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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2004
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
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ALLIANCE RESOURCE PARTNERS, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 73-1564280
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
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)
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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 [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
As of May 7, 2004, 14,692,527 common units and 3,211,266 subordinated
units are outstanding.
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TABLE OF CONTENTS
Page
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets as of March 31, 2004 and
December 31, 2003 .............................................................. 1
Condensed Consolidated Statements of Income for the three months
ended March 31, 2004 and 2003 .................................................. 2
Condensed Consolidated Statements of Cash Flows for the three
months ended March 31, 2004 and 2003 ........................................... 3
Notes to Condensed Consolidated Financial Statements ........................... 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS................................... 9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK .............................................................. 14
ITEM 4 CONTROLS AND PROCEDURES ........................................................ 15
FORWARD-LOOKING STATEMENTS ..................................................... 16
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS .............................................................. 18
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS ...................................... 18
ITEM 3. DEFAULTS UPON SENIOR SECURITIES ................................................ 18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ............................ 18
ITEM 5. OTHER INFORMATION .............................................................. 18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ............................................... 18
i
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT UNIT DATA)
MARCH 31, DECEMBER 31,
2004 2003
------------ ------------
(UNAUDITED)
ASSETS
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 Unitholder 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
=========== ===========
See notes to consolidated financial statements.
1
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-------------------------------
2004 2003
----------- -----------
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 (net of interest income and interest capitalized
for the three months ended March 31, 2004 and 2003 of $110 and
$279, respectively) 3,843 3,967
----------- -----------
Total operating expenses 139,174 110,835
----------- -----------
INCOME FROM OPERATIONS 18,650 14,090
OTHER INCOME 314 (7)
----------- -----------
INCOME BEFORE INCOME TAXES 18,964 14,083
INCOME TAX EXPENSE 739 955
----------- -----------
NET INCOME $ 18,225 $ 13,128
=========== ===========
ALLOCATION OF NET INCOME:
PORTION APPLICABLE TO WARRIOR COAL LOSS
PRIOR TO ITS ACQUISITION ON FEBRUARY 14, 2003 $ - (666)
PORTION APPLICABLE TO PARTNERS' INTEREST 18,225 13,794
----------- -----------
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
=========== ===========
DISTRIBUTION DECLARED PER COMMON AND SUBORDINATED UNIT $ 0.5625 $ 0.525
=========== ===========
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
=========== ===========
See notes to consolidated financial statements.
2
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
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
============= ===========
See notes to consolidated financial statements.
3
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND PRESENTATION
Alliance Resource Partners, L.P., a Delaware limited partnership (the
"Partnership") was formed in May 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 condensed consolidated financial statements include the
accounts and operations of the Partnership and present the financial position as
of March 31, 2004 and December 31, 2003, and the results of its operations and
cash flows for the three months ended March 31, 2004 and 2003. All material
intercompany transactions and accounts of the Partnership have been eliminated.
On February 14 and March 14, 2003, the Partnership issued 2,250,000 and
288,000 additional Common Units at a public offering price of $22.51 per unit
and received net proceeds of $48.5 million and $6.2 million, respectively,
before expenses of approximately $0.8 million, excluding the underwriters fees.
In November 2003, 3,211,265 outstanding Subordinated Units were converted to
Common Units in accordance with the Partnership's agreement.
On February 14, 2003, the Partnership acquired Warrior Coal, LLC ("Warrior
Coal") (Note 3). Because the Warrior Coal acquisition was between entities under
common control, the acquisition was recorded at historical cost in a manner
similar to that used in a pooling of interests. Accordingly, the condensed
consolidated financial statements and notes of the Partnership have been
restated to reflect the combined historical results of operations, financial
position and cash flows of the Partnership and Warrior Coal for the three months
ended March 31, 2003.
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 financial
statements and notes included in the Partnership's Annual Report on Form 10-K
for the year ended December 31, 2003.
2. CONTINGENCIES
The Partnership is involved in various lawsuits, claims and regulatory
proceedings incidental to its business. The Partnership provides for costs
related to litigation and regulatory proceedings, including civil fines issued
as part of the outcome of these proceedings, when a loss is probable and the
amount is reasonably determinable. Although the ultimate outcome of these
matters cannot be predicted with certainty, in the opinion of management, the
outcome of these matters, to the extent not previously provided for or covered
under insurance, is not expected to have a material adverse effect on the
Partnership's business, financial position or results of operations.
Nonetheless, these matters or estimates that are based on current facts and
circumstances, if resolved in a manner different from the basis on
4
which management has formed its opinion, could have a material adverse effect on
the Partnership's financial position or results of operations.
