SEC Comment Letter for ALLIANCE RESOURCE PARTNERS LP (ARLP) (CIK 0001086600) (ARLP) — Dec 5, 2006
ALLIANCE RESOURCE PARTNERS LP (ARLP) (CIK 0001086600)
Date: Dec. 5, 2006 · CIK: 0001086600 · Accession: 0000000000-06-059332
AI Filing Summary & Sentiment
Reasoning
Letter
3/@9/2b 1455 9182S57358 ALLIANCE COAL PAGEO1/7 ALLIANCE COALLLC GEISDTIDD ONLYFOTHE OP THE WP/TDUM.IO IOMCtErmriTO WHIa rrADORE AND MAYCONTAIN INPORMAflON IWT TSPRP1ILEG CONPIDEN1WAN1 EXEMPT PROMDISCIASIJP.E UNDER/IFPUCABIEL Tf the mcofthie notthedI EeCe1ttheen1pIr e.iitipcmik ILngthenieeetotheex3cdiheutyiethudyno ther dtnxcq of 1IthreLIfywvJdát1cetot ii pIeteriot4u$iUIy by trlqthoneaIIecariitt theondteetthet3tIec theU.SPoat.Irvice ThankYou TOFROMjwCOLRU1Qfl COMPANYDAT2 FPXNUMBERTOTALNOOP PAGES 1NcUDING COVERi PhONENUS$DERS BEPEENCB NWBER REYOURREPERBHCE NUMBEk URGENT FOR R3VIEW PLEASE COMMENT PLEASE REPLY PLEASEKCYCLE MDSfwIJc4LSk 1717 BOULDER POBOX22027 TULSA OK74121-2027 918295.7600 PAX918295-7357
03/89/2086 1455 9182957358 ALLIANCE COAL PAGE 82/87 ALLIANCE RESOURCE PARThLRS LI DRAFT SUBJECT TODISCUSSION ANDMODIFICATION VIAFacsimile March 2006 Kimberly aider Assistant ChiefAccountant United StatesSecurities andExchange Commission Division ofCorporation Finance 100StreetN.E Washington J.C20549-7010 RE Alliance Resource Partners L.P Form10-KFiledMarch152005 Letter datedFebruary 272006 FileNo0-26823 DearMsCalder Thisletter isprovided indraftformat andwillheformally filedwiththeSECvia EDGAR uponreaching mutual agreement withtheStaffconcerning the issues raised in theabove referenced letterandsubsequent conference calls Onbehalf of Alliance Resource Partners L.PthePartnership weareresponding to comments madebytheaccounting stafftheStaff oftheSecurities andExchange Commission theSEC in letter transmitted toMrJoseph Craft IIonFebruary 272006andduring conference caliswith certain members ofthePartnerships management onMarch 2006 ThePartnerships strongdesire istofileitsAnnual Report onForm10-Kfortheyear endedDecember 312005Year 2005Form10-K onorbefore the March.162006 filingdeadline Inorder toassistthePartnershi.p inmeeting thefilingdeadline inthe eventtheStaffhasfurthercomments werequestthattelephonic conference callbe arranged withtheStafftofacilitate timely resolution of thismatter Asdiscussed duringourconference callweconfirm thatourchiefoperating decision makerCODM received discrete financial information onmine-by-mine basisfor eleven moiiths during theyear2005 Modifications toreports received byourCODM weremade asofDecember 312005 thatwebelieve eliminate discrete financial 2592238_.DOC
83/09/2886 1455 9182957358 ALLIANCE COAL PAGE 03/07 Kimberly Calder Assistant ChiefAccountant March 2006 Page of information onmine-by-mine basis Basedonthechanges tothereports currently received byourCODM andconsistent with ourconversations weunderstand thatwe maydiscuss withtheStaffourview thatfortheyear2006wehave single operatingand reportable segmentunderSFAS131paragraph 10 Asanoutgrowth ofourdialogue withtheStaffweconfirm thatthePartnershipwill provide segment disclosure inaccordance withStatement of Financial Accounting StandardNo 1.31Disclosures aboutSegment ofanEnterprise andRelated Jformation SFAS131innotetoitsconsolidated financial statem ents thatwillbeincluded inits Year2005Form 10-K Theformofthesegment disclosure isattached asExhibit Proposed Segment Reporting Format Asexplained inthenarrative contained intheproposed segment information notethe Partnership ispresenting thefollowing threesegments IllinoisBasin Central Appalachia andNorthern Appalachia Theillinois Basin iscomprised oftheDotikiGibson Hopkins Pattiki andWarrior coalmines Central Appalachiaiscomprised ofthePontiki andMCMiningmines Northern Appalachiaiscomprised oftheMettiki