Alliance Holdings GP, L.P. Increases Quarterly Distribution by 2.8% to $0.74 Per Unit and Reports Financial Results

  Alliance Holdings GP, L.P. Increases Quarterly Distribution by 2.8% to $0.74
  Per Unit and Reports Financial Results

Business Wire

TULSA, Okla. -- January 29, 2013

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 December 31, 2012 (the "2012 Quarter") of $0.74 per unit, or
an annualized rate of $2.96 per unit. The declared distribution will be paid
on February 19, 2013 to AHGP’s unitholders of record as of the close of
trading on February 12, 2013.

The announced quarterly cash distribution represents a 16.1% increase over the
$0.6375 per unit distribution (an annualized rate of $2.55 per unit) for the
quarter ended December 31, 2011 (the "2011 Quarter") and an increase of 2.8%
over the third quarter 2012 distribution of $0.72 per unit (an annualized rate
of $2.88 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 $1.1075
per unit, or $4.43 per unit on an annualized basis, payable on February 14,
2013 to all unitholders of record as of the close of trading on February 7,
2013. (See ARLP Press Release dated January 29, 2013.)

For the year ended December 31, 2012 (the "2012 Period"), AHGP reported net
income of $196.1 million, or $3.28 per basic and diluted limited partner unit,
compared to net income for the year ended December 31, 2011 of $214.1 million,
or $3.58 per basic and diluted limited partner unit. The decrease in net
income during the 2012 Period primarily reflects losses and charges related to
ARLP’s idling of the Pontiki mine, including a non-cash asset impairment of
$19.0 million, reduced shipments into the metallurgical export markets and
increased depreciation, depletion and amortization. For the 2012 Quarter, net
income increased slightly to $52.9 million, or $0.88 per basic and diluted
limited partner unit, compared to $52.1 million, or $0.87 per basic and
diluted limited partner unit, for the 2011 Quarter. (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 $45.4 million, or $181.6 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 2013
an estimated $3.0 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) 435-1398 and provide pass code 42785094.
International callers should dial (617) 614-4078 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
10279395. 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                Year Ended

                 December 31,                      December 31,
                  2012          2011           2012          2011       
                                                                    
SALES AND
OPERATING
REVENUES:
Coal sales       $ 538,330        $ 462,238        $ 1,979,437      $ 1,786,089
Transportation     4,383            6,487            22,034           31,939
revenues
Other sales
and operating     6,605          5,794          32,459         25,175     
revenues
Total revenues    549,318        474,519        2,033,930      1,843,203  
                                                                    
EXPENSES:
Operating
expenses
(excluding         356,485          296,744          1,303,291        1,131,750
depreciation,
depletion and
amortization)
Transportation     4,383            6,487            22,034           31,939
expenses
Outside coal       3,848            24,785           38,607           54,280
purchases
General and        15,219           14,299           62,713           54,991
administrative
Depreciation,
depletion and      63,199           43,098           218,122          160,335
amortization
Asset
impairment        -              -              19,031         -          
charge
Total
operating          443,134          385,413          1,663,798        1,433,295
expenses
                                                                    
INCOME FROM        106,184          89,106           370,132          409,908
OPERATIONS
Interest
(expense)          (7,066     )     5,395            (28,453    )     (21,574    )
income, net
Equity in loss
of affiliates,     (3,610     )     (3,404     )     (14,650    )     (3,404     )
net
Other income      262            (357       )    3,115          983        
(loss)
INCOME BEFORE      95,770           90,740           330,144          385,913
INCOME TAXES
INCOME TAX        (356       )    (209       )    (1,082     )    (430       )
BENEFIT
NET INCOME         96,126           90,949           331,226          386,343
LESS: NET
INCOME
ATTRIBUTABLE      (43,231    )    (38,833    )    (135,158   )    (172,200   )
TO
NONCONTROLLING
INTERESTS
NET INCOME
ATTRIBUTABLE
TO ALLIANCE
HOLDINGS GP,     $ 52,895        $ 52,116        $ 196,068       $ 214,143    
L.P. ("NET
INCOME OF
AHGP")
                                                                    
BASIC AND
DILUTED NET
INCOME OF AHGP   $ 0.88          $ 0.87          $ 3.28          $ 3.58       
PER LIMITED
PARTNER UNIT
DISTRIBUTIONS
PAID PER         $ 0.72          $ 0.61          $ 2.7225        $ 2.275      
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)
                                               
                                                 Year Ended
ASSETS
                                                 December 31,
                                                  2012         2011      
                                                                 
