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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________TO_____________
COMMISSION FILE NO.: 0-26823
ALLIANCE RESOURCE PARTNERS, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 73-1564280
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
1717 SOUTH BOULDER AVENUE, SUITE 600, TULSA, OKLAHOMA 74119
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
(918) 295-7600
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
As of May 12, 2000, 8,982,780 Common Units and 6,422,531 Subordinated
Units are outstanding.
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TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
ITEM 1. FINANCIAL STATEMENTS Page
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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
Consolidated Balance Sheets as of March 31, 2000 and
December 31, 1999 .............................................................. 1
Consolidated and Combined Statements of Income for the three months
ended March 31, 2000 and 1999 (Predecessor) .................................... 2
Consolidated and Combined Condensed Statements of Cash Flows for
three months ended March 31, 2000 and 1999 (Predecessor) ....................... 3
Consolidated Statement of Partners' Capital from January 1, 2000 to
March 31, 2000 ................................................................. 4
Notes to Consolidated and Combined Financial Statements ........................ 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS ................................. 7
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK .............................................................. 10
FORWARD-LOOKING STATEMENTS ..................................................... 11
</TABLE>
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PART II
OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS .............................................................. 12
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS ...................................... 12
ITEM 3. DEFAULTS UPON SENIOR SECURITIES ................................................ 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS ............................................................... 12
ITEM 5. OTHER INFORMATION .............................................................. 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ............................................... 12
</TABLE>
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT UNIT DATA)
ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------------- ----------
(UNAUDITED)
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CURRENT ASSETS:
Cash and cash equivalents ........................................................ $ 9,600 $ 8,000
Trade receivables ................................................................ 37,092 33,056
Marketable securities (at cost, which approximates fair value) ................... 35,772 42,339
Inventories ...................................................................... 21,874 21,130
Advance royalties ................................................................ 1,557 1,557
Prepaid expenses and other assets ................................................ 1,746 923
---------------- -----------
Total current assets ........................................................ 107,641 107,005
PROPERTY, PLANT AND EQUIPMENT AT COST 281,301 278,221
LESS ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION (109,321) (102,709)
---------------- ------------
171,980 175,512
OTHER ASSETS:
Advance royalties ................................................................ 7,656 8,306
Coal supply agreements, net ...................................................... 18,991 19,879
Other long-term assets ........................................................... 3,966 4,112
---------------- ------------
$ 310,234 $ 314,814
================ ===========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
CURRENT LIABILITIES:
Accounts payable.................................................................. $ 21,065 $ 19,377
Due to affiliates ................................................................ 2,015 806
Accrued taxes other than income taxes ............................................ 4,997 4,574
Accrued payroll and related expenses.............................................. 9,070 8,811
Accrued interest.................................................................. 1,662 5,491
Workers' compensation and pneumoconiosis benefits ................................ 4,318 4,317
Other current liabilities ........................................................ 3,467 2,937
---------------- -----------
Total current liabilities.................................................... 46,594 46,313
---------------- -----------
LONG-TERM LIABILITIES:
Long-term debt, excluding current maturities ..................................... 230,000 230,000
Accrued pneumoconiosis benefits .................................................. 21,760 21,655
Workers' compensation ............................................................ 16,170 15,696
Reclamation and mine closing ..................................................... 13,485 13,407
Other liabilities ................................................................ 3,647 3,671
---------------- -----------
Total liabilities .................................................... 331,656 330,742
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL (DEFICIT):
Common Unitholders 8,982,780 units outstanding ............................ 155,565 158,705
Subordinated Unitholder 6,422,531 units outstanding ....................... 121,029 123,273
General Partners .......................................................... (298,016) (297,906)
---------------- ------------
Total Partners' capital (deficit) ........................................... (21,422) (15,928)
---------------- ------------
$ 310,234 $ 314,814
================ ===========
</TABLE>
See notes to unaudited consolidated and combined financial statements.
