13:00 | 28.01.2011
Alliance Resource Partners, L.P. Reports Record Quarterly and Annual Financial Results with Net Income Up 109.3% in the 2010 Fourth Quarter and 67.1% for the 2010 Year; Increases Quarterly Cash Distribution 3.6% to $0.86 Per Unit
Alliance Resource Partners, L.P. (NASDAQ: ARLP) today reported records
for revenues, EBITDA and net income for the quarter ended December 31,
2010 (the “2010 Quarter”). Revenues for the 2010 Quarter climbed to
$418.6 million, an increase of 40.4% compared to the quarter ended
December 31, 2009 (the “2009 Quarter”). Increased revenues contributed
to higher EBITDA, up 59.8% to $132.2 million, Net Income of ARLP, which
jumped 109.3% to $87.4 million, and net income per basic and diluted
limited partner unit, which rose 160.0% to $1.82 per unit.
ARLP also set new records for revenues, EBITDA and net income for the
year ended December 31, 2010 (the “2010 Period”), all of which were
previously set in the year ended December 31, 2009 (the “2009 Period”).
Revenues for the 2010 Period rose 30.8% to a record $1.6 billion,
compared to the 2009 Period. EBITDA, Net Income of ARLP and net income
per basic and diluted limited partner unit also climbed to record levels
in the 2010 Period, as EBITDA increased 46.7% to $499.5 million, Net
Income of ARLP jumped 67.1% to $321.0 million and net income per basic
and diluted limited partner unit increased 87.6% to $6.68, all as
compared to the 2009 Period. (For a discussion of our net income
presentation and a definition of EBITDA and related reconciliations to
comparable GAAP financial measures, please see the end of this release.)
For the eleventh consecutive quarter, the Board of Directors of ARLP’s
managing general partner increased the cash distribution to unitholders.
The distribution for the 2010 Quarter rose to $0.86 per unit (an
annualized rate of $3.44 per unit), payable on February 14, 2011 to all
unitholders of record as of the close of trading on February 7, 2011.
The announced distribution represents an 11.0% increase over the cash
distribution of $0.775 for the 2009 Quarter and a 3.6% increase over the
cash distribution of $0.83 for the 2010 third quarter (the “Sequential
Quarter”).
“For 2010, ARLP continued to show strength in numbers as we delivered
our tenth consecutive year of record growth and posted new benchmarks
for production and sales volumes, revenues, EBITDA and net income,” said
Joseph W. Craft III, President and Chief Executive Officer. “We are
particularly proud that these results were accomplished during a year in
which our lost-time accident rate was one-third below the industry
average and the lowest in ARLP’s history. This strong performance,
combined with expectations for another record year in 2011 and
opportunities for continued growth in the future, allowed ARLP’s Board
of Directors to increase ARLP’s quarterly unitholder growth rate by 40%
above the 2.5% per quarter rate of growth we have followed for the last
two quarters.”
Consolidated Financial ResultsThree Months Ended December 31, 2010 Compared to Three Months Ended
December 31, 2009
Record revenues in the 2010 Quarter were driven primarily by record coal
sales volumes and price realizations due to ARLP’s strong coal sales
contract position. Increased tons sold from the River View mine drove
coal sales volumes up 26.6% in the 2010 Quarter to 7.8 million tons,
compared to 6.1 million tons in the 2009 Quarter. Primarily reflecting
improved pricing under ARLP’s long-term coal sales contracts and sales
into the higher priced export markets, average coal sales prices
increased 13.3% in the 2010 Quarter to $52.24 per ton sold, compared to
$46.12 per ton sold in the 2009 Quarter. Production volumes also
increased 14.8% in the 2010 Quarter to 7.3 million tons, primarily as a
result of increased coal production at our River View mine and
additional run days at our Mountain View longwall operation.
Operating expenses in the 2010 Quarter increased 35.3% to $259.6
million, primarily related to the continued ramp up of production at our
River View mine since commencement of initial production in August 2009.
