13:00 | 27.01.2010
Alliance Holdings GP, L.P. Increases Quarterly Distribution by 2.8% to $0.4525 Per Unit and Reports Increased Fourth Quarter and Record Annual Financial Results
Alliance Holdings GP, L.P. (NASDAQ: AHGP) today announced that the Board
of Directors of its general partner (the “Board”) declared a quarterly
cash distribution for the quarter ended December 31, 2009 (the “2009
Quarter”) of $0.4525 per unit, or an annualized rate of $1.81 per unit,
which will be paid on February 19, 2010, to AHGP’s unitholders of record
as of the close of trading on February 12, 2010.
The announced distribution represents a 12.4% increase over the $0.4025
per unit distribution (an annualized rate of $1.61 per unit) for the
quarter ended December 31, 2008 (the “2008 Quarter”) and an increase of
2.8% over the third quarter 2009 distribution of $0.44 per unit (an
annualized rate of $1.76 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
2009 Quarter of $0.775 per unit, or $3.10 per unit on an annualized
basis, payable on February 12, 2010 to all unitholders of record as of
the close of trading on February 5, 2010. (See ARLP Press Release dated
January 27, 2010.)
AHGP also reported net income for the 2009 Quarter of $26.0 million, or
$0.43 per basic and diluted limited partner unit, an increase of 44.7%
compared to net income for the 2008 Quarter of $18.0 million, or $0.30
per basic and diluted limited partner unit. For the year ended December
31, 2009, AHGP’s net income increased 40.6% to a record $114.2 million,
or $1.91 per basic and diluted limited partner unit, compared to net
income for the year ended December 31, 2008 of $81.2 million, or $1.36
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 $27.9
million, or $111.7 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 2010 an estimated
$2.3 million in general and administrative expenses associated with
being a publicly traded limited partnership. At December 31, 2009, AHGP
had no borrowings outstanding under its revolving credit facility.
AHGP and ARLP will discuss their 2009 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) 761-0749 and provide pass
code 84576634. International callers should dial (617) 614-2707 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 25542069. 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: increased competition in coal markets and the ARLP
Partnership’s ability to respond to the competition; sustained decreases
in coal prices, which could adversely affect the ARLP Partnership’s
operating results and cash flows; decreases in spot market prices for
coal; risks associated with the ARLP Partnership’s expansion of its
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; the impact and duration of the
current worldwide economic downturn; liquidity constraints, including
those resulting from the cost or unavailability of financing due to
current credit market conditions; customer bankruptcies 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, including those related to carbon 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 earned on 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; 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; coal market’s share of electricity generation; prices of
fuel that compete with or impact coal usage, such as oil or natural gas;
replacement of 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 its 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, 2008, filed on March 6, 2009 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 EndedDecember 31
Year EndedDecember 31,
2009
2008
2009
2008
SALES AND OPERATING REVENUES:
Coal sales
$
282,363
$
293,016
$
1,163,871
$
1,093,059
Transportation revenues
10,386
11,407
45,733
44,755
Other sales and operating revenues
5,327
6,421
20,998
18,327
Total revenues
298,076
310,844
1,230,602
1,156,141
EXPENSES:
Operating expenses (excluding depreciation, depletion and
amortization)
191,834
218,552
797,527
801,854
Transportation expenses
10,386
11,407
45,733
44,755
Outside coal purchases
1,815
9,326
7,524
23,776
General and administrative
12,815
9,364
42,875
38,857
Depreciation, depletion and amortization
33,757
30,981
117,524
105,278
Gain from sale of coal reserves
-
-
-
(5,159
)
Net gain from insurance settlement and other
-
-
-
(2,790
)
Total operating expenses
250,607
279,630
1,011,183
1,006,571
INCOME FROM OPERATIONS
47,469
31,214
219,419
149,570
Interest expense
(7,383
)
(7,773
)
(30,847
)
(22,145
)
Interest income
1
1,328
1,066
3,776
Other income
693
177
1,247
875
INCOME BEFORE INCOME TAXES
40,780
24,946
190,885
132,076
INCOME TAX EXPENSE (BENEFIT)
(102
)
153
709
(480
)
NET INCOME
40,882
24,793
190,176
132,556
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
(14,890
)
(6,825
)
(75,960
)
(51,342
)
