Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 06, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | ALLIANCE RESOURCE PARTNERS LP | |
Entity Central Index Key | 1,086,600 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Units Outstanding | 74,188,784 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 | |
CURRENT ASSETS: | |||
Cash and cash equivalents | $ 35,936 | $ 24,601 | |
Trade receivables | 171,402 | 184,187 | |
Other receivables | 628 | 1,025 | |
Due from affiliates | 168 | 7,221 | |
Inventories | 123,608 | 83,155 | |
Advance royalties | 7,663 | 9,416 | |
Prepaid expenses and other assets | 17,740 | 31,283 | |
Total current assets | 357,145 | 340,888 | |
PROPERTY, PLANT AND EQUIPMENT: | |||
Property, plant and equipment, at cost | 3,215,566 | 2,815,620 | |
Less accumulated depreciation, depletion and amortization | (1,336,176) | (1,150,414) | |
Total property, plant and equipment, net | 1,879,390 | 1,665,206 | |
OTHER ASSETS: | |||
Advance royalties | 26,887 | 15,895 | |
Due from affiliate | 11,047 | ||
Equity investments in affiliates | 48,034 | 224,611 | |
Goodwill (Note 4) | 161,985 | ||
Other long-term assets | 31,952 | 27,412 | |
Total other assets | 268,858 | 278,965 | |
TOTAL ASSETS | 2,505,393 | [1] | 2,285,059 |
CURRENT LIABILITIES: | |||
Accounts payable | 100,456 | 85,843 | |
Due to affiliates | 170 | 370 | |
Accrued taxes other than income taxes | 21,032 | 19,426 | |
Accrued payroll and related expenses | 47,514 | 57,656 | |
Accrued interest | 3,330 | 318 | |
Workers' compensation and pneumoconiosis benefits | 8,893 | 8,868 | |
Current capital lease obligations | 1,333 | 1,305 | |
Other current liabilities | 27,003 | 17,109 | |
Current maturities, long-term debt | 142,159 | 230,000 | |
Total current liabilities | 351,890 | 420,895 | |
LONG-TERM LIABILITIES: | |||
Long-term debt, excluding current maturities | 810,889 | 591,250 | |
Pneumoconiosis benefits | 58,858 | 55,278 | |
Accrued pension benefit | 38,566 | 40,105 | |
Workers' compensation | 49,084 | 49,797 | |
Asset retirement obligations | 107,820 | 91,085 | |
Long-term capital lease obligations | 14,602 | 15,624 | |
Other liabilities | 22,453 | 5,978 | |
Total long-term liabilities | 1,102,272 | 849,117 | |
Total liabilities | $ 1,454,162 | $ 1,270,012 | |
COMMITMENTS AND CONTINGENCIES | |||
Alliance Resource Partners, L.P. ("ARLP") Partners' Capital: | |||
Limited Partners - Common Unitholders 74,188,784 and 74,060,634 units outstanding, respectively | $ 1,340,572 | $ 1,310,517 | |
General Partners' deficit | (257,593) | (260,088) | |
Accumulated other comprehensive loss | (33,669) | (35,847) | |
Total ARLP Partners' Capital | 1,049,310 | 1,014,582 | |
Noncontrolling interest | 1,921 | 465 | |
Total Partners' Capital | 1,051,231 | 1,015,047 | |
TOTAL LIABILITIES AND PARTNERS' CAPITAL | $ 2,505,393 | $ 2,285,059 | |
[1] | Total assets for Other and Corporate include investments in affiliate of $48.0 million at September 30, 2015. Total assets for the Illinois Basin segment and Other and Corporate include investments in affiliates of $200.1 million and $1.5 million, respectively, at September 30, 2014. |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - shares | Sep. 30, 2015 | Dec. 31, 2014 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Limited Partners, Common Unitholders, units outstanding | 74,188,784 | 74,060,634 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||||||
SALES AND OPERATING REVENUES: | |||||||||
Coal sales | $ 547,466 | $ 548,357 | $ 1,632,493 | $ 1,649,093 | |||||
Transportation revenues | 9,395 | 6,001 | 24,323 | 17,816 | |||||
Other sales and operating revenues | 9,584 | 14,970 | 74,765 | 43,019 | |||||
Total revenues | 566,445 | [1] | 569,328 | [1] | 1,731,581 | [1] | 1,709,928 | [2] | |
EXPENSES: | |||||||||
Operating expenses (excluding depreciation, depletion and amortization) | 336,527 | 349,170 | 1,045,954 | 1,024,305 | |||||
Transportation expenses | 9,395 | 6,001 | 24,323 | 17,816 | |||||
Outside coal purchases | 2 | 3 | 326 | 7 | |||||
General and administrative | 17,948 | 16,995 | 52,336 | 54,201 | |||||
Depreciation, depletion and amortization | 84,661 | 69,646 | 242,730 | 203,539 | |||||
Asset impairment charge | 10,695 | 10,695 | |||||||
Total operating expenses | 459,228 | 441,815 | 1,376,364 | 1,299,868 | |||||
INCOME FROM OPERATIONS | 107,217 | 127,513 | 355,217 | 410,060 | |||||
Interest expense (net of interest capitalized for the three months ended September 30, 2015 of $152 and the nine months ended September 30, 2015 and 2014 of $518 and $833, respectively) | (7,352) | (8,584) | (23,626) | (25,395) | |||||
Interest income | 285 | 432 | 1,421 | 1,238 | |||||
Equity in (loss) income of affiliates, net | (17,221) | 68 | (49,049) | (13,546) | |||||
Other income | 455 | 549 | 750 | 1,178 | |||||
INCOME BEFORE INCOME TAXES | 83,384 | 119,978 | 284,713 | 373,535 | |||||
INCOME TAX EXPENSE | 12 | 17 | |||||||
NET INCOME | 83,372 | 119,978 | 284,696 | 373,535 | |||||
LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST | 7 | 27 | |||||||
NET INCOME ATTRIBUTABLE TO ALLIANCE RESOURCE PARTNERS, L.P. ("NET INCOME OF ARLP") | 83,379 | 119,978 | 284,723 | 373,535 | |||||
GENERAL PARTNERS' INTEREST IN NET INCOME OF ARLP | 37,311 | 35,316 | 111,735 | 103,465 | |||||
LIMITED PARTNERS' INTEREST IN NET INCOME OF ARLP | $ 46,068 | $ 84,662 | $ 172,988 | $ 270,070 | |||||
BASIC AND DILUTED NET INCOME OF ARLP PER LIMITED PARTNER UNIT (Note 10) (in dollars per unit) | [3] | $ 0.61 | $ 1.13 | $ 2.29 | $ 3.59 | ||||
DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT (in dollars per unit) | $ 0.675 | $ 0.625 | $ 1.9875 | $ 1.835 | |||||
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING - BASIC AND DILUTED (in units) | 74,188,784 | 74,060,634 | 74,169,538 | 74,038,952 | |||||
[1] | Revenues included in the Other and Corporate column are primarily attributable to the Matrix Group revenues, Mt. Vernon transloading revenues, administrative service revenues from affiliates, MAC revenues, Wildcat Insurance revenues and brokerage coal sales. | ||||||||
[2] | Revenues included in the Other and Corporate column are primarily attributable to the Matrix Group revenues, Mt. Vernon transloading revenues, administrative service revenues from affiliates, MAC revenues, Wildcat Insurance revenues and brokerage coal sales. | ||||||||
[3] | Diluted EPU gives effect to all dilutive potential common units outstanding during the period using the treasury stock method. Diluted EPU excludes all dilutive potential units calculated under the treasury stock method if their effect is anti-dilutive. For the three and nine months ended September 30, 2015 and 2014, the combined total of LTIP, SERP and Deferred Compensation Plan units of 627, 844, 735 and 776, respectively, were considered anti-dilutive under the treasury stock method. |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||
Interest expense, interest capitalized | $ 152 | $ 518 | $ 833 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
NET INCOME | $ 83,372 | $ 119,978 | $ 284,696 | $ 373,535 | |
OTHER COMPREHENSIVE INCOME/(LOSS): | |||||
Total recognized in accumulated other comprehensive income/(loss) | 726 | (70) | 2,178 | (209) | |
COMPREHENSIVE INCOME | 84,098 | 119,908 | 286,874 | 373,326 | |
Less: Comprehensive loss attributable to noncontrolling interest | 7 | 27 | |||
COMPREHENSIVE INCOME ATTRIBUTABLE TO ARLP | 84,105 | 119,908 | 286,901 | 373,326 | |
Pension Plan | |||||
OTHER COMPREHENSIVE INCOME/(LOSS): | |||||
Amortization of net actuarial (gain) loss | [1] | 839 | 193 | 2,516 | 580 |
Total recognized in accumulated other comprehensive income/(loss) | 839 | 193 | 2,516 | 580 | |
Pneumoconiosis benefits | |||||
OTHER COMPREHENSIVE INCOME/(LOSS): | |||||
Amortization of net actuarial (gain) loss | [1] | (113) | (263) | (338) | (789) |
Total recognized in accumulated other comprehensive income/(loss) | $ (113) | $ (263) | $ (338) | $ (789) | |
[1] | Amortization of net actuarial (gain)/loss is included in the computation of net periodic benefit cost (see Notes 11 and 13 for additional details). |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES | $ 528,895 | $ 586,393 |
Property, plant and equipment: | ||
Capital expenditures | (159,182) | (233,659) |
Changes in accounts payable and accrued liabilities | (3,093) | 145 |
Proceeds from sale of property, plant and equipment | 1,519 | 272 |
Proceeds from insurance settlement for property, plant and equipment | 4,512 | |
Purchases of equity investments in affiliates | (47,624) | (85,250) |
Payments for acquisitions of businesses, net of cash acquired (Note 4) | (74,953) | |
Payments to affiliate for acquisition and development of coal reserves | (1,401) | |
Advances/loans to affiliate | (7,300) | |
Other | 1,807 | |
Net cash used in investing activities | (288,826) | (315,381) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Borrowings under securitization facility | 6,500 | |
Payments under securitization facility | (6,500) | |
Payments on term loans | (20,319) | (12,500) |
Borrowings under revolving credit facilities | 463,000 | 221,800 |
Payments under revolving credit facilities | (200,000) | (301,800) |
Payments on long-term debt | (205,000) | (18,000) |
Payments on capital lease obligations | (994) | (1,113) |
Contributions to consolidated company from affiliate noncontrolling interest | 1,483 | |
Net settlement of employee withholding taxes on vesting of Long-Term Incentive Plan | (2,719) | (2,991) |
Cash contributions by General Partners | 95 | 111 |
Distributions paid to Partners | (258,697) | (235,344) |
Other | (5,583) | |
Net cash used in financing activities | (228,734) | (349,837) |
NET CHANGE IN CASH AND CASH EQUIVALENTS | 11,335 | (78,825) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 24,601 | 93,654 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 35,936 | 14,829 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Cash paid for interest | 20,164 | 20,381 |
Cash paid for income taxes | 14 | |
NON-CASH INVESTING AND FINANCING ACTIVITY: | ||
Accounts payable for purchase of property, plant and equipment | 12,561 | 18,069 |
Market value of common units issued under Long-Term Incentive and Directors Deferred Compensation Plans before minimum statutory tax withholding requirements | 7,389 | 8,417 |
Acquisition of businesses: | ||
Fair value of assets assumed | 273,196 | |
Cash paid | (74,953) | |
Fair value of liabilities assumed | $ 198,243 | |
Disposition of property, plant and equipment: | ||
Net change in assets | 846 | |
Book value of liabilities transferred | (5,246) | |
Gain recognized | $ (4,400) |
ORGANIZATION AND PRESENTATION
ORGANIZATION AND PRESENTATION | 9 Months Ended |
Sep. 30, 2015 | |
ORGANIZATION AND PRESENTATION | |
ORGANIZATION AND PRESENTATION | 1. ORGANIZATION AND PRESENTATION Significant Relationships Referenced in Notes to Condensed Consolidated Financial Statements References to “we,” “us,” “our” or “ARLP Partnership” mean the business and operations of Alliance Resource Partners, L.P., the parent company, as well as its consolidated subsidiaries. References to “ARLP” mean Alliance Resource Partners, L.P., individually as the parent company, and not on a consolidated basis. References to “MGP” mean Alliance Resource Management GP, LLC, the managing general partner of Alliance Resource Partners, L.P., also referred to as our managing general partner. References to “SGP” mean Alliance Resource GP, LLC, the special general partner of Alliance Resource Partners, L.P., also referred to as our special general partner. References to “Intermediate Partnership” mean Alliance Resource Operating Partners, L.P., the intermediate partnership of Alliance Resource Partners, L.P. References to “Alliance Coal” mean Alliance Coal, LLC, the holding company for the substantial majority of the operations of Alliance Resource Operating Partners, L.P., also referred to as our primary operating subsidiary. References to “AHGP” mean Alliance Holdings GP, L.P., individually as the parent company, and not on a consolidated basis. References to “AGP” mean Alliance GP, LLC, the general partner of Alliance Holdings GP, L.P. Organization ARLP is a Delaware limited partnership listed on the NASDAQ Global Select Market under the ticker symbol “ARLP.” ARLP was formed in May 1999 to acquire, upon completion of ARLP’s initial public offering on August 19, 1999, certain coal production and marketing assets of Alliance Resource Holdings, Inc., a Delaware corporation (“ARH”), consisting of substantially all of ARH’s operating subsidiaries, but excluding ARH. ARH is owned by Joseph W. Craft III, the President and Chief Executive Officer and a Director of our managing general partner, and Kathleen S. Craft. SGP, a Delaware limited liability company, is owned by ARH and holds a 0.01% general partner interest in each of ARLP and the Intermediate Partnership. We are managed by MGP, a Delaware limited liability company, which holds a 0.99% and a 1.0001% managing general partner interest in ARLP and the Intermediate Partnership, respectively, and a 0.001% managing member interest in Alliance Coal. AHGP is a Delaware limited partnership that was formed to become the owner and controlling member of MGP. AHGP completed its initial public offering on May 15, 2006. AHGP owns directly and indirectly 100% of the members ’ interest of MGP, the incentive distribution rights (“IDR”) in ARLP and 31,088,338 common units of ARLP. Basis of Presentation The accompanying condensed consolidated financial statements include the accounts and operations of the ARLP Partnership and present our financial position as of September 30, 2015 and December 31, 2014, the results of our operations and comprehensive income for the three and nine months ended September 30, 2015 and 2014 and the cash flows for the nine months ended September 30, 2015 and 2014. All of our intercompany transactions and accounts have been eliminated. These condensed consolidated financial statements and notes are unaudited. However, in the opinion of management, these financial statements reflect all normal recurring adjustments necessary for a fair presentation of the results for the periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full year ending December 31, 2015. These condensed consolidated financial statements and notes are prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting and do not include all of the information normally included with financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) of the United States. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014. On June 16, 2014, we completed a two-for-one split of our common units, whereby holders of record as of May 30, 2014 received a one unit distribution on each unit outstanding on that date. The unit split resulted in the issuance of 37,030,317 common units. All references to the number of units and per unit net income of ARLP and distribution amounts included in this report have been adjusted to give effect for this unit split for all periods presented. Also, ARLP’s partnership agreement was amended effective June 16, 2014, to reduce by half the target thresholds for the incentive distribution rights per unit. Use of Estimates The preparation of the ARLP Partnership’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in our condensed consolidated financial statements. Actual results could differ from those estimates. Goodwill Goodwill is not amortized, but is subject to an annual review on November 30, 2015, or at other dates if events or changes in circumstances indicate that the carrying value of goodwill may be impaired. The reporting unit or units used to evaluate and measure goodwill for impairment are determined primarily from the manner in which the business is managed or operated. A reporting unit is an operating segment or a component that is one level below an operating segment. There were no impairments of goodwill during the three and nine month periods ended September 30, 2015. |
