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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q/A
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________TO_____________
COMMISSION FILE NO.: 0-26823
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ALLIANCE RESOURCE PARTNERS, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 73-1564280
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
1717 SOUTH BOULDER AVENUE, SUITE 600, TULSA, OKLAHOMA 74119
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
(918) 295-7600
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
As of November 12, 1999, 8,982,780 common units were outstanding.
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The registrant hereby amends and restates in its entirety, Item 1 of Part I and
Item 6 of Part II of its Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999. During the course of the fiscal 1999 year-end financial
audit, Alliance Resource Partners, L.P. recorded certain adjustments to the net
assets contributed under the contribution and assumption agreement dated August
20, 1999. These adjustments did not effect the consolidated and combined
statements of income. This Form 10-Q/A reflects the effects of these
adjustments.
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED AND COMBINED BALANCE SHEETS
(IN THOUSANDS, EXCEPT UNIT DATA)
ASSETS
PARTNERSHIP PREDECESSOR
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
(UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents .............................................. $ 4,200 $ --
Trade receivables ...................................................... 37,069 31,268
Marketable securities (at cost, which approximates market value) ....... 41,814 --
Income tax receivable .................................................. -- 503
Inventories ............................................................ 20,079 20,055
Advance royalties ...................................................... 2,500 2,501
Prepaid expenses and other assets ...................................... 22 1,456
---------- ----------
Total current assets .............................................. 105,684 55,783
PROPERTY, PLANT AND EQUIPMENT AT COST ..................................... 272,003 240,294
LESS ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION ................. (93,623) (69,158)
---------- ----------
178,380 171,136
OTHER ASSETS:
Advance royalties ...................................................... 7,658 8,880
Coal supply agreements, net ............................................ 21,366 24,062
Other long-term assets ................................................. 5,143 1,235
---------- ----------
$ 318,231 $ 261,096
========== ==========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Current maturities, long-term debt ..................................... $ -- $ 350
Accounts payable ....................................................... 22,119 24,527
Accounts payable to affiliate .......................................... 1,871 --
Accrued taxes other than income taxes .................................. 5,469 4,526
Accrued payroll and related expenses ................................... 8,888 9,269
Workers compensation and pneumoconiosis benefits ....................... 4,926 4,707
Other current liabilities .............................................. 4,971 5,302
---------- ----------
Total current liabilities ......................................... 48,244 48,681
---------- ----------
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities ........................... 230,000 1,687
Deferred income taxes .................................................. -- 3,906
Accrued pneumoconiosis benefits ........................................ 22,873 22,233
Workers' compensation .................................................. 13,648 13,934
Reclamation and mine closing ........................................... 13,955 12,824
Other liabilities ...................................................... 5,046 5,062
---------- ----------
Total liabilities ................................................. 333,766 108,327
COMMITMENTS AND CONTINGENCIES
COMBINED EQUITY ........................................................... -- 152,769
PARTNERS' CAPITAL (DEFICIT):
Common Unitholders 8,982,780 units outstanding ......................... 159,191 --
Subordinated Unitholder 6,422,531 units outstanding .................... 123,622 --
General Partners ....................................................... (297,889) --
Minimum pension liability .............................................. (459) --
---------- ----------
Total Partners' capital (deficit) ................................. (15,535) --
---------- ----------
$ 318,231 $ 261,096
========== ==========
See notes to unaudited consolidated and combined financial statements.
