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Alliance Holdings GP, L.P. Reports Strong Second Quarter 2007 Financial Results; and Declares Quarterly Distribution of $0.265 per Unit
TULSA, Okla.--(BUSINESS WIRE)--Alliance Holdings GP, L.P. (NASDAQ: AHGP - ) today reported net income for the quarter ended June 30, 2007 (the "2007 Quarter") of $23.8 million, or $0.40 per basic and diluted limited partner unit, an increase of 16.8% compared to net income of $20.4 million, or $0.37 per basic and diluted limited partner unit, for the quarter ended June 30, 2006 (the "2006 Quarter").

AHGP's net income increased to $46.9 million for the six months ended June 30, 2007 (the "2007 Period"), compared to $43.3 million for the six months ended June 30, 2006 (the "2006 Period"). Basic and diluted net income per limited partner unit for the 2007 Period decreased to $0.78 per unit, compared to $0.85 per basic and diluted limited partner unit for the 2006 Period. 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 AHGP's general partner (the "Board") also declared a quarterly cash distribution for the 2007 Quarter of $0.265 per unit (an annualized rate of $1.06 per unit), payable on August 17, 2007, to AHGP's unitholders of record as of August 10, 2007. This distribution represents a 6.0% increase over the cash distribution paid for the first quarter of 2007 and a 43.2% increase over the expected initial quarterly distribution reflected in AHGP's Prospectus in connection with its initial public offering on May 15, 2006. 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 July 30, 2007, ARLP announced a quarterly distribution for the 2007 Quarter of $0.56 per unit, or $2.24 per unit on an annualized basis, which will be paid on August 14, 2007 to all ARLP unitholders of record as of the close of trading on August 7, 2007. (See ARLP Press Release dated July 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 $16.7 million, or $66.7 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 June 30, 2007, AHGP had no borrowings outstanding under its revolving credit facility.

A conference call regarding AHGP's 2007 Quarter financial results is scheduled for today at 11 a.m. Eastern. To participate, dial (866) 203-3206 and provide passcode 73565583. International callers should dial (617) 213-8848. Investors may also listen to the call via the "investor information" section of AHGP's website at http://www.ahgp.com."

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         Six Months Ended
                           June 30,                  June 30,
                   ------------------------- -------------------------
                       2007         2006         2007         2006
                   ------------ ------------ ------------ ------------

Tons sold                6,279        5,570       12,457       11,672
Tons produced            5,638        5,802       12,195       12,050

SALES AND
 OPERATING
 REVENUES:
  Coal sales       $   242,364  $   205,513  $   481,234  $   423,725
  Transportation
   revenues             10,606        8,956       19,285       18,990
  Other sales and
   operating
   revenues             10,238        6,770       19,716       16,844
                   ------------ ------------ ------------ ------------
       Total
        revenues       263,208      221,239      520,235      459,559
                   ------------ ------------ ------------ ------------

EXPENSES:
  Operating
   expenses            177,968      140,877      344,957      292,887
  Transportation
   expenses             10,606        8,956       19,285       18,990
  Outside
   purchases             7,607        4,705       13,873        8,231
  General and
   administrative        8,794        7,333       17,347       14,491
  Depreciation,
   depletion and
   amortization         21,425       16,290       41,218       31,015
  Net gain from
   insurance
   settlement          (11,491)           -      (11,491)           -
                   ------------ ------------ ------------ ------------
       Total
        operating
        expenses       214,909      178,161      425,189      365,614
                   ------------ ------------ ------------ ------------

INCOME FROM
 OPERATIONS             48,299       43,078       95,046       93,945

 Interest expense       (2,842)      (3,443)      (5,663)      (6,592)
 Interest income           576          909        1,115        1,816
 Other income              167          191        1,068          462
                   ------------ ------------ ------------ ------------
INCOME BEFORE
 INCOME TAXES,
 CUMULATIVE EFFECT
 OF ACCOUNTING
 CHANGE, MINORITY
 INTEREST AND NON-
 CONTROLLING
 INTEREST               46,200       40,735       91,566       89,631
INCOME TAX EXPENSE         669          634        1,244        1,876
                   ------------ ------------ ------------ ------------
INCOME BEFORE
 CUMULATIVE EFFECT
 OF ACCOUNTING
 CHANGE, MINORITY
 INTEREST AND NON-
 CONTROLLING
 INTEREST               45,531       40,101       90,322       87,755
CUMULATIVE EFFECT
 OF ACCOUNTING
 CHANGE                      -            -            -          112
MINORITY INTEREST           85           43          167           43
                   ------------ ------------ ------------ ------------
INCOME BEFORE NON-
 CONTROLLING
 INTEREST               45,616       40,144       90,489       87,910
  Affiliate non-
   controlling
   interest in
   consolidated
   partnership's
   net income               (7)          (7)         (15)         (16)
  Non-affiliate
   non-controlling
   interest in
   consolidated
   partnership's
   net income          (21,788)     (19,748)     (43,582)     (44,623)
                   ------------ ------------ ------------ ------------
NET INCOME         $    23,821  $    20,389  $    46,892  $    43,271
                   ============ ============ ============ ============

BASIC AND DILUTED
 NET INCOME PER
 LIMITED PARTNER
 UNIT              $      0.40  $      0.37  $      0.78  $      0.85
                   ============ ============ ============ ============

DISTRIBUTIONS PAID
 PER LIMITED
 PARTNER UNIT      $      0.25  $         -  $      0.50  $         -
                   ============ ============ ============ ============