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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED AND COMBINED STATEMENTS OF
INCOME (IN THOUSANDS, EXCEPT UNIT AND PER
UNIT DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------
PARTNERSHIP PREDECESSOR
MARCH 31, MARCH 31,
2000 1999
---------------- ----------
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SALES AND OPERATING REVENUES:
Coal Sales ....................................................................... $ 86,041 $ 82,798
Other sales and operating revenues .............................................. 432 264
---------------- -----------
Total revenues ......................................................... 86,473 83,062
---------------- -----------
EXPENSES:
Operating expenses ............................................................... 64,093 56,843
Outside purchases................................................................. 2,961 8,464
General and administrative ....................................................... 3,587 3,549
Depreciation, depletion and amortization ......................................... 9,641 9,933
Interest expense (net of interest income and interest
capitalized of $706 for the Partnership Period) .............................. 4,058 40
---------------- -----------
Total operating expenses ............................................ 84,340 78,829
---------------- -----------
INCOME FROM OPERATIONS .............................................................. 2,133 4,233
OTHER INCOME ........................................................................ 233 41
---------------- -----------
INCOME BEFORE INCOME TAXES .......................................................... 2,366 4,274
INCOME TAX EXPENSE .................................................................. - 1,305
---------------- -----------
NET INCOME .......................................................................... $ 2,366 $ 2,969
================ ===========
GENERAL PARTNERS' INTEREST IN NET INCOME ............................................ $ 47
================
LIMITED PARTNERS' INTEREST IN NET INCOME ............................................ $ 2,319
================
BASIC AND DILUTED NET INCOME PER LIMITED PARTNER UNIT ............................... $ 0.15
================
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING -BASIC ................................. 15,405,311
================
WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING-DILUTED ................................ 15,550,489
================
</TABLE>
See notes to unaudited consolidated and combined financial statements.
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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED AND COMBINED CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------
PARTNERSHIP PREDECESSOR
MARCH 31, MARCH 31,
2000 1999
---------------- ----------
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CASH FLOWS PROVIDED BY OPERATING ACTIVITIES $ 7,547 $ 6,263
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment ........................................ (5,235) (5,738)
Proceeds from sale of property, plant and equipment............................... 14 353
Purchase of marketable securities................................................. (18,489) -
Proceeds from the maturity of marketable securities ........................... 25,623 -
---------------- ------------
Net cash provided by (used) in investing activities ................. 1,913 (5,385)
---------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distribution to Partners ....................................................... (7,860) -
Return of capital to Parent.................................................... - (878)
----------- -----------
Net cash used in financing activities................................ (7,860) (878)
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS ............................................ 1,600 -
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD .................................... 8,000 -
---------------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .......................................... $ 9,600 $ -
================ ===========
CASH PAID FOR:
Interest ....................................................................... $ 8,452 $ -
================ ===========
Income taxes paid through Parent ............................................... $ - $ 1,900
================ ===========
</TABLE>
See notes to unaudited consolidated and combined financial statements.
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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (DEFICIT)
FROM JANUARY 1, 2000 TO MARCH 31, 2000
(IN THOUSANDS, EXCEPT UNIT DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF LIMITED TOTAL
PARTNER UNITS PARTNERS'
------------------------ GENERAL CAPITAL
COMMON SUBORDINATED COMMON SUBORDINATED PARTNERS (DEFICIT)
---------- ------------ -------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 2000 8,982,780 6,422,531 $158,705 $ 123,273 $(297,906) $(15,928)
Distribution to Partners ...... - - (4,492) (3,211) (157) (7,860)
Net income .................... - - 1,352 967 47 2,366
---------- ---------- -------- ---------- --------- --------
Balance at March 31, 2000 ........ 8,982,780 6,422,531 $155,565 $ 121,029 $(298,016) $(21,422)
========= ========== ======== ========== ========== =========
</TABLE>
See notes to unaudited consolidated and combined financial statements.
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ALLIANCE RESOURCE PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION AND PRESENTATION
Alliance Resource Partners, L.P. is a Delaware limited partnership that
was formed on May 17, 1999, to acquire, own and operate certain coal production
and marketing assets of Alliance Resource Holdings, Inc., a Delaware corporation
("ARH" or "Parent") (formerly known as Alliance Coal Corporation) and
substantially all of its operating subsidiaries (collectively, the
"Partnership").
