Alliance Resource Partners, L.P. Reports Eleventh Consecutive Year of Record Financial Results With Net Income Up 21.3% for the 2011 Year; Increases Quarterly Unitholder Distribution 3.7% to $0.99 Per Unit
Alliance Resource Partners, L.P. (NASDAQ: ARLP) today reported that it
achieved record financial results for the eleventh consecutive year,
with records for revenues, EBITDA, net income and net income per basic
and diluted limited partner unit for the year ended December 31, 2011
(the “2011 Period”). Revenues for the 2011 Period climbed to $1.8
billion, an increase of 14.5% compared to the year ended December 31,
2010 (the “2010 Period”). Increased revenues contributed to higher
EBITDA, up 14.3% to $570.8 million, net income, which jumped 21.3% to
$389.4 million, and net income per basic and diluted limited partner
unit, which rose 21.7% to $8.13 per unit. (For a discussion of EBITDA
and related reconciliations to comparable GAAP financial measures,
please see the end of this release.)
For the quarter ended December 31, 2011 (the “2011 Quarter”), revenues
increased 13.4% to $474.6 million, compared to the quarter ended
December 31, 2010 (the “2010 Quarter”). Net income and net income per
basic and diluted limited partner unit were also higher in the 2011
Quarter, as net income increased 5.0% to $91.7 million and net income
per basic and diluted limited partner unit climbed 6.0% to $1.93 per
unit. EBITDA for the 2011 Quarter decreased slightly by 2.3% to $129.2
million.
ARLP also announced that the Board of Directors of its managing general
partner increased the cash distribution to unitholders for the fifteenth
consecutive quarter. The distribution for the 2011 Quarter rose to $0.99
per unit (an annualized rate of $3.96 per unit), payable on February 14,
2012 to all unitholders of record as of the close of trading on February
7, 2012. The announced distribution represents a 15.1% increase over the
cash distribution of $0.86 for the 2010 Quarter and a 3.7% increase over
the cash distribution of $0.955 for the 2011 third quarter (the
“Sequential Quarter”).
“The Alliance team again delivered exceptional results in 2011 as ARLP
set new records for all major operating and financial measures. This
marks our eleventh consecutive year of record results,” said Joseph W.
Craft III, President and Chief Executive Officer. “Looking ahead, we
remain encouraged that our strategy of expanding ARLP’s presence as a
low cost operator in the growing Illinois Basin and Northern Appalachia
coal markets will create opportunities for continued growth in the
future. Our record setting results and outlook for the future led our
Board of Directors to increase ARLP’s quarterly unitholder distribution
by an impressive 3.7% over the previous quarter. Based on our current
operating plans, ARLP expects quarterly unitholder distributions in 2012
to grow at a pace similar to 2011.”
Consolidated Financial ResultsYear Ended December 31, 2011 Compared to Year Ended December 31, 2010
Record revenues in the 2011 Period were driven primarily by record coal
sales volumes and price realizations due to ARLP’s strong coal sales
contract position. Increased tons sold from our River View mine, the
resumption of full production capacity at our Pattiki mine in early 2011
and expanded coal brokerage activities resulted in higher volumes for
both tons sold, up 5.4% in the 2011 Period to 31.9 million tons, and
tons produced, up 6.6% to 30.8 million tons, both as compared to the
2010 Period. As a result of improved pricing under ARLP’s long-term coal
sales contracts and increased pricing of export market sales, average
coal sales prices increased 9.3% in the 2011 Period to $55.95 per ton
sold, compared to $51.21 per ton sold in the 2010 Period.
ARLP’s increased coal sales and production volumes and ongoing cost
pressures all contributed to higher operating expenses in the 2011
Period, which rose 12.1% to $1.1 billion. In particular, higher
materials and supplies expenses, labor-related expenses, sales-related
expenses and maintenance costs impacted operating expenses across all of
ARLP’s producing regions. As mentioned above, market dynamics allowed
ARLP to expand its coal brokerage activities during the 2011 Period
which drove outside coal purchases higher by $37.2 million, compared to
the 2010 Period.