NEW ACCOUNTING STANDARDS
NEW ACCOUNTING STANDARDS | 9 Months Ended |
Sep. 30, 2015 | |
NEW ACCOUNTING STANDARDS | |
NEW ACCOUNTING STANDARDS | 2. NEW ACCOUNTING STANDARDS New Accounting Standard Issued and Adopted In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). ASU 2014-08 changes the requirements for reporting discontinued operations in Accounting Standards Codification ( “ ASC ” ) 205, Presentation of Financial Statements , by updating the criteria for determining which disposals can be presented as discontinued operations and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of discontinued operations. ASU 2014-08 was effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. The adoption of ASU 2014-08 did not have a material impact on our condensed consolidated financial statements. In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”). ASU 2015-16 requires that an acquirer within a business combination recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015 with early adoption permitted and shall be applied prospectively after adoption. We elected to early adopt the standard in September 2015. The adoption of ASU 2015-16 did not have a material impact on our condensed consolidated financial statements. New Accounting Standards Issued and Not Yet Adopted In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 is a new revenue recognition standard that provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle of the new standard is an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard will be applied retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. ASU 2014-09 was originally effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date , which defers the effective date by one year while providing the option to early adopt the standard on the original effective date. We are currently evaluating the effect of adopting ASU 2014-09. In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 provides guidance on management’s responsibility in evaluating whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter with early adoption permitted. We do not anticipate the adoption of ASU 2014-15 will have a material impact on our consolidated financial statements . In February 2015, the FASB issued ASU 2015-02, Consolidation (“ASU 2015-02”). ASU 2015-02 changes the requirements and analysis required when determining the reporting entity’s need to consolidate an entity, including modifying the evaluation of limited partnership variable interest status, presumption that a general partner should consolidate a limited partnership and the consolidation criterion applied by a reporting entity involved with variable interest entities. ASU 2015-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015 and shall be applied retrospectively to each period presented. Early adoption is permitted. We are currently evaluating the effect of adopting ASU 2015-02. In April 2015, the FASB issued ASU 2015-03, Interest – Imputation of Interest (“ASU 2015-03”). ASU 2015-03 changes the classification and presentation of debt issuance costs by requiring debt issuance costs to be reported as a direct deduction from the face amount of the debt liability rather than an asset. Amortization of the costs is reported as interest expense. The amendment does not affect the current guidance on the recognition and measurement of debt issuance costs. ASU 2015-03 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015 and shall be applied retrospectively to each period presented. We do not anticipate the adoption of ASU 2015-03 will have a material impact on our consolidated financial statements. In April 2015, the FASB issued ASU 2015-06, Effects on Historical Earnings per Unit of Master Limited Partnership Dropdown Transactions (“ASU 2015-06”). ASU 2015-06 specifies that for purposes of calculating historical earnings per unit under the two-class method, the earnings of a transferred business before the date of a dropdown transaction should be allocated entirely to the general partner. Earnings per unit of the limited partners would not change as a result of the dropdown transaction. ASU 2015-06 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015 and shall be applied retrospectively to each period presented. Early adoption is permitted. We are currently evaluating the effect of adopting ASU 2015-06. |
CONTINGENCIES
CONTINGENCIES | 9 Months Ended |
Sep. 30, 2015 | |
CONTINGENCIES | |
CONTINGENCIES | 3. CONTINGENCIES Various lawsuits, claims and regulatory proceedings incidental to our business are pending against the ARLP Partnership. We record accruals for potential losses related to these matters when, in management’s opinion, such losses are probable and reasonably estimable. Based on known facts and circumstances, we believe the ultimate outcome of these outstanding lawsuits, claims and regulatory proceedings will not have a material adverse effect on our financial condition, results of operations or liquidity. However, if the results of these matters were different from management’s current opinion and in amounts greater than our accruals, then they could have a material adverse effect. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2015 | |
ACQUISITIONS | |
ACQUISITIONS | 4. ACQUISITIONS White Oak Resources On July 31, 2015 (the “Hamilton Acquisition Date”) our subsidiary, Alliance WOR Processing, LLC (now known as Hamilton County Coal, LLC, or “Hamilton”) acquired the remaining Series A and B Units, representing 60% of the voting interests of White Oak Resources LLC (“White Oak”), from White Oak Finance Inc. and other parties (the “Sellers”) for total fair value consideration of $287.3 million (the “Hamilton Acquisition”), consisting of the following: (in thousands) Cash on hand $ Contingent consideration Settlement of pre-existing relationships Previously held equity-method investment Total consideration $ The Partnership now owns 100% of the interests in White Oak and has assumed operating control of the White Oak Mine No. 1 (now known as Hamilton Mine No. 1), an underground longwall mining operation located in Hamilton County, Illinois. The Hamilton Acquisition is consistent with our general business strategy and a strategic complement to our current coal mining operations. The Partnership expects to achieve synergies and cost reductions by using its other owned facilities and reserves, as well as utilizing its centralized marketing, operations and administrative functions. The contingent consideration is payable to the Sellers to the extent Hamilton’s quarterly average coal sales price exceeds a specified amount on future sales. Amounts payable under the contingent consideration arrangement are subject to a defined maximum of $110.0 million reduced for any payments that we make under an overriding royalty agreement between White Oak and certain of the Sellers relating to undeveloped mineral interests controlled by White Oak. The fair value of the contingent consideration arrangement at the Hamilton Acquisition Date was $14.3 million. We estimated the fair value of the contingent consideration using a probability-weighted discounted cash flow model. The assumptions used in the model included a risk-adjusted discount rate, forward coal sales price curves, and probabilities of meeting certain threshold prices. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 fair value measurement. As of September 30, 2015, there were no significant changes in the range of outcomes for the contingent consideration recognized as a result of the Hamilton Acquisition. We are in the process of performing our valuation of our previously held equity method investment, our pre-existing relationships, the contingent consideration, and the acquired assets and liabilities. Given the recent date of the acquisition and the number of valuations we need to complete, we have not finalized our valuations and therefore have recorded our acquisition using our best estimates of the fair value of the various measurements based on preliminary information. As we finalize the various valuations and we complete our review of those valuations in subsequent periods, it is possible that certain amounts related to this transaction could result in measurement period adjustments which would be recorded in those subsequent periods. As a result, we consider our accounting of the Hamilton Acquisition to be preliminary pending completion of our valuations. Prior to the Hamilton Acquisition Date, we accounted for our 40% interest in White Oak as an equity-method investment. The acquisition date fair value of the previous equity interest was $103.3 million and is included in the measurement of the consideration transferred. We re-measured our equity investment immediately prior to the Hamilton Acquisition using a discounted cash flow model. The assumptions used in the determination of the fair value include projected financial information, forward coal price curves, and a risk adjusted discount rate. The assumptions used in this fair value measurement are not observable in the market and therefore represents a Level 3 fair value measurement. In connection with the Hamilton Acquisition, we settled our pre-existing relationships with White Oak which included existing account balances of $49.6 million and contractual agreements comprised of coal leases, a coal handling and preparation agreement, a coal supply agreement, a marketing and transportation agreement and certain debt agreements. As a result of settling the existing account balances between White Oak and the Partnership, as well as the recognition of net gains associated with the above-market components of our pre-existing contractual relationships, we included $119.7 million in the measurement of consideration transferred. As part of our settlement of these agreements, we considered the rates at which a market participant would enter into these agreements and recognized gains for the above-market rates and losses for the below-market rates contained in the various agreements. We developed a discounted cash flow model to determine the fair value of each of these agreements at market rates and compared the valuations to similar models using the contractual rates of the agreements to determine our gains or losses. The assumptions used in these valuation models include processing rates, royalty rates, transportation rates, marketing rates, forward coal price curves, current interest rates, projected financial information and risk-adjusted discount rates. These fair value measurements were based on the previously discussed assumptions which are not observable in the market and therefore represent Level 3 fair value measurements. As a result of our re-measurement of our equity investment, we recognized a loss which was completely offset by an overall gain related to the above-market rates associated with our pre-existing relationships. The following table summarizes the preliminary fair value allocation of assets acquired and liabilities assumed at the Hamilton Acquisition Date: Preliminary as of September 30, 2015 (in thousands) Cash and cash equivalents $ Trade receivables Prepaid expenses Inventories Other current assets Property, plant and equipment Advance royalties Deposits Other assets Total identifiable assets acquired Accounts payable Accrued expenses Deferred revenue Current maturities, long-term debt Long-term debt, excluding current maturities Other long-term liabilities Asset retirement obligations Total liabilities assumed Net identifiable assets acquired $ Goodwill Net assets acquired $ The goodwill recognized is attributable to expected synergies primarily consisting of being able to utilize our previously owned coal handling and preparation plant rather than incurring external fees, the reduction of royalties associated with reserves being leased from us by Hamilton, and the use of our centralized marketing, operations and administrative functions. Allocation of the goodwill to its reporting units has not been completed, however, it is expected to be allocated to applicable reporting units within the Illinois Basin segment. As of September 30, 2015, there were no changes in the recognized amounts of goodwill resulting from the Hamilton Acquisition. The amounts of revenue and earnings of Hamilton included in the Partnership’s condensed consolidated statements of income from the acquisition date to the period ending September 30, 2015 are as follows: (in thousands) Revenue $ Net income The following represents the pro forma condensed consolidated income statement as if Hamilton had been included in the consolidated results of the Partnership since January 1, 2014. These amounts have been calculated after applying the Partnership’s accounting. Additionally, the Partnership’s results have been adjusted to remove the effect of its equity investment in White Oak and the preexisting relationships that it had in White Oak. Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (in thousands) Total revenues As reported $ $ $ $ Pro forma Net income As reported $ $ $ $ Pro forma Patriot Coal Corporation On December 31, 2014 (the “Initial Closing Date”), we entered into asset purchase agreements with Patriot Coal Corporation (“Patriot”) regarding certain assets relating to two of Patriot’s western Kentucky mining operations, including certain coal sales agreements, unassigned coal reserves and underground mining equipment and infrastructure. Both of the mining operations – the former Dodge Hill and Highland mining operations – were closed by Patriot in late 2014 prior to entering into these asset purchase agreements. Also on December 31, 2014, Patriot affiliates entered into agreements to sell other assets from Highland to a third party. Additional details of the transactions are discussed below. On the Initial Closing Date, our subsidiary, Alliance Coal acquired the rights to certain coal supply agreements from an affiliate of Patriot for approximately $21.0 million. Of the $21.0 million purchase price, $9.3 million was paid into escrow subject to obtaining certain assignment consents. In February 2015, $7.5 million of the escrowed amount was released to Patriot for a consent received and $1.8 million was returned to Alliance Coal as a result of a consent not received, reducing our purchase price to $19.2 million. The acquired agreements provide for delivery of a total of approximately 5.1 million tons of coal from 2015 through 2017. On February 3, 2015 (the “Acquisition Date”), Alliance Coal and Alliance Resource Properties acquired from Patriot an estimated 84.1 million tons of proven and probable high-sulfur coal reserves in western Kentucky (substantially all of which was leased by Patriot), and substantially all of Dodge Hill’s assets related to its former coal mining operation in western Kentucky, which principally included underground mining equipment and an estimated 43.2 million tons of non-reserve coal deposits (substantially all of which was leased by Dodge Hill). In addition, we assumed Dodge Hill’s reclamation liabilities totaling $2.3 million. Also on the Acquisition Date, the Intermediate Partnership’s newly formed subsidiaries, UC Mining, LLC and UC Processing, LLC, acquired certain underground mining equipment and spare parts inventory from Patriot’s former Highland mining operation. The mining and reserve assets acquired from Patriot described