NET INCOME ATTRIBUTABLE TO ALLIANCE HOLDINGS GP, L.P. (”NET
INCOME OF AHGP”)
$
25,992
$
17,968
$
114,216
$
81,214
BASIC AND DILUTED NET INCOME OF AHGP PER LIMITED PARTNER UNIT
$
0.43
$
0.30
$
1.91
$
1.36
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT
$
0.44
$
0.39
$
1.685
$
1.3175
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
December 31,
2009
2008
CURRENT ASSETS:
Cash and cash equivalents
$
24,361
$
246,708
Trade receivables
91,223
87,922
Other receivables
3,159
6,021
Inventories
64,357
26,510
Advance royalties
3,629
3,200
Prepaid expenses and other assets
8,889
10,162
Total current assets
195,618
380,523
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost
1,378,914
1,085,214
Less accumulated depreciation, depletion and amortization
(556,370
)
(468,784
)
Total property, plant and equipment, net
822,544
616,430
OTHER ASSETS:
Advance royalties
26,802
23,828
Other long-term assets
9,303
11,845
Total other assets
36,105
35,673
TOTAL ASSETS
$
1,054,267
$
1,032,626
LIABILITIES AND PARTNERS’ CAPITAL
CURRENT LIABILITIES:
Accounts payable
$
63,496
$
63,991
Due to affiliates
27
54
Accrued taxes other than income taxes
10,792
11,235
Accrued payroll and related expenses
22,101
20,555
Accrued interest
2,918
3,454
Workers’ compensation and pneumoconiosis benefits
9,886
9,377
Current capital lease obligation
324
351
Other current liabilities
11,205
12,671
Current maturities, long-term debt
18,000
18,000
Total current liabilities
138,749
139,688
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities
422,000
440,000
Pneumoconiosis benefits
34,344
31,436
Accrued pension benefit
19,696
19,952
Workers’ compensation
53,845
47,828
Asset retirement obligations
53,116
56,204
Due to affiliates
314
103
Long-term capital lease obligation
460
784
Other liabilities
9,043
5,459
Total long-term liabilities
592,818
601,766
Total liabilities
731,567
741,454
COMMITMENTS AND CONTINGENCIES
PARTNERS’ CAPITAL:
Alliance Holdings GP, L.P. (”AHGP”) Partners’ Capital:
Limited Partners – Common Unitholders 59,863,000 units outstanding,
respectively
269,742
256,395
Accumulated other comprehensive loss
(7,465
)
(8,673
)
Total AHGP Partners’ Capital
262,277
247,722
Noncontrolling interests
60,423
43,450
Total Partners’ Capital
322,700
291,172
TOTAL LIABILITIES AND PARTNERS’ CAPITAL
$
1,054,267
$
1,032,626
ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)
Year Ended
December 31,
2009
2008
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
$ 280,802
$ 259,311
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures
(328,162)
(176,482)
Changes in accounts payable and accrued liabilities
5,727
10,046
Proceeds from sale of property, plant and equipment
8
2,708
Proceeds from sale of coal reserves
-
7,159
Purchase of marketable securities
(4,527)
-
Proceeds from marketable securities
4,527
-
Payment for acquisition of coal reserves and other assets
-
(29,800)
Receipts of prior advances on Gibson rail project
2,295
2,244
Net cash used in investing activities
(320,132)
(184,125)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt
-
350,000
Borrowings under revolving credit facilities
-
88,850
Payments under revolving credit facilities
-
(116,850)
Payments on capital lease obligation
(351)
(377)
Payment on long-term debt
(18,000)
(18,000)
Payment of debt issuance costs
(339)
(1,721)
Purchase of options on limited partner common units
-
(22)
Net settlement of employee withholding taxes on vesting of ARLP
Long-Term Incentive Plan
(791)
-
Contributions to consolidated partnership from affiliate
noncontrolling interest
-
1
Contribution by limited partner-affiliate
-
816
Distributions paid by consolidated partnership to noncontrolling
interests
(63,320)
(54,089)
Distributions paid to Partners
(100,869)
(78,869)
Net cash (used in) provided by financing activities
(183,670)
169,739
EFFECT OF CURRENCY TRANSLATION ON CASH
653
-
NET CHANGE IN CASH AND CASH EQUIVALENTS
(222,347)
244,925
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
246,708
1,783
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$ 24,361
$ 246,708
Presentation of Net Income
On January 1, 2009, we adopted the provisions of Financial Accounting
Standards Board (”FASB”) Accounting Standards Codification (”ASC”)
810-10-65 and FASB ASC 810-10-45-16 (Statement of Financial Accounting
Standards No. 160, Noncontrolling Interests in Consolidated Financial
Statements), which establishes accounting and reporting standards
for noncontrolling ownership interest in subsidiaries. Prior to adoption
of FASB ASC 810-10-65 and FASB ASC 810-10-45-16, consolidated net income
included earnings attributable to AHGP but excluded earnings
attributable to noncontrolling interests. Consolidated net income now
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.
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