Higher operating expenses also reflect increased costs associated with
incidental production at the Tunnel Ridge mine development project
during the 2010 Quarter and increased coal production and sales volumes
at the Mountain View mine resulting from additional longwall run days.
Financial results for the 2010 Quarter compared to the 2009 Quarter were
also impacted by higher depreciation, depletion and amortization, which
increased $3.6 million to $37.3 million, primarily as a result of
additional depreciation expense associated with the River View mine.
General and administrative expenses also increased $2.1 million to $14.2
million in the 2010 Quarter, primarily as a result of higher incentive
compensation expenses.
Year Ended December 31, 2010 Compared to Year Ended December 31, 2009
Led by increased production and sales volumes at the River View and
Mountain View mines, tons produced climbed 11.7% to 28.9 million tons
and tons sold jumped 21.3% to a record 30.3 million tons. Higher coal
sales volumes and record coal sales prices, which increased $4.61 per
ton sold, combined to drive revenues, EBITDA and net income to record
levels, as noted previously. As discussed above, higher operating
expenses were primarily related to the continued ramp up of production
at the River View mine and increased costs associated with incidental
production at the Tunnel Ridge mine development project.
Regional Results and Analysis
(in millions, except per ton data)
2010 Fourth
Quarter
2009 Fourth
Quarter
% Change
Quarter /
Quarter
2010 Third
Quarter
% Change
Sequential
Illinois Basin
Tons sold
6.297
4.710
33.7
%
6.276
0.3
%
Coal sales price per ton (1)
$
47.71
$
42.47
12.3
%
$
47.67
0.1
%
Segment Adjusted EBITDA Expense per ton (2)
$
29.28
$
26.00
12.6
%
$
29.51
(0.8
)%
Segment Adjusted EBITDA (2)
$
116.4
$
77.7
49.8
%
$
114.2
1.9
%
Central Appalachia
Tons sold
0.542
0.658
(17.6
)%
0.531
2.1
%
Coal sales price per ton (1)
$
79.16
$
65.69
20.5
%
$
78.18
1.3
%
Segment Adjusted EBITDA Expense per ton (2)
$
56.11
$
48.06
16.7
%
$
62.52
(10.3
)%
Segment Adjusted EBITDA (2)
$
12.6
$
11.7
7.7
%
$
8.3
51.8
%
Northern Appalachia
Tons sold
0.888
0.740
20.0
%
0.837
6.1
%
Coal sales price per ton (1)
$
67.57
$
51.87
30.3
%
$
64.63
4.5
%
Segment Adjusted EBITDA Expense per ton( 2)
$
49.58
$
47.60
4.2
%
$
55.25
(10.3
)%
Segment Adjusted EBITDA (2)
$
16.8
$
4.0
320.0
%
$
8.8
90.9
%
Total (3)
Tons sold
7.750
6.122
26.6
%
7.676
1.0
%
Coal sales price per ton (1)
$
52.24
$
46.12
13.3
%
$
51.68
1.1
%
Segment Adjusted EBITDA Expense per ton (2)
$
34.10
$
31.52
8.2
%
$
35.13
(2.9
)%
Segment Adjusted EBITDA (2)
$
146.4
$
94.8
54.4
%
$
133.7
9.5
%
(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.
Increased coal sales volumes in the Illinois Basin and Northern
Appalachian regions spurred ARLP to a record 7.8 million tons sold in
the 2010 Quarter, compared to 6.1 million tons in the 2009 Quarter and
7.7 million tons in the Sequential Quarter. Higher Illinois Basin coal
sales volumes primarily reflect expansion at the River View mine and
increased sales from coal inventories in the region. Increased sales
into the higher priced export market from the Mettiki complex and
continued incidental production at the Tunnel Ridge mine development
project during the 2010 Quarter drove coal sales volumes in Northern
Appalachia higher compared to both the 2009 and Sequential Quarters. In
Central Appalachia, coal sales volumes were lower in the 2010 Quarter
compared to the 2009 Quarter as a result of reduced coal production due
to heightened regulatory oversight and the timing of shipments. ARLP’s
total coal inventories fell to approximately 291,000 tons at the end of
the 2010 Quarter, a decrease of approximately one million tons and
364,000 tons from inventories at the end of the 2009 and Sequential
Quarters, respectively.
