ($2.8 million of operating income in the second quarter of 1995
compared to an operating loss of $0.3 million in the second quarter of 1994).
The operating loss of the Coal Operations segment was $13.6 million in the
current period compared to an operating loss of $0.3 million in the 1994 period.
Major factors contributing to the $13.3 million of increased losses for the
Coal Operations segment included (1) earnings deterioration at the Virginia
Division totalling $9.6 million (an operating loss of $8.4 million in the second
quarter of 1995 compared to operating income of $1.2 million in the second
quarter of 1994) and (2) the elimination of earnings of Criterion Coal Company
sold in December 1994 and the Hampton Division sold in January 1995 ($4.1
million of operating income in the second quarter of 1994 from both properties).
The deterioration at the Virginia Division is related to reduced sales, higher
per ton production costs and increased depreciation expense.
Coal revenues in the second quarter of 1995 were $39.5 million from 2.0 million
tons sold compared to $107.0 million from 4.3 million tons sold in the second
quarter of 1994. The decrease was due to (1) the sale of the assets of
Criterion Coal Company in 1994 and the Hampton Division early in 1995,
(2) reduced sales by the Virginia Division and (3) a significant reduction in
brokered coal sales and the elimination of export coal sales.
See the attached Financial Highlights for additional information.
First Half 1995 Financial Results
Westmoreland Coal Company's net loss was $9.0 million in the first half of 1995
compared to a net loss of $6.5 million in the second half of 1994. Net loss
applicable to common shareholders was $11.4 million, or a loss of $1.64 per
share, in the first half of 1995 compared to a net loss applicable to common
shareholders of $8.9 million, or a loss of $1.28 per share, in the first half of
1994.
Results for the first half of 1995 included $9.5 million of gains on asset
sales. The Company's operating loss was $15.1 million higher in the 1995 period
than in 1994 mainly due to (1) $16.6 million of increased operating losses at
the Virginia Division and (2) the elimination of earnings of Criterion Company
and the Hampton Division ($6.4 million in the first half of 1994 from both
properties). This was offset by $7.8 million of improvement in operating
income at the Independent Power Operations segment.
Coal revenues for the first half of 1995 were $80.3 million from 4.0 million of
tons sold compared to $205.2 million from 8.0 million tons sold in the first
half of 1994.
Net cash used by operating activities was $7.7 million for the first half of
1995compared to net cash provided by operating activities of $13.0 million in
the first half of 1994.
See the attached Financial Highlights for additional information.
Liquidity Outlook
Due to the continuing losses at the Virginia Division, the ongoing cash costs
related to post retirement medical and workers compensation benefits, the
scheduled funding requirements related to the Roanoke Valley II independent
power project and the sale of Cleancoal Terminal Company, the Company's
liquidity resources would be inadequate to meet operating requirements
through December 31, 1995. Accordingly, management plans to address this
near-term problem by reducing costs and selling all or part of the Virginia
Division's assets and/or related businesses. Christopher K. Seglem,
Westmoreland's President and Chief Executive Officer, reported at the 1995
Annual Meeting on June 6, 1995, "As the core mining property, Virginia has
been the key variable for the Company for many years....Further losses are not
tolerable. One way or another the value of Virginia's assets must be put to
work generating cash for years to come....Over the past several months we have
met with employees, the United Mine Workers of America, Penn Virginia, Duke
Power Company, other customers, mining contractors and other operators to
determine our options, values, and the best course of action....We are now
cautiously optimistic that some reasonable value can be achieved with Virginia
for the near-term. We intend to move forward aggressively on this."
As previously reported, the Company will be required to take additional steps,
such as the acquisition of new income-producing properties, to generate enough
cash to meet its requirements through 1996 and beyond.
The Company, however, cannot give assurances at this time that these steps can
be accomplished.
Second Quarter 10-Q Filed
Westmoreland today filed its second quarter Form 10-Q with the Securities and
Exchange Commission. Shareholders interested in receiving a copy of the Form
10-Q can request a copy from Westmoreland Coal Company by writing to the
Company at the following address: Westmoreland Coal Company, Shareholder
Relations Department, 700 The Bellevue, 200 South Broad Street, Philadelphia,
PA 19102.
###
For information contact R. Page Henley, Jr. (215) 545-2500.