3.WARRIOR COAL ACQUISITION
On February 14, 2003, the Partnership acquired Warrior Coal pursuant to
the terms of an Amended and Restated Put and Call Option Agreement ("Put/Call
Agreement") with ARH Warrior Holdings, Inc. ("ARH Warrior"), a subsidiary of
ARH. The Partnership acquired Warrior Coal for approximately $12.7 million and
paid Warrior Coal's borrowings of $17.0 million under a revolving credit
agreement between Alliance Resource GP, LLC (the "Special GP"), a subsidiary of
ARH, and Warrior Coal. Because the Warrior Coal acquisition was between entities
under common control, the acquisition has been accounted for at historical cost
in a manner similar to that used in a pooling of interests. The Partnership
financed the transaction with a portion of the net proceeds from the public
offering of 2,538,000 Common Units (Note 1) in February and March 2003.
Under the terms of the Put/Call Agreement, the Partnership assumed certain
other obligations, including a mineral lease and sublease with SGP Land, LLC, an
affiliate of ARH Warrior, covering coal reserves that have been and will
continue to be mined by Warrior Coal. The terms and conditions of the mineral
lease and sub-lease were not changed as a result of the acquisition.
4. DOTIKI FIRE INCIDENT
On February 11, 2004, Webster County Coal, LLC's ("Webster County Coal")
Dotiki mine was temporarily idled for a period of twenty-seven calendar days
following the occurrence of a mine fire that originated with a diesel supply
tractor (the "Dotiki Fire Incident"). As a result of the firefighting efforts,
the Mine Safety and Health Administration, Kentucky Department of Mines and
Minerals, and Webster County Coal personnel, Dotiki successfully extinguished
the fire and totally isolated the affected area of the mine behind permanent
barriers. Initial production resumed on March 8, 2004. At the current time, the
Partnership is unable to quantify the financial impact of the fire. The
Partnership has commercial property insurance that provides coverage for damage
to property destroyed, interruption of business operations, including profit
recovery, and expenditures incurred to minimize the period and total cost of
disruption to operations. The Partnership currently believes such insurance
coverage will cover a substantial portion of the total cost of the disruption to
the Partnership's operations. However, until the claim is resolved with the
applicable insurance underwriters, there can be no assurance of the amount or
timing of recovery of such insurance proceeds.
On February 18, 2004, the Partnership submitted a preliminary cost
estimate of the expenses and losses incurred by Webster County Coal and other
affiliates arising from or in connection with the Dotiki Fire Incident. The
preliminary costs estimates were based on then current information and the
insurers were advised that such estimates would change as additional information
became known and events became more certain. Following detailed discussions with
representatives of the insurers, on April 16, 2004, the Partnership tendered an
initial proof of loss requesting a gross advance payment of $8.5 million. The
lead underwriter has accepted the proof of loss and, subject to a reservation of
rights provision, payment of an unallocated $5.0 million, which is net of the
$1.0 million self-retention and $2.5 million deductible (collectively, the
"Insurance Deductible"), is anticipated to be received in the second quarter of
2004. The accounting for this initial partial advance and any future partial
payments will be subject to the accounting methodology described below.
Currently, the Partnership continues to evaluate its potential insurance
recoveries in the following areas:
1. Expenses incurred as a result of the fire -- Extra expenses,
expediting expenses, and other costs associated with extinguishing
the fire are being expensed as incurred, with related
5
estimated insurance recoveries recorded as they are considered to be
probable, up to the amount of the actual cost incurred.
2. Damage to Dotiki mine property -- The net book value of property
destroyed, which is currently estimated at $138,000, was written off
in the first quarter of 2004, with a corresponding amount recorded
as an estimated insurance recovery, since such recovery is
considered probable. Any insurance proceeds from the claims relating
to the Dotiki mine property (other than amounts relating to the
matters discussed in 1. above) that exceed the net book value of
such damaged property are expected to result in a gain. The
anticipated gain will be recorded as the insurance claim is resolved
and proceeds are received.
3. Dotiki mine business interruption costs -- At the current time, the
Partnership is in the process of preparing a business interruption
analysis that will be reflected in a proof of loss which the
Partnership anticipates it will file with the insurers during June
2004. Expenses associated with business interruption are expensed as
incurred, and estimated insurance recoveries of such expenses will
be recognized to the extent such recoveries are considered to be
probable. Recoveries in excess of actual costs incurred will be
recorded as gains when the insurance claim is resolved and proceeds
are received.
Pursuant to the accounting methodology described above, through March 31,
2004, the Partnership has recorded a recoverable insurance receivable of $2.9
million net of the Insurance Deductible and 10% co-insurance. The recognized net
insurance receivable has been reflected as an offset to operating expenses for
the Partnership's first quarter 2004 financial results. The Partnership
continues to discuss the preparation of the claim and the determination of the
total claim with its insurers. The Partnership's assessment of probability with
respect to the receivable was made based on discussions with the insurers as
well as legal, insurance, and financial experts retained to assist in the claim
process. A portion of the anticipated unallocated partial payment of $5.0
million may be attributable to certain categories of insurance recoveries that
must be deferred under generally accepted accounting principles until final
resolution of the insurance claim. The Partnership has recognized the amount of
estimated net insurance receivable that it is currently able to assess as
probable of recovery, up to the amount of actual costs incurred. The estimates
will change as additional information becomes available with respect to actual
costs and as the insurers perform their review of preliminary and final claim
information submitted by the Partnership. At this time, based on the magnitude
and complexity of the insurance claim, the Partnership is unable to reasonably
estimate the total amount of the insurance claim as well as the Partnership's
exposure, if any, for amounts not covered by its insurance program.
6
5. NET INCOME PER LIMITED PARTNER UNIT
A reconciliation of net income and weighted average units used in
computing basic and diluted earnings per unit is as follows (in thousands,
except per unit data):
THREE MONTHS ENDED
MARCH 31,
--------------------------
2004 2003
---------- ----------
Limited partners' interest in net income $ 17,860 $ 13,517
Weighted average limited partner units - basic 17,904 16,594
Basic net income per limited partner unit $ 1.00 $ 0.81
========== ==========
Weighted average limited partner units - basic 17,904 16,594
Units contingently issuable:
Restricted units for Long-Term Incentive Plan 476 530
Directors' compensation units deferred 15 15
Supplemental Executive Retirement Plan 44 38
---------- ----------
Weighted average limited partner units, assuming dilutive
effect of restricted units 18,439 17,177
---------- ----------
Diluted net income per limited partner unit $ 0.97 $ 0.79
========== ==========
6. RESTRICTED UNIT-BASED COMPENSATION
The Partnership has elected to account for the compensation expense of the
non-vested restricted units granted under the Long-Term Incentive Plan using the
intrinsic value method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" and the related Financial Accounting
Standards Board Interpretation No. 28, "Accounting for Stock Appreciation Rights
and Other Variable Stock Option or Award Plans. "Compensation cost for the
non-vested restricted units is recorded on a pro-rata basis, as appropriate,
given the "cliff vesting" nature of the grants, based on the current market
value of the Partnership's Common Units at the end of each period.
Consistent with the disclosure requirements of Statement of Financial
Accounting Standards ("SFAS") No. 148, "Accounting for Stock-Based Compensation
Transition and Disclosure," and amendment of SFAS No. 123, "Accounting for
Stock-Based Compensation," the following table provides pro forma results as if
the fair value-based method had been applied to all outstanding and non-vested
awards, including Long-Term Incentive Plan units, in each period presented (in
thousands, except per unit data):
7
THREE MONTHS ENDED
MARCH 31,
--------------------------
2004 2003
---------- -----------
Net income, as reported $ 18,225 $ 13,128
Add: compensation expenses related to Long-Term
Incentive Plan units included in reported net income 3,917 534
Deduct: compensation expense related to Long-Term
Incentive Plan units determined under fair value method
for all awards (1,143) (884)
---------- -----------
Net income, pro forma $ 20,999 $ 12,778
========== ===========
General partners' interest in net income (loss), pro forma $ 420 $ (397)
========== ===========
Limited partners' interest in net income, pro forma $ 20,579 $ 13,175
========== ===========
Earnings per limited partner unit:
Basic, as reported $ 1.00 $ 0.81
========== ===========
Basic, pro forma $ 1.15 $ 0.79
========== ===========
Diluted, as reported $ 0.97 $ 0.79
========== ===========
Diluted, pro forma $ 1.12 $ 0.77
========== ===========
7. RECENT ACCOUNTING PRONOUNCEMENTS
Consistent with other extractive industry entities, the Partnership has
historically classified leased coal interests and advance royalties as tangible
assets, which is consistent with the classification of owned coal due to the
similar rights of the leaseholder. Statement of Financial Accounting Standards
(SFAS) No. 141, "Business Combinations," identifies mineral rights as an example
of a contract-based intangible asset that should be considered for separate
classification as the result of a business combination. Due to the potential for
inconsistencies in applying the provisions of SFAS No. 141 and SFAS No. 142,
"Goodwill and Other Tangible Assets" in the extractive industries as they relate
to mineral interests controlled by other than fee ownership, the Emerging Issues
Task Force ("EITF") established a Mining Industry Working Group to address this
issue. During March 2004, the EITF reached a consensus regarding classification
of leased coal interests and advance royalties as tangible assets. On April 30,
2004, the Financial Accounting Standards Board ("FASB") issued FASB Staff
Positions ("FSP") Nos. 141-1 and 142-1, "Interaction of FASB Statements No. 141,
Business Combination, and No. 142 Goodwill and Other Intangible Assets", and
EITF Issue No. 04-02, "Whether Mineral Rights Are Tangible or Intangible
Assets", which amends SFAS Nos. 141 and 142 to state that certain use rights may
have characteristics of assets other than intangible assets. Accordingly, use
rights should be accounted for based on their substance. The guidance in this
FSP is to be applied to the first reporting period beginning after April 29,
2004. The Partnership does not believe this FSP results in a re-characterization
of its related assets, which have historically been classified as tangible.
8. SUBSEQUENT EVENTS
On April 23, 2004, the Partnership declared a quarterly distribution for
the period from January 1, 2004 to March 31, 2004, of $0.625 per unit, totaling
approximately $11,628,000 (which includes the General Partners' portion,) on all
of its Common and Subordinated Units outstanding, payable on May 14, 2004, to
all unitholders of record on May 3, 2004.
Mettiki Coal (WV), LLC has proposed a long-wall underground mine extension
(the "E-Mine") to be located primarily in Tucker County, West Virginia,
approximately ten (10) miles from the
8
Partnership's Mettiki Coal, LLC existing long-wall mine located in Garrett
County, Maryland. In order to proceed with the development of the E-Mine,
Mettiki Coal (WV) filed two separate permit applications with the West Virginia
Department of Environmental Protection ("WVDEP") concerning on-site disposal of
scalped rock and underground mining. A related water discharge permit was
transferred to the new underground mining permit application. The Partnership
was notified on April 16, 2004, that WVDEP had approved the permit for on-site
disposal of scalped rock. The water discharge and underground mining
applications, respectively, have been deemed administratively complete and are
pending a final decision by the WVDEP.
On March 23, 2004, an informal public conference was held by WVDEP
concerning the new underground mining permit application. The Partnership
expects the WVDEP to notify Mettiki Coal (WV) concerning the approval or denial
of the two permit applications within the next several weeks. Management, at
this time, believes that all statutory requirements have been satisfied and
reasonably anticipates that the WVDEP will approve the two permit applications.
However, management cannot assure that the WVDEP will approve the two permit
applications.
In regard to the underground mining and related water discharge permit
applications, any approval of the two permits by WVDEP is subject to appeal by
third-party interveners. Any such appeal of the approval of the water discharge
permit and the underground mining permit will be directed to the West Virginia
Environmental Quality Board (the "EQB") and to the West Virginia Surface Mine
Board ("SMB"), respectively. EQB and SMB are five- and seven-member boards,
respectively, both of which typically hear appeals regarding the issuance or
denial of permits, permit conditions, or enforcement actions within several
months from the date of appeal. Decisions are normally rendered within several
weeks after an administrative hearing has been concluded. In the event of an
appeal by a third-party intervener of the WVDEP's and/or EQB's approval of the
relevant permit application, management believes the WVDEP's and EQB's approval
of the permit applications will be upheld by the SMB and/or the EQB, as
applicable.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SUMMARY
We reported record quarterly net income for the three months ended March
31, 2004 (the 2004 Quarter) of $18.2 million, an increase of 38.8% over the
three months ended March 31, 2003 (the 2003 Quarter). The 2004 Quarter benefited
from favorable market conditions as we realized higher prices on long-term coal
sales agreements, and we were able to sell additional production at
significantly higher prices into the export and Central Appalachia coal markets.
The increase in quarterly net income was achieved despite lost production,
continuing fixed expenses and other expenses incurred as a result of a mine fire
that occurred at the Dotiki mine (Dotiki Fire Incident). See "Results of
Operations - Dotiki Fire Incident" below.
For 2004, we have commitments for substantially all of our estimated 2004
production of 20.6 million tons. For our estimated 2005 production of 21.3
million tons, approximately 82% is committed under existing coal sales
agreements and approximately 49% is subject to market price negotiations for
existing contracts as well as anticipated new coal supply agreements.
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 mining
agreements with third party mining companies to produce coal on reserves we
own or control near our Mettiki mining 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
9
increase production during the second half of 2004, we plan to add equipment at
our Gibson County Coal and Pattiki mines. We estimate additional 2004 capital
expenditures of approximately $5.1 million for these contract mining and
equipment projects.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2004 Compared to Three Months Ended March 31, 2003
PER TON SOLD
----------------------
MARCH 31, MARCH 31,
------------------------- ----------------------
2004 2003 2004 2003
-------- -------- ------ ------
(IN THOUSANDS)
Tons sold 5,110 4,456 N/A N/A
Tons produced 5,112 4,990 N/A N/A
Coal Sales $144,539 $114,450 $28.29 $25.68
Operating Expenses and Outside Purchases $105,393 $ 83,771 $20.62 $18.80
Coal sales. Coal sales for the 2004 Quarter increased 26.3% to $144.5
million from $114.5 million for the 2003 Quarter. The increase of $30.0 million
reflects higher prices on long-term coal sales agreements and the sale of
additional production at significantly higher prices into the export and Central
Appalachia coal markets. Higher prices on long term contracts reflect a stronger
market in the second half of 2003 when contracts were entered into for shipments
in 2004 compared to the market in the second half of 2002 when contracts were
entered into for shipments in 2003. The export market opportunities are
generally attributable to strong economic expansion in China. The increase in
Central Appalachia spot market pricing is primarily attributable to a
combination of the diversion of coal production from domestic markets to export
markets and a decline in region-wide production. Tons sold increased 14.7% to
5.1 million tons for the 2004 Quarter from 4.5 million tons in the 2003 Quarter
reflecting additional production and increased demand for the coals we market.
Operating Expenses. Operating expenses increased 26.1% to $104.3 million
for the 2004 Quarter from $82.8 million for the 2003 Quarter. The increase of
$21.5 million primarily results from an increase in aggregate operating expenses
associated with additional coal sales of 654,000 tons and the expenses
associated with the Dotiki Fire Incident described below.
General and administrative. General and administrative expenses increased
to $10.3 million for the 2004 Quarter compared to $5.7 million for the 2003
Quarter. The increase of $4.6 million is primarily attributable to increased
accruals associated with our managing general partner's incentive compensation
plans. The majority of the increase in these accruals is attributable to the
Long-Term Incentive Plan, which is a restricted unit program and is impacted by
the increased market value of our common units.
Other sales and operating revenues. Other sales and operating revenues
were comparable for the 2004 and 2003 Quarters at $6.4 million and $6.2 million,
respectively.
Outside purchases. Outside purchases were comparable for the 2004 and 2003
Quarters at $1.1 million and $1.0 million, respectively.
Depreciation, depletion and amortization. Depreciation, depletion and
amortization expense was comparable for the 2004 and 2003 Quarters at $12.8
million and $13.1 million, respectively.
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Interest expense. Interest expense was comparable for each of the 2004 and
2003 Quarters at $3.8 million and $4.0 million, respectively.
Transportation revenues and expenses. Transportation revenues and expenses
increased to $6.8 million for the 2004 Quarter from $4.3 million for the 2003
Quarter. The increase of $2.5 million was primarily attributable to higher sales
volumes and increased shipments to customers with above-average transportation
costs.
Income before income taxes. Income before income taxes increased to $19.0
million for the 2004 Quarter from $14.1 million for the 2003 Quarter. The
increase of $4.9 million is primarily attributable to higher sales volumes and
higher prices on both long-term coal sales agreements and short-term sales
agreements in the export and Central Appalachia coal markets. The benefits of
increased sales volumes and prices were partially offset by the net costs
associated with the Dotiki Fire Incident, higher production costs and increased
sales related expenses.
Income taxes. Income taxes decreased to $0.7 million for the 2004 Quarter
compared to $1.0 million for the 2003 Quarter. Although we are not a taxable
entity for federal or state income tax purposes, our indirect subsidiary,
Alliance Service, Inc., is subject to federal and state income taxes. The
decrease of $0.3 million was primarily attributable to Warrior Coal, which was
subject to income taxes prior to our acquisition of Warrior Coal on February 14,
2003.
Dotiki Fire Incident
On February 11, 2004, our Webster County Coal, LLC's (Webster County Coal)
Dotiki mine was temporarily idled for a period of twenty-seven calendar days
following the occurrence of a mine fire that originated with a diesel supply
tractor (Dotiki Fire Incident). As a result of our firefighting efforts, the
Mine Safety and Health Administration, Kentucky Department of Mines and
Minerals, and Webster County Coal personnel, Dotiki successfully extinguished
the fire and totally isolated the affected area of the mine behind permanent
barriers. Initial production resumed on March 8, 2004. At the current time, we
are unable to quantify the financial impact of the fire. We have commercial
property insurance that provides coverage for damage to property destroyed,
interruption of business operations, including profit recovery, and expenditures
incurred to minimize the period and total cost of disruption to operations. We
currently believe such insurance coverage will cover a substantial portion of
the total cost of the disruption to our operations. However, until the claim is
resolved with the applicable insurance underwriters, we can make no assurance of
the amount or timing of recovery of such insurance proceeds.
On February 18, 2004, we submitted a preliminary cost estimate of the
expenses and losses incurred by Webster County Coal and our affiliates arising
from or in connection with the Dotiki Fire Incident. The preliminary costs
estimates were based on then current information and the insurers were advised
that such estimates would change as additional information became known and
events became more certain. Following detailed discussions with representatives
of the insurers, on April 16, 2004, we tendered an initial proof of loss
requesting a gross advance payment of $8.5 million. The lead underwriter has
accepted the proof of loss and, subject to a reservation of rights provision,
payment of an unallocated $5.0 million, which is net of the $1.0 million
self-retention and $2.5 million deductible (collectively, the Insurance
Deductible), is anticipated to be received in the second quarter of 2004. The
accounting for this initial partial advance and any future partial payments will
be subject to the accounting methodology described below. Currently, we continue
to evaluate potential insurance recoveries in the following areas:
1. Expenses incurred as a result of the fire -- Extra expenses, expediting
expenses, and other costs associated with extinguishing the fire are being
expensed as incurred, with related estimated
11
insurance recoveries recorded as they are considered to be probable, up to
the amount of the actual cost incurred.
2. Damage to Dotiki mine property -- The net book value of property
destroyed, which is currently estimated at $138,000, was written off in
the first quarter of 2004, with a corresponding amount recorded as an
estimated insurance recovery, since such recovery is considered probable.
Any insurance proceeds from the claims relating to the Dotiki mine
property (other than amounts relating to the matters discussed in 1.
above) that exceed the net book value of such damaged property are
expected to result in a gain. The anticipated gain will be recorded as the
insurance claim is resolved and proceeds are received.
