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Item 5. Market for Registrant’s Common Equity

2021-02-23 compared with 2020-02-20 · 4 added, 145 removed, 15 unchanged (91% of the section changed)

3 unchanged sentences

There were approximately 37,734 record holders of common units at December 31, 2020.

We distribute to our partners, on a quarterly basis, all of our available cash.

Available cash with respect to each quarter may, at the discretion of our general partner, be distributed to the limited partners as of a record date selected by the general partner.

"Available cash,"

as defined in our partnership agreement, generally means, with respect to any quarter, all cash on hand at the end of each quarter, plus working capital borrowings after the end of the quarter, less cash reserves in the amount necessary or appropriate in the reasonable discretion of our general partner to (a) provide for the proper conduct of our business, (b) comply with applicable law or any debt instrument or other agreement of ours or any of our affiliates, and (c) provide funds for distributions to unitholders for any one or more of the next four quarters.

Prior to the Exchange Transaction, if quarterly distributions of available cash exceeded certain target distribution levels, MGP received distributions based on specified increasing percentages of the available cash that exceeded the target distribution levels.

The target distribution levels were based on the amounts of available cash from our operating surplus distributed for a quarter that exceeded the minimum quarterly distribution ("MQD") and common unit arrearages, if any.

The MQD was defined as $0.125 per unit for each full fiscal quarter ($0.50 per unit on an annual basis).

Under the quarterly incentive distribution provisions of the partnership agreement prior to the Exchange Transaction, MGP was entitled to receive 15% of the amount we distributed in excess of $0.1375 per unit, 25% of the amount we distributed in excess of $0.15625 per unit, and 50% of the amount we distributed in excess of $0.1875 per unit.

Beginning with distributions declared for the three months ended June 30, 2017, payable in August 2017, we no longer make distributions with respect to IDRs.

Equity Compensation Plans

7 unchanged sentences

The unit repurchase program authorization does not obligate ARLP to repurchase any dollar amount or number of units, and repurchases may be commenced or suspended from time to time without prior notice.

The table below represents all unit repurchases for the three months ended December 31, 2019:

Total Number of Units Purchased

Average Price Paid per Unit

Total Number of Units Purchased as Part of Publicly Announced Program

Maximum Dollar Value that May Yet Be Used to Repurchase Units Under the Publicly Announced Program

(in thousands)

November 1 through November 30, 2019

Since inception of the unit repurchase program, we have repurchased and retired 5,460,604 units at an average unit price of $17.12 for an aggregate purchase price of $93.5 million as of December 31, 2019.

The remaining authorized amount for unit repurchases under this program was $6.5 million.

SELECTED FINANCIAL DATA

Our historical financial data below were derived from our audited consolidated financial statements as of and for the years ended December 31, 2019, 2018, 2017, 2016 and 2015.

(in millions, except unit, per unit, per ton data and per BOE data)

Year Ended December 31,

Statements of Income

Sales and operating revenues:

Oil & gas royalties

Transportation revenues

Other revenues

Total revenues

Operating expenses (excluding depreciation, depletion and amortization)

Transportation expenses

Outside coal purchases

General and administrative

Depreciation, depletion and amortization

Settlement gain

Asset impairment

Total operating expenses

Income from operations

Interest expense (net of interest capitalized)

Interest income

Equity method investment income (loss)

Equity securities income

Acquisition gain

Debt extinguishment loss

Other income (expense)

Income before income taxes

Income tax expense (benefit)

Net income attributable to noncontrolling interest

Net income attributable to ARLP

General Partners (1)

Limited Partners

Earnings per limited partner unit-basic and diluted (2) (3)

Pro forma earnings per limited partner unit-basic and diluted (2) (4)

Distributions paid per limited partner unit

Weighted-average number of units outstanding-basic and diluted

Balance Sheet Data:

Working capital (5)

Long-term obligations (6)

Total liabilities

Partners' capital

Other Operating Data:

Tons produced

Coal sales per ton sold (7)

Cost per ton sold (8)

Oil & gas BOE sold

Average sales price per BOE (9)

Other Financial Data:

Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Adjusted EBITDA (10)

Maintenance capital expenditures (11)

(1) Amounts for 2018 reflect the impact of the Simplification Transactions which ended net income allocations and quarterly cash distributions to MGP after May 31, 2018.

Amounts for 2017 reflect the impact of the Exchange Transaction ending distributions that would have been paid for the IDRs and a 0.99% general partner interest in ARLP, both of which were held by MGP prior to the Exchange Transaction.

For the time period between the Exchange Transaction and the Simplification Transactions, MGP maintained a 1.0001% general partner interest in the Intermediate Partnership and a 0.001% managing member interest in Alliance Coal and thus received quarterly distributions and income and loss allocations during this time period.

See "Item 8.

Financial Statements and Supplementary Data— Note 14 – Earnings Per Limited Partner Unit"

for more information.

(2) Diluted earnings per unit ("EPU") gives effect to all dilutive potential common units outstanding during the period using the treasury stock method.

Diluted EPU excludes all dilutive units calculated under the treasury stock method if their effect is anti-dilutive.

For the years ended December 31, 2019, 2018, 2017, 2016 and 2015, long-term incentive plan ("LTIP"), Supplemental Executive Retirement Plan ("SERP") and Directors' compensation units of 1,284,013, 1,658,908 1,466,404, 922,386 and 734,171, respectively, were considered anti-dilutive.