above are located in Union and Henderson Counties, Kentucky. The mining equipment, spare parts and underground infrastructure that we acquired from Patriot has been and is continuing to be dispersed to our existing operations in the Illinois Basin region in accordance with their highest and best use. Our purchase price of $19.2 million and $20.5 million paid on the Initial Closing Date and the Acquisition Date, respectively, described above was financed using existing cash on hand. In addition, our purchase price was increased by $8.3 million, comprising $2.1 million cash paid prior to the Acquisition Date related to the transaction and an agreement to pay approximately $6.2 million additional consideration as discussed below. As we have no intentions of operating the former Dodge Hill mining complex as a business and only acquired certain assets of Highland, we believe unaudited pro forma information of revenue and earnings is not meaningful as it relates to the acquisition of Patriot assets described above and furthermore not materially different than revenue and earnings as presented in our condensed consolidated statements of income. The primary ongoing benefit derived from the transaction relates to the coal supply agreements acquired, which would have permitted the sale of 0.8 million tons and 2.4 million tons at average pricing of $46.67 per ton sold during the three and nine months ended September 30, 2014, respectively, based on the contract price and sales volumes, if we had owned the contracts during that period. Revenues generated by these contracts since the Initial Closing Date were $29.4 million and $108.7 million, respectively, for the three and nine months ended September 30, 2015. In conjunction with our acquisitions on the Acquisition Date, WKY CoalPlay, LLC (“WKY CoalPlay”), a related party, acquired approximately 39.1 million tons of proven and probable high-sulfur owned coal reserves located in Henderson and Union Counties, Kentucky from Central States Coal Reserves of Kentucky, LLC (“Central States”), a subsidiary of Patriot, for $25.0 million and in turn leased those reserves to us. In February 2015, we paid $2.1 million to WKY CoalPlay for the initial annual minimum royalty payment (Note 8). The fair value of the acquired tangible and intangible assets and assumed liabilities are based on discounted cash flow projections and estimated replacement cost valuation techniques. We used an estimate of replacement cost based on comparable market prices to value the acquired equipment and utilized discounted cash flows to value intangible assets and reserves. Key assumptions used in the valuations included projections of future cash flows, and estimated weighted-average cost of capital, and internal rates of return. Due to the unobservable nature of these inputs, these estimates are considered Level 3 fair value measurements. The following table summarizes the consideration transferred from us to Patriot and the preliminary and final fair value allocation of assets acquired and liabilities assumed as valued at the Acquisition Date, incorporating fair value adjustments made subsequent to the Acquisition Date: Preliminary as of March 31, 2015 Adjustments Final as of September 30, 2015 (in thousands) Consideration transferred $ $ Recognized amounts of net tangible and intangible assets acquired and liabilities assumed: Inventories ) Property, plant and equipment, including mineral rights and leased equipment Customer contracts, net - Other assets ) - Asset retirement obligation - Other liabilities - ) Net tangible and intangible assets acquired $ $ Included in the above consideration transferred is an agreement to pay an additional $6.2 million related to the acquisition, of which $5.6 million was paid as of September 30, 2015. Additionally, a fair value adjustment of $3.1 million to increase liabilities and property, plant and equipment was recorded to reflect the impact of operating leases assumed in the acquisition. Other adjustments to the preliminary fair values resulted from additional information obtained about facts in existence on February 3, 2015. Intangible assets related to coal supply agreements, represented as “ Customer contracts, net” in the table above are reflected in the Prepaid expenses and other assets and Other long-term assets line items in our condensed consolidated balance sheets. For the three and nine months ended September 30, 2015, amortization expense for the acquired coal supply agreements of $4.0 million and $10.1 million, respectively, has been recognized based on the weighted-average term of the contracts on a per unit basis. MAC In March 2006, White County Coal, and Alexander J. House entered into a limited liability company agreement to form Mid-America Carbonates, LLC (“MAC”). MAC was formed to engage in the development and operation of a rock dust mill and to manufacture and sell rock dust. White County Coal initially invested $1.0 million in exchange for a 50% equity interest in MAC. Our equity investment in MAC was $1.6 million at December 31, 2014. Effective on January 1, 2015, we purchased the remaining 50% equity interest in MAC from Mr. House for $5.5 million cash paid at closing. In conjunction with the acquisition, we recorded $4.2 million of goodwill which is reflected in Other and Corporate in our segment presentation (Note 14) and is included in Goodwill on our condensed consolidated balance sheets. |
LONG-LIVED ASSET IMPAIRMENT
LONG-LIVED ASSET IMPAIRMENT | 9 Months Ended |
Sep. 30, 2015 | |
LONG-LIVED ASSET IMPAIRMENT | |
LONG-LIVED ASSET IMPAIRMENT | 5. LONG-LIVED ASSET IMPAIRMENT In September 2015, we surrendered a lease agreement for certain undeveloped coal reserves and related property in western Kentucky. We determined that coal reserves held under this lease agreement were no longer a core part of our foreseeable development plans. As such, we surrendered the lease in order to avoid the high holding costs of those reserves. We recorded an impairment charge of $10.7 million to our Illinois Basin segment during the quarter ended September 30, 2015 to remove certain assets associated with the lease, including mineral rights, advanced royalties and mining permits. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2015 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 6. FAIR VALUE MEASUREMENTS We measure fair value in accordance with GAAP which defines fair value, requires disclosures about assets and liabilities carried at fair value, and establishes a hierarchal disclosure framework based upon the quality of inputs used to measure fair value. Valuation techniques used in our fair value measurements are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our own market assumptions. These two types of inputs create the following fair value hierarchy: Level 1 – Quoted prices for identical instruments in active markets. Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations whose inputs are observable or whose significant value drivers are observable. Level 3 – Instruments whose significant value drivers are unobservable. The following table summarizes our recurring fair value measurements within the hierarchy: September 30, 2015 December 31, 2014 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 (in thousands) Long-term debt $ - $ $ - $ - $ $ - Contingent consideration - - - - - Total $ - $ $ $ - $ $ - The carrying amounts for cash equivalents, accounts receivable, accounts payable, due from affiliates and due to affiliates approximate fair value because of the short maturity of those instruments. At September 30, 2015 and December 31, 2014, the estimated fair value of our long-term debt, including current maturities, was approximately $963.8 million and $833.4 million, respectively, based on interest rates that we believe are currently available to us in active markets for issuance of debt with similar terms and remaining maturities (Note 7). The fair value of debt, which is based upon these interest rates, is classified as a Level 2 measurement under the fair value hierarchy. At September 30, 2015, the fair value of our contingent consideration arrangement related to the Hamilton Acquisition was $14.3 million (Note 4). |
LONG-TERM DEBT
LONG-TERM DEBT | 9 Months Ended |
Sep. 30, 2015 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | 7. LONG-TERM DEBT Long-term debt consists of the following: September 30, 2015 December 31, 2014 (in thousands) Revolving Credit facility $ $ Series A senior notes - Series B senior notes Term loan Securitization facility Hamilton revolving credit facility - Hamilton equipment financing agreement - Less current maturities ) ) Total long-term debt $ $ Our Intermediate Partnership has a $700.0 million revolving credit facility (“Revolving Credit Facility”), $145.0 million in Series B senior notes (“Series B Senior Notes”) and a $212.5 million term loan (“Term Loan” and collectively, with the Revolving Credit Facility and the Series B Senior Notes, the “ARLP Debt Arrangements”), which are guaranteed by all of the material direct and indirect subsidiaries of our Intermediate Partnership. On October 16, 2015 the Revolving Credit Facility was amended to increase the baskets for capital lease obligations and sale-leaseback arrangements from $10.0 million to $100.0 million. Our Intermediate Partnership also has a $100.0 million accounts receivable securitization facility (“Securitization Facility”). In addition, as a result of the Hamilton Acquisition (Note 4), we assumed a $10.0 million revolving credit facility (“Hamilton Revolving Credit Facility”) and an equipment financing note (“Hamilton Equipment Financing Note”). At September 30, 2015, current maturities include the Hamilton Revolving Credit Facility and a portion of the Term Loan. On June 26, 2015 the outstanding balance of the Series A senior notes totaling $205.0 million was paid. The ARLP Debt Arrangements contain various covenants affecting our Intermediate Partnership and its subsidiaries restricting, among other things, the amount of distributions by our Intermediate Partnership, incurrence of additional indebtedness and liens, sale of assets, investments, mergers and consolidations and transactions with affiliates, in each case subject to various exceptions. The ARLP Debt Arrangements also require the Intermediate Partnership to remain in control of a certain amount of mineable coal reserves relative to its annual production. In addition, the ARLP Debt Arrangements require our Intermediate Partnership to maintain (a) debt to cash flow ratio of not more than 3.0 to 1.0 and (b) cash flow to interest expense ratio of not less than 3.0 to 1.0, in each case, during the four most recently ended fiscal quarters. The debt to cash flow ratio and cash flow to interest expense ratio were 1.23 to 1.0 and 24.3 to 1.0, respectively, for the trailing twelve months ended September 30, 2015. We were in compliance with the covenants of the ARLP Debt Arrangements as of September 30, 2015. At September 30, 2015, we had borrowings of $403.0 million and $5.4 million of letters of credit outstanding with $291.6 million available for borrowing under the Revolving Credit Facility. We utilize the Revolving Credit Facility, as appropriate, for working capital requirements, capital expenditures and investments in affiliates, scheduled debt payments and distribution payments. We incur an annual commitment fee of 0.25% on the undrawn portion of the Revolving Credit Facility. On December 5, 2014, certain direct and indirect wholly-owned subsidiaries of our Intermediate Partnership entered into the Securitization Facility providing additional liquidity and funding. Under the Securitization Facility, certain subsidiaries sell trade receivables on an ongoing basis to our Intermediate Partnership, which then sells the trade receivables to AROP Funding, LLC (“AROP Funding”), a wholly-owned bankruptcy-remote special purpose subsidiary of our Intermediate Partnership, which in turn borrows on a revolving basis up to $100.0 million secured by the trade receivables. After the sale, Alliance Coal, as servicer of the assets, collects the receivables on behalf of AROP Funding. The Securitization Facility bears interest based on a Eurodollar Rate. The Securitization Facility has an initial term of 364 days; however, we have the contractual ability and the intent to extend the term for an additional 364 days. At September 30, 2015, we had $100.0 million outstanding under the Securitization Facility. As a result of the Hamilton Acquisition, we assumed the Hamilton Revolving Credit Facility and the Hamilton Equipment Financing Agreement. In November 2014, White Oak entered into the Hamilton Revolving Credit Facility allowing for periodic borrowings up to $10.0 million, collateralized by White Oak’s accounts receivable. Borrowings under the Hamilton Revolving Credit Facility carried interest at the prime rate plus 0.1%, which was 3.35% at September 30, 2015. On October 19, 2015, the outstanding balance of the Hamilton Revolving Credit Facility totaling $10.0 million was repaid. In 2012, White Oak acquired vendor financing totaling $100.0 million through the Hamilton Equipment Financing Agreement, which was secured by continuous mining, long-wall mining, and underground belt system equipment purchased from the lender. The Hamilton Equipment Financing Agreement required repayment of principal and interest in equal monthly installments of $2.1 million from July 2014 until June 2019. As of September 30, 2015, $82.5 million remained outstanding on the note and carried an annual interest rate of 8%. On October 16, 2015, the outstanding balance of the Hamilton Equipment Financing Agreement totaling $80.6 million was repaid without penalty with funds drawn on the Revolving Credit Facility. On October 29, 2015, we entered into a sale-leaseback transaction whereby we sold certain mining equipment for $100.0 million and concurrently entered into a lease agreement for the sold equipment with a four-year term. Under the lease agreement, we will pay an initial monthly rent of $1.9 million. A balloon payment equal to 20% of the equipment cost is due at the end of the lease term. We have recognized this transaction as a capital lease. On October 6, 2015, Cavalier Minerals JV, LLC (“Cavalier Minerals”) (Note 8) entered into a credit agreement (the “Cavalier Credit Agreement”) with Mineral Lending, LLC (“Mineral Lending”) for a $100.0 million line of credit (the “Cavalier Credit Facility”). Mineral Lending is an entity owned by Alliance Resource Holdings II, Inc. (“ ARH II, ” the parent of ARH), an entity owned by an officer of ARH who is also a director of ARH II (“ARH Officer”) and foundations established by our President and Chief Executive Officer and Kathleen S. Craft. There is no commitment fee under the facility. Borrowings under the Cavalier Credit Facility bear interest at a one month LIBOR rate plus 6% with interest payable quarterly. Repayment of the principal balance will begin following the first fiscal quarter after the earlier of the date on which the aggregate amount borrowed exceeds $90.0 million or December 31, 2017, in quarterly payments of an amount equal to the greater of $1.3 million initially, escalated to $2.5 million after two years, or fifty percent of Cavalier Minerals’ excess cash flow. The Cavalier Credit Facility matures September 30, 2024, at which time all amounts then outstanding are required to be repaid. Cavalier Minerals may prepay the Cavalier Credit Facility at any time in whole or in part subject to terms and conditions described in the Cavalier Credit Agreement. |
VARIABLE INTEREST ENTITIES
VARIABLE INTEREST ENTITIES | 9 Months Ended |
