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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): May 15, 1996
WESTMORELAND COAL COMPANY
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(Exact name of registrant as specified in its charter)
DELAWARE 0-752 23-1128670
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(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation or organization) Number Identification No.)
2 North Cascade Avenue, 14th Floor Colorado Springs, Colorado 80903
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 719-442-2600
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Item 2. Acquisition or Disposition of Assets
On May 15, 1996, Westmoreland Coal Company ("Westmoreland") completed
a transaction with Penn Virginia Corporation ("Penn Virginia") which provides
for the relinquishment of certain leases of Westmoreland coal reserves back to
Penn Virginia in exchange for a cash payment of $10,678,000 and other
consideration from Penn Virginia. In addition to cash, Westmoreland received an
18-month option to purchase Penn Virginia's 16% ownership interest in
Westmoreland Resources, Inc.
On May 17, 1996, Westmoreland completed non-cash transactions which
provide for sale of its idled Wentz Complex to Stonega Mining and Processing
Company (Stonega) and its idled Pine Branch Mining Inc. to Roaring Fork Mining
Company (Roaring Fork). Stonega and Roaring Fork will assume certain
reclamation and other liabilities associated with the idled operations as
consideration.
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
The following unaudited condensed pro forma consolidated balance sheet
assumes that the Penn Virginia transaction and the disposition of the Wentz
Complex and Pine Branch Mining Inc. occurred on March 31, 1996.
The following unaudited condensed pro forma consolidated statements of
operations for the three months ended March 31, 1996 and for the year ended
December 31, 1995 assume that the Penn Virginia transaction and the
dispositions of the Wentz Complex and Pine Branch Mining Inc. occurred as of
January 1, 1996 and January 1, 1995, respectively. The pro forma results of
operations are not necessarily indicative of the results of operations that
actually would have been attained if the transactions had occurred on these
dates.
The unaudited condensed pro forma consolidated financial statements
should be read in conjunction with the historical financial statements and
related notes of Westmoreland.
(c) Exhibits
No. Description
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10(o) Agreement among Penn Virginia Corporation and Westmoreland Coal
Company
10(p) Amendment and Restatement of Virginia Lease
10(q) Assignment Agreement between Pine Branch Mining Inc. and Roaring
Fork Mining, Inc.
10(r) Assignment Agreement between Westmoreland Coal Company and
Stonega Mining and Processing Company
99.1 Press release dated May 15, 1996
99.2 Press release dated May 22, 1996
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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: May 29, 1996 By: /s/ ROBERT J. JAEGER
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Robert J. Jaeger
Senior Vice President - Finance
Treasurer, and Controller
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WESTMORELAND COAL COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
Three months ended March 31, 1996
(Unaudited)
Pro Forma
Historical Adjustments Pro Forma
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(in thousands)
Current Assets:
Cash and cash equivalents $ 6,321 10,678(1) 16,999
Notes and accounts receivable (net) 6,701 6,701
Inventories 784 784
Other current assets 803 803
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Total Current Assets 14,609 10,678 25,287
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Property, plant and equipment (net) 59,445 59,445
Investment in Independent
Power Operations 49,489 49,489
Investment in DTA 19,131 19,131
Other assets 21,805 21,805
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Total Assets $ 164,479 10,678 175,157
========= ========= =========
Total Current Liabilities 29,463 53(1) 29,516
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Accrual for workers' compensation 26,795 26,795
Accrual for postretirement medical costs 75,941 75,941
Other liabilities 69,930 (3,001)(2) 66,929
Shareholders' (Deficit):
Preferred Stock
575 575
Common Stock 17,402 17,402
Other Paid in Capital 94,641 94,641
Accumulated (deficit) (150,268) 13,626 (136,642)
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Total shareholders' deficit (37,650) 13,626 (24,024)
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Total Liabilities and
Shareholders' (Deficit) $ 164,479 10,678 175,157
========= ========= =========
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WESTMORELAND COAL COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Three months ended March 31, 1996
(Unaudited)
Pro Forma
Historical Adjustments Pro Forma
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(in thousands except per share data)
Revenues:
Coal $ 10,552 (13)(3) 10,539
Independent power - equity in
earnings and fees 4,351 4,351
Services 1,457 1,457
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16,360 (13) 16,347
Costs and expenses:
Cost of coal sold 11,387 (217)(3) 11,170
Heritage costs 3,630 3,630
Other 4,371 4,371
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19,388 (217) 19,171
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Operating (loss) (3,028) (204) (2,824)
Gains on the sales of assets 2,441 -- (5) 2,441
Other income 1,671 143(4) 1,814
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Income before income tax expense
and minority interest 1,084 347 1,431
Income tax expense 317 317
Minority Interest 311 311
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Net income $ 456 347 803
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Less preferred stock dividends
in arrears (1,222) (1,222)
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Net loss applicable to common
shareholders $ (766) 347 (419)
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Net income (loss) per share applicable
to common shareholders $ (.11) (.06)
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Weighted average number of common
shares outstanding 6,965 6,965
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WESTMORELAND COAL COMPANY AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Year ended December 31, 1995
