##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 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
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 2 North Cascade Avenue, 2nd FloorColorado Springs, CO
    
    80903(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code:
(719) 442-2600
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Exchange on Which RegisteredCommon Stock, par value $2.50 per share
    
    NYSE AMEXDepositary Shares, each representingone-quarter of a share of Series A ConvertibleExchangeable Preferred StockPreferred Stock Purchase Rights
 Securities registered pursuant to Section 12(g) of the Act:
  o þ
 o þ
 þ o
 o o
 þ
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company.)
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes o No þ
   DOCUMENTS INCORPORATED BY REFERENCE




---



##### 



WESTMORELAND COAL COMPANY
FORM 10-K
ANNUAL REPORT
TABLE OF CONTENTS
 Item
    
    
    
    PagePART I1
    
    Business
    
    
    41A
    
    Risk Factors
    
    
    151B
    
    Unresolved Staff Comments
    
    
    262
    
    Properties
    
    
    263
    
    Legal Proceedings
    
    
    264
    
    Removed and Reserved
    
    
    264B
    
    Mine Safety Disclosure
    
    
    26PART II5
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    276
    
    Selected Financial Data
    
    
    297
    
    Management's Discussion and Analysis of Financial Condition and Results of Operations
    
    
    307A
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    468
    
    Financial Statements and Supplementary Data
    
    
    479
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    929A
    
    Controls and Procedures
    
    
    92PART III10
    
    Directors, Executive Officers and Corporate Governance
    
    
    9511
    
    Executive Compensation
    
    
    9512
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    9513
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    9514
    
    Principal Accountant Fees and Services
    
    
    95PART IV15
    
    Exhibits and Financial Statement Schedules
    
    
    96Signatures
    
    
    97Exhibit 10.10Exhibit 21.1Exhibit 23.1Exhibit 23.2Exhibit 23.3Exhibit 31.1Exhibit 31.2Exhibit 32Exhibit 95.1
   2




---



##### Table of Contents



Cautionary Note Regarding Forward-Looking Statements
   
    
    changes in our postretirement medical benefit and pension obligations and the impact of the
recently enacted healthcare legislation;
 
    
    changes in our black lung obligations, changes in our experience related to black lung
claims, and the impact of the recently enacted healthcare legislation;
 
    
    our potential inability to expand or continue current coal operations due to limitations in
obtaining bonding capacity for new mining permits;
 
    
    our potential inability to maintain compliance with debt covenant and waiver agreement
requirements;
 
    
    the potential inability of our subsidiaries to pay dividends to us due to restrictions in
our debt arrangements, reductions in planned coal deliveries or other business factors;
 
    
    risks associated with the structure of ROVAs contracts with its lenders, coal suppliers
and power purchaser, which could dramatically affect the overall profitability of ROVA;
 
    
    the effect of Environmental Protection Agency inquiries and regulations on the operations
of ROVA;
 
    
    the effect of prolonged maintenance or unplanned outages at our operations or those of our
major power generating customers;
 
    
    future legislation and changes in regulations, governmental policies and taxes, including
those aimed at reducing emissions of elements such as mercury, sulfur dioxides, nitrogen
oxides, particulate matter or greenhouse gases; and
 
    
    other factors are described in Risk Factors herein.
   3




---



##### Table of Contents



PART I
  
 ITEM 1 BUSINESS.
 Overview
    
  4




---



##### Table of Contents



Coal Segment
 General
    Total Cost ofProperty,Tons Sold
    
    
    Plant and
    
    
    Employees/Mining
    
    
    
    Manner of
    
    
    
    (In thousands)
    
    
    Equipment
    
    
    LaborOperation
    
    Prior Operator
    
    Transport
    
    Machinery
    
    2008
    
    
    2009
    
    
    2010
    
    
    ($ in millions)
    
    
    Relations(1)
    
    Coal SeamMONTANARosebud
    
    Entech, Inc., 
a subsidiary of Montana Power, Purchased 2001
    
        Conveyor belt
    BNSF Rail    Truck
    
        4 drag-lines    Load-out facility
    
    
    13,026
    
    
    
    10,332
    
    
    
    12,231
    
    
    $
    140.9
    
    
    383 employees; 297 represented by
Local 400 of the IUOE
    
        RosebudAbsaloka
    
    Washington Group International, 

Inc. as contract operator, Ended contract in 2007
    
        BNSF Rail    Truck
    
        1 drag-line    Load-out facility
    
    
    6,418
    
    
    
    5,911
    
    
    
    5,467
    
    
    $
    135.1
    
    
    170 employees; 
131 represented by Local 400 of the IUOE
    
        Rosebud-McKaySavage
    
    Knife River Corporation, a subsidiary of MDU Resources Group, Inc., Purchased 2001
    
        Truck
    
        1 dragline
    
    
    359
    
    
    
    344
    
    
    
    353
    
    
    $
    4.6
    
    
    13 employees; 11 represented by Local 400 of the IUOE
    
        PustTEXASJewett
    
    Entech, Inc., a subsidiary of Montana Power, Purchased 2001
    
        Conveyor belt
    
        4 drag-lines
    
    
    6,494
    
    
    
    5,080
    
    
    
    4,203
    
    
    $
    32.1
    
    
    327 employees
    
        Wilcox GroupNORTH DAKOTABeulah
    
    Knife River Corporation,
a subsidiary of MDU Resources Group, Inc., Purchased 2001
    
        Conveyor belt    BNSF Rail
    
        2 drag-lines    Load-out facility
    
    
    3,046
    
    
    
    2,585
    
    
    
    2,898
    
    
    $
    61.8
    
    
    149 employees; 118 represented by Local 1101 of the UMWA
    
        Schoolhouse    Beulah-ZapTOTALS
    
    
    
    
    
    
    
    

29,343
    
    
    
    24,252
    
    
    
    25,152
    
    
    $
    374.5
    
    
    1,042 employees
 (1)
    
    557 employees, or approximately 52% of our total employees, are represented by
collective bargaining agreements. The labor agreement at the Absaloka Mine, which covers 12%
of our workforce, expires during 2011.  5




---



##### Table of Contents



Properties
     6




---



##### Table of Contents



Absaloka Mine
    
    
    Rosebud Mine
    
    
    Jewett Mine
    
    
    Beulah Mine
    
    
    Savage MineTexas
    
    
    DakotaWestmoreland
    
    
    Western Energy
    
    
    Westmoreland
    
    
    Westmoreland
    
    
    WestmorelandOwned by
    
    Resources, Inc.
    
    
    Company
    
    
    Coal Co.
    
    
    Corporation
    
    
    Savage CorporationRosebud and
    
    
    Leon, FreestoneBig Horn County,
    
    
    Treasure Counties,
    
    
    and Limestone
    
    
    Mercer and Oliver
    
    
    Richland County,Location
    
    MT
    
    
    MT
    
    
    Counties, TX
    
    
    Counties, ND
    
    
    MTCoal reserves (thousands of tons)(1)Proven
    
    
    66,976
    
    
    
    200,333
    
    
    
    44,842
    
    
    
    45,248
    
    
    
    13,117Probable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,394
    
    
    
    Permitted reserves (thousands of tons)
    
    
    61,290
    
    
    
    115,642
    
    
    
    44,842
    
    
    
    21,682
    
    
    
    1,0232010 production (thousands of tons)
    
    
    5,466
    
    
    
    12,254
    
    
    
    4,171
    
    
    
    2,895
    
    
    
    352Estimated life of permitted reserves(2)
    
    
    2020
    
    
    
    2019
    
    
    
    2022
    
    
    
    2015
    
    
    
    2013Lessor
    
       Crow Tribe
    
       Federal Government
    
       Private parties
    
       Private parties
    
       Federal Government   Private parties
    
       State of MT
    
       State of TX
    
       State of ND
    
       Private parties   Great Northern Properties
    
    
    
    
    
       Federal GovernmentLease term
    
    Through exhaustion
    
    Varies
    
    Varies
    
    Varies
    
    VariesCurrent production capacity (thousands of tons)
    
    
    7,500
    
    
    
    13,300
    
    
    
    7,000
    
    
    
    3,400
    
    
    
    400Coal type
    
    Sub-bituminous
    
    Sub-bituminous
    
    Lignite
    
    Lignite
    
    LigniteMajor customers
    
       Xcel Energy
    
       Colstrip 1&2 owners
    
       NRG Texas Power LLC
    
       Otter Tail
    
       MDU   Western Fuels Assoc.
    
       Colstrip 3&4 owners
    
    
    
       MDU
    
       Sidney Sugars   Midwest Energy
    
    
    
    
    
    
    
    
    
       Minnkota   Rocky Mountain Power
    
    
    
    
    
    
    
    
    
       Northwestern Public ServiceDelivery method
    
    Rail / Truck
    
    Truck / Rail / Conveyor
    
    Conveyor
    
    Conveyor / Rail
    
    TruckApprox. heat content (BTU/lb.)(3)
    
    
    8,571
    
    
    
    8,534
    
    
    
    6,652
    
    
    
    7,002
    
    
    
    6,380Approx. sulfur content (%)(4)
    
    
    0.66
    
    
    
    0.64
    
    
    
    0.78
    
    
    
    0.76
    
    
    
    0.50Year current complex opened
    
    
    1974
    
    
    
    1968
    
    
    
    1985
    
    
    
    1963
    
    
    
    1958Total tons mined since inception (thousands of
tons)
    
    
    172,602
    
    
    
    431,931
    
    
    
    183,263
    
    
    
    102,251
    
    
    
    14,493
 
 (1)
    
    The SEC Industry Guide 7 defines reserves as that part of a mineral deposit, which could be
economically and legally extracted or produced at the time of the reserve determination.
Proven and probable coal reserves are defined by SEC Industry Guide 7 as follows:Proven (Measured) Reserves Reserves for which (a) quantity is computed from dimensions
revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from
the results of detailed sampling and (b) the sites for inspection, sampling and measurement are
spaced so close and the geographic character is so well defined that size, shape, depth and
mineral content of reserves are well-established.Probable (Indicated) Reserves Reserves for which quantity and grade and/or quality are
computed from information similar to that used for proven (measured) reserves, but the sites for
inspection, sampling and measurement are farther apart or are otherwise less adequately spaced.
The degree of assurance, although lower than that for proven (measured) reserves, is high enough
to assume continuity between points of observation.(2)
    
    Approximate year in which permitted reserves would be exhausted, based on current mine plan
and production rates. Our Jewett Mines permit is expected to be renewed in 2011 while the
other permit expires in 2014, but effectively they cover all of the Mines reserves for the
entire life of the mine. The Absaloka Mine permits expire in 2013 and 2014.(3)
    
    Approximate heat content applies to the coal mined in 2010.(4)
    
    Approximate sulfur content applies to the tons mined in 2010.  7




---



##### Table of Contents



Customers
  Rosebud.
 Absaloka
 Savage
 Jewett
  8




---



##### Table of Contents



Beulah
 Competition
   
    
    all of our mines are the most economic suppliers to each of their respective
principal customers, a result of a transportation advantage over our competitors in that
market;
 
    
    nearly all of the power plants we supply were specifically designed to use our
coal; and
 
    
    the plants we supply are among the lowest cost producers of electric power in
their respective regions and are among the cleaner producers of power from solid fossil
fuels.
    Material Effects of Regulation
   9




---



##### Table of Contents



Mine Safety and Health .
  2010Lost Time
    
    
    ReportableRate
    
    
    RateWCC Mines
    
    
    0.88
    
    
    
    1.31National Surface Mines
    
    
    1.23
    
    
    
    1.83
  Surface Mining Control and Reclamation Act.
  Clean Air Act and Related Regulations .
  10




---



##### Table of Contents



Bonding Requirements .
 Resource
Conservation and Recovery Act.
 Comprehensive Environmental Response, Compensation, and Liability Act.
 Climate Change Legislation and Regulations .
  11




---



##### Table of Contents



Power Segment
 General
   Megawatt
    
    
    CapacityYear
    
    Hours
    
    
    Factor2010
    
    
    1,620,000
    
    
    
    88
    %2009
    
    
    1,486,000
    
    
    
    81
    %2008
    
    
    1,641,000
    
    
    
    89
    %
  Coal Supply
   12




---



##### Table of Contents



Customer
  Material Effects of Regulation
 Material Effects of Regulation.
   Heritage Segment
    Corporate Segment
     13




---



##### Table of Contents



Available Information
    14




---



##### Table of Contents



ITEM 1A RISK FACTORS.
  Risk Factors Relating to our Operations
 Risks associated with being highly leveraged.
  
    
    limit our ability to obtain additional debt financing in the future for working
capital, capital expenditures, acquisitions, or other general corporate purposes;
 
    
    require us to dedicate a substantial portion of our cash flow from operations to
debt service, reducing the availability of cash flow for other purposes; or
 
    
    increase our vulnerability to economic downturns, limit our ability to capitalize on
significant business opportunities, and restrict our flexibility to react to changes in
market or industry conditions.
  We may not generate sufficient cash flow at our operating subsidiaries to pay our operating
expenses, meet our debt service costs and pay our heritage and corporate costs.
    15




---



##### Table of Contents



Our debt agreements contain covenant restrictions that may limit our ability to operate our
business.
  
    
    incur additional debt or issue guarantees;
 
    
    create liens;
 
    
    make certain investments;
 
    
    enter into transactions with our affiliates;
 
    
    sell certain assets;
 
    
    redeem capital stock or make other restricted payments;
 
    
    declare or pay dividends or make other distributions to stockholders; and
 
    
    merge or consolidate with any entity.
  Our dependence on a small group of customers could adversely affect our revenues if such customers
reduce or suspend their coal purchases or if they become unable to pay for our coal.
   If our assumptions regarding our future expenses related to employee benefit plans are incorrect,
then expenditures for these benefits could be materially higher than we have assumed. In addition,
we may have exposure under those plans that extend beyond what our obligations would be with
respect to our own employees.
   16




---



##### Table of Contents



Recent healthcare legislation contains amendments to the Black Lung Benefits Act that could
adversely affect our financial condition and results of operations.
   17




---



##### Table of Contents



Inaccuracies in our estimates of our coal reserves could result in decreased profitability from
lower than expected revenues or higher than expected costs.
  
    
    quality of the coal;
 
    
    geological and mining conditions, which may not be fully identified by
available exploration data and/or may differ from our experiences in areas where we
currently mine;
 
    
    the percentage of coal ultimately recoverable;
 
    
    the assumed effects of regulation, including the issuance of required permits,
taxes, including severance and excise taxes and royalties, and other payments to
governmental agencies;
 
    
    assumptions concerning the timing for the development of the reserves; and
 
    
    assumptions concerning equipment and productivity, future coal prices,
operating costs, including for critical supplies such as fuel, tires and explosives,
capital expenditures and development and reclamation costs.
  If the assumptions underlying our reclamation and mine closure obligations are materially
inaccurate, we could be required to expend greater amounts than anticipated.
    18




---



##### Table of Contents



If the cost of obtaining new reclamation bonds and renewing existing reclamation bonds continues to
increase or if we are unable to obtain additional bonding capacity, our operating results could be
negatively affected.
  Our coal mining operations are subject to external conditions that could disrupt operations and
negatively affect our profitability.
   Our operations are vulnerable to natural disasters, operating difficulties and infrastructure
constraints, not all of which are covered by insurance, which could have an impact on its
productivity.
   19




---



##### Table of Contents



Health, safety, environment and other regulations, standards and expectations evolve over time and
unforeseen changes could have an adverse effect on our results of operations and liquidity.
  Should our Indian Coal Tax Credit transaction be audited by the Internal Revenue Service, or IRS,
and the tax results contemplated thereby disallowed, the financial benefits of the transaction
would be reduced and we may be required to return payments received from a third party investor.
   Our future success depends upon our ability to continue acquiring and developing coal reserves that
are economically recoverable and to raise the capital necessary to fund our expansion.
   20




---



##### Table of Contents



Union represented labor creates an increased risk of work stoppages and higher labor costs.
   Our revenues could be affected by unscheduled outages or if scheduled maintenance outages last
longer than anticipated.
  The profitability of ROVA could be severely affected beginning in 2014 due to differences in the
termination dates of our coal supply agreements and power purchase agreements.
  Permitting issues in Central Appalachia could put ROVAs coal supply at risk.
   21




---



##### Table of Contents



We face intense competition to attract and retain employees. Further, managing Chief Executive
Officer and key executive succession and retention is critical to our
success.
   Risk Factors Relating to the Coal and Power Industries
 The recent downturn in the domestic and international financial markets, and the risk of prolonged
global recessionary conditions, could adversely affect our financial condition and results of
operations.
  Competition in the U.S. coal industry may adversely affect our revenues and results of operations.
  Any change in consumption patterns by utilities away from the use of coal could affect our ability
to sell the coal we produce or the prices that we receive.
    22




---



##### Table of Contents



Increased regulation of greenhouse gas emissions could adversely affect our cost of operations.
  Extensive government regulations impose significant costs on our mining operations, and future
regulations could increase those costs or limit our ability to produce and sell coal.
  
    
    limitations on land use;
 
    
    employee health and safety;
 
    
    mandated benefits for retired coal miners;
 
    
    mine permitting and licensing requirements;
 
    
    reclamation and restoration of mining properties after mining is
completed;
 
    
    air quality standards;
 
    
    water pollution;
 
    
    construction and permitting of facilities required for mining operations,
including valley fills and other structures, including those constructed in water
bodies and wetlands;
 
    
    protection of human health, plant life and wildlife;
 
    
    discharge of materials into the environment; and
 
    
    effects of mining on groundwater quality and availability.
    23




---



##### Table of Contents



Extensive environmental laws and regulations affect the end-users of coal and could reduce the
demand for coal as a fuel source and cause the volume of our sales to decline. These laws and
regulations could also impose costs on ROVA that it would be unable to pass through to its
customer.
     Risk Factors Relating to our Equity
 Provisions of our certificate of incorporation, bylaws, Delaware law and our stockholder rights
plan may have anti-takeover effects that could prevent a change of control of our company that
stockholders may consider favorable, and the market price of our common stock may be lower as a
result.
   24




---



##### Table of Contents



Future sales of our common stock by our major stockholder may depress our share price and influence
our management policies.
   25




---



##### Table of Contents



ITEM 1B UNRESOLVED STAFF COMMENTS.
  
