SUPPLEMENTAL CONSOLIDATING FINANCIAL INFORMATION

Pursuant to the indenture governing the 10.75% Senior Notes, certain 100% owned subsidiaries of the Company have fully and unconditionally guaranteed the notes on a joint and several basis.

Guarantees of the Senior Notes will be released under certain circumstances, including:

(1)

in the event of a sale or other disposition of all or substantially all of the assets of such Guarantor Subsidiary, by way of merger, consolidation or otherwise, a sale or other disposition of all of the Equity Interests of such Guarantor Subsidiary then held by the Issuers or any Restricted Subsidiary; provided, that the sale or other disposition does not violate the “Asset Sales” provisions of the Indenture;


(2)	if such Guarantor Subsidiary is designated as an Unrestricted Subsidiary in accordance with the provisions of this Indenture, upon effectiveness of such designation;


(3)	upon Legal Defeasance or Covenant Defeasance (as such terms are defined in the indenture) or upon satisfaction and discharge of the Indenture;


(4)	upon the liquidation or dissolution of such Guarantor Subsidiary, provided no event of default has occurred and is continuing; or


(5)	at such time as such Guarantor Subsidiary is no longer required to be a Guarantor Subsidiary of the Senior Notes as described in the Indenture, provided no event of default has occurred and is continuing.

The following tables present unaudited consolidating financial information for (i) the issuer of the notes (Westmoreland Coal Company), (ii) the co-issuer of the notes (Westmoreland Partners), (iii) the guarantors under the notes, and (iv) the entities that are not guarantors under the notes:

CONSOLIDATING BALANCE SHEETS

September 30, 2013

(In thousands)



Assets	Parent/ Issuer			Co-Issuer		Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Total
Current assets:
Cash and cash equivalents	$	8,647		$	907	$	17,750		$	18,183		$	—		$	45,487
Receivables:
Trade	—			14,669		16,267			36,377			—			67,313
Contractual third-party reclamation receivables	—			—		58			11,172			—			11,230
Intercompany receivable/payable	(5,990		)	—		3,738			(30,817		)	33,069			—
Other	195			—		20,618			1,426			(17,803		)	4,436
	(5,795		)	14,669		40,681			18,158			15,266			82,979
Inventories	—			4,067		16,888			18,379			—			39,334
Other current assets	6,196			577		9,269			5,178			—			21,220
Total current assets	9,048			20,220		84,588			59,898			15,266			189,020
Property, plant and equipment:
Land and mineral rights	—			1,395		93,031			168,755			—			263,181
Plant and equipment	3,850			220,769		229,720			202,379			—			656,718
	3,850			222,164		322,751			371,134			—			919,899
Less accumulated depreciation, depletion and amortization	2,642			69,106		125,779			233,282			—			430,809
Net property, plant and equipment	1,208			153,058		196,972			137,852			—			489,090
Advanced coal royalties	—			—		500			4,436			—			4,936
Reclamation deposits	—			—		—			74,403			—			74,403
Restricted investments and bond collateral	15,092			5,996		39,298			26,833			—			87,219
Contractual third-party reclamation receivables	—			—		360			80,319			—			80,679
Intangible assets	—			1,693		—			248			—			1,941
Investment in subsidiaries	241,226			—		(792		)	3,770			(244,204		)	—
Other assets	9,044			—		2,300			3,207			(2,000		)	12,551
Total assets	$	275,618		$	180,967	$	323,226		$	390,966		$	(230,938	)	$	939,839

CONSOLIDATING BALANCE SHEETS

September 30, 2013

(In thousands)



