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8-K - FORM 8-K - Alliance Holdings GP, L.P.d248443d8k.htm

Exhibit 99.1

PRESS RELEASE

 

LOGO

  

CONTACT:

Brian L. Cantrell

Alliance Holdings GP, L.P.

1717 South Boulder Avenue, Suite 400

Tulsa, Oklahoma 74119

(918) 295-7673

FOR IMMEDIATE RELEASE

ALLIANCE HOLDINGS GP, L.P.

Increases Quarterly Distribution by 4.7% to $0.61 Per Unit and Reports Record Quarterly Financial Results

TULSA, OKLAHOMA, October 28, 2011 – Alliance Holdings GP, L.P. (NASDAQ: AHGP) today announced that the Board of Directors of its general partner declared a quarterly cash distribution for the quarter ended September 30, 2011 (the “2011 Quarter”) of $0.61 per unit, or an annualized rate of $2.44 per unit. The declared distribution will be paid on November 18, 2011 to AHGP’s unitholders of record as of the close of trading on November 11, 2011.

The announced distribution represents a 22.0% increase over the $0.50 per unit distribution (an annualized rate of $2.00 per unit) for the quarter ended September 30, 2010 (the “2010 Quarter”) and an increase of 4.7% over the second quarter 2011 distribution of $0.5825 per unit (an annualized rate of $2.33 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 2011 Quarter of $0.955 per unit, or $3.82 per unit on an annualized basis, payable on November 14, 2011 to all unitholders of record as of the close of trading on November 7, 2011. (See ARLP Press Release dated October 28, 2011.)

AHGP also reported record net income for the 2011 Quarter of $57.1 million, or $0.95 per basic and diluted limited partner unit, an increase of 44.6% compared to net income for the 2010 Quarter of $39.5 million, or $0.66 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 $37.4 million, or $149.5 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 2011 an estimated $4.1 million in general and administrative expenses.

 

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AHGP and ARLP will discuss their 2011 Quarter financial results during a joint conference call scheduled for today at 10:00 a.m. Eastern. To participate in the conference call, dial (800) 920-8624 and provide pass code 92749055. International callers should dial (617) 597-5430 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 39869026. 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.

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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.

 

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FORWARD-LOOKING STATEMENTS: With the exception of historical matters, any matters discussed in this press release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projected results. These risks, uncertainties and contingencies include, but are not limited to, the following: changes in competition in coal markets and the ARLP Partnership’s ability to respond to such changes; changes in coal prices, which could affect the ARLP Partnership’s operating results and cash flows; risks associated with the ARLP Partnership’s expansion of its operations and properties; the impact of 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 the ARLP Partnership’s customers operate; liquidity constraints, including those resulting from any future unavailability of financing; customer bankruptcies, cancellations or breaches to existing contracts, or other failures to perform; customer delays, failure to take coal under contracts or defaults in making payments; adjustments made in price, volume or terms to existing coal supply agreements; fluctuations in coal demand, prices and availability due to labor and transportation costs and disruptions, equipment availability, governmental regulations, including those related to carbon dioxide emissions, and other factors; legislation, regulatory and court decisions and interpretations thereof, including issues related to climate change and miner health and safety; the ARLP Partnership’s productivity levels and margins it earns on coal sales; unexpected changes in raw material costs; unexpected changes in availability of skilled labor; the ARLP Partnership’s ability to maintain satisfactory relations with its employees; any unanticipated increases in labor costs, adverse changes in work rules, or unexpected cash payments or projections associated with post-mine reclamation and workers’ compensation claims; any unanticipated increases in transportation costs and risk of transportation delays or interruptions; greater than expected environmental regulation, costs and liabilities; a variety of operational, geologic, permitting, labor and weather-related factors; risks associated with major mine-related accidents, such as mine fires, or interruptions; results of litigation, including claims not yet asserted; difficulty maintaining the ARLP Partnership’s surety bonds for mine reclamation as well as workers’ compensation and black lung benefits; difficulty in making accurate assumptions and projections regarding pension, black lung benefits and other post-retirement benefit liabilities; coal market’s share of electricity generation, including as a result of environmental concerns related to coal mining and combustion and the cost and perceived benefits of alternative sources of energy, such as natural gas, nuclear energy and renewable fuels; uncertainties in estimating and replacing the ARLP Partnership’s coal reserves; a loss or reduction of benefits from certain tax credits; AND difficulty obtaining commercial property insurance, and risks associated with the ARLP Partnership’s participation (excluding any applicable deductible) in the 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, 2010, filed on March 8, 2011 with the SEC. Except as required by applicable securities laws, AHGP does not intend to update its forward-looking statements.

