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EX-10.5 - EXHIBIT 10.5 - WESTMORELAND COAL Coexh10-5_2015q1.htm
EX-10.2 - EXHIBIT 10.2 - WESTMORELAND COAL Coexh10-2_2015q1.htm
EX-10.3 - EXHIBIT 10.3 - WESTMORELAND COAL Coexh10-3_2015q1.htm
EX-10.1 - EXHIBIT 10.1 - WESTMORELAND COAL Coexh10-1_2015q1.htm
EXCEL - IDEA: XBRL DOCUMENT - WESTMORELAND COAL CoFinancial_Report.xls
EX-10.6 - EXHIBIT 10.6 - WESTMORELAND COAL Coexh10-6_2015q1.htm
EX-95.1 - EXHIBIT 95.1 - WESTMORELAND COAL Coexh95-1_2015q1.htm
EX-31.1 - EXHIBIT 31.1 - WESTMORELAND COAL Coexh31-1_2015q1.htm
EX-31.2 - EXHIBIT 31.2 - WESTMORELAND COAL Coexh31-2_2015q1.htm
EX-10.7 - EXHIBIT 10.7 - WESTMORELAND COAL Coexh10-7_2015q1.htm
EX-32 - EXHIBIT 32 - WESTMORELAND COAL Coexh32_2015q1.htm
EX-10.4 - EXHIBIT 10.4 - WESTMORELAND COAL Coexh10-4_2015q1.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 __________________________________________
FORM 10-Q
 __________________________________________
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2015
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                 to                 
Commission File No. 001-11155
  ___________________________________________
WESTMORELAND COAL COMPANY
(Exact name of registrant as specified in its charter)
 __________________________________________
Delaware
23-1128670
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
 
9540 South Maroon Circle, Suite 200
Englewood, CO
80112
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (855) 922-6463
 __________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
o
 
Accelerated filer
x
Non-accelerated filer
o
(Do not check if a smaller reporting company.)
Smaller reporting company
o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
Indicate the number of shares outstanding of each of the issuer's classes of common stock as of April 23, 2015: 17,908,598 shares of common stock, $2.50 par value.




TABLE OF CONTENTS
 


2


PART I - FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS


WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
 
March 31,
2015
 
December 31,
2014
 
(In thousands)
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
53,393

 
$
14,258

Receivables:
 
 
 
Trade
154,167

 
143,052

Loan and lease receivables
9,609

 
10,493

Contractual third-party reclamation receivables
14,457

 
12,462

Other
16,300

 
19,923

 
194,533

 
185,930

Inventories
133,819

 
133,855

Deferred income taxes
14,696

 
13,083

Other current assets
15,077

 
13,645

Total current assets
411,518

 
360,771

Property, plant and equipment:
 
 
 
Land and mineral rights
496,034

 
500,226

Plant and equipment
989,914

 
956,112

 
1,485,948

 
1,456,338

Less accumulated depreciation, depletion and amortization
562,413

 
528,676

Net property, plant and equipment
923,535

 
927,662

Loan and lease receivables
65,417

 
73,180

Advanced coal royalties
19,637

 
17,508

Reclamation deposits
76,715

 
77,907

Restricted investments and bond collateral
129,813

 
164,389

Contractual third-party reclamation receivables, less current portion
100,818

 
104,021

Investment in joint venture
32,395

 
33,409

Intangible assets, net of accumulated amortization of $15.8 million and $15.3 million at March 31, 2015 and December 31, 2014, respectively
30,784

 
31,315

Other assets
39,116

 
39,416

Total Assets
$
1,829,748

 
$
1,829,578

See accompanying Notes to Consolidated Financial Statements.

3


WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets (Continued)
(Unaudited)
 
March 31,
2015
 
December 31,
2014
 
(In thousands)
Liabilities and Shareholders’ Deficit
 
 
 
Current liabilities:
 
 
 
Current installments of long-term debt
$
42,554

 
$
43,136

Revolving lines of credit

 
9,576

Accounts payable and accrued expenses:
 
 
 
Trade and other accrued liabilities
141,479

 
149,514

Interest payable
9,180

 
2,699

Production taxes
52,174

 
45,747

Workers’ compensation
1,018

 
671

Postretirement medical benefits
13,263

 
13,263

SERP
368

 
368

Deferred revenue
17,372

 
13,175

Asset retirement obligations
48,024

 
43,289

Other current liabilities
27,054

 
52,459

Total current liabilities
352,486

 
373,897

Long-term debt, less current installments
1,004,623

 
932,075

Workers’ compensation, less current portion
6,223

 
6,315

Excess of black lung benefit obligation over trust assets
11,916

 
11,252

Postretirement medical benefits, less current portion
293,253

 
293,156

Pension and SERP obligations, less current portion
48,226

 
49,779

Deferred revenue, less current portion
32,914

 
35,255

Asset retirement obligations, less current portion
399,378

 
409,456

Intangible liabilities, net of accumulated amortization of $13.8 million and $13.5 million at March 31, 2015 and December 31, 2014, respectively
4,271

 
4,538

Deferred income taxes
37,444

 
34,852

Other liabilities
27,686

 
28,448

Total liabilities
2,218,420

 
2,179,023

Shareholders’ deficit:
 
 
 
Preferred stock of $1.00 par value
 
 
 
Authorized 5,000,000 shares; issued and outstanding nil shares at March 31, 2015 and 91,669 shares at December 31, 2014

 
92

Common stock of $2.50 par value
 
 
 
Authorized 30,000,000 shares; issued and outstanding 17,769,746 shares at March 31, 2015 and 17,102,777 shares at December 31, 2014
44,421

 
42,756

Other paid-in capital
184,475

 
185,644

Accumulated other comprehensive loss
(150,046
)
 
(124,296
)
Accumulated deficit
(480,637
)
 
(468,902
)
Total Westmoreland Coal Company shareholders’ deficit
(401,787
)
 
(364,706
)
Noncontrolling interest
13,115

 
15,261

Total deficit
(388,672
)
 
(349,445
)
Total Liabilities and Deficit
$
1,829,748

 
$
1,829,578

See accompanying Notes to Consolidated Financial Statements.

4


WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
 
Three Months Ended March 31,
 
2015
 
2014
 
(In thousands, except per share data)
Revenues
$
371,483

 
$
180,202

Cost, expenses and other:
 
 
 
Cost of sales
301,711

 
138,630

Depreciation, depletion and amortization
38,059

 
16,059

Selling and administrative
26,716

 
13,331

Heritage health benefit expenses
3,059

 
3,544

Loss on sale/disposal of assets
229

 
38

Restructuring charges
553

 
397

Derivative gain
(5,276
)
 

Income from equity affiliates
(2,025
)
 

Other operating loss
2

 
150

 
363,028

 
172,149

Operating income
8,455

 
8,053

Other income (expense):
 
 
 
Interest expense
(24,735
)
 
(20,798
)
Interest income
2,140

 
302

Gain (loss) on foreign exchange
2,109

 
(6,790
)
Other income
193

 
93

 
(20,293
)
 
(27,193
)
Loss before income taxes
(11,838
)
 
(19,140
)
Income tax expense (benefit)
2,040

 
(110
)
Net loss
(13,878
)
 
(19,030
)
Less net loss attributable to noncontrolling interest
(2,146
)
 

Net loss attributable to Westmoreland Coal Company
(11,732
)
 
(19,030
)
Less preferred stock dividend requirements

 
261

Net loss applicable to common shareholders
$
(11,732
)
 
$
(19,291
)
Net loss per share applicable to common shareholders:
 
 
 
Basic and diluted
$
(0.67
)
 
$
(1.30
)
Weighted average number of common shares outstanding
 
 
 
Basic and diluted
17,621

 
14,787

See accompanying Notes to Consolidated Financial Statements.

