Exhibit 99.1
PRESS RELEASE
CONTACT:
BRIAN L. CANTRELL
Alliance Resource Partners, L.P.
1717 South Boulder Avenue, Suite 600
(ALLIANCE RESOURCE PARTNERS, L.P. LOGO) Tulsa, Oklahoma 74119
(918) 295-7673
FOR IMMEDIATE RELEASE
ALLIANCE RESOURCE PARTNERS, L.P.
ANNOUNCES RECORD QUARTERLY NET INCOME; RAISES QUARTERLY CASH DISTRIBUTION BY
11% TO $0.625 PER UNIT; AND INCREASES GUIDANCE
TULSA, Oklahoma, April 23, 2004 - Alliance Resource Partners, L.P. (NASDAQ:
ARLP) today reported record net income for the first quarter ended March 31,
2004 of $18.2 million, or $1.00 per basic limited partner unit, an increase of
approximately 39% over 2003 first quarter net income of $13.1 million, or $0.81
per basic limited partner unit. Net income per basic limited partner unit is
calculated using the weighted average number of basic units outstanding of
17,903,793 and 16,593,609 for the quarters ended March 31, 2004 and 2003,
respectively, both of which reflect our common unit offerings completed in the
first quarter of 2003. Income before income taxes for the quarter improved 35%
to a record $19.0 million, compared to $14.1 million for the same quarter of
2003.
The Partnership also announced that its Board of Directors declared a quarterly
cash distribution of $0.625 per unit for the first quarter ended March 31, 2004
(an annualized rate of $2.50 per unit), payable on May 14, 2004, to all
unitholders of record as of May 3, 2004. This represents an increase of 11% over
the cash distribution for the fourth quarter of 2003 of $0.5625 per unit (an
annualized rate of $2.25 per unit) and a 25% increase since 2002.
"We achieved record revenues, tons produced and net income for the quarter due
to favorable market conditions which allowed us to benefit from higher prices,
increase production and secure additional sales," said Joseph W. Craft III,
President and Chief Executive Officer. "These results and market conditions have
allowed us to increase our distribution to unitholders for the second
consecutive quarter in advance of our normal mid-year review. Going forward, we
expect to consider future distribution increases at the January and July Board
of Directors' meetings."
Revenues for the 2004 first quarter were $157.8 million, an increase of
approximately 26% over revenues of $124.9 million for the comparable period last
year. Revenues for the first quarter of 2004 were positively impacted by the
increase in tons of coal sold and higher contract prices on long-term coal sales
agreements. In addition, our revenues in the 2004 first quarter benefited
significantly from higher sales prices realized on incremental production sold
into the export and Central Appalachia coal markets.
Production increased to 5.1 million tons for the first quarter of 2004 as
compared to 5.0 million for the comparable period in 2003, primarily due to
higher productivity at our Warrior Coal, Gibson County Coal and East Kentucky
operations. These increases were partially offset by reduced production at our
idled Hopkins County Coal operation (See ARLP Press Releases, dated April 3 and
June 2, 2003) and the impact of the Dotiki mine fire earlier this year.
-MORE-
Results for the first quarter of this year were achieved despite lost
production, continuing fixed expenses and other expenses incurred as a result of
the mine fire that occurred at the Dotiki mine, operated by our Webster County
Coal, LLC subsidiary. (See ARLP Press Releases, dated February 12, March 1,
March 8, and March 25, 2004.) We maintain commercial property insurance policies
which we believe will substantially cover the expenses and losses relating to
the fire. For the first quarter of 2004, we have recognized a $2.9 million
receivable under the insurance policies reflecting a partial recovery of certain
fire-related expenses, net of a $3.5 million self-retention and deductible and
10% coinsurance. We continue to analyze the full extent of expenses and losses
(including business interruption) pertaining to the fire. Until our analysis is
complete, however, it is premature to quantify the total impact of the Dotiki
mine fire incident on the financial results of Alliance.