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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED AND COMBINED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
(UNAUDITED)
PARTNERSHIP PREDECESSOR
------------ ------------------------------------------------------------------
FROM
COMMENCEMENT FOR THE FOR THE FOR THE FOR THE
OF OPERATIONS PERIOD FROM PERIOD FROM PERIOD FROM PERIOD FROM
(ON AUGUST 20, 1999) JULY 1, 1999 JULY 1, 1998 JANUARY 1, 1999 JANUARY 1, 1998
TO TO TO TO TO
SEPTEMBER 30, AUGUST 19, SEPTEMBER 30, AUGUST 19, SEPTEMBER 30,
1999 1999 1998 1999 1998
-------------------- ------------ ------------- --------------- ---------------
SALES AND OPERATING REVENUES:
Coal Sales ................................ $ 43,927 $ 47,669 $ 97,291 $ 217,033 $ 274,387
Other sales and operating revenues......... 125 134 1,137 577 3,332
------------ ------------ ------------ ------------ ------------
Total revenues ..................... 44,052 47,803 98,428 217,610 277,719
EXPENSES:
Operating expenses ........................ 30,456 35,024 64,937 152,066 185,327
Outside purchases ......................... 2,442 2,570 13,293 17,738 38,075
General and administrative ................ 1,685 1,959 4,135 8,912 11,849
Depreciation, depletion and amortization... 4,450 5,246 9,767 24,622 30,493
Interest expense .......................... 1,627 21 44 100 129
Unusual item .............................. -- -- 3,812 -- 3,812
------------ ------------ ------------ ------------ ------------
Total operating expenses ............. 40,660 44,820 95,988 203,438 269,685
------------ ------------ ------------ ------------ ------------
INCOME FROM OPERATIONS ..................... 3,392 2,983 2,440 14,172 8,034
OTHER INCOME ............................... 117 334 206 531 404
------------ ------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES ................. 3,509 3,317 2,646 14,703 8,438
INCOME TAX EXPENSE ......................... -- 1,015 1,035 4,498 2,831
------------ ------------ ------------ ------------ ------------
NET INCOME ................................. $ 3,509 $ 2,302 $ 1,611 $ 10,205 $ 5,607
============ ============ ============ ============ ============
GENERAL PARTNERS' INTEREST IN
NET INCOME ................................ $ 70
============
LIMITED PARTNERS' INTEREST IN
NET INCOME ................................ $ 3,439
============
BASIC AND DILUTED NET INCOME
PER LIMITED PARTNER UNIT .................. $ 0.22
============
WEIGHTED AVERAGE NUMBER
OF UNITS OUTSTANDING ...................... 15,405,311
============
See notes to unaudited consolidated and combined financial statements.
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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED AND COMBINED CONDENSED STATEMENTS OF CASH FLOW
(IN THOUSANDS)
(UNAUDITED)
PARTNERSHIP PREDECESSOR
------------------ -------------------------------------
FROM
COMMENCEMENT FOR THE FOR THE
OF OPERATIONS PERIOD FROM PERIOD FROM
(ON AUGUST 20, 1999) JANUARY 1, 1999 JANUARY 1, 1998
TO TO TO
SEPTEMBER 30, 1999 AUGUST 19, 1999 SEPTEMBER 30, 1998
------------------- --------------- ------------------
CASH FLOWS PROVIDED BY (USED IN)
OPERATING ACTIVITIES .................................... $ (29,537) $ 32,896 $ 35,935
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for purchase of business ........................ -- -- (7,310)
Direct acquisition costs ................................ -- -- (821)
Purchase of property, plant and equipment ............... (10,895) (21,984) (22,376)
Proceeds from sale of property, plant and equipment ..... 66 447 70
Purchase of marketable securities ....................... (34,514) -- --
Proceeds from sale of marketable securities ............. 8,452 -- --
------------ ------------ ------------
Net cash used in investing activities .............. (36,891) (21,537) (30,437)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from initial public offering (see Note 1) .. 137,872 -- --
Cash contribution by General Partner .................... 5,917 -- --
Distributions upon formation (see Note 1) ............... (64,750) -- --
Payment of formation costs .............................. (2,919) -- --
Deferred financing cost ................................. (3,517) -- --
Payments on long-term debt .............................. (1,975) -- --
Return of capital ....................................... -- (11,359) (5,498)
------------ ------------ ------------
Net cash provided by (used in) financing activities ........ 70,628 (11,359) (5,498)
------------ ------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS
AND BALANCE AT END OF PERIOD ............................ $ 4,200 $ -- $ --
============ ============ ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Debt transferred from General Partner ................... $ 230,000
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Marketable securities transferred from General Partner .. $ 15,486
============
See notes to unaudited consolidated and combined financial statements.
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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
FROM COMMENCEMENT OF OPERATIONS
(ON AUGUST 20, 1999) TO SEPTEMBER 30, 1999
(IN THOUSANDS, EXCEPT UNIT DATA)
(UNAUDITED)
NUMBER OF LIMITED TOTAL
PARTNER UNITS MINIMUM PARTNERS'
----------------------- GENERAL PENSION CAPITAL
COMMON SUBORDINATED COMMON SUBORDINATED PARTNERS LIABILITY (DEFICIT)
--------- ------------ --------- ------------ --------- --------- ---------
Balance at commencement of
operations (on August 20, 1999) ...... -- -- $ -- $ 1 $ -- $ -- $ 1
Issuance of units to public ........ 7,750,000 -- 133,732 -- -- -- 133,732
Contribution of net assets of
Predecessor ...................... 1,232,780 6,422,531 23,455 122,186 (24,612) (459) 120,570
Managing General Partner
contribution ..................... -- -- -- -- 5,917 -- 5,917
Amount retained by Special General
Partner from debt borrowings
assumed by the Partnership ....... -- -- -- -- (214,514) -- (214,514)
Distribution at time of formation... -- -- -- -- (64,750) -- (64,750)
Net income from commencement
of operations (on August 20,
1999) to September 30, 1999 ...... -- -- 2,004 1,435 70 -- 3,509
--------- --------- --------- --------- --------- --------- ---------
Balance at September 30, 1999 ......... 8,982,780 6,422,531 $ 159,191 $ 123,622 $(297,889) $ (459) $ (15,535)
========= ========= ========= ========= ========= ========= =========
See notes to unaudited consolidated and combined financial statements.
