Alliance Holdings GP, L.P. Increases Quarterly Distribution by 2.8% to $0.74 Per Unit and Reports Fi

Alliance Holdings GP, L.P. Increases Quarterly Distribution by 2.8% to $0.74 Per Unit and Reports Financial Results

TULSA, Okla.--(BUSINESS WIRE)-- Alliance Holdings GP, L.P. (NAS: AHGP) today announced that the Board of Directors of its general partner declared a quarterly cash distribution for the quarter ended December 31, 2012 (the "2012 Quarter") of $0.74 per unit, or an annualized rate of $2.96 per unit. The declared distribution will be paid on February 19, 2013 to AHGP's unitholders of record as of the close of trading on February 12, 2013.

The announced quarterly cash distribution represents a 16.1% increase over the $0.6375 per unit distribution (an annualized rate of $2.55 per unit) for the quarter ended December 31, 2011 (the "2011 Quarter") and an increase of 2.8% over the third quarter 2012 distribution of $0.72 per unit (an annualized rate of $2.88 per unit).


The declared distribution is based on the distribution AHGP will receive from its ownership interests in Alliance Resource Partners, L.P. (NAS: ARLP) . ARLP today announced a quarterly distribution for the 2012 Quarter of $1.1075 per unit, or $4.43 per unit on an annualized basis, payable on February 14, 2013 to all unitholders of record as of the close of trading on February 7, 2013. (See ARLP Press Release dated January 29, 2013.)

For the year ended December 31, 2012 (the "2012 Period"), AHGP reported net income of $196.1 million, or $3.28 per basic and diluted limited partner unit, compared to net income for the year ended December 31, 2011 of $214.1 million, or $3.58 per basic and diluted limited partner unit. The decrease in net income during the 2012 Period primarily reflects losses and charges related to ARLP's idling of the Pontiki mine, including a non-cash asset impairment of $19.0 million, reduced shipments into the metallurgical export markets and increased depreciation, depletion and amortization. For the 2012 Quarter, net income increased slightly to $52.9 million, or $0.88 per basic and diluted limited partner unit, compared to $52.1 million, or $0.87 per basic and diluted limited partner unit, for the 2011 Quarter. (For a discussion of net income presentation, please see the end of this release.)

AHGP currently has no other operating activities apart from those conducted by the operating subsidiaries of ARLP and reports its financial results on a consolidated basis with the financial results of ARLP. AHGP's principal sources of cash flow are its ownership of general partner interests, limited partner interests and incentive distribution rights in ARLP. Based on ARLP's current declared distribution, AHGP expects to receive quarterly cash distributions from ARLP of $45.4 million, or $181.6 million on an annualized basis. AHGP's primary cash requirements are for working capital, distributions to its unitholders and general and administrative expenses, including for 2013 an estimated $3.0 million in general and administrative expenses.

AHGP and ARLP will discuss their 2012 Quarter financial results during a joint conference call scheduled for today at 10:00 a.m. Eastern. To participate in the conference call, dial (800) 435-1398 and provide pass code 42785094. International callers should dial (617) 614-4078 and provide the same pass code. Investors may also listen to the call via the "investor information" section of ARLP's website at http://www.arlp.com or AHGP's website at http://www.ahgp.com.

An audio replay of the conference call will be available for approximately one week. To access the audio replay, dial (888) 286-8010 and provide pass code 10279395. International callers should dial (617) 801-6888 and provide the same pass code.

This announcement is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, AHGP's distributions to foreign investors are subject to federal income tax withholding at the highest applicable tax rate.

About Alliance Holdings GP, L.P.

AHGP is a limited partnership formed to own and control Alliance Resource Management GP, LLC, the managing general partner of Alliance Resource Partners, L.P. (NAS: ARLP) , through which it holds a 1.98% general partner interest and the incentive distribution rights in ARLP. In addition, AHGP owns 15,544,169 common units of ARLP.

News, unit prices and additional information about AHGP including filings with the Securities and Exchange Commission, are available at http://www.ahgp.com. For more information, contact the investor relations department of AHGP at (918) 295-1415 or via e-mail at investorrelations@ahgp.com.

