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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 JUNE 30, 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 August 9, 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 4 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.
-i-
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT UNIT DATA)
ASSETS
JUNE 30, DECEMBER 31,
2001 2000
--------- -----------
(UNAUDITED)
(RESTATED, SEE NOTE 4)
CURRENT ASSETS:
Cash and cash equivalents ............................................... $ 8,104 $ 6,933
Trade receivables .................................................... 39,020 35,898
Due from affiliates .................................................. 990 208
Marketable securities (at cost, which approximates fair value) ....... 23,694 37,398
Inventories .......................................................... 12,966 10,842
Advance royalties .................................................... 2,865 2,865
Prepaid expenses and other assets ....................................... 873 1,168
--------- ---------
Total current assets ............................................... 88,512 95,312
PROPERTY, PLANT AND EQUIPMENT AT COST ...................................... 343,282 320,445
LESS ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION .................. (151,568) (135,782)
--------- ---------
191,714 184,663
OTHER ASSETS:
Advance royalties ....................................................... 10,183 10,009
Coal supply agreements, net ............................................. 14,153 16,324
Other long-term assets .................................................. 2,589 2,858
--------- ---------
$ 307,151 $ 309,166
========= =========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ........................................................ $ 29,882 $ 25,558
Accrued taxes other than income taxes ................................... 6,399 4,863
Accrued payroll and related expenses .................................... 7,753 6,975
Accrued interest ........................................................ 5,402 5,439
Workers' compensation and pneumoconiosis benefits ....................... 4,335 4,415
Other current liabilities ............................................... 6,327 5,710
Current maturities, long-term debt ...................................... 11,250 3,750
--------- ---------
Total current liabilities........................................... 71,348 56,710
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities ............................ 218,750 226,250
Accrued pneumoconiosis benefits ......................................... 14,149 21,651
Workers' compensation ................................................... 17,450 16,748
Reclamation and mine closing ............................................ 15,355 14,940
Due to affiliates ....................................................... 2,215 1,278
Other liabilities ....................................................... 3,062 3,376
--------- ---------
Total liabilities .................................................. 342,329 340,953
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL (DEFICIT):
Common Unitholders 8,982,780 units outstanding .......................... 147,703 149,642
Subordinated Unitholder 6,422,531 units outstanding ..................... 115,409 116,794
General Partners ........................................................ (298,290) (298,223)
--------- ---------
Total Partners' capital (deficit) .................................. (35,178) (31,787)
--------- ---------
$ 307,151 $ 309,166
========= =========
See notes to consolidated financial statements.
-1-
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------------------------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
(Restated, see (Restated, see
Note 4) Note 4)
SALES AND OPERATING REVENUES:
Coal sales .................................. $ 104,012 $ 82,698 $ 204,828 $ 168,739
Transportation revenues ..................... 5,301 3,787 9,213 6,734
Other sales and operating revenues .......... 1,409 167 3,433 599
------------ ------------ ------------ ------------
Total revenues .................... 110,722 86,652 217,474 176,072
------------ ------------ ------------ ------------
EXPENSES:
Operating expenses .......................... 77,931 59,436 151,266 123,529
Transportation expenses ..................... 5,301 3,787 9,213 6,734
Outside purchases ........................... 8,360 4,332 13,225 7,293
General and administrative .................. 4,023 3,625 8,946 7,212
Depreciation, depletion and amortization .... 11,095 9,560 22,355 19,201
Interest expense (net of interest income and
interest capitalized for the three months and
six months ended June 30, 2001 and
2000 of $536, $656, $1,168 and $1,362,
respectively) ............................... 4,221 4,204 8,483 8,262
------------ ------------ ------------ ------------
Total operating expenses ....... 110,931 84,944 213,488 172,231
------------ ------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS .................. (209) 1,708 3,986 3,841
OTHER INCOME ................................... 163 390 404 623
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE ........................... (46) 2,098 4,390 4,464
CUMULATIVE EFFECT OF ACCOUNTING CHANGE ......... -- -- 7,939 --
------------ ------------ ------------ ------------
NET INCOME (LOSS) .............................. $ (46) $ 2,098 $ 12,329 $ 4,464
============ ============ ============ ============
GENERAL PARTNERS' INTEREST IN
NET INCOME (LOSS) ......................... $ (1) $ 42 $ 247 $ 89
============ ============ ============ ============
LIMITED PARTNERS' INTEREST IN
NET INCOME (LOSS) ......................... $ (45) $ 2,056 $ 12,082 $ 4,375
============ ============ ============ ============
BASIC NET INCOME (LOSS) PER LIMITED
PARTNER UNIT .............................. $ (0.01) $ 0.13 $ 0.78 $ 0.28
============ ============ ============ ============
BASIC NET INCOME (LOSS) PER LIMITED PARTNER
UNIT BEFORE ACCOUNTING CHANGE ............. $ (0.01) $ 0.13 $ 0.28 $ 0.28
============= ============ ============ ============
DILUTED NET INCOME (LOSS) PER LIMITED
PARTNER UNIT .............................. $ (0.01) $ 0.13 $ 0.77 $ 0.28
============ ============ ============ ============
DILUTED NET INCOME (LOSS) PER LIMITED PARTNER
UNIT BEFORE ACCOUNTING CHANGE ............. $ (0.01) $ 0.13 $ 0.27 $ 0.28
============ ============ ============ ============
PRO FORMA NET INCOME (LOSS) ASSUMING
ACCOUNTING CHANGE IS APPLIED RETROACTIVELY .. $ (46) $ 1,938 $ 12,329 $ 4,242
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING-BASIC ......................... 15,405,311 15,405,311 15,405,311 15,405,311
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING-DILUTED ....................... 15,681,411 15,550,845 15,680,817 15,550,845
============ ============ ============ ============
See notes to consolidated financial statements.