WEIGHTED AVERAGE
 NUMBER OF UNITS
OUTSTANDING-BASIC
 AND DILUTED        59,863,000   54,505,857   59,863,000   50,954,160
                   ============ ============ ============ ============
             ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

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

                                             June 30,    December 31,
ASSETS                                         2007          2006
                                           ------------  -------------

CURRENT ASSETS:
  Cash and cash equivalents                 $   17,671      $  37,069
  Trade receivables, net                        86,511         96,558
  Other receivables                              3,236          3,378
  Due from affiliates                                -             25
  Marketable securities                              -            260
  Inventories                                   27,105         20,224
  Advance royalties                              3,316          4,629
  Prepaid expenses and other assets              4,307          8,419
                                           ------------  -------------
       Total current assets                    142,146        170,562

PROPERTY, PLANT AND EQUIPMENT:
  Property, plant and equipment, at cost       899,008        819,991
  Less accumulated depreciation, depletion
   and amortization                           (387,923)      (383,284)
                                           ------------  -------------
       Total property, plant and
        equipment, net                         511,085        436,707

OTHER ASSETS:
  Advance royalties                             28,169         22,135
  Other long-term assets                        14,798          6,091
                                           ------------  -------------
       Total other assets                       42,967         28,226
                                           ------------  -------------
TOTAL ASSETS                                $  696,198      $ 635,495
                                           ============  =============

LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Accounts payable                          $   54,111      $  58,513
  Due to affiliates                                614          1,289
  Accrued taxes other than income taxes         14,840         14,618
  Accrued payroll and related expenses          13,585         14,698
  Accrued interest                               4,362          4,264
  Workers' compensation and pneumoconiosis
   benefits                                      7,723          7,704
  Current capital lease obligation                 373            339
  Other current liabilities                      7,494         13,964
  Current maturities, long-term debt            18,585         18,000
                                           ------------  -------------
       Total current liabilities               121,687        133,389

LONG-TERM LIABLITIES:
  Long-term debt, excluding current
   maturities                                  149,000        126,000
  Pneumoconiosis benefits                       27,884         26,315
  Accrued pension benefit                        7,699          6,191
  Workers' compensation                         46,021         38,488
  Asset retirement obligations                  48,682         47,825
  Long-term capital lease obligation             1,327          1,512
  Minority interest                                672            839
  Other liabilities                              7,969          6,610
                                           ------------  -------------
       Total long-term liabilities             289,254        253,780
                                           ------------  -------------
       Total liabilities                       410,941        387,169
                                           ------------  -------------

NON-CONTROLLING INTEREST IN CONSOLIDATED
 PARTNERSHIP:
  Affiliate                                   (303,817)      (303,823)
  Non-Affiliates                               344,619        324,784
                                           ------------  -------------
       Total non-controlling interest           40,802         20,961
                                           ------------  -------------

COMMITMENTS AND CONTINGENCIES

PARTNERS' CAPITAL:
 Limited Partners - Common Unitholders
  59,863,000 units outstanding                 251,282        234,321
 Accumulated other comprehensive income         (6,827)        (6,956)
                                           ------------  -------------
  Total Partners' Capital                      244,455        227,365
                                           ------------  -------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL     $  696,198      $ 635,495
                                           ============  =============
             ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

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

                                                   Six Months Ended
                                                       June 30,
                                                 ---------------------
                                                    2007       2006
                                                 ---------- ----------

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES      $ 139,877  $ 128,303
                                                 ---------- ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Property, plant and equipment:
       Capital expenditures                        (69,170)   (92,017)
       Changes in accounts payable and accrued
        liabilities                                 (7,315)    (1,786)
       Proceeds from sale of property, plant and
        equipment                                    3,048        510
  Proceeds from insurance settlement for
   replacement assets                                2,511          -
  Purchase of marketable securities                      -    (19,187)
  Proceeds from marketable securities                  260     44,018
  Payment for acquisition of business                    -     (1,648)
  Payment for acquisition of coal reserves and
   other assets                                    (53,309)         -
  Advances on Gibson rail project                   (5,888)         -
                                                 ---------- ----------
       Net cash used in investing activities      (129,863)   (70,110)
                                                 ---------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings under revolving credit facilities      23,585        500
  Payments on capital lease obligation                (151)         -
  Payment of debt issuance cost                          -       (690)
  Equity contribution received by Mid-America
   Carbonates, LLC                                       -      1,000
  Contributions to consolidated partnership from
   affiliate non-controlling interest                    1          -
  Distributions paid by consolidated partnership
   to affiliate non-controlling interest               (11)        (8)
  Distributions paid by consolidated partnership
   to non-affiliate non-controlling interest       (22,905)   (19,567)
  Distributions paid to Partners                   (29,931)  (314,198)
  Net proceeds from issuance of common units in
   initial public offering                               -    291,300
                                                 ---------- ----------
       Net cash used in financing activities       (29,412)   (41,663)
                                                 ---------- ----------

NET CHANGE IN CASH AND CASH EQUIVALENTS            (19,398)    16,530

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

                                                 ---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD       $  17,671  $  48,602
                                                 ========== ==========

SUPPLEMENTAL CASH FLOW INFORMATION:
  CASH PAID FOR:
    Interest                                     $   6,077  $   6,934
                                                 ========== ==========
    Income taxes                                 $   2,175  $   2,545
                                                 ========== ==========

  NON-CASH INVESTING ACTIVITY:
    Purchase of property, plant and equipment    $   4,824  $   7,577
                                                 ========== ==========


Contact:

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