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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 MARCH 31, 2001
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
ALLIANCE RESOURCE PARTNERS, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OR OTHER JURISDICTION OF 73-1564280
INCORPORATION OR ORGANIZATION) (IRS EMPLOYER IDENTIFICATION NO.)
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)
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 May 10, 2001, 8,982,780 Common Units and 6,422,531 Subordinated
Units are outstanding.
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This amendment is being filed to reflect the restatement of the Partnership's
consolidated financial statements, as discussed in Note 3 thereto, and other
information related to such restated financial statements. Except for Items 1
and 2 of Part I and Item 6 of Part II, no other information included in the
original report on Form 10-Q is amended by this Form 10-Q/A.
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT UNIT DATA)
ASSETS
MARCH 31, DECEMBER 31,
2001 2000
-------------- --------------
(UNAUDITED)
(RESTATED, SEE NOTE 3)
CURRENT ASSETS:
Cash and cash equivalents .................................... $ 16,804 $ 6,933
Trade receivables ............................................ 34,205 35,898
Due from affiliates .......................................... 41 208
Marketable securities (at cost, which approximates fair value) 23,414 37,398
Inventories .................................................. 12,684 10,842
Advance royalties ............................................ 2,865 2,865
Prepaid expenses and other assets ............................ 1,101 1,168
-------------- --------------
Total current assets .................................... 91,114 95,312
PROPERTY, PLANT AND EQUIPMENT AT COST ........................... 337,863 320,445
LESS ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION ....... (145,405) (135,782)
-------------- --------------
192,458 184,663
OTHER ASSETS:
Advance royalties ............................................ 9,872 10,009
Coal supply agreements, net .................................. 15,263 16,324
Other long-term assets ....................................... 2,750 2,858
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$ 311,457 $ 309,166
============== ==============
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ............................................. $ 29,548 $ 25,558
Accrued taxes other than income taxes ........................ 5,962 4,863
Accrued payroll and related expenses ......................... 9,332 6,975
Accrued interest ............................................. 1,662 5,439
Workers' compensation and pneumoconiosis benefits ............ 4,318 4,415
Other current liabilities .................................... 6,577 5,710
Current maturities, long-term debt ........................... 7,500 3,750
-------------- --------------
Total current liabilities ............................... 64,899 56,710
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities ................. 222,500 226,250
Accrued pneumoconiosis benefits .............................. 13,924 21,651
Workers' compensation ........................................ 17,405 16,748
Reclamation and mine closing ................................. 15,119 14,940
Due to affiliates ............................................ 1,745 1,278
Other liabilities ............................................ 3,137 3,376
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Total liabilities ....................................... 338,729 340,953
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL (DEFICIT):
Common Unitholders 8,982,780 units outstanding ............... 152,221 149,642
Subordinated Unitholder 6,422,531 units outstanding .......... 118,639 116,794
General Partners ............................................. (298,132) (298,223)
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Total Partners' capital (deficit) ....................... (27,272) (31,787)
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$ 311,457 $ 309,166
============== ==============
See notes to consolidated financial statements.
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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
--------------------------------------------------
2001 2000
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(RESTATED, SEE NOTE 3)
SALES AND OPERATING REVENUES:
Coal sales ...................................................... $ 100,816 $ 86,041
Transportation revenues ......................................... 3,912 2,947
Other sales and operating revenues .............................. 2,024 432
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Total revenues ........................................ 106,752 89,420
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EXPENSES:
Operating expenses .............................................. 73,335 64,093
Transportation expenses ......................................... 3,912 2,947
Outside purchases ............................................... 4,865 2,961
General and administrative ...................................... 4,923 3,587
Depreciation, depletion and amortization ........................ 11,260 9,641
Interest expense (net of interest income and interest capitalized
for the three months ended March 31, 2001 and 2000 of
$632 and $706, respectively) ............................... 4,262 4,058
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Total operating expenses .............................. 102,557 87,287
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INCOME FROM OPERATIONS ............................................. 4,195 2,133
OTHER INCOME ....................................................... 241 233
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INCOME BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE ............................................... 4,436 2,366
CUMULATIVE EFFECT OF ACCOUNTING CHANGE ............................. 7,939 --
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NET INCOME ......................................................... $ 12,375 $ 2,366
============== ==============
GENERAL PARTNERS' INTEREST IN
NET INCOME .................................................... $ 248 $ 47
============== ==============
LIMITED PARTNERS' INTEREST IN
NET INCOME .................................................... $ 12,127 $ 2,319
============== ==============
BASIC NET INCOME PER LIMITED
PARTNER UNIT .................................................. $ 0.79 $ 0.15
============== ==============
BASIC NET INCOME PER LIMITED PARTNER
UNIT BEFORE ACCOUNTING CHANGE ................................. $ 0.28 $ 0.15
============== ==============
DILUTED NET INCOME PER LIMITED
PARTNER UNIT .................................................. $ 0.77 $ 0.15
============== ==============
DILUTED NET INCOME PER LIMITED PARTNER
UNIT BEFORE ACCOUNTING CHANGE ................................. $ 0.28 $ 0.15
============== ==============
PRO FORMA NET INCOME ASSUMING ACCOUNTING CHANGE
IS APPLIED RETROACTIVELY ...................................... $ 12,375 $ 2,304
============== ==============
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING-BASIC ............................................. 15,405,311 15,405,311
============== ==============
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING-DILUTED ........................................... 15,680,594 15,550,489
============== ==============
See notes to consolidated financial statements.