Liabilities and Shareholders’ Deficit	Parent/ Issuer			Co-Issuer			Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Total
Current liabilities
Current installments of long-term debt	$	(1,685	)	$	—		$	2,268		$	21,542		$	—		$	22,125
Accounts payable and accrued expenses:
Trade	3,427			9,318			14,825			50,863			(17,783		)	60,650
Production taxes	—			2			18,540			26,203			—			44,745
Workers’ compensation	805			—			—			—			—			805
Postretirement medical benefits	12,494			—			87			1,487			—			14,068
SERP	390			—			—			—			—			390
Deferred revenue	—			9,245			1,084			2,133			—			12,462
Asset retirement obligations	—			—			3,585			21,453			—			25,038
Other current liabilities	4,536			—			27			119			(19		)	4,663
Total current liabilities	19,967			18,565			40,416			123,800			(17,802		)	184,946
Long-term debt, less current installments	246,261			—			1,720			75,363			(2,000		)	321,344
Workers’ compensation, less current portion	8,366			—			—			—			—			8,366
Excess of black lung benefit obligation over trust assets	8,409			—			—			—			—			8,409
Postretirement medical benefits, less current portion	222,090			—			60,259			40,452			—			322,801
Pension and SERP obligations, less current portion	28,357			281			19,787			5,481			—			53,906
Deferred revenue, less current portion	—			43,174			—			5,802			—			48,976
Asset retirement obligations, less current portion	—			876			41,154			196,133			—			238,163
Intangible liabilities	—			5,861			—			—			—			5,861
Other liabilities	5,942			—			18,684			2,752			—			27,378
Intercompany receivable/payable	16,537			—			(1,803		)	3,904			(18,638		)	—
Total liabilities	555,929			68,757			180,217			453,687			(38,440		)	1,220,150
Shareholders’ deficit
Preferred stock	160			—			—			—			—			160
Common stock	36,479			5			110			132			(247		)	36,479
Other paid-in capital	134,133			52,828			94,395			64,223			(211,446		)	134,133
Accumulated other comprehensive loss	(142,779		)	(351		)	(5,003		)	(23,245		)	28,599			(142,779		)
Accumulated earnings (deficit)	(290,655		)	59,728			53,507			(103,831		)	(9,404		)	(290,655		)
Total Westmoreland Coal Company shareholders’ deficit	(262,662		)	112,210			143,009			(62,721		)	(192,498		)	(262,662		)
Noncontrolling interest	(17,649		)	—			—			—			—			(17,649		)
Total equity (deficit)	(280,311		)	112,210			143,009			(62,721		)	(192,498		)	(280,311		)
Total liabilities and shareholders’ deficit	$	275,618		$	180,967		$	323,226		$	390,966		$	(230,938	)	$	939,839

CONSOLIDATING BALANCE SHEETS

December 31, 2012

(In thousands)



Assets	Parent/ Issuer			Co-Issuer		Guarantor Subsidiaries			Non- Guarantor Subsidiaries			Consolidating Adjustments			Total
Current assets:
Cash and cash equivalents	$	14,836		$	4,545	$	5,362		$	6,867		$	—		$	31,610
Receivables:
Trade	—			13,018		13,428			33,591			—			60,037
Contractual third-party reclamation receivables	—			—		56			10,151			—			10,207
Intercompany receivable/payable	(8,002		)	—		5,667			(30,641		)	32,976			—
Other	77			—		16,806			1,182			(14,845		)	3,220
	(7,925		)	13,018		35,957			14,283			18,131			73,464
Inventories	—			3,047		16,538			18,149			—			37,734
Other current assets	739			298		5,550			9,917			—			16,504
Total current assets	7,650			20,908		63,407			49,216			18,131			159,312
Property, plant and equipment:
Land and mineral rights	—			1,395		91,741			168,605			—			261,741
Plant and equipment	3,198			219,857		215,751			196,914			—			635,720
	3,198			221,252		307,492			365,519			—			897,461
Less accumulated depreciation, depletion and amortization	2,364			61,474		108,151			212,632			—			384,621
Net property, plant and equipment	834			159,778		199,341			152,887			—			512,840
Advanced coal royalties	—			—		500			3,816			—			4,316
Reclamation deposits	—			—		—			72,718			—			72,718
Restricted investments and bond collateral	15,183			5,990		39,208			26,828			—			87,209
Contractual third-party reclamation receivables	—			—		327			83,831			—			84,158
Intangible assets	—			2,923		—			280			—			3,203
Investment in subsidiaries	248,565			—		(792		)	3,770			(251,543		)	—
Other assets	10,267			—		635			3,457			(2,000		)	12,359
Total assets	$	282,499		$	189,599	$	302,626		$	396,803		$	(235,412	)	$	936,115

CONSOLIDATING BALANCE SHEETS

December 31, 2012

(In thousands)