Financial results for the 2011 Period compared to the 2010 Period were
also impacted by higher depreciation, depletion and amortization, which
increased $13.5 million to $160.3 million, primarily as a result of
additional depreciation expense associated with capital investments at
our River View and Dotiki mines. General and administrative expenses
increased minimally to $52.3 million in the 2011 Period, an increase of
3.0% over the 2010 Period, primarily as a result of higher salaries and
wages expense. Net interest expense decreased $8.1 million compared to
the 2010 Period, primarily as a result of a nonrecurring adjustment in
capitalized interest.
As expected, our preferred equity investment in White Oak Resources, LLC
(“WOR”) began to impact ARLP’s financial results during the 2011 Period.
As a result, net equity in loss of affiliates increased primarily due to
the allocation of approximately $4.3 million of losses related to ARLP’s
preferred equity interest in WOR.
Three Months Ended December 31, 2011 Compared to Three Months Ended
December 31, 2010
For the 2011 Quarter, higher coal sales volumes and increased average
coal sales prices, which rose $4.33 per ton sold, combined to drive
revenues up 13.4% to $474.6 million, compared to the 2010 Quarter. Net
income and net income per basic and diluted limited partner unit were
also higher in the 2011 Quarter, as net income increased 5.0% to $91.7
million and net income per basic and diluted limited partner unit
climbed 6.0% to $1.93 per unit.
Driven by higher operating expenses and equity in loss of affiliates,
EBITDA for the 2011 Quarter decreased 2.3% to $129.2 million. Operating
expenses rose 14.3% compared to the 2010 Quarter to $296.7 million,
primarily due to the factors discussed above as well as increased costs
associated with incidental production at our Tunnel Ridge mine
development project and higher expenses related to a scheduled longwall
move at our Mountain View mine. Outside coal purchases climbed $19.8
million in the 2011 Quarter due to the previously discussed expansion of
ARLP’s brokerage activity. As discussed above, equity in loss of
affiliates increased $3.4 million in the 2011 Quarter, primarily as a
result of our preferred equity investment in WOR.
Depreciation, depletion and amortization increased $5.8 million to $43.1
million in the 2011 Quarter compared to the 2010 Quarter, primarily as a
result of infrastructure and equipment expenditures at various
operations. In addition, net interest expense decreased $12.7 million,
compared to the 2010 Quarter, primarily as a result of the previously
discussed nonrecurring adjustment to capitalized interest.
Regional Results and Analysis
(in millions, except per ton data)
2011 Fourth
Quarter
2010 Fourth
Quarter
% ChangeQuarter /Quarter
2011 ThirdQuarter
% ChangeSequential
Illinois Basin
Tons sold
6.429
6.297
2.1
%
6.631
(3.0
)%
Coal sales price per ton (1)
$
50.63
$
47.71
6.1
%
$
50.83
(0.4
)%
Segment Adjusted EBITDA Expense per ton (2)
$
31.55
$
29.28
7.8
%
$
31.67
(0.4
)%
Segment Adjusted EBITDA (2)
$
122.9
$
116.4
5.6
%
$
127.2
(3.4
)%
Central Appalachia
Tons sold
0.629
0.542
16.1
%
0.616
2.1
%
Coal sales price per ton (1)
$
81.59
$
79.16
3.1
%
$
79.99
2.0
%
Segment Adjusted EBITDA Expense per ton (2)
$
65.53
$
56.11
16.8
%
$
59.76
9.7
%
Segment Adjusted EBITDA (2)
$
10.1
$
12.6
(19.3
)%
$
12.5
(18.6
)%
Northern Appalachia
Tons sold
0.857
0.888
(3.5
)%
0.820
4.5
%
Coal sales price per ton (1)
$
83.40
$
67.57
23.4
%
$
89.89
(7.2
)%
Segment Adjusted EBITDA Expense per ton (2)
$
69.43
$
49.58
40.0
%
$
62.07
11.9
%
Segment Adjusted EBITDA (2)
$
12.8
$
16.8
(23.8
)%
$
23.7
(46.0
)%
Total (3)
Tons sold
8.171
7.750
5.4
%
8.326
(1.9
)%
Coal sales price per ton (1)
$
56.57
$
52.24
8.3
%
$
56.89
(0.6
)%
Segment Adjusted EBITDA Expense per ton (2)
$
39.39
$
34.10
15.5
%
$
37.75
4.3
%
Segment Adjusted EBITDA (2)(4)
$
142.8
$
146.4
(2.5
)%
$
166.0
(14.0
)%
(1) Sales price per ton is defined as total coal sales divided by total
tons sold.
