EXHIBIT 99.1
PRESS RELEASE
CONTACT:
Megan J. Cordle
Alliance Resource Partners, L.P.
(ALLIANCE RESOURCE PARTNERS, L.P.) 1717 South Boulder Avenue, Suite 600
Tulsa, Oklahoma 74119
(918) 295-7642
FOR IMMEDIATE RELEASE
ALLIANCE RESOURCE PARTNERS, L.P.
Announces Increase in Net Income for Third Quarter 2003; Quarterly Record for
Revenues and Tons Sold; and Declares Quarterly Cash Distribution of $0.525 Per
Unit
Tulsa, Oklahoma, October 24, 2003 - Alliance Resource Partners, L.P. (Nasdaq:
ARLP) today reported net income of $10.8 million, or $0.59 per basic limited
partner unit, for the third quarter ended September 30, 2003, compared to $4.1
million, or $0.31 per basic limited partner unit, for the same quarter of 2002.
Income before income taxes for the third quarter ended September 30, 2003, was
$11.5 million compared to $3.6 million for the same quarter of 2002. Net income
per basic limited partner unit for the third quarter ended September 30, 2003,
is based on 17,903,793 units, which reflects the common units offering completed
in the first quarter of 2003, compared to 15,405,311 for the same quarter of
2002.
The Partnership also declared a quarterly cash distribution of $0.525 per unit
(an annualized rate of $2.10) for the third quarter ended September 30, 2003,
payable on November 14, 2003, to all unitholders of record as of November 3,
2003.
Revenues and tons sold for the third quarter ended September 30, 2003,
established quarterly records of $141.8 million and 5.2 million tons,
respectively, compared to $132.8 million and 4.7 million tons in the third
quarter of 2002. Revenues increased due to higher sales volumes, partially
offset by lower sales prices. Coal inventories declined by approximately 330,000
tons during the third quarter of 2003.
Production for the third quarter of 2003 was 4.7 million tons, compared to 4.1
million tons in the third quarter of 2002. Production increased at all of the
Partnership's active operations, more than offsetting the production loss
associated with idling the Hopkins County Coal mine in June 2003. (See ARLP
Press Releases, dated April 3 and June 2, 2003). The Partnership's increased
production is attributable to several strategic capital investments made during
the past two years. The Partnership has added continuous miner units at its
Gibson County Coal, Warrior Coal and MC Mining mines and made infrastructure
investments, such as new mine shafts, at the Dotiki and Pattiki mines. Quarterly
production at the Mettiki mine was comparable with the previous three quarters,
but significantly greater than the third quarter of 2002, when adverse geologic
conditions were encountered.
Net income for the third quarter of 2003 benefited from the increase in tons
sold and the lower per ton operating expenses associated with the increase in
production. The increase in net income was achieved even though general and
administrative expense and income tax expense for the third
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quarter of 2003 were higher than general and administrative expense and income
tax expense for last year's comparable quarter. The general and administrative
expense increase was primarily attributable to higher accruals, totaling $1.8
million, associated with the Partnership's managing general partner's incentive
compensation plans. The majority of these accruals is attributable to the
Long-Term Incentive Plan, which is a restricted unit program and was impacted by
the increased market value of the Partnership's common units. In addition,
general and administrative expenses were impacted by higher insurance and surety
bonding costs. The increased income tax expense is associated with coal synfuel
related services performed by Alliance Service, Inc., an indirect wholly-owned
subsidiary of the Partnership, which is subject to federal and state income
taxes.
Commenting on the Partnership's 2003 third quarter performance, Joseph W. Craft
III, the Partnership's President and Chief Executive Officer, said "A strong
shipping quarter combined with another solid performance from our operations
have resulted in better than expected financial results for the quarter. Coal
prices have picked up recently due to an improving domestic economy, supply
uncertainties in the Eastern United States and relatively high natural gas
prices. During the third quarter, the Partnership sold the balance of its
anticipated production for 2003 and improved its sales position for 2004."
For the nine months ended September 30, 2003, the Partnership had net income of
$32.5 million, or $1.86 per basic limited partner unit, compared to net income
of $29.5 million, or $1.92 per basic limited partner unit, for the same period
of 2002. Revenues were $400.2 million and coal sales were 14.4 million tons for
the first nine months of 2003, compared to $385.0 million and 13.6 million tons
for the same period of 2002, respectively. Net income per basic limited partner
unit for the nine months ended September 30, 2003, is based on a weighted
average of 17,471,864 units, which reflects the weighted average impact of the
common units offering completed in the first quarter of 2003, compared to
15,405,311 units for the same period of 2002.
