Westmoreland Reports Year End 2007 Results; Investor Conference Call Scheduled for...

Westmoreland Reports Year End 2007 Results; Investor Conference Call Scheduled for April 3

COLORADO SPRINGS, Colo.--(Business Wire)--
Westmoreland Coal Company (AMEX:WLB) reported today a net loss
applicable to common shareholders of $23.2 million ($2.53 per diluted
share) for 2007 compared to a net loss of $15.1 million ($1.72 per
diluted share) for 2006. The 2007 results include a $6.4 million
(including interest) benefit from litigation settlement with the
Combined Benefit Fund and a $5.6 million benefit from the sale of a
coal royalty interest. These items were offset by $4.5 million in
restructuring charges, a $4.0 million increase in depreciation,
depletion and amortization in our coal segment reflecting new capital
invested in our mines and higher depletion charges, a $1.1 million
parts inventory write-off related to the new equipment plan at the
Jewett Mine in connection with signing the new sales agreement in
2007, $1.6 million of costs incurred for a proposed rights offering, a
$1.7 million impact from an unscheduled outage at the ROVA power
plant, and higher borrowing costs in 2007 including the impact of
funds borrowed to fund the acquisition of the remaining 50% ownership
interest in ROVA in mid-2006. The results for 2006 included a $5.1
million gain from the sale of mineral interests in Colorado.

The Company's coal segment revenues were $418.9 million for 2007,
6% higher than 2006 reflecting a 2% increase in tonnage and a 4%
increase in pricing. Power segment revenues were $85.3 million for
2007 and reflect the full-year accounting consolidation of ROVA's
operational results, which were reported under the equity method
(which only reported net earnings) for the first and second quarters
of 2006.

Coal Segment

The following table shows comparative coal revenues, sales
volumes, cost of sales and percentage changes between the periods:

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Years Ended
2007 2006 Change
-----------------------------

Revenues - thousands $418,870 $393,482 6%

Volumes - millions of equivalent
coal tons 30.0 29.4 2%

Cost of sales - thousands $345,395 $311,629 11%
*T

Tons of coal sold increased in 2007 by approximately 0.6 million
tons from 2006.

Our coal revenues increased by approximately $25.4 million in 2007
from 2006, due to the increase in tons sold and a 4% overall increase
in pricing.

Our coal segment's cost of sales in 2007 increased by $33.8
million from 2006. This increase was primarily driven by increases in
our operating and maintenance costs, higher production taxes and
royalties, $2.0 million of lease costs accrued as a result of the
amendment to the Crow Tribe lease agreement, and the write-off of $1.1
million of inventory made obsolete as a result of equipment retired in
connection with our Jewett Mine's new sales agreement and related
mining equipment plan.

Our coal segment's depreciation, depletion, and amortization
expenses in 2007 increased by approximately $4.0 million from 2006.
This increase resulted from increased depletion expenses from asset
retirement cost assets, which increased at the end of 2006 as a result
of updated engineering studies, as well as from increases in capital
expenditures and new capital leases for equipment at the mines.

Our coal segment's 2007 selling and administrative expenses
increased by $1.3 million from 2006, primarily as a result of
increases in legal and professional fees, information technology
costs, and costs associated with the assumption of our Absaloka Mine's
operations.

Power Segment

Power segment operating income was $14.2 million in 2007 compared
to $11.9 million in 2006. Our energy revenues and cost of sales both
increased from 2006 to 2007 as a result of the ROVA acquisition and
consolidation beginning effective July 1, 2006. Our 2007 energy
revenues were $85.0 million, an increase from our 2006 energy revenues
of $43.2 million. Our 2007 energy costs and expenses were $71.2
million, an increase from our 2006 energy costs and expenses of $39.0
million. We reported ROVA equity in earnings of $7.3 million in 2006
prior to the acquisition and consolidation.

In connection with the ROVA acquisition, on July 1, 2006, we
changed our method of recognizing revenue under ROVA's long-term power
sales agreements. For 2007 and 2006, revenue received under these
agreements totaling $27.6 million and $14.5 million, respectively, was
deferred.