(2) For definitions of Segment Adjusted EBITDA expense per ton and
Segment Adjusted EBITDA and related reconciliations to comparable GAAP
financial measures, please see the end of this release.
(3) Total includes other, corporate and eliminations.
(4) Total Segment Adjusted EBITDA includes equity in loss of affiliates,
net.
ARLP sold 8.2 million tons of coal in the 2011 Quarter, an increase of
5.4% over the 2010 Quarter and a decrease of 1.9% from the Sequential
Quarter, the latter primarily reflecting seasonal production
fluctuations. Higher Illinois Basin coal sales volumes compared to the
2010 Quarter were due in part to the resumption of full production
activity at our Pattiki mine and increased coal sales from our Gibson
North mine. Sequentially, Illinois Basin tons sold decreased 3.0% due to
a high level of sales volume from coal inventory at our River View mine
during the Sequential Quarter, compared to the 2011 Quarter. Increased
sales from coal inventory and purchased coal drove Central Appalachian
coal sales volumes higher in the 2011 Quarter, compared to both the 2010
and Sequential Quarters. In Northern Appalachia, a longwall move at our
Mountain View mine during the 2011 Quarter resulted in lower coal sales
volumes compared to the 2010 Quarter. Sequentially, increased incidental
coal production at our Tunnel Ridge mine development project pushed
sales tons higher in the 2011 Quarter. ARLP’s 2011 year-end coal
inventories declined to historic lows, falling to approximately 168,000
tons – a decrease of approximately 123,000 tons and 387,000 tons from
inventories at the end of the 2010 and Sequential Quarters, respectively.
Compared to the 2010 Quarter, coal sales prices improved in all of
ARLP’s operating regions during the 2011 Quarter. In particular,
increased price realizations in Northern Appalachia from coal sold into
the export markets drove ARLP’s total average coal sales prices up by
8.3% to $56.57 per ton sold.
On a consolidated basis, total Segment Adjusted EBITDA Expense per ton
in the 2011 Quarter increased 15.5% compared to the 2010 Quarter due to
the previously discussed impacts to costs and volumes. While total
Segment Adjusted EBITDA Expense per ton also increased sequentially by
4.3%, the 2011 Quarter benefited from lower workers’ compensation
expense, which was approximately $1.17 per ton lower compared to the
Sequential Quarter. In the Illinois Basin, comparatively difficult
mining conditions during the 2011 Quarter at our Dotiki and Warrior
operations negatively impacted coal recoveries and drove labor-related
expenses and materials and supply costs higher compared to the 2010
Quarter. In Central Appalachia, Segment Adjusted EBITDA Expense per ton
increased in the 2011 Quarter compared to both the 2010 and Sequential
Quarters, primarily as a result of curtailed production at our Pontiki
mine. During the 2011 Quarter, the entire Pontiki mine was idled for
approximately 24 days due to a dispute with regulators over an issue
affecting one production unit. As a result of this regulatory action,
the Pontiki mine experienced significantly higher Segment Adjusted
EBITDA Expense during the 2011 Quarter as approximately 150,000 tons of
production was lost during the shutdown. Compared to the 2010 Quarter,
increased Segment Adjusted EBITDA Expense per ton in Northern Appalachia
during the 2011 Quarter reflects a longwall move at our Mountain View
mine and lower coal recoveries experienced immediately prior to the
longwall move. The sequential increase in Segment Adjusted EBITDA
Expense per ton in Northern Appalachia also reflects the impact of
increased cost per ton of purchased coal and higher expenses related to
incidental coal production at our Tunnel Ridge mine development project.
Outlook
Commenting on ARLP’s outlook for 2012, Mr. Craft said, “We are focused
on delivering another year of record financial results in 2012. The keys
for ARLP to achieve this goal are to have a successful start up of the
Tunnel Ridge longwall operation and for our customers to take delivery
of their contracted tonnage. We enter the year with substantially all of
ARLP’s 2012 production and a substantial portion of anticipated 2013
production committed and priced under contract. The benefits of these
contracts have been reflected in our financial guidance.”
