Westmoreland Coal (WLB) Completes Restatement; Reports Q3 Earnings; Closes ROVA Power Project Refinancing

March 17, 2008 5:51 PM EDT

Westmoreland Coal Company (AMEX: WLB) has completed the previously announced restatement to correct errors in the amounts recorded for the Company’s post-retirement medical benefit obligations and related expenses, its stock-based compensation expense and its state income taxes. The Company has filed its third quarter 2007 financial results which had been delayed pending completion of the restatement process. The Company has also filed the second amendment to its 2006 Annual Report on Form 10-K with the Securities and Exchange Commission to restate its consolidated financial statements as of December 31, 2006 and 2005 and for the years ended December 31, 2006, 2005 and 2004, and selected financial information for the years 2002 to 2006.

The Company identified two groups of 198 individuals that were omitted from the census data used by its actuaries to calculate the Company’s liability for two of its post-retirement medical benefit plans. The Company also identified an error in the calculation of its stock-based compensation expense and an offsetting error in its calculation of its state income taxes.

These errors resulted in an understatement of the Company’s net loss of $5.1 million, $4.3 million, and $3.9 million for the years ending December 31, 2006, 2005, and 2004, respectively, and an understatement of the Company’s liability for post-retirement medical costs of $59.7 million and $20.0 million at December 31, 2006 and 2005, respectively.

Q3 - Net loss applicable to common shareholders was $7.4 million ($0.81 per diluted common share) for the quarter ended September 30, 2007 compared to $2.6 million ($0.29 per diluted common share) for the quarter ended September 30, 2006.

Also, The Company announced the closing of the ROVA power project refinancing also occurred today. The Company received a $5.0 million cash distribution as part of the refinancing. The new financing arrangement with Prudential Capital Group optimizes the debt structure of the project, consolidates the 2006 acquisition debt into the ROVA project debt, eliminates the need for ROVA to renew approximately $37 million in letters of credit and significantly reduces associated cash collateral requirements.[SM]

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