Mountain ViewandTunnel Ridgemines Wehaveincluded Dotiki intheillinois BasinWeacknowledgethattheStaffexpressed preliminary viewthatDotiki should bepresented asseparate segment However management believes thatDotiki should beincluded inanypresentation oftheIllinois Basin inparticular because ofthesignificant overlap ofcustomers Shipments onmany ofourcoalsupplyagreements sourced fromtheIllinois Basin areroutinely substituted between theIllinois Basin mines particularly between DotikiHopkins Pattiki and Warrior Theoverlap ofcustomers requires significant coordination between theIllinois Basinmines Dotiki isthefirstmineoperated bythePartnership andhasthelargest coalreserve base ofouractiveminesDotikis lowercostpertonreflects inparteconomies ofscalemade possible byitslargereserve baseDotiki hasthehighestnumber ofminingunitswhich contributes tooperating efficiencies WenotethatdespiteDotikis advantages with economies ofscalewehavemadesignificant investments inallofourotherIllinois Basinmines Significant investments inotherIllinois Basin mines include the purchase ofHopkins in1998 thedevelopmentofthecurrent mineshaftaccess atthe Pattiki mine thatwasnecessitated byfault line thatdividing Pattikis coalreserve base thedevelopment ofGibson beginning in1999withfullyearproduction beginning in 2001and thepurchase ofWarrior in2003These investments reflect ourviewof strong profitopportunities intheillinois Basinandcorresponding alocation of resources totheillinois Basin WeacknowledgethattheStaffexpressed preliminary viewthatitwould beappropriate toaggregate Mettiki with theillinois Basin Assuming Dotiki isincluded intheIllinois
@31/2005 1455 9182957358 ALLIANCE COAL PAGE 04/07 Kimberly Calder Assistant ChiefAccountant March 2006 Page of Basinwebelieve geographical considerations should factorintotheaggregation of Mettiki Consequently Mettiki including Mountain Viewwhich willbethe replacement ofMettiki Tunnel RidgeandPennRidge areaggregated asNorthern Appalachia Asdisclosed inprevious filings withtheSECMountain View iscurrently being developed andwilleventually replace production fromthcMettikiminewhich is expected todeplete itsreserves attheendof2006Wepurchased Tunnel Ridge in January 2005 and inDecember 2005ournewlyformed subsidiary PennRidge entered intocoal lease andsalesagreement withaffiliates ofAllegheny Energy IncThePenn Ridge coalreserves are contiguous toTunnelRidge Coalreserves weretheprimary assets purchased intheTunnel Ridgeacquisition Wehaveinitiated thepermitting processforbothTunnel RidgeandPennRidgepropertiestoallowforthefuture development ofthesemines Allthree of theseproperties are located inthe coal field referred toasNorthern Appalachia andwebelieve thispresentation provides usersofthe financial statements themostmeaningful aggregation Regulation S-KItem101Considerations Assuming theStaffs willnotobject tothesegment presentation asreflected inExhibit webelieve thatourYear2005Form10-Kwillsatisfy therequirements ofItem .101 afteradding crossreference tothesegment disclosure noteinthe consolidated financial statements Conclusion Inlightofthechiefoperating decision makers receipt of discrete financial information formajority oftheyearin2005andasweconsider the objective andbasicprinciples of SEAS 131inassisting usersoffinancial statements tobetter understand the enterprises performance better assess itsprospects forfuture netcashflowsand makemoreinformed judgments abouttheenterprise aswholewebelieve thatour proposed segment aggregation represented bytheillinois Basin Central Appalachia and Northern Appalachia provides the best viewthrough rnanagernentseyesandisthe aggregation usersofthefinancial statements would mostexpectandtherefore findmost useful Please feelfree to callmeat918.295.7673 ifyouhaveanyquestions Sincerely