 ITEM 2 PROPERTIES.
 Properties
 
 ITEM 3 LEGAL PROCEEDINGS.
  
 ITEM 4 REMOVED AND RESERVED.
 
 ITEM 4B MINE SAFETY DISCLOSURE.
   26




---



##### Table of Contents



PART II
 
 ITEM 5 MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER                  PURCHASES OF
EQUITY SECURITIES.
 Market Information
  Holders
   Sales PricesCommon StockHigh
    
    
    Low2009First Quarter
    
    $
    12.12
    
    
    $
    4.61Second Quarter
    
    
    10.86
    
    
    
    6.88Third Quarter
    
    
    10.25
    
    
    
    6.33Fourth Quarter
    
    
    9.20
    
    
    
    6.282010First Quarter
    
    $
    13.94
    
    
    $
    9.06Second Quarter
    
    
    14.40
    
    
    
    8.00Third Quarter
    
    
    10.25
    
    
    
    7.38Fourth Quarter
    
    
    12.14
    
    
    
    9.83
 Dividend Policy
   27




---



##### Table of Contents



Stock Performance Graph
  
    
    You invested $100 in Westmoreland Coal common stock and in each index at
the closing price on December 31, 2005;
 
    
    All dividends were reinvested;
 
    
    Annual reweighting of the peer groups; and
 
    
    You continued to hold your investment through December 31, 2010.
  
 Year Ending December 31,Company/Market/Peer Group
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010Westmoreland Coal Company
    
    $
    100.00
    
    
    $
    85.85
    
    
    $
    60.70
    
    
    $
    48.47
    
    
    $
    38.91
    
    
    $
    52.14NYSE AMEX Composite
    
    $
    100.00
    
    
    $
    119.87
    
    
    $
    144.08
    
    
    $
    85.85
    
    
    $
    116.25
    
    
    $
    146.002010 Peer Group Index(1)
    
    $
    100.00
    
    
    $
    66.40
    
    
    $
    92.50
    
    
    $
    44.01
    
    
    $
    99.68
    
    
    $
    136.202009 Peer Group Index
    
    $
    100.00
    
    
    $
    67.52
    
    
    $
    103.74
    
    
    $
    50.38
    
    
    $
    117.02
    
    
    $
    159.84
 (1)
    
    We revised our peer group to better reflect comparable sized companies in our
industry.
  28




---



##### Table of Contents



ITEM 6 SELECTED FINANCIAL DATA.
 Westmoreland Coal Company and Subsidiaries
 Five-Year Review
 2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(1)(In thousands; except per share data)Consolidated Statements of Operations InformationRevenues
    
    $
    506,057
    
    
    $
    443,368
    
    
    $
    509,696
    
    
    $
    504,217
    
    
    $
    444,407Operating income (loss)
    
    
    20,521
    
    
    
    (31,774
    )
    
    
    (16,035
    )
    
    
    (5,882
    )
    
    
    4,617Loss from continuing operations(2)
    
    
    (3,170
    )
    
    
    (29,162
    )
    
    
    (48,567
    )
    
    
    (13,230
    )
    
    
    (10,860
    )Income from discontinued operations, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,725
    
    
    
    406Net loss
    
    
    (3,170
    )
    
    
    (29,162
    )
    
    
    (48,567
    )
    
    
    (11,505
    )
    
    
    (10,454
    )Less net income (loss) attributable to non-controlling interest
    
    
    (2,645
    )
    
    
    (1,817
    )
    
    
    
    
    
    
    1,194
    
    
    
    2,244Less preferred stock dividend requirements
    
    
    1,360
    
    
    
    1,360
    
    
    
    1,360
    
    
    
    1,360
    
    
    
    1,585Less premium on exchange of preferred stock for common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    791Net loss applicable to common shareholders
    
    $
    (1,885
    )
    
    $
    (28,705
    )
    
    $
    (49,927
    )
    
    $
    (14,059
    )
    
    $
    (15,074
    )Per common share (basic and diluted):Loss from continuing operations
    
    $
    (0.17
    )
    
    $
    (2.88
    )
    
    $
    (5.25
    )
    
    $
    (1.72
    )
    
    $
    (1.77
    )Net loss applicable to common shareholders
    
    $
    (0.17
    )
    
    $
    (2.88
    )
    
    $
    (5.25
    )
    
    $
    (1.53
    )
    
    $
    (1.72
    )Balance Sheet Information (end of period)Working capital deficit
    
    $
    (35,793
    )
    
    $
    (74,976
    )
    
    $
    (24,152
    )
    
    $
    (94,674
    )
    
    $
    (66,773
    )Net property, plant and equipment
    
    
    416,955
    
    
    
    456,184
    
    
    
    443,400
    
    
    
    442,426
    
    
    
    431,452Total assets
    
    
    750,306
    
    
    
    772,728
    
    
    
    812,967
    
    
    
    782,528
    
    
    
    761,382Total debt
    
    
    242,104
    
    
    
    254,695
    
    
    
    269,153
    
    
    
    271,448
    
    
    
    306,007Shareholders deficit (3)
    
    
    (162,355
    )
    
    
    (141,799
    )
    
    
    (217,598
    )
    
    
    (177,257
    )
    
    
    (180,431
    )Other Data:Net cash provided by (used in):Operating activities
    
    $
    45,353
    
    
    $
    29,448
    
    
    $
    55,245
    
    
    $
    82,516
    
    
    $
    29,434Investing activities
    
    
    (29,180
    )
    
    
    (38,597
    )
    
    
    (6,588
    )
    
    
    (43,259
    )
    
    
    (33,922
    )Financing activities
    
    
    (20,917
    )
    
    
    (20,273
    )
    
    
    (28,452
    )
    
    
    (46,259
    )
    
    
    20,010Capital expenditures
    
    
    22,814
    
    
    
    34,546
    
    
    
    31,320
    
    
    
    30,412
    
    
    
    20,852
 (1)
    
    Effective June 29, 2006, we acquired a 50% interest in a partnership, which owns the
230-megawatt ROVA power plants from a subsidiary of E.ON U.S. LLC. The acquisition increased
our ownership interest in the partnership to 100%.(2)
    
    Includes a non-cash tax benefit of $17.1 million and $9.1 million in 2009 and 2007,
respectively.(3)
    
    Effective December 31, 2006, we recorded an increase in shareholders deficit of $129.8
million to reflect on our balance sheet the underfunded status of our pension and
postretirement medical benefit plans.
   29




---



##### Table of Contents



ITEM 7 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF                  OPERATIONS.
 The following discussion and analysis contains forward-looking statements and estimates that
involve risks and uncertainties. Actual results could differ materially from these estimates.
Factors that could cause or contribute to differences from estimates include those discussed under
Cautionary Note Regarding Forward-Looking Statements and Risk Factors contained in Item 1
above.
 Overview
   Recent Developments
  Legislation Enacted
  Healthcare Reform
 Accumulated other
comprehensive loss
   30




---



##### Table of Contents



Results of Operations
 Items that Affect Comparability of Our Results
  Year Ended December 31,
    
    2010
    
    
    2009
    
    
    2008(In thousands)Fair value adjustment on derivative and related amortization
of debt discount
    
    $
    (4,840
    )
    
    $
    5,076
    
    
    $
    Heritage legal claim settlement
    
    
    
    
    
    
    756
    
    
    
    Reclamation claim
    
    
    
    
    
    
    (4,825
    )
    
    
    Beneficial conversion feature interest expense
    
    
    
    
    
    
    
    
    
    
    (8,146
    )Loss on extinguishment of WML debt
    
    
    
    
    
    
    
    
    
    
    (3,834
    )Loss on extinguishment of ROVA debt
    
    
    
    
    
    
    
    
    
    
    (1,344
    )Settlement of coal royalty dispute
    
    
    
    
    
    
    
    
    
    
    (2,635
    )Gain on sale of interest in Ft. Lupton power project
    
    
    
    
    
    
    
    
    
    
    876Restructuring charges
    
    
    
    
    
    
    
    
    
    
    (2,009
    )Impact (pre-tax)
    
    $
    (4,840
    )
    
    $
    1,007
    
    
    $
    (17,092
    )Tax effect of other comprehensive income gains
    
    $
    
    
    
    $
    17,062
    
    
    $
    
 Items recorded in 2010
 
    
    We recorded expense of $3.4 million resulting from the mark-to-market
accounting of the conversion feature in our convertible notes, primarily due to an
increase in our stock price during 2010, with $1.4 million of interest expense of a
related debt discount.
 Items recorded in 2009
 
    
    We recorded an income tax benefit of $17.1 million related to a tax effect of
other comprehensive income gains, primarily related to a decrease in our postretirement
medical obligations.
 
    
    We recorded income of $6.1 million resulting from the mark-to-market accounting
of the conversion feature in our convertible notes and a decrease in the value of our
warrant offset with $1.0 million of interest expense of a related debt discount.
 
    
    We recorded a gain of $0.8 million related to a settlement of past heritage
claims, as a result of efforts to reduce our heritage costs.
 
    
    We recorded $4.8 million in net expense related to the settlement of the
reclamation claim at our Rosebud Mine. This included a $6.5 million reduction in
revenue, offset with a $1.7 million reduction in cost of sales.
  31




---



##### Table of Contents



Items recorded in 2008
 
    
    We recorded $8.1 million of expense related to the beneficial conversion
feature in the convertible notes we issued in March 2008, as the conversion price was
lower than the fair market value of our common stock at the time of issuance.
 
    
    We refinanced both our WML and ROVA debt during 2008 and as a result recorded
losses of $3.8 million and $1.3 million, respectively, for the extinguishment of debt.
 
    
    We recorded $2.6 million in net expense related to two coal royalty claims as
we reached an agreement with the U.S. Minerals Management Service and the Montana
Department of Revenue to settle two long-standing disputes. This included $12.8
million of cost of sales, offset with $10.2 million of revenue.
 
    
    On July 2, 2008, we received $0.9 million for our royalty interest in the
gas-fired Ft. Lupton project and recognized a gain of $0.9 million on the sale.
 
    
    In 2007, we initiated a restructuring plan in order to reduce the overall cost
structure of the Company. As a result, in 2008 we recorded restructuring charges of
$2.0 million. Most of the restructuring charges related to termination benefits,
outplacement costs, and lease costs related to the consolidation of corporate office
space.
 2010 Compared to 2009
 Summary
   32




---



##### Table of Contents



Items that Affect Comparability of Our Results
 2010(In millions)Increase in coal segment operating income driven by price increases, new agreements, 2009 customer shutdowns, and strong cost management performance at several mines
    
    $
    27.6Decrease in heritage segment operating costs primarily due to the agreement we entered into to modernize how we provide prescription drug benefits to retirees
    
    
    16.6Increase in our power segment operating income due to increased megawatt hours sold and decreased maintenance expenses due to planned and unplanned maintenance outages, with no comparable outages occurring in 2010
    
    
    4.0Increase in the noncontrolling interest adjustment to reduce losses from a partially owned consolidated coal segment subsidiary
    
    
    0.8Gain on sale of securities
    
    
    0.7Total
    
    $
    49.7
 Coal Segment Operating Results
  Year Ended December 31,Increase / (Decrease)2010
    
    
    2009
    
    
    $
    
    
    %(In thousands)Revenues
    
    $
    418,058
    
    
    $
    361,206
    
    
    $
    56,852
    
    
    
    15.7
    %Operating income
    
    
    32,922
    
    
    
    476
    
    
    
    32,446
    
    
    
    6816.4
    %Adjusted EBITDA(1)
    
    
    81,681
    
    
    
    51,207
    
    
    
    30,474
    
    
    
    59.5
    %Tons sold  millions of equivalent tons
    
    
    25.2
    
    
    
    24.3
    
    
    
    0.9
    
    
    
    3.7
    %Operating income per ton sold
    
    $
    1.31
    
    
    $
    0.02
    
    
    $
    1.29
    
    
    
    6568.9
    %
 (1)
    
    Adjusted EBITDA is defined and reconciled to net loss at the end of this Results of
Operations section.
  Items that Affect Comparability of Our Results,
  33




---



##### Table of Contents



Power Segment Operating Results
  Year Ended December 31,Increase / (Decrease)2010
    
    
    2009
    
    
    $
    
    
    %(In thousands)Revenues
    
    $
    87,999
    
    
    $
    82,162
    
    
    $
    5,837
    
    
    
    7.1
    %Operating income
    
    
    11,721
    
    
    
    7,672
    
    
    
    4,049
    
    
    
    52.8
    %Adjusted EBITDA(1)
    
    
    22,664
    
    
    
    18,117
    
    
    
    4,547
    
    
    
    25.1
    %Megawatts hours
    
    
    1,620
    
    
    
    1,486
    
    
    
    134
    
    
    
    9.0
    %
 (1)
    
    Adjusted EBITDA is defined and reconciled to net loss at the end of this
Results of Operations section.
   Heritage Segment Operating Results
  Year Ended December 31,Increase / (Decrease)2010
    
    
    2009
    
    
    $
    
    
    %(In thousands)Health care benefits
    
    $
    9,927
    
    
    $
    22,490
    
    
    $
    (12,563
    )
    
    
    (55.9
    )%Combined benefit fund payments
    
    
    2,953
    
    
    
    3,132
    
    
    
    (179
    )
    
    
    (5.7
    )%Workers compensation benefits (credits)
    
    
    81
    
    
    
    (485
    )
    
    
    566
    
    
    
    116.7
    %Black lung benefits
    
    
    1,460
    
    
    
    2,937
    
    
    
    (1,477
    )
    
    
    (50.3
    )%Total heritage health benefit expenses
    
    
    14,421
    
    
    
    28,074
    
    
    
    (13,653
    )
    
    
    (48.6
    )%Selling and administrative costs
    
    
    1,547
    
    
    
    3,696
    
    
    
    (2,149
    )
    
    
    (58.1
    )%Heritage segment operating loss
    
    $
    15,968
    
    
    $
    31,770
    
    
    $
    (15,802
    )
    
    
    (49.7
    )%
 Items that Affect Comparability of Our Results
 Corporate Segment Operating Results
   34




---



##### Table of Contents



Nonoperating Results (including other income (expense), income tax benefit, and net loss
attributable to noncontrolling interest)
 Items that Affect Comparability
of Our Results
 Items that
Affect Comparability of our Results
  2009 Compared to 2008
 Summary
  Items that Affect Comparability of Our Results
 2009(In millions)Decrease in coal segment operating income driven by reduced tonnages sold due to the 2009 customer shutdowns and unfavorable energy market conditions, partially offset with income from Indian Coal Tax Credit monetization transaction, and losses from a partially owned consolidated subsidiary
    
    $
    (12.7
    )Decrease in our power segment operating income due to reduced megawatt hours sold, increased maintenance expenses due to a planned major maintenance outage and a significant 2009 unplanned outage
    
    
    (8.3
    )Decrease in heritage costs due to elimination of postretirement medical benefits for non-represented employees costs in the third quarter of 2009, reduced workers compensation expenses due to changes in interest rates and favorable claims experience, offset by an increase in cost containment efforts and unfavorable changes in the valuation of Black Lung benefits trust assets and liabilities due to changes in interest rates
    
    
    2.9Decrease in corporate expenses due to cost control efforts and a reduction in stock compensation expense
    
    
    2.7Favorable noncontrolling interest adjustment due to losses from a partially owned consolidated subsidiary
    
    
    1.8Decrease in interest income partially offset with a decrease in interest expense due to debt refinancing and an increase in other income
    
    
    (1.3
    )Decrease in income taxes driven by lower state taxable income due to customer outages
    
    
    1.0Total
    
    $
    (13.9
    )
  35




---



##### Table of Contents



Coal Segment Operating Results
  Year Ended December 31,Increase / (Decrease)2009
    
    
    2008
    
    
    $
    
    
    %(In thousands)Revenues
    
    $
    361,206
    
    
    $
    419,806
    
    
    $
    (58,600
    )
    
    
    (14.0
    )%Operating income
    
    
    476
    
    
    
    15,211
    
    
    
