EXHIBIT 99.1
NATURAL RESOURCE PARTNERS L.P. [NRP LOGO]
601 Jefferson St., Suite 3600, Houston, TX 77002
NEWS RELEASE
================================================================================
NATURAL RESOURCE PARTNERS L.P.
REPORTS 2003 FOURTH QUARTER AND FULL YEAR RESULTS
HIGHLIGHTS:
o FOURTH QUARTER NET INCOME OF $8.6 MILLION OR $0.37 PER UNIT AND 2003
NET INCOME OF $36.9 MILLION OR $1.59 PER UNIT
o FOURTH QUARTER AND 2003 CASH FLOW FROM OPERATING ACTIVITIES OF $14.7
MILLION AND $64.5 MILLION, RESPECTIVELY
o FOURTH QUARTER AND 2003 DISTRIBUTABLE CASH FLOW OF $12.4 MILLION AND
$59.8 MILLION, RESPECTIVELY
o RECENTLY ANNOUNCED INCREASE IN QUARTERLY DISTRIBUTION TO $0.5625 PER
UNIT
o CASH BALANCE INCREASED FROM $7.8 MILLION ON DECEMBER 31, 2002 TO $24.3
MILLION ON DECEMBER 31, 2003
HOUSTON, FEBRUARY 12, 2004 - NATURAL RESOURCE PARTNERS L.P. (NYSE: NRP) today
reported fourth quarter 2003 net income of $8.6 million or $0.37 per limited
partner unit and 2003 net income of $36.9 million or $1.59 per limited partner
unit. Cash flow from operating activities was $14.7 million and $64.5 million,
for the fourth quarter and the year respectively, while distributable cash flow
was $12.4 million and $59.8 million, respectively, for the quarter and the year.
Distributable cash flow is a non-GAAP financial measure.
The condensed statement of income and the statement of cash flows that follow
include the results for the period commencing on October 17, 2002, the closing
of NRP's initial public offering, through December 31, 2002. Since this time
period is less than a full quarter, we have not compared earnings or cash flows
of the current year versus the prior year.
FOURTH QUARTER 2003
Fourth quarter 2003 sales by NRP's lessees generated $18.4 million in coal
royalty revenues based on sales volumes of 11.0 million tons, for an average
coal royalty revenue of $1.68 per ton. This compares to $14.4 million in coal
royalty revenues based on production of 8.9 million tons, for an average coal
royalty revenue of $1.62 per ton for the same three month period of 2002. The
27% increase in coal royalty revenues is due
-continued-
NRP Reports 2003 Fourth Quarter and Full Year Results Page 2 of 9
mainly to the 23% increase in production, with a $0.06 per ton increase in the
average coal royalty rate. Acquisitions completed during the last year account
for $2.2 million of the increase in coal royalty revenues and 1.1 million tons
of the increase in production.
FULL YEAR 2003
For the year ended December 31, 2003, NRP's lessees sold 44.3 million tons of
coal, up 13.8 million tons, or 45% from last year. This production generated
coal royalty revenues of $73.8 million, an increase of $24.2 million, or
approximately 49%. This increase is primarily due to the acquisitions NRP
completed during the last year.
CAPITAL RESOURCES
At December 31, 2003, NRP had borrowings under the revolving credit facility
totaling $27 million, and $175 million of outstanding senior unsecured notes. On
January 2, 2004, NRP borrowed an additional $73 million under its revolving
credit facility to purchase mineral interests from BLC Properties LLC.
Subsequent to the borrowing on January 2, the partnership has $75 million of
available capacity under its revolving credit facility.
PINNACLE MINE UPDATE
As previously reported, in September 2003, the Pinnacle mine was idled following
a ventilation disruption most likely caused by a lightening strike, and on
December 10, 2003, NRP received a force majeure notice from Pinnacle Mining
Company, LLC, its lessee regarding the mine. The notice allows Pinnacle to
forego payment of the minimum royalties due under the lease terms until the mine
is again in production. Although the scientific tests performed by Pinnacle
indicate that there has been no recent activity in the mine, the mine remains
idled. This week however, a coordinated team of mine rescue personnel consisting
of trained Pinnacle employees as well as representatives from the U.S. Mining
Safety and Health Administration (MSHA) and the West Virginia Office of Miners
Health Safety and Training entered the mine to examine and assess the conditions
underground. Pinnacle's management will continue to work with government
officials and the United Mine Workers to safely reopen the mine for production.