WESTMORELAND COAL COMPANY
Financial Highlights - Earnings
(In Thousands Except Per Share Data)
Three Months Six Months
Ended June 30 Ended June 30
1995 1994 (1) 1995 1994 (1)
Operating income (loss)
Coal Operations:
Virginia Division $ (8,390) (2) $ 1,168 $ (15,920) (2) $ 673
Pine Branch Mining Incorporated (173) (501) (367) (1,681)
Westmoreland Resources, Inc. 627 507 1,326 1,291
Westmoreland Coal Sales Company (621) (64) (100) 563
Net corporate expenses (2,286) (2,574) (5,618) (3) (4,832)
West Virginia - Idled Operations (2,187) (2,631) (4,738) (4,906)
Hampton Division - 611 - 581
Criterion Coal Company - 3,456 - 5,800
Cleancoal Terminal Company (597) (279) (701) (709)
Total Coal Operations (13,627) (307) (26,118) (3,220)
Independent Power Operations:
Westmoreland Energy, Inc. 2,789 (4) (292) 5,239 (4) (841)
WEI - recognition of deferred income - - 1,750 -
Total Independent Power Operations 2,789 (292) 6,989 (841)
Operating loss $ (10,838) $ (599) $ (19,129) $ (4,061)
Gains on the sale of assets $ 23 $ - $ 9,538 (5) $ -
Net loss $ (10,443) (1,710) $ (8,965) $ (6,498)
Less preferred stock dividends:
Declared 1,222 - 2,444 1,222
In arrears - 1,222 - 1,222
1,222 1,222 2,444 2,444
Net loss applicable to
common shareholders $ (11,665) $ (2,932) $ (11,409) $ (8,942)
Net loss per share
applicable to common shareholders $ (1.68) $ (.42) $ (1.64) $ (1.28)
<FN>
(1) Restated to conform with current classifications and to reflect Westmoreland
Energy, Inc. as a continuing operation.
(2) Second quarter comparison adversely affected by higher per ton production
costs, 455,000 less tons sold an
$2.2 million of increased depreciation expense. First half comparison
adversely affected by higher per ton production
costs, 664,000 less tons sold and $ 3.8 million of increased depreciation
expense.
(3) Includes a $1.4 million non-cash charge for an early retirement program
related to the relocation of the corporate office.
(4) Second quarter and first half comparisons were positively impacted by the
mid-1994 start-up of ROVA I, Rensselaer and Ft. Lupton projects
(5) Includes $ 9.1 million from the sale of the Hampton Division.
The above quarterly information is prepared from the accounts of the Company
without audit.
</FN>
Westmoreland Coal Company
Financial Highlights - Coal Statistics
(In Thousands)
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
TONS SOLD
Inland 2,029 3,860 3,974 7,090
Export - 412 - 908
Total Tons Sold 2,029 4,272 3,974 7,998
INLAND TONS SOLD
Virginia Division * 794 1,249 1,657 2,321
Westmoreland Resources, Inc. 1,141 1,089 2,147 2,084
Hampton Division - 265 - 522
Criterion Coal Company - 568 - 1,044
Total Westmoreland Operations 1,935 3,171 3,804 5,971
From Unaffiliated Producers 94 689 170 1,119
Total Inland Tons Sold 2,029 3,860 3,974 7,090
EXPORT TONS SOLD
Hampton Division - 94 - 143
Criterion Coal Company - 2 - 2
From Unaffiliated Producers - 316 - 763
Total Export Tons Sold - 412 - 908
TOTAL TONS SOLD 2,029 4,272 3,974 7,998
COAL SOURCES
Virginia Division * 794 1,249 1,657 2,321
Westmoreland Resources, Inc. 1,141 1,089 2,147 2,084
Hampton Division - 359 - 665
Criterion Coal Company - 570 - 1,046
Total Westmoreland Operations 1,935 3,267 3,804 6,116
From Unaffiliated Producers 94 1,005 170 1,882
Total Coal Sources 2,029 4,272 3,974 7,998
Average revenue per ton sold:
Eastern Operations $ 35.50 $ 31.27 $ 35.64 $ 34.41
Westmoreland Resources, Inc. 6.96 6.85 7.05 7.03
Weighted Average $ 19.45 $ 25.05 $ 20.20 $ 25.65
* Includes tons:
Sold by Pine Branch
Mining Incorporated 61 63 131 98
Purchased from Unaffiliated
Producers 164 207 415 359
<FN>
The above quarterly information is prepared from the accounts of the Company
without audit.