CURRENT ASSETS:
Cash and cash equivalents                        $ 31,111        $ 281,469
Trade receivables                                  172,724         128,643
Other receivables                                  1,019           3,525
Due from affiliates                                562             -
Inventories                                        46,660          33,837
Advance royalties                                  11,492          7,560
Prepaid expenses and other assets                 20,554        12,022    
Total current assets                               284,122         467,056
                                                                 
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment, at cost             2,361,863       1,974,520
Less accumulated depreciation, depletion and      (832,293  )    (793,200  )
amortization
Total property, plant and equipment, net           1,529,570       1,181,320
                                                                 
OTHER ASSETS:
Advance royalties                                  23,267          27,916
Equity investments in affiliates                   88,513          40,118
Due from affiliates                                3,084           -
Other long-term assets                            30,284        18,067    
Total other assets                                145,148       86,101    
TOTAL ASSETS                                     $ 1,958,840    $ 1,734,477 
                                                                 
LIABILITIES AND PARTNERS' CAPITAL
                                                                 
CURRENT LIABILITIES:
Accounts payable                                 $ 100,678       $ 97,369
Due to affiliates                                  327             494
Accrued taxes other than income taxes              20,033          15,897
Accrued payroll and related expenses               38,501          35,876
Accrued interest                                   1,435           2,195
Workers’ compensation and pneumoconiosis           9,320           9,511
benefits
Current capital lease obligations                  1,000           676
Other current liabilities                          19,572          15,326
Current maturities, long-term debt                18,000        18,000    
Total current liabilities                          208,866         195,344
                                                                 
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities       773,000         686,000
Pneumoconiosis benefits                            59,931          54,775
Accrued pension benefit                            31,078          27,538
Workers’ compensation                              68,786          64,520
Asset retirement obligations                       81,644          70,836
Long-term capital lease obligations                18,613          2,497
Other liabilities                                 9,147         6,774     
Total long-term liabilities                       1,042,199     912,940   
Total liabilities                                 1,251,065     1,108,284 
                                                                 
COMMITMENTS AND CONTINGENCIES
                                                                 
PARTNERS' CAPITAL:
Alliance Holdings GP, L.P. ("AHGP") Partners'
Capital:
Limited Partners – Common Unitholders              448,976         414,165
59,863,000 units outstanding
Accumulated other comprehensive loss              (18,296   )    (17,560   )
Total AHGP Partners' Capital                       430,680         396,605
Noncontrolling interests                          277,095       229,588   
Total Partners' Capital                           707,775       626,193   
TOTAL LIABILITIES AND PARTNERS' CAPITAL          $ 1,958,840    $ 1,734,477 


ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)
                                                 
                                                   Year Ended
                                                   December 31,
                                                    2012        2011     
                                                                  
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES        $ 546,224     $ 576,105  
                                                                  
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment:
Capital expenditures                                 (424,631 )     (321,920 )
Changes in accounts payable and accrued              (4,007   )     11,640
liabilities
Proceeds from sale of property, plant and            114            1,526
equipment
Purchase of equity investments in affiliate          (59,800  )     (42,700  )
Payment for acquisition of business                  (100,000 )     -
Payments to affiliate for acquisition and            (34,601  )     (50,800  )
development of coal reserves
Advances/loans to affiliate                          (5,229   )     -
Payments from affiliate                              4,229          -
Other                                               546          1,146    
Net cash used in investing activities               (623,379 )    (401,108 )
                                                                  
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under term loan                           250,000        -
Borrowings under revolving credit facility           278,800        -
Payments under revolving credit facility             (123,800 )     -
Payment on term loan                                 (300,000 )     -
Payment on long-term debt                            (18,000  )     (18,000  )
Payments on capital lease obligations                (943     )     (812     )
Payment of debt issuance costs                       (4,272   )     -
Contribution by limited partner - affiliate          2,000          -
Net settlement of employee withholding taxes on
vesting of                                           (3,734   )     (2,324   )

ARLP Long-Term Incentive Plan
Distributions paid by consolidated partnership       (90,277  )     (78,441  )
to noncontrolling interests
Distributions paid to Partners                      (162,977 )    (136,188 )
Net cash used in financing activities               (173,203 )    (235,765 )
                                                                  
NET CHANGE IN CASH AND CASH EQUIVALENTS              (250,358 )     (60,768  )
                                                                  
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD     281,469        342,237
                                                                 
CASH AND CASH EQUIVALENTS AT END OF PERIOD         $ 31,111      $ 281,469  

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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