EXHIBIT 99.1
PRESS RELEASE
(ALLIANCE RESOURCE
PARTNERS, L.P. LOGO) CONTACT:
BRIAN L. CANTRELL
Alliance Resource Partners, L.P.
1717 South Boulder Avenue, Suite 600
Tulsa, Oklahoma 74119
(918) 295-7673
FOR IMMEDIATE RELEASE
ALLIANCE RESOURCE PARTNERS, L.P.
ANNOUNCES RECORD QUARTERLY RESULTS; INCREASES QUARTERLY CASH DISTRIBUTION TO
$0.65 PER UNIT; AND RAISES GUIDANCE
TULSA, Oklahoma, July 22, 2004 - Alliance Resource Partners, L.P. (NASDAQ: ARLP)
today reported net income of $22.9 million, or $1.25 per basic limited partner
unit, for the second quarter ended June 30, 2004, compared to $8.5 million, or
$0.47 per basic limited partner unit, for the 2003 second quarter. The second
quarter 2004 results represent record quarterly net income for the Partnership
and reflect a 168% increase in net income as compared to the same period last
year. Income before income taxes for the 2004 second quarter improved to a
record $23.6 million, an increase of 155% over the $9.2 million reported for the
same quarter of 2003.
The Partnership also announced that its Board of Directors declared a quarterly
cash distribution of $0.65 per unit for the second quarter ended June 30, 2004
(an annualized rate of $2.60), payable on August 13, 2004, to all unitholders of
record as of August 2, 2004. This represents an increase of 4% over the $0.625
distribution per unit for the first quarter of this year (an annualized rate of
$2.50) and a 24% increase since the distribution for the second quarter of 2003.
Revenues for the 2004 second quarter rose 22% to a record $162.5 million
compared to $133.5 million in the same period last year. Revenues increased in
the current quarter due to record tons of coal sold, 5.2 million tons in the
2004 second quarter compared to 4.7 million tons sold in the 2003 second
quarter, and continued strength in spot prices in the export and Central
Appalachian coal markets.
Record quarterly production of 5.2 million tons represents an increase of 12%
over the 4.6 million tons produced during the comparable period last year. The
Partnership continued to realize the benefits of previous capital and
infrastructure investments through higher productivity at its Illinois Basin and
East Kentucky operations. These increases were partially offset by the
production loss associated with the idling of the Hopkins County Coal operation
(See ARLP Press Releases, dated April 3 and June 2, 2003).
Operating expenses increased to $102.9 million for the second quarter of 2004 as
compared to $94.9 million in the 2003 quarter. Increased operating expenses were
primarily due to higher sales volumes and sales related expenses, increased
maintenance expenses, and higher materials and supplies costs. Although total
operating expenses increased in the current quarter, operating expenses per
produced ton sold decreased by $0.17 per ton as compared to the same period last
year. General and administrative expenses rose by $4.6 million during the second
quarter of this year to $11.3 million as compared to $6.7 million during the
same period of 2003. This expense increase was primarily a result of increased
incentive compensation expense and was principally
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attributable to the increased market value of the Partnership's common units,
which closed at $46.66 per unit on June 30, 2004.
For the six months ended June 30, 2004, the Partnership had net income of $41.1
million, or $2.25 per basic limited partner unit, compared to net income of
$21.7 million, or $1.27 per basic limited partner unit, for the same period of
2003. Revenues were $320.4 million and coal sales were 10.3 million tons for the
first six months of 2004, compared to $258.4 million and 9.2 million tons,
respectively, for the same period of 2003.
The continuing strength in the U.S. coal markets has favorably impacted
Alliance's financial results for the first half of this year. As a result of
increased production, particularly at the Pattiki, Warrior, Gibson County and
East Kentucky mines, the Partnership was able to benefit from robust market
conditions by selling additional tons at higher prices. Revenues were further
benefited by tons sold into the export market at substantially higher prices.
For the six months ended June 30, 2004, higher total operating expenses were
primarily due to increased sales volumes, maintenance expense, material and
supplies costs, and sales related expenses. These increased costs were more than
offset by higher prices during the first half of 2004, as average coal sales
prices improved by $2.76 per ton compared to the six month period ended June 30,
2003.
Commenting on the Partnership's performance, Joseph W. Craft III, President and
Chief Executive Officer said, "We have enjoyed a sustained period of high level
performance as evidenced by Alliance recently being named to Business Week's
annual list of '100 Best Growth Companies' for the second year in a row. I am
extremely pleased that our strong performance has continued this year as we have
reacted quickly to the opportunities presented by favorable market conditions.
So far this year, we have achieved record results for revenues, net income,
production tons, and tons sold. It is gratifying to share this success by
increasing our distribution to unitholders for the third consecutive quarter."
