P R E P A R E D
A L L I A N C E R E S O U R C E P A R T N E R S, L . P. / A L L I A N C E H O L D I N G S G P, L . P.
2 0 1 5 A N N U A L R E P O R T
Keep in mind, that through all of this turmoil,
Alliance has remained profitable, generated solid
cash flow and maintained a conservative financial
structure. Alliance entered this downturn as an
industry leader and, with our exceptional people
and strategically located, low-cost operations, we
expect to emerge even stronger.
F E L L O W U N I T H O L D E R S
O
nce again, the dedicated men and women of Alliance have delivered on their
commitment to excellence, producing and selling record volumes of coal in 2015.
Despite weak power demand, persistently low natural gas prices, ongoing regulatory
pressures and an oversupplied coal market, their efforts led Alliance to remain profitable
and generate strong cash flow in a difficult year.
How? We were prepared. Through strategic planning, effective execution and hard work, with
a focus on efficient and low-cost operations. By staying true to the values and operational
mindset that delivered 14 consecutive years of record performance, we were able to put
ourselves in a position of strength and adjust to the market slump through strategic decisions.
As a result, we’ve remained solid. Distributable Cash Flow came in at a record $561.6 million
and our distribution coverage ratio for the full year was a robust 1.6 times.¹
That position of strength allowed us to take advantage of several opportunities, including the
acquisition of the remaining equity interest in White Oak Resources LLC ("White Oak").
ARLP now owns 100 percent of the equity interests in White Oak, and has full ownership and
control of Mine No. 1 and related assets. Other transactions completed in the first quarter of
2015 included the acquisition of coal supply agreements, coal reserves, mining equipment and
other assets that will help solidify our position as a low-cost producer over the next decade.
While these strategic investments were designed to produce long-term results, reduced coal
sales prices and customer deferrals of approximately 1.8 million tons in the short term drove
revenues down 1.2% to $2.27 billion.
Bottom line: the current downturn across the commodity space has decimated many
companies – especially in the energy sector and coal in particular. We have been proactive,
responding to market realities and making hard decisions. Right-sizing production. Reducing
costs. Optimizing capital. Maintaining unitholder distributions. We believe these decisions
have created a sustainable platform that will serve Alliance well as the markets recover.
For the past year, oil, gas and coal have been oversupplied, leading to depressed commodity
prices. We view these low commodity prices as unsustainable in the long term and, moving
into 2016, we are starting to see meaningful supply discipline in the market. Natural gas rig
counts declined by 60% in the past year and coal production in our operating regions
dropped 24%. This gives us confidence moving forward that prices will increase and return
to more profitable levels by the end of 2017.
Keep in mind, that through all of this turmoil, Alliance has remained profitable, generated
solid cash flow and maintained a conservative financial structure. Alliance entered this
downturn as an industry leader and, with our exceptional people and strategically located,
low-cost operations, we expect to emerge even stronger.
We have always taken the long view, and we are confident that Alliance is positioned to
succeed for years to come.
Joseph W. Craft III
President, Chief Executive Officer, and Director of ARLP and AHGP,
and Chairman of the Board of AHGP
A P R I L 1 5 , 2 0 1 6
1. Please see the inside back cover for definitions of non-GAAP measures and GAAP to non-GAAP
reconciliation information.
1
8 P E R F O R M A N C E
Our talented, hardworking employees
are the fundamental essence of
Alliance’s ongoing success.
M
arket conditions always impact the bottom line. For 2015, in addition to
lower coal sales prices and weak coal demand due to tepid power demand,
low natural gas prices, elevated utility stockpiles and mild weather, our financial
performance was affected by several significant items.
First, ARLP booked $100.1 million of non-cash asset impairments related to the
idling of our Onton mine, lower coal sales pricing available to our MC Mining mine,
and the surrender of leases that were no longer strategic to our operations. In addition,
prior to closing the White Oak acquisition last July, losses passed through to ARLP
in 2015 related to our equity investment in White Oak increased $31.8 million to
$48.5 million, compared to 2014. Upon completion of the business combination
accounting for the acquisition, we also recorded a $22.5 million non-cash net gain in
the fourth quarter, primarily to reflect the value of ARLP’s agreements negotiated as
part of the initial transaction structure with White Oak.
