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Westmoreland Coal Company (NYSE Amex:WLB) reported today a net loss applicable to common shareholders of $28.7 million ($2.88 per diluted share) for 2009 compared to a net loss of $49.9 million ($5.25 per diluted share) for 2008.
“We endured extraordinary circumstances during 2009 and successfully managed controllable expenses and liquidity” said Keith E. Alessi, Westmoreland’s President and CEO. “Unscheduled prolonged outages at two of our customers’ power plants, and then at our own, combined to put extraordinary downward pressure on our results. We navigated through these unprecedented challenges and remained focused on cost containment and conservation of cash. To support those objectives, we made significant progress in managing the high heritage costs that have plagued the company for many years. During the year, we successfully negotiated a modernized method to provide prescription drugs to our union retirees. We also froze the pension plan and eliminated postretirement medical benefits for our non-union workforce. These initiatives contributed to the $106.7 million reduction in associated liabilities at year end. We also successfully extended our WRI line of credit and increased our WRI term debt to significantly improve our overall liquidity. The resumption of business at the three aforementioned power plants combined with new terms on a major coal contract and the effects of our cost containment efforts should result in significantly improved results in 2010. I appreciate the tenacity that our people displayed under these difficult circumstances as well as their loyalty and support.”
Westmoreland’s 2009 net loss includes a $17.1 million non-cash income tax benefit resulting from other comprehensive income gains, $5.1 million of income from the favorable valuation of the conversion feature in the Company’s convertible notes, a $0.8 million gain related to the settlement of a heritage benefit claim, and $4.8 million of expense related to the anticipated settlement of a customer dispute.
The 2008 net loss includes $13.3 million in charges related to various debt financings, a $2.6 million expense for the settlement of two coal royalty claims, and $2.0 million in restructuring charges. These items were partly offset by the $0.9 million gain on the sale of the Company’s interest in the Ft. Lupton power project.
Excluding the $18.1 million of 2009 income and the $17.1 million of 2008 expense from the items discussed above, the 2009 net loss increased by $13.9 million. This increase in net loss was primarily driven by significant coal customer outages and planned and unplanned ROVA maintenance outages in the fourth quarter of 2009. These decreases were partially offset by income from the Company’s Indian Coal Tax Credit transactions as well as reductions in corporate and heritage costs resulting from cost control efforts.
The Company’s revenues in 2009 decreased to $443.4 million compared with $509.7 million in 2008. This decrease was also driven by coal customer outages and a $7.7 million decrease in power revenues due to the unplanned outage.