 

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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,
 
     2011     2010     2011     2010  

SALES AND OPERATING REVENUES:

        

Coal sales

   $ 473,683      $ 396,655      $ 1,323,851      $ 1,146,719   

Transportation revenues

     7,446        7,111        25,452        25,637   

Other sales and operating revenues

     6,528        6,590        19,381        18,866   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

     487,657        410,356        1,368,684        1,191,222   
  

 

 

   

 

 

   

 

 

   

 

 

 

EXPENSES:

        

Operating expenses (excluding depreciation, depletion and amortization)

     294,771        264,388        835,006        750,357   

Transportation expenses

     7,446        7,111        25,452        25,637   

Outside coal purchases

     19,864        5,736        29,495        12,122   

General and administrative

     13,613        16,327        40,692        39,353   

Depreciation, depletion and amortization

     40,275        37,587        117,237        109,560   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     375,969        331,149        1,047,882        937,029   

INCOME FROM OPERATIONS

     111,688        79,207        320,802        254,193   

Interest expense

     (8,782     (7,633     (27,248     (22,667

Interest income

     84        47        279        148   

Other income

     360        460        1,340        614   
  

 

 

   

 

 

   

 

 

   

 

 

 

INCOME BEFORE INCOME TAXES

     103,350        72,081        295,173        232,288   

INCOME TAX EXPENSE (BENEFIT)

     (317     995        (221     1,586   
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME

     103,667        71,086        295,394        230,702   

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

     (46,559     (31,602     (133,367     (103,956
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCOME ATTRIBUTABLE TO ALLIANCE HOLDINGS GP, L.P.

(“NET INCOME OF AHGP”)

   $ 57,108      $ 39,484      $ 162,027      $ 126,746   
  

 

 

   

 

 

   

 

 

   

 

 

 

BASIC AND DILUTED NET INCOME OF AHGP PER LIMITED PARTNER UNIT

   $ 0.95      $ 0.66      $ 2.71      $ 2.12   
  

 

 

   

 

 

   

 

 

   

 

 

 

DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT

   $ 0.5825      $ 0.4825      $ 1.665      $ 1.40   
  

 

 

   

 

 

   

 

 

   

 

 

 

WEIGHTED AVERAGE NUMBER OF UNITS

OUTSTANDING-BASIC AND DILUTED

     59,863,000        59,863,000        59,863,000        59,863,000   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except unit data)

(Unaudited)

 

      September  30,
2011
    December  31,
2010
 
    

ASSETS

    

CURRENT ASSETS:

    

Cash and cash equivalents

   $ 309,771      $ 342,237   

Trade receivables

     144,201        112,942   

Other receivables

     2,336        2,537   

Due from affiliates

     —          1,635   

Inventories

     45,835        31,548   

Advance royalties

     4,812        4,812   

Prepaid expenses and other assets

     1,716        10,363   
  

 

 

   

 

 

 

Total current assets

     508,671        506,074   

PROPERTY, PLANT AND EQUIPMENT:

    

Property, plant and equipment, at cost

     1,838,660        1,598,130   

Less accumulated depreciation, depletion and amortization

     (750,586     (648,883
  

 

 

   

 

 

 

Total property, plant and equipment, net

     1,088,074        949,247   

OTHER ASSETS:

    