-2-
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
---------------------------
2001 2000
-------- --------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES ............ $ 30,402 $ 16,982
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment ........... (27,236) (14,233)
Proceeds from sale of property, plant and equipment.. 21 73
Purchase of marketable securities ................... (23,526) (35,714)
Proceeds from the maturity of marketable securities.. 37,230 41,804
-------- --------
Net cash used in investing activities .. (13,511) (8,070)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distribution to Partners ............................ (15,720) (15,720)
-------- --------
Net cash used in financing activities .. (15,720) (15,720)
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS ................ 1,171 (6,808)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ....... 6,933 8,000
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ............. $ 8,104 $ 1,192
======== ========
CASH PAID FOR:
Interest .......................................... $ 9,325 $ 9,423
======== ========
See notes to consolidated financial statements.
-3-
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 June 30,
2001 and December 31, 2000, and the results of its operations for the
three-month and six-month periods ended June 30, 2001 and 2000 and cash flows
for the six months ended June 30, 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 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 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, 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
-4-
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 net income of the six months
ended June 30, 2001. The effect of the change on the three months ended June 30,
2001 was to decrease net income $232,000 ($(0.01) per basic and diluted limited
partner unit) and the effect of the change on the six months ended June 30, 2001
was to decrease income before cumulative effect of accounting change $435,000
($(0.03) per basic and diluted limited partner unit) and increase net income
$7,504,000 ($0.48 and $0.47 per basic and diluted limited partner unit,
respectively). The effect of the change on the first quarter of 2001 was to
decrease income before cumulative effect of accounting change $203,000 ($(0.01)
per basic and diluted limited partner unit) to $4,436,000 ($0.28 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) to $12,375,000
($0.79 and $0.77 per basic and diluted limited partner unit). Assuming the
retroactive application of the service cost method of estimating the black lung
liability, the pro forma net income for the three and six months ended June 30,
2000 would have been approximately $1,938,000 and $4,242,000 or $0.12 and $0.27
per basic and diluted limited partner unit, respectively, as compared to
reported net income of $2,098,000 and $4,464,000 or $0.13 and $0.28 per basic
and diluted limited partner unit, respectively.