3. Dotiki mine business interruption costs -- At the current time, we are in
the process of preparing a business interruption analysis that will be
reflected in a proof of loss which we anticipate will be filed with the
insurers during June 2004. Expenses associated with business interruption
are expensed as incurred, and estimated insurance recoveries of such
expenses will be recognized to the extent such recoveries are considered
to be probable. Recoveries in excess of actual costs incurred will be
recorded as gains when the insurance claim is resolved and proceeds are
received.
Pursuant to the accounting methodology described above, through March 31,
2004, we have recorded a recoverable insurance receivable of $2.9 million net of
the Insurance Deductible and 10% co-insurance. The recognized net insurance
receivable has been reflected as an offset to operating expenses for the first
quarter 2004 financial results. We continue to discuss the preparation of the
claim and the determination of the total claim with our insurers. Our assessment
of probability with respect to the receivable was made based on discussions with
our insurers as well as legal, insurance, and financial experts retained to
assist in the claim process. A portion of the anticipated unallocated partial
payment of $5.0 million may be attributable to certain categories of insurance
recoveries that must be deferred under generally accepted accounting principles
until final resolution of the insurance claim. We have recognized the amount of
estimated net insurance receivable that we are currently able to assess as
probable of recovery, up to the amount of actual costs incurred. Our estimates
will change as additional information becomes available with respect to actual
costs and as the insurers perform their review of preliminary and final claim
information submitted by us. At this time, based on the magnitude and complexity
of the insurance claim, we are presently unable to reasonably estimate the total
amount of the insurance claim as well as our exposure, if any, for amounts not
covered by our insurance program.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Cash provided by operating activities was $34.5 million for the 2004
Quarter compared to $13.0 million in the 2003 Quarter. The increase in cash
provided by operating activities was principally attributable to an increase in
net income and a decrease in coal inventory in the 2004 Quarter compared to the
2003 Quarter.
Net cash used in investing activities was $9.6 million for the 2004
Quarter compared to $22.8 million in the 2003 Quarter. The decrease is
principally attributable to the Warrior Coal acquisition during the 2003 Quarter
offset by an increase in capital expenditures associated with Dotiki expanding
its preparation plant and the adding of two continuous miners. See discussion of
"Related Party Transactions" below concerning the Warrior Coal acquisition.
12
Net cash used in financing activities was $10.3 million for the 2004
Quarter compared to net cash provided by financing activities of $30.0 million
in the 2003 Quarter. The change to net cash used in financing activities from
net cash provided by financing activities is primarily attributable to the
proceeds received from our common unit offering during the 2003 Quarter offset
by the repayment of Warrior Coal's revolving credit agreement balance during the
2003 Quarter and increased distributions to partners.
Capital Expenditures
Capital expenditures decreased to $13.4 million in the 2004 Quarter from
$22.8 million in the 2003 Quarter, which includes the acquisition of Warrior
Coal. See discussion of "Cash Flows -- Net cash used in investing activities"
above concerning the decrease in capital expenditures. Capital expenditures for
the remainder of 2004 are estimated to be $38.2 million.
Notes Offering and Credit Facility
Alliance Resource Operating Partners, L.P., our intermediate partnership,
has $180 million principal amount of 8.31% senior notes due August 20, 2014,
payable in ten equal annual installments of $18 million beginning in August 2005
with interest payable semiannually (the Senior Notes). On August 22, 2003, our
intermediate partnership completed a new $85 million revolving credit facility
(Credit Facility), which expires September 30, 2006. The Credit Facility
replaced a $100 million credit facility that would have expired August 2004. We
paid in full all amounts outstanding under the original credit facility with
borrowings of $20 million under the Credit Facility. The interest rate on the
Credit Facility is based on either the (i) London Interbank Offered Rate or (ii)
the "Base Rate", which is equal to the greater of the JPMorgan Chase Prime Rate
or the Federal Funds Rate plus 1/2 of 1%, plus, in either case, an applicable
margin. We incurred certain costs totaling $1.2 million associated with the
Credit Facility. These costs have been deferred and are being amortized as a
component of interest expense over the term of the Credit Facility. We had no
borrowings outstanding under the Credit Facility at March 31, 2004. Letters of
credit can be issued under the Credit Facility not to exceed $30 million.
Outstanding letters of credit reduce amounts available under the Credit
Facility. At March 31, 2004, we had letters of credit of $9.0 million
outstanding under the Credit Facility.
The Senior Notes and Credit Facility are guaranteed by all of the
subsidiaries of our intermediate partnership. The Senior Notes and Credit
Facility contain various restrictive and affirmative covenants, including
restrictions on the amount of distributions by our intermediate partnership and
the incurrence of other debt. We were in compliance with the covenants of both
the Credit Facility and Senior Notes at March 31, 2004.
We have previously entered into and have maintained agreements with two
banks to provide additional letters of credit in an aggregate amount of $25.0
million to maintain surety bonds to secure our obligations for reclamation
liabilities and workers' compensation benefits. At March 31, 2004, we had $18.8
million in letters of credit outstanding under these agreements. Our special
general partner guarantees these outstanding letters of credit.