The following table summarizes the power segment's results for the
years ended December 31, 2007 and 2006:

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2007 2006
---------------------
50% share of ROVA earnings shown as equity in
earnings $- $7,315
Ft. Lupton equity earnings 394 366
---------- ----------

Total equity earnings 394 7,681
---------- ----------

Energy revenues 84,953 43,244
Costs and expenses:
Cost of sales - energy (54,951) (28,376)
Depreciation, depletion, and amortization (9,685) (4,793)
Selling and administrative (5,845) (5,727)
Restructuring charge (698) -
Gain (loss) on sales of assets (18) (123)
---------- ----------
Energy revenue less costs and expenses 13,756 4,225
---------- ----------
Power segment operating income 14,150 11,906
========== ==========
Other income (expense):
Interest expense (13,822) (7,845)
Interest income 2,343 1,223
Other income 1 (8)
---------- ----------
Income from continuing operations before income
taxes $2,672 $5,276
========== ==========
*T

(1) The Company deferred $27.6 million and $14.5 million in
revenue received in 2007 and 2006, respectively, related to capacity
payments at ROVA.

For 2007 and 2006, ROVA produced 1,590,000 and 1,639,000 MW hours,
respectively, and achieved average capacity factors of 91% and 92%,
respectively. ROVA Unit 1 experienced an unscheduled outage as a
result of a transformer failure which reduced generation for the
fourth quarter 2007.

We also recognized $394,000 in equity earnings in 2007, compared
to $366,000 in 2006, from our interest in the Ft. Lupton project.

In August 2007, the Company sold its power operation and
maintenance business to North American Energy Services, or NAES, for
$0.8 million. Included in the sale were operation and maintenance
contracts for four power plants owned by Dominion Resources, as well
as certain fixed assets of Westmoreland Technical Services. The
Company has also contracted with NAES to provide contract operation
and maintenance services at the Company's 100% owned ROVA power
facility in North Carolina. The sale of the power operation and
maintenance business resulted in a gain of $0.5 million during 2007.

The results of operations for the Company's power operation and
maintenance business and the gain on the sale are reported in
discontinued operations in the Consolidated Statements of Operations.

Heritage Segment

Our 2007 heritage costs decreased by $5.0 million from 2006
expenses. This decrease resulted primarily from a $5.8 million
settlement reached with the Combined Benefit Fund, which was recorded
in 2007. An increase in our black lung expenses partially offset the
Combined Benefit Fund settlement. A $0.4 million benefit for Black
Lung was recorded in 2006, compared to $0.3 million of expense in
2007. The benefit in 2006 resulted from favorable actuarial
projections, which decreased our obligations.

Corporate Segment

Our corporate selling and administrative expenses increased by
$0.8 million from 2006 to 2007. This increase resulted primarily from
increases in legal and professional service fees. A gain of $5.6
million on the sale of our royalty interest at the Caballo Mine in
Wyoming is included in 2007, while 2006 includes a gain of $5.1
million from the sale of mineral interests in Colorado.

Restructuring

In 2007, the Company initiated a restructuring plan in order to
reduce the overall cost structure of the Company. During 2007, we
recorded a restructuring charge of $4.5 million, which included $4.3
million of termination benefits and outplacement costs and $0.2
million of lease costs related to the consolidation of corporate
office space. We expect these charges to result in approximately $2.6
million of annual salary reductions.

Interest

Interest expense was $24.6 million and $19.2 million for 2007 and
2006, respectively. The increase resulted primarily from a $6.0
million increase in ROVA interest expense as a result of 2007 having a
full twelve months of interest compared to only six months in 2006.
Interest income increased by $2.1 million in 2007 as a result of a
$1.1 million increase in ROVA interest income, and increased interest
income from our higher restricted cash and bond collateral account
balances.

Net loss to common shareholders

Net loss applicable to common shareholders was $23.2 million
($2.53 per diluted common share) for the year ended December 31, 2007
compared to $15.1 million ($1.72 per diluted common share) for the
year ended December 31, 2006.

Cash Flow From Operations

Cash provided by operating activities was $83.5 million for 2007
compared with $29.4 million for 2006. The increase in noncash charges
to income, which includes depreciation, amortization, share based
compensation, provision for obsolete inventory, minority interest and
gains on sales of assets, in 2007 increased cash provided by operating
activities by $9.3 million. The majority of this increase related to
depreciation resulting from the consolidation of ROVA and increased
capital expenditures and $4.5 million of restructuring charges
recorded in 2007. This increase was partially offset by the increase
in net loss. Net loss was $21.8 million for 2007 compared to $12.7
million for 2006. Cash provided by operating activities in 2007 also
reflects $27.6 million of revenue deferred under ROVA's long-term
sales agreements compared to $14.5 for 2006.