    (14,735
    )
    
    
    (96.9
    )%Adjusted EBITDA(1)
    
    
    51,207
    
    
    
    57,743
    
    
    
    (6,536
    )
    
    
    (11.3
    )%Tons sold  millions of equivalent tons
    
    
    24.3
    
    
    
    29.3
    
    
    
    (5.0
    )
    
    
    (17.1
    )%Operating income per ton sold
    
    $
    0.02
    
    
    $
    0.52
    
    
    $
    (0.50
    )
    
    
    (96.2
    )%
 (1)
    
    Adjusted EBITDA is defined and reconciled to net loss at the end of this Results of
Operations section.
   Power Segment Operating Results
  Year Ended December 31,Increase / (Decrease)2009
    
    
    2008
    
    
    $
    
    
    %(In thousands)Revenues
    
    $
    82,162
    
    
    $
    89,890
    
    
    $
    (7,728
    )
    
    
    (8.6
    )%Operating income
    
    
    7,672
    
    
    
    16,920
    
    
    
    (9,248
    )
    
    
    (54.7
    )%Adjusted EBITDA(1)
    
    
    18,117
    
    
    
    26,493
    
    
    
    (8,376
    )
    
    
    (31.5
    )%Megawatts hours
    
    
    1,486
    
    
    
    1,641
    
    
    
    (155
    )
    
    
    (9.4
    )%
 (1)
    
    Adjusted EBITDA is defined and reconciled to net loss at the end of this
Results of Operations section.
  Items that Affect Comparability of Our Results .
  36




---



##### Table of Contents



Heritage Segment Operating Results
  Year Ended December 31,Increase / (Decrease)2009
    
    
    2008
    
    
    $
    
    
    %(In thousands)Health care benefits
    
    $
    22,490
    
    
    $
    25,588
    
    
    $
    (3,098
    )
    
    
    (12.1
    )%Combined benefit fund payments
    
    
    3,132
    
    
    
    3,470
    
    
    
    (338
    )
    
    
    (9.7
    )%Workers compensation benefits (credits)
    
    
    (485
    )
    
    
    4,417
    
    
    
    (4,902
    )
    
    
    (111.0
    )%Black lung benefits (credits)
    
    
    2,937
    
    
    
    (23
    )
    
    
    2,960
    
    
    
    12,869.6
    %Total heritage health benefit expenses
    
    
    28,074
    
    
    
    33,452
    
    
    
    (5,378
    )
    
    
    (16.1
    )%Selling and administrative costs
    
    
    3,696
    
    
    
    2,045
    
    
    
    1,651
    
    
    
    80.7
    %Gain on sale of assets
    
    
    
    
    
    
    (25
    )
    
    
    25
    
    
    
    (100.0
    )%Heritage segment operating loss
    
    $
    31,770
    
    
    $
    35,472
    
    
    $
    (3,702
    )
    
    
    (10.4
    )%
 Items that Affect Comparability of Our Results,
 Corporate Segment Operating Results
 Items
that Affect Comparability of Our Results
 Nonoperating Results (including other income (expense), income tax benefit (expense), and
net loss attributable to noncontrolling interest)
 Items
that Affect Comparability of Our Results
 Items that
Affect Comparability of our Results
  37




---



##### Table of Contents



Reconciliation of Adjusted EBITDA to Net Loss
  
    
    are used widely by investors to measure a companys operating performance without
regard to items excluded from the calculation of such terms, which can vary
substantially from company to company depending upon accounting methods and book value
of assets, capital structure and the method by which assets were acquired, among other
factors; and
 
    
    help investors to more meaningfully evaluate and compare the results of our
operations from period to period by removing the effect of our capital structure and
asset base from our operating results.
  
    
    do not reflect our cash expenditures, or future requirements for capital and major
maintenance expenditures or contractual commitments;
 
    
    do not reflect income tax expenses or the cash requirements necessary to pay income
taxes;
 
    
    do not reflect changes in, or cash requirements for, our working capital needs; and
 
    
    do not reflect the significant interest expense, or the cash requirements necessary
to service interest or principal payments, on certain of our debt obligations.
   38




---



##### Table of Contents



December 31,2010
    
    
    2009
    
    
    2008(In thousands)Reconciliation of Adjusted EBITDA to Net LossNet Loss
    
    $
    (3,170
    )
    
    $
    (29,162
    )
    
    $
    (48,567
    )Income tax (benefit) expense from continuing operations
    
    
    (141
    )
    
    
    (17,136
    )
    
    
    919Other (income) loss
    
    
    2,587
    
    
    
    (5,991
    )
    
    
    284Interest income
    
    
    (1,747
    )
    
    
    (3,218
    )
    
    
    (5,125
    )Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    5,178Interest expense attributable to beneficial conversion feature
    
    
    
    
    
    
    
    
    
    
    8,146Interest expense
    
    
    22,992
    
    
    
    23,733
    
    
    
    23,130Depreciation, depletion and amortization
    
    
    44,690
    
    
    
    44,254
    
    
    
    41,387Accretion of ARO and receivable
    
    
    11,540
    
    
    
    9,974
    
    
    
    9,528Amortization of intangible assets and liabilities
    
    
    590
    
    
    
    279
    
    
    
    598EBITDA
    
    
    77,341
    
    
    
    22,733
    
    
    
    35,478Restructuring charges
    
    
    
    
    
    
    
    
    
    
    2,009Customer reclamation claim
    
    
    
    
    
    
    4,825
    
    
    
    (Gain)/loss on sale of assets
    
    
    226
    
    
    
    191
    
    
    
    (1,425
    )Share-based compensation
    
    
    4,049
    
    
    
    2,552
    
    
    
    2,733Adjusted EBITDA
    
    $
    81,616
    
    
    $
    30,301
    
    
    $
    38,795
 December 31,2010
    
    
    2009
    
    
    2008(In thousands)Adjusted EBITDA by SegmentCoal
    
    $
    81,681
    
    
    $
    51,207
    
    
    $
    57,743Power
    
    
    22,664
    
    
    
    18,117
    
    
    
    26,493Heritage
    
    
    (15,968
    )
    
    
    (31,770
    )
    
    
    (35,497
    )Corporate
    
    
    (6,761
    )
    
    
    (7,253
    )
    
    
    (9,944
    )Total
    
    $
    81,616
    
    
    $
    30,301
    
    
    $
    38,795
  39




---



##### Table of Contents



Significant Anticipated Variances between 2010 and 2011 and Related Uncertainties
  
    
    We expect significantly higher overall levels of cash and liquidity throughout
2011 as a result of the issuance of the Parent Notes, as well as increased coal
operating profits and decreased heritage health benefit expenditures;
 
    
    We expect to take a charge to our earnings in 2011 of approximately $20.0
million as a result of the issuance of the Parent Notes and the mark-to-market
accounting of the conversion feature in our convertible notes;
 
    
    We expect an increase in the repayments of long-term debt resulting from our
WML Notes as well as from the various debt paid off with the proceeds of the Parent
Notes;
 
    
    We expect significantly higher overall levels of debt and interest expense
throughout 2011 as a result of the issuance of the Parent Notes;
 
    
    We expect to pay approximately $21.0 million of preferred stock dividends in
2011;
 
    
    We expect our overall coal tons delivered to decrease due to the December 31,
2010 expiration of a long-term coal supply contract at our Rosebud Mine. While this
decrease will drive a decrease in overall tonnage sold, we expect the expiration of the
contract to increase our profits and cash flow as our cost per ton sold was
significantly greater than the fixed price per ton we were receiving under the
contract;
 
    
    We expect our power operating profit to increase slightly due to the
significant maintenance expenses incurred in 2010 relating to a planned maintenance
shutdown. In addition, the ROVA credit agreements required us to perform certain
maintenance procedures that were not otherwise required. As a result, we expect the
termination of those agreements in connection with the completion of the Parent Notes
offering will result in further reductions in 2011 maintenance expenses;
 
    
    We expect an increase in our depreciation, depletion, and amortization expense
in 2011 due to increases in our asset reclamation obligation studies driving increased
depletion expense as well as slightly increased capital spending levels in 2011;
 
    
    We expect to make additional capital investments during 2011 in the range of
$40.0 to $50.0 million to improve our mining operations, decrease our equipment
maintenance costs, and increase our coal reserves. We expect these capital investments
to be funded through our mines operating cash flows or, if necessary, WMLs existing
credit facility or capital leases; and
 
    
    We expect an increase in our investments in bond collateral in the range of
$9.0 to $12.0 million primarily as a result of securing reclamation bonds for new
mining areas in 2011.
 Material Effects of
Regulation Material Effects of Regulation
  40




---



##### Table of Contents



Liquidity and Capital Resources
  Parent Notes Offering February 4, 2011 and Use of Proceeds
    Liquidity Limitations and Requirements
   2010 Actual
    
    
    2011 Expected(In millions)Postretirement medical benefits
    
    $
    14.5
    
    
    $
    13.6Pension contributions (1)
    
    
    10.8
    
    
    
    10.2CBF premiums
    
    
    3.0
    
    
    
    2.7Workers compensation benefits
    
    
    0.6
    
    
    
    1.0
 (1)
    
    Of the 2010 pension contribution, $5.0 million was made
through the contribution of Company stock. No stock
contributions are expected in 2011.
  41




---



##### Table of Contents



Historical Sources and Uses of Cash
  Years Ended December 31,2010
    
    
    2009(In thousands)Cash provided by (used in):Operating activities
    
    $
    45,353
    
    
    $
    29,448Investing activities
    
    
    (29,180
    )
    
    
    (38,597
    )Financing activities
    
    
    (20,917
    )
    
    
    (20,273
    )
    Other current liabilities
  42




---



##### Table of Contents



Contractual Obligations and Commitments
  Payments Due by PeriodTotal
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    After 2015(In thousands)Long-term debt obligations(1)(principal and interest)
    
    $
    279,738
    
    
    
    51,731
    
    
    
    40,076
    
    
    
    61,264
    
    
    
    38,008
    
    
    
    35,880
    
    
    
    52,779Capital lease obligations (principal and
interest)
    
    
    30,293
    
    
    
    8,714
    
    
    
    8,319
    
    
    
    7,077
    
    
    
    4,461
    
    
    
    1,617
    
    
    
    105Operating lease obligations
    
    
    18,311
    
    
    
    6,665
    
    
    
    4,243
    
    
    
    2,827
    
    
    
    2,233
    
    
    
    1,625
    
    
    
    718Purchase obligations(2)
    
    
    105,534
    
    
    
    28,552
    
    
    
    28,552
    
    
    
    28,552
    
    
    
    17,077
    
    
    
    2,801
    
    
    
    Other long-term liabilities(3)
    
    
    1,096,065
    
    
    
    44,442
    
    
    
    41,937
    
    
    
    42,308
    
    
    
    54,298
    
    
    
    42,763
    
    
    
    870,317Totals
    
    $
    1,529,941
    
    
    
    140,104
    
    
    
    123,127
    
    
    
    142,028
    
    
    
    116,077
    
    
    
    84,686
    
    
    
    923,919ProForma long-term debt
obligations(4)(principal and
interest)
    
    $
    435,022
    
    
    
    26,098
    
    
    
    39,661
    
    
    
    43,918
    
    
    
    40,898
    
    
    
    41,355
    
    
    
    243,092
 (1)
    
    On February 4, 2011, we refinanced our convertible notes, WRIs term and revolving line
of credit and ROVAs term debt. See Note 4 to our consolidated financial statements for
details.(2)
    
    Our purchase obligations relate to coal supply agreements for our power plants. See
Note 15 to our consolidated financial statements for details.(3)
    
    Represents benefit payments for our postretirement medical benefits, black lung,
workers compensation, and combined benefit fund plans, as well as contributions for our
defined benefit pension plans and final reclamation costs.(4)
    
    Amounts shown are subsequent to the Parent Notes offering in February 2011.
 Critical Accounting Policies
 Postretirement Medical Benefits
      43




---



##### Table of Contents



Postretirement Medical BenefitsHealth Care Cost Trend Rate
    
    1% Increase
    
    
    1% Decrease(In thousands)Effect on service and interest cost components
    
    $
    1,282
    
    
    $
    (1,079
    )Effect on postretirement medical benefit obligation
    
    $
    22,565
    
    
    $
    (19,116
    )
 Asset Retirement Obligations, Final Reclamation Costs and Reserve Estimates
   Income Taxes and Deferred Income Taxes
       44




---



##### Table of Contents



Recent Accounting Pronouncements
    Off-Balance Sheet Arrangements
   PostWorkers
    
    
    RetirementReclamation
    
    
    Compensation
    
    
    Medical BenefitObligations
    
    
    Obligations
    
    
    Obligations
    
    
    Other
    
    
    Total(In thousands)Surety bonds
    
    $
    230,367
    
    
    $
    10,303
    
    
    $
    9,432
    
    
    $
    4,245
    
    
    $
    254,347Letters of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,556
    
    
    
    8,556$
    230,367
    
    
    $
    10,303
    
    
    $
    9,432
    
    
    $
    12,801
    
    
    $
    262,903
  45




---



##### Table of Contents



ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
  Commodity Price Risk
   Interest Rate Risk
  Effect of 1%increaseor 1% decreaseRevolving lines of credit(1)
    
    $
    184WRIs term debt(1)
    
    
    96
 (1)
    
    On February 4, 2011, proceeds from the Parent Notes
offering were used to repay WRIs term and revolving line
of credit. See Note 4 to our consolidated financial statements
for details.
 
  46




---



##### Table of Contents



ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 Index to Financial Statements
    
    PageReports of Independent Registered Public Accounting Firms
    
    
    48Consolidated Balance Sheets
    
    
    50Consolidated Statements of Operations
    
    
    52Consolidated Statements of Shareholders Deficit and Comprehensive Loss
    
    
    53Consolidated Statements of Cash Flows
    
    
    54Notes to Consolidated Financial Statements
    
    
    55
  47




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
     Determining Whether an Instrument (or Embedded Feature) is Indexed to an
Entitys Own Stock
 Internal ControlIntegrated Framework
  
  48




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     /s/ KPMG LLP
 
  49




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
 
 Consolidated Balance Sheets
 December 31,
    
    
    December 31,2010
    
    
    2009(In thousands)AssetsCurrent assets:Cash and cash equivalents
    
    $
    5,775
    
    
    $
    10,519Receivables:Trade
    
    
    50,578
    
    
    
    46,393Contractual third-party reclamation receivables
    
    
    7,743
    
    
    
    7,257Other
    
    
    4,545
    
    
    
    3,16262,866
    
    
    
    56,812Inventories
    
    
    23,571
    
    
    
    25,871Other current assets
    
    
    5,335
    
    
    
    6,047Total current assets
    
    
    97,547
    
    
    
    99,249Property, plant and equipment:Land and mineral rights
    
    
    83,824
    
    
    
    83,694Capitalized asset retirement cost
    
    
    114,856
    
    
    
    134,821Plant and equipment
    
    
    506,661
    
    
    
    486,238705,341
    
    
    
    704,753Less accumulated depreciation, depletion and amortization
    
    
    (288,386
    )
    
    
    (248,569
    )Net property, plant and equipment
    
    
    416,955
    
    
    
    456,184Advanced coal royalties
    
    
    3,695
    
    
    
    3,056Reclamation deposits
    
    
    72,274
    
    
    
    73,067Restricted investments and bond collateral
    
    
    55,384
    
    
    
    48,188Contractual third-party reclamation receivables, less current portion
    
    
    87,739
    
    
    
    74,989Deferred income taxes
    
    
    2,458
    
    
    
    2,341Intangible assets, net of accumulated amortization of $9.1 million
and $6.8 million at December 31, 2010 and December 31, 2009,
respectively
    
    
    6,555
    
    
    
    8,781Other assets
    
    
    7,699
    
    
    
    6,873Total Assets
    
    $
    750,306
    
    
    $
    772,728
   50




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets (Continued)
 December 31,
    
    
    December 31,2010
    
    
    2009(In thousands)Liabilities and Shareholders DeficitCurrent liabilities:Current installments of long-term debt
    
    $
    14,973
    
    
    $
    41,089Revolving lines of credit
    
    
    
    
    
    
    16,400Accounts payable and accrued expenses:Trade
    
    
    46,247
    
    
    
    39,264Production taxes
    
    
    26,317
    
    
    
    24,510Workers compensation
    
    
    954
    
    
    
    1,031Postretirement medical benefits
    
    
    13,581
    
    
    
    14,501SERP
    
    
    304
    
    
    
    306Deferred revenue
    
    
    10,209
    
    
    
    8,760Asset retirement obligations
    
    
    14,514
    
    
    
    15,513Other current liabilities
    
    
    6,241
    
    
    
    12,851Total current liabilities
    
    
    133,340
    
    
    
    174,225Long-term debt, less current installments
    
    
    208,731
    
    
    
    197,206Revolving lines of credit, less current portion
    
    
    18,400
    
    
    
    Workers compensation, less current portion
    
    
    9,424
    
    
    
    10,188Excess of pneumoconiosis benefit obligation over trust assets
    
    
    2,246
    
    
    
    786Postretirement medical benefits, less current portion
    
    
    197,279
    
    
    