5


WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Consolidated Statements of Comprehensive Loss
(Unaudited)
 
Three Months Ended March 31,
 
2015
 
2014
 
(In thousands)
Net loss
$
(13,878
)
 
$
(19,030
)
Other comprehensive income (loss):
 
 
 
Pension and other postretirement plans:
 
 
 
Amortization of accumulated actuarial gains or losses, pension
1,110

 
359

Adjustments to accumulated actuarial losses and transition obligations, pension
203

 

Amortization of accumulated actuarial gains or losses, transition obligations, and prior service costs, postretirement medical benefit
327

 
5

Tax effect of other comprehensive income gains
(575
)
 
(138
)
Change in foreign currency translation adjustment
(27,140
)
 

Unrealized and realized gains and losses on available-for-sale securities
325

 

Other comprehensive income
(25,750
)
 
226

Comprehensive loss attributable to the Parent company
$
(39,628
)
 
$
(18,804
)
See accompanying Notes to Consolidated Financial Statements.

6


WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Consolidated Statements of Deficit
Three Months Ended March 31, 2015
(Unaudited)

 
Preferred Stock
 
Common Stock
 
Other
Paid-In
Capital
 
Accumulated
Other
Comprehensive Loss
 
Accumulated
Deficit
 
Non-controlling
Interest
 
Total
Deficit
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
 
(In thousands, except shares data)
Balance at December 31, 2014
91,669

 
$
92

 
17,102,777

 
$
42,756

 
$
185,644

 
$
(124,296
)
 
$
(468,902
)
 
$
15,261

 
$
(349,445
)
Preferred dividends declared

 

 

 

 

 

 
(3
)
 

 
(3
)
Common stock issued as compensation

 

 
29,801

 
75

 
1,447

 

 

 

 
1,522

Conversion and redemption of convertible notes and securities
(91,669
)
 
(92
)
 
604,557

 
1,511

 
(1,738
)
 

 

 

 
(319
)
Issuance of restricted stock

 

 
32,611

 
79

 
(878
)
 

 

 

 
(799
)
Net loss

 

 

 

 

 

 
(11,732
)
 
(2,146
)
 
(13,878
)
Other comprehensive loss

 

 

 

 

 
(25,750
)
 

 

 
(25,750
)
Balance at March 31, 2015

 
$

 
17,769,746

 
$
44,421

 
$
184,475

 
$
(150,046
)
 
$
(480,637
)
 
$
13,115

 
$
(388,672
)
See accompanying Notes to Consolidated Financial Statements.

7


WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
 
Three Months Ended March 31,
 
2015
 
2014
 
(In thousands)
Cash flows from operating activities:
 
 
 
Net loss
$
(13,878
)
 
$
(19,030
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Depreciation, depletion and amortization
38,059

 
16,059

Accretion of asset retirement obligation and receivable
7,031

 
3,479

Non-cash tax benefits
(575
)
 
(138
)
Amortization of intangible assets and liabilities, net
(253
)
 
153

Share-based compensation
1,522

 
728

Loss on sale/disposal of assets
229

 
38

Non-cash interest expense
1,327

 

Amortization of deferred financing costs
2,532

 
271

Other
(29
)
 

Gain on sales of investment securities
(15
)
 

Gain on derivative
(5,276
)
 

Loss (gain) on foreign exchange
(2,109
)
 
6,790

Income from equity affiliates
(2,025
)
 

Distributions from equity affiliates
144

 

Changes in operating assets and liabilities:
 
 
 
Receivables
(15,899
)
 
5,202

Inventories
(4,957
)
 
4,525

Excess of black lung benefit obligation over trust assets
664

 
701

Deferred income tax
2,766

 

Accounts payable and accrued expenses
12,336

 
10,959

Deferred revenue
605

 
(1,302
)
Income tax payable
(481
)
 
28

Accrual for workers’ compensation
(1,158
)
 
(69
)
Asset retirement obligations
(4,838
)
 
(1,352
)
Accrual for postretirement medical benefits
424

 
906

Pension and SERP obligations
1,211

 
(293
)
Other assets and liabilities
(15,717
)
 
1,993

Net cash provided by operating activities
1,640

 
29,648

Cash flows from investing activities:
 
 
 
Additions to property, plant and equipment
(13,027
)
 
(3,050
)
Change in restricted investments and bond collateral and reclamation deposits
538

 
(465,544
)
Cash released from escrow for acquisition
34,000

 

Cash payments related to acquisitions and other
(35,887
)
 

Cash acquired related to acquisitionss
2,783

 

Net proceeds from sales of assets
1,123

 

Proceeds from the sale of restricted investments
1,568

 

Payments related to loan and lease receivables
(1,044
)
 

Receipts from loan and lease receivables
2,591

 

Receivable from customer for property and equipment purchases

 
(10
)
Other
(3,295
)
 
(60
)
Net cash used in investing activities
(10,650
)
 
(468,664
)
Cash flows from financing activities:
 
 
 
Change in book overdrafts
420

 
(315
)
Borrowings from long-term debt, net of debt premium
79,359

 
454,219

Repayments of long-term debt
(17,160
)
 
(6,239
)
Borrowings on revolving lines of credit
32,675

 


8


Repayments on revolving lines of credit
(42,251
)
 

Debt issuance costs and other refinancing costs
(2,806
)
 
(7,598
)
Preferred dividends paid
(3
)
 
(261
)
Proceeds from issuance of common shares

 

Exercise of stock options

 

Redemption of preferred stock
(319
)
 

Net cash provided by financing activities
49,915

 
439,806

Effect of foreign exchange rates on cash
(1,770
)
 

Net increase in cash and cash equivalents
39,135

 
790

Cash and cash equivalents, beginning of period
14,258

 
61,110

Cash and cash equivalents, end of period
$
53,393

 
$
61,900

Non-cash transactions:
 
 
 
Accrued purchases of property and equipment
$
8,107

 
$
983

Capital leases and other financing sources
12,700

 
12,936

See accompanying Notes to Consolidated Financial Statements.

9


WESTMORELAND COAL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1.    BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include accounts of Westmoreland Coal Company, or the Company, or Parent, and its subsidiaries and controlled entities. The Company’s current principal activities are conducted within the United States and Canada. U.S. activities include the production and sale of coal from its mines in Montana, Wyoming, North Dakota, Texas, and Ohio and the ownership of the Roanoke Valley power plants, or ROVA, in North Carolina. Canadian activities include the production and sale of coal from six surface mines in Alberta and Saskatchewan, selling char to the barbecue briquette industry, and a 50% interest in a joint venture which produces activated carbon. The Company’s activities are primarily conducted through wholly owned subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation.
U.S. Coal Operations – The Company’s Kemmerer Mine is owned by its subsidiary Westmoreland Kemmerer, Inc., or Kemmerer. The Company’s Absaloka Mine is owned by its subsidiary Westmoreland Resources, Inc., or WRI. The Beulah, Jewett, Rosebud, and Savage Mines are owned through the Company’s subsidiary Westmoreland Mining LLC, or WML. The Company’s Buckingham Mine is owned by its subsidiary WCC Land Holding Company, Inc. See Note 2 for additional information on the Buckingham Mine.
Canadian Operations – Prairie Mines & Royalty ULC, or PMRU, operates five surface coal mines in Alberta and Saskatchewan. PMRU owns and operates the Paintearth, Sheerness, Genesee, Poplar River and Estevan mines. PMRU directly owns a 50% joint venture interest in the Estevan Activated Carbon Joint Venture, at the Estevan mine, which produces activated carbon for the removal of mercury from flue gas. PMRU also sells char to the barbecue briquette industry. Coal Valley Resources Inc., or CVRI, operates the Coal Valley Mine which is a surface mine located in West Central Alberta where the majority of coal is exported overseas to Asian utility companies and commodity traders. CVRI operated the Obed Mountain surface mine, which ceased production in 2013 and is currently in reclamation.
Master Limited Partnership – On December 31, 2014, the Company acquired Westmoreland Resources GP, LLC (formerly Oxford Resources GP, LLC) (the “GP”), the general partner of Westmoreland Resource Partners, LP (formerly Oxford Resource Partners, LP) (NYSE: WMLP, “WMLP”). Concurrent with the acquisition of the GP, Westmoreland contributed certain royalty-bearing coal reserves to WMLP in return for common units representing limited partner interests in WMLP, resulting in the Company owning approximately 79% of the outstanding equity interests in WMLP. WMLP is a low-cost producer of high value thermal coal in Northern Appalachia. WMLP markets its coal primarily to large electric utilities with coal-fire, base load scrubbed power plants under long-term coal sales contracts. See Note 2 for additional information.
The consolidated financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles and require use of management’s estimates. The financial information contained in this Form 10-Q 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 months ended March 31, 2015 are not necessarily indicative of results to be expected for the year ending December 31, 2015.
These quarterly consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (the “2014 Form 10-K”). The accounting principles followed by the Company are set forth in the Notes to the Company’s consolidated financial statements in its 2014 Form 10-K. 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.
Debt Obligations
As of March 31, 2015, the Company is subject to three major debt arrangements: (1) $350.0 million in aggregate principal amount of 8.75% senior secured notes at the parent level (the “8.75% Notes”); (2) a secured term loan facility at the parent level in the aggregate principal amount of $423.9 million (the “WCC Term Loan Facility”); and (3) a secured term loan facility at WMLP in the aggregate principal amount of $176.3 million (the “WMLP Term Loan Facility”).
The 8.75% Notes are guaranteed by Westmoreland Energy LLC, Westmoreland Kemmerer, Inc., 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). The 8.75% Notes are not guaranteed by Westmoreland Canada LLC or any of its subsidiaries, nor are they guaranteed by Westmoreland Resources GP, LLC or Westmoreland Resource Partners, LP, referred to as the Non-guarantors. The WCC Term Loan Facility is guaranteed by

10

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT.)

