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ALLIANCE HOLDINGS GP, L.P. Reports Solid First Quarter 2007 Financial Results; and Declares Quarterly Distribution of $0.25 per Unit

TULSA, Okla., Apr 30, 2007 (BUSINESS WIRE) -- Alliance Holdings GP, L.P. (NASDAQ: AHGP) today reported net income for the quarter ended March 31, 2007 (the "2007 Quarter") of $23.1 million, compared to net income of $22.9 million for the quarter ended March 31, 2006 (the "2006 Quarter"). Basic and diluted net income per limited partner unit for the 2007 Quarter decreased to $0.39 per unit, compared to $0.48 per limited partner unit for the 2006 Quarter. This decrease in basic and diluted net income per limited partner unit is the result of an increase in the number of common units outstanding due to the issuance of 12,500,000 common units on May 9, 2006 in conjunction with AHGP's initial public offering.

The Board of Directors of the AHGP's general partner (the "Board") also declared a quarterly cash distribution for the 2007 Quarter of $0.25 per unit, or an annualized rate of $1.00 per unit. The distribution will be paid on May 18, 2007, to all unitholders of record as of May 11, 2007. Increases to AHGP's quarterly cash distribution to unitholders are expected to be considered by the Board at its January and July meetings.

The declared distribution is based on the distribution AHGP will receive from its ownership interests in Alliance Resource Partners, L.P. (NASDAQ: ARLP). On April 30, 2007, ARLP announced a quarterly distribution for the 2007 Quarter of $0.54 per unit, or $2.16 per unit on an annualized basis, which distribution will be paid on May 15, 2007 to all ARLP unitholders of record as of the close of trading on May 8, 2007. (See ARLP Press Release dated April 30, 2007.)

AHGP currently has no other operating activities apart from those conducted by the operating subsidiaries of ARLP and reports its financial results on a consolidated basis with the financial results of ARLP. AHGP's principal sources of cash flow are its ownership of general partner interests, limited partner interests and incentive distribution rights in ARLP. Based on ARLP's current declared distribution, AHGP expects to receive quarterly cash distributions from ARLP of $15.6 million, or $62.5 million, on an annualized basis. AHGP's primary cash requirements are for general and administrative expenses, including for 2007 an estimated $2.2 million in incremental general and administrative expenses associated with being a publicly traded limited partnership, working capital requirements, and distributions to its unitholders. At March 31, 2007, AHGP had no borrowings outstanding under its revolving credit facility.

About Alliance Holdings GP, L.P.

AHGP is a limited partnership formed to own and control Alliance Resource Management GP, LLC, the managing general partner of ARLP, through which it holds a 1.98% general partner interest and the incentive distribution rights in ARLP. In addition, AHGP owns 15,544,169 common units of ARLP.

News, unit prices and additional information about AHGP including filings with the Securities and Exchange Commission, are available at http://www.ahgp.com. For more information, contact the investor relations department of AHGP at 918-295-1415 or via e-mail at investorrelations@ahgp.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: initially, our operating cash flow will be derived exclusively from cash distributions from ARLP; the risks to the business of ARLP include: increased competition in coal markets and ARLP's ability to respond to the competition; fluctuation in coal prices, which could adversely affect ARLP's operating results and cash flows; risks associated with the expansion of ARLP's operations and properties; deregulation of the electric utility industry or the effects of any adverse change in the domestic coal industry, electric utility industry, or general economic conditions; dependence on significant customer contracts, including renewing customer contracts upon expiration of existing contracts; customer bankruptcies and/or cancellations or breaches of existing contracts; customer delays or defaults in making payments; fluctuations in coal demand, prices and availability due to labor and transportation costs and disruptions, equipment availability, governmental regulations and other factors; ARLP's productivity levels and margins that it earns on its coal sales; greater than expected increases in raw material costs; greater than expected shortage of skilled labor; any unanticipated increases in labor costs, adverse changes in work rules, or unexpected cash payments associated with asset retirement obligations 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; risk associated with major mine-related accidents, such as mine fires or other interruptions; results of litigation, including claims not yet asserted; difficulty maintaining ARLP's surety bonds for asset retirement obligations as well as workers' compensation and black lung benefits; coal market's share of electricity generation; prices of fuel that compete with or impact coal usage, such as oil or natural gas; legislation, regulatory and court decisions; the impact from provisions of The Energy Policy Act of 2005; replacement of coal reserves; a loss or reduction of the direct or indirect benefit from certain state and federal tax credits, including non-conventional source fuel tax credits; difficulty obtaining commercial property insurance, and risks associated with ARLP's increased participation (excluding any applicable deductible) in the commercial insurance property program.

