Alliance Holdings GP, L.P. Increases Quarterly Distribution by 2.9% to $0.8075 Per Unit and Reports Quarterly Financial Results Business Wire TULSA, Okla. -- October 28, 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 September 30, 2013 (the "2013 Quarter") of $0.8075 per unit, or an annualized rate of $3.23 per unit. The declared distribution will be paid on November 19, 2013 to AHGP’s unitholders of record as of the close of trading on November 12, 2013. The announced quarterly cash distribution represents a 12.2% increase over the $0.72 per unit distribution (an annualized rate of $2.88 per unit) for the quarter ended September 30, 2012 (the "2012 Quarter") and an increase of 2.9% over the second quarter 2013 distribution of $0.785 per unit (an annualized rate of $3.14 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 2013 Quarter of $1.175 per unit, or $4.70 per unit on an annualized basis, payable on November 14, 2013 to all unitholders of record as of the close of trading on November 7, 2013. (See ARLP Press Release dated October 28, 2013.) AHGP also reported net income for the 2013 Quarter of $54.2 million, or $0.91 per basic and diluted limited partner unit, an increase of 37.3% compared to net income for the 2012 Quarter of $39.5 million, or $0.66 per basic and diluted limited partner unit. (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 $49.0 million, or $196.0 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 $2.9 million in general and administrative expenses. AHGP and ARLP will discuss their 2013 Quarter financial results during a joint conference call scheduled for today at 10:00 a.m. Eastern. To participate in the conference call, dial (866) 318-8615 and provide pass code 91181891. International callers should dial (617) 399-5134 and provide the same pass code. Investors may also listen to the call via the "investor relations" section of ARLP’s website at http://www.arlp.com or the "investor information" section of 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 17544865. 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 email@example.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; legislation, regulations, and court decisions and interpretations thereof, including those relating to the environment, mining, miner health and safety and health care; 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; 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; unexpected operational interruptions due to geologic, permitting, labor, weather-related or other 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 other sources of electricity, 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 deductions and 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, 2012, filed on March 1, 2013 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, 2013 2012 2013 2012 SALES AND OPERATING REVENUES: Coal sales $ 518,447 $ 499,003 $ 1,594,530 $ 1,441,107 Transportation 11,554 5,625 23,459 17,651 revenues Other sales and operating 7,135 6,720 20,595 25,854 revenues Total revenues 537,136 511,348 1,638,584 1,484,612 EXPENSES: Operating expenses (excluding 346,045 338,644 1,042,057 946,806 depreciation, depletion and amortization) Transportation 11,554 5,625 23,459 17,651 expenses Outside coal 636 4,424 2,028 34,759 purchases General and 15,237 15,282 47,956 47,494 administrative Depreciation, depletion and 66,099 59,781 198,688 154,923 amortization Asset impairment - 19,031 - 19,031 charge Total operating 439,571 442,787 1,314,188 1,220,664 expenses INCOME FROM 97,565 68,561 324,396 263,948 OPERATIONS Interest expense, (6,168 ) (7,446 ) (19,004 ) (21,626 ) net Interest income 253 94 565 239 Equity in loss of (5,990 ) (2,832 ) (15,556 ) (11,040 ) affiliates, net Other income 372 254 999 2,853 INCOME BEFORE 86,032 58,631 291,400 234,374 INCOME TAXES INCOME TAX (718 ) (102 ) (1,307 ) (726 ) BENEFIT NET INCOME 86,750 58,733 292,707 235,100 LESS: NET INCOME ATTRIBUTABLE TO (32,539 ) (19,238 ) (117,517 ) (91,927 ) NONCONTROLLING INTERESTS NET INCOME ATTRIBUTABLE TO ALLIANCE HOLDINGS $ 54,211 $ 39,495 $ 175,190 $ 143,173 GP, L.P. ("NET INCOME OF AHGP") BASIC AND DILUTED