Liabilities and Shareholders’ Deficit	Parent/ Issuer			Co-Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Current liabilities
Current installments of long-term debt	$	(1,548	)	$	—		$	1,939		$	23,400		$	—		$	23,791
Accounts payable and accrued expenses:
Trade	4,707			4,978			15,163			42,085			(14,840		)	52,093
Production taxes	—			3			10,014			23,211			—			33,228
Workers’ compensation	820			—			—			—			—			820
Postretirement medical benefits	12,494			—			87			1,487			—			14,068
SERP	390			—			—			—			—			390
Deferred revenue	—			8,788			2,997			1,037			—			12,822
Asset retirement obligations	—			—			3,519			18,719			—			22,238
Other current liabilities	11,312			—			10			144			(4		)	11,462
Total current liabilities	28,175			13,769			33,729			110,083			(14,844		)	170,912
Long-term debt, less current installments	245,456			—			2,473			91,269			(2,000		)	337,198
Workers’ compensation, less current portion	8,710			—			—			—			—			8,710
Excess of black lung benefit obligation over trust assets	8,356			—			—			—			—			8,356
Postretirement medical benefits, less current portion	224,336			—			55,981			39,458			—			319,775
Pension and SERP obligations, less current portion	29,265			289			19,346			5,350			—			54,250
Deferred revenue, less current portion	—			50,239			—			6,652			—			56,891
Asset retirement obligations, less current portion	—			829			40,063			200,717			—			241,609
Intangible liabilities	—			6,625			—			—			—			6,625
Other liabilities	701			—			15,677			1,642			—			18,020
Intercompany receivable/payable	23,731			—			(7,972		)	35,787			(51,546		)	—
Total liabilities	568,730			71,751			159,297			490,958			(68,390		)	1,222,346
Shareholders’ deficit
Preferred stock	160			—			—			—			—			160
Common stock	35,502			5			110			132			(247		)	35,502
Other paid-in capital	130,852			52,807			93,456			62,539			(208,802		)	130,852
Accumulated other comprehensive loss	(148,345		)	(372		)	(4,987		)	(24,492		)	29,851			(148,345		)
Accumulated earnings (deficit)	(289,727		)	65,408			54,750			(132,334		)	12,176			(289,727		)
Total Westmoreland Coal Company shareholders’ deficit	(271,558		)	117,848			143,329			(94,155		)	(167,022		)	(271,558		)
Noncontrolling interest	(14,673		)	—			—			—			—			(14,673		)
Total equity (deficit)	(286,231		)	117,848			143,329			(94,155		)	(167,022		)	(286,231		)
Total liabilities and shareholders’ deficit	$	282,499		$	189,599		$	302,626		$	396,803		$	(235,412	)	$	936,115

CONSOLIDATING STATEMENTS OF OPERATIONS

Three Months Ended September 30, 2013

(In thousands)



	Parent/ Issuer			Co-Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues	$	—		$	24,911		$	58,529		$	107,698		$	(14,346	)	$	176,792
Costs and expenses:
Cost of sales	—			16,366			43,972			92,202			(14,347		)	138,193
Depreciation, depletion and amortization	92			2,551			7,027			7,765			(1		)	17,434
Selling and administrative	2,909			907			2,857			5,825			—			12,498
Heritage health benefit expenses	3,789			—			—			268			—			4,057
Loss (gain) on sales of assets	—			—			1			(14		)	—			(13		)
Other operating income	—			—			(3,913		)	—			—			(3,913		)
	6,790			19,824			49,944			106,046			(14,348		)	168,256
Operating income (loss)	(6,790		)	5,087			8,585			1,652			2			8,536
Other income (expense):
Interest expense	(7,622		)	(10		)	(61		)	(2,222		)	6			(9,909		)
Interest income	29			5			102			171			(6		)	301
Other income (loss)	—			—			55			34			—			89
	(7,593		)	(5		)	96			(2,017		)	—			(9,519		)
Income (loss) before income taxes and income of consolidated subsidiaries	(14,383		)	5,082			8,681			(365		)	2			(983		)
Equity in income of subsidiaries	13,369			—			—			—			(13,369		)	—
Income (loss) before income taxes	(1,014		)	5,082			8,681			(365		)	(13,367		)	(983		)
Income tax expense (benefit)	(1		)	—			2,138			(395		)	(1,712		)	30
Net income (loss)	(1,013		)	5,082			6,543			30			(11,655		)	(1,013		)
Less net loss attributable to noncontrolling interest	(3,774		)	—			—			—			—			(3,774		)
Net income (loss) attributable to the Parent company	$	2,761		$	5,082		$	6,543		$	30		$	(11,655	)	$	2,761

CONSOLIDATING STATEMENTS OF OPERATIONS

Three Months Ended September 30, 2012

(In thousands)