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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-----------------------------------------------------
2001 2000
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CASH FLOWS PROVIDED BY OPERATING ACTIVITIES .............................. $ 21,741 $ 8,114
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment ............................ (17,994) (5,235)
Proceeds from sale of property, plant and equipment .................. -- 14
Purchase of marketable securities .................................... (5,195) (18,489)
Proceeds from the maturity of marketable securities .................. 19,179 25,056
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Net cash provided by (used in) investing activities ............... (4,010) 1,346
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CASH FLOWS FROM FINANCING ACTIVITIES:
Distribution to Partners ............................................. (7,860) (7,860)
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Net cash used in financing activities ............................. (7,860) (7,860)
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NET CHANGE IN CASH AND CASH EQUIVALENTS ................................. 9,871 1,600
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ........................ 6,933 8,000
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CASH AND CASH EQUIVALENTS AT END OF PERIOD .............................. $ 16,804 $ 9,600
================ ================
CASH PAID FOR:
Interest ............................................................. $ 8,465 $ 8,452
================ ================
See notes to consolidated financial statements.
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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND PRESENTATION
Alliance Resource Partners, L.P., a Delaware limited partnership (the
"Partnership"), was formed on 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),
consisting of substantially all of ARH's operating subsidiaries, but excluding
ARH.
The accompanying consolidated financial statements include the accounts
and operations of the Partnership and present the financial position as of March
31, 2001 and December 31, 2000, and the results of its operations and cash flows
for the three months ended March 31, 2001 and 2000. All material intercompany
transactions and accounts have been eliminated. Certain reclassifications have
been made to the 2000 consolidated statements to conform with classifications
used in 2001.
These consolidated 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 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 consolidated and
combined financial statements and notes included in the Partnership's Annual
Report on Form 10-K for the year ended December 31, 2000.
2. CONTINGENCIES
The Partnership is involved in various lawsuits, claims and regulatory
proceedings, including those conducted by the Mine Safety and Health
Administration, incidental to its business. In the opinion of management, the
outcome of such matters to the extent not previously provided for or covered
under insurance, will not have a material adverse effect on the Partnership's
business, financial position or results of operations, although management
cannot give any assurance to that effect.
3. ACCOUNTING CHANGE
The Partnership changed its method of estimating coal workers'
pneumoconiosis ("black lung") benefits liability effective January 1, 2001 to
the service cost method described in Statement of Financial Accounting Standards
("SFAS") No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions", which method is permitted under SFAS No. 112 "Employers' Accounting
for Postemployment Benefits". The Partnership previously accrued the black lung
benefits liability at the present value of the actuarially determined current
and future estimated black lung benefit payments utilizing the methodology
prescribed under SFAS No. 5 "Accounting for Contingencies," which was also
permitted by SFAS No. 112. Recently, governmental regulations regarding the
black lung benefits claims approval process were enacted. These new regulations
specifically define the black lung disability as progressive and also expand the
definition of pneumoconiosis to mandate consideration of diseases that are
caused by factors other than exposure to coal dust. The Partnership believes the
change to the SFAS
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No. 106 measurement methodology better matches black lung costs over the service
lives of the miners who ultimately receive the black lung benefits and is more
reflective of the recently enacted regulations, which place significant emphasis
on coal miners' future years of employment in the coal industry.