Westmoreland Energy LLC, Westmoreland Kemmerer, Inc., Westmoreland Mining LLC, Westmoreland Resources, Inc. and certain other direct and indirect subsidiaries of the Company (other than Absaloka Coal, LLC, Westmoreland Risk Management, Inc., Westmoreland Canada, LLC, Westmoreland Resources GP, LLC, Westmoreland Resource Partners, LP and certain other immaterial subsidiaries).
Borrowings under the WMLP Term Loan Facility are secured by substantially all of WMLP’s and its subsidiaries’ assets.
Inventories
Inventories, which include materials and supplies as well as raw coal, are stated at the lower of cost or market. Cost is determined using the average cost method. Coal inventory costs include labor, supplies, equipment, depreciation, depletion, amortization, operating overhead and other related costs.
Derivatives
The Company enters into financial derivatives to manage exposure to fluctuations in foreign currency exchange rates and power prices. The Company does not utilize derivative financial instruments for trading purposes or for speculative purposes.
The Company’s derivative instruments are recorded at fair value with changes in fair value recognized in the Consolidated Statements of Operations at the end of each period in Gain (loss) on foreign exchange or Derivative gain.
Foreign Exchange Transactions
Amounts held and transactions denominated in foreign currencies other than the operating unit’s functional currency give rise to foreign exchange gains and losses which are included within Gain (loss) on foreign exchange.
Equity-Method Investments
The Company’s 50% interest in the Estevan Activated Carbon Joint Venture is accounted for under the equity method of accounting. Investments in unconsolidated affiliates that the Company has the ability to exercise significant influence over, but not control, are accounted for under the equity method of accounting. Under the equity method of accounting, the Company records its proportionate share of the entity’s net income or loss at each reporting period in Income from equity affiliates on the Consolidated Statements of Operations with a corresponding entry to increase or decrease the carrying value of the investment.
Loan and Lease Receivables
The Company periodically makes loans and finance leases at the Genesee mine in accordance with its operating agreement with its only customer for purposes of funding capital expenditures and working capital requirements. Finance lease and loan receivables are measured at the present value of the future lease payments at the inception of the arrangement. Lease payments received are comprised of a repayment of principal and finance income. Finance income is recognized based on the interest rate implicit in the finance lease. PMRU recognizes finance income over periods between 3 and 27 years, which reflect a constant periodic return on its net investment in the finance lease. Initial direct costs are included in the initial measurement of the finance lease receivables and reduce the amount of income recognized over the lease term.
Income Taxes
The Company’s effective tax rate in the three months ended March 31, 2015, was lower than the effective tax rate in the three months ended March 31, 2014, primarily due to the forecasted 2015 decrease in pre-tax loss and an increase in income tax expense related to the our acquisition of PMRU and CVRI (the “Canadian Acquisition”).

For the three months ended March 31, 2015, the Company’s effective tax rate differs from the statutory rate primarily due to the U.S. valuation allowance and foreign operations. For the three months ended March 31, 2014, the Company’s effective tax rate differs from the statutory rate primarily due to the U.S. valuation allowance.

Foreign Currency Translation
The functional currency of the Company’s Canadian operations is the Canadian dollar. The Company’s Canadian operations’ assets and liabilities are translated at period end exchange rates, and revenues and costs are translated using average exchange rates for the period. Foreign currency translation adjustments are reported in Other comprehensive income.


11

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT.)

Noncontrolling Interest
The Company owns 100% of the GP equity units and thereby has controlling interest of WMLP. The Company includes the accounts of the GP and provides for a noncontrolling interest in WMLP, which was approximately 21% at March 31, 2015.
Recently Adopted Accounting Pronouncements
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 consolidated results of operations, cash flows and financial position.
In April 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized liability, be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The new guidance should be applied on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. Upon transition, an entity is required to comply with the applicable disclosures for a change in an accounting principle. These disclosures include the nature of and reason for the change in accounting principle, the transition method, a description of the prior-period information that has been retrospectively adjusted, and the effect of the change on the financial statement line items (i.e., debt issuance cost asset and the debt liability). The new guidance is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years, with early adoption permitted for financial statement that have not been previous issued. Management projects the impact to the financial statements resulting in balance sheet reclassification for which the Deferred financing costs, net account is recharacterized as a a contra-liability reducing the Long-term debt, less current installments balance for each of the respective periods upon adoption.

2.    ACQUISITIONS
Acquisition of Buckingham Coal Company, LLC
On January 1, 2015, Westmoreland completed the acquisition of Buckingham Coal Company, LLC, an Ohio-based coal supplier (“Buckingham”), pursuant to an agreement dated January 1, 2015 among WCC Land Holding Company, Inc., an affiliate of the Company, for an initial cash purchase price of $34.0 million, reduced by a working capital adjustment of $1.6 million (the “Buckingham Acquisition”). The Buckingham operations are included in the Company’s Coal - U.S. segment.
The acquisition of Buckingham has been accounted for under the acquisition method of accounting that requires the total purchase consideration to be allocated to the assets acquired and liabilities assumed based on estimates of fair value.
The allocation of the purchase price is preliminary pending the completion of various analyses and the finalization of estimates. During the measurement period (which is not to exceed one year from the acquisition date), additional assets or liabilities may be recognized if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets or liabilities as of that date. The preliminary allocation may be adjusted after obtaining additional information regarding, among other things, asset valuations, liabilities assumed and revisions of previous estimates. These adjustments may be significant and will be accounted for retrospectively.
A summary of the purchase consideration and a preliminary allocation of the purchase consideration follows (in millions):
 
Provisional
as of
March 31,
2015
Purchase Price:
 
Cash paid - Initial payment
$
34.0

Cash received - Working capital adjustment
(1.6
)
Net cash consideration
$
32.4

 
 
Preliminary allocation of purchase price:
 
Assets:
 
     Cash and cash equivalents
$
2.8

     Inventories - materials and supplies
2.0

     Inventories - coal

     Other current assets
0.1

Total current assets
4.9

     Land and mineral rights
11.0

     Plant and equipment
24.7

Total Assets
40.6

Liabilities:
 
     Trade payables and other accrued liabilities
(4.4
)
     Asset retirement obligations
(1.0
)
Total current liabilities
(5.4
)
     Asset retirement obligations, less current portion
(2.8
)
Total Liabilities
(8.2
)
Net fair value
$
32.4

Acquisition of General Partner of Westmoreland Resource Partners, LP
On December 31, 2014, the Company completed the acquisition of the GP (the “GP Acquisition”), and completed a contribution of certain royalty-bearing coal reserves to WMLP in return for WMLP common units (the “Contribution” and together with the GP Acquisition, the “WMLP Transactions”).
Westmoreland paid $30.0 million in December 2014 and $3.5 million in January 2015 to acquire the GP; and received 4,512,500 common units of WMLP (on a post-split basis following a 12-to-1 reverse split of WMLP’s common and general partner units) as consideration for the Contribution.
In connection with the closing, WMLP’s name was changed to Westmoreland Resource Partners, LP from Oxford Resource Partners, LP and the name of the GP was changed to Westmoreland Resources GP, LLC from Oxford Resources GP, LLC. The common units of WMLP trade on the NYSE under the symbol “WMLP”.
The acquisition of the GP has been accounted for under the acquisition method of accounting that requires the total purchase consideration to be allocated to the assets acquired and liabilities assumed based on estimates of fair value.
The allocation of the purchase price is preliminary pending the completion of various analyses and the finalization of estimates. During the measurement period (which is not to exceed one year from the acquisition date), additional assets or liabilities may be recognized if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets or liabilities as of that date. The preliminary allocation may be adjusted after obtaining additional information regarding, among other things, asset valuations, liabilities assumed and revisions of previous estimates. These adjustments may be significant and will be accounted for retrospectively.