	Parent/ Issuer			Co-Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues	$	—		$	22,534		$	53,091		$	94,103		$	(8,396	)	$	161,332
Costs and expenses:
Cost of sales	—			14,982			34,658			75,844			(8,396		)	117,088
Depreciation, depletion and amortization	104			2,533			5,732			7,165			—			15,534
Selling and administrative	3,001			995			2,381			5,288			—			11,665
Heritage health benefit expenses	3,638			—			—			243			—			3,881
Loss (gain) on sales of assets	—			—			18			(4		)	—			14
Other operating income	—			—			(2,301		)	—			—			(2,301		)
	6,743			18,510			40,488			88,536			(8,396		)	145,881
Operating income (loss)	(6,743		)	4,024			12,603			5,567			—			15,451
Other income (expense):
Interest expense	(8,292		)	(10		)	(93		)	(2,723		)	22			(11,096		)
Interest income	44			2			107			344			(22		)	475
Other income	(3		)	—			193			6			—			196
	(8,251		)	(8		)	207			(2,373		)	—			(10,425		)
Income (loss) before income taxes and income of consolidated subsidiaries	(14,994		)	4,016			12,810			3,194			—			5,026
Equity in income of subsidiaries	19,982			—			—			—			(19,982		)	—
Income (loss) before income taxes	4,988			4,016			12,810			3,194			(19,982		)	5,026
Income tax expense (benefit)	(363		)	—			605			1,625			(2,192		)	(325		)
Net income (loss)	5,351			4,016			12,205			1,569			(17,790		)	5,351
Less net loss attributable to noncontrolling interest	(2,271		)	—			—			—			—			(2,271		)
Net income (loss) attributable to the Parent company	$	7,622		$	4,016		$	12,205		$	1,569		$	(17,790	)	$	7,622

CONSOLIDATING STATEMENTS OF OPERATIONS

Nine Months Ended September 30, 2013

(In thousands)



	Parent/ Issuer			Co-Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues	$	—		$	67,409		$	154,958		$	306,345		$	(27,973	)	$	500,739
Costs and expenses:
Cost of sales	—			48,221			126,509			252,385			(27,973		)	399,142
Depreciation, depletion and amortization	278			7,632			17,505			21,842			—			47,257
Selling and administrative	9,093			2,633			8,112			16,516			—			36,354
Heritage health benefit expenses	10,322			—			—			795			—			11,117
Gain on sales of assets	—			—			(146		)	(175		)	—			(321		)
Other operating income	—			—			(19,053		)	(2		)	—			(19,055		)
	19,693			58,486			132,927			291,361			(27,973		)	474,494
Operating income (loss)	(19,693		)	8,923			22,031			14,984			—			26,245
Other income (expense):
Interest expense	(22,797		)	(30		)	(220		)	(7,121		)	23			(30,145		)
Loss on extinguishment of debt	(64		)	—			—			—			—			(64		)
Interest income	105			20			212			564			(23		)	878
Other income (loss)	—			—			297			(10		)	—			287
	(22,756		)	(10		)	289			(6,567		)	—			(29,044		)
Income (loss) before income taxes and income of consolidated subsidiaries	(42,449		)	8,913			22,320			8,417			—			(2,799		)
Equity in income of subsidiaries	39,565			—			—			—			(39,565		)	—
Loss before income taxes	(2,884		)	8,913			22,320			8,417			(39,565		)	(2,799		)
Income tax expense (benefit)	—			—			63			6,137			(6,115		)	85
Net income (loss)	(2,884		)	8,913			22,257			2,280			(33,450		)	(2,884		)
Less net loss attributable to noncontrolling interest	(2,976		)	—			—			—			—			(2,976		)
Net income (loss) attributable to the Parent company	$	92		$	8,913		$	22,257		$	2,280		$	(33,450	)	$	92

CONSOLIDATING STATEMENTS OF OPERATIONS

Nine Months Ended September 30, 2012

(In thousands)



	Parent/ Issuer			Co-Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Revenues	$	—		$	59,138		$	136,202		$	268,031		$	(21,961	)	$	441,410
Costs and expenses:
Cost of sales	—			43,644			94,909			223,314			(21,961		)	339,906
Depreciation, depletion and amortization	317			7,554			14,382			20,289			—			42,542
Selling and administrative	9,794			2,874			7,583			18,433			(1,527		)	37,157
Heritage health benefit expenses	11,006			—			—			737			—			11,743
Loss on sales of assets	—			—			18			273			—			291
Other operating loss (income)	—			—			(12,030		)	—			1,527			(10,503		)
	21,117			54,072			104,862			263,046			(21,961		)	421,136
Operating income (loss)	(21,117		)	5,066			31,340			4,985			—			20,274
Other income (expense):
Interest expense	(23,315		)	(30		)	(298		)	(8,438		)	70			(32,011		)
Interest income	192			6			224			1,019			(70		)	1,371
Other income	187			—			280			144			—			611
	(22,936		)	(24		)	206			(7,275		)	—			(30,029		)
Income (loss) before income taxes and income of consolidated subsidiaries	(44,053		)	5,042			31,546			(2,290		)	—			(9,755		)
Equity in income of subsidiaries	34,200			—			—			—			(34,200		)	—
Loss before income taxes	(9,853		)	5,042			31,546			(2,290		)	(34,200		)	(9,755		)
Income tax expense (benefit)	(1,337		)	—			2,374			753			(3,029		)	(1,239		)
Net income (loss)	(8,516		)	5,042			29,172			(3,043		)	(31,171		)	(8,516		)
Less net loss attributable to noncontrolling interest	(4,914		)	—			—			—			—			(4,914		)
Net income (loss) attributable to the Parent company	$	(3,602	)	$	5,042		$	29,172		$	(3,043	)	$	(31,171	)	$	(3,602	)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended September 30, 2013

(In thousands)



	Parent/Issuer			Co-Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net income (loss)	$	(1,013	)	$	5,082	$	6,543	$	30		$	(11,655	)	$	(1,013	)
Other comprehensive income (loss)
Amortization of accumulated actuarial gains or losses, pension	872			7		—		215			(222		)	872
Amortization of accumulated actuarial gains or losses, transition obligations, and prior service costs, postretirement medical benefit	1,002			—		—		213			(213		)	1,002
Unrealized and realized gains and losses on available-for-sale securities	(16		)	—		—		(16		)	16			(16		)
Other comprehensive income (loss)	1,858			7		—		412			(419		)	1,858
Comprehensive income (loss) attributable to the Parent company	$	845		$	5,089	$	6,543	$	442		$	(12,074	)	$	845

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three Months Ended September 30, 2012

(In thousands)



	Parent/Issuer			Co-Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net income (loss)	$	5,351		$	4,016	$	12,205	$	1,569		$	(17,790	)	$	5,351
Other comprehensive income (loss)
Amortization of accumulated actuarial gains or losses, pension	729			6		—		185			(191		)	729
Amortization of accumulated actuarial gains or losses, transition obligations, and prior service costs, postretirement medical benefit	643			—		—		243			(243		)	643
Tax effect of other comprehensive income gains	(521		)	—		—		—			—			(521		)
Unrealized and realized gains and losses on available-for-sale securities	(25		)	—		1		(25		)	24			(25		)
Other comprehensive income (loss)	826			6		1		403			(410		)	826
Comprehensive income (loss) attributable to the Parent company	$	6,177		$	4,022	$	12,206	$	1,972		$	(18,200	)	$	6,177

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Nine Months Ended September 30, 2013

(In thousands)



	Parent/Issuer			Co-Issuer		Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net income (loss)	$	(2,884	)	$	8,913	$	22,257		$	2,280		$	(33,450	)	$	(2,884	)
Other comprehensive income (loss)
Amortization of accumulated actuarial gains or losses, pension	2,617			21		—			648			(669		)	2,617
Amortization of accumulated actuarial gains or losses, transition obligations, and prior service costs, postretirement medical benefit	3,004			—		—			640			(640		)	3,004
Unrealized and realized gains and losses on available-for-sale securities	(55		)	—		(17		)	(38		)	55			(55		)
Other comprehensive income (loss)	5,566			21		(17		)	1,250			(1,254		)	5,566
Comprehensive income (loss) attributable to the Parent company	$	2,682		$	8,934	$	22,240		$	3,530		$	(34,704	)	$	2,682

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Nine Months Ended September 30, 2012

(In thousands)