Reflecting on the future, Mr. Craft added, "We remain well positioned for the
rest of this year. Planned production increases are on schedule with deliveries
from two third-party mining activities at Mettiki beginning earlier this month.
Equipment additions have been completed at our Gibson County mine and are
scheduled at our Pattiki mine later this quarter. We have committed essentially
all of our estimated 2004 production of 20.6 million tons under existing coal
sales agreements and continue to evaluate the market for additional
opportunities. Based on our performance to date and current projections, we are
increasing our estimate for 2004 net income to a range of $70.0 to $80.0
million."
Estimated net income for the year ending December 31, 2004 excludes any
additional insurance recoveries for expenses and losses attributable to a mine
fire that occurred earlier this year at the Dotiki mine. (See ARLP Press
Releases, dated February 12, March 1, March 8, March 25, and April 23, 2004).
Through June 30, 2004, the Partnership has recognized $3.1 million as recovery
under its commercial insurance policies of certain expenses related to the
Dotiki fire (net of a $3.5 million self-retention and deductible and 10%
coinsurance). Alliance continues to work closely with its insurance underwriters
in the adjustment of losses associated with and the recovery of additional
insurance proceeds relating to the Dotiki mine fire. Although the Partnership
expects to receive additional insurance proceeds, which may be material in
amount, it can not give any assurances as to the eventual timing or amount of
any such proceeds.
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.
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These projections do not include the potential impact of any mergers,
acquisitions or other business combinations that may occur after the date of
this release. At the end of this release, we have included more information
regarding business risks that could affect our results.
Alliance Resource Partners is the nation's only publicly traded master limited
partnership involved in the production and marketing of coal. Alliance Resource
Partners currently operates mining complexes in Illinois, Indiana, Kentucky and
Maryland.
FORWARD-LOOKING STATEMENTS: WITH THE EXCEPTION OF HISTORICAL MATTERS, ANY
MATTERS DISCUSSED IN THIS PRESS RELEASE ARE FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM PROJECTED RESULTS. THESE RISKS, UNCERTAINTIES AND CONTINGENCIES
INCLUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING: COMPETITION IN COAL MARKETS AND
OUR ABILITY TO RESPOND TO THE COMPETITION; FLUCTUATION IN COAL PRICES, WHICH
COULD ADVERSELY AFFECT OUR OPERATING RESULTS AND CASH FLOWS; DEREGULATION OF THE
ELECTRIC UTILITY INDUSTRY OR THE EFFECTS OF ANY ADVERSE 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.
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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OPERATING DATA
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------- -----------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
TONS SOLD 5,196 4,749 10,306 9,205
TONS PRODUCED 5,185 4,643 10,297 9,633
SALES AND OPERATING REVENUES:
Coal sales $ 149,325 $ 122,589 $ 293,864 $ 237,039
Transportation revenues 7,019 5,071 13,857 9,386
Other sales and operating revenues 6,202 5,811 12,649 11,971
------------ ------------ ------------ ------------
Total revenues 162,546 133,471 320,370 258,396
------------ ------------ ------------ ------------
EXPENSES:
Operating expenses 102,857 94,933 207,185 177,685
Transportation expenses 7,019 5,071 13,857 9,386
Outside purchases 799 370 1,864 1,389
General and administrative 11,276 6,654 21,605 12,305
Depreciation, depletion and amortization 13,415 13,662 26,186 26,793
Interest expense 3,836 3,990 7,679 7,957
------------ ------------ ------------ ------------
Total operating expenses 139,202 124,680 278,376 235,515
------------ ------------ ------------ ------------
INCOME FROM OPERATIONS 23,344 8,791 41,994 22,881
OTHER INCOME 245 457 559 450
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 23,589 9,248 42,553 23,331
INCOME TAX EXPENSE 728 720 1,467 1,675
------------ ------------ ------------ ------------
NET INCOME $ 22,861 $ 8,528 $ 41,086 $ 21,656
============ ============ ============ ============
GENERAL PARTNERS' INTEREST IN NET INCOME (LOSS) $ 457 $ 170 $ 822 $ (219)
============ ============ ============ ============
LIMITED PARTNERS' INTEREST IN NET INCOME $ 22,404 $ 8,358 $ 40,264 $ 21,875
============ ============ ============ ============
BASIC NET INCOME PER LIMITED PARTNER UNIT $ 1.25 $ 0.47 $ 2.25 $ 1.27
============ ============ ============ ============
DILUTED NET INCOME PER LIMITED PARTNER UNIT $ 1.22 $ 0.45 $ 2.18 $ 1.23
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING-BASIC 17,903,793 17,903,793 17,903,793 17,252,320
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING-DILUTED 18,438,551 18,485,741 18,437,704 17,833,368
============ ============ ============ ============
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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except unit data)