2
8 Excluding the impact of these non-cash items, ARLP’s adjusted earnings before
interest, taxes, depreciation and amortization (adjusted EBITDA) for 2015 was
$747.2 million, down 7.0% from 2014.1 Reflecting these excluded items, adjusted
net income declined 22.8% to $383.8 million at ARLP and at AHGP by 13.9% to
$244.7 million.2
On a per ton basis, total average coal sales price realizations in 2015 fell 3.5% year-
over-year to $53.62. Due to effective production optimization and cost reduction
efforts, however, costs per ton sold in 2015 improved by 1.7% compared to 2014.
A look at ARLP’s balance sheet shows we exited 2015 with total liquidity at a healthy
$442.5 million and a conservative leverage ratio of 1.2x total debt to EBITDA.
1, 2. Please see the inside back cover for definitions of non-GAAP measures and GAAP to non-GAAP reconciliation information.
3
8 P L A N N I N G
We’ve said it before: to achieve success,
you must plan for it carefully and work for
it tirelessly. And, when challenges arise, the
validity of your plan is tested. As we saw in
2015, our strategy proved itself sound and
Alliance met the challenge. And, it’s a
strategy we remain committed to:
S A F E T Y F I R S T We have a long history of providing our miners with safety training
and technology that is second to none. During 2015, our operations posted results
that were 60% below the industry average for lost time incidents. This achievement is
even more remarkable considering that the Mine Safety and Health Administration
declared 2015 the safest year ever in the history of the mining industry.
S T R O N G C U S T O M E R R E L AT I O N S H I P S Longstanding relationships with
our customers keep our product moving and our company profitable. We work hard
to protect those relationships, and that served us well throughout 2015.
L O W - C O S T O P E R AT I O N S We have always been good stewards of our financial
resources, employing efficient methods to deliver cost-effective results. Being well-versed
in this discipline was beneficial when additional cost-cutting measures were needed this
past year.
H I G H - R E T U R N D E V E L O P M E N T P R O J E C T S Building long-term value
is essential to building success. Though development may have slowed for now,
industry-leading returns are still high on our priority list.
D I S C I P L I N E D A C Q U I S I T I O N S We’ve always worked hard to make sure we take
advantage of growth opportunities that fit, and equally hard to make sure we pass on
those that don't. This strategy was key to our entering the downturn from a position of
strength. Again, we were prepared.
4
8 Faced with weak power demand, persistently low
natural gas prices, ongoing regulatory pressures
and an oversupplied coal market, we were able to
achieve these results relying on ARLP’s long-term
sales agreements and our ability to reduce operating
expenses and capital expenditures.
5
8
P R O A C T I V E
T
he benefit of being prepared is that Alliance is positioned to rationally adjust
to changing conditions. Carefully considered, proactive steps have allowed
us to address uncertainty with confidence.
In response to the current marketplace and in preparation for future conditions,
we optimized operations by shifting production to our lowest-cost mines and
reducing unit shifts and production days to bring our production volumes more
in line with our contracted coal sales. As part of these optimization efforts, we
idled our Onton and Gibson North mines in 2015, and depleted our Elk Creek
mine at Hopkins County Coal in the first quarter of 2016.
What other steps did we take? We lowered operating expenses, moving 2015
Segment Adjusted EBITDA Expense per ton more in line with 2014 levels.
We reduced 2015 capital expenditures $39 million from initial expectations.
We also stabilized unitholder distributions, enhanced liquidity and took other
important steps to solidify our position.
We believe that our strong balance sheet provides ARLP with strategic
advantages in a difficult market and should provide us the financial flexibility
to take advantage of opportunities that develop as we execute our strategy.