ARLP continued to benefit from higher contract pricing in all regions as
average coal sales prices increased in the 2010 Quarter, compared to
both the 2009 Quarter and the Sequential Quarter.
Total Segment Adjusted EBITDA Expense per ton in the 2010 Quarter
increased 8.2% compared to the 2009 Quarter due to the previously
discussed increases in consolidated coal sales, coal production and
operating expenses. Compared to the Sequential Quarter, reduced workers’
compensation accruals in the 2010 Quarter resulted in lower Segment
Adjusted EBITDA Expense per ton in each region. For the 2010 Quarter,
Segment Adjusted EBITDA Expense per ton in the Illinois Basin increased
over the 2009 Quarter primarily due the impact of continued production
restrictions related to the failure of the vertical hoist system at the
Pattiki mine, difficult mining conditions at the Dotiki and Warrior
mines and the impact of the previously discussed sales from coal
inventory during the 2010 Quarter. Partially offsetting these increases,
Segment Adjusted EBITDA Expense per ton in the Illinois Basin benefited
from increased coal sales of low cost production from the River View
mine in the 2010 Quarter. In Central Appalachia, the above mentioned
impacts of increasingly stringent regulatory compliance requirements
contributed to higher Segment Adjusted EBITDA Expense per ton in the
2010 Quarter, compared to the 2009 Quarter. Compared to the 2009
Quarter, increased Segment Adjusted EBITDA Expense per ton in Northern
Appalachia during the 2010 Quarter reflects higher costs associated with
producing metallurgical quality coal, increased purchases of outside
coal for sale into the export markets, and expenses related to
incidental coal production at the Tunnel Ridge mine development project.
Outlook
Commenting on ARLP’s outlook, Mr. Craft said, “We are optimistic about
our prospects to deliver another record year of financial performance in
2011. Our projections for this year are heavily reliant on contracted
sales commitments and the sustained strength we see in the export
markets, both metallurgical and steam. ARLP’s anticipated 2011 results
are expected to benefit from running eight continuous mining units for
the entire year at River View and the recent return of our Pattiki mine
to full production capacity. We also anticipate ARLP will be able to
continue to place one million tons per year into the export
metallurgical markets at attractive prices. In addition, we look forward
to further expansion of ARLP’s production volumes when our new Northern
Appalachian longwall operation at Tunnel Ridge comes on line in early
2012. Our long term view of the supply/demand dynamics in the domestic
steam coal markets remains positive. Coal stockpiles declined during the
fourth quarter and the U.S. economy appears to have stabilized and is
showing signs of growth, raising expectations for higher electricity
consumption in the future and pointing to increased coal demand.
Domestic steam coal supply will likely remain under pressure from
continued growth in global coal demand and production constraints due to
heightened regulatory oversight.”
Mr. Craft continued, “Prior to year end, we also elected to take
advantage of attractive debt capital markets by completing a $300
million bank term loan. This financing increases our liquidity and
ARLP’s flexibility to pursue future opportunities. This flexibility,
combined with our operating strength, solid customer relationships and
product diversity, leaves Alliance well positioned to deliver superior
value to our unitholders in the future.”
For 2011, ARLP is currently anticipating total capital expenditures in a
range of $320.0 to $360.0 million, including maintenance capital
expenditures. Estimated capital expenditures include completion of the
longwall development at the Tunnel Ridge mine, several infrastructure
improvements and efficiency projects at various mines, a mine extension
project at M.C. Mining and increased capital expenditures to comply with
new regulatory requirements. For its current five-year planning horizon,
ARLP is estimating maintenance capital expenditures of approximately
$4.70 per ton produced. Actual operating necessity capital expenditures
in 2011 may vary due to changes in anticipated construction and
maintenance schedules. As a result of these planned investments, ARLP
expects 2011 depreciation, depletion and amortization expenses to
increase to a range of $160.0 to $170.0 million, compared to $146.9
million in 2010.