Sep. 30, 2015 | |
VARIABLE INTEREST ENTITIES | |
VARIABLE INTEREST ENTITIES | 8. VARIABLE INTEREST ENTITIES Cavalier Minerals On November 10, 2014, our wholly owned subsidiary, Alliance Minerals, LLC (“Alliance Minerals”), and Bluegrass Minerals Management, LLC (“Bluegrass Minerals”) entered into a limited liability company agreement (the “Cavalier Agreement”) to create Cavalier Minerals, which was formed to indirectly acquire oil and gas mineral interests through its noncontrolling ownership interest initially in AllDale Minerals L.P. and subsequently also in AllDale Minerals II, L.P. (collectively “AllDale Minerals”) (Note 9). Alliance Minerals and Bluegrass Minerals initially committed funding of $48.0 million and $2.0 million, respectively, to Cavalier Minerals, and Cavalier Minerals committed funding of $49.0 million to AllDale Minerals. Alliance Minerals’ contributions through December 31, 2014 to Cavalier Minerals totaled $11.5 million. During the three and nine months ended September 30, 2015, Alliance Minerals contributed $16.4 million and $35.6 million, respectively, bringing our total investment in Cavalier Minerals to $47.1 million at September 30, 2015. Our remaining commitment to Cavalier Minerals of $0.9 million was made October 26, 2015. Bluegrass Minerals, which is owned and controlled by the ARH Officer and is Cavalier Minerals’ managing member, contributed $2.0 million as of September 30, 2015. On October 6, 2015, Alliance Minerals and Bluegrass Minerals committed to fund an additional $96.0 million and $4.0 million, respectively, to Cavalier Minerals, and Cavalier Minerals committed to fund an additional $100.0 million to AllDale Minerals. At Alliance Minerals’ election, Cavalier Minerals will meet its remaining funding commitment to AllDale Minerals through contributions from Alliance Minerals and Bluegrass Minerals or from borrowings under the Cavalier Credit Facility (Note 7). We expect to fund our remaining commitments utilizing existing cash balances, future cash flows from operations, borrowings under credit and securitization facilities and cash provided from the issuance of debt or equity, or by requiring Cavalier Minerals to draw on the Cavalier Credit Facility. Cavalier Minerals also reimburses Bluegrass Minerals for certain insignificant general and administrative costs incurred on behalf of Cavalier Minerals. In accordance with the Cavalier Agreement, Bluegrass Minerals is entitled to receive an incentive distribution from Cavalier Minerals equal to 25% of all distributions (including in liquidation) after return of members’ capital reduced by certain distributions received by Bluegrass Minerals or its owner from AllDale Minerals Management, LLC, the managing member of AllDale Minerals. Alliance Minerals’ ownership interest in Cavalier Minerals at September 30, 2015 was 96%. The remainder of the equity ownership is held by Bluegrass Minerals. As of September 30, 2015, Cavalier Minerals had not made any distributions to its owners. We have consolidated Cavalier Minerals’ financial results as we concluded that Cavalier Minerals is a variable interest entity (“VIE”) and we are the primary beneficiary because our consent is required for significant activities of Cavalier Minerals and due to Bluegrass Minerals’ relationship to us as described above. Bluegrass Minerals equity ownership of Cavalier Minerals is accounted for as noncontrolling ownership interest in our condensed consolidated balance sheets. In addition, earnings attributable to Bluegrass Minerals are recognized as net loss attributable to noncontrolling interest in our condensed consolidated statements of income. WKY CoalPlay On November 17, 2014, SGP Land, LLC (“SGP Land”), a wholly-owned subsidiary of SGP, and two limited liability companies owned by irrevocable trusts established by our President and Chief Executive Officer (“Craft Companies”) entered into a limited liability company agreement to form WKY CoalPlay. WKY CoalPlay was formed, in part, to purchase and lease coal reserves. WKY CoalPlay is managed by an entity controlled by the ARH Officer who is an employee of SGP Land and trustee of the irrevocable trusts owning the Craft Companies. In February 2015, WKY CoalPlay acquired approximately 39.1 million tons of proven and probable high-sulfur owned coal reserves located in Henderson and Union Counties, Kentucky from a wholly-owned subsidiary of Patriot for $25.0 million and in turn leased those reserves to us (“CoalPlay 2015 Lease”). The CoalPlay 2015 Lease has an initial term of 20 years and provides for earned royalty payments to WKY CoalPlay of 4% of the coal sales price and annual minimum royalty payments of $2.1 million. All annual minimum royalty payments are recoupable against earned royalty payments. An option was also granted to us to acquire the leased reserves at any time during a three-year period beginning in February 2018 for a purchase price that would provide WKY CoalPlay a 7% internal rate of return on its investment in these reserves taking into account payments previously made under the lease. We paid WKY CoalPlay $2.1 million in February 2015 for the initial annual minimum royalty payment. As of September 30, 2015, we had paid $10.8 million of advanced royalties to WKY CoalPlay, none of which have been recouped, and which is reflected in the long-term Advance royalties line item in our condensed consolidated balance sheets and includes previous annual minimum royalty payments made to WKY CoalPlay associated with leases entered into in 2014, in addition to the initial annual minimum royalty payment for the CoalPlay 2015 Lease. We have concluded that WKY CoalPlay is a VIE because of our ability to exercise the option noted above as well as two other similar options granted to us by WKY CoalPlay in December 2014, which is not within the control of the equity holders and, if it occurs, could potentially limit the expected residual return to the owners of WKY CoalPlay. We do not have any economic or governance rights related to WKY CoalPlay and our options that provide us with a variable interest in WKY CoalPlay’s reserve assets do not give us any rights that constitute power to direct the primary activities that most significantly impact WKY CoalPlay’s economic performance. SGP Land has the sole ability to replace the manager of WKY CoalPlay at its discretion and therefore has power to direct the activities of WKY CoalPlay. Consequently, we concluded that SGP Land is the primary beneficiary of WKY CoalPlay. |
EQUITY INVESTMENTS
EQUITY INVESTMENTS | 9 Months Ended |
Sep. 30, 2015 | |
EQUITY INVESTMENTS | |
EQUITY INVESTMENTS | 9. EQUITY INVESTMENT AllDale Minerals On November 10, 2014, Cavalier Minerals (Note 8) made an initial contribution of $7.4 million in return for a limited partner interest in AllDale Minerals, which was created to purchase oil and gas mineral interests in various geographic locations within producing basins in the continental U.S. As of December 31, 2014, Cavalier Minerals’ had contributed $11.6 million to AllDale Minerals. During the three and nine months ended September 30, 2015, Cavalier Minerals contributed an additional $16.9 million and $37.4 million, respectively, bringing the total investment in AllDale Minerals to $49.0 million as of September 30, 2015. We continually review all rights provided to Cavalier Minerals and us by various agreements and continue to conclude all such rights do not provide Cavalier Minerals or us the ability to unilaterally direct any of the activities of AllDale Minerals that most significantly impact its economic performance. As such, we account for Cavalier Minerals’ ownership interest in the income or loss of AllDale Minerals as an equity investment in our condensed consolidated financial statements. We record equity income or loss based on AllDale Minerals’ distribution structure. Cavalier Minerals’ limited partner interest in AllDale Minerals was 71.7% at September 30, 2015. For the three and nine months ended September 30, 2015, we have been allocated losses of $0.1 million and $0.6 million, respectively, from AllDale Minerals. |
NET INCOME OF ARLP PER LIMITED
NET INCOME OF ARLP PER LIMITED PARTNER UNIT | 9 Months Ended |
Sep. 30, 2015 | |
NET INCOME OF ARLP PER LIMITED PARTNER UNIT | |
NET INCOME OF ARLP PER LIMITED PARTNER UNIT | 10. NET INCOME OF ARLP PER LIMITED PARTNER UNIT We utilize the two-class method in calculating basic and diluted earnings per unit ( “ EPU ” ). Net income of ARLP is allocated to the general partners and limited partners in accordance with their respective partnership percentages, after giving effect to any special income or expense allocations, including incentive distributions to our managing general partner, the holder of the IDR pursuant to our partnership agreement, which are declared and paid following the end of each quarter. Under the quarterly IDR provisions of our partnership agreement, our managing general partner is entitled to receive 15% of the amount we distribute in excess of $0.1375 per unit, 25% of the amount we distribute in excess of $0.15625 per unit, and 50% of the amount we distribute in excess of $0.1875 per unit. Our partnership agreement contractually limits our distributions to available cash; therefore, undistributed earnings of the ARLP Partnership are not allocated to the IDR holder. In addition, outstanding awards under our Long-Term Incentive Plan ( “ LTIP ”) and phantom units in notional accounts under our Supplemental Executive Retirement Plan (“SERP”) and the MGP Amended and Restated Deferred Compensation Plan for Directors (“Deferred Compensation Plan”) include rights to nonforfeitable distributions or distribution equivalents and are therefore considered participating securities. As such, we allocate undistributed and distributed earnings to these outstanding awards in our calculation of EPU. The following is a reconciliation of net income of ARLP used for calculating basic earnings per unit and the weighted-average units used in computing EPU for the three and nine months ended September 30, 2015 and 2014: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (in thousands, except per unit data) Net income of ARLP $ $ $ $ Adjustments: Managing general partner’s priority distributions General partners’ 2% equity ownership Limited partners’ interest in net income of ARLP Less: Distributions to participating securities Undistributed earnings attributable to participating securities - Net income of ARLP available to limited partners $ $ $ $ Weighted-average limited partner units outstanding – basic and diluted Basic and diluted net income of ARLP per limited partner unit (1) $ $ $ $ (1) Diluted EPU gives effect to all dilutive potential common units outstanding during the period using the treasury stock method. Diluted EPU excludes all dilutive potential units calculated under the treasury stock method if their effect is anti-dilutive. For the three and nine months ended September 30, 2015 and 2014, the combined total of LTIP, SERP and Deferred Compensation Plan units of 627, 844, 735 and 776, respectively, were considered anti-dilutive under the treasury stock method. |
WORKERS' COMPENSATION AND PNEUM
WORKERS' COMPENSATION AND PNEUMOCONIOSIS | 9 Months Ended |
Sep. 30, 2015 | |
WORKERS' COMPENSATION AND PNEUMOCONIOSIS | |
WORKERS' COMPENSATION AND PNEUMOCONIOSIS | 11. WORKERS’ COMPENSATION AND PNEUMOCONIOSIS The changes in the workers ’ compensation liability, including current and long-term liability balances, for each of the periods presented were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (in thousands) Beginning balance $ $ $ $ Accruals increase Payments Interest accretion Valuation gain (1) - - Ending balance $ $ $ $ (1) Our liability for the estimated present value of current workers’ compensation benefits is based on our actuarial estimates. Our actuarial calculations are based on a blend of actuarial projection methods and numerous assumptions including claim development patterns, mortality, medical costs and interest rates. We conducted a mid-year review of our actuarial assumptions in the second quarter of 2015 which resulted in a valuation gain primarily attributable to favorable changes in claims development and an increase in the discount rate used to calculate the estimated present value of future obligations from 3.41% at December 31, 2014 to 3.71% at June 30, 2015. Our mid-year review of our actuarial assumptions in the second quarter of 2014 also resulted in a valuation gain primarily attributable to favorable changes in claims development, offset partially by a decrease in the utilized discount rate from 4.11% at December 31, 2013 to 3.67% at June 30, 2014. Certain of our mine operating entities are liable under state statutes and the Federal Coal Mine Health and Safety Act of 1969, as amended, to pay pneumoconiosis, or black lung, benefits to eligible employees and former employees and their dependents. Components of the net periodic benefit cost for each of the periods presented are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (in thousands) Service cost $ $ $ $ Interest cost Amortization of net actuarial gain (1) Net periodic benefit cost $ $ $ $ (1) Amortization of net actuarial gain is included in the Operating expenses (excluding depreciation, depletion and amortization) line item within our condensed consolidated statements of income. |
COMPENSATION PLANS
COMPENSATION PLANS | 9 Months Ended |
Sep. 30, 2015 | |
COMPENSATION PLANS | |