In a difficult market,
these are the right
moves, no question
about it.¹
1. The Motley Fool, “Five Things Alliance Resource Partners’ Management Wants You To Know.”
6
8 Illinois
Indiana
Ohio
10
Pennsylvania
Maryland
6A
6B
8
1
2
3
7
4 5
11
West Virginia
Kentucky
9
Virginia
Illinois Basin
Appalachia
C U R R E N T M I N I N G O P E R AT I O N S
T R A N S F E R T E R M I N A L
Mount Vernon Transfer Terminal
Operates a coal loading terminal in Indiana
on the Ohio River
M I N E D E V E L O P M E N T P R O J E C T S
Henderson/Union County Reserves
1. Pattiki Complex
2. River View Complex
3. Dotiki Complex
4. Warrior Complex
5. Hopkins Complex *
6. Gibson Complex
a. Gibson North Mine **
b. Gibson South Mine
7. Sebree Complex **
8. Hamilton Complex
9. MC Mining Complex
10. Tunnel Ridge Complex
11. Metiki Complex
* Production depleted in the first quarter of 2016.
** Production is currently idled.
7
8
P E R S P E C T I V E
C
oal critics cannot argue with these facts: The United States is home to the largest
estimated recoverable reserves of coal in the world. Our country has enough
estimated recoverable reserves of coal to last more than 200 years based on current
production levels.¹ Of the coal consumed in the United States, about 93% is used for
generating electricity.² In 2015, coal was responsible for nearly 1.4 billion MWh of
electricity per day, more than any other fuel.³
It’s a fact: coal is still in play. And according to the International Energy Agency,
worldwide coal consumption is projected to increase each year through 2020.⁴ Even if
future growth is less than previously predicted, there will still be a demand for coal for
many years to come. Alliance is prepared to supply that coal.
We’ve positioned ourselves as a preferred supplier with a reliable performance history
and a strong balance sheet. We offer multiple transport options including direct rail,
direct barge and truck. We can supply a wide range of coal specifications including a
range of BTU heat content products, coal with low-, mid- and high-sulfur content and
coal with low or high-chlorine content. All this, plus our ability to provide contract
flexibility with respect to the quality mix, volume and sourcing, make Alliance an
attractive option for a wide variety of customers. And since we are producing less
than capacity, when the coal market starts to recover, we will be able to take advantage
of the situation quickly with our highly desirable Illinois Basin and Northern
Appalachian coal.
Looking ahead, we continue to believe that
ARLP can successfully navigate the current
market and that we are well positioned
to grow production and cash flows as the
market comes back into balance.
1, 2. U.S. Energy Information Administration, “What is the role of coal in the United States?” January 19, 2016
3. Reuters, “Coal remains top U.S. power source in 2015, gas a close second,” February 26, 2016
4. International Energy Agency, “Coal Medium-Term Market Report 2015,” December 18, 2015
8
8 ARLP Coal – Tons Produced
ARLP Coal – Tons Sold
41.2
40.7
38.8
34.8
30.8
2015
2014
2013
2012
2011
40.2
39.7
38.8
35.2
31.9
40
35
30
25
20
15
10
10
15
20
25
30
35
40
Million Tons
Million Tons
ARLP Revenues
ARLP EBITDA
$2.27
$2.30
$2.21
$2.03
$1.84
2015
2014
2013
2012
2011
$669.6
$685.9
$803.7
$581.1
$570.8
2.40
2.20
2.00
1.80
1.60
1.40
1.20
1.00
100
200
300
400
500
600
700
800
Dollars in Billions
Dollars in Millions
ARLP Net Income
ARLP Total Assets
$497.2
$306.2
$393.5
$389.4
$335.6
2015
2014
2013
2012
2011
$2.36
$2.29
$2.12
$1.96
$1.73
500
450
400
350
300
250
200
150
100
1.00
1.20
1.40
1.60
1.80
2.00
2.20
2.40
Dollars in Millions
Dollars in Billions
ARLP Distributions Paid Distributions paid per LP unit
AHGP Distributions Paid Distributions paid per LP unit
$2.66
$2.47*
$2.28*
$2.08*
$1.81*
2015
2014
2013
2012
2011
$3.77
$3.44
$3.10
$2.72
$2.28
3.00
2.00
1.00
0
0
1.00
2.00
3.00
4.00
Dollars
Dollars
Amounts rounded to the nearest penny. *Adjusted for 2:1 Unit Split.
