Alliance Resource Partners, L.P. Increases Quarterly Cash

Tag : Form W 9


"Global long-term supply/demand fundamentals for coal remainpositive and continue to support strong domestic coal markets,particularly for the markets served by ARLP's high-sulfur coal,"said Joseph W. Craft III, President and Chief Executive Officer."Supported by these market dynamics, during the first half of 2008we successfully contracted for significant coal sales volumes atattractive long-term prices to support the development of the newRiver View mine and recently completed a $350 million debt offeringto help finance the construction of this operation. The strongdistribution increase announced today is evidence of the progresswe have made on ARLP's growth initiatives to date. We are alsoencouraged about our future growth opportunities and, as a result,are setting a goal of increasing unitholder distributions byapproximately 6% - 8% per quarter through 2010."

For the 2008 Quarter, ARLP reported net income of $36.7 million, or$0.68 of adjusted net income per diluted limited partner unit,compared to net income of $46.2 million, or $1.03 of adjusted netincome per diluted limited partner unit, for the 2007 Quarter. Tobetter compare ARLP's operating results between the 2008 and 2007Quarters, it is appropriate to consider the impact of severalsignificant non-recurring items which impacted both quarters. Afternormalizing for these items, net income for the 2008 Quarterincreased by approximately 6.8% compared to the 2007 Quarter. Inthe 2008 Quarter, ARLP realized non-recurring benefits to netincome totaling $9.9 million from gains on settlement of claimsrelating to the 2005 failure of the vertical belt system at itsPattiki mine ($1.9 million) and the 2004 Excel No. 3 mine fire($2.8 million), as well as a gain from the sale of non-core coalreserves ($5.2 million). By contrast, in the 2007 Quarter ARLPrealized non-recurring benefits to net income totaling $21.1million resulting from a final gain on settlement with insuranceunderwriters for claims relating to the 2004 Excel No. 3 mine fire($12.3 million) and benefits associated with varioussynfuel-related agreements which expired on December 31, 2007 ($8.8million). (For a definition of adjusted net income per limitedpartner unit and related reconciliation to GAAP, please see the endof this release.)

ARLP reported EBITDA in the 2008 Quarter of $65.4 million, comparedto EBITDA of $70.5 million in the 2007 Quarter. After normalizingfor non-recurring synfuel-related benefits to EBITDA realized inthe 2007 Quarter ($9.7 million) and the above describednon-recurring gains which impacted both quarters, ARLP's EBITDA inthe 2008 Quarter increased by approximately 14.4% over the 2007Quarter. (For a definition of EBITDA and related reconciliation toGAAP, please see the end of this release.)

Driven by record average coal sales prices per ton and higher coalsales volumes, revenues for the 2008 Quarter increased to $276.2million, compared to $263.3 million for the 2007 Quarter. Totalaverage coal sales prices realized in the 2008 Quarter compared tothe 2007 Quarter increased 2.3% to $39.50 per ton sold, while coalsales volumes rose 5.5% to 6.6 million tons. Other sales andoperating revenues in the 2008 Quarter fell to $3.7 millionprimarily due to the loss of $7.5 million in synfuel-related otheroperating revenues realized in the 2007 Quarter.

Operating expenses in the 2008 Quarter increased to $191.4 million,compared to $178.0 million in the 2007 Quarter, primarily as aresult of higher coal production volumes, which increased 14.7% to6.5 million tons. In addition, increased labor related expenses,materials and supply costs, maintenance costs and regulatorycompliance costs contributed to higher operating expenses in the2008 Quarter. Increased sales related expenses due to higher coalsales revenues and volumes also contributed to higher operatingexpenses in the 2008 Quarter.

Increased staffing levels and incentive compensation expensesresulted in higher general and administrative costs, whichincreased to $12.1 million in the 2008 Quarter compared to $8.3million in the 2007 Quarter. Depreciation, depletion andamortization increased to $25.6 million in the 2008 Quarter,compared to $21.4 million in the 2007 Quarter, as a result ofcontinuing capital expenditures related to infrastructureimprovements, efficiency projects and expansion of productioncapacity.

Six Months Ended June 30, 2008 Compared to Six Months Ended June30, 2007

For the six months ended June 30, 2008 (the "2008 Period"), ARLPreported records for tons produced, tons sold and revenues.Revenues for the 2008 Period rose 7.6% to $559.8 million and coalsales volumes increased 9.3% to 13.6 million tons, as compared to$520.4 million and 12.5 million tons for the six months ended June30, 2007 (the "2007 Period"), respectively. Increased coal sales inthe 2008 Period more than offset the decline in other sales andoperating revenues resulting from the loss of $14.7 million insynfuel-related other operating revenues realized in the 2007Period.

Net income for the 2008 Period was $79.9 million, or $1.43 ofadjusted net income per diluted limited partner unit, compared tonet income of $91.8 million, or $1.59 of adjusted net income perdiluted limited partner unit, for the 2007 Period. EBITDA for the2008 Period declined slightly to $134.2 million, compared to EBITDAof $138.6 million for the 2007 Period. Financial results for the2008 Period reflect the loss of synfuel-related benefits realizedin the 2007 Period of approximately $16.9 million and $18.6 millionfor net income and EBITDA, respectively. (For definitions ofadjusted net income per limited partner unit and EBITDA and relatedreconciliations to GAAP, please see the end of this release.)