    175,722Pension and SERP obligations, less current portion
    
    
    20,462
    
    
    
    26,827Deferred revenue, less current portion
    
    
    75,395
    
    
    
    84,243Asset retirement obligations, less current portion
    
    
    227,129
    
    
    
    229,102Intangible liabilities, net of accumulated amortization $9.4
million at December 31, 2010 and $7.7 million at December
31, 2009, respectively
    
    
    8,663
    
    
    
    10,300Other liabilities
    
    
    11,592
    
    
    
    5,928Total liabilities
    
    
    912,661
    
    
    
    914,527Shareholders deficit:Preferred stock of $1.00 par value

Authorized 5,000,000 shares;

Issued and outstanding 160,129 shares at
December 31, 2010, and December 31, 2009
    
    
    160
    
    
    
    160Common stock of $2.50 par value

Authorized 30,000,000 shares;

Issued and outstanding 11,160,798 shares at
December 31, 2010 and 10,345,927 shares at
December 31, 2009
    
    
    27,901
    
    
    
    25,864Other paid-in capital
    
    
    98,466
    
    
    
    91,432Accumulated other comprehensive loss
    
    
    (57,680
    )
    
    
    (31,223
    )Accumulated deficit
    
    
    (226,740
    )
    
    
    (226,215
    )Total Westmoreland Coal Company shareholders deficit
    
    
    (157,893
    )
    
    
    (139,982
    )Noncontrolling interest
    
    
    (4,462
    )
    
    
    (1,817
    )Total deficit
    
    
    (162,355
    )
    
    
    (141,799
    )Total Liabilities and Shareholders Deficit
    
    $
    750,306
    
    
    $
    772,728
   51




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
 
 Consolidated Statements of Operations
 Years Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands, except per share data)Revenues
    
    $
    506,057
    
    
    $
    443,368
    
    
    $
    509,696Cost and expenses:Cost of sales
    
    
    394,827
    
    
    
    373,070
    
    
    
    409,795Depreciation, depletion and amortization
    
    
    44,690
    
    
    
    44,254
    
    
    
    41,387Selling and administrative
    
    
    39,481
    
    
    
    40,612
    
    
    
    40,513Heritage health benefit expenses
    
    
    14,421
    
    
    
    28,074
    
    
    
    33,452Restructuring charges
    
    
    
    
    
    
    
    
    
    
    2,009Loss (gain) on sales of assets
    
    
    226
    
    
    
    191
    
    
    
    (1,425
    )Other operating income
    
    
    (8,109
    )
    
    
    (11,059
    )
    
    
    485,536
    
    
    
    475,142
    
    
    
    525,731Operating income (loss)
    
    
    20,521
    
    
    
    (31,774
    )
    
    
    (16,035
    )Other income (expense):Interest expense
    
    
    (22,992
    )
    
    
    (23,733
    )
    
    
    (23,130
    )Interest expense attributable to beneficial conversion feature
    
    
    
    
    
    
    
    
    
    
    (8,146
    )Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (5,178
    )Interest income
    
    
    1,747
    
    
    
    3,218
    
    
    
    5,125Other income (loss)
    
    
    (2,587
    )
    
    
    5,991
    
    
    
    (284
    )(23,832
    )
    
    
    (14,524
    )
    
    
    (31,613
    )Loss before income taxes
    
    
    (3,311
    )
    
    
    (46,298
    )
    
    
    (47,648
    )Income tax (benefit) expense
    
    
    (141
    )
    
    
    (17,136
    )
    
    
    919Net loss
    
    
    (3,170
    )
    
    
    (29,162
    )
    
    
    (48,567
    )Less net loss attributable to noncontrolling interest
    
    
    (2,645
    )
    
    
    (1,817
    )
    
    
    Net loss attributable to the Parent company
    
    
    (525
    )
    
    
    (27,345
    )
    
    
    (48,567
    )Less preferred stock dividend requirements
    
    
    1,360
    
    
    
    1,360
    
    
    
    1,360Net loss applicable to common shareholders
    
    $
    (1,885
    )
    
    $
    (28,705
    )
    
    $
    (49,927
    )Net loss per share applicable to common shareholders:Basic and diluted
    
    $
    (0.17
    )
    
    $
    (2.88
    )
    
    $
    (5.25
    )Weighted average number of common shares outstandingBasic and diluted
    
    
    10,791
    
    
    
    9,967
    
    
    
    9,512
   52




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
 
 Consolidated Statement of Shareholders Deficit and Comprehensive Loss
 Years Ended December 31, 2008, 2009 and 2010
 Class A
    
    
    
    
    
    
    
    
    
    
    Accumulated
    
    
    
    
    
    
    
    
    
    
    TotalConvertible
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    Non-
    
    
    ShareholdersExchangeable
    
    
    Common
    
    
    Other Paid-In
    
    
    Comprehensive
    
    
    Accumulated
    
    
    controlling
    
    
    EquityPreferred Stock
    
    
    Stock
    
    
    Capital
    
    
    Loss
    
    
    Deficit
    
    
    Interest
    
    
    (Deficit)(In thousands)Balance at December 31, 2007 (160,129 preferred shares and
9,427,203 common shares outstanding)
    
    $
    160
    
    
    $
    23,567
    
    
    $
    85,352
    
    
    $
    (125,187
    )
    
    $
    (161,149
    )
    
    $
    
    
    
    $
    (177,257
    )Common stock issued as compensation (221,933 shares)
    
    
    
    
    
    
    554
    
    
    
    2,242
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,796Common stock options exercised (40,882 shares)
    
    
    
    
    
    
    102
    
    
    
    101
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    203Warrant repriced in lieu of registration requirement
    
    
    
    
    
    
    
    
    
    
    355
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    355Beneficial conversion feature on convertible debt
    
    
    
    
    
    
    
    
    
    
    8,146
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,146Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48,567
    )
    
    
    
    
    
    
    (48,567
    )Adjustments to accumulated actuarial losses of pension plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,589
    )
    
    
    
    
    
    
    
    
    
    
    (17,589
    )Amortization of accumulated actuarial losses of pension plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    351
    
    
    
    
    
    
    
    
    
    
    
    351Adjustments to accumulated actuarial losses, prior service
costs and transition obligations of postretirement medical
benefit plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,533
    
    
    
    
    
    
    
    
    
    
    
    5,533Amortization of accumulated actuarial losses, prior service
costs and transition obligations of postretirement medical
benefit plans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,319
    
    
    
    
    
    
    
    
    
    
    
    8,319Unrealized loss on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (788
    )
    
    
    
    
    
    
    
    
    
    
    (788
    )Other than temporary impairment of available-for-sale
securities recognized in earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    900
    
    
    
    
    
    
    
    
    
    
    
    900Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (51,841
    )Balance at December 31, 2008 (160,129 preferred shares and
9,690,018 common shares outstanding)
    
    
    160
    
    
    
    24,223
    
    
    
    96,196
    
    
    
    (128,461
    )
    
    
    (209,716
    )
    
    
    
    
    
    
    (217,598
    )Cumulative effect of adoption of ASC 815-40
    
    
    
    
    
    
    
    
    
    
    (9,847
    )
    
    
    
    
    
    
    10,846
    
    
    
    
    
    
    
    999Common stock issued as compensation (255,909 shares, less
100,000 shares forfeited)
    
    
    
    
    
    
    391
    
    
    
    2,180
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,571Contributions of Company stock to pension plans assets
(500,000 shares)
    
    
    
    
    
    
    1,250
    
    
    
    2,903
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,153Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (27,345
    )
    
    
    (1,817
    )
    
    
    (29,162
    )Tax effect of other comprehensive income gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,062
    )
    
    
    
    
    
    
    
    
    
    
    (17,062
    )Adjustments to accumulated actuarial losses and transition
obligations, pension
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,459
    )
    
    
    
    
    
    
    
    
    
    
    (1,459
    )Amortization of accumulated actuarial losses and transition
obligations, pension
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,845
    
    
    
    
    
    
    
    
    
    
    
    1,845Amortization of accumulated actuarial losses and transition
obligations, postretirement medical benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,079
    
    
    
    
    
    
    
    
    
    
    
    7,079Effect of pension plan freeze
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,670
    
    
    
    
    
    
    
    
    
    
    
    10,670Effect of postretirement medical benefit plan amendments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    95,313
    
    
    
    
    
    
    
    
    
    
    
    95,313Unrealized gain on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    852
    
    
    
    
    
    
    
    
    
    
    
    852Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68,076Balance at December 31, 2009 (160,129 preferred shares and
10,345,927 common shares outstanding)
    
    
    160
    
    
    
    25,864
    
    
    
    91,432
    
    
    
    (31,223
    )
    
    
    (226,215
    )
    
    
    (1,817
    )
    
    
    (141,799
    )Common stock issued as compensation (337,371 shares)
    
    
    
    
    
    
    843
    
    
    
    3,206
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,049Common stock options exercised (2,500 shares)
    
    
    
    
    
    
    6
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8Contributions of Company stock to pension plan assets
(475,000 shares)
    
    
    
    
    
    
    1,188
    
    
    
    3,826
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,014Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (525
    )
    
    
    (2,645
    )
    
    
    (3,170
    )Amortization of accumulated actuarial losses and transition
obligations, pension
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,312
    
    
    
    
    
    
    
    
    
    
    
    1,312Adjustments to accumulated actuarial losses and transition
obligations, pension
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,860
    )
    
    
    
    
    
    
    
    
    
    
    (3,860
    )Amortization of accumulated actuarial gains and transition
obligations, postretirement medical benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (275
    )
    
    
    
    
    
    
    
    
    
    
    (275
    )Adjustments to accumulated actuarial gains and transition
obligations, postretirement medical benefits
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,195
    )
    
    
    
    
    
    
    
    
    
    
    (23,195
    )Unrealized and realized gains on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (439
    )
    
    
    
    
    
    
    
    
    
    
    (439
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29,627
    )Balance at December 31, 2010 (160,129 preferred shares and
11,160,798 common shares outstanding)
    
    $
    160
    
    
    $
    27,901
    
    
    $
    98,466
    
    
    $
    (57,680
    )
    
    $
    (226,740
    )
    
    $
    (4,462
    )
    
    $
    (162,355
    )
   53




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
 
 Consolidated Statements of Cash Flows
 Years Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Cash flows from operating activities:Net loss
    
    $
    (3,170
    )
    
    $
    (29,162
    )
    
    $
    (48,567
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation, depletion and amortization
    
    
    44,690
    
    
    
    44,254
    
    
    
    41,387Accretion of asset retirement obligation and receivable
    
    
    11,540
    
    
    
    9,974
    
    
    
    9,528Non-cash tax benefits
    
    
    
    
    
    
    (17,062
    )
    
    
    Amortization of intangible assets and liabilities, net
    
    
    590
    
    
    
    279
    
    
    
    598Restructuring charges
    
    
    
    
    
    
    
    
    
    
    2,009Share-based compensation
    
    
    4,049
    
    
    
    2,552
    
    
    
    2,733Loss (gain) on sales of assets
    
    
    226
    
    
    
    191
    
    
    
    (1,425
    )Non-cash interest expense
    
    
    1,236
    
    
    
    1,470
    
    
    
    8,934Amortization of deferred financing costs
    
    
    2,304
    
    
    
    1,975
    
    
    
    839Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    2,292Loss (gain) on impairment and sales of investment securities
    
    
    (604
    )
    
    
    412
    
    
    
    900Loss (gain) on derivative instruments
    
    
    3,456
    
    
    
    (6,122
    )
    
    
    Changes in operating assets and liabilities:Receivables, net
    
    
    (4,728
    )
    
    
    15,503
    
    
    
    (6,240
    )Inventories
    
    
    2,300
    
    
    
    (1,217
    )
    
    
    4,144Excess of pneumoconiosis benefit obligation over trust assets
    
    
    1,460
    
    
    
    3,025
    
    
    
    (23
    )Accounts payable and accrued expenses
    
    
    9,041
    
    
    
    (13,802
    )
    
    
    2,001Deferred revenue
    
    
    (7,399
    )
    
    
    10,486
    
    
    
    29,177Accrual for workers compensation
    
    
    (841
    )
    
    
    (1,619
    )
    
    
    3,316Asset retirement obligations
    
    
    (7,783
    )
    
    
    (2,219
    )
    
    
    (889
    )Accrual for postretirement medical benefits
    
    
    (2,832
    )
    
    
    7,762
    
    
    
    10,021Pension and SERP obligations
    
    
    (3,902
    )
    
    
    3,173
    
    
    
    (2,116
    )Other assets and liabilities
    
    
    (4,280
    )
    
    
    (405
    )
    
    
    (3,374
    )Net cash provided by operating activities
    
    
    45,353
    
    
    
    29,448
    
    
    
    55,245Cash flows from investing activities:Additions to property, plant and equipment
    
    
    (22,814
    )
    
    
    (34,546
    )
    
    
    (31,320
    )Change in restricted investments and bond collateral and reclamation
deposits
    
    
    (8,545
    )
    
    
    (4,601
    )
    
    
    24,319Net proceeds from sales of assets
    
    
    712
    
    
    
    937
    
    
    
    2,641Proceeds from the sale of investments
    
    
    2,307
    
    
    
    796
    
    
    
    Receivable from customer for property and equipment purchases
    
    
    (840
    )
    
    
    (1,183
    )
    
    
    (2,228
    )Net cash used in investing activities
    
    
    (29,180
    )
    
    
    (38,597
    )
    
    
    (6,588
    )Cash flows from financing activities:Change in book overdrafts
    
    
    (595
    )
    
    
    596
    
    
    
    (5,043
    )Borrowings from long-term debt
    
    
    
    
    
    
    8,562
    
    
    
    205,377Repayments of long-term debt
    
    
    (20,405
    )
    
    
    (35,275
    )
    
    
    (219,785
    )Borrowings on revolving lines of credit
    
    
    170,900
    
    
    
    94,116
    
    
    
    169,600Repayments on revolving lines of credit
    
    
    (168,900
    )
    
    
    (88,016
    )
    
    
    (173,500
    )Debt issuance costs
    
    
    (1,925
    )
    
    
    (256
    )
    
    
    (5,304
    )Exercise of stock options
    
    
    8
    
    
    
    
    
    
    
    203Net cash used in financing activities
    
    
    (20,917
    )
    
    
    (20,273
    )
    
    
    (28,452
    )Net increase (decrease) in cash and cash equivalents
    
    
    (4,744
    )
    
    
    (29,422
    )
    
    
    20,205Cash and cash equivalents, beginning of year
    
    
    10,519
    
    
    
    39,941
    
    
    
    19,736Cash and cash equivalents, end of year
    
    $
    5,775
    
    
    $
    10,519
    
    
    $
    39,941Supplemental disclosures of cash flow information:Cash paid during the year for:Interest
    
    $
    19,744
    
    
    $
    20,418
    
    
    $
    22,226Income taxes (refunds)
    
    
    (236
    )
    
    
    2,263
    
    
    
    2,227Non-cash transactions:Accrued purchases of property and equipment
    
    
    628
    
    
    
    949
    
    
    
    2,715Capital leases and other financing sources
    
    
    3,748
    
    
    
    11,286
    
    
    
    14,859
   54




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
 
 Notes to Consolidated Financial Statements
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Operations
   Liquidity
       55




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
 Consolidation Policy
    Use of Estimates
  Cash and Cash Equivalents
  Trade Receivables
  Inventories
  Restricted Investments and Bond Collateral
 Restricted Investments and Bond Collateral
 Mine Development
   56




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
  Property, Plant and Equipment
   YearsBuildings and improvements
    
    15 to 30Machinery and equipment
    
    3 to 36
   Reclamation Deposits and Contractual Third-Party Reclamation Receivables
  Financial Instruments
 Accumulated other comprehensive income (loss)
  Accumulated
other comprehensive loss
  57




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
 Other income (expense)
 Intangible Assets and Liabilities
  Cost of sales Revenues
  AmortizationExpense (Revenue)(In thousands)2011
    
    $
    6572012
    
    
    6572013
    
    
    6572014
    
    
    102015
    
    
    (798
    )
 Workers Compensation Benefits
   Black Lung Benefits
 Excess of pneumoconiosis benefit obligation over trust assets
  58




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
  Postretirement Health Care Benefits
  Pension and SERP Plans
  Deferred Revenue
  Asset Retirement Obligations
   Income Taxes
   Income tax
expense
  59




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
  Deferred Financing Costs
 Other assets
 Coal Revenues
  Power Revenues
   Other Operating Income (Loss)
 Other operating income
 Exploration and Drilling Costs
 Cost of sales
 Share-Based Compensation
  Earnings (Loss) per Share
   60




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
  Years Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Convertible notes and securities
    
    
    2,943
    
    
    
    2,820
    
    
    
    2,673Restricted stock units, stock options, SARs, and warrant shares
    
    
    630
    
    
    
    779
    
    
    
    870Total shares excluded from diluted shares calculation
    
    
    3,573
    
    
    
    3,599
    
    
    
    3,543
 Accounting Pronouncements Adopted
    2. INVENTORIES
  December 31,2010
    
    
    2009(In thousands)Coal
    
    $
    678
    
    
    $
    1,158Materials and supplies
    
    
    23,474
    
    
    