12

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT.)

A summary of the purchase consideration and a preliminary allocation of the purchase consideration follows (in millions):
Purchase Price:
 
Cash paid at closing
$
30.0

Contingent consideration
3.5

Fair value of outstanding WMLP units (1)
10.8

Total purchase consideration
$
44.3

 
 
Preliminary allocation of purchase price:
 
Assets:
 
     Trade receivables and other
$
22.5

     Inventories - materials and supplies
7.4

     Inventories - coal
6.6

     Other current assets
1.3

Total current assets
37.8

     Land and mineral rights
38.6

     Plant and equipment
134.0

     Advanced coal royalties
9.2

     Restricted investments and bond collateral
10.6

     Intangible assets
31.0

     Other assets
0.2

Total Assets
261.4

Liabilities:
 
     Trade payables and other accrued liabilities
(19.1
)
     Asset retirement obligations
(7.8
)
     Other current liabilities
(4.0
)
Total current liabilities
(30.9
)
     Long-term debt, less current installments
(160.1
)
     Asset retirement obligations, less current portion
(23.9
)
     Warrants
(2.0
)
     Other liabilities
(0.2
)
Total Liabilities
(217.1
)
Net Assets
44.3

Non-controlling Interest
(10.8
)
Invested Equity
$
33.5

(1) Represents the market price of WMLP units outstanding using the December 31, 2014 closing price of $1.00.
No goodwill was recorded in the GP Acquisition and $31.0 million of intangible assets to be amortized over a fifteen-year period were identified in the GP Acquisition. The intangible asset identified in the GP Acquisition is a favorable terminal lease at a dock in Ohio which was fair valued based on more favorable market prices than contracted prices in lease agreements as measured during a business combination.
Canadian Acquisition
On April 28, 2014, Westmoreland Coal Company acquired PMRU and CVRI. These Canadian operations include six producing thermal coal mines in the Canadian provinces of Alberta and Saskatchewan, a char production facility, and a 50% interest in an activated carbon plant.

13

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT.)

Unaudited Pro Forma Information
The following unaudited pro forma information has been prepared for illustrative purposes only and assumes the acquisitions occurred on January 1, 2013, in the case of the Canadian Acquisition and the WMLP Transactions, and on January 1, 2014, in the case of the Buckingham Acquisition. The unaudited pro forma results have been prepared based on estimates and assumptions, which the Company believes are reasonable, however, they are not necessarily indicative of the consolidated results of operations had the acquisitions occurred on the dates indicated above, or of future results of operations.
(In thousands, except per share data)
Three Months Ended March 31,
 
2014
Total Revenues
 
As reported
$
180,202

Pro forma (unaudited)
$
465,791

 


Operating Income
 
As reported
$
8,053

Pro forma (unaudited)
$
36,176

 
 
Net income (loss) applicable to common shareholders
 
As reported
$
(19,291
)
Pro forma (unaudited)
$
1,382

 
 
Net income (loss) per share applicable to common shareholders
 
As reported
$
(1.30
)
Pro forma (unaudited)
$
0.09


3.    INVENTORIES
Inventories consisted of the following:
 
March 31, 2015
 
December 31, 2014
 
(In thousands)
Coal stockpiles
$
42,266

 
$
41,795

Coal fuel inventories
9,524

 
6,531

Materials and supplies
84,713

 
88,584

Reserve for obsolete inventory
(2,684
)
 
(3,055
)
Total
$
133,819

 
$
133,855



14

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT.)

4.    RESTRICTED INVESTMENTS AND BOND COLLATERAL
The Company’s restricted investments and bond collateral consist of the following: 
 
March 31, 2015
 
December 31, 2014
 
(In thousands)
Coal - U.S. Segment:
 
 
 
Reclamation bond collateral:
 
 
 
Kemmerer Mine
$
25,692

 
$
25,282

Absaloka Mine
11,799

 
11,781

Rosebud Mine
3,145

 
3,145

Beulah Mine
1,270

 
1,270

Buckingham acquisition escrow

 
34,000

Coal - Canada Segment:
 
 
 
PMRU
18,209

 
18,199

CVRI
31,869

 
31,866

Coal - WMLP Segment:
 
 
 
WMLP
9,547

 
10,634

Power Segment:
 
 
 
Power contract collateral
12,600

 
12,600

Corporate Segment:
 
 
 
Postretirement medical benefit bonds
8,834

 
8,780

Workers’ compensation bonds
6,848

 
6,832

Total restricted investments and bond collateral
$
129,813

 
$
164,389

For all of its restricted investments and bond collateral accounts, the Company can select from limited fixed-income investment options for the funds and receive the investment returns on these investments. Funds in the restricted investments and bond collateral accounts are not available to meet the Company’s general cash needs.
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 loss.
The Company’s carrying value and estimated fair value of its restricted investments and bond collateral at March 31, 2015 were as follows:
 
Carrying Value
 
Fair Value
 
Fair Value Hierarchy
 
(In thousands)
 
 
Cash and cash equivalents
$
92,771

 
$
92,771

 
Level 1
Time deposits
2,451

 
2,451

 
Level 1
Available-for-sale
34,591

 
34,591

 
Level 1
 
$
129,813

 
$
129,813

 
 
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 March 31, 2015 were as follows (in thousands):
Cost basis
$
34,212

Gross unrealized holding gains
901

Gross unrealized holding losses
(522
)
Fair value
$
34,591


15

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT.)

Maturities of available-for-sale securities were as follows at March 31, 2015: 
 
Cost Basis
 
Fair Value
 
(In thousands)
Due within one year
$
391

 
$
378

Due in five years or less
12,262

 
12,424

Due after five years to ten years
12,953

 
12,993

Due in more than ten years
8,606

 
8,796

 
$
34,212

 
$
34,591


5.
RESTRUCTURING CHARGES
In 2013, the Company entered into an agreement with Virginia Electric Power Company, to restructure the remaining 5 years of the ROVA contract. The Company recorded restructuring charges for ROVA restructuring of nil and $0.4 million for the three months ended March 31, 2015 and March 31, 2014, respectively.
The table below represents the restructuring provision activity related to the ROVA restructuring affecting our Power segment during the three months ended March 31, 2015 (in millions):
Beginning Balance
 
Restructuring Charges
 
Restructuring Payments
 
Ending Balance
$
0.4

 
$

 
$
0.4

 
$

During 2014, the Company initiated strategic changes related to the Canadian Acquisition and the GP Acquisition. The restructuring actions were completed in 2014 for the Canadian Acquisition and are expected to be completed in 2015 for the GP Acquisition. The Company recorded restructuring charges for one-time employee termination benefits of $0.6 million and nil for the three months ended March 31, 2015 and 2014, respectively, and expects that accruals will be paid through 2016.
The table below represents the restructuring provision activity related to the Canadian Acquisition and the GP Acquisition affecting our Coal - Canada, Coal - U.S. and Coal - WMLP segments during the three months ended March 31, 2015 (in millions):
Beginning Balance
 
Restructuring Charges
 
Restructuring Payments
 
Ending Balance
$
8.8

 
$
0.6

 
$
5.8

 
$
3.6



16

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT.)