ARLP is currently anticipating 2011 coal production in a range of 31.6
to 32.6 million tons and coal sales in a range of 32.0 to 33.0 million
tons, of which approximately 95% is contractually committed and priced.
ARLP has also secured coal sales commitments for approximately 27.3
million tons, 24.1 million tons and 19.0 million tons in 2012, 2013 and
2014, respectively, of which approximately 3.0 million tons in 2012 and
6.2 million tons in both 2013 and 2014 remain open to market pricing.
Based on current estimates, ARLP is anticipating total average coal
sales price realizations will increase in 2011 by approximately 6.0% to
8.0% per ton over 2010 realizations. Reflecting anticipated increases in
coal sales volumes and coal sales prices, ARLP is currently estimating
2011 revenues in a range of $1.75 to $1.85 billion, excluding
transportation revenues. Although mining operations continue to benefit
from cost control initiatives across the organization, ARLP currently
anticipates certain expense categories will increase on a per ton basis
in 2011 driving total Segment Adjusted EBITDA Expense per ton higher by
approximately 6.0% to 8.0% compared to 2010.
For 2011, ARLP is also currently estimating that EBITDA will increase
approximately 9.0% to 17.0% to a range of $545.0 to $585.0 million,
while Net Income of ARLP is currently anticipated to increase by
approximately 7.5% to 20.0% to a range of $345.0 to $385.0 million. (For
a definition of EBITDA and related reconciliations to comparable GAAP
financial measures, please see the end of this release.)
A conference call regarding ARLP’s 2010 Quarter financial results is
scheduled for today at 10:00 a.m. Eastern. To participate in the
conference call, dial (866) 356-4441 and provide pass code 21507166.
International callers should dial (617) 597-5396 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 10043698. 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 fifth 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 a new mining complex
in 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: increased competition in coal markets and our ability to
respond to the competition; decreases in coal prices, which could
adversely affect our operating results and cash flows; risks associated
with the expansion of our 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;
weakness in global economic conditions or in industries in which our
customers operate; liquidity constraints, including those resulting from
the cost or unavailability of financing due to current capital market
conditions; 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 that we earn on our coal sales; greater than expected increases
in raw material costs; greater than expected shortage 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 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 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; replacement of coal reserves; a
loss or reduction of benefits from certain tax credits; 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, 2009, filed on February 26, 2010 with the SEC
and ARLP’s Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2010, filed on November 8, 2010 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,
2010
2009
2010
2009
Tons Sold
7,750
6,122
30,295
24,975
Tons Produced
7,276
6,338
28,860
25,838
SALES AND OPERATING REVENUES:
Coal sales
$
404,820
$
282,363
$
1,551,539
$
1,163,871
Transportation revenues
7,947
10,386
33,584
45,733
Other sales and operating revenues
5,846
5,434
24,942
21,427
Total revenues
418,613
298,183
1,610,065
1,231,031
EXPENSES:
Operating expenses (excluding depreciation, depletion and
amortization)
259,578
191,834
1,009,935
797,527
Transportation expenses
7,947
10,386
33,584
45,733
Outside coal purchases
4,956
1,815
17,078
7,524
General and administrative
14,185
12,117
50,818
41,117
Depreciation, depletion and amortization
37,321
33,757
146,881
117,524
Total operating expenses
323,987
249,909
1,258,296
1,009,425
INCOME FROM OPERATIONS
94,626
48,274
351,769
221,606
Interest expense, net
(7,395
)
(7,383
)
(30,062
)
(30,847
)
Interest income
54
13
200
1,049
Other income
237
693
851
1,247
INCOME BEFORE INCOME TAXES
87,522
41,597
322,758
193,055
INCOME TAX EXPENSE (BENEFIT)
155
(103
)
1,741
708
NET INCOME
87,367
41,700
321,017
192,347
LESS: NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST
-
42
-
(190
)
NET INCOME ATTRIBUTABLE TO ALLIANCE RESOURCE PARTNERS, L.P. (”NET