4. RESTATEMENT
Subsequent to the issuance of its unaudited consolidated financial
statements for the quarter ended June 30, 2001, the Partnership determined that
the change in the method of estimating the black lung benefits liability
previously reported in its Form 10-Q for the quarter ended June 30, 2001 should
have been accounted for as a change in accounting principle rather than as a
change in the estimate of the black lung benefits liability. As a result, the
accompanying unaudited consolidated financial statements as of and for the three
and six months ended June 30, 2001 have been restated from the amounts
previously reported to appropriately present this change. A summary of the
significant effects of the restatement is as follows (in thousands):
-5-
As Previously As
Reported Restated
------------- --------
At June 30, 2001:
Accrued pneumoconiosis benefits $ 13,962 $ 14,149
Total partners' deficit (34,991) (35,178)
For the three months ended June 30, 2001:
Operating expenses $ 77,699 $ 77,931
Unusual items (income) (7,691) --
Income (loss) before cumulative effect of
accounting change 7,877 (46)
Net income (loss) 7,877 (46)
Basic net income (loss) per limited partner unit $ 0.50 $ (0.01)
Diluted net income (loss) per limited partner unit $ 0.49 $ (0.01)
For the six months ended June 30, 2001:
Operating expenses $ 150,831 $ 151,266
Unusual items (income) (7,691) --
Income before cumulative effect of
accounting change 12,516 4,390
Cumulative effect of accounting change -- 7,939
Net income 12,516 12,329
Basic net income per limited partner unit $ 0.80 $ 0.78
Diluted net income per limited partner unit $ 0.78 $ 0.77
5. SUBSEQUENT EVENT
On July 26, 2001, the Partnership declared a minimum quarterly distribution
for the period from April 1, 2001 to June 30, 2001, of $0.50 per unit, totaling
approximately $7,703,000, on all of its Common and Subordinated Units
outstanding, payable on August 14, 2001 to all unitholders of record on August
3, 2001.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SELECTED OPERATING DATA
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- ---------------------------
2001 2000 2001 2000
------ ------ ------ ------
Tons sold (000s) 4,278 3,500 8,580 7,225
Tons produced (000s) 3,828 3,168 8,068 7,056
Revenues per ton sold (1) $24.64 $23.68 $24.27 $23.44
Cost per ton sold (2) $21.11 $19.26 $20.21 $19.11
-6-
(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 June 30, 2001 Compared to Three Months Ended June 30, 2000
Coal sales. Coal sales for the three months ended June 30, 2001 (the "2001
Quarter") increased 25.8% to $104.0 million from $82.7 million for the three
months ended June 30, 2000 (the "2000 Quarter"). The increase of $21.3 million
was primarily attributable to higher sales prices and utility demand as well as
additional revenues from the new Gibson County Coal, LLC mining complex, which
was not in operation during the 2000 Quarter. Tons sold increased 22.2% to 4.3
million for the 2001 Quarter from 3.5 million for the 2000 Quarter. Tons
produced increased 20.8% to 3.8 million tons for the 2001 Quarter from 3.2
million for the 2000 Quarter.
Transportation revenues. Transportation revenues increased to $5.3 million
for the 2001 Quarter from $3.8 million for the 2000 Quarter. The increase of
$1.5 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 $1.4 million for the 2001 Quarter from $0.2 million for the 2000
Quarter. The increase of $1.2 million results from the introduction of a third
party coal synfuel production facility at the Partnership's Hopkins County Coal,
LLC mining complex. Hopkins County Coal receives various fees for operating the
third party's coal synfuel facility and providing other services. The synfuel
shipments will continue on a month-to-month basis through August 2001. While
current negotiations are underway to continue synfuel arrangements beyond this
date, continuation of the operating revenues associated with the coal synfuel
production facility can not be assured.
Operating expenses. Operating expenses increased 31.1% to $77.9 million for
the 2001 Quarter from $59.4 million for the 2000 Quarter. The increase of $18.5
million primarily resulted from increased sales volumes and the addition of
operating expenses associated with the new Gibson County Coal mining complex,
which was not in operation during the 2000 Quarter. Additionally, difficult
mining conditions were encountered at several operations, which placed an undue
burden on equipment scheduled for replacement, resulting in unanticipated
equipment failures and higher maintenance costs.
Transportation expenses. See "Transportation revenues" above concerning the
increase in transportation expenses.
Outside purchases. Outside purchases increased to $8.4 million for the 2001
Quarter compared to $4.3 million for the 2000 Quarter. The increase of $4.1
million primarily resulted from increased activity in the domestic coal
brokerage market due to favorable spot price levels, which resulted in increased
volumes at higher purchase prices.
-7-
General and administrative. General and administrative expenses increased
11.0% to $4.0 million for the 2001 Quarter compared to $3.6 million for the 2000
Quarter. The increase of $0.4 million was primarily attributable to accruals
related to the additional restricted units granted under the Long-Term Incentive
Plan, which is impacted by the increased value of the common units.
Depreciation, depletion and amortization. Depreciation, depletion and
amortization expenses increased 16.1% to $11.1 million for the 2001 Quarter
compared to $9.6 million for the 2000 Quarter. The increase of $1.5 million
resulted primarily from 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, respectively.
EBITDA (income before net interest expense, depreciation, depletion and
amortization) was comparable for the 2001 and 2000 Quarters at $15.3 million and
$15.9 million, respectively.
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 unusual items. 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).