Prior to August 20, 1999, (a) MAPCO Coal Inc., a Delaware corporation
and direct wholly-owned subsidiary of ARH merged with and into Alliance Coal,
LLC, a Delaware limited liability company ("Alliance Coal"), which prior to
August 20, 1999 was also a wholly-owned subsidiary of ARH, (b) several other
indirect corporate subsidiaries of ARH were merged with and into corresponding
limited liability companies, each of which is a wholly-owned subsidiary of
Alliance Coal and (c) two indirect limited liability company subsidiaries of ARH
became subsidiaries of Alliance Coal as a result of the merger described in
clause (a) above. Collectively, the coal production and marketing assets and
operating subsidiaries of ARH acquired by the Partnership are referred to as the
Alliance Resource Group (the "Predecessor"). The Delaware limited partnerships
and limited liability companies that comprise the Partnership are as follows:
Alliance Resource Partners, L.P., Alliance Resource Operating Partners, L.P.
(the "Intermediate Partnership"), Alliance Coal, LLC (the holding company for
operations), Alliance Land, LLC, Alliance Properties, LLC, Backbone Mountain,
LLC, Excel Mining, LLC, Gibson County Coal, LLC, Hopkins County Coal, LLC, MC
Mining, LLC, Mettiki Coal, LLC, Mettiki Coal (WV), LLC, Mt. Vernon Transfer
Terminal, LLC, Pontiki Coal, LLC, Toptiki Coal, LLC, Webster County Coal, LLC,
and White County Coal, LLC.
The accompanying consolidated financial statements include the accounts
and operations of the Partnership and present the financial position as of March
31, 2000, and the results of their operations, cash flows and changes in
partners' capital (deficit) for the three months ended March 31, 2000. All
material intercompany transactions and accounts have been eliminated. The
accompanying combined financial statements include the accounts and operations
of the Predecessor for the periods indicated. All significant intercompany
transactions and accounts have been eliminated.
These consolidated and combined financial statements and notes thereto
for interim periods are unaudited. However, in the opinion of management, these
financial statements reflect all adjustments (which include only normal
recurring adjustments) necessary for a fair presentation of the results of the
periods presented. Results for interim periods are not necessarily indicative of
results for a full year.
These consolidated and combined financial statements and notes are
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission for interim reporting and should be read in conjunction with the
consolidated and combined financial statements and notes included in the
Partnership's Annual Report on Form 10-K for the year ended December 31, 1999.
Initial Public Offering and Concurrent Transactions
On August 20, 1999, the Partnership completed its initial public
offering (the "IPO") of 7,750,000 Common Units ("Common Units") representing
limited partner interests in the Partnership at a price of $19.00 per unit.
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Concurrently with the closing of the IPO, the Partnership entered into
a contribution and assumption agreement (the "Contribution Agreement"), dated
August 20, 1999, among the Partnership and the other parties named therein,
whereby, among other things, ARH contributed its 100% member interest in
Alliance Coal, which is the sole member of fourteen subsidiary operating limited
liability companies, to the Intermediate Partnership and the Partnership holds a
99.999% non-managing member interest in Alliance Coal. The Partnership and the
Intermediate Partnership are managed by Alliance Resource Management GP, LLC, a
Delaware limited liability company (the "Managing GP"), which, as a result of
the consummation of the transactions under the Contribution Agreement, holds (a)
a 0.99% and 1.0001% managing general partner interest in the Partnership and the
Intermediate Partnership, respectively, and (b) a 0.001% managing member
interest in Alliance Coal. Also as a result of the consummation of the
transactions completed under the Contribution Agreement, Alliance Resource GP,
LLC, a Delaware limited liability company and wholly-owned subsidiary of ARH
(the "Special GP"), holds, (a) 1,232,780 Common Units, (b) 6,422,531
Subordinated Units ("Subordinated Units") convertible into Common Units in the
future upon the occurrence of certain events and (c) a 0.01% special general
partner interest in each of the Partnership and the Intermediate Partnership.
Concurrently with the closing of the IPO, the Special GP issued and the
Intermediate Partnership assumed the obligations under a $180 million principal
amount of 8.31% senior notes due August 20, 2014. The Special GP also entered
into and the Intermediate Partnership assumed the obligations under a $100
million credit facility. The credit facility consists of three tranches,
including a $50 million term loan facility, a $25 million working capital
facility and a $25 million revolving credit facility. The Partnership has
borrowings outstanding of $50 million under the term loan facility and no
borrowings outstanding under either the working capital facility or the
revolving credit facility at March 31, 2000. The weighted average interest rate
on the term loan facility at March 31, 2000 was 7.19%. The credit facility
agreement expires August 2004. The senior notes and credit facility contain
various restrictive and affirmative covenants, including the amount of
distributions by the Intermediate Partnership and the incurrence of other debt.
