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Alliance Holdings GP, L.P. Increases Quarterly Distribution by 22.6% to $0.3525 Per Unit and Reports Second Quarter 2008 Financial Results

TULSA, Okla.--(BUSINESS WIRE)--July 28, 2008--Alliance Holdings GP, L.P. (NASDAQ: AHGP) today announced that the Board of Directors of AHGP's general partner (the "Board") declared a quarterly cash distribution for the quarter ended June 30, 2008 (the "2008 Quarter") of $0.3525 per unit (an annualized rate of $1.41 per unit), payable on August 19, 2008, to AHGP's unitholders of record as of the close of trading on August 12, 2008.

The announced distribution represents a 33.0% increase over the $0.265 per unit distribution (an annualized rate of $1.06 per unit) for the quarter ended June 30, 2007 (the "2007 Quarter") and an increase of 22.6% over the first quarter 2008 distribution of $0.2875 per unit (an annualized rate of $1.15 per unit) In addition, the Board will begin considering increases to unitholder cash distributions on a quarterly basis, instead of its historical practice of considering distribution increases 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 28, 2008, ARLP announced a quarterly distribution for the 2008 Quarter of $0.66 per unit, or $2.64 per unit on an annualized basis, which will be paid on August 14, 2008 to all ARLP unitholders of record as of the close of trading on August 7, 2008. (See ARLP Press Release dated July 28, 2008.)

"Robust coal market fundamentals coupled with ARLP's strong performance and positive growth outlook have again allowed us to provide our unitholders with an attractive increase to quarterly cash distributions," said Joseph W. Craft, III, President and Chief Executive Officer. "Assuming ARLP can meet its goal of increasing cash distributions by 6.0% to 8.0% each quarter through 2010, AHGP unitholders could see quarterly distributions more than double during the same period as a result of the accelerated cash flow growth achievable through our ownership interests in ARLP."

AHGP also reported net income for the 2008 Quarter of $21.7 million, compared to net income of $23.8 million for the 2007 Quarter. Basic and diluted net income per limited partner unit for the 2008 Quarter decreased to $0.36 per unit, compared to $0.40 per basic and diluted limited partner unit for the 2007 Quarter.

For the six months ended June 30, 2008 (the "2008 Period"), AHGP's net income decreased to $44.7 million compared to $46.9 million for the six months ended June 30, 2007 (the "2007 Period"). Basic and diluted net income per limited partner unit for the 2008 Period decreased to $0.75 per unit, compared to $0.78 per basic and diluted limited partner unit for the 2007 Period.

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 $21.9 million, or $87.6 million on an annualized basis. AHGP's primary cash requirements are for general and administrative expenses, including for 2008 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, 2008, AHGP had no borrowings outstanding under its revolving credit facility.

AHGP and ARLP will discuss their 2008 Quarter financial results during a joint conference call scheduled for today at 10:00 a.m. Eastern. To participate in the conference call, dial (866) 356-4281 and provide pass code 38911440. International callers should dial (617) 597-5395. Investors may also listen to the call via the "investor information" section of AHGP's website at http://www.ahgp.com.

An audio replay of the conference call will be available for approximately one week. To access the audio replay, dial (888) 286-8010 and provide pass code 86251739. International callers should dial (617) 801-6888.

This announcement is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, AHGP's distributions to foreign investors are subject to federal income tax withholding at the highest applicable tax rate.

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, other business combinations, or dispositions 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 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 to 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 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; risk associated with major mine-related accidents, such as mine fires or interruptions; results of litigation, including claims not yet asserted; difficulty maintaining ARLP's surety bonds for mine reclamation 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 and interpretations thereof, including but not limited to issues related to climate change; the impact from provisions of The Energy Policy Act of 2005; the impact from provisions of or changes in enforcement activities associated with the Mine Improvement and New Emergency Response Act of 2006 as well as subsequent federal and state legislation or regulations; replacement of coal reserves; a loss or reduction of direct or indirect benefits from certain state and federal tax credits; difficulty obtaining commercial property insurance, and risks associated with ARLP's 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, 2007, filed on March 7, 2008 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,
                   ------------------------- -------------------------
                       2008         2007         2008         2007
                   ------------ ------------ ------------ ------------

