EXHIBIT 99.1
PRESS RELEASE
CONTACT:
CAROLYN A. FREDRICH
Director - Investor Relations
[ALLIANCE RESOURCE Alliance Resource Partners, L.P.
PARTNERS L.P. LOGO] 1717 South Boulder Avenue, Suite 600
Tulsa, Oklahoma 74119
(918) 295-7642
FOR IMMEDIATE RELEASE
ALLIANCE RESOURCE PARTNERS, L.P.
ANNOUNCES 15% INCREASE IN NET INCOME FOR FIRST QUARTER 2003; DECLARES QUARTERLY
CASH DISTRIBUTION OF $0.525 PER UNIT
TULSA, Oklahoma, April 25, 2003 - Alliance Resource Partners, L.P. (NASDAQ:
ARLP) today reported net income of $13.1 million, or $0.81 per basic limited
partner unit, for the first quarter ended March 31, 2003, compared to $11.4
million, or $0.71 per basic limited partner unit, for the same quarter of 2002.
This represents a 15 percent increase in net income on a quarter-to-quarter
comparative basis. Income before income taxes for the quarter was a record $14.1
million compared to $11.6 million for the same quarter of 2002. This represents
a 22 percent increase.
The Partnership also declared a quarterly cash distribution of $0.525 per unit
for the first quarter ended March 31, 2003 (an annualized rate of $2.10),
payable on May 15, 2003, to all unitholders of record as of May 5, 2003. At the
closing market price of $24.35 per unit as of Thursday, April 24, 2003, this
represents an annual pre-tax yield of approximately 8.6 percent.
As previously announced, Warrior Coal, LLC was acquired on February 14, 2003
from ARH Warrior Holdings, Inc., a company indirectly owned by management of the
Partnership (See ARLP Press Releases, dated November 14, 2002 and March 14,
2003). The acquisition is treated similar to a pooling of interests under
accounting rules requiring that historical financial statements and related
operating data be restated to include the results for Warrior Coal, LLC for all
periods presented. Warrior Coal, LLC results prior to the acquisition date will
be allocated entirely to the General Partner; therefore, Limited Partners'
Interest in Net Income and the related per unit amounts will not change from
prior periods.
During the first quarter of 2003, the Partnership's common units outstanding
increased by a net 2,498,482 Common Units, which increase was attributable
primarily to a common unit offering, resulting in an increase in the total
number of Common and Subordinated Units outstanding to 17,903,793. For the
quarter ending March 31, 2003, per unit results are calculated using the
weighted average number of units outstanding of 16,593,609 and 17,176,824 on a
basic limited partner unit and diluted limited partner unit basis, respectively.
Production for the first quarter of 2003 was 5.0 million tons compared to 4.8
million tons for the first quarter of 2002. The increase in production was
primarily due to the fourth continuous mining unit added in February of this
year at the Partnership's Gibson County operation and higher productivity at its
Mettiki and Dotiki operations. Total operating expenses declined $3.5 million,
or approximately 3 percent for this quarter compared to the first quarter of
last year. The decrease was partially attributable to better mining conditions
experienced this year.
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Revenues for the 2003 first quarter were $124.9 million and tons sold totaled
4.5 million compared to $125.4 million and 4.5 million tons sold in the first
quarter of 2002. Revenues for the first quarter of 2003 benefited by customer
acceleration of certain contract shipments to Synfuel Solutions Operating LLC,
which resulted in an increase of the fees earned under various rental and
service agreements the Partnership has with Synfuel Solutions Operating LLC.
Coal inventories at the Partnership's operations grew by slightly more than
500,000 tons during the current quarter as several customers experienced
unplanned outages and deliveries to utilities industry-wide were less than
anticipated, as customers elected to draw down their coal stockpile levels.
Commenting on the quarter, Joseph W. Craft III, President and Chief Executive
Officer said, "The Partnership enjoyed another solid quarter of earnings
improvement, achieving strong year over year performance attributable to lower
operating costs and increased synfuel volumes." Looking forward, Mr. Craft
added, "With the fast start this quarter, we are ahead of plan and are focused
on continuing the favorable cost trends we experienced in the first quarter.
During April 2003, as planned, our one-unit underground mine at Hopkins County
Coal depleted its reserves allowing the miners and equipment to be redeployed at
Warrior Coal. The planned move of Synfuel Solutions Operating LLC 's coal
synfuel production facility to Warrior was successfully completed at the same
time. In addition, we recently began using the new mine shaft at our Dotiki
mine, and the transition to a new reserve area at Pattiki is progressing on
schedule."