Financial results for the year-to-date have benefited from lower per ton
operating costs, primarily reflecting increased production, partially offset by
lower sales prices. Year-to-date financial results have been negatively impacted
by the increases in general and administrative and income tax expenses as
explained above in the review of third quarter 2003 financial results.
Looking ahead, Mr. Craft stated, "The Partnership is estimating net income for
the 2003 fourth quarter to be between $8 and $10 million, based on anticipated
shipments of 5 million tons. Assuming these results are achieved, the
Partnership's net income for the year would be at record levels, ranging from
$40 to $42 million, which is 7% higher than previous guidance at the mid-point
of the range." Mr. Craft added, "Currently, approximately 86% of next year's
anticipated coal production of 19 million tons is contracted for sale, which is
above normal for this time of year. We are, however, engaged in the final round
of negotiations with several potential customers for shipments in 2004 which, if
successful, will provide us the opportunity to increase our production by
approximately 500,000 tons next year. Once we finalize these negotiations, we
will be in a better position to provide earnings guidance for 2004. We are
committed to delivering again on our goal of sustaining growth in earnings and
cash flow."
As of September 30, 2003, the Partnership satisfied the early conversion
financial tests contained in the Partnership Agreement. As a result, one-half of
the outstanding subordinated units (i.e., 3,211,265 subordinated units) held by
Alliance Resource GP, LLC, the special general partner of the Partnership, will
convert into common units on November 15, 2003. The remainder of the
subordinated units are expected to convert into common units in the fourth
quarter of 2004,
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assuming the Partnership continues to meet the financial test requirements of
the Partnership Agreement. As of November 15, 2003, Alliance Resource GP, LLC,
will own 4,444,045 and 3,211,266 of the Partnership's common and subordinated
units, respectively. As of that date, total units outstanding, both common and
subordinated, are expected to remain at 17,903,793.
The statements and projections used throughout this release are based on current
expectations. These statements and projections are forward-looking, and actual
results may differ materially. These projections do not include the potential
impact of any mergers, acquisitions or other business combinations that may
occur after the date of this release. At the end of this release, we have
included more information regarding business risks that could affect our
results.
Alliance Resource Partners is the nation's only publicly traded master limited
partnership involved in the production and marketing of coal. Alliance Resource
Partners currently operates mining complexes in Illinois, Indiana, Kentucky and
Maryland.
FORWARD-LOOKING STATEMENTS: WITH THE EXCEPTION OF HISTORICAL MATTERS, ANY
MATTERS DISCUSSED IN THIS PRESS RELEASE ARE FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM PROJECTED RESULTS. THESE RISKS, UNCERTAINTIES AND CONTINGENCIES
INCLUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING: COMPETITION IN COAL MARKETS AND
OUR ABILITY TO RESPOND TO THE COMPETITION; FLUCTUATION IN COAL PRICES, WHICH
COULD ADVERSELY AFFECT OUR OPERATING RESULTS AND CASH FLOWS; DEREGULATION OF THE
ELECTRIC UTILITY INDUSTRY OR THE EFFECTS OF ANY ADVERSE CHANGES IN THE DOMESTIC
COAL INDUSTRY, ELECTRIC UTILITY INDUSTRY, OR GENERAL ECONOMIC CONDITIONS;
DEPENDENCE ON SIGNIFICANT CUSTOMER CONTRACTS, INCLUDING RENEWING CUSTOMER
CONTRACTS UPON EXPIRATION OF EXISTING CONTRACTS; CUSTOMER BANKRUPTCIES AND/OR
CANCELLATIONS OF, OR BREACHES TO, EXISTING CONTRACTS; CUSTOMER DELAYS OR
DEFAULTS IN MAKING PAYMENTS; FLUCTUATIONS IN COAL DEMAND, PRICES AND
AVAILABILITY DUE TO LABOR AND TRANSPORTATION COSTS AND DISRUPTIONS, EQUIPMENT
AVAILABILITY, GOVERNMENTAL REGULATIONS AND OTHER FACTORS; OUR PRODUCTIVITY
LEVELS AND MARGINS THAT WE EARN ON OUR COAL SALES; ANY UNANTICIPATED INCREASES
IN LABOR COSTS, ADVERSE CHANGES IN WORK RULES, OR UNEXPECTED CASH PAYMENTS
ASSOCIATED WITH POST-MINE RECLAMATION AND WORKERS' COMPENSATION CLAIMS; ANY
UNANTICIPATED INCREASES IN TRANSPORTATION COSTS AND RISK OF TRANSPORTATION
DELAYS OR INTERRUPTIONS; GREATER THAN EXPECTED ENVIRONMENTAL REGULATIONS, COSTS
AND LIABILITIES; A VARIETY OF OPERATIONAL, GEOLOGIC, PERMITTING, LABOR AND
WEATHER-RELATED FACTORS; RISKS OF MAJOR MINE-RELATED ACCIDENTS OR INTERRUPTIONS;
RESULTS OF LITIGATION; DIFFICULTY MAINTAINING OUR SURETY BONDS FOR MINE
RECLAMATION AS WELL AS WORKERS' COMPENSATION AND BLACK LUNG BENEFITS; DIFFICULTY
OBTAINING COMMERCIAL PROPERTY INSURANCE; AND RISKS ASSOCIATED WITH OUR 10.0%
PARTICIPATION (EXCLUDING ANY APPLICABLE DEDUCTIBLE) IN THE COMMERCIAL PROPERTY
PROGRAM.