INCOME OF ARLP”)
$
87,367
$
41,742
$
321,017
$
192,157
GENERAL PARTNERS’ INTEREST IN NET INCOME OF ARLP
$
19,757
$
15,826
$
73,172
$
60,639
LIMITED PARTNERS’ INTEREST IN NET INCOME OF ARLP
$
67,610
$
25,916
$
247,845
$
131,518
BASIC AND DILUTED NET INCOME OF ARLP PER LIMITED PARTNER UNIT
$
1.82
$
0.70
$
6.68
$
3.56
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT
$
0.83
$
0.76
$
3.205
$
2.95
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING
36,716,855
36,661,029
36,710,431
36,655,555
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except unit data)(Unaudited)
ASSETS
December 31,
2010
2009CURRENT ASSETS:
Cash and cash equivalents
$
339,562
$
21,556
Trade receivables
112,942
91,223
Other receivables
2,537
3,159
Due from affiliates
1,912
83
Inventories
31,548
64,357
Advance royalties
4,812
3,629
Prepaid expenses and other assets
10,024
8,801
Total current assets
503,337
192,808
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost
1,598,130
1,378,914
Less accumulated depreciation, depletion and amortization
(648,883
)
(556,370
)
Total property, plant and equipment, net
949,247
822,544
OTHER ASSETS:
Advance royalties
27,439
26,802
Other long-term assets
21,255
9,246
Total other assets
48,694
36,048
TOTAL ASSETS
$
1,501,278
$
1,051,400
LIABILITIES AND PARTNERS’ CAPITAL
CURRENT LIABILITIES:
Accounts payable
$
63,339
$
62,821
Due to affiliates
573
27
Accrued taxes other than income taxes
13,901
10,777
Accrued payroll and related expenses
30,773
22,101
Accrued interest
2,491
2,918
Workers’ compensation and pneumoconiosis benefits
8,518
9,886
Current capital lease obligation
295
324
Other current liabilities
16,715
11,062
Current maturities, long-term debt
18,000
18,000
Total current liabilities
154,605
137,916
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities
704,000
422,000
Pneumoconiosis benefits
45,039
34,344
Accrued pension benefit
13,296
19,696
Workers’ compensation
59,796
53,845
Asset retirement obligations
56,045
53,116
Due to affiliates
1,954
1,148
Long-term capital lease obligation
165
460
Other liabilities
10,595
7,895
Total long-term liabilities
890,890
592,504
Total liabilities
1,045,495
730,420
COMMITMENTS AND CONTINGENCIES
PARTNERS’ CAPITAL:
Alliance Resource Partners, L.P. (”ARLP”) Partners’ Capital:
Limited Partners – Common Unitholders 36,716,855 and 36,661,029
units outstanding, respectively
761,875
630,165
General Partners’ deficit
(287,371
)
(293,153
)
Accumulated other comprehensive loss
(18,721
)
(17,149
)
Total ARLP Partners’ Capital
455,783
319,863
Noncontrolling interest
-
1,117
Total Partners’ Capital
455,783
320,980
TOTAL LIABILITIES AND PARTNERS’ CAPITAL
$
1,501,278
$
1,051,400
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)
Year Ended December 31,
2010
2009
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
$
520,588
$
282,741
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures
(289,874
)
(328,162
)
Changes in accounts payable and accrued liabilities
(7,480
)
5,727
Proceeds from sale of property, plant and equipment
381
8
Purchase of marketable securities
-
4,527
Proceeds from marketable securities
-
(4,527
)
Receipts of prior advances on Gibson rail project
1,982
2,295
Net cash used in investing activities
(294,991
)
(320,132
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under term loan facility
300,000
-
Borrowings under revolving credit facilities
95,000
-
Payments under revolving credit facilities
(95,000
)
-
Payments on capital lease obligation
(324
)
(351
)
Payment on long-term debt
(18,000
)
(18,000
)
Payment of debt issuance costs
(1,417
)
(339
)
Net settlement of employee withholding taxes on vesting of
Long-Term Incentive Plan
(1,265
)
(791
)
Cash contributions by General Partners
43
31
Distributions paid to Partners
(186,354
)
(167,131
)
Net cash provided by (used in) financing activities
92,683
(186,581
)
EFFECT OF CURRENCY TRANSLATION ON CASH
(274
)
653
NET CHANGE IN CASH AND CASH EQUIVALENTS
318,006
(223,319
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
21,556
244,875
CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
339,562
$
21,556
Presentation of Net Income
Consolidated net income includes earnings attributable to both ARLP and
noncontrolling interests. Consolidated net income less earnings
attributable to noncontrolling interest is referred to as “net income
attributable to ARLP.” Unless otherwise noted, any reference above to
net income in this release represents net income attributable to ARLP.
