Alliance Resource Partners, L.P. Reports Record 2003 Financial Results Including 38% Annual and 194% Quarterly Increases to Net Income.Business Editors TULSA Tulsa (tŭl`sə), city (1990 pop. 367,302), seat of Tulsa co., NE Okla., on the Arkansas River east of its junction with the Cimarron; inc. 1898. , Okla.--(BUSINESS WIRE)--Jan. 26, 2004 Announces TVA TVA: see Tennessee Valley Authority. Long Term Sales Contract Sales Contract Contract between a seller and buyer for the sale of goods, services, or both. ; and Increases Quarterly Cash Distribution by 7% to $0.5625 Per Unit Alliance Resource Partners, L.P. (Nasdaq:ARLP ARLP Acoustic Reference Level Plan ) today announced record annual and quarterly financial results for 2003. The Partnership reported net income for 2003 of $47.9 million, an increase of 38% over 2002 net income of $34.8 million. Net income per basic limited partnership unit in 2004 increased to $2.71, as compared to $2.31 per unit in 2002. Fourth quarter net income increased 194% to $15.4 million compared to $5.2 million net income during the same period in 2002. Net income for the fourth quarter of 2003 increased to $0.85 per basic limited partnership unit, as compared to $0.38 per unit for the 2002 fourth quarter. The Partnership also announced a 7% increase in its quarterly cash distribution as its Board of Directors declared a quarterly cash distribution of $0.5625 per unit for the fourth quarter of 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 $2.25 per unit), payable on February February: see month. 13, 2004 to all unitholders of record as of February 5, 2004. The cash distribution for the third quarter of 2003 was $0.525 per unit (an annualized rate of $2.10 per unit). "Better than expected operating costs operating costs npl → gastos mpl operacionales and revenues led the way for record-breaking Adj. 1. record-breaking - surpassing any previously established record; "a record-breaking high jump"; "record-breaking crowds" best - (superlative of `good') having the most positive qualities; "the best film of the year"; "the best solution"; "the best time for results in the fourth quarter of 2003," said Joseph W. Craft III, President and Chief Executive Officer. "Through the continuing dedicated efforts of everyone at Alliance, we have achieved record financial and operational results for the third consecutive year. Our strong year-over-year cash flow growth and projections for the future have allowed us to increase our quarterly cash distribution for the second year in a row. The Board of Directors reviews the Partnership's distribution policy periodically and will determine future distributions based primarily upon earnings, cash flows, capital needs and the general coal industry outlook." For the 2003 fourth quarter, the Partnership reported revenue and tons sold of $142.6 million, and 5.1 million tons, respectively, compared to 2002 fourth quarter revenue of $133.9 million and 4.8 million tons sold. The increases in revenues and tons sold for the quarter are attributable to the increased capacity added during 2003 at the Partnership's Warrior Warrior, river, Ala.: see Black Warrior. Coal, Gibson County Gibson County is the name of several counties in the 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. operations. The Partnership's quarterly revenue was also impacted by a contractual modification that resulted in a $2.0 million favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. pricing adjustment associated with coal feedstock feed·stock n. Raw material required for an industrial process. Noun 1. feedstock - the raw material that is required for some industrial process raw material, staple - material suitable for manufacture or use or finishing sales 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 (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ("SSO See single sign-on and CSO. SSO - single sign-on ") for shipments made this past year prior to the fourth quarter of 2003. The pricing adjustment, which also applies to all future sales to SSO, increased quarterly net income by $1.8 million after associated expenses. The Partnership continues to benefit from infrastructure investments completed over the last several years, as productivity increased at essentially all of the Partnership's mining complexes. These benefits are reflected in an 8% reduction in cost per ton sold for the 2003 fourth quarter as compared to the fourth quarter of 2002. Partially offsetting these reduced operating costs, general and administrative expenses rose during the quarter primarily due to a $3.0 million increase in incentive compensation expense. The majority of this expense increase was related to the Long-Term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. Incentive Plan and was caused by the increased market value of the Partnership's common units, which closed the year at $34.38 per unit. Partnership revenues and tons sold were at record levels for the year ended December December: see month. 