QUOTE
"Our net income for the year was in line with our previously announced
expectations. Our fourth quarter net income, while in line with our
expectations, was below the third quarter net income due to the idled Pinnacle
mine. The Pinnacle mine accounted for approximately $1.6 million in coal royalty
revenues and $1.2 million in net income in the third quarter prior to its
idling," said Nick Carter, President and Chief Operating Officer of NRP.
2004 OUTLOOK
NRP Reports 2003 Fourth Quarter and Full Year Results Page 3 of 9
There has been no change to the previously announced guidance for 2004. NRP
still anticipates generating net income of approximately $39.5 to $41.5 million
and distributable cash flow of $64.1 to $66.6 million. These estimates do not
include any production from the currently idled Pinnacle mine.
DISTRIBUTIONS
NRP recently announced an increase of $0.025 to its quarterly distribution,
which is now $0.5625 per unit, or $2.25 per unit on an annualized basis. This
was the third distribution increase since going public in October 2002 and
equates to a 10% increase in NRP's annualized distributions since that time.
DISCLOSURE OF NON-GAAP FINANCIAL MEASURES
Distributable cash flow represents cash flow from operations less actual
principal payments and cash reserves set aside for scheduled principal payments
on the senior notes. Distributable cash flow is a "non-GAAP financial measure"
that is presented because management believes it is a useful adjunct to net cash
provided by operating activities under GAAP. Distributable cash flow is a
significant liquidity metric that is an indicator of NRP's ability to generate
cash flows at a level that can sustain or support an increase in quarterly cash
distributions paid to its partners. Distributable cash flow is also the
quantitative standard used throughout the investment community with respect to
publicly traded partnerships. Distributable cash flow is not a measure of
financial performance under GAAP and should not be considered as an alternative
to cash flows from operating, investing or financing activities. A
reconciliation of distributable cash flow to net cash provided by operating
activities is included in the tables attached to this release. Distributable
cash flow may not be calculated the same for NRP as other companies.
Natural Resource Partners L.P. is headquartered in Houston, TX, with its
operations headquarters in Huntington, WV. NRP is a master limited partnership
that is principally engaged in the business of owning and managing coal
properties in the three major coal producing regions of the United States:
Appalachia, the Illinois Basin and the Powder River Basin.
For additional information, please contact Kathy Hager at 713-751-7555 or
khager@nrplp.com. Further information about NRP is available on the
partnership's website at http://www.nrplp.com.
This press release may include "forward-looking statements" as defined by the
Securities and Exchange Commission. Such statements include the net income and
the distributable cash flow discussed in the 2004 outlook. All statements, other
than statements of historical facts, included in this press release that address
activities, events or developments that the partnership expects, believes or
anticipates will or may occur in the future are forward-looking statements.
These statements are based on certain assumptions made by the partnership based
on its experience and perception of historical trends, current conditions,
expected future developments and other factors it believes are appropriate in
the circumstances. Such statements are subject to a number of
NRP Reports 2003 Fourth Quarter and Full Year Results Page 4 of 9
assumptions, risks and uncertainties, many of which are beyond the control of
the partnership. These risks include, but are not limited to, decreases in
demand for coal; changes in operating conditions and costs; production cuts by
our lessees; commodity prices; unanticipated geologic problems; changes in the
legislative or regulatory environment and other factors detailed in Natural
Resource Partners' Securities and Exchange Commission filings. Natural Resource
Partners L.P. has no obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise.
04-4
-financials follow-
NRP Reports 2003 Fourth Quarter and Full Year Results Page 5 of 9
NATURAL RESOURCE PARTNERS L.P.
OPERATING STATISTICS
(In thousands, except per ton data)
<Table>
<Caption>
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2003 2002 2003 2002
--------- --------- --------- ---------
Coal royalty revenues:
Appalachia $ 16,009 $ 11,829 $ 63,855 $ 40,688
Illinois Basin 793 892 3,566 2,994
Northern Powder River Basin 1,575 1,712 6,349 5,926
--------- --------- --------- ---------
Total $ 18,377 $ 14,433 $ 73,770 $ 49,608
========= ========= ========= =========
Sales volumes (tons):
Appalachia 8,957 6,535 35,998 22,600
Illinois Basin 666 737 3,034 2,433
Northern Powder River Basin 1,336 1,638 5,312 5,474
--------- --------- --------- ---------
Total 10,959 8,910 44,344 30,507
========= ========= ========= =========
Average royalty revenue per ton:
Appalachia $ 1.79 $ 1.81 $ 1.77 $ 1.80
Illinois Basin 1.19 1.21 1.18 1.23
Northern Powder River Basin 1.18 1.05 1.20 1.08
--------- --------- --------- ---------
Total $ 1.68 $ 1.62 $ 1.66 $ 1.63
========= ========= ========= =========
</Table>
NRP Reports 2003 Fourth Quarter and Full Year Results Page 6 of 9
NATURAL RESOURCE PARTNERS L.P.