Reconciliation of GAAP “net income” to non-GAAP “Adjusted net income”
(in thousands)
Net income
Asset impairment charge
Acquisition gain, net
Adjusted net income
Year Ended December 31
2015
2014
2013
2012
2011
$ 306,171
$ 497,213
$ 393,490
$ 335,571
$ 389,353
100,130
(22,548)
-
-
-
-
19,031
-
-
-
$ 383,753
$ 497,213
$ 393,490
$ 354,602
$ 389,353
Reconciliation of GAAP “net income” to non-GAAP “EBITDA”, “Adjusted EBITDA”
and “Distributable Cash Flow”
(in thousands)
Net Income
Depreciation, depletion and amortization
Interest expense, gross
Capitalized interest
Income tax expense (benefit)
EBITDA
Asset impairment charge
Acquisition gain, net
Adjusted EBITDA
Equity in loss of affiliates, net
Interest expense, gross
Income tax (expense) benefit
Year Ended December 31
2015
2014
2013
2012
2011
$ 306,171
$ 497,213
$ 393,490
$ 335,571
$ 389,353
333,713
30,389
(695)
21
669,599
100,130
(22,548)
747,181
49,046
(30,389)
(21)
274,566
264,911
218,122
32,746
(833)
-
35,074
(8,992)
1,396
803,692
685,879
-
-
803,692
16,648
(32,746)
-
-
-
685,879
24,441
(35,074)
(1,396)
36,891
(8,436)
(1,082)
581,066
19,031
-
600,097
14,650
(36,891)
1,082
160,335
36,376
(14,797)
(431)
570,836
-
-
570,836
3,404
(36,376)
431
Estimated maintenance capital expenditures 1
(204,243)
(240,419)
(221,058)
(191,400)
(144,539)
Distributable Cash Flow
Distributions paid to partners
Distribution Coverage Ratio
$ 561,574
$ 574,175
$ 452,792
$ 387,538
$ 393,756
$ 346,799
$ 317,626
$ 288,439
$ 257,923
$ 217,860
1.62
1.72
1.57
1.50
1.81
1, 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. We estimate maintenance capital expenditures on an annual basis based upon a five-year planning horizon.
Reconciliation of GAAP “Operating Expenses” to non-GAAP “Segment Adjusted
EBITDA Expense per ton”
(in thousands, except per ton data)
2015
2014
2013
2012
2011
Operating expense
Outside coal purchases
Other income
$ 1,377,053
$ 1,383,360
$ 1,398,763
$ 1,303,291
$ 1,131,750
327
(955)
14
(1,566)
2,030
(1,891)
38,607
(3,115)
54,280
(983)
Segment Adjusted EBITDA Expense
$ 1,376,425
$ 1,381,808
$ 1,398,902
$ 1,338,783
$ 1,185,047
Divided by tons sold
40,247
39,731
38,835
35,170
31,925
Segment Adjusted EBITDA Expense per ton
$ 34.20
$ 34.78
$ 36.02
$ 38.07
$ 37.12
Year Ended December 31
Partnership Tax Details
Unitholders are partners in the partnership and receive
quarterly cash distributions. Cash distributions generally
are not taxable as long as the individual unitholder’s tax
basis remains above zero.
A partnership generally is not subject to federal or state
income tax. The annual income, gains, losses, deductions
or credits of the partnership flow through to the
unitholders, who are required to report their allocated
share of these amounts on their individual tax returns, as
though the unitholder had incurred these items directly.
Schedule K-1
Unitholders of record receive Schedule K-1 packages
that summarize their allocated share of the partnership’s
reportable tax items for the fiscal year. It is important
to note that cash distributions received should not be
reported as taxable income. Only the amounts provided
on the Schedule K-1 should be entered on each
unitholder’s tax return.