	Parent/Issuer			Co-Issuer		Guarantor Subsidiaries		Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Net income (loss)	$	(8,516	)	$	5,042	$	29,172	$	(3,043	)	$	(31,171	)	$	(8,516	)
Other comprehensive income (loss)
Amortization of accumulated actuarial gains or losses, pension	2,187			16		—		557			(573		)	2,187
Amortization of accumulated actuarial gains or losses, transition obligations, and prior service costs, postretirement medical benefit	1,929			—		—		729			(729		)	1,929
Tax effect of other comprehensive income gains	(1,496		)	—		—		—			—			(1,496		)
Unrealized and realized gains and losses on available-for-sale securities	(248		)	—		1		(44		)	43			(248		)
Other comprehensive income (loss)	2,372			16		1		1,242			(1,259		)	2,372
Comprehensive income (loss) attributable to the Parent company	$	(6,144	)	$	5,058	$	29,173	$	(1,801	)	$	(32,430	)	$	(6,144	)

CONSOLIDATING STATEMENTS OF CASH FLOWS

Nine Months Ended September 30, 2013

(In thousands)



Statements of Cash Flows	Parent/ Issuer			Co-Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Cash flows from operating activities:
Net income (loss)	$	(2,884	)	$	8,913		$	22,257		$	2,280		$	(33,450	)	$	(2,884	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Equity in income of subsidiaries	39,565			—			—			—			(39,565		)	—
Depreciation, depletion, and amortization	278			7,632			17,505			21,842			—			47,257
Accretion of asset retirement obligation and receivable	—			48			3,145			6,314			—			9,507
Amortization of intangible assets and liabilities, net	—			467			—			31			—			498
Share-based compensation	1,868			30			877			1,819			—			4,594
Gain on sale of assets	—			—			(146		)	(175		)	—			(321		)
Amortization of deferred financing costs	2,353			—			35			402			—			2,790
Loss on extinguishment of debt	64			—			—			—			—			64
Gain on sales of investment securities	—			—			(4		)	(21		)	—			(25		)
Changes in operating assets and liabilities:
Receivables, net	(118		)	(1,651		)	(6,651		)	(4,557		)	4,486			(8,491		)
Inventories	—			(1,020		)	(350		)	(230		)	—			(1,600		)
Excess of black lung benefit obligation over trust assets	53			—			—			—			—			53
Accounts payable and accrued expenses	(8,223		)	4,314			7,264			12,060			(2,958		)	12,457
Deferred revenue	—			(6,608		)	(1,913		)	246			—			(8,275		)
Income tax payable	—			—			(1,679		)	1,653			—			(26		)
Accrual for workers’ compensation	(359		)	—			—			—			—			(359		)
Asset retirement obligations	—			—			(1,801		)	(5,087		)	—			(6,888		)
Accrual for postretirement medical benefits	118			—			4,278			1,634			—			6,030
Pension and SERP obligations	1,042			13			441			777			—			2,273
Other assets and liabilities	(215		)	(453		)	(1,652		)	4,134			1			1,815
Net cash provided by (used in) operating activities	33,542			11,685			41,606			43,122			(71,486		)	58,469
Cash flows from investing activities:
Distributions received from subsidiaries	50,800			—			—			—			(50,800		)	—
Additions to property, plant and equipment	(486		)	(715		)	(11,342		)	(7,680		)	—			(20,223		)
Change in restricted investments and bond collateral and reclamation deposits	91			(6		)	(530		)	(9,207		)	—			(9,652		)



Net proceeds from sales of assets	—			—			335			269			—			604
Proceeds from the sale of investments	—			—			428			7,499			—			7,927
Receivable from customer for property and equipment purchases	—			—			—			(1		)	—			(1		)
Net cash provided by (used in) investing activities	50,405			(721		)	(11,109		)	(9,120		)	(50,800		)	(21,345		)
Cash flows from financing activities:
Change in book overdrafts	—			—			20			—			—			20
Repayments of long-term debt	(500		)	—			(1,874		)	(19,691		)	—			(22,065		)
Borrowings on revolving lines of credit	—			—			—			7,000			—			7,000
Repayments on revolving lines of credit	—			—			—			(7,000		)	—			(7,000		)
Debt issuance costs and other refinancing costs	(26		)	—			—			(156		)	—			(182		)
Dividends/distributions	(1,020		)	(14,500		)	(23,500		)	(12,800		)	50,800			(1,020		)
Transactions with Parent/affiliates	(88,590		)	(102		)	7,245			9,961			71,486			—
Net cash provided by (used in) financing activities	(90,136		)	(14,602		)	(18,109		)	(22,686		)	122,286			(23,247		)
Net increase (decrease) in cash and cash equivalents	(6,189		)	(3,638		)	12,388			11,316			—			13,877
Cash and cash equivalents, beginning of year	14,836			4,545			5,362			6,867			—			31,610
Cash and cash equivalents, end of year	$	8,647		$	907		$	17,750		$	18,183		$	—		$	45,487

