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Alliance Holdings GP, L.P. Increases Quarterly Distribution by 5.2% to $0.555 Per Unit and Reports Record Quarterly Financial Results

TULSA, Okla., Apr 26, 2011 (BUSINESS WIRE) -- Alliance Holdings GP, L.P. (NASDAQ: AHGP) today announced that the Board of Directors of its general partner declared a quarterly cash distribution for the quarter ended March 31, 2011 (the "2011 Quarter") of $0.555 per unit, or an annualized rate of $2.22 per unit, which will be paid on May 20, 2011, to AHGP's unitholders of record as of the close of trading on May 13, 2011.

The announced distribution represents a 19.4% increase over the $0.465 per unit distribution (an annualized rate of $1.86 per unit) for the quarter ended March 31, 2010 (the "2010 Quarter") and an increase of 5.2% over the fourth quarter 2010 distribution of $0.5275 per unit (an annualized rate of $2.11 per unit).

The declared distribution is based on the distribution AHGP will receive from its ownership interests in Alliance Resource Partners, L.P. (NASDAQ: ARLP). ARLP today announced a quarterly distribution for the 2011 Quarter of $0.89 per unit, or $3.56 per unit on an annualized basis, payable on May 13, 2011 to all unitholders of record as of the close of trading on May 6, 2011. (See ARLP Press Release dated April 26, 2011.)

AHGP also reported record net income for the 2011 Quarter of $51.5 million, or $0.86 per basic and diluted limited partner unit, an increase of 25.5% compared to net income for the 2010 Quarter of $41.0 million, or $0.69 per basic and diluted limited partner unit. (For a discussion of net income presentation, please see the end of this release.)

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 $34.0 million, or $136.0 million on an annualized basis. AHGP's primary cash requirements are for working capital, distributions to its unitholders and general and administrative expenses, including for 2011 an estimated $4.0 million in general and administrative expenses. At March 31, 2011, AHGP had no borrowings outstanding under its revolving credit facility.

AHGP and ARLP will discuss their 2011 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) 804-6920 and provide pass code 34660224. International callers should dial (857) 350-1666 and provide the same pass code. Investors may also listen to the call via the "investor information" section of ARLP's website at www.arlp.com or AHGP's website at 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 56922239. International callers should dial (617) 801-6888 and provide the same pass code.

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 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: changes in competition in coal markets and the ARLP Partnership's ability to respond to such changes; changes in coal prices, which could affect the ARLP Partnership's operating results and cash flows; risks associated with the ARLP Partnership's expansion of its operations and properties; the impact of recent 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 the ARLP Partnership's 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 climate change and miner health and safety; the ARLP Partnership's productivity levels and margins it earns on coal sales; unexpected changes in raw material costs; unexpected changes in availability of skilled labor; the ARLP Partnership's ability to maintain satisfactory relations with its 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 the ARLP Partnership's 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 the ARLP Partnership's coal reserves; a loss or reduction of benefits from certain tax credits; AND difficulty obtaining commercial property insurance, and risks associated with the ARLP Partnership'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, 2010, filed on March 8, 2011 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,

2011 2010
SALES AND OPERATING REVENUES:
Coal sales $ 407,685 $ 364,159
Transportation revenues 9,300 9,705
Other sales and operating revenues 6,187 6,753
Total revenues 423,172 380,617
EXPENSES:
Operating expenses (excluding depreciation, depletion and amortization) 256,118 239,267
Transportation expenses 9,300 9,705
Outside coal purchases 3,789 1,842
General and administrative 13,273 11,203
Depreciation, depletion and amortization 37,862 36,296
Total operating expenses 320,342 298,313
INCOME FROM OPERATIONS 102,830 82,304
Interest expense (9,310 ) (7,595 )
Interest income 106 52
Other income (expense) 587 (150 )
INCOME BEFORE INCOME TAXES 94,213 74,611
INCOME TAX EXPENSE (BENEFIT) (228 ) 169
NET INCOME 94,441 74,442
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS (42,934 ) (33,414 )
NET INCOME ATTRIBUTABLE TO ALLIANCE HOLDINGS GP, L.P. ("NET INCOME OF AHGP") $ 51,507 $ 41,028
BASIC AND DILUTED NET INCOME OF AHGP PER LIMITED PARTNER UNIT $ 0.86 $ 0.69
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT $ 0.5275 $ 0.4525

WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING-BASIC AND DILUTED

59,863,000 59,863,000
ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except unit data)
(Unaudited)
ASSETS March 31, December 31,
2011 2010
CURRENT ASSETS:
Cash and cash equivalents $ 341,833 $ 342,237
Trade receivables 123,777 112,942
Other receivables 1,366 2,537
Due from affiliate - 1,635
Inventories 55,631 31,548
Advance royalties 4,812 4,812
Prepaid expenses and other assets 7,251 10,363
Total current assets 534,670 506,074
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost 1,652,197 1,598,130
Less accumulated depreciation, depletion and amortization (673,275 ) (648,883 )
Total property, plant and equipment, net 978,922 949,247
OTHER ASSETS:
Advance royalties 30,464 27,439
Other long-term assets 21,133 21,312
Total other assets 51,597 48,751
TOTAL ASSETS $ 1,565,189 $ 1,504,072
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 69,042 $ 63,934
Due to affiliates 627 573
Accrued taxes other than income taxes 17,084 13,916
Accrued payroll and related expenses 28,372 30,773
Accrued interest 7,673 2,491
Workers' compensation and pneumoconiosis benefits 8,358 8,518
Current capital lease obligations 817 295
Other current liabilities 14,950 16,780
Current maturities, long-term debt 18,000 18,000
Total current liabilities 164,923 155,280
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities 704,000 704,000
Pneumoconiosis benefits 46,353 45,039
Accrued pension benefit 13,029 13,296
Workers' compensation 63,235 59,796
Asset retirement obligations 56,567 56,045
Due to affiliates - 682
Long-term capital lease obligations 3,002 165
Other liabilities 3,582 12,549
Total long-term liabilities 889,768 891,572
Total liabilities 1,054,691 1,046,852
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL:
Alliance Holdings GP, L.P. ("AHGP") Partners' Capital:
Limited Partners - Common Unitholders 59,863,000 units outstanding 351,002 330,346
Accumulated other comprehensive loss (8,097 ) (8,138 )
Total AHGP Partners' Capital 342,905 322,208
Noncontrolling interests 167,593 135,012
Total Partners' Capital 510,498 457,220
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 1,565,189 $ 1,504,072
ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2011 2010
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES $ 120,315 $ 106,195
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures (63,782 ) (77,457 )
Changes in accounts payable and accrued liabilities (4,836 ) 6,048
Proceeds from sale of property, plant and equipment 54 101
Receipts of prior advances on Gibson rail project 528 562
Net cash used in investing activities (68,036 ) (70,746 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities - 33,250
Payments under revolving credit facilities - (10,000 )
Payments on capital lease obligations (166 ) (79 )
Net settlement of employee withholding taxes on vesting of ARLP Long-Term Incentive Plan (2,324 ) (1,265 )
Distributions paid by consolidated partnership to noncontrolling interests (18,615 ) (16,737 )
Distributions paid to Partners (31,578 ) (27,089 )
Net cash used in financing activities (52,683 ) (21,920 )
EFFECT OF CURRENCY TRANSLATION ON CASH - (282 )
NET CHANGE IN CASH AND CASH EQUIVALENTS (404 ) 13,247
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 342,237 24,361
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 341,833 $ 37,608

Presentation of Net Income

Consolidated net income includes earnings attributable to both AHGP and noncontrolling interests. Unless otherwise noted, any reference to net income in this release represents net income attributable to AHGP.

SOURCE: Alliance Holdings GP, L.P.

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