Reconciliation of GAAP “Cash Flows Provided by
Operating Activities” to non-GAAP “EBITDA”, Reconciliation of non-GAAP
“EBITDA” to GAAP “Net Income” and “Net Income Attributable to ARLP” (in
thousands).
EBITDA is defined as net income before net interest expense, income
taxes, depreciation, depletion and amortization and net income
attributable to noncontrolling interest. 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 Months EndedSept. 30,
Year EndedDecember 31,
2010
2009
2010
2009
2010
2011EMidpoint
Cash flows provided by operating activities
$
126,345
$
44,392
$
520,588
$
282,741
$
135,376
$
500,900
Non-cash compensation expense
(1,110
)
(906
)
(4,051
)
(3,582
)
(1,047
)
(5,200
)
Asset retirement obligations
(643
)
(670
)
(2,579
)
(2,678
)
(644
)
(2,500
)
Coal inventory adjustment to market
321
(2,139
)
(498
)
(3,030
)
215
-
Loss on retirement of damaged vertical hoist conveyor equipment
-
-
(1,204
)
-
-
-
Net gain on foreign currency exchange
-
466
(274
)
653
59
-
Net gain (loss) on sale of property, plant and equipment
(176
)
(19
)
(234
)
(136
)
12
-
Other
(1,026
)
(137
)
(1,448
)
(537
)
(151
)
-
Net effect of working capital changes
977
34,470
(42,402
)
36,440
(23,032
)
36,800
Interest expense, net
7,341
7,370
29,862
29,798
7,586
34,000
Income tax expense (benefit)
155
(103
)
1,741
708
995
1,000
EBITDA
132,184
82,724
499,501
340,377
119,369
565,000
Depreciation, depletion and amortization
(37,321
)
(33,757
)
(146,881
)
(117,524
)
(37,587
)
(165,000
)
Interest expense, net
(7,341
)
(7,370
)
(29,862
)
(29,798
)
(7,586
)
(34,000
)
Income tax (expense) benefit
(155
)
103
(1,741
)
(708
)
(995
)
(1,000
)
Net income
87,367
41,700
321,017
192,347
73,201
365,000
Net (income) loss attributable to noncontrolling interest
-
42
-
(190
)
-
-
Net income attributable to ARLP
$
87,367
$
41,742
$
321,017
$
192,157
$
73,201
$
365,000
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,
2010
2009
2010
Operating expense
$
259,578
$
191,834
$
264,388
Outside coal purchases
4,956
1,815
5,736
Other income
(237
)
(693
)
(460
)
Segment Adjusted EBITDA Expense
$
264,297
$
192,956
$
269,664
Divided by tons sold
7,750
6,122
7,676
Segment Adjusted EBITDA Expense per ton
$
34.10
$
31.52
$
35.13
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.
Three Months EndedDecember 31,
Three Months EndedSeptember 30,
2010
2009
2010
EBITDA (See reconciliation to GAAP above)
$
132,184
$
82,724
$
119,369
General and administrative
14,185
12,117
14,304
Segment Adjusted EBITDA
$
146,369
$
94,841
$
133,673
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