COMPENSATION PLANS | 12. COMPENSATION PLANS Long-Term Incentive Plan We have the LTIP for certain employees and officers of our managing general partner and its affiliates who perform services for us. The LTIP awards are grants of non-vested “phantom” or notional units, which upon satisfaction of vesting requirements, entitle the LTIP participant to receive ARLP common units. Annual grant levels and vesting provisions for designated participants are recommended by our President and Chief Executive Officer, subject to review and approval of the compensation committee of the MGP board of directors (the “Compensation Committee”). On January 26, 2015, the Compensation Committee determined that the vesting requirements for the 2012 grants of 202,778 restricted units (which is net of 11,450 forfeitures) had been satisfied as of January 1, 2015. As a result of this vesting, on February 11, 2015, we issued 128,150 unrestricted common units to the LTIP participants. The remaining units were settled in cash to satisfy the tax withholding obligations for the LTIP participants. On January 26, 2015, the Compensation Committee authorized additional grants of up to 314,019 restricted units, of which 303,165 were granted during the nine months ended September 30, 2015 and will vest on January 1, 2018, subject to satisfaction of certain financial tests. The fair value of these 2015 grants is equal to the intrinsic value at the date of grant, which was $37.18 per unit. LTIP expense was $2.8 million and $2.5 million for the three months ended September 30, 2015 and 2014, respectively, and $8.3 million and $7.1 million for the nine months ended September 30, 2015 and 2014, respectively. After consideration of the January 1, 2015 vesting and subsequent issuance of 128,150 common units, approximately 3.7 million units remain available under the LTIP for issuance in the future, assuming all grants issued in 2013, 2014 and 2015 currently outstanding are settled with common units, without reduction for tax withholding, and no future forfeitures occur. As of September 30, 2015, there was $15.0 million in total unrecognized compensation expense related to the non-vested LTIP grants that are expected to vest. That expense is expected to be recognized over a weighted-average period of 1.3 years. As of September 30, 2015, the intrinsic value of the non-vested LTIP grants was $20.9 million. As of September 30, 2015, the total obligation associated with the LTIP was $18.4 million and is included in the partners’ capital Limited partners-common unitholders line item in our condensed consolidated balance sheets. As provided under the distribution equivalent rights provisions of the LTIP, all non-vested grants include contingent rights to receive quarterly cash distributions in an amount equal to the cash distributions we make to unitholders during the vesting period. SERP and Directors Deferred Compensation Plan We utilize the SERP to provide deferred compensation benefits for certain officers and key employees. All allocations made to participants under the SERP are made in the form of “phantom” ARLP units. The SERP is administered by the Compensation Committee. Our directors participate in the Deferred Compensation Plan. Pursuant to the Deferred Compensation Plan, for amounts deferred either automatically or at the election of the director, a notional account is established and credited with notional common units of ARLP, described in the Deferred Compensation Plan as “phantom” units. For both the SERP and Deferred Compensation Plan, when quarterly cash distributions are made with respect to ARLP common units, an amount equal to such quarterly distribution is credited to each participant ’ s notional account as additional phantom units. All grants of phantom units under the SERP and Deferred Compensation Plan vest immediately. For the nine months ended September 30, 2015 and 2014, SERP and Deferred Compensation Plan participant notional account balances were credited with a total of 24,741 and 15,860 phantom units, respectively, and the fair value of these phantom units was $30.23 per unit and $44.47 per unit, respectively, on a weighted-average basis. Total SERP and Deferred Compensation Plan expense was $0.4 million and $0.3 million for the three months ended September 30, 2015 and 2014, respectively, and $1.0 million and $0.9 million for the nine months ended September 30, 2015 and 2014, respectively. As of September 30, 2015, there were 393,722 total phantom units outstanding under the SERP and Deferred Compensation Plan and the total intrinsic value of the SERP and Deferred Compensation Plan phantom units was $8.8 million. As of September 30, 2015, the total obligation associated with the SERP and Deferred Compensation Plan was $13.3 million and is included in the partners’ capital Limited partners-common unitholders line item in our condensed consolidated balance sheets. |
COMPONENTS OF PENSION PLAN NET
COMPONENTS OF PENSION PLAN NET PERIODIC BENEFIT COSTS | 9 Months Ended |
Sep. 30, 2015 | |
COMPONENTS OF PENSION PLAN NET PERIODIC BENEFIT COSTS | |
COMPONENTS OF PENSION PLAN NET PERIODIC BENEFIT COSTS | 13. COMPONENTS OF PENSION PLAN NET PERIODIC BENEFIT COSTS Eligible employees at certain of our mining operations participate in a defined benefit plan (the “Pension Plan”) that we sponsor. The benefit formula for the Pension Plan is a fixed dollar unit based on years of service. Components of the net periodic benefit cost for each of the periods presented are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (in thousands) Service cost $ $ $ $ Interest cost Expected return on plan assets Amortization of net loss (1) Net periodic benefit cost $ $ $ $ (1) Amortization of net actuarial loss is included in the Operating expenses (excluding depreciation, depletion and amortization) line item within our condensed consolidated statements of income. During the nine months ended September 30, 2015, we made contribution payments of $1.0 million to the Pension Plan for the 2014 plan year and $1.4 million for the 2015 plan year. On October 14, 2015, we made a contribution payment of $0.7 million for the 2015 plan year. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2015 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 14. SEGMENT INFORMATION We operate in the eastern U.S. as a producer and marketer of coal to major utilities and industrial users. We aggregate multiple operating segments into two reportable segments: Illinois Basin and Appalachia and an “all other” category referred to as Other and Corporate. Our reportable segments correspond to major coal producing regions in the eastern U.S. Similar economic characteristics for our operating segments within each of these two reportable segments generally include coal quality, geology, coal marketing opportunities, mining and transportation methods and regulatory issues. As a result of acquiring the remaining equity interests in Hamilton, formerly known as White Oak (Note 4), we restructured our reportable segments to include Hamilton as part of our Illinois Basin segment due to the similarities in product, management, location, and operation with other mines included in the segment. This new organization reflects how our chief operating decision maker manages and allocates resources to our various operations. Prior periods have been recast to include Hamilton in our Illinois Basin segment. The Illinois Basin reportable segment is comprised of multiple operating segments, including Webster County Coal, LLC’s Dotiki mining complex, Gibson County Coal, LLC’s mining complex (“Gibson”), which includes the Gibson North mine and Gibson South mine, Hopkins County Coal, LLC’s Elk Creek mine and the Fies property, White County Coal, LLC’s Pattiki mining complex, Warrior Coal, LLC’s mining complex, Sebree Mining, LLC’s mining complex (“Sebree”), which includes the Onton mine, River View Coal, LLC’s mining complex and the Hamilton mining complex. In April 2014, production began at the Gibson South mine. The Elk Creek mine is currently expected to cease production in early 2016. On November 6, 2015, Gibson and Sebree issued Worker Adjustment and Retraining Notification (“WARN”) Act notices. See Note 15. The Appalachia reportable segment is comprised of multiple operating segments, including the Mettiki mining complex, the Tunnel Ridge, LLC mining complex, the MC Mining, LLC mining complex and the Penn Ridge Coal, LLC (“Penn Ridge”) property. The Mettiki mining complex includes Mettiki Coal (WV), LLC’s Mountain View mine and Mettiki Coal, LLC’s preparation plant. The Penn Ridge property is held by us for future mine development. Other and Corporate includes marketing and administrative expenses, Alliance Service, Inc. (“ASI”) and its subsidiary, Matrix Design Group, LLC and its subsidiaries Matrix Design International, LLC and Matrix Design Africa (PTY) LTD (“Matrix Design”), Alliance Design Group, LLC (“Alliance Design”) (collectively, Matrix Design and Alliance Design are referred to as the “Matrix Group”), ASI’s ownership of aircraft, the Mt. Vernon Transfer Terminal, LLC (“Mt. Vernon”) dock activities, coal brokerage activity, MAC (Note 4), certain activities of Alliance Resource Properties, the Pontiki Coal, LLC mining complex, which sold most of its assets in May 2014, Wildcat Insurance, LLC (“Wildcat Insurance”), Alliance Minerals, and its affiliate, Cavalier Minerals (Note 8), which holds an equity investment in AllDale Minerals (Note 9), and AROP Funding (Note 7). Reportable segment results as of and for the three and nine months ended September 30, 2015 and 2014 are presented below. Illinois Basin Appalachia Other and Corporate Elimination (1) Consolidated (in thousands) Three months ended September 30, 2015 Total revenues (2) $ 420,517 $ 136,741 $ 40,264 $ (31,077) $ 566,445 Segment Adjusted EBITDA Expense (3) Segment Adjusted EBITDA (4)(5) Capital expenditures (7) - Three months ended September 30, 2014 (recast) Total revenues (2) $ 395,984 $ 167,391 $ 7,730 $ (1,777) $ 569,328 Segment Adjusted EBITDA Expense (3) Segment Adjusted EBITDA (4)(5) - Capital expenditures (7) - Nine months ended September 30, 2015 Total revenues (2) $ $ 460,154 $ 147,079 $ (113,471) $ 1,731,581 Segment Adjusted EBITDA Expense (3) Segment Adjusted EBITDA (4)(5) Total assets (6) Capital expenditures (7) - Nine months ended September 30, 2014 (recast) Total revenues (2) $ $ 468,671 $ 23,660 $ (7,280) $ 1,709,928 Segment Adjusted EBITDA Expense (3) Segment Adjusted EBITDA (4)(5) - Total assets (6) Capital expenditures (7) - (1) The elimination column represents the elimination of intercompany transactions and is primarily comprised of sales from the Matrix Group and MAC to our mining operations, coal sales and purchases between operations within different segments, sales of receivables to AROP Funding and insurance premiums paid to Wildcat Insurance. (2) Revenues included in the Other and Corporate column are primarily attributable to the Matrix Group revenues, Mt. Vernon transloading revenues, administrative service revenues from affiliates, MAC revenues, Wildcat Insurance revenues and brokerage coal sales. (3) Segment Adjusted EBITDA Expense includes operating expenses, outside coal purchases and other income. Transportation expenses are excluded as these expenses are passed through to our customers and consequently we do not realize any gain or loss on transportation revenues. We review Segment Adjusted EBITDA Expense per ton for cost trends. The following is a reconciliation of consolidated Segment Adjusted EBITDA Expense to Operating expenses (excluding depreciation, depletion and amortization) : Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (in thousands) Segment Adjusted EBITDA Expense $ $ $ $ Outside coal purchases ) Other income Operating expenses (excluding depreciation, depletion and amortization) $ $ $ $ (4) Segment Adjusted EBITDA is defined as net income (prior to the allocation of noncontrolling interest) before net interest expense, income taxes, depreciation, depletion and amortization, general and administrative expenses and asset impairment charge. Management therefore is able to focus solely on the evaluation of segment operating profitability as it relates to our revenues and operating expenses, which are primarily controlled by our segments. Consolidated Segment Adjusted EBITDA is reconciled to net income as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (in thousands) Consolidated Segment Adjusted EBITDA $ $ $ $ General and administrative Depreciation, depletion and amortization Asset impairment charge - - Interest expense, net Income tax expense - - Net income $ $ $ $ (5) Includes equity in loss of affiliates for the three and nine months ended September 30, 2015 of $(17.1) million and $(48.5) million, respectively, included in the Illinois Basin segment and $(0.1) million and $(0.6) million, respectively, included in Other and Corporate. Includes equity in income (loss) of affiliates for the three and nine months ended September 30, 2014 of $39,000 and $(13.8) million, respectively, included in the Illinois Basin segment and $0.2 million and $0.3 million, respectively, included in Other and Corporate. (6) Total assets for Other and Corporate include investments in affiliate of $48.0 million at September 30, 2015. Total assets for the Illinois Basin segment and Other and Corporate include investments in affiliates of $200.1 million and $1.5 million, respectively, at September 30, 2014. (7) Capital expenditures shown above exclude the Hamilton Acquisition on July 31, 2015, the Patriot acquisition on February 3, 2015 and the MAC acquisition on January 1, 2015 (Note 4). |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2015 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 15. SUBSEQUENT EVENTS On October 27, 2015, we declared a quarterly distribution for the quarter ended September 30, 2015, of $0.675 per unit, on all common units outstanding, totaling approximately $87.5 million, including our managing general partner’s incentive distributions, payable on November 13, 2015 to all unitholders of record as of November 6, 2015. On November 6, 2015 Gibson issued WARN Act notices to approximately 120 of its employees in anticipation of eliminating one and a half production units at its Gibson North and Gibson South mines. By December 31, 2015, we currently expect Gibson to be operating four production units at the Gibson South mine with the Gibson North mine idled. Resumption of production at the Gibson North mine will be market dependent. On November 6, 2015 Sebree issued WARN Act notices to all of its employees at the Onton mine, and stopped coal production at the mine. As a result of employment opportunities at our other operations, we currently expect this reduction in force to affect approximately 140 employees. We are currently evaluating the impact to our financial statements as a result of these production reductions. |
ORGANIZATION AND PRESENTATION (
ORGANIZATION AND PRESENTATION (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
ORGANIZATION AND PRESENTATION | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements include the accounts and operations of the ARLP Partnership and present our financial position as of September 30, 2015 and December 31, 2014, the results of our operations and comprehensive income for the three and nine months ended September 30, 2015 and 2014 and the cash flows for the nine months ended September 30, 2015 and 2014. All of our intercompany transactions and accounts have been eliminated. These condensed consolidated financial statements and notes are unaudited. However, in the opinion of management, these financial statements reflect all normal recurring adjustments necessary for a fair presentation of the results for the periods presented. Results for interim periods are not necessarily indicative of results to be expected for the full year ending December 31, 2015. These condensed consolidated financial statements and notes are prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting and do not include all of the information normally included with financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) of the United States. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014. On June 16, 2014, we completed a two-for-one split of our common units, whereby holders of record as of May 30, 2014 received a one unit distribution on each unit outstanding on that date. The unit split resulted in the issuance of 37,030,317 common units. All references to the number of units and per unit net income of ARLP and distribution amounts included in this report have been adjusted to give effect for this unit split for all periods presented. Also, ARLP’s partnership agreement was amended effective June 16, 2014, to reduce by half the target thresholds for the incentive distribution rights per unit. |
Use of Estimates | Use of Estimates The preparation of the ARLP Partnership’s condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in our condensed consolidated financial statements. Actual results could differ from those estimates. |
Goodwill | Goodwill Goodwill is not amortized, but is subject to an annual review on November 30, 2015, or at other dates if events or changes in circumstances indicate that the carrying value of goodwill may be impaired. The reporting unit or units used to evaluate and measure goodwill for impairment are determined primarily from the manner in which the business is managed or operated. A reporting unit is an operating segment or a component that is one level below an operating segment. There were no impairments of goodwill during the three and nine month periods ended September 30, 2015. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
White Oak | |
Acquisitions | |