SALES AND
 OPERATING
 REVENUES:
   Coal sales      $   261,567  $   242,364  $   530,725  $   481,234
   Transportation
    revenues            11,007       10,606       21,627       19,285
   Other sales and
    operating
    revenues             3,546       10,238        7,259       19,716
                   ------------ ------------ ------------ ------------
      Total
       revenues        276,120      263,208      559,611      520,235
                   ------------ ------------ ------------ ------------

EXPENSES:
   Operating
    expenses           191,363      177,968      383,981      344,957
   Transportation
    expenses            11,007       10,606       21,627       19,285
   Outside
    purchases            4,552        7,607        7,455       13,873
   General and
    administrative      12,612        8,794       21,928       17,347
   Depreciation,
    depletion and
    amortization        25,600       21,425       48,894       41,218
   Gain on sale of
    coal reserves       (5,159)           -       (5,159)           -
   Net gain from
    insurance
    settlement and
    other               (2,790)     (11,491)      (2,790)     (11,491)
                   ------------ ------------ ------------ ------------
      Total
       operating
       expenses        237,185      214,909      475,936      425,189

INCOME FROM
 OPERATIONS             38,935       48,299       83,675       95,046
   Interest
    expense             (3,250)      (2,842)      (6,238)      (5,663)
   Interest income         209          576          315        1,115
   Other income            250          167          467        1,068
                   ------------ ------------ ------------ ------------
INCOME BEFORE
 INCOME TAXES,
 MINORITY INTEREST
 AND NON-
 CONTROLLING
 INTEREST               36,144       46,200       78,219       91,566
INCOME TAX EXPENSE
 (BENEFIT)                 (70)         669         (725)       1,244
                   ------------ ------------ ------------ ------------
INCOME BEFORE
 MINORITY INTEREST
 AND NON-
 CONTROLLING
 INTEREST               36,214       45,531       78,944       90,322
MINORITY INTEREST
 (EXPENSE)                (102)          85         (243)         167
                   ------------ ------------ ------------ ------------
INCOME BEFORE NON-
 CONTROLLING
 INTEREST               36,112       45,616       78,701       90,489
   Affiliate non-
    controlling
    interest in
    consolidated
    partnership's
    net income              (5)          (7)         (12)         (15)
   Non-affiliate
    non-
    controlling
    interest in
    consolidated
    partnership's
    net income         (14,406)     (21,788)     (33,963)     (43,582)
                   ------------ ------------ ------------ ------------
NET INCOME         $    21,701  $    23,821  $    44,726  $    46,892
                   ============ ============ ============ ============

BASIC AND DILUTED
 NET INCOME PER
 LIMITED PARTNER
 UNIT              $      0.36  $      0.40  $      0.75  $      0.78
                   ============ ============ ============ ============

DISTRIBUTIONS PAID
 PER LIMITED
 PARTNER UNIT      $    0.2875  $      0.25  $     0.575  $      0.50
                   ============ ============ ============ ============

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

             ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

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

                                               June 30,   December 31,
ASSETS                                           2008         2007
                                              ----------- ------------

CURRENT ASSETS:
   Cash and cash equivalents                  $  362,354  $     1,783
   Trade receivables                              81,028       92,667
   Other receivables                               5,180        3,399
   Due from affiliates                               158            -
   Inventories                                    28,483       26,100
   Advance royalties                               4,452        4,452
   Prepaid expenses and other assets               3,968        9,281
                                              ----------- ------------
      Total current assets                       485,623      137,682

PROPERTY, PLANT AND EQUIPMENT:
   Property, plant and equipment, at cost      1,004,012      948,210
   Less accumulated depreciation, depletion
    and amortization                            (453,337)    (427,572)
                                              ----------- ------------
      Total property, plant and equipment,
       net                                       550,675      520,638

