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8-K - 8-K - Alliance Holdings GP, L.P.a13-3855_18k.htm

Exhibit 99.1

 

PRESS RELEASE

 

 

 

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 2.8% to $0.74 Per Unit and Reports Financial Results

 

TULSA, OKLAHOMA, January 29, 2013 — 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 December 31, 2012 (the “2012 Quarter”) of $0.74 per unit, or an annualized rate of $2.96 per unit.  The declared distribution will be paid on February 19, 2013 to AHGP’s unitholders of record as of the close of trading on February 12, 2013.

 

The announced quarterly cash distribution represents a 16.1% increase over the $0.6375 per unit distribution (an annualized rate of $2.55 per unit) for the quarter ended December 31, 2011 (the “2011 Quarter”) and an increase of 2.8% over the third quarter 2012 distribution of $0.72 per unit (an annualized rate of $2.88 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 2012 Quarter of $1.1075 per unit, or $4.43 per unit on an annualized basis, payable on February 14, 2013 to all unitholders of record as of the close of trading on February 7, 2013.  (See ARLP Press Release dated January 29, 2013.)

 

For the year ended December 31, 2012 (the “2012 Period”), AHGP reported net income of $196.1 million, or $3.28 per basic and diluted limited partner unit, compared to net income for the year ended December 31, 2011 of $214.1 million, or $3.58 per basic and diluted limited partner unit. The decrease in net income during the 2012 Period primarily reflects losses and charges related to ARLP’s idling of the Pontiki mine, including a non-cash asset impairment of $19.0 million, reduced shipments into the metallurgical export markets and increased depreciation, depletion and amortization. For the 2012 Quarter, net income increased slightly to $52.9 million, or $0.88 per basic and diluted limited partner unit, compared to $52.1 million, or $0.87 per basic and diluted limited partner unit, for the 2011 Quarter.  (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 $45.4 million, or $181.6 million on an annualized basis. AHGP’s primary cash requirements are

 

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for working capital, distributions to its unitholders and general and administrative expenses, including for 2013 an estimated $3.0 million in general and administrative expenses.

 

AHGP and ARLP will discuss their 2012 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) 435-1398 and provide pass code 42785094.  International callers should dial (617) 614-4078 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 10279395.  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 Alliance Resource Partners, L.P. (NASDAQ: 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.

 

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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 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 air and water quality and miner health and safety; the ARLP Partnership’s productivity levels and margins earned on its 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; difficulty obtaining commercial property insurance, and risks associated with the ARLP Partnership’s participation (excluding any applicable deductible) in the commercial insurance property program; and difficulty in making accurate assumptions and projections regarding future revenues and costs associated with equity investments in companies we do not control.

 

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, 2011, filed on February 28, 2012 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
December 31,

 

Year Ended
December 31,

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

 

 

 

SALES AND OPERATING REVENUES:

 

 

 

 

 

 

 

 

 

Coal sales

 

$

538,330

 

$

462,238

 

$

1,979,437

 

$

1,786,089

 

Transportation revenues

 

4,383

 

6,487

 

22,034

 

31,939

 

Other sales and operating revenues

 

6,605

 

5,794

 

32,459

 

25,175

 

Total revenues

 

549,318

 

474,519

 

2,033,930

 

1,843,203

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

Operating expenses (excluding depreciation, depletion and amortization)

 

356,485

 

296,744

 

1,303,291

 

1,131,750

 

Transportation expenses

 

4,383

 

6,487

 

22,034

 

31,939

 

Outside coal purchases

 

3,848

 

24,785

 

38,607

 

54,280

 

General and administrative

 

15,219

 

14,299

 

62,713

 

54,991

 

Depreciation, depletion and amortization

 

63,199

 

43,098

 

218,122

 

160,335

 

Asset impairment charge

 

 

 

19,031

 

 

Total operating expenses

 

443,134

 

385,413

 

1,663,798

 

1,433,295

 

 

 

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

106,184

 

89,106

 

370,132

 

409,908

 

Interest (expense) income, net

 

(7,066

)

5,395

 

(28,453

)

(21,574

)

Equity in loss of affiliates, net

 

(3,610

)

(3,404

)

(14,650

)

(3,404

)

Other income (loss)

 

262

 

(357

)

3,115

 

983

 

INCOME BEFORE INCOME TAXES

 

95,770

 

90,740

 

330,144

 

385,913

 

INCOME TAX BENEFIT

 

(356

)

(209

)

(1,082

)

(430

)

NET INCOME

 

96,126

 

90,949

 

331,226

 

386,343

 

LESS:  NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

(43,231

)

(38,833

)

(135,158

)

(172,200

)

NET INCOME ATTRIBUTABLE TO ALLIANCE HOLDINGS GP, L.P. (NET INCOME OF AHGP)

 

$

52,895

 

$

52,116

 

$

196,068

 

$

214,143

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED NET INCOME OF AHGP PER LIMITED PARTNER UNIT

 

$

0.88

 

$

0.87

 