Schedule K-1 information also is available on our web
sites. Please visit www.arlp.com and www.ahgp.com.
Unitholders should refer questions regarding their
Schedule K-1 as follows:
By Mail
K-1 Support
P.O. Box 799060
Dallas, TX 75379-9060
By Phone/Fax
Alliance Resource Partners, L.P.
Phone (800) 485-6875
Fax (866) 554-3842
Alliance Holdings GP, L.P.
Phone (866) 867-4060
Fax (866) 554-3842
Transfer Agent and Registrar
Direct requests regarding transfer of units, lost
certificates, lost distribution checks or address
changes to:
American Stock Transfer and Trust Company
Attn: Shareholder Services
59 Maiden Lane – Plaza Level
New York, NY 10038
(800) 937-5449
Investor Information and Form 10-K
For more information or free copies of the 2015 Form
10-K, please contact the appropriate e-mail address
or phone number listed below. Form 10-K also may be
downloaded from the Partnerships’ Web sites.
Alliance Resource Partners, L.P.
investorrelations@arlp.com
E-mail:
(918) 295-7674
Phone:
Web site: www.arlp.com
Alliance Holdings GP, L.P.
investorrelations@ahgp.com
E-mail:
Phone:
(918) 295-1415
Web site: www.ahgp.com
General Information
The following information applies to
Alliance Resource Partners, L.P. (ARLP)
and Alliance Holdings GP, L.P. (AHGP)
unless specified otherwise.
Partnership Offices
1717 South Boulder Avenue, Suite 400
Tulsa, OK 74119
(918) 295-7600
Partnership Mailing Address
P.O. Box 22027
Tulsa, OK 74121-2027
Contact
Brian L. Cantrell
Senior Vice President and
Chief Financial Officer
(918) 295-7674
brian.cantrell@arlp.com
Business Structure
Publicly traded master limited partnership.
Common Unit Trading
Common units are traded on the NASDAQ
Global Select Market.
NASDAQ Ticker Symbols
Alliance Resource Partners, L.P. (ARLP)
Alliance Holdings GP, L.P. (AHGP)
Common Units Outstanding
at 02/26/2016
ARLP 74,375,025 common units
AHGP 59,863,000 common units
Independent Auditors
Ernst & Young LLP
1700 One Williams Center
Tulsa, OK 74172
Unitholder Information
Cash Distributions
The partnerships expect to make quarterly
distributions to unitholders of record on the
applicable record dates according to the
following schedules:
Alliance Resource Partners, L.P.
Within 45 days after the end of each March,
June, September and December.
Alliance Holdings GP, L.P.
Within 50 days after the end of each March,
June, September and December.
Executive Officers & Directors
ARLP ≈ AHGP ≈
Joseph W. Craft III ≈≈
President, Chief Executive Officer,
and Director of ARLP and AHGP,
and Chairman of the Board of AHGP
Brian L. Cantrell ≈≈
Senior Vice President and
Chief Financial Officer
R. Eberley Davis ≈≈
Senior Vice President,
General Counsel and Secretary
Robert G. Sachse ≈
Executive Vice President
Charles R. Wesley ≈
Executive Vice President
and Director
Thomas M. Wynne ≈
Senior Vice President and
Chief Operating Officer
Nick Carter ≈
Director, member of the Audit,
Compensation and Conflicts
Committees for ARLP
John P. Neafsey ≈
Director, Chairman of the
Board of Directors, Chairman of the
Conflicts Committee, and member
of the Compensation Committee
John H. Robinson ≈
Director, Chairman of the
Compensation Committee,
and member of the Audit and
Conflicts Committees
Wilson M. Torrence ≈≈
Director, Chairman of the Audit
Committee for ARLP and AHGP
and member of the ARLP
Compensation Committee
Thomas M. Davidson, Sr. ≈
Director, Chairman of the Conflicts
Committee and member of the
Audit Committee
Robert J. Druten ≈
Director and member of the Audit
and Conflicts Committees
P.O. Box 22027, Tulsa, Oklahoma 74121-2027 | www.arlp.com | www.ahgp.com