Commenting on the coal market, Mr. Craft said: "Looking at the big picture,
first quarter electricity generation was strong responding to a much colder than
normal winter. Natural gas prices were higher and at levels generally considered
noncompetitive with coal. Industry-wide coal production in the eastern United
States, for several reasons, has fallen. Considering these factors, it is
understandable why many industry analysts are projecting a favorable outlook for
our industry for the balance of the year." Mr. Craft added, "We are preparing
for a status quo marketplace, but readying ourselves for a pick-up in coal
demand as we seek commitments for the 2.2 million tons of unsold coal we have
targeted to sell for this year. If new sales commitments are not identified by
the end of May, we will have to implement the reduction in force previously
announced at Hopkins County Coal which, if implemented, would reduce our unsold
position to 1.4 million tons. (See ARLP Press Release, dated April 3, 2003).
Demand for our product, during the rest of the year, will be the key to
maximizing our financial results."
The statements and projections used throughout this release are based on current
expectations. These statements and projections are forward-looking, and actual
results may differ materially. These projections do not include the potential
impact of any mergers, acquisitions or other business combinations that may
occur after the date of this release. At the end of this release, we have
included more information regarding business risks that could affect our
results.
Alliance Resource Partners is the nation's only publicly traded master limited
partnership involved in the production and marketing of coal. Alliance Resource
Partners currently operates 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 CHANGES IN THE DOMESTIC
COAL INDUSTRY, ELECTRIC UTILITY INDUSTRY, OR GENERAL ECONOMIC CONDITIONS;
DEPENDENCE ON SIGNIFICANT CUSTOMER CONTRACTS, INCLUDING RENEWING
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CUSTOMER CONTRACTS UPON EXPIRATION OF EXISTING CONTRACTS; CUSTOMER BANKRUPTCIES
AND/OR CANCELLATIONS OF, OR BREACHES TO, EXISTING CONTRACTS; CUSTOMER DELAYS OR
DEFAULTS IN MAKING PAYMENTS; FLUCTUATIONS IN COAL DEMAND, PRICES AND
AVAILABILITY DUE TO LABOR AND TRANSPORTATION COSTS AND DISRUPTIONS, EQUIPMENT
AVAILABILITY, GOVERNMENTAL REGULATIONS AND OTHER FACTORS; OUR PRODUCTIVITY
LEVELS AND MARGINS THAT WE EARN ON OUR COAL SALES; ANY UNANTICIPATED INCREASES
IN LABOR COSTS, ADVERSE CHANGES IN WORK RULES, OR UNEXPECTED CASH PAYMENTS
ASSOCIATED WITH POST-MINE RECLAMATION AND WORKERS' COMPENSATION CLAIMS; ANY
UNANTICIPATED INCREASES IN TRANSPORTATION COSTS AND RISK OF TRANSPORTATION
DELAYS OR INTERRUPTIONS; GREATER THAN EXPECTED ENVIRONMENTAL REGULATIONS, COSTS
AND LIABILITIES; A VARIETY OF OPERATIONAL, GEOLOGIC, PERMITTING, LABOR AND
WEATHER-RELATED FACTORS; RISKS OF MAJOR MINE-RELATED ACCIDENTS OR INTERRUPTIONS;
RESULTS OF LITIGATION; DIFFICULTY MAINTAINING OUR SURETY BONDS FOR MINE
RECLAMATION AS WELL AS WORKERS' COMPENSATION AND BLACK LUNG BENEFITS; DIFFICULTY
OBTAINING COMMERCIAL PROPERTY INSURANCE; AND RISKS ASSOCIATED WITH OUR 15.48%
PARTICIPATION (EXCLUDING ANY APPLICABLE DEDUCTIBLE) IN THE COMMERCIAL PROPERTY
PROGRAM.
ADDITIONAL INFORMATION CONCERNING THESE AND OTHER FACTORS CAN BE FOUND IN THE
PARTNERSHIP'S PUBLIC PERIODIC FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION ("SEC"), INCLUDING THE PARTNERSHIP'S ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 2002 FILED ON MARCH 20, 2003 WITH THE SEC. EXCEPT AS
REQUIRED BY APPLICABLE SECURITIES LAWS, THE PARTNERSHIP DOES NOT INTEND TO
UPDATE ITS FORWARD-LOOKING STATEMENTS.
