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Alliance Resource Partners, L.P. Increases Quarterly Distribution By 2.1% To $1.085 Per Unit: Posts Record Coal Sales And Production Volumes And Reports Quarterly Financial Results

News, unit prices and additional information about ARLP, including filings with the Securities and Exchange Commission, are available at http://www.arlp.com . For more information, contact the investor relations department of ARLP at (918) 295-7674 or via e-mail at investorrelations@arlp.com.

The statements and projections used throughout this release are based on current expectations. These statements and projections are forward-looking, and actual results may differ materially. These projections do not include the potential impact of any mergers, acquisitions or other business combinations that may occur after the date of this release. At the end of this release, we have included more information regarding business risks that could affect our results.

FORWARD-LOOKING STATEMENTS: With the exception of historical matters, any matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projected results. These risks, uncertainties and contingencies include, but are not limited to, the following: changes in competition in coal markets and our ability to respond to such changes; changes in coal prices, which could affect our operating results and cash flows; risks associated with the expansion of our operations and properties; the impact of health care legislation; deregulation of the electric utility industry or the effects of any adverse change in the coal industry, electric utility industry, or general economic conditions; dependence on significant customer contracts, including renewing customer contracts upon expiration of existing contracts; changing global economic conditions or in industries in which our customers operate; liquidity constraints, including those resulting from any future unavailability of financing; customer bankruptcies, cancellations or breaches to existing contracts, or other failures to perform; customer delays, failure to take coal under contracts or defaults in making payments; adjustments made in price, volume or terms to existing coal supply agreements; fluctuations in coal demand, prices and availability due to labor and transportation costs and disruptions, equipment availability, governmental regulations, including those related to carbon dioxide emissions, and other factors; legislation, regulatory and court decisions and interpretations thereof, including issues related to air and water quality and miner health and safety; our productivity levels and margins earned on our coal sales; unexpected changes in raw material costs; unexpected changes in the availability of skilled labor; our ability to maintain satisfactory relations with our employees; any unanticipated increases in labor costs, adverse changes in work rules, or unexpected cash payments or projections associated with post-mine reclamation and workers′ compensation claims; any unanticipated increases in transportation costs and risk of transportation delays or interruptions; greater than expected environmental regulation, costs and liabilities; a variety of operational, geologic, permitting, labor and weather-related factors; risks associated with major mine-related accidents, such as mine fires, or interruptions; results of litigation, including claims not yet asserted; difficulty maintaining our surety bonds for mine reclamation as well as workers′ compensation and black lung benefits; difficulty in making accurate assumptions and projections regarding pension, black lung benefits and other post-retirement benefit liabilities; coal market's share of electricity generation, including as a result of environmental concerns related to coal mining and combustion and the cost and perceived benefits of alternative sources of energy, such as natural gas, nuclear energy and renewable fuels; uncertainties in estimating and replacing our coal reserves; a loss or reduction of benefits from certain tax credits; difficulty obtaining commercial property insurance, and risks associated with our participation (excluding any applicable deductible) in the commercial insurance property program; and difficulty in making accurate assumptions and projections regarding future revenues and costs associated with equity investments in companies we do not control.

Additional information concerning these and other factors can be found in ARLP’s public periodic filings with the Securities and Exchange Commission ("SEC"), including ARLP’s Annual Report on Form 10-K for the year ended December 31, 2011, filed on February 28, 2012 with the SEC. Except as required by applicable securities laws, ARLP does not intend to update its forward-looking statements.

     

ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OPERATING DATA

(In thousands, except unit and per unit data)

(Unaudited)

 
Three Months Ended

September 30,

Nine Months Ended

September 30,

2012   2011 2012   2011
 
Tons Sold 8,910 8,326 25,383 23,754
Tons Produced 9,000 7,644 25,697 23,398
 
SALES AND OPERATING REVENUES:
Coal sales $ 499,003 $ 473,683 $ 1,441,107 $ 1,323,851
Transportation revenues 5,625 7,446 17,651 25,452
Other sales and operating revenues   6,813     6,618     26,133     19,648  
Total revenues   511,441     487,747     1,484,891     1,368,951  
 
EXPENSES:
Operating expenses (excluding depreciation, depletion and amortization) 338,644 294,771 946,806 835,006
Transportation expenses 5,625 7,446 17,651 25,452
Outside coal purchases 4,424 19,864 34,759 29,495
General and administrative 13,598 13,276 43,939 38,698
Depreciation, depletion and amortization 59,781 40,275 154,923 117,237
Asset impairment charge   19,031     -     19,031     -  
Total operating expenses   441,103     375,632     1,217,109     1,045,888  
 
INCOME FROM OPERATIONS 70,338 112,115 267,782 323,063
 
Interest expense (7,446 ) (8,782 ) (21,626 ) (27,248 )
Interest income 94 83 238 275
Equity in loss of affiliates, net (2,832 ) - (11,040 ) -
Other income   254     360     2,853     1,340  
INCOME BEFORE INCOME TAXES 60,408 103,776 238,207 297,430
 
INCOME TAX BENEFIT   (102 )   (317 )   (726 )   (221 )
 