</FN>
Westmoreland Coal Company
Consolidated Statements of Income
(In Thousands Except Per Share Data)
Three Months Ended Six Months Ended
June 30 June 30
1995 1994* 1995 1994*
Revenues:
Coal $ 39,468 $ 107,003 $ 80,256 $ 205,163
Independent Power 3,786 1,759 8,681 2,833
43,254 108,762 88,937 207,996
Costs and expenses:
Cost of coal sold 43,602 97,358 88,160 188,625
Cost of sales-Independent Power 629 684 1,007 1,311
Depreciation, depletion
and amortization 5,600 4,303 10,639 8,554
Selling and administrative 4,261 7,016 8,260 13,567
54,092 109,361 108,066 212,057
Operating loss (10,838) (599) (19,129) (4,061)
Gains on the sales of assets 23 - 9,538 -
Interest expense (339) (1,189) (681) (2,282)
Interest and other income 1,119 783 2,258 1,314
Loss before income tax expense
(benefit) and minority interest (10,035) (1,005) (8,014) (5,029)
Income taxes (benefit):
Current 349 328 844 841
Deferred (110) 268 (247) 324
239 596 597 1,165
Minority interest 169 109 354 304
Net loss (10,443) (1,710) (8,965) (6,498)
Less preferred stock dividends:
declared 1,222 - 2,444 1,222
in arrears - 1,222 - 1,222
1,222 1,222 2,444 2,444
Net loss applicable
to common shareholders $ (11,665) $ (2,932) $ (11,409) $ (8,942)
Net loss per share applicable to
common shareholders $ (1.68) $ (.42) $ (1.64) $ (1.28)
Weighted average number of
common shares outstanding 6,961 6,955 6,960 6,955
<FN>
* Restated to reflect Westmoreland Energy, Inc. as a continuing operation.
The above quarterly information is prepared from the accounts of the Company
without audit.
</FN>
Westmoreland Coal Company
Consolidated Statements of Cash Flows
(In Thousands)
Six Months Ended June 30
1995 1994*
Cash flows from operating activities:
Net loss $ (8,965) $ (6,498)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Gains on the sales of assets (9,538) -
Equity earnings from independent power projects (6,076) (2,383)
Recognition of development fee income (1,750) -
Cash distributions from independent power projects 5,087 1,105
Depreciation, depletion and amortization 10,639 8,554
Decrease in accrual for pneumoconiosis benefits (195) (650)
Decrease in notes and accounts receivables, net
of allowance for doubtful accounts 9,668 14,912
Increase in inventories 2,018 2,900
Decrease in accounts payable and accrued expenses (11,557) (10,511)
Increase in accrual for postretirement
medical costs 3,037 3,683
Other (41) 1,908
Net cash provided (used) by operating activities (7,673) 13,020
Cash flows from investing activities:
Fixed assets additions (342) (2,617)
(Increase) decrease in notes receivable 1,592 (868)
Proceeds from sales of assets 10,131 85
LG&E support fee payment - (3,563)
Net cash provided (used) by investing activities 11,381 (6,963)
Cash flows from financing activities:
Hampton lease buyout premium (1,103) -
Repayment of long-term debt (2,132) (6,159)
Cash deposits to support surety bonds - (4,430)
Dividends paid to shareholders (1,222) (3,144)
Other - 4
Net cash used in financing activities (4,457) (13,729)
Net increase (decrease) in cash and
cash equivalents (749) (7,672)
Cash and cash equivalents, beginning of period 15,453 24,262
Cash and cash equivalents, end of period $ 14,704 $ 16,590
<FN>
* Restated to conform with current classifications and to reflect
Westmoreland Energy, Inc. as a continuing operation.
The above quarterly information is prepared from the accounts of the Company
without audit.
</FN>
Westmoreland Coal Company
Condensed Consolidated Balance Sheets
(In Thousands)
June 30 Dec. 31
1995* 1994
Assets
Current Assets:
Cash and cash equivalents $ 14,704 $ 15,453
Receivables, net 14,380 25,329
Inventories 6,311 8,604
Assets of Cleancoal Terminal Co. held for sale 5,848 -
Other current assets 890 952
Total current assets 42,133 50,338
Net property, plant and equipment 78,929 89,728
Assets of Cleancoal Terminal Co. held for sale - 6,149
Investment in Independent Power Projects 44,035 43,046
Investment in DTA 19,642 20,375
Other assets 19,790 20,103
Total assets $ 204,529 $ 229,739
Liabilities and Shareholders' Equity
Current Liabilities:
Current installments of long-term debt $ 11,074 $ 3,561
Accounts payable and accrued expenses 24,641 35,720
Accrual for postretirement medical costs 8,075 8,075
Preferred dividends payable 1,222 -
Taxes on income 4,123 4,463
Total current liabilities 49,135 51,819
Long-term debt 2,725 12,370
Accrual for pneumoconiosis benefits 14,809 15,004
Accrual for workers' compensation 22,174 21,771
Accrual for postretirement medical costs 39,442 36,405
Other liabilities 11,789 16,613
Deferred income taxes 14,485 14,732
Minority interest 10,655 10,301
Shareholders' equity 39,315 50,724
Total liabilities and shareholders' equity $ 204,529 $ 229,739
<FN>
* Prepared from the accounts of the Company without audit.
</FN>