6.    LINES OF CREDIT AND DEBT
The amounts outstanding under the Company’s debt consisted of the following as of the dates indicated: 
 
Total Debt Outstanding
 
March 31, 2015
 
December 31, 2014
 
(In thousands)
8.75% Notes due 2022
$
350,000

 
$
350,000

WCC Term Loan Facility due 2020
423,938

 
350,000

WMLP Term Loan Facility due 2018
176,327

 
175,000

Capital lease obligations
101,893

 
109,351

Revolving line of credit

 
9,576

Other
9,627

 
4,062

Debt discount
(14,608
)
 
(13,202
)
Total debt outstanding
1,047,177

 
984,787

Less current installments
(42,554
)
 
(52,712
)
Total debt outstanding, less current installments
$
1,004,623

 
$
932,075

The following table presents aggregate contractual debt maturities of all debt: 
 
As of March 31, 2015
 
(In thousands)
2015
$
32,756

2016
41,944

2017
33,031

2018
12,505

2019
186,514

Thereafter
755,035

Total
1,061,785

Less: debt discount
(14,608
)
Total debt
$
1,047,177

On January 22, 2015, the Company amended the WCC Term Loan Facility to increase the borrowings by $75.0 million, for an aggregate principal amount of $425.0 million as of that date. The amendments to the WCC Term Loan Facility were made in connection with the acquisition of Buckingham and for working capital. Net proceeds were $71.0 million after a 2.5% discount, 1.5% broker fee, a consent fee of 1.17%, and $0.1 million of additional debt issuance costs.
Under the revolving line of credit (the “Revolving Credit Facility”) the maximum available borrowing amount is $50.0 million. As of March 31, 2015, the Company had no borrowings under the Revolving Credit Facility and had outstanding letters of credit in the amount of $22.8 million.
During the three months ended March 31, 2015, the Company entered into $12.7 million of new capital leases.
Additional information regarding the Company’s debt is outlined in Note 6 to the Consolidated Financial Statements in the Company’s 2014 Annual Report on Form 10-K.

7.    POSTRETIREMENT MEDICAL BENEFITS AND PENSION
Postretirement Medical Benefits
The Company provides postretirement medical benefits to retired employees and their dependents as mandated by the Coal Industry Retiree Health Benefit Act of 1992 and pursuant to collective bargaining agreements. The Company also provides these benefits to qualified full-time employees pursuant to collective bargaining agreements.

17

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT.)

The components of net periodic postretirement medical benefit cost are as follows: 
 
Three Months Ended March 31,
2015
 
2014
 
(In thousands)
Components of net periodic benefit cost:
 
 
 
Service cost
$
1,054

 
$
822

Interest cost
2,907

 
3,203

Amortization of deferred items
327

 
5

Total net periodic benefit cost
$
4,288

 
$
4,030

The following table shows the net periodic postretirement medical benefit costs that relate to current and former mining operations: 
 
Three Months Ended March 31,
 
2015
 
2014
 
(In thousands)
Former mining operations
$
2,034

 
$
2,403

Current operations
2,254

 
1,627

Total net periodic benefit cost
$
4,288

 
$
4,030

The costs for the former mining operations are included in Heritage health benefit expenses and costs for current operations are included in Cost of sales and Selling and administrative expenses.
Pension
The Company provides pension benefits to qualified full-time employees pursuant to collective bargaining agreements.
The Company incurred net periodic benefit costs of providing these pension benefits as follows:
 
Three Months Ended March 31,
 
2015
 
2014
 
(In thousands)
Components of net periodic benefit cost:
 
 
 
Service cost
$
506

 
$
500

Interest cost
1,985

 
1,747

Expected return on plan assets
(2,639
)
 
(2,154
)
Amortization of deferred items
1,110

 
359

Total net periodic pension cost
$
962

 
$
452

These costs are included in Cost of sales and Selling and administrative expenses.
The Company made no contributions to its pension plans in the three months ended March 31, 2015. The Company expects to make $1.2 million of contributions to its pension plans during the remainder of 2015.

18

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT.)


8.    HERITAGE HEALTH BENEFIT EXPENSES
The caption Heritage health benefit expenses used in the consolidated statements of operations refers to costs of benefits the Company provides to its former mining operation employees. The components of these expenses are as follows:
 
Three Months Ended March 31,
 
2015
 
2014
 
(In thousands)
Health care benefits
$
2,049

 
$
2,276

Combined benefit fund payments
462

 
512

Workers’ compensation benefits
110

 
136

Black lung benefits
438

 
620

Total
$
3,059

 
$
3,544


9.
ASSET RETIREMENT OBLIGATIONS, CONTRACTUAL THIRD-PARTY RECLAMATION RECEIVABLE AND RECLAMATION DEPOSITS
The asset retirement obligation, contractual third-party reclamation receivable, and reclamation deposits for each of the Company’s operating segments at March 31, 2015 are summarized below:
 
Asset
Retirement
Obligation
 
Contractual
Third-Party
Reclamation
Receivable
 
Reclamation
Deposits
 
(In thousands)
Coal - U.S.
$
295,569

 
$
109,126

 
$
76,715

Coal - Canada
118,285

 
6,149

 

Coal - WMLP
32,569

 

 

Power
979

 

 

Total
$
447,402

 
$
115,275

 
$
76,715

Asset Retirement Obligations
Changes in the Company’s asset retirement obligations were as follows: 
 
Three Months Ended March 31,
 
2015
 
2014
 
(In thousands)
Asset retirement obligations, beginning of year (including current portion)
$
452,745

 
$
279,864

Accretion
9,701

 
5,836

Liabilities settled
(8,195
)
 
(4,437
)
Changes due to amount and timing of reclamation
336

 

Asset retirement obligations acquired
3,769

 

Changes due to foreign currency translation
(10,954
)
 

Asset retirement obligations, end of period
447,402

 
281,263

Less current portion
(48,024
)
 
(22,227
)
Asset retirement obligations, less current portion
$
399,378

 
$
259,036


19

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT.)

Contractual Third-Party Reclamation Receivables
At March 31, 2015, the Company recognized an asset of $115.3 million as contractual third-party reclamation receivables, representing the present value of customer obligations to reimburse the Company for future reclamation expenditures.
Reclamation Deposits
The Company’s reclamation deposits will be used to fund final reclamation activities. The Company’s carrying value and estimated fair value of its reclamation deposits at March 31, 2015 were as follows: 
 
Carrying Value
 
Fair Value
 
Fair Value Hierarchy
 
(In thousands)
 
 
Cash and cash equivalents
$
43,228

 
$
43,228

 
Level 1
Available-for-sale securities
33,487

 
33,487

 
Level 1
 
$
76,715

 
$
76,715


 
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 loss.
Available-for-Sale Reclamation Deposits
The cost basis, gross unrealized holding gains and losses, and fair value of available-for-sale securities at March 31, 2015 were as follows (in thousands):
Cost basis
$
33,118

Gross unrealized holding gains
964

Gross unrealized holding losses
(595
)
Fair value
$
33,487


Maturities of available-for-sale securities were as follows at March 31, 2015:
 
Cost Basis
 
Fair Value
 
(In thousands)
Within one year
$
226

 
$
240

Due in five years or less
17,820

 
18,030

Due after five years to ten years
6,622

 
6,514

Due in more than ten years
8,450

 
8,703

 
$
33,118

 
$
33,487


10.    DERIVATIVE INSTRUMENTS
Derivative Assets and Liabilities
The Company evaluates all of its financial instruments to determine if such instruments are derivatives, derivatives that qualify for the normal purchase normal sale exception, or contain features that qualify as embedded derivatives. All derivative financial instruments, except for derivatives that qualify for the normal purchase normal sale exception, are recognized on the balance sheet at fair value. Changes in fair value are recognized in earnings if they are not eligible for hedge accounting or in other comprehensive income if they qualify for cash flow hedge accounting.
In the first quarter of 2014, the Company entered into two foreign currency exchange forward contracts to purchase Canadian Dollars to manage a portion of its exposure to fluctuating rates of exchange on anticipated Canadian Dollar-denominated Canadian Acquisition cash flows. These two foreign currency contracts had a total notional amount of $348.3 million and were settled in April 2014.

20

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT.)