(Unaudited)
Pro Forma
Historical Adjustments Pro Forma
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(in thousands except per share data)
Revenues:
Coal $ 111,303 (4,387)(3) 106,916
Independent power - equity in
earnings and fees 16,968 16,968
Services 2,637 2,637
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130,908 (4,387) 126,521
Costs and expenses:
Cost of coal sold 129,353 (5,902)(3) 123,451
Depreciation, depletion and
amortization 14,903 (682)(3) 14,221
Selling and administrative 14,458 14,458
Unusual charges 66,623 (1,377)(3) 65,246
Other 1,131 1,131
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226,468 (7,961) 218,507
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Operating (loss) (95,560) 3,574 (91,986)
Gains on the sales of assets 9,088 -- (5) 9,088
Other income 2,942 632(4) 3,574
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Income before income tax expense
and minority interest (83,530) 4,206 (79,324)
Income tax expense 1,488 1,488
Minority Interest 1,368 1,368
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Net income $ (86,386) 4,206 (82,180)
========= ========= =========
Less preferred stock dividends
in arrears 4,888 4,888
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Net loss applicable to common
shareholders $ (91,274) 4,206 (87,068)
========= ========= =========
Net income (loss) per share applicable
to common shareholders $ (13.11) (12.50)
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Weighted average number of common
shares outstanding 6,965 6,965
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WESTMORELAND COAL COMPANY AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
A. BASIS OF PRESENTATION
On May 15, 1996, Westmoreland relinquished certain coal reserves held under
lease agreements with Penn Virginia, back to Penn Virginia. In consideration,
Westmoreland received a cash payment of $10,800,000, net of $122,000 owed for
related personal property and real estate taxes. In addition, Westmoreland
received an eighteen month option to purchase Penn Virginia's 16% ownership
interest in Westmoreland Resources, Inc. (WRI) for $3,000,000. Westmoreland
retained the right to use and maintain certain surface facilities, and received
assignable access rights to Westmoreland's Stone Mountain Reserves. The
original lease agreement between Westmoreland and Penn Virginia remains in
effect and certain subleases were terminated an/or assigned to third parties.
The accompanying condensed pro forma consolidated balance sheet includes pro
forma adjustments to give effect to the relinquishment of the coal reserves to
Penn Virginia and the proceeds received therefrom, as of March 31, 1996. The
condensed pro forma consolidated statements of operations include pro forma
adjustments to give effect to the use of proceeds for the Penn Virginia
transaction.
On May 15, 1996, Westmoreland entered into agreements to sell its idled Wentz
Complex to Stonega and to sell its idled Pine Branch Mining Inc. to Roaring
Fork, in exchange for the assumption of certain reclamation and other
liabilities. These non-cash transactions closed on May 17, 1996.
The Wentz Complex transaction assigns all of the reclamation and certain
environmental liabilities to Stonega. In addition, Stonega will be responsible
for all employee benefit costs for any former Westmoreland employees who
subsequently are hired by Stonega. Certain environmental liabilities, as well
as certain land leases have been retained by Westmoreland.
The Pine Branch Mining Inc. transaction assigns certain reclamation and
environmental liabilities and certain equipment leases to Roaring Fork. In
addition, Roaring Fork will be responsible for all employee benefit costs for
any former Westmoreland employees who subsequently are hired by Roaring Fork.
The accompanying condensed pro forma consolidated balance sheet includes pro
forma adjustments to give effect to the dispositions of the Wentz Complex and
Pine Branch Mining Inc. as of March 31, 1996. The condensed pro forma
consolidated statements of operations include pro forma adjustments to give
effect to the dispositions of these operations for the three months ended March
31, 1996 and the year ended December 31, 1995.
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NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
B. PRO FORMA ADJUSTMENTS
The following pro forma adjustments have been made to the historical balance
sheet of Westmoreland at March 31, 1996 and to the historical statements of
operations for the three months ended March 31, 1996 and the year ended
December 31, 1995.
1. To record the relinquishment of certain coal reserves to Penn
Virginia, for total proceeds of $10,800,000, net of related personal
property and real estate taxes of $122,000 and to record estimated
transactions costs of $175,000.
2. To record the Wentz Complex and Pine Branch Mining Inc. dispositions
and the assignment of $3,001,000 of reclamation and environmental
liabilities. As of March 31, 1996, all assets related to the Wentz
Complex and Pine Branch Mining Inc. had been impaired and therefore,
no adjustment for assets dispositions is required. In addition, no pro
forma adjustments have been made for employee benefit costs to be
transferred to Stonega and Roaring Fork as no Westmoreland employees
have been hired to date.
3. To eliminate the revenue and expenses attributable to the Wentz
Complex and Pine Branch Mining Inc., including the rent expense
related to the equipment leases.
4. To record the assumed interest income on the net proceeds of
$10,678,000, calculated at an assumed rate of 5.37% for the three
months ended March 31, 1996 and at an assumed rate of 5.86% for the
year ended December 31, 1995.
5. In May 1996, Westmoreland will record a gain of $13,626,000 related to
the disposition of these assets. Such gains have not been included in
these pro forma condensed consolidated financial statements.
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EXHIBIT INDEX
Exhibit
No. Description
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10(o) Agreement among Penn Virginia Corporation and Westmoreland Coal
Company
10(p) Amendment and Restatement of Virginia Lease
10(q) Assignment Agreement between Pine Branch Mining Inc. and Roaring
Fork Mining, Inc.
10(r) Assignment Agreement between Westmoreland Coal Company and
Stonega Mining and Processing Company
99.1 Press release dated May 15, 1996
99.2 Press release dated May 22, 1996