COMPANY SHAKES UP EXECS AMID SEC PROBE

0 Comments | Gazette, The (Colorado Springs), Apr 3, 2008 | by WAYNE HEILMAN

Westmoreland Coal Co. replaced its chief financial officer Wednesday and promoted three other executives to new accounting posts in the wake of two earnings restatements in 16 months.

The move comes two days after the company told stockholders it is being investigatted by the Securities and Exchange Commission for accounting errors that triggered restatements cutting earnings by more than $60 million and wiping out more than $120 million in stockholder equity.

Westmoreland said that Kevin Paprzycki is replacing David Blair as chief financial officer and that Blair is leaving the company, but it provided no reason for his departure. Paprzycki joined Westmoreland in June 2006 as controller and principal accounting officer.

Blair joined Westmoreland in April 2005 after 17 years with Nalco Chemical Co., where he had most recently been acting chief financial officer of Ondeo Nalco Co. He earned $411,166 in salary, bonuses, stock options and other compensation in 2006, the most recent information available.

Paprzycki was previously controller at Applied Films Corp. between November 2005 and June 2006 and was chief financial officer at Evans and Sutherland Computer Corp. from June 2004 to November 2005 after serving for three years as the company's finance director.

Westmoreland also named Douglas Kathol as treasurer and said he continues as vice president of development. Ronald Beck had been Westmoreland's vice president of finance and treasurer, but the release did not mention whether he remains with the company, and the company declined further comment.

Kathol joined Westmoreland in August 2003 and previously was vice president and controller of Norwest Mine Services Inc. Beck joined Westmoreland in July 2001 and served as acting chief financial officer for two years until Blair was hired in 2005.

Westmoreland also promoted Russ Werner as accounting director and Bruno LeCrampe as internal controls director and hired Mary Hauck as vice president of human resources. Hauck was senior human resources director for the dialysis services company DaVita Inc.

Werner and LeCrampe joined Westmoreland in June 2006, but the company did not disclose their previous positions in a news release announcing the changes.

Westmoreland added $20 million to its losses for 2002-06 and inflated its negative net worth by more than 50 percent March 17 because of errors in calculating for future retirement benefits, stock options, state income taxes and coal-reserve lease payments.

A November 2006 restatement triggered by errors in calculating tax benefits widened losses by $40 million and wiped out $62.9 million in shareholder equity. As a result of the two restatements, Westmoreland's liabilities now exceed its assets by $177.3 million.

The company disclosed Monday that the SEC's Denver office notified it Thursday of an "informal inquiry" into accounting errors that triggered the latest restatement. Westmoreland said it could face fines, court orders or civil lawsuits from the SEC.

Westmoreland's stock rose 52 cents, or 3.8 percent, to $14.22 in trading Wednesday on the American Stock Exchange after the management shake-up was announced. The company owns five coal mines in Montana, North Dakota and Texas and a power plant in North Carolina.

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