CONDENSED STATEMENT OF INCOME
(In thousands, except per unit amounts)
<Table>
<Caption>
FROM COMMENCEMENT FROM COMMENCEMENT
OF OPERATIONS OF OPERATIONS
THREE MONTHS (OCTOBER 17, 2002) (OCTOBER 17, 2002)
ENDED THROUGH YEAR ENDED THROUGH
DECEMBER 31, 2003 DECEMBER 31, 2002 DECEMBER 31, 2003 DECEMBER 31, 2002
----------------- ----------------- ----------------- -----------------
Revenues:
Coal royalties $ 18,377 $ 11,532 $ 73,770 $ 11,532
Property taxes 1,550 1,047 5,069 1,047
Minimums recognized as revenue 427 872 2,033 872
Override royalties 209 226 1,022 226
Other 1,455 216 3,572 216
----------------- ----------------- ----------------- -----------------
Total revenues 22,018 13,893 85,466 13,893
Operating costs and expenses:
Depletion and amortization 6,344 4,526 25,365 4,526
General administrative and other 2,419 1,059 8,923 1,059
Taxes other than income 1,553 1,296 5,810 1,296
Royalty payments 337 397 1,299 397
----------------- ----------------- ----------------- -----------------
Total operating costs and expenses 10,653 7,278 41,397 7,278
----------------- ----------------- ----------------- -----------------
Operating income 11,365 6,615 44,069 6,615
Other income (expense)
Interest expense (2,718) (200) (6,814) (200)
Interest income 47 -- 206 --
Loss from sale of oil and gas properties (55) -- (55) --
Loss from interest rate hedge -- -- (499) --
----------------- ----------------- ----------------- -----------------
Net income $ 8,639 $ 6,415 $ 36,907 $ 6,415
================= ================= ================= =================
Net income attributable to general partner $ 173 $ 128 $ 738 $ 128
================= ================= ================= =================
Net income attributable to limited partners $ 8,466 $ 6,287 $ 36,169 $ 6,287
================= ================= ================= =================
BASIC AND DILUTED NET INCOME PER LIMITED
PARTNER UNIT
Common $ 0.37 $ 0.28 $ 1.59 $ 0.28
================= ================= ================= =================
Subordinated $ 0.37 $ 0.28 $ 1.59 $ 0.28
================= ================= ================= =================
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING:
Common 11,354 11,354 11,354 11,354
================= ================= ================= =================
Subordinated 11,354 11,354 11,354 11,354
================= ================= ================= =================
</Table>
NRP Reports 2003 Fourth Quarter and Full Year Results Page 7 of 9
NATURAL RESOURCE PARTNERS L.P.