Schedule of consideration transferred | On July 31, 2015 (the “Hamilton Acquisition Date”) our subsidiary, Alliance WOR Processing, LLC (now known as Hamilton County Coal, LLC, or “Hamilton”) acquired the remaining Series A and B Units, representing 60% of the voting interests of White Oak Resources LLC (“White Oak”), from White Oak Finance Inc. and other parties (the “Sellers”) for total fair value consideration of $287.3 million (the “Hamilton Acquisition”), consisting of the following: (in thousands) Cash on hand $ Contingent consideration Settlement of pre-existing relationships Previously held equity-method investment Total consideration $ |
Summary of fair value allocation of assets acquired and liabilities assumed | Preliminary as of September 30, 2015 (in thousands) Cash and cash equivalents $ Trade receivables Prepaid expenses Inventories Other current assets Property, plant and equipment Advance royalties Deposits Other assets Total identifiable assets acquired Accounts payable Accrued expenses Deferred revenue Current maturities, long-term debt Long-term debt, excluding current maturities Other long-term liabilities Asset retirement obligations Total liabilities assumed Net identifiable assets acquired $ Goodwill Net assets acquired $ |
Schedule of revenue and earnings since acquisition date and pro forma condensed consolidated income statement | The amounts of revenue and earnings of Hamilton included in the Partnership’s condensed consolidated statements of income from the acquisition date to the period ending September 30, 2015 are as follows: (in thousands) Revenue $ Net income The following represents the pro forma condensed consolidated income statement as if Hamilton had been included in the consolidated results of the Partnership since January 1, 2014. These amounts have been calculated after applying the Partnership’s accounting. Additionally, the Partnership’s results have been adjusted to remove the effect of its equity investment in White Oak and the preexisting relationships that it had in White Oak. Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (in thousands) Total revenues As reported $ $ $ $ Pro forma Net income As reported $ $ $ $ Pro forma |
Patriot Coal Corporation | |
Acquisitions | |
Summary of consideration transferred and fair value allocation of assets acquired and liabilities assumed | Preliminary as of March 31, 2015 Adjustments Final as of September 30, 2015 (in thousands) Consideration transferred $ $ Recognized amounts of net tangible and intangible assets acquired and liabilities assumed: Inventories ) Property, plant and equipment, including mineral rights and leased equipment Customer contracts, net - Other assets ) - Asset retirement obligation - Other liabilities - ) Net tangible and intangible assets acquired $ $ |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
FAIR VALUE MEASUREMENTS | |
Summary of recurring fair value measurements within the hierarchy | September 30, 2015 December 31, 2014 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 (in thousands) Long-term debt $ - $ $ - $ - $ $ - Contingent consideration - - - - - Total $ - $ $ $ - $ $ - |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
LONG-TERM DEBT | |
Schedule of Long-Term Debt | September 30, 2015 December 31, 2014 (in thousands) Revolving Credit facility $ $ Series A senior notes - Series B senior notes Term loan Securitization facility Hamilton revolving credit facility - Hamilton equipment financing agreement - Less current maturities ) ) Total long-term debt $ $ |
NET INCOME OF ARLP PER LIMITE27
NET INCOME OF ARLP PER LIMITED PARTNER UNIT (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
NET INCOME OF ARLP PER LIMITED PARTNER UNIT | |
Reconciliation of net income and EPU calculations | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (in thousands, except per unit data) Net income of ARLP $ $ $ $ Adjustments: Managing general partner’s priority distributions General partners’ 2% equity ownership Limited partners’ interest in net income of ARLP Less: Distributions to participating securities Undistributed earnings attributable to participating securities - Net income of ARLP available to limited partners $ $ $ $ Weighted-average limited partner units outstanding – basic and diluted Basic and diluted net income of ARLP per limited partner unit (1) $ $ $ $ (1) Diluted EPU gives effect to all dilutive potential common units outstanding during the period using the treasury stock method. Diluted EPU excludes all dilutive potential units calculated under the treasury stock method if their effect is anti-dilutive. For the three and nine months ended September 30, 2015 and 2014, the combined total of LTIP, SERP and Deferred Compensation Plan units of 627, 844, 735 and 776, respectively, were considered anti-dilutive under the treasury stock method. |
WORKERS' COMPENSATION AND PNE28
WORKERS' COMPENSATION AND PNEUMOCONIOSIS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Accrued Workers Compensation And Pneumoconiosis Benefits | |
Reconciliation of changes in workers' compensation liability | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (in thousands) Beginning balance $ $ $ $ Accruals increase Payments Interest accretion Valuation gain (1) - - Ending balance $ $ $ $ (1) Our liability for the estimated present value of current workers’ compensation benefits is based on our actuarial estimates. Our actuarial calculations are based on a blend of actuarial projection methods and numerous assumptions including claim development patterns, mortality, medical costs and interest rates. We conducted a mid-year review of our actuarial assumptions in the second quarter of 2015 which resulted in a valuation gain primarily attributable to favorable changes in claims development and an increase in the discount rate used to calculate the estimated present value of future obligations from 3.41% at December 31, 2014 to 3.71% at June 30, 2015. Our mid-year review of our actuarial assumptions in the second quarter of 2014 also resulted in a valuation gain primarily attributable to favorable changes in claims development, offset partially by a decrease in the utilized discount rate from 4.11% at December 31, 2013 to 3.67% at June 30, 2014. |
Pneumoconiosis benefits | |
Accrued Workers Compensation And Pneumoconiosis Benefits | |
Components of net periodic benefit cost | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (in thousands) Service cost $ $ $ $ Interest cost Amortization of net actuarial gain (1) Net periodic benefit cost $ $ $ $ (1) Amortization of net actuarial gain is included in the Operating expenses (excluding depreciation, depletion and amortization) line item within our condensed consolidated statements of income. |
COMPONENTS OF PENSION PLAN NE29
COMPONENTS OF PENSION PLAN NET PERIODIC BENEFIT COSTS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Pension Plan | |
Employee Benefit Plans | |
Components of net periodic benefit cost | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (in thousands) Service cost $ $ $ $ Interest cost Expected return on plan assets Amortization of net loss (1) Net periodic benefit cost $ $ $ $ (1) Amortization of net actuarial loss is included in the Operating expenses (excluding depreciation, depletion and amortization) line item within our condensed consolidated statements of income. |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
SEGMENT INFORMATION | |
Schedule of reportable segment results | Reportable segment results as of and for the three and nine months ended September 30, 2015 and 2014 are presented below. Illinois Basin Appalachia Other and Corporate Elimination (1) Consolidated (in thousands) Three months ended September 30, 2015 Total revenues (2) $ 420,517 $ 136,741 $ 40,264 $ (31,077) $ 566,445 Segment Adjusted EBITDA Expense (3) Segment Adjusted EBITDA (4)(5) Capital expenditures (7) - Three months ended September 30, 2014 (recast) Total revenues (2) $ 395,984 $ 167,391 $ 7,730 $ (1,777) $ 569,328 Segment Adjusted EBITDA Expense (3) Segment Adjusted EBITDA (4)(5) - Capital expenditures (7) - Nine months ended September 30, 2015 Total revenues (2) $ $ 460,154 $ 147,079 $ (113,471) $ 1,731,581 Segment Adjusted EBITDA Expense (3) Segment Adjusted EBITDA (4)(5) Total assets (6) Capital expenditures (7) - Nine months ended September 30, 2014 (recast) Total revenues (2) $ $ 468,671 $ 23,660 $ (7,280) $ 1,709,928 Segment Adjusted EBITDA Expense (3) Segment Adjusted EBITDA (4)(5) - Total assets (6) Capital expenditures (7) - (1) The elimination column represents the elimination of intercompany transactions and is primarily comprised of sales from the Matrix Group and MAC to our mining operations, coal sales and purchases between operations within different segments, sales of receivables to AROP Funding and insurance premiums paid to Wildcat Insurance. (2) Revenues included in the Other and Corporate column are primarily attributable to the Matrix Group revenues, Mt. Vernon transloading revenues, administrative service revenues from affiliates, MAC revenues, Wildcat Insurance revenues and brokerage coal sales. (3) Segment Adjusted EBITDA Expense includes operating expenses, outside coal purchases and other income. Transportation expenses are excluded as these expenses are passed through to our customers and consequently we do not realize any gain or loss on transportation revenues. We review Segment Adjusted EBITDA Expense per ton for cost trends. The following is a reconciliation of consolidated Segment Adjusted EBITDA Expense to Operating expenses (excluding depreciation, depletion and amortization) : Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (in thousands) Segment Adjusted EBITDA Expense $ $ $ $ Outside coal purchases ) Other income Operating expenses (excluding depreciation, depletion and amortization) $ $ $ $ (4) Segment Adjusted EBITDA is defined as net income (prior to the allocation of noncontrolling interest) before net interest expense, income taxes, depreciation, depletion and amortization, general and administrative expenses and asset impairment charge. Management therefore is able to focus solely on the evaluation of segment operating profitability as it relates to our revenues and operating expenses, which are primarily controlled by our segments. Consolidated Segment Adjusted EBITDA is reconciled to net income as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (in thousands) Consolidated Segment Adjusted EBITDA $ $ $ $ General and administrative Depreciation, depletion and amortization Asset impairment charge - - Interest expense, net Income tax expense - - Net income $ $ $ $ (5) Includes equity in loss of affiliates for the three and nine months ended September 30, 2015 of $(17.1) million and $(48.5) million, respectively, included in the Illinois Basin segment and $(0.1) million and $(0.6) million, respectively, included in Other and Corporate. Includes equity in income (loss) of affiliates for the three and nine months ended September 30, 2014 of $39,000 and $(13.8) million, respectively, included in the Illinois Basin segment and $0.2 million and $0.3 million, respectively, included in Other and Corporate. (6) Total assets for Other and Corporate include investments in affiliate of $48.0 million at September 30, 2015. Total assets for the Illinois Basin segment and Other and Corporate include investments in affiliates of $200.1 million and $1.5 million, respectively, at September 30, 2014. (7) Capital expenditures shown above exclude the Hamilton Acquisition on July 31, 2015, the Patriot acquisition on February 3, 2015 and the MAC acquisition on January 1, 2015 (Note 4). |
Reconciliation of consolidated Segment Adjusted EBITDA Expense to operating expenses (excluding depreciation, depletion and amortization) | The following is a reconciliation of consolidated Segment Adjusted EBITDA Expense to Operating expenses (excluding depreciation, depletion and amortization) : Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (in thousands) Segment Adjusted EBITDA Expense $ $ $ $ Outside coal purchases ) Other income Operating expenses (excluding depreciation, depletion and amortization) $ $ $ $ |
Reconciliation of consolidated Segment Adjusted EBITDA to net income | Consolidated Segment Adjusted EBITDA is reconciled to net income as follows: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (in thousands) Consolidated Segment Adjusted EBITDA $ $ $ $ General and administrative Depreciation, depletion and amortization Asset impairment charge - - Interest expense, net Income tax expense - - Net income $ $ $ $ |
ORGANIZATION AND PRESENTATION31
ORGANIZATION AND PRESENTATION (Details) $ in Thousands | Jun. 16, 2014shares | Sep. 30, 2015USD ($)shares | Sep. 30, 2014 | Sep. 30, 2015USD ($)shares | Sep. 30, 2014 |
Ownership interests | |||||
Ownership percentage by general partners | 2.00% | 2.00% | 2.00% | 2.00% | |
Unit split ratio | 2 | ||||
Units issued due to split | 37,030,317 | ||||
Impairments of goodwill (in dollars) | $ | $ 0 | $ 0 | |||
ARLP | SGP | |||||
Ownership interests | |||||
Ownership percentage by general partners | 0.01% | ||||
ARLP | MGP | |||||
Ownership interests | |||||
Ownership percentage by general partners | 0.99% | ||||
ARLP | AHGP | |||||
Ownership interests | |||||
Ownership percentage of managing general partner by parent | 100.00% | ||||
Units owned by parent | 31,088,338 | 31,088,338 | |||
Intermediate Partnership | SGP | |||||
Ownership interests | |||||
Ownership percentage by general partners | 0.01% | ||||
Intermediate Partnership | MGP | |||||
Ownership interests | |||||
Ownership percentage by general partners | 1.0001% | ||||
Alliance Coal | MGP | |||||
Ownership interests | |||||
Ownership percentage by general partners | 0.001% |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) $ in Thousands | Jul. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||||
Recognized amounts of net tangible and intangible assets acquired and liabilities assumed: | ||||||||||
Goodwill | $ 161,985 | $ 161,985 | $ 161,985 | |||||||
Business Acquisition, Pro Forma Information [Abstract] | ||||||||||
Total revenues, As reported | 566,445 | [1] | $ 569,328 | [1] | 1,731,581 | [1] | $ 1,709,928 | [2] | ||
Net income, As reported | $ 83,372 | 119,978 | $ 284,696 | 373,535 | ||||||
White Oak | ||||||||||
Acquisitions | ||||||||||
Remaining equity interest acquired (as a percent) | 60.00% | |||||||||
Cash on hand | $ 50,000 | |||||||||
Contingent consideration | 14,300 | |||||||||
Settlement of pre-existing relationships | 119,663 | |||||||||
Previously held equity-method investment | 103,322 | |||||||||
Total consideration | $ 287,285 | |||||||||
Ownership interest in acquiree (as a percent) | 100.00% | 100.00% | 100.00% | |||||||
Maximum amount of contingent consideration payable | $ 110,000 | $ 110,000 | $ 110,000 | |||||||
Prior equity interest (as a percent) | 40.00% | |||||||||
Settlement of existing account balances | $ 49,600 | |||||||||
Recognized amounts of net tangible and intangible assets acquired and liabilities assumed: | ||||||||||
Cash and cash equivalents | 3,125 | |||||||||
Trade receivables | 3,122 | |||||||||
Prepaid expenses | 4,364 | |||||||||
Inventories | 7,240 | |||||||||
Other current assets | 9,415 | |||||||||
Property, plant and equipment | 258,798 | |||||||||
Advance royalties | 3,349 | |||||||||
Deposits | 6,981 | |||||||||
Other assets | 5,580 | |||||||||
Total identifiable assets acquired | 301,974 | |||||||||
Accounts payable | (31,399) | |||||||||
Accrued expenses | (18,609) | |||||||||
Deferred revenue | (517) | |||||||||
Current maturities, long-term debt | (29,529) | |||||||||
Long-term debt, excluding current maturities | (64,588) | |||||||||
