ALLIANCE RESOURCE PARTNERS, L.P. Announces 15% Increase in Net Income for First Quarter 2003; Declares Quarterly Cash Distribution of $0.525 Per Unit.Energy Editors/Business Editors TULSA, Okla.--(BUSINESS WIRE)--April 25, 2003 Alliance Resource Partners, L.P. (Nasdaq:ARLP ARLP Acoustic Reference Level Plan ) 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 annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. 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 Warrior, river, Ala.: see Black Warrior. Coal, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control was acquired on February 14, 2003 from ARH ARH Agence Régionale de l'Hospitalisation ARH Art History ARH Armed Reconnaissance Helicopter ARH Adolescent Reproductive Health ARH Autosomal Recessive Hypercholesterolemia ARH Appalachian Regional Hospital ARH Appalachian Regional Healthcare, Inc. 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 Pooling of Interests An accounting method, used in mergers and acquisitions, where the balance sheet items of the two companies are simply added together. Notes: The opposite of pooling of interests is the purchase acquisition method. 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 di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. 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 Gibson County is the name of several counties in the United States:
The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. 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. 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 syn·fu·el n. A liquid or gaseous fuel derived from coal, shale, or tar sand, or obtained by fermentation of certain substances, such as grain. [syn(thetic) + fuel.] 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 stock·pile n. A supply stored for future use, usually carefully accrued and maintained. tr.v. stock·piled, stock·pil·ing, stock·piles To accumulate and maintain a supply of for future use. 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 operating costs npl → gastos mpl operacionales 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 fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. cost trends we experienced in the first quarter. During April 2003, as planned, our one-unit underground mine at Hopkins County Hopkins County is the name of two counties in the United States:
tr.v. de·plet·ed, de·plet·ing, de·pletes To decrease the fullness of; use up or empty out. [Latin d 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 shaft (shaft) a long slender part, such as the diaphysis of a long bone. shaft n. 1. An elongated rodlike structure, such as the midsection of a long bone. 2. 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 United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , 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 [Latin, The existing state of things at any given date.] Status quo ante bellum means the state of things before the war. The status quo to be preserved by a preliminary injunction is the last actual, peaceable, uncontested status which preceded the pending controversy. 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 Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. , Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). , Kentucky Kentucky, state, United States Kentucky (kəntŭk`ē, kĭn–), one of the so-called border states of the S central United States. It is bordered by West Virginia and Virginia (E); Tennessee (S); the Mississippi R. and Maryland Maryland (mâr`ələnd), one of the Middle Atlantic states of the United States. It is bounded by Delaware and the Atlantic Ocean (E), the District of Columbia (S), Virginia and West Virginia (S, W), and Pennsylvania (N). . FORWARD-LOOKING STATEMENTS forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. : 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 Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. include, but are not limited to, the following: competition in coal markets and our ability to respond to the competition; fluctuation Fluctuation A price or interest rate change. in coal prices, which could adversely affect our operating results and cash flows; deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. 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 customer contracts upon expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created 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 Reclamation A claim for the right to return or the right to demand the return of a security that has been previously accepted as a result of bad delivery or other irregularities in the delivery and settlement process. and workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. 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 ge·ol·o·gy n. pl. ge·ol·o·gies 1. The scientific study of the origin, history, and structure of the earth. 2. The structure of a specific region of the earth's crust. 3. A book on geology. , permitting, labor and weather-related factors; risks of major mine-related accidents or interruptions; results of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. ; difficulty maintaining our surety bonds surety bond An insurance fee required before a duplicate security is issued to replace one that has been lost. The fee is approximately 4% of the market value of the security to be replaced. for mine reclamation Mine reclamation is the process of creating useful landscapes that meet a variety of goals, typically creating productive ecosystems (or sometimes industrial or municipal land) from mined land. as well as workers' compensation and black lung black lung: see pneumoconiosis. benefits; difficulty obtaining commercial property insurance; and risks associated with our 15.48% participation (excluding any applicable deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). ) 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 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.
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
=========== ===========
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
=========== ============
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
----------- ------------
Total liabilities 344,543 355,694
----------- ------------
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)
----------- ------------
$349,578 $316,932
=========== ============
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)
-------- --------
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)
-------- --------
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
======== ========
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become is presented below because it is a widely accepted financial indicator of a company's ability to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. and service debt. EBITDA is defined as income before net interest expense, income taxes and depreciation, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able 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 Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . 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 computing - computer EBITDA may not be the same method used to compute To perform mathematical operations or general computer processing. For an explanation of "The 3 C's," or how the computer processes data, see computer. similar measures reported by other companies, or EBITDA may be computed differently by the Partnership in different contexts (i.e. public reporting versus computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. under financing agreements Financing Agreements In the context of project financing, the documents which provide the project financing and sponsor support for the project as defined in the project contracts. ). 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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