Mr. Craft continued, “The current sluggish coal markets – caused by low
natural gas prices, mild weather patterns, ongoing regulatory burdens,
weaker export demand and aggressive reselling of coal previously
purchased by traders and utilities – are creating challenges for
domestic coal producers. ARLP expects these challenges will likely cause
other coal operators to reduce production, setting the stage for a
rebound in coal prices in the second half of 2012. We intend to use this
lull in the market to focus on cost control and executing our growth
projects at Tunnel Ridge, Gibson South and White Oak. Our long term view
of the supply/demand fundamentals in the Illinois Basin and Northern
Appalachian regions continues to be positive, and we remain committed to
ARLP’s strategic efforts to expand in these growing markets.”
For 2012, ARLP is providing the following full year guidance for its
operating activities, which is exclusive of the impact of our
investments in WOR discussed separately below:
Capital Expenditures – Total 2012 capital expenditures for ARLP’s
operating activities are currently estimated in a range of $400.0 to
$425.0 million, including maintenance capital expenditures. Major
capital projects include production expansions related to completion of
the longwall development at our Tunnel Ridge mine (approximately $90.0
to $100.0 million) and continuing development of our Gibson South mine
(approximately $50.0 to $55.0 million). Maintenance capital expenditures
anticipated during 2012 reflect increased capital expenditures to comply
with evolving regulatory requirements, equipment rebuilds and
replacements, mine extension projects at various mines, and significant
infrastructure projects at several operations. Notably, these projects
include our Dotiki mine accessing the West Kentucky No. 13 coal seam,
which requires larger equipment, and completion of a new preparation
plant at an estimated capital cost of $40.0 to $45.0 million. In
addition, our MC Mining and Mountain View operations will transition
into new reserve areas during 2012 at an estimated capital cost of $20.0
to $25.0 million and $8.0 to $10.0 million, respectively. Based on
anticipated maintenance capital requirements in 2012 and considering its
current five-year planning horizon, ARLP is currently estimating total
average maintenance capital expenditures of approximately $5.50 per ton
produced for long-term distribution planning purposes. Actual operating
necessity capital expenditures in 2012 are expected to be approximately
$2.00 per ton higher due to the significant infrastructure projects
described above.
As a result of ARLP’s capital investment projects and reflecting
commencement of longwall production at Tunnel Ridge, depreciation,
depletion and amortization expense for 2012 is expected to increase to a
range of $200.0 to $210.0 million, compared to $160.3 million in 2011.
Coal Production and Sales Volumes – ARLP is currently
anticipating 2012 coal production in a range of 34.0 to 35.0 million
tons. The increase in production from 2011 reflects the addition of two
continuous miner units in the Illinois Basin and the start of longwall
operations at our Tunnel Ridge mine in the 2012 second quarter.
Coal sales volumes are estimated in a range of 34.75 to 35.85 million
tons, of which approximately 97.0% is contractually committed and
priced. ARLP has also secured coal sales commitments for approximately
33.5 million tons, 27.2 million tons and 19.8 million tons in 2013, 2014
and 2015, respectively, of which approximately 7.7 million tons in 2013
and 7.1 million tons in both 2014 and 2015 remain open to market pricing.
Per Ton Revenue and Cost Estimates – Based on its committed sales
contracts and estimates for its current open position, ARLP is
anticipating total average coal sales price realizations will increase
in 2012 by approximately 2.0% to 4.0% per ton over 2011 realizations.
Reflecting anticipated increases in coal sales volumes and estimated
coal sales prices, ARLP is currently expecting 2012 revenues in a range
of $2.0 to $2.1 billion, excluding transportation revenues.
Ongoing cost and regulatory pressures will continue to impact ARLP’s
operating expenses in 2012. While these impacts along with the continued
expansion of coal brokerage activities are expected to drive total
Segment Adjusted EBITDA Expense per ton higher, ARLP is currently
anticipating realized margins per ton in 2012 will be comparable to 2011.
EBITDA and Net Income – For 2012, ARLP’s operating activities are
currently expected to generate EBITDA in a range of $590.0 to $680.0
million and net income in a range of $360.0 to $440.0 million. (For a
definition of EBITDA and related reconciliations to comparable GAAP
financial measures, please see the end of this release.)