(3) As a result of the Exchange Transaction, net income beginning with the second quarter of 2017 was not allocated to IDRs and the related general partner interests exchanged;

however, additional net income in a corresponding amount was allocated to limited partner interests.

Please read "Item 8.

Financial Statements and Supplementary Data— Note 12 – Earnings Per Limited Partner Unit"

for more information on the impact of the Exchange Transaction on basic and diluted earnings per limited partner unit.

(4) On a pro forma basis, as if the Exchange Transaction and the Simplification Transactions had taken place on January 1, 2015, the reconciliation of net income attributable to ARLP to basic and diluted earnings per unit and the weighted-average units used in computing EPU are as follows:

Year Ended December 31,

(in thousands, except per unit data)

Net income attributable to ARLP

Pro forma adjustments (a)

Pro forma net income attributable to ARLP

Distributions to participating securities

Undistributed earnings attributable to participating securities

Net income attributable to ARLP available to limited partners (b)

Weighted-average limited partner units outstanding – basic and diluted (b)

Pro forma earnings per limited partner unit - basic and diluted

(a) Pro forma adjustments to the net income attributable to ARLP primarily represent the elimination of administrative service revenues from AHGP and the inclusion of general and administrative expenses incurred at AHGP.

(b) Net income attributable to ARLP available to limited partners reflects net income allocations made for all periods presented based on the ownership structure subsequent to the Simplification Transactions.

Accordingly, no general partner income allocations are presented above.

Pro forma amounts above also reflect weighted average units outstanding as if the issuance of 56,128,141 ARLP common units in the Exchange Transaction and 1,322,388 ARLP common units in the Simplification Transactions applied to all periods presented.

(5) Working capital is impacted by current maturities of long-term debt.

For information regarding long-term debt, please read "Item 8.

Financial Statements and Supplementary Data—Note 7 – Long-Term Debt."

(6) Long-term obligations include long-term portions of debt, finance and operating lease obligations.

(7) Coal sales per ton sold are based on total coal sales divided by tons sold.

(8) Cost per ton sold is based on the total of operating expenses excluding oil & gas related expenses and outside coal purchases divided by tons sold.

(9) Average sales price per BOE is defined as royalty revenues excluding lease bonus revenue divided by total barrels of oil equivalent.

BOE for natural gas volumes is calculated on a 6:1 basis (6 Mcf of natural gas to one barrel).

(10) EBITDA and Adjusted EBITDA are financial measures not calculated in accordance with generally accepted accounting principles ("GAAP").

EBITDA is defined as net income attributable to ARLP before net interest expense, income taxes and depreciation, depletion and amortization.

Adjusted EBITDA is EBITDA modified for certain items that may not reflect the trend of future results, such as asset impairments, gains and losses from acquisition-valuation related accounting, settlement gains, and debt extinguishment losses.

EBITDA is used as a supplemental financial measure by management and by external users of our financial statements such as investors, commercial banks, research analysts and others.

We believe that the presentation of EBITDA provides useful information to investors regarding our performance and results of operations because EBITDA, when used in conjunction with related GAAP financial measures, (i) provides additional information about our core operating performance and ability to generate and distribute cash flow, (ii) provides investors with the financial analytical framework upon which we base financial, operational, compensation and planning decisions and (iii) presents a measurement that investors, rating agencies and debt holders have indicated is useful in assessing us and our results of operations.

We believe Adjusted EBITDA is a useful measure for investors because it further demonstrates the performance of our assets without regard to items that may not reflect the trend of future results.

EBITDA and Adjusted EBITDA should not be considered as alternatives to net income attributable to ARLP, net income, income from operations, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP.

EBITDA and Adjusted EBITDA are not intended to represent cash flow and do not represent the measure of cash available for distribution.

Our method of computing EBITDA and Adjusted EBITDA may not be the same method used to compute similar measures reported by other companies, or EBITDA and Adjusted EBITDA may be computed differently by us in different contexts (e.g., public reporting versus computation under financing agreements).

The following table presents a reconciliation of (a) GAAP "Cash Flows Provided by Operating Activities"

to non-GAAP Adjusted EBITDA and EBITDA and (b) non-GAAP Adjusted EBITDA and EBITDA to GAAP "Net income attributable to ARLP":

Year Ended December 31,

(in thousands)

Cash flows provided by operating activities

Non-cash compensation expense

Asset retirement obligations

Coal inventory adjustment to market

Equity investment income (loss)

Distributions received from investments

Income from equity securities paid-in-kind

Net gain (loss) on sale of property, plant and equipment

Valuation allowance of deferred tax assets

Net effect of working capital changes

Interest expense, net

Income tax expense

Settlement gain

Cash received on redemption of equity securities in excess of investment

Acquisition gain attributable to noncontrolling interests

Net (income) loss attributable to noncontrolling interests

Adjusted EBITDA

Settlement gain

Asset impairment

Acquisition gain, net

Debt extinguishment loss

Depreciation, depletion and amortization

Interest expense, net

Income tax expense

Net income attributable to ARLP

(11) Our maintenance capital expenditures, as defined under the terms of our partnership agreement, are those capital expenditures required to maintain, over the long term, the operating capacity of our capital assets.

During the three months ended December 31, 2020, we did not repurchase and retire any units.

Since inception of the unit repurchase program, we have repurchased and retired 5,460,639 units at an average unit price of $17.12 for an aggregate purchase price of $93.5 million.

The remaining authorized amount for unit repurchases under this program is $6.5 million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity