2. ACQUISITION

Acquisition of San Juan

On January 31, 2016, Westmoreland San Juan, LLC (“WSJ”), a variable interest entity of the Company, acquired San Juan Coal Company (“SJCC”), which operates the San Juan mine in Farmington, New Mexico, and San Juan Transportation Company (together with SJCC, the “San Juan Entities” and such transaction, the “San Juan Acquisition”) for a total cash purchase price of approximately $126.9 million, subject to post-closing adjustments. The San Juan mine is the exclusive supplier of coal to the adjacent San Juan Generating Station (“SJGS”) under a coal supply agreement through 2022. The San Juan operations are included in the Company’s Coal - U.S. segment. See Note 3 - Variable Interest Entity for additional information.

WSJ financed the San Juan Acquisition with a $125.0 million loan from NM Capital Utility Corporation, an affiliate of Public Service Company of New Mexico (one of the owners of SJGS), and with available cash on hand. See Note 6 - Debt and Lines of Credit for additional information.

The San Juan Acquisition has been accounted for under the acquisition method of accounting that requires the total purchase consideration to be allocated to the assets acquired and liabilities assumed based on estimates of fair value.

The allocation of the purchase price is preliminary pending the completion of various analyses and the finalization of estimates. During the measurement period (which is not to exceed one year from the acquisition date), additional assets or liabilities may be recognized if new information is obtained about facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets or liabilities as of that date. The preliminary allocation may be adjusted after obtaining additional information regarding, among other things, asset valuations, liabilities assumed and revisions of previous estimates, and these adjustments may be significant. Certain estimates in the San Juan purchase price allocation are classified as Level 3 fair value estimates.

A preliminary allocation of the purchase consideration follows (in millions):



	Provisional as of March 31, 2016
Purchase price:
Cash paid	$	126.9

Preliminary allocation of purchase price:
Assets:
Inventories - coal and supplies	$	8.8
Other Receivables	9.5
Contractual third-party reclamation receivable	4.6
Total current assets	22.9
Land and mineral rights	108.8
Plant and equipment	73.5
Contractual third-party reclamation receivable	66.8
Other assets	10.5
Total assets	282.5
Liabilities:
Trade payables and other accrued liabilities	13.5
Production taxes	2.0
Other liabilities	9.4
Asset retirement obligations	4.6
Total current liabilities	29.5
Asset retirement obligations, less current portion	66.8
Postretirement medical	1.9
Deferred income taxes	48.0
Other liabilities	9.4
Total liabilities	155.6
Net fair value	$	126.9

Unaudited Pro Forma Information

The following unaudited pro forma information has been prepared for illustrative purposes only and assumes the San Juan Acquisition occurred on January 1, 2015. The unaudited pro forma results have been prepared based on estimates and assumptions, which the Company believes are reasonable, however, they are not necessarily indicative of the consolidated results of operations had the acquisitions occurred on the dates indicated above, or of future results of operations.



(In thousands, except per share data)	Three Months Ended March 31,		Three Months Ended March 31,
	2016		2015
Total Revenues
As reported	$	354,721	$	371,483
Pro forma (unaudited)	$	380,996	$	451,782

Operating Income
As reported	$	11,538	$	8,455
Pro forma (unaudited)	$	12,633	$	18,148

Net income (loss) applicable to common shareholders
As reported	$	30,584	$	(11,732	)
Pro forma (unaudited)	$	31,009	$	(5,587	)

Net income (loss) per share applicable to common shareholders (basic and diluted)
As reported	$	1.67	$	(0.67	)
Pro forma (unaudited)	$	1.70	$	(0.32	)