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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND PRESENTATION
Alliance Resource Partners, L.P. is a Delaware limited partnership formed
May 17, 1999, to acquire, own and operate certain coal production and marketing
assets of Alliance Resource Holdings, Inc., a Delaware corporation ("ARH")
(formerly known as Alliance Coal Corporation) and substantially all of its
operating subsidiaries (collectively, the "Partnership").
Prior to August 20, 1999, (i) MAPCO Coal Inc., a Delaware corporation and
direct wholly-owned subsidiary of ARH merged with and into Alliance Coal, LLC, a
Delaware limited liability company ("Alliance Coal"), which prior to August 20,
1999 was also a wholly-owned subsidiary of ARH, (ii) several other indirect
corporate subsidiaries of ARH were merged with and into corresponding limited
liability companies, each of which is a wholly-owned subsidiary of Alliance Coal
and (iii) two indirect limited liability company subsidiaries of ARH became
subsidiaries of Alliance Coal as a result of the merger described in clause (i)
above. Collectively, the coal production and marketing assets and operating
subsidiaries of ARH acquired by the Partnership are referred to as the
"Predecessor." The Delaware limited partnerships and limited liability companies
that comprise the Partnership are as follows: Alliance Resource Partners, L.P.,
Alliance Resource Operating Partners, L.P. (the "Intermediate Partnership"),
Alliance Coal, LLC (the "Holding Company for Operations"), Alliance Land, LLC,
Alliance Properties, LLC, Backbone Mountain, LLC, Excel Mining, LLC, Gibson
County Coal, LLC, Hopkins County Coal, LLC, MC Mining, LLC, Mettiki Coal, LLC,
Mettiki Coal (WV), LLC, Mt. Vernon Transfer Terminal, LLC, Pontiki Coal, LLC,
Toptiki Coal, LLC, Webster County Coal, LLC, and White County Coal, LLC.
The accompanying financial statements and related notes present the
consolidated financial position as of September 30, 1999, and the results of its
operations, cash flows and changes in partners' equity for the period from
commencement of operations on August 20, 1999 to September 30, 1999. All
material intercompany transactions and accounts have been eliminated. The
combined financial statements of the Predecessor are for the periods indicated.
These consolidated and combined financial statements and notes thereto for
interim periods are unaudited. However, in the opinion of management, these
financial statements reflect all adjustments (which include only normal
recurring adjustments) necessary for a fair presentation of the results of the
periods presented. Results for interim periods are not necessarily indicative of
results for a full year.
These consolidated and combined financial statements and notes are prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
for interim reporting and should be read in conjunction with the combined
financial statements and notes included in the Partnership's Registration
Statement on Form S-1, as amended (Registration No. 333-78845) (the
"Registration Statement").
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Initial Public Offering and Concurrent Transactions
On August 20, 1999, the Partnership completed its initial public offering
(the "IPO") of 7,750,000 common units ("Common Units") representing limited
partner interests in the Partnership at a price of $19.00 per unit.
Concurrently with the closing of the IPO, the Partnership entered into a
contribution and assumption agreement (the "Contribution Agreement"), dated
August 20, 1999, among the Partnership and the other parties named therein,
whereby, among other things, ARH contributed its 100% member interest in
Alliance Coal, which is the sole member of fourteen subsidiary operating limited
liability companies, to the Intermediate Partnership. As a result of the
consummation of the transactions contemplated under the Contribution Agreement,
the Partnership holds a 98.9899% limited partner interest in the Intermediate
Partnership, and the Intermediate Partnership holds a 99.999% non-managing
member interest in Alliance Coal. The Partnership and the Intermediate
Partnership will be managed by the Managing GP, which, as a result of the
consummation of the transactions under the Contribution Agreement, holds (i) a
0.99% and 1.0001% managing general partner interest in the Partnership and the
Intermediate Partnership, respectively, and (ii) a 0.001% managing member
interest in Alliance Coal. Also as a result of the consummation of the
transactions completed under the Contribution Agreement, Alliance Resource GP,
LLC, a Delaware limited liability company and wholly-owned subsidiary of ARH
(the "Special GP"), holds, (i) 1,232,780 Common Units, (ii) 6,422,531
subordinated units ("Subordinated Units") convertible into Common Units in the
future upon the occurrence of certain events and (iii) a 0.01% special general
partner interest in each of the Partnership and the Intermediate Partnership.