During 2014, the Company entered into contracts to purchase power at its ROVA facility to manage exposure to power price fluctuations. These contracts cover the period from April 2014 to March 2019 and contracted power prices range from $41.05 to $56.33 megawatts per hour, with a weighted average contract price of $43.39 over the remaining contract lives. The fair value of these power price derivatives are based on comparing contracted prices to projected future prices.
The fair value of outstanding derivative instruments not designated as hedging instruments on the accompanying Consolidated Balance Sheets was as follows (in thousands): 
Derivative Instruments
 
Balance Sheet Location
 
March 31, 2015
 
December 31, 2014
Contracts to purchase power
 
Other current liabilities
 
$
6,546

 
$
8,265

Contracts to purchase power
 
Other liabilities
 
21,666

 
21,103

The effect of derivative instruments not designated as hedging instruments on the accompanying Consolidated Statements of Operations was as follows (in thousands): 
Derivative Instruments
 
Statement of
Operations Location
 
Three Months Ended March 31, 2015
 
Three Months Ended March 31, 2014
Canadian dollar foreign exchange forward contracts
 
Gain (loss) on foreign exchange
 
$

 
$
(6,790
)
Contracts to purchase power
 
Derivative gain
 
5,276

 


11.    FAIR VALUE MEASUREMENTS
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Notes 4, 9 and 10 for additional disclosures related to fair value measurements.
Fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy, as defined below, gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.
Level 1, defined as observable inputs such as quoted prices in active markets for identical assets.
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 table below sets forth, by level, the Company’s financial assets that are accounted for at fair value at March 31, 2015:
 
Level 1
(In thousands)
Assets:
 
Available-for-sale investments included in Restricted investments and bond collateral
$
34,591

Available-for-sale investments included in Reclamation deposits
33,487

Total assets
$
68,078

Long-term debt fair value estimates are based on observed prices for securities with an active trading market when available (Level 2) and otherwise using discount rate estimates based on interest rates (Level 3). As of March 31, 2015, the Company had no long-term debt with Level 3 fair values. The estimated fair values of the Company’s debt with fixed and variable interest rates are as follows:

21

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT.)

 
Fixed Interest Rate
 
Variable Interest Rate
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
 
(In thousands)
 
(In thousands)
December 31, 2014
$
345,498

 
$
348,250

 
$
341,300

 
$
344,750

March 31, 2015
$
345,617

 
$
350,875

 
$
413,712

 
$
421,818

The Company uses derivative financial instruments, primarily foreign exchange contracts and forward contracts to purchase power, to reduce its exposure to market risks from changes in foreign exchange rates and changes in prices for power, respectively. The foreign exchange contracts are measured at fair value using quoted forward foreign exchange prices from counterparties corroborated by market-based pricing (Level 2). The contracts to purchase power are measured at fair value using forward pricing curves for power from counterparties corroborated by market-based pricing (Level 2). Additional information related to the Company’s derivative financial instruments is disclosed in Notes 1 and 10 to the consolidated financial statements.
The Company’s non-recurring fair value measurements include asset retirement obligations (refer to Note 9).
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 and the capitalized asset retirement cost is depleted using the units-of-production method.
The fair value of assets and liabilities acquired through business combinations is calculated using a discounted-cash flow approach using Level 3 inputs. Cash flow estimates require forecasts and assumptions for many years into the future for a variety of factors.

12.    SHAREHOLDERS’ DEFICIT AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Preferred Stock
The Company paid less than $0.1 million of preferred stock dividends for the three months ended March 31, 2015. During the three ended March 31, 2015, approximately 88,494 shares of preferred stock were converted into 604,557 shares of common stock and 3,175 shares of preferred stock were redeemed under a mandatory redemption for $0.3 million. At March 31, 2015, there were no outstanding preferred stock shares.
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
 
Unrealized gains and losses on available-for-sale
securities, net
 
Foreign currency translation adjustment
 
Tax effect of
other
comprehensive
income gains
 
Accumulated
other
comprehensive
income (loss)
 
(In thousands)
Balance at December 31, 2014
$
(36,065
)
 
$
(39,716
)
 
$
413

 
$
(17,880
)
 
$
(31,048
)
 
$
(124,296
)
Other comprehensive income (loss) before reclassifications
203

 

 
311

 
(27,140
)
 
(575
)
 
(27,201
)
Amounts reclassified from accumulated other comprehensive income (loss)
1,110

 
327

 
14

 

 

 
1,451

Balance at March 31, 2015
$
(34,752
)
 
$
(39,389
)
 
$
738

 
$
(45,020
)
 
$
(31,623
)
 
$
(150,046
)

22

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT.)

The following table reflects the reclassifications out of accumulated other comprehensive loss for the three months ended March 31, 2015 are as follows (in thousands):
Details about accumulated other comprehensive loss components
 
Amount reclassified from accumulated
other comprehensive loss1
 
Affected line item
in the statement
where net income
(loss) is presented
 
Three Months Ended March 31, 2015
 
Available-for sale securities
 
 
 
 
Realized gains and losses on available-for sale securities
 
$
14

 
Other income (loss)
 
 
 
 
 
Amortization of defined benefit pension items
 
 
 
 
Prior service costs
 
$
2

 
 
Actuarial losses
 
1,108

 
2 
Total
 
$
1,110

 
 
Amortization of postretirement medical items
 
 
 
 
Prior service costs
 
$
(159
)
 
3 
Actuarial losses
 
486

 
3 
Total
 
$
327

 
 
____________________
(1)
Amounts in parentheses indicate debits to income/loss.
(2)
These accumulated other comprehensive loss components are included in the computation of net periodic pension cost. (See Note 7 - Pension for additional details)
(3)
These accumulated other comprehensive loss components are included in the computation of net periodic postretirement medical cost. (See Note 7 - Postretirement Medical Benefits for additional details)

13.     SHARE-BASED COMPENSATION
The Company grants employees and non-employee directors restricted stock units. Non-employee directors receive equity awards with a value of $90,000 after each annual meeting.
The Company recognized compensation expense from share-based arrangements shown in the following table:
 
Three Months Ended March 31,
 
2015
 
2014
 
(In thousands)
Recognition of fair value of restricted stock units, stock options and SARs over vesting period; and issuance of stock
$
663

 
$
728

Contributions of stock to the Company’s 401(k) plan
859

 

Total share-based compensation expense
$
1,522

 
$
728

Restricted Stock Units
A summary of restricted stock award activity for the three months ended March 31, 2015 is as follows: 
 
Units
 
Weighted
Average
Grant-Date
Fair Value
 
Unamortized
Compensation
Expense
(In thousands)
 
Non-vested at December 31, 2014
409,362

 
$
13.87

 
 
 
Vested
(9,639
)
 
9.49

 
 
 
Forfeited
(3,610
)
 
30.76

 
 
 
Non-vested at March 31, 2015
396,113

 
$
15.41

 
$
2,516

(1) 
____________________
(1)
Expected to be recognized over the next three years.

23

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT.)

In April 2015, 233,974 restricted stock units were granted, of which 117,003 units will vest ratably over a three-year period. The remaining 116,971 units are performance-based, which will vest and pay out at the end of a three-year period if performance goals are met.
Stock Options
A summary of stock option activity for the three months ended March 31, 2015 is as follows:
 
Stock Options
 
Weighted
Average
Exercise Price
 
Weighted
Average
Remaining
Contractual
Life
(In years)
 
Aggregate Intrinsic
Value
(In thousands)
 
Unamortized
Compensation
Expense
(In thousands)
Outstanding at December 31, 2014
110,806

 
$
22.15

 
 
 
 
 
 
Expired

 

 
 
 
 
 
 
Outstanding and exercisable at March 31, 2015
110,806

 
$
22.15

 
2.9
 
$
510

 
$

There were no stock options granted during the three months ended March 31, 2015.
SARs
A summary of SARs activity for the three months ended March 31, 2015 is as follows:
 
SARs
 
Weighted
Average Exercise Price
 
Weighted
Average
Remaining
Contractual
Life
(In years)
 
Aggregate Intrinsic
Value
(In thousands)
 
Unamortized
Compensation
Expense
(In thousands)
Outstanding at December 31, 2014
16,943

 
$
25.44

 
 
 
 
 
 
Expired

 

 
 
 
 
 
 
Outstanding and exercisable at March 31, 2015
16,943

 
$
25.44

 
1.1
 
$
22

 
$

There were no SARs granted during the three months ended March 31, 2015.