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.

FORWARD-LOOKING STATEMENTS: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 include, but are not limited to, the following: changes in competition in coal markets and the ARLP Partnership's ability to respond to such changes; changes in coal prices, which could affect the ARLP Partnership's operating results and cash flows; risks associated with the ARLP Partnership's expansion of its operations and properties; the impact of health care legislation; deregulation of the electric utility industry or the effects of any adverse change in the coal industry, electric utility industry, or general economic conditions; dependence on significant customer contracts, including renewing customer contracts upon expiration of existing contracts; changing global economic conditions or in industries in which the ARLP Partnership's customers operate; liquidity constraints, including those resulting from any future unavailability of financing; customer bankruptcies, cancellations or breaches to existing contracts, or other failures to perform; customer delays, failure to take coal under contracts or defaults in making payments; adjustments made in price, volume or terms to existing coal supply agreements; fluctuations in coal demand, prices and availability due to labor and transportation costs and disruptions, equipment availability, governmental regulations, including those related to carbon dioxide emissions, and other factors; legislation, regulatory and court decisions and interpretations thereof, including issues related to air and water quality and miner health and safety; the ARLP Partnership's productivity levels and margins earned on its coal sales; unexpected changes in raw material costs; unexpected changes in availability of skilled labor; the ARLP Partnership's ability to maintain satisfactory relations with its employees; any unanticipated increases in labor costs, adverse changes in work rules, or unexpected cash payments or projections associated with post-mine reclamation and workers' compensation claims; any unanticipated increases in transportation costs and risk of transportation delays or interruptions; greater than expected environmental regulation, costs and liabilities; a variety of operational, geologic, permitting, labor and weather-related factors; risks associated with major mine-related accidents, such as mine fires, or interruptions; results of litigation, including claims not yet asserted; difficulty maintaining the ARLP Partnership's surety bonds for mine reclamation as well as workers' compensation and black lung benefits; difficulty in making accurate assumptions and projections regarding pension, black lung benefits and other post-retirement benefit liabilities; coal market's share of electricity generation, including as a result of environmental concerns related to coal mining and combustion and the cost and perceived benefits of alternative sources of energy, such as natural gas, nuclear energy and renewable fuels; uncertainties in estimating and replacing the ARLP Partnership's coal reserves; a loss or reduction of benefits from certain tax credits; difficulty obtaining commercial property insurance, and risks associated with the ARLP Partnership's participation (excluding any applicable deductible) in the commercial insurance property program; and difficulty in making accurate assumptions and projections regarding future revenues and costs associated with equity investments in companies we do not control.

Additional information concerning these and other factors can be found in AHGP's public periodic filings with the Securities and Exchange Commission ("SEC"), including AHGP's Annual Report on Form 10-K for the year ended December 31, 2011, filed on February 28, 2012 with the SEC.Except as required by applicable securities laws, AHGP does not intend to update its forward-looking statements.

ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OPERATING DATA

(In thousands, except unit and per unit data)

(Unaudited)

Three Months Ended

December 31,

Year Ended

December 31,

2012

2011

2012

2011

SALES AND OPERATING REVENUES:

Coal sales

$

538,330

$

462,238

$

1,979,437

$

1,786,089

Transportation revenues

4,383

6,487

22,034

31,939

Other sales and operating revenues

6,605

5,794

32,459

25,175

Total revenues

549,318

474,519

2,033,930

1,843,203

EXPENSES:

Operating expenses (excluding depreciation, depletion and amortization)

356,485

296,744

1,303,291

1,131,750

Transportation expenses

4,383

6,487

22,034

31,939

Outside coal purchases

3,848

24,785

38,607

54,280

General and administrative

15,219

14,299

62,713

54,991

Depreciation, depletion and amortization

63,199

43,098

218,122

160,335

Asset impairment charge

-

-

19,031

-

Total operating expenses

443,134

385,413

1,663,798

1,433,295

INCOME FROM OPERATIONS

106,184

89,106

370,132

409,908

Interest (expense) income, net

(7,066

)