The adjustment of $7,939,000 to apply retroactively the new method of
estimating the black lung liability is included in restated net income of the
quarter ended March 31, 2001. The effect of the restatement resulting from the
accounting change for the quarter ended March 31, 2001 was to decrease income
before cumulative effect of accounting change $203,000 ($(0.01) per basic and
diluted limited partner unit) and increase net income $7,736,000 ($0.49 and
$0.48 per basic and diluted limited partner unit, respectively). Assuming the
retroactive application of the service cost method of estimating the black lung
liability, the pro forma net income for the quarter ended March 31, 2000 would
have been approximately $2,304,000 or $0.15 per basic and diluted limited
partner unit, respectively, as compared to reported net income of $2,366,000 or
$0.15 per basic and diluted limited partner unit.
4. SUBSEQUENT EVENT
On April 26, 2001, the Partnership declared a minimum quarterly
distribution for the period from January 1, 2001 to March 31, 2001, of $0.50 per
unit, totaling approximately $7,703,000, on all of its Common and Subordinated
Units outstanding, payable on May 15, 2001 to all unitholders of record on May
4, 2001.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
SELECTED OPERATING DATA
THREE MONTHS ENDED
------------------------
MARCH 31, MARCH 31,
2001 2000
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Tons sold (000s) 4,302 3,725
Tons produced (000s) 4,240 3,888
Revenues per ton sold (1) $ 23.91 $ 23.21
Cost per ton sold (2) $ 19.32 $ 18.96
(1) Revenues per ton sold is based on the total of coal sales and other sales
and operating revenues divided by tons sold.
(2) Cost per ton is based on the total of operating expenses, outside purchases
and general and administrative expenses divided by tons sold.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000
Coal sales. Coal sales for the three months ended March 31, 2001 (the
"2001 Quarter") increased 17.2% to $100.8 million from $86.0 million for the
three months ended March 31, 2000 (the "2000 Quarter"). The increase of $14.8
million was primarily attributable to higher sales prices and utility demand as
well as additional revenues from the new Gibson County Coal mining complex,
which was not in operation during the 2000 Quarter. Tons sold increased 15.5% to
4.3 million for the 2001 Quarter from
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3.7 million for the 2000 Quarter. Tons produced increased 9.1% to 4.2 million
tons for the 2001 Quarter from 3.9 million for the 2000 Quarter.
Transportation revenues. Transportation revenues increased to $3.9
million for the 2001 Quarter from $2.9 million for the 2000 Quarter. The
increase of $1.0 million was primarily attributable to increased tons sold. The
Partnership reflects reimbursement of the cost of transporting coal to customers
through third party carriers as transportation revenues and the corresponding
expense as transportation expense in the consolidated statements of income. No
profit margin is realized on transportation revenues.
Other sales and operating revenues. Other sales and operating revenues
increased to $2.0 million for the 2001 Quarter from $0.4 million for the 2000
Quarter. The increase of $1.6 million results from the introduction of a third
party coal synfuel production facility at the Partnership's Hopkins County Coal
mining complex. Hopkins County Coal receives various fees for operating the
third party's coal synfuel facility and providing other services. The synfuel
shipments continue in 2001 on a month-to-month basis, currently contemplated
through mid-2001. The continuation of the operating revenues associated with the
coal synfuel production facility can not be assured.
Operating expenses. Operating expenses increased 14.4% to $73.3 million
for the 2001 Quarter from $64.1 million for the 2000 Quarter. The increase of
$9.2 million primarily results from increased sales volumes and the addition of
operating expenses from the new Gibson County Coal mining complex, which was not
in operation during the 2000 Quarter.
Transportation expenses. See "Transportation revenues" above concerning
the increase in transportation expenses.
Outside purchases. Outside purchases increased 64.3% to $4.9 million for
the 2001 Quarter compared to $3.0 million for the 2000 Quarter. The increase of
$1.9 million was primarily the result of outside purchases to fulfill new
contract commitments at Hopkins County Coal, which had previously suspended
production at one of its surface mines. The idled surface operation will be
brought back on-line during the second quarter of 2001 after having its
production suspended for almost one year.
General and administrative. General and administrative expenses increased
37.2% to $4.9 million for the 2001 Quarter compared to $3.6 million for the 2000
Quarter. The increase of $1.3 million was primarily attributable to accruals
related to the Short-Term Incentive Plan, which are based upon financial
performance, along with additional restricted units granted under the Long-Term
Incentive Plan, which is impacted by the increased value of common units.
Depreciation, depletion and amortization. Depreciation, depletion and
amortization expenses increased 16.8% to $11.3 million for the 2001 Quarter
compared to $9.6 million for the 2000 Quarter. The increase of $1.7 million was
primarily the result of the additional depreciation expense associated with the
new Gibson County Coal mining complex, which was not in operation during the
2000 Quarter.
Interest expense. Interest expense was comparable for the 2001 and 2000
Quarters at $4.2 million and $4.1 million, respectively.
EBITDA (income before net interest expense, depreciation, depletion and
amortization) increased 73.7% to $27.9 million for the 2001 Quarter compared
with $16.1 million for the 2000 Quarter. The $11.8 million increase is primarily
attributable to the $7.9 million cumulative effect of accounting change.
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See "Part 1, Item 1. Financial Statements - Note 3. Accounting Change."
Additionally, higher sales prices and utility demand as well as the addition of
the new Gibson County Coal mining complex, which was not in operation during the
2000 Quarter contributed to the increase in EBITDA.
EBITDA should not be considered as an alternative to net income, income
from operations, cash flows from operating activities or any other measure of
financial performance presented in accordance with generally accepted accounting
principles. EBITDA has not been adjusted for the cumulative effect of accounting
change. EBITDA is not intended to represent cash flow and does not represent the
measure of cash available for distribution, but provides additional information
for evaluating the Partnership's ability to make minimum quarterly
distributions. The Partnership's method of computing EBITDA also may not be the
same method used to compute similar measures reported by other companies, or
EBITDA may be computed differently by the Partnership in different contexts
(i.e., public reporting versus computation under financing agreements).
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Cash provided by operating activities was $21.7 million for the 2001
Quarter compared to $8.1 million in the 2000 Quarter. The increase in cash
provided by operating activities was principally attributable to an increase in
net income for the 2001 Quarter compared to the 2000 Quarter and a comparative
decrease in working capital.
Net cash used in investing activities was $4.0 million for the 2001
Quarter compared to net cash provided by investing activities of $1.3 million in
the 2000 Quarter. The increase is principally attributable to capital
expenditures related to both the completion of the new Gibson County Coal mining
complex that commenced production in late 2000 and the extension of our existing
White County Coal mining complex into adjacent coal reserves.
Net cash used in financing activities was comparable for the 2001 and
2000 Quarters at $7.9 million.
Capital Expenditures
Capital expenditures increased to $18.0 million in the 2001 Quarter
compared to $5.2 million in the 2000 Quarter. See "Cash Flows" above concerning
the increase in capital expenditures.
Notes Offering and Credit Facility
Concurrently with the closing of the Partnership's initial public
offering, Alliance Resource GP, LLC (the "Special GP"), the Partnership's
special general partner, issued and the Alliance Resource Operating Partners,
L.P. (the "Intermediate Partnership") assumed the obligations with respect to
$180 million principal amount of 8.31% senior notes due August 20, 2014. 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 borrowings outstanding of $50 million under the term loan
facility and no borrowings outstanding under either the working capital facility
or the revolving credit facility at March 31, 2001. The weighted average
interest rate on the term loan facility at March 31, 2001, was 6.31%. The credit
facility expires August 2004. The senior notes and credit facility are
guaranteed by all of the subsidiaries of the Intermediate Partnership. In
addition, the
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credit facility is further secured by a pledge of treasury securities, which,
upon written notice, are released for purposes of financing qualifying capital
expenditures of the Intermediate Partnership or its subsidiaries. The senior
notes and credit facility contain various restrictive and affirmative covenants,
including limitations on the amount of distributions by the Intermediate
Partnership and the incurrence of other debt.
Recent Accounting Pronouncements
On January 1, 2001, the Partnership adopted Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities," which established accounting and reporting standards for derivative
instruments and for hedging activities. It required that all derivatives be
recognized as either assets or liabilities in the statement of financial
position and be measured at fair value. The Partnership currently has no
identified derivative instruments or hedging activities. Accordingly, this
standard had no material effect on the Partnership's consolidated financial
statements upon adoption.
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PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit No. Description
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18.1 -- Preferability Letter on Accounting Change
(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 March 28, 2002.
ALLIANCE RESOURCE PARTNERS, L. P.
By: Alliance Resource Management GP, LLC
its managing general partner
/s/ Michael L. Greenwood
-------------------------------------
Michael L. Greenwood
Senior Vice President,
Chief Financial Officer
and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
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EXHIBIT INDEX
Exhibit No. Description
----------- -----------
18.1 -- Preferability Letter on Accounting Change
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