CONSOLIDATING STATEMENTS OF CASH FLOWS

Nine Months Ended September 30, 2012

(In thousands)



Statements of Cash Flows	Parent/ Issuer			Co-Issuer			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Total
Cash flows from operating activities:
Net income (loss)	$	(8,516	)	$	5,042		$	29,172		$	(3,043	)	$	(31,171	)	$	(8,516	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Equity in income of subsidiaries	34,200			—			—			—			(34,200		)	—
Depreciation, depletion, and amortization	317			7,554			14,382			20,289			—			42,542
Accretion of asset retirement obligation and receivable	—			44			2,990			6,003			—			9,037
Amortization of intangible assets and liabilities, net	—			466			—			26			—			492
Non-cash tax benefits	(1,496		)	—			—			—			—			(1,496		)
Share-based compensation	2,118			34			428			2,196			—			4,776
Loss on sale of assets	—			—			18			273			—			291
Amortization of deferred financing costs	2,127			—			304			473			—			2,904
Gain on sales of investment securities	(183		)	—			—			—			—			(183		)
Changes in operating assets and liabilities:
Receivables, net	(29		)	(379		)	(21,186		)	(4,602		)	6,142			(20,054		)
Inventories	—			571			(638		)	(421		)	—			(488		)
Excess of black lung benefit obligation over trust assets	1,626			—			—			—			—			1,626
Accounts payable and accrued expenses	(2,624		)	642			16,698			11,673			(6,410		)	19,979
Deferred revenue	—			(6,307		)	(786		)	1,741			—			(5,352		)
Accrual for workers’ compensation	(212		)	—			—			—			—			(212		)
Asset retirement obligations	—			—			(1,089		)	(5,055		)	—			(6,144		)
Accrual for postretirement medical benefits	(143		)	—			3,536			1,149			—			4,542
Pension and SERP obligations	835			9			516			589			—			1,949
Other assets and liabilities	(190		)	(470		)	1,526			(4,210		)	—			(3,344		)
Net cash provided by (used in) operating activities	27,830			7,206			45,871			27,081			(65,639		)	42,349
Cash flows from investing activities:
Distributions received from subsidiaries	8,550			—			—			—			(8,550		)	—
Additions to property, plant and equipment	(123		)	(2,033		)	(6,195		)	(7,715		)	—			(16,066		)
Change in restricted investments and bond collateral and reclamation deposits	(3,098		)	(5		)	(24,873		)	(1,832		)	—			(29,808		)
Cash payments related to acquisitions and other	4,000			—			(76,522		)	—			—			(72,522		)
Net proceeds from sales of assets	—			—			240			145			—			385



Proceeds from the sale of investments	1,828			—			—			—			—			1,828
Receivable from customer for property and equipment purchases	—			—			—			(466		)	—			(466		)
Net cash provided by (used in) investing activities	11,157			(2,038		)	(107,350		)	(9,868		)	(8,550		)	(116,649		)
Cash flows from financing activities:
Change in book overdrafts	—			(259		)	—			1,112			—			853
Borrowings from long-term debt	119,364			—			—			—			—			119,364
Repayments of long-term debt	—			—			(1,912		)	(14,519		)	—			(16,431		)
Borrowings on revolving lines of credit	—			—			—			16,500			—			16,500
Repayments on revolving lines of credit	—			—			—			(16,500		)	—			(16,500		)
Debt issuance costs and other refinancing costs	(5,563		)	—			—			(1		)	—			(5,564		)
Dividends/distributions	(1,020		)	(1,050		)	—			(7,500		)	8,550			(1,020		)
Transactions with Parent/affiliates	(149,093		)	(66		)	68,496			15,024			65,639			—
Net cash provided by (used in) financing activities	(36,312		)	(1,375		)	66,584			(5,884		)	74,189			97,202
Net increase (decrease) in cash and cash equivalents	2,675			3,793			5,105			11,329			—			22,902
Cash and cash equivalents, beginning of year	26,141			6			143			4,493			—			30,783
Cash and cash equivalents, end of year	$	28,816		$	3,799		$	5,248		$	15,822		$	—		$	53,685