Additional information concerning these and other factors can be found in AHGP's public periodic filings with the Securities and Exchange Commission ("SEC"), including AHGP's Annual Report on Form 10-K for the year ended December 31, 2006, filed on March 15, 2007 with the SEC. Except as required by applicable securities laws, AHGP does not intend to update its forward-looking statements.

             ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

    CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OPERATING DATA
            (In thousands, except unit and per unit data)
                             (Unaudited)

                                                 Three Months Ended
                                                      March 31,
                                               -----------------------
                                                  2007        2006
                                               ----------- -----------

Tons sold                                           6,178       6,102
Tons produced                                       6,557       6,248

SALES AND OPERATING REVENUES:
  Coal sales                                     $238,870    $218,212
  Transportation revenues                           8,679      10,034
  Other sales and operating revenues                9,478      10,074
                                               ----------- -----------
      Total revenues                              257,027     238,320
                                               ----------- -----------

EXPENSES:
  Operating expenses                              166,989     152,010
  Transportation expenses                           8,679      10,034
  Outside purchases                                 6,266       3,526
  General and administrative                        8,553       7,158
  Depreciation, depletion and amortization         19,793      14,725
                                               ----------- -----------
      Total operating expenses                    210,280     187,453
                                               ----------- -----------

INCOME FROM OPERATIONS                             46,747      50,867
  Interest expense                                 (2,821)     (3,149)
  Interest income                                     539         907
  Other income                                        901         271
                                               ----------- -----------
INCOME BEFORE INCOME TAXES, CUMULATIVE EFFECT
 OF ACCOUNTING CHANGE, MINORITY INTEREST AND
 NON-CONTROLLING INTEREST                          45,366      48,896

INCOME TAX EXPENSE                                    575       1,242
                                               ----------- -----------

INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING
 CHANGE, MINORITY INTEREST AND NON-CONTROLLING
 INTEREST                                          44,791      47,654
CUMULATIVE EFFECT OF ACCOUNTING CHANGE                  -         112
MINORITY INTEREST                                      82           -
                                               ----------- -----------
INCOME BEFORE NON-CONTROLLING INTEREST             44,873      47,766
  Affiliate non-controlling interest in
   consolidated partnership's net income               (8)         (9)
  Non-affiliate non-controlling interest in
   consolidated partnership's net income          (21,794)    (24,875)
                                               ----------- -----------

NET INCOME                                        $23,071     $22,882
                                               =========== ===========

BASIC AND DILUTED NET INCOME PER LIMITED
 PARTNER UNIT                                       $0.39       $0.48
                                               =========== ===========
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT         $0.25          $-
                                               =========== ===========

WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING-BASIC AND DILUTED                  59,863,000  47,363,000
                                               =========== ===========

             ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED BALANCE SHEETS
                   (In thousands, except unit data)
                             (Unaudited)

                                                March 31, December 31,
ASSETS                                            2007       2006
                                                --------- ------------

CURRENT ASSETS:
  Cash and cash equivalents                      $41,095      $37,069
  Trade receivables, net                          90,997       96,558
  Other receivables                                2,460        3,378
  Due from affiliates                                 71           25
  Marketable securities                                -          260
  Inventories                                     33,620       20,224
  Advance royalties                                3,309        4,629
  Prepaid expenses and other assets                5,760        8,419
                                                --------- ------------
       Total current assets                      177,312      170,562

PROPERTY, PLANT AND EQUIPMENT:
  Property, plant and equipment at cost          846,935      819,991
  Less accumulated depreciation, depletion and
   amortization                                 (399,316)    (383,284)
                                                --------- ------------
       Total property, plant and equipment, net  447,619      436,707