    25,713Reserve for obsolete inventory
    
    
    (581
    )
    
    
    (1,000
    )Total
    
    $
    23,571
    
    
    $
    25,871
  61




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
 3. RESTRICTED INVESTMENTS AND BOND COLLATERAL
  December 31,2010
    
    
    2009(In thousands)Coal Segment:Westmoreland Mining  debt reserve account
    
    $
    7,514
    
    
    $
    5,064Reclamation bond collateral:Rosebud Mine
    
    
    12,263
    
    
    
    12,462Absaloka Mine
    
    
    10,956
    
    
    
    9,228Jewett Mine
    
    
    3,001
    
    
    
    1,502Beulah Mine
    
    
    1,270
    
    
    
    1,270Power Segment:Letter of credit account
    
    
    5,990
    
    
    
    6,037Debt protection account
    
    
    905
    
    
    
    2,067Repairs and maintenance account
    
    
    1,067
    
    
    
    Ash reserve account
    
    
    602
    
    
    
    600Corporate Segment:Workers compensation bonds
    
    
    6,350
    
    
    
    6,118Postretirement medical benefit bonds
    
    
    5,466
    
    
    
    3,840Total restricted investments and bond collateral
    
    $
    55,384
    
    
    $
    48,188
   Carrying Value
    
    
    Fair Value(In thousands)Cash and cash equivalents
    
    $
    39,557
    
    
    $
    39,557Time deposits
    
    
    10,266
    
    
    
    10,266Held-to-maturity securities
    
    
    2,672
    
    
    
    3,012Available-for-sale securities
    
    
    2,889
    
    
    
    2,889$
    55,384
    
    
    $
    55,724
  Coal Segment
    62




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
 Power Segment
     Corporate Segment
  Held-to-Maturity and Available-for-Sale Restricted Investments and Bond Collateral
  December 31,2010
    
    
    2009(In thousands)Amortized cost
    
    $
    2,672
    
    
    $
    3,479Gross unrealized holding gains
    
    
    340
    
    
    
    113Gross unrealized holding losses
    
    
    
    
    
    
    (2
    )Fair value
    
    $
    3,012
    
    
    $
    3,590
  Amortized Cost
    
    
    Fair Value(In thousands)Due in five years or less
    
    $
    652
    
    
    $
    730Due after five years to ten years
    
    
    762
    
    
    
    859Due in more than ten years
    
    
    1,258
    
    
    
    1,423$
    2,672
    
    
    $
    3,012
  December 31,2010
    
    
    2009(In thousands)Cost basis
    
    $
    2,566
    
    
    $
    2,625Gross unrealized holding gains
    
    
    323
    
    
    
    281Gross unrealized holding losses
    
    
    
    
    
    
    (27
    )Fair value
    
    $
    2,889
    
    
    $
    2,879
  63




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
 4. LINES OF CREDIT AND LONG-TERM DEBT
  Total Debt OutstandingDecember 31,2010
    
    
    2009(In thousands)Westmoreland Mining, LLC:Revolving line of credit
    
    $
    1,500
    
    
    $
    Term debt
    
    
    125,000
    
    
    
    125,000Capital lease obligations
    
    
    18,407
    
    
    
    22,360Other term debt
    
    
    2,556
    
    
    
    1,463Westmoreland Resources, Inc.:Revolving line of credit
    
    
    16,900
    
    
    
    16,400Term debt
    
    
    9,600
    
    
    
    12,000Capital lease obligations
    
    
    7,821
    
    
    
    9,864ROVA:Term debt
    
    
    46,220
    
    
    
    55,575Debt premiums
    
    
    428
    
    
    
    880Corporate:Convertible notes
    
    
    18,495
    
    
    
    17,258Debt discount
    
    
    (4,823
    )
    
    
    (6,105
    )Total debt outstanding
    
    
    242,104
    
    
    
    254,695Less current portion
    
    
    (14,973
    )
    
    
    (57,489
    )Total debt outstanding, less current portion
    
    $
    227,131
    
    
    $
    197,206
  SubsequentAs of
    
    
    to ParentDecember 31,
    
    
    Notes2010
    
    
    Offering(In thousands)2011
    
    $
    42,298
    
    
    $
    14,9732012
    
    
    32,732
    
    
    
    21,5122013
    
    
    56,855
    
    
    
    26,3152014
    
    
    34,435
    
    
    
    22,5652015
    
    
    32,170
    
    
    
    21,910Thereafter
    
    
    48,009
    
    
    
    198,009Total
    
    
    246,499
    
    
    
    305,284Less: debt discount
    
    
    (4,395
    )
    
    
    (7,500
    )Total debt
    
    $
    242,104
    
    
    $
    297,784
 Westmoreland Mining LLC
   64




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
     Westmoreland Resources, Inc.
      ROVA
    65




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
  Convertible Debt
    5. POSTRETIREMENT MEDICAL BENEFITS
  Accumulated other comprehensive loss
 Accumulated other comprehensive loss
 Accumulated
other comprehensive loss
  66




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
  December 31,2010
    
    
    2009(In thousands)Change in benefit obligations:Net benefit obligation at beginning of year
    
    $
    190,223
    
    
    $
    284,851Service cost
    
    
    539
    
    
    
    735Interest cost
    
    
    10,498
    
    
    
    16,233Plan participant contributions
    
    
    153
    
    
    
    140Actuarial (gain) loss
    
    
    23,195
    
    
    
    (60,155
    )Gross benefits paid
    
    
    (14,797
    )
    
    
    (17,816
    )Federal subsidy on benefits paid
    
    
    1,049
    
    
    
    1,315Plan amendments
    
    
    
    
    
    
    (35,080
    )Net benefit obligation at end of year
    
    
    210,860
    
    
    
    190,223Change in plan assets:Employer contributions
    
    
    14,644
    
    
    
    17,676Plan participant contributions
    
    
    153
    
    
    
    140Gross benefits paid
    
    
    (14,797
    )
    
    
    (17,816
    )Fair value of plan assets at end of year
    
    
    
    
    
    
    Unfunded status at end of year
    
    $
    (210,860
    )
    
    $
    (190,223
    )Amounts recognized in the balance sheet consist of:Current liabilities
    
    $
    (13,581
    )
    
    $
    (14,501
    )Noncurrent liabilities
    
    
    (197,279
    )
    
    
    (175,722
    )Accumulated other comprehensive loss (gain)
    
    
    8,336
    
    
    
    (15,134
    )Net amount recognized
    
    $
    (202,524
    )
    
    $
    (205,357
    )Amounts recognized in accumulated other
comprehensive loss consists of:Net actuarial loss (gain)
    
    $
    15,777
    
    
    $
    (7,151
    )Prior service credit
    
    
    (7,627
    )
    
    
    (8,262
    )Transition obligation
    
    
    186
    
    
    
    279$
    8,336
    
    
    $
    (15,134
    )
   67




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
  Years Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Components of net periodic benefit
cost:Service cost
    
    $
    539
    
    
    $
    735
    
    
    $
    677Interest cost
    
    
    10,498
    
    
    
    16,233
    
    
    
    17,107Amortization of:Transition obligation
    
    
    93
    
    
    
    3,381
    
    
    
    3,613Prior service cost (credit)
    
    
    (636
    )
    
    
    924
    
    
    
    1,325Actuarial loss
    
    
    268
    
    
    
    2,774
    
    
    
    3,381Total net periodic benefit cost
    
    $
    10,762
    
    
    $
    24,047
    
    
    $
    26,103
  Years Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Former mining operations
    
    $
    9,225
    
    
    $
    22,186
    
    
    $
    24,553Current operations
    
    
    1,537
    
    
    
    1,861
    
    
    
    1,550Total net periodic benefit cost
    
    $
    10,762
    
    
    $
    24,047
    
    
    $
    26,103
 Heritage health benefit
expenses
 Assumptions
  December 31,2010
    
    
    2009Discount rate
    
    
    5.15
    %
    
    
    5.71
    %Measurement date
    
    
    December 31, 2010
    
    
    
    December 31, 2009
   December 31,2010
    
    
    2009
    
    
    2008Discount rate
    
    
    5.71
    %
    
    
    5.45% - 6.05
    %
    
    
    6.10
    %Measurement date
    
    
    December 31, 2009
    
    
    
    December 31, 2008
    
    
    
    December 31, 2007
  68




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
  Year Ended December 31,2010
    
    
    2009Health care cost trend rate assumed for next year
    
    
    7.50
    %
    
    
    8.00
    %Rate to which the cost trend is assumed to decline
(ultimate trend rate)
    
    
    5.00
    %
    
    
    5.00
    %Year that the trend rate reaches the ultimate trend rate
    
    
    2016
    
    
    
    2016
  Postretirement Medical Benefits1%  Increase
    
    
    1%  Decrease(In thousands)Effect on service and interest cost components
    
    $
    1,282
    
    
    $
    (1,079
    )Effect on postretirement medical benefit
obligation
    
    $
    22,565
    
    
    $
    (19,116
    )
 Cash Flows
  Postretirement
    
    
    Medicare D
    
    
    Net PostretirementMedical Benefits
    
    
    Subsidy
    
    
    Medical Benefits(In thousands)2011
    
    $
    14,734
    
    
    $
    (1,153
    )
    
    $
    13,5812012
    
    
    15,088
    
    
    
    (1,215
    )
    
    
    13,8732013
    
    
    15,428
    
    
    
    (1,270
    )
    
    
    14,1582014
    
    
    15,617
    
    
    
    (1,318
    )
    
    
    14,2992015
    
    
    15,903
    
    
    
    (1,350
    )
    
    
    14,553Years 2016 - 2020
    
    
    78,962
    
    
    
    (7,201
    )
    
    
    71,761
 Combined Benefit Fund
  Workers Compensation Benefits
   69




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
  December 31,2010
    
    
    2009(In thousands)Workers compensation, beginning of year
(including current portion)
    
    $
    11,219
    
    
    $
    12,838Accretion
    
    
    429
    
    
    
    300Claims paid
    
    
    (633
    )
    
    
    (806
    )Actuarial changes
    
    
    (637
    )
    
    
    (1,113
    )Workers compensation, end of year
    
    
    10,378
    
    
    
    11,219Less current portion
    
    
    (954
    )
    
    
    (1,031
    )Workers compensation, less current portion
    
    $
    9,424
    
    
    $
    10,188
  Pneumoconiosis (Black Lung) Benefits
    December 31,2010
    
    
    2009(In thousands)Actuarial present value of benefit obligation:Expected claims from terminated employees
    
    $
    949
    
    
    $
    937Amounts owed to existing claimants
    
    
    13,108
    
    
    
    13,723Total present value of benefit obligation
    
    
    14,057
    
    
    
    14,660Plan assets at fair value, primarily government-backed securities
    
    
    11,811
    
    
    
    13,874Excess of the pneumoconiosis benefit obligation over trust assets
    
    $
    (2,246
    )
    
    $
    (786
    )
 Excess of
pneumoconiosis benefit obligation over trust assets
   70




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
 Plan Assets
  Year Ended December 31, 2010Quoted Prices
    
    
    Significantin Active
    
    
    OtherMarkets for
    
    
    ObservableIdentical Assets
    
    
    InputsFair Value
    
    
    Level 1
    
    
    Level 2(In thousands)U.S. treasury securities
    
    $
    10,416
    
    
    $
    
    
    
    $
    10,416Mortgage-backed securities
    
    
    682
    
    
    
    
    
    
    
    682Cash and cash equivalents
    
    
    713
    
    
    
    713
    
    
    
    $
    11,811
    
    
    $
    713
    
    
    $
    11,098
 Year Ended December 31, 2009Quoted Prices
    
    
    Significantin Active
    
    
    OtherMarkets for
    
    
    ObservableIdentical Assets
    
    
    InputsFair Value
    
    
    Level 1
    
    
    Level 2(In thousands)U.S. treasury securities
    
    $
    12,860
    
    
    $
    
    
    
    $
    12,860Mortgage-backed securities
    
    
    839
    
    
    
    
    
    
    
    839Cash and cash equivalents
    
    
    175
    
    
    
    175
    
    
    
    $
    13,874
    
    
    $
    175
    
    
    $
    13,699
   6. PENSION AND OTHER SAVING PLANS
 Defined Benefit Pension Plans
  Accumulated other
comprehensive loss.
   71




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
 Supplemental Executive Retirement Plan
   Defined Benefit Pension
    
    
    SERPDecember 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009(In thousands)Change in benefit obligation:Net benefit obligation at beginning of year
    
    $
    76,084
    
    
    $
    76,672
    
    
    $
    3,200
    
    
    $
    3,279Service cost
    
    
    610
    
    
    
    1,577
    
    
    
    
    
    
    
    Interest cost
    
    
    4,490
    
    
    
    4,650
    
    
    
    183
    
    
    
    191Actuarial loss
    
    
    7,025
    
    
    
    3,171
    
    
    
    175
    
    
    
    36Benefits paid
    
    
    (2,762
    )
    
    
    (1,610
    )
    
    
    (306
    )
    
    
    (306
    )Plan amendments
    
    
    
    
    
    
    204
    
    
    
    
    
    
    
    Curtailments
    
    
    
    
    
    
    (8,580
    )
    
    
    
    
    
    
    Net benefit obligation at end of year
    
    
    85,447
    
    
    
    76,084
    
    
    
    3,252
    
    
    
    3,200Change in plan assets:Fair value of plan assets at the beginning
of year
    
    
    52,152
    
    
    
    40,783
    
    
    
    
    
    
    
    Actual return on plan assets
    
    
    7,732
    
    
    
    7,196
    
    
    
    
    
    
    
    Employer contributions
    
    
    10,811
    
    
    
    5,782
    
    
    
    306
    
    
    
    306Benefits paid
    
    
    (2,762
    )
    
    
    (1,610
    )
    
    
    (306
    )
    
    
    (306
    )Fair value of plan assets at end of year
    
    
    67,933
    
    
    
    52,151
    
    
    
    
    
    
    
    Funded status at end of year
    
    $
    (17,514
    )
    
    $
    (23,933
    )
    
    $
    (3,252
    )
    
    $
    (3,200
    )Amounts recognized in the accompanying
balance sheet consist of:Current liability
    
    $
    
    
    
    $
    
    
    
    $
    (304
    )
    
    $
    (306
    )Noncurrent liability
    
    
    (17,514
    )
    
    
    (23,933
    )
    
    
    (2,948
    )
    
    
    (2,894
    )Accumulated other comprehensive loss
    
    
    22,946
    
    
    
    20,542
    
    
    
    770
    
    
    
    625Net amount recognized at end of year
    
    $
    5,432
    
    
    $
    (3,391
    )
    
    $
    (2,482
    )
    
    $
    (2,575
    )Amounts recognized in accumulated other
comprehensive loss consist of:Net actuarial loss
    
    $
    22,946
    
    
    $
    20,542
    
    
    $
    765
    
    
    $
    610Prior service costs
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    15$
    22,946
    
    
    $
    20,542
    
    
    $
    770
    
    
    $
    625
   72




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
   Defined Benefit Pension
    
    
    SERPYears Ended December 31,
    
    
    Years Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008(In thousands)Components of net periodic
benefit cost:Service cost
    
    $
    610
    
    
    $
    1,577
    
    
    $
    2,597
    
    
    $
    
    
    
    $
    
    
    
    $
    Interest cost
    
    
    4,490
    
    
    
    4,650
    
    
    
    4,390
    
    
    
    183
    
    
    
    191
    
    
    
    198Expected return on plan assets
    
    
    (4,393
    )
    
    
    (3,359
    )
    
    
    (4,416
    )
    
    
    
    
    
    
    
    
    
    
    Curtailment loss
    
    
    
    
    
    
    204
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortization of:Prior service cost
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    10
    
    
    
    10Actuarial loss
    
    
    1,282
    
    
    
    1,817
    
    
    
    340
    
    
    
    20
    
    
    
    18
    
    
    
    11Total net periodic pension cost
    
    $
    1,989
    
    
    $
    4,889
    
    
    $
    2,911
    
    
    $
    213
    
    
    $
    219
    
    
    $
    219
 Cost of sales Selling and administrative expenses
 Assumptions
  Defined Benefit Pension
    
    
    SERPDecember 31,
    
    
    December 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Discount rate
    

    5.15% - 5.40%
    
    

    5.96%
    
    

    5.40%
    
    

    6.00%Rate of compensation increase
    

    N/A
    
    

    N/A
    
    

    N/A
    
    

    N/AMeasurement date
    
    December 31, 2010
    
    
    December 31, 2009
    
    
    December 31, 2010
    
    
    December 31, 2009
   Defined Benefit Pension
    
    
    SERPYears Ended December 31,
    
    
    Years Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2008Discount rate
    

    5.75%-6.00%
    
    

    6.10%
    
    

    6.20%-6.30%
    
    
    6.00%
    
    
    6.10%
    
    
    6.30%Expected return on

plan assets
    

    7.80%
    
    

    7.96%
    
    

    8.50%
    
    

    N/A
    
    

    N/A
    
    

    N/ARate of
compensation
increase
    

    N/A
    
    

    4.00%-7.50%
    
    

    4.00%-7.50%
    
    

    N/A
    
    

    4.00%-7.50%
    
    

    4.00%-7.50%Measurement date
    
    December 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2007
    
    
    December 31, 2009
    
    
    December 31, 2008
    
    
    December 31, 2007
  73




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
 Plan Assets
   Target 
AllocationAsset categoryCash and equivalents
    
    
    0% - 10
    %Equity securities funds
    
    
    40% - 70
    %Debt securities funds
    
    
    30% - 60
    %Other
    
    
    0% - 10
    %Total
  Year Ended December 31, 2010QuotedPrices inActive
    
    
    SignificantMarkets for
    
    
    Other
    
    
    SignificantIdentical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    InputsFair Value
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3(In thousands)Equity securities funds:U.S.
    
    $
    29,233
    
    
    $
    29,233
    
    
    $
    
    
    
    $
    International
    
    
    6,659
    
    
    
    6,659
    
    
    
    
    
    
    
    Debt securities funds:U.S. bonds
    
    
    22,736
    
    
    
    
    
    
    
    22,736
    
    
    
    Short-term securities
    
    
    1,313
    
    
    
    1,313
    
    
    
    
    
    
    
    Limited partnerships and
limited liability companies
    
    
    1,359
    
    
    
    
    
    
    
    
    
    
    
    1,359Westmoreland Coal common stock
    
    
    6,045
    
    
    
    6,045
    
    
    
    
    
    
    
    Cash and cash equivalents
    
    
    588
    
    
    
    588
    
    
    
    
    
    
    
    $
    67,933
    
    
    $
    43,838
    
    
    $
    22,736
    
    
    $
    1,359
  74




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
 Year Ended December 31, 2009QuotedPrices inActive
    
    
    SignificantMarkets for
    
    
    Other
    
    
    SignificantIdentical
    
    
    Observable
    
    
    UnobservableAssets
    
    
    Inputs
    
    
    InputsFair Value
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3(In thousands)Equity securities funds:U.S.
    
    $
    24,850
    
    
    $
    24,850
    
    
    $
    
    
    
    $
    International
    
    
    2,467
    
    
    
    2,467
    
    
    
    
    
    
    
    Debt securities funds:U.S. bonds
    
    
    15,065
    
    
    
    
    
    
    
    15,065
    
    
    
    Short-term securities
    
    
    967
    
    
    
    967
    
    
    
    
    
    
    
    Limited partnerships and
limited liability companies
    
    
    1,697
    
    
    
    
    
    
    
    
    
    
    
    1,697Westmoreland Coal common stock
    
    
    3,240
    
    
    
    3,240
    
    
    
    
    
    
    
    Cash and cash equivalents
    
    
    3,865
    
    
    
    3,865
    
    
    
    
    
    
    
    $
    52,151
    
    
    $
    35,389
    
    
    $
    15,065
    
    
    $
    1,697
     Limited partnerships and limitedliability companiesYear Ended December 31,2010
    
    
    2009(In thousands)Beginning balance
    
    $
    1,697
    
    
    $
    5,866Realized loss
    
    
    
    
    
    
    (283
    )Unrealized (loss) gain
    
    
    197
    
    
    
    (234
    )Settlements
    
    
    (535
    )
    
    
    (3,652
    )Ending balance
    
    $
    1,359
    
    
    $
    1,697
  75




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
 Contributions
   Cash Flows
  Pension Benefits(In thousands)2011
    
    $
    2,6742012
    
    
    3,0492013
    
    
    3,4762014
    
    
    3,8992015
    
    
    4,277Years 2016 - 2020
    
    
    27,412
  Multi-Employer Pension
  Other Plans
  7.
    
    HERITAGE HEALTH BENEFIT EXPENSES
 Heritage health benefit expenses
 Years Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Health care benefits
    
    $
    9,927
    
    
    $
    22,490
    
    
    $
    25,588Combined benefit fund payments
    
    
    2,953
    
    
    
    3,132
    
    
    
    3,470Workers compensation benefits
(credit)
    
    
    81
    
    
    
    (485
    )
    
    
    4,417Black lung benefits (credit)
    
    
    1,460
    
    
    
    2,937
    
    
    
    (23
    )Total
    
    $
    14,421
    
    
    $
    28,074
    
    
    $
    33,452
   76




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
 8.
    
    ASSET RETIREMENT OBLIGATIONS, CONTRACTUAL THIRD-PARTY RECLAMATION RECEIVABLE, AND
RECLAMATION DEPOSITS
  ContractualAsset
    
    
    Third-PartyRetirement
    
    
    Reclamation
    
    
    ReclamationObligation
    
    
    Receivable
    
    
    Deposits(In thousands)Rosebud
    
    $
    106,990
    
    
    $
    14,622
    
    
    $
    72,274Jewett
    
    
    80,335
    
    
    
    80,335
    
    
    
    Absaloka
    
    
    32,338
    
    
    
    525
    
    
    
    Beulah
    
    
    18,588
    
    
    
    
    
    
    
    Savage
    
    
    2,676
    
    
    
    
    
    
    
    ROVA
    
    
    716
    
    
    
    
    
    
    
    Total
    
    $
    241,643
    
    
    $
    95,482
    
    
    $
    72,274
 Asset Retirement Obligations
  Years Ended December 31,2010
    
    
    2009(In thousands)Asset retirement obligations, beginning of year
(including current portion)
    
    $
    244,615
    
    
    $
    222,708Accretion
    
    
    19,773
    
    
    
    17,436Liabilities settled
    
    
    (15,351
    )
    
    
    (9,434
    )Changes due to amount and timing of reclamation
    
    
    (7,394
    )
    
    
    13,905Asset retirement obligations, end of year
    
    
    241,643
    
    
    
    244,615Less current portion
    
    
    (14,514
    )
    
    
    (15,513
    )Asset retirement obligations, less current portion
    
    $
    227,129
    
    
    $
    229,102
   Contractual Third-Party Reclamation Receivables
  Contractual third-party reclamation receivables Capitalized asset retirement cost
  77




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
 Reclamation Deposits
  Carrying Value
    
    
    Fair Value(In thousands)Cash and cash equivalents
    
    $
    38,534
    
    
    $
    38,534Held-to-maturity securities
    
    
    15,633
    
    
    
    17,044Time deposits
    
    
    15,903
    
    
    
    15,903Available-for-sale securities
    
    
    2,204
    
    
    
    2,204$
    72,274
    
    
    $
    73,685
  Held-to-Maturity and Available-for-Sale Reclamation Deposits
  Years Ended December 31,2010
    
    
    2009(In thousands)Amortized cost
    
    $
    15,633
    
    
    $
    21,099Gross unrealized holding gains
    
    
    1,453
    
    
    
    1,418Gross unrealized holding losses
    
    
    (42
    )
    
    
    (9
    )Fair value
    
    $
    17,044
    
    
    $
    22,508
  Amortized Cost
    
    
    Fair Value(In thousands)Due in five years or less
    
    $
    3,350
    
    
    $
    3,732Due after five years to ten years
    
    
    4,207
    
    
    
    4,335Due in more than ten years
    
    
    8,076
    
    
    
    8,977$
    15,633
    
    
    $
    17,044
  December 31,2010
    
    
    2009(In thousands)Cost basis
    
    $
    2,000
    
    
    $
    2,402Gross unrealized holding gains
    
    
    204
    
    
    
    712Fair value
    
    $
    2,204
    
    
    $
    3,114
  78




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
 9.
    
    DERIVATIVE INSTRUMENTS
 Adoption of ASC 815-40
 Determining Whether an Instrument (or
Embedded Feature) is Indexed to an Entitys Own Stock Accounting for
Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion
Ratios
  Debt
    
    
    Derivative
    
    
    Other Paid-
    
    
    AccumulatedDiscount
    
    
    Liability
    
    
    In-Capital
    
    
    Deficit(In thousands)Record January 1, 2009, debt discount and derivative instrument liability related
to convertible debt
    
    $
    7,734
    
    
    $
    5,605
    
    
    $
    
    
    
    $
    (2,129
    )Record January 1, 2009, derivative instrument liability related to warrant
    
    
    
    
    
    
    477
    
    
    
    
    
    
    
    477Record amortization of debt discount from March 4, 2008, through December 31, 2008
    
    
    (653
    )
    
    
    
    
    
    
    
    
    
    
    653Record the reversal of the beneficial conversion feature expensed in 2008 under
ASC 470-20
    
    
    
    
    
    
    
    
    
    
    (8,147
    )
    
    
    (8,147
    )Record the reversal of prior accounting related to the warrant
    
    
    
    
    
    
    
    
    
    
    (1,700
    )
    
    
    (1,700
    )$
    7,081
    
    
    $
    6,082
    
    
    $
    (9,847
    )
    
    $
    (10,846
    )
 Convertible Debt
  Stock Price
    
    
    Bond Yield$
    11.94
    
    
    
    5.16
    %
 Warrant
  Number of SharesIncluded in
    
    Dividend
    
    
    
    
    
    
    Risk Free
    
    
    Expected LifeWarrant
    
    Yield
    
    
    Volatility
    
    
    Rate
    
    
    (in years)173,228
    
    None
    
    
    65
    %
    
    
    0.20
    %
    
    
    1.0
  79




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
  December 31,Derivative Instruments
    
    Balance Sheet Location
    
    
    2010
    
    
    2009Convertible debt
-conversion feature
    
    Other liabilities
    
    $
    3,588
    
    
    $
    Warrant
    
    Other liabilities
    
    
    
    
    
    
    30
  Income (Expense) Recognized inEarnings on DerivativesStatement of
    
    
    Year Ended December 31,Derivative Instruments
    
    Operations Location
    
    
    2010
    
    
    2009Convertible debt
-conversion feature
    
    Other income (loss)
    
    $
    (3,486
    )
    
    $
    5,674Warrant
    
    Other income (loss)
    
    
    30
    
    
    
    448
 10.
    
    FAIR VALUE MEASUREMENTS
   Carrying Value
    
    
    Fair Value(In thousands)December 31, 2009
    
    $
    192,608
    
    
    $
    201,352December 31, 2010
    
    $
    185,320
    
    
    $
    196,483
  
    
    Level 1, defined as observable inputs such as quoted prices in active markets for
identical assets. Level 1 assets include available-for-sale equity securities
generally valued based on independent third-party market prices.
 
    
    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. The Company had no Level 2 inputs at December
31, 2010.
 
    
    Level 3, defined as unobservable inputs in which little or no market data exists,
therefore requiring an entity to develop its own assumptions. The Companys
convertible notes conversion feature and warrant were classified as Level 3. These
items were valued using the Binomial Lattice model and the Black-Scholes model,
respectively.
  80




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
  Year Ended December 31, 2010Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total(In thousands)Assets:Available-for-sale investments
included in Restricted investments
and bond collateral
    
    $
    2,889
    
    
    $
    
    
    
    $
    
    
    
    $
    2,889Available-for-sale investments
included in Reclamation deposits
    
    
    2,204
    
    
    
    
    
    
    
    
    
    
    
    2,204Total assets
    
    $
    5,093
    
    
    $
    
    
    
    $
    
    
    
    $
    5,093Liabilities:Convertible debt  conversion feature
    
    $
    
    
    
    $
    
    
    
    $
    3,588
    
    
    $
    3,588Total liabilities
    
    $
    
    
    
    $
    
    
    
    $
    3,588
    
    
    $
    3,588
 Year Ended December 31, 2009Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total(In thousands)Assets:Available-for-sale
investments included in
Restricted investments
and bond collateral
    
    $
    2,879
    
    
    $
    
    
    
    $
    
    
    
    $
    2,879Available-for-sale
investments included in
Reclamation deposits
    
    
    3,114
    
    
    
    
    
    
    
    
    
    
    
    3,114Total assets
    
    $
    5,993
    
    
    $
    
    
    
    $
    
    
    
    $
    5,993Liabilities:Warrant
    
    $
    
    
    
    $
    
    
    
    $
    30
    
    
    $
    30Total liabilities
    
    $
    
    
    
    $
    
    
    
    $
    30
    
    
    $
    30
  Year Ended December 31,2010
    
    
    2009(In thousands)Beginning balance
    
    $
    30
    
    
    $
    January 1, 2010, beginning balance
adjustment pursuant to adoption of ASC
815-40
    
    
    
    
    
    
    6,082Additional debt discount
    
    
    102
    
    
    
    70Change in fair value
    
    
    3,456
    
    
    
    (6,122
    )Ending balance
    
    $
    3,588
    
    
    $
    30
  81




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
 11. STOCKHOLDERS EQUITY
 Preferred and Common Stock
   Extended TotalShares
    
    
    Per Share
    
    
    (in thousands)Dividends accumulated(1)
    
    
    160,129
    
    
    $
    124.53
    
    
    $
    19,940Redemption value
    
    
    160,129
    
    
    $
    100.00
    
    
    
    16,013Total
    
    
    
    
    
    
    
    
    
    $
    35,953
 (1)
    
    In February 2011, the Company paid the $19.9 million of
accumulated dividends
as of January 1, 2011.  Restricted Net Assets
   12.
    
    RESTRICTED STOCK, STOCK OPTIONS, AND STOCK APPRECIATION RIGHTS
    82




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
  Years Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Recognition of fair value of restricted stock, stock options
and SARs over vesting period
    
    $
    1,058
    
    
    $
    702
    
    
    $
    1,227Contributions of stock to the Companys 401(k) plan
    
    
    2,991
    
    
    
    1,869
    
    
    
    1,569Compensation credit for performance units plan (1)
    
    
    
    
    
    
    (19
    )
    
    
    (63
    )Total share-based compensation expense (2)
    
    $
    4,049
    
    
    $
    2,552
    
    
    $
    2,733
 (1)
    
    The Companys only active performance unit plan expired June 30, 2009.(2)
    
    These costs are recorded in Cost of salesand Selling and administrative expensesin
the accompanying statement of operations.  December 31, 2008Assumptions (weighted average):Risk-free interest rate
    
    
    3.62
    %Expected dividend yield
    
    NoneExpected volatility
    
    
    50
    %Expected life (in years)
    
    
    7.0
 Restricted Stock
   UnamortizedWeighted Average
    
    
    CompensationCommon
    
    
    Grant-Date Fair
    
    
    ExpenseShares
    
    
    Value
    
    
    (In thousands)Non-vested at December 31, 2009
    
    
    96,558
    
    
    $
    8.36Granted
    
    
    157,833
    
    
    $
    8.31Vested
    
    
    (47,656
    )
    
    $
    9.21Forfeited
    
    
    (14,038
    )
    
    $
    8.14Non-vested at December 31, 2010
    
    
    192,697
    
    
    $
    8.13
    
    
    $
    1,265
    (1)
 (1)
    
    Expected to be recognized over the next three years.    83




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
 Stock Options
   WeightedAverageRemaining
    
    
    
    
    
    
    UnamortizedWeighted
    
    
    Contractual
    
    
    Aggregate
    
    
    CompensationAverage
    
    
    Life
    
    
    Intrinsic
    
    
    ExpenseStock Options
    
    
    Exercise Price
    
    
    (in years)
    
    
    Value
    
    
    (In thousands)Outstanding at December 31, 2009
    
    
    354,224
    
    
    $
    18.73Exercised
    
    
    (2,500
    )
    
    $
    3.38
    
    
    
    
    
    
    $
    16,588Expired
    
    
    (28,466
    )
    
    $
    17.40Forfeited
    
    
    (4,668
    )
    
    $
    21.40Outstanding at December 31, 2010
    
    
    318,590
    
    
    $
    18.99
    
    
    
    4.4
    
    
    $
    16,938Exercisable at December 31, 2010
    
    
    273,834
    
    
    $
    18.60
    
    
    
    3.9
    
    
    $
    16,938
    
    
    $
    259
    (1)
 (1)
    
    Expected to be recognized over the next year.    SARs
   WeightedAverageRemaining
    
    
    
    
    
    
    UnamortizedWeighted
    
    
    Contractual
    
    
    Aggregate
    
    
    CompensationAverage Base
    
    
    Life
    
    
    Intrinsic
    
    
    ExpenseSARs
    
    
    Price
    
    
    (in years)
    
    
    Value
    
    
    (In thousands)Outstanding at December 31, 2009
    
    
    155,334
    
    
    $
    21.91Expired
    
    
    (36,400
    )
    
    $
    21.18Outstanding at December 31, 2010
    
    
    118,934
    
    
    $
    22.13
    
    
    
    4.6
    
    
    $
    Exercisable at December 31, 2010
    
    
    118,934
    
    
    $
    22.13
    
    
    
    4.6
    
    
    $
    
    
    
    $
    
    84




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
  13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
  Tax Effect of
    
    
    AccumulatedPension and
    
    
    Available for
    
    
    Other
    
    
    OtherPostretirement
    
    
    Sale
    
    
    Comprehensive
    
    
    ComprehensiveMedical Benefits
    
    
    Securities
    
    
    Income Gains
    
    
    Loss(In thousands)Balance at January 1, 2008
    
    $
    (116,093
    )
    
    $
    
    
    
    $
    (9,094
    )
    
    $
    (125,187
    )2008 activity
    
    
    (3,386
    )
    