ADDITIONAL INFORMATION CONCERNING THESE AND OTHER FACTORS CAN BE FOUND IN THE
PARTNERSHIP'S PUBLIC PERIODIC FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION ("SEC"), INCLUDING THE PARTNERSHIP'S ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 2002 FILED ON MARCH 20, 2003 WITH THE SEC. EXCEPT AS
REQUIRED BY APPLICABLE SECURITIES LAWS, THE PARTNERSHIP DOES NOT INTEND TO
UPDATE ITS FORWARD-LOOKING STATEMENTS.
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ALLIANCE RESOURCE PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OPERATING DATA
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
(UNAUDITED)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- ----------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Tons sold 5,181 4,703 14,386 13,620
Tons produced 4,729 4,080 14,362 13,531
SALES AND OPERATING REVENUES:
Coal sales $ 131,131 $ 122,241 $ 368,170 $ 355,657
Transportation revenues 5,231 5,032 14,617 14,490
Other sales and operating revenues 5,437 5,507 17,408 14,849
------------ ------------ ------------ ------------
Total revenues 141,799 132,780 400,195 384,996
------------ ------------ ------------ ------------
EXPENSES:
Operating expenses 98,464 99,780 276,149 268,510
Transportation expenses 5,231 5,032 14,617 14,490
Outside purchases 3,844 2,773 5,233 8,384
General and administrative 6,494 4,316 18,799 14,422
Depreciation, depletion and amortization 12,556 12,903 39,349 38,516
Interest expense 4,088 4,008 12,045 12,154
------------ ------------ ------------ ------------
Total operating expenses 130,677 128,812 366,192 356,476
------------ ------------ ------------ ------------
INCOME FROM OPERATIONS 11,122 3,968 34,003 28,520
OTHER INCOME (EXPENSE) 344 (412) 794 425
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 11,466 3,556 34,797 28,945
INCOME TAX EXPENSE 663 (570) 2,338 (593)
------------ ------------ ------------ ------------
NET INCOME $ 10,803 $ 4,126 $ 32,459 $ 29,538
============ ============ ============ ============
GENERAL PARTNERS' INTEREST
IN NET INCOME (LOSS) $ 216 $ (579) $ (3) $ (98)
============ ============ ============ ============
LIMITED PARTNERS' INTEREST
IN NET INCOME $ 10,587 $ 4,705 $ 32,462 $ 29,636
============ ============ ============ ============
BASIC NET INCOME PER LIMITED PARTNER UNIT $ 0.59 $ 0.31 $ 1.86 $ 1.92
============ ============ ============ ============
DILUTED NET INCOME PER LIMITED PARTNER UNIT $ 0.57 $ 0.30 $ 1.80 $ 1.87
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING - BASIC 17,903,793 15,405,311 17,471,864 15,405,311
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING - DILUTED 18,487,787 15,844,316 18,053,904 15,842,689
============ ============ ============ ============
</Table>
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ALLIANCE RESOURCE PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT UNIT DATA)
<Table>
<Caption>
SEPTEMBER 30, DECEMBER 31,
2003 2002
------------ ------------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,340 $ 9,028
Trade receivables, net 42,658 33,018
Marketable securities 23,519 470
Inventories 16,652 13,165
Advance royalties 5,233 5,232
Prepaid expenses and other assets 3,601 2,784
------------ ------------
Total current assets 93,003 63,697
PROPERTY, PLANT AND EQUIPMENT AT COST 471,102 446,629
LESS ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION (244,411) (216,777)
------------ ------------
226,691 229,852
OTHER ASSETS:
Advance royalties 8,917 10,542
Coal supply agreements, net 6,126 8,167
Other long-term assets 4,750 4,674
------------ ------------
$ 339,487 $ 316,932
============ ============
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 19,628 $ 23,330
Due to affiliates 2,321 1,286
Accrued taxes other than income taxes 9,698 8,105
Accrued payroll and related expenses 11,594 10,004
Accrued interest 1,661 5,361
Workers' compensation and pneumoconiosis benefits 4,949 5,275
Other current liabilities 6,535 9,877
Current maturities, long-term debt -- 16,250
------------ ------------
Total current liabilities 56,386 79,488
------------ ------------