NET INCOME $ 60,510   $ 104,093   $ 238,933   $ 297,651  
 
GENERAL PARTNERS’ INTEREST IN NET INCOME $ 27,263   $ 23,474   $ 80,015   $ 66,688  
 
LIMITED PARTNERS’ INTEREST IN NET INCOME $ 33,247   $ 80,619   $ 158,918   $ 230,963  
 
BASIC AND DILUTED NET INCOME PER LIMITED PARTNER UNIT $ 0.89   $ 2.16   $ 4.25   $ 6.19  
 
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT $ 1.0625   $ 0.9225   $ 3.0775   $ 2.6725  
 
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING – BASIC AND DILUTED   36,874,949     36,775,741     36,859,018     36,766,897  
       

ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except unit data)

(Unaudited)

 

ASSETS

September 30, December 31,
2012 2011
CURRENT ASSETS:
Cash and cash equivalents $ 2,061 $ 273,528
Trade receivables 152,826 128,643
Other receivables 1,432 3,525
Due from affiliates 191 5,116
Inventories 63,923 33,837
Advance royalties 9,038 7,560
Prepaid expenses and other assets   10,185     11,945  
Total current assets 239,656 464,154
 
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost 2,278,297 1,974,520
Less accumulated depreciation, depletion and amortization   (784,123 )   (793,200 )
Total property, plant and equipment, net 1,494,174 1,181,320
 
OTHER ASSETS:
Advance royalties 26,972 27,916
Equity investments in affiliates 74,329 40,118
Other long-term assets   31,138     18,010  
Total other assets   132,439     86,044  
TOTAL ASSETS $ 1,866,269   $ 1,731,518  
 
LIABILITIES AND PARTNERS' CAPITAL
 
CURRENT LIABILITIES:
Accounts payable $ 113,316 $ 96,869
Due to affiliates 395 494
Accrued taxes other than income taxes 19,126 15,873
Accrued payroll and related expenses 42,233 35,876
Accrued interest 6,320 2,195
Workers’ compensation and pneumoconiosis benefits 9,488 9,511
Current capital lease obligations 1,019 676
Other current liabilities 22,900 15,326
Current maturities, long-term debt   18,000     18,000  
Total current liabilities 232,797 194,820
 
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities 693,000 686,000
Pneumoconiosis benefits 60,987 54,775
Accrued pension benefit 24,273 27,538
Workers’ compensation 74,862 64,520
Asset retirement obligations 76,695 70,836
Long-term capital lease obligations 18,865 2,497
Other liabilities   8,536     6,774  
Total long-term liabilities   957,218     912,940  
Total liabilities   1,190,015     1,107,760  
 
COMMITMENTS AND CONTINGENCIES
 
PARTNERS' CAPITAL:
Alliance Resource Partners, L.P. (“ARLP”) Partners’ Capital:
Limited Partners - Common Unitholders 36,874,949 and 36,775,741 units outstanding, respectively 989,293 943,325
General Partners' deficit (274,534 ) (279,107 )
Accumulated other comprehensive loss   (38,505 )   (40,460 )
Total Partners' Capital   676,254     623,758  
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 1,866,269   $ 1,731,518  
   

ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 
Nine Months Ended

September 30,

2012     2011
 
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES $ 431,628   $ 432,336  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures (332,353 ) (216,308 )
Changes in accounts payable and accrued liabilities (4,024 ) 511
Proceeds from sale of property, plant and equipment 114 465
Purchase of equity investments in affiliate (43,100 ) (35,700 )
Payment for acquisition of business (100,000 ) -
Payments to affiliate for development of coal reserves (34,601 ) (33,841 )
Advances/loans to affiliate (2,229 ) -
Payments from affiliate 4,229 -
Other   546     810  
Net cash used in investing activities   (511,418 )   (284,063 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under term loan 250,000 -
Borrowings under revolving credit facility 150,000 -
Repayments under revolving credit facility (75,000 ) -
Payment on term loan (300,000 ) -
Payment on long-term debt (18,000 ) (18,000 )
Payments on capital lease obligations (673 ) (595 )
Payment of debt issuance costs (4,272 ) -

Net settlement of employee withholding taxes on vesting of Long-Term Incentive Plan

(3,734 ) (2,324 )
Cash contributions by General Partners 150 87
Distributions paid to Partners   (190,148 )   (159,826 )
Net cash used in financing activities   (191,677 )   (180,658 )
 
NET CHANGE IN CASH AND CASH EQUIVALENTS (271,467 ) (32,385 )
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 273,528 339,562
   
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,061   $ 307,177  
 

Reconciliation of GAAP "Net Income" to non-GAAP "EBITDA" and “Adjusted EBITDA” and non-GAAP "Distributable Cash Flow" (in thousands).

EBITDA is defined as net income before net interest expense, income taxes and depreciation, depletion and amortization and Adjusted EBITDA is EBITDA modified to reflect significant non-recurring items that may not reflect the trend of future results. EBITDA is used as a supplemental financial measure by our management and by external users of our financial statements such as investors, commercial banks, research analysts and others, to assess:

  • the financial performance of our assets without regard to financing methods, capital structure or historical cost basis;
  • the ability of our assets to generate cash sufficient to pay interest costs and support our indebtedness;
  • our operating performance and return on investment as compared to those of other companies in the coal energy sector, without regard to financing or capital structures; and
  • the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.

We believe Adjusted EBITDA is a useful measure for investors because it further demonstrates the performance of our assets without regard to non-recurring charges.

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