14.    EARNINGS PER SHARE
Basic earnings (loss) per share has been computed by dividing the net income (loss) applicable to common shareholders by the weighted average number of shares of common stock outstanding during each period. Net income (loss) applicable to common shareholders includes the adjustment for net income or loss attributable to noncontrolling interest. Diluted earnings (loss) per share is computed by including the dilutive effect of common stock that would be issued assuming conversion or exercise of outstanding convertible notes and securities, stock options, stock appreciation rights, and restricted stock units. No such items were included in the computations of diluted loss per share in the three months ended March 31, 2015 and 2014 because the Company incurred a net loss applicable to common shareholders in these periods and the effect of inclusion would have been anti-dilutive.
The table below shows the number of shares that were excluded from the calculation of diluted loss per share because their inclusion would be anti-dilutive to the calculation:
 
Three Months Ended March 31,
 
2015

2014
 
(In thousands)
Convertible securities
$

 
$
828

Restricted stock units, stock options and SARs
524

 
779

Total shares excluded from diluted shares calculation
$
524

 
$
1,607



24

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT.)

15.    BUSINESS SEGMENT INFORMATION
Segment information is based on a management approach, which requires segmentation based upon the Company’s internal organization, reporting of revenue, and operating income.
The Company’s operations are classified into six reporting segments: Coal - U.S., Coal - Canada, Coal - WMLP, Power, Heritage, and Corporate and Eliminations. The Buckingham operations are included in the Company’s Coal - U.S. segment.
Summarized financial information by segment is as follows:
 
Coal -
U.S.(1)
 
Coal - Canada(2)
 
Coal - WMLP(3)
 
Power
 
Heritage
 
Corporate and Eliminations(4)
 
Consolidated
 
(In thousands)
Three Months Ended March 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
196,392

 
$
103,242

 
$
67,567

 
$
20,647

 
$

 
$
(16,365
)
 
$
371,483

Restructuring charges

 

 
553

 

 

 

 
553

Depreciation, depletion, and amortization
14,088

 
11,265

 
10,180

 
2,484

 

 
42

 
38,059

Operating income (loss)
11,266

 
9,865

 
(4,517
)
 
413

 
(3,349
)
 
(5,223
)
 
8,455

Total assets
733,833

 
593,684

 
296,131

 
172,310

 
16,005

 
17,785

 
1,829,748

Capital expenditures
10,399

 
4,049

 
1,570

 
579

 

 
(3,570
)
 
13,027

Three Months Ended March 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
$
158,190

 
$

 
$

 
$
22,012

 
$

 
$

 
$
180,202

Restructuring charges

 

 

 
397

 

 

 
397

Depreciation, depletion, and amortization
13,459

 

 

 
2,524

 

 
76

 
16,059

Operating income (loss)
13,447

 

 

 
1,744

 
(3,830
)
 
(3,308
)
 
8,053

Total assets
697,916

 

 

 
167,998

 
15,622

 
525,611

 
1,407,147

Capital expenditures
3,053

 

 

 
35

 

 
(38
)
 
3,050

____________________
(1)
The Buckingham Acquisition was completed on January 1, 2015. For the three months ended March 31, 2015, revenues and operating income for Buckingham were $30.1 million and $1.0 million, respectively.
(2)
The Canadian operations were acquired on April 28, 2014, therefore, there is no activity for the three months ended March 31, 2014.
(3)
The operations reported under the segment Coal - WMLP were acquired on December 31, 2014, therefore, there is no activity for the three months ended March 31, 2014.
(4)
The Coal - WMLP segment recorded revenues of $16.4 million for intersegment revenues to the Coal - U.S. segment.
A reconciliation of segment income from operations to loss before income taxes follows: 
 
Three Months Ended March 31,
 
2015
 
2014
 
(In thousands)
Income from operations
$
8,455

 
$
8,053

Interest expense
(24,735
)
 
(20,798
)
Interest income
2,140

 
302

Gain (loss) on foreign exchange
2,109

 
(6,790
)
Other income
193

 
93

Loss before income taxes
$
(11,838
)
 
$
(19,140
)


25

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONT.)

16.    CONTINGENCIES
The Company is a party to routine claims and lawsuits with respect to various matters. The Company provides for costs related to contingencies when a loss is probable and the amount is reasonably estimable. After conferring with counsel, it is the opinion of management that the ultimate resolution of pending claims will not have a material adverse effect on the consolidated financial condition, results of operations, or liquidity of the Company.

26


ITEM 2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements.” Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements we make about recent acqisitions and their anticipated effects on us, and our expectation that our cash from operations, cash on hand and available borrowing capacity will be sufficient to meet our investing, financing, and working capital requirements for the foreseeable future.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We therefore caution you against relying on any of these forward-looking statements. They are statements neither of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include political, economic, business, competitive, market, weather and regulatory conditions and the following:
our ability to effectively manage WMLP;
our efforts to effectively integrate the operations we acquired in the Canadian Acquisition with our existing business and our ability to manage our expanded operations following the acquisition;
our ability to realize growth opportunities and cost synergies as a result of the addition of our Canadian Operations;
our substantial level of indebtedness and our ability to adhere to financial covenants related to our borrowing arrangements;
the ability of our hedging arrangement with respect to our ROVA facility to generate free cash flow due to the fully hedged position through March 2019;
changes in our post-retirement medical benefit and pension obligations and the impact of the recently enacted healthcare legislation on our employee health benefit costs;
inaccuracies in our estimates of our coal reserves;
the effect of consummating financing, acquisition or disposition transactions;
our potential inability to expand or continue current coal operations due to limitations in obtaining bonding capacity for new mining permits, and/or increases in our mining costs as a result of increased bonding expenses;

the effect of prolonged maintenance or unplanned outages at our operations or those of our major power generating customers;
the inability to control costs, recognize favorable tax credits and/or receive adequate train traffic at our open market mine operations;
competition within our industry and with producers of competing energy sources;
our relationships with, and other conditions affecting, our customers;
the availability and costs of key supplies or commodities, such as diesel fuel, steel and explosives;
potential title defects or loss of leasehold interests in our properties, which could result in unanticipated costs or an inability to mine the properties;
the effect of legal and administrative proceedings, settlements, investigations and claims, including any related to citations and orders issued by regulatory authorities, and the availability of related insurance coverage;
existing and future legislation and regulation affecting both our coal mining operations and our customers’ coal usage, governmental policies and taxes, including those aimed at reducing emissions of elements such as mercury, sulfur dioxides, nitrogen oxides, particulate matter or greenhouse gases;
the effect of the Environmental Protection Agency's and Canadian and provincial governments’ inquiries and regulations on the operations of the power plants to which we provide coal; and

27

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONT.)