5,395

(28,453

)

(21,574

)

Equity in loss of affiliates, net

(3,610

)

(3,404

)

(14,650

)

(3,404

)

Other income (loss)

262

(357

)

3,115

983

INCOME BEFORE INCOME TAXES

95,770

90,740

330,144

385,913

INCOME TAX BENEFIT

(356

)

(209

)

(1,082

)

(430

)

NET INCOME

96,126

90,949

331,226

386,343

LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

(43,231

)

(38,833

)

(135,158

)

(172,200

)

NET INCOME ATTRIBUTABLE TO ALLIANCE HOLDINGS GP, L.P. ("NET INCOME OF AHGP")

$

52,895

$

52,116

$

196,068

$

214,143

BASIC AND DILUTED NET INCOME OF AHGP PER LIMITED PARTNER UNIT

$

0.88

$

0.87

$

3.28

$

3.58

DISTRIBUTIONS PAID PER LIMITED PARTNER UNIT

$

0.72

$

0.61

$

2.7225

$

2.275

WEIGHTED AVERAGE NUMBER OF UNITS

OUTSTANDING - BASIC AND DILUTED

59,863,000

59,863,000

59,863,000

59,863,000

ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except unit data)

(Unaudited)

ASSETS

Year Ended

December 31,

2012

2011

CURRENT ASSETS:

Cash and cash equivalents

$

31,111

$

281,469

Trade receivables

172,724

128,643

Other receivables

1,019

3,525

Due from affiliates

562

-

Inventories

46,660

33,837

Advance royalties

11,492

7,560

Prepaid expenses and other assets

20,554

12,022

Total current assets

284,122

467,056

PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment, at cost

2,361,863

1,974,520

Less accumulated depreciation, depletion and amortization

(832,293

)

(793,200

)

Total property, plant and equipment, net

1,529,570

1,181,320

OTHER ASSETS:

Advance royalties

23,267

27,916

Equity investments in affiliates

88,513

40,118

Due from affiliates

3,084

-

Other long-term assets

30,284

18,067

Total other assets

145,148

86,101

TOTAL ASSETS

$

1,958,840

$

1,734,477

LIABILITIES AND PARTNERS' CAPITAL

CURRENT LIABILITIES:

Accounts payable

$

100,678

$

97,369

Due to affiliates

327

494

Accrued taxes other than income taxes

20,033

15,897

Accrued payroll and related expenses

38,501

35,876

Accrued interest

1,435

2,195

Workers' compensation and pneumoconiosis benefits

9,320

9,511

Current capital lease obligations

1,000

676

Other current liabilities

19,572

15,326

Current maturities, long-term debt

18,000

18,000

Total current liabilities

208,866

195,344

LONG-TERM LIABILITIES:

Long-term debt, excluding current maturities

773,000

686,000

Pneumoconiosis benefits

59,931

54,775

Accrued pension benefit

31,078

27,538

Workers' compensation

68,786

64,520

Asset retirement obligations

81,644

70,836

Long-term capital lease obligations

18,613

2,497

Other liabilities

9,147

6,774

Total long-term liabilities

1,042,199

912,940

Total liabilities

1,251,065

1,108,284

COMMITMENTS AND CONTINGENCIES

PARTNERS' CAPITAL:

Alliance Holdings GP, L.P. ("AHGP") Partners' Capital:

Limited Partners - Common Unitholders 59,863,000 units outstanding

448,976

414,165

Accumulated other comprehensive loss

(18,296

)

(17,560

)

Total AHGP Partners' Capital

430,680

396,605

Noncontrolling interests

277,095

229,588

Total Partners' Capital

707,775

626,193

TOTAL LIABILITIES AND PARTNERS' CAPITAL

$

1,958,840

$

1,734,477

ALLIANCE HOLDINGS GP, L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Year Ended

December 31,

2012

2011

CASH FLOWS PROVIDED BY OPERATING ACTIVITIES

$

546,224

$

576,105

CASH FLOWS FROM INVESTING ACTIVITIES:

Property, plant and equipment:

Capital expenditures

(424,631