83/09/2806 1455 9182957358 ALLIANCE COAL PAGE 06/07 Kimberly Cal der Asitant ChiefAccountant March 2006 Page of Brian Cantrell SeniorVicePresident and ChiefFinancial Officer
83//28@E 1455 918257358 ALLIANCE COAL PAGE 86/87 Segment information ThePartnership operates inthe eastern United States asproducerandmarketer of coal tomajor United States utilities andindustrialusersalsolocated inthe eastern United States ThePartnership ha thefollowing threereportable segments theIllinois Basin CentralAppalachiaandNorthern Appalachia Thesegments alsorepresentti-icthreemajorcoaldepositsintheeastern United States Coalquality coal seamhciht transportation methods andregulatory issues are similar within segmentTheIllinois Basin iscomprised of theDotiki Gibson Hopkins Pattiki andWarrior mines CentralAppalachia iscomprised ofthePntiki andMCMining mines Northern Appalachia iscomprised of theMettiki Mountain View Tunnel Ridge andPennRidgemines TheMountain Viewmine iscurrently being devclopcdtoeventually replace production fromtheMettiki mine which isexpected todeplete itscoal reserves inlate2006 The Partnership isintheprocessofpermitting theTunnel RidgeandPennRidge properties forfuturemine development Operating segmentresults fortheyearsended December 31 2005 2004 and2002arcpresented below OtherandCorporate includes marketing andadministrative expensestheMtVernon Transfer Terminal andcoalbrokerage activity Illinois Central Northern Other and BasinAppalachia Appalachia Corporate Consolidated inthousands Operating segment results fortheyearendedDember 312005were asfollows Totalrevenues 553908 157203 120423 7.184 838.718 Selectedproduction expenses 289720 94909 62425 3606 450660 Segment Adjusted EBITDA 183075 41583 36047 2.924 263.629 Total asSets274638 91853 73.789 92407 532.687 Capital expenditures 64521 21047 23.359 1.590 110517 Operating segmentresults fortheyearendedDecember 312004wereasfollows Totalrevenues 391005 147.361 112251 2672 653.289 Selectedproduction expenses 224.540 98162 51304 585 374.59j Segment Adjusted EBITDA34 121.763 28.953 41.141 1.431 193.288 Total assets 217072 64241 46168 85303 412784 Capital expenditures 32870 1.4465 6605 773 54.713 Operating segmentresults fortheyearended December 312003wereasfollows Totalrevenues 328586 116443 89933 7785 542741 Selectedproduction expenses 184112 77.840 44.521 6748 313221 Segment Adjusted EBJTDA 9535 23962 27288 624 147225 Total assets 189.079 65395 43127 38853 336.454 Capital expenditures 26243 .1.2134 4408 219 43004 Revenues included intheOther andCorporate column areattributable to MtVernon Transfer Terminal transloading revenuesandbrokerage coal sales Selectedproduction expensesi5comprisedofoperating expensesandoutsidepurchases asreflected intheConsoiidatcd Statements ofIncome excluding production taxesandroyaltiesthatarc incurred aspercentageof coal salesor volumes
03/09/2008 1455 9182957358 ALLIANCE COAL PAGE 07/07 Segment adjusted EI3ITDA isdefined asnetincome before inconic taxexpense benefit tntercst expenseandinterest income depreciation dcpletion andamortization andgeneral andadministrativeexpense TheIllinois Basinsycar2004segment adjusted EBITDA includes $15.2million forthenetgainfrominsurance settlement associated with the Dotiki FireIncident YearEnded December 31 2005 2004 2003 inthousands Reconciliation ofSegment Adjusted EBITDA toincome beforeincome taxes TotalSegment Adjusted EBITDA 263.629 193288 147225 General administrative 33484 45400 28270 Depreciation depiction andamortization 55637 53664 52495 Interest expense 11816 14963 15981 Incone beforeincome taxes 162692 79261 50479 Reconciliation of Selected Production Expenses toCombinedOperating Expenses andOutside Purchases Selected Production Expenses 450660 374591 313221 Production taxesandroyalties 85941 71793 64122 Combinedoperating expensesandoutside purchases 536601 $446384 377343
Show Raw Text
3/@9/2b 1455 9182S57358 ALLIANCE COAL PAGEO1/7 ALLIANCE COALLLC GEISDTIDD ONLYFOTHE OP THE WP/TDUM.IO IOMCtErmriTO WHIa rrADORE AND MAYCONTAIN INPORMAflON IWT TSPRP1ILEG CONPIDEN1WAN1 EXEMPT PROMDISCIASIJP.E UNDER/IFPUCABIEL Tf the mcofthie notthedI EeCe1ttheen1pIr e.iitipcmik ILngthenieeetotheex3cdiheutyiethudyno ther dtnxcq of 1IthreLIfywvJdát1cetot ii pIeteriot4u$iUIy by trlqthoneaIIecariitt theondteetthet3tIec theU.SPoat.Irvice ThankYou TOFROMjwCOLRU1Qfl COMPANYDAT2 FPXNUMBERTOTALNOOP PAGES 1NcUDING COVERi PhONENUS$DERS BEPEENCB NWBER REYOURREPERBHCE NUMBEk URGENT FOR R3VIEW PLEASE COMMENT PLEASE REPLY PLEASEKCYCLE MDSfwIJc4LSk 1717 BOULDER POBOX22027 TULSA OK74121-2027 918295.7600 PAX918295-7357 03/89/2086 1455 9182957358 ALLIANCE COAL PAGE 82/87 ALLIANCE RESOURCE PARThLRS LI DRAFT SUBJECT TODISCUSSION ANDMODIFICATION VIAFacsimile March 2006 Kimberly aider Assistant ChiefAccountant United StatesSecurities andExchange Commission Division ofCorporation Finance 100StreetN.E Washington J.C20549-7010 RE Alliance Resource Partners L.P Form10-KFiledMarch152005 Letter datedFebruary 272006 FileNo0-26823 DearMsCalder Thisletter isprovided indraftformat andwillheformally filedwiththeSECvia EDGAR uponreaching mutual agreement withtheStaffconcerning the issues raised in theabove referenced letterandsubsequent conference calls Onbehalf of Alliance Resource Partners L.PthePartnership weareresponding to comments madebytheaccounting stafftheStaff oftheSecurities andExchange Commission theSEC in letter transmitted toMrJoseph Craft IIonFebruary 272006andduring conference caliswith certain members ofthePartnerships management onMarch 2006 ThePartnerships strongdesire istofileitsAnnual Report onForm10-Kfortheyear endedDecember 312005Year 2005Form10-K onorbefore the March.162006 filingdeadline Inorder toassistthePartnershi.p inmeeting thefilingdeadline inthe eventtheStaffhasfurthercomments werequestthattelephonic conference callbe arranged withtheStafftofacilitate timely resolution of thismatter Asdiscussed duringourconference callweconfirm thatourchiefoperating decision makerCODM received discrete financial information onmine-by-mine basisfor eleven moiiths during theyear2005 Modifications toreports received byourCODM weremade asofDecember 312005 thatwebelieve eliminate discrete financial 2592238_.DOC 83/09/2886 1455 9182957358 ALLIANCE COAL PAGE 03/07 Kimberly Calder Assistant ChiefAccountant March 2006 Page of information onmine-by-mine basis Basedonthechanges tothereports currently received byourCODM andconsistent with ourconversations weunderstand thatwe maydiscuss withtheStaffourview thatfortheyear2006wehave single operatingand reportable segmentunderSFAS131paragraph 10 Asanoutgrowth ofourdialogue withtheStaffweconfirm thatthePartnershipwill provide segment disclosure inaccordance withStatement of Financial Accounting StandardNo 1.31Disclosures aboutSegment ofanEnterprise andRelated Jformation SFAS131innotetoitsconsolidated financial statem ents thatwillbeincluded inits Year2005Form 10-K Theformofthesegment disclosure isattached asExhibit Proposed Segment Reporting Format Asexplained inthenarrative contained intheproposed segment information notethe Partnership ispresenting thefollowing threesegments IllinoisBasin Central Appalachia andNorthern Appalachia Theillinois Basin iscomprised oftheDotikiGibson Hopkins Pattiki andWarrior coalmines Central Appalachiaiscomprised ofthePontiki andMCMiningmines Northern Appalachiaiscomprised oftheMettiki Mountain ViewandTunnel Ridgemines Wehaveincluded Dotiki intheillinois BasinWeacknowledgethattheStaffexpressed preliminary viewthatDotiki should bepresented asseparate segment However management believes thatDotiki should beincluded inanypresentation oftheIllinois Basin inparticular because ofthesignificant overlap ofcustomers Shipments onmany ofourcoalsupplyagreements sourced fromtheIllinois Basin areroutinely substituted between theIllinois Basin mines particularly between DotikiHopkins Pattiki and Warrior Theoverlap ofcustomers requires significant coordination between theIllinois Basinmines Dotiki isthefirstmineoperated bythePartnership andhasthelargest coalreserve base ofouractiveminesDotikis lowercostpertonreflects inparteconomies ofscalemade possible byitslargereserve baseDotiki hasthehighestnumber ofminingunitswhich contributes tooperating efficiencies WenotethatdespiteDotikis advantages with economies ofscalewehavemadesignificant investments inallofourotherIllinois Basinmines Significant investments inotherIllinois Basin mines include the purchase ofHopkins in1998 thedevelopmentofthecurrent mineshaftaccess atthe Pattiki mine thatwasnecessitated byfault line thatdividing Pattikis coalreserve base thedevelopment ofGibson beginning in1999withfullyearproduction beginning in 2001and thepurchase ofWarrior in2003These investments reflect ourviewof strong profitopportunities intheillinois Basinandcorresponding alocation of resources totheillinois Basin WeacknowledgethattheStaffexpressed preliminary viewthatitwould beappropriate toaggregate Mettiki with theillinois Basin Assuming Dotiki isincluded intheIllinois @31/2005 1455 9182957358 ALLIANCE COAL PAGE 04/07 Kimberly Calder Assistant ChiefAccountant March 2006 Page of Basinwebelieve geographical considerations should factorintotheaggregation of Mettiki Consequently Mettiki including Mountain Viewwhich willbethe replacement ofMettiki Tunnel RidgeandPennRidge areaggregated asNorthern Appalachia Asdisclosed inprevious filings withtheSECMountain View iscurrently being developed andwilleventually replace production fromthcMettikiminewhich is expected todeplete itsreserves attheendof2006Wepurchased Tunnel Ridge in January 2005 and inDecember 2005ournewlyformed subsidiary PennRidge entered intocoal lease andsalesagreement withaffiliates ofAllegheny Energy IncThePenn Ridge coalreserves are contiguous toTunnelRidge Coalreserves weretheprimary assets purchased intheTunnel Ridgeacquisition Wehaveinitiated thepermitting processforbothTunnel RidgeandPennRidgepropertiestoallowforthefuture development ofthesemines Allthree of theseproperties are located inthe coal field referred toasNorthern Appalachia andwebelieve thispresentation provides usersofthe financial statements themostmeaningful aggregation Regulation S-KItem101Considerations Assuming theStaffs willnotobject tothesegment presentation asreflected inExhibit webelieve thatourYear2005Form10-Kwillsatisfy therequirements ofItem .101 afteradding crossreference tothesegment disclosure noteinthe consolidated financial statements Conclusion Inlightofthechiefoperating decision makers receipt of discrete financial information formajority oftheyearin2005andasweconsider the objective andbasicprinciples of SEAS 131inassisting usersoffinancial statements tobetter understand the enterprises performance better assess itsprospects forfuture netcashflowsand makemoreinformed judgments abouttheenterprise aswholewebelieve thatour proposed segment aggregation represented bytheillinois Basin Central Appalachia and Northern Appalachia provides the best viewthrough rnanagernentseyesandisthe aggregation usersofthefinancial statements would mostexpectandtherefore findmost useful Please feelfree to callmeat918.295.7673 ifyouhaveanyquestions Sincerely 83/09/2806 1455 9182957358 ALLIANCE COAL PAGE 06/07 Kimberly Cal der Asitant ChiefAccountant March 2006 Page of Brian Cantrell SeniorVicePresident and ChiefFinancial Officer 83//28@E 1455 918257358 ALLIANCE COAL PAGE 86/87 Segment information ThePartnership operates inthe eastern United States asproducerandmarketer of coal tomajor United States utilities andindustrialusersalsolocated inthe eastern United States ThePartnership ha thefollowing threereportable segments theIllinois Basin CentralAppalachiaandNorthern Appalachia Thesegments alsorepresentti-icthreemajorcoaldepositsintheeastern United States Coalquality coal seamhciht transportation methods andregulatory issues are similar within segmentTheIllinois Basin iscomprised of theDotiki Gibson Hopkins Pattiki andWarrior mines CentralAppalachia iscomprised ofthePntiki andMCMining mines Northern Appalachia iscomprised of theMettiki Mountain View Tunnel Ridge andPennRidgemines TheMountain Viewmine iscurrently being devclopcdtoeventually replace production fromtheMettiki mine which isexpected todeplete itscoal reserves inlate2006 The Partnership isintheprocessofpermitting theTunnel RidgeandPennRidge properties forfuturemine development Operating segmentresults fortheyearsended December 31 2005 2004 and2002arcpresented below OtherandCorporate includes marketing andadministrative expensestheMtVernon Transfer Terminal andcoalbrokerage activity Illinois Central Northern Other and BasinAppalachia Appalachia Corporate Consolidated inthousands Operating segment results fortheyearendedDember 312005were asfollows Totalrevenues 553908 157203 120423 7.184 838.718 Selectedproduction expenses 289720 94909 62425 3606 450660 Segment Adjusted EBITDA 183075 41583 36047 2.924 263.629 Total asSets274638 91853 73.789 92407 532.687 Capital expenditures 64521 21047 23.359 1.590 110517 Operating segmentresults fortheyearendedDecember 312004wereasfollows Totalrevenues 391005 147.361 112251 2672 653.289 Selectedproduction expenses 224.540 98162 51304 585 374.59j Segment Adjusted EBITDA34 121.763 28.953 41.141 1.431 193.288 Total assets 217072 64241 46168 85303 412784 Capital expenditures 32870 1.4465 6605 773 54.713 Operating segmentresults fortheyearended December 312003wereasfollows Totalrevenues 328586 116443 89933 7785 542741 Selectedproduction expenses 184112 77.840 44.521 6748 313221 Segment Adjusted EBJTDA 9535 23962 27288 624 147225 Total assets 189.079 65395 43127 38853 336.454 Capital expenditures 26243 .1.2134 4408 219 43004 Revenues included intheOther andCorporate column areattributable to MtVernon Transfer Terminal transloading revenuesandbrokerage coal sales Selectedproduction expensesi5comprisedofoperating expensesandoutsidepurchases asreflected intheConsoiidatcd Statements ofIncome excluding production taxesandroyaltiesthatarc incurred aspercentageof coal salesor volumes 03/09/2008 1455 9182957358 ALLIANCE COAL PAGE 07/07 Segment adjusted EI3ITDA isdefined asnetincome before inconic taxexpense benefit tntercst expenseandinterest income depreciation dcpletion andamortization andgeneral andadministrativeexpense TheIllinois Basinsycar2004segment adjusted EBITDA includes $15.2million forthenetgainfrominsurance settlement associated with the Dotiki FireIncident YearEnded December 31 2005 2004 2003 inthousands Reconciliation ofSegment Adjusted EBITDA toincome beforeincome taxes TotalSegment Adjusted EBITDA 263.629 193288 147225 General administrative 33484 45400 28270 Depreciation depiction andamortization 55637 53664 52495 Interest expense 11816 14963 15981 Incone beforeincome taxes 162692 79261 50479 Reconciliation of Selected Production Expenses toCombinedOperating Expenses andOutside Purchases Selected Production Expenses 450660 374591 313221 Production taxesandroyalties 85941 71793 64122 Combinedoperating expensesandoutside purchases 536601 $446384 377343