Advance royalties

     30,740        27,439   

Equity investments in affiliates

     37,119        —     

Other long-term assets

     17,231        21,312   
  

 

 

   

 

 

 

Total other assets

     85,090        48,751   
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 1,681,835      $ 1,504,072   
  

 

 

   

 

 

 

LIABILITIES AND PARTNERS CAPITAL

    

CURRENT LIABILITIES:

    

Accounts payable

   $ 86,796      $ 63,934   

Due to affiliates

     514        573   

Accrued taxes other than income taxes

     18,094        13,916   

Accrued payroll and related expenses

     37,405        30,773   

Accrued interest

     6,644        2,491   

Workers’ compensation and pneumoconiosis benefits

     8,521        8,518   

Current capital lease obligations

     724        295   

Other current liabilities

     18,529        16,780   

Current maturities, long-term debt

     18,000        18,000   
  

 

 

   

 

 

 

Total current liabilities

     195,227        155,280   

LONG-TERM LIABILITIES:

    

Long-term debt, excluding current maturities

     686,000        704,000   

Pneumoconiosis benefits

     49,106        45,039   

Accrued pension benefit

     10,489        13,296   

Workers’ compensation

     70,619        59,796   

Asset retirement obligations

     56,655        56,045   

Due to affiliates

     —          682   

Long-term capital lease obligations

     2,666        165   

Other liabilities

     3,568        12,549   
  

 

 

   

 

 

 

Total long-term liabilities

     879,103        891,572   
  

 

 

   

 

 

 

Total liabilities

     1,074,330        1,046,852   
  

 

 

   

 

 

 

COMMITMENTS AND CONTINGENCIES

    

PARTNERS CAPITAL:

    

Alliance Holdings GP, L.P. (“AHGP”) Partners’ Capital:

    

Limited Partners – Common Unitholders 59,863,000 units outstanding

     393,519        330,346   

Accumulated other comprehensive loss

     (8,039     (8,138
  

 

 

   

 

 

 

Total AHGP Partners’ Capital

     385,480        322,208   

Noncontrolling interests

     222,025        135,012   
  

 

 

   

 

 

 

Total Partners’ Capital

     607,505        457,220   
  

 

 

   

 

 

 

TOTAL LIABILITIES AND PARTNERS CAPITAL

   $ 1,681,835      $ 1,504,072   
  

 

 

   

 

 

 

 

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ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

     Nine Months Ended  
     September 30,  
     2011     2010  

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES

   $ 429,975      $ 391,213   
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Property, plant and equipment:

    

Capital expenditures

     (216,308     (233,773

Changes in accounts payable and accrued liabilities

     511        (6,298

Proceeds from sale of property, plant and equipment

     465        353   

Purchase of equity investment in affiliate

     (35,700     —     

Payment for acquisition of reserves

     (33,841     —     

Receipts of prior advances on Gibson rail project

     810        1,597   
  

 

 

   

 

 

 

Net cash used in investing activities

     (284,063     (238,121
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Borrowings under revolving credit facilities

     —          95,000   

Payments under revolving credit facilities

     —          (95,000

Payments on capital lease obligations

     (595     (242

Payment on long-term debt

     (18,000     (18,000

Net settlement of employee withholding taxes on vesting of ARLP Long-Term Incentive Plan

     (2,324     (1,265

Distributions paid by consolidated partnership to noncontrolling interests

     (57,787     (51,242

Distributions paid to Partners

     (99,672     (83,808
  

 

 

   

 

 

 

Net cash used in financing activities

     (178,378     (154,557
  

 

 

   

 

 

 

EFFECT OF CURRENCY TRANSLATION ON CASH

     —          (274
  

 

 

   

 

 

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

     (32,466     (1,739

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

     342,237        24,361   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

   $ 309,771      $ 22,622   
  

 

 

   

 

 

 

Presentation of Net Income

Consolidated net income includes earnings attributable to both AHGP and noncontrolling interests. Unless otherwise noted, any reference to net income in this release represents net income attributable to AHGP.

 

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