Changes in working capital increased cash provided by operating
activities in 2007 by $36.5 million compared to an increase in cash
from changes in working capital of $1.0 million in 2006. The increase
in 2007 related primarily to favorable changes of $22.9 million, $13.2
million and $9.7 million in accounts receivable, asset retirement
obligation and deferred revenue accounts, respectively, partially
offset by an unfavorable change of $12.4 million in accounts payable.

Safety

During 2007 Westmoreland achieved a lost-time accident rate of 0.9
compared to the national average of 1.5 for all surface mines. Our
mines experienced 10 lost-time accidents during 2007 versus 14 in
2006.

Liquidity

The Company has recently taken a number of steps to improve its
liquidity including completing the sale of $15.0 million in senior
secured convertible notes to an investor and completing the
refinancing of the ROVA project. The Company has also engaged a large
bank to assist in refinancing the debt at Westmoreland Mining with the
goal of better matching debt amortization with cash flow from the
mines. Depending upon the size and terms of the Westmoreland Mining
refinancing, the Company will evaluate the need to raise additional
capital.

Conference Call

A conference call regarding Westmoreland Coal Company's 2007
results will be held on April 3, 2008 at 10:00 a.m. E.S.T. Call-in
instructions will be made available on the Company's web site and
provided in a separate news release in advance of the call.

Additional Information

Investors should refer to the attached Consolidated Statements of
Operations and Summary Financial Information, and the Company's Form
10-K for the period ended December 31, 2007 for additional
information.

About Westmoreland

Westmoreland Coal Company is the oldest independent coal company
in the United States and a developer of highly clean and efficient
independent power projects. The Company's coal operations include coal
mining in the Powder River Basin in Montana and lignite mining
operations in Montana, North Dakota and Texas. Its current power
operations include ownership and operation of the two-unit ROVA
coal-fired power plant in North Carolina and an interest in a natural
gas-fired power plant in Colorado. Westmoreland is dedicated to
meeting America's dual goals of low-cost power and a clean
environment. For more information visit www.westmoreland.com.

Safe Harbor Statement

Throughout this news release, the Company makes statements which
are not historical facts or information and that may be deemed
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. These forward-looking statements include, but are not limited
to, the information set forth in Management's Discussion and Analysis
of Financial Condition and Results of Operations. For example, words
such as "may," "will," "should," "estimates," "predicts," "potential,"
"continue," "strategy," "believes," "anticipates," "plans," "expects,"
"intends," and similar expressions are intended to identify
forward-looking statements. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors, which may
cause the actual results, levels of activity, performance or
achievements, or industry results, to be materially different from any
future results, levels of activity, performance or achievements
expressed or implied by such forward-looking statements. Such factors
include, among others, the following: general economic and business
conditions; the material weaknesses in the Company's internal controls
over financial reporting identified in its Annual Report on Form 10-K
for the year ended December 31, 2007 ("our 2007 Form 10-K"), the
associated ineffectiveness of the Company's disclosure controls;
health care cost trends; the cost and capacity of the surety bond
market; the Company's ability to pay the preferred stock dividends
that are accumulated but unpaid; the Company's ability to retain key
senior management; the Company's access to financing; the Company's
ability to maintain compliance with debt covenant requirements or
obtain waivers from its lenders in cases of non-compliance; the
Company's ability to achieve anticipated cost savings and
profitability targets; the Company's ability to successfully identify
new business opportunities; the Company's ability to negotiate
profitable coal contracts, price reopeners and extensions; the
Company's ability to predict or anticipate commodity price changes;
the Company's ability to maintain satisfactory labor relations;
changes in the industry; competition; the Company's ability to utilize
its deferred income tax assets; the ability to reinvest cash,
including cash that has been deposited in reclamation accounts, at an
acceptable rate of return; weather conditions; the availability of
transportation; price of alternative fuels; costs of coal produced by
other countries; the demand for electricity; the performance of ROVA
and the structure of ROVA's contracts with its lenders and Dominion
Virginia Power; the effect of regulatory and legal proceedings;
environmental issues, including the cost of compliance with existing
and future environmental requirements; the Company's ability to raise
additional capital; and the other factors discussed in our 2007 Form
10-K. As a result of the foregoing and other factors, no assurance can
be given as to the future results and achievement of the Company's
goals. The Company disclaims any duty to update these statements, even
if subsequent events cause its views to change.