ASSETS
JUNE 30, DECEMBER 31,
2004 2003
---------- ------------
(UNAUDITED)
CURRENT ASSETS:
Cash and cash equivalents $ 44,800 $ 10,156
Trade receivables, net 56,474 38,305
Marketable securities 20,056 23,615
Inventories 16,020 14,527
Advance royalties 1,108 1,108
Prepaid expenses and other assets 925 3,432
--------- ---------
Total current assets 139,383 91,143
PROPERTY, PLANT AND EQUIPMENT AT COST 493,551 474,357
LESS ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION (269,456) (251,567)
--------- ---------
224,095 222,790
OTHER ASSETS:
Advance royalties 15,288 12,439
Coal supply agreements, net 4,084 5,445
Other long-term assets 4,209 4,637
--------- ---------
$ 387,059 $ 336,454
========= =========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 29,063 $ 22,651
Due to affiliates 19,925 13,546
Accrued taxes other than income taxes 11,738 10,375
Accrued payroll and related expenses 13,541 11,095
Accrued interest 5,402 5,402
Workers' compensation and pneumoconiosis benefits 5,949 5,905
Other current liabilities 8,654 5,739
--------- ---------
Total current liabilities 94,272 74,713
--------- ---------
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities 180,000 180,000
Accrued pneumoconiosis benefits 18,569 17,633
Workers' compensation 25,883 22,819
Reclamation and mine closing 25,655 21,717
Due to affiliates 7,298 3,735
Other liabilities 3,577 3,280
--------- ---------
Total liabilities 355,254 323,897
--------- ---------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL (DEFICIT):
Common Unitholders 14,692,527 units outstanding 278,666 263,071
Subordinated Unitholder 3,211,266 units outstanding 61,819 58,411
General Partners (304,891) (305,034)
Unrealized loss on marketable securities -- (102)
Minimum pension liability (3,789) (3,789)
--------- ---------
Total Partners' capital (deficit) 31,805 12,557
--------- ---------
$ 387,059 $ 336,454
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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
----------------------
2004 2003
-------- --------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES $ 75,467 $ 43,727
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (25,114) (20,019)
Purchase of Warrior Coal -- (12,661)
Proceeds from sale of property, plant and equipment 458 463
Proceeds from maturity of marketable securities 3,661 --
Proceeds from assumption of liability 2,112 --
-------- --------
Net cash used in investing activities (18,883) (32,217)
-------- --------
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 facility and working
capital facilities -- 10,600
Payments under revolving credit facility and working capital
facilities -- (10,600)
Payments on long-term debt -- (7,500)
Distributions to Partners (21,940) (17,844)
-------- --------
Net cash provided by (used in) financing activities (21,940) 11,630
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS 34,644 23,140
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 10,156 9,028
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 44,800 $ 32,168
======== ========
CASH PAID FOR:
INTEREST $ 7,614 $ 8,138
======== ========
INCOME TAXES TO TAXING AUTHORITIES $ 1,300 $ 1,625
======== ========
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EXHIBIT 99.1
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).
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- ----------------------
2004 2003 2004 2003
-------- -------- -------- --------
Cash flows provided by operating activities $ 40,934 $ 30,680 $ 75,467 $ 43,727
Reclamation and mine closing (333) (335) (667) (670)
Coal inventory adjustment to market -- (311) -- (335)
Other 62 457 8 (266)
Net effect of working capital changes (4,387) (8,301) (7,536) 5,993
Interest expense 3,836 3,990 7,679 7,957
Income taxes 728 720 1,467 1,675
-------- -------- -------- --------
EBITDA 40,840 26,900 76,418 58,081
Depreciation, depletion and amortization (13,415) (13,662) (26,186) (26,793)
Interest expense (3,836) (3,990) (7,679) (7,957)
Income taxes (728) (720) (1,467) (1,675)
-------- -------- -------- --------
Net income $ 22,861 $ 8,528 $ 41,086 $ 21,656
======== ======== ======== ========
EBITDA is defined as income before net interest expense, income taxes and
depreciation, depletion and amortization. Management believes EBITDA is a useful
indicator of its ability to meet debt service and capital expenditure
requirements and uses EBITDA as a measure of operating performance. EBITDA
should not be considered as an alternative to net income, income from
operations, cash flows from operating activities or any other measure of
financial performance presented in accordance with generally accepted accounting
principles. EBITDA is not intended to represent cash flow and does not represent
the measure of cash available for distribution. The Partnership's method of
computing EBITDA may not be the same method used to compute similar measures
reported by other companies, or EBITDA may be computed differently by the
Partnership in different contexts (i.e. public reporting versus computation
under financing agreements).
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