    
    112
    
    
    
    
    
    
    
    (3,274
    )Balance at December 31, 2008
    
    
    (119,479
    )
    
    
    112
    
    
    
    (9,094
    )
    
    
    (128,461
    )Postretirement medical
benefit plan amendments and
pension plan freeze
adjustments
    
    
    105,983
    
    
    
    
    
    
    
    
    
    
    
    105,9832009 activity
    
    
    7,465
    
    
    
    852
    
    
    
    (17,062
    )
    
    
    (8,745
    )Balance at December 31, 2009
    
    
    (6,031
    )
    
    
    964
    
    
    
    (26,156
    )
    
    
    (31,223
    )2010 activity
    
    
    (26,018
    )
    
    
    (439
    )
    
    
    
    
    
    
    (26,457
    )Balance at December 31, 2010
    
    $
    (32,049
    )
    
    $
    525
    
    
    $
    (26,156
    )
    
    $
    (57,680
    )
 Accumulated other comprehensive loss
 14. INCOME TAX
  Year Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Current:Federal
    
    $
    (10
    )
    
    $
    (323
    )
    
    $
    State
    
    
    (14
    )
    
    
    1,168
    
    
    
    919(24
    )
    
    
    845
    
    
    
    919Deferred:Federal
    
    
    
    
    
    
    (15,977
    )
    
    
    State
    
    
    (117
    )
    
    
    (2,004
    )
    
    
    (117
    )
    
    
    (17,981
    )
    
    
    Income tax expense (benefit)
    
    $
    (141
    )
    
    $
    (17,136
    )
    
    $
    919
  85




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
  Year Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Computed tax benefit at statutory rate
    
    $
    (1,126
    )
    
    $
    (15,619
    )
    
    $
    (16,200
    )Increase (decrease) in tax expense resulting from:Tax depletion in excess of basis
    
    
    (4,019
    )
    
    
    (713
    )
    
    
    (2,643
    )Non-deductible interest expense and
convertible debt valuation
    
    
    2,076
    
    
    
    (1,074
    )
    
    
    3,156Noncontrolling interest
    
    
    899
    
    
    
    618
    
    
    
    State income taxes, net
    
    
    (1,090
    )
    
    
    (2,467
    )
    
    
    (3,214
    )Change in valuation allowance for net deferred
tax assets
    
    
    (3,312
    )
    
    
    2,902
    
    
    
    24,628Medicare Part D subsidy law change
    
    
    7,159
    
    
    
    
    
    
    
    Indian Coal Tax Credits
    
    
    (120
    )
    
    
    (96
    )
    
    
    (5,893
    )Other, net
    
    
    (608
    )
    
    
    (687
    )
    
    
    1,085Income tax expense (benefit)
    
    $
    (141
    )
    
    $
    (17,136
    )
    
    $
    919
   Loss From
    
    
    Other
    
    
    TotalContinuing
    
    
    Comprehensive
    
    
    ComprehensiveOperations
    
    
    Income
    
    
    Income(In thousands)Pre-allocation
    
    $
    (46,224
    )
    
    $
    114,300
    
    
    $
    68,076Tax allocation
    
    
    17,062
    
    
    $
    (17,062
    )
    
    
    As presented
    
    $
    (29,162
    )
    
    $
    97,238
    
    
    $
    68,076
   86




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
  December 31,2010
    
    
    2009(In thousands)Deferred tax assets:Federal net operating loss carryforwards
    
    $
    74,061
    
    
    $
    67,133State net operating loss carryforwards
    
    
    24,627
    
    
    
    14,983Alternative minimum tax credit carryforwards
    
    
    7,009
    
    
    
    5,683Charitable contribution carryforwards
    
    
    169
    
    
    
    179Indian Coal Tax Credit carryforwards
    
    
    25,552
    
    
    
    26,654Accruals for the following:Workers compensation
    
    
    4,013
    
    
    
    4,338Postretirement medical benefit and pension
obligations
    
    
    80,116
    
    
    
    81,764Incentive plans
    
    
    1,843
    
    
    
    900Asset retirement obligations
    
    
    68,561
    
    
    
    66,839Deferred revenues
    
    
    29,430
    
    
    
    31,757Gain on sale of partnership interest
    
    
    6,402
    
    
    
    8,061Other accruals
    
    
    5,618
    
    
    
    7,147Total gross deferred assets
    
    
    327,401
    
    
    
    315,438Less valuation allowance
    
    
    (247,086
    )
    
    
    (232,575
    )Net deferred tax assets
    
    
    80,315
    
    
    
    82,863Deferred tax liabilities:Property, plant and equipment, differences due
to depreciation and amortization
    
    
    (76,656
    )
    
    
    (77,562
    )Change in accounting method
    
    
    (354
    )
    
    
    (2,137
    )Other
    
    
    (847
    )
    
    
    (823
    )Total gross deferred tax liabilities
    
    
    (77,857
    )
    
    
    (80,522
    )Net deferred tax asset
    
    $
    2,458
    
    
    $
    2,341
      87




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
   Expiration Date
    
    Regular Tax(In thousands)2011
    
    $
    32,6982012
    
    
    4492018
    
    
    282019
    
    
    88,4292020
    
    
    32after 2020
    
    
    96,165Total
    
    $
    217,801
   Year Ended December 31,2010
    
    
    2009(In thousands)Balance of unrecognized tax benefits at beginning of year
    
    $
    2,861
    
    
    $
    1,748Additions for tax positions related to current year
    
    
    18
    
    
    
    1,113Balance of unrecognized tax benefits at end of year
    
    $
    2,879
    
    
    $
    2,861
   15. COMMITMENTS
 Supply Agreements
   88




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
 Leases
   Year Ended December 31, 2010Capital Leases
    
    
    Operating Leases(In thousands)2011
    
    $
    8,714
    
    
    $
    6,6652012
    
    
    8,319
    
    
    
    4,2432013
    
    
    7,077
    
    
    
    2,8272014
    
    
    4,461
    
    
    
    2,2332015
    
    
    1,617
    
    
    
    1,625Thereafter
    
    
    105
    
    
    
    718Total minimum lease payments
    
    $
    30,293
    
    
    $
    18,311Less imputed interest
    
    
    (4,064
    )Present value of minimum capital
lease payments
    
    $
    26,229
   16. CONTINGENCIES
  17. BUSINESS SEGMENT INFORMATION
    89




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
  Coal
    
    
    Power
    
    
    Heritage
    
    
    Corporate
    
    
    Consolidated(In thousands)December 31, 2010Revenues
    
    $
    418,058
    
    
    $
    87,999
    
    
    $
    
    
    
    $
    
    
    
    $
    506,057Operating income (loss)
    
    
    32,922
    
    
    
    11,721
    
    
    
    (15,968
    )
    
    
    (8,154
    )
    
    
    20,521Total assets
    
    
    520,722
    
    
    
    207,643
    
    
    
    12,283
    
    
    
    9,658
    
    
    
    750,306Capital expenditures
    
    
    20,056
    
    
    
    2,207
    
    
    
    
    
    
    
    551
    
    
    
    22,814December 31, 2009Revenues
    
    $
    361,206
    
    
    $
    82,162
    
    
    $
    
    
    
    $
    
    
    
    $
    443,368Operating income (loss)
    
    
    476
    
    
    
    7,672
    
    
    
    (31,770
    )
    
    
    (8,152
    )
    
    
    (31,774
    )Total assets
    
    
    537,924
    
    
    
    216,685
    
    
    
    4,634
    
    
    
    13,485
    
    
    
    772,728Capital expenditures
    
    
    30,078
    
    
    
    4,251
    
    
    
    
    
    
    
    217
    
    
    
    34,546December 31, 2008Revenues
    
    $
    419,806
    
    
    $
    89,890
    
    
    $
    
    
    
    $
    
    
    
    $
    509,696Restructuring charges
    
    
    155
    
    
    
    
    
    
    
    
    
    
    
    1,854
    
    
    
    2,009Operating income (loss)
    
    
    15,211
    
    
    
    16,920
    
    
    
    (35,472
    )
    
    
    (12,694
    )
    
    
    (16,035
    )Total assets
    
    
    557,245
    
    
    
    239,083
    
    
    
    5,301
    
    
    
    11,338
    
    
    
    812,967Capital expenditures
    
    
    29,534
    
    
    
    1,711
    
    
    
    
    
    
    
    75
    
    
    
    31,320
  Year Ended2010
    
    
    2009
    
    
    2008(In thousands)Income (loss) from operations
    
    $
    20,521
    
    
    $
    (31,774
    )
    
    $
    (16,035
    )Interest expense attributable to beneficial conversion feature
    
    
    
    
    
    
    
    
    
    
    (8,146
    )Loss on extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (5,178
    )Interest expense
    
    
    (22,992
    )
    
    
    (23,733
    )
    
    
    (23,130
    )Interest income
    
    
    1,747
    
    
    
    3,218
    
    
    
    5,125Other income (loss)
    
    
    (2,587
    )
    
    
    5,991
    
    
    
    (284
    )Loss before income taxes
    
    $
    (3,311
    )
    
    $
    (46,298
    )
    
    $
    (47,648
    )
  2010
    
    
    2009
    
    
    2008(In thousands)Customer A  coal
    
    $
    119,633
    
    
    $
    79,502
    
    
    $
    131,859Customer B  coal
    
    
    80,493
    
    
    
    85,334
    
    
    
    80,581Customer C  power
    
    
    86,926
    
    
    
    81,037
    
    
    
    88,651Customer D  coal(1)
    
    
    64,968
    
    
    
    51,187
    
    
    
    Customer E  coal(2)
    
    
    
    
    
    
    49,670
    
    
    
    Percentage of total revenue
    
    
    70
    %
    
    
    78
    %
    
    
    60
    %
 (1)
    
    The revenue from Customer D did not exceed 10% in 2008.(2)
    
    The revenue from Customer E did not exceed 10% in 2010 and
2008.  90




---



##### Table of Contents



WESTMORELAND COAL COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
 18. QUARTERLY FINANCIAL DATA (UNAUDITED)
  Three Months EndedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 31(In thousands; except per share data)2010:Revenues
    
    $
    126,439
    
    
    $
    127,632
    
    
    $
    124,080
    
    
    $
    127,906Operating income (loss)
    
    
    5,314
    
    
    
    1,333
    
    
    
    7,839
    
    
    
    6,035Net income (loss) applicable to common
shareholders
    
    
    (3,195
    )
    
    
    919
    
    
    
    2,513
    
    
    
    (2,122
    )Basic income (loss) per common share
    
    $
    (0.30
    )
    
    $
    0.09
    
    
    $
    0.23
    
    
    $
    (0.19
    )2009:Revenues
    
    $
    121,798
    
    
    $
    104,780
    
    
    $
    112,404
    
    
    $
    104,386Operating loss
    
    
    (4,402
    )
    
    
    (6,249
    )
    
    
    (9,751
    )
    
    
    (11,372
    )Net loss applicable to common shareholders
    
    
    (5,629
    )
    
    
    (7,232
    )
    
    
    (7,837
    )
    
    
    (8,007
    )Basic and diluted loss per common share
    
    $
    (0.59
    )
    
    $
    (0.75
    )
    
    $
    (0.77
    )
    
    $
    (0.78
    )
  91




---



##### Table of Contents



ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
  
 ITEM 9A CONTROLS AND PROCEDURES.
 (a) Managements Report on Internal Control over Financial Reporting
  
    
    pertain to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of our assets;
    
    provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that our receipts and expenditures are being made only in accordance
with authorizations of our management and our directors; and
    
    provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of our assets that could have a material
effect on our financial statements.
 Internal Control  Integrated Framework
  (b) Changes in Internal Control over Financial Reporting
   92




---



##### Table of Contents



(c) Report of Independent Registered Public Accounting Firm
      .
   
  93




---



##### Table of Contents



(d) Evaluation of Disclosure Controls and Procedures
   94




---



##### Table of Contents



PART III
 
 ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
 Directors, Executive
Officer, Corporate Governance Section 16(a) Beneficial Ownership Reporting Compliance
 
 ITEM 11 EXECUTIVE COMPENSATION .
 Corporate Governance Director Compensation for 2010, Compensation Discussion and Analysis Executive Compensation for
2010
 
 ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.
 Beneficial Ownership
of Securities Equity Compensation Plan Information .
 
 ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
 Certain Transactions Corporate Governance
 
 ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES .
 Auditors
  95




---



##### Table of Contents



PART IV
 
 ITEM 15 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
       96




---



##### Table of Contents



SIGNATURES
  WESTMORELAND COAL COMPANYDate: March 11, 2011
    /s/ Keith E. AlessiName:
    Keith E. AlessiTitle:
    Chief Executive Officer and President
(A Duly Authorized Officer)  Signature
    
    Title
    
    Date/s/ Keith E. Alessi

Keith E. Alessi
    
    Chief Executive Officer,
President, and Director
    
    March 11, 2011/s/ Kevin A. Paprzycki

Kevin A. Paprzycki
    
    Chief Financial Officer and
Principal Accounting
Officer
    
    March 11, 2011/s/ Michael R. DAppolonia

Michael R. DAppolonia
    
    Director
    
    March 11, 2011/s/ Thomas J. Coffey

Thomas J. Coffey
    
    Director
    
    March 11, 2011/s/ Gail E. Hamilton

Gail E. Hamilton
    
    Director
    
    March 11, 2011/s/ Richard M. Klingaman

Richard M. Klingaman
    
    Director
    
    March 11, 2011/s/ Jan B. Packwood

Jan B. Packwood
    
    Director
    
    March 11, 2011/s/ Robert C. Scharp

Robert C. Scharp
    
    Director
    
    March 11, 2011
  97




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
     
  98




---



##### Table of Contents



WESTMORELAND COAL COMPANY
SCHEDULE I  CONDENSED BALANCE SHEET
(Parent Company Information  See Notes to Consolidated Financial Statements)
 December 31,2010
    
    
    2009(In thousands)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    271
    
    
    $
    755Receivables:Other
    
    
    66
    
    
    
    42466
    
    
    
    424Other current assets
    
    
    796
    
    
    
    454Total current assets
    
    
    1,133
    
    
    
    1,633Property, plant and equipment:Plant and equipment
    
    
    2,611
    
    
    
    2,295Less accumulated depreciation, depletion and amortization
    
    
    (1,987
    )
    
    
    (1,830
    )Net property, plant and equipment
    
    
    624
    
    
    
    465Restricted investments
    
    
    11,816
    
    
    
    9,958Investment in subsidiaries and power projects, including
intercompany balances
    
    
    115,612
    
    
    
    110,341Other assets
    
    
    2,060
    
    
    
    451Total assets
    
    $
    131,245
    
    
    $
    122,848LIABILITIES AND SHAREHOLDERS DEFICITCurrent liabilities:Current installments of long-term debt
    
    $
    
    
    
    $
    11,154Accounts payable and accrued expenses
    
    
    5,187
    
    
    
    2,854Bank overdrafts
    
    
    146
    
    
    
    257Workers compensation
    
    
    954
    
    
    
    1,031Pension and SERP obligations
    
    
    304
    
    
    
    306Postretirement medical benefits
    
    
    12,198
    
    
    
    13,198Other current liabilities
    
    
    103
    
    
    
    596Total current liabilities
    
    
    18,892
    
    
    
    29,396Long-term debt
    
    
    13,671
    
    
    
    Workers compensation, less current portion
    
    
    9,424
    
    
    
    10,188Excess of pneumoconiosis obligation over trust assets
    
    
    2,246
    
    
    
    786Related party payable
    
    
    59,432
    
    
    
    51,938Postretirement medical benefits, less current portion
    
    
    169,677
    
    
    
    151,057Pension and SERP obligations, less current portion
    
    
    16,105
    
    
    
    20,626Other liabilities
    
    
    4,153
    
    
    
    656Total liabilities
    
    
    293,600
    
    
    
    264,647Shareholders deficit:Preferred stock
    
    
    160
    
    
    
    160Common stock
    
    
    27,901
    
    
    
    25,864Other paid-in capital
    
    
    98,466
    
    
    
    91,432Accumulated other comprehensive loss
    
    
    (57,680
    )
    
    
    (31,223
    )Accumulated deficit
    
    
    (226,740
    )
    
    
    (226,215
    )Total Westmoreland Coal Company shareholders deficit
    
    
    (157,893
    )
    
    
    (139,982
    )Noncontrolling interest
    
    
    (4,462
    )
    
    
    (1,817
    )Total deficit
    
    
    (162,355
    )
    
    
    (141,799
    )Total Liabilities and Shareholders Deficit
    
    $
    131,245
    
    
    $
    122,848
  99




---



##### Table of Contents



WESTMORELAND COAL COMPANY
SCHEDULE I  CONDENSED STATEMENT OF OPERATIONS
(Parent Company Information  See Notes to Consolidated Financial Statements)
 Years Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Operating costs and expenses:Depreciation and amortization
    
    $
    391
    
    
    $
    418
    
    
    $
    381Selling and administrative
    
    
    9,292
    
    
    
    11,585
    
    
    
    12,585Restructuring charges
    
    
    
    
    
    
    
    
    
    
    1,854Heritage health benefit expenses
    
    
    13,732
    
    
    