other factors that are described in “Risk Factors” in our 2014 Form 10-K and any subsequent quarterly filing on Form 10-Q.
Unless otherwise specified, the forward-looking statements in this report speak as of the filing date of this report. Factors or events that could cause our actual results to differ may emerge from time-to-time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statements, whether because of new information, future developments or otherwise, except as may be required by law.
Overview
Westmoreland Coal Company is the oldest independent coal company in the United States. Our coal operations include sub-bituminous and lignite surface coal mining in the Western United States and Canada, an underground bituminous coal mine in Ohio, a char production facility, and a 50% interest in an activated carbon plant. We also own the general partner of, and a majority of the equity interests in, WMLP (formerly Oxford Resource Partners, LP), a publicly-traded coal master limited partnership with six mining complexes. We sold 44.8 million tons of coal in 2014 and 13.5 million tons through March 31, 2015, which includes tons sold at our Coal - WMLP segment. Our power operations include two coal-fired power generation units in North Carolina. We classify our business into six segments: Coal - U.S., Coal - Canada, Coal - WMLP, Power, Heritage and Corporate. Our principal operating segments are our Coal - U.S., Coal - Canada, Coal - WMLP and Power segments. Our two non-operating segments are our Heritage and Corporate segments. Our Heritage segment primarily includes the costs of benefits we provide to former mining operation employees and our Corporate segment consists primarily of corporate administrative expenses.
We are a holding company and conduct our operations through subsidiaries. We have significant cash requirements to fund our ongoing heritage health benefit costs and corporate overhead expenses. The principal sources of cash flow to us are distributions from our principal operating subsidiaries.
WMLP Transactions
On December 31, 2014, we completed the WMLP Transactions. We paid a total of $33.5 million in cash to acquire the GP and received 4,512,500 common units of WMLP (on a post-split basis following the 12-to-1 reverse split of WMLP’s units that occurred in connection with the closing of the GP Acquisition) as consideration for the Contribution. Our ownership in WMLP represents approximately 79% of the outstanding equity interests in WMLP, following the 25% unit dividend to unit holders that occurred on January 30, 2015.
Going forward, we expect WMLP to provide us with a platform to implement a value-creating “drop-down” strategy pursuant to which we intend to periodically contribute certain U.S. and Canadian coal assets to WMLP in exchange for a combination of cash and additional limited partner interests. We intend to complete the first such drop-down transaction in 2015. Further, as the owner of the general partner of WMLP, we expect to optimize its operations and improve its financial performance. We expect the combination of contributions of assets and improved WMLP operations to result in the resumed payment of quarterly distributions to WMLP unitholders, including us, as well as increasing future payments to us as a result of incentive distribution rights to which we are entitled as the owner of WMLP’s general partner.
Acquisition of Buckingham Coal Company, LLC
On January 1, 2015, we completed the acquisition of Buckingham Coal Company, LLC, an Ohio-based coal supplier (“Buckingham”), pursuant to an agreement dated January 1, 2015 among WCC Land Holding Company, Inc. an affiliate of the Company for an initial cash purchase price of $34.0 million, which was reduced by a working capital adjustment of $1.6 million. The Buckingham operations are included in the Company’s Coal - U.S. segment.
Separately, WCC Land Holding Company, Inc. entered into a five-year coal supply agreement with Buckingham’s primary customer, AEP Generation Resources Inc., which includes an obligation to purchase a minimum of 5.5 million tons of coal annually.
Add-on to WCC Term Loan Facility
On January 22, 2015, we amended the WCC Term Loan Credit Agreement to increase the borrowings by $75.0 million, for an aggregate principal amount of $425.0 million as of that date. The amendments to the WCC Term Loan Facility were made in connection with the acquisition of Buckingham. Net proceeds were $71.0 million after a 2.5% discount, 1.5% broker fee, a consent fee of 1.17%, and $0.1 million of additional debt issuance costs.


28

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONT.)

Results of Operations
Items that Affect Comparability of Our Results
For the three months ended March 31, 2015, our results included items that affect comparability of our results. The expense components of these items were as follows:
 
Three Months Ended March 31,
 
2015
 
2014
 
(In thousands)
Derivative gain
$
5,276

 
$

Gain (loss) on foreign exchange
2,109

 
(6,790
)
Restructuring charges
(553
)
 
(397
)
Incremental interest incurred before close of Canadian Acquisition

 
(6,144
)
Canadian Acquisition bridge facility commitment fee

 
(4,875
)
Impact (pre-tax)
$
6,832

 
$
(18,206
)
Items recorded in 2015
We recorded $5.3 million of derivative gains related to ROVA’s purchased-power contracts.
We recorded a $2.1 million gain on foreign exchange due to currency fluctuations.
We recorded $0.6 million of restructuring charges related to the WMLP Transactions that are included in Restructuring charges.
Items recorded in 2014
We recorded $6.8 million of Loss on foreign exchange. In the first quarter of 2014, we entered into two foreign currency exchange forward contracts to purchase Canadian Dollars in order to hedge a portion of our exposure to fluctuating rates of exchange on anticipated Canadian Dollar-denominated Canadian Acquisition cash flows.
We recorded $0.4 million of restructuring charges related to the ROVA agreement restructuring and is included in Restructuring charges.
We recorded $6.1 million of incremental interest expense incurred before closing of the Canadian acquisition and is included in Interest expense.
We recorded $4.9 million of interest expense related to the Canadian Acquisition bridge facility. Upon closing of the $425 million private offering, our bridge facility commitment expired unexercised and as a result; the related commitment fee of $4.9 million was expensed and is included in Interest expense.

Three Months Ended March 31, 2015 Compared to Three Months Ended March 31, 2014
Summary
The following table shows the comparative consolidated results and changes between periods:
 
Three Months Ended March 31,
 
 
 
 
 
Increase / (Decrease)
 
2015
 
2014
 
$
 
%
 
(In millions)
Revenues
$
371.5

 
$
180.2

 
$
191.3

 
106.2
 %
Net loss applicable to common shareholders
(11.7
)
 
(19.3
)
 
7.6

 
(39.4
)%
Adjusted EBITDA(1)
56.0

 
28.9

 
27.1

 
93.8
 %
____________________
(1)
Adjusted EBITDA, a non-GAAP measure, is defined and reconciled to net loss at the end of this “Results of Operations” section.

29

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONT.)

Our first quarter 2015 revenues increased primarily due to the Canadian and Buckingham acquisitions and the WMLP Transactions.
Our first quarter 2015 net loss applicable to common shareholders increased by $17.4 million, excluding $6.8 million of income during 2015 and $18.2 million of expenses during 2014 discussed above in Items that Affect Comparability of Our Results. The primary factors, in aggregate, driving this increase in net loss were:
 
Three Months Ended March 31, 2015
 
(In millions)
Results of the Coal - WMLP segment due to the WMLP Acquisition
$
(7.6
)
Increase in interest expense due to increased debt levels
(7.1
)
Decrease in our power segment operating income due to unfavorable power prices
(7.0
)
Decrease in our Coal - U.S. operating income primarily due to weather impacts and an unplanned customer outage
(2.2
)
Results of our Coal - Canada segment due to the Canadian Acquisition
5.1

Increase due to other factors
1.4

Total
$
(17.4
)
Coal - U.S. Segment Operating Results
The following table shows comparative coal revenues, operating income, Adjusted EBITDA, sales volume, and percentage changes between periods: 
 
Three Months Ended March 31,
 
 
 
 
 
Increase / (Decrease)
 
2015
 
2014
 
$
 
%
 
(In thousands, except per ton data)
Revenues
$
196,392

 
$
158,190

 
$
38,202

 
24.1
 %
Operating income
11,266

 
13,447

 
(2,181
)
 
(16.2
)%
Adjusted EBITDA(1)
29,678

 
30,567

 
(889
)
 
(2.9
)%
Tons sold—millions of equivalent tons
6.9


6.8

 
0.1

 
1.5
 %
____________________
(1)
Adjusted EBITDA, a non-GAAP measure, is defined and reconciled to net loss at the end of this “Results of Operations” section.
Our first quarter 2015 U.S. coal segment revenues and tons sold increased primarily due to the Buckingham acquisition. Operating income was negatively impacted by weather impacts and an unplanned customer outage at our Beulah Mine.
Coal - Canada Segment Operating Results
The following table shows comparative coal revenues, operating income, Adjusted EBITDA, and sales volume between periods: 
 
Three Months Ended March 31,
 
2015
 
2014
 
(In thousands, except per ton data)
Revenues
$
103,242

 
$

Operating income
9,865

 

Adjusted EBITDA(1)
24,922

 

Tons sold—millions of equivalent tons
5.5

 

____________________
(1)
Adjusted EBITDA, a non-GAAP measure, is defined and reconciled to net loss at the end of this “Results of Operations” section.

30

WESTMORELAND COAL COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONT.)

The Canadian Acquisition was completed on April 28, 2014; therefore, there is no activity for the three months ended March 31, 2014. Operating income was negatively impacted by CVRI as global reference export pricing continued to soften and production at the mine was temporarily idled to focus on one-time regulatory water management obligations. 
Coal - WMLP Segment Operating Results
The following table shows comparative revenues, operating loss, Adjusted EBITDA, and sales volume between periods: 
 
Three Months Ended March 31,
 
2015
 
2014
 
(In thousands, except per ton data)
Revenues
$
67,567

 
$

Operating loss
(4,517
)
 

Adjusted EBITDA(1)
9,590

 

Tons sold—millions of equivalent tons
1.1

 

____________________
(1)
Adjusted EBITDA, a non-GAAP measure, is defined and reconciled to net loss at the end of this “Results of Operations” section.
The acquisition of the GP and majority interest in WMLP was completed on December 31, 2014; therefore, there is no activity for the three months ended March 31, 2014.
Power Segment Operating Results
The following table shows comparative power revenues, operating income, Adjusted EBITDA, and percentage changes between periods: 
 
Three Months Ended March 31,
 
 
 
 
 
Increase / (Decrease)
 
2015
 
2014