OTHER ASSETS:
   Advance royalties                              21,700       25,974
   Other long-term assets                         16,702       18,194
                                              ----------- ------------
      Total other assets                          38,402       44,168
                                              ----------- ------------
TOTAL ASSETS                                  $1,074,700  $   702,488
                                              =========== ============

LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:
   Accounts payable                           $   54,797  $    47,034
   Due to affiliates                                   -        1,343
   Accrued taxes other than income taxes          12,421       11,091
   Accrued payroll and related expenses           17,376       15,180
   Accrued interest                                4,017        3,826
   Workers' compensation and pneumoconiosis
    benefits                                       8,038        8,124
   Current capital lease obligation                  365          377
   Other current liabilities                       9,110        6,754
   Current maturities, long-term debt             18,000       18,000
                                              ----------- ------------
      Total current liabilities                  124,124      111,729

LONG-TERM LIABILITIES:
   Long-term debt, excluding current
    maturities                                   479,500      136,000
   Pneumoconiosis benefits                        30,403       29,392
   Workers' compensation                          46,860       44,150
   Asset retirement obligations                   55,124       54,903
   Due to affiliates                                 105            -
   Long-term capital lease obligation                962        1,135
   Minority interest                                 750          507
   Other liabilities                               9,740        7,333
                                              ----------- ------------
      Total long-term liabilities                623,444      273,420
                                              ----------- ------------
      Total liabilities                          747,568      385,149
                                              ----------- ------------

NON-CONTROLLING INTEREST IN CONSOLIDATED
 PARTNERSHIP:
   Affiliate                                    (303,815)    (303,816)
   Non-Affiliates                                367,897      358,601
                                              ----------- ------------
      Total non-controlling interest              64,082       54,785
                                              ----------- ------------

COMMITMENTS AND CONTINGENCIES

PARTNERS' CAPITAL:
   Limited Partners - Common Unitholders
    59,863,000 units outstanding,
    respectively                                 262,941      262,445
   Accumulated other comprehensive income            109          109
                                              ----------- ------------
      Total Partners' Capital                    263,050      262,554
                                              ----------- ------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL       $1,074,700  $   702,488
                                              =========== ============

             ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In thousands)
                             (Unaudited)
                                                    Six Months Ended
                                                        June 30,
                                                  --------------------
                                                    2008       2007
                                                  --------- ----------

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES       $149,627  $ 139,877
                                                  --------- ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Property, plant and equipment:
      Capital expenditures                         (70,950)   (69,170)
      Changes in accounts payable and accrued
       liabilities                                   3,356     (7,315)
      Proceeds from sale of property, plant and
       equipment                                       567      3,048
      Proceeds from the sale of coal reserves        7,159          -
   Proceeds from insurance settlement for
    replacement assets                                   -      2,511
   Proceeds from marketable securities                   -        260
   Payment for acquisition of coal reserves and
    other assets                                   (13,300)   (53,309)
   Advances on Gibson rail project                       -     (5,888)
   Receipts of prior advances on Gibson rail
    project                                          1,023          -
                                                  --------- ----------
      Net cash used in investing activities        (72,145)  (129,863)
                                                  --------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from long-term debt                    350,000          -
   Borrowings under revolving credit facilities     88,850     23,585
   Payments under revolving credit facilities      (95,350)         -
   Payments on capital lease obligation               (185)      (151)
   Payment of debt issuance costs                     (830)         -
   Contributions to consolidated partnership from
    affiliate non-controlling interest                   1          1
   Distributions paid by consolidated partnership
    to affiliate non-controlling interest              (12)       (11)
   Distributions paid by consolidated partnership
    to non-affiliate non-controlling interest      (24,964)   (22,905)
   Distributions paid to Partners                  (34,421)   (29,931)
                                                  --------- ----------
      Net cash provided by (used in) financing
       activities                                  283,089    (29,412)
                                                  --------- ----------

NET CHANGE IN CASH AND CASH EQUIVALENTS            360,571    (19,398)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD     1,783     37,069

                                                  --------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD        $362,354  $  17,671
                                                  ========= ==========

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

SOURCE: Alliance Holdings GP, L.P.