The Partnership was in compliance with the covenants of both the senior notes
and credit facility at March 31, 2000.
Consistent with guidance provided by the Emerging Issues Task Force in
Issue No. 87-21 "Change of Accounting Basis in Master Limited Partnership
Transactions", the Partnership maintained the historical cost of the $121
million of net assets received under the Contribution Agreement.
Analysis of Pro Forma Results of Operations
For the three months ended March 31, 1999, the pro forma total revenues
would have been approximately $83,062,000. For the three months ended March 31,
1999, the pro forma net loss would have been approximately $(542,000) and net
loss per limited partner unit would have been $(0.03). The pro forma results of
operations reflect certain pro forma adjustments to the historical results of
operations as if the Partnership had been formed on January 1, 1999. The pro
forma adjustments include (a) pro forma interest on debt assumed by the
Partnership and (b) the elimination of income tax expense as income taxes will
be borne by the partners and not the Partnership.
2. CONTINGENCIES
Transloading Facility Dispute
The Partnership is involved in litigation with Seminole Electric
Cooperative, Inc. ("Seminole") with respect to Seminole's termination of a
long-term contract for the transloading of coal from rail to barge through the
Partnership's terminal in Indiana. Seminole filed a lawsuit December 16, 1998,
seeking declaratory relief as to the damages owed to the Partnership as a result
of such termination. Rather than
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pay the damages stipulated in the contract for breach, Seminole sought the
court's agreement that the proper damage award should be calculated based on the
Partnership's loss of net profits from its terminal for the term of the
agreement.
Seminole ceased transloading any coal shipments through the terminal and
is transporting coal deliveries under the supply contract by rail. The
Partnership is exploring alternative uses for the terminal. The Partnership is
vigorously defending its contract rights and believes those damages will be in
excess of the carrying value of the terminal.
In April 2000, the parties agreed to submit this dispute to binding
arbitration to commence during June 2000, and filed a joint motion to stay the
litigation during the pendency of the arbitration.
General Litigation
The Partnership is involved in various lawsuits, claims and regulatory
proceedings incidental to its business. In the opinion of management, the
outcome of such matters will not have a material adverse effect on the
Partnership's business, financial position or results of operations.
3. SUBSEQUENT EVENTS
On April 24, 2000, the Partnership declared a minimum quarterly
distribution for the period from January 1, 2000 to March 31, 2000 of $0.50 per
unit, totaling approximately $7,703,000 on its Common and Subordinated Units
outstanding.
In response to reduced demand, principally reflecting unplanned outages
at several major utilities, Hopkins County Coal, LLC suspended production at
one of its surface mines on May 12, 2000. The suspended production affects 45
of the 231 Hopkins County Coal, LLC employees. The suspended production is not
expected to have a material effect on the Partnership's consolidated financial
position or results of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
SELECTED OPERATING DATA
PARTNERSHIP PREDECESSOR
MARCH 31, MARCH 31,
2000 1999
----------- -----------
Tons sold (000's) 3,725 3,577
Tons produced (000's) 3,888 3,591
Revenues per ton sold $ 23.21 $ 23.22
Cost per ton sold (1) $ 18.96 $ 19.25
(1) Cost per ton is based on the total of operating expenses, outside purchases
and general and administrative expenses divided by tons sold.
RESULTS OF OPERATIONS
Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999
Coal sales. Coal sales for the three months ended March 31, 2000 (the
"2000 Quarter") increased 3.9% to $86.0 million from $82.8 million for the three
months ended March 31, 1999 (the "1999 Quarter"). The increase of $3.2 million
is primarily attributable to increased tons sold at the Partnership's
restructured Pontiki/Excel operation partially offset by lower brokerage
volumes. The lower brokerage volumes are largely attributable to reduced
participation in coal export brokerage markets. The brokerage business is not
expected to be material in the future. Because the coal brokerage operations
generate lower margins than direct coal sales, changes in the levels of
brokerage activity have a greater impact on
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revenues and outside purchases than on margins. Tons sold increased 4.1% to 3.7
million for the 2000 Quarter from 3.6 million for the 1999 Quarter. Tons
produced increased 8.3% to 3.9 million tons for the 2000 Quarter from 3.6
million for the 1999 Quarter.