Total operating expenses increased to $104.3 million for this quarter as
compared to $82.8 million for the first quarter of last year. The increase was
primarily due to higher costs due to increased production, increased sales
related expenses, and net expenses related to the Dotiki mine fire. Operating
expenses for the 2004 quarter were $0.38 per ton sold below expectation for all
operations, excluding Dotiki. General and administrative expenses also increased
in the first quarter of this year by $4.6 million to $10.3 million as compared
to $5.7 million during the same period of 2003, primarily as a result of
increased incentive compensation expense. This expense increase was principally
attributable to the Long-Term Incentive Plan and was caused by the increased
market value of our common units, which closed at $40.00 per unit on March 31,
2004.
In response to robust market conditions as well as a supply shortage in the
markets served by our Mettiki mine, we have signed two separate agreements with
contract mining companies to produce coal on reserves we control near the
Mettiki complex. We expect both of these operations to begin production in June
2004 and will add annual production of approximately 625,000 tons. To further
increase production during the second half of 2004, we will also add equipment
at our Gibson County Coal and Pattiki mines. We are estimating additional 2004
capital expenditures of approximately $5.1 million for these contract mining and
equipment projects. As a result of these projects and accelerated production
schedules at certain other operations, we are now estimating 2004 production at
20.6 million tons. Approximately 200,000 tons remain unsold in 2004.
Looking ahead, Mr. Craft said, "Based on our current projections, we are
increasing estimated net income for the year ending December 31, 2004 to a range
of $65.0 to $75.0 million, excluding any additional insurance recoveries for
expenses and losses attributable to the Dotiki mine fire. For 2005, we are
currently estimating coal production of approximately 21.3 million tons of which
approximately 82% is committed under existing coal sales agreements.
Approximately 49% of our estimated 2005 production is subject to market price
negotiations for existing contracts as well as anticipated new coal supply
agreements. We will continue to assess market demand and, should attractive
opportunities become available, we will consider increasing production to meet
the needs of our customers."
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.
-MORE-
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 eight 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 CHANGE 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 REGULATION, 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 INSURANCE
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, 2003 FILED ON MARCH 12, 2004 WITH THE SEC. EXCEPT AS
REQUIRED BY APPLICABLE SECURITIES LAWS, THE PARTNERSHIP DOES NOT INTEND TO
UPDATE ITS FORWARD-LOOKING STATEMENTS.
-MORE-
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OPERATING DATA
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
(UNAUDITED)
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
---------------------------
2004 2003
------------ ------------
Tons sold 5,110 4,456
Tons produced 5,112 4,990
SALES AND OPERATING REVENUES:
Coal sales $ 144,539 $ 114,450
Transportation revenues 6,838 4,315
Other sales and operating revenues 6,447 6,160
------------ ------------
Total revenues 157,824 124,925
------------ ------------
EXPENSES:
Operating expenses 104,328 82,752
Transportation expenses 6,838 4,315
Outside purchases 1,065 1,019
General and administrative 10,329 5,651
Depreciation, depletion and amortization 12,771 13,131
Interest expense 3,843 3,967
------------ ------------
Total operating expenses 139,174 110,835
------------ ------------
INCOME FROM OPERATIONS 18,650 14,090
OTHER INCOME (EXPENSE) 314 (7)
------------ ------------
INCOME BEFORE INCOME TAXES 18,964 14,083
INCOME TAX EXPENSE 739 955
------------ ------------
NET INCOME $ 18,225 $ 13,128
============ ============
GENERAL PARTNERS' INTEREST IN NET INCOME (LOSS) $ 365 $ (389)
============ ============
LIMITED PARTNERS' INTEREST IN NET INCOME $ 17,860 $ 13,517
============ ============
BASIC NET INCOME PER LIMITED PARTNER UNIT $ 1.00 $ 0.81
============ ============