    26,813
    
    
    
    32,104Loss on sales of assets
    
    
    
    
    
    
    
    
    
    
    123,415
    
    
    
    38,816
    
    
    
    46,925Operating loss
    
    
    (23,415
    )
    
    
    (38,816
    )
    
    
    (46,925
    )Other income (expense):Interest expense
    
    
    (3,195
    )
    
    
    (2,618
    )
    
    
    (9,385
    )Interest income
    
    
    246
    
    
    
    376
    
    
    
    532Other income (loss)
    
    
    (3,389
    )
    
    
    5,691
    
    
    
    66(6,338
    )
    
    
    3,449
    
    
    
    (8,787
    )Loss before income taxes and income of consolidated
subsidiaries
    
    
    (29,753
    )
    
    
    (35,367
    )
    
    
    (55,712
    )Equity in income of subsidiaries
    
    
    26,268
    
    
    
    (10,869
    )
    
    
    7,172Loss from continuing operations before income taxes
    
    
    (3,485
    )
    
    
    (46,236
    )
    
    
    (48,540
    )Income tax benefit (expense)
    
    
    315
    
    
    
    17,074
    
    
    
    (27
    )Net loss
    
    
    (3,170
    )
    
    
    (29,162
    )
    
    
    (48,567
    )Less net loss attributable to noncontrolling interest
    
    
    (2,645
    )
    
    
    (1,817
    )
    
    
    Net loss attributable to the Parent company
    
    $
    (525
    )
    
    $
    (27,345
    )
    
    $
    (48,567
    )
  100




---



##### Table of Contents



WESTMORELAND COAL COMPANY
SCHEDULE I  CONDENSED STATEMENT OF CASH FLOWS
(Parent Company Information  See Notes to Consolidated Financial Statements)
 Years Ended December 312010
    
    
    2009
    
    
    2008(In thousands)Cash flows from operating activities:Net loss
    
    $
    (3,170
    )
    
    $
    (29,162
    )
    
    $
    (48,567
    )Adjustments to reconcile net loss to net cash provided by operating activities:Equity in income of subsidiaries
    
    
    (26,268
    )
    
    
    10,869
    
    
    
    (7,172
    )Non-cash tax benefits
    
    
    
    
    
    
    (17,062
    )
    
    
    Depreciation and amortization
    
    
    391
    
    
    
    418
    
    
    
    381Loss on sales of assets
    
    
    
    
    
    
    
    
    
    
    1Gain on sale of investments
    
    
    (97
    )
    
    
    (11
    )
    
    
    Share-based payment expense
    
    
    4,049
    
    
    
    2,552
    
    
    
    2,733Non-cash interest expense
    
    
    1,236
    
    
    
    1,470
    
    
    
    8,934Amortization of deferred financing costs
    
    
    1,489
    
    
    
    1,143
    
    
    
    78Warrant repriced
    
    
    
    
    
    
    
    
    
    
    355Loss (gain) on derivative
    
    
    3,486
    
    
    
    (5,674
    )
    
    
    Changes in operating assets and liabilities:Receivables, net
    
    
    358
    
    
    
    102
    
    
    
    (526
    )Accounts payable and accrued expenses
    
    
    2,333
    
    
    
    (123
    )
    
    
    (1,499
    )Accrual for postretirement obligations
    
    
    (2,813
    )
    
    
    (3,362
    )
    
    
    3,175Pension and SERP obligations
    
    
    (6,828
    )
    
    
    (430
    )
    
    
    (6,701
    )Other assets and liabilities
    
    
    (304
    )
    
    
    186
    
    
    
    4,042Net cash used by operating activities
    
    
    (26,138
    )
    
    
    (39,084
    )
    
    
    (44,766
    )Cash flows from investing activities:Distributions received from subsidiaries
    
    
    31,300
    
    
    
    26,398
    
    
    
    35,525Additions to property, plant and equipment
    
    
    (550
    )
    
    
    (218
    )
    
    
    (75
    )Change in restricted investments and bond collateral
    
    
    (1,714
    )
    
    
    (2,239
    )
    
    
    (914
    )Net proceeds from sale of investments
    
    
    156
    
    
    
    415
    
    
    
    Net cash provided by investing activities
    
    
    29,192
    
    
    
    24,356
    
    
    
    34,536Cash flows from financing activities:Change in book overdrafts
    
    
    (111
    )
    
    
    (291
    )
    
    
    548Borrowings of long-term debt
    
    
    
    
    
    
    
    
    
    
    15,000Debt issuance costs
    
    
    (1,718
    )
    
    
    
    
    
    
    (623
    )Loans from (to) subsidiaries
    
    
    (1,717
    )
    
    
    14,818
    
    
    
    (4,248
    )Exercise of stock options
    
    
    8
    
    
    
    
    
    
    
    203Net cash provided by (used in) financing activities
    
    
    (3,538
    )
    
    
    14,527
    
    
    
    10,880Net increase (decrease) in cash and cash equivalents
    
    
    (484
    )
    
    
    (201
    )
    
    
    650Cash and cash equivalents, beginning of year
    
    
    755
    
    
    
    956
    
    
    
    306Cash and cash equivalents, end of year
    
    $
    271
    
    
    $
    755
    
    
    $
    956
  101




---



##### Table of Contents



EXHIBIT INDEX
 Incorporated by ReferenceExhibit
    
    
    
    
    
    File
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    Number
    
    Exhibit
    
    
    Filing Date
    
    Herewith3.1
    
    
    Restated Certificate of Incorporation
    
    S-1
    
    333-117709
    
    
    3.1
    
    
    7/28/20043.2
    
    
    Certificate of Correction to the
Restated Certificate of
Incorporation
    
    8-K
    
    001-11155
    
    
    3.1
    
    
    10/21/20043.3
    
    
    Certificate of Amendment to the
Restated Certificate of
Incorporation
    
    8-K
    
    001-11155
    
    
    3.1
    
    
    9/07/20073.4
    
    
    Certificate of Amendment to the
Restated Certificate of
Incorporation
    
    8-K
    
    001-11155
    
    
    3.2
    
    
    9/07/20073.5
    
    
    Amended and Restated Bylaws
    
    8-K
    
    001-11155
    
    
    3.1
    
    
    4/11/20084.1
    
    
    Certificate of Designation of Series
A Convertible Exchangeable Preferred
Stock
    
    10-K
    
    001-11155
    
    
    3
    (a)
    
    3/15/19934.2
    
    
    Indenture between Westmoreland Coal
Company (WCC) and Fidelity Bank
National Association relating to the
Exchange Debentures
    
    S-1
    
    333-117709
    
    
    4.2
    
    
    7/28/20044.3
    
    
    Form of Exchange Debenture
    
    S-1
    
    333-117709
    
    
    4.3
    
    
    7/28/20044.4
    
    
    Deposit Agreement among WCC, First
Chicago Trust Company of New York
and the Holders
    
    S-1
    
    333-117709
    
    
    4.4
    
    
    7/28/20044.5
    
    
    Common Stock certificate
    
    S-2
    
    33-1950
    
    
    4
    (c)
    
    12/04/19854.6
    
    
    Preferred Stock certificate
    
    S-2
    
    33-47872
    
    
    4.6
    
    
    5/13/19924.7
    
    
    Form of Depository Receipt
    
    S-1
    
    333-117709
    
    
    4.5
    
    
    7/28/20044.8
    
    
    Amended and Restated Rights
Agreement, dated 2/07/2003, between
WCC and EquiServe Trust Company
    
    8-K
    
    001-11155
    
    
    4.1
    
    
    02/07/20034.9
    
    
    First Amendment to Amended and
Restated Rights Agreement dated
5/02/ 2007, between WCC and
Computershare Trust Company
    
    8-A
    
    001-11155
    
    
    (l
    )
    
    05/04/20074.10
    
    
    Second Amendment to Amended and
Restated Rights Agreement dated
March 4, 2008, between WCC and
Computershare Trust Company
    
    8-A
    
    001-11155
    
    
    (l
    )
    
    03/06/20084.11
    
    
    Indenture, dated as of 2/04/2011, by
and between Westmoreland Coal
Company, Westmoreland Partners and
Wells Fargo Bank, NA, as trustee and
note collateral agent.
    
    8-K
    
    001-11155
    
    
    4.1
    
    
    02/10/20114.12
    
    
    Form of 10.75% Senior Notes due 2018
(included as Exhibit A in Exhibit
4.11).
    
    8-K
    
    001-11155
    
    
    4.2
    
    
    02/10/20114.13
    
    
    Registration Rights Agreement, dated
2/04/2011, among Westmoreland Coal
Company and Westmoreland Partners
and Gleacher & Company Securities,
Inc., as initial purchaser
    
    8-K
    
    001-11155
    
    
    4.3
    
    
    02/10/20114.14
    
    
    Pledge and Security Agreement dated
as of 2/04/ 2011, by Westmoreland
Coal Company and Westmoreland
Partners in favor of Wells Fargo
Bank, NA, as note collateral agent
    
    8-K
    
    001-11155
    
    
    4.4
    
    
    02/10/2011
  102




---



##### Table of Contents



Incorporated by ReferenceExhibit
    
    
    
    
    
    File
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    Number
    
    Exhibit
    
    
    Filing Date
    
    HerewithOther debt instruments are omitted in accordance with Item 601(b)(4)(iii)(A) of Regulation S-K. Copies of such
agreements will be furnished to the Securities and Exchange Commission upon request. Exhibits with asterisks indicate
management contracts or compensatory plans or arrangements.10.1*
    
    
    Amended and Restated
2007 Equity
Incentive Plan for
Employees and
Non-Employee
Directors
    
    10-Q
    
    001-11155
    
    
    10.1
    
    
    11/05/201010.2*
    
    
    Form of ISO Agreement
    
    10-Q
    
    001-11155
    
    
    10.1
    
    
    05/09/200810.3*
    
    
    Form of NQSO
Agreement for
directors
    
    10-Q
    
    001-11155
    
    
    10.2
    
    
    05/09/200810.4*
    
    
    Form of NQSO
Agreement for
persons other than
directors
    
    10-Q
    
    001-11155
    
    
    10.3
    
    
    05/09/200810.5*
    
    
    Form of Restricted
Stock Agreement for
directors with
time-based vesting
    
    10-K
    
    001-11155
    
    
    10.11
    
    
    03/13/200910.6*
    
    
    Form of Restricted
Stock Agreement for
directors
    
    8-K
    
    001-11155
    
    
    10.1
    
    
    08/09/201010.7*
    
    
    Form of Restricted
Stock Agreement for
employees
    
    8-K
    
    001-11155
    
    
    10.1
    
    
    07/02/200910.8*
    
    
    Form of Restricted
Stock Unit Agreement
    
    8-K
    
    001-11155
    
    
    10.2
    
    
    08/09/201010.9*
    
    
    Severance Policy
    
    8-K
    
    001-11155
    
    
    10.2
    
    
    06/23/201010.10*
    
    
    Annual Incentive Plan/ Long-Term Incentive Plan Policy
    
    
    
    
    
    
    
    
    
    
    
    X10.11
    
    
    Amended Coal Mining
Lease between
Westmoreland
Resources, Inc.
(WRI) and Crow Tribe
dated 11/26/1974, as
amended in 1982
    
    10-Q
    
    0-752
    
    
    10
    (a)
    
    05/15/199210.12
    
    
    Amendment to Amended
Coal Mining Lease
between the Crow
Tribe and WRI dated
12/02/1994
    
    10-K
    
    001-11155
    
    
    10.16
    
    
    03/13/200910.13
    
    
    Exploration and
Option to Lease
Agreement between
the Crow Tribe and
WRI dated 2/13/2004
    
    10-K/A
    
    001-11155
    
    
    10.17
    
    
    05/08/200910.14
    
    
    Crow Tribal Lands
Coal Lease between
the Crow Tribe and
WRI dated 2/13/2004
    
    10-K/A
    
    001-11155
    
    
    10.51
    
    
    05/08/200910.15
    
    
    Master Agreement
dated 1/04/1999,
between WCC and the
UMWA
    
    8-K
    
    001-11155
    
    
    99.2
    
    
    02/04/199910.16
    
    
    Third Amendment and
Restatement of the
Power Purchase and
Operating Agreement
between
Westmoreland-LG&E
Partners and
Virginia Electric
and Power Company
for ROVA I
    
    10-Q
    
    001-11155
    
    
    10.2
    
    
    11/06/200610.17
    
    
    Second Amendment and
Restatement of the
Power Purchase and
Operating Agreement
between
Westmoreland-LG&E
Partners and
Virginia Electric
and Power Company
for ROVA II
    
    10-Q
    
    001-11155
    
    
    10.3
    
    
    11/06/200610.18
    
    
    Senior Secured
Convertible Note
Purchase Agreement
dated 3/04/2008
among WCC and
Tontine
    
    8-K
    
    001-11155
    
    
    10.1
    
    
    03/06/200810.19
    
    
    Amendment to Senior
Secured Convertible
Note Purchase
Agreement dated
1/05/2011
    
    8-K
    
    001-11155
    
    
    99.1
    
    
    01/14/2011
  103




---



##### Table of Contents



Incorporated by ReferenceExhibit
    
    
    
    
    
    File
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    Number
    
    Exhibit
    
    
    Filing Date
    
    Herewith10.20
    
    
    Registration Rights Agreement
dated 3/04/2008, among WCC and
Tontine
    
    8-K
    
    001-11155
    
    
    10.2
    
    
    03/06/200810.21
    
    
    Note Purchase Agreement dated
6/26/2008 among Westmoreland
Mining LLC (WML) and
institutional investors
    
    8-K
    
    001-11155
    
    
    10.1
    
    
    06/26/200810.22
    
    
    Continuing Agreement of
Guaranty and Suretyship dated
6/26/2008 from various WML
subsidiaries
    
    8-K
    
    001-11155
    
    
    10.2
    
    
    06/26/200810.23
    
    
    Security Agreement dated
6/26/2008 among WML and U.S.
Bank NA
    
    8-K
    
    001-11155
    
    
    10.3
    
    
    06/26/200810.24
    
    
    Pledge Agreement dated
6/26/2008 among WCC, WML and
U.S. Bank NA, for the benefit
of the noteholders
    
    8-K
    
    001-11155
    
    
    10.4
    
    
    06/26/200810.25
    
    
    Amended and Restated Credit
Agreement dated 6/26/2008
among WML and PNC Bank, NA
    
    8-K
    
    001-11155
    
    
    10.5
    
    
    06/26/200810.26
    
    
    Amended and Restated
Continuing Agreement of
Guaranty dated 6/26/2008 from
various WML subsidiaries in
favor of PNC Bank, NA
    
    8-K
    
    001-11155
    
    
    10.6
    
    
    06/26/200810.27
    
    
    Amended and Restated Security
Agreement dated 6/26/2008
among WML and U.S. Bank NA
    
    8-K
    
    001-11155
    
    
    10.7
    
    
    06/26/200810.28
    
    
    Amended and Restated Pledge
Agreement dated 6/26/2008
among WCC, WML and U.S. Bank
NA
    
    8-K
    
    001-11155
    
    
    10.8
    
    
    06/26/200810.29
    
    
    Waiver and Consent
    
    8-K
    
    001-11155
    
    
    10.1
    
    
    10/09/200910.30
    
    
    Waiver and Consent
    
    8-K
    
    001-11155
    
    
    10.2
    
    
    10/09/200910.31
    
    
    Membership Interest Purchase
Agreement among WRI, WRI
Partners, Inc., Absaloka Coal,
LLC and Feedstock Investments
IV, LLC dated 10/16/2008
    
    8-K
    
    001-11155
    
    
    10.1
    
    
    10/21/200810.32
    
    
    Form of Fixed Payment Note
    
    8-K
    
    001-11155
    
    
    10.3
    
    
    10/21/200810.33
    
    
    Form of Contingent Payment Note
    
    8-K
    
    001-11155
    
    
    10.4
    
    
    10/21/200816.1
    
    
    Letter of KPMG LLP dated March
16, 2009
    
    8-K
    
    001-11155
    
    
    16.1
    
    
    3/23/200921.1
    
    
    Subsidiaries of WCC
    
    
    
    
    
    
    
    
    
    
    
    X23.1
    
    
    Consent of Ernst & Young LLP
    
    
    
    
    
    
    
    
    
    
    
    X23.2
    
    
    Consent of KPMG LLP
    
    
    
    
    
    
    
    
    
    
    
    X23.3
    
    
    Consent of Norwest Corporation
    
    
    
    
    
    
    
    
    
    
    
    X31.1
    
    
    Certification of Chief
Executive Officer pursuant to
Rule 13a-14(a)
    
    
    
    
    
    
    
    
    
    
    
    X31.2
    
    
    Certification of Chief
Financial Officer pursuant to
Rule 13a-14(a)
    
    
    
    
    
    
    
    
    
    
    
    X32
    
    
    Certifications of Chief
Executive Officer and Chief
Financial Officer pursuant to
18 U.S.C. Section 1350
    
    
    
    
    
    
    
    
    
    
    
    X95.1
    
    
    Mine Safety Disclosure
    
    
    
    
    
    
    
    
    
    
    
    X
  104