Alliance Holdings GP, L.P. Increases Quarterly Distribution by 3.2% to $0.72 Per Unit and Reports Quarterly Financial Results

  Alliance Holdings GP, L.P. Increases Quarterly Distribution by 3.2% to $0.72
  Per Unit and Reports Quarterly Financial Results

Business Wire

TULSA, Okla. -- October 26, 2012

Alliance Holdings GP, L.P. (NASDAQ: AHGP) today announced that the Board of
Directors of its general partner declared a quarterly cash distribution for
the quarter ended September 30, 2012 (the "2012 Quarter") of $0.72 per unit,
or an annualized rate of $2.88 per unit. The declared distribution will be
paid on November 19, 2012 to AHGP’s unitholders of record as of the close of
trading on November 12, 2012.

The announced quarterly cash distribution represents an 18.0% increase over
the $0.61 per unit distribution (an annualized rate of $2.44 per unit) for the
quarter ended September 30, 2011 (the "2011 Quarter") and an increase of 3.2%
over the second quarter 2012 distribution of $0.6975 per unit (an annualized
rate of $2.79 per unit).

The declared distribution is based on the distribution AHGP will receive from
its ownership interests in Alliance Resource Partners, L.P. (NASDAQ: ARLP).
ARLP today announced a quarterly distribution for the 2012 Quarter of $1.085
per unit, or $4.34 per unit on an annualized basis, payable on November 14,
2012 to all unitholders of record as of the close of trading on November 7,
2012. (See ARLP Press Release dated October 26, 2012.)

AHGP reported net income for the 2012 Quarter of $39.5 million, or $0.66 per
basic and diluted limited partner unit, compared to $57.1 million, or $0.95
per basic and diluted limited partner unit, in the 2011 Quarter. The decrease
in net income during the 2012 Quarter primarily reflects approximately $24.1
million of losses and charges related to ARLP's idling of the Pontiki mine,
including a non-cash asset impairment of $19.0 million, and reduced coal
shipments into the metallurgical export markets. (For a discussion of net
income presentation, please see the end of this release.)

AHGP currently has no other operating activities apart from those conducted by
the operating subsidiaries of ARLP and reports its financial results on a
consolidated basis with the financial results of ARLP. AHGP’s principal
sources of cash flow are its ownership of general partner interests, limited
partner interests and incentive distribution rights in ARLP. Based on ARLP’s
current declared distribution, AHGP expects to receive quarterly cash
distributions from ARLP of $44.3 million, or $177.2 million on an annualized
basis. AHGP’s primary cash requirements are for working capital, distributions
to its unitholders and general and administrative expenses, including for 2012
an estimated $4.5 million to $4.75 million in general and administrative
expenses.

AHGP and ARLP will discuss their 2012 Quarter financial results during a joint
conference call scheduled for today at 10:00 a.m. Eastern. To participate in
the conference call, dial (800) 299-9086 and provide pass code 23801657.
International callers should dial (617) 786-2903 and provide the same pass
code. Investors may also listen to the call via the "investor information"
section of ARLP’s website at http://www.arlp.com or AHGP’s website at
http://www.ahgp.com.

An audio replay of the conference call will be available for approximately one
week. To access the audio replay, dial (888) 286-8010 and provide pass code
72201009. International callers should dial (617) 801-6888 and provide the
same pass code.

This announcement is intended to be a qualified notice under Treasury
Regulation Section 1.1446-4(b), with 100% of the partnership’s distributions
to foreign investors attributable to income that is effectively connected with
a United States trade or business. Accordingly, AHGP’s distributions to
foreign investors are subject to federal income tax withholding at the highest
applicable tax rate.

About Alliance Holdings GP, L.P.

AHGP is a limited partnership formed to own and control Alliance Resource
Management GP, LLC, the managing general partner of Alliance Resource
Partners, L.P. (NASDAQ: ARLP), through which it holds a 1.98% general partner
interest and the incentive distribution rights in ARLP. In addition, AHGP owns
15,544,169 common units of ARLP.

News, unit prices and additional information about AHGP, including filings
with the Securities and Exchange Commission, are available at
http://www.ahgp.com. For more information, contact the investor relations
department of AHGP at (918) 295-1415 or via e-mail at
investorrelations@ahgp.com.

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.