DILUTED NET INCOME PER LIMITED PARTNER UNIT $ 0.97 $ 0.79
============ ============
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING-BASIC 17,903,793 16,593,609
============ ============
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING-DILUTED 18,439,099 17,176,824
============ ============
</Table>
-MORE-
ALLIANCE RESOURCE PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT UNIT DATA)
<Table>
<Caption>
ASSETS
MARCH 31, DECEMBER 31,
2004 2003
---------- ------------
(UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents $ 24,819 $ 10,156
Trade receivables, net 47,644 38,305
Other receivables 2,901 --
Marketable securities 20,023 23,615
Inventories 15,204 14,527
Advance royalties 1,108 1,108
Prepaid expenses and other assets 2,136 3,432
--------- ---------
Total current assets 113,835 91,143
PROPERTY, PLANT AND EQUIPMENT AT COST 486,623 474,357
LESS ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION (262,655) (251,567)
--------- ---------
223,968 222,790
OTHER ASSETS:
Advance royalties 12,051 12,439
Coal supply agreements, net 4,765 5,445
Other long-term assets 4,360 4,637
--------- ---------
$ 358,979 $ 336,454
========= =========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable $ 32,323 $ 22,651
Due to affiliates 15,904 13,546
Accrued taxes other than income taxes 11,684 10,375
Accrued payroll and related expenses 12,027 11,095
Accrued interest 1,662 5,402
Workers' compensation and pneumoconiosis benefits 5,944 5,905
Other current liabilities 6,257 5,739
--------- ---------
Total current liabilities 85,801 74,713
--------- ---------
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities 180,000 180,000
Accrued pneumoconiosis benefits 17,874 17,633
Workers' compensation 24,223 22,819
Reclamation and mine closing 21,892 21,717
Due to affiliates 5,287 3,735
Other liabilities 3,409 3,280
--------- ---------
Total liabilities 338,486 323,897
--------- ---------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL (DEFICIT):
Common Unitholders 14,692,527 units outstanding 269,463 263,071
Subordinated Unitholders 3,211,266 units outstanding 59,808 58,411
General Partners (304,910) (305,034)
Unrealized loss on marketable securities (79) (102)
Minimum pension liability (3,789) (3,789)
--------- ---------
Total Partners' capital 20,493 12,557
--------- ---------
$ 358,979 $ 336,454
========= =========
</Table>
-MORE-
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
-------------------------
2004 2003
-------- --------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES $ 34,533 $ 13,047
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (13,427) (10,131)
Purchase of Warrior Coal -- (12,661)
Proceeds from sale of property, plant and equipment 254 38
Proceeds from maturity of marketable securities 3,615 --
-------- --------
Net cash used in investing activities (9,558) (22,754)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common unit offering to public -- 53,965
Cash contribution by General Partners -- 9
Payments on Warrior Coal revolving credit agreement balance -- (17,000)
Borrowings under revolving credit and working capital facilities -- 10,600
Payments under revolving credit and working capital facilities -- (5,600)
Payments on long-term debt -- (3,750)
Distributions to Partners (10,312) (8,253)
-------- --------
Net cash provided by (used in) financing activities (10,312) 29,971
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS 14,663 20,264
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 10,156 9,028
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 24,819 $ 29,292
======== ========
CASH PAID FOR:
Interest $ 7,546 $ 7,928
======== ========
Income taxes to taxing authorities $ -- $ 200
======== ========
</Table>
-MORE-
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
MARCH 31,
----------------------
2004 2003
------- -------
Cash flows provided by operating activities $34,533 $13,047
Reclamation and mine closing (334) (335)
Coal inventory adjustment to market - (24)
Other (54) (723)
Net effect of working capital changes (3,149) 14,294
Interest expense 3,843 3,967
Income taxes 739 955
------- -------
EBITDA 35,578 31,181
Depreciation, depletion and amortization (12,771) (13,131)
Interest expense (3,843) (3,967)
Income taxes (739) (955)
------- -------
Net income $18,225 $13,128
======= =======
</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).
-END-