OTHER ASSETS:
  Advance royalties                               24,713       22,135
  Other long-term assets                           8,265        6,091
                                                --------- ------------
       Total other assets                         32,978       28,226
                                                --------- ------------
TOTAL ASSETS                                    $657,909     $635,495
                                                ========= ============

LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Accounts payable                               $60,933      $58,513
  Due to affiliates                                  976        1,289
  Accrued taxes other than income taxes           15,520       14,618
  Accrued payroll and related expenses            14,940       14,698
  Accrued interest                                 1,282        4,264
  Workers' compensation and pneumoconiosis
   benefits                                        7,729        7,704
  Current capital lease obligation                   371          339
  Other current liabilities                       12,165       13,964
  Current maturities, long-term debt              18,000       18,000
                                                --------- ------------
       Total current liabilities                 131,916      133,389

LONG-TERM LIABILITIES:
  Long-term debt, excluding current maturities   126,000      126,000
  Pneumoconiosis benefits                         27,160       26,315
  Accrued pension benefit                          7,010        6,191
  Workers' compensation                           42,276       38,488
  Asset retirement obligation                     48,301       47,825
  Long-term capital lease obligation               1,420        1,512
  Minority interest                                  757          839
  Other liabilities                                7,892        6,610
                                                --------- ------------
       Total long-term liabilities               260,816      253,780
                                                --------- ------------
       Total liabilities                         392,732      387,169
                                                --------- ------------

NON-CONTROLLING INTEREST IN CONSOLIDATED
 PARTNERSHIP:
  Affiliate                                     (303,819)    (303,823)
  Non-Affiliates                                 333,525      324,784
                                                --------- ------------
       Total non-controlling interest             29,706       20,961
                                                --------- ------------

COMMITMENTS AND CONTINGENCIES

PARTNERS' CAPITAL:
 Limited Partners - Common Unitholders
  59,863,000 units outstanding                   242,427      234,321
 Accumulated other comprehensive income/minimum
  pension liability                               (6,956)      (6,956)
                                                --------- ------------
  Total Partners' Capital                        235,471      227,365
                                                --------- ------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL         $657,909     $635,495
                                                ========= ============

             ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In thousands)
                             (Unaudited)

                                                   Three Months Ended
                                                       March 31,
                                                  --------------------
                                                    2007       2006
                                                  ---------   --------

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES        $68,456    $67,642
                                                  ---------   --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Property, plant and equipment:
       Capital expenditures                        (30,725)   (44,714)
       Changes in accounts payable and accrued
        liabilities                                 (5,803)      (567)
       Proceeds from sale of property, plant and
        equipment                                       53        418
  Purchase of marketable securities                      -     (4,735)
  Proceeds from marketable securities                  260     14,596
  Advance on Gibson rail project                    (1,754)         -
                                                  ---------   --------
       Net cash used in investing activities       (37,969)   (35,002)
                                                  ---------   --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payments on capital lease obligation                 (60)         -
  Contributions by consolidated partnership from
   affiliate non-controlling interest                    1          -
  Distributions paid by consolidated partnership
   to affiliate non-controlling interest                (5)        (4)
  Distributions paid by consolidated partnership
   to non-affiliate non-controlling interest       (11,432)    (9,788)
  Distributions paid to Partners                   (14,965)   (11,448)
                                                  ---------   --------
       Net cash used in financing activities       (26,461)   (21,240)
                                                  ---------   --------

NET CHANGE IN CASH AND CASH EQUIVALENTS              4,026     11,400

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD    37,069     32,072

                                                  ---------   --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD         $41,095    $43,472
                                                  =========   ========

SUPPLEMENTAL CASH FLOW INFORMATION:
CASH PAID FOR:
  Interest                                          $6,045     $6,864
                                                  =========   ========
  Income taxes to taxing authorities                  $650     $1,025
                                                  =========   ========

NON-CASH INVESTING ACTIVITY
  Purchase of property, plant and equipment         $6,337     $8,797
                                                  =========   ========

SOURCE: Alliance Holdings GP

Alliance Holdings GP, L.P.
Brian L. Cantrell, 918-295-7673

Copyright Business Wire 2007

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