Other sales and operating revenues. Other sales and operating revenues
were comparable for the 2000 Quarter and the 1999 Quarter at $0.4 million and
$0.3 million, respectively.
Operating Expenses. Operating expenses increased 12.8% to $64.1 million
for the 2000 Quarter compared to $56.8 million for the 1999 Quarter. The
increase of $7.3 million was a result of increased production volumes at the
Partnership's restructured Pontiki/Excel operation and additional expenses
associated with unexpected weather-related problems, including localized
flooding and tornadoes that interrupted production at several mines.
Outside purchases. Outside purchases declined 65.0% to $3.0 million for
the 2000 Quarter compared to $8.5 million for the 1999 Quarter. The decrease of
$5.5 million was the result of lower coal export brokerage volumes. See "Coal
sales" above concerning the decrease in coal export brokerage volumes.
General and administrative. General and administrative expenses were
comparable for the 2000 Quarter and the 1999 Quarter at $3.6 million and $3.5
million, respectively.
Depreciation, depletion and amortization. Depreciation, depletion and
amortization expense were comparable for the 2000 Quarter and the 1999 Quarter
at $9.6 million and $9.9 million, respectively.
Interest expense. Interest expense was $4.1 million for the 2000 Quarter
compared to less than $0.1 million for the 1999 Quarter. The increase reflects
the interest on the $180 million principal amount of 8.31% senior notes and $50
million of borrowings on the term loan facility in connection with the initial
public offering and concurrent transaction occurring on August 20, 1999. See
"Part I, Item 1. Financial Statements -- Note 1. Organization and Presentation."
Income before income taxes. Income before income taxes decreased 44.6% to
$2.4 million for the 2000 Quarter compared with $4.3 million for the 1999
Quarter. The decrease of $1.9 million is primarily related to interest expense
associated with the debt incurred concurrent with the closing of the IPO,
partially offset by higher income from increased production and sales volumes at
the Partnership's restructured Pontiki/Excel operation.
Income tax expense. The Partnership's earnings or loss for federal income
taxes purposes will be included in the tax returns of the individual partners.
Accordingly, no recognition is given to income taxes in the accompanying
financial statements of the Partnership. The Predecessor is included in the
consolidated federal income tax return of ARH. Federal and state income taxes
are calculated as if the Predecessor had filed its return on a separate company
basis utilizing an effective income tax rate of 31%.
EBITDA (income from operations before net interest expense, income taxes,
depreciation, depletion and amortization) increased 12.8% to $16.1 million
for the 2000 Quarter compared with $14.2 million for the 1999 Quarter. The $1.9
million increase is primarily attributable to higher income from increased
production and sales volumes at the Partnership's restructured Pontiki/Excel
operation.
EBITDA should not be considered as an alternative to net income, income
before income taxes, cash flows from operating activities or any other measure
of financial performance presented in accordance with generally accepted
accounting principles. EBITDA is not intended to represent cash flow and does
not represent the measure of cash available for distribution, but provides
additional
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information for evaluating the Partnership's ability to make the minimum
quarterly distribution. The Partnership's method of computing EBITDA also may
not be the same method used to compute similar measures reported by other
companies, or EBITDA may be computed differently by the Partnership in different
contexts (i.e., public reporting versus computation under financing agreements).
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Cash flows provided by operating activities was $7.5 million in the
2000 Quarter compared to $6.3 million in the 1999 Quarter. The increase in cash
flows provided by operating activities is principally attributable to changes in
working capital.
Net cash provided by investing activities was $1.9 million for the 2000
Quarter. Net cash used in investing activities was $5.4 million in the 1999
Quarter. The increase is principally attributable to liquidating $7.1 million of
U.S. Treasury Notes to fund various qualifying capital expenditures.
Net cash used in financing activities was $7.9 million for the 2000
Quarter compared to $0.9 million in the 1999 Quarter. The increase was the
result of a minimum quarterly distribution paid in the 2000 Quarter of $0.50 per
unit on its Common and Subordinated Units outstanding totaling approximately
$7.9 million.
Capital Expenditures
Capital expenditures were comparable for the 2000 Quarter and the 1999
Quarter at $5.2 million and $5.7 million, respectively.