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ALLIANCE RESOURCE PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF INCOME AND OPERATING DATA
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
(UNAUDITED)
THREE MONTHS ENDED
------------------------------
MARCH 31,
2003 2002
------------ ------------
Tons sold 4,456 4,474
Tons produced 4,990 4,760
SALES AND OPERATING REVENUES:
Coal sales $ 114,450 $ 115,845
Transportation revenues 4,315 5,096
Other sales and operating revenues 6,160 4,447
------------ ------------
Total revenues 124,925 125,388
------------ ------------
EXPENSES:
Operating expenses 82,752 84,517
Transportation expenses 4,315 5,096
Outside purchases 1,019 2,805
General and administrative 5,651 4,941
Depreciation, depletion and amortization 13,131 12,991
Interest expense 3,967 3,937
------------ ------------
Total operating expenses 110,835 114,287
------------ ------------
INCOME FROM OPERATIONS 14,090 11,101
OTHER INCOME (EXPENSE) (7) 452
------------ ------------
INCOME BEFORE INCOME TAXES 14,083 11,553
INCOME TAX EXPENSE 955 153
------------ ------------
NET INCOME $ 13,128 $ 11,400
============ ============
GENERAL PARTNERS' INTEREST
IN NET INCOME (LOSS) $ (389) $ 404
============ ============
LIMITED PARTNERS' INTEREST
IN NET INCOME $ 13,517 $ 10,996
============ ============
BASIC NET INCOME PER LIMITED PARTNER UNIT $ 0.81 $ 0.71
============ ============
DILUTED NET INCOME PER LIMITED PARTNER UNIT $ 0.79 $ 0.69
============ ============
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING-BASIC 16,593,609 15,405,311
============ ============
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING-DILUTED 17,176,824 15,841,062
============ ============
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ALLIANCE RESOURCE PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT UNIT DATA)
MARCH 31, DECEMBER 31,
2003 2002
--------- ------------
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 29,292 $ 9,028
Trade receivables, net 40,239 33,018
Marketable securities 446 470
Inventories 24,803 13,165
Advance royalties 5,233 5,232
Prepaid expenses and other assets 1,886 2,784
--------- ---------
Total current assets 101,899 63,697
PROPERTY, PLANT AND EQUIPMENT AT COST 450,271 446,629
LESS ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION (222,764) (216,777)
--------- ---------
227,507 229,852
OTHER ASSETS:
Advance royalties 8,824 10,542
Coal supply agreements, net 7,487 8,167
Other long-term assets 3,861 4,674
--------- ---------
$ 349,578 $ 316,932
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LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 21,477 $ 23,330
Due to affiliates 1,571 1,286
Accrued taxes other than income taxes 8,687 8,105
Accrued payroll and related expenses 11,189 10,004
Accrued interest 1,622 5,361
Workers' compensation and pneumoconiosis benefits 5,465 5,275
Other current liabilities 12,923 9,877
Current maturities, long-term debt 17,500 16,250
--------- ---------
Total current liabilities 80,434 79,488
--------- ---------
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities 195,000 195,000
Accrued pneumoconiosis benefits 16,508 16,067
Workers' compensation 20,711 19,949
Reclamation and mine closing 21,957 21,821
Due to affiliates 6,933 20,652
Other liabilities 3,000 2,717
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Total liabilities 344,543 355,694
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COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL (DEFICIT):
Common Unitholders 11,481,262 and 8,982,780 units outstanding, respectively 201,816 144,219
Subordinated Unitholder 6,422,531 units outstanding 114,713 112,916
General Partners (306,043) (290,472)
Unrealized loss on marketable securities (176) (150)
Minimum pension liability (5,275) (5,275)
--------- ---------
Total Partners' capital (deficit) 5,035 (38,762)
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$ 349,578 $ 316,932
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ALLIANCE RESOURCE PARTNERS, L.P.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
----------------------
2003 2002
-------- --------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES $ 13,047 $ 15,385
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (10,131) (17,091)
Proceeds from sale of property, plant and equipment 38 4
Proceeds from the maturity of marketable securities 57
-------- --------
Net cash used in investing activities (10,093) (17,030)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common unit offering to public 53,965 --
Cash contribution by General Partners 9 --
Payments on Warrior Coal revolver (17,000) --
Purchase of Warrior Coal (12,661) --
Borrowings under revolving credit and working capital facilities 10,600 17,500
Payments under revolving credit and working capital facilities (5,600) (12,500)
Payments on long-term debt (3,750) (3,750)
Distributions to Partners (8,253) (7,860)
-------- --------
Net cash provided by (used in) financing activities 17,310 (6,610)
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NET CHANGE IN CASH AND CASH EQUIVALENTS 20,264 (8,255)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,028 11,093
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 29,292 $ 2,838
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EBITDA is presented below because it is a widely accepted financial indicator of
a company's ability to incur and service debt. EBITDA is defined as income
before net interest expense, income taxes and depreciation, depletion and
amortization. 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). The table below shows how the Partnership
calculated EBITDA.
THREE MONTHS ENDED
MARCH 31,
2003 2002
------- -------
Net income (loss) $13,128 $11,400
Interest expense 3,967 3,937
Income taxes 955 153
Depreciation, depletion and amortization 13,131 12,991
------- -------
EBITDA $31,181 $28,481
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