Conversion of Subordinated Units
As a result of satisfying certain financial tests in our partnership
agreement as of September 30, 2003, one-half of the outstanding subordinated
units (i.e., 3,211,265 subordinated units) held by our special general partner
converted into common units on November 15, 2003. The remaining 3,211,266
subordinated units are expected to convert on a one-for-one basis into common
units in the fourth quarter of 2004, assuming we continue to meet the financial
test requirements of our partnership agreement.
13
Related Party Transactions
In February 2003, we acquired Warrior Coal from an affiliate, ARH Warrior
Holdings, Inc. (ARH Warrior Holdings), in accordance with the terms of an
Amended and Restated Put and Call Option Agreement. We paid $12.7 million to ARH
Warrior Holdings and repaid Warrior Coal's borrowings of $17.0 million under a
revolving credit agreement between our special general partner and Warrior Coal.
Please see "Item 1. Financial Statements - Note 3, Warrior Coal Acquisition."
We have continuing related party transactions with our managing general
partner and our special general partner, including our special general partner's
affiliates. These related party transactions relate principally to the provision
of administrative services by our managing general partner, mineral and
equipment leases with our special general partner and its affiliates, and
guarantees from our special general partner for letters of credit.
Please read our Annual Report on Form 10-K for the year ended December 31,
2003, "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations - Related Party Transactions - " for additional
information concerning the related party transactions described above.
Recent Accounting Pronouncements
Consistent with other extractive industry entities, we have historically
classified leased coal interests and advance royalties as tangible assets, which
is consistent with the classification of owned coal due to the similar rights of
the leaseholder. Statement of Financial Accounting Standards (SFAS) No. 141,
"Business Combinations," identifies mineral rights as an example of a
contract-based intangible asset that should be considered for separate
classification as the result of a business combination. Due to the potential for
inconsistencies in applying the provisions of SFAS No. 141 and SFAS No. 142,
"Goodwill and Other Tangible Assets" in the extractive industries as they relate
to mineral interests controlled by other than fee ownership, the Emerging Issues
Task Force (EITF) established a Mining Industry Working Group to address this
issue. During March 2004, the EITF reached a consensus regarding classification
of leased coal interests and advance royalties as tangible assets. On April 30,
2004, the Financial Accounting Standards Board (FASB) issued FASB Staff
Positions (FSP) Nos. 141-1 and 142-1, "Interaction of FASB Statements No. 141,
Business Combination, and No. 142 Goodwill and Other Intangible Assets", and
EITF Issue No. 04-02, "Whether Mineral Rights Are Tangible or Intangible
Assets", which amends SFAS Nos. 141 and 142 to state that certain use rights may
have characteristics of assets other than intangible assets. Accordingly, use
rights should be accounted for based on their substance. The guidance in this
FSP is to be applied to the first reporting period beginning after April 29,
2004. We do not believe this FSP results in a re-characterization of our related
assets, which have historically been classified as tangible.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
All of our transactions are denominated in U.S. dollars and, as a result,
we do not have material exposure to currency exchange-rate risks.
We did not engage in any interest rate, foreign currency exchange-rate or
commodity price-hedging transactions as of March 31, 2004.
Borrowings under the current Credit Facility and the previous credit
facility are and were at variable rates and, as a result, we have interest rate
exposure. Our earnings are not materially affected by changes in interest rates.
We had no borrowings outstanding under the Credit Facility during the 2004
Quarter or at March 31, 2004.
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As of March 31, 2004, there were no significant changes in our
quantitative and qualitative disclosures about market risk as set forth in our
Annual Report on Form 10-K for the year ended December 31, 2003.
ITEM 4. CONTROLS AND PROCEDURES
An evaluation was carried out by management, including our chief executive
officer and chief financial officer, of the effectiveness of the design and
operation of our disclosure controls and procedures (as defined in Rule
13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934). Based
upon this evaluation, the chief executive officer and the chief financial
officer concluded that the design and operation of these disclosure controls and
procedures were effective as of the end of the period covered by this report.
During the quarterly period ended March 31, 2004, there have not been any
changes in our internal control over financial reporting (as defined in Rule
13a-15(f) under the Securities Exchange Act of 1934) identified in connection
with this evaluation that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
Each of the chief executive officer and the chief financial officer of our
managing general partner has furnished as Exhibit 32.1 and Exhibit 32.2,
respectively, a certificate to the Securities and Exchange Commission as
required by Section 906 of the Sarbanes-Oxley Act of 2002.
15
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements.
These statements are based on our beliefs as well as assumptions made by, and
information currently available to, us. When used in this document, the words
"anticipate," "believe," "continue," "estimate," "expect," "forecast", "may,"
"project", "will," and similar expressions identify forward-looking statements.
These statements reflect our current views with respect to future events and are
subject to various risks, uncertainties and assumptions. Specific factors which
could cause actual results to differ from those in the forward-looking
statements include:
- 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 or export 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;
- risk 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; and
- difficulty obtaining commercial property insurance, and risks
associated with our 10.0% participation (excluding any applicable
deductible) in the commercial insurance property program.