Other long-term liabilities | (15,175) | |||||||||
Asset retirement obligation | (12,484) | |||||||||
Total liabilities assumed | (172,301) | |||||||||
Net identifiable assets acquired | 129,673 | |||||||||
Goodwill | 157,612 | |||||||||
Net tangible and intangible assets acquired | $ 287,285 | |||||||||
Acquisitions, additional information | ||||||||||
Changes in the recognized amount of goodwill | 0 | |||||||||
Revenue of acquired business included in consolidated statements of income | 29,302 | |||||||||
Net income of acquired business included in consolidated statements of income | $ (6,120) | |||||||||
Business Acquisition, Pro Forma Information [Abstract] | ||||||||||
Total revenues, Pro forma | 575,160 | 578,869 | 1,795,228 | 1,733,404 | ||||||
Net income, Pro forma | $ 80,299 | $ 110,991 | $ 272,327 | $ 361,361 | ||||||
[1] | Revenues included in the Other and Corporate column are primarily attributable to the Matrix Group revenues, Mt. Vernon transloading revenues, administrative service revenues from affiliates, MAC revenues, Wildcat Insurance revenues and brokerage coal sales. | |||||||||
[2] | Revenues included in the Other and Corporate column are primarily attributable to the Matrix Group revenues, Mt. Vernon transloading revenues, administrative service revenues from affiliates, MAC revenues, Wildcat Insurance revenues and brokerage coal sales. |
ACQUISITIONS (Details 2)
ACQUISITIONS (Details 2) $ in Thousands, T in Millions | Feb. 03, 2015USD ($)T | Dec. 31, 2014USD ($) | Feb. 28, 2015USD ($)T | Feb. 02, 2015USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014$ / TT | Sep. 30, 2015USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014$ / TT | Dec. 31, 2014T |
Coal Reserves in Henderson and Union Counties, Kentucky | WKY CoalPlay | Variable Interest Entity, Not Primary Beneficiary | Coal lease | ||||||||||
Acquisitions | ||||||||||
Coal reserves leased from related party (in tons) | T | 39.1 | |||||||||
Payments for royalties | $ 2,100 | |||||||||
WKY CoalPlay | Coal Reserves in Henderson and Union Counties, Kentucky | Central States, a subsidiary of Patriot | ||||||||||
Acquisitions | ||||||||||
Coal reserves, rights purchased (in tons) | T | 39.1 | 39.1 | ||||||||
Purchase price (in dollars) | $ 25,000 | $ 25,000 | ||||||||
Patriot Coal Corporation | ||||||||||
Acquisitions | ||||||||||
Purchase price paid in cash | $ 20,500 | $ 2,100 | ||||||||
Coal reserves (in tons) | T | 84.1 | |||||||||
Non-reserve coal deposits (in tons) | T | 43.2 | |||||||||
Increase to purchase price from prior cash paid and agreement for contingent consideration | $ 8,300 | |||||||||
Consideration transferred | 47,874 | |||||||||
Recognized amounts of net tangible and intangible assets acquired and liabilities assumed: | ||||||||||
Inventories | 1,994 | |||||||||
Property, plant and equipment, including mineral rights and leased facilities | 32,029 | |||||||||
Customer contracts, net | 19,193 | |||||||||
Asset retirement obligation | (2,255) | |||||||||
Other liabilities | (3,087) | |||||||||
Net tangible and intangible assets acquired | 47,874 | |||||||||
Acquisitions, additional information | ||||||||||
Agreement for additional payment included in estimated consideration transferred | 6,200 | |||||||||
Portion of additional agreed consideration amount paid to date | $ 5,600 | |||||||||
Patriot Coal Corporation | Preliminary as of March 31, 2015 | ||||||||||
Acquisitions | ||||||||||
Consideration transferred | 47,514 | |||||||||
Recognized amounts of net tangible and intangible assets acquired and liabilities assumed: | ||||||||||
Inventories | 3,255 | |||||||||
Property, plant and equipment, including mineral rights and leased facilities | 26,995 | |||||||||
Customer contracts, net | 19,193 | |||||||||
Other assets | 326 | |||||||||
Asset retirement obligation | (2,255) | |||||||||
Net tangible and intangible assets acquired | 47,514 | |||||||||
Patriot Coal Corporation | Adjustments | ||||||||||
Recognized amounts of net tangible and intangible assets acquired and liabilities assumed: | ||||||||||
Inventories | (1,261) | |||||||||
Property, plant and equipment, including mineral rights and leased facilities | 5,034 | |||||||||
Other assets | (326) | |||||||||
Other liabilities | $ (3,087) | |||||||||
Patriot Coal Corporation | Customer contracts | ||||||||||
Acquisitions | ||||||||||
Initial purchase price for coal supply agreements | $ 21,000 | |||||||||
Amount paid into escrow | 9,300 | |||||||||
Escrow deposit released | 7,500 | |||||||||
Escrow deposit returned | $ 1,800 | |||||||||
Coal to be delivered under acquired supply agreements (in tons) | T | 5.1 | |||||||||
Pro forma coal sales under acquired supply agreements (in tons) | T | 0.8 | 2.4 | ||||||||
Pro forma average price for coal sales under acquired supply agreements (in dollars per ton) | $ / T | 46.67 | 46.67 | ||||||||
Revenues generated since the Initial Closing Date | $ 29,400 | $ 108,700 | ||||||||
Consideration transferred | $ 19,200 | |||||||||
Acquisitions, additional information | ||||||||||
Amortization expense for acquired coal supply agreements | $ 4,000 | $ 10,100 |
ACQUISITIONS (Details 3)
ACQUISITIONS (Details 3) - USD ($) $ in Thousands | Jan. 01, 2015 | Mar. 31, 2006 | Sep. 30, 2015 | Dec. 31, 2014 |
Acquisitions | ||||
Goodwill | $ 161,985 | |||
White County Coal | MAC | ||||
Acquisitions | ||||
Purchase of equity investment | $ 1,000 | |||
MAC | ||||
Acquisitions | ||||
Equity interest (as a percent) | 50.00% | |||
Balance of equity investment | $ 1,600 | |||
Remaining equity interest acquired (as a percent) | 50.00% | |||
Cash on hand | $ 5,500 | |||
Goodwill | $ 4,200 |
ASSET IMPAIRMENT CHARGE (Detail
ASSET IMPAIRMENT CHARGE (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended |
Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2015 | |
Asset impairment charges | |||
Asset impairment charge | $ 10,695 | $ 10,695 | |
Illinois Basin | Assets associated with surrendered lease agreement | |||
Asset impairment charges | |||
Asset impairment charge | $ 10,700 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - Estimated fair value - Recurring - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Level 2 | ||
FAIR VALUE MEASUREMENTS | ||
Long-term debt | $ 963,801 | $ 833,351 |
Total | 963,801 | $ 833,351 |
Level 3 | ||
FAIR VALUE MEASUREMENTS | ||
Contingent consideration | 14,300 | |
Total | $ 14,300 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Long-Term Debt | ||
Long-term debt including current and non-current | $ 953,048 | $ 821,250 |
Less current maturities | (142,159) | (230,000) |
Total long-term debt | 810,889 | 591,250 |
Revolving Credit Facility | ||
Long-Term Debt | ||
Long-term debt including current and non-current | 403,000 | 140,000 |
Term Loan | ||
Long-Term Debt | ||
Long-term debt including current and non-current | 212,500 | 231,250 |
Series A Senior Notes | ||
Long-Term Debt | ||
Long-term debt including current and non-current | 205,000 | |
Series B Senior Notes | ||
Long-Term Debt | ||
Long-term debt including current and non-current | 145,000 | 145,000 |
Securitization Facility | ||
Long-Term Debt | ||
Long-term debt including current and non-current | 100,000 | $ 100,000 |
Hamilton Revolving Credit Facility | ||
Long-Term Debt | ||
Long-term debt including current and non-current | 10,000 | |
Hamilton Equipment Financing Agreement | ||
Long-Term Debt | ||
Long-term debt including current and non-current | $ 82,548 |
LONG-TERM DEBT (Details 2)
LONG-TERM DEBT (Details 2) $ in Thousands | Jun. 26, 2015USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Oct. 16, 2015USD ($) |
Long-Term Debt | |||||
Outstanding balance of debt repaid | $ 205,000 | $ 18,000 | |||
ARLP Debt Arrangements | |||||
Long-Term Debt | |||||
ARLP debt arrangements requirements, period over which the ratios are required to be maintained | 1 year | ||||
Actual debt to cash flow ratio for trailing twelve months | 1.23 | ||||
Actual cash flow to interest expense ratio for trailing twelve months | 24.3 | ||||
ARLP Debt Arrangements | Maximum | |||||
Long-Term Debt | |||||
ARLP debt arrangements requirements, debt to cash flow ratio | 3 | ||||
ARLP Debt Arrangements | Minimum | |||||
Long-Term Debt | |||||
ARLP debt arrangements requirements, cash flow to interest expense ratio | 3 | ||||
Revolving Credit Facility | |||||
Long-Term Debt | |||||
Revolving credit facility | $ 700,000 | $ 700,000 | |||
Maximum separate capital lease obligations and sale leaseback arrangements | 10,000 | 10,000 | $ 100,000 | ||
Line of credit facility outstanding amount | 403,000 | 403,000 | |||
Letters of credit outstanding | 5,400 | 5,400 | |||
Line of credit facility, available for borrowing | $ 291,600 | 291,600 | |||
Annual commitment fee percentage, undrawn portion | 0.25% | ||||
Frequency of commitment fee on undrawn portion | annual | ||||
Series A Senior Notes | |||||
Long-Term Debt | |||||
Outstanding balance of debt repaid | $ 205,000 | ||||
Securitization Facility | |||||
Long-Term Debt | |||||
Revolving credit facility | $ 100,000 | 100,000 | |||
Line of credit facility outstanding amount | $ 100,000 | $ 100,000 | |||
Initial term | 364 days | ||||
Extended term | 364 days |
LONG-TERM DEBT (Details 3)
LONG-TERM DEBT (Details 3) - USD ($) $ in Thousands | Oct. 19, 2015 | Oct. 16, 2015 | Sep. 30, 2015 | Sep. 30, 2014 |
Long-Term Debt | ||||
Outstanding balance of debt repaid | $ 205,000 | $ 18,000 | ||
Hamilton Revolving Credit Facility | ||||
Long-Term Debt | ||||
Revolving credit facility | $ 10,000 | |||
Effective interest rate (as a percent) | 3.35% | |||
Outstanding balance of debt repaid | $ 10,000 | |||
Hamilton Revolving Credit Facility | Prime rate | ||||
Long-Term Debt | ||||
Basis spread for variable interest rate (as a percent) | 0.10% | |||
Hamilton Equipment Financing Agreement | ||||
Long-Term Debt | ||||
Aggregate principal amount | $ 100,000 | |||
Frequency of installments | monthly | |||
Amount of equal installments | $ 2,100 | |||
Interest rate (as a percent) | 8.00% | |||
Outstanding balance of debt repaid | $ 80,600 |
LONG-TERM DEBT (Details 4)
LONG-TERM DEBT (Details 4) - Sale-leaseback of certain mining equipment $ in Millions | Oct. 29, 2015USD ($) |
Sale-leaseback transaction | |
Proceeds from sale of mining equipment leased back | $ 100 |
Term of lease | 4 years |
Monthly rent under lease agreement | $ 1.9 |
Balloon payment due at end of lease term (as a percent) | 20.00% |
LONG-TERM DEBT (Details 5)
LONG-TERM DEBT (Details 5) - Cavalier Credit Agreement $ in Millions | Oct. 06, 2015USD ($) |
Long-Term Debt | |
Credit facility amount | $ 100 |
Annual commitment fee percentage, undrawn portion | 0.00% |
Threshold aggregate borrowings to trigger principal repayment | $ 90 |
Period for initial amount of payments | 2 years |
Minimum | |
Long-Term Debt | |
Initial quarterly payments | $ 1.3 |
Quarterly payments after initial period | $ 2.5 |
Quarterly payments as a percentage of excess cash flow | 50.00% |
LIBOR | |
Long-Term Debt | |
Basis spread for variable interest rate (as a percent) | 6.00% |
VARIABLE INTEREST ENTITIES (Det
VARIABLE INTEREST ENTITIES (Details) - USD ($) $ in Thousands | Oct. 26, 2015 | Dec. 31, 2014 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Oct. 06, 2015 | Nov. 10, 2014 |
Variable Interest Entities | ||||||||
Funding contributed | $ 47,624 | $ 85,250 | ||||||
Contributions from noncontrolling owner | 1,483 | |||||||
Variable Interest Entity, Primary Beneficiary | Cavalier Minerals | ||||||||
Variable Interest Entities | ||||||||
Initial funding commitment | $ 48,000 | |||||||
Noncontrolling owner's initial funding commitment | 2,000 | |||||||
Funding contributed | $ 900 | $ 11,500 | $ 16,400 | 35,600 | $ 47,100 | |||
Remaining funding commitment | $ 900 | $ 900 | 900 | |||||
Contributions from noncontrolling owner | $ 2,000 | |||||||
Additional funding commitment | $ 96,000 | |||||||
Noncontrolling owner's additional funding commitment | 4,000 | |||||||
Incentive distribution for noncontrolling owners (as a percent) | 25.00% | |||||||
Ownership interest in VIE (as a percent) | 96.00% | |||||||
Cavalier Minerals | AllDale Minerals | ||||||||
Variable Interest Entities | ||||||||
Initial funding commitment | $ 49,000 | |||||||
Additional funding commitment | $ 100,000 |
VARIABLE INTEREST ENTITIES (D43
VARIABLE INTEREST ENTITIES (Details 2) $ in Thousands, T in Millions | Feb. 03, 2015USD ($)T | Feb. 28, 2015USD ($)T | Dec. 31, 2014USD ($)item | Sep. 30, 2015USD ($) |
Variable Interest Entities | ||||
Advance royalties paid | $ 15,895 | $ 26,887 | ||
WKY CoalPlay | Coal Reserves in Henderson and Union Counties, Kentucky | Central States, a subsidiary of Patriot | ||||
Variable Interest Entities | ||||
Coal reserves, rights purchased (in tons) | T | 39.1 | 39.1 | ||
Purchase price (in dollars) | $ 25,000 | $ 25,000 | ||
WKY CoalPlay | Variable Interest Entity, Not Primary Beneficiary | ||||
Variable Interest Entities | ||||
Advance royalties paid | $ 10,800 | |||
Number of options to acquire leased reserves granted during period | item | 2 | |||
WKY CoalPlay | Variable Interest Entity, Not Primary Beneficiary | Coal Reserves in Henderson and Union Counties, Kentucky | Coal lease | ||||
Variable Interest Entities | ||||
Lease agreement term | 20 years | |||
Percentage of earned royalty on coal sale price | 4.00% | |||
Annual minimum royalties | $ 2,100 | |||
Term to acquire the leased reserves | 3 years | |||
Percentage of internal rate of return on purchase price, if leased reserves acquired | 7.00% | |||
Payments for royalties | $ 2,100 |
EQUITY INVESTMENT (Details)
EQUITY INVESTMENT (Details) - AllDale Minerals - USD ($) $ in Millions | Nov. 10, 2014 | Sep. 30, 2015 | Sep. 30, 2015 | Dec. 31, 2014 |
Equity Investments | ||||
Allocated losses | $ 0.1 | $ 0.6 | ||
Cavalier Minerals | ||||
Equity Investments | ||||
Contribution to equity investee | $ 7.4 | 16.9 | 37.4 | |
Total contributions to investee | $ 49 | $ 49 | $ 11.6 | |
Ownership interest in equity method investee (as a percent) | 71.70% | 71.70% |
NET INCOME OF ARLP PER LIMITE45
NET INCOME OF ARLP PER LIMITED PARTNER UNIT (Details) | 9 Months Ended |
Sep. 30, 2015$ / shares | |
Excess Of $0.1375 Per Unit | |
Incentive distributions | |
General partner incentive distribution percentage | 15.00% |
Threshold distribution of net income per unit (in dollars per unit) | $ 0.1375 |
Excess Of $0.15625 Per Unit | |
Incentive distributions | |
General partner incentive distribution percentage | 25.00% |
Threshold distribution of net income per unit (in dollars per unit) | $ 0.15625 |
Excess Of $0.1875 Per Unit | |
Incentive distributions | |
General partner incentive distribution percentage | 50.00% |
Threshold distribution of net income per unit (in dollars per unit) | $ 0.1875 |
NET INCOME PER LIMITED PARTNER
NET INCOME PER LIMITED PARTNER UNIT (Details 2) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
NET INCOME OF ARLP PER LIMITED PARTNER UNIT | |||||
Net income of ARLP | $ 83,379 | $ 119,978 | $ 284,723 | $ 373,535 | |
Managing general partner's priority distributions | (36,371) | (33,588) | (108,205) | (97,954) | |
General partners' 2% equity ownership | (940) | (1,728) | (3,530) | (5,511) | |
LIMITED PARTNERS' INTEREST IN NET INCOME OF ARLP | 46,068 | 84,662 | 172,988 | 270,070 | |
Distributions to participating securities | (880) | (751) | (2,602) | (2,188) | |
Undistributed earnings attributable to participating securities | (585) | (367) | (2,027) | ||
Net income of ARLP available to limited partners | $ 45,188 | $ 83,326 | $ 170,019 | $ 265,855 | |
Weighted average limited partner units outstanding - basic and diluted (in units) | 74,188,784 | 74,060,634 | 74,169,538 | 74,038,952 | |
