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 September 30, 2009 (the "2009 Quarter") of $0.44 per unit, or an annualized rate of $1.76 per unit, which will be paid on November 19, 2009, to AHGP’s unitholders of record as of the close of trading on November 12, 2009.
The announced distribution represents a 12.8% increase over the $0.39 per unit distribution (an annualized rate of $1.56 per unit) for the quarter ended September 30, 2008 (the "2008 Quarter") and an increase of 2.9% over the second quarter 2009 distribution of $0.4275 per unit (an annualized rate of $1.71 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 $0.76 per unit, or $3.04 per unit on an annualized basis, payable on November 13, 2009 to all unitholders of record as of the close of trading on November 6, 2009. (See ARLP Press Release dated October 28, 2009.)
AHGP also reported net income for the 2009 Quarter of $23.7 million, or $0.40 per basic and diluted limited partner unit, an increase of 27.9% compared to net income for the 2008 Quarter of $18.5 million, or $0.31 per basic and diluted limited partner unit. For the nine months ended September 30, 2009, AHGP’s net income increased 39.5% to a record $88.2 million, or $1.47 per basic and diluted limited partner unit, compared to net income for the nine months ended September 30, 2008 of $63.2 million, or $1.06 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 $27.1 million, or $108.5 million on an annualized basis. AHGP’s primary cash requirements are for working capital requirements, distributions to its unitholders and general and administrative expenses, including for 2009 an estimated $2.2 million in general and administrative expenses associated with being a publicly traded limited partnership. At September 30, 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) 713-8310 and provide pass code 52016000. International callers should dial (617) 597-5308 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 44482289. International callers should dial (617) 801-6888.
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 Ended September 30 | Nine Months Ended September 30 | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| SALES AND OPERATING REVENUES: | ||||||||||||||||
| Coal sales | $ | 281,628 | $ | 269,318 | $ | 881,508 | $ | 800,043 | ||||||||
| Transportation revenues | 11,663 | 11,721 | 35,347 | 33,348 | ||||||||||||
| Other sales and operating revenues | 6,246 | 4,647 | 15,671 | 11,906 | ||||||||||||
| Total revenues | 299,537 | 285,686 | 932,526 | 845,297 | ||||||||||||
| EXPENSES: | ||||||||||||||||
| Operating expenses (excluding depreciation, depletion and amortization) | 204,840 | 199,321 | 605,693 | 583,302 | ||||||||||||
| Transportation expenses | 11,663 | 11,721 | 35,347 | 33,348 | ||||||||||||
| Outside coal purchases | 517 | 6,995 | 5,709 | 14,450 | ||||||||||||
| General and administrative | 10,370 | 7,565 | 30,060 | 29,493 | ||||||||||||
| Depreciation, depletion and amortization | 28,145 | 25,403 | 83,767 | 74,297 | ||||||||||||
| Gain from sale of coal reserves | - | - | - | (5,159 | ) | |||||||||||
| Net gain from insurance settlement and other | - | - | - | (2,790 | ) | |||||||||||
| Total operating expenses | 255,535 | 251,005 | 760,576 | 726,941 | ||||||||||||
| INCOME FROM OPERATIONS | 44,002 | 34,681 | 171,950 | 118,356 | ||||||||||||
| Interest expense | (7,675 | ) | (8,134 | ) | (23,464 | ) | (14,372 | ) | ||||||||
| Interest income | 121 | 2,133 | 1,065 | 2,448 | ||||||||||||
| Other income | 126 | 231 | 554 | 698 | ||||||||||||
| INCOME BEFORE INCOME TAXES | 36,574 | 28,911 | 150,105 | 107,130 | ||||||||||||
| INCOME TAX EXPENSE (BENEFIT) | 585 | 92 | 811 | (633 | ) | |||||||||||
| NET INCOME | 35,989 | 28,819 | 149,294 | 107,763 | ||||||||||||
| LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS | (12,300 | ) | (10,299 | ) | (61,070 | ) | (44,517 | ) | ||||||||
| NET INCOME ATTRIBUTABLE TO ALLIANCE HOLDINGS GP, L.P. ("NET INCOME OF AHGP") | $ | 23,689 | $ | 18,520 | $ | 88,224 | $ | 63,246 | ||||||||
BASIC AND DILUTED NET INCOME OF AHGP PER LIMITED PARTNER UNIT | $ | 0.40 | $ | 0.31 | $ | 1.47 | $ | 1.06 | ||||||||
| DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT | $ | 0.4275 | $ | 0.3525 | $ | 1.245 | $ | 0.9275 | ||||||||
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING-BASIC AND DILUTED | 59,863,000 | 59,863,000 | 59,863,000 | 59,863,000 | ||||||||||||
ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(In thousands, except unit data) | ||||||||
(Unaudited) | ||||||||
| ASSETS | September 30, | December 31, | ||||||
| 2009 | 2008 | |||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | 94,118 | $ | 246,708 | ||||
| Trade receivables | 93,532 | 87,922 | ||||||
| Other receivables | 3,675 | 6,021 | ||||||
| Marketable securities | 4,952 | - | ||||||
| Inventories | 49,239 | 26,510 | ||||||
| Advance royalties | 3,200 | 3,200 | ||||||
| Prepaid expenses and other assets | 955 | 10,162 | ||||||
| Total current assets | 249,671 | 380,523 | ||||||
| PROPERTY, PLANT AND EQUIPMENT: | ||||||||
| Property, plant and equipment, at cost | 1,317,098 | 1,085,214 | ||||||
| Less accumulated depreciation, depletion and amortization | (532,741 | ) | (468,784 | ) | ||||
| Total property, plant and equipment, net | 784,357 | 616,430 | ||||||
| OTHER ASSETS: | ||||||||
| Advance royalties | 26,628 | 23,828 | ||||||
| Other long-term assets | 12,404 | 11,845 | ||||||
| Total other assets | 39,032 | 35,673 | ||||||
| TOTAL ASSETS | $ | 1,073,060 | $ | 1,032,626 | ||||
| LIABILITIES AND PARTNERS’ CAPITAL | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 66,094 | $ | 63,991 | ||||
| Due to affiliates | 488 | 54 | ||||||
| Accrued taxes other than income taxes | 11,837 | 11,235 | ||||||
| Accrued payroll and related expenses | 23,709 | 20,555 | ||||||
| Accrued interest | 6,703 | 3,454 | ||||||
| Workers’ compensation and pneumoconiosis benefits | 9,254 | 9,377 | ||||||
| Current capital lease obligation | 331 | 351 | ||||||
| Other current liabilities | 12,524 | 12,671 | ||||||
| Current maturities, long-term debt | 18,000 | 18,000 | ||||||
| Total current liabilities | 148,940 | 139,688 | ||||||
| LONG-TERM LIABILITIES: | ||||||||
| Long-term debt, excluding current maturities | 422,000 | 440,000 | ||||||
| Pneumoconiosis benefits | 33,559 | 31,436 | ||||||
| Accrued pension benefit | 20,881 | 19,952 | ||||||
| Workers’ compensation | 59,663 | 47,828 | ||||||
| Asset retirement obligations | 57,949 | 56,204 | ||||||
| Due to affiliates | 215 | 103 | ||||||
| Long-term capital lease obligation | 543 | 784 | ||||||
| Other liabilities | 7,007 | 5,459 | ||||||
| Total long-term liabilities | 601,817 | 601,766 | ||||||
| Total liabilities | 750,757 | 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 | 270,090 | 256,395 | ||||||
| Accumulated other comprehensive income (loss) | (8,013 | ) | (8,673 | ) | ||||
| Total AHGP Partners’ Capital | 262,077 | 247,722 | ||||||
| Noncontrolling interests | 60,226 | 43,450 | ||||||
| Total Partners' Capital | 322,303 | 291,172 | ||||||
| TOTAL LIABILITIES AND PARTNERS’ CAPITAL | $ | 1,073,060 | $ | 1,032,626 | ||||
ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2009 | 2008 | |||||||
| CASH FLOWS PROVIDED BY OPERATING ACTIVITIES | $ | 236,881 | $ | 191,339 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Property, plant and equipment: | ||||||||
| Capital expenditures | (251,453 | ) | (122,887 | ) | ||||
| Changes in accounts payable and accrued liabilities | 5,084 | 11,339 | ||||||
| Proceeds from sale of property, plant and equipment | 1 | 2,487 | ||||||
| Proceeds from sale of coal reserves | - | 7,159 | ||||||
| Purchase of marketable securities | (4,527 | ) | - | |||||
| Payment for acquisition of coal reserves and other assets | - | (29,800 | ) | |||||
| Receipts of prior advances on Gibson rail project | 1,828 | 1,645 | ||||||
| Net cash used in investing activities | (249,067 | ) | (130,057 | ) | ||||
| 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 | (261 | ) | (281 | ) | ||||
| Payment on long-term debt | (18,000 | ) | (18,000 | ) | ||||
| Payment of debt issuance costs | - | (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 | (47,010 | ) | (39,057 | ) | ||||
| Distributions paid to Partners | (74,529 | ) | (55,523 | ) | ||||
| Net cash (used in) provided by financing activities | (140,591 | ) | 208,213 | |||||
| EFFECT OF CURRENCY TRANSLATION ON CASH | 187 | - | ||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | (152,590 | ) | 269,495 | |||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 246,708 | 1,783 | ||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 94,118 | $ | 271,278 | ||||
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.
Contacts:
Brian L. Cantrell, 918-295-7673