As anticipated, ARLP’s 2012 consolidated financial results will also be
impacted our recent commitments to WOR related to its new longwall Mine
No. 1 development and our preferred equity interest in WOR. In addition
to the above described capital expenditures related to its operating
activities, ARLP currently anticipates capital expenditures during 2012
of approximately $125.0 to $150.0 million for reserve acquisitions and
construction of surface facilities related to its participation in the
WOR Mine No. 1 development project. During 2012, ARLP also currently
expects to fund approximately $100.0 to $125.0 million of its preferred
equity investment commitment to WOR. As a result of these investments,
ARLP expects the pass through of losses related to its WOR investments
to negatively impact 2012 consolidated EBITDA by $20.0 to $25.0 million
and net income by $15.0 to $20.0 million. Development of WOR’s Mine No.
1 is proceeding in line with our expectations and, as previously
disclosed, ARLP continues to anticipate its investments in WOR will
become meaningfully accretive to its financial results once longwall
production from the WOR Mine No. 1 begins in the 2015 time frame.
ARLP’s balance sheet remained strong at December 31, 2011 with a net
debt to EBITDA ratio of 0.75:1.0 and approximately $404.5 million of
available liquidity. ARLP is currently analyzing the debt capital
markets and evaluating its liquidity requirements for 2012 and beyond.
A conference call regarding ARLP’s 2011 Quarter financial results is
scheduled for today at 10:00 a.m. Eastern. To participate in the
conference call, dial (866) 383-8008 and provide pass code 77683113.
International callers should dial (617) 597-5341 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.
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 78830184. 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, ARLP’s distributions to foreign investors are subject to
federal income tax withholding at the highest applicable tax rate.
About Alliance Resource Partners, L.P.
ARLP is a diversified producer and marketer of coal to major United
States utilities and industrial users. ARLP, the nation’s first publicly
traded master limited partnership involved in the production and
marketing of coal, is currently the third largest coal producer in the
eastern United States with mining operations in the Illinois Basin,
Northern Appalachian and Central Appalachian coal producing regions.
ARLP operates nine mining complexes in Illinois, Indiana, Kentucky,
Maryland and West Virginia and is also constructing new mining complexes
in Indiana and West Virginia. In addition, ARLP operates a coal loading
terminal on the Ohio River at Mount Vernon, Indiana.
News, unit prices and additional information about ARLP, including
filings with the Securities and Exchange Commission, are available at http://www.arlp.com.
For more information, contact the investor relations department of ARLP
at (918) 295-7674 or via e-mail at investorrelations@arlp.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 our ability to
respond to such changes; changes in coal prices, which could affect our
operating results and cash flows; risks associated with the expansion of
our 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 our 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;
our productivity levels and margins earned on our coal sales; unexpected
changes in raw material costs; unexpected changes in the availability of
skilled labor; our ability to maintain satisfactory relations with our
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 our 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 our coal reserves; a loss or reduction of
benefits from certain tax credits; and, difficulty obtaining commercial
property insurance, and risks associated with our participation
(excluding any applicable deductible) in the commercial insurance
property program.Additional information concerning these and other factors can be
found in ARLP’s public periodic filings with the Securities and Exchange
Commission (”SEC”), including ARLP’s Annual Report on Form 10-K for the
year ended December 31, 2010, filed on February 28, 2011 with the SEC.Except as required by applicable securities laws, ARLP does not
intend to update its forward-looking statements.ALLIANCE RESOURCE PARTNERS, 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,
2011
2010
2011
2010
Tons Sold
8,171
7,750
31,925
30,295
Tons Produced
7,355
7,276
30,753
28,860
SALES AND OPERATING REVENUES:
Coal sales
$
462,238
$
404,820
$
1,786,089
$
1,551,539
Transportation revenues
6,487
7,947
31,939
33,584