STATEMENT OF CASH FLOWS
(In thousands)
<Table>
<Caption>
FROM COMMENCEMENT FROM COMMENCEMENT
OF OPERATIONS OF OPERATIONS
THREE MONTHS (OCTOBER 17, 2002) (OCTOBER 17, 2002)
ENDED THROUGH YEAR ENDED THROUGH
DECEMBER 31, 2003 DECEMBER 31, 2002 DECEMBER 31, 2003 DECEMBER 31, 2002
----------------- ----------------- ----------------- -----------------
Cash flows from operating activities:
Net Income $ 8,639 $ 6,415 $ 36,907 $ 6,415
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depletion and amortization 6,344 4,526 25,365 4,526
Non-cash interest charge 12 -- 26 --
Loss on sale of oil and gas properties 55 -- 55 --
Change in operating assets and
liabilities:
Accounts receivable (842) (9,043) (1,947) (9,043)
Other assets (1,284) (511) (811) (511)
Accounts payable and accrued
liabilities (1,075) 1,602 (193) 1,602
Deferred revenue 2,043 2,018 1,802 2,018
Cash paid on accrued incentive plan (507) -- (507) --
Accrued incentive plan expenses 837 -- 2,763 --
Property and franchise taxes payable 517 1,731 1,068 1,731
----------------- ----------------- ----------------- -----------------
Net cash provided by operating
activities 14,739 6,738 64,528 6,738
----------------- ----------------- ----------------- -----------------
Cash flows from investing activities:
Acquisition of property (18,832) (57,449) (142,541) (57,449)
Proceeds from sale of oil and gas properties 30 -- 30 --
----------------- ----------------- ----------------- -----------------
Net cash used in investing activities (18,802) (57,449) (142,511) (57,449)
----------------- ----------------- ----------------- -----------------
Cash flows from financing activities:
Proceeds from loans 19,000 57,500 317,100 57,500
Deferred financing costs -- (1,316) (2,541) (1,316)
Repayment of loans -- (46,531) (172,600) (46,531)
Distributions to partners (12,454) -- (46,478) --
Contributions by sponsors -- 1,847 -- 1,847
Proceeds from initial sale of common units net
of costs -- 45,453 -- 45,453
Proceeds from sale of common units to GNP and
NGCC -- 1,510 -- 1,510
Accumulated other comprehensive loss -- -- (931) --
----------------- ----------------- ----------------- -----------------
Net cash provided by financing
activities 6,546 58,463 94,550 58,463
----------------- ----------------- ----------------- -----------------
Net increase in cash 2,483 7,752 16,567 7,752
Cash at beginning of period 21,837 1 7,753 1
----------------- ----------------- ----------------- -----------------
Cash at end of of period $ 24,320 $ 7,753 $ 24,320 $ 7,753
================= ================= ================= =================
SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest $ 4,025 $ -- $ 5,778 $ --
Non-cash investing activities -- -- -- --
Net assets contributed by partners -- 153,091 -- 153,091
Excess of cost over net book value of Arch
properties -- 110,315 -- 110,315
Deferred revenue assumed on acquisition
of property -- (2,152) -- (2,152)
</Table>
NRP Reports 2003 Fourth Quarter and Full Year Results Page 8 of 9
NATURAL RESOURCE PARTNERS L.P.
CONDENSED BALANCE SHEET
(In thousands)
<Table>
<Caption>
DECEMBER 31, DECEMBER 31,
2003 2002
------------ ------------
Current assets $ 36,496 $ 17,307
Land, coal and other mineral rights owned and leased, net 492,160 374,187
Other assets 3,020 1,225
------------ ------------
Total assets $ 531,676 $ 392,719
============ ============
Current liabilities $ 14,744 $ 3,333
Long term debt 192,650 57,500
Deferred revenue 15,054 13,252
Accrued liabilities (1) 1,070 --
Partner's capital 308,158 318,634
------------ ------------
Total liabilities and partners' capital $ 531,676 $ 392,719
============ ============
Supplemental information:
Long term debt $ 192,650 $ 57,500
Partner's capital 308,158 318,634
------------ ------------
Total capitalization $ 500,650 $ 57,500
Long term debt/Total capitalization 38% 15%
</Table>
(1) Associated with the Partnership's long term incentive plan
NRP Reports 2003 Fourth Quarter and Full Year Results Page 9 of 9
NATURAL RESOURCE PARTNERS L.P.
RECONCILIATION OF UNAUDITED GAAP FINANCIAL MEASURES
TO NON-GAAP FINANCIAL MEASURES
(In thousands)
<Table>
<Caption>
FROM COMMENCEMENT FROM COMMENCEMENT
OF OPERATIONS OF OPERATIONS
THREE MONTHS (OCTOBER 17, 2002) (OCTOBER 17, 2002)
ENDED THROUGH YEAR ENDED THROUGH
DECEMBER 31, 2003 DECEMBER 31, 2002 DECEMBER 31, 2003 DECEMBER 31, 2002
----------------- ----------------- ----------------- -----------------
Reconciliation of GAAP "Net cash provided by operating
activities" to Non-GAAP "Distributable Cash Flow"
Cash flow from operating activities $ 14,739 $ 6,738 $ 64,528 $ 6,738
Less actual principal payments -- -- -- --
Less reserves for scheduled principal payments (2,350) -- (4,700) --
----------------- ----------------- ----------------- -----------------
DISTRIBUTABLE CASH FLOW $ 12,389 $ 6,738 $ 59,828 $ 6,738
================= ================= ================= =================
</Table>