31, 2003 at $542.7 million and 19.5 million tons, respectively, compared to $518.9 million and 18.4 million tons for 2002. Increased revenues and tons sold reflect higher sales volume due to improved production levels at essentially all of the Partnership's active operations, partially offset by lower sales prices. Reflecting benefits from the Partnership's infrastructure investments, cost per ton sold for the full year 2003 improved approximately 4% compared to prior year costs. Financial results for the year 2003, compared to the year 2002, were adversely impacted by higher expense accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. of $6.9 million associated with incentive compensation programs and a $3.7 million increase in income tax expense. Approximately $2.1 million of the increase in income tax expense was due to coal synfuel-related services performed by Alliance Service, Inc., an indirect wholly-owned subsidiary of the Partnership, which is subject to federal and state income taxes. The balance of the income tax expense increase was attributable to Warrior Coal, which had a net income tax benefit for the year 2002 of approximately $1.3 million. Since its acquisition by the Partnership on February 14, 2003 (See ARLP Press Releases, dated November November: see month. 14, 2002, March 14, 2003 and April 25, 2003), the financial results of Warrior Coal are no longer subject to federal or state income taxes. Commenting on 2003 performance, Mr. Craft said, "We continue to realize the benefits of optimizing our operating capacity and striving to be the low-cost producer for the markets we serve. Alliance is continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. working to improve efficiencies as evidenced by our investment in a 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 Dotiki, completion of a new portal facility and addition of a production unit at MC Mining, and extension of the Pattiki mine into an adjacent coal reserve. Additional efficiencies were realized as we added a fourth production unit at our Gibson County Coal operation and idled two surface mines and closed a depleted de·plete tr.v. de·plet·ed, de·plet·ing, de·pletes To decrease the fullness of; use up or empty out. [Latin d underground mine at Hopkins County Hopkins County is the name of two counties in the United States:
v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. SSO's coal synfuel production unit to this facility. I am extremely proud that, through all of these initiatives and the dedicated efforts of our entire organization, we were able to grow our net income by 38% this past year. Since 2000, our first full year after becoming a publicly-traded partnership in 1999, Alliance has increased its net income at a compounded annual growth rate of 45%." In 2003, the Partnership's capital expenditures totaled $55.7 million, including maintenance capital expenditures of approximately $30.0 million. The remaining capital expenditures related primarily to the purchase of Warrior Coal and the completion of the efficiency projects discussed above. Alliance is estimating full-year 2004 capital expenditures of approximately $46.5 million, including maintenance capital expenditures of approximately $33.9 million. The balance of the capital expenditures in 2004 relate to new efficiency efforts, including $7.7 million in projects to increase capacity at the Dotiki mine in Western Kentucky. The Partnership expects depreciation expense to increase by approximately $1.4 million in 2004 as compared to 2003. The Partnership's Webster County Webster County is the name of seven counties and a parish in the 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. Basin coal to TVA's coal-fired power plants. The TVA agreement contains periodic contract re-opening provisions addressing market price and other terms and conditions. Under the agreement, Webster County Coal's Dotiki mine will initially provide approximately 1.0 million tons of coal to TVA, beginning January 1, 2004, with annual shipments increasing to 1.5 million tons beginning January 1, 2005. In addition to the TVA agreement, the Partnership has also completed negotiations with several other customers for multi-year coal sales contracts beginning in 2004. The Partnership is anticipating 19.7 million tons of coal production for 2004, an increase of 700,000 tons over the most recent estimate (See ARLP Press Release, dated October 24, 2003.) Currently, the Partnership has commitments for substantially all of its 2004 estimated production. For 2005, the Partnership is currently estimating coal production at levels similar to 2004. With respect to the Partnership's estimated 2005 production, approximately 83% is committed under existing coal sales agreements and approximately 50% is subject to market price negotiations. Looking ahead, Mr. Craft stated, "We are obviously pleased with our results in 2003 and the outlook is also promising, as we anticipate that demand for our product will be stable and improving during 2004. Alliance is well positioned to take advantage of potential additional coal demand in the markets we serve. With the capital investments we have made over the past three years, the Years, The the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109] See : Time Partnership has excess production capacity of approximately 2 million tons to respond to additional increases in marketplace demand." During 2004, the Partnership is anticipating higher per ton sales prices, offset in part by slightly higher per ton costs. Based on its current projections, the Partnership is giving guidance that net income for the full year ending December 31, 2004 is expected in the range of $50.0 to $55.0 million. 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 the 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 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 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 10.0% 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.