$

3.28

 

$

3.58

 

DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT

 

$

0.72

 

$

0.61

 

$

2.7225

 

$

2.275

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

 

Year Ended
December 31,

 

 

 

2012

 

2011

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

Cash and cash equivalents

 

$

31,111

 

$

281,469

 

Trade receivables

 

172,724

 

128,643

 

Other receivables

 

1,019

 

3,525

 

Due from affiliates

 

562

 

 

Inventories

 

46,660

 

33,837

 

Advance royalties

 

11,492

 

7,560

 

Prepaid expenses and other assets

 

20,554

 

12,022

 

Total current assets

 

284,122

 

467,056

 

 

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT:

 

 

 

 

 

Property, plant and equipment, at cost

 

2,361,863

 

1,974,520

 

Less accumulated depreciation, depletion and amortization

 

(832,293

)

(793,200

)

Total property, plant and equipment, net

 

1,529,570

 

1,181,320

 

 

 

 

 

 

 

OTHER ASSETS:

 

 

 

 

 

Advance royalties

 

23,267

 

27,916

 

Equity investments in affiliates

 

88,513

 

40,118

 

Due from affiliates

 

3,084

 

 

Other long-term assets

 

30,284

 

18,067

 

Total other assets

 

145,148

 

86,101

 

TOTAL ASSETS

 

$

1,958,840

 

$

1,734,477

 

 

 

 

 

 

 

LIABILITIES AND PARTNERS CAPITAL

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

Accounts payable

 

$

100,678

 

$

97,369

 

Due to affiliates

 

327

 

494

 

Accrued taxes other than income taxes

 

20,033

 

15,897

 

Accrued payroll and related expenses

 

38,501

 

35,876

 

Accrued interest

 

1,435

 

2,195

 

Workers’ compensation and pneumoconiosis benefits

 

9,320

 

9,511

 

Current capital lease obligations

 

1,000

 

676

 

Other current liabilities

 

19,572

 

15,326

 

Current maturities, long-term debt

 

18,000

 

18,000

 

Total current liabilities

 

208,866

 

195,344

 

 

 

 

 

 

 

LONG-TERM LIABILITIES:

 

 

 

 

 

Long-term debt, excluding current maturities

 

773,000

 

686,000

 

Pneumoconiosis benefits

 

59,931

 

54,775

 

Accrued pension benefit

 

31,078

 

27,538

 

Workers’ compensation

 

68,786

 

64,520

 

Asset retirement obligations

 

81,644

 

70,836

 

Long-term capital lease obligations

 

18,613

 

2,497

 

Other liabilities

 

9,147

 

6,774

 

Total long-term liabilities

 

1,042,199

 

912,940

 

Total liabilities

 

1,251,065

 

1,108,284

 

 

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

 

 

PARTNERS CAPITAL:

 

 

 

 

 

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

 

 

 

 

 

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

 

448,976

 

414,165

 

Accumulated other comprehensive loss

 

(18,296

)

(17,560

)

Total AHGP Partners’ Capital

 

430,680

 

396,605

 

Noncontrolling interests

 

277,095

 

229,588

 

Total Partners’ Capital

 

707,775

 

626,193

 

TOTAL LIABILITIES AND PARTNERS CAPITAL

 

$

1,958,840

 

$

1,734,477

 

 

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ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Year Ended

 

 

 

December 31,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES

 

$

546,224

 

$

576,105

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Property, plant and equipment:

 

 

 

 

 

Capital expenditures

 

(424,631

)

(321,920

)

Changes in accounts payable and accrued liabilities

 

(4,007

)

11,640

 

Proceeds from sale of property, plant and equipment

 

114

 

1,526

 

Purchase of equity investments in affiliate

 

(59,800

)

(42,700

)

Payment for acquisition of business

 

(100,000

)

 

Payments to affiliate for acquisition and development of coal reserves

 

(34,601

)

(50,800

)

Advances/loans to affiliate

 

(5,229

)

 

Payments from affiliate

 

4,229

 

 

Other

 

546

 

1,146

 

Net cash used in investing activities

 

(623,379

)

(401,108

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Borrowings under term loan

 

250,000

 

 

Borrowings under revolving credit facility

 

278,800

 

 

Payments under revolving credit facility

 

(123,800

)

 

Payment on term loan

 

(300,000

)

 

Payment on long-term debt

 

(18,000

)

(18,000

)

Payments on capital lease obligations

 

(943

)

(812

)

Payment of debt issuance costs

 

(4,272

)

 

Contribution by limited partner - affiliate

 

2,000

 

 

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

 

(3,734

)

(2,324

)

Distributions paid by consolidated partnership to noncontrolling interests

 

(90,277

)

(78,441

)

Distributions paid to Partners

 

(162,977

)

(136,188

)

Net cash used in financing activities

 

(173,203

)

(235,765

)

 

 

 

 

 

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

(250,358

)

(60,768

)

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

 

281,469

 

342,237

 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

 

$

31,111

 

$

281,469

 

 

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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