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities 201,000 195,000
Accrued pneumoconiosis benefits 17,284 16,067
Workers' compensation 23,801 19,949
Reclamation and mine closing 22,159 21,821
Due to affiliates 10,930 20,652
Other liabilities 2,702 2,717
------------ ------------
Total liabilities 334,262 355,694
------------ ------------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL (DEFICIT):
Common Unitholders 11,481,262 and 8,982,780 units
outstanding, respectively 200,331 144,219
Subordinated Unitholder 6,422,531 units outstanding 116,333 112,916
General Partners (306,038) (290,472)
Unrealized loss on marketable securities (126) (150)
Minimum pension liability (5,275) (5,275)
------------ ------------
Total Partners' capital (deficit) 5,225 (38,762)
------------ ------------
$ 339,487 $ 316,932
============ ============
</Table>
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ALLIANCE RESOURCE PARTNERS, L.P.
CONDENSED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<Table>
<Caption>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
2003 2002
------------ ------------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES $ 62,491 $ 56,374
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (34,190) (48,579)
Purchase of Warrior Coal (12,661) --
Proceeds from sale of property, plant and equipment 413 322
Purchase of marketable securities (23,021)
Proceeds from the maturity of marketable securities -- 10,085
------------ ------------
Net cash used in investing activities (69,459) (38,172)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common unit offering to public 53,956 --
Cash contribution by General Partners 9 --
Payments on Warrior Coal revolver (17,000) --
Borrowings under revolving credit and working capital facilities 31,600 61,700
Payments under revolving credit and working capital facilities (10,600) (51,700)
Payments on long-term debt (31,250) (11,250)
Distributions to Partners (27,435) (23,580)
------------ ------------
Net cash used in financing activities (720) (24,830)
------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (7,688) (6,628)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,028 11,093
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,340 $ 4,465
============ ============
</Table>
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Reconciliation of GAAP "Cash Flows Provided by Operating Activities" to Non-GAAP
"EBITDA" and Reconciliation of Non-GAAP "EBITDA" to GAAP "Net Income" (in
thousands)
<Table>
<Caption>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- ----------------------------
2003 2002 2003 2002
------------ ------------ ------------ ------------
Cash flows provided by operating activities $ 18,764 $ 17,913 $ 62,491 $ 56,374
Reclamation and mine closing (335) (297) (1,005) (892)
Coal inventory adjustment to market 327 (448) (8) (1,271)
Other 234 516 (32) 350
Net effect of changes in operating assets and liabilities 4,369 (655) 10,362 13,493
Interest expense 4,088 4,008 12,045 12,154
Income taxes 663 (570) 2,338 (593)
------------ ------------ ------------ ------------
EBITDA 28,110 20,467 86,191 79,615
Depreciation, depletion and amortization (12,556) (12,903) (39,349) (38,516)
Interest expense (4,088) (4,008) (12,045) (12,154)
Income taxes (663) 570 (2,338) 593
------------ ------------ ------------ ------------
Net income $ 10,803 $ 4,126 $ 32,459 $ 29,538
============ ============ ============ ============
</Table>
EBITDA is defined as income before net interest expense, income taxes and
depreciation, depletion and amortization. Management believes EBITDA is a useful
indicator of its ability to meet debt service and capital expenditure
requirements and uses EBITDA as a measure of operating performance. 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 is not intended to represent cash flow and does not represent
the measure of cash available for distribution. The Partnership's method of
computing EBITDA 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).
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