If one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, our actual results may differ materially
from those described in any forward-looking statement. When considering
forward-looking statements, you should also keep in mind the risk factors
described in our Annual Report on Form 10-K for the year ended December 31,
2003. The risk factors could also cause our actual results to differ materially
from those contained in any forward-looking statement. We disclaim any
obligation to update the above list or to announce publicly the result of any
revisions to any of the forward-looking statements to reflect future events or
developments.
You should consider the above information when reading any forward-looking
statements contained:
- in this Quarterly Report on Form 10-Q;
- other reports filed by us with the SEC;
- our press releases; and
16
- written or oral statements made by us or any of our officers or
other persons acting on our behalf.
17
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The information under "Contingencies" in Note 2 of the Notes to Unaudited
Condensed Consolidated Financial Statements herein is hereby incorporated by
reference. See also "Item 3. Legal Proceedings" in the Annual Report on Form
10-K for the year ended December 31, 2003.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
31.1 Certification of Joseph W. Craft III, President and Chief Executive
Officer of Alliance Resource Management GP, LLC, the managing
general partner of Alliance Resource Partners, L.P., dated May 7,
2004, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
furnished herewith.
31.2 Certification of Brian L. Cantrell, Senior Vice President and Chief
Financial Officer of Alliance Resource Management GP, LLC, the
managing general partner of Alliance Resource Partners, L.P., dated
May 7, 2004, pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 furnished herewith.
32.1 Certification of Joseph W. Craft III, President and Chief Executive
Officer of Alliance Resource Management GP, LLC, the managing
general partner of Alliance Resource Partners, L.P., dated May 7,
2004, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
furnished herewith.
32.2 Certification of Brian L. Cantrell, Senior Vice President and Chief
Financial Officer of Alliance Resource Management GP, LLC, the
managing general partner of Alliance Resource Partners, L.P., dated
May 7, 2004, pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 furnished herewith.
18
(b) Reports on Form 8-K:
A Form 8-K was filed on January 27, 2004 to submit to the Securities
and Exchange Commission a press release announcing earnings and operating
results for the fourth quarter of 2003. The press release contains the
following financial statements: (i) condensed consolidated statements of
income and operating data for the three months and years ended December
31, 2003 and 2002; (ii) condensed consolidated balance sheets at December
31, 2003 and 2002; and (iii) condensed consolidated statements of cash
flow for the years ended December 31, 2003 and 2002.
A Form 8-K was filed on February 12, 2004 to submit to the
Securities and Exchange Commission a press release that our wholly-owned
subsidiary, Webster County Coal, LLC, had temporarily idled the Dotiki
mine located near Providence, Kentucky following the occurrence of a mine
fire on February 11, 2004.
A Form 8-K/A was filed on March 2, 2004 to submit to the Securities
and Exchange Commission a press release regarding the status of efforts
made to extinguish a mine fire that temporarily idled the Dotiki mine.
A Form 8-K/A was filed on March 8, 2004 to submit to the Securities
and Exchange Commission a press release announcing the extinguishment of a
mine fire that temporarily idled the Dotiki mine following the occurrence
of the mine fire on February 11, 2004.
A Form 8-K/A was filed on March 26, 2004 to submit to the Securities
and Exchange Commission a press release that Mr. David Lauriski, Assistant
Secretary of Labor for Mine Safety and Health, visited our wholly-owned
subsidiary, Webster County Coal, LLC, to recognize the individuals
responsible for the successful recovery of the Dotiki mine from an
underground mine fire that originated on February 11, 2004. The press
release also contains information on the status of efforts made to
extinguish a mine fire that temporarily idled the Dotiki mine.
19
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 May 7, 2004.
ALLIANCE RESOURCE PARTNERS, L. P.
By: Alliance Resource Management GP, LLC
its managing general partner
/s/ Joseph W. Craft III
--------------------------------------
Joseph W. Craft III
President, Chief Executive
Officer and Director
/s/ Brian L. Cantrell
--------------------------------------
Brian L. Cantrell
Senior Vice President
and Chief Financial Officer
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EXHIBIT INDEX
31.1 Certification of Joseph W. Craft III, President and Chief Executive
Officer of Alliance Resource Management GP, LLC, the managing
general partner of Alliance Resource Partners, L.P., dated May 7,
2004, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
furnished herewith.
31.2 Certification of Brian L. Cantrell, Senior Vice President and Chief
Financial Officer of Alliance Resource Management GP, LLC, the
managing general partner of Alliance Resource Partners, L.P., dated
May 7, 2004, pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 furnished herewith.
32.1 Certification of Joseph W. Craft III, President and Chief Executive
Officer of Alliance Resource Management GP, LLC, the managing
general partner of Alliance Resource Partners, L.P., dated May 7,
2004, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
furnished herewith.
32.2 Certification of Brian L. Cantrell, Senior Vice President and Chief
Financial Officer of Alliance Resource Management GP, LLC, the
managing general partner of Alliance Resource Partners, L.P., dated
May 7, 2004, pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 furnished herewith.