Other sales and operating revenues
5,884
5,846
25,532
24,942
Total revenues
474,609
418,613
1,843,560
1,610,065
EXPENSES:
Operating expenses (excluding depreciation, depletion and
amortization)
296,744
259,578
1,131,750
1,009,935
Transportation expenses
6,487
7,947
31,939
33,584
Outside coal purchases
24,785
4,956
54,280
17,078
General and administrative
13,636
14,185
52,334
50,818
Depreciation, depletion and amortization
43,098
37,321
160,335
146,881
Total operating expenses
384,750
323,987
1,430,638
1,258,296
INCOME FROM OPERATIONS
89,859
94,626
412,922
351,769
Interest expense, net
5,294
(7,395
)
(21,954
)
(30,062
)
Interest income
100
54
375
200
Equity in loss of affiliates, net
(3,404
)
-
(3,404
)
-
Other income (loss)
(357
)
237
983
851
INCOME BEFORE INCOME TAXES
91,492
87,522
388,922
322,758
INCOME TAX EXPENSE (BENEFIT)
(210
)
155
(431
)
1,741
NET INCOME
$
91,702
$
87,367
$
389,353
$
321,017
GENERAL PARTNERS’ INTEREST IN NET INCOME
$
19,562
$
19,757
$
86,251
$
73,172
LIMITED PARTNERS’ INTEREST IN NET INCOME
$
72,140
$
67,610
$
303,102
$
247,845
BASIC AND DILUTED NET INCOME PER LIMITED PARTNER UNIT
$
1.93
$
1.82
$
8.13
$
6.68
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT
$
0.9550
$
0.83
$
3.6275
$
3.205
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING
36,775,741
36,716,855
36,769,126
36,710,431
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except unit data)(Unaudited)
ASSETS
December 31,
2011
2010CURRENT ASSETS:
Cash and cash equivalents
$
273,528
$
339,562
Trade receivables
128,643
112,942
Other receivables
3,525
2,537
Due from affiliates
5,116
1,912
Inventories
33,837
31,548
Advance royalties
7,560
4,812
Prepaid expenses and other assets
11,945
10,024
Total current assets
464,154
503,337
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost
1,974,520
1,598,130
Less accumulated depreciation, depletion and amortization
Limited Partners – Common Unitholders 36,775,741 and 36,716,855
units outstanding, respectively
943,325
761,875
General Partners’ deficit
(279,107
)
(287,371
)
Accumulated other comprehensive loss
(40,460
)
(18,721
)
Total Partners’ Capital
623,758
455,783
TOTAL LIABILITIES AND PARTNERS’ CAPITAL
$
1,731,518
$
1,501,278
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)
Year Ended December 31,
2011
2010
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
$
573,983
$
520,588
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures
(321,920
)
(289,874
)
Changes in accounts payable and accrued liabilities
11,640
(7,480
)
Proceeds from sale of property, plant and equipment
1,526
381
Purchases of equity investments in affiliate
(42,700
)
-
Payments to affiliate for acquisition and development of coal
reserves
(50,800
)
-
Other
1,146
1,982
Net cash used in investing activities
(401,108
)
(294,991
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under term loan
-
300,000
Borrowings under revolving credit facilities
-
95,000
Payments under revolving credit facilities
-
(95,000
)
Payments on capital lease obligations
(812
)
(324
)
Payment of debt issuance cost
-
(1,417
)
Payment on long-term debt
(18,000
)
(18,000
)
Net settlement of employee withholding taxes on vesting of
Long-Term Incentive Plan
(2,324
)
(1,265
)
Cash contributions by General Partners
87
43
Distributions paid to Partners
(217,860
)
(186,354
)
Net cash (used in) provided by financing activities
(238,909
)
92,683
EFFECT OF CURRENCY TRANSLATION ON CASH
-
(274
)
NET CHANGE IN CASH AND CASH EQUIVALENTS
(66,034
)
318,006
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
339,562
21,556
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
273,528
$
339,562
Reconciliation of GAAP “Cash Flows Provided by
Operating Activities” to non-GAAP “EBITDA” and Reconciliation of
non-GAAP “EBITDA” to GAAP “Net Income” (in thousands).
EBITDA is defined as net income before net interest expense, income
taxes and depreciation, depletion and amortization. EBITDA is used as a
supplemental financial measure by our management and by external users
of our financial statements such as investors, commercial banks,
research analysts and others, to assess:
the financial performance of our assets without regard to financing
methods, capital structure or historical cost basis;
the ability of our assets to generate cash sufficient to pay interest
costs and support our indebtedness;
our operating performance and return on investment as compared to
those of other companies in the coal energy sector, without regard to
financing or capital structures; and
the viability of acquisitions and capital expenditure projects and the
overall rates of return on alternative investment opportunities.
EBITDA should not be considered as an alternative to net income, income
from operations, cash flows from operating activities or any other
measure of financial performance presented in accordance with generally
accepted accounting principles. EBITDA is not intended to represent cash
flow and does not represent the measure of cash available for
distribution. Our method of computing EBITDA may not be the same method
used to compute similar measures reported by other companies, or EBITDA
may be computed differently by us in different contexts (i.e. public
reporting versus computation under financing agreements).
Three Months EndedDecember 31,
Year EndedDecember 31,
Three MonthsEndedSept. 30,
Year EndedDecember 31,
2011
2010
2011
2010
2011
2012EMidpoint
Cash flows provided by operating activities
$
141,647
$
126,345
$
573,983
$
520,588
$
170,951
$
563,400
Non-cash compensation expense
(1,638
)
(1,110
)
(6,235
)
(4,051
)
(1,682
)
(7,500
)
Asset retirement obligations
(636
)
(643
)
(2,546
)
(2,579
)
(637
)
(2,850
)
Coal inventory adjustment to market
(323
)
321
(386
)
(498
)
1,302
-
Equity in loss of affiliates, net
(3,404
)
-
(3,404
)
-
-
(22,850
)
Loss on retirement of damaged vertical hoist conveyor equipment
-
-
-
(1,204
)
-
-
Net gain on foreign currency exchange
-
-
-
(274
)
-
-
Net gain (loss) on sale of property, plant and equipment
1,005
(176
)
634
(234
)
205
-
Other
(1,678
)
(1,026
)
(1,488
)
(1,448
)
643
-
Net effect of working capital changes
(173
)
977
(10,870
)
(42,402
)
(26,414
)
55,300
Interest expense, net
(5,394
)
7,341
21,579
29,862
8,699
27,500
Income tax expense (benefit)
(210
)
155
(431
)
1,741
(317
)
(500
)
EBITDA
129,196
132,184
570,836
499,501
152,750
612,500
Depreciation, depletion and amortization
(43,098
)
(37,321
)
(160,335
)
(146,881
)
(40,275
)
(203,000
)
Interest expense, net
5,394
(7,341
)
(21,579
)
(29,862
)
(8,699
)
(27,500
)
Income tax (expense) benefit
210
(155
)
431
(1,741
)
317
500
Net income
$
91,702
$
87,367
$
389,353
$
321,017
$
104,093
$
382,500
Reconciliation of GAAP “Operating Expenses” to
non-GAAP “Segment Adjusted EBITDA Expense per ton” and Reconciliation of
non-GAAP “EBITDA” to “Segment Adjusted EBITDA” (in thousand, except per
ton data).
Segment Adjusted EBITDA Expense per ton represents the sum of operating
expenses, outside coal purchases and other income divided by tons sold.
Transportation expenses are excluded as these expenses are passed
through to our customers, consequently we do not realize any margin on
transportation revenues. Segment Adjusted EBITDA Expense is used as a
supplemental financial measure by our management to assess the operating
performance of our segments. Segment Adjusted EBITDA Expense is a key
component of EBITDA in addition to coal sales and other sales and
operating revenues. The exclusion of corporate general and
administrative expenses from Segment Adjusted EBITDA Expense allows
management to focus solely on the evaluation of segment operating
performance as it primarily relates to our operating expenses. Outside
coal purchases are included in Segment Adjusted EBITDA Expense because
tons sold and coal sales include sales from outside coal purchases.
Three Months EndedDecember 31,
Three Months EndedSeptember 30,
2011
2010
2011
Operating expense
$
296,744
$
259,578
$
294,771
Outside coal purchases
24,785
4,956
19,864
Other (income) loss
357
(237
)
(360
)
Segment Adjusted EBITDA Expense
$
321,886
$
264,297
$
314,275
Divided by tons sold
8,171
7,750
8,326
Segment Adjusted EBITDA Expense per ton
$
39.39
$
34.10
$
37.75
Segment Adjusted EBITDA is defined as net income before net interest
expense, income taxes, depreciation, depletion and amortization, general
and administrative expenses and income attributable to noncontrolling
interest.