Notes Offering and Credit Facility
Concurrently with the closing of the IPO, the Special GP issued and the
Intermediate Partnership assumed the obligations under a $180 million principal
amount of 8.31% senior notes due August 20, 2014. The Special GP also entered
into and the Intermediate Partnership assumed the obligations under a $100
million credit facility. The credit facility consists of three tranches,
including a $50 million term loan facility, a $25 million working capital
facility and a $25 million revolving credit facility. The Partnership has
borrowings outstanding of $50 million under the term loan facility and no
borrowings outstanding under either the working capital facility or the
revolving credit facility at March 31, 2000. The weighted average interest rate
on the term loan facility at March 31, 2000, was 7.19%. The credit facility
expires August 2004. The senior notes and credit facility are secured by a
pledge of the member's interest in all of the subsidiaries of Alliance Coal,
LLC. The senior notes and credit facility contain various restrictive and
affirmative covenants, including the amount of distributions by the Intermediate
Partnership and the incurrence of other debt.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). The Statement establishes
accounting and reporting standards for derivative instruments and for hedging
activities. It requires that an entity recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. The Partnership has not determined the impact on its
financial statements that may result from adoption of SFAS 133, which is
required to be implemented by the Partnership no later than January 1, 2001.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Almost all of the Predecessor's transactions were, and almost all of
the Partnership's transactions are, denominated in U. S. dollars, and as a
result, it does not have material exposure to currency exchange-rate risks.
The Predecessor did not, and the Partnership does not, engage in any
interest rate, foreign currency exchange rate or commodity price-hedging
transactions.
The Intermediate Partnership assumed obligations under a $100 million
credit facility. Borrowings under the credit facility are at variable rates and
as a result the Partnership has interest rate exposure.
As of March 31, 2000, there were no significant changes in the
Partnership's quantitative and qualitative disclosures about market risk as set
forth in the Partnership's Annual Report on Form 10-K for the year ended
December 31, 1999.
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FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements.
These statements are based on the Partnership's beliefs as well as assumptions
made by and information currently available to the Partnership. When used in
this document, the words "anticipate," "believe," "expect," "estimate,"
"forecast," "project," and similar expressions identify forward-looking
statements. These statements reflect the Partnership's current views with
respect to future events and are subject to various risks, uncertainties and
assumptions including but not limited to:
o the Partnership's dependence on significant customer contracts
and the terms of those contracts, including renewing customer
contracts upon expiration and the price of coal sold under new
customer contracts;
o the Partnership's productivity levels and margins that it
earns from the sale of coal;
o the effects of any unanticipated increases in labor costs,
adverse changes in work rules or unexpected cash payments
associated with post-mine reclamation, workers' compensation
claims, and environmental litigation or cleanup;
o the risk of major mine-related accidents or interruptions; and
o the effects of any adverse change in the domestic coal
industry, electric utility industry, or general economic
conditions.
If one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described in this Form 10-Q. Except as required by applicable securities
laws, the Partnership does not intend to update these forward-looking
statements.
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No material litigation was filed against the Partnership during the
three months ended March 31, 2000. Except as otherwise set forth herein, there
were no material changes in legal proceedings previously disclosed.
See "Part I, Item 1. Financial Statements -- Note 2. Contingencies."
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit No. Description
----------- -----------
27.1 -- Financial Data Schedule.
(b) Reports on Form 8-K:
None
-12-
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, in Tulsa, Oklahoma, on May 12, 2000.
ALLIANCE RESOURCE PARTNERS, L. P.
By: Alliance Resource Management GP, LLC
its managing general partner
/s/ Michael L. Greenwood
--------------------------------
Michael L. Greenwood
Senior Vice President,
Chief Financial Officer
and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
-13-
<PAGE> 17
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
27.1 -- Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 9,600
<SECURITIES> 35,772
<RECEIVABLES> 37,092
<ALLOWANCES> 0
<INVENTORY> 21,874
<CURRENT-ASSETS> 107,641
<PP&E> 281,301
<DEPRECIATION> (109,321)
<TOTAL-ASSETS> 310,234
<CURRENT-LIABILITIES> 46,594
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (21,422)
<TOTAL-LIABILITY-AND-EQUITY> 310,234
<SALES> 86,041
<TOTAL-REVENUES> 86,473
<CGS> 67,054
<TOTAL-COSTS> 84,340
<OTHER-EXPENSES> 233
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,058
<INCOME-PRETAX> 2,366
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,366
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,366
<EPS-BASIC> 0.15
<EPS-DILUTED> 0.15
</TABLE>