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Westmoreland Coal Company and Subsidiaries
Consolidated Statements of Operations (Unaudited)
----------------------------------------------------------------------

Years Ended December 31,
2007 2006 2005
--------------------------------
(In thousands)
Revenues:
Coal $418,870 $393,482 $361,017
Energy 84,953 43,244 -
Power projects - equity in earnings 394 7,681 12,727
---------- ---------- ----------
504,217 444,407 373,744
---------- ---------- ----------
Cost and expenses:
Cost of sales - coal 345,395 311,629 288,728
Cost of sales - energy 54,951 28,376 -
Depreciation, depletion and
amortization 38,123 29,340 21,603
Selling and administrative 44,813 42,409 35,272
Restructuring charges 4,523 - -
Heritage health benefit expenses 27,589 32,821 31,704
Loss (gain) on sales of assets (5,295) (4,785) 67
---------- ---------- ----------
510,099 439,790 377,374
---------- ---------- ----------
Operating income (loss) (5,882) 4,617 (3,630)
Other income (expense):
Interest expense (24,638) (19,234) (10,948)
Interest income 8,152 6,089 3,523
Minority interest (1,194) (2,244) (950)
Other income 243 73 1,727
---------- ---------- ----------
(17,437) (15,316) (6,648)
---------- ---------- ----------
Loss from continuing operations
before income taxes and cumulative
effect of change in accounting
principle (23,319) (10,699) (10,278)
Income tax expense from continuing
operations 199 2,405 2,667
---------- ---------- ----------
Loss before cumulative effect of
change in accounting principle (23,518) (13,104) (12,945)
Cumulative effect of change in
accounting principle - - 2,662
---------- ---------- ----------
Loss from continuing operations (23,518) (13,104) (10,283)
Discontinued operations:
Income from discontinued
operations, net of income tax
expense of less than $0.1 million
in 2007 and 2006 1,242 406 -
Gain on sale of discontinued
operations 483 - -
---------- ---------- ----------
Income from discontinued operations 1,725 406 -
---------- ---------- ----------
Net loss (21,793) (12,698) (10,283)
Less preferred stock dividend
requirements 1,360 1,585 1,744
Less premium on exchange of preferred
stock for common stock - 791 -
---------- ---------- ----------
Net loss applicable to common
shareholders $(23,153) $(15,074) $(12,027)
========== ========== ==========
*T

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Westmoreland Coal Company and Subsidiaries
Summary Financial Information (Unaudited)
----------------------------------------------------------------------

Years Ended December 31,
2007 2006 2005
-----------------------------
(In thousands, except per
share data)
Net loss per share from continuing
operations before cumulative effect of
change in accounting principle:
Basic $(2.71) $(1.77) $(1.77)
Diluted $(2.71) $(1.77) $(1.77)
Net income per share applicable to
common shareholders from cumulative
effect of change in accounting
principle:
Basic $- $- $0.32
Diluted $- $- $0.30
Net income per share from discontinued
operations:
Basic $0.19 $0.05 $-
Diluted $0.19 $0.05 $-
Net loss per share applicable to common
shareholders:
Basic $(2.53) $(1.72) $(1.45)
Diluted $(2.53) $(1.72) $(1.45)
========= ========= =========
Weighted average number of common shares
outstanding
Basic 9,166 8,748 8,280
Diluted 9,385 9,105 8,868
*T

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December 31,
2007 2006
---------------------
(In thousands)
Cash Flow
Net cash provided by operating activities $83,462 $29,434
Net cash used in investing activities (44,205) (33,922)
Net cash provided by (used in) financing
activities (46,259) 20,010

Production and Sales
Coal - tons (millions) 30.0 29.4
*T

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December 31, December 31,
2007 2006
-------------------------
(In thousands)
Balance Sheet Data
Total assets $782,528 $761,382
Total debt 271,448 306,007
Shareholder's deficit (177,257) (185,933)
Common shares outstanding 9,427 9,014
*T

Westmoreland Coal Company
Diane Jones, 719-442-2600

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