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: changes in
competition in coal markets and the ARLP Partnership's ability to respond to
such changes; changes in coal prices, which could affect the ARLP
Partnership's operating results and cash flows; risks associated with the ARLP
Partnership's expansion of its operations and properties; the impact of health
care legislation; deregulation of the electric utility industry or the effects
of any adverse change in the coal industry, electric utility industry, or
general economic conditions; dependence on significant customer contracts,
including renewing customer contracts upon expiration of existing contracts;
changing global economic conditions or in industries in which the ARLP
Partnership’s customers operate; liquidity constraints, including those
resulting from any future unavailability of financing; customer bankruptcies,
cancellations or breaches to existing contracts, or other failures to perform;
customer delays, failure to take coal under contracts or defaults in making
payments; adjustments made in price, volume or terms to existing coal supply
agreements; fluctuations in coal demand, prices and availability due to labor
and transportation costs and disruptions, equipment availability, governmental
regulations, including those related to carbon dioxide emissions, and other
factors; legislation, regulatory and court decisions and interpretations
thereof, including issues related to air and water quality and miner health
and safety; the ARLP Partnership's productivity levels and margins earned on
its coal sales; unexpected changes in raw material costs; unexpected changes
in availability of skilled labor; the ARLP Partnership's ability to maintain
satisfactory relations with its employees; any unanticipated increases in
labor costs, adverse changes in work rules, or unexpected cash payments or
projections 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 associated with major
mine-related accidents, such as mine fires, or interruptions; results of
litigation, including claims not yet asserted; difficulty maintaining the ARLP
Partnership's surety bonds for mine reclamation as well as workers'
compensation and black lung benefits; difficulty in making accurate
assumptions and projections regarding pension, black lung benefits and other
post-retirement benefit liabilities; coal market's share of electricity
generation, including as a result of environmental concerns related to coal
mining and combustion and the cost and perceived benefits of alternative
sources of energy, such as natural gas, nuclear energy and renewable fuels;
uncertainties in estimating and replacing the ARLP Partnership’s coal
reserves; a loss or reduction of benefits from certain tax credits; difficulty
obtaining commercial property insurance, and risks associated with the ARLP
Partnership's participation (excluding any applicable deductible) in the
commercial insurance property program; and difficulty in making accurate
assumptions and projections regarding future revenues and costs associated
with equity investments in companies we do not control.

Additional information concerning these and other factors can be found in
AHGP’s public periodic filings with the Securities and Exchange Commission
("SEC"), including AHGP's Annual Report on Form 10-K for the year ended
December 31, 2011, filed on February 28, 2012 with the SEC. Except as required
by applicable securities laws, AHGP does not intend to update its
forward-looking statements.

                                                 
                                                     
ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES
                                                     
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OPERATING DATA

(In thousands, except unit and per unit data)

(Unaudited)
                                                     
                   Three Months Ended                Nine Months Ended

                   September 30,                     September 30,
                   2012            2011             2012            2011
                                                                      
SALES AND
OPERATING
REVENUES:
Coal sales         $ 499,003        $ 473,683        $ 1,441,107      $ 1,323,851
Transportation       5,625            7,446            17,651           25,452
revenues
Other sales
and operating       6,720          6,528          25,854         19,381     
revenues
Total revenues      511,348        487,657        1,484,612      1,368,684  
                                                                      
EXPENSES:
Operating
expenses
(excluding           338,644          294,771          946,806          835,006
depreciation,
depletion and
amortization)
Transportation       5,625            7,446            17,651           25,452
expenses
Outside coal         4,424            19,864           34,759           29,495
purchases
General and          15,282           13,613           47,494           40,692
administrative
Depreciation,
depletion and        59,781           40,275           154,923          117,237
amortization
Asset
impairment          19,031         -              19,031         -          
charge
Total
operating            442,787          375,969          1,220,664        1,047,882
expenses
                                                                      
INCOME FROM          68,561           111,688          263,948          320,802
OPERATIONS
Interest             (7,446     )     (8,782     )     (21,626    )     (27,248    )
expense, net
Interest             94               84               239              279
income
Equity in loss
of affiliates,       (2,832     )     -                (11,040    )     -
net
Other income        254            360            2,853          1,340      
INCOME BEFORE        58,631           103,350          234,374          295,173
INCOME TAXES
INCOME TAX          (102       )    (317       )    (726       )    (221       )
BENEFIT
NET INCOME           58,733           103,667          235,100          295,394
LESS: NET
INCOME
ATTRIBUTABLE        (19,238    )    (46,559    )    (91,927    )    (133,367   )
TO
NONCONTROLLING
INTERESTS
NET INCOME
ATTRIBUTABLE
TO ALLIANCE
HOLDINGS GP,       $ 39,495        $ 57,108        $ 143,173       $ 162,027    
L.P. ("NET
INCOME OF
AHGP")
                                                                      
BASIC AND
DILUTED NET
INCOME OF AHGP     $ 0.66          $ 0.95          $ 2.39          $ 2.71       
PER LIMITED
PARTNER UNIT
DISTRIBUTIONS
PAID PER           $ 0.6975        $ 0.5825        $ 2.0025        $ 1.665      
LIMITED
PARTNER UNIT
                                                                      
WEIGHTED
AVERAGE NUMBER
OF UNITS
                    59,863,000     59,863,000     59,863,000     59,863,000 
OUTSTANDING -
BASIC AND
DILUTED

                                                              
                                                                 
ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES
                                                                 
CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except unit data)

(Unaudited)
                                                                 
ASSETS                                           September 30,   December 31,
                                                 2012            2011
                                                                 
CURRENT ASSETS:
Cash and cash equivalents                        $ 4,110         $ 281,469
Trade receivables                                  152,826         128,643
Other receivables                                  1,432           3,525
Due from affiliates                                79              -
Inventories                                        63,923          33,837
Advance royalties                                  9,038           7,560
Prepaid expenses and other assets                 10,321        12,022    
Total current assets                               241,729         467,056
                                                                 
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost             2,278,297       1,974,520
Less accumulated depreciation, depletion and      (784,123  )    (793,200  )
amortization
Total property, plant and equipment, net           1,494,174       1,181,320
                                                                 
OTHER ASSETS:
Advance royalties                                  26,972          27,916
Equity investments in affiliates                   74,329          40,118
Other long-term assets                            31,196        18,067    
Total other assets                                132,497       86,101    
TOTAL ASSETS                                     $ 1,868,400    $ 1,734,477 
                                                                 
LIABILITIES AND PARTNERS' CAPITAL
                                                                 
CURRENT LIABILITIES:
Accounts payable                                 $ 113,776       $ 97,369
Due to affiliates                                  395             494
Accrued taxes other than income taxes              19,150          15,897
Accrued payroll and related expenses               42,233          35,876
Accrued interest                                   6,320           2,195
Workers’ compensation and pneumoconiosis           9,488           9,511
benefits
Current capital lease obligations                  1,019           676
Other current liabilities                          22,900          15,326
Current maturities, long-term debt                18,000        18,000    
Total current liabilities                          233,281         195,344
                                                                 
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities       693,000         686,000
Pneumoconiosis benefits                            60,987          54,775
Accrued pension benefit                            24,273          27,538
Workers’ compensation                              74,862          64,520
Asset retirement obligations                       76,695          70,836
Long-term capital lease obligations                18,865          2,497
Other liabilities                                 8,536         6,774     
Total long-term liabilities                       957,218       912,940   
Total liabilities                                 1,190,499     1,108,284 
                                                                 
COMMITMENTS AND CONTINGENCIES
                                                                 
PARTNERS' CAPITAL:
Alliance Holdings GP, L.P. ("AHGP") Partners'
Capital:
Limited Partners – Common Unitholders              437,140         414,165
59,863,000 units outstanding
Accumulated other comprehensive loss              (16,669   )    (17,560   )
Total AHGP Partners' Capital                       420,471         396,605
Noncontrolling interests                          257,430       229,588   
Total Partners' Capital                           677,901       626,193   
TOTAL LIABILITIES AND PARTNERS' CAPITAL          $ 1,868,400    $ 1,734,477 

                                                 
                                                   
ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES
                                                   
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)
                                                   
                                                   Nine Months Ended
                                                   September 30,
                                                   2012          2011
                                                                  
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES        $ 422,369     $ 429,975  
                                                                  
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures                                 (332,353 )     (216,308 )
Changes in accounts payable and accrued              (4,024   )     511
liabilities
Proceeds from sale of property, plant and            114            465
equipment
Purchase of equity investments in affiliate          (43,100  )     (35,700  )
Payment for acquisition of business                  (100,000 )     -
Payments to affiliate for development of coal        (34,601  )     (33,841  )
reserves
Advances/loans to affiliate                          (2,229   )     -
Payments from affiliate                              4,229          -
Other                                               546          810      
Net cash used in investing activities               (511,418 )    (284,063 )
                                                                  
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under term loan                           250,000        -
Borrowings under revolving credit facility           150,000        -
Payments under revolving credit facility             (75,000  )     -
Payment on term loan                                 (300,000 )     -
Payment on long-term debt                            (18,000  )     (18,000  )
Payments on capital lease obligations                (673     )     (595     )
Payment of debt issuance costs                       (4,272   )     -
Net settlement of employee withholding taxes on      (3,734   )     (2,324   )
vesting of ARLP Long-Term Incentive Plan
Distributions paid by consolidated partnership       (66,755  )     (57,787  )
to noncontrolling interests
Distributions paid to Partners                      (119,876 )    (99,672  )
Net cash used in financing activities               (188,310 )    (178,378 )
                                                                  
NET CHANGE IN CASH AND CASH EQUIVALENTS              (277,359 )     (32,466  )
                                                                  
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD     281,469        342,237
                                                                 
CASH AND CASH EQUIVALENTS AT END OF PERIOD         $ 4,110       $ 309,771  
                                                                             

Presentation of Net Income

Consolidated net income includes earnings attributable to both AHGP and
noncontrolling interests. Unless otherwise noted, any reference to net income
in this release represents net income attributable to AHGP.

Contact:

Alliance Holdings GP, L.P.
Brian L. Cantrell, 918-295-7673
 
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