Six Months Ended June 30, 2001 compared to Six Months Ended June 30, 2000
Coal sales. Coal sales for the six months ended June 30, 2001 (the "2001
Period") increased 21.4% to $204.8 million from $168.7 million for the six
months ended June 30, 2000 (the "2000 Period"). The increase of $36.1 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 Period. Tons sold increased 18.8% to 8.6
million for the 2001 Period from 7.2 million for the 2000 Period. Tons produced
increased 14.3% to 8.1 million tons for the 2001 Period from 7.1 million for the
2000 Period.
Transportation revenues. Transportation revenues increased to $9.2 million
for the 2001 Period from $6.7 million for the 2000 Period. The increase of $2.5
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 $3.4 million for the 2001 Period from $0.6 million for the 2000
Period. The increase of $2.8 million resulted 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 will continue on a month-to-month basis through August 2001. While
current negotiations are underway to continue synfuel arrangements beyond
-8-
this date, continuation of the operating revenues associated with the coal
synfuel production facility can not be assured.
Operating expenses. Operating expenses increased 22.5% to $151.3
million for the 2001 Period from $123.5 million for the 2000 Period. The
increase of $27.8 million primarily resulted from increased sales volumes and
the addition of operating expenses associated with the new Gibson County Coal
mining complex, which was not in operation during the 2000 Period. Additionally,
difficult mining conditions were encountered at several operations, which placed
an undue burden on equipment scheduled for replacement, resulting in
unanticipated equipment failures and higher maintenance costs.
Transportation expenses. See "Transportation revenues" above concerning
the increase in transportation expenses.
Outside purchases. Outside purchases increased to $13.2 million for the
2001 Period compared to $7.3 million for the 2000 Period. The increase of $5.9
million primarily resulted from increased activity in the domestic coal
brokerage market due to favorable spot price levels, which resulted in increased
volumes at higher purchase prices.
General and administrative. General and administrative expenses
increased 24.0% to $8.9 million for the 2001 Period compared to $7.2 million for
the 2000 Period. The increase of $1.7 million was primarily attributable to
higher accruals related to the Short-Term Incentive Plan, combined with
additional restricted units granted under the Long-Term Incentive Plan, which is
impacted by the increased value of the common units.
Depreciation, depletion and amortization. Depreciation, depletion and
amortization expenses increased 16.4% to $22.4 million for the 2001 Period
compared to $19.2 million for the 2000 Period. The increase of $3.2 million
primarily resulted from additional depreciation expense associated with the new
Gibson County Coal mining complex, which was not in operation during the 2000
Period.
Interest expense. Interest expense was comparable for the 2001 and 2000
Periods at $8.5 million and $8.3, million respectively.
EBITDA (income before net interest expense, depreciation, depletion and
amortization) increased 35.2% to $43.2 million for the 2001 Period compared with
$31.9 million for the 2000 Period. The $11.3 million increase is primarily
attributable to the $7.9 million cumulative effect of accounting change. See
"Part. 1, Item 1. Financial Statements - Note 3. Accounting Change."
Additionally, the new Gibson County Coal mining complex, which was not in
operation during the 2000 Period 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 unusual items nor 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).
-9-
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Cash provided by operating activities was $30.4 million for the 2001
Period compared to $17.0 million in the 2000 Period. The increase in cash
provided by operating activities was principally attributable to a decrease in
working capital.
Net cash used in investing activities was $13.5 million for the 2001
Period compared to net cash used in investing activities of $8.1 million in the
2000 Period. The increased use of cash 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, LLC mine into adjacent coal reserves.
Net cash used in financing activities was comparable for the 2001 and
2000 Periods at $15.7 million.
Capital Expenditures
Capital expenditures increased to $27.2 million in the 2001 Period
compared to $14.2 million in the 2000 Period. 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 Alliance Resource Operating Partners, L.P.
("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 June 30, 2001. The weighted average interest rate
on the term loan facility at June 30, 2001, was 5.11%. 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 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
In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations," and No. 142, "Goodwill and Intangible Assets". SFAS No. 141
eliminates the pooling-of-interests method of accounting for business
combinations and requires that all business combinations be accounted for under
the purchase method. In addition, it further clarifies the criteria for
recognition of intangible assets separately from goodwill. This statement is
effective for business combinations initiated after June 30, 2001.
-10-
SFAS No. 142 discontinues the practice of amortizing goodwill and
indefinite lived intangible assets and initiates an annual review for
impairment. This statement is effective January 1, 2002 for all goodwill and
other intangible assets included in an entity's statement of financial position
at that date, regardless of when those assets were initially recognized. The new
standards are not expected to have a material impact on the Partnership's
financial position or results of operations.
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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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