Skip to content

Press Release

Printer Friendly Version View printer-friendly version
<< Back
Alliance Holdings GP, L.P. Increases Quarterly Distribution by 4.7% to $0.61 Per Unit and Reports Record Quarterly Financial Results

TULSA, Okla., Oct 28, 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 September 30, 2011 (the "2011 Quarter") of $0.61 per unit, or an annualized rate of $2.44 per unit. The declared distribution will be paid on November 18, 2011 to AHGP's unitholders of record as of the close of trading on November 11, 2011.

The announced distribution represents a 22.0% increase over the $0.50 per unit distribution (an annualized rate of $2.00 per unit) for the quarter ended September 30, 2010 (the "2010 Quarter") and an increase of 4.7% over the second quarter 2011 distribution of $0.5825 per unit (an annualized rate of $2.33 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 $0.955 per unit, or $3.82 per unit on an annualized basis, payable on November 14, 2011 to all unitholders of record as of the close of trading on November 7, 2011. (See ARLP Press Release dated October 28, 2011.)

AHGP also reported record net income for the 2011 Quarter of $57.1 million, or $0.95 per basic and diluted limited partner unit, an increase of 44.6% compared to net income for the 2010 Quarter of $39.5 million, or $0.66 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 $37.4 million, or $149.5 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 $4.1 million in general and administrative expenses.

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 (800) 920-8624 and provide pass code 92749055. International callers should dial (617) 597-5430 and provide the same pass code. Investors may also listen to the call via the "investor information" section of ARLP's website at http://www.arlp.com or 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 39869026. 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 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: 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

September 30,

Nine Months Ended

September 30,

2011 2010 2011 2010
SALES AND OPERATING REVENUES:
Coal sales $ 473,683 $ 396,655 $ 1,323,851 $ 1,146,719
Transportation revenues 7,446 7,111 25,452 25,637
Other sales and operating revenues 6,528 6,590 19,381 18,866
Total revenues 487,657 410,356 1,368,684 1,191,222
EXPENSES:
Operating expenses (excluding depreciation, depletion and amortization) 294,771 264,388 835,006 750,357
Transportation expenses 7,446 7,111 25,452 25,637
Outside coal purchases 19,864 5,736 29,495 12,122
General and administrative 13,613 16,327 40,692 39,353
Depreciation, depletion and amortization 40,275 37,587 117,237 109,560
Total operating expenses 375,969 331,149 1,047,882 937,029
INCOME FROM OPERATIONS 111,688 79,207 320,802 254,193
Interest expense (8,782 ) (7,633 ) (27,248 ) (22,667 )
Interest income 84 47 279 148
Other income 360 460 1,340 614
INCOME BEFORE INCOME TAXES 103,350 72,081 295,173 232,288
INCOME TAX EXPENSE (BENEFIT) (317 ) 995 (221 ) 1,586
NET INCOME 103,667 71,086 295,394 230,702
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS (46,559 ) (31,602 ) (133,367 ) (103,956 )

NET INCOME ATTRIBUTABLE TO ALLIANCE HOLDINGS GP, L.P. ("NET INCOME OF AHGP")

$ 57,108 $ 39,484 $ 162,027 $ 126,746
BASIC AND DILUTED NET INCOME OF AHGP PER LIMITED PARTNER UNIT $ 0.95 $ 0.66 $ 2.71 $ 2.12
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT $ 0.5825 $ 0.4825 $ 1.665 $ 1.40

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)
ASSETS September 30, December 31,
2011 2010
CURRENT ASSETS:
Cash and cash equivalents $ 309,771 $ 342,237
Trade receivables 144,201 112,942
Other receivables 2,336 2,537
Due from affiliates - 1,635
Inventories 45,835 31,548
Advance royalties 4,812 4,812
Prepaid expenses and other assets 1,716 10,363
Total current assets 508,671 506,074
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost 1,838,660 1,598,130
Less accumulated depreciation, depletion and amortization (750,586 ) (648,883 )
Total property, plant and equipment, net 1,088,074 949,247
OTHER ASSETS:
Advance royalties 30,740 27,439
Equity investments in affiliates 37,119 -
Other long-term assets 17,231 21,312
Total other assets 85,090 48,751
TOTAL ASSETS $ 1,681,835 $ 1,504,072
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable $ 86,796 $ 63,934
Due to affiliates 514 573
Accrued taxes other than income taxes 18,094 13,916
Accrued payroll and related expenses 37,405 30,773
Accrued interest 6,644 2,491
Workers' compensation and pneumoconiosis benefits 8,521 8,518
Current capital lease obligations 724 295
Other current liabilities 18,529 16,780
Current maturities, long-term debt 18,000 18,000
Total current liabilities 195,227 155,280
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities 686,000 704,000
Pneumoconiosis benefits 49,106 45,039
Accrued pension benefit 10,489 13,296
Workers' compensation 70,619 59,796
Asset retirement obligations 56,655 56,045
Due to affiliates - 682
Long-term capital lease obligations 2,666 165
Other liabilities 3,568 12,549
Total long-term liabilities 879,103 891,572
Total liabilities 1,074,330 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 393,519 330,346
Accumulated other comprehensive loss (8,039 ) (8,138 )
Total AHGP Partners' Capital 385,480 322,208
Noncontrolling interests 222,025 135,012
Total Partners' Capital 607,505 457,220
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 1,681,835 $ 1,504,072
ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
2011 2010
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES $ 429,975 $ 391,213
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures (216,308 ) (233,773 )
Changes in accounts payable and accrued liabilities 511 (6,298 )
Proceeds from sale of property, plant and equipment 465 353
Purchase of equity investment in affiliate (35,700 ) -
Payment for acquisition of reserves (33,841 ) -
Receipts of prior advances on Gibson rail project 810 1,597
Net cash used in investing activities (284,063 ) (238,121 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities - 95,000
Payments under revolving credit facilities - (95,000 )
Payments on capital lease obligations (595 ) (242 )
Payment on long-term debt (18,000 ) (18,000 )

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 (57,787 ) (51,242 )
Distributions paid to Partners (99,672 ) (83,808 )
Net cash used in financing activities (178,378 ) (154,557 )
EFFECT OF CURRENCY TRANSLATION ON CASH - (274 )
NET CHANGE IN CASH AND CASH EQUIVALENTS (32,466 ) (1,739 )
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 342,237 24,361
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 309,771 $ 22,622

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