NET INCOME OF $ 0.91 $ 0.66 $ 2.93 $ 2.39 AHGP PER LIMITED PARTNER UNIT DISTRIBUTIONS PAID PER LIMITED $ 0.785 $ 0.6975 $ 2.2875 $ 2.0025 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, 2013 2012 CURRENT ASSETS: Cash and cash equivalents $ 23,121 $ 31,111 Trade receivables 169,916 172,724 Other receivables 1,121 1,019 Due from affiliates 620 562 Inventories 69,331 46,660 Advance royalties 11,280 11,492 Prepaid expenses and other assets 3,817 20,554 Total current assets 279,206 284,122 PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment, at cost 2,576,521 2,361,863 Less accumulated depreciation, depletion (990,133 ) (832,293 ) and amortization Total property, plant and equipment, net 1,586,388 1,529,570 OTHER ASSETS: Advance royalties 20,881 23,267 Equity investments in affiliates 124,345 88,513 Due from affiliate 11,150 3,084 Other long-term assets 29,003 30,284 Total other assets 185,379 145,148 TOTAL ASSETS $ 2,050,973 $ 1,958,840 LIABILITIES AND PARTNERS' CAPITAL CURRENT LIABILITIES: Accounts payable $ 107,450 $ 100,678 Due to affiliates 393 327 Accrued taxes other than income taxes 22,636 20,033 Accrued payroll and related expenses 51,603 38,501 Accrued interest 6,185 1,435 Workers’ compensation and pneumoconiosis 9,478 9,320 benefits Current capital lease obligations 1,214 1,000 Other current liabilities 21,763 19,572 Current maturities, long-term debt 80,500 18,000 Total current liabilities 301,222 208,866 LONG-TERM LIABILITIES: Long-term debt, excluding current 687,500 773,000 maturities Pneumoconiosis benefits 63,921 59,931 Accrued pension benefit 31,202 31,078 Workers’ compensation 70,733 68,786 Asset retirement obligations 76,517 81,644 Long-term capital lease obligations 17,513 18,613 Other liabilities 6,831 9,147 Total long-term liabilities 954,217 1,042,199 Total liabilities 1,255,439 1,251,065 COMMITMENTS AND CONTINGENCIES PARTNERS' CAPITAL: Alliance Holdings GP, L.P. ("AHGP") Partners' Capital: Limited Partners – Common Unitholders 487,453 448,976 59,863,000 units outstanding Accumulated other comprehensive loss (17,314 ) (18,296 ) Total AHGP Partners' Capital 470,139 430,680 Noncontrolling interests 325,395 277,095 Total Partners' Capital 795,534 707,775 TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 2,050,973 $ 1,958,840 ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine Months Ended September 30, 2013 2012 CASH FLOWS PROVIDED BY OPERATING ACTIVITIES $ 548,884 $ 422,369 CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant and equipment: Capital expenditures (242,653 ) (332,353 ) Changes in accounts payable and accrued (354 ) (4,024 ) liabilities Proceeds from sale of property, plant and 124 114 equipment Purchases of equity investments in affiliate (47,500 ) (43,100 ) Payment for acquisition of business - (100,000 ) Payments to affiliate for acquisition and (21,318 ) (34,601 ) development of coal reserves Advances/loans to affiliate (7,500 ) (2,229 ) Payments from affiliate - 4,229 Other - 546 Net cash used in investing activities (319,201 ) (511,418 ) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under term loan - 250,000 Borrowings under revolving credit facilities 211,000 150,000 Payments under revolving credit facilities (216,000 ) (75,000 ) Payment on term loan - (300,000 ) Payment on long-term debt (18,000 ) (18,000 ) Payments on capital lease obligations (886 ) (673 ) Payment of debt issuance costs - (4,272 ) Net settlement of employee withholding taxes (3,015 ) (3,734 ) on vesting of ARLP Long-Term Incentive Plan Distributions paid by consolidated (73,835 ) (66,755 ) partnership to noncontrolling interests Distributions paid to Partners (136,937 ) (119,876 ) Net cash used in financing activities (237,673 ) (188,310 ) NET CHANGE IN CASH AND CASH EQUIVALENTS (7,990 ) (277,359 ) CASH AND CASH EQUIVALENTS AT BEGINNING OF 31,111 281,469 PERIOD CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 23,121 $ 4,110 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
Alliance Holdings GP, L.P. Increases Quarterly Distribution by 2.9% to $0.8075 Per Unit and Reports Quarterly Financial Results
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