Basic and diluted net income of ARLP per limited partner unit (in dollars per unit) | [1] | $ 0.61 | $ 1.13 | $ 2.29 | $ 3.59 |
Anti-dilutive under the treasury stock method (in units) | 627 | 844 | 735 | 776 | |
Ownership percentage by general partners | 2.00% | 2.00% | 2.00% | 2.00% | |
[1] | Diluted EPU gives effect to all dilutive potential common units outstanding during the period using the treasury stock method. Diluted EPU excludes all dilutive potential units calculated under the treasury stock method if their effect is anti-dilutive. For the three and nine months ended September 30, 2015 and 2014, the combined total of LTIP, SERP and Deferred Compensation Plan units of 627, 844, 735 and 776, respectively, were considered anti-dilutive under the treasury stock method. |
WORKERS' COMPENSATION AND PNE47
WORKERS' COMPENSATION AND PNEUMOCONIOSIS (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Reconciliation of changes in the workers' compensation liability | |||||||||
Beginning balance | $ 55,671 | $ 61,515 | $ 57,557 | $ 62,909 | |||||
Accruals increase | 2,959 | 1,291 | 9,126 | 8,755 | |||||
Payments | (2,250) | (2,667) | (6,864) | (8,194) | |||||
Interest accretion | 489 | 646 | 1,466 | 1,939 | |||||
Valuation gain | [1] | (4,416) | (4,624) | ||||||
Ending balance | $ 55,671 | $ 57,557 | $ 61,515 | $ 62,909 | $ 56,869 | $ 60,785 | $ 56,869 | $ 60,785 | |
Workers' compensation discount rate (as a percent) | 3.71% | 3.41% | 3.67% | 4.11% | |||||
[1] | Our liability for the estimated present value of current workers′ compensation benefits is based on our actuarial estimates. Our actuarial calculations are based on a blend of actuarial projection methods and numerous assumptions including claim development patterns, mortality, medical costs and interest rates. We conducted a mid-year review of our actuarial assumptions in the second quarter of 2015 which resulted in a valuation gain primarily attributable to favorable changes in claims development and an increase in the discount rate used to calculate the estimated present value of future obligations from 3.41% at December 31, 2014 to 3.71% at June 30, 2015. Our mid-year review of our actuarial assumptions in the second quarter of 2014 also resulted in a valuation gain primarily attributable to favorable changes in claims development, offset partially by a decrease in the utilized discount rate from 4.11% at December 31, 2013 to 3.67% at June 30, 2014. |
WORKERS' COMPENSATION AND PNE48
WORKERS' COMPENSATION AND PNEUMOCONIOSIS (Details 2) - Pneumoconiosis benefits - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Accrued Workers Compensation And Pneumoconiosis Benefits | |||||
Service cost | $ 773 | $ 857 | $ 2,237 | $ 2,571 | |
Interest cost | 524 | 566 | 1,571 | 1,697 | |
Amortization of net actuarial gain | [1] | (113) | (263) | (338) | (789) |
Net periodic benefit cost | $ 1,184 | $ 1,160 | $ 3,470 | $ 3,479 | |
[1] | Amortization of net actuarial gain is included in the Operating expenses (excluding depreciation, depletion and amortization) line item within our condensed consolidated statements of income. |
COMPENSATION PLANS (Details)
COMPENSATION PLANS (Details) - ARLP LTIP - USD ($) $ / shares in Units, $ in Millions | Feb. 11, 2015 | Jan. 01, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | Jan. 26, 2015 |
Compensation Plans | ||||||||
Common units issued upon vesting | 128,150 | |||||||
Share based compensation expense | $ 2.8 | $ 2.5 | $ 8.3 | $ 7.1 | ||||
Units available for grant | 3,700,000 | 3,700,000 | ||||||
Unrecognized compensation expense | $ 15 | $ 15 | ||||||
Weighted-average period for recognition of expense | 1 year 3 months 18 days | |||||||
Total unit based obligation recorded | 18.4 | $ 18.4 | ||||||
Phantom Share Units (PSUs) | ||||||||
Compensation Plans | ||||||||
Additional grants authorized (in units) | 314,019 | |||||||
Units granted | 303,165 | |||||||
Fair value as intrinsic value at date of grant (in dollars per unit) | $ 37.18 | |||||||
Intrinsic value of outstanding grants | $ 20.9 | $ 20.9 | ||||||
Phantom Share Units (PSUs) | 2012 Grants | ||||||||
Compensation Plans | ||||||||
Units for which vesting requirements were deemed satisfied | 202,778 | |||||||
Forfeitures (in units) | 11,450 |
COMPENSATION PLANS (Details 2)
COMPENSATION PLANS (Details 2) - SERP and Deferred Compensation Plans - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Compensation Plans | ||||
Share based compensation expense | $ 0.4 | $ 0.3 | $ 1 | $ 0.9 |
Total unit based obligation recorded | $ 13.3 | $ 13.3 | ||
Phantom Share Units (PSUs) | ||||
Compensation Plans | ||||
Units granted | 24,741 | 15,860 | ||
Fair value (in dollars per unit) | $ 30.23 | $ 44.47 | ||
Units outstanding | 393,722 | 393,722 | ||
Intrinsic value of outstanding grants | $ 8.8 | $ 8.8 |
COMPONENTS OF PENSION PLAN NE51
COMPONENTS OF PENSION PLAN NET PERIODIC BENEFIT COSTS (Details) - USD ($) $ in Thousands | Oct. 14, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Pension Plan | ||||||
Components of net periodic benefit cost: | ||||||
Service cost | $ 618 | $ 543 | $ 1,855 | $ 1,630 | ||
Interest cost | 1,074 | 1,019 | 3,222 | 3,056 | ||
Expected return on plan assets | (1,398) | (1,368) | (4,193) | (4,106) | ||
Amortization of net loss | [1] | 839 | 193 | 2,516 | 580 | |
Net periodic benefit cost | $ 1,133 | $ 387 | 3,400 | $ 1,160 | ||
2014 plan year | ||||||
Components of net periodic benefit cost: | ||||||
Employer contribution | 1,000 | |||||
2015 plan year | ||||||
Components of net periodic benefit cost: | ||||||
Employer contribution | $ 700 | $ 1,400 | ||||
[1] | Amortization of net actuarial loss is included in the Operating expenses (excluding depreciation, depletion and amortization) line item within our condensed consolidated statements of income. |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) | 3 Months Ended | 9 Months Ended | ||||||||
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)segment | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) | ||||||
Segment Information | ||||||||||
Number of reportable segments | segment | 2 | |||||||||
Reportable segment results | ||||||||||
Total revenues | $ 566,445,000 | [1] | $ 569,328,000 | [1] | $ 1,731,581,000 | [1] | $ 1,709,928,000 | [2] | ||
Segment Adjusted EBITDA Expense | [3] | 336,074,000 | 348,624,000 | 1,045,530,000 | 1,023,134,000 | |||||
Segment Adjusted EBITDA | [4],[5] | 203,755,000 | 214,771,000 | 612,679,000 | 655,432,000 | |||||
Total assets | 2,505,393,000 | [6] | 2,173,602,000 | [6] | 2,505,393,000 | [6] | 2,173,602,000 | [6] | $ 2,285,059,000 | |
Capital expenditures | [7] | 51,424,000 | 79,081,000 | 159,182,000 | 235,060,000 | |||||
Additional information | ||||||||||
Equity in income (loss) of affiliates, net | (17,221,000) | 68,000 | (49,049,000) | (13,546,000) | ||||||
Investments in affiliate | 48,034,000 | 48,034,000 | $ 224,611,000 | |||||||
Payments to affiliate for acquisition and development of coal reserves | 1,401,000 | |||||||||
Goodwill | 161,985,000 | 161,985,000 | ||||||||
Operating segments | Illinois Basin | ||||||||||
Reportable segment results | ||||||||||
Total revenues | 420,517,000 | [1] | 395,984,000 | [1] | 1,237,819,000 | [1] | 1,224,877,000 | [2] | ||
Segment Adjusted EBITDA Expense | [3] | 249,615,000 | 247,625,000 | 728,048,000 | 736,174,000 | |||||
Segment Adjusted EBITDA | [4],[5] | 147,522,000 | 145,255,000 | 445,819,000 | 465,851,000 | |||||
Total assets | [6] | 1,799,170,000 | 1,526,744,000 | 1,799,170,000 | 1,526,744,000 | |||||
Capital expenditures | [7] | 37,350,000 | 62,830,000 | 105,536,000 | 182,884,000 | |||||
Additional information | ||||||||||
Equity in income (loss) of affiliates, net | (17,100,000) | 39,000 | (48,500,000) | (13,800,000) | ||||||
Investments in affiliate | 200,100,000 | 200,100,000 | ||||||||
Operating segments | Appalachia | ||||||||||
Reportable segment results | ||||||||||
Total revenues | 136,741,000 | [1] | 167,391,000 | [1] | 460,154,000 | [1] | 468,671,000 | [2] | ||
Segment Adjusted EBITDA Expense | [3] | 80,421,000 | 95,956,000 | 296,980,000 | 275,446,000 | |||||
Segment Adjusted EBITDA | [4],[5] | 53,380,000 | 68,501,000 | 154,760,000 | 184,460,000 | |||||
Total assets | [6] | 565,213,000 | 591,516,000 | 565,213,000 | 591,516,000 | |||||
Capital expenditures | [7] | 11,616,000 | 13,371,000 | 49,055,000 | 42,040,000 | |||||
Operating segments | Other and Corporate | ||||||||||
Reportable segment results | ||||||||||
Total revenues | 40,264,000 | [1] | 7,730,000 | [1] | 147,079,000 | [1] | 23,660,000 | [2] | ||
Segment Adjusted EBITDA Expense | [3] | 33,701,000 | 6,820,000 | 124,321,000 | 18,794,000 | |||||
Segment Adjusted EBITDA | [4],[5] | 6,266,000 | 1,015,000 | 21,752,000 | 5,121,000 | |||||
Total assets | [6] | 278,068,000 | 56,742,000 | 278,068,000 | 56,742,000 | |||||
Capital expenditures | [7] | 2,458,000 | 2,880,000 | 4,591,000 | 10,136,000 | |||||
Additional information | ||||||||||
Equity in income (loss) of affiliates, net | (100,000) | 200,000 | (600,000) | 300,000 | ||||||
Investments in affiliate | 48,000,000 | 1,500,000 | 48,000,000 | 1,500,000 | ||||||
Elimination | ||||||||||
Reportable segment results | ||||||||||
Total revenues | [8] | (31,077,000) | [1] | (1,777,000) | [1] | (113,471,000) | [1] | (7,280,000) | [2] | |
Segment Adjusted EBITDA Expense | [3],[8] | (27,663,000) | (1,777,000) | (103,819,000) | (7,280,000) | |||||
Segment Adjusted EBITDA | [4],[5],[8] | (3,413,000) | (9,652,000) | |||||||
Total assets | [6],[8] | $ (137,058,000) | $ (1,400,000) | $ (137,058,000) | $ (1,400,000) | |||||
[1] | Revenues included in the Other and Corporate column are primarily attributable to the Matrix Group revenues, Mt. Vernon transloading revenues, administrative service revenues from affiliates, MAC revenues, Wildcat Insurance revenues and brokerage coal sales. | |||||||||
[2] | Revenues included in the Other and Corporate column are primarily attributable to the Matrix Group revenues, Mt. Vernon transloading revenues, administrative service revenues from affiliates, MAC revenues, Wildcat Insurance revenues and brokerage coal sales. | |||||||||
[3] | Segment Adjusted EBITDA Expense includes operating expenses, outside coal purchases and other income. Transportation expenses are excluded as these expenses are passed through to our customers and consequently we do not realize any gain or loss on transportation revenues. We review Segment Adjusted EBITDA Expense per ton for cost trends. | |||||||||
[4] | Includes equity in loss of affiliates for the three and nine months ended September 30, 2015 of $(17.1) million and $(48.5) million, respectively, included in the Illinois Basin segment and $(0.1) million and $(0.6) million, respectively, included in Other and Corporate. Includes equity in income (loss) of affiliates for the three and nine months ended September 30, 2014 of $39,000 and $(13.8) million, respectively, included in the Illinois Basin segment and $0.2 million and $0.3 million, respectively, included in Other and Corporate. | |||||||||
[5] | Segment Adjusted EBITDA is defined as net income (prior to the allocation of noncontrolling interest) before net interest expense, income taxes, depreciation, depletion and amortization, general and administrative expenses and asset impairment charge. Management therefore is able to focus solely on the evaluation of segment operating profitability as it relates to our revenues and operating expenses, which are primarily controlled by our segments. | |||||||||
[6] | Total assets for Other and Corporate include investments in affiliate of $48.0 million at September 30, 2015. Total assets for the Illinois Basin segment and Other and Corporate include investments in affiliates of $200.1 million and $1.5 million, respectively, at September 30, 2014. | |||||||||
[7] | Capital expenditures shown above exclude the Hamilton Acquisition on July 31, 2015, the Patriot acquisition on February 3, 2015 and the MAC acquisition on January 1, 2015 (Note 4). | |||||||||
[8] | The elimination column represents the elimination of intercompany transactions and is primarily comprised of sales from the Matrix Group and MAC to our mining operations, coal sales and purchases between operations within different segments, sales of receivables to AROP Funding and insurance premiums paid to Wildcat Insurance. |
SEGMENT INFORMATION (Details 2)
SEGMENT INFORMATION (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Reconciliation of consolidated Segment Adjusted EBITDA Expense to operating expenses (excluding depreciation, depletion and amortization) | |||||
Segment Adjusted EBITDA Expense | [1] | $ 336,074 | $ 348,624 | $ 1,045,530 | $ 1,023,134 |
Outside coal purchases | (2) | (3) | (326) | (7) | |
Other income | 455 | 549 | 750 | 1,178 | |
Operating expenses (excluding depreciation, depletion and amortization) | $ 336,527 | $ 349,170 | $ 1,045,954 | $ 1,024,305 | |
[1] | Segment Adjusted EBITDA Expense includes operating expenses, outside coal purchases and other income. Transportation expenses are excluded as these expenses are passed through to our customers and consequently we do not realize any gain or loss on transportation revenues. We review Segment Adjusted EBITDA Expense per ton for cost trends. |
SEGMENT INFORMATION (Details 3)
SEGMENT INFORMATION (Details 3) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
Reconciliation of consolidated Segment Adjusted EBITDA to net income | |||||
Consolidated Segment Adjusted EBITDA | [1],[2] | $ 203,755 | $ 214,771 | $ 612,679 | $ 655,432 |
General and administrative | (17,948) | (16,995) | (52,336) | (54,201) | |
Depreciation, depletion and amortization | (84,661) | (69,646) | (242,730) | (203,539) | |
Asset impairment charge | (10,695) | (10,695) | |||
Interest expense, net | (7,067) | (8,152) | (22,205) | (24,157) | |
Income tax expense | (12) | (17) | |||
NET INCOME | $ 83,372 | $ 119,978 | $ 284,696 | $ 373,535 | |
[1] | Includes equity in loss of affiliates for the three and nine months ended September 30, 2015 of $(17.1) million and $(48.5) million, respectively, included in the Illinois Basin segment and $(0.1) million and $(0.6) million, respectively, included in Other and Corporate. Includes equity in income (loss) of affiliates for the three and nine months ended September 30, 2014 of $39,000 and $(13.8) million, respectively, included in the Illinois Basin segment and $0.2 million and $0.3 million, respectively, included in Other and Corporate. | ||||
[2] | Segment Adjusted EBITDA is defined as net income (prior to the allocation of noncontrolling interest) before net interest expense, income taxes, depreciation, depletion and amortization, general and administrative expenses and asset impairment charge. Management therefore is able to focus solely on the evaluation of segment operating profitability as it relates to our revenues and operating expenses, which are primarily controlled by our segments. |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent event $ / shares in Units, $ in Millions | Nov. 06, 2015itememployee | Oct. 27, 2015USD ($)$ / shares |
Subsequent Event | ||
Distributions declared (in dollars per unit) | $ / shares | $ 0.675 | |
Approximate distribution to be paid, including incentive distributions | $ | $ 87.5 | |
Illinois Basin | Gibson | ||
Subsequent Event | ||
Expected reduction in force following issuance of WARN Act notices (in employees) | 120 | |
Number of production units expected to be eliminated | item | 1.5 | |
Number of production units expected to remain in operation | item | 4 | |
Illinois Basin | Sebree | ||
Subsequent Event | ||
Expected reduction in force following issuance of WARN Act notices (in employees) | 140 |