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,
----------------------- -----------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Tons sold 5,081 4,750 19,467 18,370
Tons produced 4,876 4,439 19,238 17,970
SALES AND OPERATING
REVENUES:
Coal sales $133,426 $123,858 $501,596 $479,515
Transportation
revenues 4,936 4,502 19,553 18,992
Other sales and
operating revenues 4,190 5,536 21,598 20,385
----------- ----------- ----------- -----------
Total revenues 142,552 133,896 542,747 518,892
----------- ----------- ----------- -----------
EXPENSES:
Operating expenses 92,686 99,057 368,835 367,567
Transportation
expenses 4,936 4,502 19,553 18,992
Outside purchases 3,275 1,693 8,508 10,077
General and
administrative 9,471 5,915 28,270 20,337
Depreciation,
depletion and
amortization 13,146 13,892 52,495 52,408
Interest expense 3,936 4,206 15,981 16,360
----------- ----------- ----------- -----------
Total operating
expenses 127,450 129,265 493,642 485,741
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS 15,102 4,631 49,105 33,151
OTHER INCOME 580 115 1,374 540
----------- ----------- ----------- -----------
INCOME BEFORE INCOME
TAXES 15,682 4,746 50,479 33,691
INCOME TAX EXPENSE
(BENEFIT) 239 (501) 2,577 (1,094)
----------- ----------- ----------- -----------
NET INCOME $15,443 $5,247 $47,902 $34,785
=========== =========== =========== ===========
GENERAL PARTNERS'
INTEREST IN NET INCOME
(LOSS) $309 $(680) $306 $(778)
=========== =========== =========== ===========
LIMITED PARTNERS'
INTEREST IN NET INCOME $15,134 $5,927 $47,596 $35,563
=========== =========== =========== ===========
BASIC NET INCOME PER
LIMITED PARTNER UNIT $0.85 $0.38 $2.71 $2.31
=========== =========== =========== ===========
DILUTED NET INCOME PER
LIMITED PARTNER UNIT $0.82 $0.37 $2.62 $2.24
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF UNITS
OUTSTANDING-BASIC 17,903,793 15,405,311 17,580,734 15,405,311
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF UNITS
OUTSTANDING-DILUTED 18,486,098 15,842,783 18,162,839 15,842,708
=========== =========== =========== ===========
ALLIANCE RESOURCE PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except unit data)
December 31,
2003 2002
--------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $10,156 $9,028
Trade receivables, net 38,305 33,018
Marketable securities 23,615 470
Inventories 14,527 13,165
Advance royalties 1,108 5,232
Prepaid expenses and other assets 3,432 2,784
--------- ---------
Total current assets 91,143 63,697
PROPERTY, PLANT AND EQUIPMENT AT COST 474,357 446,629
LESS ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION (251,567) (216,777)
--------- ---------
222,790 229,852
OTHER ASSETS:
Advance royalties 12,439 10,542
Coal supply agreements, net 5,445 8,167
Other long-term assets 4,637 4,674
--------- ---------
$336,454 $316,932
========= =========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $22,651 $23,330
Due to affiliates 13,546 1,286
Accrued taxes other than income taxes 10,375 8,105
Accrued payroll and related expenses 11,095 10,004
Accrued interest 5,402 5,361
Workers' compensation and pneumoconiosis
benefits 5,905 5,275
Other current liabilities 5,739 9,877
Current maturities, long-term debt - 16,250
--------- ---------
Total current liabilities 74,713 79,488
--------- ---------
LONG-TERM LIABILITIES:
Long-term debt, excluding current
maturities 180,000 195,000
Accrued pneumoconiosis benefits 17,633 16,067
Workers' compensation 22,819 19,949
Reclamation and mine closing 21,717 21,821
Due to affiliates 3,735 20,652
Other liabilities 3,280 2,717
--------- ---------
Total liabilities 323,897 355,694
--------- ---------
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL (DEFICIT):
Common Unitholders 14,692,527 and 8,982,780
units outstanding, respectively 263,961 144,219
Subordinated Unitholder 3,211,266 and 6,422,531
units outstanding, respectively 58,411 112,916
General Partners (305,924) (290,472)
Unrealized loss on marketable securities (102) (150)
Minimum pension liability (3,789) (5,275)
--------- ---------
Total Partners' capital (deficit) 12,557 (38,762)
--------- ---------
$336,454 $316,932
========= =========
ALLIANCE RESOURCE PARTNERS, L.P.
CONDENSED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended
December 31,
-------------------------
2003 2002
-------------- ----------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES $110,312 $101,306
-------------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and
equipment (43,004) (67,339)
Purchase of Warrior Coal (12,661) -
Proceeds from sale of property, plant
and equipment 913 323
Purchase of marketable securities (23,091) -
Proceeds from the maturity of marketable
securities - 10,085
-------------- ----------
Net cash used in investing activities (77,843) (56,931)
-------------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common unit offering to
public 53,927 -
Cash contribution by General Partners 9 -
Payments on Warrior Coal revolver (17,000) -
Borrowings under revolving credit and
working capital facilities 31,600 66,400
Payments under revolving credit and
working capital facilities (31,600) (66,400)
Payments on long-term debt (31,250) (15,000)
Distributions to Partners (37,027) (31,440)
-------------- ----------
Net cash used in financing activities (31,341) (46,440)
-------------- ----------
NET CHANGE IN CASH AND CASH EQUIVALENTS 1,128 (2,065)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 9,028 11,093
-------------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $10,156 $9,028
============== ==========
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 Year Ended
December 31, December 31,
------------------- -------------------
2003 2002 2003 2002
---------- -------- --------- ---------
Cash flows provided by
operating activities $47,821 $44,932 $110,312 $101,306
Reclamation and mine closing (336) (473) (1,341) (1,365)
Coal inventory adjustment to
market (679) 1,223 (687) (48)
Other 385 664 353 1,014
Net effect of changes in
operating assets and
liabilities (18,602) (27,207) (8,240) (13,714)
Interest expense 3,936 4,206 15,981 16,360
Income taxes 239 (501) 2,577 (1,094)
---------- -------- --------- ---------
EBITDA 32,764 22,844 118,955 102,459
Depreciation, depletion and
amortization (13,146) (13,892) (52,495) (52,408)
Interest expense (3,936) (4,206) (15,981) (16,360)
Income taxes (239) 501 (2,577) 1,094
---------- -------- --------- ---------
Net income $15,443 $5,247 $47,902 $34,785
========== ======== ========= =========
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 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. 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 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. ). |
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