Alliance Resource Partners, L.P. Reports Record Annual Financial and Operating Results; and Provides Guidance for 2008

Business Wire, Jan 31, 2008

TULSA, Okla. -- Alliance Resource Partners, L.P. (NASDAQ:ARLP) today reported records for tons produced, tons sold, revenues and EBITDA for the year ended December 31, 2007 (the "2007 Period"). ARLP's net income for the 2007 Period was $170.4 million, or $3.78 of adjusted net income per diluted limited partner unit, compared to net income of $172.9 million, or $4.03 of adjusted net income per diluted limited partner unit for the year ended December 31, 2006 (the "2006 Period"). (ARLP's use of adjusted net income per limited partner unit is consistent with methodology generally used by securities analysts and consensus estimates. For definitions of adjusted net income per limited partner unit and EBITDA and related reconciliations to GAAP, please see the end of this release).

On January 24, 2008, the Board of Directors of ARLP's managing general partner (the "Board") declared a quarterly cash distribution for the quarter ended December 31, 2007 (the "2007 Quarter") of $0.585 per unit (an annualized rate of $2.34 per unit), payable on February 14, 2008 to all unitholders of record as of the close of trading on February 7, 2008. (See ARLP Press Release dated January 24, 2008.) The announced distribution represents a 4.5% increase over the third quarter 2007 cash distribution of $0.56 per unit. Increases to ARLP's quarterly cash distribution to unitholders are generally considered by the Board at its January and July meetings.

"ARLP, for the seventh consecutive year, established new records for coal sales, production volumes, revenues and EBITDA," said Joseph W. Craft III, President and Chief Executive Officer. "I am particularly gratified that all of these achievements were accomplished while completing 2007 as one of our safest years on record. I am also pleased to share ARLP's success with our unitholders by increasing our cash distribution by more than 8.3% over the past twelve months, while continuing to maintain one of the highest distribution coverage ratios in the MLP sector."

Consolidated Financial Results

Three Months Ended December 31, 2007 Compared to Three Months Ended December 31, 2006

For the 2007 Quarter, ARLP reported net income of $39.9 million, or $0.89 of adjusted net income per diluted limited partner unit, compared to net income of $45.5 million, or $1.03 of adjusted net income per diluted limited partner unit, for the quarter ended December 31, 2006 (the "2006 Quarter"). EBITDA in the 2007 Quarter decreased 3.1% to $64.6 million, compared to EBITDA of $66.7 million in the 2006 Quarter. (For definitions of adjusted net income per limited partner unit and EBITDA and related reconciliations to GAAP, please see the end of this release.)

Revenues for the 2007 Quarter decreased 4.1% to $252.4 million, compared to $263.2 million for the 2006 Quarter. Lower revenues in the 2007 Quarter reflect reductions in tons of coal sold and synfuel-related revenues, partially offset by higher average coal sales prices, which rose $1.86 to a record $39.20 per ton sold. Sales tons in the 2007 Quarter decreased 7.3% to 6.0 million tons, compared to 6.5 million tons of coal sold during the 2006 Quarter, primarily as a result of timing of coal shipments in the Illinois Basin during the 2007 Quarter and higher sales from coal inventories during the 2006 Quarter at the Elk Creek and Mettiki mines. Synfuel-related operating revenues fell $4.2 million to $3.4 million, primarily due to reduced synfuel-related activities in the 2007 Quarter compared to the 2006 Quarter.

Operating expenses in the 2007 Quarter decreased to $163.3 million, compared to $172.7 million in the 2006 Quarter. Lower operating expenses are primarily due to lower coal sales volumes and a $9.8 million reduction in workers' compensation expense due to a change in estimates associated with year end valuations. Partially offsetting these reductions were increases to other labor related expenses, as well as higher sales related expenses, materials and supply costs, regulatory compliance costs and higher costs at the Mettiki mine complex due to conducting longwall operations in West Virginia during the 2007 Quarter compared to Maryland during the 2006 Quarter.

General and administrative costs increased $1.9 million in the 2007 Quarter compared to the 2006 Quarter, primarily due to higher incentive compensation expenses. Funds for this increased incentive compensation were provided by a capital contribution from a related party. Capital expenditures throughout 2007 related to infrastructure improvements, efficiency projects, expansion of production capacity and development of announced growth projects led to higher depreciation, depletion and amortization expense, which rose $4.1 million compared to the 2006 Quarter.

Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

ARLP reported net income of $170.4 million for the 2007 Period, a decrease of 1.5% compared to net income of $172.9 million for the 2006 Period. Revenues for the 2007 Period increased 6.8% to a record $1,033.3 million and coal sales volumes rose 1.5% to a record 24.7 million tons, as compared to $967.6 million and 24.4 million tons for the 2006 Period, respectively. The 2007 Period revenues also benefited from record average coal sales prices per ton of $38.84, an increase of 5.6% compared to the 2006 Period. EBITDA for the 2007 Period increased 6.5% to a record $267.0 million, compared to EBITDA of $250.8 million for the 2006 Period. Total coal production climbed to a record 24.3 million tons in the 2007 Period, compared to 23.7 million tons of coal produced during the 2006 Period. (For a definition of EBITDA and reconciliation to GAAP, please see the end of this release.)