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Alliance Holdings GP, L.P. Increases Quarterly Distribution by 4.7% to $0.6675 Per Unit and Reports Quarterly Financial Results

TULSA, Okla.--(BUSINESS WIRE)--Apr. 30, 2012-- 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, 2012 (the "2012 Quarter") of $0.6675 per unit, or an annualized rate of $2.67 per unit. The declared distribution will be paid on May 18, 2012 to AHGP’s unitholders of record as of the close of trading on May 11, 2012.

The announced distribution represents a 20.3% increase over the $0.555 per unit distribution (an annualized rate of $2.22 per unit) for the quarter ended March 31, 2011 (the "2011 Quarter") and an increase of 4.7% over the fourth quarter 2011 distribution of $0.6375 per unit (an annualized rate of $2.55 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 2012 Quarter of $1.025 per unit, or $4.10 per unit on an annualized basis, payable on May 15, 2012 to all unitholders of record as of the close of trading on May 8, 2012. (See ARLP Press Release dated April 30, 2012.)

AHGP also reported net income for the 2012 Quarter of $49.3 million, or $0.82 per basic and diluted limited partner unit, a decrease of 4.3% compared to net income for the 2011 Quarter of $51.5 million, or $0.86 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 $41.1 million, or $164.4 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 2012 an estimated $4.50 million to $4.75 million in general and administrative expenses.

AHGP and ARLP will discuss their 2012 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) 711-8198 and provide pass code 37030595. International callers should dial (617) 597-5327 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 18917126. 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 Alliance Resource Partners, L.P. (NASDAQ: 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 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 air and water quality and miner health and safety; the ARLP Partnership's productivity levels and margins earned on its 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; difficulty obtaining commercial property insurance, and risks associated with the ARLP Partnership's participation (excluding any applicable deductible) in the commercial insurance property program; and difficulty in making accurate assumptions and projections regarding future revenues and costs associated with equity investments in companies we do not control.

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, 2011, filed on February 28, 2012 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,
  2012       2011  
 
SALES AND OPERATING REVENUES:
Coal sales $ 429,599 $ 407,685
Transportation revenues 6,585 9,300
Other sales and operating revenues   7,308     6,187  
Total revenues   443,492     423,172  
 
EXPENSES:
Operating expenses (excluding depreciation, depletion and amortization) 273,515 256,118
Transportation expenses 6,585 9,300
Outside coal purchases 14,181 3,789
General and administrative 14,677 13,273
Depreciation, depletion and amortization   43,033     37,862  
Total operating expenses 351,991 320,342
 
INCOME FROM OPERATIONS 91,501 102,830
Interest expense (5,912 ) (9,310 )
Interest income 93 106
Equity in loss of affiliates, net (3,778 ) -
Other income   215     587  
INCOME BEFORE INCOME TAXES 82,119 94,213
INCOME TAX BENEFIT   (367 )   (228 )
NET INCOME 82,486 94,441
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS   (33,172 )   (42,934 )
NET INCOME ATTRIBUTABLE TO ALLIANCE HOLDINGS GP, L.P.
("NET INCOME OF AHGP") $ 49,314   $ 51,507  
 
BASIC AND DILUTED NET INCOME OF AHGP PER LIMITED PARTNER UNIT $ 0.82   $ 0.86  
 
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT $ 0.6375   $ 0.5275  
 
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,
  2012     2011  
 
CURRENT ASSETS:
Cash and cash equivalents $ 192,065 $ 281,469
Trade receivables 119,608 128,643
Other receivables 564 3,525
Due from affiliates 3,008 -
Inventories 73,503 33,837
Advance royalties 7,559 7,560
Prepaid expenses and other assets   8,932     12,022  
Total current assets 405,239 467,056
 
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost 2,087,996 1,974,520
Less accumulated depreciation, depletion and amortization   (826,137 )   (793,200 )
Total property, plant and equipment, net 1,261,859 1,181,320
 
OTHER ASSETS:
Advance royalties 30,420 27,916
Due from affiliates 776 -
Equity investments in affiliates 41,652 40,118
Other long-term assets   16,537     18,067  
Total other assets   89,385     86,101  
TOTAL ASSETS $ 1,756,483   $ 1,734,477  
 
LIABILITIES AND PARTNERS' CAPITAL
 
CURRENT LIABILITIES:
Accounts payable $ 83,219 $ 97,369
Due to affiliates 1,015 494
Accrued taxes other than income taxes 19,262 15,897
Accrued payroll and related expenses 33,626 35,876
Accrued interest 6,625 2,195
Workers’ compensation and pneumoconiosis benefits 9,511 9,511
Current capital lease obligations 662 676
Other current liabilities 18,830 15,326
Current maturities, long-term debt   33,000     18,000  
Total current liabilities 205,750 195,344
 
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities 671,000 686,000
Pneumoconiosis benefits 56,064 54,775
Accrued pension benefit 27,400 27,538
Workers’ compensation 68,222 64,520
Asset retirement obligations 71,103 70,836
Long-term capital lease obligations 2,340 2,497
Other liabilities   7,464     6,774  
Total long-term liabilities   903,593     912,940  
Total liabilities   1,109,343     1,108,284  
 
COMMITMENTS AND CONTINGENCIES
 
PARTNERS' CAPITAL:
Alliance Holdings GP, L.P. ("AHGP") Partners' Capital:
Limited Partners – Common Unitholders 59,863,000 units outstanding 424,905 414,165
Accumulated other comprehensive loss   (17,245 )   (17,560 )
Total AHGP Partners' Capital 407,660 396,605
Noncontrolling interests   239,480     229,588  
Total Partners' Capital   647,140     626,193  
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 1,756,483   $ 1,734,477  
 
     
ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Three Months Ended
March 31,
  2012       2011  
 
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES $ 107,651   $ 120,315  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures (105,339 ) (63,782 )
Changes in accounts payable and accrued liabilities (5,244 ) (4,836 )
Proceeds from sale of property, plant and equipment 15 54
Purchase of equity investment in affiliate (4,400 ) -
Payment to affiliate for development of coal reserves (18,000 ) -
Advances/loans to affiliate (776 ) -
Other   268     528  
Net cash used in investing activities   (133,476 )   (68,036 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on capital lease obligations (171 ) (166 )
Net settlement of employee withholding taxes on vesting of
ARLP Long-Term Incentive Plan (3,734 ) (2,324 )
Distributions paid by consolidated partnership to noncontrolling interests (21,511 ) (18,615 )
Distributions paid to Partners   (38,163 )   (31,578 )
Net cash used in financing activities   (63,579 )   (52,683 )
 
NET CHANGE IN CASH AND CASH EQUIVALENTS (89,404 ) (404 )
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 281,469 342,237
   
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 192,065   $ 341,833  
 

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