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Alliance Holdings GP, L.P. Reports Increased Third Quarter 2007 Financial Results; Declares Quarterly Distribution of $0.265 Per Unit
TULSA, Okla., Oct 29, 2007 (BUSINESS WIRE) -- Alliance Holdings GP, L.P. (NASDAQ: AHGP) today reported net income for the quarter ended September 30, 2007 (the "2007 Quarter") of $20.5 million, or $0.34 per basic and diluted limited partner unit, an increase of 6.0% compared to net income of $19.4 million, or $0.32 per basic and diluted limited partner unit, for the quarter ended September 30, 2006 (the "2006 Quarter").

AHGP's net income increased to $67.4 million for the nine months ended September 30, 2007 (the "2007 Period"), compared to $62.6 million for the nine months ended September 30, 2006 (the "2006 Period"). Basic and diluted net income per limited partner unit for the 2007 Period decreased to $1.13 per unit, compared to $1.16 per basic and diluted limited partner unit for the 2006 Period. This decrease in basic and diluted net income per limited partner unit for the 2007 Period 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 November 19, 2007, to AHGP's unitholders of record as of November 12, 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 October 29, 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 November 14, 2007 to all ARLP unitholders of record as of the close of trading on November 7, 2007. (See ARLP Press Release dated October 29, 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 $2.4 million in incremental general and administrative expenses associated with being a publicly traded limited partnership, working capital requirements and distributions to its unitholders. At September 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 10:00 a.m. Eastern. To participate, dial 866-825-3308 and provide pass code 11584750. International callers should dial 617-213-8062. 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       Nine Months Ended
                            September 30,           September 30,
                       ----------------------- -----------------------
                          2007        2006        2007        2006
                       ----------- ----------- ----------- -----------

SALES AND OPERATING
 REVENUES:
  Coal sales             $242,412    $228,802    $723,646    $652,527
  Transportation
   revenues                 9,138      10,966      28,423      29,956
  Other sales and
   operating revenues       8,875       4,847      28,591      21,691
                       ----------- ----------- ----------- -----------
       Total revenues     260,425     244,615     780,660     704,174
                       ----------- ----------- ----------- -----------

EXPENSES:
  Operating expenses      176,857     162,209     521,814     455,096
  Transportation
   expenses                 9,138      10,966      28,423      29,956
  Outside purchases         3,737       6,020      17,610      14,251
  General and
   administrative           7,716       7,859      25,063      22,350
  Depreciation,
   depletion and
   amortization            21,804      17,276      63,022      48,291
  Net gain from
   insurance
   settlement                   -           -     (11,491)          -
                       ----------- ----------- ----------- -----------
       Total operating
        expenses          219,252     204,330     644,441     569,944
                       ----------- ----------- ----------- -----------

INCOME FROM OPERATIONS     41,173      40,285     136,219     134,230
 Interest expense          (3,039)     (2,883)     (8,702)     (9,475)
 Interest income              280         716       1,395       2,532
 Other income                 121         216       1,189         678
                       ----------- ----------- ----------- -----------
INCOME BEFORE INCOME
 TAXES, CUMULATIVE
 EFFECT OF ACCOUNTING
 CHANGE, MINORITY
 INTEREST AND NON-
 CONTROLLING INTEREST      38,535      38,334     130,101     127,965
INCOME TAX EXPENSE            550         352       1,794       2,228
                       ----------- ----------- ----------- -----------
INCOME BEFORE
 CUMULATIVE EFFECT OF
 ACCOUNTING CHANGE,
 MINORITY INTEREST AND
 NON-CONTROLLING
 INTEREST                  37,985      37,982     128,307     125,737
CUMULATIVE EFFECT OF
 ACCOUNTING CHANGE              -           -           -         112
MINORITY INTEREST              63          53         230          96
                       ----------- ----------- ----------- -----------
INCOME BEFORE NON-
 CONTROLLING INTEREST      38,048      38,035     128,537     125,945
  Affiliate non-
   controlling
   interest in
   consolidated
   partnership's net
   income                      (7)         (7)        (22)        (23)
  Non-affiliate non-
   controlling
   interest in
   consolidated
   partnership's net
   income                 (17,534)    (18,677)    (61,116)    (63,300)
                       ----------- ----------- ----------- -----------
NET INCOME                $20,507     $19,351     $67,399     $62,622
                       =========== =========== =========== ===========

BASIC AND DILUTED NET
 INCOME PER LIMITED
 PARTNER UNIT               $0.34       $0.32       $1.13       $1.16
                       =========== =========== =========== ===========

DISTRIBUTIONS PAID PER
 LIMITED PARTNER UNIT      $0.265    $0.12285      $0.765    $0.12285
                       =========== =========== =========== ===========

WEIGHTED AVERAGE
 NUMBER OF UNITS
OUTSTANDING-BASIC AND
 DILUTED               59,863,000  59,863,000  59,863,000  53,956,407
                       =========== =========== =========== ===========

             ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

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

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

CURRENT ASSETS:
  Cash and cash equivalents                    $19,523        $37,069
  Trade receivables, net                        89,300         96,558
  Other receivables                              2,256          3,378
  Due from affiliates                                -             25
  Marketable securities                              -            260
  Inventories                                   24,998         20,224
  Advance royalties                              3,316          4,629
  Prepaid expenses and other assets              1,276          8,419
                                          -------------  -------------
       Total current assets                    140,669        170,562

PROPERTY, PLANT AND EQUIPMENT:
  Property, plant and equipment, at cost       922,159        819,991
  Less accumulated depreciation,
   depletion and amortization                 (406,954)      (383,284)
                                          -------------  -------------
       Total property, plant and
        equipment, net                         515,205        436,707

OTHER ASSETS:
  Advance royalties                             27,308         22,135
  Other long-term assets                        14,753          6,091
                                          -------------  -------------
       Total other assets                       42,061         28,226
                                          -------------  -------------
TOTAL ASSETS                                  $697,935       $635,495
                                          =============  =============

LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
  Accounts payable                             $55,406        $58,513
  Due to affiliates                              1,064          1,289
  Accrued taxes other than income taxes         12,935         14,618
  Accrued payroll and related expenses          17,405         14,698
  Accrued interest                               1,162          4,264
  Workers' compensation and
   pneumoconiosis benefits                       7,715          7,704
  Current capital lease obligation                 375            339
  Other current liabilities                      9,774         13,964
  Current maturities, long-term debt            18,000         18,000
                                          -------------  -------------
       Total current liabilities               123,836        133,389

LONG-TERM LIABILITIES:
  Long-term debt, excluding current
   maturities                                  135,000        126,000
  Pneumoconiosis benefits                       28,691         26,315
  Accrued pension benefit                        4,053          6,191
  Workers' compensation                         51,752         38,488
  Asset retirement obligations                  49,110         47,825
  Long-term capital lease obligation             1,232          1,512
  Minority interest                                609            839
  Other liabilities                              7,276          6,610
                                          -------------  -------------
       Total long-term liabilities             277,723        253,780
                                          -------------  -------------
       Total liabilities                       401,559        387,169
                                          -------------  -------------

NON-CONTROLLING INTEREST IN CONSOLIDATED
 PARTNERSHIP:
  Affiliate                                   (303,816)      (303,823)
  Non-Affiliates                               351,029        324,784
                                          -------------  -------------
       Total non-controlling interest           47,213         20,961
                                          -------------  -------------

COMMITMENTS AND CONTINGENCIES

PARTNERS' CAPITAL:
 Limited Partners - Common Unitholders
  59,863,000 units outstanding                 255,925        234,321
 Accumulated other comprehensive income         (6,762)        (6,956)
                                          -------------  -------------
  Total Partners' Capital                      249,163        227,365
                                          -------------  -------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL       $697,935       $635,495
                                          =============  =============

             ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

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

                                                  Nine Months Ended
                                                    September 30,
                                               -----------------------
                                                  2007        2006
                                               ----------- -----------

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES      $209,422    $183,158
                                               ----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Property, plant and equipment:
      Capital expenditures                        (95,017)   (141,963)
      Changes in accounts payable and accrued
       liabilities                                 (9,297)     (1,198)
      Proceeds from sale of property, plant
       and equipment                                5,859         599
  Proceeds from insurance settlement for
   replacement assets                               2,511           -
  Purchase of marketable securities                     -     (19,188)
  Proceeds from marketable securities                 260      68,343
  Payment for acquisition of business                   -      (2,318)
  Payment for acquisition of coal reserves and
   other assets                                   (53,309)          -
  Advances on Gibson rail project                  (5,912)          -
                                               ----------- -----------
     Net cash used in investing activities       (154,905)    (95,725)
                                               ----------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Payment on long-term debt                       (18,000)    (18,000)
  Borrowings under revolving credit facilities    130,525         500
  Payments under revolving credit facilities     (103,525)          -
  Payments on capital lease obligation               (244)          -
  Payment of debt issuance cost                      (194)       (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
                                                      (16)        (13)
  Distributions paid by consolidated
   partnership to non-affiliate non-
   controlling interest
                                                  (34,815)    (30,201)
  Distributions paid to Partners                  (45,795)   (326,439)
  Net proceeds from issuance of common units
   in initial public offering                           -     291,300
                                               ----------- -----------
     Net cash used in financing activities        (72,063)    (82,543)
                                               ----------- -----------

NET CHANGE IN CASH AND CASH EQUIVALENTS           (17,546)      4,890

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

                                               ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD        $19,523     $36,962
                                               =========== ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
  CASH PAID FOR:
    Interest                                      $12,587     $13,715
                                               =========== ===========
    Income taxes                                   $2,175      $2,545
                                               =========== ===========

  NON-CASH INVESTING ACTIVITY:
    Purchase of property, plant and equipment      $2,843      $8,166
                                               =========== ===========

SOURCE: Alliance Holdings GP, L.P.

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