Concurrently with the closing of the IPO, the Special GP issued and the
Intermediate Partnership assumed the obligations under a $180 million principal
amount of 8.31% senior notes due August 20, 2014. The senior notes contain
various restrictive and affirmative covenants, including restrictions on the
incurrence of other debt. The Special GP also entered into and the Intermediate
Partnership assumed the obligations under a $100 million credit facility. The
credit facility consists of three tranches, including a $50 million term loan
facility, a $25 million working capital facility and a $25 million revolving
credit facility. The Partnership has drawn $50 million under the term loan
facility but has not drawn any money under either the working capital facility
or the revolving credit facility. The weighted average interest rate on the term
loan facility at September 30, 1999 was 6.38%. The credit facility agreement
expires August 2004. The credit facility contains various restrictive covenants,
including the amount of distributions by the Intermediate Partnership and the
incurrence of other debt. The credit facility also contains various financial
covenants. The Partnership was in compliance with the covenants of both the
senior notes and credit facility at September 30, 1999.
Consistent with guidance provided by the Emerging Issues Task Force in
Issue No. 87-21 "Change of Accounting Basis in Master Limited Partnership
Transactions", the Partnership maintained the historical cost of the $121.0
million of net assets received under the Contribution Agreement.
Analysis of Pro Forma Results of Operations
The pro forma results of operations for the nine months ended September 30,
1999 and 1998, are derived from the historical financial statements of the
Partnership from the commencement of operations on August 20, 1999 through
September 30, 1999 and the Predecessor for the period from January 1, 1999
through August 19, 1999 and January 1, 1998 through September 30, 1998. The pro
forma results of operations reflect certain pro forma adjustments to the
historical results of operations as if the Partnership had been formed on
January 1, 1998. The pro forma adjustments include (i) pro forma interest on
debt
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assumed by the Partnership and (ii) the elimination of income tax expense as
income taxes will be borne by the partners and not the Partnership. For the nine
months ended September 30, 1999 and 1998, the pro forma total revenues would
have been approximately $216,662,000 and $277,719,000, respectively. For the
nine months ended September 30, 1999 and 1998, the pro forma net income (loss)
would have been approximately $5,362,000 and $(6,018,000) and net income (loss)
per limited partner unit would have been $0.34 and $(0.38), respectively.
2. CONTINGENCIES
Transloading Facility Dispute
Mt. Vernon Transfer Terminal, LLC ("Mt. Vernon"), a Delaware limited
liability company, is currently involved in litigation with Seminole Electric
Cooperative, Inc. ("Seminole") with respect to a long-term contract for the
transloading of coal from rail to barge through Mt. Vernon's terminal in
Indiana. Seminole has filed a lawsuit to terminate this contract and is seeking
a declaratory judgment as to the damages owed to Mt. Vernon. The provisions of
the contract stipulate the calculation of damages to be paid in the event of
breach. Rather than pay the amount of damages stipulated, Seminole is seeking
the court's agreement that the proper damage award should be calculated based on
Mt. Vernon's loss of net profits from the terminal for the term of the
agreement.
Seminole has ceased transloading any coal shipments through this terminal
and is transporting coal deliveries under the supply contract by rail. Mt.
Vernon is currently exploring alternative uses for this terminal, including
shipping different products to other customers or selling the terminal. Mt.
Vernon intends to vigorously defend its contract rights and believes that it
will prevail in the determination of the amount of damages Seminole owes under
the contract and believes those damages will be in excess of the carrying value
of this terminal.
General Litigation
The Partnership is involved in various lawsuits, claims and regulatory
proceedings incidental to its business. In the opinion of management, the
outcome of such matters will not have a material adverse effect on the
Partnership's business, combined financial position or results of operations.
3. SUBSEQUENT EVENT
On October 18, 1999, the Partnership declared a cash distribution of $0.23
per unit on its outstanding common and subordinated units. The distribution
represents the minimum quarterly distribution for the 42-day period from the
commencement of operations (on August 20, 1999) through September 30, 1999. The
$3.5 million distribution will be paid on November 12, 1999 to unitholders of
record on October 29, 1999.
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PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit No. Description
27.1 -- Financial Data Schedule.
(b) Reports on Form 8-K:
None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, in Tulsa, Oklahoma, on June 2, 2000.
ALLIANCE RESOURCE PARTNERS, L. P.
By: Alliance Resource Management GP, LLC
its managing general partner
/s/ Michael L. Greenwood
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Michael L. Greenwood
Senior Vice President, Chief
Financial Officer and Treasurer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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27.1 -- Financial Data Schedule.